§ Order for Second Reading read.
§ 3.44 p.m.
§ The First Secretary of State and Secretary of State for Employment and Productivity (Mrs. Barbara Castle)
I beg to move, That the Bill be now read a Second time.
The Bill sets up a new body—the Commission for Industry and Manpower—which will take over and develop the work of the Prices and Incomes Board and the Monopolies Commission. In doing so, it will strengthen the powers of public scrutiny not only over monopolies, but over the increasing concentration of market power in the hands of fewer and fewer firms. It will continue the vigilance of the Monopolies Commission in the field of mergers, while giving the Commission the opportunity, where the Government think it appropriate, to have a look retrospectively at how a merger has worked out in practice so that we can see whether the benefits anticipated have in fact been achieved.
It provides for the disclosure, where desirable in the public interest, of fuller information about a company's accounts, as recommended by the Monopolies Commission. It continues the invaluable work of the Prices and Incomes Board in scrutinising archaic pay structures, inflationary pay settlements, and all forms of the inefficient use of labour, while abandoning the statutory control of incomes to which the Opposition objected so vociferously.
In all this, the new body will be the ally of industry in protecting industrial users against discriminatory practices. It will be the stimulant of efficiency in both the public and private sectors, and the watchdog of the consumer against unjustified price increases. It will also rationalise the work of two bodies whose field of inquiry has tended increasingly to overlap—a rationalisation which has been recognised in objective quarters as an overdue, commonsense piece of streamlining.
It would, therefore, appear that the purposes of the new body, are common 556 to all of us, and yet we have been warned that the Bill will be one of the most fiercely contested in the lifetime of this Parliament; that the Opposition will denounce it as a blow against industry, with the same fury as they once denounced the Industrial Expansion Act. I think that it is worth spending a little time examining why this should be so.
The House has always been united, in words at any rate, in the view that society needs protection against the abuse of market power through monopoly practices. It was a Labour Government who introduced the first Monopolies Act in 1948, and since then the legislation has gone through various modifications. But, in fact, from the very beginning, there has been a marked difference of approach between the two sides of the House. Hon. Gentlemen opposite have always been, in theory, the party of "competition"—and the right hon. Member for Leeds, North-East (Sir K. Joseph) has been making great play with this theme recently in a series of "keynote" speeches to which we have been treated in the last few weeks.
But, in fact, their attitude to concentrations of market power has always been "half-hearted and schizophrenic", to turn the right hon. Gentleman's own words of a year ago against him, because their instinct has always been to do too little too late.
Of course, the Opposition are always telling us that they struck great blows for competition when they set up the Restrictive Practices Court and took measures which effectively ended resale price maintenance, and these measures certainly were of real value to consumers, but, as these abuses were eliminated, firms sought other ways of reducing the impact of competitive forces and of consolidating their market power.
As the right hon. Member for Leeds, North-East has himself admitted, competition is not the natural state of industry—it is not a miracle ingredient running through private enterprise, making all its transactions dazzlingly white. On the contrary, when one line of defence against competition is removed from industry, it promptly develops another.
In saying that, I am not indulging in a piece of Socialist prejudice. The right hon. Member for Leeds, North-East himself admitted it to the Financial Times 557 the other day, in an interview outlining Conservative policy towards industry and how life would be tougher under the Tories.
Having begun by making the routine obeisance to the achievements of the Restrictive Trade Practices Act and the abolition of resale price maintenance, he went on:Now some industries have retreated to more subtle operations, much harder to get at. Price leadership; very difficult to get at.Of course, he is right, and industry has adopted other devices, too, such as collusive tendering. When restrictive agreements had to be registered, we saw the emergnce of information agreements in their place—a development which we took power to control in our Restrictive Trades Practices Act, 1968. With the ending of resale price maintenance, a new practice has grown up among manufacturers of recommending resale prices, a practice which we are taking power to deal with in Clause 13 of the Bill, again as advocated by the Monopolies Commission. Again, the ending of restrictive agreements has undoubtedly stimulated the growth of mergers.
The price of competition is eternal vigilance by the Government. I could not put it better than the right hon. Gentleman the Member for Leeds, North-East himself did in a recent speech:Left to themselves, most businessmen would share the market and keep newcomers out. To maintain competition calls for determined, tireless Government action".Yet Her Majesty's Opposition intend to oppose the Bill on the grounds that it embodies too much Government action. Very odd! Apparently, their enthusiasm for competition is limited to speechmaking; their will to act has been exhausted by those two measures we hear so much about. They have shot their bolt.
The truth is, of course, that the Opposition have never had any great enthusiasm for the work of the Monopolies Commission. When they set up the Restrictive Practices Court in 1956, they cut the membership of the Commission down to a mere 10—all of whom except the chairman were part-time, with the result that its inquiries took years. On average, it took 4½ years to produce a report. The flow of references was reduced to 558 a mere trickle, and it was not until the General Election of 1964 was imminent that they talked of reviving its work again.
Once again, it was left to a Labour Government to act, to enlarge the Commission, increase the number of references sixfold and halve the average time taken to report. But here again, the approach of the Opposition was a half-hearted one. They did not like our proposal to subject to the scrutiny of the Commission not only mergers leading to the creation of a technical monopoly—that is, control of one-third or more of the supply of any product or service—but also mergers involving firms of a certain size—that is, where assets of over £5 million were being transferred.
The Opposition liked it even less when we took power to hold up a merger pending an investigation by the Monopolies Commission; that sounded too much like effective action to them. And now, over this Bill, they are being equally equivocal. Apparently, they want to put yet another body between industry and Parliament. They want to set up a registrar of monopolies who would investigate the need for an investigation before a matter was referred to the Commission.
§ Sir Harmar Nicholls (Peterborough)
On a point of order. Mr. Speaker. Is not the purpose of a Second Reading to have the Bill explained? I have been sitting here hoping that this important Bill will be explained by the right hon. Lady, but so far I have not heard her give one word of explanation. Are we not entitled to an explanation of the Bill?
§ Mrs. Castle
I am not surprised that my description of the purposes and content of the Bill exasperates the hon. Member for Peterborough (Sir Harmar Nicholls).
As I was saying, apparently the Opposition want to set up a registrar of monopolies who would investigate the need for an investigation. The reasons for this suggestion are as obscure as other aspects of the Opposition's policy, but no doubt we shall get some clarification 559 when the right hon. Member for Mitcham (Mr. R. Carr) speaks. I hope that the right hon. Gentleman will make clear what the purpose of this move would be. He may argue that he wants to decide whether a reference to the Commission should be made out of what he would call the arbitrary hands of Ministers.
Does this mean that references would be automatically the ones which the registrar had found provided prima facie cases? Or would the final decision rest with the Government? If the latter, have we got rid of arbitrariness? Our attitude to the proposal would be very much conditioned by what effect it was intended to have. Is it the right hon. Gentleman's idea to strengthen the operation of a competition policy? In that case, his obvious course is to support the Bill today and move an Amendment in Committee.
If, however, the Opposition are determined to vote against the Second Reading, we can only deduce that the proposal is a device for duplication and delay which would make reference more difficult. I suspect that it is all part of the current confusion of their ideas, the pathetic parade of indecision over industrial policy that we have had from them and from no one more than the right hon. Member for Leeds, North-East, their chosen mouthpiece on this subject. Despite his bold and dashing words to the young Conservatives——
§ Mr. R. B. Cant (Stoke-on-Trent, Central)
Is it not the case that the architect of "creative capitalism", or "civilised capitalism", is really not seeking to found a new Tory philosophy in this matter, but is trying, as the Sunday Times said, to detach himself from the right hon. Gentleman the Leader of the Opposition and from the right hon. Member for Enfield, West (Mr. Iain Macleod) so as to leave the way open for his leadership of the Conservative Party?
§ Mrs. Castle
I cannot help my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) over that intervention because I am totally at a loss to understand what the right hon. Gentleman's policy is.
As I was saying, the right hon. Member became remarkably evasive with the Financial Times a few days ago when 560 asked to commit himself as to what the Conservatives would actually do to stimulate competition. Would they keep the I.R.C. in existence with reduced powers? He replied:Well, this battle is still going on and we've not quite finally decided.Would they increase the investment incentives for industry? His reply was:We haven't finally decided.Richest of all was his answer to the question whether they would intensify competition on American lines: He said:This is what we have got to decide before one or other of us makes the speech on mergers.I do not know which right hon. Gentleman opposite is to make the speech on mergers today, but we await it with interest. While they are thinking out their policy, perhaps I can explain the Government's approach as outlined in the Bill.
The structure of industry has been changing rapidly and fundamentally recently, and rightly so. I think we are all agreed that there had to be rationalisation, regrouping, concentration into larger units, if this country was to hold its own with development in other countries.
This process, which the Government have deliberately stimulated, has gone ahead dramatically in the last few years. But I should have thought that we would all also recognise that it could carry its own dangers with it. It would be folly to worship size for its own sake. Of course, we want economies of scale and we also want to be sure that larger units really do produce those economies.
The Government, therefore, have pursued two complementary strategies. On the one hand, with the help of the I.R.C., they have stimulated the most far reaching restructuring of industry since the Industrial Revolution. On the other, they have recognised that the concentration of industry into a smaller number of hands has created situation of market power which can lead to less efficiency, not more, and which call for public scrutiny. We believe, therefore, that we need a body which will carry on the excellent supervisory work of the Monopolies Commission. I am sure that we all want to pay a warm tribute to the way in which the Commission has carried out its work.
561 But we also believe that the scope of the inquiries of the Monopolies Commission is inadequate for the new industrial situation of today. As my right hon. Friend the Member for Grimsby (Mr. Crosland) pointed out when he was President of the Board of Trade, the Commission has never been solely concerned with investigating particular abuses of market power. It has also had a constructive job to do, seeing whether a firm enjoying monopoly power is making the most efficient use of its resources—and in this the work of the Commission has tended increasingly to merge with that of the Prices and Incomes Board which has approached the same problem from a different angle.
As my right hon. Friend put it, size is not a universal guarantee of efficiency, and there are plenty of "sleeping giants" in industry. We need, therefore, to ensure that the concentration of industry we have promoted—and shall continue to promote where necessary—really does produce the return in greater efficiency which is the whole justification of the exercise.
It is this which has led us to extend the concept of market power in the Bill to include, not only situations of technical monopoly or situations where a firm controls one-third of the market in particular products, or situations where a group of firms act together to restrict competition, but the behaviour of large firms. This wider concept is set out in Clauses 2 to 4.
§ Sir Harmar Nicholls
How does the right hon. Lady expect to judge efficiency? Will it be judged on profits, or how?
§ Mrs. Castle
The hon. Gentleman's intervention is a little early. I am coming to that point.
Size in itself conveys power in a modern industrial society. Large firms have often substantial independence of action in fixing prices, determining wage increases, setting the pattern of production and investment. They have large financial resources and can cross-subsidise to support weak sectors of their business. Twenty-five per cent. of the market in a broad range of related products will afford far greater market power than a third of the market in a single line. Vertical integration confers 562 market power quite as much as monopolies in particular products. The provisions in the present monopolies legislation simply do not cover all the cases where market power can be exercised contrary to the public interest.
That is why, in Clause 2, we have extended the possibility of reference to all firms with net assets of £10 million or more. But, of course, this does not mean that all such firms will be referred. The C.B.I. has tried to give the impression that there will be an immense extension of the power of the Government to interfere in the commercial affairs of industry. A picture has been drawn of the managing director of every large firm in the country entering his office with trepidation each morning to see if a fatal letter has arrived from my Department referring him to the C.I.M.
Clearly, this is all nonsense. References will be made only where there is some cause for concern that the use of its market power by a firm may be in conflict with the public interest. Indeed, one intention of this Clause is to avoid the need for probing the conduct of every firm, large or small, as was usually the case when a price rise was referred to the P.I.B. In future, we will be able to concentrate scrutiny on those firms which may be exercising their market power to the detriment of the public interest.
It may be helpful to the House if I set out broadly what will guide us in deciding whether to make references under Clauses 2 and 3. In most cases a reference will spring from concern about some specific aspect of a firm's behaviour or performance. For example, we may be concerned at the level of prices being charged—prices may have increased faster than those in industry generally, or they may not have been reduced when they might have been expected to decline as a result of technological developments.
There may be concern at the level of profits where these are substantially above the general level for industry. There may be evidence of discriminatory practice or discount structures. There may be companies pursuing a policy of growth by acquisition not accompanied by a clear improvement in performance. We believe that we should be concerned not only with the traditional abuses of 563 monopoly—exploitation and harmful discrimination—but also with the damage to the public interest which tends to flow from the lack of challenge in non-competitive situations—the "sleeping giant" problem.
In addition, there will be cases where firms possess a complete monopoly in an important product or an extremely high share of the United Kingdom market. Obviously, the possibility of harm to the public interest in these cases of dominant market power is so much greater than where the market is shared between several firms that the consequences for the public interest of such high degrees of monopoly power ought to be impartially examined by an independent tribunal.
The power to make references will apply equally to publicly-owned undertakings as to private firms. As the P.I.B. has shown, there is a strong case for having a body which can examine some aspects of the conduct of nationalised industries. Of course, the boards of these industries are given objectives which should not involve a basic clash between interests pursued by the boards and the public interest. But price increases and pay settlements in these sectors of the economy may require examination, and other matters may arise which should be referred.
In addition, the Bill provides for the C.I.M. to carry out efficency studies of the nationalised industries where Ministers think that this will be helpful. The P.I.B. has begun to develop this work and the C.I.M. will continue it. But, as sub-section (2) of Clause 2 makes clear, such general studies of efficiency will be confined to the public sector where Ministers have a specific responsibility. It will not be possible to make general efficiency references of private firms. Of course, this does not mean that efficiency in the private sector will not be the concern of the Commission. Like the P.I.B., the Commission will always be seeking to make a positive contribution to increasing efficiency, not just looking for conduct to criticise.
Clauses 5 to 9 of the Bill reproduce the provisions of the present legislation with regard to the examination of mergers. These Clauses are taken over 564 almost without change from the 1965 Act, except that in Clause 7 we have added one new provision; the right to refer the results of past mergers to the Commission, whether it originally approved the merger or not, after an interval of two years.
This is something for which a number of people have pressed; and it seems eminently sensible that we should take stock from time to time of the results of these great mergers, to find out what has really happened and to make sure that the expected benefits really have flowed from them.
Among the references which may be made to the C.I.M. are questions relating to salaries, wages or other forms of income. In other words, the Commission will continue the probing, proselytising work of the P.I.B. which has had a remarkable success in elevating the efficient use of manpower to a new level of importance in the minds of management and of trade unions alike.
No doubt we shall hear a great deal during the debate of the allegation that the Bill does nothing to deal with the "monopoly power" of the trade unions, whatever that may mean. Hon. Gentlemen opposite are becoming obsessed with the trade unions: union-baiting has become their last "white hope", though the more they talk about the need to do something about the unions the clearer it becomes how out of touch they are with the real world of collective bargaining.
For there is one simple fact that they refuse to face, and that is that management gets the unions it deserves. The prime responsibility for industrial relations rests with management. And so does the prime responsibility for negotiating pay settlements.
During the last few years the Government have done more than any previous Administration to hammer home to management and trade unions alike the need to link wage increases to productivity and to get rid of obsolete restrictive practices, if we are ever to curb inflation.
It was this Government, not the party opposite, who set up the P.I.B. to overhaul inflationary pay structures and set up the C.I.R. to reform out-of-date negotiating procedures, believing that we shall never realise our full economic potential 565 unless we revolutionise the use of manpower to match the technological revolution being promoted by Ministry of Technology and the I.R.C.
Precious little help we have had in all this from hon. Gentlemen opposite. They have done everything in their power to "crib, cabin and confine" the work of the P.I.B. Only the other day, on T.V., in a debate on these proposals with my right hon. Friend the Minister of State, the right hon. Member for Mitcham was indulging in one of his all-too-familiar schoolboy sneers. "We've had C.I.R.s, I.R.C.s and P.I.B.s," he said, "all three-letter word commissions and the only three letters that I think matches them all is N.B.G.'". Good for a giggle, but no good at all as a constructive contribution to one of the most important issues facing the country.
The right hon. Gentleman went on to say that the C.I.M. should be able to investigate restrictive practices by trade unions. What does he think the P.I.B. has been doing all these years? What does he think has been the purpose of the 150 investigations it has carried out but to highlight the inescapable relationship between high prices and the inefficient use of labour, of which the failure to link pay increases to productivity is such an important symbol?
These investigations will continue under the new Commission. Under Clause 26, it will be possible to ask the Commission to report on productivity questions in any industry or firm, in exactly the same way as the P.I.B. has done. It will be able to look at wage structures, the way manpower is employed and deployed and at any barrier to optimum efficiency. Industrial relations practices are, of course, a matter for the C.I.R. So it is absurd to suggest that the references under the Bill will be one-sided.
As for powers, is the right hon. Gentleman complaining that we are dropping the statutory control of incomes which he has attacked so often in the House? Or does he want us to drop the right to regulate prices where the Commission has found that a firm is abusing its market power, a right which is an integral part of the present legislation against monopolies?
The fact is that it is impossible to separate prices and incomes policy from competition policy—just as the P.I.B. 566 found it impossible to discuss price increases or pay settlements intelligently except in the context of the general efficiency of a company. That is one of the major reasons for merging the P.I.B. with the Monopolies Commission in this new body.
When hon. Gentlemen opposite complain about the market power of trade unions, they are really complaining about the market power of the firms which negotiate with them. When a firm or group of firms command a dominant position in the market, they have little incentive to be tough in negotiations, to insist on a soundly-based productivity bargain instead of the old-type inflationary pay settlement, because they know that they can always pass on their increased costs in higher prices.
§ Mr. Tom Boardman (Leicester, South-West)
How can the right hon. Lady reconcile what she has been saying about the responsibilities of management with her statement that power has now passed to the factory floor, a boast which she proudly makes?
§ Mrs. Castle
I agree with my hon. Friend. It is time that some hon. Gentlemen opposite grew up. It is obvious that the hon. Gentleman has not read the remarks that I made, particularly in view of what he said about my having boasted about it. It is nothing to do with me that power has passed to the shop floor. I was doing a piece of objective reporting. I have been saying this afternoon that it is management's responsibility to face the facts and follow these new developments down the line and really start on the job of communicating intelligently within industry and facing up to its responsibilities.
It should be obvious that some of the greatest beneficiaries of dominant market power are the trade union negotiators involved. That is why it is essential to retain a power over prices. Firms which abuse their market strength in this way should not be allowed to pass on to the consumer the higher costs that flow from their own inefficiency.
Despite all the brickbats that have been hurled at the P.I.B.—not least from the benches opposite—we are now getting belated recognition from all sides of the 567 great contribution it has made to educating us all in some of the basic economic facts of life. We believe that this vital education work must be continued by the new Commission. It is an uphill road, but we shall not abandon it.
§ Mrs. Castle
If I give way too much my speech will be greatly lengthened.
One of the criticisms which has been made of prices and incomes policy is that the scope of the P.I.B. has not been comprehensive enough. Too many people in the public service have had their pay dealt with by other bodies, so that the advice received by the Government in fixing their remuneration has not always reflected the same principles.
In July last year the then Paymaster told the House that we were considering ways of giving the P.I.B. a more central rôle in co-ordinating the arrangements for determining pay in the public sector, including the work of the special bodies. This Bill gives us the opportunity to do so.
§ Sir Edward Boyle (Birmingham, Handsworth)
The right hon. Lady keeps speaking of the need to give greater scope because, she says, the scope of the P.I.B. was not sufficient. Is she aware that one of the strongest criticisms of the P.I.B. has been that some of its reports, and particularly its report on university salaries, have been intolerably superficial? Will the C.I.M. have anything like sufficient permanent staff to carry out all the functions she is describing?
§ Mrs. Castle
The right hon. Gentleman has anticipated a later part of my speech. I shall, of course, be referring to the procedures of the new Commission. I am at present dealing with the need to coordinate the arrangements for determining pay in the public sector, and I said that the Bill would give us the opportunity to do so.
Clause 24 of the Bill enables Ministers to refer to the Commission any question relating to pay and conditions in the public services, and the people to be covered by this Clause are set out in Schedule 3 of the Bill. They include civil servants, N.H.S. employees, the 568 police, the Armed Forces, local authority employees and university teachers.
Most of these are already covered by their own negotiating machinery, and this will not be interfered with; but it will be a question of asking the Commission from time to time to satisfy itself that we are working out the best pay structures, relating pay to performance wherever possible and securing the most efficient use of manpower.
Other groups will be covered by standing references to the C.I.M., as they were to the P.I.B. The obvious case is the Armed Forces, though power will be there to cover other cases as well, such as university teachers.
But there are other groups in the public service the fixing of whose pay raises special problems, because it is what I would call "politically sensitive". In Clause 25 we make provision for the Commission to review and report on the pay of these groups, as defined in Schedule 4. The House will note with interest that, in addition to senior civil servants, the boards of nationalised industries and the top levels of local government, it includes Members of Parliament and Ministers. I am sure that the House will welcome this development.
It is only right and proper that all public servants, including ourselves, who have no normal negotiating machinery, should have their pay and conditions reviewed at regular intervals by an independent body. It is clearly right that the Commission, which is responsible for advising on pay questions generally, should also be responsible for seeing that pay structures and settlements in these cases accord with the best principles of incomes policy.
We would all agree that the present arrangements are unsatisfactory from a number of points of view. In the first place, for some of these groups there are no arrangements for regular review at all, and that means that ad hoc inquiries have to be set on foot on each occasion. As a result, we get a series of disconnected reports, perhaps based on different principles, and it often happens that the increase for one group is then used as an argument for increases for the others.
The provisions of the Bill will overcome these difficulties. We propose that 569 there should be a standing arrangement whereby a special panel of the Commission, whose constitution is set out in paragraph 13 of Schedule 1, would automatically review the pay for these groups at stated intervals.
We are not laying down in the Bill a precise timetable for these reviews. But we have come to the conclusion that there would be substantial advantages in adopting a system of automatic reviews at regular intervals, and not leaving this to the discretion of Ministers or the Commission.
I propose, therefore, to ask the chairman, when appointed, to make it the practice of the panel to report fully on the pay of these groups at four-yearly intervals; with a less detailed review every two years. I would ask the chairman to set the work of the panel in motion as soon as the Commission is set up, so that we could have an initial major report by mid-1971. There would then be a mid-way review in 1973, and a full report in 1975.
The House will see that the Commission will consult with me about the timing of reports, and that I have the power to ask it to make a report. These are necessary provisions to meet unforeseen circumstances. But, as far as can be foreseen, we shall want the Commission to proceed on the regular automatic timetable I have just described, and the Bill gives me no power to veto the panel from reporting at any time if it regards it as desirable to do so.
The Government believe that reports from this panel of the Commission will command public confidence. In the case of those groups whose remuneration is within the Government's direct control, I can give an undertaking that the Government would take their decisions on the Commission's recommendations without delay. In the case of Members of Parliament, Peers and Ministers, we would put the recommendations before Parliament. The only reservation here is that if a report happened to be made near the end of a Parliament's life it would be desirable to leave action to the new Parliament. In the case of officers of local authorities, it would, of course, be for the local authorities to consider action on the recommendations.
So much for the references. Now for 570 the powers that will be available to the Government to follow up the Commission's reports. These are set out in Clauses 10 to 18 of the Bill. They no doubt appear far-reaching. So they have to be if the Government are to be able to deal with the variety of detriments which the Commission's reports may reveal. But they have been on the Statute Book since 1948, and neither this Administration nor previous ones have used them harshly or unfairly.
There are only two points on which we are proposing an extension of the powers under the present monopolies legislation. The first will enable Ministers to stop a firm recommending resale prices if—and only if—the Commission finds the practice to be against the public interest. This flows from the report which the Monopolies Commission made on this matter, in which it recommended that powers should be taken.
The second new power relates to the disclosure by a firm of financial information over and above anything required under the Companies Acts. Here again, we are acting in the light of a recent Monopolies Commission report, and I regard it as a reserve power. We intend to work out with industry a code of good practice for disclosure over and above the legal requirements, but I believe that the code is much more likely to be adhered to if, in the last resort, there is power to require disclosure where the C.I.M. finds that this is necessary to protect the public interest.
Indeed, all these powers are available to Ministers only where the C.I.M. states in its report that a matter has an adverse effect on the public interest. The powers are available only to remedy or prevent that specific adverse effect. To allay some of the unnecessary alarm which has been aroused about the possible use of these powers, we have deliberately tightened up the wording of the previous legislation to leave no doubt that Ministers can act only to deal with what the Commission has found to be wrong, and that no power can be used unless it is directly relevant to the adverse effect on the public interest. These safeguards are spelt out in Clause 10(1).
I know that the C.B.I. is particularly concerned about the power to regulate prices set out in Clause 13(c) of the Bill. 571 As I have said, this power has always been an essential part of our monopolies policy and, for the reasons I have given, we have no intention of abandoning it. But, with the widening of the scope of the Bill, the C.B.I. has been alarmed lest the power might be used indiscriminately to hold down prices in a whole range of situations which have nothing to do with the abuse of market power. This is certainly not our intention, and that is why we have spelt out two safeguards in the Bill.
First, in Clause 13, we have included a new condition which says, in effect, that the Government may not make a price regulation order unless the Commission has found in its report that the prices concerned represent an unreasonable use of market power; in other words, that competition cannot be relied on to protect the consumer.
Secondly, in Clause 16(2) we have provided that, where the reference to the Commission related only to a specific price increase, the power of price control can be used only for a maximum of 18 months. This means that if the C.I.M. finds a particular price increase is unjustified and against the public interest, then such a report cannot be used as a basis for permanent price control over that firm.
I want to emphasise that all these powers are there only as a last resort. The real protection to the public interest springs from the inquiry and report of the Commission, from setting out the facts and from the well-based recommendations which I am sure we shall obtain from the Commission. I do not believe that those concerned are likely to persist in conduct which the commission finds contrary to the public interest, and that once the Commission has pointed out the undesirability of certain practices they will then be ready to modify those practices. But the powers are there, and need to be there, in reserve.
§ Mr. Richard Marsh (Greenwich)
My right hon. Friend has put forward certain safeguards in terms of price increases. Will she say whether or not these safeguards would be acceptable, both in statute and in practice, in relation to the public as well as the private sector, and 572 that there will be safeguards against intervention to prevent justifiable price increases?
§ Mrs. Castle
Yes, the policy which I have outlined is applied to the public sector and to the private sector. The conditions for the operation of the powers will apply in the public as well as in the private sector.
§ Mr. Marsh
There may be a misunderstanding between us. My fear was not that the public sector would be allowed to increase prices excessively, but how far the safeguards built into the private sector to prevent intervention to stop justifiable price increases would be acceptable, both in statute and in practice, to allow price increases which ought to take place in nationalised industries.
§ Mrs. Castle
As my right hon. Friend knows, if there are references to the Commission, these safeguards will apply equally.
Finally, I want to say something about the status of the Commission. The Commission will in no sense be an agency of the Government. It will be a fully independent body. It will be subject to no directions from the Government other than any general directions about its procedure. It will be concerned with the public interest. And for this purpose it is provided with some guidance in Clause 31 of where the public interest lies. This guidance is basically similar to that given to the Monopolies Commission since 1948. But we have widened it to cover all the matters now within the remit of the Commission, including services, and prices and incomes policy. We have also strengthened the references to the interests of consumers.
One word on procedure. I believe that the procedures adopted by the Prices and Incomes Board and the Monopolies Commission have, in fact, been fair to those whose affairs were under examination. But it is important that all concerned should feel they have had a full and fair chance to deal with all the issues which the Commission deals with in the report. This is not a matter which is appropriate for the Bill, but I do want to allay any anxieties there may be about this and I shall be discussing with the chairman-designate, when he is appointed, how this can best be achieved.
573 This, then, is the Government's blueprint for helping industry to become more virile, more vigorous and more competitive. Without this approach, we shall never be able to fight inflation in this country. We gather from this morning's Daily Express that the Leader of the Opposition now fully launched on his electioneering flood, has told the Tory 1900 Club that he is intends to make the cost-of-living his main battle cry. He will even, so the Daily Express tells us, give this priority over his "bash the unions" campaign, perhaps because his supporters are beginning to get cold feet on that.
Apparently the right hon. Gentleman gave his audience last night the results of Tory research on the cost-of-living issue, which showed that 56 per cent. of those interviewed believed that prices could best be kept down by competition between companies. Well, here is the right hon. Gentleman's chance. If he really believes in competition, he will support the stronger provisions in the Bill. If not, we will know that Selsdon man isfull of sound and fury, Signifying nothing".but tough words and soft deeds.
Because the Bill forms the basis for action, I confidently commend it to the House.
§ 4.32 p.m.
§ Mr. Robert Carr (Mitcham)
As I listened to the right hon. Lady the First Secretary I felt that perhaps at least and at last there was one point on which she spoke with real knowledge and experience. That was when she spoke about what it feels like to have cold feet.
It struck me during her opening remarks that the right hon. Lady must have had a vision last night. She must suddenly have seen the date of the General Election and, the date of the Government's defeat, and felt it urgently necessary to get practice in speaking from an Opposition point of view. She did us the compliment of devoting the whole of the first part of her speech to an attack on the future Government's policy. Of course, it is the policy of the future Government that really matters for this country now.
The right hon. Lady painted a picture of the Bill. She called it "the ally of 574 industry". I suspect that industry will have a somewhat Trojan horse suspicion about this ally coming into it. She spoke of it as "a stimulus to efficiency". I should have thought it much more likely to be a stimulus to delay in decision-making, a stimulus to reduction in capital investment and to a reduction in the competitiveness and vigour of industry, which is what we want. She spoke of this Commission as a watchdog for the consumer. It must be a new breed of barkless, toothless mongrel from the point of view of protecting the consumer. I can only think that in her speech the right hon. Lady epitomised the truth of the saying:Beauty is in the eye of the beholder.When she looks at this Commission and sees it as bringing virility into industry, imagination knows no bounds.
At least the right hon. Lady has now got another cause, another crusade. In the past, as each oasis on her desert horizon has turned out to be a mirage, she has immediately gone undaunted towards a new one. First, we had productivity and productivity bargaining. That was the theme of her hot gospelling activities about two years ago. We do not hear much about productivity bargaining today—even with paper bottoms, let alone copper bottoms. In 1969, the great theme was the conciliation pause and "In Place of Strife". These too have "gone with the wind". Now we have the Commission for Industry and Manpower.
An evil fate seems to hang over almost every cause which the right hon. Lady espouses. Her prices and incomes policy has ended in the most inflationary wage increases since the Prime Minister last tried to win an election with a wage bonanza. It has led to the most rapid rise in prices since there was a Socialist Government 20 years ago. Her industrial relations policy, which, as if tempted by fate, she called "In Place of Strife", has resulted in industrial strife on an unprecedented and still escalating scale.
For centuries the alchemists of old searched in vain for the Philosopher's Stone to turn base metal into gold. The right hon. Lady has fallen upon the secret of what one might call anti-alchemy. Every bit of gold she touches turns to lead. This C.I.M. will sink with the rest like a lump of lead, too, because it is based on muddled thinking and confused motives. If we are to understand 575 the Bill at all, we have to see it exactly for what it is—another instalment in the Government's ineffective and damaging prices and incomes policy. It is supposed to be the final and permanent version of that policy.
When casting around for that final version, the Government had the not unhopeful idea—at least in theory—that the answer might be found in an instrument to correct the abuse of market power. That is what the Prime Minister told us in the debate on the Address on 28th October last. It is also what the right hon. Lady told us in the debate on prices and incomes on 17th December, when she spoke aboutaccepting the principle that all those who exercise market power should be accountable to the community for their actions."—[OFFICIAL REPORT, 17th December, 1969; Vol. 793, c. 1379.]It is also what was said in the consultative document, which was distributed before the Bill was prepared. The last sentence of paragraph 3 of that document spoke about the need formachinery to deal with all situations of imperfect competition.The first sentence of paragraph 4 of the document promised thatThe new commission will be in a position to deal with this problem throughout the economy.I ask the House to note the use by the right hon. Lady in December of the phrase,all those who exercise market powerand the use of the words in the consultative document that we needed machinery "throughout the economy" and "to deal with all situations of imperfect competition."
But now we have the Bill, that promise has not been kept: these principles have not been put into practice. Whatever the differences—and there are enormous differences of a deep kind—between the supply of labour and of goods, nevertheless market power can be exerted and can be abused both by the price fixers and by the wage fixers.
For example, take the case of the printing industry. Can anyone pretend that the supply of labour, the manning scales, the levels of pay, the admission of women and the existence of restrictive practices are not all strongly affected by the market 576 power exercised by the printing trade unions through their extremely tight closed shop and other arrangements. Of course they are.
And if one is to attempt to achieve me Government's avowed objective—to quote the Prime Minister—of the correction of the abuses of market power, then the correction has to be applied equally, as the right hon. Lady herself said in December, to all those who exercise it. And any control over the abuse of market power and the supply of labour is, as the right hon. Lady admitted, specifically excluded from the Bill.
It might well be argued that the supply of labour should not be dealt with in this sort of legislation or by this sort of corn-mission. That could and would be a serious argument. The point about it is, however, that the Government is making no attempt to deal with this sort of market power either in this Bill, or any other Bill or in any other way. [An HON. MEMBER: "Neither did the right hon. Gentleman's party from 1950 to 1964.'] We are at the moment talking about the C.I.M. Bill and the principles the Government laid down and which they are failing, as always, to put into practice.
Quite apart from any question of justice in the treatment of one section of the community compared with another, this omission inevitably renders largely nugatory the principle of dealing with the problem by the control of market power. So we have a Bill, and under it a Commission, in which the principle of market power is hopelessly mixed up with and largely overlaid by considerations which, in our view, will prove as harmful in their new C.I.M. context as they did in the past in their old prices and incomes policy context.
Thus, this C.I.M. is a strange mongrel creature in which, unfortunately, the dominant characteristics have been inherited from the P.I.B. rather than the Monopolies Commission parent. Under this proposed dispensation we now have a situation where prices can be statutorily regulated and controlled; and not only, whatever the right hon. Lady may say, when the abuse of market power has been proved. The Bill goes much wider than that.
We have, under this proposed dispensation, the situation where prices can 577 be statutorily controlled and wages cannot be. We do not believe—and we are absolutely consistent in this—in the detailed statutory control of either wages or prices. But this particular mix of statutory price control and no wage control is a recipe for disaster. It will encourage either roaring inflation—if it is possible to get an inflation more roaring than the one we are in at the moment—or, if prices should, by any chance, be held below the rising wage costs, declining profitability and, therefore, declining investment in industry when the Chancellor is saying that declining investment would be one of the worst things for economic policy.
Those, then, will be the penalties we would pay and that would be the sort of disaster. Paradoxically, we may find ourselves with a mixture of both evils at the same time—the traditional Labour Government induced "stagflation" about which my right hon. Friend has often spoken——
§ Sir Harmar Nicholls
I am trying to get an answer to an important point which the right hon. Lady did not give to me. I gather from the right hon. Lady that one of the tests of inefficiency was high profits. Would my right hon. Friend help me? Is his view that a firm is efficient or inefficient when it makes no profit or low profit? Is "low profit "not to be a test of efficiency?
§ Mr. Carr
I certainly cannot say what the Government's view is because they are very mixed up about it. So often what the right hand of the Government believes is quite opposite from what their left hand believes. Our view is absolutely clear. So long as one has achieved a competitive environment—and that is vital—high profits are a test of efficiency. High profits are good. High profits are the source of innovation, new development, more employment, more exports and a better standard of living.
§ Mr. Carr
I am glad that my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) is pleased. I am sure that the country will be pleased with him.
578 Moreover, I suggest that there is another possible danger in this policy, for which, strangely, the right hon. Lady was taking some credit in one part of her speech. I fear, and I suspect that my fears may well be shared by at least a number of hon. Gentlemen opposite, that this may add even more fuel to the fires of industrial conflict. If companies really were to try to use either the facts or the threat of Government price control as a reason for refusing wage claims, I believe that the anger and bitterness of workers and trade unions and the unfairness of it all might be even greater than under the provocation of the old statutory incomes policy. I do not believe that many companies will be able to do what the right hon. Lady suggested they could do in the circumstances of a modern economy; but if they were to use the fact that the Government were stopping them increasing their prices I think that the right hon. Lady would find that she has thrown another fire lighter on to the fire of industrial strife.
There is no doubt, of course, that the C.I.M. will be presented to the public in the coming months as the new, wonderful instrument of power which will at last control the cruel rate of price increases and inflation which is now well established as the hallmark of Labour Government. It will not. As far as controlling prices is concerned, it is nothing but a spoof, a great big spoof.
Look at the record. We have had these powers of early warning and statutory control of price increases for most of the five and half years of this Government's life and look what has happened. If all this bureaucratic and Ministerial intervention has not worked hitherto, what scrap of evidence is there to suggest that suddenly it will begin working now? During the six years prior to 1964 under a Conservative Government, with no early warning system, with no statutory price control, except in a proven case of abuse of market power under monopolies legislation, prices rose only about half as fast as they have been doing during the five and half years of Labour government.
Moreover, the Labour Government's record is just as bad relatively since they have introduced all this paraphernalia of prices policy, as it was during the first one 579 and half years of their period of office. Food prices have been the subject of particularly close scrutiny under the early warning system, yet they have risen even faster than prices generally—a 6.3 per cent. increase in food prices during the 12 months ended in February; and since devaluation we have been told that there have been 15,000 price increases in grocery items alone. That is only part of the story under Labour Government. Coal up 29 per cent., electricity up to 28 per cent., gas up 15 per cent., house prices up 40 per cent., mortgage repayments on an average priced new home up £3 10s. a week: this is what has happened under these wonderful, bureaucratic, early warning powers, with high-powered experts in ivory towers looking into matters. Now we are asked the believe that prices will be kept under control by the continuation of this crackpot system.
Let us consider what has been happening in the last three months since that notable day just before Christmas, 17th December, when the right hon. Lady the First Secretary and the Chancellor of the Exchequer pleaded with the House to extend the powers of Part II of the Prices and Incomes Act, 1966. That, we were told, was a vital bridging operation until we could get the C.I.M. Bill passed and working. Few of us on either side of the House, whichever way we may have voted in the Lobby, could see why it was vital; but Ministers told us that it was and that we should be sunk without it. They said that this bridge was essential and that we must have it to reach the promised land of the C.I.M. which has been disclosed to us today.
But where have we got to on that bridge since 17th December? What use has been made of the powers which were said to be so essential before Christmas? What influence has their existence had as a deterrent in the background? The answer is, none at all—certainly none for the good.
In pleading for an extension of the powers on 17th December, the right hon. Lady said:if output per worker increases by 3 per cent., most pay settlements need to fall within a range of 2½ per cent. to 4½ per cent. if the aim of greater price stability is to be achieved.—[OFFICIAL REPORT, 17th December, 1969; Vol. 793, c. 1379.]580 What has happened to pay settlements? There have been settlements of 10 per cent., 12 per cent—[An HON. MEMBER: "20 per cent."] Some have been higher. I am talking about the average. What does the right hon. Lady say about "greater price stability" now, and what can the Bill do about it?
Consider what the Chancellor of the Exchequer said in winding up the debate on prices and incomes on 17th December:We should now be able to look forward to a greatly reduced rate of price increase. We could break the price-inflation psychology but not if we have a wage or price explosion."—[OFFICIAL REPORT, 1969; Vol. 793, c. 1476.]What a forecast from the Chancellor of the Exchequer. I only hope that he will be more accurate next week. But, far more important, what an irresponsible lapse in the standard of judgment and advice which the House should expect from a Chancellor of the Exchequer. Did not the right hon. Gentleman know, or even have the slightest inkling of, what was boiling up in industry? If he did not know, he and his colleagues are indeed living in a padded cell at the top of an ivory tower.
Everyone in touch with the real world knew before Christmas what was happening. Everyone knew that what the right hon. Lady and the Chancellor were saying was utter nonsense. They knew that these powers which the Ministers were saying were essential, were useless and would never be used. Yet we went through that charade.
Since that date, we have had a wage and price explosion of the sort which the Chancellor said he thought he could move away from. There have been wage increases in the 10 to 15 per cent. range, with no attempt to attach any productivity strings at all. So far this year prices have been rising at an annual rate of almost 8 per cent., with many more price increases to come. An increase in the price of bread was announced yesterday. Increases in the price of meat, milk and goodness knows how many other foods are soon to follow. There are to be increases in Post Office charges. London bus fares are to rise as a result of the 16 per cent. wage increase announced in the newspapers today.
The situation is appalling. We are in the throes of a roaring inflation. The 581 Government have stood by in the last three months doing nothing. They have refrained from making the slightest use of the powers which only just before Christmas they told the House and the country were essential to prevent what has happened. Cannot the Prime Minister, the Chancellor of the Exchequer and the right hon. Lady see the damage being done by this farce—by the gap between words and reality, between promise and performance? It is a farce; but it is also a tragedy. Cannot Ministers see that this sort of, not just double talk, but absolute gobbledegook destroys the credibility and authority of government as an institution?
Is it any wonder that respect for Government and Parliament and politicians generally is plummeting to its lowest depths? Is it any wonder that people take the law into their own hands on almost every occasion? [Interruption.] Strangely enough, law and order, not only or even mainly in the sense of catching and punishing criminals, but, above all, in the sense of supporting freedom and responsibility, happens to be what democratic government is about. When democratic government has reduced itself to no credibility and no authority, very serious damage has been done. That is what right hon. Gentlemen and the right hon. Lady opposite have done.
§ Mr. Frederick Lee (Newton)
Would the right hon. Gentleman agree that every one of the wage increases he has mentioned resulted from free collective bargaining? His party does not believe in Government interference by legislation. How would he stop such wage increases?
§ Mr. Carr
I will come to that. [HON. MEMBERS: "Oh"] If the right hon. Gentleman looks at the speeches which my right hon. and hon. Friends and I have made on successive Prices and Incomes Bills, he will find that the answer—the only answer which can be found in freedom—is an entirely different economic, fiscal and industrial relations policy. My right hon. and hon. Friends and myself have spelt this out on a number of occasions. We shall be delighted to take the opportunity to spell it out on other occasions, but not during this debate. [Interruption.] Hon. Members will hear some of it, but not all of 582 it, today. Some of it will be coming in a moment.
How can Ministers expect anyone in the country, let alone in the House, to take them seriously when they come forward with a Bill like this for more and more State intervention, for making permanent, powers of investigation and control over prices which have proved so ineffectual and such a laughing stock over the last four years? We reject the whole approach, not because the Bill concentrates on making competition more effective, but because it does not. We do not believe that more and more inquiry and report by more and more so-called experts into more and more aspects of more and more companies could ever produce the expanding, risk-taking, tautly efficient economy on which our future prosperity depends.
§ Mr. Carr
The hon. Gentleman does not understand the purpose of the law we propose. It is a condition for the minimal amount of Government interference. The only condition in a free society in which individual sections and interests in the society can have the minimum amount of interference is a condition in which the Government have laid down the basic rules within which all of us are free to operate. Without that there can be no respect for other people's interests. This is one of the great problems of order in a free society, and it is the major job of Government. That is our philosophy: we only wish it were the philosophy of the party opposite.
We have said that it is only within the context of such an economy that we can ever hope to solve our prices and incomes problems. We have said over and over again, and we shall go on saying, that high profitability, high investment, high earnings, higher efficiency and an expanding economy will only come when we get fiscal, economic and industrial relations policies radically different from those of the Labour Government. Within the context of these entirely different policies, we believe most certainly and strongly that there must be a Monopolies Commission more powerful and effective than the present Commission, and the next Conservative 583 Government will create just such a Commission.
§ Mr. Sydney Bidwell (Southall)
Does the right hon. Gentleman agree that over the last four years there has been an enormous spurt in productivity and an enormous spurt in conscientiousness between management and men; and that this has led to the record export figures that are solving the balance of payments crisis left by the party opposite?
§ Mr. Carr
But not because of a statutory prices and incomes policy. I have said, and the right hon. Lady has quite fairly quoted me in previous debates as saying, that some of the early reports of the Prices and Incomes Board had a powerful educative effect which was very beneficial, but that was before the day when the whole thing got prostituted by detailed statutory powers of control. That has always been the distinction we have made.
I shall now indicate by criticism of some of the main proposals of the Bill the sort of Commission which the next Conservative Government will create in the next Parliament. First, however, in case it is not already clear, let me state categorically that in creating the right sort of agency the next Conservative Government will inevitably, unfortunately, have to make radical changes in the composition, the constitution, the terms of reference, the procedures and the powers of the C.I.M. as proposed in the Bill. It is only fair to put that statement firmly on record.
There are many important criticisms to be made of the main provisions of the Bill. I obviously cannot and I certainly will not try to deal with many of them. My hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) will raise a few more that I leave out, but a lot of other criticisms of great substance will have to await the Committee stage.
First, there is the composition of the Commission. To show our idea of what is needed, I want to quote a very brief extract from the speech made at Truro by my right hon. Friend the Leader of the Opposition on 24th September, 1968, when he said:The Monopolies Commission needs to be streamlined. It should be staffed with a first- 584 rate fulltime Board ready to act as speedily as business decisions today demand.The C.I.M. as constituted in the Bill fails completely to pass that test. We still have the same number of members, only one of whom has to be full time. Nothing has been said in the documents or in speeches about the staffing of the Commission, or its professionalism. The Commission is inadequate for its present tasks. It is hopelessly inadequate for the wide range of new powers that are being added to it, even if one agreed with all those new powers being added.
Secondly, we have the power of reference to the Commission resting solely with Ministers—a point which the hon. Lady specifically mentioned. We are sure that that is now wrong. It may have been all right in the early days of monopolies policy, but we came to the conclusion by 1964 that the time had come to make a change. Selection of cases will always be difficult, and always open to suspicion about motives of one kind or another. We think that the initiative ought not to be solely in political hands, particularly if this is to become a more active part of policy.
Examples of reference and non-reference in recent years have given cause for concern. There was the G.E.C.-A.E.I. merger—not referred. Why? Sponsorship, I suppose, by the I.R.C. was thought to be sufficient. But the fact that something is sponsored behind closed doors by one agency of the Government does not provide the public accountability which the right hon. Lady says is the principle of the Bill.
There was the Reed-I.P.C. merger—on what possible grounds was that not referred? It was a conglomerate, and was certainly market dominant in some areas. If ever there was an obvious case for reference before the merger went through, that was it.
No one knows why the proposed Burmah Oil-Laporte merger was referred; but the merger was stopped as a result. On what basis was it referred? Other oil companies are deep in the chemical industry—why not Burmah Oil? What has been the result? The result of the Burmah Oil-Laporte merger being prevented means that we are now almost certain to have a 20 per cent. stake by the Belgian company. That may be good or it may be bad—I do not know—but by saying that 585 the Burmah Oil-Laporte proposal had to be referred, we have created a position in which this British company, with its know-how, could—I do not say that it will—pass into foreign control.
Another example is the recent I.C.I. proposal to take over Viyella, Carringtons and Dewhurst. In this case we had the Paymaster-General apparently setting himself up as his own personal alternative commission.
All this is not public accountability. Examples like these provide the reasons which make us strongly recommend that the time has now come when we should establish a registrar of monopolies who would have the duty to initiate references. There is here a difference between monopolies and restrictive trade practices. It is not as easy to define in a Bill what one means by a market and by market dominance as it was to define criteria of trade practices. Because of that difference, we do not think that the registrar of monopolies could have quite the full, unfettered, independent power of the Registrar of Restrictive Trade Practices. We therefore suggest that while the registrar should have power to initiate, Ministers should have power to veto, because that would leave it in the hands of Parliament. Parliament could see what had been done, and have an opportunity to examine.
It is sheer nonsense for the right hon. Lady to talk of our idea of a registrar as though it were some device to weaken the powers of the Commission. The reverse is the truth. It is intended to toughen the Commission, and to give criteria to an independent body to bring cases——
§ Mr. Joel Barnett (Heywood and Royton)
The right hon. Gentleman earlier complained about the Minister not making references to the Commission in certain instances where he feels, and many others might feel, reference should have been made. Does he now propose to take away from Ministers the right to initiate such references?
§ Mr. Carr
I am proposing to place on the registrar a duty to seek out cases where it appears that market dominance exists, and to propose references by means of criteria. I am certainly prepared to consider the possibility that Ministers should also have the right to 586 propose—[HON. MEMBERS: "Ministers are elected."] But the Registrar of Restrictive Trade Practices is also a non-elected official, set up with legal powers and legal terms of reference. He has to make reports that have to be presented to the House, and may be debated. Is not that practice more publicly accountable than decisions taken by Ministers behind closed doors to refer one company and its proposed merger and not another? This is not a proposal which will decrease Parliamentary accountability. It will increase it.
§ Mr. Darling
Surely, the right hon. Gentleman is aware that we had to amend the Restrictive Trade Practices Act in order to give discretion to Ministers so that certain practices which would otherwise have been brought before the Court were not brought before the Court in the public interest.
§ Mr. Carr
But that does not invalidate the case for the registrar. The Government did not, therefore, abolish the Registrar of Restrictive Trade Practices, although they happened to find circumstances which, in their judgment—whether everyone agreed is another matter—justified altering his powers and terms of reference. But that is a perfectly logical and democratic thing to do. It was not the same as saying that there should be no registrar. We consider that there should be a registrar in this case, not only from the point of view of reference, but also—I come to this now—in connection with the procedures of the Commission.
We believe that it would be to the advantage of both the Commission and of industry, and to the advantage of the respect of one for the other, as well as the quality of the Commission's work, if we could separate the investigatory and presentational work from what I would call the judgment. We believe, therefore, that the registrar, properly staffed, should be given the duty of preparing and presenting cases to the Commission for consideration.
587 Next, I come to the vital question of making size of itself a criterion for reference to the Commission. This is a new criterion. We object to it most strongly. The only valid test for reference, in our view, is market power and limited competition.
§ Mr. Dell
I wish to take up a point before the right hon. Gentleman leaves the question of a registrar of monopolies and the power to refer mergers. He said that the registrar would be given criteria. I take it that he will in due course say what those would be. Will he say also whether there would be a standstill on a merger pending the investigation, and whether the £5 million asset criterion in the present legislation would continue?
§ Mr. Carr
Perhaps they are, but we shall deal with them. Within the compass of a Second Reading opening speech, there is a limit to the number of matters one can argue in detail. We are throwing into the pool of argument, which is what an Opposition should do—we are always told that we ought to be constructive—constructive suggestions about the registrar. [An HON. MEMBER: "They have not thought about it."] Indeed, we have thought about it. It was in our 1964 White Paper, and we shall debate the matter in detail at the appropriate time.
I had come to the question of making size by itself a criterion for reference to the Commission. As I say, this is a new criterion, and we strongly object to it. The only proper valid test for reference is market power and limited competition. If, for social or economic reasons, we fear the creation of giant industrial undertakings, the proper safeguards are to look at mergers at the time they are pro- 588 posed—that we support—and second, to cause more disclosure of their affairs by companies by extending company law requirements, which also we support, as we do the concept that employees should be given at least the same amount of information as shareholders.
I come now to another new point of the Bill, namely, follow-up inquiries on mergers. We object to this, too. The proper time to look critically at a merger is immediately it is proposed. The possibility—let alone the fact—of an inquiry is an adequate and proper safeguard against irresponsible claims being made in the course of trying to win a merger battle and irresponsible or wrong purposes contrary to the public interest. Thereafter, why should a company, just because it has been formed by a merger, be treated differently from any other form of company? Why should it have its roots pulled up and examined, possibly at two-yearly intervals, just because it was formed by process of merger? That is hardly conducive to growth or efficiency. It is totally illogical and unnecessary.
A merger can be, and always should be, subject to reference on grounds of market power and restricted competition, but if that criterion does not apply, why should a merger be looked at any more than a company which does not happen to have been formed by a merger process?
§ Sir Harmar Nicholls
If we are to be the Government soon, it is as well that our leaders should know some of our feelings. The registrar will have to be an Archangel Gabriel to have these powers without the restriction of Parliament, and I should like to know where he will come from. I want my right hon. Friend to know that there will be one or two reservations on this side about whether he should be given these powers.
§ Mr. Carr
I fully accept the point which my hon. Friend makes. When we are in a position to put these proposals in detail, those questions will be gone into and fully debated. But, just as we came to the conclusion that a Registrar of Restrictive Trade Practices was, on balance, right, so we believe that, on balance, a registrar in this case—although not without its difficulties and snags—is preferable to continuing to leave the 589 matter entirely in the hands of Ministers. I fully accept, however, that this is a matter which should be debated across the Floor of the House and on each side of the House.
I come now to the scale and type of powers given to Ministers under the Bill. The powers are virtually limitless because they are so loosely defined. The right hon. Lady said that they were really not very different from those which had existed before, and I agree about that; but what is very different is the context in which they will be used. There will now be an almost limitless range of pretexts on which a company, as opposed to a whole industry, may be referred to the Commission. Once a reference has been made, and once an adverse report is in the Minister's hands, the Minister will have power to do almost anything. The Minister is in no way limited by the Bill to implementating the proposals and recommendations in the Commission's report. She can throw them out of the window. So long as she has an adverse report, she has power to do almost anything, without definition or limitation.
Yet, funnily enough, amid all that power, there is no mention of one power which is increasingly important in the international world, namely, the possibility of using the weapon of tariff reduction as one of the most important means of enforcing competition on any sluggish giant or any sort of sluggish company in the country.
There is another danger that, unlike the monopolies legislation hitherto, the Bill gives the Minister power to make orders against individual companies instead of against whole industries. Thus, one company can be penalised vis-à-vis its competitors not because it has been shown to be behaving more badly than any of its competitors but just because of the chance that it has been investigated and its competitors have not. This is open to grave opportunity for dangerous unfairness.
One new feature in the Bill, which we thoroughly approve of and which, therefore, it is only fair to mention, is the inclusion of nationalised industries. [An HON. MEMBER: "The right hon. Gentleman would."] Yes, and I hope that hon. Members opposite do as well.
590 I come now to Part II of the Bill, which I shall deal with in omnibus fashion—the compulsory notification of increases in prices, charges, incomes and dividends. This epitomises the whole philosophy and approach to which we object and which so palpably has failed to work in recent years. Let us consider the enormous amount of work and the bureaucracy which it will involve if this becomes a permanent feature of our system. What purpose will it serve? Most of the time, it will be done for love of paper-pushing, occasionally, perhaps, for the purpose of providing information for the work of the Commission. But are Ministers really claiming that they have not known which industries or companies ought in the past to have been referred to the Monopolies Commission for lack of some compulsory notification system? I do not believe that they could substantiate such a claim, and I am certain that we do not want this compulsory notification system for that purpose.
If it has a real purpose, it is quite different, namely, the purpose of giving Ministers and civil servants power to influence the commercial decisions of companies behind the scenes; to make companies subservient to Whitehall. Quite apart from the ant-heap of bureaucracy which it will throw up, it seems likely to create less competition rather than more, to create less of a competitive and more of a play-safe psychology. To create a situation in which, before a company can make decisions, it has to go along to its guardian under-secretary in the appropriate Department and say, "Please, Sir, I want to do this, and may I do that?", is not the way to create an environment in which we can encourage competitive, vigorous, risk-taking, innovating, fast-moving boards of directors and managements in this country. On the contrary, this running to the gentleman in Whitehall is one of the most enervating influences on British industry; and it is disastrous if it is continued.
So the Bill brings into focus the real difference in economic philosophy between the two sides of the House and brings into focus the choice in economic terms which the country must make. Britain must have an effective economic driving force if we are to have an expanding economy—expanding in scale, in 591 capital intensity, in the level of innovation and efficiency.
There are only two main alternative driving forces. Either may be successful. One of the driving forces is State direction and control. The other is the driving force of the market economy, of competitive free enterprise—profitable free enterprise, profitable enterprise in a competitive environment, individual responsibility, with freedom; and, if there is freedom, sometimes the abuses that go with freedom.
In Britain under a Socialist Labour Government neither of these driving forces is given anything like full throttle. Labour dislikes and distrusts the market force economy. It tends to choke it with interventiton, to starve it of incentive, and to weaken its toughness and self-reliance with too much subsidy and advice.
On the other hand, Labour Government draws back from full-blooded State direction. Labour Governments meddle but do not manage. The meddling leads to muddling. The muddling leads to the need for more meddling and intervention. That is the dreary vicious circle, not just of this Labour Government but of all past Labour Governments. It is what springs from their basic beliefs and dogma.
In Britain we must make a clearer choice. There is no need to go to either extreme, but we must come down more firmly on one side of the fence or the other—either much less intervention, much more freedom, much more incentive, much more dependence on the market economy; or—this is a perfectly valid alternative—more full-blooded State direction and planning.
There is no doubt about our choice. We believe that there is no doubt about the country's choice when it is put to them. When we talk about the market economy and freedom, that is not the same as a free-for-all. We mean freedom with responsibility. We mean liberty with order. We believe that the prime job of government is to lay down the rules by law, whether in the field of taxation, or in industrial relations, or in social policy; second, to appoint, where necessary, the referees to judge when the rules have been broken and, if necessary, to take corrective action. But 592 within the limits of those rules government should leave the maximum freedom for the individual to get on with his job in his own way. In that way we believe that we shall get responsible private interest marching in step with public policy.
We believe that that is the key to success in a free democracy. If that is not the key, right hon. and hon. Members opposite must come clean with the alternative choice, which is much, much more State direction, control and ownership. Let them put that choice clearly to the country. We have no doubt about the answer. It is because we are firm in our belief about freedom and the market economy that we are voting against the Bill tonight.
§ 5.25 p.m.
§ Mr. Frederick Lee (Newton)
The right hon. Gentleman for Mitcham (Mr. R. Carr), in his criticisms of the Bill, and in telling us what the Tory Party would do, confounded even our ideas of what the Tory Party's policies are. The worst he could say about the results of the Bill was that it may well be that trade unions which could not secure wage advances because the Commission had recommended that there should not be increases in prices would then blame the Commission for their inability to secure wage advances.
I do not know whether the right hon. Gentleman has a bad memory. He was describing with utter precision what the Tory Government did some years ago. When Sir Anthony Eden was Prime Minister and Harold Macmillan was Chancellor of the Exchequer, they decided that for a given period no nationalised industry should be allowed to increase its prices. They did that for no other reason than to stop wage advances in the nationalised industries. Afterwards, when Harold Macmillan had become Prime Minister and when the prices and incomes policy, such as it was, was in being, it culminated in Harold Macmillan coming to the Dispatch Box and using the House to deliver a terrific public reprimand to the Chairman of the Electricity Council for having the effrontery and the impudence to grant a wage advance higher than that which Tory Ministers had said that he could grant.
593 That is a completely accurate description of what the right hon. Gentleman today told us we must never allow to happen. When the right hon. Gentleman thinks it out, I challenge him to deny that which I have asserted—that he gave us the most precise description of where his Government led us when they used the House to indict trade unions for asking for wage increases.
I interrupted the right hon. Gentleman in the course of his speech. He was indicting the Government for responsibility for the inflationary processes now going on. I pointed out that every one of the wage increases had come about as a result of free collective bargaining, which the Tory Party agrees with. That being so, and the Tory Party having no time whatever for legislation which would give the Government any powers in this matter, what would the right hon. Gentleman do about it? What should this Government have done about it? That is what I asked.
We have had no answer. I challenge the Tory Party to answer my question. I challenge the hon. Member for Warwick and Leamington (Mr. Dudley Smith) to tell us the answer when he replies. The Tories cannot play this two ways. Either the Government have power to stop these things, or one believes in the free negotiating medium to produce the given results. Which way does the Tory Party want to play it?
§ Mr. R. Carr
I do not understand the right hon. Gentleman. We have made it absolutely clear all along that we believe in free collective bargaining and are opposed to statutory incomes control. We are not opposed to an inquiring and reporting procedure which can help to educate. We have made that clear, too. But that is absolutely different from what we are talking about today, and it is absolutely different from the sort of statutory incomes policy which has been operated by the Labour Government since 1966.
§ Mr. Lee
That will not do. I still want the answer. Either the Government intervene by statutory or other methods or they must leave industry completely uninhibited to determine wage and price increases. Which way is the right hon. Gentleman going? He has told us that the Government are to be indicted be- 594 cause these increases are producing inflationary pressure. I asked him what he would do, and he has not given the answer. The Opposition are trying to cash in on a situation, for which they, more than the Government, are responsible, in order to curry favour.
I am not convinced of the need for the marriage of the N.B.P.I. and the Monopolies Commission. I could better understand the bringing together of the Industrial Reorganisation Commission, whose work I admire, and the Monopolies Commission. The work of those two bodies fuses more readily than the work of the Monopolies Commission and the N.B.P.I. As an unrepentant believer in the prices and incomes policy, I feel that, when this marriage is consummated, the N.B.P.I. may take on the appearance of a victim of assault and battery.
At least half the functions of the N.B.P.I. have already passed into the realm of the theoretical. I find it difficult to understand why, when the Government have renounced their own power to regulate incomes to productivity, they should now accept responsibility for price increases over which they have no control. I do not want the new creation to be discredited. It is in the interests of the nation that it should have authority and that its reports should be accepted by knowledgeable people, but in conditions where incomes increases are unrestricted, the Commission can only rubber stamp the vast majority of price increases which are referred to it. In those conditions, I do not think that the new Commission stands as much chance as the N.B.P.I. stood of having its reports accepted by a cross-section of the community as fair and objective.
It is interesting to watch the gyrations of the Leader of the Opposition. On one day we heard cries of ersatz indignation about the incomes explosion, which was precipitated by his own actions. The Government lost the prices and incomes battle. The leadership in that battle came from the Opposition—let us give them credit for winning it. The Opposition won that battle, and made it possible for what they describe as an explosion of increases in incomes to occur. On the following day we hear from the Leader of the Opposition equally loud cries of criticism of the 595 Government about the price increases which his own policies have made inevitable. Hypocrisy cannot go much further than that. I never understood what Disraeli meant when he said—For me, there remains this at least, the opportunity of expressing thus publicly my belief that a Conservative Government is an organised hypocrisy.I have now learnt precisely what he meant. What could be better described as organised hypocrisy than a party, which looks upon itself as the alternative Government, and which has helped to produce a certain amount of anarchy in industrial circles, bemoaning the fact that it won the battle against the Government?
Instead of the Government saying, "We know that there are price increases and we will try to contain them by taking certain action", they should tell the nation that the price increases are due to their failure to win the incomes policy battle, the real winner of which was the Tory Party. The Tory Party must bear responsibility for all that flows from the loss of the Government's incomes policy.
§ Mr. John Page (Harrow, West)
I think the hon. Gentleman is being a little unfair to his right hon. Friend the Member for Sowerby (Mr. Houghton), some of his other hon. Friends and Mr. Victor Feather in underrating what they did to deflect the Government, and giving us all the credit for it.
§ Mr. Lee
Do not try to run away from it then. I am perhaps giving the hon. Gentleman and his party the credit, which they do not deserve, of knowing precisely where their policies lead the nation. If they deflect the Government from its policies they must take the responsibility for the result. It is ridiculous to talk about underrating what Mr. Victor Feather and other people have done. If I were a leading trade unionist, I would want increases for my members, and, if the Opposition, which looks upon itself apparently as the next Government, says in this House on 24 occasions that workers who defect from the voluntary 596 incomes policy were right to do so whilst millions of others were obeying that policy, I would want to get on the bandwaggon, and this is what some trade unions did. I do not blame them for that; that is why they are there; but I do blame political parties which bring about the position in which the trade unions can do this.
The incomes policy was never intended simply as a restrictive measure. It was meant to bring, in line with increased productivity, increased emoluments and living standards. The tragedy is that the Government abandoned it at the very moment when it was possible to reap the benefit of the constructive side of the incomes policy, having endured the more destructive side for so long. The legislation deals with the dangers of monopoly. We emphasise the need for maintaining a competitive base under certain conditions.
I hope the House will realise that we are now moving into an industrial and economic situation in which competition plays less and less of a part in certain industries and in which the price one pays for efficiency is that of increased size. I believe we should not try to thwart that kind of development in certain of our heavy industries. It may be we have to accept that they have developed to the point where semi-monopoly may be essential if they are to be highly efficient.
If I am right, there is one question which the nation must answer, and it is a question that is not posed in this legislation. If semi-monopoly is the price one pays for efficiency, what kind of monopoly should it be, private or public? It is wrong that we should now look at the economic and power issues which come from monopoly in the rather confined space imposed by the legislation. I hope that the Government have not turned their back on the proposition that, rather than refuse to accept the need for monopoly or semi-monopoly in certain of our heavy industries, the question about private or public monopoly must again be due for discussion both in this House and in other political spheres.
The work which has been carried out in restructuring industry has given this nation a chance to get back into the top flight of industrial nations. That work would never have been done if we had 597 listened to the Tories describing the Industrial Reorganisation Corporation as "back-door nationalisation" and had heeded their advocacy that we should retain small splintered kinds of industries. Indeed, although they were opposed to the greatest amalgamation which has occurred in years, nationalisation of the steel industry, it undoubtedly has given to that industry in this country the chance to compete on equal terms with the steel industry of any nation. I shudder to think what would be the position of British Steel now if we had not encouraged that kind of practical monopoly.
While I support the Bill, I hope that we shall not close our eyes to the logic of the economic and industrial development we now see in Britain. This party has never looked on public ownership as a dogma. I think we are able to defend that proposition in relation to any industry which we have taken over, whether it be coal, electricity or whatever it may be. Therefore, let us not look for subterfuge or for ways which may be inimical to the best interests of industry. Let us instead look at the question which I have posed to the House and which I hope the Government will take seriously.
§ 5.44 p.m.
§ Mr. Kenneth Lewis (Rutland and Stamford)
This Bill is the biggest example of bureaucratic bumbledom we have yet had from a Department which has come to Parliament with some supreme examples of that kind of thinking. The Department of Employment and Productivity, headed by the right hon. Lacy, is seeking to establish a record for putting Bills through the House. My right hon. Friend the Member for Mitcham (Mr. R. Carr) said that he saw a General Election ahead and therefore there seems to be a certain amount of speed in the Department wanting to get this Bill on the Statute Book.
I am beginning to wonder why it is so anxious to get this Bill through. The Bill claims to be an amalgamation of the Monopolies Commission and the National Board for Prices and Incomes. The right hon. Lady and her predecessors on many occasions in this House have stated their firm support of the prices and incomes policy. They said at the beginning that it was hoped the policy would go from a statutory policy to a voluntary one. If 598 they really believe in the National Board for Prices and Incomes, I cannot understand why they are now proceeding to demolish it, unless they are trying to wrap up the old statutory proposals of the Board in a voluntary guise under this Bill. If, by mischance, they are brought back into power, which is unlikely to happen, we should soon find that the incomes side of the prices and incomes policy would again be statutory.
I do not believe this marriage to be necessary. It has taken place at too late an age to be very productive in the long term and it will be disruptive in the short term. The trouble is that this Government have a tendency to legislate for the sake of it. Do not Ministers understand that industry in trying to get our exports going has enough to do without having to deal with new complicated Bills which seem to roll off the parliamentary line month by month.
We had a great deal from the right hon. Lady today about the great necessity to keep down prices. It was the most utter load of nonsense since she and the Government know very well that, first of all, they have failed to keep down prices, and that if they had not allowed prices to rise we would have been in an even more disastrous state than we are now. It was obvious that prices had to rise following devaluation. Furthermore, when the wage increases that we have seen in the last few months get through the pipeline, if prices do not rise to match up to them this Government will be faced with the prospect of another devaluation. Indeed I believe that is what their policies are heading for.
The present improvement in the balance of payments is likely to fade and if, by mischance, they are returned to Government, the country will be faced with devaluation. Certainly this would be the case if the policies enunciated by the right hon. Lady were brought into operation and if prices were held down. Therefore, anything in the Bill which suggests that the Chancellor could possibly subscribe to a policy of keeping down prices is a mirage.
One implication in the Bill is that there are too many small companies in this country and that we want fewer and larger units. In fact, 28 firms in this country are responsible for about 50 per 599 cent., of the manufacturing assets. This does not include the nationalised industries, although there is the prospect of more nationalisation even if the Government are not now prepared to put nationalisation into their election manifesto. Instead, they put it in the Gas Bill and the Electricity Bill. They are giving powers to the nationalised industries to go into the oil business and to engage in the manufacture of electrical plant and so on. In other words, the monopolies are likely to grow in the nationalised sector if the Government have their way.
Apart from that, mergers have been taking place at a very fast rate in the private sector in the last two or three years. It is interesting to note that the Government say in the Bill that they wish to control mergers. The Government have power to control them now, but in recent times we have seen a number of mergers taking place which the Government have not felt it necessary to refer to the Monopolies Commission as it exists at present. They have allowed mergers to go through on the nod in certain circumstances where they have suited Government policies.
Hon. Members must ask themselves if we are not in danger of allowing bigness to go too far. Our small companies provide a considerable part of our export effort. Furthermore, they are the companies which grow bigger and become the giants of tomorrow. If we believe in enterprise, and if we believe not only in a market economy, as we on this side of the House do, but also with Hon. Members opposite in a mixed economy, we have to realise that encouragement needs to be given to small companies to enable them to grow. In a Bill of this kind, it would be wrong to discourage the small man who employs, say, 500 or more workers and who can develop by taking over other companies. It may be that we should consider mergers at the lower level as being of more value to the country than mergers at the higher level. Very often mergers at the higher level create a situation where mergers among smaller companies become impossible, because even an amalgamated group of small companies can no longer compete with the giants.
§ Mr. Lewis
What I would call the middle band of companies is affected by the Bill. In so far as that is so, in my view it also affects indirectly smaller companies in the lower bands.
The right hon. Lady has brought the nationalised industries within the scope of the Bill. That is acceptable and is a new development. But I imagine that the powers of the individual Ministers who control the nationalised industries will be greater than the powers of the proposed Commission to deal with those industries and that there will be an escape hatch applied to them which will not apply in the private sector.
We have seen an example in recent days. Before Easter, the Minister of Posts and Telecommunications announced that the cost of the use of the telephone to the general public would be increased. The hon. Lady was challenged about the companies which would be dealt with under the Bill if it was thought that their price structure was wrong. She replied that it would deal with companies which were in a monopoly position or companies which should be able to bring down their prices because of the advantages of the increased technology behind them. This must apply to the Post Office. It is a monopoly. It has all the advantages of modern technological improvements. Instead, we are to have a swingeing increase of prices imposed by the Post Office and backed by Ministers. It is almost a mini-Budget in advance of the Budget proper next week, and it will raise £65 million from the users of the telephone services.
601 This Bill will simply cause an increase of interference with industry. It will not help competition. It will further restrict it. Certainly it will do nothing to keep down prices. None of the policies of this Government has been effective in doing that. Furthermore, it will have no effect on the wages front, because the wages boom has already gone through the roof.
Hon. Members opposite should find Clause 20 extremely interesting since it makes provision for the enforcement of orders by civil action. In the last few days, we have heard complaints from various trade union leaders and right hon. and hon. Gentlemen opposite about the policy of my right hon. and hon. Friends in connection with the trade unions. In our policy there is the possibility of civil action against unions who break the law on agreed contracts. Leaders of trade uions and hon. Gentlemen opposite have objected to it. Presumably the Government intend to delete the enforcement procedure from this Bill—or is it really true that they believe in one law for management and another for those who wield great power on the shop floor?
This Bill is a waste of time, and it is right that we on this side of the House should oppose it. It will simply add to the burdens of industry, which already has enough to do in seeking to increase its own and the country's economic success.
§ 5.58 p.m.
§ Mr. Joel Barnett (Heywood and Royton)
I hope that the hon. Gentleman the Member for Rutland and Stamford (Mr. Kenneth Lewis) will forgive me if I do not follow him. He seemed to be dealing with a Bill which is not before us at the moment. His main opposition seems to be that he does not like Bills——
§ Mr. Barnett
Perhaps I might take up the points raised by the right hon. Member for Mitcham (Mr. R. Carr). He said that he was opposed to the Bill. However, I thought that his opposition was a bogus one. He told us about the radical changes that he would make in the Monopolies Commission. But he made it clear that the Opposition are in favour of a Monopolies Commission, and 602 the first radical change which he mentioned affected the composition and staffing of the Commission. That was one of his major reasons for a radical change. However, in Schedule 1 of the Bill there is an opportunity for the Minister to vary by order the size of the Commission.
Does the right hon. Gentleman want the Bill to spell out the names of the members of the Commission? Unless there is a serious reflection on the competence of the members of the present Commission, what does the right hon. Gentleman imagine will be the composition of the new one? If this is the type of radical change in the Commission that he has in mind, it is very odd. If this is a major reason why he wants a change in the Bill and why the Opposition are opposing it, he must forgive us if we find it odd.
During the five years prior to 1965, the number of inquiries carried out by the Commission under a Tory Government were: 1960, nil; 1961, one; 1962, nil; 1963, two; and 1964, nil. If the Opposition have suddenly found a need for streamlining the Commission in some way, and this is the radical reason for opposing the Bill, I find it strange indeed.
The only really radical point made was literally shot to pieces almost before the right hon. Gentleman had uttered it. That was the point about the registrar of monopolies. This great new idea and radical reason for opposing the Bill was shot down by his hon. Friend the Member for Peterborough (Sir Harmar Nicholls) who asked, "Where will you find this Archangel Gabriel?" The hon. Gentleman is right. When I intervened and said that the right hon. Gentleman would take away from the Minister the right to initiate references, he said that he might consider allowing the Minister that power. We may be told later, but I think that was the only radical change of real substance, other than wanting the opportunity to impose tariff reductions.
Does the right hon. Gentleman want the Bill to set out and specify on which particular goods it will impose tariff reductions as a deterrent to companies in this country? If this is the Opposition's thinking on radical changes in a Monopolies Commission set-up, I reiterate that this is surely a bogus opposition.
603 Presumably the real argument, to which reference was made by the right hon. Gentleman, is the whole question of the amount of intervention in the market which was perhaps best summed up by the right hon. Member for Leeds, North-East (Sir K. Joseph)—this was referred to in another context by my right hon. Friend opening the debate—in the interview, if one can call it that, which appeared in the Financial Times on 16th March this year. I say "if one can call it that", because, as my right hon. Friend pointed out, most of the interview consisted of the right hon. Gentleman pointing out that he had not quite made up his mind, that he was leaving options open, and that he had not decided, on every question put to him. He said that the major way that he would deal with mergers would be by disclosure. In that context the right hon. Gentleman said:Management will then either have to improve the performance of an activity that is shown year after year to be disastrous, or sell it off, or close it down.I suppose that this sums up the philosophy of the Opposition. They will wait year after year until they see how the market decides to allow these companies to pursue their policies. Then, eventually, if it turns out that they are that bad, and if there are still some assets left for somebody to take over and deal with, then the market economy will have allowed it to happen. This is the way they would see the economy running.
This is precisely what they did and to what we were led in 1964—leaving companies year after year to be run in a way which was clearly to the detriment of the national economy.
I say that it is a bogus opposition because I do not believe that the Opposition are really opposed to the idea of a Monopolies Commission. Any Government must have the right to intervene to check abuse of market powers. This is why I give my support to that part of the Bill setting up a Monopolies Commission. But, with that right and my support, certain questions follow the setting up of such a commission.
First, the definition of what we mean by a monopoly. In a small country like ours the definition is somewhat different from what might be expected elsewhere. The world is our market, and our market 604 is ever more becoming the world's. The danger of dominance becomes less in these circumstances. This is why, whilst we have a large number of what, by any definition we have known in the past, would be called monopolies, we do not in every case ask the Monopolies Commission to investigate, for the obvious reason that many do not require to be investigated.
Nevertheless, there are cases where the public interest is involved and so one comes to the question of what is the public interest and how it is defined. My right hon. Friend tried to give a definition. Clause 31 gives some criteria to the Commission when investigating and reporting on any matter referred to it. However, nothing is said about the criteria that the Minister would use in deciding whether the public interest is involved for the purpose of making a reference.
Taking the criteria in Clause 31(2) which may operate against the public interest, the Commission must have regard to
According to those criteria, there is hardly a company in this country which would not be operating against the public interest. Few companies are that efficient. Nevertheless, these are the criteria for the Commission when investigating and reporting. The criteria for the Minister in deciding whether to make a reference are much narrower. We accept this. But precisely how narrow and what they should be is not easy to define.
- "(a) the production, treatment and distribution of goods and the provision of services, by the most efficient and economical means…
- (b) the organisation of industry and services in such a way that their efficiency is progressively increased, new enterprise, and new investment is encouraged and costs are minimised;
- (c) the best distribution and most effective use of labour, materials and capital assets".
Since 1965, the number of inquiries has grown. There were two in 1965, 10 in 1966, and six in each of the years 1967, 1968 and 1969. Those were under the wider scope of the 1965 Act. Those figures indicate that only a small number of companies is likely to be referred to the Commission. That is because there is generally little abuse of monopoly powers in the narrow sense. In the wider sense of Clause 31 there is clearly abuse 605 in terms of uneconomical use of assets. The reason there is no abuse of monopoly powers is not because of some desire on the part of companies to serve the public interest; it is to a large extent because of the deterrent effect of the powers of a Monopolies Commission. Without those powers I wonder whether companies would consider their duty to the public interest to a greater extent than their own interests.
I come now to where the power should lie in the making of a reference. This is where I come to the important point made by the right hon. Gentleman about the possibility of setting up a body outside this House with power to initiate references. It is worth considering whether this House, through a Minister, should no longer have that power. The right hon. Gentleman made it clear, initially, that what he had in mind was that a Minister should have power only to veto, not to initiate, references, although in an answer to an intervention of mine he quickly decided that maybe he would allow the Minister to have power to initiate.
I am reluctant to take power away from this House and put it into the hands of somebody else to decide when a monopoly, or possible monopoly, should be investigated. If that happened, it would mean that the House would be able to say something about it only when the report came out.
I am not necessarily happy about the idea that a reference should be made by a Minister without the House having any say in it other than being able to question the Minister at Question Time. I think that we should consider the possibility of allowing the House to query the very reference itself. I should not be prepared to consider the right hon. Gentleman's idea of removing some of the power from the House by taking away from the Minister the right to initiate a reference on his own. I think that it is worth considering whether the House should have the right to question the Minister rather more strongly merely than at Question Time about his decision to initiate a reference.
§ Mr. J. Bruce-Gardyne (South Angus)
I have listened with interest to the hon. Gentleman's argument. He says that he would object to a registrar of mono- 606 polies not being answerable to the House. Why does that objection apply, when a similar objection does not apply to the Registrar of Restrictive Practices, who is in a similar position?
§ Mr. Barnett
Here we are starting something, a whole investigation. We are asking the Commission to investigate and report, without the House having decided that that should be done. We all recognise that there could be cases in which there should be an investigation, but the registrar may not want it.
Equally, there could be cases in which the House may not want an investigation. I have in mind the present I.C.I.-Viyella situation. It may be that a lengthy inquiry is not necessary, but merely a quick one, without a report from the Monopolies Commission. The registrar, on the other hand, might decide to go through the whole lengthy business of an investigation and a Monopolies Commission report. There are serious objections to leaving this power in the hands of somebody outside.
I come to the question of how the power should be exercised. Obviously, it must be exercised effectively by an adequate sized commission. Schedule 1 of the Bill gives the Minister power to vary the size of the Commission. I referred to this on a previous occasion, and I am happy to see this provision in the Bill.
The question then arises of how frequently one should expect the Commission to carry out investigations, and how many investigations there should be. When my right hon. Friend the Member for Battersea, North (Mr. Jay), the former President of the Board of Trade, introduced his Bill in 1965 he said that perhaps companies having more than half of a market should always be investigated. I therefore tabled a Question to find out how many such companies there were, and how many had been investigated. I was told that there were about 156 companies.
Following the receipt of that information, I was told by an hon. Member that he thought that one company had been missed out. He seemed a little upset about it. But even if there were only 156 companies, we know that only 10 were investigated. I understand and accept that because I cannot state that 607 because those 156 companies have control of more than half a market they should be investigated. Clearly, one must look at each case on its merits. That is why this is a clear case in which pragmatism, and not dogmatism, should be the order of the day. As I say, one must look at each case on its merits.
We need to look at more companies, not in the narrow sense, but in the sense to which I have referred before; namely, in the wider economic sense that so many of them are failing the nation. The danger is not that we are investigating too many companies, but that the deterrent effect of the Bill could work against the wider public interest by causing stagnation in the board room. That is why, when the right hon. Member for Mitcham referred to the effect of the market on the board rooms of the country, and told us how, without what the Government were doing they would go ahead and not be enervated, I though that many board rooms would not recognise themselves from the right hon. Gentleman's description. Certainly, they would have have done prior to 1964, when one saw what had happened after 13 years of freedom from a Labour Government.
There is still the possibility of stagnation in the board rooms if we rely too much on a Monopolies Commission and the work that it can do. This is the real argument for the I.R.C. and its work in the opposite direction. This is why we need an I.R.C. We must have the stimulus of this kind of organisation which will do the work of encouraging the right sort of merger. I should like to see the corporation given further stimulus, because the work of any monopolies and mergers commission can have only a marginal effect on efficiency.
If a monopolies and mergers commission can have only a marginal effect, the prices and incomes part of the Bill will have a non-existent effect on efficiency. The tragedy of the prices and incomes part of the Bill is not just that we are back to square one. It is that we are back to pre-square one.
I do not speak as someone who wants legislation on prices and incomes. I did not vote for it. I speak as one who wants a prices and incomes policy, but not for a short-term manipulation to deal with the so-called wage explosion. There is as 608 much nonsense talked about that as there was by the right hon. Gentleman about many other things this afternoon. The talk ignores, for example, what is happening to our international competitors who have similar problems. In Europe, for example, we find this so-called wage explosion. Not only do they have the same problem, but they have failed to deal with it, in precisely the same way as we have.
I do not pretend that the level of wage increases is not serious. Of course it is, but one could have a more serious situation. One could have no inflation at all, as there was in the 'twenties and 'thirties and we know what happened to the economy in those days. I do not see inflation as being quite so bad as some hon. Gentlemen opposite do, because for me, inflation, the balance of payments, the £, or the parity of it, are not at the head of my list of economic priorities, certainly not at the expense of economic growth and full employment.
But when all the facts have been stated about a wage explosion, and when all the demands for action have been made by all the Press commentators, we see that at the end of these learned articles no new way is suggested of dealing with the problem, for the simple reason that there is no new way of dealing with it.
When we realise that there is no new miracle method by which to deal with the prices and incomes part of our economy, we realise, also, that the trouble with the prices and incomes part of the Bill is that it has lost sight of the objective. It is perhaps worth reminding the House, if only briefly, of what my right hon. Friend the Member for Belper (Mr. George Brown) did way back in 1964. He came to the House with a statement of intent, signed by the leaders of both sides of industry. It is worth recalling at least part of that statement. Paragraph 10 stated:We therefore undertake, on behalf of our members: to encourage and lead a sustained attack on the obstacles to efficiency, whether on the part of management or of workers, and to strive for the adoption of more rigorous standards of performance at all levels; to co-operate with the Government in endeavouring, in the face of practical problems, to give effective shape to the machinery that the Government intend to establish for the following purposes:It went on to deal with prices and incomes, and so forth.
609 I am sure that the gentleman from both sides of industry who signed that declaration are honourable men and meant what they said. But they found that, while in theory it sounded fine, in practice it did not work out quite so easily. The trouble was that we tried to force them to use that policy for short term economic ends. The question now is how we are to achieve the objective set out in that document.
We shall not do so by the Bill. The one thing wrong with it on prices and incomes is that it ignores the traumatic effect of the last 5½ years. That is why we are back to worse than square one. We cannot start in the middle as if nothing had happened. We have to start all over again. A prices and incomes policy, we have always said, is impossible to impose. Willing co-operation is needed. But if the leaders of industry who signed that document in 1964 really meant it, that co-operation must be sought all over again. We shall not help to get it by what is in this Bill. The sooner we make a start on seeking that co-operation, the sooner we will arrive at some form of solution.
§ 6.21 p.m.
§ Mr. Charles Fletcher-Cooke (Darwen)
The hon. Member for Heywood and Royton (Mr. Barnett) reserved most of his fire for Part II of the Bill. The whole question we have to decide is whether it is right to marry the remains of the Prices and Incomes Board to the Monopolies Commission. It is clear from the speeches today that the answer is "No", and that is why we are voting against the Bill. It is as simple as that. Part II gives the Government powers to make all sorts of investigations, although very few powers to make any orders, certainly none on wages.
I regard this marriage as very damaging to the Monopolies Commission, which has won golden opinions from all those all over the world interested in the question of market domination throughout its 24 years of existence. I do not 610 want to see anything done to injure that reputation. I fear that by foisting the rump of the Prices and Incomes Board on to the Commission its reputation will be damaged.
There is an excellent report by the O.E.C.D. entitled "Market Power and Law" which no doubt the Minister of State has read. It gives the Monopolies Commission a very good bill of health. Why spoil that record by attaching to the Commission what we regard as not only useless, but, as the hon. Member said, dangerous powers? There is, of course, great danger in attaching to the Commission any taint of political intervention.
There is, in the question of market dominance, a great dispute in the world as between what are called the "structural" approach and the "conduct" approach. The Americans and one or two others have the former. They look at the market and the people in it and, whether those people behave well or badly, they say, "No. They have too much potential power"—or even, "They may have too much potential power"—"and whether they wield it well or badly or at all they have to be divested."
We have the conduct approach—very much so. This is to say, even where an organisation has as much as 90 per cent., as in the case of B.I.C.C., of the market, if, on the whole, its conduct is considered to be good by the Commission it is not subjected either to price fixing or divesting procedures or anything like that. Again, this study of the various methods by which the various countries treat this difficult question comes out on the whole in our favour The conduct approach avoids all sorts of difficulties, although, of course, it has all sorts of dangers. The difficulties it avoids are such things as the definition of the market, whether by geography or by product.
In the case of the American system, hundreds of days are spent in first of all defining what the geographical market should be, whereas, for the Monopolies Commission, this is already defined by the Government, who have to operate within the wording of the parent Act, which says that…the market shall be the United Kingdom or any substantial part thereof…As far as I know, there has never been any problem as to what constitutes a 611 substantial part of the United Kingdom for this purpose.
Even more difficult in the structural system is the definition of product. By defining the product, one almost gets the answer one wants. For example, if one defines the product as footwear, one will probably find that few people have a large or too large a slice of the market. But if one defines the product as children's footwear, or as ladies' footwear, or as gentlemen's footwear, one may well find the answer to be entirely different. Therefore, the defining of the market in both these senses is crucial. It takes a very long time and I think that the conduct system by which the Government predetermine these definitions is much more practical.
There are many other advantages of our system. They all depend absolutely upon public confidence in the impartiality of their operation because they give the Government an enormous say—much more than in the European systems and certainly much more than in the North American systems. I fear that, by the Bill, the opportunities for abuse by the Government are greatly increased.
For example, my right hon. Friend the Member for Mitcham (Mr. R. Carr) suggested that the time had come to take the question of references to some extent outside the sole purview of the Government. I believe that he suggested this much for the reasons I have given. The conduct system is only tolerable if the whole system is operated absolutely judicially because here there is no method of private enforcement. In many other systems, private companies, if they feel they are injured by monopolists or mergers, have an independent source of reference to the Commission or court or whatever it may be.
If the Government of the country do not choose to operate—for example, in the case of the Federal Trade Commission in the United States—then a private concern has powers of access to the sources of power and can initiate inquiries or suits as it chooses. That is true of many other systems. Here, it is not true, so far. Since it is not true, it is all the more important that whatever Government agency does the initiations it should act entirely judicially.
612 That, of course, has been very seriously doubted during recent years in the case of this Government, particularly over the recent episode of the I.C.I. bid for Viyella and Carrington and Dewhurst. If there had been a power of private reference or the power of a registrar, he would have put that question of the domination of the fibre manufacturers, both actual and potential, upon the textile industry, into a proper perspective. We were told that that was not done because speed was necessary.
Instead of that, a political organisation was set up—I am not sure whether the Minister of State was a member, and, of course, I would trust him, personally, absolutely—a political tribunal was erected ad hoc to do a job which, for the sake of the world, and not just this country, must appear to be completely above political suspicion. There were people involved in this who are not British subjects and who look upon our law and practice hitherto in this matter as being judicial in its approach if not in its form.
That is why the Bill is yet another nudge in the wrong direction. By slapping on to the Monopolies Commission the prices and incomes functions, which are extremely political—as we have known from the last five years' searing and bitter experiences—it does something to detract from the high reputation of the Commission. Also, the addition to the powers of the Monopolies Commission of references into absolute size, irrespective of market domination and monopoly is another push in that direction.
There has never been, in any of the systems and structures dealing with market power and the law anywhere in the world power to examine on the grounds of absolute size. To quote one sentence from page 60 of the definitive work to which I referred:It appears from the cases that criteria of absolute size have never been applied in order to determine the existence of market dominance or of market power in general.That is to say, we in this country are starting on a completely new and uncharted sea, completely new and more drastic and more interventionist even than in the Sherman and Clayton Acts in the United States, which are regarded as horrors by those who wish to monopolise
§ Mr. Fletcher-Cooke
There may be a size criterion for notification, but there has never been a case which has been referred on the grounds of size. It is not surprising, because, if there is no prima facie case of monopoly power, market domination or anything like that, the only grounds can be of inquiry into efficiency.
If we are to have a general roving commission into the efficiency or behaviour of large companies, whether market dominating or not, it seems to me that that should be in an entirely separate Bill and conducted by an entirely separate organisation. I should be strongly against it, but if it has to be done, we should not dilute or pervert the Monopolies Commission for something way beyond its functions. This is my objection to the Bill and I believe it to be a serious one.
I had imagined that some more intellectual defence of this great departure would have been given by the Secretary of State. I had thought that she would say, for example, that the problem of conglomerates could not be dealt with under the present Monopolies Commission's powers. I was prepared with a long argument to explain how they could be. But she has not used that argument which I had imagined would at least have crossed her mind.
The second intellectual argument which I had imagined the right hon. Lady would produce was the argument of Professor Corwin Edwards, which I have no doubt the Minister of State knows, that market power can no longer be defined, that it has become such an impalpable could suffusing the whole business of the world that it is impossible to reduce it to a legal definition of any sort, so these wide-ranging powers have to be taken. But none of that was argued. All that was said was that, in vague terms, the Labour Government had already made industry so virile that it had to be made more virile yet and that this was a great instrument of virility. There is not a sufficient argument or defence of what I regard as a hybrid measure. Like all hybrids, we 614 will find that it has very bad, if any, posterity.
§ 6.36 p.m.
§ Mr. Norman Atkinson (Tottenham)
I cannot remember ever having heard the Opposition in such difficulty in trying to criticise a Bill. The opening speeches from both Front Benches were arguing opposite cases, but seemed to be frightened to death of the case they were arguing. My right hon. Friend the First Secretary—I hope that I get the gender right—is an absolute master of the soft sell. But there is a problem there. While she tries to project this concept, trying to placate criticism which may be coming from the C.B.I. or from the other side of industry, she is infuriating the people whom we represent.
In trying to point out that the thing is not really so sharp-toothed, that it will not make all that difference in terms of intervention, and that industrialists should not be afraid, my right hon. Friend is showing the Labour Movement that this is not a major instrument in projecting some of the policies which we have argued for so long. So there are great difficulties in that argument.
The Opposition are frightened of being honest and admitting that they are totally non-interventionist in their whole approach to the management of the economy. Thus they get into the schizophrenic difficulty of trying to argue the case both ways. Obviously, the right hon. Member for Mitcham (Mr. R. Carr) was frightened to death of falling into the arms of the right hon. Member for Wolverhampton, South-West (Mr. Powell), in his arguments about free marketeering. The applause which greeted one or two of his comments suggested that the party opposite are free marketeers and base their whole case on that.
The right hon. Gentleman also said that this could be like the Government throwing a piece of firewood into a fire of industrial relations. If they intervened to freeze a price at the same time as a union was negotiating a wage increase in that industry, he said, there could be an explosion. The unions would welcome that, because part of their case is that we should try to negotiate wages against price ceilings. By negotiating wages in this way, if we were pushing against price ceilings, we would compel 615 the representatives of industry to concede a wage advance at the expense of dividends. We are not afraid of that: we would welcome it. However, many of us feel that it is likely to be a theoretical aspect only.
I turn to the rôle of the new Commission to review wage structures in some parts of industry. This is to be welcomed, because it gives us an opportunity to consider some of the problems that have arisen in sectors of the economy in which wages are paid from taxation, particularly nursing. This could be a new era for negotiating wages in medicine, for nurses and doctors, just as my right hon. Friend pointed out that it could provide a new method for negotiating the salaries of teachers and university staffs. In this respect, the Bill, also, is to be welcomed.
There is a difference of view between the two sides of the House on the question of intervention or non-intervention. My hon. Friends and I are complete interventionists. We therefore regard the Bill as an instrument for intervention, and we welcome it. To us, this is an essential piece of apparatus for intervening in the economy and I hope that, in Committee, the Bill will be strengthened in accordance with, for example, some of the suggestions of the T.U.C.
Not only the T.U.C., but various sections of the trade union movement, including my union, the A.E.U., have made comments on the Bill. In general, the whole of the Labour Movement supports the Bill, its concepts and purposes. The T.U.C. has made some of its criticisms of the Measure known and it has suggested some additional areas of operation for the proposed Commission.
The T.U.C. has suggested that the Commission should be strengthened to give it greater opportunity to investigate the accounting practises of multi-national companies in this country. It is also concerned, in connection with multinationals, to see import-export balances investigated, possibly by the Commission. It is to be hoped, therefore, that the new body will be strengthened to give it the ability to investigate questions of this sort.
Again, on the question of multinationals and other giants in industry, the T.U.C. has pointed to the need for com- 616 panies to submit their manpower and investment policies for periods of, say, three to four years ahead. The T.U.C. would like the new Commission to have power to compel companies, and particularly the multi-nations, to submit their manpower policies for the period ahead.
Next, the T.U.C. believes that the whole system of price intervention should be strengthened. It also suggests that mergers should not be agreed in the absence of an understanding on the redundancy side. I understand that this question is to be discussed in some detail. It is to be hoped that a code applying to mergers and redundancies will be written into the Bill.
When speaking of what he described as the inadequacy of staffing proposed for the new Commission, the right hon. Member for Mitcham was right to mention the fear about the ability of this body to perform its various functions. I believe—this view is supported by many members of the trade union movement with whom I have discussed the matter—that the C.I.M. should create a pool of leading consultants who could adequately deal with such matters as organisation and methods, work study and cost analysis. There has been great criticism of the P.I.B. in this respect and of some of the investigations that it has made.
Similarly, there has been some criticism of the policy of employing foreign consultants in this sphere to work in this country. Many of us have never been able to understand why it was necessary to bring in a team of Americans to tell us what was wrong with the Bank of England, or why it was necessary to bring in a crowd of Americans—people who were totally orientated to private enterprise and who understood the code of behaviour of private enterprise in the United States—to tell us what was wrong with the nationalised industries in this country.
We believe that the new Commission should be strengthened from this point of view because we say that there is a sufficient pool of expertise in Britain—in organisation and methods, work study, cost analysis, and so on—from which we could recruit people to be employed by the Government to undertake investigations of this kind. In other words, we have no need to travel the world looking for consultants to do this job for us.
617 We strongly believe that these people should be employed by the Government, remembering that in their investigations they could have contradictory parts to play. For example, while investigating a nationalised industry they might reach conclusions which are critical of one or more sectors of private industry. They might feel inhibited from reaching firm conclusions since their next brief might come from the very section of private industry of which they are critical.
The right hon. Member for Mitcham spoke of the need for price stability. The trade unions regard this as a priority and are equally concerned about it. They take this view for two main reasons. First, they refute, as I do, the suggestion that price inflation is the direct result of wage increases. This is not necessarily so. Indeed, when speaking of that emotive thing, the so-called wage explosion, we should not forget that the Ford Motor Company recently concluded an agreement for an across-the-board wage increase of about 20 per cent. That company has gone out of its way to point out that its recent price increase of 3 per cent. to 4 per cent. has nothing to do with its concession of a 20 per cent. wage increase.
The company has detailed why its recent price increase arose and has said that the cost of steel and non-ferrous metals has been basically responsible for it. We should, therefore, congratulate Ford's on conceding a 20 per cent. wage increase and on afterwards arguing that none of it has been passed on to the consumer. Thus, it is not correct to say that the wage claims now being negotiated represent the basis of future price explosions.
Price inflation hits the wage earner hardest. Inflation during recent years has almost cancelled out wage advances gained by organised labour. In 1969, wages went up by 8 per cent. and take-home pay rose by about 6 per cent., but the index of retail prices rose by 5 per cent. Therefore, when one looks at the overall picture, organised workers in general have made little advance in terms of improvement in their overall living standards. Trade unions basically are more concerned about price stability than the actual amount being negotiated in the wage packet since they realised that their 618 efforts are being eroded. In the matter of living standards wage negotiators are having to run like mad to stand still. This is an important point which should be emphasised.
The T.U.C. comments on the Bill touched on the question whether price inflation could be curbed by use of an instrument such as this legislation as a deliberate act of policy. They mentioned the necessity for strict surveillance of Government purchases, the size of which and the nature of overall procurement policy have an enormous influence on prices. The second consideration relates to the efficiency audit, which trade unionsists welcome since we believe that there is an absolute need far an efficiency yardstick by which we can understand what is happening in the nationalised industries. It is in the interests of wage earners that this should be done.
Thirdly, there is the question of maintaining wages against price ceilings. The right hon. Member for Mitcham spoke about throwing firewood into the fire of industrial relations. This again, is a matter of great importance to the trade unions. The fourth matter relates to the intensification of price consciousness in the retail trades.
Finally, there is the shift of indirect taxation to direct tax, on which the T.U.C. has made its views clear. I hope that the Chancellor of the Exchequer will get the message when he comes to make his statement to the House.
§ Mr. James Dickens (Lewisham, West)
My hon. Friend rightly pointed out that a number of elements, other than increases in money wages, cause inflation. Does he recall that the National Economic Development Council, in its 1968 Report on Movements in Prices, Productivity and Incomes, drew attention to the fact that the biggest single reason for the increase in the cost of living since 1964 has been the increases in direct taxation, followed by increases in import prices and increases in general domestic costs, and that the endeavour to secure a high return on capital has been by far the biggest single element?
§ Mr. Atkinson
I am obliged to my hon. Friend for making that point. I will not paint the lily by going into what 619 was said by the Leader of the Opposition. What my hon. Friend said is quite correct. I would add that the whole of the case was put in the debate in the House before the Easter Recess, when we presented the idea for a Socialist Budget, has been borne out by experience.
It is an important part of trade union concern to be involved in price stability, particularly retail prices. Price inflation over the years has prevented any radical revision of the share of the cake that goes to wage earners. There has been little movement over a period of 40 years between the share that goes to rent, interest and profit and other unearned income and that which goes to wages. Over a period of about 30 years there has been a shift of about 4 per cent. This is a matter about which we are most concerned when trying to devise some method of slowing down price inflation.
We all recognise that rigid price control is costly and unworkable. At the moment only one commodity is controlled by the Government, and that is milk. This may seem surprising when one hears discussions about what should be the Government's attitude on the control of prices. There is an argument taking place over the price of bread, but the Government have no control over the price of bread, and this must be remembered.
Housewives are often advised that if they wish to cut the cost of living they should take the trouble to shop around. But that is not as easy as it seems. To shop around effectively one would have to have an immense intelligence network in the district, with a member of the family going to the shops and radioing the information back to mother, saying that so-and-so shop had taken 3d. off tinned fruit. Another aspect to be borne in mind is that few cut-price goods, as many traders will confess, are genuine price reductions.
The question is to find a sensible and attractive voluntary scheme to influence retail prices. I believe that this is possible and I would make one suggestion to the House. I have discussed this idea with industry and with the distributive trades, who thought it a good idea, and it also has trade union support. I would 620 suggest a scheme of merit awards on the lines of an adaptation of the Royal Warrant system. At present, a few traders and manufacturers are granted permission by the Queen to affix to their price labels the Royal insignia and the use of the words, "By Appointment". This, for obvious reasons, is a much sought-after privilege, but I believe it is a privilege that should be earned. I feel that we could replace that system by a merit award scheme under the auspices of the commission which we are discussing today.
The criteria would involve price stability over a reasonable period and guarantees about weight and quality. The awards would be reproduced on labels on goods, including the maximum price registered. Such a scheme could be supported by a massive Press and television campaign, which would obviously bring sales benefits to those who exhibited a merit award on their products.
This could be totally voluntary and would be an attractive way of over-coming some of the difficulties. It is in line with the Consumer Council's ideas. The Consumer Council has had a lot to say about this in many reports, notably one in 1968, which said:Another problem caused by the end of R.P.M. is the frequent lack of the yardstick of a manufacturer's recommended price to enable consumers to measure the size of the bargain they are being offered when retailers advertise cut prices. In January, 1968 the Council sent a memorandum to the Monopolies Commission which is enquiring into the practice of recommending resale prices. In it, we argued that manufacturers should be allowed to tell retailers and the public the 'usual' retail prices of their goods. But two safeguards are needed.The practice should not be allowed to be used as a means of maintaining unjustifiably large retail margins.Where 'usual' prices are used as a means of advertising the bargains, the prices crossed out should genuinely be those at which substantial amounts of goods are sold.That is in line with many of the ideas floated by the Council.
Another aspect of the problem is the coming of decimal currency. Certainly, during the first few years of change-over it would help considerably to have printed on price labels and other marks on products the maximum price and its conversion into decimal currency. That would help to give considerable confidence that the cost of living was not 621 accelerating in the way that many people suggest. It would be an attractive scheme which should be considered by the Government. I hope that we shall have an opportunity in Committee to look at some of these suggestions.
If the Bill is strengthened in the way proposed by the T.U.C. and many trades unions, it could be a tremendous instrument for us to intervene in the economy, making the kind of adjustments we have argued about for so long and making it possible to double the rate of economic growth. That is why we are concerned with these things. It is because of our dissatisfaction at the rate of growth and because we as a Labour Movement believe that what we should try to achieve is a high-wage economy with stable prices. It is my belief that the first Government which can produce that for this country will be in office for many years to come.
§ 7.3 p.m.
§ Mr. David Howell (Guildford)
I resist the temptation to comment at great length on the speech of the hon. Member for Tottenham (Mr. Atkinson), except to express surprise that he was not a little more cheerful. Perhaps if the hon. Member for Lewisham, West (Mr. Dickens) had been "on" tonight he would have been more cheerful. After all, for hon. Members opposite this should be a rather cheerful occasion. You, Mr. Speaker, and I and many hon. Members, have been here for four or five years listening to the doleful appeals of hon. Members opposite to their Front Bench to get rid of the income legislation. Now it has gone and this is the wake. I should have expected a little more cheerfulness in the comments of the hon. Member. Unless his gloom is under-pinned by the certain knowledge that, now the whole dotty paraphernalia of the Department of Employment and Productivity is to be turned into other channels, it will be no more effective as it has been over the years of incomes restraint.
That is my fear, and if I sound gloomy it is for that reason. I mistrust the ability or capacity of the new sponsoring department, the Department of Employment and Productivity, to pursue desirable aims of public policy in this field in an 622 effective way. I believe, as my hon. Friends believe, that powerful instruments of public policy are needed to spur competition. I agree most strongly with my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) that competition is not a natural state of affairs and that constant intervention is needed to maintain a competitive situation, and constant watchfulness.
In this sense, the distinction which the hon. Member for Tottenham tried to draw between hon. Members opposite whom he described as interventionists and those on this side of the House whom he regards as non-interventionists is unreal. This problem requires very sophisticated consistent and systematic intervention.
Those in favour of intervention in the modern situation cannot just pass a few laws and sit back; they must be interventionists. This is particularly needed—it is a new phenomenon of the 'sixties and 'seventies—when it comes to policing, and spotting the areas where the actions of Government, often unconsciously as customer and in procurement policies, or through statutes and fiscal policies, the full significance of which may not be clearly seen, stultifies competition. The task is to spot where the process is adding to the constipation of the competitive system and where necessary changes should be made in the public and private sectors. This cannot be done just by a Monopolies Commission or the Commission for Industry and Manpower idea proposed in this Bill.
The hon. Member for Heywood and Royton (Mr. Barnett) put it very clearly. He made quite clear that this alone is not sufficient if we are talking seriously about competitive policy in the modern situation.
Of course we must look at many areas where there is an abuse of market power. Such areas are very difficult to define. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cook) showed with legal precision what the immense difficulties are. It is necessary to have a Monopolies Commission instrument of a strengthened and streamlined kind such as was suggested by my right hon. Friend the Member for Bexley (Mr. Heath), less than two years ago, to cope with this limited aspect of competitive policy.
623 But other things are additionally necessary. Earlier in the debate someone made the gibe that perhaps there has been a change of mind on this side of the House and that we give greater attention to these matters than we did five years ago. Of course more attention is necessary because there has grown up in the last few years a great obsession with the cult of bigness. I do not say that that has been the inheritance exclusively of the Labour Government. It has been very much a feature of the early and middle sixties. The Labour Government's Minister of Technology, with his ever-boyish desire to be on the latest trend and in the latest fashion, early became an adherent of bigness. The voice of industrial policy as it emanates from Whitehall and the Ministry of Technology is a voice in favour of bigness and the need for large firms. We heard more about that from the right hon. Member for Newton (Mr. Frederick Lee) this afternoon. I am not sure that he was right nor that the clichés about bigness are right any more.
As we move into the seventies, small firms with high innovation, the high technology firms, and even firms such as motor manufacturers, will have immense opportunities. Not bigness but smallness and flexibility will be the key qualities. Yet for the moment the Government's prevailing philosophy is bigness. That makes it more and more necessary to have sharp instruments for anti-monopoly and for competitive policy.
I may be offering hostages to fortune, but I think the Prices and Incomes Board and the kind of analyses it undertook in its early days were in some cases, but not all, rather useful. They had a great educative value. In the very early days before the whole organisation became distracted, it was interesting to see the analytical approach to industries where competition should be working and was not. Analyses was needed to show the fault lay within Government policy, or Government industrial relations, to show where a competitive system was not operating. But it all went sour, and for the same reason the whole "Neddy" exercise went sour. They took on the task of trying to cope with an incomes policy. They took the poisoned chalice, drank from it. From then on the whole 624 organisation had withered and writhed and produced less and less effective reports.
So I concede that the analytical approach to the patterns of competition in industry which the early P.I.B. reports attempted to present was necessary and useful and desirable. So the question arises and is presented to us by this Bill of who carries out this function and under the sponsorship of which Ministries? I suppose that in a logical world or in mildly sensible Whitehall the functions would be carried out under the sponsorship or under the paternal umbrella of the Ministry of Technology, or the Ministry of Industry as the Ministry of Technology has become.
The difficulty here is the one to which I have already pointed—that the Minister of Technology is the voice of big industry. It is at the bigness end of White-hall. To put the agencies under the umbrella of a Ministry which is dedicated to bigness in all forms and to pushing industries together and calling things industries which are not industries—something like the ball-bearing industry or that sort of concept—and imagining that they will stay together and be big and competitive because they are big—to mix that with these new agencies would be nonsense.
The Ministry of Technology is not merely a poacher—as opposed to a game-keeper—in private industry, being in favour of big private industry. It is actively supporting the activity of the public sector in monopoly practices, by, for example, creating bodies like the British Research and Development Corporation which will drive private enterprise research out of business or by supporting the Post Office Corporation as the Post Office suppliers which has already driven private enterprise suppliers of Post Office equipment out of business.
§ Mr. Eric Lubbock (Orpington)
The hon. Gentleman must be aware if he has read the Green Paper that the B.R.D.C. will seek to contract research work from private industry but that if private industry does not choose to place those contracts with the B.R.D.C., they will not exist. How can it therefore be poaching from private industry?
§ Mr. Howell
That is the theory. As the hon. Member for Orpington (Mr. Lubbock) knows, the idea is to attract £18 million worth of private research. But if, as time goes by, this is not forth-coming, then the definition which the Minister has adhered to of the research being done at full cost will become more and more eroded under pressure to provide the work for these facilities. But we do not want a debate on another Green Paper at this stage. This is my view and it lies behind the point I am putting forward.
For these reasons it seems to me that the Ministry of Technology could not be the home of the new Monopolies Commission, the C.I.M. or the new instruments of competition needed in today's Government. Where then should it lie? The Government have come forward with their answer that it should lie with the Department of Employment and Productivity. What distresses me about this kind of proposition and the way that it is brought forward—and it applies to other things, like the British Research and Development Corporation—is the absence of any sign of application of the Fulton principles adhered to and welcomed by the Prime Minister on behalf of the Government. The Fulton principle was that in organisational change and adaptation and allocation of functions to civil servants and to departments in future there would be a cardinal rule which would be: define the objectives, look at the job first, analyse the function, see what one was trying to do and then create an organisation as far as possible best suited to carry that out.
One has only to have a brief look at the sort of goulash of functions put into this Bill and take a brief glance at the rumbling squabbling between Ministers and Secretaries of State which went on behind the decision to hustle these functions away from the Board of Trade into the Department of Employment and Productivity, or under that Department, to realise that in this case Fulton was pushed out in the cold. In this case there was no analysis of objectives, no definition of functions and no clear recommendation of the right organisational structure.
I do not know whether the Civil Service Department were allowed in on the act but if so it certainly has not laid its mark on it. This is clear if one looks at 626 some of the main functions which the Bill suggests that the C.I.M. is supposed to perform—the consumer protection functions and the guardianship against the abuse of market power. There seems to me no reason why these should belong with the D.E.P. It has no tradition in that field and I doubt whether it is going to have the skills or the staff to operate effectively in that field. I believe most strongly that my right hon. Friend is right in saying that a separate registrar is long overdue; which must not be completely subject to ministerial discretion. The problems of accountability to this House can be resolved in a wav which will make for greater accountability than we have at present with the decision to refer made behind closed doors.
Then there is the competition policy which is a much broader and tougher question and the whole question of strengthening company law and policing the operation of company law and of carrying out the activities of spotting where the Government in all its industrial policies and customer rôles will be against or discouraging the competitive process. Does this belong with the D.E.P.? It has not the tradition of handling competition policy or the vigorous pursuit of competition. If such a tradition exists anywhere I suppose it is in the old Board of Trade which is now being divested of these matters. There again I cannot see a case for these matters going to the D.E.P.
Finally, there is the other part of the mixed bag—the whole question of price stabilisation for which the C.I.M. is some-how supposed to provide. This of course is the vacuum area where there is nothing. Indeed there was nothing before although there were the words of the incomes policy. I say here, and again I may part company with some of my hon. Friends, that I do not think any political party in Britain nor any political party in continental Europe has the answer to the question which the right hon. Member for Newton (Mr. Frederick Lee) seemed to be demanding to the whole question of rapid inflation in modern society. I do not think—I am suspicious on panaceas—there is a total answer. Some of it may lie in a monetary policy, but one has looked a little askance, particularly in the last two years, as the Treasury has gone dotty on monetary policy in the 627 belief that by operating on the money supply, wages and prices will be miraculously slowed down. One ought not to pass without commenting that during this year of so-called stringent monetary control, wages and prices have gone roaring up faster than ever. Of course, we must have a sensible monetary policy and proper monetary discipline, but the whole answer to inflation does not lie there. It does not lie in the incomes policy panacea either. It does not lie in the effort which the right hon. Lady, the right hon. Member for Belper (Mr. George Brown) and other right hon. Gentlemen opposite have been making for years to peddle the incomes policy like a religious trinket off a tray which will solve the inflation problem. This panacea approach makes no more sense.
If we are to find an answer, and if we are to look beyond the absurdity of the C.I.M. and consider other sources from which we may begin to draw an answer, it may be that the hon. Member for Tottenham had something. We must go back to the rather unfashionable question of the rate of growth of output. This is embarrassing for the Government to talk about because it is not very big—only 2 per cent. last year—and it has been pooh-poohed by those who say that output is not everything, that there is the smell of flowers of spring to be added to the rate of growth and that one must not be too much of a "growthman". But, however we define output, whether including leisure or not, this I believe is where our eyes must turn.
It is not the least surprising that, with a 2 per cent. rate of growth of output last year, there has been an enormous rate of inflation. The point is made even stronger if we consider, not merely output, but the rate of increase of industrial investment which, over the last five years, since 1964, has been 0.2 per cent., a minute amount—one-tenth of the rate of increase of industrial investment between 1951 and 1964. Against that background, it is not surprising that there has been a very rapid rate of increase in price inflation. For it is in innovation and in new products, in the input of imagination, ideas and equipment into making products that the hope for price stability lies.
628 No much can be done by campaigning against wage increases. Of course, I agree with my right hon. Friends that the wage situation is out of control because a general neurosis has seized the land. Everyone believes that prices will go up and therefore more wages must be grabbed. But, on the whole, the rate of wage inflation last year of 8, 9 or 10 per cent. seems to be about the norm in Western countries, the kind of wage increase which is unavoidable and even possibly desirable in Western economies. If this is a low wage economy, as it is, and if higher wages are desirable, as they are, wage inflation of 8, 9 or 10 per cent. is not too disastrous. But it is certainly disastrous if there is only a 2 per cent. increase in output and a 0.2 per cent. rate of increase in investments. It is disastrous if wage increases continue without output rising and if, therefore, prices are roaring upwards.
When an hon. Member opposite said that this country is no different from other countries, he was right about the rate of wage increase, but utterly wrong about the rate of output increase and therefore utterly wrong about the consequent rate of inflation, which is intolerably high in this country.
It is here, and not in the five years wasted energy in rampaging against wage rates, that the answer lies. It is in innovation and in the application of imagination and the motivation of management and incentive to management to make that innovation and not in the restriction of wages that the answer lies. And of course it lies in a structure of trade unions and labour relations which allows that high investment and rapid innovation to take place.
The question is: how will these things come about? Will the C.I.M help? Of course it will not. It does not even begin to do so. Will the C.I.R. help? Of course it will not. It is without teeth, a busted flush. The Government made a fatal mistake in not accepting Mr. Andrew Shonfield's recommendation in the Donovan Report. If they had done so, they might have had some success in reshaping trade unionism to cope with a high innovation economy.
Does the answer lie in the Department of Employment and Productivity? There are few of us left who have much hope in that direction. Inflation at the present 629 rate—5 per cent. last year, with a 7 per cent. increase in food prices—is a symptom of a dying Government, rather like a dying man who loses control of his muscles one after the other. I do not believe that it is any use attacking rising prices I have said that to my hon. Friends.
The root causes of the trouble which people in this country are perfectly capable of looking to beyond the immediate question of rising prices are a low growth of output, an absurdly and desperately low rate of investment, low efficiency, a vast, bulbous and antique public sector and a public administration which neutralises enormous areas of resources within a crazily ineffective and inefficient framework. These are the things to tackle. Shuffling the Monopolies Commission from the Board of Trade to the Department of Productivity, or talking about competition without creating effective instruments of competition, or placating the right hon. Lady's hon. Friends—I suppose that they are her friends—below the Gangway by abandoning the incomes policy will not do.
I shall vote against the Bill because it symbolises all that is second rate in the present style of government.
§ 7.26 p.m.
§ Mr. Robert Sheldon (Ashton-under-Lyne)
The hon. Member for Guildford (Mr. David Howell) called himself an interventionist. We are grateful to know that there are such Members on the benches opposite. But even his interventism would be of a somewhat modest kind compared with the kind which the Government will be forced to go in for to obtain some of the powers required to deal with industry.
Over the past 20 or 30 years, we have seen a revolution in the attitude of Governments to industry. It has been accelerated since 1964. The normal attitude of Government to industry previously was that the Government should hold the ring and let industry operate within its own confines as best it may. The new philosophy, which we have fully embraced, is that the Government should involve and concern themselves in and, because of its importance to the well-being of this country, must take a more and more prominent part in industry.
630 As long as the people vote for Governments to control the economy effectively, any Government, of whatever party, will be forced by that electoral pressure to take on more and more responsibilities within industry. This is an inescapable consequence. It is inescapable in all Western European countries and even in the United States. As long as prosperity is one of the things for which people vote for Governments, then Governments will involve themselves more and more to make sure that if they have responsibility for matters over which they have no power they will acquire some power in exercising that responsibility.
The way in which the present Government involved themselves in industry through the Industrial Reorganisation Corporation was splendid. The Bill is one more modest step in this direction. I do not think that we have the relationship between Government and Industry right as yet, but we are beginning to learn and to understand it. I take some comfort from the way in which things are going. In the Government there are a number of Ministers, and there are even a number of civil servants, who are beginning to understand how industry works and how the Government can co-operate with it. In my right hon. Friend the Minister of State at the Department of Employment and Productivity and my right hon. Friend the Paymaster-General we have men who have contacts with industry which enable them to under-stand industry's problems. These are developments in the right direction.
Whether we call this process creeping Socialism, public control, industrial regulation or a statist solution does not matter. The name does not matter. What is inevitable is that these relationships are being established and will go on being established. Even if hon. Members opposite were to form the next Government, they would move in this direction—perhaps not as fast—as they were forced to move throughout the 'fifties.
There is bound to be a demand for extra staff by the new Commission. I am disappointed to see on page iv from the information which is now compulsory, that it is expected that there will be little or no change in public service man-power as a result of the Bill. As the right hon. Member for Birmingham, Hands-worth (Sir Edward Boyle) said, I should 631 have expected some demand for an improved service. I would not have expected a vast increase, but I would have expected a modest increase, and I am rather sorry that we have not seen that.
All during this Parliament we have seen an increase in the numbers of mergers and a dedication to some of these larger organisations. The advantage of this kind of movement with new industries is more apparent, but our problems in the restructuring of industry, as we moved from a world in which we exported to the Commonwealth as our main customer, to a world in which we export an increasing proportion to other countries, has meant that we have had a larger share of contracting industries than other countries.
What we have needed to do is not so much organise the industries which are capable of expanding and which we are ready to expand, but rather to devise a new framework for the structure of those industries which were contracting and at the same time try to get the efficiencies and improved methods obtaining in those industries.
It can be done, but it is not easy. What can be done is that one forms a concentration and closes down the less efficient parts. Because the size is larger, one can re-equip in a more useful way than if one were to leave the individual units to fall back in production. The obvious examples are the railways, the mines and shipbuilding, where there has been concentration. Although they have not always made as much use of it as they should, there has been the chance to modernise, even in a declining industry.
We see in the Bill the basic dichotomy between the work of the Industrial Reorganisation Corporation and that of the Monopolies Commission. They were the two sides of the scale—one pushing one way and the other pushing the other way. We know that, at present, the Monopolies Commission is rather less in fashion than the I.R.C.
The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) said that the Monopolies Commission had won golden opinions. It may have won them from lawyers, but it did not win many from me. I saw it as of considerable importance in its early years, but as we became more and more involved with 632 industry, we found that waiting three or four years for a report was not acceptable. The pace of industrial change today is such that there are not all that many industries in which we are prepared to wait so long for an absolutely precise report.
By the time a report of that length is produced, the situation has changed and the demand for the report has changed. The great virtue and attractiveness of the National Board for Prices and Incomes was that it could get out a report. It may not have been so accurate or so comprehensive, but it was relevant when it came out. It still had something to say about a situation which was considered important when the reference was made.
§ Mr. Fletcher-Cooke
Which of the many excellent reports of the Monopolies Commission does the hon. Gentleman say were not relevant when they came out?
§ Mr. Sheldon
The Courtalds reference is a very good example. When that subject was referred, it was one of the major problems of the textile industry. By the time the Commission reported, the whole structure of Courtalds was changing. This happens all the time. We must have something which comes out when the issue is still important.
The interesting thing is that the reason why the I.C.I. bid for Viyella could never have been referred to the Monopolies Commission was that one could not wait several years for that kind of report. One had to take action. So the Monopolies Commission could not be consulted in a large number of issues.
Therefore, we come to the point made by my right hon. Friend the Member for Newton (Mr. Frederick Lee), that one of the major problems today is not so much how to prevent monopolies, because there will be a large increase in monopolies, as industrial concentration gathers weight. Not in all—there are many exceptions—but in a large number of areas, industrial concentration is the logical answer.
If we are to have this, how do we not prevent monopolies—by definition, certain monopolies are advantageous and cannot be prevented—but control them? This is becoming the problem of our 633 time. What worries me about the Bill is that the Department will have responsibility for just one side of the argument—the question of monopolies. When a Department has responsibility for one aspect of the argument, it tends to support that aspect. I hope that this will be carefully examined to ensure that the Department does not become a Department against monopolies and mergers, but that, in some way, it may come to understand the two aspects.
There has been some reference to the statement that the nature of monopolies is changing, because of the lessening of the barriers between countries. I do not think that monopolies in Britain today will be diminished by our entry of Europe. We will not find that international competition will be a substitute for domestic competition. It will not be an answer, because, if international competition starts invading the British market to such an extent that it has a real effect in promoting vigorous competition, at the very instant that it does that, we shall be forced, as a country, as a House of Commons, to legislate to ensure that our industries do not suffer adversely.
The Lancashire textile industry is an example. There can be some marginal effects on competition, but not the effects of competition from overseas that we can see in this country arising from internal competition. As imports affect jobs and the economy, as they will, we cannot let imports pour in to produce the market forces which some people would wish to see. Also, as such imports have their effect, as a result of tariffs reduced to encourage such competition, these might make some of our monopolies economically less viable. This, again, no Government could afford to see. So the Government must involve themselves and must establish certain criteria, which are very difficult, to see how we make the monopolies which we are to have efficient and effective. Competition is the perfect test. Without that perfect test, what does one do? How does one replace it with another test?
In an increasing number of ways now—this is a process which will continue—competition is very much a blunted spur. It is still effective in international trade. Exports from this country compete vigor- 634 ously with exports from Germany, France and elsewhere. There is vigorous and effective international competition, but there is rather less competition in each of the home markets concerned.
The merits of competition are, first, that it is a spur, though a blunted spur now, and second, that it is a yardstick measuring precisely the effectiveness and efficiency of particular industries. What is difficult is to find ways of replacing competition as the yardstick for measuring efficiency
One can say, as my hon. Friend the Member for Tottenham (Mr. Atkinson) did, that there are other methods of one kind and another for judging efficiency, but I am unconvinced by his arguments in this respect, and although I believe that there will have to be much greater attention directed to other methods of establishing and measuring efficiency, I am not hopeful that they will ever be as good as competition. But where we have no choice, where we have a monopoly against which we cannot set the standard of competition, we must make do with rather less adequate methods.
The most precise method is after all to establish the costs of company A against the costs of company B; if A's costs are less, A is more efficient. Similarly, if one can establish the sales of company A against the sales of company B and show that A's sales are greater, A is more efficient. If more customers go to company A than to company B, company A is more efficient. These are absolute standards readily determined—an excellent yardstick, but, unfortunately, there is a diminishing number of situations in which yardsticks can be used. We need, therefore, to search for other tests. It will not be easy, but whatever we can use will have to be used because these will be the only methods available.
In the consultative document from the Department of Employment and Productivity, it is said, in paragraph 6, that…the Government believes that the growth of large industrial units has weakened competitive forces and made it necessary to widen the area of public scrutiny.We have in the Bill methods for doing just that. I regard as admirable the way in which the Bill allows certain companies to be subject to scrutiny and 635 to disclose certain information which may not otherwise be disclosed.
I hope that my right hon. Friend will have something to say about the code of conduct on which she is at present negotiating with the C.B.I. This is a valuable method of securing co-operation with industry, to say that there are limits to how precisely one can form legislation so that the Government can work with industry in a common objective, and it is far better to have a legislative framework as a last resort if there is no agreement in the meantime.
After all, it is somewhat akin to our Guillotine procedure, under which we have a Business Committee which tries to organise matters amicably, but, at the end of the day, failing agreement there is resort to another method. If we can find this sort of relationship with the C.B.I. and with industry so that there is an understanding about what should be disclosed, even though one cannot frame legislative words to fit exactly, and if we can find this way of extending the area of consultation, the outcome will be wholly admirable.
I should like to see that sort of attention applied particularly to conglomerates, a subject of great concern now, as they are bound to be. One of the most important aspect of conglomerates is that one should be able to identify the various parts of such a company so that one may compare not only the conglomerate with another—for that is meaningless—but parts of the conglomerate with other industries making only that product or those parts of another conglomerate making that product. This kind of comparison is of great importance.
We still have some way to go, but I am encouraged to see the use of business ratios developing. I looked forward to this when we discussed the original Bill, and I am glad that it is now becoming more widely used, with such ratios as sales as a proportion of total assets or profits as a proportion of total assets being taken for the purpose of comparison between different industries. At last, investment analysts are making use of this method and showing the efficiency of one company as against another.
Now, the prices and incomes side of it. I have always believed, and still 636 do, that this is an area in which the Government are unable to do much. I think that we have at times over-emphasised what is ever likely to be possible, though I have always believed that this is a method by which we should slowly, step by step, be able to achieve a greater understanding of how the shares should be taken by different sectors of employees. We are still in the same position, and, unless we can find some way of determining the shares, inflation will always be the answer.
We can, however, operate only within what is possible. I hope that we are here laying the foundations for a later stage. While we should not go beyond what is possible now, at least the educative part of it will be of value. The hope which we had in 1965 may be rekindled, and with, perhaps, some of the dedication which a number of people had then, it may be possible to start again almost from scratch.
Now, the level of prices and the question of inflation. I believe that there are many misconceptions about the effects of inflation and the inefficiencies arising from inflation. Many of the consequences of inflation are felt because we are relatively unused to it. We are not really familiar with how to adjust to inflation as a more permanent state of affairs, as it is likely to be.
Do those who talk about current high rates of interest, for example, remember that they are not so high when the inflationary element is deducted from them? So long as there is inflation in the Western world, incorporated in the rate of interest must be the rate of inflation, so that, for example, if there is an 8 per cent. rate of interest and a 5 per cent. rate of inflation, one has, in effect, a 3 per cent. rate of interest. This is the kind of sophistication which is beginning to seep through, and, obviously, it will go a lot further.
Despite all that, it can be held that inflation is far preferable to several other possibilities, among which I single out unemployment as not the least of them. I wholly accept that, but we must not be blind to the inefficiencies of inflation itself.
Adjustment for inflation can be made in respect of savings; there is no difficulty there. As regards costing and investment, 637 as people adopt a more sophisticated attitude to inflation, they will come to work on the basis of constant money, as we do in the Ministry of Defence and our Estimates generally. There are countries today which have got used to this. When it comes to questions of money, people rapidly learn where their interests lie. These are matters which industry can encounter and overcome.
But the great inefficiency which can never be overcome is the damage that inflation can do to productivity. Inflation does not cause much damage to savings. People can learn to live with it, though they have not learned to do so yet. We cannot assume that inflation is purely temporary and will go away, nor do I think that hon. Members opposite think in quite those terms. If inflation stays for any length of time, people will learn to live with it. They will want some money for their old age, or for some particular venture, aim or ambition, and inflation does not stop them doing so. What stops them is not understanding inflation: the thought that if one has £100 now it will be worth only £20 some time later.
The most important aspect of inflation, and one which cannot be overcome, is its impact on productivity. Once we have rates of inflation of 5, 6, or 7 per cent. and rates of productivity of only 3 per cent.—and the rate of inflation is not assured in advance—the rate of productivity becomes rather less important to the manufacturer and the industrialist. If the manufacturer faces at the beginning of the year a possible rate of productivity of, say, 3 per cent.—which is roughly what it is at present—and then finds himself facing a rate of inflation of any-where between 4 per cent. and 7 per cent., productivity becomes less important to him. That is what countries which have inflated very seriously have found. It has been found that all the other matters can be disposed of by making various corrections. It is just a question of an increasing sophistication which is bound to come about.
But this is one more argument against increasing inflation in order to achieve certain other desirable objectives. I hope that the Government will be able to find a way of diminishing it—curing it, no one 638 can do. But to keep some sort of check on it is a worthy and desirable objective, and I look forward not to the Bill having much impact on that aspect, but, at least, to further ideas which will come to the Department and which it may be able later to use.
§ 7.53 p.m.
§ Dr. M. P. Winstanley (Cheadle)
I apologise for an apparent discourtesy in that I had to be absent from the debate for a short time on an important constituency matter of which some hon. Members know and whose sympathy I have. I assure those hon. Members whose speeches I have missed that I intended no discourtesy to them; and that I shall read their speeches with great interest.
I have listened to the speeches of the hon. Members for Ashton-under-Lyne (Mr. Sheldon) and Guildford (Mr. David Howell) with interest. It seemed to me that they both spent their time on interesting philosophical discussions of what is at the heart of this matter: what can we do either to restore competition, or even to do without competition? The approach of the two hon. Members was rather different.
I say at once that we on this bench have very grave doubts about the Bill, and our doubts are not yet fully resolved. In other words, we are not yet wholly lost to the Government spokesman—not wholly. How we vote later will be largely determined by his answers to certain questions I have to put.
We support the merger of the Prices and Incomes Board with the Monopolies Commission. We ourselves have in the past recommended just that step. We think that, essentially, the two are operating in the same territory and should be operating in an integrated way. Nevertheless, we are very doubtful about some of the Bill's nosey-parkering provisions, which seem to go much further than is necessary. We do not say that some action with regard to monopolies, mergers and restrictive practices of one kind and another is not necessary, but until we have heard a lot more by way of justification we do not wish to support what I describe as nosey-parkering provisions which would cause difficulties without producing corresponding benefits.
639 It may be wondered whether we are doing the right job at all. In dealing with the problem in this way, are we acting as we have done in so many other directions? Are we taking an existing pattern in industry which is not working satisfactorily and trying to make it work somehow, rather than attempting to change to a better pattern? I believe that both sides are inclined to do that even with industrial relations.
We are constantly hearing, particularly from this side of the House, of different schemes to enforce the performance of agreements instead of trying to improve the machinery for making sensible agreements in the first place. I would like to see a more radical approach to the whole question, rather than just taking things as they are on the assumption that they must remain as they are but introducing a whole series of measures to force them to work.
The right hon. Lady the Secretary of State has told us that the principle behind the Bill is public accountability. There is nothing wrong with that. We entirely support anyone who is trying to get more or more adequate public accountability from an industry, be it large or small. The Prime Minister has said that the Bill is an instrument to correct abuses of market power, but I do not disagree with the right hon. Gentleman the Member for Mitcham (Mr. R. Carr) when he says that the Bill does only half the job. There is no mention of, or attempt to deal with abuse of the market power of labour. I do not wish to over-emphasise that side of the matter, or to say that the abuse is constant or all-embracing, but there seems to us, or there did seem to us, an important absence there.
We are dealing with a subject which seems to me to highlight the essential differences between the political parties. The hon. Member for Tottenham (Mr. Atkinson) referred to himself as a total interventionist. The hon. Member for Guildford told us that he was just an interventionist. We on this bench wish to make it clear that we are interventionists only to such an extent as is necessary. Our policies for industry are aimed as far as possible at creating the kind of situation in which intervention will not be necessary.
640 We are dealing with a major problem which confronts all the political parties and to which none of them has yet found an adequate answer. It is the problem of the increasing size of various kinds of organisation. We accept that in the modern competitive world situation, organisations in certain spheres must inevitably get larger and larger. We fully accept that in certain kinds of industry—science-based industries and advanced technology—organisations must be very large if they are to thrive. But when organisations get very large one has new problems to deal with. This problem has been referred to by both sides.
How does one provide public account-ability and preserve competition in a large scale enterprise at the same time allowing it to be humane and sensitive? Little has been said about the rôle of those who work in large-scale industry and this is hardly mentioned in the Bill. Will the Commission have power, in dealing with mergers, to comment on the interests of workers?
The Government have not found the answer. At one time the answer was to be nationalisation. Once an industry was nationalised, it was thought that it would automatically become accountable and sensitive. We know from our experience that this is not so. I do not suggest that it never can be, and I welcome the experiments of the statutory undertakings who are trying to introduce regional competition. The statutory undertakers have attempted to introduce a competitive atmosphere; for instance, the electricity boards are competing with other sources of energy.
But, in general, we must accept that the nationalised industries have not turned out to be the publicly accountable bodies, sensitive to the people who work in and depend on them, that many hon. Members on the Government benches hoped.
§ Mr. Simon Mahon (Bootle)
Does not the hon. Gentleman agree that this has happened to such an extent that the National Dock Labour boards on Mersey-side are casting aside any man over 30 years of age and debarring him from participation in industry?
§ Dr. Winstanley
I am sure other hon. Members can produce similar examples in different spheres, but we should 641 remember that these are faults which arise from the structure of industry rather than from the way in which they are managed. The problem is what is to be done, and this is what the Bill is about. The Long Title underlines that the Bill has to do with large undertakings.
On first looking at the Bill we welcomed the fusion of the Monopolies Commission with the N.B.P.I., but were uneasy about the extent of the intervention allowed, and the extent to which the Bill appeared to fossilise industry in its existing state. On looking further, we found that the Bill dealt with labour as well as management. Clause 3(1)(a) refers toat least one-third of the goods or services".This is something new. The previous legislation on monopolies and restrictive practices did not refer to services.
Clause 3 is almost a word-for-word reproduction of Section 4(1)(a) of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948:at least one-third of all the goods of that description…So the word "services" has been specifically added in this Bill.
Does this mean that the Commission can inquire into conveyancing, restrictive practices operated by estate agents, scale fees, the management of theatres and the operation of theatrical agencies? If so, we welcome that as one slight advance.
§ Mr. Peter Emery (Honiton)
Why does the hon. Gentleman welcome the ability of the Government to inquire into theatrical agencies and other minor service sectors? The last thing we want is Government agencies, or statutory bodies supplied with taxpayers' money, interfering in these matters. I should have thought that even the Liberal Party would want to keep its fingers out of that.
§ Dr. Winstanley
I can understand some hon. Gentlemen wishing to keep their fingers out of it, and other hon. Gentlemen wishing to keep their mouths shut about it. Serious monopoly practices exist in respect of services, and I am astonished that any hon. Member should suggest that these are minor matters. If he went out into the country and said restrictive practices in relation to convey 642 ancing and scale fees did not matter, he would get a sharp answer.
The Bill does not reproduce from the 1948 Act the proviso to Section 4(2):Provided that in considering whether or not any two or more persons so conduct their affairs as aforesaid, practices as to the workers to be employed or not to be employed by them, or as to the remuneration, conditions of employment, hours of work or working conditions of workers, or any class of workers, so employed shall be left out of account.This Section, which excludes matters relating to employment from the legislation, is omitted from the Bill. Is it intended that the conduct of a trade union which represents employees in more than one-third of an industry can be referred to the Commission? The Bill appears to permit this, and to permit the making of an order by which smaller bargaining units would be obligatory.
Clause 12(a) suggests that an order could be made to declare unlawful a sympathetic strike:An order under Section 10 of this Act may—I will not quote it in full, but if the Minister will look at it he will see that it changes the position with regard to the specific exclusion of employment.(a) declare it to be unlawful, except to such extent and in such circumstances as may be provided by or under the order…
The same situation arises in Clause 20(4):Section 4 of the Trade Disputes Act 1906 (which prohibits actions of tort against trade unions) shall not apply to any civil proceedings in respect of a contravention or apprehended contravention of any order under Section 10, 18 or 19 of this Act.That suggests that trade unions indulging in sympathetic strikes could be sued in tort without the protection of the Trade Disputes Act, 1906.
We do not wish to be misunderstood and identified with other people on this side of the House who appear to think that the industrial relations problem can be put right by legislation. We have made our proposals clear and expressed them fully in debate. We have said that we would bring nationally negotiated wage agreements into the ambit of restrictive trade practices legislation so as to encourage company or plant level bargaining. It seemed that at last in the Bill the Government were beginning to change the law in relation to trade 643 unions, restrictive practices and certain of the immunities which formerly existed.
If that is the case we are at least prepared to give the Bill a start. We are unhappy about parts of it, but would be willing to see it go into Committee where we would hope that some parts would be removed and the rest tidied up. If the Minister says that all matters to do with employment have been left out of the Bill because they are to be brought into a new industrial relations Bill, then I would be inclined to advise my hon. and right hon. Friends to vote against the Bill.
We will not solve the problem of monopolies, lack of competition in industry, the lack of any feeling of involvement in industry, by making all sorts of glib assumptions about human motivation. I have listened to some extraordinary statements during the debate, automatic assumptions about what motivates people. If we are really to get industry to work so that the country can be competitive in this new situation we have to look much more realistically at human motivation. We have to get away from the idea that nothing matters except wages. I hope that we will move to a new kind of industrial democracy and that whatever Government are in power they will not say, "We have inherited this kind of system. We must keep it and make it work." I would like to see us introducing real constructive legislation to change the mood, the atmosphere and the system.
§ Mr. Dell
It may help the hon. Gentleman if I reply immediately to his question. Services have been the subject of scrutiny by the Monopolies Commission since 1955. It is doing work on a reference on professional services of the sort the hon. Gentleman is interested in. The question of the manner of employment would be referable under Clause 28.
§ Dr. Winstanley
Is it the intention of the Government to change the situation with regard to the immunity of trade unions through the Bill? If we examine the omissions in Clause 3 and compare it with the original Clause 4 it will be seen that it is identical 644 except that there was in the original Clause 4 an addition making matters concerning employment immune. That has been left out.
The right hon. Member for Mitcham has said that the Government are only doing half of the job and this is true. I suspect that the right hon. Gentleman would himself also do only half the job, the other half. We would like to see both halves done and until we have an assurance that both halves will be done instead of just one, we shall be very reluctnat to support the Bill.
§ 8.15 p.m.
§ Mr. W. Howie (Luton)
In view of the important decisions which hinge on the replies of my hon. Friend to the Member for Cheadle (Dr. Winstanley) I will not attempt to follow the hon. Member in any detail. I agree with much of what he said about the position of the employee in big firms, especially to do with mergers. The employee has a right to be heard with regard to a merger, not only after it has taken place but at the stage where it is under consideration. His position is at least as important as that of a share-holder.
I was very heartened by the hon. Member's admission that he was an interventionist. We have now had contributions from all three parties, claiming to be interventionists, but not from the Opposition Front Bench, although we know that they are interventionists. My view of the Bill is similar in part to the view held by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). Not totally so, because I am less interested in the judicial nature of the Monopolies Commission than he, but I, too, see the Bill as producing something in the nature of a hybrid. I must admit to having some slight hesitation on that score.
One central reason for the Bill is to deal with the use of abuse of market power. What interests me is that I am not certain that the use or abuse of market power is the same for a commercial organisation as it is for a trade union. These two kinds of bodies are operating in quite different markets. I know that sometimes labour is described as a commodity, bought and sold in the market in the same way as any other commodity, but this is not so. Labour is more than an abstraction, it is men. 645 It has been said that the market power of the trade unions is a response to the strength of the organisations with which they have to deal and that it is therefore different in kind.
It will be remembered that some years ago the market power of the unions was described as a countervailing power, when Galbraith recognised that it was different. For that reason, I am not sure that it should be lumped in together with the market power of the capitalist. To some extent the Government are falling into the same error which the Leader of the Opposition has fallen into in his enthusiasm to apply the theory of legal restriction and limitation on trade unions and their activities, as though he was dealing with a commercial product. He is applying the idea of commercial law to a trade union situation which is quite different. It is not obvious to me at first sight that the same body should deal with both groups of problems.
In all probability this idea grew from the development of the Prices and Incomes Board. It became apparent during the recent life of the Board that to do its job properly and to investigate wages, salaries, prices, and so on, it had more and more to analyse industry in a managerial sense. To some extent the Board began to impinge on the Monopolies Commission. It was no doubt from the enlargement of the Board's activities that this idea grew.
I think that in combining two kinds of market situations in one Bill it is absolutely correct that wages should not be left to the market. To that extent the idea of a prices and incomes policy has always attracted me. The error which the Government made was that in the course of their struggle to put the economy right and to deal with the balance of payments, the prices and incomes policy came more into the centre of their economic strategy, whereas it should have remained nearer the periphery.
I have never doubted that the development of a reasonably acceptable prices and incomes policy would be a very slow process. It does not alarm me that the recent attempt appears at the moment to have failed. I expect that the development of a prices and incomes policy will be achieved by a series of efforts and a series of failures, and that sometimes 646 one way will be taken and sometimes another way. In the fullness of time, wages will be taken out of the market, and that is absolutely correct.
My second misgiving about the proposed Commission, although I am not sure that I am right in having it, is that there occurs in the publication which accompanies the Bill, the consultative document, the idea that the Government are turning away from what the hon. Member for Guildford (Mr. David Howell) has called the fashion for bigness. My impression is that the Commission may develop a distaste for bigness in industry, for monopoly and for oligopoly. I am not opposed to bigness in industry, nor am I opposed to monopoly and oligopoly. I am not keen on monopoly and oligopoly in private hands, but in themselves they do not worry me too much. After all, there are ways of dealing with a monopoly if it is thought that it is unsuited for private control.
Leaving aside a very small number of firms, we must remember that the big British firms are not all that big in world or even European terms. Many of our firms who export 30 or 40 per cent. and sometimes even more of their production are often competing with much larger firms. Only a few firms in Britain are comparable in scale to the giants in the United States and the one or two in Europe. We still need a great deal of encouragement towards mergers in our industry, and to discourage the notion that bigness is going out of fashion.
That brings me to the I.R.C., which is one of the most valuable and supportable innovations of the Government. Its job is to promote mergers and sometimes to use public money to do it. By promoting mergers, it improves the competitiveness and strength of our industry. The hon. Member for Guildford referred to an example of its work, though he got it wrong. He gave the impression that the I.R.C. had initiated the notion of merging the British ball-bearing industry, whereas what happened was that the Swedish ball-bearing industry developed the notion of merging the British industry.
As a matter of fact, I thought that it was an excellent idea. I had a little quarrel with the I.R.C. about it. But 647 what undoubtedly will happen is that, after a time, the merged British ball-bearing industry will, in turn, merge with at least the British end of the Swedish industry, and it will then achieve a size where the British will be able to take a larger part in the world's ball-bearing business.
As my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said earlier, the problem is that the I.R.C. and the proposed C.I.M. may find themselves pulling at the same rope in opposite directions. If a situation arises where the I.R.C. is trying to merge two companies, it is important that the C.I.M. does not get in its way. The priority must be given to the I.R.C. and the new Commission must yield to it.
My last misgiving arises from the power of the Government to make Orders. I am prompted to mention this as a result of the intervention of my hon. Friend the Member for Haywood and Royton (Mr. Barnett), who tried to suggest that we should initiate references to the new Commission from this House. To some extent, that is an attractive idea, but I refer on the whole to leave it to the Government, if only because I am anxious to avoid a kind of parade of debates in this House on Orders dealing with references before they have happened, rather like the interminable series of debates that we had on the prices and incomes policy, though at least they occurred after decisions had been taken.
I would not like to think that we shall have to go through that kind of procedure at the beginning each time we initiate a reference—[Interruption.] I notice that the hon. Member for Worthing (Mr. Higgins) does not agree with me It may be that I misunderstood my hon. Friend.
Leaving aside my misgivings, I am strongly in favour of Clause 26, which is perhaps the best Clause of all, a part from the Schedule removing from us the odious job of deciding our own salaries. It is long overdue for that to be done by an independent body, and the Bill provides that that shall happen.
Clause 26 gives the Commission a considerable amount of elbow room. As its first reference, I hope that it will report on any question relating to wages and 648 practices of any description in the motor manufacturing industry. I select that industry deliberately, because one central reason for the industrial unrest in that industry arises from the complexity and confusion of its wage rates and earnings levels. The present turmoil in the industry over such matters as parity or comparability shows this. It is the very confusion of wage rates throughout the industry which has given rise to a theory of comparability between firms and between departments of firms.
I want to cite an example of the kind of situation which arises from the confusion. Hon. Members will be aware of the recent strike at Ellesmere Port involving 112 back viewers—a new kind of subspecies of inspector. My right hon. Friend the Minister of State will be familiar with the dispute, as it arose near his constituency. The strike was settled last week, but, in view of the fact that it was concerned with this mix-up of rates of pay, on terms which may sow the seeds of a number of not too dissimilar disputers.
It is worth considering how a strike of that kind occurs and to try to find who is to blame. It is easy to say that here are 112 men holding the rest to ransom and costing their employers millions of pounds. It may be argued that they should all be sacked. That is a natural response, but it is a superficial one. There is no doubt that the strike was unofficial, unconstitutional, wild-cat and totally deplorable. But it was a classic unofficial strike which could have come straight out of the Donovan Report.
A small group of men reacted to what they thought was an unjust managerial decision. They thought—rightly I think—that they had obtained a promise of status and position from the management, but in the next set of wage negotiations the promise was not fulfilled. So the managerial decision which they thought unjust was at best ambiguous. My point is that the managerial decision, unjust or ambiguous as it was, arose from the tortuous nature of the wage rates in that industry. I think that this is worthy of examination. The firm threatened to sack these men, although I believe that the central fault was the firm's.
What I find interesting about the Opposition's view is that, had the trade union laws which the Leader of the 649 Opposition spoke about over the weekend been in operation, the firm would have been able to sack these men with impunity. This is an extraordinary situation.
§ Mr. David Mitchell (Basingstoke)
That is a gross distortion of what my right hon. Friend said on Saturday. In the circumstances described by the hon. Gentleman, the men would have had a right of action against the employer for damages for breach of the agreement.
§ Mr. Howie
It is not a distortion of what the Leader of the Opposition said on Saturday. It was a reference to what he said on Monday. I leave it there. There would have been no justice in being sacked with impunity. That is one example arising from the complexity of the wage structure in the industry which a body of this kind would be well equipped to examine.
I believe that the Government should take the nationalised industries completely out of the Bill. Now and again the Government listen to criticism of their attitude from their own supporters and sometimes yield to their entreaties. About a year ago, when electricity prices were to be put up, there was a clamour that they should be referred to the National Board for Prices and Incomes, and Government yielded. I believe that they were mistaken. They now have a chance to remedy that situation, and they should take it.
The point about nationalisation was so that the Government should have control over nationalised industries. This is especially important, because the pricing policies of these industries often reflect back on the taxation system. It is important that a decision relating so closely to the taxation system, as do the pricing policies of nationalised industries, should be taken by Government, not by an outside board, however eminent and how-ever appointed. I hope that the Government will remove all reference to nationalised industries.
Despite the enthusiasm of the Opposition, competition is not the natural way in industry. It is the very reverse. It is an error which we should try to avoid to reverse the natural condition of things.
§ 8.34 p.m.
§ Mr. David Mitchell (Basingstoke)
Today, the House is asked to pass the Commission for Industry and Manpower Bill. I think that its title should be, "Commission for Interference and Meddling."
The right hon. Member for Newton (Mr. Frederick Lee), who is not now in his place, asked, on prices and wages: does the Conservative Party believe in an uncontrolled free-for-all or in State intervention? He challenged us to say which we would choose. I accept that challenge, and answer that that is not the choice. There is no need to look in a crystal ball to ask what we would do. The right hon. Gentleman can look in the book and see what happened when we had a voluntary wages and prices policy. The cost of living went up at half the rate that it is now going up. Hon. Gentlemen opposite, who will be going to the country before long, would be very glad if they could show that they had a record of price increases as good as that which the Conservatives had when in office.
The right hon. Gentleman's second question was: why should the Government accept responsibility for current price increases over which they have no control? That is a rhetorical question which at first sounds interesting. No control? What about S.E.T., designed to increase prices? What about the extra cost of vehicle licences, designed to in crease the cost of distribution? What about the extra cost of money in business with the high Bank Rate? The right hon. Gentleman may be right that they have no control, but they have the responsibility for causing the excess inflation facing the country.
I want to stand back and look at the priority needs of industry in the 'seventies and consider whether the Bill will help or damage it. Britain in the 'seventies will be dominated by the Government's intention, announced by the Prime Minister in 1967, to apply to join the Common Market. I hear that negotiations will start in July. The Prime Minister is on record as saying that he intends that those negotiations should succeed. Apparently the news has not reached the Minister or the Department putting forward the Bill.
651 Looking at the White Paper, "Britain and the European Communities: An Economic Assessment", we find the dreary tale of the effect on food prices, consumption and the cost of living, the contribution to the Community Agricultural Fund, and the net effect on the balance of payments. Not until we come to page 26 do we find the advantages:There would be substantial advantages for British industry from membership of this new enlarged Common Market, stemming primarily"—I stress "primarily"—from the opportunities for greater economies of scale".It is clear that the White Paper is saying that the economic advantages of joining the Common Market will come with the economies of mass production.
If we have any doubt about that, turning to page 35, we read:But successful competition with the United States in the high technology industries of the future will increasingly depend on the existence of at least some West European companies of comparable size to their United States counter-parts. At present, most of the largest companies in the United Kingdom and in the rest of western Europe are much smaller than their United States competitors.It is clear that the first question which one is entitled to ask of the Bill is whether it will assist in company growth, in company amalgamations, and in rationalisation. The answer is clearly, "No". Indeed, far from assisting, and instead of sharpening its teeth to attack monopoly, something with which I entirely agree, it attacks size. Any company with £10 million assets, or any amalgamation involving a company with more than £5 million assets, will be caught within the ambit of the Bill. In the past, monopoly defined as market dominance was rightly held to be suspect. Now the very things which we need if we are to be a success in the Common Market, the size and the economies which can come from large-scale production, are to be suspect.
People may ask why the threat of investigation should inhibit growth and amalgamations. I say bluntly to anyone woh doubts that that will be so that he has not been in contact with a company which has been involved in investigations by the P.I.B. Days of management time are devoted to preparing and answering questions. More days are devoted to 652 preparing answers to questions. There are discussions on company policy about the investigation and on the questions which are being put up. Management is virtually paralysed for days from doing its proper function by the need to please its political masters. Nothing could be more disastrous for the country at a time when we should be preparing ourselves for the toughest cut-throat competition that we will have known when we get free trade with Western Germany, Italy and France.
The second priority for industry now is investment, more investment, and yet more investment. We need investment in more modernisation, in more mechanisation, in computerisation, and in new plant and process. If 10 economists were gathered together and asked to define the answer to a problem, they would provide 10 different solutions, except one. On the question whether Britain needs more investment in her industry today, they would all agree.
What do we find? Where is the money to come from? We find that during the recent period of Government the rate of increase of investment in industry has been falling off. My hon. Friend the Member for Guildford (Mr. David Howell) drew attention to the fact that it has fallen from an increase of 2 per cent. per annum under the Conservatives from 1951 to 1964 to 0.2 per cent. last year. And this is the seed corn of our future prosperity.
Where will the money come from for the modernisation of, and investment in, industry? At the moment, 40 per cent. of it comes from pension funds, but once the Crossman pension proposals are on the Statute Book that figure will be slimmed down quite a bit. Where is the money to come from? In the main, it comes from the ploughing back of profits, but one hon. Gentleman opposite after another has told us this afternoon that profits are immoral, and this Commission is designed to lean heavily on industry to see that it does not make profits or, if it does, that they are as slim as possible.
The C.I.M. may make orders requiring notification of price increases by any company—not a monopoly, but any company—with assets of more than £10 million, and after a C.I.M. report the 653 Government can take power to fix prices themselves. They can fix prices in a situation in which they will not control wages, and in a situation in which the Minister's trade union friends can demand a wage increase. Despite that, the Minister will be able to tell companies that they cannot increase prices. There will be a squeeze on profits, a squeeze on the money which should be invested in the modernisation of firms, and in the modernisation of industry.
I say again that this is the seed corn of our future prosperity, and it will mean, inevitably, that the amount of money available for reinvestment in industry will be less than it should be. Already, profits in industry are below those of our international competitors. Investment in industry is below that of our international competitors and, consequently, as a direct result, wages in this country are increasingly below those of our international competitors.
I turn, next, to the effect of the Government's proposition that we should join the Common Market. With an enlarged Market, we shall have totally free trade with Europe. The whole purpose of the Common Market is to do away with the artificial restrictions imposed by national boundaries. Under this system, what might have been a monopoly within the United Kingdom in the past will no longer be one, with the result that the definition of monopoly will be totally different from that which operates today. In those circumstances, it cannot make sense to ask the House to pass a Bill which, in a couple of years' time, will not be worth the paper on which it has been written.
The Bill is a nonsense and a waste of time when we should be concentrating on competition to keep prices down. We ask the Government to wake up to the fact that the Prime Minister has applied to join the Common Market and that the whole basis of the Bill and the thinking behind it have, therefore, been totally changed by that prospect. If the Government had already been alive to that fact, there would have been a different Bill, perhaps designed to bring British practice and law closer to those now applied in Europe.
§ 8.45 p.m.
§ Mr. Leslie Huckfield (Nuneaton)
The hon. Member for Basingstoke (Mr. David Mitchell) will forgive me if I do not follow him into some of the more European aspects he laid before us.
We have heard a lot tonight, particularly from hon. Members opposite, about the need for mergers and increasing size in British industry. We have Government bodies such as the I.R.C. which are primarily designed to encourage size. Wherever one looks today, there seem to be mergers and acquisitions and firms and companies and assets increasing all the time. The trouble is that, amongst all the bodies we have, or are to have, to watch over the increase in the size of companies, nobody seems very concerned with the human aspects.
In this, I speak with some reference to my constituency of late. Many of my constituents in Nuneaton work in the Coventry car trade and have been concerned about recent decisions by the Chrysler-Rootes Motor Corporation. I know that many too are concerned about the effect of the merger which produced the British Leyland Motor Corporation. In all these mergers and increases in size, there seems great emphasis on the need to grow bigger in order to compete with the Americans and the Europeans, but not half as much emphasis as I would wish on some of the often very serious human consequences.
Whenever a backbench Member, speaking from a constituency point of view, questions a Minister about the I.R.C. or the Prices and Incomes Board or the Monopolies Commission in relation to some of the human factors, he is told time and again that this or that body has no responsibility or no say in the human side of the matter.
I would like to have seen in this Bill much more reference to the very serious human consequences of many of the decisions which industry will have to take. Those decisions will mean more mergers. We had an interesting example during the week before last when a prominent trade union leader tried to exercise or to have his say in the proposed merger between B.O.A.C. and B.U.A. One was surprised to see how many voices were raised opposite against 655 the men who work in the industry having their say. If we are to have more mergers under the new Commission and more increases in size, let us not only have concern for the human aspect but, above all, give the workers the right to have their say as well.
I wish there had been more reference in the Bill to giving the workers a chance to have their say because, after all, we are talking about people who often spend their whole working lives in an industry. Surely they have a right to be heard as well.
We have heard a great deal about size and pubic control of monopoly, near-monopoly, duopoly, oligolopy and various other "opolies", which all mean that industry is getting bigger and more inhuman. But the difficulty is that certain industries have recently been getting bigger and not so subject to public control. I wish that the Bill had included some references to the need for more public control. This is something which the Industrial Reorganisation Corporation, the Monopolies Commission and the Prices and Incomes Board are not equipped to do. I wish that it had referred to investigating future public ownership and public accountability, to ensure that these acquisitions did not get even more out of control.
We shall be subjected to this kind of thing increasingly in the Common Market, and it is worrying that increasing amounts of taxpayers' money are being absorbed in these industries. If the I.R.C. is to intervene and make taxpayers' money available to these mergers in interest free loans and building grants, public accountability and, preferably, public control as well, should be increased.
There has been reference to size of monopolies and to what should be the size at which the Commission should intervene. The old definition of a near-monopoly in the 1948 Act which set up the Monopolies Commission was of a situation in which one firm commanded more than 30 per cent. of the market. We have heard references to £5 million and £10 million asset sizes. I can think of a whole number of firms which have never undergone this kind of searching investigation.
656 I would refer my hon. Friends on the Front Bench to National Car Parks Limited, a company which has busied itself over the past 10 years acquiring key city centre sites, the value of which was created by the community, but the profits from which go to this company. If the Government are looking for a first case to be referred to the new Commission, I hope that it will be this firm. Wherever one goes in London or any of our big cities, it is National Car Parks that one sees taking our money and making the profit. I hope that my hon. Friend will refer to this later on.
There has been a reference to the need for efficiency audits, but I was disappointed when the Secretary of State said that it was not possible to make "general efficiency references" of private firms. But we are very keen on subjecting nationalised industries to ever-increasing numbers of investigations. I should have thought that there are large numbers of private firms which should be investigated and that those powers should be included in the Bill. I hope that, in future, some of the spotlight which has been shed on public industry will be shed on private industry as well, as the Prices and Incomes Board started to do.
I am glad that the Secretary of State referred to the dropping of the statutory control of wages. I was originally taught that the Board and the prices and incomes policy would genuinely help those who could not fight for themselves—the lower paid. The trouble is that, as the policy has worked out, it is only now that it is at last, thank goodness, crumbling, that the lower paid and those who could not fight for themselves are starting to get a fair deal.
It is easy to talk of statutory wages control, but there has not been half enough talk about statutory control of the other forms of income. I am thinking of incomes like capital gains, dividend increases and rents.
I hope that on both sides of the House we have heard the death-knell of proposals for the statutory control of wages. It has not worked successfully in the past and it is unfair to expect workers to have some sort of statutory control over their share of the national income while—even members of the Government will admit this—it has always been difficult to exert control over dividends, interest payments 657 and all the other important sources of income for the upper-class sections of the community.
If we are to have a body examining wage structures, then I hope that it will examine some of the other salary and income structures, because the only sort of incomes policy in which I am interested is one which at last alters the present inequalities in the distribution of wealth.
I am glad that under Clause 13 there are powers—we were told that these powers already existed—to regulate prices. However, I understand that these powers will be used only in certain cases and where prices are obviously derived from a firm taking advantage of its market power. The trouble is that if prices are regulated only on that basis, then there is a danger that that excuse will be used when back benchers, and particularly those on this side of the House, press for price controls to be introduced.
I cannot help thinking that the original prices and incomes policy—indeed, any such policy that now exists, if anybody still believes in it—would have been seen to have worked more fairly if we could have effectively taken control of prices. I only hope that, with the new powers which my right hon. Friend has to investigate and regulate prices after the Commission has reported, we will see a determined effort to control and regulate many of the key prices.
We failed to control certain key prices, such as the price of bread, beer and milk, to name only three. I hope that we will not fail to regulate key prices in future. There is no doubt that if one speaks to people about this when canvassing for local elections, and so on, the inability to control key prices is uppermost in people's minds when they speak of the rising cost of living and the Government having failed to regulate important price increases.
I have written to several Government Departments about certain price increases. Considering some of the mournful and lugubrious excuses that I have been given, I hope that the new Commission will not present the same sort of excuses. We must show that we mean business. If we do not, we will get this continuing inflationary spiral in which inflation is the only safety valve in the 658 pressure conflict in society between managements and unions.
Inflation may form a neat safety valve if other countries inflate at the same rate. Unfortunately, some countries inflate faster than others. The lower-paid and those on fixed incomes—in other words, those who cannot fight for themselves—lose out every time.
We have heard from hon. Gentlemen opposite about what they now call "civilised capitalism". I do not believe that capitalism can be civilised, because I do not believe in capitalism. We have also heard much about humanising the structure of industry and the increasing size which industry is striving to reach.
I hope that if industry gets bigger and we are to have a Commission which will investigate examples of it getting bigger, this new Commission, whether it be part of the P.I.B. or the old Monopolies Commission, will adopt a more human approach to these matters, and will accept that people's lives, jobs and futures are at stake. I trust that that will be the guiding light of the new Commission on Industry and Manpower.
§ 9.0 p.m.
§ Mr. Tom Boardman (Leicester, South-West)
As the right hon. Lady is present, I will take a moment to say how much I regret the tone of her speech in opening the debate. She is aware that there is on this side of the House unanimous support for creating the type of competition that will bring about efficiency. While there is much in the Bill which we contest, there is much in it which we would like constructively to amend. A less aggressive, bitter approach from her before she had heard the debate would have been welcome.
Why are restrictive trade practices excluded from the Bill? Although the consultative document says that these responsibilities are separable, it goes on in paragraph 15 to show clearly how the responsibilities overlap. It seems a nonsense to exclude this from a Bill designed to create a more competitive industry.
There has been some debate on the question of ministerial selection of the references. I endorse what was said by my right hon. Friend the Member for Mitcham (Mr. R. Carr) and others. The Ministerial method of selection must bring political considerations into 659 account, which may not necessarily coincide with efficiency. It must also give rise to the feeling, rightly or wrongly, that party considerations are introduced. It has been suggested that to bring in a registrar to do the first vetting might introduce delay. The Minister of State knows that there have been considerable Ministerial delays over decisions as to whether a matter should be referred, and I cannot believe that the registrar procedure would be anything but quicker and more effective.
My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) put forward the case of the Commission versus a judicial tribunal. Again it is a matter of speed and legal justice. Experience has shown that tribunals of full-time members achieve a speed which cannot be matched by part-time members. The Bill provides for a Commission of up to 20 members, and, differently from what we have enacted in the last few years, the Commission must now sit as a whole. There is no provision enabling it to sit in separate groups which would speed up business. Why this was omitted? It is a peculiar omission.
Lack of time prevents me from developing some of the arguments about monopolies by trade unions. As wages form something over 50 per cent. of the costs of industry, it is farcical to have a situation where the law permits exploitation of that element yet endeavours to control prices, with such a large wage element in them. It seems illogical.
There are points which can be raised in Committee about the power to probe companies at over £10 million. It seems that this probe must be carried out in a vacuum, without any yardsticks drawn from other parts of that industry, and, I hope, without powers to probe comparable companies. It will be interesting to see how this witch-hunt is to be directed. The question of price control has been put by my right hon. Friend as resting on one of two alternatives. There is the alternative which we put forward of increased competition and the one put forward by the Secretary of State, of State intervention. While there is no black and white of total intervention or total non-intervention, it is clear that as the right hon. Lady claims to be the ally of indus- 660 try she is coming down on the wrong side of the fence to prevent industry saying, "God save me from my friends."
§ 9.5 p.m.
§ Mr. Dudley Smith (Warwick and Leamington)
The Secretary of State began her speech this afternoon by describing this new body as the "ally of industry". Later, she referred to it as "a virile stimulant to efficiency". She ended by calling the C.I.M. a "blueprint". I should have used a different colour in describing it, particularly after hearing the speech of the hon. Member for Tottenham (Mr. Atkinson). He said frankly that he was a total interventionist and that this was an interventionist Bill. We know the sort of intervention he was talking about. In some ways he let the cat out of the bag, but he is one of the most honest hon. Members and we understand and appreciate his point of view. I wish that there was more frankness among hon. Members on the Government benches on this subject.
I have listened to practically every speech in this debate. There have been some very good ones on both sides of the House, but nothing I have heard leads me remotely to think that the Bill is a good one or deserves to become law. As I usually do, I declare my interest. I work in industry. The company with which I am associated will probably qualify under the size criterion for treatment under this Measure. On reflection, I think that those who perhaps had a hand in preparing and presenting the Bill ought to have had some industrial experience. If they had, its provisions might well have been different.
One is left at the end of the day with a single question—why are the Government doing this? One can hardly expect the Minister of State, when he winds up the debate, to add any extra information over and above what we have heard already. This is a question I shall try to examine and to answer. There are three possible reasons for the action on the part of the Government. First, apparently they are bringing forward this legislation because they wish to strengthen the law against monopolies. That is an admirable sentiment which has been commended on both sides of the House. It is well worth doing, but I 661 think they will fail to do it by this provision. In my view, the new Commission will not be flexible enough and it has the wrong terms of reference. If it tackles all the tasks envisaged in the Bill, its members will be grievously over-burdened in the work they have under-taken. There is no guarantee whatever that anyone connected with the C.I.M. will have had any industrial experience.
The hon. Member for Heywood and Royton (Mr. Barnett) chided my right hon. Friend the Member for Mitcham (Mr. R. Carr) on the question of staffs. He said that there was provision in the Schedules for extra staffs if they were found necessary. That could apply to any Government Department. Any Government can double the number of any institution which they happen to run. They could even double the size of Parliament if they wished and brought in the necessary legislation. If the Government are serious they should have strengthened the C.I.M. from the outset and given it a reasonable number of members for it to operate. The right hon. Lady did not think this was of any significance, for she did not mention the subject.
Apparently the Government wish to get rid of prices and incomes policy because it has been like some ugly unwanted child over the years, becoming more and more an embarrassment to the family as it has grown older. That is an admirable sentiment, but the Government will fail to do that because the Prices and Incomes Board will remain as a prices board. It will still have some dealings with the question of incomes, but no effective powers over them. In many respects, this will be the same old interfering busybody set up, despite its grandoise title and irrespective of whichever Smith, Jones, Robinson, or Brown is appointed to run it. Therefore, again I think that the Government will fail on that point.
In that situation we must emphasise more and more that incomes are being left out of the Bill. Under the previous legislation we were bitterly opposed to the implementation of a prices and incomes policy. We did not disguise the fact, but at least business and commerce were dealt with under one legislative heading. Under these proposals no powers will be retained to delay or limit 662 wage increases. All the statutory backing for the incomes policy is removed and this will inevitably tend to encourage rather than discourage further excessive increases in income.
As my hon. Friend the Member for Guildford (Mr. David Howell) said in an admirable speech, the neurosis has already settled in because we now have severe wage inflation. He rightly stressed that one can only have wage inflation when this is properly matched by output.
The Government apparently wish to establish a vigorous-sounding expert industrial body which will guide and help commerce and promote genuine competities in the public interest. Again, this is an admirable sentiment and one which all hon. Members would like to see. But I think that the Government will fail to achieve it through this medium. Industry and commerce are likely to be obstructed rather than assisted by the proposals before the House today.
The present monopolies position is all-important in these circumstances. As my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) said in his usual lucid and compelling speech, this marriage is very damaging to the Monopolies Commission. In the past, it has had a fair bill of health and I think that it has become accepted on many sides. My hon. and learned Friend does not want its reputation injured by this shotgun marriage. Nor do I.
I remember only too well the superficiality of some of the later reports of the Prices and Incomes Board when comparing them with the reports produced by the Monopolies Commission. There are great dangers in a roving commission into the efficiency of industry as a whole which is concentrated on size and largely, in some respects, ignoring monopolistic position.
The opportunities for misuse and abuse are greatly increased if one has a body such as the C.I.M. which has been detailed to us today. It is no secret that we on this side of the House want a stronger, more effective Monopolies Commission which will safeguard free enterprise and prevent market domination. There is genuine public concern—and rightly so—that monopolistic tendencies should not be allowed to get out of hand and that people should have alter- 663 native choices in goods and services and also in firms for which to work. One of the worst considerations arising from a monopoly is that many people are sometimes thrown out of work and find it difficult to get comparable positions else-where. Therefore, I feel that the field should not be too much narrowed.
There is a good deal of agreement between hon. Members on both sides of the House. The point was made in a fine speech by my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis). Nevertheless, while we must not become mesmerised by size alone as the equation of efficiency—mere size does not always mean efficiency—we must also not forget that experience has shown that, on the whole, as a nation, we have coped reasonably well with the question of monopolies and monopoly growth. The Government now seem to be pretending, by the introduction of these new and rather ill-defined powers, that monopoly in industry is on the rampage, or will shortly be so. I agree with my hon. Friend the Member for Guildford that we must be ever vigilant against monopoly and have a sharp instrument to deal with it. But there is no sign of growth on this score.
It is worth putting on record that, despite the Government's best efforts to interfere with industry, competition in this country has increased in recent years, because of a number of factors. One was the abolition of resale price maintenance. Others were more effective restrictive practice legislation and sustained and vital growth of international competitiveness. This goes both ways, because one must learn to sell abroad. Many British companies are now international whereas once they were national.
Other factors are the general erosion of tariff barriers since the end of the Kennedy Round, the increased prospect of entry to the European Economic Community, and, perhaps above all, the advancing technological change which penetrates once cosy and stagnant markets and shakes up the operators and makes then realise that overnight their manufacturing and marketing techniques can become obsolete and put them out of business. The availability of substitutes is very important in this respect.
664 Where the Government have made their mistake on monopolies—and this has been emphasised by a number of hon. Members today—is by decreeing that size shall be one of the two criteria for implied guilt or Ministerial interference. The manifest unfairness to our large industrial companies can be seen when one examines the size proposition more closely. I assure the Government that we shall examine it very closely and critically in Committee.
The Government have decided, quite arbitrarily and without any convincing explanation, on a size criterion of £10 million net assets. It is almost as if they said in their appropriate Cabinet Committee which considered the matter, "Let us clobber the big boys and make an example of them. Take, for example, The Times list of the 400 leading companies of the country". I cannot believe that any bigger or better yardstick was employed by the right hon. Lady and her political advisers.
This raises enormous difficulties for the larger industrial companies. Imagine that one is boss of one of these companies and one falls under the eagle scrutiny of the right hon. Lady the First Secretary. After the Bill becomes law, because one's asset exceed £10 million, she can at her whim play havoc with one's pricing policy by referring it for investigation, while one's competitor, who by act of fate, falls on the right side of the £10 million line can have a field day at one's expense.
I do not accept the premise of the right hon. Member for Newton (Mr. Frederick Lee), who, in an interesting speech, said that he felt that this would be a price rubber stamp. The C.I.M. would involve itself very considerably with prices. A competitor, given this unfair advantage, can exploit his opportunities, and he will do so with skill and judgment to full measure. Take the subsidiary company of an international organisation based out-side the United Kingdom. It is unlikely to be caught by these proposals, because I believe—and perhaps the Minister of State will confirm this—that only its local assets will be taken into account whereas the companies which it is tackling on a competitive basis—its British inter-national counterparts—will have all their assets taken into consideration.
665 Take the conglomerates with vastly differing sectors of business I am associated with the pharmaceutical industry. The company for which I work has a wide variety of interests and activities besides being one of the nation's leading pharmaceutical companies. The Swiss and American companies predominate in the pharmaceutical industry in Britain. I should have thought that most of them will escape this legislation, particularly as they are subsidiaries. But a company with multifarious activities which take it above the £10 million cut-off mark will be assessed and judged on all its activities while its foreign competitors escape.
If, subsequently, these unfairnesses are discovered and underlined, some of the foreign companies, if the legislation is changed, will probably depart from these shores to avoid further meddlesome statutory control. This is another important point when companies are looking to this country for expansion, either by investment or by establishing factories here.
In these days of industrial troubles and a deplorable unofficial strike record, we often hear of companies which might be tempted to uproot and transfer their production to the Continent. Can any-one imagine anything, pursued to its ultimate conclusion, more calculated to drive leading companies to consider establishing a European base than this legislation. It is price control which will inhibit a proper return on capital if it is pressed home against them. Surely, size is a thoroughly bad yardstick, when we analyse the situation, for deciding issues in cases like this. We can all think of smaller combines which can often establish a far more monopolistic position than their larger counterparts. Competition often comes from the larger concerns much more fiercely than lower down the scale.
One is forced to ask what the real purpose is of the early warning system which is now to become permanent, and of this mixing up of prices legislation with monopoly investigatory procedure. I do not accept the First Secretary's assurance that industry has not much to fear from these proposals. If the new price powers are pursued too strongly, they will destroy profit margins and undermine business 666 confidence alarmingly, and will ultimately sabotage British investment policy.
There has been a strong backstage hint, which I find incredible, that, as the Government are now completely unable to control inflation and are worried about the staggering wage increases and the concomitant price rises, they have hit on this solution as an attempt to save the day. They will now take a tough line on prices, so that companies can tell unions pressing for wage increases that they cannot possibly respond and that if they do they will be forced into a decline. This is a complete recipe for disaster and it will encourage more industrial concern and strife than the present situation.
But, if the proposed Commission does become effective, surely it will foster an institutionalised mentality in industry, just when those members of it, whether or not we enter the Common Market, should be looking to other parts of the world and meeting the challenges of other continents. This will make industry play safe and shun competition. The Government are saying to industry, "Your sponsoring civil servant at the Board of Trade or the Department of Employment and Productivity is really your best friend. Keep on his right side and he will not discriminate against you. Let him establish your pricing policy for you."
Today, the number of man hours wasted by senior executives in industry in keeping pace with Government demands is an absolute scandal—hours which could be better spent in aiding the export drive, increasing productive efficiency, or earning profits for the future prosperity of the country. There are questionnaires to be answered, officials to be seen and reports to be compiled.
Added to this is the enormous burden of new legislation coming out week by week, which impinges on a company's every activity and needs constantly to be surveyed and conjured with. I know of one senior executive in industry—a friend of mine—who estimates that he nowadays spends two-thirds of his working lifetime coping with problems thrown up by the Government, instead of getting on with his appointment as a research director. This is particularly valuable to his company, because he is very good at 667 understanding legislation, but it is quite wrong that he should——
§ Mr. Atkinson
The hon. Gentleman has been striking a very personal note in telling us of his experiences. Will he tell us whether he is a part-time Member of Parliament or part-time member of a company? Second, what is his relationship in the job which he does? Does it compare with the amount of time his friends are spending on that relationship with the Government?
§ Mr. Smith
I am a full-time Member of Parliament and a part-time member of industry. If the hon. Gentleman worked for the Opposition Front Bench, he would very soon learn how hard members of the Opposition have to work.
The experiences to which I have referred, and others like them, are an indication of what people closely concerned with industry are undergoing now. It is a tribute to industry that it is as buoyant and successful as it is, despite the Government, not because of the Government.
At the outset of my speech, I asked why the Government were bringing the Bill forward. Is it a genuine desire on their part to promote competition, with a new energetic burst of consumerism, or is it, in reality, the right hon. Lady with her well-known love of interference with industry for interference's sake? I believe it to be the latter.
My hon. Friends may disagree, but I think that the Government are not serious in their proposals regarding prices. Apart from the obviously attractive window-dressing spin-off exercise on which they have embarked, understandably as an election approaches, I cannot see them being able to operate their plans effectively if they are to do so fairly. As my right hon. Friend the Member for Mitcham said, every other prices and incomes Measure so far in this Parliament has failed dismally, and there is no reason why this one should not do the same.
668 If, on the other hand, the Government are serious, if they intend to concentrate purely on prices and press this part of the legislation discriminately and vigorously, then industry is in for its worst experience yet. It ought to be copying the farmers and the anti-apartheid demonstrators and marching on St. James's Square tonight. In the final analysis, this Government, as so often, are speaking with two voices. In the first part of the Bill, the monopolies legislation, they are paying lip-service to competition, allegedly seeking to sustain and nurture it. In the second part, they are building machinery to distort competition and to discriminate against some of the leading companies which are so often the pace-setters. We need strong and effective monopolies legislation, and we shall attend to that in due course. The public must be protected and consumer interests must be constantly surveyed in the interests of all the people.
Recently, the President of the C.B.I. referred to "a major gap of understanding" between the Government and industry. Such a comment is not surprising when one remembers the way in which the First Secretary of State and the Prime Minister ran away from their industrial relations reform and abandoned the incomes side of their faulty prices and incomes policy. We are living in an age of smash and grab, and we all know it.
The Commission for Industry and Manpower, however grandiose and misleading its title, will not save the day in any attempt to control prices. It will fail signally. Every week, we see that industrial action brings rich results, whether it be the £11,000-a-year B.O.A.C. captains, the potential £60-a-week Mersey dockers, or even that currently equally militant body, the teachers. We are all in a wage scramble, and if we are not careful we shall be left behind. This is an ugly and dangerous manifestation of economic policies which have gone sadly wrong.
A good indication of the extent to which the erosion of inflation has gone is the pathetic poster which I saw yesterday on a Post Office van, saying, "Now you can become a £1,000 a year postman". To many relatively humble families that is now a far from adequate wage. The Government are saying, "We 669 shall counter the situation by holding down prices", but they cannot possibly succeed.
Friends and contacts in industry have been telling me for a long time that the Government are naturally hostile to industry and that they can never hope for anything better. I have suggested that whilst there is a certain basis for that type of observation, the Government really do know the importance of industry to the country's economic performance, and that although they dislike the profit motive they will, in the end, do something to sustain it.
I must say that after today's experience I think that I was wrong in saying that. This Bill proves conclusively that not only do the Government not understand industry, but are prepared to indulge their emotive feelings against industry. That is why we shall tonight vote against the Second Reading, and that is why, when in the not too distant future we occupy the benches opposite, we shall radically overhaul the Bill's provisions.
§ 9.30 p.m.
§ The Minister of State, Department of Employment and Productivity (Mr. Edmund Dell)
We have not had very much from the Opposition during the course of the day about the Bill, with the exception of the hon. and learned Gentleman the Member for Darwen (Mr. Fletcher-Cooke), who is very experienced in these matters and with whose comments I shall deal later.
I must say, with respect to the right hon. Gentleman the Member for Mitcham (Mr. R. Carr) and the hon. Member for Warwick and Leamington (Mr. Dudley Smith), that my main feeling during the day has been how much I missed the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph). I believe that he would have spoken about the Bill and, if voting against it, would have given good reasons for it. The Opposition's failure to indicate with any conviction their reasons for opposing the Bill shows that they are equivocal in their attitude to competition, as, indeed, has been shown on many occasions in their history when some of them have wished to take action to promote competition.
It is appropriate that it should have been the hon. Member for Warwick and 670 Leamington who summed up this evening for the Opposition, because only a few weeks ago I had the honour to introduce into the House the first Order on information agreements relating to prices and terms and conditions specified under the Restrictive Trade Practices Act, 1968, and the hon. Gentleman gave that Order, which was a major advance in the field of competition, what he himself called a guarded welcome. He had to be rebuked by his hon. and learned Friend the Member for Darwen for that lukewarm welcome to a major advance.
The reason, apparently, which was to be presented to the House for voting against the Bill was that the Opposition had new and radical ideas about competition, of which they were to give us an inkling. When my right hon. Friend made a few preliminary remarks about what we had read of those ideas, we were told that we only had to wait for the right hon. Member for Mitcham in order to hear what those new and radical proposals were.
What were those new and radical proposals? The right hon. Gentleman is disappointed that in the Bill there is no power to reduce tariffs. Does he really think that in this Bill we need power to reduce tariffs? Does he think that there is no legislation under which we can reduce tariffs if it will help the competitive situation and it is desirable to do so?
The Opposition's major new radical proposal is for a registrar of monopolies—as the hon. Member for Peterborough (Sir Harmar Nicholls) so appropriately said, this Archangel Gabriel who is to act in this field.
But that is not such a new idea. It was proposed in the 1964 White Paper. Indeed, in the conditions of 1964 and 1965 there were some arguments for it, because we wanted more speed in conducting references, and that we have achieved. We wanted more references—and the Opposition's pitiful record in the making of references has been indicated by my hon. Friend the Member for Heywood and Royton (Mr. Barnett)—and we had more references.
It was felt also by those who drafted the 1964 White Paper that it was necessary to improve the procedure of the Commission in order to give it a greater appearance of fairness, although the 1964 White Paper stated that that point rested 671 to some extent on a misconception. On the point of procedure, we have clearly indicated that in this legislation we have every intention of ensuring that the procedure will be, and will be seen to be, fair, and we are discussing that point of procedure with Confederation of British Industry. It is vital that the Commission should be fair and should be seen to be fair.
Now there is another idea. The 1964 White Paper said that the Registrar of Monopolies should have a certain responsibility, subject to Board of Trade approval, for referring monopolies. It did not say that the Registrar of Monopolies should have the power of referring mergers. The 1964 White Paper was specific on this point. It said that the Board of Trade would have that power. The right hon. Member for Bexley (Mr. Heath), in the debate on the White Paper, was specific on this point. He said that the Government would have that power. When the Monopolies and Mergers Bill of 1965 was introduced, again it was made clear from the Opposition benches that the power of referring mergers would rest with the Government. The same point point was made by the right hon. Member for Leeds, North-East on 10th November, 1969 in col. 99.
In other words, this is a departure from those statements. It is not a bad idea because it is a departure, but one would have expected, if this departure were to be made, that there would have been some understanding of the associated issues involved. In my intervention, I asked the right hon. Gentleman certain specific questions, and I expected him to answer those questions because they were germane to this point. He said there would be a criterion, and I asked him what it would be. I asked him whether the £5 million asset test would continue and whether there would be power to hold up mergers pending the inquiry. The right hon. Gentleman answered none of these questions saying that his hon. Friend the Member for Warwick and Leamington would give the answer, but he did not. The answers were not given because these matters have not been thought out.
This idea was evidently worked out at a Shadow Cabinet meeting the other night. The Opposition had to decide on a reason 672 for opposing the Bill, and they had to present themselves to the country as champions of competition. They would be voting against a Bill which was dedicated to increasing competition, and they had to have a reason for this. So they went back to their history books and revived the idea of the Registrar of Monopolies, without thinking out in specific terms what was involved in that proposal or what was involved in their proposals for the control of mergers generally.
The Opposition say that if this system is introduced and there is a registrar of monopolies who will refer mergers, ministerial discretion will be avoided. They go on to say that, because of the great difficulty of establishing criteria, there will be a Government veto: in other words, there will be Ministerial discretion. If they are really interested in using a control over mergers to preserve competition, there must be a £5 million asset test. It is useless to limit oneself to cases which involve the creation of a monopoly or the intensification of a monopoly; one must also be concerned with the preservation of competition——
§ Mr. Dell
No doubt the hon. Gentleman will be on the Committee; we shall be glad to see him, as he knows a little about this subject, and we can then discuss whether it is a non sequitur.
We need this power for a further reason which was given by the Monopolies Commission in a recent report. The one thing which is important if we are to have an efficient, competitive economy is the preservation of the well managed smaller firm which is often taken over by a larger firm without any increase in efficiency.
My question whether there would be a standstill on a merger pending the inquiry was not answered. We are left in the ludicrous position in which the Opposition left themselves on the 1964 White Paper, that there would be inquiries into mergers, but, meanwhile, mergers would be allowed to go ahead. No doubt if the Commission found that a merger had been against the public interest, the parties would divest. There would obviously be no real power to deal adequately with that situation. In other words, this idea simply has not been thought through.
673 The right hon. Member for Leeds, North-East—I regret his absence, since he knows about these subjects—said in the House on 10th November, 1969:The Government have rightly in our view rejected legal guidelines for mergers."—[OFFICIAL REPORT, 10th November, 1970; Vol. 191, c. 99.]If there is to be a registrar of monopolies referring mergers he will have to have guidelines.
That is why I asked the right hon. Member for Mitcham what were the criteria. Either this registrar will have enormous discretion, or none. If there is to be enormous discretion, then the Government should exercise it, not a registrar. To have a registrar exercising this discretion would in no way reduce uncertainty. Indeed, he would rapidly lose public confidence. If he had no discretion it would be difficult, or virtually impossible, to draw up appropriate guidelines because it is impossible to define in advance the weight to be attributed to different factors in a merger situation.
Therefore, there is need for discretion and that discretion must be the Government's—except, possibly, on one condition. Far more mergers would be referred under the Registrar of Monopolies than are referred at the moment, and this is inconsistent with a great deal of what has been said in this House about the advantages which would accrue from mergers.
I have devoted a good deal more of my speech to this subject than did the right hon. Gentleman, because I happen to have thought about this subject. By all means let us discuss this matter in Committee. The main point is that if this suggestion is intended to increase competition and strengthen the situation, the Opposition should vote for the Bill and seek to move Amendments in Committee. But if they are to vote against the Bill, their Amendments will be regarded as probably signifying an intention not to strengthen the Commission and increase competition but to weaken it.
§ Mr. R. Carr
The main reason that we are voting against this Bill, as the right hon. Gentleman knows quite well is because of the intolerable nature of Part II and the fact that they are making size a criterion for referral. Those are 674 two fundamental points which we will have none of since they have nothing to do with maintaining competition.
§ Mr. Dell
The hon. and learned Member for Darwen made the point about size much more effectively than the right hon. Member for Mitcham has made it, and I will come to that point shortly.
The Bill is about competition. It amalgamates the Monopolies Commission and the National Board for Prices and Incomes, but it does a great deal more than that. First, it establishes certain rights which the Government should exercise on behalf of the public through the instrumentality of a Commission such as this. The first right is to investigate and to bring matters of importance into public view—through educational reports, to follow what the right hon. Gentleman was saying in his opening speech, reports in respect of which there is no power in the Government unless something is found to be against the public interest.
The second right is the right to check on results. It has been eloquently argued on both sides of the House that in modern competitive conditions, taking account of international trade and of modern economic scales of production, it is to be expected that in many cases larger size will mean greater efficiency and reduction of costs. If that be so—and it is so in many cases—do not let us assume that it is achieved. If there is to be a reduction in competition, we have a right to check.
Reference was made to the influence of greater disclosure. More disclosure would certainly be of great assistance in considering mergers and their results and would be of particular assistance in respect of large companies. One thing the Bill does is to provide a reserve power in respect of disclosure. We are trying to establish a voluntary code of financial disclosure, with this power to back it up. My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) asked me what was the present position.
We have established a working party on disclosure, the first meeting of which is to take place shortly. The members of it are the Department of Employment and Productivity, the C.B.I., the Stock Exchange, the Institute of Chartered 675 Accountants, the Board of Trade and the Ministry of Technology. Where necessary, we will have discussions with the City Take-over Panel.
The third right is the right to intervene, again where necessary to preserve competition or where necessary to deal with the situations which result when, for good reasons, one has to accept a reduction of competition in order to get the right economies of scale.
The hon. Member for Guildford (Mr. David Howell) strongly supports this right to intervene. He said today that he strongly supported the right to intervene to preserve competition because, he said, there was a need to intervene to support and preserve competition. He made the same point towards the end of last year when he said:Competition is not a natural phenomenon. It is a phenomenon only maintained by an increasingly sophisticated form of intervention."—[OFFICIAL REPORT, 3rd December, 1969; Vol. 792, c. 1647.]Evidently the hon. Gentleman does not like the Bill, but what he calls intervention will be called interference and meddling by many of his hon. Friends. However, I agree that we need intervention to preserve competition.
We are concerned here not just with the regulation of monopoly abuses or the control of restrictive agreements. There is a need for action against the prevention, distortion and restriction of competition.
I am asked why we do not limit this to monopolies and why size is introduced into the Bill—size both in respect of mergers and in respect of market power references. The monopoly criteria in any case—[Interruption.] I will not quarrel with the hon. Member for Wanstead and Woodford—market power or non-market power. Often one does not know in advance until one has made a study. The hon. Gentleman should not assume that one can make a reference with certainty as to whether action against the public interest or a situation of market power or a restrictive agreement will be found to have been operating, despite the existence of the 1956 Restrictive Trade Practices Act.
There is this size criterion, though it is not in itself a criterion for reference. 676 The monopoly criterion is a conventional figure—one-third of the market. I do not know what sort of validity the hon. and learned Member for Darwen attaches to one-third of the market. It could be 25 per cent.
§ Mr. Fletcher-Cooke
I do not attach any theological significance to it, but the O.E.C.D. thought it a good rule.
§ Mr. Dell
But many other countries consider other figures very good rules.
I am coming to the point, why size? There are several reasons. First, there is a need to examine the whole of the firm concerned and not just the monopoly elements of it. Under the existing legislation, if a firm has a monopoly position the monopoly elements can be examined, but the non-monopoly elements which may be considerable and may have great influence over its monopoly activities are outside the legal coverage of the Monopolies Commission. It is a point of some significance in considering certain firms, of which it is easy to find examples.
There is also the fact that size can lead to a reduction in competition. I will give two examples. One is reciprocal buying. That is a practice which has been causing concern recently in the United States. There was an important case in 1965 on the point. Another way in which size in itself can affect competition is by the transfer of resources within a company, particularly a conglomerate, completely changing the real nature of the competitive situation and, in a way, subsidising competition.
These are reasons why one has to go beyond considerations of monopoly in the Bill. There is no presumption against monopoly or size any more than in the existing monopoly legislation there is a presumption against monopoly.
The grounds for reference indicated in Clause 2(2) are more specifically defined than in previous legislation. The particular part of the subsection to which I draw attention isany question relating to the prevention, restriction or distortion of competition, any question relating to the use made of a dominant position in any sector of the economy".Though size itself is not a criterion, it has to be within the size criterion, but there has to be some other reason. This widening of the scope of references is 677 needed if we are not just going to regulate monopolies to preserve competition.
§ Mr. John Page
The right hon. Lady said today that Clause 26 gives the C.I.M. power to investigate any industry or firm. I believe that she made a mistake. Would the right hon. Gentleman care to correct her?
§ Mr. Dell
I am sure that my right hon. Friend did not make a mistake. Clause 26 deals with general references which both the Monopolies Commission and the National Board for Prices and Incomes can currently undertake. The C.I.M. will be able to undertake them, but there will be no powers following these reports. In other words, they will be for the information of the public and possible further legislation.
Reference has been made, particularly by my hon. Friend the Member for Tottenham (Mr. Atkinson), to the C.B.I. My hon. Friend was afraid that we were doing too much to conciliate the C.B.I. At any rate, I think that he will agree that we have not had much success. Frankly, I did not expect very much success, given its initial attitude.
In considering any competition legislation in this country, one bears in mind, as I think right hon. and hon. Gentlemen opposite would bear in mind, the attitude of the predecessor of the C.B.I. to the Restrictive Trade Practices Act, 1956. The C.B.I. has not even welcomed the fact that we are excluding smaller businesses from scope, except where they are in a monopoly position or in an oligopolistic position. The C.B.I. mainly represents the larger firms. But even the C.B.I. accepts that there is a new concept, of which the Government are entitled to take note, which is called near monopoly. In other words, it, too, thinks that it is necessary to go outside the current monopoly criterion.
Nevertheless, despite the disagreements which we have had with the C.B.I., it is nonsense to suggest, as it seems to have been suggesting, that we have taken no notice of the views that it has expressed to us. On the contrary, we have, in redefining the public interest in Clause 31, introduced, as one of the conditions of which the Commission must take note in making its studies, new projects and new investment. We have introduced powers, to which my right hon. Friend 678 specifically referred, in relation to prices. There will be a limitation on the use of our powers, following a report, concerning prices and the period, unlike current legislation, in respect of which those prices can be controlled. There is also what we are doing about procedure.
The response of the C.B.I. to these discussions and what we have done to attempt to meet its views where we could, consistent with the basic philosophy of this legislation, has been to advise its members to cease giving us 28 days prior notification—a completely irresponsible response.
I understand that there will be briefing for hon. Members from the C.B.I. which will no doubt be useful in Committee. It will be interesting to observe whether these briefs will be used in the interests of weakening the legislation or strengthening competition.
Why, then, have the Opposition decided to oppose the Bill? The right hon. Member for Mitcham seemed to suggest that, following a report of the Commission, the Government would have powers at large. He thought that we could throw out the recommendations of the Commission and do what we like. This is not the case. On the contrary, the use of powers is more strictly controlled under this legislation than under the existing monopolies legislation. The use of powers has to be relevant to the findings regarding the public interest.
Another reason which the right hon. Gentleman gave was what he judged to be the wrong power of control over prices which exists in the Bill, there being no power to control wage settlements. I was not quite sure what point he was arguing from time to time. At one time he seemed to be arguing that price control would reduce investment. At another time he seemed to be arguing that price control had failed. I do not know on which of those legs he will come down.
The interesting thing on which the right hon. Gentleman mainly did not appear to be able to make up his mind was whether there should be any power of statutory control over prices in the case of market power situations. Under the existing monopolies and mergers legislation, there is a power of control over prices in the conditions governed by that 679 legislation where it is found that they are against the public interest.
Here, given the increase in scope, we have power over prices where it is found that there is action against the public interest and where there is unreasonable use of market power. Even the C.B.I. has not said to us that in non-competitive conditions, in what it calls monopoly or near-monopoly conditions, there should not be a power of control over prices. Of course there should be. It is a necessary safeguard to the public interest in these cases.
Then we come to the major objection, and that is that we do not include in the Bill any power of control over the trade unions' market power, or trade union restrictive practices. As my right hon. Friend said, there is a power of investigation and publicity given in Clause 26, which deals with general references. It would be ridiculous to introduce into a Bill of this sort, even if it were sensible at all, dealing as it does with commercial and industrial situations, a power of control over restrictive practices by trade unions. The Opposition themselves do not suggest it. What they suggest in "Fair Deal at Work" is that there should be reports by their productivity board, and they say that these reports will be highly influential. There is no reason to suppose that the reports made by the commission in this respect will be any less influential.
The Opposition have never suggested that these two aspects of market power,
§ if one likes, should be mixed up in the same legislation, and again I regard this as an absurd reason for opposing this Measure. But even if there were some merit in this reason, why should the Opposition, if they are interested in competition, oppose what the Bill will do to protect the consumer, to protect the smaller firm fighting against the market power, sometimes improperly exercised, of the larger firms? As my hon. Friend the Member for Heywood and Royton said, the reasons given by the Opposition for voting against this legislation are completely bogus.
§ The real fact is that the Opposition had to find some reason to vote against it. They do not, after all, want to vote against their financial sponsors who are covered in the Bill, and therefore they are showing again a lack of courage in their convictions, and a dedication to words without deeds. They want an abrasive society for everyone else, but the monopoly profit of an easy life for the large firms in this country.
I shall again quote the interesting and true words which my right hon. Friend quoted from the speech of the right hon. Member for Leeds, North-East:
Left to themselves, most business men would share the market and keep newcomers out.
That is what the Opposition want to happen. We, through the Bill, will prevent it from happening.
§ Question put:—
§ The House divided: Ayes 279, Noes 230.683
|Division No. 97.]||AYES||[10.0 p.m.|
|Albu, Austen||Boston, Terence||Craddock, George (Bradford, S.)|
|Allaun, Frank (Salford, E.)||Bottomley, Rt. Hn. Arthur||Crawshaw, Richard|
|Allen, Scholefield||Boyden, James||Dalyell, Tam|
|Anderson, Donald||Bradley, Tom||Darling, Rt. Hn. George|
|Archer, Peter (R'wley Regis & Tipt'n)||Bray, Dr. Jeremy||Davidson, Arthur (Accrington)|
|Ashley, Jack||Brooks, Edwin||Davies, E. Hudson (Conway)|
|Ashton, Joe (Bassetlaw)||Broughton, Sir Alfred||Davies, G. Elfed (Rhondda, E.)|
|Atkins, Ronald (Preston, N.)||Brown, Rt. Hn. George (Belper)||Davies, Dr. Ernest (Stretford)|
|Atkinson, Norman (Tottenham)||Brown, Hugh D. (G'gow, Provan)||Davies, Rt. Hn. Harold (Leek)|
|Bagier, Gordon A. T.||Brown, Bob (N'c'tle-upon-Tyne, W.)||Davies, Ifor (Gower)|
|Barnes, Michael||Brown, R. W. (Shoreditch & F'bury)||Davies, S. O. (Merthyr)|
|Barnett, Joel||Buchan, Norman||de Freitas, Rt. Hn. Sir Geoffrey|
|Baxter, William||Buchanan, Richard (G'gow, Sp'burn)||Delargy, H. J.|
|Beaney, Alan||Butler, Herbert (Hackney, C.)||Dell, Edmund|
|Bence, Cyril||Butler, Mrs. Joyce (Wood Green)||Diamond, Rt. Hn. John|
|Benn, Rt. Hn. Anthony Wedgwood||Cant, R. B.||Dickens, James|
|Bennett, James (G'gow, Bridgeton)||Carmichael, Neil||Dobson, Ray|
|Bidwell, Sydney||Carter-Jones, Lewis||Doig, Peter|
|Binns, John||Castle, Rt. Hn. Barbara||Dunn, James A.|
|Bishop, E. S.||Coe, Denis||Dunnett, Jack|
|Blackburn, F.||Coleman, Donald||Dunwoody, Mrs. Gwyneth (Exeter)|
|Blenkinsop, Arthur||Concannon, J. D.||Dunwoody, Dr. John (F'th & C'b'e)|
|Boardman, H. (Leigh)||Conlan, Bernard||Eadie, Alex|
|Booth, Albert||Corbet, Mrs. Freda||Edelman, Maurice|
|Edwards, Robert (Bilston)||Kenyon, Clifford||Pentland, Norman|
|Edwards, William (Merioneth)||Kerr, Russell (Feltham)||Perry, George H. (Nottingham, S.)|
|Ellis, John||Lawson, George||Prentice, Rt. Hn. Reg|
|English, Michael||Leadbitter, Ted||Price, Thomas (Westhoughton)|
|Ennals, David||Lee, Rt. Hn. Frederick (Newton)||Probert, Arthur|
|Evans, Albert (Islington, S.W.)||Lee, Rt. Hn. Jennie (Cannock)||Randall, Harry|
|Evans, Fred (Caerphilly)||Lee, John (Reading)||Rees, Merlyn|
|Evans, Ioan L. (Birm'h'm, Yardley)||Lever, Rt. Hn. Harold (Cheetham)||Rhodes, Geoffrey|
|Faulds, Andrew||Lewis, Ron (Carlisle)||Richard, Ivor|
|Fernyhough, E.||Lipton, Marcus||Roberts, Albert (Normanton)|
|Finch, Harold||Lomas, Kenneth||Roberts, Rt. Hn. Goronwy|
|Fitt, Gerard (Belfast, W.)||Loughlin, Charles||Roberts, Gwilym (Bedfordshire, S.)|
|Fletcher, Rt. Hn. Sir Eric (Islington, E.)||Luard, Evan||Robertson, John (Paisley)|
|Fletcher, Ted (Darlington)||Lyons, Edward (Bradford, E.)||Robinson, Rt. Hn. Kenneth (St. P'c'as)|
|Foot, Michael (Ebbw Vale)||McCann, John||Rodgers, William (Stockton)|
|Ford, Ben||MacColl, James||Roebuck, Roy|
|Forrester, John||MacDermot, Niall||Rogers, George (Kensington, N.)|
|Fowler, Gerry||Macdonald, A. H.||Rose, Paul|
|Fraser, John (Norwood)||McElhone, Frank||Ross, Rt. Hn. William|
|Freeson, Reginald||McGuire, Michael||Rowlands, E.|
|Galpern, Sir Myer||Mackie, John||Ryan, John|
|Gardner, Tony||Mackintosh, John P.||Shaw, Arnold (Ilford, S.)|
|Garrett, W. E.||McMillan, Tom (Glasgow, C.)||Sheldon, Robert|
|Ginsburg, David||McNamara, J. Kevin||Shinwell, Rt. Hn. E.|
|Golding, John||MacPherson, Malcolm||Shore, Rt. Hn. Peter (Stepney)|
|Gordon Walker, Rt. Hn. P. C.||Mahon, Peter (Preston, S.)||Short, Rt. Hn. Edward (N'c'tle-u-Tyne)|
|Gray, Dr. Hugh (Yarmouth)||Mahon, Simon (Bootle)||Short, Mrs. Renée (W'hampton, N. E.)|
|Greenwood, Rt. Hn. Anthony||Mallalieu, E. L. (Brigg)||Silkin, Rt. Hn. John (Deptford)|
|Gregory, Arnold||Mallalieu, J. P. W. (Huddersfield, E.)||Sillars, J.|
|Griffiths, Eddie (Brightside)||Mapp, Charles||Silverman, Julius|
|Gunter, Rt. Hn. R. J.||Marks, Kenneth||Slater, Joseph|
|Hamilton, William (Fife, W.)||Marquand, David||Small, William|
|Hamling, William||Marsh, Rt. Hn. Richard||Snow, Julian|
|Hannan, William||Mayhew, Christopher||Spriggs, Leslie|
|Harper, Joseph||Mellish, Rt. Hn. Robert||Steele, Thomas (Dunbartonshire, W.)|
|Harrison, Walter (Wakefield)||Mendelson, John||Stonehouse, Rt. Hn. John|
|Hart, Rt. Hn. Judith||Mikardo, Ian||Strauss, Rt. Hn. John|
|Haseldine, Norman||Millan, Bruce||Summerskill, Hn. Dr. Shirley|
|Hattersley, Roy||Miller, Dr. M. S.||Taverne, Dick|
|Hazell, Bert||Milne, Edward (Blyth)||Thomas, Rt. Hn. George|
|Heffer, Eric S.||Mitchell, R. C. (S'th'pton, Test)||Thornton, Ernest|
|Henig, Stanley||Molloy, William||Tinn, James|
|Herbison, Rt. Hn. Margaret||Morgan[...], Elystan (Cardiganshire)||Tomney, Frank|
|Hilton, W. S.||Morris, Alfred (Wythenshawe)||Tuck, Raphael|
|Hobden, Dennis||Morris, Charles R. (Openshaw)||Urwin, T. W.|
|Hooley, Frank||Morris, John (Aberavon)||Wainwright, Edwin (Dearne Valley)|
|Horner, John||Moyle, Roland||Walker, Harold (Doncaster)|
|Houghton, Rt. Hn. Douglas||Mulley, Rt. Hn. Frederick||Wallace, George|
|Howarth, Robert (Bolton, E.)||Murray, Albert||Watkins, David (Consett)|
|Howell, Denis (Small Heath)||Newens, Stan||Watkins, Tudor (Brecon & Radnor)|
|Howie, W.||Noel-Baker, Rt. Hn. Philip||Weitzman, David|
|Huckfield, Leslie||Norwood, Christopher||Wellbeloved, James|
|Hughes, Rt. Hn. Cledwyn (Anglesey)||Oakes, Gordon||Wells, William (Walsall, N.)|
|Hughes, Hector (Aberdeen, N.)||Ogden, Eric||White, Mrs. Eirene|
|Hughes, Roy (Newport)||O'Halloran, Michael||Whitlock, William|
|Hunter, Adam||O'Malley, Brian||Willey, Rt. Hn. Frederick|
|Hynd, John||Oram, Bert||Williams, Alan (Swansea, W.)|
|Irvine, Rt. Hn. Sir Arthur||Orbach, Maurice||Williams, Alan Lee (Hornchurch)|
|Jackson, Colin (B'h'se & Spenb'gh)||Orme, Stanley||Williams, Clifford (Abertillery)|
|Janner, Sir Barnett||Oswald, Thomas||Williams, Mrs. Shirley (Hitchin)|
|Jay, Rt. Hn. Douglas||Owen, Dr. David (Plymouth, S'tn)||Willis, Rt. Hn. George|
|Jeger, George (Goole)||Padley, Walter||Wilson, William (Coventry, S.)|
|Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Page, Derek (King's Lynn)||Winnick, David|
|Jenkins, Hugh (Putney)||Paget, R. T.||Woodburn, Rt. Hn. A.|
|Johnson, Carol (Lewisham, S.)||Palmer, Arthur||Woof, Robert|
|Johnson, James (K'ston-on-Hull, W.)||Pannell, Rt. Hn. Charles||Wyatt, Woodrow|
|Jones, Dan (Burnley)||Park, Trevor|
|Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)||Parker, John (Dagenham)||TELLERS FOR THE AYES:|
|Jones, T. Alec (Rhondda, West)||Pavitt, Laurence||Mr. James Hamilton and|
|Judd, Frank||Pearson, Arthur (Pontypridd)||Mr. Ernest Armstrong.|
|Alison, Michael (Barkston Ash)||Bell, Ronald||Boyd-Carpenter, Rt. Hn. John|
|Allason, James (Hemel Hempstead)||Bennett, Dr. Reginald (Gos. & Fhm)||Boyle, Rt. Hn. Sir Edward|
|Archer, Jeffrey (Louth)||Berry, Hn. Anthony||Braine, Bernard|
|Atkins, Humphrey (M't'n & M'd'n)||Biffen, John||Brewis, John|
|Awdrey, Daniel||Biggs-Davison, John||Brinton, Sir Tatton|
|Baker, Kenneth (Acton)||Birch, Rt. Hn. Nigel||Bromley-Davenport, Lt.-Col. Sir Walter|
|Baker, W. H. K. (Banff)||Black, Sir Cyril||Brown, Sir Edward (Bath)|
|Balniel, Lord||Blaker, Peter||Bruce-Gardyne, J.|
|Barber, Rt. Hn. Anthony||Bossom, Sir Clivc||Buchanan-Smith, Alick (Angus, N & M)|
|Beamish, Col. Sir Tufton||Boardman, Tom (Leicester, S. W.)||Bullus, Sir Eric|
|Burden, F. A.||Hordern, Peter||Percival, Ian|
|Campbell, B. (Oldham, W.)||Hornby, Richard||Peyton, John|
|Campbell, Gordon (Moray & Nairn)||Howell, David (Guildford)||Pike, Miss Mervyn|
|Carr, Rt. Hn. Robert||Hunt, John||Pink, R. Bonner|
|Cary, Sir Robert||Hutchison, Michael Clark||Pounder, Rafton|
|Channon, H. P. G.||Iremonger, T. L.||Powell, Rt. Hn. Enoch|
|Chataway, Christopher||Irvine, Bryant Godman (Rye)||Price, David (Eastleigh)|
|Chichester-Clark, R.||Jenkin, Patrick (Woodford)||Prior, J. M. L.|
|Clegg, Walter||Jennings, J. C. (Burton)||Pym, Francis|
|Cooke, Robert||Jones, Arthur (Northants, S.)||Quennell, Miss J. M.|
|Cooper-Key, Sir Neill||Jopling, Michael||Ramsden, Rt. Hn. James|
|Cordle, John||Kaberry, Sir Donald||Rawlinson, Rt. Hn. Sir Peter|
|Corfield, F. V.||Kershaw, Anthony||Renton, Rt. Hn. Sir David|
|Craddock, Sir Beresford (Spelthorne)||Kimball, Marcus||Rhys Williams, Sir Brandon|
|Crouch, David||King, Evelyn (Dorset, S.)||Ridley, Hn. Nicholas|
|Crowder, F. P.||King, Tom||Ridsdale, Julian|
|Cunningham, Sir Knox||Kirk, Peter||Rippon, Rt. Hn. Geoffrey|
|Currie, G. B. H.||Kitson, Timothy||Robson Brown, Sir William|
|Dalkeith, Earl of||Knight, Mrs. Jill||Rodgers, Sir John (Sevenoaks)|
|Dance, James||Lambton, Antony||Rossi, Hugh (Hornsey)|
|Davidson, James (Aberdeenshire, W.)||Lancaster, Col. C. G.||Royle, Anthony|
|d'Avigdor-Goldsmid, Sir Henry||Lane, David||Russell, Sir Ronald|
|Dean, Paul||Langford-Holt, Sir John||Sandys, Rt. Hn. D.|
|Deedes, Rt. Hn. W. F. (Ashford)||Lawler, Wallace||Scott, Nicholas|
|Digby, Simon Wingfield||Legge-Bourke, Sir Harry||Scott-Hopkins, James|
|Dodds-Parker, Douglas||Lewis, Kenneth (Rutland)||Sharples, Richard|
|Douglas-Home, Rt. Hn. Sir Alec||Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)||Shaw, Michael (Sc'b'gh & Whitby)|
|du Cann, Rt. Hn. Edward||Lloyd, Ian (P'tsm'th, Langstone)||Sinclair, Sir George|
|Eden, Sir John||Lloyd, Rt. Hn. Selwyn (Wirral)||Smith, Dudley (W'wick & L'mington)|
|Elliot, Capt. Walter (Carshalton)||Longden, Gilbert||Speed, Keith|
|Elliott, R. W. (N'c'tle-upon-Tyne, N.)||McAdden, Sir Stephen||Stainton, Keith|
|Emery, Peter||MacArthur, Ian||Stodart, Anthony|
|Errington, Sir Eric||Maclean, Sir Fitzroy||Stoddart-Scott, Col. Sir M.|
|Fisher, Nigel||McMaster, Stanley||Summers, Sir Spencer|
|Fletcher-Cooke, Charles||Macmillan, Maurice (Farnham)||Tapsell, Peter|
|Fortescue, Tim||McNair-Wilson, Michael||Taylor, Sir Charles (Eastbourne)|
|Foster, Sir John||McNair-Wilson, Patrick (New Forest)||Taylor, Edward M. (G'gow, Cathcart)|
|Fraser, Rt. Hn. Hugh (St'fford & Stone)||Maddan, Martin||Taylor, Frank (Moss Side)|
|Fry, Peter||Marples, Rt. Hn. Ernest||Temple, John M.|
|Galbraith, Hn. T. G.||Marten, Nej[...]||Thatcher, Mrs. Margaret|
|Gibson-Watt, David||Maude, Angus||Tilney, John|
|Gilmour, Ian (Norfolk, C.)||Mawby, Ray||Turton, Rt. Hn. R. H.|
|Glover, Sir Douglas||Maxwell-Hyslop, R. J.||van Straubenzee, W. R.|
|Glyn, Sir Richard||Maydon, Lt.-Cmdr. S. L. C.||Vaughan-Morgan, Rt. Hn. Sir John|
|Godber, Rt. Hn. J. B.||Mills, Peter (Torrington)||Vickers, Dame Joan|
|Goodhart, Philip||Mills, Stratton (Belfast, N.)||Waddington, David|
|Gower, Raymond||Miscampbell, Norman||Walker, Peter (Worcester)|
|Grant-Ferris, Sir Robert||Mitchell, David (Basingstoke)||Walker-Smith, Rt. Hn. Sir[...] Derek|
|Griffiths, Eldon (Bury St. Edmunds)||Monro, Hector||Wall, Patrick|
|Gurden, Harold||Montgomery, Fergus||Walters, Dennis|
|Hall, John (Wycombe)||Morgan, Geraint (Denbigh)||Ward, Christopher (Swindon)|
|Hall-Davis, A. G. F.||Morrison, Charles (Devizes)||Ward, Dame Irene|
|Hamilton, Lord (Fermanagh)||Mott-Radclyffe, Sir Charles||Weatherill, Bernard|
|Hamilton, Michael (Salisbury)||Munro-Lucas-Tooth, Sir Hugh||Wells, John (Maidstone)|
|Harris, Frederic (Croydon, N. W.)||Murton, Oscar||Wiggin, Jerry|
|Harrison, Brian (Maldon)||Nabarro, Sir Gerald||Williams, Donald (Dudley)|
|Harrison, Col. Sir Harwood (Eye)||Neave, Airey||Wilson, Geoffrey (Truro)|
|Harvey, Sir Arthur Vere||Nicholls, Sir Harmar||Winstanley, Dr. M. P.|
|Harvie Anderson, Miss||Noble, Rt. Hn. Michael[...]||Wolrige-Gordon, Patrick|
|Hastings, Stephen||Nott, John||Woodnutt, Mark|
|Hawkins, Paul||Onslow, Cranley||Worsley, Marcus|
|Hay, John||Orr, Capt. L. P. S.||Wright, Esmond|
|Heald, Rt. Hn. Sir Lionel||Orr-Ewing, Sir Ian||Wylie, N. R.|
|Heseltine, Michael||Osborn, John (Hallam)||Younger, Hn. George|
|Higgins, Terence L.||Page, John (Harrow, W.)|
|Hiley, Joseph||Pearson, Sir Frank (Clitheroe)||TELLERS FOR THE NOES:|
|Hill, J. E. B.||Peel, John||Mr. Jasper More and|
|Hogg, Rt. Hn. Quintin||Mr. Anthony Grant.|
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).