§ 3.34 p.m.
§ Mr. Geoffrey Rippon (Hexham)
I beg to move,That this House deplores the failure of Her Majesty's Government's economic policies which have led and will continue to lead to rising prices thereby endangering the standard of living.It is appropriate that this debate should take place so soon after, and in the context of, the new Secretary of State for Employment and Productivity's recent seaside excursions. As the Minister who, in her own words, is responsible for the co-ordination of the Government's attack on prices, we look forward to her assault upon her colleagues, and not least upon her successor as Minister of Transport. We certainly accept her assurance that the right hon. Lady is no decoy for the Prime Minister. So far as most of us are concerned, he is a dead duck anyway. The Secretary of State herself is, of course, much more formidable, a sort of modern Boadicea in her own right and when she descended on Margate with her chopper she was infinitely more dangerous.
What we would like to hear from the right hon. Lady today is how, to adapt her Margate speech, she intends towage unceasing war on price increasesdirectly attributable to Government policies; how she intends to "expose vigorously" what is happening in Whitehall; and generally to keep what she calls "her eagle eye" on the prices of goods and services supplied by the nationalised industries. I put one simple question to her right at the outset. What price which the Government could influence have they failed to raise?
The Government are always very willing to thump the table and to attack private industries and undertakings from which they expect cuts, but each new statement they make on prices and incomes moves in like a sort of fog bank to disguise the failure of their own economic policies—the devaluation of the £, 1114 rising public expenditure, rising taxation and record interest rates. Those are the root causes of rising prices that have to be met from lower net incomes.
No amount of price-cutting by manufacturers, although many of them have done a great deal in that direction already, can offset the combination of stagnant production and rising Government demands. There are several sorts of inflation, inflation in times of scarcity where demand exceeds supply, inflation due to the rising costs of primary products in the rest of the world, inflation due to wages exceeding production, but these are not the chief anxieties today. Our main trouble under this Government is that we are suffering from the most dangerous form of inflation of all—that inflation which arises from the disruption of the normal and natural pattern of economic development and growth. It is inflation of this kind, Government-created inflation, that is today sapping the structure of industry, holding back all the time the growth of the economy, undermining confidence in savings and investment and in the future value of money.
In this situation nothing but further harm can be done by any statutory attempt to fix wages and prices. The late Ernest Bevin would not even attempt it in wartime. It does not make sense, and it is unworkable—the root cause of our economic troubles today is unending—absolutely unending—Government interference. The further imposition of a statutory wages control, which, of course, was pledged to end this year, will only damage still further free selective bargaining and distort our economy still further. Of course, we shall be told that it is only temporary, but the one permanent characteristic of this Government is that they are always in temporary difficulties.
The late President Kennedy put the issue clearly when he said:The free market is the decentralised regulator of our economic system. The free market is not only a more efficient decision-maker than the wisest central planning body, but, even more important, the free market keeps economic power widely dispersed. It is thus a vital under-pinning of our democratic system.The Deputy Leader of the Labour Party understands this. As he said in Doncaster on 19th September, 1965:The moment you start compelling people in the field of industrial relations, in the field of 1115 work, or in the field of management and unions you are going well down the road away from democracy.His instinct to resign in July, 1966, was probably the right one, and if he had done so then we might be in a healthier position today.
The real horror of the new Secretary of State's first speeches is their arrogant assumption that it is the Government's business to meet every problem by exerting their own power and authority in a new way. She just announces, as though it were a solution to anything, that she will interfere more often and at an earlier stage.
The fundamentally wrong approach of the Government and the distorted basis of its policy was clearly manifested in the misleading cases which the Secretary of State brought up at Margate. Not even A. P. Herbert's Mr. Haddock would have thought of litigating about them. Her speech suggested that she had suddenly found great areas where price reductions are possible which had hitherto gone completely unnoticed by anybody else.
First, petrol. The oil companies have regularly reduced prices. It is the Socialist tax increases which have put up the cost of petrol by ls. 2d. a gallon. No marginal reduction in company prices will obviate the Automobile Association's estimate that the effect of the Budget is to add 8s. a week to the average motorist's costs.
Then, cars. On the very day that she said that something ought to be done about car prices, her colleague, the Minister of Technology, was about to agree to price increases directly caused by Government policies. Not much co-ordination of the price war there!
What about two other candidates for investigation, synthetic fibres and refrigerators? Those are in areas of intense international competition, where the manufacturers are engaged all the time in a desperate struggle to offset taxes and to keep prices down to a level where they can compete with the imported products.
The right hon. Lady then went on to refer to the copper-mining industries, and she expressed her intention to look more closely at the prices for goods where copper is an important raw material, "and perhaps generalise the principle". Had she looked before she spoke, she 1116 would have found that it is standard practice, for example, in an electrical plant contract, to have a cost price adjustment clause which automatically reduces the contract price when copper prices go down. Left alone, industry is perfectly capable of striking its own bargain over commodities such as copper, where the price level notoriously fluctuates.
Then there was a reference to the chemical industry. That is another industry which is in an area of intense competition, where the rise in prices between 1958 and 1967 was 4 per cent. in all, compared with a rise in manufacturing prices generally of 20 per cent. over this period.
They, apparently, are the worst cases in the private sector which the Minister has so far been able to find on which she is about to wage her "phoney" war. The right hon. Lady then went on to make a great parade of referring to the Prices and Incomes Board cases where recommended prices have been increased by the same percentage as manufacturers' prices. But who in this House can possibly know better than the right hon. Lady that the Government's actions which have raised industrial costs have raised distributors' costs even more, and they will rise still further as a result of her Transport Bill. What about freight charges? Having increased them, what does she now propose to do to reduce them? Surely, of all the Members in this House, she must understand that rising transport costs, for which she is responsible, are reflected in virtually every rising price in the country.
It is really only the latest Government confidence trick, and a pretty obvious one at that, to say that they will make someone else do something, when the main remedy lies with the Government themselves. So far, all that they have done in the matter of price increases is to appeal to people who, as it were, are suffering from a famine, to vote for nothing but toothpicks.
What are the facts of the situation? The overall cost of living has risen by over 13 per cent. under this Government. Public expenditure has gone up by over £1,000 million in the current year, and the value of the £ has fallen by 2s. 4d. In answer, the Government just say that this is continued inflation which has to 1117 be met by severe fiscal and monetary measures, reduced consumption and statutory control over wages and prices. But ordinary people are no longer impressed by jargon of this sort from the Government. They are not influenced by the tone and the tons of literature which pour out from the abstract school of political economists in the Treasury and elsewhere, who have held the country in their baneful grip for a very long time.
To the family, the issue is a simple one. Inflation to them raises just the question: will they be able to pay their grocery bills? Will they be able to pay their rent? Will they be able to keep up the cost of the mortgage?
There are many families in which only one end of the budget ever moves. They are the people on pensions and fixed incomes who rely on them and on their savings. The Minister can say statistically, no more, that wages have marginally risen faster than prices. Even so, it is very significant that in the so-called years of Tory misrule, "the 13 wasted years", real earnings rose three times as fast as they have done under a Labour Government.
The Secretary of State herself admits that the retail price index is suspect. Index or no index, the housewife does not need to be told that The Grocer has reported about 4,000 price increases since devaluation. It is true, of course, and everyone in this House ought to acknowledge it, that the abolition of resale price maintenance by my hon. Friend the Leader of the Opposition has done much to mitigate the situation and, by stimulating competition, helped to keep prices down.
But nothing can offset what the Government have done. Increases in prices since October 1964 mean that it would cost the average family over £2 10s. a week more today to buy the same things that they bought in 1964, on the basis of the Ministry of Labour's Family Expenditure Survey.
§ Mr. Kenneth Lomas (Huddersfield, West)
The hon. Member has quoted the figures from October, 1964, to March, 1968. Perhaps he would bear in mind that, according to the Ministry of Labour Gazette, the figures that we 1118 accept, retail prices as a whole have increased by 13.6 per cent. and food prices by 13 per cent., but weekly basic wage rates have increased by no less than 18.4 per cent., and hourly rates by 23.4 per cent. Would he not, therefore, agree that the Government have kept prices down in relation to wages?
§ Mr. Rippon
I accept the figures as the hon. Gentleman has given them. I rely on them. I read the Ministry of Labour Gazette almost every night, before I go to bed. It is exactly what I said. Statistically, at the margin, wages have increased more than prices, 18 per cent. against approximately 13 per cent.—14 per cent., but that is not continuing at present.
I made the point, also, that under a Conservative Government the real level of earnings rose three times as fast as under a Labour Government, that is to say, they rose by 3.5 per cent. per annum compared to under 1 per cent. So I do not think that the hon. Gentleman will find that my figures are in any way inaccurate.
Grocery bills will fluctuate from season to season and from place to place. The Secretary of State and the hon. Gentleman can read an up-to-date shopping list and survey in today's Daily Sketch. There is no nonsense there about the retail price index. They even cut out luxuries such as cigarettes and even TV licences. They just take an ordinary shopping bag and an ordinary housewife and show, in spite of the improvements that have undoubtedly taken place in manufacturing, merchandising and distributing techniques, that the price for 31 items on a 42 item list have gone up in a way that means spending roughly 2s. 1d. more in every £.
What of the future? We have been talking only about statistics that apply up to the present. The Secretary of State admits that prices must rise by 3 per cent. as a result of devaluation and another 2 per cent. for recent increases in electricity, gas and so on, together with the tax increases in the Budget. She has not yet committed herself to any figure for increased earnings. Perhaps she might do that this afternoon. But the Financial statement in connection with the Budget made it clear that personal consumption would have to fall by 1 per cent. a year in the next 18 months. 1119 In other words, for the first time a Government are deliberately planning for a fall in the standard of living of that order. But that is an optimistic assessment. The National Institute for Economic and Social Research expects a rise in prices of 7½ per cent. this year, and the Selective Employment Tax increase in the autumn will have a further effect in a full year.
Every single action that the present Government have taken has been calculated to put up prices at every step, because the increased taxes they impose fall first on components, then again on manufacture, again on distribution and again on the retailer. In the end the burden falls on the consumer. Even the British Rail hotels put at the bottom of the bill the increase due to the iniquitous Selective Employment Tax.
Then there are what might be called the hidden price increases represented by the deteriorating standards of quality and service. Housing standards are being pared to get within the new cost limits. Hotels, restaurants and shops must not only meet the Selective Employment Tax and higher insurance contributions but higher fuel costs and postal and telephone charges, apart from the effects of direct taxation. Inevitably, service suffers.
Everybody in the House knows from going round the country that the standard and quality of life is being steadily undermined by the Government. Sometimes it is just a reduction in the amount of goods in the packet. The number of matches in a box is steadily reduced. There is a real danger that my right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) will not be able to do his sums any more. There will not be enough matches, which will be a national disaster because he did them so much better than the Prime Minister or the present Government.
The Government's folly and mismanagement have had the most appalling consequences in the sphere of housing, land and mortgages. Everybody remembers the Prime Minister's bold declaration thatWe shall cheapen the cost of housing by our interest rate policy.Ever since then housing interest rates and the cost of housing have climbed steadily 1120 and steeply. No matter how the Minister of Housing and Local Government may try to fool the public by huffing and puffing about interfering with the statutory rights of local authorities and making them dip into their reserves—assuming that their Socialist predecessors left them with any—the effects of rising costs in housing are utterly remorseless.
The Report of the Prices and Incomes Board on Increases in Rents of Local Authority Housing said that a survey of local authorities showed that only 4 per cent. reported that the reduction or abolition of rate fund contributions to the housing revenue account was the main cause of rent increases and only 4 per cent. suggested that the increases might be due to a change in or the introduction of a rent rebate scheme. It is only a policy of fair rents for all, which cannot be determined by an arbitrary standard, which is protecting the poorest families at present.
The really significant factors in rising rents to which the Secretary of State must address herself are the rising costs of house construction and rising interest rates. The average all-in building cost of a local authority house in England and Wales in the year ended 30th September, 1967, was £4,718, an increase of nearly 28 per cent. over 1964. Construction costs, like so many other costs, have been forced up by rising taxation, the Selective Employment Tax, which turns up every time, and the rising cost of materials. Repairs and maintenance costs are also up. So, too, is the price of land—up by 13½ per cent. since 1964 even in the local authority sector, in spite of inadequate compensation on compulsory purchase.
The effect of high interest rates has been even more devastating. They are now so high that the Prices and Incomes Board reported that they amount to about 50 per cent. of the total of local authority housing costs. There is another factor in this, showing how people are misled by the Government. Many local authorities were induced by the Government's promise of lower long-term interest rates to borrow short-term. They are now absolutely in the knacker's yard, because they are forced to finance their short-term borrowing as it matures at the current high rates of interest. Against this 1121 background, the Government's measures to give local authorities marginally higher subsidies or tax-subsidised rates of interest which are not available in the public sector are just a spit into the wind.
In the private sector the position is much more serious. The average cost of a new house built in the private sector in Great Britain in the last quarter of 1967 was £4,350, and land prices are higher here, partly because of the absence of the element of confiscation on acquisition and perhaps even more because of the damaging effects of the Land Commission Act. It is now revealed that the Land Commission is spending £12 for every £1 it collects. As that Right-wing newspaper, the Sunday Mirror, said on 18th February:The creation of this expensive monument to bureaucracy is one of the few election promises the Labour Party has so far been able to keep. It is a pity.The figures I have been quoting are of steep increases in prices before devaluation, before the last swingeing dose of taxation, before the full effect of the Land Commission and the betterment levy, and before the further increase in interest rates on private borrowing and on mortgages. In an article on 23rd December, the Financial Times estimated that as a result of the tremendous financial pressures exerted by the Government on the economy the basic cost of building a three-bedroom house might well show a national average rise of £350 during 1968, of which £200 would be for increased land cost and £60 for increased finance charges and overheads. It is perhaps significant that only £22 would be due to increased cost of labour. Those figures take no account of increased prices after the Budget or the effect of the Transport Bill on haulage charges for building materials.
Therefore, we face a situation in which a young married couple who seek a mortgage for a new house, in or out of the mortgage option scheme, are very much worse off than they would have been in 1964, and their position is deteriorating every month that passes. For example, in 1964 mortgage repayments on a £3,000 house would have taken a quarter of average industrial earnings. Today they would take more than a third, and—and here is where there the deteriorating standard comes in—at that price today it would be a smaller and inferior house.
1122 What of those who have already committed themselves to buying their own home on mortgages? They have been cruelly deceived by the Government. They were led to believe that they might have mortgage interest rates as low as 3 per cent. [An HON. MEMBER: "The right hon. Member for Belper (Mr. George Brown) promised it."] What have they had instead? First, a rise from 6 per cent. to 6¾ per cent., then to 7⅛ per cent., and then to the highest level ever of 7⅝ per cent. This is not the fault of the building societies. The Secretary of State cannot suggest that. Mortgage rates are at a record level because Bank Rate is at its highest level for the longest time for more than a century. Allowing for tax relief, repayments on a £3,000 mortgage repayable over 25 years has gone up by about 10s. a week, and for the ordinary householder that is on top of increased taxes, higher food prices, dearer gas, electricity, coal and petrol—and, yesterday, £1 a ton on coke.
No wonder building society investors have been saving less and less. In March, the net inflow of savings dropped to a lowest-ever £20 million. In face of galloping inflation, people are not only unable to save more but they are spending what they have, in the belief, which the Government do nothing to dispel, that prices will go on rising faster and faster.
Everyone agrees that prices are too high and rising. Every housewife and every worker will agree with the Secretary of State about that. They also think that they have the right to complain. But what I cannot understand is how the Government or any member of the Government can have the effrontery to say that they intend to wage a war on prices. To the people, the Government are the enemy. It is the Government upon whom the Secretary of States needs to wage war.
What does the Secretary of State intend to do about the Prime Minister? He ought to be called upon to explain the case for his Ministerial payroll Vote, the cost of which has gone up by another £22,000 since 4th April to a record £613,000. We have now the most numerous and costly set of Ministers in the world. I will not say necessarily that their salaries give rise to the highest cost in the world, but certainly they are the most over-priced.
1123 What about the new Minister of Power, who now sits on his golden bed of nationalised nails? Can be explain how we are to cut prices when domestic electricity is up by 13 per cent., gas is up by 13 per cent. and coke went up by £1 per ton only yesterday. How can the Minister of Housing and Local Government cut down the cost of rents and mortgages, and can the Postmaster-General tell us how much faster a 5d. letter will go than a 4d. one, and how much productivity will be improved by higher telephone charges and yellow telephone kiosks?
Nor should we leave out of the dock the Home Secretary, who has authorised about 40 rises in licences and other fees from 1st April. What sort of war is he waging on prices when he raises the cost of a public music and dancing licence by 1,900 per cent. from 5s. to £5? How can the President of the Board of Trade justify a 1,100 per cent. increase in the cost of registering companies' annual balance sheets, even if it is admitted that the unpopularity of the Government justifies raising the licence for a gunpowder store from 5s. to £2 5s.? How does the Secretary of State for Economic Affairs justify either the D.E.A. or himself?
Finally, there is the Chancellor of the Exchequer. What contribution is he making to the war on prices? There is no magic in his Budget. With the economy virtually stagnant and Government expenditure up by over £1,000 million, of course taxation goes up by the same amount. When the other Mr. Wilson robbed a train of £1 million, he and his confederates went to prison. When they escaped, no one said that it was a bold, courageous act by people who left themselves with no alternative.
Nothing has contributed more to rising prices in the last three and a half years than the actions of this Government who, having promised that there would be no general increase in taxation during the lifetime of the present Parliament, have so far raised it by over £2,200 million a year. The main reason is that, out of every extra £ of increased production, 15s. has gone on spending in the public sector.
I want, finally, to refer to an Answer that my hon. Friend the Member for 1124 Harrow, Central (Mr. Grant) elicited from the Chief Secretary of the Treasury. It was the devastating admission that, between 1964 and 1967, while the gross national product rose by 5½ per cent. and consumer expenditure rose by the same amount, public authorities' current expenditure on goods and services rose by 12 per cent. In the same period, which is even more startling, public investment rose by 26 per cent. while private sector investment actually fell by 1 per cent.
In a sentence, that is why the country is in dead trouble today. We are suffering from a Government who demand sacrifices from every section of the community, except themselves. We are in a situation where the country can depend on only one fact. As long as this Government are in office, we will go on paying and they will go on spending.
§ 4.4 p.m.
§ The First Secretary of State and Secretary of State for Employment and Productivity (Mrs. Barbara Castle)
The Motion on the Order Paper today is couched in economic terms. We were promised an attack upon the Government's economic policies. All that we have had from the right hon. and learned Member for Hexham (Mr. Rippon) is the rather sweeping statement that we have interfered with the normal and natural pattern of growth, which, presumably, took place under the Conservatives.
To hear him and others of his right hon. and hon. Friends, one would assume that their economic policy had ended in a triumphant success instead of with the biggest overseas deficit in our history. Listening to them, one would wonder why the country turned its back on their Eldorado in 1964. One would wonder why the slogan, "You never had it so good", did not work that time. The answer is that the country realised that right hon. and hon. Gentlemen opposite had produced no solution to the country's economic problems and that it was time that someone else found an answer instead.
It is not often that we have a very profound economic analysis from right hon. and hon. Gentlemen opposite. When we do, it is usually an inaccurate one. In reading the debate which took place on 21st March on the Budget Statement, I was very interested to read the remarks 1125 of the right hon. Member for Mitcham (Mr. R. Carr), who was supposed to be elaborating the Conservative Party's alternative to the prices and incomes policy. He summed up the whole Conservative successful alternative in the following words:…unit labour costs in manufacturing industry in Britain rose by 2 per cent. only between 1958 and 1964 when we were in power".—[OFFICIAL REPORT, 21st March, 1968; Vol. 761, c. 635.]That is a complete distortion of the facts. The right hon. Gentleman made a big impact on the House with that statement and, if it were true, it would have been a remarkable achievement. If it had been true, right hon. and hon. Gentlemen opposite would never have left office. However, it is not true. Under the Conservatives, unit labour costs in that period rose by five times as much as the right hon. Gentleman said. In fact, they rose by 10 per cent. If he had quoted accurately from the O.E.C.D. Observer, as he was claiming, he would have made that clear to the House.
I will be more honest with the House than right hon. and hon. Gentlemen opposite have ever been. I admit that labour costs per unit have risen during the last three years under the Labour Government. But what matters is not the average figure of the increase in labour unit costs. What matters is how those unit costs have fluctuated from year to year, from what causes and with what consequences.
If we study the years 1958 to 1964 and see what happened to wages, prices, production and, therefore, unit costs, as well as employment and the balance of payments during that period, we find that Conservative Governments never solved the problem of maintaining full employment, keeping unit costs stable and securing a healthy balance of payments.
The spending spree and the "Never had it so good" slogan on which they won the 1959 Election led, in the following year, to a balance of payments deficit of £450 million and rising unit labour cost which, in 1961, rose not by even an average of 2 per cent., but by 6 per cent.
§ Sir Cyril Osborne (Louth)
Would the hon. Lady admit that last year's deficit on balance was £540 million?
§ Mrs. Castle
I have told the hon. Gentleman that I am admitting all the true comparisons. Perhaps he will allow me to develop my argument.
Faced with this, the Tories, in that year, took the economic measures of which we all know—including the pay pause—and painfully brought down unit labour costs by holding down wages; but when they relaxed again in preparation for the General Election in 1964 the race towards catastrophe in the balance of payments became a galloping one and the deficit rose to the astronomical figure of £774 million.
One of the problems of the Labour Government, thanks to hon. Gentlemen opposite, has been that our starting point was that deficit. We knew that the only hope of increasing the standard of living of our own people while bringing this deficit down substantially was to find an alternative to the traditional deflationary policies; and that was why we launched the prices and incomes policy. Hon. Gentlemen opposite are now indulging in a great deal of amusement at the expense of that policy. I would like to know exactly where they stand on it, because they have contradicted themselves more than once. To say that the trouble lies in Government interference with what happens to wages, after what they did during their period of office, is really a most belated reply.
§ Mr. Rippon
Does the right hon. Lady deny what I said, that under the Conservative Government real earnings rose by over 3 per cent. per annum while under the Labour Government they have risen by well under 1 per cent.?
§ Mrs. Castle
No, I do not accept that for a moment and I will prove it to the House; because otherwise we cannot have a meaningful discussion about the cost of living.
Hon. Gentlemen opposite were not successful in holding it down. The right hon. and learned Gentleman the Member for Hexham had his anxieties during his period of office about rising housing and construction costs, as reference to the records will truly show. We in this House can bandy talk across the Chamber, but we shall not begin to face up to a solution of the cost of living problem unless we can explain the facts objectively 1127 and analytically. One of the inescapable truths about our prices and incomes policy in the first 18 months was that it was far more successful on the prices side than it was on the wages side. [An HON. MEMBER: "Why?"] The hon. Gentleman is at least not denying the fact. That is point No. 1.
There was a rise in wages. In the 15 months to July, 1966 the hourly wage rates rose at an annual rate of 7½ per cent. Wage and salary earnings rose by 6¾ per cent. and the retail price index at an annual rate of 3¼ per cent., a massive advance in real wages at a time when we were still struggling, and struggling successfully, to bring down that astronomical inherited deficit. The prices and incomes policy did succeed and it was because of that success, with wages galloping ahead of prices in a situation where this country was in chronic overseas debt, that we were compelled to introduce the incomes standstill and follow it with the period of severe restraint.
Since then the gap between wages and prices has narrowed, but wages are still well ahead. If we take the whole period from July, 1966 to February, 1968, hourly wage rates have been rising at an annual rate of 5½ per cent. earnings at 5¼ per cent. and prices by 3 per cent. So if the hon. Gentleman wants to compare prices and wages under Labour and Conservative policies the picture is very different from the way he has painted it, because between April, 1965 and January, 1968 the retail price index rose by 8.6 per cent. while hourly wage rates rose by 18.6 per cent.
During the corresponding period April, 1961 to January, 1964 prices rose by 8.8 per cent—not 8.6 per cent.—and hourly wage rates by 12.9 per cent.
§ Mr. Cranley Onslow (Woking)
Can the right hon. Lady tell us why, if what she is saying is remotely true, the £ in our pocket is not worth more?
§ Mrs. Castle
The pounds in our pocket were devalued during every year of the Conservative Government, and hon. Gentlemen know that perfectly well. The reason for the success in holding prices down was the effectiveness of the prices side of the prices and incomes policy. Let us take a more specific field, the trend in food prices when the Conservatives were 1128 in office, compared with now; and I am comparing like with like, the last quarter in one year with the last quarter of the previous year. The increases in food prices were: between 1961 and 1962, 2.6 per cent.; between 1962 and 1963, 3 per cent.; and between 1963 and 1964, 4.6 per cent.
In short, food prices were not only rising each year under the Conservatives, but the increase was accelerated. [HON. MEMBERS: "Deal with today."] It is relevant, because I will now give hon. Gentlemen the comparable figures since Labour came to power. Between 1964 and 1965, food prices rose by 2.9 per cent.; between 1965 and 1966, they rose by 3.6 per cent.; and between 1966 and 1967, they rose by only 1.8 per cent. Of course, hon. Gentlemen opposite do not want to believe it, for it would invalidate their whole argument. I repeat that food prices in the last quarter of 1967 were 1.8 per cent. higher than in the last quarter of 1966, a smaller amount than in any of the preceding five years. These are the facts.
We have had a fusillade of figures from the right hon. and learned Gentleman of what he claimed were the facts and, therefore, hon. Gentlemen opposite must take the comparable and corresponding figures from this side. We know, of course, that the real answer to this whole problem, the real way in which we can begin to get stability in real wages and in the cost of living is by solving, if and when we are able to do so, the basic problem of expanding our production on the foundations of stable and competitive unit labour costs. That is really the test and it is as a result of measures we have had to take under the prices and incomes policy that our unit labour costs have now fallen and are competitive, to a degree not reached under the Conservatives, with those of countries with whom our exports are competing in world markets.
The improvements which we are bringing about have come too late to enable us to avoid devaluation and its inevitable cost increases. If we devalue, to make ourselves more competitive internationally, the way we do it means that the prices of our exports fall, while the level of our import prices rises.—[Interruption.]
§ Mr. Deputy Speaker (Sir Eric Fletcher)
I hope that the House will enable the Minister to be heard.
§ Mr. Rippon
Does the right hon. Lady simply agree that the £ in her pocket is now worth a great deal less than it was before devaluation?
§ Mrs. Castle
I repeat, the £ in our pockets was continually decreased in value under the Conservative Government. I repeat that at the end of their period of office, the Conservatives left the country with economic problems facing it. They left the country with the after-math of a spending spree which the country had not earned. The task that this Government have had to undertake has been by the control of the relationship between prices and production, to enable us to reach a stable basis upon which we can advance.
It is no part of my case, nor has it been any part of the case that I have made in the country, or am making with the trade unions, to deny that devaluation inevitably brings its difficulties. It brings the difficulties of an increase in the cost of our imported raw materials, and an increase therefore in the prices we pay. I accept—and hon. Gentlemen opposite will find it in the speeches which they have derided—that in the coming year we face increases that we have not had to face up to now.
In the coming year we face a 3 per cent. increase in prices due to devaluation, a 2 per cent. increase due to the rise in nationalised industry prices, and in the Budget tax. This is inevitably our starting point. [Laughter.] The only way out of this, and hon. Gentlemen may laugh, is to concentrate on bringing home to the people that we can only afford an expansion of incomes if that is earned by increased production and productivity.
§ Sir Gerald Nabarro (Worcestershire, South)
What the right hon. Lady says is unexceptional. Would she explain to the House why, for example, in the coal mining industry, which has increased its productivity during the last 12 months by more than any other industry, the rewards to the consuming public is that coke prices are to be increased by a record amount of 20s. per ton?
§ Mrs. Castle
The hon. Gentleman knows that the increase was examined by the Prices and Incomes Board. Nationalised industry price increases are subject to scrutiny as closely as any other. The 1130 hon. Gentleman is merely putting in another form the problem we face in tackling our basic costs. Hon. Gentlemen opposite did not solve the problem, but they go on pretending to the country that they did. The facts and the evidence are irrefutable.
Through the medium of the prices and incomes policy we are engaged in drumming home to the people that if we want to keep prices down, and this is the starting point, then we have to match all increases in income by increased productivity. We have to hammer this lesson home to our people and, equally, we have to satisfy them that someone else is not getting away with increases in incomes that have not been earned, that the manufacturer is not getting away with unnecessary price increases, nor the retailer getting away with the bonus, the windfall, of an increased margin because the fruits of his percentage margin rise when devaluation pushes up manufacturers' recommended prices.
There is absolutely no hope of convincing the working people of the essential fairness of the incomes policy unless we have a rigorous prices policy as well. That is what I am doing, and that is what hon. Gentlemen opposite have been gibing at. This is what we have successfully prosecuted, as I showed in the case of food prices, through the procedure for the close watch, the early warning procedure and everything else.
The only way in which we can get away with this incomes and productivity policy is to make it clear that we do not intend to tolerate unnecessary price increases. The right hon. and learned Member for Hexham misquoted me, with typical Conservative inaccuracy. I did not say that I would make war on price increases. I say that that is impossible. What I shall make war on is the unnecessary price increase. This is the message that I gave to the country at the week-end, and which I repeat to this House. This is why the Government, in our new Prices and Incomes Bill, will be taking the extended power over the prices front.
This is why we shall extend the prices stand-still, where it is justified, to 12 months, just as we are to do with wage increases. This is why we are taking power in the Bill to enforce price reductions where, for example, prices of imported raw materials have fallen, where 1131 industries are making great technical advances, due in part to the increasing scale of production, or where profits of certain firms are rising. Hon. Gentlemen opposite gibe at me for that.
An industrialist said that I was a silly woman, making a silly political speech. The newspapers this morning are full of the very developments for which I was asking, full of the examples of what I was claiming would be possible. Today, more than 40 manufacturers of cosmetics and toiletries have decided to abandon retail price maintenance. [Interruption.] As a result, everyone expects that the prices of lipstick and face cream and hon. Gentlemen's shaving lotion will come down. All this is despite the increase in Purchase Tax in the Budget. Why will they come down in price? The Times this morning said that beauty products carry high profit margins and there was plenty of room for price cuts by the larger groups.
Are hon. Gentlemen opposite sneering now? This is exactly one of the criteria which we spelled out in the White Paper, on the basis of which we say price reductions should take place. There is a massive break-through on the detergent front as well, with the ending of the five-year agreement struck by Unilever and Procter and Gamble in 1963. The two firms are now free to introduce cut price offers. On what they have called their heavy duty laundry category detergents, Unilever has blazed the trail by knocking 8d. or 9d. off the prices of some of the large packets of its goods. For five years these companies pledged themselves not to use price competition as a form of promotion of their goods, and now they have agreed that they can.
Will anybody tell me that this would have happened had it not been for the work of the Monopolies Commission and the Prices and Incomes Board? And this is on top of the agreement to keep certain brands at lower prices, following the Monopolies Commission Report and the pressure brought to bear on them by my right hon. Friend the President of the Board of Trade. The ball has started rolling now; let us see if we can push it into other courts.
Take the cases in which the prices of imported raw materials have fallen despite devaluation. We all know that the 1132 price of copper was £815 a ton in February: this week it was £474 a ton. British Insulated Callender Cables last week cut its prices for general wire and cables by an average of 12 per cent. This is what it has to do with prices and incomes. This shows what other firms can do. As wire and cables are used in many other firms and industries, the decrease in prices should be reflected widely and it will be the object of the Prices and Incomes Board and of my Department to see that it is. I welcome prompt action such as that taken by B.I.C. Cables and I intend to ensure that other manufacturers pass on in lower prices any decreases in the prices of raw materials, and to make sure that these decreases are passed right down to the consumer.
Petrol has been mentioned, also. A review is going on at this moment of the surcharge made by oil companies as a result of the Middle East crisis last summer. This surcharge covers not only petrol, but all the main products. While I recognise that basic petrol prices have been falling over the years, leaving aside the taxation, of which we are all well aware, I still hope that the outcome of the review will be a reduction in the present level of the surcharge.
One area which needs a great deal more looking at is that of retail markets. The Prices and Incomes Board has come to the conclusion that there is no reason for an increase in distributors' cash margins when manufacturers increase their recommended prices as a result of devaluation. Departments have already started to take this up with the manufacturers of price-recommended goods and with the main organisations representing the distributors. There are a number of areas in which, on the face of it, retail margins already appear to be very large and where there might well be a case for protection of the interest of consumers, even after allowing for the effects of devaluation. We are actively considering a number of references to the Prices and Incomes Board and I hope to be able to announce the first of these in the very near future.
Reference has been made to the retail price index. I have not suggested for a moment that the index is infallible. We all know that the index is compiled with the help of a very expert advisory committee, including the trade unions. I have 1133 said that I want to satisfy myself that it bears an exact relation to the facts. I think that people believe that larger price increases than the index shows have taken place because the incidence of individual prices may hit hard in a particular case and give an impression of a general inflation of prices which in fact has not taken place.
Outstandingly, this happened in the housing field and, of the increase in the retail price index of 3.6 points since the middle of 1966 increasing housing cost has been responsible for not less than 1.1 points. There is no doubt that housing costs are hitting people very heavily and it is for this reason that the Government referred certain rent increases to the Prices and Incomes Board, which has now issued its invaluable Report.
§ Mrs. Castle
The hon. Gentleman says that it has not solved anything, but in the lives of individuals it has.
§ Mrs. Castle
No, I will not; I have give way a lot already.
The Report found that rent increases should be so phased that they averaged not more than 7s. 6d. a week in any year except in the most exceptional circumstances, and my right hon. Friend the Minister of Housing has already told Parliament that the Government accept the Report. But we have gone further than that and have fixed an absolute ceiling——
§ Mrs. Castle
I am very sorry, but I have given way a great deal and I do not want to take too much time. No doubt the hon. Gentleman can catch the Speaker's eye. If not, it is his misfortune, not the House's.
The Government have gone further than that by fixing an absolute ceiling on any rent increase of 10s., and we shall be legislating for that in the Prices and Incomes Bill. Hon. Gentlemen have said that this will have no effect, but of the 22 authorities——
§ Mrs. Anne Kerr (Rochester and Chatham) rose——1134
§ Mrs. Castle
I will give way because I believe in fair play and I have not yet given way to anyone from my own side.
§ Mrs. Anne Kerr
Has my right hon. Friend the remotest idea when we shall have legislation on council house rents, about which I am very much concerned, as I feel sure are many other hon. Members on this side?
§ Mrs. Castle
The legislation for the powers I have mentioned will be contained in the Prices and Incomes Bill, which, I hope, will have my hon. Friend's support.
Of the 22 local authorities whose rent increase the Board examined, 17 had increases in train higher than that figure of 7s. 6d.—some dramatically higher. I was delighted to see in the papers the other day that the rent increase of 15s. a week proposed for 3,000 Walsall tenants—and this is one of the authorities whose increases were examined by the Board—may be halved as a result of the recommendations of the Prices and Incomes Board and the Government's announcement of its enforcement plans.
Let us take the situation in the Greater London area. I was rather surprised that the right hon. Gentleman did not refer to that, because the G.L.C.'s proposals were mentioned. The main features of these were that average rents would have increased by about 70 per cent. over the three years up to 1970–71, with average increases at each stage of between 11s. 6d. and 9s. 3d. Individual rents would have gone up by more or less than this, with maximum increases in some cases of over £1 a week. The reason for this, of course, is partly the rising housing costs, but there is also the abolition of the rate fund contribution of £4.2 million which the G.L.C. would otherwise have made in the period up to 1970–71. One of the reasons is the cancellation of that contribution, starting with the cancellation of £1.2 million this year.
In the case of the G.L.C., the Board specifically rejected the Council's case for basing its rents on fair rents in the private sector, and made it clear that it thought that, in the present situation of prices and incomes policy, rate contributions should continue.
On both grounds, therefore, the Board's Report comes down firmly against the G.L.C.'s proposals, and my 1135 right hon. Friend the Minister of Housing and Local Government has asked the Council to review the proposed increases. [AN HON. MEMBER: "Who will pay? The ratepayer?"] The House knows that this Government have made a bigger contribution to reducing the rate burden than the Conservatives even talked about.
This is the basis on which we shall prosecute the prices and incomes policy. I repeat that the Conservatives did not avert a rising cost of living when they were in power. They did not avert economic crisis after economic crisis, culminating in the severest crisis of 1964. We on this side of the House are tackling the cause of high prices at its roots, because we are tackling the problem of what is needed to stimulate and develop productivity.
This is the purpose and inspiration of our incomes policy. There is no ground on which we can ask the workers to accept that policy except by the utmost vigilance in the prices field—on rents, retail margins, raw materials and profit margins, all these things on which the surveillance of the Prices and Incomes Board has shown that action can be taken. The Government will take the necessary powers to ensure that action is carried through.
§ 4.42 p.m.
§ Sir Cyril Osborne (Louth)
With all the Christian charity in the world, I am compelled to say that the Minister's speech was a great disappointment, not only to those of us on this side of the House but also to her own supporters. She did not even begin to touch the fringe of the problem, and the look on the faces of her supporters was the best index of the disappointment which they felt at her failure.
May I say this in defence of the right hon. Lady. Before she spoke, I felt very sorry for her, because I believed that the Prime Minister had given her an impossible job to do. In my opinion, no one can prevent prices from rising. The right hon. Lady must fail, as those who held the office before her failed, for the simple reason that the greatest ingredient in prices is wages, and if wages rise, other things being equal, prices must rise. Since the trade unions will not allow the right hon. Lady to keep down wages, she can- 1136 not and nor can anyone else, keep down prices.
§ Sir C. Osborne
If the hon. Lady will be kind enough to listen, I will explain, even to her dull mind, about dividends.
I propose to repeat what the Financial Secretary to the Treasury said the other night—and if the hon. Lady will not believe him, she will have it from me; she has asked for it. No one in a free society, whatever party may be in power, can prevent prices from rising. Prices rise or fall according to the normal operation of the law of supply and demand. It is a quite simple concept that if the supply of goods and services is greater than the immediate demand, prices will fall. If the supply of goods and services is smaller than the immediate demand, prices will rise. Our problem is to increase the supply of goods and services until it exceeds the immediate demand. It would be possible for the right hon. Lady to do the job which the Prime Minister has set her only if she had dictatorial powers and turned the country into a concentration camp; and nobody really wants that.
I remind hon. Members of the basic problems underlying our difficulties. The Government admit that in 1967 we spent £540 million more than we earned. I am not comparing like with like; that gets us nowhere. I am merely stating the facts. Therefore, we lived to that extent—£540 million—above our income. In 1968, our problem is to produce £540 million more in wealth than we did last year without charging ourselves any more for producing it—that is, by keeping incomes stable and not charging ourselves more for producing that extra wealth—because that is the only way in which we shall get ourselves out of debt.
But, in addition to the extra £540 million which we must earn, we must be prepared to repay the debts which the Government have incurred since 1965 and which must be repaid—[Interruption.] I should be grateful if I could have the right hon. Lady's attention. It would be courteous to the House—[HON. MEMBERS: "Get on with it."] I will get on with it in my own time. Before some hon. Members became Members, 1137 certain courtesies were observed. They are not observed now.
§ Mr. Albert Murray (Gravesend)
It is a pity that the hon. Gentleman did not observe them when my right hon. Friend was speaking.
§ Sir C. Osborne
I did. I listened attentively and carefully to what the right hon. Lady said. I am trying to reply to it, and I should be obliged if she would listen.
In addition to the £540 million which we overspent last year, we must repay during the next three years nearly another £1,000 million which we borrowed. According to Government figures, since 1965 we borrowed in loans which have not yet been repaid £798 million from the foreign bankers. But—and this is one of the tragedies—devaluation has increased the cost of those loans, so that we must repay £929 million on the £798 million which we borrowed. Devaluation on this one item alone will cost our country no less than £131 million. During the next three years, we must earn about £240 million a year over and above what we are spending in addition to the £540 million which we overspent last year in order to honour our debts to the men overseas who came to our aid.
This is the size of the problem which faces us. It is nothing to do with party politics. This is the economic problem facing any party in power. This year, we must repay £43 million to the Swiss Bank consortium. Next year, we must repay £104 million to the B.I.S. in 1970, we must repay £583 million to the I.M.F., 20 per cent. more than we borrowed from it because, unhappily, devaluation was forced on us. One of the mockeries of the present age is that it is said that devaluation is an opportunity. It was a terrible tragedy, humiliation and defeat for us. We are now having to pay the price.
We must earn in the coming years about £1,000 million a year more than we are earning now, and not spend a penny more in earning it or we shall default on our loans. I cannot think that anyone would want to default.
§ Mrs. Anne Kerr
The point I was trying to make was that the hon. Gentleman was referring only to wages and prices, not to dividends. He has not, I think, answered my point on that.
§ Sir C. Osborne
If the hon. Lady will be patient I promise here I will deal with the problem even to her satisfaction. I will give her the facts which the Financial Secretary gave in the House when he was summing up in the debate on the Finance Bill, and they, I should think, would be accepted by the hon. Lady as accurate, as they come from her own Government.
The problem before the right hon. Lady is this. She somehow has got to get the nation, in its working capacity, to produce this £1,000 million per year more, without spending any more at all; or to accept a reduction in our standard of living by £1,000 million a year. That is the problem. We either earn that £1,000 million extra or we cut our standard of living by that £1,000 million. For my part, I want to see our country increase its national income so that we do not have to cut our standard of living. I am certain that hon. Members on both sides would like to see that solution.
Where the Government have failed, where the right hon. Lady has failed, where she failed at the seaside only two days ago, is to convince trade unionists of the brutal stark facts which the Treasury, at least, knows to be true, and till the Government can get their own supporters to accept these facts the problem will never be solved. The trade unions are opposing the Government's very mild—I believe it to be very mild—prices and incomes policy.
I supported a prices and incomes policy when Sir Stafford Cripps advocated it 20 years ago. But for his death I think that the nation would have had a prices and incomes policy and we would all have learned a great deal from it. I supported it when my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) proposed it, and I think that had he not been sacked by the then Prime Minister, and he had succeeded, we would not be in the same difficulties as those in which we are today.
I believe that, whoever is in power, some form of incomes and prices policy is inevitable. I think that a sterner one than the Government are proposing will be inevitable. The right hon. Lady's problem is to get the trade unions to believe this simple truth and the stumbling 1139 block of her friends in the trade union world is that they believe that somehow they have a divine right to an increase in wages every year, whether they earn those increases or not. If our national production does not warrant paying those extra wages they believe that they have a divine right to get, then prices rise, and it is only in so far as the right hon. Lady can convince her trade union allies of these basic facts that she will succeed, and if she fails her policy will fail as well.
I deal with the question by the hon. Lady the Member for Rochester and Chatham (Mrs. Anne Kerr). She asked: why cannot increased wages be paid out of profits, out of dividends, and not cause a cost of living increase? A fair question. The Financial Secretary to the Treasury answered that the other night. This is what he said:The wages and salaries bill last year was £21,342 million. The gross ordinary dividends"—for 1967—were £1,610 million…"—[OFFICIAL REPORT, 24th April, 1968; Vol. 763, c. 398.]First of all, 42½ per cent. has to be paid in Corporation and Profits Tax and—at a very rough estimate—I would say 30 per cent. then has to be paid in Income Tax and Surtax, but before we reach that, out of that £1,610 million there has to be paid, from those dividends, money for pension funds, insurance funds, unit trust funds, which go back to the workers, and other funds, and the net amount which goes to the ordinary shareholder in net dividends must be about one-quarter, that is, about £400 million at the outside. Now, £400 million net dividend income per year in ordinary dividend is a fleabite as compared with £21,342 million paid in wages and salaries.
Indeed, if the whole were confiscated and given out in wages it would make an infinitesimal difference to the wage earners. Am I answering the question which the hon. Lady put? Can the increase in wages be paid out of dividends? The answer is, no. I hope that if she will not accept what I say she will read what the Financial Secretary to the Treasury had to say.
§ Mrs. Anne Kerr
I did not suggest they should be paid out in that way. I simply drew the hon. Member's attention to the 1140 fact that he had omitted to mention dividends whereas he had mentioned prices and wages.
§ Sir C. Osborne
I thought the hon. Lady was complaining that the increase in wages or the increase in the cost of living really could be paid out of ordinary dividends which the "greedy" shareholders themselves get. At least, I hope I have proved that that is not possible.
There is another figure of which I would remind the House and the right hon. Lady. I accept the difficulties she has to face, and this is where I think the poor girl must fail, and I do not think she can succeed. Over the last five years, the Financial Secretary said, the increase in wages and salaries amounted to £5,331 million. The increase in wages in the last five years is three times the total gross amount paid in ordinary dividends. If the net amount paid in ordinary dividends were taken—which is the true basis of comparison—it must be 20 times as much. So that the hon. Lady will see that what I call the redistribution of the national income, the soaking of the rich, would not solve this very difficult problem which the right hon. Lady has to face. Her problem is to convince her allies in the trade union movement of the real problem facing her Government and the country.
During her speech the right hon. Lady said that wages have gone up much more than prices, and I asked her why, and she did not answer. I will tell her why. Because her predecessor, the former Foreign Secretary, the right hon. Member for Belper (Mr. George Brown), from that Box, claimed that he got the employer's support for his national plan, and Frank Cousins, standing just below the Gangway, said he would never give it his support. Prices were kept down because the Government had the support, largely, of the employers, and wages went up because the Government failed to get the support of their own allies in the trade union movement. This is the tragedy which faces the right hon. Lady. I do not know how, with all the best will in the world, she will overcome it. I will give three examples where I think the Government are failing the nation and their supporters. First, when the Chancellor of the Exchequer met the Trades 1141 Union Congress about six weeks ago he was retorted in The Times as saying to the trade union leaders that unless they accepted the prices and incomes policy there would be 1,500,000 unemployed in the country. It was wise to warn them of the dangers facing the nation. I put a Question to him about this, but he denies saying it. He was frightened of the stark facts which he had given being reported in the House.
Secondly, in July, 1966, the Prime Minister met the Trades Union Congress and he told the trade union leaders more brutally the truth. He said that there could be 2 million unemployed if the prices and incomes policy were not accepted. I asked the Prime Minister about this last week and he wriggled out of it by saying that he did not mean in this country alone; it would only be so if there was a catastrophic fall in business throughout the whole world. He was blaming it on the Americans, the Japanese and the Germans.
Thirdly, the Government and their allies are guilty of a lack of moral courage. George Woodcock, the leader of the trade union movement, said two months ago that when it came to the crunch the Government would give way. I accuse the Government of not compelling their nominal supporters to accept the truth of what the Treasury keeps telling the House.
The question is often asked: what would you Tories do; what is your answer to the problem? I cannot speak for my Front Bench. I can only speak as a permanent back bencher. There is only one remedy to our very serious problem. Everybody in industry—management, owner and worker alike—must work harder, longer and more efficiently for no more wages, salaries, profits, rents or dividends. That is the only solution to our problem.
We have to produce more and flood the market with extra goods. My word, that would bring prices down quickly. Prices will not be brought down by legislation. It is by flooding the market with goods of high quality and at low prices that we will get prices down, and that will only come about if we work longer, harder and more efficiently.
I appreciate the enormous difficulty of the right hon. lady's task. The Prime 1142 Minister should not have put it on the shoulders of a lady. The two men who held office before failed and the Prime Minister himself has ratted on it. It has defeated the right hon. Lady's three predecessors. Why she should carry the blame for others, I do not know. This is sex warfare carried to the nth degree. She knows it. Her experience of two days with the trade unions must show her that she cannot succeed.
Our only salvation lies in a greater willingness by everybody to work. There are far too many, both in the West End and in the East End, who are not ashamed of eating the bread of idleness. In every class of society far too many people are prepared to live on other people's earnings and to shuffle and sponge their way through life. This is what is facing us. It is a horrible problem and I do not think that the right hon. Lady can cure it.
The present welfare services need drastic overhauling. There are far too many people sponging on the welfare services. The abuses will have to be cut out. It is utter madness to give in welfare payments nearly as much for a person being idle as he can earn by working for a full week. Why should men work when, by going on the welfare services, they can get as much by being idle? This is something which both parties ought to investigate. Those who can but will not work one day soon should be allowed to starve.
The incompetent employers—my friends, though I hope not many of my personal friends—should be made to fear the bankruptcy court, just as the idle worker should be made to fear the sack. This is the only way to get the spur of efficiency into our economy. We shall not get the required industrial efficiency with an unreformed Welfare State. The whole system requires overhauling.
The awful part is that while the trade union movement honestly believes that it has a right to increased wages every year, the right hon. Lady is batting on a sticky wicket. She has an impossible task before her.
I would remind her of what someone, for whom I had the highest regard, said to his party and to the country 20 years 1143 ago. Speaking in this House, Sir Stafford Cripps said:We cannot afford increases in wage levels or shorter hours unless they increase production per man year."—[OFFICIAL REPORT, 10th March, 1947; Vol. 434, c. 994.]This is what the right hon. Lady should have said at the conference.
To the Trades Union Congress at Margate, on 7th September, 1948, Sir Stafford Cripps said:There is only one way by which, with a given volume of employment, we can increase our real standard of living, and that is by each of us producing more. There is no other answer.This is a fine message, as it were, from the grave.
At a special meeting of the Labour Party at Workington on 9th January, 1949—and this is the core of what ought to be said to the trade union movement today—Sir Stafford Cripps said:You must be patient, and you must not ask for, or expect, any further advances in social standards or wage levels until we have been able to increase productivity in industries"—not a promise that productivity will be increased, but that they can only have increases after the increase in productivity has been achieved—so as to make more goods available either by domestic supply or importation.Finally, in the debate on devaluation on 27th September, 1949—and I pass this last shot on to both sides, because if we were in power tomorrow we would face the same problems, and I sometimes think that we would be as incompetent in dealing with them——
§ Mr. William Hannan (Glasgow, Maryhill)
The hon. Member for Louth (Sir C. Osborne) has been quoting Sir Stafford Cripps in 1949. What was the hon. Gentleman's attitude to Sir Stafford Cripps? Was he not then deriding the remarks which he is now eulogising? Will the hon. Gentleman explain those remarks in the context of Mr. Harold Macmillan's speech, "You have never had it so good."?
§ Sir C. Osborne
If the hon. Member knew the facts he would not ask the question, because it is on record. He asked what my attitude was to Sir Stafford Cripps in 1947, 1948 and 1949. One day Sir Stafford Cripps was attacked by 1144 "feather-bedding" Evans and I defended Sir Stafford. I defended him because I thought that he was a man of great moral stature and high idealism. If the hon. Member wants to read some of the finest of Cripps' writings, I beg of him to get his superb booklet "Towards a Christian Democracy". I supported Sir Stafford Cripps and I even got into trouble with my own party for doing so.
My final quotation is this. Sir Stafford Cripps said in the House on 27th September, 1949:Any worker, by hand or brain, who goes slow or is absentee, or demands more money for no more output, is, in fact, doing his best to put up his own household bills and to put somebody—quite possibly himself—out of a job."—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 31.]That is true today. If the Government could only get their allies in the trade union movement to believe the words of Sir Stafford Cripps they could save the country. It is because I do not think that the right hon. Lady can succeed where her predecessors in this Government have failed that I believe the Motion on the Order Paper is worthy of support.
§ 5.12 p.m.
§ Mr. W. S. Hilton (Bethnal Green)
We have had two speeches from the Opposition Benches—one from the right hon. and learned Member for Hexham (Mr. Rippon) and one from the hon. Member for Louth (Sir C. Osborne) which have been notable from the point of view that they both contradicted each other on the basis of their approach. The right hon. and learned Member for Hexham insinuated that the Government are betraying the workers of this country in the present economic situation, whereas the other hon. Gentleman is saying that the workers are betraying the Government. They will have to sort out their paradoxes.
What I would say to my right hon. Friend the Secretary of State, who is not here at the moment, is that she is facing one of the most difficult tasks that any Minister of this Government has at the present time in trying to hold prices. It is an impossible task she has been given. I believe that devaluation and the recent Budget will inevitably lead to an increase in prices and that this is something which cannot be avoided, as the hon. Member for Louth has said.
1145 When the Chancellor made his Budget speech he made it quite clear that of the £923 million he was going to take out of the economy the major part was going to be in indirect taxation, which has always the most immediate effect on prices. There is no doubt, therefore, that the Chancellor's whole strategy depends on prices being increased to take a certain sum of money out of the economy. The ironical fact that faces my right hon. Friend the Secretary of State is this. If she were to succeed in her objective of stabilising prices, she would automatically kill the objective of the Chancellor who has budgeted for price increases.
I nevertheless have sympathy with the aims of the Budget. I realise, as the hon. Member for Louth has been pointing out, that to some extent we have to cream off certain amounts of purchasing power if we are to achieve an equitable balance of payments. Having expressed that sympathy with part of the Budget's objectives, I cannot express complete sympathy with the Budget for certain parts of it seem to me to be inequitable, in that it asks the workers for sacrifice to help the economy but does not achieve complete justice between all sections in asking for that sacrifice. I do not want to go into all these aspects of the Budget—the debate is not about the Budget—but I do want to deal with those parts of it which will involve rising prices.
I hope that my right hon. Friend the Secretary of State will accept that the greatest blow to this concept that there should be equity in sacrifice is the recent 50 per cent. increase in the Selective Employment Tax that the Chancellor saw fit to impose in order to raise a considerable sum of money. I have not been in the House as long as some of the hon. Members here, but if ever there were a worse tax than the Selective Employment Tax introduced into the House I have not read about it. And if it is not the worst tax that has ever been introduced, it is the most anomaly ridden tax that has been introduced in recent years.
§ Mr. Hilton
I think the hon. Gentleman for Worcestershire, South (Sir G. Nabarro) will not be making that statement when he hears the latter part of my speech.
1146 In September the Selective Employment Tax is going to be increased to 37s. 6d. for every male employee. This increase is happening only a short time after the distributive trades, the construction industry, and others who have to bear this impost, have tried to cope with the first 25s. imposed in the 1967 Budget and meet the urgent economies that it demands on their organisations. What will happen when they are faced in September with another increase? It is bound to have a most direct affect on prices. This is the one tax which is bound to lead to an increase in prices in shops already facing problems from the initial tax.
I am a Co-operative Member of Parliament. I declare this vested interest. Unlike the vested interests of some of the hon. Members opposite, it is not an interest that I hold individually with a few people in making private profit; it is an interest I hold with 13 million other people throughout the country who support the Co-operative movement because we believe it is the finest form of social democracy that there is. It is also one of the greatest protections against rising prices that the ordinary working man and woman can have. The increase in Selective Employment Tax is going to affect us very greatly in trying to hold down prices for the membership of our societies. Some might say that this affects retail distribution in general, so why do I make a special case for the Co-operative movement? I do so, because there is a special case for the Co-operative movement. No retail organisation in this country provides the same range of services as the Co-operative movement to its members. No other organisation will take care of them from the cradle to the grave.
§ Mr. Hilton
The hon. Member for Worcestershire, South (Sir G. Nabarro) is saying "rubbish". If he wishes to interrupt me on this point and explain why it is rubbish perhaps he will do so.
§ Sir G. Nabarro
I do not wish to interrupt the hon. Gentleman the Member for Bethnal Green (Mr. Hilton) unduly, because I hope to catch your eye, Mr. Deputy Speaker, later on. All I expostulated in exasperation with the hon. Member is that it is rubbish that he arrogates to the Co-ops—the most incompetent of 1147 all distributors in Britain—care for its members from the "cradle to the grave". They are least able to speak on behalf of commercial enterprise.
§ Mr. Hilton
I asked what other retail organisation will supply all these commodities, professional services and funeral services, often with a greater content of social service than profit-making motive? He did not deal with that point. Can the hon. Gentleman name any other? He has his chance now to name any other retail organisation which does this.
§ Sir G. Nabarro
I must not try to fragment the hon. Gentleman's speech. I hope to catch your eye later, Mr. Deputy Speaker, and I will deal with the matter then exhaustively and devastatingly.
§ Mr. Hilton
The House can see an evasion in that reply. The hon. Gentleman is a peculiar person. He speaks for the Worcestershire miners on one occasion, for the Right-wing Tories on another and is the darling of the dockers at the moment. To meet this kind of situation we should have a special bench here for him, not a cross-bench as they have in the other place but one which faces all ways to suit his chameleon-like personality.
I continue with claim that this is the kind of service which the Co-operative Movement gives and we are prepared for example, to enter the country districts to meet the needs of people even at a loss, so this is the first special point I make in favour of the movement.
The second is this. The Co-operative movement cannot dodge or evade taxation which is levied in this way as other organisations can. In our movement all staff are employees, and a tax on employees, like the Selective Employment Tax, has to be paid for all of them. We employ opticians, chemists, butchers, greengrocers and others to give a whole range of services and we pay this tax for every one of these people. But in the same towns and villages where we have co-operative societies we have also private chemists, private opticians and private greengrocers who are self-employed and do not have to pay the tax——
§ Sir C. Osborne
Surely it is an unfair use of the English language to say that 1148 they "dodge" taxation, when the law of the land does not impose taxation upon them. Surely the hon. Gentleman should withdraw that word.
§ Mr. Hilton
I did not say that these people dodge taxation: I said that the Co-operative movement could not evade taxation. What I would like to know is whether these private traders, who are self-employed, are going to keep their prices down by the 37s. 6d. margin per person by which they are better off than the Co-operative movement? Will the Secretary of State keep an eye on them to ensure that they do not cream off the extra 37s. 6d. in profit margins while we have to pay it in taxation?
This is why I say that the Co-operative movement is a special case. I have no hesitation in declaring my vested interest in saying that it is a special case because of the services which it provides. One thing about the House which has struck me is that the Opposition never miss an opportunity to try to achieve financial reductions, taxation reductions or concessions for private industry, but immediately start howling when we defend our own democratic organisations.
We are on this side because we believe in social democracy and our Ministers should pay greater attention of the special nature of socially-owned organisations. Have any Government in the past ever asked the Co-operative movement to try to hold down prices to assist at a time of economic stringency? They have certainly done so, and we have always responded. Therefore, I say to my right hon. Friend that, while I know that the Selective Employment Tax will go through because it is Government policy, it is a bad tax. It was levied on a standard industrial classification which has no real relevance to the social necessity or purpose of any business.
I would ask hon. Members in all parts of the House: is it right that, in a development area, a factory producing one-armed bandits or other gambling machines will have a refund of Selective Employment Tax, a 7s. 6d. premium, and the Regional Employment Premium, for doing what I do not regard as a socially necessary job, whereas all distributive organisations in the same area will be taxed to make this payment to that factory? The Co-operative movement 1149 has consistently supported the Government and, in return, I would ask that my right hon. Friends should now begin to look at the anomalies in the standard industrial classification to see whether, for distribution as a whole, they can make some reasonable alterations to help reduce the impost upon us.
I now come to the part of my speech which the hon. Member for Worcestershire, South will not greatly admire. This Government have taken measures which I have criticised, but I know full well that the only reason that they have had to do so is because of the gross political incompetence of the Government which this country had until 1964. They were not only incompetent by British political standards: they were the most grossly incompetent Government in all Europe.
I realise that many figures have been bandied about by the right hon. and learned Member for Hexham without a single indication of their source. In giving my figures I first refer to the United Nations Organisation publication, "Factors in Economic Growth in Europe during the 1950s". This is the period for which the Tories were responsible in Government. The United Nations Organisation publication states that this country had the lowest growth in gross domestic product of any country reviewed during that time: it was right at the bottom of the table. We also had the second lowest rate of investment in industry. The Government of so-called business men managed during those 10 years to get this country into such a state that we had also the lowest record of labour productivity of any country in Europe, including Southern Ireland.
Therefore, the £800 million deficit which we faced in 1964 was the symptom of a diseased economy and not the complete story. If I hold my Front Bench responsible for any mistakes which they have made while in power, it is for not realising the serious state of the economy they inherited and for not taking urgent measures very much earlier than they did.
Given the situation we inherited, what has been the achievement of Labour as compared with the Conservative Government? We have been in power three full years, from October, 1964, to October, 1967. What is our record com- 1150 pared with the three previous years under a Conservative Administration, when they looked at their achievements with a nearnarcissustic complex, as if they were achieving the best results ever attained in this country.
I will give relevant figures from the Monthly Digest of Statistics and figures of earnings from the Ministry of Labour Gazette, if any hon. Member wants to go and check sources. I used to be research officer for a federal union organisation and in compiling wage cases these are the figures which I would use.
§ Sir C. Osborne
Before he gives those figures, then, would he bring them into line with what he has just said? First of all, the deficit in 1964 was not £800 million but about £760 million, of which overseas investments, which were going to bring us income, represented over £300 million, so the real deficit was about £350 million. The Government admit that their deficit last year was £540 million, after three years of great sacrifice, so the position last year was worse than in 1964. Would the hon. Gentleman deal with that?
§ Mr. Hilton
I can understand the reason for that interjection and the quibble over figures. The hon. Gentleman knows what is coming and is trying to delay it for as long as possible. The right hon. and learned Member for Hexham in his speech said that he was concerned about the future, and accused my right hon. Friend of using contemporary figures. But I noticed he did not deal with statistics relating to the period before 1964. Now, I know the right hon. and learned Member for Hexham. I knew him when he was an efficient Minister of Public Building and Works. I therefore know that he has enough intelligence to quote figures if they can be used to his advantage. He did not use the figures I shall quote, because they are to his party's disadvantage. According to the Index of Retail Prices, in the last three years of Conservative rule—from October, 1961, to October, 1964—retail 1151 prices went up by 9.1 per cent. As an ex-trade union officer, I know the important facts are not those represented by the movement in retail prices alone—although the economists might be worried about them—but the way in which the incomes of my members moved in relation to price increases.
For example, if retail prices increase by 10 per cent. tomorrow but incomes increase by 50 per cent, few people would grumble. Taking price increases against increased earnings during the last three years of Tory rule, what happened? Prices went up by 9.1 per cent. and hourly earnings went up by 17.2 per cent. in the same period. Thus, under a Conservative Administration, we had a surplus of hourly earnings over the rise in the cost of living in those three years of 8.2 per cent. That is the record of hon. Gentlemen opposite and it is on that basis that they are apparently castigating our record.
§ Mr. Hilton
That is the record which you and your colleagues achieved. I know that you do not like to hear these things——
§ Mr. Hilton
I apologise, Mr. Deputy Speaker. Your face is much more attractive than the faces on the benches opposite that I would not wish to associate you with them.
§ Mr. Hilton
Whether or not the hon. Member for Louth likes to hear these things, he is going to have to listen. Not one of his hon. Friends has attempted to rise to contradict what I have been saying. Considering the mess left by successive Conservative Administrations, it is important to note that between October, 1964, and October, 1967—under three years of Socialist rule—retail prices went up by 10.9 per cent. and hourly earnings went up by 23.4 per cent. This gives a surplus of earnings over the rise in the cost of living of 12.5 per cent. as against the Tory's 8.2 per cent. Despite those figures hon. Gentlemen opposite have the 1152 cheek to table a censure Motion apparently because we have managed to better their efforts by only 50 per cent.! Although I am not a gambling man, if any hon. Gentleman opposite can show that the statistics I have quoted do not reveal the true position, I will give £10 to any charity he wishes to name. This is therefore the Labour Government's record in a period in which it has been difficult because of extreme economic difficulties.
I have had to criticise the Government because of taxation which I believe will affect the cost of living. I have done that not only on behalf of the Co-operative movement but on behalf of the others who suffer the anomalies of S.E.T. Considering the economic difficulties which have faced us, however, we have had a fine record and my criticisms have been made in the hope that amendments to this tax can be considered in the interests of equity. If we do this we can continue to show to the people of Britain that, irrespective of the economic difficulties we may have to face, we can always do a lot better in Government than the Conservatives.
§ 5.34 p.m.
§ Sir Gerald Nabarro (Worcestershire, South)
I suppose that it would be a Parliamentary courtesy for me to congratulate the right hon. Lady the Minister for her maiden speech as Secretary of State for Employment and Productivity. I do so only as a Parliamentary courtesy. The content of her speech was unimpressive, unconvincing, flatulent and flabby.
§ Sir G. Nabarro
I am not sure whether the right hon. Member for Leeds, West (Mr. C. Pannell), who entered the Chamber less than two minutes ago, in bawling "Vulgar as ever", means to address his comments to the Chair or to me. In any event, he is a judge of vulgarity.
§ Mr. Deputy Speaker
Order. I urge the right hon. Gentleman not to make interruptions from a sedentary position.
§ Sir G. Nabarro
As always, I am grateful for your protection, Mr. Deputy Speaker.
As I was saying, the right hon. Lady's speech was unimpressive and unconvincing, for if everything is so wonderful with our economic position today, I question why it is necessary for her to devote her utmost energies endeavouring to convince the trade unions that they should accept an absolute wage and salary freeze—[Interruption.]—subject only to a maximum increase in the forthcoming year of perhaps 3½ per cent., whereas inflation is rampant and continuous. Not only the unions remain utterly unconvinced. The entire electorate feels the same. Not in my life-time——
§ Sir G. Nabarro
—have there been a crop of by-election results like the recent results.
You reprimanded the right hon. Member for Leeds, West, Mr. Deputy Speaker, for his sedentary vulgarity. Perhaps it could be repeated to the hon. Member for Gravesend (Mr. Murray) who never achieves anything more than bawling abuse from a sedentary position. Never in my lifetime, or in the hon. Gentleman's lifetime, has there been a swing of opinion at by-elections comparable to the swing in the recent by-elections. The party opposite suffered the loss of what were formerly regarded as utterly safe Labour seats, such as Dudley and Stourbridge.
§ Sir G. Nabarro
My hon. Friend the Member for Louth (Sir C. Osborne) knows about potatoes in Lincolnshire. I know about industry, trade and commerce in Worcestershire. I have been around these parts for nearly a quarter-of-a-century. I spoke at the eve-of-the-poll meeting at the Dudley by-election. A splendid time was had by all, except that no Labour candidate held a meeting. He dare not. He would have been lynched—[Interruption.]—metaphorically speaking.
§ Mr. Hilton rose——1154
§ Mr. Alex Eadie (Midlothian) rose——
§ Sir G. Nabarro
The hon. Gentleman should not be impulsive. I will give way shortly.
At that eve-of-the-poll meeting about 1,000 electors of Dudley crowded into the hall and another 1,000 were turned away because they could not gain admission. The majority of the electors told the story the following day. I thought that the Conservatives might get a majority of 2,000 or so, but in fact we got a majority of 11,000, a swing of considerable dimensions away from the previous Labour majority of 10,000, a turnover of 21,000 votes. Never in my lifetime has there been a by-election result like that.
It is fair to mention that the quality of the candidature—my hon. Friend the Member for Dudley (Mr. Donald Williams)—no doubt influenced the result, but it was overwhelmingly the dissatisfaction of the electorate with the economic and financial policies of the Labour Government that caused that massive turnover in votes. I am delighted to see my newly elected hon. Friend the Member for Acton (Mr. Kenneth Baker) in his place. In his constituency the swing was not quite as large, though impressive. Worcestershire people are more perceptive than Londoners. They are not so likely to be bamboozled by the policies of Her Majesty's Government.
§ Mr. Cyril Bence (Dumbartonshire, East)
It was in Dudley that people put pigs on the wall to listen to the German brass bands.
§ Sir G. Nabarro
I do not want to put the pigs on the wall. I can read the truth for myself in the by-election figures.
The right hon. Lady tells us that her economic and financial policies are splendid and that she has the absolute confidence of the electorate. Then why is she bending over backwards to convince the trade unions of the validity of her policies, and secondly, why are the electorate in all parts of Britain so utterly dissatisfied with the performance of the Labour Government?
§ Mr. Hilton
I am sorry to interrupt the hon. Member when he is reading his autobiography, but he said that he found my speech unconvincing. I made a sporting offer——
§ Sir G. Nabarro
Will the hon. Member allow me to interrupt him? I want to put him right. I did not refer to the hon. Member. I have not mentioned Bethnal Green yet. I am referring to the speech of the right hon. Lady and I have done so throughout my speech. When I come to the hon. Member and refer to Bethnal Green, perhaps he will allow me to end the paragraph, resume my seat, and give way to him, but I have not yet given way to him.
§ Mr. Eadie rose——
§ Sir G. Nabarro
No. The hon. Member has just come in. When I turn to coal miners later in my speech I will give way to him.
§ Mr. Hilton
May I complete my point? If my speech was unconvincing, as it might well be, can the hon. Member for Worcestershire, South say now that the figures I have quoted are wrong and that he disagrees with them? Or is he prepared to accept my wager and check the figures?
§ Sir G. Nabarro
When I have made progress with my speech I might refer to the hon. Member for Bethnal Green (Mr. Hilton). I have not done so yet. When I refer to him I will give way. Likewise, when I talk about coal miners I will give way to the hon. Member for Midlothian (Mr. Eadie).
§ Sir G. Nabarro
I am not giving way yet. The cause of the profound dissatisfaction with the policies of Her Majesty's Government is overwhelmingly that the electorate dislike so much the rampant and continuous inflation we have been suffering in the last 12 months. This springs from three important factors. It springs, first, from devaluation of sterling on 18th November last. It springs, secondly, from a huge additional load of taxation imposed in the Budget, £700 million in the present year. It springs, thirdly, from the failure of the Labour Government to increase production on any substantial scale. I shall deal with these three major issues.
To listen to the right hon. Lady talk of devaluation one might assume that it 1156 was an act of calculated statesmanship on the part of the Prime Minister. On the contrary, let us all be perfectly clear; the devaluation of sterling was a calamity that was forced on the Prime Minister by the incompetent handling of the finances of our country by his own Administration. Would he have devalued sterling had we not been in a condition of financial extremity? I put that question to him. The answer I believe is, no, he would not have devalued sterling. He did so because he was forced to do so. He knew far better as a good economist—in academic theory alone.
He knew full well what would be the consequences flowing from devaluation of sterling in the form of increased and increasing prices in the ensuing year. He had lived through it all before. My hon. Friend the Member for Louth (Sir C. Osborne) referred to Sir Stafford Cripps in adulatory terms, an adulation I do not share. [An HON. MEMBER: "He was a good bloke."] I quite agree that he was a good bloke but I do not share the adulation of my hon. Friend. Sir Stafford devalued sterling, after denying nine times that he would devalue, in the fall of 1949. It took another 12 to 18 months before the full spate of inflation descended upon our nation.
It was in April, 1951, that three members of his Government deserted. The present Prime Minister first, the late Mr. Aneurin Bevan second, Mr. John Freeman, our Ambassador in Washington, third, gave up their Ministerial portfolios and retired to the back benches in April, 1951, in the full spate of inflation following devaluation 18 months earlier. The same thing will happen again. In the course of 1968 and 1969 we will suffer the same vicious inflation following devaluation of sterling. It is quite inescapable—nothing can be done to avert it now—as we suffered 18 years ago in 1950 and 1951.
The second issue I put to the House a moment ago, the effects of the increase of £700 million in taxes in the Budget announced on 19th March by the Chancellor of the Exchequer, is probably even more serious. I shall give way happily to the hon. Member for Bethnal Green, for the early part of his speech in my humble judgment was extremely sound. That is why to the hon. Member—loyal 1157 Co-operative Member as he is, and I respect him for it—I said sotto voce, "Come over here". Sotto voce I said it to him for he was spelling out precisely the arguments of my hon. and right hon. Friends during the last two years about Selective Employment Tax.
When a Government put on a tax of that kind it adds at once to the retail price of goods in the shops. Very often shopkeepers work on a margin as small as 7½ per cent. They cannot possibly absorb an impost of the size of the Selective Employment Tax. It goes on the mark up. It increases retail prices. I respect hon. Members who are Co-operative Members. I know them all, my old friend the Parliamentary Secretary, the hon. Member for Jarrow (Mr. Fernyhough) is a loyal Co-operative. I remember eight of them sitting in a line on the Government benches and my taunting them during the Budget debates after Selective Employment Tax was introduced.
I predicted that all these difficulties would arise from S.E.T. I invited any one of them to go into the Lobby with me against the Government. Not one of them did so. They thought me too un-wholesome to walk with, in a political sense. Clean and delectable as I am in all fiscal matters, they thought me too unwholesome to be associated with. One or two abstained. What the hon. Member for Bethnal Green pronounced this afternoon is undoubtedly true. The whole of the additional Selective Employment Tax is going on prices.
He, rather like me, has not been able to find a place on the Finance Bill Committee. I am sure he shares my sentiments about what I have said. I am glad that he is nodding assent to what I have said.
§ Sir G. Nabarro
He shares my sentiments about it. It is that Committee's loss that we are not there to advance these lucid fiscal views. But the hon. Gentleman will have his chance later. I have here the Division list for the Second Reading of the Finance Bill on 24th April, when there were two Divisions. I believe that the hon. Member for Bethnal Green in his lay apparel is "Hilton 1158 W.S.". I see that he voted for the Finance Bill and the increase in Selective Employment Tax.
The hon. Gentleman should do what I did when I do not like things that my party does—cross the Floor and vote against it, not be whipped into the Lobby by the Patronage Secretary. The hon. Member challenging the number of votes on my part against the Tory Party on Finance Bills should read the history of 1951 to 1964. Nobody can match it. Due to the fiscal improprieties of my own Front Bench—not my right hon. and learned Friend the Member for Hexham (Mr. Rippon) or my hon. Friend the Member for Finchley (Mrs. Thatcher), but the Chancellor of the Exchequer of the day—I frequently voted against them on Purchase Tax, Income Tax, Schedule A Income Tax, Surtax, and a whole variety of taxes. That is the proper behaviour of a Member on a relatively minor issue, during the Committee stage of the Finance Bill. It is his prerogative to vote against his own party if he wants to in Committee.
I say to the right hon. Lady today that the inflationary effect of the Budget is not confined to Selective Employment Tax and the extra sum of money that it will raise. Taxes in general have been raised by £700 million and within 12 months the whole of that sum will go on prices. That is the way it works in present conditions in our society. If taxes are raised by £700 million an approximately commensurate sum is added to the aggregation of retail prices. No political party can escape that. All tax additions are highly inflationary.
The combination of the effects of devaluation and of the penal and swingeing increases in taxes in the Budget will create the most dreadful inflation during the coming year. That is why the Shadow Cabinet has chosen its words impeccably and irreproachably, and I praise it for that. It did not look to the past alone but says,…policies which have led and will continue to lead to rising prices thereby endangering the standard of living.I emphasise the words "will continue to lead", for I believe that the worst of the inflation is still to come.
The third issue to which I alluded was production and productivity. I am sorry that the hon. Member for Midlothian 1159 (Mr. Eadie) has temporarily left the Chamber, but I am delighted as always to see the hon. Member for Derbyshire, South—or is it North or West?——
§ Sir G. Nabarro
All right—NorthEast or South-West, the hon. Gentleman who is the chairman of the mining group in the Labour Party. I talked about production and productivity for a moment, and I want to say something about the coal mines. Coal miners have increased productivity in Britain in the past 12 months more than any other group of workers. The assessed increase is between 13 and 14 per cent. If the policies of the Government are to be correctly applied all productive workers in the mines should have a commensurate increase in their remuneration.
That is the first point. The second, which flows from it, is that the consumers of coal and coal products should benefit by reduced prices, if the right hon. Lady is called in judgment, as a result of that big increase in productivity and production. This big increase has been building up over the past 12 months, and sensational it is too. As the greatest friend of the coal miners in the House, I warmly congratulate them on their achievement. It is a pity that that message of congratulation did not come from the right hon. Lady. It is left to a Tory to do it for her. True friend of the miners——
§ Sir G. Nabarro
Certainly. Of all organised labour. That is why I am pleading the case I am pleading today. But what has happened to the consumers who should reap the benefit of this increased production and productivity?
§ Mr. Swain rose——
§ Sir G. Nabarro
I shall give way at the end of my paragraph.
1160 We were told yesterday in a pregnant Press announcement—pregnant because it does not become effective until 1st October—that the price of domestic and industrial coke is to be raised by the National Coal Board by the biggest single margin in one leap, since nationalisation 21 years ago. Industrial and domestic coke is to go up by 20s. a ton on 1st October. Moreover, Phurnacite ovoids are to be increased by 15s. a ton, and other premium fuels by up to 15s. a ton. Nobody can do without fuel. We are largely a coal-based fuel economy. It is no good the hon. Gentleman nodding dissent.
§ Sir G. Nabarro
The hon. Gentleman should keep a closer control over his facial movements. I interpreted them as nodding dissent.
We are largely a coal-based fuel economy——
§ Mr. Swain
I must again remind the hon. Gentleman that he has a memory as short as the hairs on a fish's nose. Did he read in conjunction with the Press statement on the price of coke that the price of domestic coal is going down by 25s. a ton as and from this week? Is not that a substantial decrease?
§ Sir G. Nabarro
If I may be allowed to intervene, the contribution of the hon. Gentleman is valueless because a large part of Britain is covered today by smoke-controlled areas where one cannot burn bituminous coal. Smokeless fuels must be burned, and one of these is coke. Those in such areas who are dependent on coke will have to pay 20s. a ton more, and it is no good people arguing with me about this. That is the fact.
We are largely a coal-based fuel economy. The price of solid fuels is rising sharply, and in my part of the Midlands—the West Midlands, which include Worcestershire—we are singularly badly placed because the solid fuel price increase comes on top of a 3s. in the pound increase for electricity, the biggest in the country, and a 2s. in the pound increase in gas prices. So we now have 1161 a big increase in coal prices, in coke prices, in electricity prices and in gas prices. Moreover, to make matters far worse, the Government increase the duty on petrol and oil, thus further penalising people who drive motor cars or heat their homes with domestic fuel oil.
One way or another, the principal culprit in the increase in fuel prices is none other than Her Majesty's Government. I hope that nobody on the other side of the House will say, "Oh, yes, but a Minister of Power does not control fuel prices". Does he not? We now have a situation whereby the Prices and Incomes Board has to sanctify and approve price increases by nationalised industries. Perhaps, when the Parliamentary Secretary replies to this debate, he will confirm that the Board has so sanctified and approved the 20s. per ton increase in coke prices from 1st October. I want to learn of his approval for that, and his blessing for this increase, for there again, as with the increase in petrol and oil prices, the Government by themselves are the principal culprits in putting up the cost of heating, the cost of lighting and the cost of cooking in our homes, all of which bear particularly harshly upon elderly people.
I have one word to add about the behaviour of the nationalised industries in this situation. The Steel Board has published a dismal account of its proceedings both yesterday and today. At a time when the utmost economy ought to be practised by every commercial enterprise in Britain, what does the British Steel Corporation do? It abandons its London offices to which it was committed a year ago, costing a modest rental of £275,000 a year, and substitutes office premises in Grosvenor Square, W.1, costing £700,000 a year. What a splendid example of economy in the conduct of public affairs, especially at a time when the Corporation is losing money heavily week by week.
Therefore, the fourth cause of inflation is the policy of nationalisation. Before steel was nationalised, more than 90 per cent. of the industry operated at a substantial trading and commercial profit. Only 10 per cent., or less, of the industry operated at a loss. That 10 per cent. or less was Richard Thomas and Baldwins in South Wales. Today, now 1162 that the whole industry is nationalised, the whole industry operates at a loss.
Small wonder that the electorate have seen through the bamboozling of Socialist election promises during the last three to four years. First, they have seen through the financial disaster and mismanagement which culminated in devaluation of sterling. Second, they have seen through the inadequacies of the policies of nationalisation. Third, they have realised painfully the huge holes burned in their individual pockets by the Socialist policies of progressive increases in every form of direct and indirect taxation. Fourth, they have manifested these inadequacies of Socialist policies by registering their utmost disapproval in the ballot box.
Mercifully, there is no recovery for the Labour Party. It is only a matter of time before the heads roll. Charitable chap though I am, I am not sorry for the right hon. Lady the Secretary of State for Employment and Productivity. She has an impossible task. She is trying to apply Socialist policies which manifestly are unworkable. The only end to this dismal story will be the break up of the Government. The sooner it comes the earlier will be the salvation of my country.
§ 6.6 p.m.
Dr. Shirley Sumerskill (Halifax)
It is quite clear that the views of hon. Members opposite about a prices policy are as varied, numerous and vague as they are about an incomes policy. They seem to demonstrate a purely negative and rather pessimistic attitude to the problem. This Government does at least have a positive policy towards prices which, to a certain extent, has been misunderstood on both sides of the House. The Government have never claimed to be able to stop all price increases. They have claimed to try to stop unreasonable or unjustifiable price increases.
Prices and the level of prices are at the heart of the country's present economic difficulties, so they have become of interest not only to the housewife but to every politician and every person. If the right hon. Lady cannot win the battle of the prices she will not win the battle of the wages policy, and economically all will be lost.
We have yet to hear from hon. Members opposite whether or not they support 1163 the Prices and Incomes Board and the work that it is doing. If they do support it, then they should be magnanimous enough to admit it. What is their own record with regard to a prices policy? When they were in power the Conservatives allowed retail prices to rise by 40 per cent., that is to say, by 8s. in the £. They looked on while this happened, as if it was unpleasant but unavoidable, and seemed to have no discernible policy. It was almost a policy of masterly inactivity. Perhaps they found it exciting, as Lord Thorneycroft in his speech in another place described it as exciting to live on the edge of bankruptcy.
Yet now that same party is indignant, reprimanding and outraged about rising prices under this Government. They claim that we should not have allowed any prices to rise. Do they accept that some price increases are justifiable? Do they accept that some price increases are reasonable? We have had no clear indication of their views on price increases, whether they think that some price increases are justifiable, and what they would do to prevent unreasonable increases.
It is to the credit of the Government that they are the first to take serious steps to deal with the problem. They are, at least, making an effort to bring about a constructive policy to deal with what is a longstanding problem. We are not ashamed of interfering with prices. The right hon. and learned Member for Hexham (Mr. Rippon) used the word "interfering" as if it were something that the Government should not do. On the contrary, it is the Government's intention to interfere with prices and see that they only rise if they are reasonable increases.
As for the accusation in the Motion that our standard of living is endangered, I think that that is a completely false assumption. The standard of living is difficult to measure, but, if it is measured in figures relating to consumer expenditure, it is shown strikingly that throughout the last ten years, in spite of rising prices under Conservative and Labour Governments, the standard of living of people in Britain has gradually and steadily improved. I reject the charge from the right hon. and learned Member 1164 for Hexham that the Government are "planning" to lower the standard of living.
The great theme which should run through the debate is that wage rates are rising faster than prices, as everyone has agreed. We cannot consider prices without considering wages, incomes, productivity and dividends. They are all inter-related and must be considered together.
Between October 1964 and January 1968, which is a large part of the time that the Labour Government have been in power, retail prices covering all items have risen by 12½7 per cent. which is an increase of just over 2s. 6d. in the £. In the same period, weekly wage rates rose by 17½7 per cent., which is about 3s. 6d. in the £. It is totally misleading for Conservatives in this House and in the country to give the impression that the Government are freezing all wages and, at the same time, allowing prices to soar unchecked. Statistics are always dull and extremely difficult to put over to the general public but, if the Government's prices policy is to succeed, it is necessary and important for the country to have faith in it and for the truth of the position to be explained.
I want to deal for a moment with food prices. Hon. Members will have attended or read the report of the Adjournment debate on food prices which took place on 11th March. In spite of the revealing figures given by my hon. Friend the Member for Huddersfield, West (Mr. Lomas) on that occasion, I am surprised that right hon. and hon. Gentlemen opposite saw fit to put down this Motion. Anyone who has read the debate will surely feel convinced of the Government's case. I will not go into the figures now. Suffice it to say that a great deal of misleading information has been published about the extent and number of price increases.
The success of the Government's prices policy is far greater than is generally realised, and perhaps my right hon. Friend said too little in her opening speech about the numbers of price increases which have been prevented and the number of prices which have even been lowered. Quite rightly, she stressed the enormity of the task which the Government face. We hear so much about the difficulties of a wages policy, 1165 but it is quite clear to most people that the difficulties of a prices policy are even greater.
No trade unionist or man in the street will accept a severe wages policy unless it can be shown that there is also in operation a successful prices policy to go with it. Perhaps the greatest misunderstanding arises over food prices, because these are extremely hard to keep steady. Climatic conditions and seasonal factors cause enormous variations in food prices. The North of the country tends to have far lower prices than the South. Obviously in an area where fruit and vegetables are plentiful, prices will be lower than in another area. Even in my own part of the country, one can find variations in the same town and even in the same market place, with higher prices at one end of a street than at the other. In the minds of people there is concern about price variations, and they find those even harder to understand and tolerate than price rises. I ask my right hon. Fr end to deal with price variations all over the country, as they are part of the problem of price increases.
The Government have never claimed to avoid all price increases, but I ask them to give special attention to variations in price of the same commodity. I hope that the Government will make it clear that it is totally false and a gross exaggeration of the facts to say that everything is going up these days.
I have two suggestions to make to the Minister. First, I would suggest the setting up of regional prices boards. I know that they would involve more civil servants, but, as I have just pointed out, price increases and variations concern specific areas of the country, and it would be convenient administratively to deal with prices according to regions such as the South-West, Yorkshire, Wales, and so on. At the same time, they would relieve the National Board for Prices and Incomes of an enormous amount of work. We are told that it has been inundated with complaints about prices and that, in the last couple of months, it has received more price complaints than it did in the whole of the previous year. It may be that regional prices boards would do something to explain to the public the cause of price variations and rises and the differences between the North of the country 2nd the South. It is clear that 1166 almost every commodity is cheaper in the North than it is in the South.
As for regional price indices, the Index of Prices was never understood by the ordinary housewife. I welcome the initiative of the Ministry of Labour in publishing average prices and price ranges of about 80 items of food at regular intervals and, most important, in language which the ordinary housewife can understand.
There are some advocates of a prices policy who are so determined that it should operate fairly and efficiently that they would support the type of statutory price freeze which existed during the war. However, most people would oppose that completely. It would be quite impossible to operate without a large number of civil servants and snoopers and all the atmosphere of restriction which we experienced during the war. It would prevent healthy competition between shops and would be difficult to implement as we do not have the system of rationing which made it easier to operate in the war. Quite apart from that, there are thousands of perfectly justifiable increases and price adjustments taking place up and down the country every day which obviously cannot be avoided.
Ideally, price stability must be operated on a voluntary basis in the same way that, ideally, we would want an incomes policy to operate and succeed on a voluntary basis. It is regrettable that a minority of unscrupulous shopkeepers, restaurant owners, wholesalers and firms have imposed unreasonable general price increases using such excuses as devaluation, the Budget and the Selective Employment Tax. At the same time I welcome the example set by the Government in its rather belated decision at the end of last year to refer all the price increases proposed by nationalised industries to the Prices Board. This was a great step forward and an example to private enterprise. Human nature being what it is, a price rise is a good reason for a grumble but a price cut usually passes unnoticed.
What can the general public do in this battle on prices? It is quite clear they are more price conscious today than ever before. There has been an overwhelming response to the Government's request that individual shoppers should 1167 report what they consider to be unjustifiable price increases. There is no apathy or lack of concern amongst the general public about prices today. Every hon. Member will have received many inquiries from his constituents about a whole range of items ranging from the cheap to the expensive. I myself have referred for investigation the price of a cup of tea in a British Railways canteen and the price of sandwiches and buns at a transport cafe.
It is the principle that is involved, rather than the halfpennies and pennies. But this voluntary co-operation from the public is extremely desirable and to be welcomed; and it is, in fact, essential if this prices and incomes policy is to succeed. But it is not only the housewife who has been vigilant. In my own constituency the trades council has set itself up as watchdog to seek out and report for possible investigation unreasonable price increases in the town. The same type of activity should be undertaken all over the country by women's organisations, chambers of commerce and particularly consumer protection associations. This could be a new and extremely important function for consumer protection associations to undertake, considering price as well as quality. Shops charging unreasonable prices would then be avoided in favour of those which do not, as their reputation became known in the town.
It is the unwary shopper who always gets caught. Publicity, propaganda and education at a local level will make the public aware of the problem of prices and the wage packet, and this is just as important as Government action. I believe the public do realise, contrary to what an hon. Gentleman opposite has said, that the Government are on their side on this matter and are not against them, and that the Government are simply asking for the co-operation of the public in a joint policy. There used to be a phrase "the customer is always right". That seems to be dying out now, but it would be a good idea if the customer occasionally thought she was right and became more inquisitive, belligerent and suspicious and was not afraid to complain and question if she thought a price was too high, in the same way as she will certainly complain and question if she 1168 feels that the quality of an article is deficient.
In spite of what we have heard today from hon. Members opposite, the Government have a really impressive array of price reviewing machinery which the Conservative Government did not seek to institute. Apart from the Prices and Incomes Board, the early warning system and the Monopolies Commission ensure that key price increases can be checked. For example, in 1966 the Report of the Monopolies Commission caused a price to be not only stabilised but reduced. This was the case with Kodak, who were obliged to cut the prices of their colour film by an average of as much as 20 per cent. This was as a direct result of the report of the Commission. The Prices and Incomes Board has either stabilised or lowered the prices of an impressive series of commodities. I will give the House only three.
One, a very important one, was that the price of the Daily Mirror was held down for nearly six months. Proposed increases in television rental charges have been prevented by the Board, and the price of flour was held well below the maximum asked for by the trade. I have mentioned only three of a very long list, but more important than these individual items is the certain fact that the threat of investigation by the Prices and Incomes Board is encouraging businessmen everywhere to hold down their prices. The Board can show that where one price rise may be justified another can be exorbitant.
I would urge the Government, in their prices policy, to give special and continued attention to those sections of the community who are particularly severely affected by any price rise, however small it might be. I refer particularly to retirement pensioners and those on fixed incomes. They do not benefit from any increase in wage rates, and there is an urgent need for retirement pensions to be geared to the cost of living and the average wage; otherwise these people are left behind when there are even justifiable price increases.
I deplore the pessimistic and unconstructive tone of the speeches which we have heard from hon. Gentlemen opposite, not to mention their inconsistency and lack of a positive Conservative policy. We still have to hear from 1169 some hon. Member opposite what is the Conservative policy for stabilising prices and in connection with the wages policy. The next year will be a real testing time for this prices policy. If we are prepared to put up with some price rises and to forgo an increase in personal consumption, then by the end of 1968 we should begin to enjoy the full benefits of devaluation, which include more stable prices; and, unlike the hon. Gentleman the Member for Louth (Sir C. Osborne) I believe that the right hon. Lady can and will succeed with this policy.
§ 6.28 p.m.
§ Captain Walter Elliot (Carshalton)
I hope before I finish to give the hon. Lady the Member for Halifax (Dr. Summerskill) what I believe to be a constructive suggestion for dealing with this problem. I must confess that I have found this debate unusually confusing and, with respect to the hon. Lady, I do not think her speech made the pricing policy of the Government any clearer. I really shudder to think what conclusions the nation as a whole can draw from this debate and the statements from the Government. We have had many debates in this House on the subject of rising prices and as we all know—and it is not entirely a coincidence—they take place about this time of the year; and in my experience, which is not of very many years, the whole House is united in bewailing the fact that prices are rising. But the hon. Lady the Member for Halifax, made the remark—I believe I took it correctly—that if her friend the right hon. Lady speaking from the Front Bench cannot win the battle of prices, all is lost.
Listening to the Minister, it seemed in the early part of her speech, when she was chiding this side of the House, that she was trying to argue that wages were still moving ahead of prices under the Socialist Government. It crossed my mind, as am sure it crossed the minds of other hon. Members, that if this was so, how were we to make room for exports? The fact is that prices are rising and although the Government may not welcome this loudly, this is what they want. We understand that they may have to make friendly noises to the effect that they should not go too high, that some prices should even be reduced. But 1170 it is the case that by deliberate acts of policy the Government are raising prices.
If prices have not gone up by the Measures which have already been taken, then they would have gone up as a result of other measures. The way hon. Members opposite talk I really have a feeling that they are convincing themselves that this is not the case. It most certainly is. It is being done deliberately, through the tax mechanism, quite apart from the effects of devaluation. It is done, and this again is part of Government policy, which we understand, so that there will be a transfer of resources from public and private consumption to exports. We all agree with the aim. Where I part company is with the method employed to achieve it.
I do not think that it will work. Higher taxes have certainly not curbed Government expenditure. It has greatly increased. Anyone who had experience, as I have in earlier days, of a Government spending Department, can imagine the rubbing of hands in all those Departments at the prospect of £900 million more coming in for Government expenditure this year. It will not curb public expenditure, and I do not believe, working through the tax mechanism as the Government are, that they will succeed in curbing private expenditure sufficiently, if at all.
Providing one's income or resources is not suddenly cut off—whether they be in the form of salary or savings—it is an extremely difficult matter to reduce one's standard of living. People will adjust their savings rather than their living standards under the Government's policy. We have today and have had for many years, a crisis of over-consumption. Governments, and this Government in particular, because heavy government expenditure is embedded in Socialist doctrine, are the greatest consumers of all. It is ironic that we have reached this position as a direct result of policies which put an end to the slumps of pre-war years when the problem was under-consumption. We know the solution to the problem—vast increases in Government expenditure which puts money into pockets of the people, social services which insulate us from the fear of unemployment and hard times.
People feel free to spend. At the same time we have persuasive advertising to 1171 encourage us to buy, and through hire purchase, and other financial devices, credit has become available to every man, woman and teenager. One solution is to cut Government expenditure and restyle social services to help those in need, without featherbedding the whole nation. This is an extremely difficult thing to do. It is almost impossible for a Socialist Government and would be very difficult for a Tory Government. In the first place people are paying for their social benefits and will want them. I believe that they should get them. Any reorientation of the social services will thus take time, and we want the change quickly.
There is another solution which I would like to put forward. The Government are trying to cut consumption through the tax mechanism. Every hon. Member opposite had better recognise that, under whatever heading it goes. To increase savings would produce the same result, and would have a much better effect. The mass of the population who each year spend their earnings to the hilt can and must be persuaded to change their habits. In the past people have saved instead of spending because they wished to provide for the future.
That motive has been weakened, but I believe it to be still strong. We have to sell thrift, to the people, with all the techniques of mass advertising so effective today, and backed by positive tax incentives. In America, Germany and Japan worthwhile tax incentives are given and the population saves on average 10 per cent. of their earnings—2s. in the £.
It is difficult for a backbencher to get accurate figures on this, and I would not want to be dogmatic, but the figures that I have been given suggest that since 1964 higher taxes have cut personal savings from 1s. in the £ to 10d. If one looks at the National Savings figures in 1964, the net saving was £357 million. These are not the only figures of saving, of course, in 1966 they were minus £30 million and in 1966–67 they improved to £74.6 million. I very much doubt whether they will do this in 1968–69. These figures certainly suggest that higher taxation leads to reduced savings.
In an article in the Financial Times of 28th November, 1967, Mr. Wincott said:In the U.S. employee savings schemes are common, but they do involve tax concessions to employers (as well as employees) on their 1172 contributions. In Western Germany, the efforts to encourage savings have been so successful that they are now something of an embarrassment to the Government.There, there is not only a limited exemption from income-tax for incomes additional to those arising from one's regular earned income, which encourages extra earnings efforts. There are premiums of 20 or 25 per cent. (depending on the type of savings) paid on savings, provided these are immobilised for five years. (There are limits on the amounts of savings qualifying, so that the benefits mainly go to the small saver.)—which is what we want…the response has been so great that cost to the Government has risen from"—and then the figures are given.
That is one way, but I would like to give another. I would like to see the income from savings made tax free for everyone over 60 or 65. Will the Minister examine that? How much would it cost? How much would it bring in in savings? How widely should it be drawn? I said everyone over the age of 60 or 65.
I cannot go into categories, but I really believe a scheme such as that would be worth examining. But it will need more than a fireside chat from the Prime Minister to change our spending and savings habits. First we have got to give these real incentives. Secondly, we have got to sell the idea, using the power of our mass media of communication to the full and all the persuasiveness of modern advertising technique. One has only to consider the budgets for advertising of great firms such as Unilever to see what can be done, and compare them with the puny efforts which are used for putting over the case for savings. Once we start the people saving we can say goodbye to rising prices and to constantly rising taxation, and I believe that it will create the attitudes to work, productivity and spending which we need so desperately in this country today.
§ 6.42 p.m.
§ Mr. Alfred Morris (Manchester, Wythenshawe)
May I refer briefly to two speeches made earlier in the debate. The hon. Gentleman the Member for Worcestershire, South (Sir G. Nabarro) tells a very good story, sometimes even an amusing story. Would that his speech had been delivered as sotto voce as his whispered intervention during the speech of my hon. Friend the Member for Bethnal Green (Mr. Hilton). I must not refer 1173 at too great length to what the hon. Gentleman said because he has now left the Chamber, and at least he was not as condescending or as slighting to my right hon. Friend as was the hon. Gentleman the Member for Louth (Sir C. Osborne), who felt that this portfolio was far too difficult to be entrusted to any woman. Never was there a more inexcusable example of male prejudice in a speech delivered in this House.
As Minister of Transport my right hon. Friend was both controversial and tough. She had to suffer the constant criticisms of Aims of Industry and the Conservative Central Office, but she had the pleasure of being vindicated by events. The breathalyser was but one example of a policy which she pursued against unpopularity and which is now recognised by the great majority of people to have been an important step forward. I wish my right hon. Friend well in her new responsibilities and I believe she has every prospect of being a great success in her new office. She certainly did not say, as the hon. Member for Worcestershire, South implied, that all was well and idyllic in the present situation. I think she realises that this is a very difficult portfolio indeed and one which will call for all the skills and all the talents which she has already manifested as a Minister in the present Government.
Now we are often told in this House that it is utterly meaningless to discuss incomes in isolation from prices. But it is also meaningless to discuss prices in isolation from incomes. This is appreciated by hon. Gentlemen opposite, as it is by my hon. Friends on this side of the House. So why is it that the party opposite, which is not very well represented in this debate——
§ Mr. Morris
This is a Motion of censure by the Opposition against the present Government, and, if I may say so, it is being pursued with remarkable little energy and enthusiasm. But why is it that the party opposite have sought to table a Motion of censure "deploring rising prices"? Is it that the Opposition want to see the Prices and Incomes Bill 1174 brought forward as quickly as possible? Is it that they want to see the powers to enforce price reductions as soon as possible? I would have thought that anyone who deplored price increases would welcome the provisions which we expect in the Bill for enforcing price reductions.
I was very pleased to see in the White Paper, Cmnd. 3590, the strict criteria for price increases in paragraph 16, and also the new criteria for price reductions. Paragraph 17 says that:The need in the present economic circumstances to increase price competitiveness makes even more necessary efforts by all concerned in determining prices to reduce prices wherever possible. During the next two years increased productivity and efficiency should make some price reductions possible and should help to keep other prices stable.I notice also that Appendix II to the White Paper deals with the guidelines for productivity agreements of the National Board for Prices and Incomes. It says about salary and wage negotiations that:The undertaking should be ready to show clear benefits to the consumer through a contribution to stable prices.Thus there will be a place for the consumer at the negotiating table. I believe that in their approach to all the very difficult questions of prices and incomes policy thoughtful people will welcome the emphasis on the need to pay some regard to the consumer in salary and wage negotiations.
For my part, I do not think that the Opposition brought this Motion forward in order to hasten the day when there will be statutory enforcement of price reductions. Nor do I think that they will depart in any way from the statement that was made by Sir Stephen Brown, writing for the Confederation of British Industry to every Member of this House on 5th April, when he said:A proposal to which we are wholly opposed is the intention to take powers to require reductions in existing prices.Perhaps the hon. Lady, when she comes to reply to this debate, will say clearly—because I think the electorate want from their public representatives the clearest possible statements of their intentions—whether, speaking on behalf of the Opposition, she shares the view of the C.B.I.
§ Mr. Morris
I am not certain that the hon. Lady heard the quotation, so I will repeat it.A proposal to which we are wholly opposed is the intention to take powers to require reductions in existing prices.Does the Opposition agree with the C.B.I. or does it agree with the Government that there will be cases, in consequence of higher productivity and my right hon. Friend's intention, for consumers to share in its benefits?
§ Captain Elliot
Does the hon. Gentleman recognise and support the Government's policy, which is to raise prices and reduce internal consumption in order to export more?
§ Mr. Morris
The hon. and gallant Gentleman had his opportunity to speak. I shall be referring to what I think about the effects of recent increases in indirect taxation. And perhaps he will allow me to emphasise the point that it is rather surprising that I should be helping to keep the debate going by speaking at length in reply to a censure Motion by the Opposition. You cannot put another question in reply to my question. I am asking whether you support the policy of the C.B.I. or the policy of the Government.
§ Mr. Deputy Speaker (Mr. Sydney Irving)
Order. The hon. Gentleman must use the traditional form of address.
§ Mr. Morris
But we are still faced with the problem of what is the Motion about? And in my view, Mr. Deputy Speaker, it is about party propaganda and party tactics in the worst possible sense. Any hon. Member who has read the Adjournment debate on prices, which was initiated by my hon. Friend the Member for Huddersfield, West (Mr. Lomas), knows that there were many inaccuracies in the case put by the right hon. and learned Member for Hexham (Mr. Rippon). It is tempting to reply in similar terms to hon. Members opposite who have made their propaganda speeches.
The Opposition are against any sort of incomes policy—at least, the right hon. Member for Bexley (Mr. Heath) is against it, but not perhaps the right hon. Member for Barnet (Mr. Maudling). May we, therefore, be told during this debate what is the Opposition's policy 1176 on prices and incomes? The Opposition are critical of the Budget. I have criticised the Budget in parts, particularly the very severe increase in Selective Employment Tax, but the Opposition criticise S.E.T. without suggesting any alternative. My criticisms of S.E.T. oblige me to say that I should have much preferred to increase direct taxation by 4d. rather than increase S.E.T. by 50 per cent. I have argued in previous debates that those who think direct taxation is wholly bad and indirect taxation is wholly good should defend their argument much more than they have so far been required to do in this House. The person who spends all of his income on food, shelter and clothing—the necessities of life—suffers very greatly from a policy which is biased in favour of indirect taxation. But, of course, the person who spends only a small percentage of his or her income on the necessities of life will prefer indirect taxation to direct taxation.
The arguments against severe increases in indirect taxation have gone very much by default. As I have said before, I believe that S.E.T. is unduly discriminatory against retailing organisations. Why, for example, is there need to discriminate against the Co-operative movement and other retailers oven the selling of electrical appliances? The nationalised industry, which retails these appliances, does not pay S.E.T. while the Co-operative Movement and other retailers do. I am not a critic of the nationalised industries. The hon. Member for Worcestershire, South paid a warm tribute to the National Coal Board. And I am sure that the nationalised electricity supply industry does not need this discrimination in its favour in the selling of electrical appliances.
Nor is the Standard Industrial Classification a proper instrument for deciding who should pay a tax of this kind. I hope profoundly that the Government will not await the outcome of the Reddaway Inquiry to remedy anomalies which all of us recognise. Some people see the Reddaway Inquiry as a delaying tactic. But I am sure that a very useful report will ensue. I do, however, hope that the opportunity will be taken in the Finance Bill to introduce Amendments removing at least some of the worst anomalies of this much criticised 1177 tax. When the Opposition attack S.E.T. they sometimes omit to say that some of them passionately want to see a tax imposed on value added. May I say to consumers that the introduction of a tax on value added by any future Conservative Government could make the S.E.T. look like an act of consumer protection.
The Opposition say that they would reduce taxes and spend more on defence. They would also cut Government spending but do not indicate where the axe will fall. I hope that they will be forthcoming and explain their policy much more than they have done so far.
There were murmured references and some muted heckling about rents and rates during the speech of my right hon. Friend. It may be that forthcoming political events outside the House are the reason why this Motion has been tabled. But this Government, more than any previous Government, have held down rents and rates by their policies.
When addressing his party's local government conference in Birmingham on 29th March, the right hon. Member for Altrincham and Sale (Mr. Barber), speaking as the Chairman of the Conservative Party, argued that theConservative-controlled local authorities had found themselves faced with the task of mitigating at the local level the harsh facts of incompetent Labour Government".Among the harsh facts which it was alleged they had faced were "swingeing cuts in public expenditure". As if that were not enough humbug from a Conservative spokesman whose Parliamentary colleagues have been literally howling and shrieking for bigger and better cuts in public expenditure, the right hon. Gentleman went on to say thatwhat the British people want in politics is honesty and truth".In the city in which the right hon. Gentleman gave his address—and this has a very big effect on the payment of rates—public expenditure by the Government in the form of total Exchequer grant, on both capital and revenue account, went up from £21,091,847 in 1963–64 to £28,635,918 in 1966–67. Thus, there was an increase in public expenditure out of taxation of more than £7.5 million during the first three years of the Labour Government. In terms of percentage increase, Leeds, Manchester, Not- 1178 tingham, Bradford, Cardiff, Newcastle-upon-Tyne and Southampton fared even better than Birmingham. For the 20 largest county boroughs in England and Wales, the increase over the three years was £50 million. So there is not really much sign of "swingeing cuts in public expenditure" affecting local authorities.
My principal concern is with the city of Manchester. I have recently been comparing the treatment of its ratepayers by the present Government and their Conservative predecessor. Manchester's share of the extra £50 million in total Exchequer grants was £4 million. In rate support grants and their former equivalents, the following payments were made by the present Government and the last Conservative Government. In 1961–62, £8,406,673 was paid to Manchester; in 1962–63, it was £9,116,782; in 1963–64, £11,275,168; in 1965–66, £12,906,508; in 1966–67, £13,724,029; and in 1967–68, £14,626,447 (estimate). The estimate of rate support grants payable to the city for 1967–68 includes the new "domestic element" of £220,995, which is expected to increase to more than £680,000 during the present year.
This element, as many hon. Members know, represents the cost in Manchester of a scheme initiated by Labour's Local Government (Finance) Act, 1966, under which all household ratepayers are now charged a lower poundage than other ratepayers. The effect of the scheme in Manchester, as elsewhere, was that householder's rates were reduced by 5d. last year. They will be reduced by 10d. this year, 1s. 3d. the following year, and so on. This is price-cutting by the Labour Government in what is for many people a particularly sensitive field.
It may not have been one of the harsh facts with which, according to the right hon. Gentleman the Member for Altrincham and Sale, local Conservatives have had to deal. But the scheme does make complete nonsense of this Motion and of the claim that local Conservatives alone have held down rates. Domestic de-rating has been a most important form of price stabilisation carried through by the present Government. Also it supports the view that the Government have been much kinder to the electorate as rate-payers than as taxpayers—particularly as indirect taxpayers—and that if there had been less Government help for local 1179 authorities, there would have been less need to incur the odium of reintroducing prescription charges and of deferring the raising of the school leaving age.
In addition to general domestic de-rating on an annually increasing scale, and making it much easier for owner-occupiers to pay rates by monthly instalments, there is also the Labour Government's rate rebate scheme for the relief of individual ratepayers on low incomes. Manchester paid out £187,350 in rate rebates during 1966–67. The Government met 75 per cent. of the cost, and the average rebate received by the individual recipient in Manchester was £17 5s. 7d., which was available to him to spend on other things. Taking into account the improvements in the scheme which were announced by the Prime Minister in January, it is expected that the number of rebates will rise substantially during this year.
The Conservative Government's one and only essay in individual rate relief was written into Section 5 of the pre-election Rating (Interim Relief) Act, 1964. My inquiries show that the total of grants paid under this Section of the Act to individual Manchester ratepayers suffering hardship was £480 in 1964–65; £374 in 1965–66; and £207 in 1966–67. Even some of the right hon. Gentleman's audience in Birmingham might agree that facts rarely come harsher than these.
Yet there is one more fact which ought to be mentioned about individual rate relief. Whereas the Labour Government were prepared to pay 75 per cent. of £187,350, their Conservative predecessors had agreed to pay only 50 per cent. of £207. Individual ratepayers in such hard-pressed local communities as Bournemouth and Broadstairs may have welcomed Section 5 of the 1964 Act, but there was little more than peanuts, not to say potato crisps, for the relief of individual ratepayers in cities like Manchester.
Nor are domestic derating and individual rate relief the only fields in which the present Government put their predecessors to shame. There is also the important field of housing and, in particular, housing finance. As a housing priority area, Manchester's house building programme is now limited only by capacity to build. In 1967–68, the housing sub- 1180 sidies paid to Manchester were £1,744,004, or almost twice as generous as those allowed by the Conservative Government in 1961–62, when the figure was £927,808. The difference in approach in this field is fully borne out by the following comparison of housing subsidies paid during the last three years of Conservative Government and the first three years of Labour Government. Between 1961 and 1964, £3,055,203 was paid to Manchester in housing subsidies; from 1965 to 1968, the figure was £4,703,475.
But while the Labour Government have been steadily increasing housing subsidies, the Conservative majority at Manchester's Town Hall have frozen the rate subsidy at the amount which was being paid when they took control of the city last May. This is why I would ask the party opposite not to lecture the Government; instead, hon. Members opposite should be lecturing their colleagues on the local authorities who have frozen rate support for housing revenue accounts.
I am told again and again by Manchester people that they will rigorously fight any increase in council house rents, which are, for so many people, one of the most important prices of all. They argue that if the Government can increase by £1,700,000 the amount they pay in housing subsidies over a period of three years, the local authorities should not be allowed to freeze the rate support to the housing revenue account. Rate support to the housing revenue account is not, of course, a subsidy for council house tenants to bring down their rents. It is in respect of town planning and includes financial help for the clearing of sites. Council house tenants alone should not be held responsible for town planning. So I would emphasise to hon. and right hon. Members opposite that instead of lecturing the Government they should be lecturing their supporters in the town halls of this country, asking them to change their policies in this very important field, than which there is no more sensitive question in the whole range of prices.
I must tell the hon. Lady the Member for Finchley (Mrs. Thatcher), more in despair, that her colleagues in Manchester have slowed down slum clearance, cut back the building of new homes and 1181 stopped the city's clean air programme. Other achievements which mark the end of their first year of control include a cut in spending on street cleansing, a lowering of maintenance standards in Manchester's schools and, to save a few thousand pounds, the ending of a scheme under which elderly and disabled men and women were given small amounts of tobacco or sweets in the city's welfare homes. After the massive help they received from the Government to keep rates down, that is the contribution they have made.
This is why I suggest that, instead of arguing here in an almost empty House of Commons a much-heralded censure Motion against the Government, the party opposite should be arguing for more humanity where it counts—in the localities. I feel very much that what people want more than anything else is equity. Our politics, the politics of Labour Government, must be about nothing if they are not about equity. I believe we must do more to inform people of what has been done by this Government to hold prices down. We must argue more than we have done about the basic inconsistencies in the speeches which are made against us. We must do more to explain such facts as those brought forward by my hon. Friends in this debate and in a recent debate by my hon. Friend the Member for Huddersfield, West (Mr. Lomas), because people are too often misled by those who are more interested in propaganda than in the facts of our present situation.
§ 7.10 p.m.
§ Mr. Tom Boardman (Leicester, South-West)
I will not try to follow the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris), because I got lost in the maze of figures that appear in the document from which he was reading and in that I lost the logic of his argument. I want to take up one point in reply to what he said about the Conservative Party appearing to be going for consumer protection. I hope I have it right.
§ Mr. Boardman
The hon. Gentleman tells me that I have it wrong. However, I remind him that he made no mention 1182 of the Resale Price Maintenance Act, which has done more to bring about a competitive society in the retail trade and bring prices down than anything that has ever been done by a Labour Government at any time.
§ Mr. Morris
I was arguing that the White Paper, Cmnd. 3590, is wise in saying that there is a place for the interests of the consumer when salaries and wages are being negotiated. This is a new and important proposition.
§ Mr. Boardman
I am sorry, but I did not follow the hon. Gentleman's argument.
I will switch from that and deal with one section of the community which is most severely hit by rising prices. I refer to the elderly. I was surprised and disappointed that the right hon. Lady made no reference of any kind to the elderly. She talked a lot about wages going ahead of prices and the gap that this provided, but there was no reference to the elderly. Apart from a passing reference by the hon. Member for Halifax (Dr. Summerskill), nothing has been said by any hon. Member on the other side of the House about this section of the community. I would remind hon. Members opposite of the hardship caused by rising prices to the 150,000 people whose average age is over 85 and who get no insured pension. The House and the nation will recall that that was the group of people for whom the Conservative Party tried to get justice.
My hon. Friend the Member for Worthing (Mr. Higgins) brought forward a Bill in February this year to try to get justice for those 150,000 people who were deprived of any insured pension by seeing that they got the same contribution, not coming from the stamp, but from the general fund of taxation, that goes to retirement pensioners. The House will recall that the Government used their majority on that occasion to defeat the Bill. It will also be remembered that in the last Parliament the device that was used by the Labour Government to prevent a similar Bill put forward by my hon. Friend the Member for Abingdon (Mr. Neave) coming before the House.
§ Mr. Boardman
I recall all the arguments which were put forward which were answered one by one from this side in February. We are speaking of a dwindling section of the community with an average age of 85. In the last Parliament the Labour Government used a device to prevent a Bill coming before the House and they used their majority in February last to defeat it.
I move to another section of the elderly, the public services and Armed Forces. They were promised parity of pensions. That promise has not been implemented. The people concerned are the Government's own employees. They have not had the 17 per cent. increase in wages, or whatever the figures are which have been quoted. They were promised parity of pensions and they have been deprived of it.
I include in this group those living on fixed incomes, those who have retired and invested their savings and are living on the income from them or on private pensions and find that with rising prices their dream of a comfortable retirement has been turned into a nightmare of existing. Those people have not been mentioned. We have not heard one word about them.
I turn now to the section of the elderly which is wholly or mainly dependent upon State pension. I accept that in statistical terms it can be shown that pensions have risen faster than prices during the last 16 years. But the trouble, as the Minister knows, is that no one believes it, least of all the pensioners. They did not believe it during our 13 years and they do not believe it now. We all know from travelling around our constituencies that, in true terms of purchasing power, the older folk are worse off than they have ever been. One knows, too, that the commodities which have gone up in price have been those to which they have been most vulnerable. Food prices are one of the biggest increase. Now coke, gas and electricity has gone up in price. As my hon. Friend the 1184 Member for Worcestershire, South (Sir G. Nabarro) said earlier, in a smokeless zone—as my constituency is becoming such a zone, where these fuels must be used—one finds that the price rises of coke, gas and electricity have been higher than the rises in the Index of Retail Prices. One wonders whether the Index of Retail Prices is a correct guide for the cost of living of the elderly. I ask the Government to look at that aspect, because I challenge whether it can be so when one sees the hardship that is caused.
I am sure that hon. Members have found in their constituencies as I have in mine, old souls sitting wrapped in blankets in front of unlit gas fires because they are afraid of the gas bill in this year of 1968. They also sit without the light on because they are afraid of the electricity bill. They see and have seen their savings eroded. It becomes even more painful and hard on the older old folks because those over 70 have probably got through all their savings and every price rise fills them with fear about how they can see their days through. These are the people to whom I am referring about whom no reference has been made by the right hon. Lady.
It may be said in reply—but I hope it will not—that retirement pensions were raised in October, 1967. I hope that is not given as any answer. I do expect an answer. If this is raised I would remind the Minister that that rise I well remember, because it happened to coincide with the by-election which returned me to this House. Polling day for that by-election was about a week after the first payment of the increased pension. It was then said freely by responsible members of the Government that the pension increase was to give those pensioners a substantial rise, as it was, and that they would be able to maintain the increase which they had achieved over the rise in prices. Nothing was said about the rise in the pension being because the Government were going to devalue a month later. Indeed, the Government denied the possibility. Nothing was said about the increased pension being given so that they would have it to meet the rising prices resulting from the stiffest Budget of all time which would come five months later.
I hope that the Minister will not, in reply, suggest that the pension increase 1185 made in October, 1967, was to cover the rising prices which have since occurred. If so, no one will believe it. We must remember that the Prime Minister, on the 18th January, in his Budget statement, said there was no intention to increase the retirement pension, at any rate until the autumn of 1969—two years ahead. These retirement pension arrangements have to absorb not only the rising prices which have occurred since November, but the rising prices that are going on, galloping ahead, until Autumn 1969, without any hope of an increase. Can that be just or right? If the Minister's answer is "We are going to increase the supplementary pension this autumn," I would reply that only about one million of the elderly are drawing supplementary pensions and this will leave a vast number who are not helped by it. Secondly, by next autumn they will have suffered a year of these rising prices and the hardship which is involved. I trust some better answer than that can be given.
I had hoped, on a different occasion, to which I will refer in a moment that it would be possible to put forward some suggestions for dealing with these problems. I do not suggest that the problem of the elderly should be met by an increase in the total of Government spending. The proportion of Government spending on the welfare services is as high as it possibly can be at the moment. There should be an alteration of priorities. I believe, as my hon. Friend the Member for Louth (Sir C. Osborne) said, that we have got our priorities quite wrong. We must encourage those who are able to provide for themselves and their families to do so and concentrate public monies on those who are not able to provide for themselves. In that category I include the elderly, and particularly the older of the elderly. Our theme must be independence and not dependence, and this is where we must change our priorities. I am not advocating that there should be an increase in the total amount expended on the Welfare State, but that priorities should be adjusted and the industrial growth of this country that we should thus secure—and will not secure under this Government—would itself generate further resources to put these people ahead and keep them in parity with the rising prices.
1186 The sectors of the public to which I have referred have various things in common. They are each now having to do without something. They come under different income brackets; I have referred to those who are on retirement pension, those on supplementary benefits, those who are retired, some perhaps with quite reasonable fixed incomes. In each case, the rising prices are causing them to do without something each month which they had the month before, and they will have to do with less and less as each month passes. This is what I mean by a decline in the standard of living.
These people have something else in common: they do not demonstrate; they do not march down Whitehall; they do not have trade unions; they do not threaten strikes and go-slows unless their demands are met. Is that why they are ignored? Is that why the right hon. Lady felt it unneccessary to make any reference to them?
They have one other thing in common: they have no power to increase their income. They are dependent on what they have, whether it is a fixed pension, a private pension or the savings from investments in War Loan, or whatever it may be. They have no power to increase that income; they cannot get a 3½ per cent. increase by extra productivity; they cannot work overtime. They are completely dependent on what is coming in and on controlled prices to ensure that their budget is balanced.
Until this week I believed the problems of these old folk, to whom I have referred, was one about which the Labour Party cared as much as we do on this side of the House. I thought their failure to provide for them was due to their incompetence. As a result of what happened on Monday I know differently. The Front Bench of the Government then adopted tactics—a deliberate filibuster—in order to prevent any discussion on a Motion which stood in my name, calling the attetion of the House to the declining living standards of the elderly. It was a contemptible act which showed complete disregard for the elderly. The nation will take note of what was done. The only conclusion one could draw from this deliberate filibuster is that the Labour Party do not care. They do not care to have those problems discussed.
1187 As I have already said, the elderly do not have trade unions, they do not subscribe to political levies; there is no one to put forward their case apart from their Member of Parliament. When an hon. Member of Parliament had the good fortune to succeed in the Ballot and proposed to move a Private Members' Motion on behalf of the elderly—which should be close to the hearts of all Members of the House—it was quite despicable to see the House use this device to prevent it being discussed. This will not be forgotten any more than the nation forgets the treatment given to the Bill sponsored by my hon. Friend the Member for Abingdon.
We must not forget that those of whom I am speaking, the old, are people who, in the main, have lived through two world wars, have worked hard and brought up families without any State assistance, and the peak of their earning power was at a time when wages were low and they had difficulty in saving. It is due to them that we enjoy so many of the benefits we have today. They deserve better of us and they certainly are not getting it under a Labour Government.
§ 7.28 p.m.
§ Mr. Albert Murray (Gravesend)
I am sorry that the hon. Member for Worcestershire, South (Sir G. Nabarro) is not with us at the moment, because I should like to congratulate him on a great acting performance. We see this performance regularly. After the last few weeks, the only rôle we could not cast him for is Othello. He may be compared to many goods to be bought in our shops: he is well advertised and beautifully packaged, but when opened, the packet is half empty and what is left is not of much value.
We have not had constructive suggestions from the Opposition about keeping the cost of living and prices down. Nobody would have believed that this was the party that had to cajole, persuade and bully its Members on resale price maintenance, during their term of office. They did not have a clear majority then—they had to get their Members into the Lobby by hook or by crook to do what they have been suggesting we ought to be doing today—to keep prices down.
After the speech of the hon. Member for Leicester, South-West (Mr. Tom 1188 Boardman), anyone would think that prices had not increased under the Tories and that the old-age pensioners had a wonderful time. Perhaps I can quote some facts, which I am sure will not come amiss. If he is sincere, as I believe, about the plight of the old, he will be aware that the price of bacon rose from 3s. 1d. a pound in 1951 to 5s. 1d. in 1964. The price of cheese rose from 1s. 2d. a pound in 1951 to 3s. 3d. in 1964, margarine from 7d. to 11d. and tea—old people like their cup of tea, perhaps, more than young people—from 3s. 4d. to 6s. 4d.
The problem with the Conservative Party is that they just do not know where they are when in opposition. They have given us no constructive policy today for keeping prices down. During our period of office, we have at least tried to make the lot of some old people easier. I do not know what the Opposition expected after three years of Labour Government. They seemed to expect us to fulfil all our election pledges in the first year, as well as dealing with most of the problems which they left behind after 13 years.
Of course there is sympathy for those who cannot draw National Insurance payments, but for 13 years these people were neglected—and the same is true of the Bill of the hon. Member for Abingdon (Mr. Neave). Also, during these three years, we have introduced rate rebate schemes, which give some assistance to those on low incomes and ensure that those below the limit get some help.
No one would deny that there have been price increases in the last three years and I do not doubt that this will go on, but there is a certain mythology about these increases. Anyone who reads the News of the World—6 million people buy it every week and, as a former print worker myself, I am not sorry—will know that it did a price check in the last week of January. It sent someone out to buy 36 items, which the paper revealed on 20th January had cost just under £4, or 3½d. more than in November. But the interesting fact is that they cost 1s. 10½d. less than in May, 1967. One thing which we must ask the housewife is to shop around more—[Laughter.]—the right hon. and learned Member for Hexham (Mr. Rippon) may well laugh, but I will quote some facts for him——
§ Mr. Rippon
If the hon. Gentleman would look at today's survey in the Daily Sketch, which is bang up to date, he would see a very different story.
§ Mr. Murray
There are differences in these matters. The Observer did a similar survey on 35 items and found that the prices of them had gone down in February and March. Margaret Stone, who did this survey, shops at Victor Value. A member of the co-operative society in Salford found from his own survey in Salford that he could get 34 of those 35 items for more than 10s. less. So the lesson is, shop at the Co-op.—[An HON. MEMBER: "And get the divi."]—As one of my hon. Friends says, they can also get the "divi".
The Observer this month shows that prices are now up, but most of those increases are on seasonal items. My hon. Friend the Member for Erith and Cray-ford (Mr. Wellbeloved) will know that one of the largest increases for the housewife is in the price of meat—and for the unique reason that there has been a ban on imported beef, and we will hope to see that price go down in the next few weeks. But there is a lesson in this—of making the housewife more perceptive.
What can the Government do about the housewife and her shopping? The First Secretary of State could help. She could talk to some manufacturers. By a strange coincidence, I have with me these packages—[HON. MEMBERS: "Oh."]—This is perfectly in order: I have checked. I have some of the packets and advertisements with which housewives are tempted. The managing director or chairman of, I think, Unilever said that the housewife likes to be titillated by advertising promotion. What the First Secretary should do is ask some manufacturers to have a moratorium on some of their promotions and large advertising compaigns in the coming year.
For instance, I have this cornflakes packet, the name of which I will not mention, which shows that, if one enters a competition, one can win 100 Hoover kitchens, each worth £250. Someone must pay for this and I am certain that the cost is not coming from the manufacturer's profits. If one buys a certain type of cat food—I do not eat it myself—one can win one of 20,000 "lucky horoscope" 1190 games. Or one can go in for a competition run by a margarine firm's "lucky wheel" competition—rather like choosing the leader of the Tory Party—and win £17,500 in cash.
Manufacturers should be trying to cut prices at this time. I am sure that many of the housewives in my constituency would be happier with 1d. or 2d. off than with this catering for a small minority of consumers with various promotional and advertising gimmicks.
But what is even worse is the gimmick of a coffee manufacturer—who again shall be nameless. If one buys their coffee and sends in a certain number of vouchers, one can get free eggs for breakfast to the value of 3s. What is wrong with this is that I am buying this brand of coffee and getting my eggs cheaper, but those who are not buying it are not getting their eggs cheaper.
This is also true of another product, a slimming loaf—which I do not use—which offers a voucher worth 6d. when one buys a particular brand of meat extract. Again, the person who does not buy this slimming loaf does not get the value of that "tanner" off in the shops.
During this time of restraint, the First Secretary should be trying to talk to manufacturers about the possibilities of their cutting prices on some of these goods. The Government had a great opportunity when the Monopolies Commission and the N.B.P.I. found against the detergent manufacturers, saying that detergents were 40 per cent. over-priced. The Government should have stuck firm. Instead, the Government did a deal with the firm and two new brands were introduced. In his annual report issued last week, the chairman of the company said that these brands were not going too well and that they had secured only 20 per cent. of the market. I would have thought that that percentage of the market was very good. Certainly hon. Gentlemen opposite will be glad if they get that percentage of the nation's votes in 1970 or 1971.
The Government should have held fast because I do not believe that these products have been advertised in the same way as the other leading brands have been publicised. That may be why they are not securing a bigger share of the market. In any event, I do not believe that one brand of detergent is very dif- 1191 ferent from another or that when only two large organisations such as Unilever and Procter and Gamble are holding the British market for these products, the housewife can get as fair a deal as she should be getting.
The Government should also take more note of the ideas of the Consumers Association and Consumer Council. They have recommended the establishment of consumer centres throughout the country and the Consumer Council considers that for about £2 million a year it could man a large number of these centres and advise consumers on whether or not they are getting a fair deal. Although we usually refer to housewives as being the most important consumers—and no doubt they are—we must remember other buyers like bachelors and widowers who may be old age pensioners. They, too, must be protected and the establishment of consumer centres might be of great help in this context.
The Consumer Council performs an important function with its magazine Which?, but that has a circulation of only about 430,000. It is claimed to have a pass-on readership of eight times that figure, which means that about 4 million people read it. I am worried because the vast majority of that 4 million readership are middle-class people in what are called the A and B groups. The harassed housewife who must dash to the shops, cook lunch for her children coming home from school and prepare dinner at night does not have time to sit down and read Which?. As the majority of housewives cannot be informed by this means of the best buys of the week, the establishment of consumer centres would be of great assistance.
We have heard a great deal from manufacturers about their not being able to do much more to help. I suggest that they stop making political contributions to the Tory Party and pass on the money to the housewife. The Guest Keen and Nettlefold organisation is providing about £38,000 to the Conservative Party. I suggest that a penny off the price of a dozen screws would be more beneficial to the economy. The Rugby Portland Cement Company will provide £15,000 to the coffers of the Tory Party to fight the "wicked Socialists". I read that an organisation called British Vita, a newly floated group to produce flexible foam, 1192 intends to make a political contribution to the Conservatives.
§ Mr. Murray
I am glad of the right hon. and learned Gentleman's support. He might be interested to know that the chairman of the newly floated company, Mr. Norman Grimshaw, is reported to have stated that he intends to make a political contribution to ensure that there is a virile Opposition to the present Government. I do not think that British Vita will get its money's worth. The firm would be better off reducing the price of its flexible foam products, and that goes for the other companies to which I referred.
Many hon. Members have been greatly disturbed by the increase in building society interest rates. I have tabled a Question for 7th May on this issue. I suggest that these rates should be frozen at 7⅛ per cent., the figure which remains in operation until 1st May. The Building Societies Association, which represents 320 building societies, expressed distress at the situation, announced the increased rates and then held a wake at the Dorchester Hotel. It must have been distressed or it would have staged it at Claridge's. Here we see a large organisation, representing a great number of building societies, pleading poverty, announcing increased rates and then going to the Dorchester for a nosh-up. In this day and age, it strikes me as odd that such an organisation should be allowed to splurge our money in this way. I say "our" because I should declare my interest in that I will be paying the additional money on my mortgage.
The building societies should start making some economies. There are 635 building societies in Britain, which shows that there is ample room for more efficiency and some amalgamations. The building society which granted my mortgage has spent a considerable time trying to find £5 of mine which appears to have gone astray. I should mention that the firm uses computers. One can imagine the duplication that goes on when we have 635 building societies. The Building Societies Association courteously wrote to me after I tabled a Question on this subject. I urged them to become more efficient, to pay their way and not to just announce increased rates of interest.
1193 In his Budget speech the Chancellor mentioned that there is likely to be a 1 per cent. fall in the standard of living in the coming year. That may be true. However, if that 1 per cent. fall is to mean one less motor car in a hundred—particularly if it happens to be a Renault, Citroen or Volkswagen—not many of my hon. Friends will be terribly distressed. We fear that the 1 per cent. fall will mean one less meal in a hundred families who, at any rate, are not enjoying the standard of living of the majority. The Government must concentrate on this problem and protect the poorer sections of the community.
The Government have gone some way along this path in referring 22 councils to the Prices and Incomes Board on the question of rents. This is a start. In the last year or two we have seen, under a Labour Government, some councils and particularly Conservative-controlled authorities, considering this to be open season for council house rent increases. Stabilising the position at an average of 7s. 6d. per week per year is Government action to be welcomed.
The Government have a great responsibility. They must be able to persuade the unions and manufacturers and at the same time live with the voice of gloom from the benches opposite. The hon. Member for Louth (Sir C. Osborne) is only one example of that voice of gloom. That hon. Gentleman has been making gloomy speeches not only during the last three years of Socialist rule but for many years before that.
Several hon. Members opposite, including the hon. Member for Worcestershire, South have made unkind remarks about my right hon. Friend the Minister responsible for employment and productivity. If the trade unions see that this Government mean business, that the Government are prepared to put their foot down against unreasonable price increases and investigate some things which need investigating, if we show we are willing to fight price rises where we consider them unreasonable, my right hon. Friend will get the support of the trade unions. As she said, this period can be a starting point not merely for improving the standard of living of our people, but for allowing us as a nation to play our part 1194 in world affairs as an economically viable unit.
§ 7.51 p.m.
§ Mr. Ian Lloyd (Portsmouth, Langstone)
I hope that the hon. Member for Gravesend (Mr. Murray) will not mind if I do not follow him far in the serious aspects of his speech. I was delighted by many of the amusing aspects. I want to refer to three points which he made.
I am sure that hon. Members on both sides of the House will support the line he took about consumer protection organisations, particularly the magazine Which? We all agree that it serves an extremely constructive purpose, as does its fellow magazine whose name I forget for the moment. While we are all in favour of Which?, we are not in favour of witchcraft and some of the economic measures taken by the Government in recent years appear to come more from the arena of witchcraft than from the studious rationality of that magazine.
A second point the hon. Member made was that representatives of the building society movement showed a lack of appreciation of present difficulties by holding their meeting at the Dorchester Hotel. I do not hold shares in the Dorchester Hotel directly or indirectly and I do not mind where building society representatives meet, but it is strange to argue that serious people talking about serious business should not meet in a place where all the necessary facilities can be provided. This, no doubt, is true of all large hotels. Does the hon. Member expect them to meet on the concourse of King's Cross Station, or some similar place? If he thought seriously about the matter, I am sure that he would not press that point very far.
One of the most serious points that the hon. Member made was his reference to imported motor cars. Of all countries we probably are the most vulnerable to this very dangerous type of argument because we are dependent on a great variety of export markets and upon people not adopting a narrow nationalistic view when they buy motor cars. It is most important that when we purchase motor cars, or any other form of major equipment for industrial or consumer purposes, we should purchase the product on its merits, because we ask the rest of the world to do that in respect of our products.
§ Mr. Murray
What I tried to say was that if there is to be a fall of 1 per cent. in the standard of living as suggested by the Chancellor, then if a comparison is to be made we would prefer the standard to fall in the purchase of motor cars from wherever they come rather than in a decent standard of living for the people.
§ Mr. Lloyd
So long as the hon. Member was not seeking to discriminate on the grounds I have mentioned, I accept that entirely.
I had not intended to speak in this debate, but I was prompted to do so by the speech of the First Secretary of State, who, alas, has just left her place on the Front Bench. Some of the things she said this afternoon led me to conclude that there was a certain weariness pervading the Government Front Bench. It seems that the Government are tired—some of the leading members of the Government are tired. I am reminded of the charming story of a little lift boy who spent his day operating a lift. A visiting American tourist got into the lift and noticed the pale little chap of 14 or 15. She asked him, "Young man, are you tired?" He said "Yes, Ma'am." She said "Do you get tired going up?" He replied "No Ma'am." She asked "Do you get tired going down?" He replied, "No, ma'am." She asked "What makes you tired?" The boy replied, "I get tired answering questions."
It seems that the Government are tired of answering questions, because questions are becoming very pertinent and probing and they are leading to a situation in which the Government find is extremely difficult to answer. The Government are presiding over an economy where things go up and things go down and always the wrong things go up and the wrong things go down. Undoubtedly the Government find themselves in exactly the same position as the little boy in the lift.
Again, this afternoon the Secretary of State, following the example of prominent Ministers, gave us what I suppose she regarded as a statistical display. Again and again she used with apparent precision to one place of decimals economic magnitudes which could be used only within limits of plus or minus 5 per cent. This is a fundamental point. I have raised it before and I need to do so again. If the House and the country 1196 are asked to draw most important conclusions about variations of .1 per cent., .5 per cent. or even 1 per cent., a serious obligation rests on Ministers who repeatedly use these figures to make plain to the House and the country that this degree of precision inheres in them. Again and again we get figures given to us, but no one says that the statistical degree of error is plus or minus 1 per cent. Therefore, we are entitled to argue for that degree of precision. I challenge the First Secretary and other Ministers to give us the statistical limit of error. Otherwise, how can we rely on their presentation of a case?
I turn to the wholly misleading criteria of unemployment which seems to dominate the Government's thinking. Here again, if we are to draw useful and constructive conclusions about the economy, we must not look at obsolete criteria. I have not the time to develop the case in detail, but the existing stress on crude unemployment figures used throughout prices and incomes debates and discussions is virtually meaningless. We are concerned with a ratio. It is the ratio of output with a high probability of sale to those employed people—I would give a triple qualification—who are effectively, necessarily and indispensably employed in their occupations. I resisted that dreadful phrase, "wholly, necessarily and exclusively", but it has the same sort of aura about it and could be used in this connection with more justification.
If we were able—as I think we must become able, although it may take a long time—to look at the employed population in industry and agriculture and the Services and to define them by this criteria, it seems we would find that our existing measure of employment was largely statistical and beneath this confusing and misleading statistical surface there is probably an order of magnitude of something like 10 per cent. to 20 per cent. of the so-called employed population who do not fall within the definition.
It can be argued that if one talks in this way one is not thinking of the human consequences and the economic consequences. I do not think that charge can be sustained because in the Welfare State in which there is an alternative income—I have come across extraordinary examples recently of young 1197 people drawing from the whole range of social benefits social incomes far better than they derive in employment—our great concern about that aspect of unemployment can be overdone, and possibly is seriously overdone. Nevertheless, we are not entitled to be less concerned about the social aspect of unemployment, because there are very few people who genuinely enjoy being paid, whether a large or small sum, to do nothing. The very few who do enjoy being paid to do nothing throughout their lifetime are probably a special category of the unemployed with whom one would have to deal in any society on a different basis. We must not overlook this aspect, because it is fundamentally important.
I now turn to the question of prices. Here the First Secretary showed a most astonishing naivety. She chose to start with the example of copper, a metal in which there is a most volatile market, volatile for very good reasons. I think that it was the late Mr. Bernard Baruch who, under interrogation by a Senate committee, was asked what he was and replied quite unashamedly, "I am a speculator". The committee asked him to define what that meant and he said, "Someone who tries intelligently to anticipate the future". That may be his particular definition, but it applies to everyone dealing in copper, because copper mines are situated in odd parts of the world where odd things happen. Therefore, it is necessary in that industry intelligently to anticipate the future, and we have a highly-developed Metal Exchange in London at which the price of copper is determined.
But the copper-using industry, which is the important industry here, is far more afraid of its competition from the aluminium industry than of the First Secretary and anything she might do. Everything I have read about the copper-using industry suggests that the real spur of competition comes from aluminium and various other alternative sources. Copper is an example of something the Government can satisfactorily leave to the world competitive situation, and they need not worry very much about its price.
Then the right hon. Lady spoke of oil. What an astonishing example! It is the supreme example of the efficiency of 1198 private enterprise in offsetting rising costs in a major consumption article practically throughout the world over a long period—virtually since oil has been used. If one takes the real cost of petroleum, it is probably one the most stable commodities. The only thing that has rendered its price unstable is the taxation imposed by Governments. Of all the examples—and there are 10,000 or 15,000 commodities in use in this country—I should have thought that petroleum was one of the last which should engage the right hon. Lady's attention.
Why not deliberately harness the force of competition? We have seen many other fields in which prices are brought down where competition and enterprise are given free rein and production is not inhibited by a great variety of State restrictions and legislation.
I turn very briefly to another point which the right hon. Lady raised. She accused the Opposition of a certain degree of inprecision of economic thought. After listening to her this afternoon, I should have thought that she was the last person to make such a charge. But let us accept her premise. Let us ask her to deal, as I think she should, with a much more serious argument, I am the first to admit that it is not mine, but it deserves to be given wider publicity than it may have had. It is one which has been set out in great detail in documents available to hon. Members on both sides of the House and is found in Professor Paish's article on the economy in the April Lloyds Bank Review.
Even if our views are worthless—and I do not accept that premise—there are a number of arguments in that article which the Government should answer. The first concerns unit labour costs, a question which was stressed by the First Secretary. In the article Professor Paish points out that by itself this criterion is quite insignificant. The important question is the ratio of the growth of employment and output to the margin of unused productive potential. As I understand it, this is the key factor in the article. It is a most powerful argument. Does the right hon. Lady accept it? If not, what can she put in its place? Can she advise the House why she does not accept it? Even if the Opposition in their economically inarticulate state cannot understand this sort of thing, there are 1199 many in the country who would like to understand and to know the right hon. Lady's arguments.
Another question powerfully dealt with by Professor Paish is that of economic growth, which is constantly bandied about in the House. He takes a long perspective; it is a significant aspect of the article that in the graphs given General Elections are not very evident anywhere. It is the record of Government action in the post-war world about which he is talking, and it is really a non-political argument. He argues that our record is not absolutely bad throughout the post-war period. I accept that. Second, he says that when we make comparisons—particularly with Europe, but not only with Europe—they are unfavourable to us primarily because after the Second World War Europe contained a large number of technologically backward areas, particularly agricultural, from which a large movement of labour could take place to the more technologically advanced areas. We should take this much more into consideration when discussing the problems of the British economy, because growth is bandied about here with very little sense of perspective or of the important surrounding arguments which must be taken into consideration.
I now come briefly to the question of incomes policy. I hope that the right hon. Lady will not mind if I transpose the metaphor somewhat. Here it seems to me that she is putting her shirt on it. We should not want her to lose it, certainly not in public here. But there is a serious danger that she may find herself emulating a mixture of Lady Godiva and the Emperor who lost his clothes. I do not ask the House necessarily to accept my arguments, which, in the view of hon. Members on both sides, may not be as authorititative in any way as those of Professor Paish, but to accept those set out by him with great force and conviction in the article to which I referred. He says:If the effects of an 'incomes policy', even when imposed under the most favourable conditions, are likely to be only temporary, when imposed in continuing conditions of extreme full employment it is unlikely to enjoy even this limited success.…In such conditions, it is doubtful if they could be prevented, even 1200 by penal legislation, from using methods which would increase their labour costs"—he is referring to employers—in order to attract and retain the labour they urgently needed. Even if standard wage rates were effectively controlled, there are innumerable methods of giving higher remuneration, in cash and in kind: guaranteed overtime; up-grading; revised piece-rates; merit payments; bonus or incentive schemes; profit-sharing; pension schemes or other fringe benefits; even improved canteen or other amenities. All are means of bidding up the price of labour, so that the gap between the standard rate and the actual remuneration paid widens continuously.What do the Government think about this argument? Do they believe that it can be refuted, that it is a lot of nonsense? If so, will they produce the arguments and the statistics to show this?
Finally, it seems to me that Prof. Paish put his finger right on the heart of the matter when he referred to the output, profits, savings and investment cycle and argued that we need give attention to the whole cycle. This is the cycle which produces wealth and enables Governments to solve their problems. It seems to me that when considering it the Government look only at the output and investment end, and prefer to ignore the question of profits and savings, the two key factors in the middle. This is precisely what we need. We need higher profits. The Government take about 75 per cent. of them anyway, but the private sector needs at least the 25 per cent. which it is allowed to retain. We need higher profits and savings. We do not want to hamstring a part of this cycle if we are to make serious progress towards the solution of our national problems.
§ 8.10 p.m.
§ Mr. Kenneth Lomas (Huddersfield, West)
The hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd) covered a fairly wide area, but I fail to detect in what he has said anything that is directly related to the Motion that we are debating and which has been put forward as a Motion of censure by hon. and right hon. Gentlemen opposite. It is interesting to note that the great onslaught that we were expecting from the Conservative benches today has attracted only 3 per cent. of the Conservative Members in the House. This is most regrettable. One would have thought that they would be here trying to prove 1201 the accusations which they make in putting the Motion on the Order Paper.
I am glad to speak after my hon. Friend the Member for Gravesend (Mr. Murray). It is always a pleasure to read what he has to say. It is an even greater privilege to see him make his speech. He has almost converted me to the idea that television should be installed very quickly in the House. It was a devastating performance and an illustration of what can be done with visual aids.
I want to refer to the Motion before the House, and to enlarge on the comments that I made in an Adjournment debate on 11th March. My statements on that occasion could well be brought up to date and used to answer many of the accusations that have been made by hon. Members on the other side of the House and some statements which have been made from time to time from this side of the House on the effort, or lack of effort, by the Government to control prices.
I want to look at the facts. I take as my bible, or certainly as my book of authority, the Ministry of Labour Gazette, which is the book that trade unionists on this side and industrialists on the other side have long used. It is recognised in this House as accurate, and it can be quoted with conviction.
During the period a Labour Government have been in power, from October, 1964, to the latest available date, which is March, 1968, retail prices as a whole have risen by 13.6 per cent., about 2s. 8½d. in the £, and the price of food has risen by just over 13 per cent. or 2s. 7d. in the £. It is no use merely to talk about rising prices unless prices are related to wages. During the period from October, 1964, until March, 1968, the weekly wage rate has increased by 18.4 per cent., 3s. 8d. in the £, and hourly rates by 23.4 per cent. or 4s. 8d. in the £.
It can hardly be argued from those figures that a Labour Government have kept wages down while allowing prices to rise. This is the trouble. We have not done so, and that is precisely why the Government are now in the position of having once more to introduce prices and incomes legislation in order to make their policies effective.
1202 The Opposition cannot have it both ways. One cannot, on the one hand, say that the prices and incomes policy of the Government has failed and then go on to say that the Government have failed to control prices.
If it is argued that we were electioneering between 1964 and 1966, it is well to look at the figures from the time the Labour Government came to power, in April of 1966, to the present day, bearing in mind that this period includes the period of standstill and the period of severe restraint. Between April, 1966, and March, 1968, the retail price index has gone up by 5.7 per cent., 1s. ld. in the £, and food prices have gone up by 5.9 per cent., 1s. 2d. in the £. Weekly wage rates from April, 1966, to March, 1968, have risen by 9.9 per cent., almost 2s. in the £, and the hourly rate has gone up by 10.4 per cent., just over 2s. in the £. And I repeat that this was during the period of standstill and severe restraint. During the last two years wages have risen by almost twice as much as prices.
If the Opposition accuse the Government of failure to control prices, let us look at the comparative figures to see what happened in the last two years of the Conservative administration, from October, 1962, to October, 1964. During those two years retail prices rose by 6.4 per cent., 1s. 3d. in the £, and food prices rose by 7.4 per cent., 1s. 6d. in the £. The weekly wage rate rose by 8.3 per cent., slightly over 1s. 7d., and the hourly rates rose by 8.9 per cent., 1s. 9d. in the £.
Let us, therefore, compare like with like. A comparison of the last two years of the Labour Government with the last two years of the Conservative administration shows that all prices rose more under the Tories than they have risen under the Labour administration, whilst wages have risen more in the two years since April, 1966, than in the last two years under the Conservative administration.
A comparison of the figures shows that during the last 2 years of Conservative administration all prices rose by 2d. in the £ more, food by 4d. in the £ more than under Labour in its last 2 years. In the same comparative period weekly wage rates rose by 5d. less and hourly rates by 3d. less. It ill behoves hon. or right 1203 hon. Members of this House to accuse the Government of not taking effective action on prices and of not allowing wages to increase. I do not see how they can possibly press the Motion which is before the House tonight on any facts and figures they can produce.
Some of my hon. Friends on this side of the House should ask themselves on whose side are the trade unions. The trade union movement should be on the side of the Government who are doing all they can to ensure not only that prices are held down, but that wages of the lower-paid workers are allowed to increase beyond the accepted norm, in the interests of social justice. This seems to me right and proper.
Let me give you some more facts. There is nothing like facts for refuting a Conservative argument, because they do not like facts. If one is in possession of the facts, one can always say that these are the facts. I do not want any airy-fairy nonsense or political brouhaha; I want answers to the facts. During the last 12 or 13 months, from March, 1967, to March, 1968, half way through the period of severe restraint, prices rose by 8d. in the £, food by 9d. in the £; weekly wage rates rose by 1s. 6d. in the £ and hourly rates rose by a similar amount.
Since devaluation, from November of last year to March of this year, all prices went up by something like 3½d. in the £ weekly, and food, I grant, did go up by 8d. in the £, but hourly rates went up by 2½ to 3 per cent., 6d. or 7d. in the £. Those, then, are the facts of life. The sooner that they are digested and understood, the better it will be.
It was said on a memorable occasion: "I can only give you the facts. Only God can give you the intelligence to understand them." I hope that it will be realised that the Government are doing all that they can to control the movement of both wages and prices.
There have been criticisms of the way in which the Retail Prices Index has been compiled, and I suppose that they would be fair criticisms under any Government. However, hon. Gentlemen opposite were prepared to use those figures, and so were industrialists, and trade unions. Taken on a broad basis, the way in which the index is compiled is a fair enough indication, when one considers the tremendous 1204 amount of work which goes into the compilation of the index for almost every item. The weighting system changes every year, but it is worked out that, out of the average family budget, about 6s. in every £ goes on food, 2s. 6d. goes on drink and tobacco, a shade over 2s. 6d. goes on housing, fuel, light and transport take just over 4s., clothing and household goods take 2s. 6d., and the rest goes on miscellaneous items.
The way in which food prices are compiled gives a fair indication of what it is all about. There are 200 offices throughout the country sending out officers on the same day every month to five different types of shop to buy the same articles. They are able to get a relative increase in any price or in any reduction in price.
It is interesting to point out that Professor Alan Day, writing in The Observer early in March in an article on the Retail Price Index, said:Almost certainly the Retail Price Index over-estimates the amount by which prices have risen.In many cases, it is possible to buy goods below the recommended price. If one shops round, it is possible to get them cheaper. However, I am prepared to accept the figures published in the Ministry of Labour Gazette.
What we have to understand is that we as a nation cannot continue to spend more than we earn. That is why we have to have legislation to ensure that our cost factor is competitive in the world's markets.
It is often said and has been said again today that the pensioner is the person who has felt the draught under this Government. However, since October, 1964, we have given the pensioner a 33⅓ per cent. increase. It was quite wrong for an hon. Member opposite to say that only a million pensioners are on supplementary allowances. I invite hon. Members to check at their own local offices of the Ministry of Social Security to find out how many pensioners are now drawing supplementary allowances. Huddersfield is a fairly representative borough, and, in my constituency, the figure is as high as 70 or 75 per cent.
We are helping these people in many other ways, and trying to introduce a note of social justice into our society which 1205 was badly lacking before this Government was elected in 1964. In addition, we are trying to assist the lower-paid worker and the person living on a fixed income by allowances of one kind or another. By the rate support grant, we have made sure that rates have been kept fairly stable, and I object strenuously to Conservative-controlled councils cashing in on it for the May elections and saying that they did it. If it had not been for this Government, rates would have gone up tremendously. The rent and rate rebate schemes are designed to assist people in the lower income groups, and we have introduced all these measures because we on this side of the House believe in social justice and consider that something along these lines should be done.
On 11th March, I raised the possibility of a special index for pensioners. Replying to the debate, my hon. Friend the Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said:As to the question of publishing regional prices and prices particularly affecting special groups like pensioners, my right hon. Friends have asked the Cost of Living Advisory Committee to examine whether more information should be collected and published on these matters."—[OFFICIAL REPORT, 11th March, 1968; Vol. 760, c. 1149.]Certainly it is not a closed book, and I hope that the Department is looking at them to see if we can have a special index of prices compiled with the interests of pensioners at heart. It is something which must be done.
The right hon. and learned Member for Hexham (Mr. Rippon) and a number of his hon. Friends have referred again and again to the statements made in the Press attributed to The Grocer magazine about the tremendous number of increases which have occurred. It is time that that was knocked on the head once and for all.
The Grocer performs a job for the trade, and it does it very well. No one argues about that. But it is entirely misleading to the housewife and the general public. What it does is to cite every single increase of every article of every size and shape. In a letter which I received from The Grocer when I took the matter up with it, I was told:The figure, since devaluation, was 2,500 by February, and this has been arrived at by counting all brands, varieties and sizes as separate items.1206 In the Adjournment debate on 11th March, I illustrated how it is possible to show an altogether artificial number of increases by this method. I used the example of peas to make my point. Two different types are produced. There are garden peas and processed peas, and they come in five sizes. If the price of peas goes up, there are immediate increases on 10 commodities. If that figure is multiplied by the number of manufacturers, one can see it reflected in The Grocer by as many as 70, 80 or 90 increases at a time. Therefore, it is quite misleading.
Hon. Members might be interested to know that, when the price of Bronco toilet paper went up, it was reflected in The Grocer as 16 increases since, apparently, there are different colours, twin packs and so on. Every single one is shown as a separate increase. Again, taking the price of pickles, because of the number of manufacturers, different types and flavours, one can easily show increases on well over 100 items.
When The Grocer reported recently that 118 items had gone up, I was surprised to find on investigation that, among other items, they included imported cheeses. I discovered that there are two firms who import Continental cheeses, and that some of the increases related to goat cheese wrapped in chestnut leaves, cheese in a classic pyramid shape, or log-shaped cheese. It is ridiculous to suggest that such items are on the shopping list of the average housewife. How silly can one get?
That is why the arguments advanced by hon. Gentlemen opposite who happen to read the national Press or pick up information given by The Grocer is entirely misleading. I hope we are not going to have any more of this nonsense, because it certainly does not reflect the situation; and I would much rather rely on the Ministry of Labour Gazette than on the columns of the Daily Express or even the Daily Sketch which have been quoted today.
It really boils down to the fact that this Government have taken action on prices and everything else, but we have to come to terms with reality and so have the Opposition. It is no use hon. Gentlemen opposite "Hear, hearing" or doing things like that when by their own Front Bench spokesman they have shown 1207 that they would make the cost of living greater by spending more money on defence and other items, and by reducing the social services and thereby putting a greater burden on the ordinary lower paid worker in the country. It is no use hon. Gentlemen opposite shaking their heads, because that has been said time and time again from the other side of the House and they have recorded in the Division Lobbies their view that they would spend more on defence and less on the social services. If we are to spend less on the social services, then, whether we like it or not, it means an increase in the cost of living for the lower paid worker and there is no answer to that.
Nor is there any answer from the other side as to where they would make the cuts they are always telling the Government to make—no answer at all. Is it to be in education, housing or the roads? Of course not, because that is not electorally popular. But every single time we have brought forward an economy in defence hon. Gentlemen opposite have opposed us on the floor of the House and in the Division Lobbies, and that is something about which the country should know. Theirs are crocodile tears for the lower paid workers and the pensioners and they cut no ice when people look at what has been happening under this Government to help people in need.
§ Captain W. Elliot
Would the hon. Gentleman not agree that during our period in office expenditure on social services and on other things, too, went up enormously and we still brought taxation down, because the gross national product went up? The trouble with this Government is that production has been stagnant for the last three-and-a-half years.
§ Mr. Lomas
I accept wholeheartedly the point that expenditure on the social services will rise under any Government and it did rise under the Conservative Administration. But I am saying that under our administration expenditure on the social services has risen at a far greater rate. Those services have been given to people who have been in more deserving cases, and we have sought out people whom those on the outside ignored. When the right hon. Lady the Member for Lanark (Miss Herbison) was Minister for Social Security she went out of her way to try to find people who had 1208 been neglected for so long by the other side.
Again, it is true that production was rising in given years, but there was a stop-go cycle and we are now trying to get out of this particular mess; for never let us forget and never let it be forgotten that because of the electioneering tactics of the party opposite we not only inherited a terrible mess but also had to restore confidence in this country in the eyes of the world because of the piled up deficit that was left behind. Therefore, we started not from scratch but from minus. We began to build up the Ministry of Technology and other Departments which are now paying off, and we are now finding the benefits of that particular policy.
What has to be fully understood is that we as a country are fighting for our very economic survival and if we do not win this battle it is not a question of politics but a question of Britain as a nation going to the wall. We really have to get that sunk in. We also believe we are working to change society. We are working to get a better kind of society. But in moving from a capitalist or mixed economy there is inevitably bound to be a transitional period of hardship and upheaval. We have tried to cushion the effects of that upheaval and hardship by such things as redundancy payments, earnings related benefits and other provisions. But we want this change because we on this side believe that the old system was one based on the law of supply and demand, a system under which the weak went to the wall, a system based on a free-for-all, where the militants got their own way and to hell with everybody else. We will not accept that system.
We do not accept that system, we want one based on social justice. I do not want our nation to drift. I want our people to know where they are going, to have a sense of purpose. I hope that this will be understood and that it will be recognised that what we are doing through our prices and incomes policy is in the long term interests of the country and the people. This Government have not always been right. They have made mistakes and will no doubt make mistakes again.
May I offer one word of advice to them and say that they must recognise 1209 that when there is a problem of rising prices which cannot be avoided, like the electricity charges last year, then they should use the mechanism that they have established—the Prices and Incomes Board. Let the Board have a look at it and report back so that we can all see what it is about. We must not make the mistake that we made 12 months ago, when the question of increasing rents was raised. We were told repeatedly, on both sides of the House, that this was not a matter in which the Government could intervene. Then, when pressure mounted, the Government intervened and sent the matter to the Prices and Incomes Board, and we got a very good report. The Government must anticipate the feelings of the ordinary people and use the Board where it can, not for their own sake, but to make it clear to the nation that the matter has been fully investigated and the Government know exactly where they are going.
The Government had a very tough and difficult 18 months initially with such a low majority and the uncertainty of not knowing for how long they would last. This, coupled with the inherited deficit, made matters tougher. But they have shown by their attitude, policies and fairness in the last three years, they are intent on changing Britain into something better. They have shown that they are trying to introduce policies designed to ensure that not only the strong men of the trade union movement or anywhere else who get wage increases, but that the lower-paid worker and those on fixed incomes receive a fair share of the increasing national wealth. That policy is laid down in the White Paper to which my right hon. Friend referred, dealing with the criteria for prices and incomes increases. If these are applied and understood and recognised as attempts to get the country out of our economic mess, make it solvent again, we can thus create a basis upon which to build a society which will make this nation a better country for all.
§ 8.38 p.m.
§ Mr. Kenneth Baker (Acton)
I thought it would be interesting to you, Mr. Speaker, and to hon. Members to have a fresh and immediate view from the hustings of what is thought there about this issue. In the recent by-election at Acton the main issue, without a shadow 1210 of a doubt, was the cost of living. This was rather surprising because during that by-election we had many stirring, exciting and some slightly absurd events. There was the weekend gold crisis, the resignation of the Foreign Secretary, and the Deputy Leader of the Labour Party, and there was also the Budget.
All those events provided only the back-cloth. Right at the front of the stage was the issue of the cost of living and rising prices. This is not surprising because since this Government has been in power the purchasing power of the pound has fallen from 20s. in 1964 to about 17s. 6d. today. I do not need to tell hon. Members this—they have only to look at their postbags to know its truth. This is one issue on which we all constantly receive letters. I had one this morning from a constituent who wrote:I have had a light lunch, along with my fellow workmates"—this was obviously written at the place where he had it—at the Cafe in the Park, Acton"—It is known as thatI found today that tea has gone up from 4d. to 6d., and cheese rolls from 8d. to 10d. There are several other items but I have only mentioned these for they are my usual lunch.He goes on to say:After all, the Cafe in the Park, Acton, is not classy. It is an ordinary place for myself, my workmates and my children.I know that hon. Members on all sides of the House get letters like this every day, but it is no good my telling this constituent to look at the Prices and Incomes White Paper which was published last week, because he might tell me to do with that what he would have told me to do with the previous White Paper on Prices and Incomes, for he is concerned only with the fact that the price of bread has gone up, the price of cheese has gone up, the price of tea has gone up, his electricity bill has gone up, his gas bill has gone up and his fares have gone up.
During this debate many Members opposite have asked what we on this side of the House would do about it. They have said, quite legitimately, "What would the Conservatives do?" May I suggest two lines of action. First, I think it is up to the Government to put their own house in order. This Government were elected in 1964 on a 1211 series of promises made by the present Prime Minister according to which he was going to bring in firm government. At the time he made great play with how much more effective his slide rule was going to be than the box of matches of the then Prime Minister. But what have we seen of the slide rule? What we have had so far is all slide and no rule.
In col. 177 of yesterday's HANSARD is published the fact that over the past three-and-a-half years prices in the nationalised industries have increased by 20 per cent. and prices of fuel and light have increased by 21 per cent. And this does not include, as far as I can see, the quite scandalous increase which many of my constituents are going to have to pay in London Transport fares—an increase of some 14 per cent. I think it was disgraceful for the Government to give approval to the Prices and Incomes Report.
The hon. Member for Huddersfield, West (Mr. Lomas) said that it would be sensible for the Government to refer intended price increases to the Prices and Incomes Board. I go along with him. But what a shabby report that was. In effect it said to London Transport: "You are the most inefficient public undertaking we have looked at; you have not done the basic market research; you do not know who you are carrying; you do not know where you are carrying them; you have no idea whatever what is the purpose of their journey. In spite of this, you are so inefficient that we are going to approve this price increase of 14 per cent, and then you will become efficient." This is not the way to run a public undertaking and it is something of which we as Members of Parliament should be deeply ashamed.
The second thing we on this side of the House would do to try to stabilise prices is to bring more competition into British industry. I will give hon. Members opposite a direct example of how competition can bring down prices. Members are probably aware that at the time of devaluation the Observer newspaper bought what was called "the Observer shopping basket". It was bought on the Sunday before devaluation and it has been bought, I believe, every Sunday since. At the end of January the increase in the price of this shopping 1212 basket was about 7½ per cent. What was interesting was that during February and March the increase fell, and was only 2½ per cent. What was the reason? It was not the fact that there were seasonal reductions in the prices of food. It was the fact that at the end of January, beginning of February, Victor Value decided to undercut all their competitors, to stop issuing pink trading stamps and to reduce prices. This started a price war which every major grocer had to get in on, and as a result the consumer benefited. That is a direct example of what competition can do.
To refer very briefly to something that happened in this House yesterday, a direct example of what we should not be doing is passing the Restrictive Trade Practices Bill. The President of the Board of Trade stood at the Dispatch Box yesterday and defended Clause 1, which is a limitation of competition, and I think that was a deplorable thing to do.
Finally, I come to the new policy and the new Minister looking after prices and incomes. I suppose that all Members received the paper which I received in my mail today, the "Occult Gazette". I could not help feeling when I read the headlines and a bit of the copy that this was an extraordinary example of clairvoyance. It seemed to pre-report what the right hon. Lady said today. The headline was:Cosmic consciousness as the Divine Awakening of the Norm".It goes on to say:As the morning sun rose in all its radiant Glory, the world, blind to truth",as the right hon. Lady reminded us many times today,trembled as those early Rays interpenetrated the unfolding earth. For Merope"—and here is the right hon. Lady—had opened up the glory of the 'eighth' and set the Norm alight".That is what the Government are trying to do. It is as fatuous as that.
I ask the right hon. Lady and her fellow Ministers to try to distinguish between the declarations of intent about keeping prices stable, with which we all agree, and the outcome, which has always been increases in prices. There is a real distinction of words here, and I beg the Ministers on the Treasury Bench 1213 to bear that in mind. It is a distinction which I could not help recalling a few days ago when I was trying to teach my young daughter of 2½ years, who is just learning to speak, that I am a Member of Parliament. I explained it to her half a dozen times. She then said, "Daddy, you are not an M.P.—you are a man". It is very difficult to explain to someone with such slender intelligence that these two statuses are not necessarily incompatible. However, the intentions of Ministers and the effects of their acts seem to be incompatible.
Every hon. Member believes in the stability of prices, but it is no good making pious declarations about it. The Government must, first, put their house in order, and, secondly, let competition really shake up industry. Until they do these two things, there will be no successful outcome for their incomes policy.
§ 8.47 p.m.
§ Mr. George Wallace (Norwich, North)
My hon. Friend the Member for Gravesend (Mr. Murray) gave the House some startling examples of sales promotion gimmicks related to his general case on retail prices. There is no doubt that such gimmicks attract the public. Indeed, I would go further and say that they hypnotise the public.
This debate seems to have been related purely to retail prices. This is natural enough, because the housewife is affected by retail prices, and every politician says that he has the housewife in mind, remembering that his wife is normally the family's "Chancellor of the Exchequer" There is, however, another field to which greater attention should be paid and in which practical action can be taken to reduce prices. I refer to the wholesale field—bulk purchasing and bulk selling, particularly of food.
We are very much an importing nation, particularly of foodstuffs. Incidentally, we could produce more ourselves individually and collectively, and I would say in passing that it is a great pity that there is an obvious decline in the number of allotment gardens where a great deal of self-help could be carried out on behalf of the family by the family.
I am not against the primary importer. He does a magnificent job in procuring 1214 supplies and getting them to this country for distribution. But I am against the speculation which has taken place and is taking place, particularly when supplies of foodstuffs are short. I would say to the hon. Gentleman the Member for Acton (Mr. Kenneth Baker) that this is a field where competition puts up prices. I would give for example, but not in detail, shipments from overseas.
They change hands frequently before ships dock. Very frequently indeed, with meat and many other foodstuffs, documents, pieces of paper, are sold from hand to hand, each purchaser taking a small margin but not making a single practical contribution to distribution. This, particularly when goods are in short supply, puts up prices. A farthing on a pound of meat each time a document changes hands, and it may change hands seven or eight times, as I have seen myself in my previous career, has the effect of putting up prices. This, I think, is wrong.
This is a field where definite, positive action can be taken and where inquiry ought to be made as soon as possible. This is in no sense an interference with private enterprise or the private trader. This action would be against speculators, and the speculations which are so frequently carried out and which are against the public interest, the interest of the primary importer who brings in the goods, and of the wholesaler in this country who puts them to the point of distribution. I mentioned this some time ago to the Chancellor of the Exchequer; it is a point I have made before. This sort of thing is going on, and I do ask that some investigation be made in the field of the wholesale meat trade, and trade in similar goods, such as butter and provisions, where, I think, by cutting down the speculation which takes place, and which serves no useful purpose, we could make a definite, positive reduction in prices, without too much drastic action or interference with private trade.
§ 8.52 p.m.
§ Mr. David Lane (Cambridge)
I do not want to be unchivalrous, but I must say of the right hon. Lady's speech earlier today that if her elegance is so far unpunctured by her bed of nails, so also—alas!—is her complacency.
1215 I am glad to have a brief moment to express some of the feelings of my constituents about the problem of rising prices. I want to quote a few sentences from a letter I had from an old lady in my constituency last week. It ends with this pathetic appeal:Life is very hard and miserable at the moment. I know I am not the only one in this trouble as it always the ones who have tried to save that have to pay the heaviest. Can you help at all to find some way to carry on, hoping for better times?Such are the feelings of our constituents. We are all conscious of their feelings of despair and resentment, and yet in the face of all this the Government still seem to be protesting their own innocence and blaming everybody else.
Our Motion deplores the failure of the Government's economic policies. I do not want at this late stage of the debate to go into details of their failures, the failure of their priorities, the failure of confidence, the failure to control Government expenditure, the failure to arrest the growth of prices in the nationalised industries. I have had only today fresh evidence of this from the Council of Iron-foundry Associations, which are now suffering from an increase in coke prices of nearly 20 per cent. in the last three years. There are also the failure to encourage savings, the failure of resolution, and the failure to maintain the parity of sterling.
But let me touch for a moment on just two of the constructive points which I wanted to make. One is that the Government are appealing to the country for sacrifice, for restraint. May we even at this late stage ask the Government to set some example themselves? When they publish the Prices and Incomes Bill will they not seize the opportunity they have already missed twice in the last six months to announce a reduction for a period of 18 months in Ministerial salaries?
The second point I want to touch on is the importance of the public sector—the fuel industries in particular. I have the greatest respect for the Parliamentary Secretary, who I understand will reply. I know that he will not misunderstand when I regret the absence of the Minister of Power. We thought that he would be here. I am sorry, too, that the hon. Member for Derbyshire, North-East (Mr. Swain) has now left the Chamber, be- 1216 cause he would support our plea that, with a new Minister of Power and a new Leader of the House, we might at last have a chance of debating the White Paper on Fuel Policy. Nothing is more important for tackling the problem of prices at the roots than the prices of the nationalised fuel industries. As regards coal, I beg the new Minister of Power to stand firm for the policy of the White Paper and to keep up the momentum towards a lean, efficient and low-cost coal industry, which I am certain has a prosperous future if it adjusts itself quickly to the new circumstances.
Concerning electricity and gas, on the latest figures that we have the total investment programme of the nationalised fuel industries will be running at the rate of about £1,000 million a year for the next ten years or more. Surely in all this there is still room for some economy which, indirectly, will have the effect of stabilising prices.
I respect the Minister of Power. I am sorry that he is not here. He has been released from his bed of nails, and I hope that he will go to his work in a new spirit of divine discontent with the price performance of the nationalised industries under his control. I believe that in his new office he can do as much as any individual Member of the Government to tackle the price problem at the roots—that is in the nationalised fuel industries. If he does this, he may still salvage something from the present wreck of Government policies and give some new hope to the old lady in my constituency and to many others like her.
§ 8.58 p.m.
§ Mrs. Margaret Thatcher (Finchley)
A number of hon. Members have referred to the fact that this has not been one of the most fully attended debates that we have had on this subject. The reason for that is that two main Committees are sitting upstairs—one fighting rising prices in the shape of the Transport Bill and the other fighting through the Finance Bill. Many hon. Members here would like to have taken part in those proceedings and many hon. Members on the Finance Bill Committee would undoubtedly like to be here, but the system we are operating does not allow us to take part in both.
Some hon. Members have, once again, gone back to the deficit which occurred 1217 in 1964 and the then economic situation. Some have criticised the figures we have used. I will try to answer their criticisms, and all the figures which I shall use will be those produced from Government sources. If one wants to fight the Government it is not necessary to produce special figures; their own are perfectly good enough. One has only to read them.
The argument has been that there was a deficit of over £700 million in 1964. The actual revised figure was £776 million. That is made up in two parts: one of the current account deficit and the other of the capital account deficit. The current account deficit was £402 million. I want to deal with that first, because, as many hon. Members know, the significant thing is the trading or current account deficit. The capital account deficit is represented by shares and investments overseas and, in fact, is not a deficit; it is represented by assets which regularly bring in a source of income to this nation, from which this Government benefit.
I will deal with the current account deficit and its history. Let us see how it compares, and how the whole record of the Tory Government compares, with Labour over those years.
It has been necessary to invoke the help of the Library. I am taking the figures from the United Kingdom Balance of Payments Summary 1967. I have gone back to an older one for the 1951 figures, which are sometimes compiled on a different basis. Every figure I am using has its source of origin in one Government Department or another. Let us look back over the whole period to try to get the position into perspective.
In 1951 the current balance deficit we inherited was £419 million, that is to say, £17 million greater than was inherited by hon. Members opposite. We dealt with it and I will show how in a moment.
In 1952 we turned that deficit into a balance of £163 million—a very rapid changeover during a very short time. During that period we stayed in credit with a balance of £145 million in 1953, a balance of £117 million in 1954; in 1955 we went into deficit to the tune of £155 million but we were back in credit in 1956 with £208 million. We were in credit in 1957, £233 million; in credit in 1218 1958, £347 million. These are substantial credits. We were again in credit in 1959 to the tune of £149 million; there was a deficit in 1960 of £258 million, but we were back in credit again within the year, and there was in 1961 a credit of £5 million. In 1962 there was a credit of £127 million; in 1963 a credit of £116 million; in 1964 a deficit of £402 million.
That was the record and since then under Labour a deficit in 1965 of £110 million; a deficit in 1966 of £59 million and—then the biggest of all time—a deficit in 1967 of £514 million.
There are one or two conclusions to be drawn from this. When we inherited a problem we used it as an opportunity and challenge, and not as a source of grumbling. We went from a deficit of £419 million to a balance of £163 million in one year. That is an improvement of £582 million in 12 months. If this Government had done that in 1964 we could have been back in balance very quickly by about 1966. But they did not; they have repeated deficits.
Note that we never, during our time in office, had two consecutive years in deficit on current account. One of the more difficult problems now is that, under a Labour Government, there have been three consecutive years in deficit on current account.
There is a third point, taking figures once again from Government sources, that the £402 million deficit which I have referred to was a deficit on paper because, if one looks at the increased value of stocks and work in progress, one finds that that more than equals the deficit. In 1964 the value of the physical increase in stocks and work in progress was £649 million. It had increased by £421 million over the preceding year. There was the deficit—in warehouses bulging with goods and raw materials. There is many a housewife who would say in time of rising prices or danger of rising prices "Stock is better than money".
So it was only a paper deficit represented by goods in the warehouses and work in progress. When one looks at Government figures again, one finds that the value of those stocks went down in 1965 and in 1966. But, of course, if one imports a lot of stocks in one year, one does not need to import them the next year: they are used up, so the balance 1219 improves. In the following year, stocks again went down.
But there is one significant fact. Although our deficit was accounted for by bulging warehouses of raw materials and work in progress, that is not true of the greatest of all deficits which we have this year. The deficit this year on current account is £514 million and if one turns from that to the value of physical increase in stocks and work in progress, one finds that it is nothing like that. According to the Government's figures in the preliminary estimates of national income and balance of payments, the value of stocks and work in progress this year is £68 million. So the £514 million is a true deficit.
I turn now to the capital, deficit, which was represented by assets overseas, for which this Government have had very many occasions to be thankful. The capital deficit was £374 million. A short time after, the Prime Minister was boasting in New York of the nation's assets of £11,000 million, of which that capital deficit was a part. But even if one considers it from the worst angle, that that capital deficit was not represented by assets, it was more than covered, from the nation's viewpoint, by the Government dollar portfolio holdings, which came into the reserves later—cashed by this Government, never by us—in two lots, one of £316 million and the second of £160 million at the old value.
So let us look at Government figures—not mine—to see what the situation was. There were stocks in the warehouses to the tune of over £600 million. There were securities to cover any deficit, quite apart from the reserves. There were investments stacked high overseas, bringing this Government an annual income of £890 million a year. Looked at as a business—stocks full, collateral to meet any deficit, investment good and bringing in an income—this was a great opportunity for expansion, and it was a tragedy that it was not taken.
That is the kind of situation with which hon. Members were left. We could and would have dealt with it as we dealt with it in 1951 and we could have been back in balance by 1966 and expanding again—but not under this Government.
1220 We were also challenged on some of the figures about which——
§ Mr. Hilton
I realise that the hon. Lady is trying to be sincere in the case, but should it not be stated, for the record, that, in 1951, when the Conservative Government were elected, the great change was that the Korean war finished and world prices turned in favour of this country as against what we had to face?
§ Mrs. Thatcher
Whatever happened, we dealt with it and this Government did not, as the hon. Gentleman knows. Also, in dealing with it, we built up a tremendous amount of overseas assets which the last Government could not during the 1945–51 period. I do not complain about that, but, during our period, we did build up those assets and this Government benefit from them every day that they are in office.
We were also challenged about the standards of living under the two Governments. Again, I will take not figures which I have extracted from any documents but figures which my hon. Friend the Member for Louth (Sir C. Osborne) extracted from the Chief Secretary. My hon. Friend has had a knack for many years of extracting significant figures and this was one of them.
At the beginning of April my hon. Friend asked for the crucial figure in deciding the standard of living; that is, the figure of personal disposable income at constant prices—what the money left in one's pocket will buy after one has paid taxes and National Insurance contributions. It is the figure which the Chancellor of the Exchequer left out of his forecasts, probably because he dare not include it. Although the right hon. Gentleman left it out for future years, my hon. Friend was able to get the figures for past years. My hon. Friend…asked the Chancellor of the Exchequer what has been the average annual increase in prsonal disposable incomes at constant prices for the years 1952–64, inclusive"—when we were in office—and 1965–67, inclusive…The Answer given by the Chief Secretary was that during our period in office, 1952–64, the…average annual increase in personal disposable income at constant prices…was 3¾ per cent. and from 1965–67 was just over 1½ per cent."—[OFFICIAL REPORT, 2nd April, 1968; Vol. 762, c. 158.]1221 That Answer was given by the Chief Secretary and if any juggling of figures was done, he was responsible.
I come to other matters which have been raised in the debate. We have had almost two sides to the general argument. Hon. Gentlemen opposite have been saying that food prices have not risen as much as the retail prices index, while my hon. Friends have been saying that fuel prices, which are the other big component, have risen a great deal more. The significant factor is that food prices are in the hands of private enterprise—and those prices have not risen as much—while fuel prices are in the hands of the nationalised industries—and these prices have risen far more. This makes one thankful that the retail distribution trade has not been nationalised. If it had been we would all be paying far more for our food at the Co-op.
Had the right hon. Lady the Minister been speaking from this Front Bench, she would have made a great deal about the rising costs of fuel because she, like all hon. Members, would have been expressing anxiety about the effects of these rising prices on people who have less to spend, those who are ill and must stay at home and the elderly. If one must stay at home, one uses more fuel. In this position she would be urging me, if I were Minister, to have a special retail price index for the elderly, with pensions geared to it. I am sure that she is well appraised of this point. The fact is that fuel prices are continually rising more than other prices and that this is entirely due to the public sector policy.
Let us consider some of the separate industries and increases in prices that have occurred. First, coal. This increased in price in 1966 by £80 million in all. It is not possible to split up that sum, because that £80 million was designed to cover both present and future deficits of the National Coal Board.
What has happened since then? Only yesterday an increase in the price of coke was announced and we learn that it is to go up by 20s. a ton. The right hon. Lady said that this had been referred to the Prices and Incomes Board. I ask her to check that because no reference has been made to the matter having been referred. The only coke increases referred to the Board were those about 1222 gas coke, and those increases were referred and allowed. As far as I know, no price increases for coke made by the N.C.B. have been referred to the Board. [HON. MEMBERS: "Answer."] I trust that the right hon. Lady will clear this matter up. [HON. MEMBERS: "Answer."] Subject to her correction, that is the position. [Interruption.] I trust that the Parliamentary Secretary will answer this point when he replies.
§ The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley) indicated assent.
§ Mrs. Thatcher
The saving grace of the right hon. Lady's Department is that she has a marvellous Parliamentary Secretary who has done a lot of donkey work and who should have been promoted. I must occasionally say something nice about the hon. Gentleman, because he and I have argued the toss on prices and incomes Orders on many occasions. I suspect that the matter was never referred to the Prices and Incomes Board and that this is another example of a nationalised industry's prices not being subjected to the same disciplines as proposed private enterprise increases. It is especially important because not only does the increase fall on the consumer but it also falls on iron foundries, which are very big users of coke. This makes a direct increase in their prime costs. They have had to take increases in costs of coke in February, 1965, of 14s. 6d. a ton, in April, 1966, of 15s. a ton, and this one of 20s. a ton.
I am sorry that the Minister of Power is not here. [HON. MEMBERS: "Where is he?"] In his reply to a letter from the ironfounders he did not say anything about this being referred to the Prices and Incomes Board. He said:I am sorry to have to disappoint you, but the Board's case—that is the National Coal Board—for the 20s. a ton increase on 1st May is so pressing that it would not be appropriate for me to suggest that the Board should reconsider the modifications you put forward.The right hon. Lady said that she thought it had been referred; therefore, she thought that it ought to have been referred. If now she finds it has not been referred, I ask her to tell her Parliamentary Secretary to let us know later in this debate whether she will now refer it to the Prices and Incomes Board.
1223 For gas the average increase is 8.7 per cent. When I asked the former Minister of Power the prices within the average he knew all the time, because this was in the Report published that afternoon, but he would not tell a full House from the Dispatch Box. Later it transpired that within the average there was as much as 13½ per cent. for Wales and 11 per cent. for the south-eastern area. These increases have yet to take their real effect. People will not feel the full effect until next winter. These are further increases yet to come into operation.
Everyone knows about electricity price increases. My bill is up. It came with a nice little apologetic note, but that does not alter the fact that it is up by 15 per cent., 3s. in the £. This was another increase which was not referred to the Prices and Incomes Board. It is another case of the public sector not being referred to the disciplines in the same manner as the private sector is. The right hon. Lady was a member of the Cabinet which agreed that that increase should not be referred.
An increase that was referred was that of the Electricity Generating Board's prices. When the Generating Board increase was referred the Prices and Incomes Board did not allow prices to go up by as much as the Generating Board wanted. The conclusion one could draw is that, had the electricity increase been referred, the Board would not allow it to go up by as much. Perhaps once again the Government were afraid to refer to the Board.
There have been other increases in the nationalised sector which have still to take effect. There are the increases in postal charges and telephone charges, which are to come on 1st October. There is quite a batch of increases stacked up to take effect in the autumn and at the onset of winter. It is interesting to note that when the Board examined those increases it uncovered an astonishing situation. It said:The Post Office have made proposals for certain tariff increases, but, as we have explained, these are largely based on a costing system which does not provide the appropriate data.How astonishing! You put up a case for increases, but you cannot support it 1224 with properly analysed figures. This happens to Ministers in any Department, but I hope that when the Postmaster-General saw that some one blew his top and sorted the industry out. It is absolutely scandalous that people should have gone to the Board without making a proper case and without having a system so that they could make a proper case for the increase they were asking for.
Those are some of the price increases which have come from the public sector, over which the Government have direct price control. I come for a short time to increases in transport costs. These partly arise from the Transport Bill, but also very much from the Budget. The increases imposed on road users in the last Budget were absolutely terrific. Perhaps I could give one or two figures. Commercial vehicle licence duty for the four-ton lorry——
§ Mr. J. J. Mendelson (Penistone)
Before the hon. Lady leaves the last batch of price increases, I want to tell her that she is producing a purely propaganda speech—[HON. MEMBERS: "Oh."]—and she knows it. It was the last Conservative Administration which laid down that the electricity Boards must make ends meet on new investment and must charge the consumer the full price to make new investment possible. The hon. Lady is making a cheap propaganda case, and she knows it, even if other hon. Members opposite do not.
§ Mrs. Thatcher
Tell the housewife paying a 3s. in the £ increase that I am making a cheap propaganda speech.—[Interruption.]—The hon. Gentleman knows that one of the reasons why prices have gone up is that investment was too great for the demand—and the reason for that—and it is a problem with which the Minister is grappling now—is that the Electricity Council considered that it must take into account the forecasts of the National Plan. That was pure propaganda and not fact at all.
I have many figures about increased transport costs, but let me give quickly just the fuel tax increases under different Governments—[Interruption.]
§ Sir Robert Cary (Manchester, Withington)
On a point of order, Mr. Deputy Speaker. Can you give your protection 1225 to my hon. Friend against the continuous intervention of the hon. Gentleman opposite?
§ Mr. Deputy Speaker (Sir Eric Fletcher)
I must ask the hon. Member for Penistone (Mr. Mendelson) to restrain himself.
§ Mrs. Thatcher
That is very kind of you, Mr. Deputy Speaker, but I can cope with him.
The Labour Government of 1945 to 1951 increased petrol tax by 1s. 1½d. in those six years. In our 13 years in office we increased it by only 10½d. In the Labour Government's next four years it has gone up by 1s. 2d. If the tax had not gone up the price of petrol would have been down, because the basic price has fallen. It is one of those cases where when private industry manages to reduce prices the Government cancel out the reductions by slapping on a bigger tax. It is like the small cartoon in tonight's Evening News, which shows a grocer telling a lady,This is our old '2d. off' brand that Mrs. Castle as Transport Minister helped to put 4d. on.There have been price increases after price increases which have been Government-induced. This led the present Minister of Power to make one of his very good speeches when he was not Minister of Power but was what the First Secretary is now, but not quite. His speech to the Industrial Society is reported both in The Times and in the Daily Mail—perhaps I had better quote from The Times. The headline is "Standard of living 'must fall'", and he said:There is bound to be a drop in the standard, and if anybody in this country thinks he is going to have the same standard as in the past, we shall never get anywhere.That, of course, is directly reflected in our Motion. I had some sympathy with him when he came out in one of his flashes of engaging candour later on in his speech and said:It was time everybody forgot about election promises. 'I would never have another election manifesto if I had my way'.Of course he would not, because the entire Socialist election manifesto was vote for them, and everything would come to those who voted for them. In fact, the situation has been quite different.
1226 The problem of rising prices has been with us for a long time. I am the first to agree to that. We could not completely control rising prices. [Interruption.] Of course, we could not. The retail price index went up during our period of office, but the crucial figure was the one which my hon. Friend extracted from the First Secretary.
Several reports have been issued on how to deal with rising prices. There was in 1961 a report to the Council for European Economic Co-operation, which recommended several things which came into being in our time. The two last points are the ones to which I wish to direct the attention of the House, and I would advise the House to wait until I have finished the complete paragraph. The report recommended:a 'wages policy' that would give some guidance to the trade unions and collective business organisations in their wage bargaining. This recommendation is not supported by all the economists in the group, and the majority which is in favour emphasises that it does not support wage control. All in the group favour a policy for wages in the public sector of the economy.There we are, a voluntary incomes policy, which is the Conservative policy which got us back into balance when we were in difficulties.
The report also recommended:More competition, both domestic and foreign, in order to dilute the power of business to administer prices.That is the answer. The prices which hon. Members opposite have quoted as being held, or as not rising as much as others, have been prices which have been subject to competition. The prices which have risen most in the nationalised sector have been those which have never been subjected to the discipline of competition.
The nation has gone on a very big spending spree. It remembers that in the 18 months after the last devaluation in 1951, the cost of living rose by a very considerable amount, the largest increase of all, nearly 13 per cent.
We have had nearly all the Socialist formula before. We have had higher taxes before. This led to rising prices. The Socialist Government have taxed the people, raised the prices, pegged the wages and penalised the pace-makers. All that has not led to a solution. It has led to devaluation and the biggest trading deficit we have ever had.
1227 I have said that no Government have yet solved the problem of how to keep down rising prices, but hon. Members will remember that the dialogue about rising prices used to be carried out in the context of three things. The question was how to have all three, full employment, stable prices, and a free society. For a long time it was thought that a small amount of inflation was the price one had to pay for the other two. But look at the position under this Government. We have not got full employment. In fact, we have 2 per cent. unemployment practically built into the bricks. We have not got stable prices, and we have not got a free society, but another dose of compulsion, and that is why we condemn the Government tonight.
§ 9.30 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley)
There was one short passage in the speech that we have just heard from the hon. Member for Finchley (Mrs. Thatcher) which seemed so eminently reasonable that I want to absolve her from the first criticism which must be levied against every other hon. Member who has contributed to the debate from the benches opposite. That is the persistent dilemma, belief and delusion that, somehow, there can be found a painless solution to our economic difficulties. That belief characterised much of their——
§ Sir C. Osborne rose——
§ Mr. Hattersley
That sort of optimism characterised much of their economic policy during their years in office and, if they had not chosen to delude themselves and the public in that way, we should not have faced many of the problems that we do today.
§ Sir C. Osborne rose——
§ Mr. Rippon
Why does the hon. Gentleman refuse to give way to my hon. Friend the Member for Louth (Sir C. Osborne), who is a very senior Member of this House? My hon. Friend said the exact opposite of what the Parliamentary Secretary attributes to him.
§ Mr. Hattersley
I refuse to give way to the hon. Gentleman because I have been on my feet for about fifteen seconds, and I intend to deal with his contribution as well as that of the right hon. and learned Member for Hexham (Mr. Rippon) before 10 o'clock.
I believe that that sort of optimism is the optimism which has caused very many of the nation's troubles, and it is against the basic fallacy of that optimism that we must consider the criticisms made of the Government today.
The fundamental criticisms come under three heads. The first is that the prices that have increased have been, substantially, prices in the public sector. The second is that many price increases are the direct result of budgetary policy. The third is that many price increases are directly attributable to devaluation. I want to deal with those three points in turn, but, before I do that, I want to put the charge which is implicit in the Motion in something like perspective.
No one pretends that there have not been substantial price increases, but it is equally obvious, or should be, that those increases have been nothing like as great as has been implied, or suggested, or, I must say, pretended during a large part of the afternoon.
My right hon. Friend gave figures for increases in the Retail Prices Index for the period between April, 1965 and January, 1968, which is a period beginning with the effective operation of prices and incomes policy. Because the figures given were a reasonable selection ending in January of last year, some right hon. and hon. Gentlemen opposite rather disingenuously demanded that they should be extended to take account of what they believed to be increases in the Retail Prices Index in the last three months. In their own words, they demanded that the figures should be "brought up to date."
I am very happy to do that. Taking the three years from April, 1965, and the beginnings of an effective prices and incomes policy to March of this year, which is the month for which the last figures are available, the increase in the Retail Prices Index was a little more than 9 per cent. Taking the three years under the party opposite which are directly comparable, April, 1961, to March, 1964, the increase in the Retail Prices Index 1229 was a little more than 9 per cent. [HON. MEMBERS: "Oh."] In terms of literal accuracy, it must be said that the Conservative Party's record in those three years is about 0.4 per cent. better than that of the present Government. The difference between us is 1 in 1,000 per year, and it is that difference that the hon. Member for Worcestershire, South (Sir G. Nabarro) described in his florid way as "continuous and unremitting inflation"——
§ Mr. Hattersley
If 1 in 1,000 seems rampant rather than unremitting to the hon. Gentleman, I am sure that it will seem equally inappropriate to my hon. Friends.
There has been such an attempt to dress up the history of price increases during the last three years that the right hon. and learned Gentleman the Member for Hexham even brought out a chestnut which I had thought was to hoary even for him. I refer, of course to The Grocer. He told us about The Grocer and that it is a publication of the retail trade. But he managed to mention, perhaps casually, perhaps hoping that though he mentioned the figure it would not be reported tomorrow, that according to The Grocer, more than 2,000 prices had risen in the immediate past. We have to remind him and the House that while, as my hon. Friend the Member for Huddersfield, West (Mr. Lomas) said that publication does an admirable job for the trade, it is one on which no one should rely for a judgment as to whether or not prices in this country are rising.
Having heard that reference from the right hon. and learned Gentleman, I took the opportunity to consult the most recent edition of that journal, published on 27th April, which was heralded in some newspapers, and on the front page of some of them, as demonstrating that 120 commodities had gone up in price during the last week. In fact, of those 120 commodities 20 are dog foods of different brands and sizes. [An HON. MEMBER: "Have you got your licence?"] If the hon. Gentleman will concentrate very hard he will find that the next category to which I draw attention gives him scope for an equally weak joke, because 20 groups of bottled sauces are included 1230 in the total of 120. I had considered not presenting those two facts to the House because I knew they were fruit for the weakest sense of humour, but clearly I misjudged or overestimated the mood of some hon. Members this evening. Clearly, prices have not risen in the way that has been suggested this evening and at the speed which was suggested during the afternoon. [An HON. MEMBER: "Wait another six months."] The hon. Gentleman says we should wait six months. Perhaps that is advice he should have given to the Shadow Cabinet before this Motion was put down. They have asked us to consider price rises up to today, and price rises up to today are no greater than they were during three comparable years of Conservative rule in this country in the early 1960s.
I want now to turn to the three areas of major criticism which have been levelled against the Government. There is the fact that the Budget itself increased prices. Of course the Budget increased prices. My right hon. Friend the Chancellor of the Exchequer said during the Budget debate that the net result of the Budget on the economy was to be an increase of between 1 and 1½ per cent. in retail prices. [An HON. MEMBER: "£500 million."] This was not the first Budget that has increased prices by 1 per cent. It is the first one where a Chancellor of the Exchequer has made an estimate and the first one for which figures have been available and presented to the House. But without that estimate and without that prophecy I am prepared to gamble substantial sums that an analysis of the Budget of June, 1961, will show an increase in retail prices of 1 per cent. or more; and to suggest that this is a deplorable thing during the extraordinary economic circumstances in which we find ourselves is, I believe, the height of irresponsibility.
We have heard this afternoon of the Selective Employment Tax, which it was said, was bound to be a major contribution towards price increases. There are many hon. Gentlemen opposite who approach near-frenzy when S.E.T. is mentioned. Notwithstanding that, I hope that they will consider the real implications of S.E.T. and read again a statement made on the effects of the tax on the Retail Prices Index by my right hon. Friend the Chancellor during the Budget debate.
1231 On that occasion, he made the position absolutely clear. He said that the direct effect of S.E.T. on services to the consumer was below 0.1 per cent. He also said that if one assumed, as one reasonably must, that the alternative to S.E.T. was not no tax at all but an alternative tax, and if one assumed that the tax was applied according to the criteria of the Shadow Chancellor, who urged this Government to apply indirect rather than direct taxation, then the alternative in terms of Purchase Tax, which would raise an equivalent amount of money, would certainly increase the Retail Prices Index by five times as much as S.E.T.
§ Mr. James Dance (Bromsgrove)
Surely the debate is about the excessive Government expenditure at present? Will the hon. Gentleman deal with this?
§ Mr. Hattersley
I will certainly turn to Government expenditure. Are the Opposition saying that the prices of the national fuel industries should not have been increased in terms of increasing costs to the consumer but by Government subsidies? I hope that the hon. Gentleman will get up then and say on which side of the argument he stands.
For the time being, I want to concentrate on one other point to do with S.E.T. which has been the subject of much criticism. There has been criticism of two sorts. One sort has been from my hon. Friends, who offered alternatives, and said that they certainly turned their backs on the crude criticism of S.E.T. which did not offer to put anything in its place. I want to refer the House to the benefits of S.E.T. on building, and to remind it that, while in crude terms it can be said, and has been said, that S.E.T. has increased building costs by 3 per cent., it has done something else too. It has produced a condition in the industry in which it is producing more with a smaller labour force. I have no doubt at all that the added efficiencies that S.E.T. has brought in terms of labour reduction has more than compensated for the increase in price.
§ Sir C. Osborne
It is perfectly true that labour is being used more economically, but this results in increased unemployment. This is another problem that the Government have to face.
§ Mr. Hattersley
I do not disagree with a word of that, but I am sure that the hon. Gentleman agrees that it is no solution to any problem for an industry to use labour wastefully. The point that he and I are united on is that it is an obligation on this and any Government to encourage industries to use labour with the maximum amount of efficiency. That process has been accelerated in the building industry because of S.E.T.
I turn now to price increases in the public sector, which clearly had to be and were a major part of the arguments of hon. Gentlemen opposite, and particularly of the hon. Lady the Member for Finchley. She will know that after the major increase in electricity prices it was the decision of the Prime Minister that every major increase in the public sector, or potential major increase, should be referred to the Prices and Incomes Board. It is not unimportant to consider what the net effects of those increases which have been referred to the Board have been on the Retail Prices Index.
Those references made since the declaration was given by the Prime Minister, amount to an increase of over 0.4 per cent. on the Retail Prices Index. On the averages household income of £22 10s. the increase that those most recent prices produce is 1s. 9d. out of £22 10s. If one adds to those references and those increases the earlier increase because of changes in the electricity tariff, the increase in the Retail Prices Index is about 0.7 per cent. I am not suggesting for one moment that we ought to minimise the importance of these increases or pretend that they do not fall heavily on some sections of the community. It may well be, indeed almost certainly is, that on the old and the lower-income groups they fall more heavily than on the population at large. That is why my right hon. Friend and her predecessor have examined the Retail Prices Index to make some sort of assessment of how the old, the pensioners and the lower-income groups fare during particular times.
What the hon. Lady opposite must understand is that these increases were imposed by the boards and agreed by the Government after submission to the National Board for Prices and Incomes because the Government had two alternatives, alternatives which were clearly set out by the then Chancellor of the 1233 Exchequer and which I believe the House understood and the majority of the House thought had been rightly chosen.
The first alternative was to increase prices to the consumer. The second was to increase the direct subsidy from Government funds. I do not believe that any responsible Member of this House thinks for one moment that we chose the wrong alternative. More than that, I believe that every Member of this House must agree that our decision, linked with our reference to the N.B.P.I., to have an efficiency audit of the nationalised industries, looking for a way in which future increases could be postponed or avoided, was a fundamental step in the right direction. It was this Government that decided to run the efficiency audits of the nationalised industries, not hon. Gentlemen opposite, although no one would believe it listening to some of the speakers this afternoon.
§ Sir G. Nabarro
I asked the hon. Gentleman a specific question about the announcement yesterday that industrial and domestic coke prices are to go up by 20s. a ton on 1st October. He has given two alternatives, but he has neglected to observe the third alternative. Why should not the National Coal Board, with the huge investment already made in it, increase its efficiency and its production so as to avoid this sharp increase to the consumer?
§ Mr. Hattersley
Let me go on to the coke prices, since the hon. Gentleman has raised that point. I think that the question he put this afternoon was why, since the National Coal Board is an area of expanding production and productivity, that should not be reflected in some measure in prices to the consumer. In terms of a reduction in coal prices, it has been, but coke is not simply coal—it is coal which has been through a manufacturing process, and it was necessary for the Board, if it was to remain a viable producer of coke and continue to produce it for a home market stimulated by progressive Governments in their drive for smokeless fuel, to re-equip and put in capital equipment. The only way that could be brought about was by increased prices to the consumer or by an increased subsidy by the Government. I believe, and I must tell the hon. Gentleman that I am sure that this would be the view of 1234 all reasonable people who examined the proposition, that to do that through increased prices to the consumer is eminently in the national interest, as opposed to the alternative, of a renewed and extended Exchequer subsidy.
Two points ought to be understood as regards increases in public prices. First, these are prices which have not been increased for a substantial time. Of all the prices submitted to the Prices and Incomes Board as possibilities for increases, the one which had been raised most recently had been increased two years ago, and some had not been raised for seven years. If that pattern had been reproduced in the private as well as in the public sector, not even the Opposition would have been able to debate increasing prices this afternoon.
Secondly, within the terms of the recommendation of the National Board for Prices and Incomes, my right hon. Friend the Minister of Power made absolutely sure that the application of these two rates to individual householders was so geared and organised that they would not fall unduly harshly on any single consumer.
The other point to which I must draw the attention of the House regarding price increases as a result of Government intervention is the constant reference, not least by the hon. Lady herself, to increases which, quoting as her source the cartoonist of the Evening Standard—or perhaps it was the Evening News, equally reliable as regards economic judgments—she claims have flowed from the Transport Bill of my right hon. Friend. Perhaps she would like, in the name of accuracy, to remind the cartoonist and the newspaper that that Bill is not yet law, and the old lady whose drawing appears on page 14 should be reminded that whatever increases are flowing at this moment are not flowing from the Transport Bill—the same Bill which is keeping her hon. Friends from the debate tonight.
Finally, in terms of the public area, I turn to devaluation. We always acknowledged that devaluation would result in increased prices in the home market. But I want to make it absolutely clear that the hon. and gallant Member for Carshalton (Captain W. Elliot) is totally wrong when he says that a fundamental part of our strategy in the post-devaluation situation is to ensure that prices so increase at home 1235 that domestic consumers are unable to purchase goods which we would prefer to go to foreign markets. One of our obligations in the post-devaluation situation is to make sure that domestically produced goods are competitive not only abroad but at home, and that the British consumer chooses to buy cheaper things made in Great Britain rather than abroad and imported across the exchanges.
To say that the general strategy of the Government is so to increase prices at home that the domestic consumer is unable to spend is a gross over-simplification of the position. We are so determined that unnecessary price increases at home should cease, that we have decided to continue, and indeed to extend, the price vetting mechanism outlined in previous White Papers. The House will know very well that the Government have received enormous co-operation from the C.B.I. There are rules which place a responsibility on people, before they effect an increase in the price of commodities of one sort or another, to notify the proposed increase to the appropriate Department. Those commodities cover almost 45 per cent. of the Retail Prices Index.
Most consumers, producers and retailers are anxious to co-operate with the Government in the early warning system. They are so anxious and willing to co-operate that up to now it has not been necessary to take statutory powers. But we have been able, and hope to continue to be able, to operate the early warning system on the voluntary basis which characterises it at this moment.
The object of the early warning system is to make sure that when a potential price rise is notified to us the appropriate Department can investigate the reasons given for it and do its best to make sure that it does not happen. My hon. Friend the Member for Halifax (Dr. Summerskill) told the House of some most important price increases which were prevented from taking place because of the operation of the early warning system and the intervention of the Government. I give only four examples: bread, brewing, chocolate and cement. All these things are fundamentally important to the economy. The price of all of them would be greater were it not for the early 1236 warning system and the intervention of the Government.
§ Several Hon. Members rose——
§ Mr. Hattersley
It would be difficult to argue that I have been ungenerous in giving way, and in the six minutes which remain I must make two outstanding important points.
The first outstanding point is the extraordinary absence from many speeches by hon. Members opposite of any reference to the special provision which the Government have made in these times of admittedly rising prices for the lower income groups and the people in special need. It is particularly surprising in the case of the hon. Lady the Member for Finchley. She forgot to mention, no doubt, that in 1964 the retirement pension was £3 7s. 6d. for a single person or £5 9s. for a married couple and that it is now £4 10s. or £7 6s. She forgot to mention, no doubt, that the purchasing power of the pension is now 18 per cent. greater than it was then. Not only is it 18 per cent. greater than it was then, but it is 14 per cent. greater than it has ever been.
Anyone who cares to examine those two figures—18 per cent. greater than in 1964 and 14 per cent. greater than the peak in 1963—will conclude that during the last 18 months of the Conservative Government the purchasing power of the pension fell. I cannot believe that the hon. Lady forgot that, because she was serving in the Ministry at that time.
Our attitude in times of rising prices has been fundamentally different from hers and from that of her party. We have gone out of our way to protect the lower income groups. We have protected them by increased family allowances, which include a second increase in family allowances, operative as a result of a special promise made at the time of devaluation. I have no doubt at all that when we consider the two alternatives of about 9 per cent. increases in that party's three years, and our record of about 9 per cent. over three years, with our special concession and protection for the lower income groups, that we see indeed the philosophic differences which divide that party opposite from this.
Finally, I turn to housing. I turn to two aspects of housing. The first is the 1237 reference to the Prices and Incomes Board of local authority rents, and the simple fact that, as a result of that reference, and as a result of our intervention, at least 17 major housing authorities in this country, which would in the next two or three months have been charging very substantially increased rents, will now be telling their tenants that because of Government intervention the rents are not going up as much as they intended.
§ Mr. Rippon rose——
§ Mr. Hattersley
No, I cannot give way.
Finally, I say something specifically to the right hon. and learned Gentleman. At one point during his speech he asked us to consider the constant problems faced by housing revenue accounts because of the increased prices of house building. He knows very well that year after year for two decades housing authorities have come into increasing financial embarrassment for one simple reason. Not only do the new houses which they build cost more from year to year, but also the old houses, the pre-war houses which were built cheaply and subsidised, are forming a smaller and smaller percentage of the total housing stock.
§ Mr. Hattersley
The right hon. Gentleman knows the real reason why local authorities are in housing difficulties. The
§ reason why he knows this is that when in 1963, as a young and angry chairman of a major housing committee, I wanted to tell the Minister of Public Building and Works of the difficulties confronting housing committees, the right hon. and learned Gentleman came to Sheffield to tell me that my conclusions about interest rates and my conclusions about differences with Whitehall were wrong and that the basic problem was that fewer and fewer old houses were forming the subsidised part of the total housing revenue account. This is a point he omitted to mention during his critique this afternoon of housing policy, a point which, I think, demonstrates that although his performance was a bravura performance it was a bogus performance, a performance which was supposed to make his party cheer, a performance which produced so much enthusiasm in the party opposite that at the high water mark of this debate, at 7.55 this evening, there were three Members of the Opposition here to take part in the debate on this censure Motion, a Motion which I hope my hon. and right hon. Friends will dismiss with the contempt which it deserves.
That this House deplores the failure of Her Majesty's Government's economic policies which have led and will continue to lead to rising prices thereby endangering the standard of living.
§ The House divided: Ayes 242, Noes 313.1241
|Division No. 128.]||AYES||[10.0 p.m.|
|Alison, Michael (Barkston Ash)||Burden, F. A.||Elliot, Capt. Walter (Carshalton)|
|Allason, James (Hemel Hempstead)||Campbell, Gordon||Errington, Sir Eric|
|Astor, John||Carr, Rt. Hn. Robert||Ewing, Mrs. Winifred|
|Atkins, Humphrey (M't'n & M'd'n)||Cary, Sir Robert||Farr, John|
|Awdry, Daniel||Channon, H. P. G.||Fisher, Nigel|
|Baker, Kenneth (Acton)||Chichester-Clark, R.||Fletcher-Cooke, Charles|
|Balniel, Lord||Clark, Henry||Fortescue, Tim|
|Batsford, Brian||Clegg, Walter||Foster, Sir John|
|Beamish, Col. Sir Tufton||Cooke, Robert||Fraser, Rt. Hn. Hugh (St'fford & Stone)|
|Bell, Ronald||Cooper-Key, Sir Neill||Galbraith, Hon. T. G.|
|Bennett, Dr. Reginald (Gos. & Fhm)||Cordle, John||Gibson-Watt, David|
|Berry, Hn. Anthony||Corfield, F. V.||Giles, Rear-Adm. Morgan|
|Bessell, Peter||Costain, A. P.||Gilmour, Ian (Norfolk, C.)|
|Biggs-Davison, John||Craddock, Sir Beresford (Spelthorne)||Gilmour, Sir John (Fife, E.)|
|Birch, Rt. Hn. Nigel||Crosthwaite-Eyre, Sir Oliver||Glover, Sir Douglas|
|Black, Sir Cyril||Crouch, David||Glyn, Sir Richard|
|Boardman, Tom||Crowder, F. P.||Godber, Rt. Hn. J. B.|
|Body, Richard||Cunningham, Sir Knox||Goodhart, Philip|
|Boyd-Carpenter, Rt. Hn. John||Currie, G. B. H.||Goodhew, Victor|
|Boyle, Rt. Hn. Sir Edward||Dalkeith, Earl of||Cower, Raymond|
|Braine, Bernard||Dance, James||Grant, Anthony|
|Brewis, John||d'Avigdor-Goldsmid, Sir Henry||Grant-Ferris, R.|
|Brinton, Sir Tatton||Dean, Paul (Somerset, N.)||Gresham Cooke, R.|
|Bromley-Davenport, Lt.-col. Sir Walter||Deedes, Rt. Hn. W. F. (Ashford)||Grieve, Percy|
|Brown, Sir Edward (Bath)||Digby, Simon Wingfield||Griffiths, Eldon (Bury St. Edmunds)|
|Bruce-Gardyne, J.||Doughty, Charles||Grimond, Rt. Hn. J.|
|Bryan, Paul||Douglas-Home, Rt. Hn. Sir Alec||Gurden, Harold|
|Buchanan-Smith, Alick (Angus, N & M)||Drayson, G. B.||Hall, John (Wycombe)|
|Buck, Antony (Colchester)||du Cann, Rt. Hn. Edward||Hall-Davis, A. G. F.|
|Bullus, Sir Eric||Eden, Sir John||Hamilton, Lord (Fermanagh)|
|Hamilton, Michael (Salisbury)||Maginnis, John E.||Royle, Anthony|
|Harris, Frederic (Croydon, N.W.)||Marples, Rt. Hn. Ernest||Russell, Sir Ronald|
|Harrison, Brian (Maldon)||Marten, Neil||St. John-Stevas, Norman|
|Harrison, Col. Sir Harwood (Eye)||Maude, Angus||Sandys, Rt. Hn. D.|
|Harvey, Sir Arthur Vere||Maudling, Rt. Hn. Reginald||Scott, Nicholas|
|Harvie Anderson, Miss||Mawby, Ray||Scott-Hopkins, James|
|Hastings, Stephen||Maxwell-Hyslop, R. J.||Sharples, Richard|
|Hawkins, Paul||Maydon, Lt.-Cmdr. S. L. C.||Shaw, Michael (Sc'b'gh & Whitby)|
|Heald, Rt. Hn. Sir Lionel||Mills, Peter (Torrington)||Silvester, Frederick|
|Higgins, Terence L.||Mills, Stratton (Belfast, N.)||Sinclair, Sir George|
|Hiley, Joseph||Miscampbell, Norman||Smith, Dudley (W'wick & L'mington)|
|Hill, J. E. B.||Mitchell, David (Basingstoke)||Smith, John (London & W'minster)|
|Hirst, Geoffrey||Monro, Hector||Speed, Keith|
|Hogg, Rt. Hn. Quintin||Montgomery, Fergus||Stainton, Keith|
|Holland, Philip||Morgan, Geraint (Denbigh)||Steel, David (Roxburgh)|
|Hooson, Emlyn||Morrison, Charles (Devizes)||Stoddart-Scott, Col. Sir M. (Ripon)|
|Hordern, Peter||Mott-Radclyffe, Sir Charles||Tapsell, Peter|
|Hornby, Richard||Munro-Lucas-Tooth, Sir Hugh||Taylor, Sir Charles (Eastbourne)|
|Howell, David (Guildford)||Murton, Oscar||Taylor, Edward M. (G'gow, Cathcart)|
|Hunt, John||Nabarro, Sir Gerald||Taylor, Frank (Moss Side)|
|Hutchison, Michael Clark||Neave, Airey||Teeling, Sir William|
|Iremonger, T. L.||Nicholls, Sir Harmar||Temple, John M.|
|Irvine, Bryant Godman (Rye)||Noble, Rt. Hn. Michael||Thatcher, Mrs. Margaret|
|Jenkin, Patrick (Woodford)||Nott, John||Tilney, John|
|Jennings, J. C. (Burton)||Onslow, Cranley||Turton, Rt. Hn. R. H.|
|Johnson Smith, G. (E. Grinstead)||Orr, Capt. L. P. S.||van Straubenzee, W. R.|
|Johnston, Russell (Inverness)||Orr-Ewing, Sir Ian||Vaughan-Morgan, Rt. Hn. Sir John|
|Jones, Arthur (Northants, S.)||Osborn, John (Hallam)||Vickers, Dame Joan|
|Jopling, Michael||Osborne, Sir Cyril (Louth)||Wainwright, Richard (Colne Valley)|
|Kaberry, Sir Donald||Page, Graham (Crosby)||Walker, Peter (Worcester)|
|Kerby, Capt. Henry||Page, John (Harrow, W.)||Walker-Smith, Rt. Hn. Sir Derek|
|Kershaw, Anthony||Pearson, Sir Frank (Clitheroe)||Wall, Patrick|
|King, Evelyn (Dorset, S.)||Peel, John||Walters, Dennis|
|Kitson, Timothy||Percival, Ian||Ward, Dame Irene|
|Knight, Mrs. Jill||Peyton, John||Weatherill, Bernard|
|Lambton, Viscount||Pike, Miss Mervyn||Webster, David|
|Lancaster, Col. C. G.||Pink, R. Bonner||Wells, John (Maidstone)|
|Lane, David||Pounder, Rafton||Whitelaw, Rt. Hn. William|
|Langford-Holt, Sir John||Powell, Rt. Hn. J. Enoch||Williams, Donald (Dudley)|
|Legge-Bourke, Sir Harry||Price, David (Eastleigh)||Wills, Sir Gerald (Bridgwater)|
|Lewis, Kenneth (Rutland)||Pym, Francis||Wilson, Geoffrey (Truro)|
|Lloyd, Ian (P'tsm'th, Langstone)||Quennell, Miss J. M.||Winstanley, Dr. M. P.|
|Longden, Gilbert||Ramsden, Rt. Hn. James||Wolrige-Gordon, Patrick|
|Loveys, W. H.||Rawlinson, Rt. Hn. Sir Peter||Wood, Rt. Hn. Richard|
|Lubbock, Eric||Rees-Davies, W. R.||Woodnutt, Mark|
|McAdden, Sir Stephen||Renton, Rt. Hn. Sir David||Worsley, Marcus|
|MacArthur, Ian||Rhys Williams, Sir Brandon||Wright, Esmond|
|Mackenzie, Alasdair (Ross & Crom'ty)||Ridley, Hn. Nicholas||Wylie, N. R.|
|Maclean, Sir Fitzroy||Ridsdale, Julian|
|Macleod, Rt. Hn. Iain||Rippon, Rt. Hn. Geoffrey||TELLERS FOR THE AYES:|
|McMaster, Stanley||Rodgers, Sir John (Sevenoaks)||Mr. Jasper More and|
|Maddan, Martin||Rossi, Hugh (Hornsey)||Mr. Reginald Eyre.|
|Abse, Leo||Bradley, Tom||Darling, Rt. Hn. George|
|Albu, Austen||Bray, Dr. Jeremy||Davidson, Arthur (Accrington)|
|Allaun, Frank (Salford, E.)||Brooks, Edwin||Davies, Dr. Ernest (Stretford)|
|Alldritt, Walter||Broughton, Dr. A. D. D.||Davies, G. Elfed (Rhondda, E.)|
|Allen, Scholefield||Brown, Rt. Hn. George (Belper)||Davies, Ednyfed Hudson (Conway)|
|Archer, Peter||Brown, Hugh D. (G'gow, Provan)||Davies, Harold (Leek)|
|Armstrong, Ernest||Brown, Bob (N'c'tle-upon-Tyne, W.)||Davies, Ifor (Gower)|
|Atkins, Ronald (Preston, N.)||Buchan, Norman||de Freitas, Rt. Hn. Sir Geoffrey|
|Atkinson, Norman (Tottenham)||Buchanan, Richard (G'gow, Sp'burn)||Delargy, Hugh|
|Bacon, Rt. Hn. Alice||Butler, Herbert (Hackney, C.)||Dell, Edmund|
|Bagier, Gordon A. T.||Butler, Mrs. Joyce (Wood Green)||Dempsey, James|
|Barnes, Michael||Callaghan, Rt. Hn. James||Dewar, Donald|
|Barnett, Joel||Cant, R. B.||Diamond, Rt. Hn. John|
|Baxter, William||Carmichael, Neil||Dickens, James|
|Beaney, Alan||Carter-Jones, Lewis||Dobson, Ray|
|Bellenger, Rt. Hn. F. J.||Castle, Rt. Hn. Barbara||Doig, Peter|
|Bence, Cyril||Chapman, Donald||Driberg, Tom|
|Benn, Rt. Hn. Anthony Wedgwood||Coe, Denis||Dunn, James A.|
|Bennett, James (C'gow, Bridgeton)||Coleman, Donald||Dunnett, Jack|
|Bidwell, Sydney||Concannon, J. D.||Dunwoody, Mrs. Gwyneth (Exeter)|
|Binns, John||Conlan, Bernard||Dunwoody, Dr. John (F'th & C'b'e)|
|Bishop, E. S.||Corbert, Mrs. Freda||Eadie, Alex|
|Blackburn, F.||Craddock, George (Bradford, S.)||Edwards, William (Merioneth)|
|Blenkinsop, Arthur||Crawshaw, Richard||Ellis, John|
|Boardman, H. (Leigh)||Cronin, John||English, Michael|
|Booth, Albert||Crosland, Rt. Hn. Anthony||Ennals, David|
|Bottomley, Rt. Hn. Arthur||Crossman, Rt. Hn. Richard||Ensor, David|
|Boyden, James||Cullen, Mrs. Alice||Evans, Albert (Islington, S.W.)|
|Braddock, Mrs. E. M.||Dalyell, Tam||Evans, Ioan L. (Birm'h'm, Yardley)|
|Faulds, Andrew||Lever, Harold (Cheetham)||Probert, Arthur|
|Fernyhough, E.||Lever, L. M. (Ardwick)||Pursey, Cmdr. Harry|
|Finch, Harold||Lewis, Arthur (W. Ham, N.)||Randall, Harry|
|Fitch, Alan (Wigan)||Lewis, Ron (Carlisle)||Rankin, John|
|Fletcher, Raymond (Ilkeston)||Lomas, Kenneth||Rees, Merlyn|
|Fletcher, Ted (Darlington)||Loughlin, Charles||Reynolds, G. W.|
|Foley, Maurice||Lyon, Alexander W. (York)||Rhodes, Geoffrey|
|Foot, Rt. Hn. Sir Dingle (Ipswich)||Lyons, Edward (Bradford, E.)||Roberts, Albert (Normanton)|
|Foot, Michael (Ebbw Vale)||Mabon, Dr. J. Dickson||Roberts, Goronwy (Caernarvon)|
|Ford, Ben||McCann, John||Roberts, Gwilym (Bedfordshire, S.)|
|Forrester, John||MacColl, James||Robertson, John (Paisley)|
|Fowler, Gerry||MacDermot, Niall||Robinson, Rt. Hn. Kenneth (St. P'c'as)|
|Fraser, John (Norwood)||Macdonald, A. H.||Robinson, W. O. J. (Walth'stow, E.)|
|Freeson, Reginald||McGuire, Michael||Rodgers, William (Stockton)|
|Galpern, Sir Myer||Mackenzie, Gregor (Rutherglen)||Roebuck, Roy|
|Gardner, Tony||Mackie, John||Rogers, George (Kensington, N.)|
|Garrett, W. E.||Mackintosh, John P.||Rose, Paul|
|Ginsburg, David||Maclennan, Robert||Ross, Rt. Hn. William|
|Gordon Walker, Rt. Hn. P. C.||MacMillan, Malcolm (Western Isles)||Rowlands, E. (Cardiff, N.)|
|Gray, Dr. Hugh (Yarmouth)||McMillan, Tom (Glasgow, C.)||Ryan, John|
|Greenwood, Fit. Hn. Anthony||McNamara, J. Kevin||Shaw, Arnold (Ilford, S.)|
|Gregory, Arnold||MacPherson, Malcolm||Sheldon, Robert|
|Grey, Charles (Durham)||Mahon, Peter (Preston, S.)||Shinwell, Rt. Hn. E.|
|Griffiths, David (Rother Valley)||Mahon, Simon (Bootle)||Short, Rt. Hn. Edward (N'c'tle-u-Tyne)|
|Griffiths, Rt. Hn. James (LlanellY)||Mallalieu, E. L. (Brigg)||Short, Mrs. Renée (W'hampton, N. E.)|
|Griffiths, Will (Exchange)||Mallalieu, J. P. W. (Huddersfield, E.)||Silkin, Rt. Hn. John (Deptford)|
|Gunter, Rt. Hn. R. J.||Manuel, Archie||Silkin, Hn. S. C. (Dulwich)|
|Hamilton, James (Bothwell)||Mapp, Charles||Silverman, Julius (Aston)|
|Hamling, William||Marks, Kenneth||Skeffington, Arthur|
|Hannan, William||Marquand, David||Slater, Joseph|
|Harper, Joseph||Marsh, Rt. Hn. Richard||Small, William|
|Harrison, Walter (Wakefield)||Mason, Rt. Hn. Roy||Snow, Julian|
|Haseldine, Norman||Maxwell, Robert||Spriggs, Leslie|
|Hattersley, Roy||Mayhew, Christopher||Steele, Thomas (Dunbartonshire, W.)|
|Hazell, Bert||Mellish, Rt. Hn. Robert||Stonehouse, John|
|Healey, Rt. Hn. Denis||Mendelson, J. J.||Strauss, Rt. Hn. G. R.|
|Henig, Stanley||Mikardo, Ian||Summerskill, Hn. Dr. Shirley|
|Herbison, Rt. Hn. Margaret||Millan, Bruce||Swain, Thomas|
|Hilton, W. S.||Miller, Dr. M. S.||Swingler, Stephen|
|Hooley, Frank||Molloy, William||Symonds, J. B.|
|Horner, John||Moonman, Eric||Taverne, Dick|
|Houghton, Rt. Hn. Douglas||Morgan, Elystan (Cardiganshire)||Thomas, George (Cardiff, W.)|
|Howarth, Harry (Wellingborough)||Morris, Alfred (Wythenshawe)||Thomson, Rt. Hn. George|
|Howarth, Robert (Bolton, E.)||Morris, Charles R. (Openshaw)||Thornton, Ernest|
|Howie, W.||Morris, John (Aberavon)||Tinn, James|
|Hoy, James||Moyle, Roland||Tomney, Frank|
|Hughes, Rt. Hn. Cledwyn (Anglesey)||Murray, Albert||Varley, Eric G.|
|Hughes, Emrys (Ayrshire, S.)||Neal, Harold||Wainwright, Edwin (Dearne Valley)|
|Hughes, Hector (Aberdeen, N.)||Newens, Stan||Walden, Brian (All Saints)|
|Hughes, Roy (Newport)||Norwood, Christopher||Walker, Harold (Doncaster)|
|Hunter, Adam||Oakes, Gordon||Wallace, George|
|Hynd, John||Ogden, Eric||Watkins, David (Consett)|
|Irvine, Sir Arthur||O'Malley, Brian||Watkins, Tudor (Brecon & Radnor)|
|Jackson, Colin (B'h'se & Spenb'gh)||Oram, Albert E.||Weitzman, David|
|Jackson, Peter M. (High Peak)||Orbach, Maurice||Wellbeloved, James|
|Janner, Sir Barnett||Orme, Stanley||Whitaker, Ben|
|Jay, Rt. Hn. Douglas||Oswald, Thomas||Whitlock, William|
|Jeger, George (Goole)||Owen, Dr. David (Plymouth, S'tn)||Wilkins, W. A.|
|Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Owen Will (Morpeth)||Willey, Rt. Hn. Frederick|
|Jenkins, Hugh (Putney)||Page, Derek (King's Lynn)||Williams, Alan (Swansea, W.)|
|Jenkins, Rt. Hn. Roy (Stechford)||Paget, R. T.||Williams, Alan Lee (Hornchurch)|
|Johnson, Carol (Lewisham, S.)||Palmer, Arthur||Williams, Clifford (Abertillery)|
|Johnson, James (K'ston-on-Hull, W.)||Pannell, Rt. Hn. Charles||Williams, Mrs. Shirley (Hitchin)|
|Jones, Dan (Burnley)||Park, Trevor||Williams, W. T. (Warrington)|
|Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)||Parker, John (Dagenham)||Willis, Rt. Hn. George|
|Jones, J. Idwal (Wrexham)||Parkin, Ben (Paddington, N.)||Wilson, Rt. Hn. Harold (Huyton)|
|Jones, T. Alec (Rhondda, West)||Parkyn, Brian (Bedford)||Wilson, William (Coventry, S.)|
|Kelley, Richard||Pavitt Laurence||Winnick, David|
|Kenyon, Clifford||Pearson, Arthur (Pontypridd)||Woodburn, Rt. Hn. A.|
|Kerr, Mrs. Anne (R'ter & Chatham)||Peart, Rt. Hn. Fred||Woof, Robert|
|Kerr, Dr. David (W'worth Central)||Pentland, Norman||Wyatt, Woodrow|
|Kerr, Russell (Feltham)||Perry, Ernest G. (Battersea, S.)||Yates, Victor|
|Lawson, George||Perry, George H. (Nottingham, S.)|
|Leadbitter, Ted||Prentice, Rt. Hn. R. E.||TELLERS FOR THE NOES:|
|Ledger, Ron||Price, Christopher (Perry Barr)||Mr. Harry Gourley and|
|Lee, Rt. Hn. Frederick (Newton)||Price, Thomas (Westhoughton)||Mr. Neil McBride.|
|Lee, John (Reading)||Price, William (Rugby)|