COUNTER-INFLATION (TEMPORARY PROVISIONS) BILL

HC Deb 08 November 1972 vol 845 cc1005-150

Order for Second Reading read.

3.31 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

I beg to move, That the Bill be now read a Second time.

Before I come to the detailed provisions of the Bill, I think that it would be helpful if I gave the House a short account of the circumstances which led to the decision to legislate. I will not take up the time of the House by going over the course of the discussions between the TUC, the CBI and the Government, because that has already been done by my right hon. Friend the Prime Minister. But it is right that I should remind the House of the events which led to those discussions.

As a result of a paper submitted to the National Economic Development Council by the TUC in July, 1971, the Council decided to set up the so-called "Group of Four" on which the CBI, the TUC, the Government and the National Economic Development Council were represented. That group and the Council itself discussed a number of topics which were later to figure in the tripartite talks—topics such as faster economic growth, threshold agreements and the improvement of the relative position of the lower paid.

In July last year the CBI launched its voluntary price restraint scheme, a scheme which received overwhelming support from its largest members. The Government encouraged the major nationalised industries to match the price performance of the private sector, and they assisted them financially to make this possible. The halving of the rate of SET, which had been part of the Budget, came into effect early in July, and on 19th July I announced a substantial reduction of purchase tax rates and I also increased the allowances on new capital expenditure.

From then on—that is to say, from the middle of 1971—considerable progress was made in reducing the rate of increase in prices. In July and August, 1971, just over a year after we took office, the retail price index was about 10 per cent. higher than it was a year earlier. In the following year—that is to say, by the summer of this year—the rise in prices had been brought down from the figure of 10 per cent. a year earlier to 5.8 per cent.

This was a very considerable achievement which was achieved partly as a result of the degree of progress which we had made in bringing down the general level of pay settlements, but it was mainly the result of the Government's own tax reductions and also the effect of the CBI's price restraint scheme which the CBI extended from 12 to 15 months, namely, up to the end of October.

The broad picture is that, up to this summer, we had used the means available to the Government directly to reduce the increase in prices. Voluntary cooperation in the struggle against inflation from the CBI was a great help, and this encouraged us to persevere in seeking a tripartite approach to the problem, as did the recent undertaking given by the retailers.

My right hon. Friend the Prime Minister, in his speech on the debate on the Address, and also in his statement on Monday, has given a full account of the tripartite talks and of the failure to reach agreement. Naturally, the different parties have different views about the reasons for that failure, but we can all agree with Mr. Victor Feather's remark that it …does not dispose of the problem or of the need for a joint solution… I emphasise the word "joint" because all us in Government hope that we shall be able to resume discussions with the TUC and the CBI on the objectives and problems of economic management.

But whatever views may be held about the responsibility for the breakdown, the fact was that last Thursday the TUC representatives concluded that the proposals which had been put forward on that day by my right hon. Friend the Prime Minister did not form the basis for negotiation. From that time onwards—and subject only to any change of view by the General Council of the TUC on Monday morning—it was imperative for the Government to take action. It is not without significance that the national newspapers, both of the Left and of the Right, were not merely expecting the Government to legislate—

Mrs. Renée Short (Wolverhampton, North-East)

The right hon. Gentleman has left out the Morning Star.

Mr. Barber

I know perfectly well that there is the exception of the Morning Star. But with that single exception, there is no doubt at all that the national newspapers were not merely expecting the Government to legislate; they were, almost with one voice, expressing the opinion that there was no alternative in the national interest.

On Monday afternoon my right hon. Friend set out the Government's proposals. And so, today, I am moving the Second Reading of this Bill.

The statutory control of pay and prices is, in the minds of everyone in this House, a far less satisfactory way of managing our affairs than would have been a voluntary agreement. But as my right hon. Friend explained on Monday, in the absence of a tripartite agreement the Government had come to the conclusion that they had no alternative but to bring in statutory measures to secure the broad objectives which were common ground among all three parties.

This main legislation will take time to work out in detail and to implement. The purpose of the present interim Bill is to make it possible for there to be a short standstill on prices and incomes so that the agreed objectives will not be predudiced while the main legislation is being prepared and brough into operation.

Dr. J. Dickson Mabon (Greenock)

Is the House to take it that the explanation which the right hon. Gentleman has just given matches up to the cry he made last night that my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) was telling a pack of lies in his version of these events? That does not square with what the Chancellor of the Exchequer has said. I do not want to revive last night's dying embers, but surely the right hon. Gentleman is obliged to say a little more about his charge that my hon. Friend was telling a pack of lies.

Mr. Barber

The point I made last night—

Hon. Members

Withdraw.

Mr. Barber

—which I am now happy to repeat, is that some—

Mr. Harold Wilson (Huyton)

Pack of lies?

Mr. Barber

I was asked a question, and if the right hon. Gentleman the Leader of the Opposition wants an answer I will give him one. The point I was making last night was that what the hon. Member for Ebbw Vale (Mr. Michael Foot) said did not coincide with the truth.

Mr. Wilson

The right hon. Gentleman said that it was a pack of lies.

Mr. Barber

Yes, the hon. Gentleman was repeating a pack of lies, without any doubt whatever. Everybody sitting round that table knows perfectly well that what I am saying is true.

Mr. Wilson

Na—the right hon. Gentleman is lying now.

Mr. Barber

How would the objectives, on which we were all agreed in the tripartite talks, be prejudiced if this Bill were not passed? Let me remind the House of what the three objectives were. The first was the achievement of faster growth in national output. The second was an improvement in the relative position of the lower paid. The third was a moderation of the rate of cost and price inflation.

On the first, there is widespread agreement that accelerating inflation would put at risk the faster rate of growth that we are now achieving. As to the second objective, the lower paid have as a rule—one might almost say "by definition"—less bargaining power than other sections of the community. In a situation of rapid inflation the strongest suffer least and the lower paid generally suffer most. As to the third objective—which is to moderate the rate of cost and price inflation—this Bill manifestly makes a contribution to that end.

There are thus three general points to be borne in mind about the Bill. First, it is designed to provide the time and the opportunity to develop and bring in a longer-term policy which will be both fair and effective. Second, whatever criticisms may be made about the detailed provisions in the Bill, the nation certainly understands why it is far better to take this action than merely to stand by and to allow inflation to rip. Third, over the past two years both wages and pensions have risen considerably faster than prices, and the whole aim of our policy of faster growth is to enable wages and pensions to go on rising in real terms.

The greater the co-operation, the quicker we can replace this standstill by a fair and just longer-term policy designed to share the benefit of growing prosperity among all sections of the community.

Mr. Neil McBride (Swansea, East)

The right hon. Gentleman has referred to pensions. Will not he agree that an increase in the old-age pension is needed now rather than next year and that an increase was called for? Does not he seriously think that this paltry bribe to the parents of the country is an affront to their dignity and that what is needed now is a pension increase?

Mr. Barber

I disagree entirely with the hon. Gentleman. Let me repeat the facts that I gave yesterday in answer to an intervention. The simple fact is that in the past two years this Government have increased the old-age pension by more than the increase made during the full period of the Labour Government. I hope that the hon. Gentleman and his right hon. and hon. Friends will note that. Under this Government the pension has been rising far faster than the rise in prices. The hon. Gentleman knows it, and the pensioners know it. What is more, we told the TUC in the tripartite talks that if only we could reach agreement we were prepared to give the pensioners a better deal—in other words, a bigger increase in pension—than they would have got otherwise and that, meanwhile, as an earnest of our good faith, we were prepared to make a lump-sum payment.

I agree that right hon and hon. Members in all parts of the House and certainly all the TUC representatives are agreed that the 8 million pensioners are a section of the community for whom we would like to do more. But in the light of that past history, I do not think that the pensioners will take the same view as the hon. Member for Swansea, East (Mr. McBride). For the first time, on top of the annual reviews, we have promised to provide for the pensioner a £10 bonus and £20 for a married couple tax-free as soon as it is feasible to do so. I think that the pensioners will take a different view from that of the Opposition.

I make one further point. I assure the House that our firm action to curb cost inflation will be matched by equally firm action to contain the money supply without curtailing economic growth.

The general scheme of the Bill is that it gives Ministers powers to enforce the standstill described in the White Paper for 90 days from the passing of the Act, subject to possible extension for up to 60 further days beyond that. During the period of operation of the Bill, Ministers will be able by notice or order to require those concerned to reduce prices or pay levels to the levels at which they stood before the standstill on 6th November and to prevent increases in dividends and rents.

That is the broad scheme of the Bill, and it may be for the convenience of the House if I explain some of the main provisions in rather more detail—

Mr. Donald Stewart (Western Isles)

As it was confirmed in a parliamentary answer to my hon. Friend the Member for South Ayrshire (Mr. Sillars) last week that the average weekly earnings of male manual workers in Scotland is more than £1 below the average for the United Kingdom, will the right hon. Gentleman suspend the standstill in Scotland until parity has been achieved?

Mr. Barber

I do not think that that would be either practicable or desirable.

Mr. Roy Jenkins (Birmingham, Stechford)

Will the right hon. Gentleman say whether his very rapid half-sentence about containing the money supply meant anything fresh?

Mr. Barber

As I am sure the right hon. Gentleman will appreciate on reflection, it was in effect a summary of the very long remarks that I made yesterday about the money supply. In the context of a Bill which is designed to deal with inflation it seemed right to complete the picture by making that reference.

Mr. John Biffen (Oswestry)

So that we may put the final brush touches to the picture, will my right hon. Friend say, therefore, whether in the prospective situation of a tightening money supply he expects interest rates to rise?

Mr. Barber

I think that I must give the answer to my hon. Friend which would be given by any Chancellor of the Exchequer—and that is that my hon. Friend must wait and see.

Perhaps I might now refer briefly to the principal Clauses in the Bill.

Mr. J. T. Price (Westhoughton)

Will the right hon. Gentleman give way?

Mr. Barber

No. I must get on. I have given way a great deal already.

Clause 1 begins by limiting the operation of the Bill to 90 days from the date of Royal Assent. There is also a power to extend the 90 days by a further 60 days by means of an order requiring an affirmative Resolution of both Houses. Hon. Members will see that the combined effect of Clause 1(2) and (3) is that there can be no extension without prior affirmative Resolutions. Furthermore, an order extending the 90 days has to be made not less than 30 days before the end of the 90-day period. By subsection (3) the order lapses if affirmative Resolutions of both Houses have not been obtained within 28 days of the making of the order.

Clause 2 is the heart of the Bill. As the sidenote says, it deals with prices, pay, dividends and rents. It provides that once the section has been applied to a price, a pay level, a dividend declaration or a rent, the level of the payment shall not exceed the level which applied before the standstill. In a moment I will explain the way in which Ministers will be able to give consents to vary this.

The appropriate Minister can apply the section either by order or by notice, as can be seen from subsection (6). We intend that where the section is being applied to an individual or a single firm the procedure by a notice will normally be used. However where the section is to be applied to a class of cases, whether in prices, pay, dividends or rents, an order may be more appropriate.

Paragraph 6 of the Schedule makes an order under the Bill subject to the negative Resolution procedure of either House of Parliament.

Paragraph 7 of the Schedule enables regulations to be made dealing with the manner in which a notice is to be given and such regulations will be made by Statutory Instrument which will also be subject to parliamentary control by negative Resolution.

Mr. J. T. Price

Will the right hon. Gentleman now give way? I am on the point I wished to raise earlier. Before the Chancellor begins to embark on a technical discourse spelling out the technical apparatus for enforcing a standstill, will he enlighten the House about how he will deal with the soaring and criminal increase in the price of property and land? Is any standstill to be placed on contracts that are in the pipeline, affecting public development and activity in housing and all other areas where the most exorbitant and criminal prices are being charged, such as, for example, land which the other day was sold at Altrincham, in the constituency of the Chancellor, at £56,000 an acre—[HON. MEMBERS: "Too long."] Will the right hon. Gentleman—

Mr. Speaker

Order. I already have the names of over 40 right hon. and hon. Members who want to speak in the debate. Interventions must be very brief.

Mr. Price

I will finish in a moment, Mr. Speaker. With great respect, it is impossible for the House to run away from the fact that the greatest single factor creating inflation, where the whole process starts, is the exploitation of land and property by completely unsocial elements in the community.

Mr. Barber

I have dealt with this question in the House and outside and have expressed my views on it. I want to go through the terms of the Bill and to do it briefly, because there are many hon. Members who wish to speak.

Clause 2(7) is important because it provides that there is no contravention of the Clause in relation to prices, pay or dividends if what is done is authorised by order or notice applying the Clause or is approved by a Minister in writing. The effect of this is that in making an order or notice, Ministers are not bound to require a price, a pay level or a dividend declaration to revert to the pre-standstill level if they are satisfied that there is good reason for exempting it from this requirement or for fixing it at some intermediate level.

Clause 3 deals with certain special cases in pay matters which are, in the Government's view, of such importance that they ought to be included in the Bill rather than dealt with by order, although I should tell the House that under Clause 2 we have the power to handle them under the ordinary procedure. We thought they were sufficiently important to be included in the body of the Bill. The cases with which Clause 3 is concerned are referred to in paragraph 14 of the White Paper. In these cases there are agreements made before 6th November under which pay or some other condition of service is due to be increased from a date which will fall within the standstill period.

We do not think it would be consistent with the objectives of the standstill, or fair to those who would normally be expected to negotiate an increase during the period of the standstill, to allow increases under staged agreements to proceed during this period. So, as on previous occasions—

Mr. Christopher Brocklebank-Fowler (King's Lynn)

While recognising the need for restraint and supporting generally the aims of the Bill, may I say—and I know that I speak on behalf of my hon. Friend the Member for Norfolk, North (Mr. Ralph Howell) and many other hon. Friends representing Norfolk and other counties in respect of the recent pay award made by the Agricultural Wages Board—that there is no more deserving case than agricultural workers who on average currently earn less than 69 per cent. of average industrial earnings. Will the Chancellor undertake that at the end of the standstill period agricultural workers will receive their award in full?

Mr. Barber

Obviously I cannot without notice give an off-the-cuff answer on every pay settlement or claim throughout the country. I know the position of the agricultural workers because a number of my hon. Friends representing farming constituencies have seen my right hon. Friend the Minister of Agriculture and myself about it. The position with all wages council and wages board proposals is that where the last increase for the workers concerned took effect less than 12 months before 6th November, the implementation of the wages board's proposals—there are two boards, one for Scotland and one for England—will be deferred during the standstill. This is dealt with in paragraphs 15 and 17 of the White Paper. In answer to the specific point, the new rates, assuming that they will be confirmed by the boards, and I make that assumption, will come into operation in full from the date when the standstill ends.

Mr. Eric S. Heffer (Liverpool, Walton)

Shame.

Mr. Barber

I was saying that we did not think it would be consistent with the objectives of the standstill or fair to those who would normally be expected to negotiate increases during the period of the standstill—

Mr. Harold Wilson

We are not very clear about this. If the proposals are not to take effect until the end of the freeze, which may be for 150 days, will they be backdated to the original 1st January? Has the right hon. Gentleman studied the precedent of the doctors in 1967?

Mr. Barber

I was just dealing with this very point. I made it clear in answer to my hon. Friend the Member for King's Lynn (Mr. Brocklebank-Fowler) that this will come into operation at the end of the standstill but will not be backdated. I was just going on to explain why.

Mr. Norman Atkinson (Tottenham)

Before the right hon. Gentleman does that—

Mr. Barber

I must get on. I wish to answer the point put by the Leader of the Opposition, which is a perfectly proper one. We do not think that it would be consistent with the objectives of the standstill or fair to those who would normally be expected to negotiate increases during this period to allow increases under staged agreements to proceed during the period. Any right hon. or hon. Member on the Opposition side will remember the principles which were applied on a previous occasion when there was a standstill. Accordingly, as on previous occasions, we propose that the implementation of such agreements should be deferred until the end of the standstill. The first two subsections of Clause 3 give effect to this.

I should make it clear that we expect such agreements—I am speaking generally now about this type of agreement—to come into operation with effect from the end of the standstill. We are not proposing that the amount of such agreements should be affected, provided they were made before the standstill.

Mr. Atkinson

Will the right hon. Gentleman give way?

Mr. Barber

No. Paragraph 13 of the White Paper makes it clear that where an agreement was reached before the standstill and the operative date of the increase was on or before 6th November, the increase can be implemented. The principle is that increases which begin to take effect during the standstill should not proceed.

Clause 3(3) provides for an exception to this. This exception relates to increments for age or length of service. Again, this exception is in line with the practice on previous occasions. We think that a distinction ought to be made between progress within a scale or range by the individual and an increase which lifts either a pay scale or a flat rate of pay for everyone. We have made it clear in paragraph 12 of the White Paper that where any existing pay takes the form of a range or scale, that range or scale should not be increased. But progress within the range or scale on the basis which applied before 6th November is permitted. In addition to increments on scales, this exception applies to the progress of apprentices to the adult rate and to long service payments.

Clause 4 empowers the appropriate Minister to obtain the information that he needs to establish whether a price, pay level, dividend or rent has been unjustifiably increased.

Mr. James Callaghan (Cardiff, South-East)

As dividends will normally accumulate with profits and be reflected in share prices and eventually paid to shareholders, can the right hon. Gentleman explain the equity between that situation and refusing to back-date the pay of farm workers?

Mr. Barber

What I am saying is that the treatment of dividends and of the pay of agricultural workers is confined to the period of the standstill. I have said nothing about dividends after the standstill. What I have said about agricultural and other workers to whom I have referred is that from the end of the standstill they will get their increases in full.

Mr. Heffer rose—

Mr. Barber

No. I must get on.

Mr. Heffer

Will the right hon. Gentleman give way on this question of agricultural workers' wages?

Mr. Barber

No. Clause 5 gathers together in one part of the Bill—

Mr. Heffer

Will the right hon. Gentleman give way now?

Mr. Barber

No. As I was saying, Clause 5 gathers together in one part of the Bill a series of provisions dealing with offences.

Mr. Heffer

On this question of agricultural workers' wages—

Mr. Barber

There are provisions for fines for contravening a notice—

Mr. Atkinson

On a point of order, Mr. Speaker. As I understand it, Parliament has not become an exclusive club for Privy Councillors. Why is the Chancellor so agreeable to giving way to his colleagues in the Privy Council?

Mr. Peter Rost (Derbyshire, South-East)

Because they have a lot more sense.

Mr. Atkinson

That may be so, but there are others, Mr. Speaker, who assume that you are here to protect their rights and who would like to put one or two points of view on behalf of the most exploited section of working people in the country, those whom the Government are proceeding to hammer. The right hon. Gentleman ought to give way and then answer questions about the wages—

Mr. Speaker

Order. This is not a matter for the Chair. It is entirely a matter for the discretion of the Minister.

Mr. Barber

I accept that—

Mr. Heffer

Will the right hon. Gentleman now give way?

Mr. Barber

I fully accept that the hon. Gentleman, who is particularly concerned about these matters and has always taken a consistent line on them, and his hon. Friend the Member for Tottenham (Mr. Atkinson), have points of view to express, but you, Mr. Speaker, have said that there are 38 other right hon. and hon. Members who want to express their points of view.

Mr. Atkinson

Why did the right hon. Gentleman give way to my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan)? He is an employer of farm workers.

Mr. Barber

I was referring to Clause 5 which deals with offences. There are provisions for fines for contravening a notice or order under Clause 2, and corresponding provisions for similar fines for anyone who tries to compel or influence someone by threat or otherwise to contravene Clause 2. There is provision for a smaller fine for wilful failure to produce information under Clause 4, or for producing false information or documents.

In subsection (6) we provide that where an offence under the Bill is committed by a corporation and it can be proved that this has happened with the consent or connivance of a responsible officer of the corporation, that officer can be proceeded against as well as the corporation itself. In subsection (8) there is a reference to the Industrial Relations Act. The effect of this subsection is that there shall be no "double liability" for offences under the Act.

Subsection (9) contains a safeguard which is self-explanatory, in that proceedings for an offence under the Bill will require the consent of the Attorney-General. I am sure it will be accepted by the whole House that failure to comply with the Act or a notice or order made under it would be a serious matter, punishable under the law.

Clauses 6 and 7 make the necessary provision for the Bill to apply in Scotland and Northern Ireland in order to accord with the special legal provisions which apply there.

I do not think that I need detain the House for long on the Schedule, but it may be helpful for future discussions if I say that a number of the provisions are technical. For example, paragraph 5 makes possible the variation or revocation of orders, and paragraph 8 deals with the special position of Crown servants, given that the Act will not bind the Crown. The Government, of course, intend to apply the principles of the standstill fully in the Government field, notwithstanding that the Bill will not bind the Crown.

Mr. J. Enoch Powell (Wolverhampton, South-West)

I am grateful to my right hon. Friend for giving way. As he is dealing with the Schedule, will he refer to paragraph 4 and tell the House whether that will cause this measure to override Community legislation, or whether Community legislation will have precedence over the Bill when it becomes an Act?

Mr. Barber

The provision is quite clear. It is that this Act—in other words the Bill that we are now discussing—and any provision made under it shall have effect notwithstanding anything in any other Act or other statutory provision which was made or passed before this Act. In legislation of an emergency and temporary character to deal with a limited period of 90 days, which can be extended to 150 days, I should have thought that it was wholly reasonable in the circumstances and in the national interest that there should be a provision of this kind. It is true that the Bill gives very wide powers, but it does so for a strictly limited period, and I believe that for this period these wide powers are necessary in the national interest.

Whatever may be the views of individual right hon. and hon. Members, there is no doubt that the nation as a whole expected, and approves of, the decision which the Government have taken, and therefore of the introduction of the Bill. If we had not acted as we have, inflation would not merely have continued at an unacceptable rate: it would have accelerated. As always, it would have been the powerful who would have gained, and it would have been the weak who would have lost, and it is not surprising that an opinion poll published in the evening papers today shows that three out of four people back the proposals which have been put forward by my right hon. Friend.

I say this to the right hon. Gentleman the Leader of the Opposition, who is to follow me. After the results of the American election the Opposition must be wondering whether they are wise to oppose the Bill, because the immediate action that we are taking is not all that dissimilar from the action taken last year by President Nixon, action which undoubtedly has been approved by the American people.

I say that because the British people, like the American people, hate inflation, and they hate rising prices. They know that rising prices harm the pensioner and hurt the housewife. They know that rising prices and rising costs create unemployment. They know that the upward spiral of pay and prices is the one thing that can damage and diminish our hopes of rising prosperity, and so I believe that the British people, like the American people, will have no patience with those who now attempt to undermine the action which the Government have taken.

The Bill is essential in the national interest, and I ask for the support of my right hon. and hon. Friends in giving it a Second Reading.

4.10 p.m.

Mr. Harold Wilson (Huyton)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, believing that the present crisis results from the Government's mismanagement of the economy and its deliberate alienation of the trade unions, and regretting that the Government brought about the failure of the recent talks by refusing to modify its policies on food prices, rents, other key elements in the cost of living and on regressive taxation, declines to give a Second Reading to a Bill that cannot achieve a lasting reduction in the rate of inflation without further major changes in Government policy. In view of his last remarks, addressed to me, I must concede that the Chancellor of the Exchequer is getting a bit hard up for arguments if he relies on an Evening News public opinion poll and the results of the American election. Monday's announcement and the Bill are an indictment of the Government on two counts. First, they represent even more conclusive evidence of the cynical dishonouring of the firm pledges on which the Prime Minister was elected. We are glad that the right hon. Gentleman has condescended to arrive in the House to listen to the debate. Second, they are an utter condemnation of the Government's conduct on the whole range of economic and social policies during the two and a half years they have been in office.

The Prime Minister was elected on one mandate, and one only, to deal with prices, to counter inflation. His promises on this were unequivocal. They were repeated every day of the election campaign. The events of the past few weeks condemn the right hon. Gentleman for having presided over the most devastating rate of inflation which this country has ever known in peacetime. He has not merely passively presided, not merely failed to act, but many of his policies have been deliberately designed to raise food prices and rents and to impose further burdens on the family standard of living.

The Bill is equally a repudiation of the right hon. Gentleman's cynical campaign to win votes in the last General Election by his reiterated argument against a wage freeze and his statement at that time that a Labour Government would immediately introduce a wage freeze in June, 1970, saying that he totally rejected it. He described the imposition of a wage freeze as not only impracticable but unfair, undesirable and an unjustifiable infringement on the freedom of the individual. But he has now done it.

Mr. J. Bruce-Gardyne (South Angus)

The right hon. Gentleman should read his 1966 manifesto.

Mr. Wilson

We said that we would introduce statutory controls on prices and incomes, and it was in the Queen's Speech of 1965. Obviously, it is a waste of time to give way to the hon. Gentleman.

Last week I quoted the Prime Minister's equally categorical pledges in the BBC Election Forum, 1970, which said: We opposed the compulsory wage freeze all the way through and we have been proved right. The right hon. Gentleman referred to such a freeze as "playing into the hands of extremists." He said: As a policy it has proved to be futile. What we want is a new approach. But the right hon. Gentleman's references to an incomes policy were not simply an assertion that he could not see a situation arising where a statutory freeze would be necessary. Opposition to any suggestion of a wages or prices freeze was an integral part of his campaign. It was included in his "At a stroke" statement two days before the General Election. He took the campaign to the country. Just as he had appealed to the housewives of Leicester, he appealed to the workers of the West Midlands, and with an equal degree of electoral honesty in what he promised them. He said in June, 1970: It is now quite clear that if Labour were to be voted back to power they would impose another compulsory wage freeze. Nobody seriously denies it. And there would not be much point in denying it because if they did nobody would believe them. I hope that the right hon. Gentleman will stop reading his little bits of paper and listen to what is being said. I am attacking the right hon. Gentleman for misleading the country during the General Election campaign. If he has not got the guts to speak in this debate, I hope he will have the guts to get up and defend himself in a moment. The report of his speech says that he added insult to injury by saying that a Labour Government would attempt to hold back increases already negotiated but not yet paid. Did the right hon. Gentleman say that in Birmingham? Did he say that a Labour Government would attempt to hold back prices already negotiated but not yet paid? Did he say that?

Before the Prime Minister arrived, the Chancellor of the Exchequer told the House that the Government are holding back the farm workers' increase, yet that is what the Prime Minister campaigned against in 1970. He went on to say: We know very well …"— [Interruption.] Does he deny what I have just quoted? Will the right hon. Gentleman put his piece of paper down? He can read his comics afterwards. Does he confirm what I have quoted, and does he confirm that the Chancellor of the Exchequer has said that the agricultural workers' pay award will be deferred? Does he deny either of those statements?

The Prime Minister (Mr. Edward Heath)

I was just reading what the right hon. Gentleman said in March, 1966: Any law prescribing wages would be repugnant to all parties in this country.

Mr. Wilson

I said that, but I am quoting what the right hon. Gentleman said while campaigning in the country in 1970 against our wage freeze. Now he is introducing a freeze. The right hon. Gentleman said at Birmingham—[Interruption.] Of course, Government back benchers do not like this; they were elected on the right hon. Gentleman's promises. Most of them are here as dishonestly as he is because they were elected on his mandate on prices and on a wage freeze.

Mr. Peter Tapsell (Horncastle) rose—

Mr. Wilson

The right hon. Gentleman does not need protection. If he wanted to speak he would do so. The right hon. Gentleman said at Birmingham: If you put a Labour Government back into office you will have your wages frozen by another lengthy period by Act of Parliament. Is not that what he is doing? He went on to say: We are opposed to a compulsory wage freeze. We never had it when we were in power. We opposed it right through the last Parliament…". He then talked about the fines in the Labour Government's legislation. He referred to fines of £500. He did not say that there were no prosecutions. He did not say that the maximum fines were £100 on summary conviction and £500 on indictment—he referred to the fines in his election campaign—when the fines in the present Bill are £400 on summary conviction and an unspecified, unlimited fine on indictment. That is inflation under the Tories on fines.

The second charge relates to a total breakdown of the Government's policy. The right hon. Gentleman's manifesto not only says: We utterly reject the philosophy of wage control … It also deals with inflation. The manifesto says: We have become resigned to the value of the pound in our pockets or purse falling by at least a shilling a year. That means under a Labour Government. Food prices under the present Government have been rising at almost two shillings in the pound a year. Can I have the right hon. Gentleman's attention when he has quite finished? [Interruption.] I shall get on when I have the Prime Minister's attention. What the right hon. Gentleman has portrayed as our failure has become his target. He would be very pleased if he could keep down price increases to less than a shilling in the pound each year. The right hon. Gentleman will have his own estimate of the hope which he has of holding down price increases to 5 per cent. We were condemned for what he called our shilling in the pound. He has now made it his target and he knows he will not be able to achieve it. Prices, we were told when the new Parliament assembled, would be kept down by competition. Oil companies are not keeping them down; they have put up their prices together and in harmony.

In September, 1970, the Chancellor made it clear to City journalists that prices were to be allowed to rise to restore profit margins. That was cost-inflationary and the impetus to higher wage claims. Fares, school meals, rates, food and rents were all pushed upwards by deliberate Government policy. On wages we were told that wages in the private sector would be left to workers and employers to settle and they were expected to be in tune with the Prime Minister's moralising tone of those days. The Prime Minister decided from the outset on a deliberate policy of positive discrimination between public employees and employees in the private sector. That was the policy in September, 1970.

This Bill, the consummation of the Government's policy, is the result of this systematic alienation of the unions, and were the actions not sufficiently provocative to heighten conflict we could always rely on the Chancellor of the Exchequer to provide the necessary exacerbation—in railways, for example, this year, just as the unions were meeting to discuss the Minister's proposal for arbitration; and in the Downing Street talks, on the eve of the vitally important meeting on Monday of last week.

Last night, in this new permissive society—this House—the Chancellor allowed himself to use the expression "pack of lies" about my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot). He will know that Mr. Jack Jones, addressing the Parliamentary Press Gallery luncheon today, entirely confirmed what my hon. Friend said. Who is now responsible for the "pack of lies"?

As though the Chancellor were unable to exacerbate the conflict there is a new sorcerer's apprentice now, the Vice-Chairman of the Conservative Party the hon. Member for Lewisham, West (Mr. Selwyn Gummer), appointed by the Prime Minister. [Interruption.] Hon. Members opposite cannot laugh him off. They can laugh most things off, but they cannot laugh him off because the Prime Minister appointed him. He is reported to have said last week, The wages and prices talks were destroyed by Red wreckers. The report reads: They failed because of red wreckers, a militant minority who were operating the unions' claimed Mr. John Selwyn Gummer, vice-chairman of the Conservative Party at Doncaster last night. 'The moderate leaders of the trade unions have been so terrified by the activities of the militants that they were in no position to deliver any agreement, let alone to agree to anything. It is the moderate majority of the unions who are the losers by their refusal to accept an offer to become part of the Government machine and join in making the decisions which are necessary for the whole of the community. … The moderate trade union leadership wanted the talks to succeed. But they failed because so many of the trade unions are now in the hands of extremists, and this is not because the extremists have a majority but because the moderates refuse to he militant.' The Vice-Chairman of the Conservative Party is the appointee of the Prime Minister, and I ask the Prime Minister, who claims to be anxious for the talks to be resumed and to succeed, whether he endorses that assessment by his vice-chairman, his recent appointee, or whether he repudiates it. [HON. MEMBERS: "Answer."] I am asking the Prime Minister to get up. He was popping up and down like a right honourable jack-in-the-box yesterday. He will not answer that question.

Mr. Geoffrey Finsberg (Hampstead)

On a point of order. Is it in order, Mr. Speaker, for the right hon. Gentleman to keep wasting time when 40 other Members wish to participate?

Mr. Speaker

That is not a point of order.

Mr. Wilson

It would have saved time if the Prime Minister had the guts to get up and answer that question.

The House knows that the talks broke down because the Government were the prisoners of their own doctrinaire policy. They expected the unions to support and police an agreement where they would be responsible for the whole spectrum of wages and at least some salaries. Against this there was an offer that the CBI would hold the prices of manufactured goods ex works within the 4 per cent. limit. The CBI has proved that it can do that, but, of course, it cannot police retail margins. I do not underrate any of this, either the achievement of the CBI over 15 months or the difficult task it was prepared to shoulder for a future period, but so many of its products account for only a relatively small proportion of the cost of living of the average household.

I think the Prime Minister does not seem capable fully to realise that he was not dealing only or mainly with the trade union leaders on that side of the talks. Any workable agreement must be capable of winning the hearts and minds of trade union members and the wives of trade union members, and the Prime Minister cannot convince them of his good faith after his broken promises on prices, still less when he has so little to offer.

Man does not live by bread alone, but still less is the average family's cost of living dictated by the ex works cost of machine tools or ball bearings, however important they may be for industrial efficiency and investment. For a very considerable proportion of the expenditure of families in this country the principal costs are housing, including rates and either rents or mortgage interest rates, and food, and so much of all that is outside the area of influence of the CBI, or indeed, for that matter, of this Bill. For very many families these two items, the cost of housing and the cost of food, add up to half the total family cost of living. For the very old, food is a disproportionately high part of household expenditure. For the very young, housing is. I have quoted the building society figures; for the 11,000 new borrowers from March to May this year, mortgage charges account for 23 per cent. of total incomes. And people have to feed themselves on top of that.

When I listen to him in this House, and on television on these matters, I always get the idea that the right hon. Gentleman approaches these problems with a certain degree of formalistic logic mingled with the Messianic fervour of a newly qualified industrial consultant—he did so on television on Monday night—a kind of O. and M. Rees-Mogg. He ought to be approaching these matters with concern for the welfare of every family in this country because of the qualities he has got—

The Prime Minister

As the right hon. Gentleman is dealing with these matters he ought to have pointed out that retailers prices were included, just as were nationalised industries' prices, for which the Government are responsible, including fares and fuel supplies, to be fixed in conjunction with the Government. If the right hon. Gentleman knows that all these were included he ought to have mentioned them as well as the CBI prices. What was of vital importance was that policing would be done by the TUC as well as by the CBI and the Government, and the TUC was offered what it has never been offered before: a full share in policing manufacturers' prices and retailers' prices.

Mr. Wilson

That is very interesting. Indeed I referred to retail prices last time I addressed the House and the right hon. Gentleman may find some fairly generous compliments I could pay him, but in the main he is not dealing with family expenditure. As he will understand, it is not only a question of the CBI. In his present fairly mellow mood as long as it lasts, I would ask him to consider that while wages are properly an item in industrial costs, for him they are an abstraction but for a family, on a Thursday or a Friday night they are not an abstraction but affect the standard of living of the family. Deductions at source, when the housekeeping money is handed over, deductions for rent, rates, fares, school dinner, fuel, which are placed in the tin or on the mantel-shelf, are deductions from spendable income as surely as PAYE and stamps.

I come to the point made by the right hon. Gentleman dealing with family expenditure on public sector prices—that fares, coal, gas and electricity, and postal charges would be kept within the permitted rate of increase. That means all subsidies. Some hon. Members might have felt, when they heard the Prime Minister last week, that this is not exactly what they were elected to support, especially with a bill of £280 million, but of course the Government were right in this. They recognise the problem here. It is a problem that I have frequently urged on them—the problem of predominantly labour-intensive public industries and services in which, if the workers are paid wages and salaries comparable to similar work in private industry, the direct effect on costs would mean high prices going right through the economy.

That was the Prime Minister's intention, from what he said last week, and and he has confirmed it today, but did it come through in time in the talks with the two sides of industry? In our view—this happens also to be the view of the trade union representatives there, and they have made it public—the talks failed because the Prime Minister did not come through early enough or over a sufficiently wide area with a proposal for a real, Government-directed attack on the main components in the cost of living of the average family. I want to deal with some of these.

First, on food prices and the prices of other essentials, I did not under-estimate the difficulty of dealing with them when we debated this matter last week. But of course Government policies are in all the wrong directions on food prices—food levies, the European entry terms, the complacency of the former Minister of Agriculture over beef prices last June and the Government almost falling over themselves to give the impression that they wanted to see British beef and cattle exported to Europe. One cannot combine an anti-inflationary policy with, at the same time, an obsequious determination to serve the interests of a protectionist, high-cost, high-priced European agricultural system.

On rents, why could not the Prime Minister have said in his original statement on 26th September that, as an earnest of his intentions on inflation, he would freeze the 1st October increase—he had powers to do it in the existing Act—or at least limit them to 4 per cent., given an adequate response on other questions? Having passed that date, as he did, why did he not say in the talks that he would be willing to suspend the increases due on 1st April? I do not know whether he said that he was prepared to do that: it does not seem to have been the case. This could have been done without new legislation.

Despite what the right hon. Gentleman said yesterday, when he kept getting up to challenge my right hon. Friend the Member for Leeds, East (Mr. Healey), as recently as Monday when answering my questions he was standing firm on the proposition that rents, like Europe and like the Industrial Relations Act, were the subject of legislation that he was not prepared to repeal.

The Prime Minister indicated assent.

Mr. Wilson

The right hon. Gentleman confirms that: I am grateful to him. But, he said, he would be prepared to take into account the results of that legislation. I would hope so—whatever he meant by that.

The Prime Minister said in reply to me: Many of the other matters mentioned by the right hon. Gentleman"— they were rents and housing and so on— —I must frankly say this to him—are political."—[OFFICIAL REPORT, 6th November, 1972; Vol. 845, c. 630.] He is right: of course they are. They are Tory politics. What he is saying to the House and the country and to his partners in the tripartite talks is this: "We have decided; and come inflation, come hell, come high water, we are not prepared to change our prejudices in the interests of the nation or those of the housewife."

The Prime Minister

The right hon. Gentleman is quite wrong. We were never asked in the talks to do anything about the 1st October increase in rents, although the talks were going on from the middle of July, because this was accepted by those taking part in the discussions. As for the Housing Finance Act, of course, I said that we were net prepared to repeal it but would take account of the consequences of it. That was why I made the offer of increasing the rebate allowance for the lower-paid workers.

This is a matter of policy which I was perfectly entitled to explain to those present, which I did—that we believe in the same policy that the right hon. Gentleman's Minister of Housing believed in, which was that those who are earning higher incomes and can afford to pay a fair rent should do so. We have pursued that policy and we have helped those—and I offered to make greater help available to them—in the lower income brackets.

Mr. Wilson

I thank the right hon. Gentleman. He knows perfectly well that no proposal on the lines of the Government's Housing Finance Act ever came before Ministers under the Labour Government. He has said this many times and the Chancellor of the Exchequer has a nice chosen phrase to express that particular legend: he used it last night.

Of course I understand what the right hon. Gentleman meant by this. He was being fair just now. He told us that he would take into account the results of that legislation. [An HON. MEMBER: "That he would do something about it."] Yes, that he would do something about it was what he meant. He told us last Thursday about rebates and the needs allowances and all the rest, but has he not got the faintest glimmering of the problem here?

The Prime Minister is asking people on an average wage to accept a £2 limit on their wage increases. He knows that food prices are going up a great deal more than he has ever been prepared to tell the House. In addition, however, people who had a 50p increase, without rebates, last April are now due for another 50p increase, or something up to that figure, next April. Cannot the right hon. Gentleman see that if he had wanted a viable policy, he should have said "We will deal with that not only for the rebate groups but for the average workers to get this accepted"?

This proves my point, that the right hon. Gentleman is living in a social abstraction as well as an economic abstraction and has not the faintest clue how the average family lives.

The Prime Minister

Does not the right hon. Gentleman realise when he is making these accusations that the three groups in these talks agreed on their first objective as being to help the lower-paid worker? They all accepted, including the TUC, that this would mean that the higher-paid worker could not be helped proportionately. This was the whole basis of the talks, it is why we made the offer across the board and it is why all the proposals that I put forward were to help the lower-paid workers.

Mr. Wilson

We notice the ingenuity with which the right hon. Gentleman, having made this point—some of us indeed applauded, as I did last week, his idea of a flat rate rather than a percentage increase—then cashed in on that and did nothing at all for anyone else.

The Prime Minister indicated dissent.

Mr. Wilson

I have just shown this to him with rents. He tried to justify a fundamentally unjust situation by always saying "I am trying to help the lower-paid workers" and then failing to produce just proposals for the millions of other workers from whom he was asking for restraint when he could not guarantee, as he fairly said, any control over prices.

If he was concerned with the lower, paid workers, the Chancellor would not have said this afternoon that the lowest-paid of all, the farm workers, are not getting the increase which was negotiated last week.

The Prime Minister

Why does not the right hon. Gentleman refer to the threshold agreements which we inserted and which were there for discussion and were greatly discussed during the talks? They were, together, a complete safeguard of all workers, not only the lower-paid.

Mr. Wilson

Certainly, and that is a pretty good indication that the right hon. Gentleman has no confidence in holding inflation down to the 5 per cent. that he talked about in his manifesto.

I have asked the right hon. Gentleman—he has not answered although he has been up and down—why he did not deal with the basic guarantee, not the fallback insurance policy. I realise that he made some thresholds. We put the idea to him 18 months ago, and he went on ducking and dodging on the issue until he was forced to consider it on 26th September. But it does not deal with the basic problems—rents, school meals, pensions, VAT and food prices. Had there been a move on this a week ago, I believe that the House and the country would be facing a much less bleak situation.

Now we have the freeze, which under the Bill will have a retroactive effect to 6th November. I have already said—it must be equally true of the freeze as it was of the Prime Minister's proposals—that it cannot be effective over a wide range of household expenditure. I should like to take the right hon. Gentleman through one or two of these.

On food, I have referred to the promises of the former Minister of Agriculture about a reduction in the price of beef when the midsummer and early autumn killings began. It has not happened. Now, we are warned—it was in today's Press—by a leading French meat buyer that the beef prices in British shops will rise another 25 to 30 per cent. by the middle of next year. Other meat prices are up. Pork and bacon are up, and the freeze cannot hold them. The same will be true of many manufactured goods which are under the CBI's control but are of course affected by outside prices.

The Grocer this week calculated that, in the two weeks ended 4th November, there were 517 listed price increases against a weekly average this year of 177. There has been a rapidly rising number of increases just before the freeze and there is clear evidence of anticipation of the freeze—and the Government cannot do anything about it. Those increases cover a very wide range of food. The trouble about this "temporary provisions" Bill is that it does not deal with provisions.

The price of Canadian hard wheat is up by almost 50 per cent. It is now £46 per ton as against £31 in the summer. What, then, about bread prices? The Prime Minister may continue to shake his head, but he cannot do anything about it.

The Prime Minister

The right hon. Gentleman can do nothing about it either.

Mr. Wilson

As I told the right hon. Gentleman yesterday, in the 12 months after July, 1966, the cost of living index rose by 1.44 per cent. I should like him to say that he will achieve the same rate. We should not believe him, after 1970, but it would give us a little comfort for a short while.

Next, fresh fruit. Housewives are asked to pay incredible prices for apples at present. The Government would no doubt like to allow rather more imports of apples and pears, but they cannot because they are deadlocked in negotiations with the Common Market about the quota system due on 1st February. Once again, the European obsession is dominating the cost of living.

What about oil? The right hon. Gentleman will know that the new posted increases in the price of oil will involve the cost of central heating, petrol and many other products, industrial raw materials and industrial heating, and these rises are due to come into effect on 1st January. Will the right hon. and learned Gentleman, the new Minister for Trade and Consumer Affairs, whom we congratulate on his entry to the Cabinet, say whether the new posted oil price increases will be frozen or whether they will be allowed because oil is an overseas product imported in bulk?

What about wool and wool products, and non-ferrous metals and fibres? It is no good the Chancellor of the Exchequer shaking his head; it has happened.

Mr. Barber

I was only thinking how strange it was that the right hon. Gentleman the Leader of the Opposition should be talking about an increase in oil prices in that where in 1966 he imposed a standstill he accompanied it quite deliberately by Government action for increasing the price of petrol by raising the duty.

Mr. Wilson

Yes, indeed, we did, and the right hon. Gentleman knows why we did it—because of the deficit on the balance of payments. He inherited a surplus and has thrown it away. I gave way to the Chancellor because I thought he knew what he was going to do. I thought he was going to tell us the position on oil and petrol prices. However, I hope that the right hon. and learned Gentleman the Minister for Trade and Consumer affairs will tell us tonight.

I now ask another question of the right hon. and learned Gentleman. It is fair to give him notice of it. What about imported newsprint from countries where prices are rocketing and home-produced newsprint faced with a 10 per cent. increase in imported Scandinavian pulp prices? A £7 per ton, 8 per cent. increase on the home market has been announced. Will this be allowed? What will be the effect on newspaper prices?

This is always a compassionate House for those in trouble. Even the most stony-hearted hon. Member cannot prevent a tear welling up into his eye as he contemplates the lot of the newspaper proprietors, because almost to a man they have led the campaign for firm action against inflation. The Prime Minister told us of this. Right, left and centre, they have thundered against the "robber barons" of the TUC. We have had leading articles and cartoons characterising union leaders as wreckers, muggers, saboteurs and men with coshes. These newspaper proprietors have demanded a freeze. They have said "Wages must be curbed. Employers and Government must be tough." I was very moved by this. [Interruption.] Not all newspaper proprietors did it; not Cecil King, anyway; the House may be assured of that.

Last month the newspaper proprietors, who were pressing the Chancellor and the Prime Minister to cut the wages for lower-paid workers, decided to pay out increases of £10 to £12 a week to their journalists, back-dated to July. [AN HON. MEMBER: "Quite right."] It is all right saying "Quite right" now, but they cannot do it under the Bill. They face an 8 per cent. rise in the cost of their newsprint from 1st January. Experts in newspaper economics have said that newspapers will have to raise prices. Some of the dial-a-diddle hot lines to individual newspapers will be interesting if they raise their prices. New scales for higher advertising rates have been announced from 1st January, and contracts signed. I hope that the right hon. and learned Gentleman will do his best to tell us the status of all those matters, newspaper prices, newsprint prices and advertising rates, under the freeze.

On the Bill I have one or two more questions. First, how rigid do the Government intend to be on wage negotiations? We have heard the Chancellor on the subject of agricultural workers. What about the electrical industry white collar workers, who normally follow almost within the hour negotiations for the power workers? What will their position be? What about ancillary workers in the National Health Service? What criterion will be adopted, and will there be any chance for ministerial discretion?

On the question of enforcement, as the Government refuse to reintroduce a prices and incomes board and to restore the Consumer Council will they not recognise the shambles they have got into over investigation and enforcement under the freeze? It cannot be done by long-distance telephone calls to an over-pressed switchboard in London—even if the Prime Minister had known the answer to questions put to him on television on Monday and repeated in the House yesterday by the hon. Member for Gloucester (Mrs. Sally Oppenheim) about reversing the charges. The Government should immediately make arrangements for town halls, local authorities, to handle queries and complaints, certainly as regards shop prices and charges for local services. They have professional and experienced staff. It should not be difficult to reinforce them; indeed, to appeal for volunteers. Many local authorities, as the right hon. Gentleman must know, already have price investigating committees and authorities to look into what is going on, without the freeze.

The Prime Minister is wrong in thinking of every housewife—he keeps saying this—particularly young housewives or very old housewives, rushing around the shops in his own abrasive way looking for supermarkets or village store confrontations. They just do not do it. We have seen some of them on television. Many of them would like to live in peace. Many would fear to he disproved if they thought that a price had been increased and accused a shopkeeper of raising prices. He might produce a list of last week's prices, whether or not it was correct. Many in scattered areas or neighbourhood communities, where it is not practical to shop around, would fear to lose the shopkeeper's good will. Why should not all these housewives take queries to the town hall, which could do a prima facie investigation, a screening process, before deciding to refer bad cases, or cases raising an issue of principle, to Whitehall?

Mr. J. T. Price

My right hon. Friend has made a useful suggestion about conveying these complaints more efficiently than under the long-distance telephone system. But I hope he will remember that most of the town halls in England at present are completely submerged by the reorganisation of local government, which is another by-product of legislation initiated by the present Government.

Mr. Wilson

I understand that. That point has already been put to me in discussions with a number of people. Also, those of them not tied up with that are tied up with the problems of the Housing Finance Act and pay negotiations in local government service. Having said all that, however, I am sure that there is a job they can do.

Manufacturers, I think, will be told by the right hon. Gentleman that they are required to ask for the prior authority of the appropriate Ministry before raising prices, and will have to prove their case. Why should the Government not list the major shoppers' items and require shops seeking to increase their prices to report first to the town hall, again with the idea that major issues will be referred to Whitehall? If there is to be further, continuing legislation in any form, I would propose that local price regulation committees should be set up, serviced locally, and free to initiate inquiries, reporting to whatever national price vetting committee the Prime Minister can bring himself to set up. If there is continuing legislation I hope that there will be local price regulation committees. May we be told the position on loss leaders? Are they to be permitted to be reduced and then raised again?

May we now have a clear answer on steel? Will steel be held by the Bill at 4 per cent. If it is held, does that not break the Government's commitment to Brussels? There is news in the Press from Brussels this morning of serious concern on the part of European steel producers. Are the Government applying for a waiver? Are we likely to be hauled before the European Court? The former Solicitor-General can speak with authority on this matter: he knows that we are due to be hauled there at some point if we hold the prices down here. Are we holding the prices down by Government policy or by a gentlemanly request? Will that request be effective?

Can the right hon. and learned Gentleman tell us whether the basing point charges which involve big changes in prices for many consumers and which are due for 1st January—I gather that they are already printed but not published—are going ahead?

I hope that we shall have answers to these questions and shall be told a little about the extension of the Bill. The Bill, if it goes through, will dictate the economic life of this country for 150 days from the Royal Assent. Even if it got through all its stages today in both Houses, which is inconceivable, that would take us to early April, certainly past 1st April.

On 1st April we are due to get VAT—the taxation of children's clothes, over 1 million homes face compulsory rent increases of up to 50p, rate demands are due; and the European food prices begin to bite. Family budgets will be inflated by the introduction of the Government's doctrinaire insistence on another 15p charge per child every week for school meals. Nearly all of these are what I called deductions at source.

Will the Government now announce that, whether the freeze is in force or not, depending on whether there is an order carried by both Houses, these increases will not take place either on 1st April if we are in a 90-day freeze or at the end of the freeze if we are in a 150-day freeze?

The Prime Minister must recognise that these issues are fundamental, not only for a freeze period but for any continuing arrangement he may introduce by voluntary agreement, as we all hope, and as I think he hopes, or by later legislation.

But that is not the only reason why we shall vote against the Bill. It is because a manifestly unfair and slanted programme is being inserted at the expense of millions of less-well-off families in a country which has become a byword for the development of speculation and get-rich-quick acquisitiveness by individuals who in their whole lives have done nothing to increase the wealth or welfare of the community.

The Bill is introduced against the background of unprecedented land and property speculation, of a Stock Exchange reviving the famous description of it as a casino, of a feverish merger movement that staggers even the City—with new bids every day, developing with increasing disregard for the welfare of consumers or workers; takeover bids increasingly directed not to improving the efficiency of industry but to gathering an unearned harvest of profit by asset stripping, the sale of properties, including properties which make more money for the land they can sell, and the creation of unnecessary redundancies.

That is the City over which the Chancellor of the Exchequer is presiding. We hear from the Prime Minister—it always moves me deeply—that the national interest must be heard; but when was the voice of the consumer heard in deals by both sides of industry? When in any beer merger when the pubs have been taken over was the consumer consulted? When have the workers been consulted on any deal in the City?

Perhaps the right hon. Gentleman will look at these things in a rather broader way than his narrow mechanistic industrial consultant's approach which we have had for the last few weeks.

It is as a condemnation of the inadequacy of the Government's anti-inflation policy and its unworkable character in terms of anything which is meaningful for the average family against the increasingly unjust society which the Prime Minister and his friends are creating that we shall vote against the Bill.

4.54 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

We have listened to a speech of such monumental irrelevance from the Leader of the Opposition that it encourages me actually to vote for the Bill, which was doubtful in my mind. I do not believe that the right hon. Gentleman will ever achieve much by making such party points. The only thing that he proved conclusively in his speech was that we are suffering from inflation. He did not offer one word about how to deal with it, nor did he have any policy to offer or positive contribution to make to the debate.

I am one who was sacrificed, if one likes, at the change of Government policy which finally led to the Bill. I was cast in the image of Adam Smith. Indeed, if that is to be the case I do not find it unattractive to wear the mantle. However, if some are to be sacrified when Government policy is changed it will be interesting to see who is the sacrificial lamb when this whole enterprise of prices and incomes policy proves to have failed to stem the tide of inflation.

The whole House will remember Lord Butler's prediction that within 25 years we would double our standard of living. In fact, he was wrong. In the last 20 years we have doubled our standard of living, and we have, incidentally, precisely halved the value of our currency. Therefore, events have gone even faster than Lord Butler predicted.

Within that massive change there have been two factors at work. One is the redistribution of incomes. The other is the debasement of the currency. It is important to consider the problem with those two factors in mind.

The redistribution of incomes in inevitable and in many cases is the right thing to happen. As a capitalist—the trade unions and some of my hon. Friends are the only capitalists left now—I believe that market forces should change the relative distribution of income. I have no objection to certain groups of wage earners improving their position in society as a whole. What is unfortunate about it is that there are other groups of wage earners, there are pensioners, there are salary earners, and there are people who are not able to exact large increases for themselves who are the victims of inflation.

This afternoon the Leader of the Opposition seemed to suggest that it was the people who are gaining from inflation who will be suffering as a result of the squeeze, whereas it is the people who are the victims of inflation—the poor, the low wage earners, those on fixed incomes, certain low salary earners—who are the casualties. It is wrong to believe that inflation helps them, because the reverse is true.

It is interesting to consider the changes of incomes of various groups over the period of 20 years within this redistribution. Costs have doubled, or the value of money has halved. The pension has gone up by 4.5 times. Wages have gone up by 4 times. Other groups such as salaried workers have probably done slightly worse. So for all the turmoil that has come into the last 10 years there has been little relative change, although there has been a massive debasement of the currency.

It is inflation which has been the method by which these wage increases have been granted, and the only defence which Governments have had against this pressure has been to increase the money supply. There can be no doubt that it is not the pressure of wages but the defence of Governments against this presure—that of increasing the money supply—which causes our currency to be debased.

My right hon. Friend the Chancellor of the Exchequer yesterday more or less acknowledged that if we were to curtail or restrict the money supply it would cause serious social and unemployment problems. By the converse he must admit that if we do not curtail the money supply but allow it to rip, inflation is impossible to contain. Indeed, the logic seems to me to be that a statutory prices and incomes policy is aimed not at the destruction of inflation but at the alteration of the redistribution of income. Therefore, it seems to me that to have a prices and incomes policy and not to reduce the money supply is to make a direct attack upon the market forces whereby trade unionists wish to improve their relative positions.

As a capitalist, that seems to me a wrong thing to do. The Government's policy, therefore, if it develops into a statutory prices and incomes policy, would seem to me to be a piece of economic canutism. Although we can legislate about prices and wages, the money that is being printed will find its way into the system somehow or other. There will be black markets in certain goods. People will be promoted in order to get disguised wage rises. This will lead to resentment and bitterness in other sections of the economy. Therefore, it seems to me essential that the Government, instead of pursuing the statutory goal which they have embarked upon, should look more carefully at their economic policy.

I know that my right hon. Friend has done a lot in reducing the supply of money through monetary channels. I know also that he is right, through floating the pound, to bring under control the large influxes of hot money that have upset our currency and money supply in the past. These are two positive steps which he has taken to control the money supply. But the third main source of money in the economy is the fiscal source. He had a very high deficit in his Budget in the spring, since when he has added to it considerably by extra Government expenditure unmatched by taxation. Only yesterday we were told that pensioners would get £10 for Christmas. I welcome that, but I would point out that it seems to me to cost £80 million. Where is the taxation coming from to meet that—or will there be just an increase in the money supply through fiscal channels?

These are the causes of inflation. Inflation, as my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) said yesterday, is fed by expectations—expectations of future inflation. If this policy which has been announced and which was clearly spelt out were going to destroy those expectations of further inflation, we would have seen changes already. We would have seen land and house prices begin to tumble. People are only buying houses and land because they believe this is the best hedge that exists against 10 per cent. annual inflation. We would have seen the pound float up. We would have seen wage claims moderated because trade unionists would have been frightened that bankrupting the businesses in which they work would result in their own unemployment. But none of these signs of the destruction of expectation of inflation is evident, and it is essential to persuade people that the future will be different if one is ever going to persuade them not to come into head-on collision with the forces which would be unleashed by a reduction in money supply.

Instead of talking in Downing Street about rents, about the exact nature of price control, about the snoopers' bodies which it has been suggested should be set up to receive complaints about prices in the high street, I wish that there had been talks in Downing Street explaining to the trade unions what would happen if the money supply were reduced. One can reduce the money supply. People can alter their behaviour so as not to suffer therefrom. It is possible for them to adjust their wage claims so that no unemployment results. It is possible to go on with the process of redistributing income while at the same time destroying the process of inflation. Under the policy which the Government are following I fear that we shall destroy the process of redistribution of income without destroying the bogey of inflation.

There is one other aspect of this policy. We have almost joined the European Economic Community. On 1st January we shall be full members. My right hon. Friend the Prime Minister—and I agree with him wholeheartedly—has adjured us to think European, to dream European and to breathe European. He believes, as I do, that the whole future of this country depends upon solving together the problems and difficulties which we face individually, and which we find insurmountable, by means of collective European action.

But it saddens me that we should already be planning major breaches of our obligation under the Treaty of Rome. First of all, take steel prices, which the right hon. Member for Huyton (Mr. Harold Wilson) mentioned a little while ago. How can we call it fair competition if we are subsidising our Steel Corporation which is competing with steel companies in Europe which are not subsidised? Why should the Europeans allow us to do this? What is the conceivable outcome of Britain renaging on its first commitment of this sort? It is a bad entry into the Community, to say the least. If steel and the products of other nationalised industries are going to be subsidised this will amount to a subsidy to all British industry. Indeed, if prices are going to be controlled throughout the whole economy this is not part of the Treaty of Rome. This is incompatible with what the Brussels Commission is seeking to do.

But, more important, the Chancellor of the Exchequer went to the meeting in Luxembourg to discuss inflation and, as my right hon. Friend the Member for Wolverhampton, South-West said, he subscribed to the general principle that the reduction of the money supply was the way to reduce European inflation. If he can subscribe to it for other European countries, I find it had to see why he cannot subscribe to it for this country. But the Chancellor then put in a waiver saying that as our circumstances were different we would have to opt out of this particular Community ruling.

The consequences of this seem to me to be very difficult indeed for the Government. If we are going to opt out of controlling our money supply to 4 per cent. a year, plus the change in the value of money, whatever it is, and at the same time fix our rate of parity, which we are obliged to do in the near future, it will put some very serious strains into the economic system. I honestly regret that the European Economic Community decided to have fixed parities between the member countries until such time as it can achieve a common currency floating against the dollar. I am prepared to accept a fixed parity as part of the price of joining Europe, but one cannot have differential rates of inflation as well.

Mr. Barber

My hon. Friend has misunderstood to some extent the attitude of our partners in Europe to the money supply position. Although for reasons which I think are well understood, I could not be at the meeting at Luxembourg—my place was taken by my right hon. and learned Friend the then Chancellor of the Duchy of Lancaster—I have on many occasions, with the Finance Ministers of the Six, and, indeed, with the enlarged Community, discussed the position of the money supply in relation to inflation, and I can assure my hon. Friend when he talks about the waiver that my colleagues in the enlarged Community understand perfectly well and accept the position of the United Kingdom. I think it is right that I should say that.

Mr. Ridley

I am grateful to the Chancellor of the Exchequer and I do not think anything he said was contrary to my remarks. If the waiver has been granted and gives the opportunity for us to have a different rate of money supply from that agreed for the other members, the consequences must be that the £ will come under strain when its new parity is fixed. If we inflate faster than other people, that will lead to all the old problems of hot money moving out, balance of payments crises and the other problems which have been temporarily solved by floating the £.

It seems to me, therefore, that the alternatives are to control the money supply at the European level and fix the parity, or to go on floating, which we cannot do. It seems very strange to embark upon a prices and incomes policy when the policy of money supply with Europe is in accordance with economic logic and with what the people of this country would like to see. I would not be happy, therefore, to see the Government travel the road of statutory prices and incomes control. The 90-day freeze does not seem important because it is not a permanent policy. I would like to see the Government take 90 days to adjust the money supply, to get right their policy on supplementary benefit for strikers, to stiffen their attitude to the strong forces which will come upon it there and to educate trade union leaders into the facts of the reduction in money supply. If the 90 days is used for other purposes, such as drafting statutory Bills, I find it very difficult to support the Government.

5.12 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

It is a little time since I had the pleasure of hearing the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) from the back benches. I listened with interest to the critical remarks he made, which were to some extent a version of what the right hon. Member for Wolverhampton, South-West (Mr. Powell) said yesterday and on previous occasions, but were put in a more reflective and tentative form. As I wish to say a little about the right hon. Gentleman's views at a later stage, I shall also leave my comments on the hon. Gentleman's speech until then.

What should be said at the outset of any speech dealing with the Government's general position in these matters is that there is nothing in the Prime Minister's record or in the record of any other principal Minister which begins to entitle him on a reciprocal basis to any good will in their present hour of difficulty. The Prime Minister's record of dogmatic opposition to what he is now proposing is well known. Because I wish to be brief I do not propose to weary the House by mentioning any of the numerous quotations with which the record is studded and restudded.

In his pronouncements upon the aspect of economic policy with which we are dealing today and upon wider economic policy, the Prime Minister has a record of persistent and petty partisanship almost without a break. Throughout the period from devaluation at the end of 1967 to the decisive turn in the balance of payments, when, as I think the whole House recognises, in retrospect at any rate, there were very considerable national interests at stake, I cannot recollect a single occasion when the Prime Minister showed any regard for anything on any economic issue beyond his short-term party political interests. Throughout the whole of that period he was as barren of constructive vision as he was of magnanimity.

The right hon. Gentleman appears from the reply he gave me on Monday to be trying to draw some sort of moral distinction between an incomes policy when demand management requires consumption be kept more or less steady and an incomes policy in the present circumstances when it can go ahead, and be encouraged to go ahead by the Government, because of the great slackness in the pressure on resources. I cannot recognise a distinction of that sort. There is a difference, of course, between the circumstances in which consumption can go ahead fast and those in which it must be held steady. One difference is that when it is able to go ahead fast, as at present, it should be much easier to get a voluntary policy. But I cannot begin to follow the logic of recognising a clear moral difference between the two.

In 1968 and 1969 we had to pursue some fairly hard policies. The Prime Minister has been living on the benefits of those policies almost ever since. I do not share his obsessive and unconvincing belief in his own rightness on this issue. Mistakes were made in that period, but we at least met our central objective of putting right the balance of payments. I am not aware of any single major economic objective which the Prime Minister or the Government have yet begun to accomplish. If a more senior member of the Government were present I would be glad to hear what they believe falls into that category.

Sir Robert Cary (Manchester, Withington)

We have paid off the debts.

Mr. Jenkins

Paid off the debts? Is the hon. Member, for whom I have considerable respect and affection, seriously putting that forward as a triumph of the Government? I cannot believe that any fair-minded man with a reasonable respect for the facts of history could begin to put forward such a proposition. Everyone who looks at the matter with any approach to objectivity knows that the debt repayment was well in train when the Government took over and that the Government paid off the debts on the carry-through of the balance of payments position which they inherited and which they have since frittered away.

Sir R. Cary

Surely the right hon. Gentleman would agree that for indebtedness of that magnitude to be paid off is an economic achievement in itself?

Mr. Jenkins

It is an economic achievement to have paid off the debts. It was vital to get that turn-round. When the position began to turn round at the end of 1969 it represented an important change in the fortunes of the country. But anyone who can look at what happened, see half the debt paid off by the beginning of 1970 with an almost irresistible follow-through for the remainder, and regard that as a triumph of the Government, must be bankrupt in looking for the Government's triumphs.

Mr. Ian Lloyd (Portsmouth, Langstone) rose—

Mr. Jenkins

I very much doubt whether the hon. Gentleman will have anything to add to the argument which I thought was put as persuasively as it could be by the hon. Member for Manchester, Withington (Sir R. Cary).

Also the Government have sought agreement for the recent talks only because they were defeated in a confrontation. Had they won the various battles which took place over the last year or so they would have gone on with the policies they have now been forced to discard. It is therefore a mixture of impertinence and hypocrisy for any Government spokesman to suggest that there is a national duty to support them in present circumstances. They have sacrificed any such claim by their behaviour in opposition and by the circumstances in which they have been driven to this policy.

On Sunday the Chancellor of the Exchequer—I think this was on "The World this Weekend", though I read it in a newspaper report—said highly patronisingly to my right hon. Friend the Member for Leeds, East (Mr. Healey) and others who thought like him, "I hope that they will put the national interest first." That was intolerable talk from the right hon. Gentleman, who is scarred with the battle honours of that famous trade figures fiasco of the autumn 1969 when he was so busily engaged in putting the national interest first and with a number of other issues.

Therefore, it is clear to me that the Government, because of their record in opposition and as a result of their behaviour over the past two years, are entitled to absolutely nothing from the Labour Party. However, I do not believe that we should determine our attitude in opposition by the standards of the Conservative Party. The Nemesis which has overtaken the Government in the past 2½ years and the discredit which has been brought to British party politics by the complete change-round from everything for which the Government stood at the last election is a lesson to which nobody should be indifferent.

It is right to vote against the Government tonight; I shall have no hesitation in doing that. Their general handling of the position fully justifies it. But I am not coming out against a prices and incomes policy. I believed in one in government; I believe in one in opposition. I want it to be voluntary. I want it—and this is of crucial importance—to have a longer-term validity and to be something with which we can live for some time to come and not merely a stop-gap which will be discarded.

It is therefore important that even at this stage we should begin to look beyond the 90 days or 150 days, whichever it may be. It is important that talks should, if possible, be resumed during this period to see whether it is possible to proceed by agreement after the standstill has come to an end. Like the majority, perhaps all, of hon. Members and the majority of the TUC, I wanted the Downing Street talks to succeed, for two primary reasons. First, there is great menace to the future of this country in anythng like the present rate of inflation. There is social menace and economic menace. It will cause a lot of suffering among people least able to protect themselves. It is no good pretending that we can live with 8, 9 or 10 per cent. inflation and protect everybody who needs protecting against its effects.

However, I should have liked the Downing Street talks to succeed, and wish to see success in the future, for another reason. I do not want Labour Governments to be returned to power in this country only with an impossible economic heritage. Therefore, I take no pleasure in the failures of the Government when they mean national failure and problems building up for the future.

Mr. Ian Lloyd

May I test the right hon. Gentleman's objectivity, because he is casting a most interesting analysis in an extremely partisan light? The most significant feature of the four major charts at the end of the 1971 issue of the Department of Employment's analysis of prices and incomes and the charts from 1962 to 1972 is that the change in party government is almost indistinguishable between one period and another. The lesson which we must learn from this is that all Governments have successively failed to deal with this problem.

Mr. Jenkins

I am surprised at the hon. Gentlemen's premise. I should have thought that there had been considerable fluctuations in the rate of inflation, not necessarily varying with what party was in power. That is the whole basis on which we are having this debate. However, there is no question that the recent period has been very bad, worse than anything we have experienced. If all that the hon. Gentleman is saying is that none of us can say that we solved the problem of inflation or that we have magic answer, I agree with him, as any sane person would. That does not mean that we should not consider the matter and see what we can do from now onwards.

I regard it as crucially important to try to achieve an agreed solution, because the more I contemplate the alternative, particularly the alternative put forward by the right hon. Member for Wolverhampton, South-West, the more profoundly unattractive I find that method of approach. I am sorry that, rather exceptionally, the right hon. Gentleman is not present. I cannot complain about that because he is a remarkably good attender of our debates. He speaks with great conviction and even persuasiveness on this issue; but he is profoundly wrong both in theory and in practical matters. He is wrong in theory because, led on by the vividness of his own imagination, he attaches an absolute power to monetary policy which, in my experience, the most ardent professional monetarist—say, Professor Freedman—would not dream of attaching to it. He goes far beyond that and to a length which is unsustainable.

The Government have been lax about monetary policy. I look back with a certain amusement to a little squall which blew up in the summer and autumn of 1970 when there was an attempt to pretend that the money supply had got out of control during the second quarter of that year. The Government abandoned that pretence fairly quickly when they began to get the figures for the third and fourth quarters and for 1971. But leave that aside. They have been lax, but monetary policy is not the weapon which can be used to do the whole job. It should be applied in such a way as not to frustrate other purposes.

The right hon. Member for Wolverhampton, South-West is profoundly mistaken in his belief that it is impossible to deal with inflation once it has arisen without there being a substantial increase in unemployment and that, from this point of view, it is a matter of indifference what weapon one uses. There is no evidence in the facts to sustain that view. Let me take two examples from régimes of different sorts and countries.

Since the measures of 15th August, 1971, the United States has undoubtedly had a substantial abatement in the rate of inflation. Unemployment there is high, but it has not increased in the period since then. It was high before. This abatement has been achieved without an increase in unemployment. Looking back at the history of this country, we see that the Cripps freeze was very successful in containing the rate of price increases and wage increases and was achieved with the highest and most complete employment position without any wavering from full employment as defined in the strictest sense.

The right hon. Member for Wolverhampton, South-West not only is wrong in theory but his theories bear no relationship to the facts. No doubt he will be in our Lobby tonight. I do no welcome him there. His attitude on nearly every issue is as antipathetic to mine as almost anything I can imagine. His view in attacking the Government is that they should deal with these problems by a totally unacceptable and highly theoretical monetary approach which, if he were to have his way, would bring great suffering to the people of this country.

The mind of the Government in the past few months has moved somewhat on the issue of inflation. It has moved under pressure, under defeat, because it has been impossible for them to sustain the positions on which they were elected and which they have so vainly tried to put into operation in the last two-and-a-half years. However, they still do not yet fully appreciate what is involved in the achievement of a successful voluntary incomes policy.

There has been a good deal of loose talk by the Government about a fair society, but if a voluntary incomes policy is to be secured it is important that this loose talk should be given a good deal more concrete basis than it has yet been given. This necessarily will involve, on a long-term basis, a far greater degree of public scrutiny and public accountability about command over purchasing power of all sorts—not just wages, but of other forms of income and of capital. If there is to be an effective, long-term voluntary incomes policy, what must be faced is that the country at present needs a jerk towards equality. The pattern of material reward has got out of gear with our social system. It is that lack of gear which produces a good deal of the tension and at the same time some of the inefficiency in our economy. Unless that issue is faced, I do not believe that this or any Government will produce a successful policy.

I see the right hon. Member for Barnet (Mr. Maudling) in his place today. I know that if he speaks a little later in the debate we shall all listen to him with interest. He is free of dogmatic attacks upon an incomes policy which have come from the mouths of most of those who are now putting the Bill before the House. When he and I the other day had a discussion I was struck by the fact that, while his basic approach was in many ways right, I did not think he appreciated the central issue that an incomes policy cannot be achieved without a far greater degree of public accountability for the pattern of incomes and purchasing power. This will have to be faced. I doubt whether this has yet been taken on board by the philosophy of the Government. It has certainly not yet begun to show itself in the budgetary and other policies brought forward by the Chancellor of the Exchequer.

The Government cannot be supported—their record does not entitle them to this in any way—but at the same time I do not want a situation in which when the Government move in one direction the Opposition move in another—rather like one of those weather machines in which when one man comes out another goes in. I do not regard that as a healthy position. We all have a responsibility to face up to and we must find a solution to this problem which has bedevilled governments for a long time past and could wreck us in the future—a solution which none of us has yet fully found.

5.33 p.m.

Mr. J. Bruce-Gardyne (South Angus)

We have all listened to the right hon. Gentleman for Birmingham, Stechford (Mr. Roy Jenkins) with enjoyment and, so far as I am concerned, on many subjects with a considerable measure of agreement. I suspect that it is true of hon. Members on both sides of the House that when we listen to the right hon. Member for Leeds, East (Mr. Healey) we are sometmes inclined to mutter "Come back, Roy; all is forgiven".

However, I must confess that this afternoon I did not find myself in agreement with many of the points made by the right hon. Member for Stechford. I entirely agreed with him when he said that inflation represented a great menace to our society, but whereas I believed the Labour Government were quite wrong and bound to fail when they attempted to impose a mechanistic system of control over wages and prices I believe the same to be true when my own Government try to turn the same trick. I shall deal in a moment with what the right hon. Gentleman said about money supply, because on that subject I found myself partly in agreement with him, though not wholly so.

It has crossed my mind in the past week that Mr. Speaker was sometimes appearing in the guise of presiding over an ad hoc gathering of the serfs while the grand affairs of the nation were being settled down the road at Runnymede. My hon. Friend the Member for Oswestry (Mr. Biffen) referred last night to, the penultimate paragraph of the Gracious Speech, namely: Other measures will be laid before you. I sometimes wonder whether we shall see that phrase in precisely that format again. I cannot help feeling that perhaps next year that paragraph will read Other measures, having been debated and suitably amended by the CBI and TUC, will be laid before you.

Mr. Arthur Lewis (West Ham, North)

And in Europe.

Mr. Bruce-Gardyne

The hon. Member for West Ham, North (Mr. Arthur Lewis) mentions Europe. One thing that fascinates me about the anti-Europeans among us is that, although they fight most fiercely against any loss of sovereignty of this Parliament which our entry into the Community will involve, any diminution of the sovereignty of Parliament in favour of such external bodies as the CBI and TUC causes them no concern whatever.

I do not want to delay the House for more than a few minutes, and do not wish to go into the intimate details of this poor little Bill. There are one or two points about it that cause one to speculate. I have a vision of Mr. Jimmy Reid calling out the workers of Govan Shipbuilders on strike in defiance of the standstill. They presumably will be sustained while on strike by supplementary benefits provided by the taxpayers, and when they return with a settlement that is in excess of anything permitted by the standstill, Lord Strathalmond and his fellow directors will be fined and my right hon. Friend the Minister for Industry will pay the fine on our behalf. If my right hon. Friends imagine that they will be able to maintain Mr. Jimmy Reid out of prison and in martyrdom, they may find that they are mistaken.

But there is one aspect of this Bill on which we need a little more explanation—and this point was raised a little earlier in the debate by the right hon. Gentleman the Leader of the Opposition. I refer to the question of steel prices after 1st January. I take precisely the opposite view to that taken by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor). I was looking forward to the moment when the ability of Governments to interfere in the pricing policies of nationalised industries would be diminished. It is not enough to say that the BSC will be required to observe the standstill and, presumably, to delay the arrangement of basing-paint prices until after the standstill is over. What are we to do to prevent the whole resources of the Steel Corporation being diverted to exports next spring when our prices will be at least 15 per cent. lower than those prevailing in the rest of the Community? Are we also to impose export controls? We need to know that. Even more important, we need to have some idea of the sort of increase in prices which will be required to bring us into conformity with ECSC levels the day after the standstill ends. Will it be 15, 19 or 20 per cent.? I suggest that it will be of that order.

I accept, of course, that the standstill may have some apparent effect in moderating the rate of increase in prices and wages in the next few months. Apart from anything else, after the settlements of the last few days it is not really a matter of saying that we have bolted the stable door after the horse has fled. We have gone down to the stable and given the horse a boot up the backside, and as the horse has disappeared over the horizon we have said that we are slamming the door. We can reasonably expect a moderate degree of peace in the stable hereafter. Therefore, this Bill is not of very much relevance in terms of the results that can likely to be achieved in the next four, five or six months.

Nevertheless there are three important considerations that we should bear in mind when we come to decide how to vote tonight. The first is the reputation of the House of Commons. The Leader of the Opposition made great play with the statements of my right hon. Friend the Prime Minister and others on the subject of compulsory prices and incomes freezes at the last General Election. I attempted to intervene at that stage to point out that there was a precisely similar conflict between the right hon. Gentleman's conduct during the 1966 General Election and his conduct thereafter. I put this point to my right hon. Friend the Leader of the House. I wonder whether we are likely to enhance the reputation and standing of this Parliament as the country sees us marching backwards and forwards on the same old arguments on order after order in the months ahead, only in the opposite direction from that in which we were going six years ago.

The second consideration that we should consider before voting tonight—and these are in mounting importance—is that the opposition that my right hon. and hon. Friends have always expressed to statutory prices and incomes controls was entirely sincere. I do not believe for a moment that they have any faith in this policy, and the omens are not very propitious for the prosecution of a policy in which those prosecuting it have no faith.

The third and most serious point is that, as we have been reminded time and again both yesterday and today, this is only the beginning of the road. Much to the distaste of the Labour Party, my right hon. Friends have emphasised that in the discussions with the TUC and the CBI they were not prepared to hand over their legislation on a plate. Of course they were pleased to have Mr. Vic Feather's amendments, but they were not prepared to surrender the principle of Bills. That was the first time round. I wonder whether we shall be able to do the same the second time round.

There are many like my right hon. Friend the Member for Barnet (Mr. Maudling), who I am delighted to see with us, who have suggested that in a modern industrial society we must accept that our economy can be operated only by a system of concordat between the great estates of the nation—the TUC, the CBI and the Government. I do not believe that this can possibly work, for the simple reason that if the leaders of the TUC agree to restrain the ability of their members to demand higher improvements in wages, inevitably those leaders will themselves be replaced by others who are less squeamish.

Even if I believed it possible, it is not a road that I would wish to travel. We should recognise what that road is, and we should call it by its name. The hon. Members for Tottenham (Mr. Atkinson) and Liverpool, Walton (Mr. Heifer) made this point yesterday. The name at the end of this road is "the corporate State". I do not believe that we should have too many inhibitions about acknowledging that that is where we would be going.

Having said all that, nevertheless I would go along with this legislation—[Interruption.]—wait for it—subject to one proviso. If I believed that the freeze was to be used as a device for rendering less painful the curbing of inflation at source—the curbing of inflation by curbing the Government's propensity to create inflation through the growth of the money supply and through its own deficit financing—I would support it.

Again I agree with my right hon. Friend the Member for Barnet about one very important point in his recent article in the Sunday Express, that without statutory deterrents we could expect the most powerful of the trade unions to use their industrial muscle to obtain for their members a large proportion of a more restrained growth of the money stock and, consequently, that the transitional unemployment resulting from the curbing of inflation to which my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) referred yesterday would be accentuated.

I accept that. That is why I accept that a statutory freeze could somewhat diminish the amount of transitional unemployment likely to be created by curbing inflation. But that is utterly different from what my right hon. Friend the Member for Barnet said in his first article in The Times, that budgetary and monetary mechanisms were a nonsense. He and others of my right hon. Friends sometimes seem to me to fall into the error of which they frequently accuse my right hon. Friend the Member for Wolverhampton, South-West, that of suggesting that there is a painless cure for inflation. I do not think that there is.

The crux of this was pinpointed by the Governor of the Bank of England in his speech at the Mansion House the other day. He said: I accept, as most central bankers would, that control of the money supply is one of my principal, if not my most important, concerns and I have no wish to shirk it … But … there is no monetary policy which will simultaneously stimulate expansion and moderate inflation. I have been trying for many weeks to discover which is ours. Are we embarked on the moderation of inflation. which must imply a willingness to see interest rates rise very sharply and a determination to diminish the net borrowing requirement very considerably? Or are we embarked on a policy of money supply to stimulate expansion, in which case it is nonsense to imagine that we shall restrain the growth of money supply by allowing interest rates to rise substantially? I am afraid that I have searched in vain for an answer to this conundrum.

I listened with great care yesterday to what my right hon. Friend the Chancellor of the Exchequer said. I read his words with great care this morning. I heard what he said today about being determined that equally firm action would be taken to contain money supply without imperilling expansion. But I do not find any answer to the question in what we have been told to date. Therefore, one has to look to the rest of the evidence, which, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out earlier, is all in the direction of suggesting that it is not the Government's intention to curb inflation by the weapons in their hands.

We have for example week by week huge increases in the size of the blank cheques written for the wage bills of the nationalised industries. We have a brand new regional policy for the European Community loaded on to the inflationary implications of the one which we have espoused for ourselves. Most significant of all, we have the attitude adopted by my right hon. and learned Friend on behalf of the Government at the Luxembourg meeting of Finance Ministers. This seems to be absolutely crucial. The Finance Ministers were not saying "We want to have a drastic, sudden and brutal curb of money supply". They were saying, in technical terms, that they wished to aim to bring it down to a neutral rate by the end not of 1972 or 1973 but of 1974. That, we were told, was too much for us.

Above all, the whole reason, we are told, why this time this mechanistic wage and salary policy will work is that this time "There ain't gonna be no squeeze". I believe that a statutory freeze can serve some purpose, rather as a tranquilliser which could ease the pains of the withdrawal symptoms from the endless doses of inflation with which we have attempted to offset the bargaining power of the larger trade unions for 20 years or more. It cannot be a cure.

I would not back a doctor who gave me aspirin for an appendix, and, therefore, I do not believe that I can bark this Bill in the Lobby tonight.

Several Hon. Members rose—

Mr. Deputy Speaker (Miss Harvie Anderson)

Before calling the next hon. Gentleman, I would like to draw the attention of the House to the fact that there appear to be more than 30 hon. Members who hope to speak during the debate. Even short speeches will allow only a very few to take part.

5.53 p.m.

Mr. Emlyn Hooson (Montgomery)

I will not follow the hon. Member for South Angus (Mr. Bruce-Gardyne) in his remarks, save to say that he did not distinguish between a statutory freeze and a statutory prices and incomes policy.

I was considerably struck, when I heard the Leader of the Opposition speaking today—and he was up like Box and Cox with the Prime Minister—by the resemblance to a trapese act in the circus. When the right hon. Gentleman and the Prime Minister get up these days we never know which one of them is on his head and which on his feet; we never know which one is in the air and which one has the swing. The truth is that they are both in absolutely untenable positions.

The Labour Party was driven to introducing a Prices and Incomes Bill and it was attacked for all it was worth by the present Prime Minister. Now, the Prime Minister is forced to do exactly the same thing and the Leader of the Opposition attacks him in precisely the same way. That brings discredit on both of them.

We are not today being asked to support a policy. We have been asked to support what is really a desperate and emergency expedient, one which has become necessary because of the total failure of the policies propounded by the Prime Minister and his colleagues at the last General Election.

Their excessive partisanship, which has been matched only by that of the Labour Party and the Trades Union Congress since, made the present Government blind to the realities of their situation. They failed as completely as the Labour Government failed to put the interests of the country before those of their partisans. What we are witnessing is almost a deathbed repentance with the Prime Minister piously eating all the bold words which he uttered in the 1968–71 period.

Although the emergency is largely of the Government's own creation we would be blinding ourselves if we did not realise that the crisis as opposed to the emergency affects the British people as a whole. It is no use allowing our dislike of the Government to prevent us from voting on a Measure which is now necessary in the interests of the country. We took exactly the same view as a Liberal Party over the Labour Government's Prices and Incomes Act in 1968, much as we disliked that Government. The will vote tonight for this Measure because we believe it is necessary to tackle inflation. There is no painless way of doing it. It is because the Prime Minister ran away with the pre-1906 ideas on the economy for so long—while the right hon. Member for Wolverhampton, South-West (Mr. Powell) and his colleagues run after pre-1870 ideas of the economy—that the Prime Minister failed to come to grips earlier with some of the underlying facts about our economy. The standstill will do one thing only: it will give an opportunity, in an atmosphere of rough justice, to do some of the things which the right hon. Gentleman almost criminally neglected to do when he came to power.

Mr. Norman Buchan (Renfrew, West)

What the hon. and learned Gentleman has to prove in defence of his party's position tonight—and I find his statement that he intends to vote for this Measure of all Measures staggering—is that this Measure is necessary and is the only effective way of dealing with the present inflationary situation.

Mr. Hooson

I take the view, as do my colleagues, that as we supported the Government of which the hon. Gentleman was a member in 1968 when it did the same thing, so we will support the present Government tonight in the interests of the country. What should be done in the meantime? It is pointless voting for a freeze unless advantage is taken of that time.

We believe in a statutory prices and incomes policy if we are to build up an atmosphere of good will and fairness in the country. Another part of the equation, however, must be considered, and that is the question of wealth.

Here I entirely agree with the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). The Liberals recognise, and have always recognised, that one of the things gnawing away at the guts of the working man in this country is the disparity in wealth. It is not only prices and incomes which must be examined but also the question of how to prevent this ever-growing disparity of wealth. The source of wealth is only partially related to income. Property is much more important in many ways.

Liberals also believe that there should be a statutory national minimum earnings guarantee because it is the lower-paid above all who suffer in a state of inflation. A 10 per cent. increase in the cost of living for a man earning £15 a week means that he is £1.50 down the drain. He is in no way compensated as others are by increases in value of property because he generally has none. The Trades Union Congress and some unions in particular have shown scant concern for those at the bottom of the earnings scale and, by insisting on differentials to the degree to which they are accustomed, have made their plight more difficult. When the Labour Party came into power the farm workers were at the bottom of the earnings scale. When the Labour Party left power farm workers were still in that position. When they weep tears over the farm workers today I think they are a lot of hypocrites. Farm workers are still at the bottom of the earnings scale. There should be a minimum earnings rate for the country, higher than the wages which have been recently awarded to the farm workers and which award is to be frozen. Minimum earnings should be introduced by Statute.

Mr. Arthur Lewis

The hon. and learned Gentleman has quite rightly commented about farm workers being shabbily treated by all Governments. I accept that. He mentioned the encouragement of property speculators and then he spoke of hypocrites. Did he read in one of the newspapers recently of a prominent Liberal who had done very well through property speculation, as a result of free shares, which made him thousands of pounds overnight? Was that not rather hypocritical?

Mr. Hooson

Not at all. If the Labour Government had done their job properly it would have been impossible for him to do so.

Then there should be an expanded use of the credit income tax scheme which should be viewed not as the Government view it, as an administrative welfare measure, but as a potential social welfare measure. We see no reason why housing allowances to cover rent and rates, as well as existing tax allowances on mortgages, should not be allowed. The Government have been grossly unfair and partisan in their policy on housing. Every owner-occupier who pays interest on a mortgage and is granted income tax relief on that is thereby subsidised by the State. If he is prosperous, he buys a town house, a country house and a seaside house—and I know people who have all three—and he is entitled to income tax relief on the mortgage interest on all three properties. If he wants to improve them, he is entitled to grants for making up all three properties. All these are direct subsidies by the State. In addition, he benefits from inflation affecting the value of his properties.

How can that be squared with the Government's completely unfair treatment of housing authorities and housing tenants? What equivalent benefit does the housing tenant obtain from the State? The answer is "none". That is why the Liberals would like to see housing allowances cover rent and rates, as well as seeing owner-occupiers feature under the credit income tax system.

Mrs. Jill Knight (Birmingham, Edgbaston)

Is the hon. and learned Gentleman saying that in the unlikely event of a Liberal Government there would be some kind of regulation to forbid a person buying more than one house?

Mr. Hooson

I did not say that. I said that people should not have the interest allowance and the subsidy on two or three homes, when some people do not have even one home.

Mr. Jeremy Thorpe (Devon, North)

The hon. Lady can quote that in Birmingham. It would go down well.

Mr. Hooson

We want to see a comprehensive policy for prices, incomes, dividends, and productivity so that we can have co-operative effort between management and unions throughout industry, actively encouraged by the Government. Restrictive practices on both sides of industry should be scrapped. There is no sign of any constructive effort by the Government in their policies to bring about the right conditions to achieve co-operation in industry.

It is also our view that the penal provisions should be not so much through the courts, by imposing fines, but by fiscal means. For example, prices, dividends and average earnings within a company should be limited to an agreed annual rate of increase. Any company which increased prices faster than that rate would be subject to a penal tax surcharge. Where average earnings, including fringe benefits, per person rose faster than the agreed annual rate, a penal tax surcharge would be levied either on the payroll, payable by both employer and employee, or in corporation tax. In this way we would ensure general fairness and ensure that a good percentage of profits was ploughed back into industry and business.

The Liberals believe that we need a new social contract between people, industry and the Government. They believe that there should be co-responsibility in industry, brought about by a basic change in company laws. We should allow worker representatives on the boards of directors in the way that is done in our great rival country in the Common Market, Western Germany. There should be profit and asset sharing as a compulsory feature of all public companies.

Pensions, social security benefits and other cash payments should all be linked directly with the cost of living, with periodic adjustments. It is the duty of the Government to ensure that low-income groups have a margin of safety in their income. They have none now. I do not know whether right hon. Gentlemen on the Government Front Bench realise that for the lower paid, for the lower earners, any rise in the cost of living is an extremely serious matter. A rise in prices of 2p or 3p per item, adding up to perhaps 50p over a month, as they have experienced, is terribly serious for them, because there is no margin in their incomes.

It is our view that a commission should be set up to investigate house and land prices, with a view to containing them. In particular we think that such a commission should look at the question of site value rating and the effect of unrestricted income tax relief on mortgage interest payments on the prices of houses and land. Then there is the effect of death duty relief and other benefits which encourage financial interests to invest in agricultural land for a purpose wholly unconnected with the well-being of our agriculture.

For my part—and here I do not know whether I take my colleagues with me—I warn the Government against the enormous escalation in food prices which is likely to occur when we join the Common Market on 1st January next. I believe in food subsidies. I do not know how any Government will contain prices at a level acceptable to the common people of this country without them, and I think that the Government should be looking into this matter urgently. One has only to look at the Farmers Weekly for this week and compare wholesale prices in the Common Market for agricultural produce, beef, lamb, and so on, with prices in this country to realise what will happen on 1st January unless some steps are taken in the matter.

This country has been badly served by both Tory and Labour Governments on the question of inflation. Their respective approaches have been far too partisan. Some of their policies have been grossly unfair to the people of this country as a whole, particularly the lower paid, and here I must tell the House that I have no brief for the Labour Government. They sacrificed the lower paid to the pressures from their powerfully organised partisans.

Inflation is like a cancerous growth in our body politic. It threatens our very heart. It must be contained, because it threatens the well-being of us all. It eats away at the value of our currency. It undermines confidence in our future. It makes the poor poorer. It also, unless something is done about it, makes the rich richer. It continually erodes the value of earnings while at the same time it enhances the value of all types of property and goods. It therefore leads inevitably to disparities of wealth which are becoming more and more unacceptable to the people. It causes great discontent and leads to the deep divisions which we see expressed in the House.

It is the duty of the Government, whatever their political complexion, to deal firmly with this problem. To have the consent of the people for firm dealing, that dealing must also be fair. The next 90 days will show whether the Government have had a change of heart. Above all, we shall see whether they are prepared to deal with some of the basic, underlying structural problems of our industry and, for that matter, of our country. The Liberal Party will support measures to achieve this result, as it did when Labour was in power, but it will no more support partisan and unfair Tory policies than it would support partisan and unfair Labour policies.

We have a Government and Opposition which, in my view, have ill served this country at its present juncture. The commonality of the people want to see inflation controlled, and they do not give a damn whether it is controlled by a Tory or by a Labour Government. So far every Government have failed to control it, and the trouble is that there has been such an excessively partisan feeling on both Front Benches during both crises that they have allowed partisanship to blind them to the interests of the country as a whole. One can only hope that the Prime Minister, in his deathbed repentance, has really repented at last.

6.8 p.m.

Mr. Reginald Maudling (Barnet)

I am sure that the hon. and learned Member for Montgomery (Mr. Hooson) will forgive me if I do not follow his line of argument. I wish briefly to explain why I strongly support the Bill.

This subject of inflation, and particularly cost inflation, has been close to my thoughts for nearly all the time—and that is nearly a quarter of a century—that I have been a Member of the House. If what I say today is the same as I have said in the past, I apologise for the repetition but not for the consistency.

The problem of inflation and cost inflation has faced successive Governments in this country since the war and it is facing Governments overseas too. In countries abroad one has seen varying and changing levels of success. At one time the Dutch had an answer, but that broke down. At another time Sweden had the answer. Now America is doing better than anyone else in tackling this problem of cost inflation in an industrial society. But no Government here or abroad has yet found the final answer. I am convinced that we must now get the answer right or as nearly right as is possible for human beings.

If we do not get the answer right now, the prospects for this country are very serious. The fact is that over many years, under Governments of different parties, the relative economic strength of this country has been sadly declining. I saw some figures, which were produced a month or two ago at the time of the International Monetary Fund meeting, of the relative gross domestic product per head for the European countries. The figures gave me a considerable shock. I quote the GDP per head in a common unit of the following Western European countries: Sweden, 1,800; Norway, 1,300; France, 1,300; Germany, 1,500; Switzerland, 1,400; Iceland, 1,000; and the United Kingdom, 887. That is the solemn measure of the degree to which in recent years, under successive Governments, this country has fallen behind our Western European neighbours in our economic advance.

Of course, there are a number of historical reasons. We probably came first in our industrialisation, in switching the agricultural labour force into industry. Therefore, we had less reserves available at a later stage when our competitors came along. There is the natural feeling in this country that there are many things which matter more in life than sheer economic expansion. However, sometimes we allow that feeling to kid ourselves a bit. We are inclined to say to our competitors that they are making the mistake of running too fast rather than that we are making the mistake of running too slowly. There is still the lingering effect among many of our people of the long, slow and painful retreat from Empire. It was absolutely right. It was one of the great abnegations of history but a movement which for many people was bound to have profound psychological effects. There was for many years the burden of the sterling area. That is happily much less of a burden than it was. However, for many years we had to carry that burden and we could not escape.

Despite those reasons, the fact remains that we have been falling behind and we are continuing to do so. Of course one can argue—people no doubt do—"What does it matter? What really concerns people is the absolute level of prosperity, not the relative level." That is quite wrong. A nation that falls behind its neighbours senses this. A nation that loses its pride loses its heart. If we know and feel that we are not doing all that we can—we can do just as much and just as well as any country in Western Europe—we lose a great deal of our confidence and self-respect.

The problem of relative efficiency in economic matters will become sharper as we join the Community. But even without that, it was of profound importance. It is not an accident that the phrase "The English disease" is used almost universally in Western Europe to describe a situation of inflation, dispute and industrial stagnation. I agree that the expression is often used with exaggeration, but it is used.

What are the main reasons, apart from the historic reasons which I have described, which have led to our falling behind in the race? The fundamental reason has been a tendency in our country towards inflation to a greater degree than in competing countries. With respect to some of my right hon. and hon. Friends, there are surely two different kinds of inflation. First, there is demand-pull inflation and, secondly, cost-push inflation. Both can coexist and they often do. Both can interact and they often do. But both must not be confused because the cure for one is not the cure for the other.

One can certainly stimulate demand inflation by gross expansion of the money supply. But one cannot deal with cost inflation by a gross contraction of the money supply. That is a fundamental fallacy. Possibly in a perfect world, with perfect freedom and perfect competition, the monetary theories would work. But that is a perfect world and not the real world. In the world in which we work the logic of economics is not purely the logic of mathematics. It is the logic of power and human feeling.

The basic cause of cost-push inflation clearly is in present circumstances the monopoly power of many trade unions. [HON. MEMBERS: "Oh."] That is a simple fact. It is a matter not of criticism but of fact that many unions possess the power to bring the economy to a standstill. That power has grown in recent years for sheer technical reasons. As industry becomes more efficient and competitive, so it becomes more vulnerable. A small number of people can hold up a whole industry. Skilled people cannot be replaced by volunteers. An individual firm which is attacked by industrial dispute cannot afford to go out of business or to stop production while its competitors go ahead. As industry becomes more efficient and more competitive, so it becomes more vulnerable. While the power of the unions has grown, and grown naturally, so the understanding of their power by the rest of the country and the concern of the rest of the country at their natural developing power has grown.

We are coming to a new and very changed dimension in these matters—the problem of the monopoly power of the unions. The monopoly power of capital can be dealt with through legislation. It has been. I remember so well that when we introduced legislation against the monopoly of capitalism in the 1950s, Sir Winston Churchill, who was then Prime Minister, explained very clearly that one could not proceed against the monopoly power of the unions in the same way as one could proceed against the monopoly power of capitalism. That is perfectly true. Nor can it be solved by conflict. If we try to solve the problem of the power of the unions by conflict, we will do great damage to this country. Above all, and I say this as solemnly as I can, when I hear people talking about a General Election fought on the basis of organised labour versus the rest, although I have little doubt what the result would be, the effect would be to leave the country deeply and bitterly divided within itself.

We must all continue to search for an agreed system within which we can contain the bargaining power of the unions, the need for incentives and the whole interests of the country in expansion, in prosperity and in staple prices. I think we were making some progress towards this in 1963 to 1964, but possibly I am biased. I think we were making some progress towards that concept by discussions within the National Economic Development Council to get agreement on the broad scale of the total increase of incomes which the economy could afford. Under the National Incomes Commission we were developing a system whereby we could make provision for exceptions and ensure that they remained exceptions and did not break down the general norm. However, that collapsed in 1966 when the then Government introduced their compulsory policy.

I accept that in 1966, speaking on behalf of the then Opposition, I opposed statutory control. I said then, and I now repeat, that I was against such control in principle. I believe it is wrong in principle. But I emphasised that I disliked statutory controls because they undermined the opportunities of voluntary agreement. We have tried now to reach voluntary agreement. I believe that my right hon. Friends have tried as hard as any Government could try to reach a voluntary agreement. In the absence of voluntary agreement there is no alternative to a temporary statutory pause.

What might the choices be? We can go on as we have been going on, at a rate of inflation which, as the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said, was socially unacceptable. That cannot be accepted. Another choice is to adopt the policies of the monetary enthusiasts. I do not share their enthusiasm. If we try to compress the monetary supply, to use a technical term—which means to stop people spending so much borrowed money—the net effect is simply that those who have powerful organisations behind them continue to get what they demand and the people without those organisations get less and are often unemployed, the economy stagnates and investment withers. That is totally unacceptable. There must be proper control of monetary supply to deal with the demand-pull inflation, but let us not try to deal with cost-push inflation, which is the real problem, by methods which will not work.

Without a voluntary agreement, the only course left to the Government was statutory measures. I therefore warmly support the Bill. I believe that it gives us a period within which to think further and to act further—and, I hope, to act quickly. I hope we shall not spend too much of our time and our intellectual energy in arguing about details of the proposals for the short-term pause. We must concentrate on the long-term solution. If we do not find the long-term solution this time, the setback for everyone in this country will be grave indeed.

I know one can argue that it is impossible, that one cannot control prices, that people will get round this that and the other and, when the short period of pause finishes, the dam will burst. I suppose one can prove, or very nearly prove, that virtually every course will not work. But we are here to find a course which will work. We must use the period provided by the Bill to work out a voluntary policy for incomes and prices, without which the future prospects of this country, which could be so rosy, will be disastrous.

6.21 p.m.

Mr. Stanley Orme (Salford, West)

We listened with interest to what was said by the right hon. Member for Barnet (Mr. Maudling). His speech contained elements of the analysis which he set out in his memorandum to The Times, which many hon. Members found of great interest. His analysis of capitalism I thought most informative, and this evening he developed his argument about the trade unions and he sees them in our society. I do not see them in the same light, and I shall develop my argument in that respect.

Coming back afresh, as it were, to the prices and incomes saga, I feel almost as though I were at the "Mat Hatter's teaparty". The quadrille is going on. People who took one view, previously, for different reasons, now take another view, and so on. But there are some in the middle of the whirlpool who stand consistent. I was consistently opposed to a prices and incomes policy as outlined by our Labour Government. I am still opposed to such a policy, and the more so to a statutory policy. I do not believe that it will work. The injustices and inequalities which will show them- selves as the weeks and months go by will create for the Tory Government the problems which it created for a Labour Government. I shed no tears about that, but to those hon. Members who will troop through the Lobby in support of the Government tonight I can only say, "Your troubles are only just beginning. You will have a lot to answer for to the electorate as the injustices and inequalities are felt".

We have just had an example of one such injustice and inequality. The agricultural workers' wage award is to be stopped till after the freeze. Yet we know that other workers will have increases. Certain workers have already just negotiated an increase. Many people in our society do not have to go through a form of negotiation to secure redress. These inequalities and injustices are inherent in our society as it stands today, and in my opinion it is the nature of that society which makes it impossible to have a regulated policy of this kind.

In the debate yesterday and again today there have been different analyses of the nature of our society—the mixed economy, the capitalist society, the market economy in which we live. We have had the Powellite explanation and answer, the over-simple answer that the money supply can solve the problem. Cut the money supply, it is said, and that will do it. At the same time, of course—the right hon. Member for Wolverhampton, South-West (Mr. Powell) admitted it—more unemployment will be created, but he sees the money supply as offering a magic panacea for our difficulties.

We reject that answer out of hand. Those of us who speak about the forces at work within the market economy do not support a market economy, but we accept that that economy exists. We do not see it as a beautiful capitalist module which works in a marvellous way. I see it as a ramshakle, inefficient and in many ways discriminatory system which works against many sections of the community. Let us remember also that it was the system which created the trade union movement.

The Government talk about freezing prices and dividends, but we all know that that is nonsense. What happened under a Labour Government? While one is chasing one price, a hundred prices go up. We know how the system operates in shops, businesses and elsewhere. Therefore, under the system as we have it, to single out incomes and subject them to rigid control while the other factors in the equation are allowed to go their own way is to impose a wage freeze which, in effect, means a reduction in incomes.

That was what happened under a Labour Government. Those who introduced it under the Labour Government—I listened today to my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), and yesterday to my hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers)—did not introduce such a system to persecute certain sections of the community. They wanted it to operate justly and fairly. But it did not work in that way.

The Labour Government's policy was first introduced as a voluntary scheme. My noble Friend Lord George-Brown, with his Letter of Intent and so on, said that it would help the lower-paid workers. I remember hearing the railwaymen's delegate at the Labour Party conference say that the car workers ought to stand back, the railway workers should have an increase and so on. But at the end of the day, after both the voluntary and the statutory policy, the gap between the higher-paid and the lower-paid had widened because of the operation of forces which are beyond our control.

We must look at the present situation in the same light. In his thoughtful speech this afternoon, my right hon. Friend the Member for Stechford said that when a Labour Government again tackle this problem it must no tackle it without taking into account other forces, inequalities and inconsistencies which operate within our society. He did not spell them out. I put it to my right hon. Friend that if we were to have a Labour Government tomorrow and we left the structure of our society roughly as it is at the moment, with a vast amount still in the hands of private capital, any future policy would fail just as any previous policy has failed. There is no way round that.

We have heard a good deal about the nature of our society. The right hon. Member for Barnet spoke about the dangers which he could see. The spokesman of the Liberal Party, the hon. and learned Member for Montgomery (Mr. Hooson), talked about grappling with inflation and so on. Everyone who has spoken, with the exception perhaps of those advancing the money supply argument, has advocated roughly the same sort of policy and the same sort of consultation and discussion as has gone on with the TUC. In my opinion, there is no chance of policies of that kind having any success if society is left with its present structure.

Not only must we have a redistribution of wealth. We must have a redistribution of economic ownership and power. It is interesting to note that, when a Conservative Government get into difficulty and talk about strict price control, the only bodies they can turn to in those terms are the publicy-owner bodies.

The talks which took place at Downing Street have served only to highlight the problems which exist. The Government do not try to hide the fact. There was no such thing as negotiation at Downing Street. There were 39½ hours of talks, and half an hour when the Prime Minister put forward his four points, which were forced out of him, and then the talks broke down. There is a gap between the TUC and the Government. Incidentally there is another myth, because I do not believe that those talks were on a three-sided base. From what I hear it was the CBI and the Government versus the TUC. Incidentally the CBI, without the public sector, represents about one-third of manufacturing industry. It includes Courtaulds and many other firms which violated the 5 per cent. freeze, but are these troubles the fault of those people? Oh, no. The fault is always the fault of the trade unions. It would have been extremely logical and fair that they should have asked for much more. The right hon. Member for Barnet talked about the power of the trade unions. If they have that sort of power, why are millions of workers on such low wages and living in such bad conditions?

My right hon. and hon. Friends should take a lesson from the Labour Government of 1945–51. If we want co-operation with the trade unions we should start by creating a type of society which people welcome, in which they want to live and take part; we should create the health services, the houses at reasonable rents which people can afford, and full employment. If we were to do that and then go to the trade unions and talk about responsibility, we should get a co-operative reaction, but is that what the Government have done during two years? I was amazed to hear my right hon. Friend the Member for Stechford say how sorry he was that the talks had broken down after his brilliant denunciation of the present Government's policy. After that, how can the TUC resume talks on the basis of the Government's policies? Of course the TUC is quite prepared to talk to any Government—the trade union movement is always prepared to do that—but there will have to be a different basis from that which has existed previously.

I remind my right hon. and hon. Friends of the torture we went through and the unpopularity we incurred when we entered the field of prices and incomes, and it was that issue which defeated the Labour Government. I say to hon. Members opposite that that was the final nail in our coffin. They may take some joy from that.

In this situation we have to look to creating the sort of society and conditions in which people will be prepared to cooperate. As it is, we see some funny things in our society. I was watching the Money Programme on BBC2 a fortnight ago and I heard Lord Watkinson, Chairman of Cadbury-Schweppes, say that the workers were getting too much and that we needed an incomes policy. I turned over to Granada, when the advertisements came on, when the viewers were invited to purchase many of the products which his firm produced. That is an example of the contradictions in our society. We need to improve the standard of living and set our sights much higher. The people's sights are higher. They want the good things of life, which they themselves produce, and they want the money to buy them, but they are told they cannot have it. What is more, and this is what really hurts, they are told that some people can have it but that they cannot. That really bites. It is not the avariciousness of our working people. In my opinion, as Clive Jenkins has said on a number of occasions, their demands are not because they are bloody-minded; they are not bloody-minded enough.

Wages alone will not resolve this problem. The TUC found when it was in the negotiations with the Government that there were political matters and Government policies, which have to be changed if there is to be co-operation, but the TUC was quickly told by the Prime Minister "Get off the grass. These are the prerogative of the elected Parliament." That is quite right, and I want to see the elected Parliament carry out the right policies, and I want to see adopted in this country policies which will be the basis for a free and just society, a society which removes the fear of poverty and the fear of unemployment and which gives security, not just from one week to another, as I used to live from one wage packet to another. I believe we can achieve it. We have the creativeness in our society, we have the ability, but we shall not do it by juggling around with the framework of our present structure with either a Conservative Government or, I say sadly, with a Labour Government—unless a Labour Government have Socialist policies and are prepared to transform our society into the one which so many of us want.

We cannot go on tinkering. If there is a crisis in capitalism let us take democrotic Socialist steps and see that certain key industries, the banks and insurance, are brought under public control, to be publicly accountable, and let us have real worker participation. These issues the Government themselves are raising by their policies. While many hon. Members may feel horrified by what I am saying I can tell them that I am reflecting, perhaps not in an altogether adequate way, the aspirations of millions of ordinary men and women. They do not want a society in conflict. They want a decent society, but if they have injustice they will fight it.

It must be remembered that we are not now dealing with nineteenth century Manchester School economics as expounded by the right hon. Member for Wolverhampton, South-West; nor are we dealing with the pre-war situation which was the legacy of the First World War—high unemployment and a weak trade union movement. We have a very sophisticated working-class movement in this country, sophisticated to the extent that it has proved that it can run industry—in the shipyards, by taking over factories, and by keeping production going. The workers will not accept the policy expounded by the present Government with all its inequalities and all the problems.

It will be incumbent on the Labour Party and the Labour movement to produce an alternative policy. Then let us go to the electorate and say, "This is the choice before us. The choice is between the policies of a discredited Tory Government and the Labour Party with a real, Socialist alternative policy."

6.38 p.m.

Mr. Kenneth Lewis (Rutland and Stamford)

I do not wish to follow the hon. Member for Salford, West (Mr. Orme) too closely, but I do not think anyone, least of all he, will contradict me when I say that we understand why he will not support this policy which my hon. Friends are proposing, any more than he supported the policy of his own party in 1966, especially as this policy goes even further than the policy of the last Labour Government. In 1966 I was in Committee upstairs voting on certain aspects of the Bill at that time.

On a very large proportion of the Labour Party's Bill I abstained from voting. I was not wholly against it. I have always felt a prices and incomes policy to be vital and necessary at certain times and in certain situations. When my party was returned to power at the last General Election I requested my right hon. Friends to keep in the background a prices and incomes policy in case it should be necessary to bring it into operation at some time.

In the last week there have been a considerable number of wage settlements, and my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) said of them that the horse had bolted and we had chased it out of the stable. Those settlements indicate to me that if a year ago we had had in the background a prices and incomes policy its mere threat might have prevented its implementation.

We have come to the present situation because we failed to get a voluntary agreement. I and most of my hon. and right hon. Friends would have preferred a voluntary agreement, as would anyone with any common sense in these matters. My right hon. Friends the Prime Minister and the Chancellor of the Exchequer have done their best to get such an agreement and are seen by the public to have done their best, and that is important. But, having failed to reach an agreement, it was inevitable that they should bring in some statutory provision.

The question is: will that provision work? We have the short-term effect and then, presumably, we have, still in the shade, in the background, the longterm aspect. In the short term what is being done will work, notwithstanding its complications, if my right hon. Friends do not indulge too much in those complications, if they do not seek to implement the rules too frequently and to bring people to court unnecessarily. It must be recognised that what we have is still largely a policy of consent. A Bill like this, with all its detail, clearly will not work if it is not accepted as a consensus by the people—not only by the manufacturers but by the trade unions, too.

An example of where consent already works lies in the Trade Descriptions Act. It would be very simple for Government Departments to bring multifarious actions under that Act. But, in practice, they have brought only a few. Those few have bitten. They have been highlighted and publicised, as a result of which people in industry generally have taken note. I know that this applies particularly to the travel and holiday industry: where action has been taken against one individual tour operator, many of the other operators have come into line. The Act, complicated as it could have been, has worked because its complications have not needed to be too frequently used.

I say also to my right hon. Friends that if they—there were others in industry involved as well—had not been so precipitate in taking action under the Industrial Relations Act so soon they would probably have found it unnecessary now to start talking of amending it. So with this Bill I say "Pass it with all its complications, but do not over-activate it. The public will make it work. This Measure will work because people want it to work."

But what about the long term? The Bill for dealing with counter-inflation—or under-the-counter inflation such as we have—will certainly not work by itself. Our economy will not be put right just by the Bill. I have some sympathy with what some of my hon. Friends have said; for example, about the money supply. I believe that if the money supply races ahead too fast it can run counter to what the Government are trying to do by this Bill. Indeed, it would be nonsense were the Government, while trying to restrain everyone else, to increase the money supply yet again and so put no restraint upon themselves. My right hon. Friends must keep that in mind.

My right hon. Friend the Member for Barnet (Mr. Maudling) has just made a very valuable contribution to our debate. We are sorry that he is not on the Front Bench now, but we certainly enjoyed listening to him this afternoon. But I part company slightly with him because I thought that he was suggesting that peace in industry is something that we must have and that in some way Government can wave a magic wand and get it.

Much has been said recently about Government confrontation of the trade unions, but confrontation has been two-way. There is no doubt that the unions, or some of them, have been confronting the Government, and we must recognise that they, or some of them, may continue to do so. The Government must therefore act against any who seek to confront them on this policy in the long term or in the short term. They must be prepared to stand up to confrontation. They must act in whatever way they need to act, not because we or the Government want it but because if confrontation is pursued it is confrontation against the country and the country will demand action.

My right hon. Friends will need to have a permanent consumer pricing "watch": it cannot be left to the free enterprise Which? There is no need to introduce fines, but in the long term there must be some means by which the Government can get the anti-inflation message across and give the public the opportunity to make a public relations impact on those who increase prices when they should not be increased. There is therefore an important rôle to be played by the new Minister for Trade and Consumer Affairs.

There is an even more important rôle to be played by my right hon. Friend the Secretary of State for Employment. I have a lot of sympathy with some of the comments made in the last two days by the hon. Member for Tottenham (Mr. Atkinson) and my hon. Friends the Members for Oswestry (Mr. Biffen) and for South Angus, when they said that the set-piece discussions that had taken place between the CBI, the TUC and the Government had almost got to the stage where the Government were trading votes in the Division Lobby here and the votes of the electorate in exchange for the card vote of the unions or the referenda of the CBI. The House of Commons should not accept such a position. With discussions on budgetary matters, or new Bills, or the amendment of Bills, there can be no justification for changing our system of democracy. We cannot go over to a syndicalist Government which discuss with outside bodies matters with which the House should be dealing. Although this was an exceptional situation, I hope that there will be no continuation of Government discussion on the basis of what changes can take place in policy which we have already decided and which only we have the right to amend.

The Secretary of State for Employment has, however, a continuing rôle in discussions with the unions and the CBI. There can be no substitute for this. There is nothing to be gained from a setpiece discussion which is publicised every six months. There really is nothing better than continuous dialogue in which the Secretary of State gets to know the unions and vice versa. These discussions can educate both the Minister and the unions.

Today we are dealing with a new law. Yesterday we were listening to the prophet. I am glad to know that my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) is in his place. We always enjoy his speeches, and he was at his most brilliant yesterday. For the first time, however, we heard from him where his proposals would lead. His proposals were to deal with this matter fiercely through the money supply.

In col. 889 he was asked by an hon. Member opposite how much unemployment would be necessary to deal with inflation if his policy were implemented and we dealt with the problem of cutting back heavily on the money supply. My right hon. Friend admitted that it would cause an increase in unemployment. He went further and admitted that the increase would be an "additional" increase in unemployment.

Mr. Powell

My hon. Friend has been very courteous and very kind. I am sorry that his understanding of my speech was not equal to his admiration. What I said, not once but over and over again, is that the unemployment caused by reducing inflation does not depend upon the method which is used to reduce inflation. It is a consequence of reducing inflation, however that is obtained. My hon. Friend may or may not agree with that, but that is what I said.

Mr. Lewis

I have re-read the speech of my right hon. Friend this morning, as well as having listened to it yesterday, and I have no doubt that I understood it completely. My understanding of it is that he wants nothing to do with the present policies—that at least he will agree—and that the alternative which he proposes—it is the only alternative at which one can arrive—is that we go back to the pre-war system and have an arid, dismal cut-back, a deflation, a fierce restriction of the money supply, which would cause a good deal of works to be cut back by the Government quite apart from what industry would do, as well as a reduction in investment.

I say to the Labour Party and to the unions—my right hon. Friend the Member for Barnet hinted at this today—that this is the alternative. They will vote against this Bill tonight despite the fact that they had their own prices and incomes policy. They are voting for an alternative which will creat a deflationary situation, which will increase unemployment beyond the present numbers; despite that they have already said, in this debate and yesterday, that unemployment is too high.

Mr. Richard Body (Holland with Boston)

Would my hon. Friend not agree that the prices and incomes policy introduced by President Nixon is causing an increase in unemployment among the less skilled in America, and that this scheme is rather similar to that?

Mr. Lewis

The situation is that Mr. Nixon has just had the biggest majority that any President has ever had in the history of America. It follows upon the introduction of a measure of this kind. This country and countries in Western society generally have been under controlled inflation ever since the war. What we must guard against is uncontrolled inflation. I am in favour of inflation so long as it is controlled, and if it is controlled behind our competitors we are in a very happy situation.

Even controlled inflation affects pensioners and the lower-paid. That is why Governments have to give them special assistance from time to time. The Labour Party opposite cannot complain —at least, if they do so, it is with their tongues in their cheeks—about what this Government have done for the pensioners and the lower-paid, since they have done more by far than the last Labour Government. That Government which had their prices and incomes policy, did not provide for the pensioners and the lower-paid anything like the benefits which this Government have provided.

Despite what Mr. Jack Jones and Mr. Hugh Scanlon say, if hon. Members opposite examined the pensions schemes provided for their own trade union members they would find that these trade unions provide them with a pittance, and that they have hardly increased them at all in recent years.

The Bill has come as a sense of relief to the people of this country. They long since came to the conclusion that action had to be taken. They will support that action. If the Government stick to their determination of purpose apart from the Bill, they will continue to get that support—not only for 90 days, but in the longer term.

6.58 p.m.

Mr. Austen Albu (Edmonton)

It is impossible to exaggerate the seriousness, for our social and political life, of the problems with which the Bill is intended to deal. During the debate so far, only my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) and the right hon. Member for Barnet (Mr. Maudling) and to some extent—

Mr. Arthur Lewis

On a point of order. Is it within your power, Mr. Speaker, to draw hon. Members' attention to the longstanding custom and practice that, after finishing his speech, a Member should wait to hear the next speaker? I have been here throughout last week's debate and this debate, and without exception every hon. Member on both sides has made his speech and then walked out. My hon. Friend the Member for Edmonton (Mr. Albu) is now referring to my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) and to the right hon. Member for Barnet (Mr. Maudling), neither of whom is here. It is much better for the tidiness of the debate if hon. Members stay for a while. You will agree, Mr. Speaker, that that has been the custom, even though it may not be a rule.

Mr. Speaker

The hon. Gentleman is right—it is not a rule of order, but it certainly was the tradition of the House.

Mr. Albu

I was saying that only my right hon. Friend the Member for Stechford, the right hon. Member for Barnet and to some extent my hon. Friend the Member for Salford, West (Mr. Orme) have dealt with the deep underlying social causes of our current situation. There is no need for me to rub in the extraordinary gymnastic exercise which has been performed by the Prime Minister and his Cabinet colleagues, in relation not only to this Bill but to industrial intervention in general.

I have long held the view that the refusal of succesive British Governments over more than a century, imbued with Cobdenite views, to intervene in the economy has been responsible to a large extent for our slow but accelerating economic decline. I include in that the protracted opposition to tariff protection even for new industries, and policies which have allowed our agriculture to wither and have left us with the problem of paying for huge quantities of imports and very badly paid agricultural workers.

I never expected to see the Tory Party, in this day and age, return to the Liberal shibboleths of the nineteenth century. It was incredible when the Tories came to power in 1970 that they should have done so. That the Prime Minister and his right hon. Friends could have done so underlines the fact that they have absolutely no understanding of the society they are trying to govern. This is a society of a completely new form, much newer in many ways than the authoritarian societies of Eastern Europe. When before in history have we had a society with universal franchise, universal second- dary education and a very large amount of further education, most of the time with full employment, the end of deferential attitudes and very largely the end of the puritan ethic?

This is a new sort of society, and on most of these things my right hon. Friends and I have been fighting all our political lives. This is a society in which very large numbers, certainly more than half of the population, now enjoy the good things of life; but it is also a society in which there are still left vast inequalities and all the obscenities of, for instance, windfall profits out of land and development speculation. At the same time, we have done nothing to face up to the situation which has grown up in which very large numbers of workers now have jobs which provide no satisfaction. This is a matter of particular importance for the growing number of better educated youngsters coming out of our schools who, if they are able to find jobs at all, find themselves with jobs which provide no satisfaction. The result is that the only motive in work is to earn more money to spend, and the spending is titillated continuously by advertising, particularly on television.

Behind these factors of our modern society are a good many of the causes of inflation. They are far more fundamental as causes of inflation than the monopoly power of the trade unions, to which hon. Members on the Government side of the House have continuously referred. A Government wishing to halt inflation should pay far more attention to these underlying causes. At the same time, they should at least try to unite rather than to divide the country. I shall say no more on that matter at present because largely I agree with my right hon. Friends, especially my right hon. Friend the Member for Stechford, who have said so much on this subject.

Some of my hon. Friends may argue that there must never be a policy affecting wages and salaries—my hon. Friend the Member for Salford, West did so—except in some democratic but totally Socialist dreamland that has never yet existed. But even if one does not have that society, there never has been a society without an incomes policy. The idea of a society without an incomes policy is also a Utopian dream.

There are three possibilities by which incomes are controlled. First, if incomes are allowed to rise at a faster rate than national output, prices will rise too and the rise will reduce the real increase of what the national production could make possible. But in this situation there are serious social and political dangers. Secondly, proposals have been put forward by some hon. Members, led by the right hon. Member for Wolverhampton, South-West (Mr. Powell) to restrict the money supply. In spite of his recent intervention in the speech of his hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis), I do not think that the right hon. Gentleman has convinced the House that he believes such a policy would be possible without a very much higher level of unemployment. As I remember his speech, he said that there would be higher unemployment in the transitional period. My right hon. Friend the Member for Stechford said that recent evidence seemed to show that this was completely ineffective. But there must be some level at which it would be effective. It might be a level of 2½ million to 3 million in Britain.

In the middle of the 1930s I had a very good job. I think I was earning £750 a year. I had a nice house, a car and many other amenities now very widely enjoyed but then enjoyed only by a very small minority of the population. I was able to enjoy them because for years during that period prices either fell or remained stable. That was because, during the whole of that period, there were between 2 million and 3 million unemployed. There is no doubt that at that time those 2 million to 3 million unemployed kept down wages and prices. I for one never want to return to that situation.

The third possibility is some form of restraint, either voluntary or statutory, which must be introduced or, at any rate, must be led by the Government of the day. Some of my hon. Friends argue that inflation is not caused by excessive wage and salary increases, but surely this must be so, because if one adds to wages and salaries increases in Forces' pay, employers' contributions and social security payments—which after all follow increases in wages—they amount to over 80 per cent. of the total personal consumption.

When some of my hon. Friends, as they have in the past, applaud the right hon. Member for Wolverhampton, South-West when he advocates no intervention whatsoever in free collective bargaining and the unrestricted scramble for incomes —as he always does—they should remember that were he ever to come to office it could be only because of the despair of the British people and a demand not for the laissez-faire policies he appears to advocate but for strong government. If his recipe of 2½ to 3 million unemployed —for that is what it is—failed or led to severe social unrest, can we doubt that he would become a fanatical authoritarian?

I hope, therefore, that none of my hon. Friends—I am sorry that not many are present—will encourage large bodies of people to flout the law. That may be a fine tactic in a country needing and ripe for revolution, but for what is now a fairly long time I have seen no revolution of the Left take place in that situation since 1917, and the more likely outcome would be a return at a General Election of a much more authoritarian Government of the right, whoever led it. Personally, I remain a firm social democrat and a believer in the authority of Parliament.

The problems we are facing, because of the fundamental causes I have tried to describe, are of the greatest difficulty. We tried when in office to deal with them, not very successfully though more successfully than most have given us credit for. Under different circumstances we might have done very well indeed. The Prime Minister implied on Monday, in reply to my right hon. Friend the Member for Stechford, that if we had inherited the economic strength which he did, we might have succeeded. That was the implication of the Prime Minister's reply to my right hon. Friend.

So far the Labour Party, no more than those on the Government side, have found no new answer to these problems. Like my right hon. Friend, however, I have no wish to see us come to office again after inflation has forced Britain in to the sort of balance of payments situation we inherited in 1964. Moreover, I find myself in some slight agreement with the monetarists, but not for their reasons. Our public finances are now in a state of utter and complete shambles. I am not against clearly defined subsidies for specific economic purposes, and among them a prices and incomes policy might well be one. Such clearly defined and restricted policies of subsidies could and should be debated in the House.

However, the present Government's policies are based not on forethought but on panic and involve open-ended subsidies to private and public industry alike. The Prime Minister gave the figures for the nationalised industries; I think they now approach £500 million, not voted by Parliament but coming out of the National Loans Fund.

This is a recipe for the utter demoralisation of our economic and financial system which will plague future Governments for years to come. I warn all Members of the House, including members of my own party, that we shall find it difficult to restore any sense into the priorities of public expenditure as long as this is allowed to continue. We brought some sense into it while we were in office but the present Government of so-called businessmen, this Government of apparently orthodox economists, have done more to demoralise the finances of our economy than has been done by any Government I can remember.

However, I remain convinced of the need for a prices and incomes policy. If I vote against the Government tonight, it is only on the assurance that, if we defeat them, we will immediately introduce a policy of our own, based not on class division but on social justice. I shall therefore listen with interest to my right hon. Friend the Member for Sowerby (Mr. Houghton), who is to wind up the debate for the Opposition.

7.11 p.m.

Mr. Timothy Raison (Aylesbury)

When I was walking across Waterloo Bridge this morning I happened to run into a friend of mine who is a neurologist. We talked for a while about his subject. After a little time I had the curious feeling that my brain was not in control of one of my feet. I walked on thinking that this must be auto-suggestion because I was talking to a neurologist and odd ideas were popping into my head. I was worried and thought "There is something there. Should I take the opportunity of seeking the medical advice of my neurological friend?" Then I noticed that one of my shoelaces was undone and that this was the explanation.

This points to something which perhaps lies at the heart of what we are debating, which is the importance of trying to separate symptoms from causes. I support the Bill because it is a rational and sensible way of trying to attack a particular set of symptoms. When it comes to the longer-term issues, I am not yet persuaded that the kind of element of compulsion which is inherent in the Bill will still then be appropriate.

I am not an economist, but I am not sure that that is a serious disadvantage in this matter. I have the feeling that purely economic answers are not enough and that what we are talking about is essentially a set of social phenomena.

I want to consider particularly the question of wages inflation. I do not argue that all inflation is caused by wage increases. Clearly, that would be absurd. We know full well that house price increases and food price increases are caused by other factors. However, it must be accepted that wage inflation is a very important element in what is going on. It is probably fair to argue, as Professor Lipsey has argued recently, that a wage rise of £1 means a price rise of 56p. In other words, wage inflation is, overall, the biggest single factor that we have to face.

The crucial thing about wage inflation is why it is happening. The analysis given by my right hon. Friend the Member for Barnet (Mr. Maudling) was of great importance and had a great measure of validity. The sudden increase in the power of certain unions, and more particularly their readiness to use this power, is a factor which has brought us to our present predicament. I will not analyse in detail the exact ways in which this power has grown up. My right hon. Friend did this. It looks to me like a mixture of factors. One important factor is the ability to protract strikes to an extent which was not generally true in the past. Another is the technological factor which my right hon. Friend mentioned—the concentration of things like electricity generation in a handful of stations as opposed to the widespread sources which existed in earlier times.

A greater readiness to use intimidation to carry picketing beyond the traditional bounds of peaceful picketing to something more ferocious comes into it. I do not suggest that this is widespread within the trade union movement. It is not. Nevertheless, we learned from the dock strike, the building workers' strike, and the miners' strike that it exists.

Equally, there is an attempt by some people in the trade union movement to destroy the whole framework of society.

I am also prepared to face the fact that some of our more radical measures have helped to contribute to a climate in which the unions have been prepared to take a tougher approach than in the past.

The upshot of this is to a great extent the intensive wage pressure that we have had over the past year or two. This represents also a serious challenge to our system of parliamentary democracy. I have no doubt from talking to people in the country that this is the thing above all about which they feel most deeply concerned and worried. We must face it.

The question is what to do about it. Obviously we must be absolutely firm about intimidation. As the hon. Member for Edmonton (Mr. Albu) said, we must at all costs uphold the law and, above all, the law which governs things like this. I look to the Government, in so far as it is in their power—through the police, and so on—to ensure that over the next few months intimation is not permitted.

Mr. Sydney Bidwell (Southall)

The hon. Gentleman is making a serious contribution, as is his wont. Does he agree that the broad sweep of the Industrial Relations Act has encouraged the more irresponsible element on the fringes of the trade union movement to get up to the things that he has described? In view of the trade union movement's detestation of the Act, can he say whether the Act has helped or hindered that process?

Mr. Raison

I acknowledge that the Industrial Relations Act has had sad effects. However, in almost every detail it was an entirely logical Act and for that reason I supported it, but I acknowledge that it has been used and exploited by people who are trying in some cases simply to gain wage increases and in other cases to go far beyond that and to damage society. I accept that to some extent the Act has, at the very least, been used as an excuse to cause considerable damage.

I was about to say before that intervention that my right hon. Friend the Member for Barnet made a point which is just as important as, if not even more important than, the point I have just made about intimidation; namely, that we cannot expect to solve our present problems by conflict. We may in some circumstances have to face conflict, but we cannot plump for a policy of conflict and hope to achieve any reasonable solution.

I have said that I believe that the Bill is right and that it is a sensible short-term Measure. I hope that it will get through the House. I shall support it. I have also indicated that I am not sure that in the longer term the kind of approach that the Bill may foreshadow—in other words, the compulsory approach —is the answer to our problems. I suppose there are circumstances in which there may be no alternative, but I am reluctant to believe that.

I will list what I believe to be the main snags of the compulsory approach. First, it means a loss of freedom. This may be a corny point, but it is very true. Second, it will inevitably tend to be damaging to enterprise. This is, possibly, a straight capitalist point, but again I have no doubt that it is true. The sorts of system which will be set up under any kind of compulsory incomes policy will act to inhibit the dynamism that we badly need. Third, there is the possibility of some kind of "carve-up", of a happy agreement between the big boys which leaves the small boys out in the cold. It is sometimes argued that it is the other way round, that small people are able to get away with more whilst the bigs boys must obey the rules. I do not think that fundamentally that is correct. The trouble is that the great established companies do not mind too much if wages are restrained and they do not mind price controls because they are operating on prescribed lines. It is the small entrepreneurial companies which suffer. If we hurt that part of industry we shall not solve our regional problems.

I also have a serious doubt whether it is possible to devise a compulsory policy which is capable of dealing with local factors—for example, the importance of plant, as opposed to national, bargaining. One may agree or disagree with the general tenor of the Donovan Report, but we must acknowledge that it is on the shop floor and in the plant that a great deal of power lies today, and it is an illusion to think that the big boys in the trade unions and the CBI can say "This is going to be enforced." It is local conditions which count for a great deal. It may be possible to operate a compulsory policy locally, but it seems to me inherently a very difficult exercise.

To revert to a point which was raised, oddly enough, by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), I think there is a risk that in going for a compulsory policy one is creating friction where that friction is not necessary. This is a fundamental point. I need a lot of persuading that we should move on to some sort of statutory policy and that the answers to the many difficulties that we have to face do not lie in other sorts of action.

There are, however, points which were discussed in the Downing Street negotiations with which I should like the Government to continue dealing. I should like to see more negotiations about those matters. The first was the commitment to growth. The hon. Member for Liverpool, Walton (Mr. Heffer) made a colourful speech when he said, I think, that he and his fellow workers dined on pheasant and port. More seriously, he told us that the workers today want more. I believe they do want more. This is part of the driving force behind what my right hon. Friend the Member for Barnet was analysing. So do the dependants, including the old-age pensioners, want more, and quite rightly so. There is only one way by which everybody will get more, and that is by economic growth. Therefore, the very clear commitment on the part of the Government to achieve growth is something which I welcome, and I hope we shall see development in that direction.

I support also the emphasis on the desirability of raising low wages. I am not particularly worried by what might be described as the pure economic objections, that by raising wages we price people out of jobs. I admit that that sometimes happens, but it does not seem to me to be an overriding objection. I am worried by the proposal to keep selective benefits for those in the so-called poverty trap. One of the merits of the policy of raising low wages is that by so doing we get more and more people out of the area in which they are dependent on selective benefits and into a happier position where they can pay for the bulk of their own needs out of their own earnings. I hope my right hon. Friend will give some thought to the idea of perhaps an extra £1, or something of the sort, above the flat rate for low-wage earners, at the same time allowing them to come out of the selective benefit range instead of continuing selective benefits as was proposed last week.

To sum up, it seems to me that we are doing the right thing now, but we must be extremely careful in what we do in the next period. We shall not get the sort of climate that we need unless we can get a fair society, a society in which people feel some sense of responsibility for each other. I have serious doubts whether a compulsory incomes policy is the way to bring this about.

7.24 p.m.

Mr. Arthur Lewis (West Ham, North)

This is the twenty-eighth consecutive year I have been in this House. During those 28 years I have seen dozens, possibly hundreds, of Ministers of either party come and go. I have heard of the problems and difficulties that have confronted the country during those 28 years. I have experienced every six months an economic crisis; either we have been approaching one or just leaving one. I have listened to Ministers, potential Ministers and former Ministers saying "If only we had done this, that or the other, all our problems would be over".

Today is no exception. The right hon. Member for Barnet (Mr. Maudling), who has been conspicuous by his absence for weeks on end, came into the Chamber, made a speech and then walked out. He did not observe the custom of staying and listening to other speakers who followed him.

Mr. Ridley rose—

Mr. Lewis

I will not give way now. I am stating facts. The same applies to my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). It is true also of other hon. Members. They say "If only we had done this, that or the other". But they are the people who were in a position to do what they say should have been done. My right hon. Friend the Member for Stechford referred to what his party will do when they get back into office. It was he who introduced charges for teeth and spectacles, and who attacked the National Health Service which we on these benches said should be a free service. That did not help the poor. The present Government have continued on the same lines.

The right hon. Member for Barnet said that the trade unions are at fault. They may be, but I never heard him say—and this is fact—that there are certain company directors and former Ministers, on both sides of the House who as soon as they leave office rush around getting dozens of directorships, getting thousands of pounds for part-time work, and then have the audacity and hypocrisy to come into the House, make a speech in which they say "If only the workers would control their excessive wage demands; if only the trade unions would behave themselves" and then walk out of the Chamber.

Not only do they have part-time jobs for hundreds of thousands of pounds but they become directors of companies receiving hundreds of thousands of pounds for expenses, and they do not know what is going on; at least, they say they do not. If they do not know, they ought to. If they are not in a position to know, they should not be directors of those companies. These are the people who point the finger at the £20 and £25 a week man and say "You are the ones who should tighten your belts; you are the people who are being cruel in asking for too much."

I was told by one hon. Member—I do not know whether it is true—that the right hon. Member for Barnet was leaving in order to appear on television. That is an interesting point. I am not being party political. He may well have left in order to appear on television; so might my right hon Friend the Member for Stechford. But for a quarter of an hour on television they will probably pick up more money than the average worker gets in a week working at a machine or in the pit. Yet they come here and say "What we need is a prices and incomes policy."

Mr. John Wells (Maidstone)

On a point of Order, Mr. Deputy Speaker. I apologise because I do not entirely remember the rules for calling a count. However, I do not think it is the dinner hour yet, and there appears to be virtually no member of the Labour Party present, apart from the hon. Member for West Ham, North (Mr. Arthur Lewis), during this great debate.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. I take the hon. Member's point. There is no such thing as a count nowadays.

Mr. Lewis

The hon. Member may have made a point because it so happens that the Government benches are more full than usual—probably because hon. Members opposite want to listen to me; I do not know. However, he has a point which I will develop, namely that one can come to this House on occasions and find only a few Members here. Most of them are missing. I do not say that they are slacking. They may be doing other jobs but, if so, they are getting paid for them. How are we to control such extra payments under the Bill?

We are about to enter Europe and so the question arises of payment for attendance. I understand that our delegates who go to Strasbourg get £25 a day tax-free allowances. No wonder they all queue up to go to Strasbourg. But they are the hon. Members who say that the worker earning £25 a week should pull in his belt. I am told that there will be a similar situation with the European Parliament. There is a hell of a battle going on on our side and my right hon. and hon. Friends are queueing up to get in on it. I am also told that they will be paid about £40 a day tax-free. It is hypocrisy of the highest order for any hon. Member to say that he favours a prices and incomes policy for the lower-paid worker when he knows that he and hundreds like him can avoid it.

My hon. Friend the Member for Salford, West (Mr. Orme) remarked about Lord Watkinson who appeared on television. Just before the Government announced their pay freeze policy, they did two things. They introduced a measure to allow Members of the House of Lords to draw £8.50 a day tax-free on top of their salaries without the necessity to attend. They also awarded a £3,000 increase retrospective for one year to Lord Wigg. That, I believes, is his fifth increase and his salary has quadrupled in about four years. That shows that I am being impartial because Lord Watkinson with his £8.50 a day is a Tory and Lord Wigg is from the Labour side. I see that the former Solicitor-General, now Minister for Trade and Consumer Affairs, is present. He is a great legal luminary and he had a great deal to do with the Industrial Relations Bill. He knows as well as I do that the lawyers can pick up more in a day, indeed in half a day, than the miner earns in a week. Some of my constituents became famous as the dockers who were sent to prison earlier this year. Chobham Farm is in my constituency. I remember when those dockers went to court. The four lawyers who were involved did two days' work and picked up about £4,000. What is the point of trying to tell the dockers that on wages of £50 to £60 a week they are earning too much money when people in this position can get £1,000 like that?

Will the acting Leader of the Liberal Party, the hon. and learned Member for Montgomery (Mr. Hooson), give a solemn pledge that every lawyer, including himself, will not draw extra fees but will earn only the fees they earned before the freeze? Of course he will not. They will earn the best fees possible.

Mr. Hooson

The hon. Member has simply missed the point. The statutory prices and incomes policy is necessary because groups of people will not voluntarily agree to accept such a policy and, therefore, a prices and incomes policy must be imposed across the board.

Mr. Lewis

I agree, and the hon. and learned Member has made the point. The policy will apply right across the board—at least for the lower-paid worker. But it will not affect the lawyers because they can manoeuvre and manipulate and earn whatever fees they like. There was a case recently which I must not describe in detail. A great man, a great parliamentarian, said that everyone could get justice who paid for it.

Mr. Neil Kinnock (Bedwellty)

Who was that?

Mr. Lewis

In a few days £10,000 was laid out.

Mr. Kinnock

What did he look like?

Mr. Lewis

I believe he looked rather effeminate, but I do not know. Nevertheless, there was £10,000 for a few day's work. It ill becomes hon. Members to try to fool the public when those hon. Members are drawing thousands of pounds a day in some instances, and at least many thousands of pounds a year, and will be able to continue unaffected by the legislation which will hit the ordinary worker.

There is the question of enforcement, but what a farce that involves. Someone somewhere is waiting for a telephone call but the telephone will keep ringing. I have already tried making a call to the Department of Trade and Industry about prices. Do you know what happens, Mr. Speaker? The caller is told that the Department will make a note of the complaint and that it will be looked into. He is told that if he cares to write the Department will look further into the complaint and write back.

There are already Acts on the Statute Book which require enforcement. One of them is the Companies Act which imposes certain statutory duties upon Ministers in the Department of Trade and Industry. The Act says that registered public companies must return their company accounts every so often. Hundreds of thousands of companies are not doing so. The Department has been told and it has refused to take action. I have asked the Prime Minister to instruct the Secretary of State to take action and the Prime Minister has refused to do so. Companies must have properly appointed auditors but many companies do not have them. Again, the Department has been asked to take action but has refused. Companies should have proper company meetings but these have not been held. The Department has been informed, but again no action has been taken. Companies should have properly elected directors but no directors have been appointed. And so the problem grows.

Hundreds of companies are involved, so many that the Department of Trade has told me that the problem is so out of hand that it cannot deal with it. But such companies have been fleecing the public of millions of pounds. In one case the Department was asked for four years to take action but it did not and eventually the person concerned fled to Australia with £4 million of shareholders' money.

That is the Department which must see whether a penny or 2p has been put on a pound of sausages and take appropriate action. The same Minister and the same Department are concerned. I see present my hon. Friend the Member for Birmingham, Northfield (Mr. Carter). On the V and G affair we asked for action for years. The John Broom affair was another example. I could go on for ever. Another company is Dollar Land Holdings. But nothing has been done. I was told that because the problem had become so widespread, because the Department had not done its job and things had got out of hand, it can now do nothing.

I said to a Minister that this reminded me of going to the policeman on the beat and saying "See that chap there, whose name is Bill Sykes. He has a jemmy in one hand and an oxyacetylene cutter in the other, standing outside Barclays Bank. I heard him say that he is going to break in". The policeman says "It is all right, old boy. There is so much of that going on now that I cannot take any action". That is the Government's attitude.

We have not had an answer about whether the people who telephone the Department will be able to reverse the charges. I do not see why they should not be able to do so. If the Government are genuine, let people be allowed to reverse the charges. Indeed, let them have free postage. Why not? Let every post office, public authority—[HON. MEMBERS: "Public house."]—and, indeed, every public house, have the telephone number. Let every Government Department have the telephone number. But, above all, let us have some action.

Hon. Members on both sides of the House—and I am not being party political here—will bear me out when I say that whenever we write to virtually any Department on a simple issue, it takes two or three weeks before we get even a formal acknowledgement.

Mr. McBride

A lot longer than that.

Mr. Lewis

I always under-estimate. It might take another week to get an interim reply which says that the Department has not done and cannot do anything. It will then take another week for the Department to say that it has sent the inquiry on to somebody else. If the hon. Member is fortunate, after five or six weeks he will get an answer, which is usually a negative answer, but no action.

What will happen when members of the public start writing letters to the Department? They will be simply washed away. But let us assume that miracles happen sometimes and that the Government take action. The hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) said that he would not like legal action to be taken in these matters. But how long does it usually take for legal proceedings to come before a court? Again, I must not mention the name of the hon. Member who was recently concerned in a court case, but he was very unfortunate; I do not know why. He was able to have his appeal heard quickly. Normally it takes from 12 to 18 months for an appeal to be heard. Even if legal action in connection with the Bill were taken, the 90 days would have been well expired.

What the Government propose is completely phoney. It is nothing more or less than an attack on people on the lowest standard of living. The well-to-do will be able to get round the legislation. The Government say "But look how generous we are being to the old-age pensioners. We are giving them £10 once and for all". But the old-age pensioners must wait until next January for it. Some of them will not be with us then. There is nothing to stop the Government issuing an instruction tomorrow that every old-age pension book should be stamped with £10 as and from a certain date so that that sum is paid to every old-age pensioner. If the Government wanted to do that, they could. They made the payment to my noble Friend Lord Wigg retrospective for 12 months. But the Government do not want to find a way. They shed crocodile tears but do not do anything about these matters.

I have a clear conscience in this respect. I fought and voted against the Labour Party's proposals on these matters because they could not work. The present Government's proposals will not work. I shall be pleased to table as many Amendments as possible to the Bill. The Conservative Party fought all the elections in which I have participated since 1945 with the slogan "Tory freedom works". It says "Let everyone grab what he can. Let the speculator have what he can get and let the land profiteer get what he can get"—and they have got it. But when trade unionists, who joined their unions for the specific purpose of obtaining the best possible working conditions and wages, try to get a bigger share of the cake, it is said that they are traitors. But they are merely responding to the free enterprised beliefs of the Tory Party. Right hon. and hon. Members opposite will not support a free-for-all approach by the trade unionists, but they will support such an approach by the speculators and big vested interests. The Tory Party is the party of great vested interests, banded together in a formidable confederation, corruption at home, aggression to cover it abroad, the trickery of tariff juggles, the tyranny of a well fed party machine, sentiment by the bucketful, patriotism and imperialism by the imperial pint, the party of the rich against the poor. Those words were uttered by the greatest Tory leader ever—the late Sir Winston Churchill. I subscribe to them.

7.46 p.m.

Mr. A. G. F. Hall-Davis (Morecambe and Lansdale)

I cannot profess to be as knowledgeable about the remuneration of individuals and groups as the hon. Member for West Ham, North (Mr. Arthur Lewis). Therefore, I shall not comment on his remarks in that respect. However, he said that the Government's proposals would not work because they were unfair. I shall say something about that in the course of what I hope will be a short speech to balance the length and interest of the hon. Gentleman's speech. But it was not unfairness which led to the reaction against the policy of his party's Government; it was frustration over a number of years when people's standards of living advanced hardly at all.

My hon. Friend the Member for Aylesbury (Mr. Raison) said that it was "corny" to say that he deplored the loss of freedom involved in the Government's proposals. I start by saying—and all my remarks hereafter will be made against this background—that I regard with extreme distaste the control of wages and prices by law. I shall say later why I have come to the conclusion that we should support the Bill. I have reached my decision reluctantly because what is involved is the complete withdrawal, albeit temporarily, of one of the fundamental liberties of the subject. The right of a man to negotiate his terms and conditions of employment is one of the things which distinguish a free society from an authoritarian society. I should not be true to my views and feelings if I did not say that.

The present situation has arisen because twice in recent months the view of the minority has prevailed over the view, wishes and interests of the majority. Wage bargaining in a free society, with an industrial structure sophisticated and interdependent as the structure of this country industrially is now, can operate without damage being done to the community only if those engaged in it accept that certain limits to their demands and actions are imposed by considerations of common sense, moderation and fairness.

Every negotiation that takes place finishes because at some point those engaged in it realise that a fair solution has been reached and they do not press the matter to the ultimate. We are much more likely to get a negotiated settlement, in which responsibility, fairness and the general interest are recognised when such a settlement is on a company or plant basis rather than covering a whole industry or group of industries on a national basis.

In the last 12 months the majority of people engaged in wage negotiations have made reasonable settlements. Those settlements have been responsible because they have been as low as could be expected against the rise in the cost of living compared with the previous year. As the cost of living gradually reduced month after month there was clear evidence that many negotiators and many people in industry were prepared to accept a gradually lower level of settlement. But what has happened is that a minority, in wishing to extract the maximum settlement, have not been prepared to follow a course of moderation and fairness taking into account the general interest of the community as well as their own interest. By using their bargaining strength to the full, they have made it impossible for the majority to hold to a course of moderation and social responsibility when seeking settlements.

In the last few weeks the view of the minority has again prevailed over the view of the majority. There is no doubt that there was a substantial majority in the country in favour of the Government's package announced in September—

Mr. Arthur Lewis

And against the Common Market.

Mr. Hall-Davis

I shall be happy to debate the Common Market on an appropriate occasion, but at the moment I am debating the Second Reading of the Bill.

Mr. Arthur Lewis

It is relevant to the point.

Mr. Hall-Davis

The majority of the public were in favour of taking action on the lines of the Government package announced in September. It was simple and workable and would have helped the low-paid and the pensioner. The rejection of that package was a clear rejection of the majority wish of the people.

Mr. McBride

The hon. Gentleman speaks of an irresponsible minority, but he is careful not to name them. I suggest that he should name those whom he thinks have been irresponsible.

Mr. Hall-Davis

The hon. Member for Swansea, East (Mr. McBride) should look at the recorded negotiations and settlements over the past few weeks.

Mr. Arthur Lewis

Give us the names of the hundreds of company directors who have doubled their salaries.

Mr. Hall-Davis

The hon. Member for West Ham, North (Mr. Arthur Lewis) knows very well that in the last six months industrial attitudes have been pursued in complete defiance of the national interest, and the general public recognise this as well as everybody in the House.

Mr. Arthur Lewis

Ask Gerald Nabarro —he knows.

Mr. Hall-Davis

The problem we have to face is how to recognise the interests and wishes of the majority without curtailing the freedom of individuals.

I turn to the specific question of the action which must be taken in the next few months. I hope that the Government will announce their medium-term intentions as soon as possible. There have been discussions about what should follow the Bill. After the difficulties which both parties have experienced in working out a solution to this problem, I believe that we shall not get a long-term answer within 90 or 150 days. We shall not get a long-term answer until the course of inflation has been moderated sufficiently so that people may consider matters in a cooler atmosphere without the pressure of inflation bearing so strongly upon them.

I hope that well within the 90 days the Government will say that they intend to proceed on the basis of the package which they put to the country in September. It has general support, a consensus exists on the package, and I believe that if it were adopted it would save the frustration and confrontation which arose in the longer period of freeze under the Labour Government.

I should like to see some simplification of the package. The next stage should be an extension of existing wage settlements for a period beyond the date at which they would normally run out, with wage rates and structures being left exactly as they are now. I should like to see the addition of a flat-rate plus payment with a limit set to it on top of the existing wage calculations and rates. I was not present at the discussions in Downing Street but it was reported that there was some realisation among trade union leaders that a flat-rate figure of, say, £2.50 would be of more help to the lower-paid than an increase on the base rate of £2. It is those with sophisticated wage structures who benefit most from premium rates, and they are the people who are to be found in highly-paid jobs. Many of the low-paid are in that category because they have few premium payments. Staff in general who are not among the more highly paid have few premium payments and many have no premium or overtime payments at all.

I turn to one element in the Government package that I find the least attract- tive, and this is the fact that during the tripartite discussions the target for containing inflation was 5 per cent. If we look at the record of the last 20 years—and we must remember this whenever we get depressed—we see that only three times in that period has the consumer price index risen by more than 5 per cent. I refer to the three years 1969, 1970 and 1971. In 13 out of 24 years—and these, I hasten to tell Labour Members, were not "all the 13 Tory years—the cost of living index rose by less than 3½ per cent. As it has been necessary to move to a fully-managed economy and to take full control of wages and prices, I should like to see the nation gaining some real benefits from this step. Let us as our target seek to get price rises down, certainly below 4 per cent., and keep it within that figure for at least two years. We should then have a good prospect of returning smoothly to free wage bargaining. We shall not return to a situation of free wage bargaining until we get down the pace of inflation and hold it down for a reasonable period. If we have sacrificed the freedom to negotiate and to let the market economy operate, let us as a compensating factor see that we eliminate the evil of inflation and at the same time continue the present trend of reducing unemployment and increasing the growth of the economy.

8.0 p.m.

Mr. Norman Buchan (Renfrew, West)

The contribution of the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) has not helped the situation very much. I do not know what he means, nor does anyone else, when he refers to a minority controlling the majority. The nearest approach that we have to representing the majority view of ordinary people in effective wage bargaining and everything else remains the trade unions. It is the trade unions which have been making the decisions that the hon. Gentleman regards as minority decisions, and if the hon. Gentleman wishes to see how reflective they are of ordinary working class opinion he need only consider one test. His right hon. and hon. Friends dared to test it in the case of the railway-men. The Government's policy was rejected overwhelmingly, and the policy of the union was accepted overwhelmingly.

There is no case for saying that this is a problem which has been created by the minority of trade unionists. The problem has been imposed upon the majority of working class people by a small minority, the abrasive centre core of the Tory Party and right hon. and hon. Gentlemen on the Treasury Bench.

When we are trying to look at a grave crisis seriously, the kind of talk that we heard from the hon. Member for More-cambe and Lonsdale does not help very much.

Mr. Hall-Davis

Does the hon. Gentleman consider that when two opinion polls —with all their variations they are one way of testing opinion—say that 80 per cent. and 75 per cent. of the public are in favour of the package that the TUC rejected the majority opinion has carried the day?

Mr. Buchan

There is an obvious explanation. It is the same one as that which the hon. Gentleman would use. There is a tendency for people to say "This is a good idea. Keep down other people's wages but do not keep down mine". That is why a prices and incomes policy foundered under a Labour Government, and it will founder under this Government. If the lower-paid workers in the breweries were to get a £5 or a £10 increase but the chairmen and managing directors of breweries were restricted, the hon. Member for Morecambe and Lonsdale would not find the policy so popular. I have been reading about the hon. Gentleman in The Times "Guide to the House of Commons". I know all about his brewery interests.

The second reason why it will be rejected is that a vast confidence trick has been played upon the people, and they are beginning to understand. When people are asked whether they want to hold back inflation, they say "Yes, we are against sin." The confidence trick has been to go through with these discussions at No. 10. Today, look at events, I believe that the whole affair was arranged. It was a form of high-level political theatre. It seemed to run as long as "The Mousetrap". But there was one difference. In "The Mousetrap" they did not try to blame the crime on the victim, which is what this Government have tried to do. The discussions have been conducted at such a level that when the parties emerged from them the blame could be put on the working class people. However, it is not the working class who have not been in effective control of the country for the last 2½ years but the Government. All the actions that the hon. Member for Morecambe and Lonsdale has criticised have been reactions to the abrasive attacks on them by the Government.

We saw the second echelon of the Tory Party move into action the moment the talks ended. The Vice-Chairman of the Tory Party attacked the so-called "red wreckers". That is what these talks were about, and once this measure begins to operate I do not think that the people will continue to be taken in by it.

Another reason that I put forward is what happened to the Labour Government. It was not only the abyss that we went through during the "In Place of Strife" discussion. It was that we had already lost contact with our own people. They accepted a prices and incomes policy as being fair and just for the country, but they found in practice that as long as we were not making basic inroads into capitalism we could not emerge with a fair policy.

The British people have an intense sense of fairness. They will accept a lot if they regard it as fair. But they will not regard this measure as fair for the kind of reasons advanced by my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis).

In this document we see that a sharp difference is made between those whose wages are negotiated openly and can be seen and checked and those whose wages are incomes derived in another way. If the hon. Member for Morecambe and Lonsdale is still involved with his brewery, I do not imagine that he will suffer as a result of dividends being held back for six months. Share values can still increase. Capital assets can still increase. The hon. Gentleman's dividends can still be collected at the end of six months. The same cannot be said of the wages of his workers.

Mr. Ronald Brown (Shoreditch and Finsbury)

What has been decided by the Government is that if a dividend was agreed on 24th October to be paid on 1st January, it can be paid. However, the Furniture, Timber and Allied Trades Union, with which I am connected, reached an agreement on 24th October for an increase to be paid on 1st January, but that has been refused.

Mr. Buchan

My hon. Friend makes the case dramatically and directly. I did not know about the case to which he has referred. It requires more publicity. I am sure that publicity will also be given to the case of the farm workers. We have been told that this policy is designed to serve the best interests of low paid workers. Did anyone ever hear such nonsense? The farm workers are among the lowest-paid people in the country. Food prices have been blamed on wage increases, but agriculture from which food prices stem is the lowest-paid industry, and in that case the wage increase is to be held up. I could not believe it when I heard it. My innocent interpretation on first reading the White Paper was that the farm workers' wage increase had to go through. It was not very acceptable to them as it was. But even that is to be blocked. Like the union with which my hon. Friend the Member for Shoreditch and Finsbury (Mr. Ronald Brown) is associated, the farm workers are in the forefront of this crisis, and they are to be held back. The British people will not accept that.

Furthermore, the people will reject this policy because they recognise that, quite apart from profits, dividends, shareholders and the managing directors of breweries, there is a group of people in this country whose incomes are derived in a different way. There are many lawyers in this House. If a lawyer has a brief, he is paid. If he has no brief, he is not paid. But there is nothing in the White Paper to say that lawyers shall be restricted to 5, 10 or 15 briefs over the next six months. The more work that they do, the more they will be paid—

Mr. Hall-Davies

So will a worker on overtime.

Mr. Buchan

But a man on a 40-hour week does not get this kind of income, and let no one tell me that the extra work that he does by way of overtime is paid at rates comparable to the earnings received by highly-paid lawyers, consultants and others in the group of people to whom I refer. They really believe that their own world is inviolate and should not be harmed. They are trying to create injustice. That is the purpose of the exercise. It is to lay the blame for our economic ills upon the workers, and the White Paper is extracting the pound of flesh for the crime that the Government attribute to them.

The other reason why this policy will not be accepted is twofold. First, it is not a prices and incomes policy. I happen to believe in a prices and incomes policy. I have been disappointed in the past by the fact we used a prices and incomes policy to deal with an economic crisis but not to rectify injustice. We used it in 1966 because of our balance of payments problem. As a result, we devalued the whole concept of a prices and incomes policy. Once again, before we get the right kind of Socialist thinking into a prices and incomes policy, and that means intelligent thinking, it is brought in today to be devalued. It is not a prices and incomes policy; it is a standstill, a freeze, basically for one section of the community.

To return to my point about fairness, the argument is that dividends, incomes and prices are to be held. I have dealt with dividends. We know what will happen with wages. But on the prices front —we could drive a horse and cart through it. It is the kind of thing in the White Paper which says: Wholesalers and retailers are expected to do everything possible to avoid any increases in prices. I do not see anything written here that says that Jack Jones and Hugh Scanlon are "expected" to do everything possible to hold back increases in wages. They have it imposed upon them. Enterprises will be required to absorb cost increases to the "maximum possible". Who will be determining the "possible"? The Government should not try to kid the British people, because they do not believe it.

It is said that: Certain prices—especially those for fresh food such as fruit, vegetables, meat and fish and for imported raw materials—are subject to fluctuations arising from external or seasonal causes. My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said he did not know that people ate anything else but fruit, vegetables, meat and fish. The White Paper goes on to say that where such prices rise because of seasonal or external causes the increase is to be allowed. But this is always the reason for a rise in food—seasonal increases and external causes.

The reason why beef soared under our unfortunate friend "Mr. 20 per cent. Prior" over the last few months was not the wages situation or additional costs but a whole number of external factors in relation to, among other things, the Common Market. I challenge the Government to tell me that the price of bread will not rises over the next five months. The millers have said that it will. I challenge the Government to say that the price of beef will not rise. We are to enter the Common Market on 1st January, and we are told that British entry will coincide with the early stages of a world meat shortage. This was said by Mr. Michael Higgins, purchasing director of a large French meat import and export firm at a Harrogate conference. Let the Government deny that if they like but I prefer to get an answer rather than a grin from the Financial Secretary. We do no want our Minister to be sitting laughing at a 25 per cent. to 30 per cent. increase in meat prices.

The Financial Secretary to the Treasury (Mr. Terence Higgins) rose—

Mr. Buchan

I hope that the hon. Gentleman will let me finish my sentence. The question I put to him is: will he give us a guarantee that beef and bread prices will not increase during the standstill?

Mr. Higgins

I would like to make this point, in deference to the House. I was not grinning at all. I merely said, when the hon. Member referred to someone with the same name as myself, namely Higgins, that it was no relation. I was mereley making that point. As to the point of substance, my hon. Friend will take note of what the hon. Member said.

Mr. Buchan

I suppose that that is an acceptance of the fact that bread and beef prices will rise.

Mr. Arthur Lewis

I want my hon. Friend to make it clear that at the Harrogate conference to which he has referred, which was a Government-sponsored livestock conference, when speaking of this meat shortage, it was quite clearly stated that a 25 per cent. to 35 per cent. increase in the price of beef will take place between now and next spring and the Government will not do anything about it. This is the point my hon. Friend should emphasise.

Mr. Buchan

I am glad my hon. Friend is telling me what I should be saying. He is right. We have thrown away our tools the means by which we can control things. If the price of food increases because of external factors the only way to prevent prices rising in the shops is through some form of subsidy. We are casting this aside and indeed imposing additional price increases by accepting the import levy system. During this period we shall put a tax upon food and also increase its price. The whole thing is a confidence trick, and I do not believe that the British people are so stupid as the hon. Member for Morecambe and Lonsdale suggests.

There is also the question of rents. The Government are getting themselves into a peculiar position here. They are calling for a standstill. They say that rents are included in separate legislation and are not, therefore, dealt with in the White Paper or the Bill. The British people are not conecrned about whether a certain measure is included within a particular Bill. Rents are prices, and it is that with which they are concerned.

The ludicrous position into which the Government are getting themselves is that after the announcement of this policy the only councils in Britain which are in line with the Government's policy are those which are refusing to implement the Housing Finance Act. Therefore, the Government are likely to find themselves in the position of taking such councillors, including my wife, to court for refusing to implement this Act. I know what my wife will do if she is brought to court because of this bunch opposite because she is trying to help her community in refusing to increase the rents. The moment she is in court the first witness she will call will be the Prime Minister, who says that there is a standstill on prices. That is the kind of difficulty into which the Government have got themselves.

Mr. Cecil Parkinson (Enfield, West)

Would the hon. Gentleman care to read paragraph 21 of the White Paper in which the matter about which he is talking is clearly spelled out. Perhaps he could read this to his wife and send her to sleep tonight. The White Paper says: As these rent increases were due to take place before the standstill they are not affected by it and any authorities who have not so far discharged this statutory obligation will not be relieved of it by the standstill. In that way the hon. Gentleman's wife will be in no doubt about the position.

Mr. Buchan

I do not intend to spend my time in bed tonight or any other night telling my wife that her statutory obligations which she may or may not have discharged will not be relieved by the standstill. She is entitled to protect her people in the same way as others are entitled, if their consciences tell them, to break the law and accept the consequences. I believe the British people will back us on this.

There are areas of the country which will suffer as a result of the standstill, and fairness enters also into this aspect. My area in Scotland suffers from unemployment and low wages. This policy will operate in the regions in such a way as to freeze any attempt to improve wages. Therefore, I want a third guarantee from the Government, in addition to those concerning bread and beef prices. I want a guarantee that there will not be an increase in unemployment during, and as a result of, the standstill. If the Government can give us all pledges, then they may find their predictions to be accurate.

8.18 p.m.

Mr. David Knox (Leek)

I hope that the hon. Member for Renfrew, West (Mr. Buchan) will not mind if I do not follow him in the points he has made. I have given an assurance that I will speak only for a short time. I approach this subject as someone who shares the views of my right lion. Friend the Member for Barnet (Mr. Maudling). I approve of and support the change of attitude of the Government in the last six months towards the general problem which we are discussing. I believe it was right to hold the tripartite talks and very much regret their failure.

I welcome the Government's assurance that they are still willing to follow up and to have further talks with the TUC and the CBI. I welcome this approach because I do not believe in confrontations such as we have had in recent years and also because I believe that it is necessary to have a prices and incomes policy in a modern society. A voluntary prices and incomes policy is preferable to a compulsory one. Every modern advanced country has found, or is finding, a prices and incomes policy necessary and the consequence of not having one eventually leads to social disruption, whether it comes from excessive inflation or from excessive deflation imposed to try to avoid inflation.

Most hon. Members on both sides of the House—though there are exceptions on both sides—regret the breakdown of the talks. I certainly do. I should have preferred them to have succeeded, because I prefer a voluntary incomes policy to a statutory one. But the talks having failed on this occasion, and a voluntary policy therefore being impossible, there is no alternative to the Bill which my right hon. Friends have presented to the House. I regret to some extent that the Government have not been able to give statutory effect to the package which they offered the CBI and the TUC, because that clearly would be preferable to the freeze, but I accept that that is not possible in the short term and so the Bill is acceptable to me.

I should like to spent a short time considering the nature of our inflationary problem. This was dealt with this afternoon by my right hon. Friend the Member for Barnet. It is important to recognise exactly what our inflationary problem is, because there is still a great deal of misunderstanding in our midst about it, particularly among those who think that the cure can be effected only by controlling the money supply.

Apart from the fact that it is naïve to think, as the money supply purists do, that something as complicated as a modern industrial economy can be controlled and regulated merely by controlling the supply of money, it seems that there are two fundamental errors which the money supply school make. First, they assume that because inflation involves the depreciation of the value of money, its causes must be entirely to do with money. Secondly, because they fail to distinguish between demand and cost inflation they fail to realise that cost inflation can take place without there necessarily being demand inflation and they fail to realise that the policies which are rightly used to cure demand inflation will cure cost inflation only at enormous expense in terms of unemployment, lack of company profitability and social chaos, and even then I am not convinced that they would work.

What are the differences between the two types of inflation? My right hon. Friend attempted to define them this afternoon, and perhaps I may do so as well. Demand inflation is the situation where total effective demand in the economy as a whole exceeds supply potential. Something has to give, and it is the price level of the supply. Prices therefore rise. The way that the Government deal with demand inflation is well known to the House—credit squeezes, tax increases, and so on, the purpose being to reduce demand to bring it into equation with the supply potential.

Cost inflation, on the other hand, is the situation where costs rise and force up prices. It can be the cost of imports, it can be other costs and it can be the cost of labour. Some people would argue that the price of labour—that is, wages and salaries—can rise only in a demand inflationary situation, but I would argue that because of the sluggishness of the labour market and because of the presence of monopolies in the labour market, such as trade unions and professional bodies, that is not the case.

One can therefore get, and in my view we are getting it now, labour cost inflation—I am referring as much to salaries as to wages—without there being demand inflation and without there being any shortage of resources in the labour market. In other words one can, and one does get cost inflation even when there is substantial unemployment. This seems to be the theoretical reason why today we have substantial unemployment and cost inflation. It may be that there is a level of unemployment at which there would be no labour cost inflation, but it would be much too high to be politically acceptable.

The question we have to ask ourselves is what sort of inflation we have in Britain today—demand or cost inflation. It seems obvious that it is cost inflation. From November, 1964, until July of last year the British economy was subjected to a series of powerful deflationary measures, massive increases in taxation, credit squeezes, tight control on public expenditure, reductions in planned expenditure and so on. The result of all that was that by the summer of last year there was substantial slack in the economy, there was high unemployment and there was considerable under-employment of both labour and plant.

It is obvious in such circumstances that total effective demand is, and has been for a long time, substantially below supply potential, and there is not therefore, and there has not been for a long time, demand inflation in Britain. Nor is there likely to be in the near future. At the same time it is obvious that wages and salaries, despite high unemployment and under-employment, have risen much more than output. There is, therefore, a clear-cut case of cost inflation, nothing more and nothing less.

The Government's package presented to the CBI and the TUC seemed to provide a reasonable and fair means of attacking the problem of cost inflation which, as I hope I have proved, is our problem. It seemed that this was the right way to go about dealing with the problem of cost inflation but, the talks having broken down, the freeze was inevitable.

A few moments ago I said that perhaps there was a level of unemployment at which there would be no labour cost inflation but that this would be much too high to be politically acceptable. In fact, I do not believe that to be so at the present time, and I shall say why. In the 'fifties and early 'sixties the British people came to expect real increases in living standards every year. Following the 1961 deflationary package they lost confidence in the then Tory Government's ability to produce such increases. That seems to be the main reason why the Labour Party won the 1964 election. The electorate then voted in a Labour Government, believing that they would give them the additional increase in living standards each year which the British people demanded. By 1970, because the Labour Government had failed to do that the electorate dispensed with their services in the belief that an incoming Tory Government could provide the goods.

It seems to me no mere coincidence that during the middle and latter years of the 1960s, when living standards in Britain were hardly rising at all, we saw the emergence of more militant trade union leaders of both wage and salary earners. It also seems to be no coincidence that during this period we should generate the fastest wage and salary cost inflation as people tried to improve their real living standards by obtaining higher money wages, only to be frustrated in their desires by the depression of output by the Government and the consequent rise in prices.

If all that is true, as I believe it is, it follows that the deflation of demand by controlling the money supply or by any other means would, if it worked, result in living standards being stabilised at their present level or even reduced, which in turn would aggravate the cost inflationary spiral rather than cure it.

Our current inflationary problem is therefore, as much social as it is economic. It is a fallacy to believe that deflation will cure it. In the long term, it will be improved only by ensuring that over the years living standards rise in Britain to meet the expectations of the people. Adlai Stevenson was talking about under-developed countries when he spoke about the revolution of rising expectations. But we deceive ourselves if we pretend that there is not a revolution of rising expectations in Britain today. That was a point which the hon. Member for Liverpool, Walton (Mr. Heffer) made yesterday in that moving passage about pheasants and port wine. It is a fair and legitimate point, and any British Government which fail to recognise its importance will inevitably land up in trouble.

The logic of my argument has been that that growth is essential if we are to reduce cost inflation to tolerable limits, that growth is an absolute pre-requisite if we are to do it and, since growth is not possible with the depression of demand that strict control of the supply of money would bring about, in such circumstances we need an incomes policy. Since we cannot have voluntary agreement on such a policy for the present, the Bill is needed as a temporary measure to see us over the next 90 days or perhaps a little longer, until such time as a voluntary policy can be brought about with the general agreement of the CBI, the TUC and the Government. For those reasons, I support the Bill.

8.31 p.m.

Mr. Neil Kinnock (Bedwellty)

If the hon. Member for Leek (Mr. Knox) will forgive me, I shall not take up at great length what he said. He regrets that the talks at Downing Street between the TUC, the CBI and the Government should break down. I do not. The Prime Minister offered a poisoned carrot. It is only because the TUC now occupies the position of a fourth estate and has a certain social status in our country that obliges the Government to go through the charade that was designed from the first further to reduce the public's confidence in the trade unions for a political end. If the hon. Gentleman is not wise to that already, then he is in the wrong business.

Secondly, I gathered from what the hon. Gentleman said that he believed a rising demand to meet the supply potential is one of the ways of getting out of our present inflationary difficulties. That is essentially what I and other of my hon. Friends have been arguing for at every unemployment demonstration—increasingly frequent unemployment demonstrations—over the last two and a half years. We felt that there were idle hands and idle capital, a great demand both for material goods and for services in our country, and that those hands and capital should not be idle. I see that the hon. Gentleman nods assent. I cannot see how either a 90-day freeze or a further rationalisation of incomes increases can bring about the increase in demand which the hon. Gentleman requires. The effect of an incomes freeze and an incomes rationalisation policy, whatever comes after the freeze and however long the freeze is, will lead to reduced demand because people's incomes, whether inflationary or not, will not be going up.

We have the situation where everybody recognises what would be a good thing. Everybody recognises that it would be a grand way out of unemployment and that it is one of the ways of overcoming inflation. But, by the same token, in this very Bill one of the major means of increasing the demand which is necessary to overcome our inflation, according to the analysis put forward by the hon. Member for Leek, is denied because we have got an incomes freeze, which, as we on this side have said repeatedly, could be effective, has positive sanctions, has legal sanctions, and lays down specific offences, contrasting sharply with the flimsy meaningless sanctions proposed in the prices side of the Bill.

It was said in the debate yesterday, and it has been said to a lesser extent today, that the difference between the prices and incomes policy of the last Labour Government—which I opposed, though outside the House and not inside, for obvious reasons—and the present Government's policy is to be seen in one basic fact, that the measures of 1966 and 1967 were introduced in an atmosphere of deflation, and the present measures are introduced in an atmosphere of expansion.

For the reasons I gave earlier, it seems to me a peculiar logic which describes a situation in which there are ¾ million unemployed, in which there are bellies to be filled, in which there are inadequate social services, a slum Welfare State and a disastrous housing situation, as one in which we can contemplate or seem currently to be enjoying an expansionary economy.

A prices and incomes policy depends upon the relationship between prices, incomes, productivity and profits. Given a situation in which wages and productivity are rising at about the same rate and prices are controlled, one has rising real wages and economic expansion. On the other hand, given a situation in which there is rising productivity, wages are controlled but prices are uncontrolled, there is a real and dramatic fall in the general standard of living.

Mr. Richard Kelley (Don Valley) rose—

Mr. Kinnock

Will my hon. Friend forgive me? I have only a short time, and I know that many hon. Members wish to speak.

There is that similarity between the story in 1966, 1967 and 1968 and the story today. There are other similarities. We have a general expansionary policy which is running directly into collision with a deflationary policy based essentially on wages control, not on incomes control but on wages control, restricted to only one sector of incomes, which, though large, covers only certain kinds of wages at that.

The only excuse which I could offer on behalf of my own Government was that, at least, the attempt was made in order to bring economic solvency to this country. It was made out of what I believe to have been an over-emphasised and distorted sense of social and economic priorities which led that Government to believe that the balance of payments was the most important objective which they had. It was a terrible mistake. This Government, however, do not even have that laudable end. Their sole purpose in going through the pantomime of the last two months, with talks, a false crisis and the dramatic introduction of a short sharp incomes freeze in the certain knowledge that not a price will be frozen and that there will be a conflict over the next 90 or 150 days—however long it may be—between every section of wage bargainers and the Government, is that the conflict should be seen as a challenge by the trade unions for sovereignty in this country.

I believe that that is the essence of the Prime Minister's present policy, but I believe, also, that if he chooses that kind of confrontation he will be the loser. He has a Chancellor of the Exchequer who, apparently, takes a degree of comfort from the results of the election of a near-Fascist President in the United States— [HON. MEMBERS: "Oh."]—who has a set of social priorities which would have been anathema in this country in the 1930s. Yet the Chancellor of the Exchequer applauds it. He takes comfort, also, from the fact that there are opinion polls which show a general declaration in favour of an incomes freeze. The attitude of most people towards inflation is like their attitude towards sin. No one likes it. I hope that the Conservative Political Centre will sponsor another opinion poll of the same people in 90 days and ask what their attitude to a wages freeze is then. It will give an important political lesson, a lesson which should have been rammed home in this country a long time ago.

It is all very well to say that we live in a classless society in which individual aspiration should be the motive force and impetus behind our development. In fact, at the end of the day, those who work for their living, who have only their labour by hand or by brain to gain the means of livelihood, have a common class interest. I think that in these 90 days we are going to learn that we have a Government prepared to engineer a crisis and an Act of Parliament directed solely to affecting their interests, and that the Government will do it in the name of a spurious freedom, freedom for gazumpers, freedom for asset strippers, freedom for speculators and all the other nasty interests which have agglomerated around this Government. They are the ones who have a real vested interest in Toryism. I exclude those misguided people who believe that Conservatism can bring about an improvement in their standard of living.

If we really mean to make an attack on price inflation we require to take in this Parliament control on a wartime basis of prices. The Chancellor of the Exchequer has been known to scoff at the idea that we can have wartime controls in peacetime, but it is a measure of any Government's earnest, when continually preaching about the necessity to control price inflation, of how far they are prepared to go. How far are the Government prepared to go in order to substantiate their claim that they are genuinely the enemy of price inflation? I would suggest a system—it is becoming increasingly fashionable and I suggested it 18 months ago—of a national prices board comprised of manufacturing interests, retailing interests, trade unions—including a few people from the shop floor for a change, and very unusual—and the Government interest. There ought to be responsibility through a Minister to Parliament, and the Minister ought to employ a prices inspectorate which would act on the same basis as the factory inspectorate, with the threat of sanctions. If there were a declared list of prices drawn up by the national prices board and if a retailing outlet for a manufacturer were found to exceed a recommended price, prosecution and a heavy fine would follow.

I think it is necessary to have that kind of machine, not as an academic exercise or to give more work to bureaucrats, but for this very simple reason that if we are to control inflation, and if there is widespread acceptance of the idea that we need to rationalise incomes for a more just society, it seems to me that we must have a very specific, measureable and obvious prices control policy. Can we otherwise have the effrontery as a Government, as a Parliament, as a society, to say to one section of society, the wage earners, "We expect you to submit to what we define as the national interest"? Unless we can prove that the Government are willing to act directly on prices, and enforce legally counter-inflationary measures, we are not going to command the support required for an amicable prices policy.

What I am pressing for is a massive extension of public accountability by the privote sector. We have that accountability in the public sector already, with price restrictions on the nationalised industries, so that we shall have under-investment in nationalised industries, which may suit the book of some people when they go into Europe. We have to challenge the presumptions of private interest, we have to make a direct offensive against financial orthodoxy and control prices in the private sector before we can go to the wage earners, whether inside the trade unions or outside them, and ask for their support for a rationalised incomes policy.

8.44 p.m.

Mrs. Jill Knight (Birmingham, Edgbaston)

We are debating the Bill because of the collapse of the Downing Street talks. The general public have noted and understood completely why they collapsed, and the general public completely accept the view that the trade unions leaders' Sticking point—that a prices freeze should be imposed but no wage freeze contemplated—is not only irrational and unjust but would have totally failed to correct our economic ills. My right hon. Friend the Chancellor of the Exchequer this afternoon claimed to have widespread good will for this Measure, and I am solutely certain he is right. The public are very well aware of how necessary it is, and they entirely support this Measure.

Mr. Alec Jones (Rhondda, West)

How does the hon. Lady know?

Mrs. Knight

They support it at the moment.

I will explain precisely why it is extremely difficult for some of us who believe to the very core in freedom to support a Measure of compulsory restriction such as this. We believe in freedom. The Leader of the Opposition, with his customary paucity of charm, this afternoon spoke bitterly about the way in which our party is now forced to do something which is against its very basic nature. It is very strange that the Labour Party, which apparently believes all the way along in compulsory controls of this kind, does not support the Bill.

Our only reason for putting forward the Bill now is that the country desperately needs to have inflation checked. It is nothing to be ashamed of that we should have believed for so long that it could not be possible that people were so stupid as to fail on voluntary restraint, but the result is that we have now reached a point where something such as we now propose must be done for the sake of the country. But the Labour Party cannot do it—oh, dear me, no! Never mind the country, never mind that Labour was always in favour of it before, the Opposition cannot do it tonight.

In spite of the failure of the Downing Street talks it is important to note that many trade union leaders are far too moderate and sensible to satisfy a section of the men they lead, and a section which bitterly attacks trade union negotiators. For instance, the power union negotiators were recently attacked for settling at around 7¾ per cent. The people in this section engage in detailed and long-term planning for subversion. Names have been asked for and I am happy to supply them. There is a gentleman called George Wake, who leads the Communist-controlled power workers. There is Wally Preston, who is something called an International Socialist. I gather that an International Socialist is to the left even of the Communist Party and the Labour Party in this country. He has a perfect right to follow his own bent in his political convictions, but as an AUEW shop steward he uses his political affiliations very much to the country's detriment. [Interruption.]

We talk about trade union leaders and the tiny section in the unions who are very far out to the left—[Interruption.] Far too many in that section are shop stewards. The ordinary trade unionist is a perfectly decent and reasonable chap [Interruption.]

Mr. Deputy Speaker (Mr. E. L. Mallalieu)

Order. If those hon. Members who still wish to speak are to be able to speak, it would be best if we allowed the Member having the Floor to carry on speaking.

Mrs. Knight

Neither the trade union leaders nor the section of whom I have been speaking can get anywhere without the support of the main, moderately-minded body of trade union members. I therefore suggest that one very important step which private enterprise company chiefs could take, which might prove a vital check on the activities of the troublemakers in our factories—

Mr. Buchan

Shoot them.

Mrs. Knight

As I was saying, the ordinary trade unionist is a decent and reasonable chap but he suffers too often from the general delusion, which management often helps to perpetuate, that he is not getting his fair share of the profits made by the company he works for. Most trade unionists recognise that there are people outside their orbit who have no connection with them at all. We might just as well talk about the money earned by pop signers as that earned by members of the Bar, to whom the hon. Member for West Ham, North (Mr. Arthur Lewis) referred.

But our ordinary chap knows that what matters to him is the company for which he works. He thinks that he is not getting a fair share of the profits made by that company because, in almost every case, the company does not say what the profits are. An American management consultant, a Mr. John Jennings, has not only done a good deal of statistical work which proves that point: he has followed the concept of telling all in two companies in America and the result has been dramatic.

The polls show that ordinary Americans believe that workers get only 25 per cent. of the income divided between gross wages and net profit. In fact, employees receive 90.7 per cent. of the income divided between them and net profit and 94.6 per cent. of the income divided between them and dividends.

No such poll has taken place here, but I have found two very interesting sets of statistics from the International Labour Office which show—I will not refer to them other than briefly, because of the time—that of 20 major countries in 1958, the United Kingdom was top of the league as regards the participation of wages and salaries in the national income, with 73 per cent. paid. More recent figures show that we pay out more of our profits than almost any other country.

Why is this such a secret? There should be much more publicity now on profit margins. Possibly it may frighten investors, but publicising these facts might ensure fewer strikes. The ordinary trade unionist is not a fool. He knows that if there is one cake, there is a limit to the amount of cake he can have; and if it goes on increasing and eating into profits, the baker dies and the firm goes out of business, as has happened many times in the last six or seven years in my city of Birmingham. While the investor may be initially frightened off, if the number of strikes were to decline this would encourage him to invest.

The Bill will be judged not only on its success in holding back prices but also on the availability of goods and services at the end of the period and on the trend of production and employment. Too much has been said about prices alone. More than simply prices is at stake here. I wish my right hon. Friend the success he deserves with the Bill. He has had a difficult task in putting it through and bringing it before the House, but for all our sakes he must succeed.

8.55 p.m.

Mr. Ray Carter (Birmingham, Northfield)

If I sound partisan and prejudiced in my few introductory remarks I shall have achieved my object. In March, 1968, I fought a by-election. On that day in March, 1968, there were three other Labour candidates fighting by-elections, in Acton, Meriden and Dudley. During our campaign and the period running up to those elections we were subjected, as candidates, as my party was similarly subjected, to vilification and abuse of a kind which has been completely absent concerning the present Government when introducing legislation similar to that introduced by a Labour Government and for which they were criticised so bitterly and unmercifully by almost everyone now on the Government side of the House, in particular the Prime Minister, and including the hon. Member for Birmingham, Edgbaston (Mrs. Knight).

Mr. William Price (Rugby)

Where is the hon. Lady?

Mrs. Knight

Here.

Mr. Carter

I want briefly to expose the double standards of not only the majority of Conservative hon. Members but the Press, the experts and the commentators. It was very popular baiting in the days of a Labour Government to attack the then Prime Minister and Cabinet Ministers, the whole party, on almost every issue. As an incomes policy became more and more unpopular, so it was criticised on that count, too. There was a gradual move of support towards the then Tory Opposition's claim to be able to solve the problems of inflation without an incomes policy. I am glad that the hon. Member for Edgbaston is still present. I can remind her before she leaves the Chamber that it was in our fair city of Birmingham on 5th June in the election campaign of 1970, that the Leader of the Tory Party, now Prime Minister, repeated what he had said four years earlier about his attitude in particular and the Tory Party's attitude in general towards the question of a freeze. He said then: We believe that compulsion is wrong and we want to move along the path of voluntary action, of consultation, of encouragement for the individual"—

Mrs. Knight

Hear, hear.

Mr. Carter

The right hon. Gentleman continued: to do his best and to get the rewards for doing it. What is more, in the election manifesto, the front page of which was signed by the right hon. Gentleman, it was said that Labour's compulsory wage control was a failure.

Mrs. Knight

Quite right.

Mr. Carter

The manifesto also said: We shall not repeat it. Anyone who has listened to the Prime Minister in his interjections today, who has watched him as I watched him from the Opposition back benches, he sitting and smirking on the Government Front Bench, gaining the support, as he has, of his hon. Friends on the Government back benches, cannot but be thoroughly disturbed, for a variety of reasons.

It is no good day for politics or democracy when a Prime Minister who was responsible for saying in Birmingham what I have just repeated and for making that statement in the election manifesto can continue to evade both what he said and the intent that lay behind it, and now suggest that the policy he is introducing is in strict conformity with all of his past utterances. But he is not alone in all this. All the experts I have mentioned, the commentators and people in the City, people in the background, have similarly performed all kinds of gymnastics in support of the Prime Minister and the Tory Party.

It is no surprise to me that with that kind of political action going on there is so much cynicism and disquiet outside about politics and the role of Government in general. Is it not possible any more in political life for the Prime Minister of the day, when taking a monumental decision like this, to admit that he was wrong? On all the evidence we have before us such as what the Prime Minister said in the past, that is precisely what the Prime Minister should do today. He would probably get much more support in the House and outside if he did so, because it is time that politicians of both parties, the House and Governments started to be honest with the electorate. Many of our problems stem from the fact that the parties, the House and Governments have not been anything like honest enough.

I take my political life back to the days of Suez, when the country was put from that moment onwards on a completely different and changed course. The country was never made aware of what the new course was. We were asked from 1956 onwards to change our economy from one based on a world-wide cheap market to one moving closer and closer towards the highly industrialised modern markets of Europe. We have had to change all our economic life and all our social customs and habits in the space of 15 years. Both political parties have been wedded to the single doctrine of changing Britain's rôle in the world.

My Chief Whip is now asking me to conclude, so I will truncate my speech.

It is high time for at any rate my generation, because perhaps it is too late for the Prime Minister's generation, to be absolutely honest and square with the British public and to tell the public that times are difficult but times may yet get even more difficult. That is probably the biggest danger about the Bill. The implication is that after 90 days inflation will probably have gone away and after 150 days it will certainly have gone away. I do not believe that. I believe that we are in for a far worse time when we are in the Common Market, when we are paying high prices for imported goods, when we are importing expensively, and when we have lost all those cheap raw materials and cheap foods. Then we shall start to pay the price of a change in economic direction.

It is misleading and dangerous for us to pretend that the Bill is a short cut to success. I have no qualms about the Tory Party suffering from it. My one big fear is that it will not be just the Tory Party that will suffer. It will be the House and the whole party political system that we have built up over the last 70 years.

Finally, taking my inspiration from the right hon. Member for Barnet (Mr. Maudling) and my hon. Friend the Member for Salford, West (Mr. Orme), I believe that in 1972 and for the rest of the decade what we must do in Britain and probably in the whole of Western Europe is to work out a new form of social contract, a new form of relationship with people outside Government and with the institutions that have been build up over the past 50 or 60 years.

Until that is done there will be no chance of success for any form of incomes policy, voluntary or statutory. It would not have mattered one jot if at the tripartite talks last week success had been achieved around the table, because things have changed so much in society that the words of trade union leaders, the CBI and the Government do not mean as much now as they did 25 years ago. I know, I think that the House knows, and I think that the Government know that people outside are not prepared to give up the standard of living that they have won over the past 25 years and that they would by themselves have fought to maintain it. Therefore, any agreement that might have been arrived at would not have been worth the paper it was written on.

I hope that the Government learn during the course of the next 150 days that the kind of agreement which they tried to force on the trade unions was not worth the discussions that went on. What we must do in the remaining years of this Government is to work out some new form of social contract which will make an incomes policy realisable, viable and attractive to the country.

9.5 p.m.

Mr. Douglas Houghton (Sowerby)

I am obliged to my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) for his courtesy in giving way to me. I apologise also for the sepulchral tone of my voice. I will, however, do my best.

This is really the end of a three-day debate on the Bill. It has been under discussion ever since the Prime Minister's statement on Monday. I think that the Government have had no better time than they expected to have in the course of this debate. The full implications of the present predicament of the Government will not be lost upon them when they come to see what road they have trodden since they were elected in 1970. This Bill is a symbol of political failure. I doubt whether there is any real disagreement about that in any quarter of the House. It deals with the collapse of the Government's policies.

Monday was a day of humiliation for the Government, and not a very proud day for Britain either. Two years ago the Conservatives came to office full of confidence. They were riding high. They had made the most of Labour's mistakes and difficulties and had persuaded the people that the Tory way would be the better way. There was to be a new style of government. Things were going to be different—no somersaulting, no standing on one's head, no sword-swallowing.

It was going to be resolution, determination, no deviation, straight on to the end of the road. That was the style of government that was promised in 1970. Now, after two years, the Bill marks an attempt to meet lamentable failure.

What has brought this about? Is there one thing more than another, or perhaps more than all others, that accounts for the Government having suffered such a great fall? I think there is. It is the alienation of the workers and their families throughout the land. That really is the root of their failure. In my long life in politics I have never known a Government so disliked and even hated by large sections of the community as the present Government. One has only to move in Labour circles throughout the constituencies, and in the unions, to feel the full impact of this strong feeling of indignation and anger about this Government—a Government who were going to unite the nation. But much has divided it. There is little common ground in politics today. The consensus has been destroyed.

The Government started off in what I would describe as Conservative Party jackboots. The trade unions were to be put in their place. That was the beginning. Then the social benefits, rents and school meals were to be drenched with a lot of means tests, and the Government's philosophy on the social services was to be put into operation very speedily after they came into office, without counting the cost in the morale and attitude of the people.

Two nations have emerged. We are now paying a very high price for the arrogant blunders of the first 18 months of Tory rule. They learned nothing from Labour's troubled involvements in industrial relations. Those involvements should have been a lesson to them if nothing, else was. But no, the Tories knew better. They knew better than Donovan and they knew it all. I recall the legend over the entrance to the headquarters gymnasium at Aldershot which is relevant to the present situation. It says: Be not wise in your own conceit there is more hope of a fool. The Government should take note of that legend.

I shall not dwell on what has happened since. What is relevant to the Second Reading of the Bill is that the Govern- ment by their policies over a wide front of social affairs hacked away at the very foundations of successful economic management. They thought that they could rule without consent of the people or the workers and their families. Within two years the Government needed to curry the co-operation of the TUC and had to ask for it in the middle of the chaos produced by the Industrial Relations Act.

No one can blame the TUC for the breakdown of the talks after 40 hours. Large numbers of people in the trade union movement and in the Labour Party felt that the TUC should never have supped with the devil, however long the spoon. The talks broke down because the Government had so fouled the field of negotiation with objectionable policies and legislation that, failing the reversal of much of what the Government had done, the TUC would have been repudiated by many of its members if it had reached agreement with the Government on restraint in pay increases. That is why the Government's final proposals fell short of what the TUC was willing to present to its members.

The Trades Union Congress went a long way in the negotiations if what we heard was true. It appears to have been willing at one stage to proceed with the talks on the basis that the Government intended to have either a voluntary system supported by statutory sanctions or a statutory policy right across the board. Although the TUC did not make a direct choice between the two, I understand that it proceeded with the negotiations on the basis that those propositions were before it. It was an earnest of the TUC's desire to explore the possibilities of agreement fully that it went as far as it did.

It appears, however, that some of the main planks in the TUC case were not negotiable. They were negotiable only in dealing with their effects. They were not negotiable in dealing with them as such and that is why the TUC found itself in an impossible position. Such things as the upward movement of rents, taxation reliefs for the better-off and pension increases across the board were the things to which the TUC attached great importance.

The next Labour Government will have a good deal of cleaning-up to do.

We have given a pledge to the TUC that we shall sweep away the obstacles to co-operation put there by the Tory Government. When we have done that I am sure we can get a sensible and lasting accord with the trade unions, which is what the Government lack because they deliberately chose to attack them. We in the Labour Party must work to formulate our policies in line with the aims and hopes of the trade unions for their members, for other workers and for society as a whole. The right hon. Member for Barnet (Mr. Maudling) said that the Government must get the answer right this time. To get the answer right they must start right, and that is what he next Labour Government will do. If we can achieve that, we shall ensure the sustained confidence and support of the trade unions, and that is the best kind of prices and incomes policy of all. It is the one which we are now working hard to get.

But, by contrast, the Government, like a mule in blinkers, have landed in the ditch and now they are asking Parliament to bale them out. They have no one to blame but themselves. The management of the economy is the Government's business. In a free enterprise system they must reckon with market forces and the impetus towards the maximisation of profits, gains and rewards. This is where we come very near to the basic weakness of the Government's case. My hon. Friends the Members for Salford, West (Mr. Orme) and Edmonton (Mr. Albu) referred to the mainspring of all capitalist activity and its consequences if there were not considerable disciplines and changes in the structure of society to civilise the capitalist system. Left to itself and to regulate itself, free enterprise can play havoc with social justice and contentment as well as with economic advance.

We all surely know our industrial and economic history by now: unbridled capitalism has no place in a civilised society today, and hon. Members opposite must accept that. It needs Governments to make it work. It needs guidance, regulation, control, monetary policy, taxation policy and social policy. One of my constant remarks during the period of the Labour Government was that no Government of any political complexion previously had paid so much money to make British capitalism work. Controls are essential, but the indispensable condi- tion of a well-managed economy is cooperation not only of the people at large but with other centres of economic and industrial power.

The Government were indifferent to cooperation in the early part of their rule. They did not care about it until they needed it badly, and then they became almost suppliants at Congress House to seek the willingness of the TUC to discuss inflation. The Government failed in some of the elementary lessons of their own philosophy, and hence the Bill.

We on these benches cannot let the Bill go unchallenged. To acquiesce would be to accept the Government's explanation of the breakdown of the talks, which places a responsibility on the TUC which it does not deserve and which is against the evidence of facts and circumstances of what happened last week. Moreover, the discussions could have been started much earlier without any atmosphere of crisis. They were not started earlier because the Government, by their action towards the unions, had made it impossible to get their co-operation earlier and they had to leave it until some of the anger and indignation of the trade union movement at the Industrial Relations Act began to simmer down. They made it impossible to get the co-operation of the trade unions when much earlier meetings with them would have been more fruitful.

As it was, the talks took place in an atmosphere of crisis. They were dramatised. News bulletins were broken into to give a news flash that the talks were still going on. One would have thought that it was a matter of peace and war. Why was it necessary for the Government and the two other parties to sit up half the night to discuss inflation which everybody had seen coming for the prevous two years? This is a condemnation of the Government's approach to this matter.

Because the Government estranged the unions when they needed them most, they made a belated start on trying to find the remedy, and we cannot support a Measure conceived in folly and born in desperation, because the truth is that the Government do not know what else to do. The Government are desperate and the Bill is a sign of desperation. Nor can we form with the Tory Government a coalition of failure—[Laughter.] Of course we cannot join in a coalition of failure. No self-respecting political party would be seen in coalition with the present Government on anything at present, because their failures stretch far beyond their economic management.

We have heard some comments in this debate about what the Bill seeks to do. What is certain is that it will stop the agricultural workers in their tracks; badly needed increases of pay will be postponed. The lower-paid workers, who were said to lie heavily on the conscience of the Government throughout the talks, and for whom special and novel proposals were made, are now to be denied these increases for another 90 days. Those increases are not now to be paid. Apparently, the lower-paid workers were only to be relieved of their poverty if the TUC could agree to a voluntary package deal of wage restraint. Failure to reach agreement with the TUC on that matter is to be followed by deprivation of the very people whom the talks were intended primarily to help. This is a disgraceful consequence of the talks which broke down last week.

I wonder how many millions in wages will be lost to how many millions of workers during this period of freeze. Large amounts of wages will have gone for ever, and wages council awards will be suspended for the remainder of the freeze. How many grievances, comparative injustices and anomalies will have to fester throughout the whole body politic, not only terms of wages, until the time is up and something else takes it place or the explosion follows?

It can be seen from the remarks of Mr. Jack Jones at a luncheon today, which was "on the record". that the trade unions … will campaign against the injustices of the Bill. They will multiply as people examine the full consequences of what will happen to them. Mr Jones also said, The trade unions will press the claims of the pensioners and for a thaw for the lower paid workers. All this has come to the Government as a result of the Bill.

What administrative nightmares this will create! The Bill's provisions will be littered with loopholes and riddled with petty evasion and avoidance of one kind or another. Moreover, who will reap the harvest in the appreciation of assets and bonus shares which will follow? My hon. Friend the Member for Renfrew, West (Mr. Buchan) referred to this matter, and the truth is that there is no fairness in this Bill and that most of it is rough and ready injustice.

We must face a few fundamental truths about the British economy. [HON. MEMBERS: "Hear, hear."] I am glad to hear that response, because I hope that what I am about to say will be equally warmly received. How can the incomes problem be solved here or anywhere else without a radical change in industrial ownership? It is not work but ownership that pays off in a modern industrial state.

Mr. Hooson

I agree with the hon. Gentleman, but can he say why the Labour Government did not do this?

Mr. Houghton

When a Labour Government have been as long in office as Tory Governments they will do a great many more things [Interruption.] It is all very well for right hon. and hon. Gentlemen opposite to scoff, but they know the limitations of the parliamentary process, whatever Government are in office. We know that all Governments have positive queues of changes that they wish to make for which there is not time or opportunity or where circumstances are not available to enable them to carry out all of their programmes. After all, why are the Tories at present engaged in reversing some of the things that they said they would do?

What is very much more important is what is to happen in phase 2. That is really what the Government have to tell us very soon. If there is to be a resumption of talks with the TUC—I am not sure that that will prove possible in the near future—and it comes to a further package deal, it seems plain that the trade unions will not be able to negotiate on wages and prices in isolation. They will want to bring in, as they did before, the whole range of social and fiscal policies, and that will take everyone back to No. 10 Downing Street.

When the talks were broken off, time began to run against the Government, and time is already running out. The Government should have worked out their long-term programme before now.

We on these benches hate inflation just as much as anyone else. It is the poor, the lower-paid and those unable to defend themselves who are the victims of inflation. There are many right hon. and hon. Members opposite who have their own hedge against inflation. There are a lot of people who have a hedge against inflation. But there are millions who have no hedge against inflation, and it is they whom we must protect.

We want inflation halted. But the Government have chosen their way of tackling the problem and, therefore, it is their responsibility. Although we dissociate ourselves from what they have done and the consequences of their culpable failure, we are not dividing the House on the pressing need to combat inflation by more effective and fairer means. However, we must decline to give existing Government policies our endorsement, so we shall vote against the Bill. The counter-inflationaries opposite have forfeited the confidence of the House and the nation. It is on that that we shall divide the House.

9.27 p.m.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)

As the right hon. Member for Sowerby (Mr. Houghton) pointed out, the debate has ranged widely beyond the provisions of the Bill. It has been a continuation of the debate that the House concluded yesterday, and various hon. Members on both sides have attempted to discuss and to probe the causes of the present situation.

To hear the right hon. Member for Sowerby discussing it with the bland innocence that he always brings to these occasions makes one almost forget the extent to which he was a member of a Government which grappled with this kind of problem and failed at the end of the day to secure the agreement which he now enjoins the present Government to secure. It also makes one almost inclined to forget the circumstances in which the Labour Government left office and their responsibility for the inflationary conditions which then afflicted the British economy.

Understandably a number of my hon. Friends, including my hon. Friends the Members for South Angus (Mr. BruceGardyne) and for Aylesbury (Mr. Raison), have discussed the longer future and that which is to come in the second phase of this exercise. However, it is important that the House should put in perspective the exact limits of the important undertaking upon which we are engaged. Those limits are set first by the objectives which have been agreed as the foundation of the talks which have been taking place over the last three or four months. These are objectives of faster growth in national output and real incomes, an improvement in the relative position of the lower-paid and moderation in the rate of cost and price inflation.

Those are objectives which everyone is determined to pursue. They were pursued in the talks, and to the deep regret of my right hon. Friend the Prime Minister, as he expressed it on Monday, and many others the talks broke down. In those circumstances there can be no doubt that it is for the Government to take the action needed to secure the objectives upon which agreement had been reached. To ensure that the fulfilment of those objectives is not prejudiced in the meantime, the Bill is designed to secure an immediate standstill, with a limited number of exceptions across the board, in prices, rents, dividends and pay. It is designed to provide a breathing space for the definition of a rational approach to the problem of inflation, which we are all agreed must be tackled. No one has criticised these objectives at which we are now aiming.

The discussion has tended to go beyond the limits of the Bill, dealing with how, in the long term, we must hope to achieve these objectives. There has been no dissent from the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), the hon. Member for Edmonton (Mr. Albu) or the hon. and learned Member for Montgomery (Mr. Hooson) about the absolute necessity to introduce policies which will combat inflation in the interests of the nation as a whole. Some of my hon. Friends, including my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) have been privileged to speak from a position in which they have been consistent in their pursuit of that objective.

The whole House, if I may say so, has been privileged to hear the speech of my right hon. Friend the Member for Barnet (Mr. Maudling). He has lived longer and more closely with this problem than most of us. His speech was as lucid and as distinguished as it was characteristic, and he pointed out the extent to which we often fail to appreciate the degree to which the living standards of our people, in the European context or a wider context, have under successive Governments been falling behind. He pointed out, and of this there can be no doubt, that this time we must get it right. He had something to say too—

Mr. Arthur Lewis

Where has he been all night?

Sir G. Howe

—on the argument dealt with by a number of hon. Members, namely the extent to which monetary policy can or should be regarded as playing a rôle in the longer term. My right hon. Friend the Chancellor of the Exchequer dealt with that in the course of what he had to say yesterday and returned to the subject again today.

One thing which my right hon. Friend the Chancellor emphasised yesterday and on which a number of my hon. Friends laid stress today was this: There are those who seem to argue that a more restrictive monetary policy should be the principal means of controlling inflation. It is all a matter of degree. Monetary policy has a major rôle to play in the battle against inflation. Sometimes people talk as though it should be the principal means of controlling inflation, and I ask them whether they are prepared to accept the consequences—the consequences in terms of demand that would be cut back, the consequences of terms of output that would be forgone, the consequences in terms of lower living standards, the consequences in terms of the men and women who would be out of work; because these in fact would be the results. Those were the points pressed by my right hon. Friend—

Mr. Arthur Lewis

Where is he?

Sir G. Howe

—when he said quite clearly that we cannot set about dealing with cost inflation by a contraction of the money supply. It is some comfort to find the same view expounded in the closing pages of the book by Professor Hayek "A Tiger by the Tail." There is a wide degree of opinion which makes the same point. Against that background my right hon. Friend made his position clear yesterday and today when he referred to the progress that had already been made in restraining the growth of money supply and said: I shall not hesitate to take further action if and when the position requires it."—[OFFICIAL REPORT, 7th November. 1972; Vol. 845, c. 848–50.] Again for the benefit of those who were not in the House at the beginning of today's debate, my right hon. Friend the Chancellor of the Exchequer came back to the same point when he said "I can assure the House that the firm action that we have taken to curb cost inflation will be matched by equally firm action to contain the money supply without curtailing economic growth."

Bearing in mind the limited, specific, temporary purpose of the Bill, its provisions are well designed for their purpose. They are tough, certainly, but in the context of these temporary measures the need for such an approach is well understood; and they are not only tough, but they are fair, and as fair as they can be made.

Perhaps I may begin by dealing with prices. The way in which the standstill on prices will be handled—

Mr. Neil Marten (Banbury)

I am grateful to my right hon. and learned Friend for giving way. As he knows, many of us in the House attach the highest importance to honouring election pledges. Would he, therefore, give an assurance that if the Government get the Bill, after Stage 1 they will honour their election pledge about utterly rejecting compulsory wage control?

Sir G. Howe

My right hon. Friend the Prime Minister made the position clear on that on Monday. He said then: We have come to the conclusion that we have no alternative but to bring in statutory measures to secure the agreed objectives of economic management in the light of the proposals discussed in the tripartite talks. He also said: I therefore hope that this set-back will not be allowed to stand in the way of our resuming discussions between the three parties in due course on the objectives and problems of economic management. He made it plain that that was the objective of the second phase, after the first phase had been put into effect as quickly as possible.

Mr. Harold Wilson

In his broadcast on Monday night the Prime Minister—wherever he may be now—referred to further legislation. Is it the Government's firm intention to follow this standstill Measure, as the right hon. Gentleman called it, by further legislation, or is the Prime Minister still hoping for a voluntary agreement which would obviate the necessity for further legislation when the Bill comes to an end, if it is passed by the House?

Sir G. Howe

I repeat what I said to my hon. Friend the Member for Banbury (Mr. Marten). The Prime Minister made it perfectly clear that he was anxious and willing to renew and continue the discussions between the three parties in due course, but he also said The responsibility for action now rests with the Government. We have come to the conclusion that we have no alternative but to bring in statutory measures to secure the agreed objectives of economic management in the light of the proposals discussed in the tripartite talks. My hon. Friend went on to say: The measures will take time to work out in detail and to implement. In order that the fulfilment of the objectives should not be prejudiced in the meantime, the Government propose to introduce tomorrow an interim Bill. The answer to the right hon. Gentleman's question is as I have read it. If the right hon. Gentleman has not understood it after I have read it out, I am sorry.

Mr. Harold Wilson

I am grateful to the right hon. Gentleman for giving way. I was interrupted six times by the Prime Minister, who does not even attend this debate. At the end of this period will there be legislation in any case or will the Prime Minister be prepared to have a voluntary agreement if such an agreement can be reached? The quotation did not answer my question. Will the Prime Minister accept a voluntary agreement if he can get one, or must it be legislation?

Sir G. Howe

I repeat what I have said. My right hon. Friend the Prime Minister made it perfectly clear that he was anxious to resume discussions between the three parties. But in the context of the passage which I have just read, and I read it again—[Interruption.] Almost everybody else has had no difficulty in understanding it but I will read it again: We have come to the conclusion that we have no alternative but to bring in statutory measures …".—[OFFICIAL REPORT, 6th November, 1972; Vol. 845, c. 626–7.] It is in the context of that statement that the Prime Minister went on to explain in the next paragraph the need for the introduction of an interim Bill. The right hon. Gentleman has heard the Prime Minister say it and he has heard me re-expound it. I have nothing to add to that perfectly clear statement.

Sir Harmar Nicholls (Peterborough) rose—

Sir G. Howe

As regards prices—[HON. MEMBERS: "Give way."] My hon. Friend knows that I am normally courteous in giving way both to him and to other hon. Members, but I must get on.

The general principle is that prices are to he held at their pre-6th November level. Retailers are expected to do everything they possibly can to avoid any increases in prices. In particular, retailers should not increase their cash margin in money terms on the item in question. Enterprises which are confronted with either rising import costs or rises in domestic costs will need to obtain consent or run the risk of having price increases reversed by notice or order under the legislation. Any proposals or applications which are made will be strictly scrutinised. Agreement will not normally be given except where increased costs cannot be absorbed by increased productivity or a temporary reduction in profit margin.

Mr. Heffer rose—

Mr. Buchan rose—

Sir G. Howe

The choice overwhelms me. Of course the enterprises which have already subjected themselves to 15 months of price restraint have problems. Manufacturers likewise will be expected to do everything they possibly can to absorb cost increases. If price rises occur which cannot be justified, manufacturers may be required by notice or order to reduce prices.

Mr. Heffer rose—

Sir G. Howe

Retailers may similarly be required to reduce their prices if they increase their cash margins.

Mr. Heffer

As the right hon. and learned Gentleman explained earlier, the agricultural workers will be caught by the freeze. Can the Government give an assurance that during the freeze the prices of British farm products—I am not talking about products coming in—will remain stable and not increase, since the agricultural workers' wages are not going up during this period?

Sir G. Howe

The hon. Gentleman knows perfectly well that products which are subject to market variations in prices under these proposals, and in exactly the same way as the proposals produced in 1966, have to be dealt with differently. Products which do not require to be processed—

Mr. Buchan rose—

Sir G. Howe

The position is precisely the same in relation to prices of that kind. The prices for fresh food, fruit and vegetables are subject to fluctuations arising from external or seasonal causes. They are dealt with in the White Paper in exactly the same way as they were dealt with in paragraph 4 of the 1966 White Paper, which expressly made plain that commodities, where price changes arose from changes in supply for seasonal or other reasons, had to be dealt with differently. The only difference between the last Government's White Paper and our own is that theirs had to make an additional qualification and say that they could not guarantee the consumer against price increases which are due to action by the Government such as increased taxation There is no question of any necessity for that kind of provision in the context of our proposals.

Mr. Thorpe

The right hon. and learned Gentleman knows our position on the present Bill and the position which we took in relation to the Labour Government's policy. Since he has compared the two White Papers, could he give a little more indication of the Government's thinking? Did they Tory Opposition oppose the Labour Government's policies because they did not like the detail, or on principle; and have the Government delayed in taking this action for two and a half years because they could not work out the detail or because they did not like the principle, or both?

Sir G. Howe

No, the right hon. Gentleman has not made quite so penetrating a point as he often makes. It has been made perfectly plain by my right hon. Friends both in the last Parliament and in this that voluntary agreement is far to be preferred as a way of approaching this kind of problem. It is for precisely that reason that the whole country has supported and hoped for success in the long discussions which my right hon. Friends have undertaken over the past three and a half months. Plainly that is the way in which, if it were at all possible, the Government would have preferred to solve the problem. It is only in the circumstances which arose, which were described by my right hon. Friend, that we have taken action, presenting this Bill and the temporary provisions. [Interruption.] I shall not be drawn into dealing yet again with the question raised by the Leader of the Opposition because he has had his answer a great many times already. However, the right hon. Gentleman put certain other questions and I turn to them now.

The Leader of the Opposition asked about the prices of certain commodities—oil prices, wood pulp prices and the prices of certain other imported products. The OPEC countries have agreed to increase prices of crude oil, and it is true that some of the oil is refined in the United Kingdom. The standstill applies to oil refineries as it does to other manufacturing processes. The oil companies also, as set out in paragraph 5 of the White Paper, would have to make out a case for a price increase in the same way as other manufacturers would, and they would be subject to precisely the same rigorous scrutiny. The same position arises in relation to the price of imported wood pulp. The same requirements would be imposed upon paper-makers as upon other manufacturers to absorb increases of costs to the limit possible, since it must be clear that the standstill applies to price increases in the terms defined in paragraph 5 and it applies even if price increases were announced before 6th November.

The policy on these matters will be strictly enforced, and the discretion set out in paragraph 5 will be exercised only in accordance with the strict terms there defined.

I was asked also about iron and steel prices. The Leader of the Opposition referred to price changes which are due to follow on our moving to the ECSC basing point system. The standstill applies to iron and steel prices, and the British Steel Corporation is aware of this. Obviously we shall be ready to discuss with the Community any difficulties arising from the standstill policy, but the Community countries are themselves faced with the problem of inflation and, as the House knows, they have recently taken certain decisions of an anti-inflationary nature and there is no reason to suppose that partners will not show understanding of our situation.

Mr. Powell

At this point, perhaps my right hon. and learned Friend could make clear whether the paragraph 4 of the Schedule means that the Bill overrides the provision in the European Communities Bill. Does this for the time being neutralise EEC law as part of the law of this country or not?

Sir G. Howe

I know that my right hon. Friend put that question to the Chancellor of the Exchequer. The question cannot be posed in such simple terms —[Laughter.]—because, in fact, the answer depends upon a much wider range of facts than the facts to which the question is being applied and than can be embraced in answer to a question put in that form. [Interruption.] I have explained that the question cannot be answered in that way; it depends on the way in which the question would arise.

I turn to deal with the problem of food prices, about which a number of hon. Members have asked questions. So far as food prices are concerned, as in North America, raw agricultural products were excluded, and are excluded. I have already explained that manufactured foodstuffs will be dealt with in the same way as other manufactured goods. Manufacturers, in other words, are expected to absorb cost increases wherever possible, and prices can be raised only after consultation with the Ministry of Agriculture, Fisheries and Food. Unprocessed agricultural and seafood products give rise to different questions of definition, and the Minister of Agriculture will be prepared to discuss those questions with the trade organisations concerned.

The right hon. Gentleman the Leader of the Opposition made some suggestion that rises in food prices in recent months and prospectively have been due to the Government's support for agriculture, or to import levies. He also suggested that there was a threat of food price increases because of our accession to the Common Market and the introduction of CAP on 1st January. The fact of the matter is that levy schemes are having virtually no effect on prices level at the present time. High prices of beef are the result of a world beef shortage. No levies have ever been charged on beef and veal. The prospects of levies on cereals are nil. The recent high prices for imported grains reflect particularly the shortages caused by the large purchase by eastern bloc countries. The International Wheat Council has estimated that at the end of this season world stocks will be the lowest for 20 years.

Of course, the effect and success of the policy will depend upon the extent to which it is supported by voluntary co-operation and by understanding, and it is important to notice the extent to which agreement has already been arrived at between the main trade associations covering manufacturing and distribution of food products, and the trades represented at the meeting with the Minister of Agriculture on the 6th of this month expressed their willingness to co-operate fully in that aspect of the matter. On the same day representatives of the Retail Consortium gave an assurance to my Department that they would urge their members to co-operate fully with the policy in the recognition that it is necessary to secure its objective.

As the House will know, the prices unit which has been established in the Department of Trade and Industry has been operating effectively since yesterday morning, and it has dealt already, in the two days it has been working, with 800 inquiries yesterday and, with an enlarged office, the same kind of number of inquiries today. Regional offices of the Department of Trade and Industry have also been handling inquiries. It is important to understand that the main purpose of the unit is to provide a service to industry, particularly to small firms and retailers, by explaining how the standstill will affect them. Firms seeking to apply price increases are told what to do, and they are told quite plainly that if the increases are above the pre-6th November level they risk the requirement to reduce them when the Bill comes into force. The prices unit is also assisting the general public by explaining the implications of the Bill and by giving information about the way in which price changes are intended to operate, if at all.

Again, the Department of my right hon. Friend the Minister of Agriculture, Fisheries and Food has enlarged its food price unit in order to deal with inquiries from consumers, and has been dealing with a steady flow of inquirers seeking clarification of the Government's proposals and with applications for special promotions or particular commodities.

The right hon. Gentleman asked about the relationship between dividends and deferred dividends in the context of wages of agricultural workers, a subject raised by a number of hon. Members, and of other groups of low-paid workers. It is perfectly plain from what my right hon. Friend the Chancellor of the Exchequer said that the agricultural workers will have the implementation of their agreement deferred to the end of the standstill period. [HON. MEMBERS: "Back dated?"] My right hon. Friend made it equally plain that the award comes into effect at the expiry of the transitional period.

As the right hon. Gentleman should know better than anyone else, whenever one introduces a change or a standstill of this kind there are bound to be hard cases wherever the standstill starts, and since most groups of workers have links with other groups of workers some links are bound to be temporarily broken. Various examples of this, too, have been given in the debate.

This is no more than a 90-day standstill, and if there is to be a standstill at all, and that is the intention of the House, we have to defer some increases. The right hon. Gentleman the Member for Sowerby asked by how much wages had been deferred as a result, but it is relevant also to ask by how much more wages would be depreciated and lost and cast away if our prosperity were to continue to decline, and if inflation were to be allowed to roar ahead unchecked.

The right hon. Gentleman asked how this was to be reconciled with the commitment to look after lower-paid workers in the general strategy. It is to be reconciled because the two operations are distinct from each other. The first is the imposition of a standstill period so as not to lose the opportunity of securing all the longer-term benefits. The longer-term benefits will remain exactly the same, and assistance for the lower-paid workers and, indeed, for the pensioners, remains one of the overriding objectives of the longer-term exercise.

The application of this stage of the policy will be greatly helped by the recognition by public opinion as a whole, and by the almost overwhelming support of public opinion and of the Press. We are far better able to command that support than was the right hon. Gentleman's Government because the operation is being undertaken in a totally different climate. Instead of being undertaken in an atmosphere of stagnation and rising taxation, it is being undertaken at a time when all the indicators for progress in the economy point in the right direction. [Interruption.] All the recent indicators confirm that we are on target for a 5 per cent. growth rate for the first half of next year.

My right hon. Friend pointed out the continuing growth of consumer expenditure. Surveys undertaken by the CBI show a high and rising degree of business optimism. Output is rising, and there are new orders. A most encouraging feature is the strong rise in industrial production and its effect on the labour market. We must hope in the end to be able to produce a long-term solution in accordance with long-term objectives. The whole nation knows that we cannot afford to delay such an application of the short-term standstill which is contained in this Bill, and which is essential to the health of the nation.

Question put, That the Amendment be made:—

The House divided: Ayes 271, Noes 309.

Division No. 5.]	AYES	[10.0 p.m.
Abse, Leo	Evans, Fred	Mabon, Dr. J. Dickson
Albu, Austen	Ewing, Harry	McBride, Neil
Allaun, Frank (Salford, E.)	Faulds, Andrew	McCartney, Hugh
Allen, Scholefield	Fernyhough, Rt. Hn. E.	McElhone, Frank
Archer, Peter (Rowley Regis)	Fisher,Mrs.Doris(B'ham,Ladywood)	McGuire, Michael
Ashley, Jack	Fitch. Alan (Wigan)	Mackenzie, Gregor
Ashton, Joe	Fletcher, Raymond (Ilkeston)	Mackle, John
Atkinson, Norman	Fletcher, Ted (Darlington)	Mackintosh, John P.
Bagier Gordon A T.	Foley, Maurice	Maclennan, Robert
Barnes, Michael	Foot, Michael	McMillan, Tom (Glasgow, C.)
Barnett, Guy (Greenwich)	Ford, Ben	McNamara, J. Kevin
Barnett, Joel (Heywood and Royton)	Forrester, John	Mallalieu, J. P. W. (Huddersfield, E.)
Baxter William	Fraser, John (Norwood)	Marks, Kenneth
Beaney, Alan	Freeson, Reginald	Marsden, F.
Benn, Rt. Hn. Anthony Wedgwood	Galpern, Sir Myer	Marshall, Dr. Edmund
Bennett, James (Glasgow, Bridgeton)	Garrett, W. E.	Mason, Rt. Hn. Roy
Bidwell, Sydney	Gilbert, Dr. John	Mayhew, Christopher
Bishop E S	Ginsburg, David (Dewsbury)	Meacher, Michael
Blenkinsop Arthur	Golding, John	Mellish, Rt. Hn. Robert
Boardman, H. (Leigh)	Gourlay, Harry	Mendelson, John
Booth Albert	Grant, George (Morpeth)	Mikardo, Ian
Bottomley Rt Hn Arthur	Grant, John D. (Islington, E.)	Millan, Bruce
Boyden, James (Bishop Auckland)	Griffiths, Eddie (Brightside)	Miller, Dr, M. S.
Bradley, Tom	Griffiths, will (Exchange)	Milne, Edward
Broughton Sir Alfred	Hamilton, William (Fife, W.)	Mitchell, R. C. (S'hampton, Itchen)
Brown, RobertC.(N'c'tle-u-Tyne, W.)	Hamling, William	Morgan, Elystan (Cardiganshire)
Brown, Hugh D. (G'gow Proven)	Hannan, William (G'gow, Maryhill)	Morris, Alfred (Wythenshawe)
Brown, Ronald (shoreditch & F'bury)	Hardy, Peter	Morris, Charles R. (Openshaw)
Buchan, Norman	Harrison, Walter (Wakefield)	Morris, Rt. Hn. John (Aberavon)
Buchanan, Richard (G'gow, Sp'burn)	Hart, Rt. Hn. Judith	Moyle, Roland
	Hattersley, Roy	Mulley, Rt. Hn. Frederick
Callaghan, Rt. Hn. James	Healey, Rt. Hn. Denis	Murray, Ronald King
Campbell, I. (Dunbartonshire, W.)	Heffer, Eric S.	Oakes, Gordon
Cant, R. B.	Hilton, W. S.	Ogden, Eric
Carmichael, Neil	Horam, John	O'Halloran, Michael
Carter, Ray (Birmingh'm, Northfield)	Houghton, Rt. Hn. Douglas	O'Malley, Brian
Carter-Jones, Lewis (Eccles)	Huckfield, Leslie	Oram Bert
Castle, Rt. Hn. Barbara	Hughes, Rt. Hn. Cledwyn (Anglesey)	Orbach, Maurice
Clark, David (Colne Valley)	Hughes, Mark (Durham)	Orme, Stanley
Cocks, Michael (Bristol, S.)	Hughes, Robert (Aberdeen, N.)	Oswald, Thomas
Cohen, Stanley	Hughes, Roy (Newport)	Owen, Dr. David (Plymouth, Sutton)
Coleman, Donald	Hunter, Adam	Padley, Walter
Concannon, J. D.	Irvine, Rt. Hn. Sir Arthur (Edge Hill)	Paget R. T.
Conlan, Bernard	Janner, Greville	Palmer, Arthur
Corbet, Mrs. Freda	Jay, Rt. Hn. Douglas	Pannell, Rt. Hn. Charles
Cox, Thomas (Wandsworth, C.)	Jeger, Mrs. Lena	Parker, John (Dagenham)
Crawshaw, Richard	Jenkins, Hugh (Putney)	Parry, Robert (Liverpool, Exchange)
Cronin, John	Jenkins, Rt. Hn. Roy (Stechford)	Pavitt, Laurie
Crosland, Rt. Hn. Anthony	John, Brynmor	Peart, Rt. Hn. Fred
Crossman, Rt. Hn. Richard	Johnson, Carol (Lewisham, S.)	Pendry, Tom
Cunningham, G. (Islington, S.W.)	Johnson, James (K'ston-on-Hull, W.)	Perry, Ernest G.
Cunningham, Dr. J. A. (Whitehaven)	Johnson, Walter (Derby, S.)	Prentice, Rt. Hn. Reg.
Dalyell, Tam	Jones, Barry (Flint, E.)	Prescott, John
Darling, Rt. Hn. George	Jones, Dan (Burnley)	Price, J. T. (Westhoughton)
Davidson, Arthur	Jones, Rt. Hn. Sir Elwyn(W.Ham,S.)	price, William (Rugby)
Davies, Denzil (Llanelly)	Jones, Gwynoro (Carmarthen)	Probert, Arthur
Davies, G. Elfed (Rhondda, E.)	Jones, T. Alec (Rhondda, W.)	Reed, D. (Sedgefield)
Davies, Ifor (Gower)	Kaufman, Gerald	Rees, Merlyn (Leeds, S.)
Davis, Clinton (Hackney, C.)	Kelley, Richard	Rhodes, Geoffrey
Davis, Terry (Bromsgrove)	Kerr, Russell	Richard, Ivor
Deakins, Eric	Kinnock, Neil	Roberts, Albert (Normanton)
do Freltas, Rt. Hn. Sir Geoffrey	Lambie, David	Roberts, Rt. Hn. Goronwy(Caernarvon)
Delargy, Hugh	Lamborn, Harry	Robertson, John (Paisley)
Dell, Rt. Hn. Edmund	Lamond, James	Roderick, Caerwyn E.(Br'c'n&R'dnor)
Dempsey, James	Latham, Arthur	Rodgers, William (Stockton-on-Tees)
Doig, Peter	Lawson, George	Rose, Paul B.
Dormand, J. D.	Leadbitter, Ted	Ross, Rt. Hn. William (Kilmarnock)
Douglas, Dick (Stirlingshire, E.)	Lee, Rt. Hn. Frederick	Rowlands, Ted
Douglas-Mann, Bruce	Leonard, Dick	Sandelson, Neville
Duffy, A. E. P.	Lestor, Miss Joan	Sheldon, Robert (Ashton-under-Lyne)
Dunn, James A.	Lever, Rt. Hn. Harold	Shore, Rt. Hn. Peter (Stepney)
Dunnett, Jack	Lewis, Arthur (W. Ham, N.)	Short, Mrs. Renée (W'hampton, N.E.)
Eadie, Alex	Lewis, Ron (Carlisle)	Silkin, Rt. Hn. John (Deptford)
Edelman, Maurice	Lipton, Marcus	Silkin, Hn. S. C. (Dulwich)
Edwards, Robert (Bilston)	Lomas, Kenneth	Sillars, James
Edwards, William (Merioneth)	Loughlin, Charles	Silverman, Julius
Ellis, Tom	Lyon, Alexander W. (York)	Skinner, Dennis
English, Michael	Lyons, Edward (Bradford, E.)	Smith, John (Lanarkshire, N.
Spearing, Nigel	Tinn, James	Whitehead, Philip
Spriggs, Leslie	Torney, Tom	Whitlock, William
Stallard, A. W.	Tuck, Raphael	Willey, Rt. Hn. Frederick
Stewart, Donald (Western Isles)	Urwin, T. W.	Williams, Alan (Swansea, W.)
Stewart, Rt. Hn. Michael (Fulham)	Varley, Eric G.	Williams, Mrs. Shirley (Hitchin)
Stoddart, David (Swindon)	Wainwright, Edwin	Williams, W. T. (Warrington)
Stonehouse, Rt. Hn. John	Walden, Brian (B'm'ham, All Saints)	Wilson, Alexander (Hamilton)
Strang, Gavin	Walker, Harold (Doncaster)	Wilson, Rt. Hn. Harold (Huyton)
Strauss, Rt. Hn. G. R.	Wallace, George	Wilson, William (Coventry, S.)
Summerskill, Hn. Dr. Shirley	Watkins, David	Woof, Robert
Swain, Thomas	Weitzman, David
Thomas, Rt. Hn. George (Cardiff, W.)	Wellbeloved, James	TELLERS FOR THE AYES
Thomas, Jeffrey (Abertillery)	Wells, William (Walsall, N.)	Mr Joseph Harper and
Thomson, Rt. Hn. G. (Dundee, E.)	White, James (Glasgow, Pollok)	Mr. James Hamilton.
NOES
Adley, Robert	Dixon, Piers	Howe, Rt. Hn. Sir Geoffrey
Alison, Michael (Barkston Ash)	Dodds-Parker, Douglas	Howell, David (Guildford)
Allason, James (Hemel Hempstead)	Douglas-Home, Rt. Hn. Sir Alec	Howell, Ralph (Norfolk, N.)
Amery, Rt. Hn. Julian	Drayson, G. B.	Hunt, John
Archer, Jeffrey (Louth)	du Cann, Rt. Hn. Edward	Hutchison, Michael Clark
Astor, John	Dykes, Hugh	Iremonger, T. L.
Atkins, Humphrey	Eden, Rt. Hn. Sir John	Irvine, Bryant Godman (Rye)
Awdry, Daniel	Edwards, Nicholas (Pembroke)	James, David
Baker, Kenneth (St. Marylebone)	Elliot, Capt. Walter (Carshalton)	Jenkin, Patrick (Woodford)
Baker W. H. K. (Banff)	Elliott, R. W. (N'c'tle-upon-Tyne,N.)	Jennings, J. C. (Burton)
Balniel, Rt. Hn. Lord	Emery, Peter	Jessel, Toby
Barber, Rt. Hn. Anthony	Eyre, Reginald	Johnson Smith, G. (E. Grinstead)
Batsford, Brian	Farr, John	Johnston, Russell (Inverness)
Beamish, Col. Sir Tufton	Fell, Anthony	Jones, Arthur (Northants, s.)
Bell, Ronald	Fenner, Mrs. Peggy	Jopling, Michael
Bennett, Sir Frederic (Torquay)	Finsberg, Geoffrey (Hampstead)	Josepn, Rt. Hn. sir Keith
Bennett, Dr. Reginald (Gosport)	Fisher, Nigel (Surbiton)	Kaberry, sir Donald
Benyon, W.	Fletcher-Cooke, Charles	Kellett-Bowman, Mrs. Elaine
Berry, Hn. Anthony	Fookes, Miss Janet	Kershaw, James
Biggs-Davison, John	Fortescue, Tim	Kilfedder, James
Blaker, Peter	Foster, Sir John	Kimball, Marcus
Boardman, Tom (Leicester, S.W.)	Fowler, Norman	King, Evelyn (Dorset, S.)
Body, Richard	Fox, Marcus	King, Tom (Bridgwater)
Boscawen, Hn. Robert	Fraser, Rt. Hn. Hugh(St'fford & Stone)	Kinsey, J. R.
Bossom, Sir Clive	Fry, Peter	Kirk, Peter
Bowden Andrew	Galbraith, Hn. T. G. D.	Kitson, Timothy
Braine, Sir Bernard	Gardner, Edward	Knight, Mrs. Jill
Bray, Ronald	Gibson-Watt, David	Knox, David
Brewis, John	Gilmour, Ian (Norfolk, C.)	Lambton, Lord
Brinton, Sir Tatton	Gilmour, Sir John (Fife, E.)	Lamont, Norman
Brocklebank-Fowler, Christopher	Glyn, Dr. Alan	Lane, David
Brown, Sir Edward (Bath)	Godber, Rt. Hn. J. B.	Langford-Holt, Sir John
Bryan Sir Paul	Goodhart, Philip	Le Marchant, Spencer
Buchanan-Smith, Alick (Angus, N&M)	Goodhew, Victor	Lewis, Kenneth (Rutland)
Buck Antony	Gorst, John	Lloyd, Rt. Hn. Geoffrey(Sut'nC'field)
Bullus, Sir Eric	Gower, Raymond	Lloyd, Ian (P'tsm'th, Langstone)
Burden F. A.	Grant, Anthony (Harrow, C.)	Longden, Sir Gilbert
	Gray, Hamish	Loveridge, John
Butler, Adam (Bosworth)	Green, Alan	Luce, R. N.
Campbell, Rt. Hn. G.(Moray & Nairn)	Griffiths, Eldon (Bury St. Edmunds)	McAdden, Sir Stephen
Carlisle, Mark	Grimond, Rt. Hn. J.	MacArthur, Ian
Carr, Rt. Hn. Robert	Grylls, Michael	McCrindle, R. A.
Cary, Sir Robert	Gummer, J. Selwyn	McLaren, Martin
Channon, Paul	Gurden, Harold	Maclean, Sir Fitzroy
Chapman, Sydney	Hall Miss Joan (Keighley)	McMaster, Stanley
Chataway, Rt. Hn. Christopher	Hall John (Wycombe)	Macmillan, Rt. Hn. Maurice(Farnham)
Chichester-Clark, R.	Hall-Davis, A. G. F.	McNair-Wilson, Michael
Churchill, w. s.	Hamilton, Michael (Salisbury)	McNair-Wilson, Patrick (NewForest)
Clark, William (Surrey, E)	Hannam, John (Exeter)	Maddan, Martin
Clarke, Kenneth (Rushcliffe)	Harrison, Brian (Maldon)	Madel, David
Cockeram, Eric	Harrison, Col. Sir Harwood (Eye)	Maginnis, John E.
Cooke, Robert	Haselhurst, Alan	Marples, Rt. Hn. Ernest
Coombs, Derek	Hastings, Stephen	Marten, Neil
Cooper, A. E.	Havers, Sir Michael	Mather, Carol
Cordle, John	Hawkins, Paul	Maude, Angus
Corfield, Rt. Hn. Sir Frederick	Hay, John	Maudling, Rt. Hn. Reginald
Cormack, Patrick	Hayhoe, Barney	Mawby, Ray
Costain, A. P.	Heath, Rt. Hn. Edward	Maxwell-Hyslop, R. J.
Crouch, David	Hicks, Robert	Mills, Peter (Torrington)
Crowder, F. P.	Higgins, Terence L.	Mills, Stratton (Belfast, N.)
Dalkeith, Earl of	Hiley, Joseph	Miscampbell, Norman
Davies, Rt. Hn. John (Knutsford)	Hill, John E. B. (Norfolk, S.)	Mitchell, Lt.-Col.C.(Aberdeenshire,W)
d'Avigdor-Goldsmld, Sir Henry	Hill, James (Southampton, Test)	Mitchell, David (Basingstoke)
d'Avigdor-Goldsmid, Maj.-Gen.Jack	Holland, Philip	Moate, Roger
Dean, Paul	Hooson, Emlyn	Molyneaux, James
Deedes, Rt. Hn. W. F.	Hornby, Richard	Money, Ernie
Digby, Simon Wingfield	Hornsby-Smith, Rt. Hn. Dame Patricia	Monks, Mrs. Connie

Monro, Hector	Rees, Peter (Dover)	Temple, John M.
Montgomery, Fergus	Rees-Davies, W. R.	Thatcher, Rt. Hn. Mrs. Margaret
More, Jasper	Renton, Rt. Hn. Sir David	Thomas, John Stradling (Monmouth)
Morgan, Geraint (Denbigh)	Ridley, Hn. Nicholas	Thomas, Rt. Hn. Peter (Hendon, S.)
Morgan-Giles, Rear-Adm.	Ridsdale, Julian	Thompson, Sir Richard (Croydon, S.)
Morrison, Charles	Rippon, Rt. Hn. Geoffrey	Thorpe, Rt. Hn. Jeremy
Mudd, David	Roberts, Michael (Cardiff, N.)	Tilney, John
Murton, Oscar	Roberts, Wyn (Conway)	Trafford, Dr. Anthony
Nabarro, Sir Gerald	Rossi, Hugh (Hornsey)	Trew, Peter
Neave, Airey	Rost, Peter	Tugendhat, Christopher
Nicholls, Sir Harmar	Russell, Sir Ronald	Turton, Rt. Hn. Sir Robin
Noble, Rt. Hn. Michael	St. John-Stevas, Norman	van Straubenzee, W. R.
Normanton, Tom	Scott, Nicholas	Vaughan, Dr. Gerard
Nott, John	Shaw, Michael (Sc'b'gh & Whitby)	Vickers, Dame Joan
Onslow, Cranley	Shelton, William (Clapham)	Walder David (Clitheroe)
Oppenheim Mrs. Sally	Simeons, Charles	Walker, Rt. Hn. Peter (Worcester)
Orr Capt. L. P. S.	Sinclair, Sir George	Walker-Smith, Rt. Hn. Sir Derek
Osborn, John	Skeet, T. H. H.	Wall, Patrick
Owen, Idris (Stockport, N.)	Smith, Dudley (W'wick & L'mington)	Walters, Dennis
Page, Rt. Hn. Graham (Crosby)	Soref, Harold	Ward, Dame Irene
Page, John (Harrow, W.)	Speed, Keith	Warren, Kenneth
Parkinson, Cecil	Spence, John	Wells, John (Maidstone)
Peel, John	Sproat, Ian	White, Roger (Gravesend)
Percival, Ian	Stainton, Keith	Whitelaw, Rt. Hn. William
Peyton, Rt. Hn. John	Stanbrook, Ivor	Wiggin, Jerry
Pike, Miss Mervyn	Steel, David	Wilkinson John
Pink, R. Bonner	Stewart-Smith, Geoffrey (Belper)	Winterton, Nicholas
Pounder, Rafton	Stodart, Anthony (Edinburgh, W.)	Wolrige-Gordon, Patrick
Price, David (Eastleigh)	Stoddart-Scott, Col. Sir M.	Woodhouse, Hn. Christopher
Prior, Rt. Hn. J. M. L.	Stokes, John	Woodnutt, Mark
Proudfoot, Wilfred	Stuttaford, Dr. Tom	Worsley, Marcus
Pym, Rt. Hn. Francis	Sutcliffe, John	Wylie Rt Hn N. R.
Quennell, Miss J. M.	Tapsell, Peter	Younger, Hn. George
Raison, Timothy	Taylor, Sir Charles (Eastbourne)
Ramsden, Rt. Hn. James	Taylor, Edward M.(G'gow, Cathcart)
Rawlinson, Rt. Hn. Sir Peter	Taylor, Frank (Moss Side)	TELLERS FOR THE NOES:
Redmond, Robert	Taylor, Robert (Croydon, N.W.)	Mr. Bernard Weatherill and
Reed, Laurance (Bolton, E.)	Tebbit, Norman	Mr. Walter Clegg.

Question accordingly negatived.

Main Question put, That the Bill be now read a Second time:—

The House divided: Ayes 307, Noes 272.

Division No. 6.]	AYES	[10.12 p.m.
Adley, Robert	Burden, F. A.	Eden, Rt. Hn. Sir John
Alison, Michael (Barkston Ash)	Butler, Adam (Bosworth)	Edwards, Nicholas (Pembroke)
Allason, James (Hemel Hempstead)	Campbell, Rt. Hn. G.(Moray & Nairn)	Elliot, Capt. Walter (Carshalton)
Amery, Rt. Hn. Julian	Carlisle, Mark	Elliott, R. W. (N'c'tle-upon-Tyne,N.)
Archer, Jeffrey (Louth)	Carr, Rt. Hn. Robert	Emery, Peter
Astor, John	Cary, Sir Robert	Eyre, Reginald
Atkins, Humphrey	Channon, Paul	Fan, John
Awdry, Daniel	Chapman, Sydney	Fenner, Mrs. Peggy
Baker, Kenneth (St. Marylebone)	Chataway, Rt. Hn. Christopher	Finsberg, Geoffrey (Hampstead)
Baker, W. H. K. (Banff)	Chichester-Clark, R.	Fisher, Nigel (Surbiton)
Balniel, Rt. Hn. Lord	Churchill, W. S.	Fletcher-Cooke, Charles
Barber, Rt. Hn. Anthony	Clark, William (Surrey, E.)	Fookes, Miss Janet
Batsford, Brian	Clarke, Kenneth (Rushcliffe)	Fortescue, Tim
Beamish, Col. Sir Tufton	Cockeram, Eric	Foster, Sir John
Bell, Ronald	Cooke, Robert	Fowler, Norman
Bennett, Sir Frederic (Torquay)	Coombs, Derek	Fox, Marcus
Bennett, Dr. Reginald (Gosport)	Cooper, A. E.	Fraser, Rt. Hn. Hugh (St'fford & Stone)
Benyon, W.	Cordle, John	Fry, Peter
Berry, Hn. Anthony	Corfield, Rt. Hn. Sir Frederick	Galbraith, Hn. T. G. D.
Biggs-Davison, John	Cormack, Patrick	Gardner, Edward
Blaker, Peter	Costain, A. P.	Gibson-Watt, David
Boardman, Tom (Leicester, S.W.)	Crouch David	Gilmour, Ian (Norfolk, C.)
Body, Richard	Crowder, F. P.	Gilmour Sir John (Fife, E.)
		Glyn, Dr. Alan
Boscawen, Hn. Robert	Dalkeith, Earl of	Godber, Rt. Hn. J. B.
Bossom, Sir Clive	Davies, Rt. Hn. John (Knutsford)	Goodhart Philip
Bowden, Andrew	d'Avigdor-Goldsmid, Sir Henry	Goodhew, Victor
Braine, Sir Bernard	d'Avigdor-Goldsmld, Maj.-Gen.Jack	Gorst, John
Bray, Ronald	Dean, Paul	Gower, Raymond
Brewis, John	Deedes, Rt. Hn. W. F.	Grant, Anthony (Harrow, C.)
Brinton, Sir Tatton	Digby, Simon Wingfield	Gray, Hamish
Brocklebank-Fowler, Christopher	Dixon, Piers	Green, Alan
Brown, Sir Edward (Bath)	Dodds-Parker, Douglas	Griffiths, Eldon (Bury St. Edmunds)
Bryan, Sir Paul	Douglas-Home, Rt. Hn. Sir Alec	Grimond, Rt. Hn. J.
Buchanan-Smith, Alick (Angus,N&M)	Drayson. G. B.	Gryils, Michael
Buck, Antony	du Cann, Rt. Hn. Edward	Gummer, J. Selwyn
Bullus, Sir Eric	Dykes, Hugh	Gurden, Harold
Hall, Miss Joan (Keighley)	Macmillan,Rt.Hn.Maurice(Farnham)	Rossi, Hugh (Hornsey)
Hall, John (Wycombe)	McNair-Wilson, Michael	Rost, Peter
Hall-Davis, A. G. F.	McNair-Wilson, Patrick (New Forest)	Russell, Sir Ronald
Hamilton, Michael (Salisbury)	Maddan, Martin	St. John-Stevas, Norman
Hannam, John (Exeter)	Madel, David	Scott, Nicholas
Harrison, Brian (Maldon)	Maginnis, John E.	Shaw, Michael (Sc'b'gh & Whitby)
Harrison, Col. Sir Harwood (Eye)	Marples, Rt. Hn. Ernest	Shelton, William (Clapham)
Haselhurst, Alan	Mather, Carol	Simeons, Charles
Hastings, Stephen	Maude, Angus	Sinclair, Sir George
Havers, Sir Michael	Maudling, Rt. Hn. Reginald	Skeet, T. H. H.
Hawkins, Paul	Mawby, Ray	Smith, Dudley (W'wick & L'mington)
Hay, John	Maxwell-Hyslop, R. J.	Soref, Harold
Hayhoe, Barney	Mills, peter (Torrington)	Speed, Keith
Heath, Rt. Hn. Edward	Mills, Stratton (Belfast, N.)	Spence, John
Hicks, Robert	Miscampbell, Norman	Sproat, Iain
Higgins, Terence L.	Mitchell,Lt.-Col.C.(Aberdeenshire, W)	Stainton, Keith
Hiley, Joseph	Mitchell, David (Basingstoke)	Stanbrook, Ivor
Hill, John E. B. (Norfolk, S.)	Moate, Roger	Steel, David
Hill, James (Southampton, Test)	Molyneaux, James	Stewart-Smith, Geoffrey (Beiper)
Holland, Philip	Money, Ernie	Stoddart, David (Swindon)
Hooson, Emlyn	Monks, Mrs. Connie	Stoddart-Scott, Col. Sir M.
Hornby, Richard	Monro, Hector	Stokes, John
Hornsby-Smith,Rt.Hn.Dame Patricls	Montgomery, Fergus	Stuttaford, Dr. Tom
Howe, Rt. Hn. Sir Geoffrey	More, Jasper	Sutcliffe, John
Howell, David (Guildford)	Morgan, Geraint (Denbigh)	Tapsell, Peter
Howell Ralph (Norfolk, N.)	Morgan-Giles, Rear-Adm.	Taylor, Sir Charles (Eastbourne)
Hunt, John	Morrison, Charles	Taylor, Edward M.(G'gow,Cathcart)
Hutchison, Michael Clark	Mudd, David	Taylor, Frank (Moss Side)
Iremonger, T. L.	Murton, Oscar	Taylor, Robert (Croydon, N.W.)
Irvine, Bryant Godman (Rye)	Nabarro, Sir Gerald	Tebbit, Norman
James, David	Neave, Airey	Temple, John M.
Jenkin, Patrick (Woodford)	Nicholls, Sir Harmar	Thatcher, Rt. Hn. Mrs. Margaret
Jenings, J. C. (Burton)	Noble, Rt. Hn. Michael	Thomas, John Stradling (Monmouth)
Jessel, Toby
Johnson Smith, G. (E. Grinstead)	Normanton, Tom	Thomas, Rt. Hn. Peter (Hendon, S.)
Johnston, Russell (Inverness)	Nott, John	Thompson, Sir Richard (Croydon, S.)
Jones Arthur (Northants, S.)	Onslow, Cranley	Tnorpe, Rt. Hn. Jeremy
Jopling, Michael	Oppenheim, Mrs. Sally	Tilney, John
Joseph,' Rt. Hn. Sir Keith	Orr, Capt. L. p. s.	Trafford, Dr. Anthony
Kaberry, Sir Donald	Osborn, John	Trew, Peter
Kellett-Bowmen, Mrs. Elaine	Owen, Idris (Stockport, N.)	Tugendhat, Christopher
Kershaw, Anthony	Page, Rt. Hn. Graham (Crosby)	Turton, Rt. Hn. Sir Robin
Kilfedder, James	Page, John (Harrow, W.)	van Straubenzee, W. R.
Kimball, Marcus	Parkinson, Cecil	Vaughan, Dr. Gerard
King, Evelyn (Dorset, S.)	Peel, John	Vickers, Dame Joan
King, Tom (Bridgwater)	Percival, Ian	Walder, David (Clitheroe)
Kinsey J. R.	Peyton, Rt. Hn. John	Walker, Rt. Hn. Peter (Worcester)
Kirk, Peter	Pike, Miss Mervyn	Walker-Smith, Rt. Hn. Derek
Kitson, Timothy	Pink, R. Bonner	Wall, Patrick
Knight, Mrs. Jill	Pounder, Rafton	Walters, Dennis
Knox, David	Price, David (Eastleigh)	Ward, Dame Irene
Lambton, Lord	Prior, Rt. Hn. J. M. L.	Warren, Kenneth
Lamont, Norman	Proudfoot, Wilfred	Wells, John (Maidstone)
Lane, David	Pym, Rt. Kn. Francis	White, Roger (Gravesend)
Langford-Holt, Sir John	Quennell, Miss J. M.	Whitelaw, Rt. Hn. William
Le Marchant, Spencer	Raison, Timothy	Wiggin, Jerry
Lewis, Kenneth (Rutland)	Ramsden, Rt. Hn. James	Wilkinson, John
Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfleld)	Rawlinson, Rt. Hn. Sir Peter	Winterton, Nicholas
Lloyd, Ian (P'tsm'th, Langstone)	Redmond, Robert	Wolrige-Gordon, Patrick
Longden, Sir Gilbert	Reed, Laurance (Bolton, E.)	Woodhouse, Hn. Christopher
Loveridge, John	Rees, Peter (Dover)	Woodnutt, Mark
Luce, R. N.	Rees-Davies, W. R.	Worsley, Marcus
McAdden, Sir Stephen	Renton, Rt. Hn. Sir David	Wylie, Rt. Hn. N. R.
MacArthur, Ian	Ridley, Hn. Nicholas	Younger, Hn. George
McCrindle, R. A.	Ridsdale, Julian
McLaren, Martin	Rippon, Rt. Hn. Geoffrey	TELLERS FOR THE AYES:
Maclean, Sir Fitzroy	Roberts, Michael (Cardiff, N.)	Mr. Bernard Weatherill and
McMaster. Stanley	Roberts, Wyn (Conway)	Mr. Walter Clegg.
NOES
Abse, Leo	Benn, Rt. Hn. Anthony Wedgwood	Buchan, Norman
Albu, Austen	Bennett, James (Glasgow, Bridgeton)	Buchanan, Richard (G'gow, Sp'burn)
Allaun, Frank (Salford, E.)	Bidwell, Sydney	Callaghan, Rt. Hn. James
Allen, Scholefield	Bishop, E. S.	Campbell, I. (Dunbartonshire, W.)
Archer, Peter (Rowley Regis)	Blenkinsop, Arthur	Cant, R. B.
Ashley, Jack	Boardman, H. (Leigh)	Carmichael, Neil
Ashton, Joe	Booth, Albert	Carter, Ray (Birmingh'm, Northfield)
Atkinson, Norman	Bottomley, Rt. Hn. Arthur	Carter-Jones, Lewis (Eccles)
Bagier, Gordon A. T.	Boyden, James (Bishop Auckland)	Castle, Rt. Hn. Barbara
Barnes, Michael	Bradley, Tom	Clark, David (Coine Valley)
Barnett, Guy (Greenwich)	Broughton, Sir Alfred	Cocks, Michael (Bristol, S.)
Barnett, Joel (Heywood and Royton)	Brown,RobertC.(N'c'tle-u-Tyne,W.)	Cohen, Stanley
Baxter, William	Brown, Hugh D. (G'gow, Provan)	Coleman, Donald
Beaney, Alan	Brown, Ronald (Shoreditch & F'bury)	Concannon, J. D.

Conlan, Bernard	Janner, Greville	Pannell, Rt. Hn. Charles
Corbet, Mrs. Freda	Jay, Rt. Hn. Douglas	Parker, John (Dagenham)
Cox, Thomas (Wandsworlh, C.)	Jeger, Mrs. Lena	Parry, Robert (Liverpool. Exchange)
Crawshaw, Richard	Jenkins, Hugh (Putney)	Pavitt, Laurie
Cronin, John	Jenkins, Rt. Hn. Roy (Stechford)	Peart, Rt. Hn. Fred
Crosland, Rt. Hn. Anthony	John, Brynmor	Pendry, Tom
Crossman, Rt. Hn. Richard	Johnson, Carol (Lewisham, S.)	Perry, Ernest G.
Cunningham, G. (Islington, S.W.)	Johnson, James (K'ston-on-Hull, W.)	Powell, Rt. Hn. [...]. Enoch
Cunningham, Dr. J. A. (Whitehaven)	Johnson, Walter (Derby, S.)	Prentice, Rt. Hn. Reg.
Dalyell, Tam	Jones, Barry (Flint, E.)	Prescott, John
Darling, Rt. Hn. George	Jones, Dan (Burnley)	Price, J. T. (Westhoughton)
Davidson, Arthur	Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)	Price, William (Rugby)
Davies, Denzil (Llanelly)	Jones, Gwynoro (Carmarthen)	Probert, Arthur
Davies, G. Elfed (Rhondda, E.)	Jones T. Alec (Rhondda, W.)	Reed, D. (Sedgefield)
Davies, Ifor (Gower)	Kaufman, Gerald	Rees, Merlyn (Leeds, S.)
Davis, Clinton (Hackney, C.)	Kelley, Richard	Rhodes, Geoffrey
Davis, Terry (Bromsgrove)	Kerr, Russell	Richard, Ivor
Deakins, Erie	Kinnock, Neil	Roberts, Albert (Normanton)
de Freitas, Rt. Hn. Sir Geoffrey	Lamble, David	Roberts,Rt.Hn Goronwy(Caernarvon)
Delargy, Hugh	Lamborn, Harry	Robertson, John (Paisley)
Dell, Rt. Hn. Edmund	Lamond, James	Roderick, Caerwyn E. (Bre'n&R'dnor)
Dempsey, James	Latham, Arthur	Rodgers, William (Stockton-on-Tees)
Doig. Peter	Lawson, George	Rose, Paul B.
Dormand, J. D.	Leadbitter, Ted	Ross, Rt. Hn. William (Kilmarnock)
Douglas, Dick (Stirlingshire, E.)	Lee, Rt. Hn. Frederick	Rowlands, Ted
Douglas-Mann, Bruce	Leonard, Dick	Sandelson, Neville
Duffy, A. E. P.	Lestor, Miss Joan	Sheldon, Robert (Ashton-under-Lyne)
Dunn, James A.	Lever, Rt. Hn. Harold	Shore, Rt. Hn. Peter (stepney)
Dunnett, Jack	Lewis, Arthur (W. Ham, N.)	Short, Mrs. Renée (W'hampton, N.E.)
Eadie, Alex	Lewis, Ron (Carlisle)	Silkin, Rt. Hn. John (Deptford)
Edelman, Maurice	Lipton, Marcus	Silkin, Hn. S. C. (Dulwich)
Edwards, Robert (Bilston)	Lomas, Kenneth	Sillars, James
Edwards, William (Merioneth)	Loughlin, Charles	Silverman, Julius
Ellis, Tom	Lyon, Alexander W. (York)	Skinner, Dennis
English, Michael	Lyons, Edward (Bradford. E.)	Smith, John (Lanarkshire, N.)
Evans, Fred	Mabon, Dr. J. Dickson	Spearing, Nigel
Ewing, Harry	McBride, Neil	Springs, Leslie
Faulds, Andrew	McCartney, Hugh	Stallard, A. W.
Fernyhough, Rt. Hn. E.	McElhone, Frank	Stewart, Donald (Western Isles)
Fisher, Mrs. Doris(B"ham,Ladywood)	McGuire, Michael	Stewart, Rt. Hn. Michael (Fulham)
Fitch, Alan (Wigan)	Mackenzie, Gregor	Stoddart, David (Swindon)
Fletcher, Raymond (Ilkeston)	Mackie, John	Stonehouse, Rt. Hn. John
Fletcher, Ted (Darlington)	Mackintosh, John P.	Strang, Gavin
Foley, Maurice	Maclennan, Robert	Strauss, Rt. Hn. G. R.
Foot, Michael	McMillan, Tom (Glasgow, C.)	Summerskill, Hn. Dr. Shirley
Ford, Ben	McNamara, J. Kevin	Swain, Thomas
Forrester, John	Mallalieu, J. P. W. (Huddersfield, E.)	Thomas,Rt.Hn.George (Cardiff,W.)
Fraser John (Norwood)	Marks, Kenneth	Thomas, Jeffrey (Abertillery)
Freeson, Reginald	Marsden, F.	Thompson, Rt. Hn. G. (Dundee, E.)
Galpern, Sir Myer	Marshall, Dr. Edmund	Tinn, James
Garrett, W. E.	Mason, Rt. Hn. Roy	Torney, Tom
	Mayhew, Christopher	Tuck, Raphael
Gilbert, Dr. John	Meacher, Michael	Urwin, T. W.
Ginsburg, David (Dewsbury)	Mellish, Rt. Hn. Robert	Varley, Eric G.
Golding, John
Gourlay, Harry	Mendelson, John	Wainwright, Edwin
Grant, George (Morpeth)	Mikardo, Ian	Walden, Brian (B'm'ham, All Saints)
Grant, George (Morpeth)	Millan, Bruce	Walker, Harold (Doncaster)
Grant, John D. (Islington, E.)	Miller, Dr. M. s.	Wallace, George
Griffiths, Eddie (Brightside)	Milne, (Edward)	Watkins, David
Griffiths, Will (Exchange)	Mitchell, R. C. (S'hampton, Itchen)	weitzman, David
Hamilton, William (Fife, W.)	Morgan, Elystan (Cardiganshire)	Wellbeloved, James
Hamling, William	Morris, Alfred (Wythenshawe)	wells, William (Walsall, N.)
Hannan William (G gow, Maryhill)	Morris, Charles R. (Openshaw)	white, James (Glasgow, Pollok)
Hardy, Peter	Morris, Rt. Hn. John (Aberavon)	Whitehead, Phillip
Harrison, Walter (Wakefield)	Moyle, Roland	Whitlock, William
Hart, Rt. Hn Judith	Mulley, Rt. Hn. Frederick	willey, Rt. Hn. Frederick
Hattersley, Roy	Murray, Ronald King	Williams, Alan (Swansea, W.)
Healey, Rt. Hn. Denis	Oakes, Gordon	Williams, Mrs. Shirley (Hitchin)
Heffer, Eric S.	Ogden, Eric	Williams, W. T. (Warrington)
Hilton, W. S.	O'Halloran, Michael	Wilson, Alexander (Hamilton)
Horam, John	O'Malley, Brian	Wilson, Rt. Hn. Harold (Huyton)
Houghton, Rt. Hn. Douglas	Oram, Bert	Wilson, William (Coventry, S.)
Huckfield, Leslie	Orbach, Maurice	Woof, Robert
Hughes, Rt. Hn. Cledwyn (Anglesey)	Orme, Stanley
Hughes, Mark (Durham)	Oswald, Thomas	TELLERS FOR THE NOES:
Hughes, Robert (Aberdeen, N.)	Owen, Dr. David (Plymouth, Sutton)
Hughes, Roy (Newport)	Padley, Walter	Mr. Joseph Harper and
Irvine,Rt.Hn.SirArthur(Edge Hill)	Paimer, Arthur

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Kenneth Clarke.]

Committee tomorrow.