§ 1.—(1) Each Agency shall in accordance with this paragraph make reports to the Secretary of State on the way they have discharged their functions under Part II of this Act.
§ (2) Each report shall be submitted to the Secretary of State not later than thirty days after the end of the period covered by the report, and the Secretary of State shall lay the report before Parliament.
§ (3) The first two months during which Part II of this Act is in force shall be covered by a separate report, and separate reports shall be made covering each subsequent period of three months during which Part II of this Act is in force (on the first or any subsequent occasion); and a separate report shall be made covering any terminal period short of three months.
§ (4) This paragraph shall have effect in relation to the Price Commission as if references to the Secretary of State were references to the Secretary of State and the Minister of Agriculture, Fisheries and Food, acting jointly'.—[Mr. Maurice Macmillan.]
§ Mr. Bruce-GardyneI beg to move Amendment No. 46, in page 21, line 35, after '(1)', insert
?Subject to the provisions of sub-paragraph (6) below'.
Mr. Deputy SpeakerWith this amendment it will be convenient for the House to discuss Amendment No. 47, in page 22, line 25, at end insert—
'(6) Any inquiry under the terms of this paragraph shall be conducted by full-time members or employees of the agency and may not be delegated to other organisations or persons'.
§ Mr. Bruce-GardyneThe substantive amendment is Amendment No. 47. The purpose of these amendments is to make sure that the Pay Board and the Price Commission, to put it crudely, do their own dirty work.
The situation under the late lamented National Board for Prices and Incomes, as the House may remember—and none better than my hon. Friend the Member for Oswestry (Mr. Biffen), for whose expertise in these archaic matters the entire House is indebted—was that the board farmed out its activities to a wide range 1642 of consultancy organisations. We were never told which organisations they were or, indeed, told much about them at all, except that occasionally they reared their heads.
In moving a Ten-Minutes Rule Bill in April 1967 my hon. Friend the Member for Oswestry said——
§ Dr. Alan Glyn (Windsor)I hope that my hon. Friend will be only a few minutes.
§ Mr. Bruce-GardyneI shall be longer than that, if my hon. Friend the Member for Windsor (Dr. Glyn) will forgive me. These are important matters.
I was about to say that my hon. Friend's Ten-Minutes Rule Bill was designed to ferret out more information about the consultancy services which the Prices and Incomes Board used, and I commend those who are interested in these matters to read that debate on 5th April 1967. The broad point that he was making, and I apologise for plagiarising on his industry of a previous incarnation in these matters, was that we knew nothing about the consultancy firms which were used. We were told from time to time people like the eminent Mr. Jarratt, who I imagine will figure prominently in one of the organisations we are appointing under the Bill, that the board had enlisted the support of various consultancy services for the purposes of its investigations, including in some cases foreign—for example, American—consultancy firms. My hon. Friend quoted Mr. Jarratt as saying:
We have a very full record of 200 consultancy firms, their field experience and so on."—[OFFICIAL REPORT, 5th April 1967; Vol. 744, c. 157.]My hon. Friend conjured up a vision of these consultancy firms queueing up at the door—or was that on the Committee stage of the Bill? [Interruption.] My hon. Friend corrects me. That was on the Committee stage of the Bill. He raised the question of consultancy work in relation to Clause 12, I think. He obtained the following assurance from the Secretary of State:First of all there is the question of management consultants. The Prices and Incomes Board tried to do studies in depth with efficiency audits and needed management consultant services. The agencies are only required to look at cases in the light of the code. They will not, therefore, require the 1643 same type of consultant advice as did the Prices and Incomes Board."—[OFFICIAL REPORT, Standing Committee H, 19th February 1973; c. 973.]We know that these bodies will apparently have 700 employees and, as my hon. Friend pointed out in Committee it will presumably take them some little time to acquire those employees. Meantime my right hon. and hon. Friends are hoping that the gasmen and others will be queueing up at their boards' doors for service. We must, therefore, assume that there will be a certain pressure on these boards in the early stages when, perhaps, their 700 employees have not been collected.But in any case, even if the boards are up to full strength, we need to have some elucidation about the precise wording my hon. Friend used in Committee. He said
They—meaning the boards—will not, therefore, require the same type of consultant advice as did the Prices and Incomes Board."—[OFFICIAL REPORT, Standing Committee H, 19th February, 1973; c. 973.]That may be, but what advice will they obtain? Now we have seen the code—and when these matters were discussed in Committee the code had not emerged —and we can see that the lengthy investigations which these eminent boards are to pursue are clearly far-reaching and wide-ranging.In paragraph 54 of the Green Paper, in the part dealing with distribution, we read:
In order to assist enterprises to arrive at an appropriate reduction of percentage margins under paragraph 53, the Price Commission will, if satisfied that the sharp rises in costs referred to have taken place:—Who is to do all the donkey work? Are the 700 employees of the Pay Board 1644 and the Price Commission to do the work once they are recruited? Is nobody else to do it? Are no outside consultants to be used for any purpose? May we have that assurance? We did not receive it in Committee.
- (i) consult any body which they regard as representative of enterprises affected by the rise in costs and take into account information supplied by them; and
- (ii) calculate an adjustment to gross margins designed to prevent net profit margins from rising substantially on those products, provided they are satisfied that:—
- (a) these cost increases are likely to be broadly similar for a substantial number of such enterprises; and
- (b) the maintenance of existing gross percentage margins would disproportionately increase the profit margin on those goods …".
Of the many unattractive features of the Prices and Incomes Board, its habit of providing lucrative employment for outside consultancy agencies was not the least. The independent private agencies that it was using, in a sense bringing them under the umbrella of its statutory powers and privileges, were also commercial agencies that might well be dealing in a commercial capacity with firms whose affairs they were required to investigate.
Before we complete the Report stage we need a clearer and more specific undertaking than that which my right hon. Friend gave in Committee. If we receive the assurance that when he said that the Pay Board and Price Commission would not require the same type of consultant advice as did the Prices and Incomes Board he meant that the two bodies would rely entirely and exclusively on their own members and employees, the Government will, clearly, have no embarrassment in accepting the amendment. I shall then be entirely satisfied, as I hope the House in general will.
§ Mr. BiffenThe amendment merits the serious attention of the House, even at this hour of 10.40 in the evening, which I do not regard as absurdly late. It touches upon a principle of significance but, above all, of sheer practicality, in terms that I am sure will engage the interest of my hon. Friends the Members for Kingston-upon-Thames (Mr. Norman Lamont) and Kensington, South (Sir B. Rhys Williams), not to mention the hon. member for West Ham, North (Mr. Arthur Lewis), who would probably wish to take part in the debate but for the all-pervasive influence of the Opposition Deputy Chief Whip.
The amendment touches upon the question of just how the Government's policy will be put into effect if, as we are assured, the Price Commission will depend entirely on its own resources. Here I repeat a declaration of interest that I 1645 made in Committee, that I am an unremunerated member of the board of a firm of management consultants, which I do not expect to be a beneficiary of the Bill.
We understand that the Price Commission will have a staff of between 450 and 500. That much emerged from the discussions in Committee. Presumably we must be in the process of recruitment at this moment. What kind of people are required in the Price Commission to carry out the investigations under the guidance of something which cannot be much dissimilar from the consultative document? The answer is self-evident. Accountants will be needed to work for the commission. We must inquire whether there is any prospect of the commission being able to recruit 500 accountants.
§ Mr. Joel BarnettNot a hope.
§ Mr. BiffenThere we are. Who more expert and able to answer my question than the hon. Member for Heywood and Royton (Mr. Joel Barnett)? The fact is that phase 2 will be over and done with by the autumn. If we cannot recruit accountants——
§ Mr. Norman Lamont (Kingston-upon-Thames) indicated assent.
§ Mr. BiffenMy hon. Friend agrees with me. If we cannot recruit accountants in substance and in scale in the immediate future to deal with phase 2 of the policy, our credibility becomes that much more suspect.
I return to the words with which I opened my remarks. This is a matter not only of substance but of sheer practicality. I do not care if the debate is proceeding at a point mildly inappropriate for some hon. Members. If they do not wish to partake they can spectate For those of us who are concerned about the way in which the policy will work—the degree to which it will be random the degree to which it will be highly selective—the amendment goes to the heart of the matter. When my hon Friend the Chief Secretary replies, I shall be grateful if he will indicate in broad terms how many of the 400 to 500 staff who will serve in the Price Commission will be expected to have an accountancy background and accountancy experience, 1646 and the scale of remuneration that they will receive to attract them into this aspect of Government.
Those of us with some experience of the Public Accounts Committee will recollect that the old Ministry of Aviation could not attract the right calibre of technical cost accountant on the Civil Service scales of pay. It is a germane point. Will the going rate attract accountants out of private industry and into the commission on a career basis? Presumably it cannot be on the basis of a short-term secondment, because an accountant taken from one company might have the opportunity to examine the practices of a competitive company. That point was raised in Standing Committe, and my hon. Friend the Parliamentary Secretary to the Civil Service Department was anxious to allay anxieties that were expressed.
I draw the attention of my hon. Friend the Member for Bromley (Mr. Hunt) and my hon. Friend the Member for Kingston-upon-Thames, who both have interests in the City of London, to the seeming contradiction in paragraphs 36 and 38 of the consultative document, which under the rubric "Price Reductions" says:
Where there is a fall in raw material prices or in other allowable costs, this should be fully reflected in price reduction. In addition prices should be reduced where other factors (such as an increase in the volume of sales since the last price increase) lead to a significant fall in allowable costs per unit.Paragraph 38 says:Prices should be determined so as to secure that net profit margins do not exceed the average level of the best two of the last five years of account of the enterpise concerned preceding 1 April 1973 (the reference level).The reconciliation of the seeming contradiction is something that lies fully within the competence of my right hon. Friend the Secretary of State for Employment, the agencies and the accountants who will have to operate this policy. What I am saying is that we cannot just whistle up any spare office boys to do this task. It requires people of qualification.10.45 p.m.
It may be thought that I am making slightly heavy weather of this point, but I am not, because when I went to my place of work this morning, by such means as I could, the first question put to me was: could I reconcile the seeming 1647 contradiction between paragraphs 36 and 38? That seemed to be a thoroughly unfair burden to put on me, to be an exponent and defender of this policy. None the less, people engaged in industry and commerce are doing precisely this kind of exercise and saying "If we want to operate, broadly speaking, within the social parameter of behaviour set by the code"—whether or not it has legal sanction is another matter—"how do we set about it?"
But how much more should we in this House ask what will be the staff of the agencies who have to interpret the policy? What will be their qualification, if the work is not to be sub-contracted to outside organisations—and I welcome that decision. How are my hon. Friends to proceed to recruit the kind of staff to operate this policy with the speed that is seemingly indicated by the short-term limitation of phase 2?
§ Mr. Patrick JenkinAmendment No. 46 is a paving amendment and comes at the beginning of paragraph 14 of Schedule 1, while Amendment No. 47, which we are also discussing, would insert a new sub-paragraph (6) at the end of paragraph 15 of that schedule. But I take the point that the one is intended to refer to the other notwithstanding that they deal with different paragraphs, and on that assumption I will deal with the points my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has made.
My first point is that a distinction has to be drawn between what are referred to in the paragraphs as "inquiries" and what one might describe as, perhaps, investigations. The inquiries to which the two paragraphs are related are, clearly, formal inquiries, involving formal hearings. For instance, the question of the person who is to preside over the inquiry is relevant, and the next Government amendment deals with whether the inquiry should be in private or in public. Paragraph 15 goes on to deal with various other powers which the chairman of the agency, or any other member of the agency authorised by the chairman, may have in relation to the conduct of what I think are clearly envisaged as formal inquiries.
1648 Part of my hon. Friend's amendment suggests that such an inquiry should be chaired only by a full-time member of the board or commission, but I suggest that that is perhaps an unreasonable requirement. I made it clear in Committee that in order to recruit people of the required calibre and experience we would wish to feel free to appoint members part time, and it may very well be that for a particular field a part-time member of the board would be the most appropriate person to chair the kind of formal inquiry with which these paragraphs are concerned. I could not advise the House to accept the limitation which my hon. Friend proposes, which would confine the chairmanship of these inquiries and the conduct of them solely to full-time members.
§ Mr. Bruce-GardyneCan my hon. Friend enlighten the House about the sort of activities in which he imagines part-time members of the board might be engaged when they are not engaged in Government business of this kind?
§ Mr. JenkinI will resist the temptation to be drawn into matters of that kind. The appointments will be announced in due course. It is frequent in public service for part-time members to be appointed to a variety of different boards, and we do not envisage any unusual characteristics being necessary for the appointment of part-time members here.
I turn to the point which formed the substance of the speeches made by my hon. Friends the Members for Oswestry (Mr. Biffen) and South Angus (Mr. Bruce-Gardyne). That was the problem of investigation as opposed to the formal inquiries at which these paragraphs are primarily aimed. Their point can be stated simply. They hope that the investigations which will be carried out by the Price Commission or the Pay Board will be carried out solely by members or employees of those bodies and not in any way sub-contracted out to professional firms or other outside bodies.
I am not sure I fully understand the objection which is offered to this practice. I have reminded myself, during the debate, of the point made by my hon. Friend the Member for Oswestry when he introduced a Ten-Minute Bill in 1649 1967. He has already indicated in Committee that he thought the universities were stuffed with sociologists only too anxious to come and tell industry how it should organise itself.
Any public board of this sort which appoints outside firms of accountants, management consultants or such bodies will, naturally enough, choose people of the highest reputation and integrity to carry out the work. It would be unrealistic to imagine that in what are comparatively small bodies, 300 to 400 staff all told, there would be a sufficient range of expertise to cover the whole area. Certainly it is envisaged that outside firms of accountants would be employed to carry out some of the investigations.
It may well be that under the more general matters referred to the agencies under paragraph 1 of the schedule consultants will be appointed. What my right hon. Friend was referring to in column 973 was the question of implementing the code—that part of the functions of the agencies. As he said, this is not the same sort of inquiry as was carried out by the Prices and Incomes Board, which was an advisory body only. He was quite right to say that the agencies would not require the same type of advice.
§ Mr. Bruce-GardyneI cannot in all conscience see what difference there is between the type of external consultancy services which my hon. Friend is saying these new bodies will require and the type of consultancy services which the Prices and Incomes Board recruited. I submit that what he is saying makes nonsense of what my right hon. Friend said in Committee.
§ Mr. JenkinI do not think my hon. Friend follows what I am saying. I am saying that there is a distinction to be drawn between the two functions of the agencies——
§ Mr. Bruce-GardyneWe are not talking about functions.
§ Mr. JenkinWith great respect, I am. My hon. Friend may be talking about ambushes, but I am talking about gorse bushes. I am sure he knows the quotation. In the case of the executive function of the agencies—my right hon. Friend made it clear that that is what he was 1650 talking about—it is not envisaged that substantial use would be made of consultants' advice. My right hon. Friend said:
agencies are only required to look at cases in the light of the code."—[OFFICIAL REPORT, Standing Committee H, 19th February 1973; c. 973.]Agencies have the separate function of making advisory reports to Ministers. In those circumstances, we would envisage that such bodies as accountants and consultants would be used because the commission and board would not have the full range of expertise available to them. If the amendment were intended to preclude that kind of activity, I must advise the House that the Government would feel unable to accept it and I hope that hon. Members would resist it.I should like to say a few words on the subject of confidentiality because I believe that it lies at the heart of my hon. Friends' anxieties on the use of outside bodies. Successive Governments have been concerned to ensure that confidential information secured by the Government or Government agencies should not be misused or disclosed without permission. Great trouble is taken and a double check approach is adopted. First, there is the protection of selection. Before anyone is chosen to serve on these bodies he has to pass through a careful selection process which should ensure that no one likely to divulge confidential information is chosen. Secondly, there is the strong back-up power which specifically bans disclosure and provides criminal penalties to deter anyone tempted to disclose information unlawfully, whether he is still employed by the agency or not. They are contained in paragraph 4 of the Fourth Schedule. These methods have been used successfully in the past by the Prices and Incomes Board, the Monopolies Commission and similar bodies.
I realise that this is a sensitive point, but I assure the House that it will be very much in the minds of my right hon. Friends when appointments to the Price Commission and the Pay Board are made. To emphasise our concern, we have decided to arrange that the provisions of paragraph 4 of the Fourth Schedule are drawn to the attention of those appointed to the agencies in their letters of appointment. I hope that hon. Members will 1651 think that those are strong and effective safeguards.
§ Mr. Bruce-GardyneCan my hon. Friend assure the House that when the bodies use external consultancy services the details of the services used will be published in the reports made to the House?
§ Mr. JenkinThat is not an unreasonable request and, without wishing to give any commitment, I shall ensure that it is examined. It is something which might reasonably be required. It may be appropriate, if a suitable occasion offers, for an announcement to be made in another place about it.
I hope that my hon. Friends will not feel it necessary to press the amendments.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)It was almost the last remark of my hon. Friend the Chief Secretary which brought me to my feet.
I am a little worried about the use of management consultants who will obtain information from companies for non-formal inquiries and will, or may be, requested to publish it. It is quite wrong that there should be so many people whose job it will be to go over and over industrial situations, obtaining confidential information and publishing it either in full or in a half-digested form. The formal inquiries will be hard enough on their own because it will be necessary to ascertain complicated matters such as the ratio of depreciation, and the amount of profits and losses made in past years, which will in themselves require the exercise of considerable expertise.
When it comes to the informal inquiries, it seems to me that the range of information required can be extremely wide and confidential.
§ Mr. Bruce-GardyneThere may be a slight misunderstanding. The assurance for which I asked the Chief Secretary was that the names of external consultancy services used should be published in the reports made to the House on the work of the Pay Board and the Prices Commission, not that the details of their inquiries should be published.
§ 11.0 p.m.
§ Mr. RidleyYes. I think that that is a great help. I must have misheard my 1652 hon. Friend. I entirely agree that that should be done.
However, there is for me still some anxiety over these outside consultants who will be asked to make inquiries into various industrial situations and be armed with powers of investigation under the Bill. They may obtain very confidential information. They will not be subject to the powers in the schedule which my hon. Friend read out, and they will not be subject to the Official Secrets Act, but they will, as employees of the commission, be in a very privileged position to discover confidential information while being under no more than a moral obligation not to divulge the information they obtain and not to use it for personal advantage. It is quite wrong that powers for seeking information should not be coupled with some obligation to respect secret information when it has been unearthed. It is this aspect—of the outside inquiry, rather than by a member of the commission—which worries me.
§ Mr. Bruce-GardyneI must say that the reply by my hon. Friend the Chief Secretary to this brief debate hardly silences all my anxieties on this subject. Indeed, to be honest, it rather arouses them. Above all, I confess to him, it arouses some doubt about the entire accuracy of the undertaking given by my right hon. Friend in Committee, and to which I have already referred. I think we have established that these two bodies—alas—will draw in external consultants' services as the late lamented Prices and Incomes Board used to do.
We have at least obtained from my hon. Friend one sop of appeasement in the shape of the undertaking to examine the possibility of at least informing the House in the quarterly reports of the details of the external consultancy services used. That is of significant importance, and I hope my hon. Friend will find it possible to honour that undertaking.
On that basis, and with very much reluctance, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Patrick JenkinI beg to move Amendment No. 19, in page 21, line 45, after 'hearing', insert 'the Agency may direct that'.
1653 This amendment is proposed to meet a point raised in Committee—I think by the hon. Member for Islington, East (Mr. John Grant)—suggesting that the agency should have some discretion to accede or not to accede to an application to exclude the public from an inquiry and that the inquiry should be in private. We thought that that was a good point, and we believe that these words give the agency that discretion.
§ Amendment agreed to.