§ 7.21 p.m.
§ The Chief Secretary to the Treasury (Mr. Patrick Jenkin)
I beg to move,That the Counter-Inflation (Price and Pay Code) Order 1973 (S.I., 1973, No. 658), a copy of which was laid before this House on 2nd April, be approved.This is the most important of the orders which we have made under the Counter-Inflation Act 1973. Although it has been operative since the beginning of last month——
§ Mr. Deputy Speaker (Mr. E. L. Mallalieu)
I hope that it will be convenient to discuss at the same time the motion in the name of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley):That an humble Address be presented to Her Majesty, praying that the Counter-Inflation (Notification of Increases in Prices and Charges) Order 1973 (S.I., 1973, No. 664), dated 1st April 1973, a copy of which was laid before this House on 2nd April, be annulled.
§ Mr. Jenkin
That will be convenient Mr. Deputy Speaker. I shall refer to that motion briefly in my remarks.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
On a point of order, Mr. Deputy Speaker. The motion to which you refer is a negative order which we are praying against. Is it possible to take an affirmative order with a negative order?
§ Mr. Stanley Orme (Salford, West)
Further to that point of order, Mr. Deputy Speaker. Should not that motion be taken with the approval of the House rather than with the approval of the Minister?
§ Mr. Jenkin
I stand rebuked. I was merely indicating that it would be 1338 convenient to deal with the matter in that way, but it is a matter for the House as a whole.
The code order serves a dual purpose. First, it activated Part II of the Act on 1st April; and the House will remember that it is Part II of the Act which contains the statutory powers conferred on the Price Commission and Pay Board respectively. Secondly, the order sets out the detail of the policies on prices and pay which lie at the heart of stage 2 of our counter-inflation strategy.
In opening this debate it will be appropriate for me to refer briefly to the Government's counter-inflation policy as a whole in order to set the context for our discussion of the order. Then I shall draw the House's attention to the several changes of substance between the code as it appeared in the Green Paper and the final version in the order; I want also to try to clarify the status of the code as it applies to those concerned with determining pay and prices. I have the impression that there is still some uncertainty about the matter. I shall then refer to the Prayer of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) to which reference has been made, but I shall leave it to my hon. Friend the Under-Secretary of State for Trade and Industry to give the Government's main answer after he has heard my hon. Friend's speech.
Inflation is today a world-wide problem. Prices are now rising at annual rates of some 8 to 9 per cent in almost all advanced industrial countries. These countries buy from us, they sell to us, and we compete with them both by selling in third markets and in buying food and raw materials from the world's primary producers. It follows inexorably that our economy cannot be insulated from the effects of such general price inflation; and, in particular, we cannot insulate ourselves from movements in world commodity prices. Despite all this, we are entitled to make the claim that our policy for fighting inflation in Britain not only has made our position a good deal better than it would otherwise have been without the policy, but has so far produced 1339 results which compare favourably with those in other industrial countries.
Our policy has been based on the principle of seeking to control those prices which lie within our own control, and seeking to limit the impact of those price rises that are outwith our control. That has been the policy during the standstill and that is the policy embodied in this code. It was, incidentally, also the policy of the Labour Government when they were responsible for these matters, though they did not have to grapple with a rate of inflation of commodity prices such as we have seen in recent months.
When we introduced the standstill last November the worldwide inflation in the prices of many important commodities was on an accelerating upward trend. During the standstill we applied strict controls to the prices of all goods manufactured and processed in the United Kingdom, including processed foods. Although in the first four months of the standstill from November to March—the latest date for which we have figures— the rise in the retail price index was 2.4 per cent., two-thirds of this was in the food sector, including the seasonal increases on certain fresh foods which always occur in the winter months. If we exclude food, we see that the index rose by only four-fifths of 1 per cent. in those four months. This is equivalent to an annual rate of increase of less than 2½ per cent. By comparison retail prices generally were going up at an annual rate over 9 per cent in the four months before the standstill; and with earnings increasing at 15 to 16 per cent. over a year earlier we faced the chilling prospect of a price inflation rising into double figures. Moreover, when considering results during phase 1 it is right to remember that they were achieved during a period when manufacturers' costs were rising rapidly and they had to face the effect of the many substantial pay increases which took effect before the standstill.
When we compare these results with those in other countries during this period our success is reinforced. The most recent estimates published by the OECD show that, whereas in the year to October last our rise in prices put us near the top of the inflation league, since October only two other advanced industrial countries have done better 1340 than us. Moreover, one of those was France, where substantial cuts in indirect taxation were made in December. Without these tax cuts, French inflation would have been higher than ours. So it is nonsense to claim as some do that stage 1 has been a farce. On the contrary, it has been remarkably successful.
Against that background, I now wish to turn to the code itself as embodied in this order.
The code is inevitably a complicated document, though nothing like as complicated as the American code was. I therefore propose, in the light of the House's earlier discussion—the matter has been discussed on several occasions—to concentrate on the important changes which there have been between the Green Paper and the final version of the code as it appears in the order. These have in the main occurred in the prices section: the January White Paper contained much more detail on the treatment of pay during stage 2 because of the need to give sufficient guidance to allow collective bargaining to recommence. Nevertheless, there are one or two points in the pay section which I should like to draw to the House's attention.
The £1 plus 4 per cent. limit and the £250 a year maximum limit for individuals remain. These are key features of the pay policy which will provide a larger relative increase for low-paid groups. Within particular groups the freedom for negotiators to give extra help to the lower-paid is reinforced by the individual limit. In addition, this has been presented in the new code in a way which we hope will be more helpful to those concerned with negotiations. Paragraphs 117 and 118 explain how the pay limit should be calculated and suggest examples of alternative methods where this method cannot be followed precisely.
The remaining changes in the pay code have been designed to ensure that pay control applies equitably, and I will give-the House some of the more important examples of this. The provisions on piecework and payment by results have been clarified. The principle which we have adopted is that increases in pay under such schemes are not to count against the pay limit if, and only if, they arise under the terms of schemes in operation before 1341 the standstill and from direct and measurable contributions by the employees concerned to increased output. The same applies to commission payments and increases in pay under any arrangements linked to payments by results. It is the fairest principle which could be adopted for this limited period of phase 2.
Both during the tripartite talks last year and during our subsequent consultations on the code there was general agreement that bogus productivity schemes had been a major loophole in past periods of pay restraint. This is because of the difficulty of ensuring that if there is a major change in the system of payment the same level of earnings corresponds to the same level of output. Therefore, the code provides that only increases in pay under existing payments by results or productivity schemes should be allowed outside the pay limits. We shall of course be ready and willing to discuss future policy on productivity schemes with both sides of industry.
It also became clear during our consultations that the proposals for increments set out in the Green Paper were too wide and might be liable to abuse. The code now says that, if they are not to count against the pay limits, increments must be within a predetermined range or scale and must conform to certain other detailed criteria. I must make it clear that this is not, as some have suggested, a return to the distinction drawn in the standstill between systems with fixed regular increments of the type common in the public sector and other systems. It represents simply a tightening of the much looser formula which was contained in paragraph 102 of the code published in the Green Paper.
Finally, paragraph 113 has been added to the code to prevent settlements made after 1st April from being made retrospective to a date during the standstill period. This again has been introduced to achieve equity. It preserves equity between groups of workers in this category and those who have had pay increases deferred until the end of the standstill which would otherwise have come into operation during the standstill.
As I said earlier, the changes in the prices section have been rather more widespread. However in practice they 1342 do not amount to any significant relaxation in the Government's original proposals. The key principles underlying the strict régime of price controls have not been changed. The Green Paper laid down two main régimes appropriate respectively for manufacturers and for distributors. In the manufacturing and service sector the Green Paper provided that prices could be increased only in line with strictly defined allowable cost increases and that half of any increase in allowable costs was to be absorbed by the firms concerned to ensure that consumers benefited from increases in productivity. In addition, prices should be reduced where allowable costs fell.
In the case of distributors the control was to be exercised by holding their gross percentage margins. In addition, and as a back-up to the more direct controls over prices, the Green Paper provided that there should be an over-riding requirement that net profit margins should not exceed the average of the best two of the previous five years.
Turning to the code in the order now before us, all these elements remain, modified only to a limited extent to ensure greater equity and more effective operation and to give fuller recognition to the need pressed upon us from both sides to encourage investment.
The major change which has been made to ensure that the code operates more equitably has been that relating to the productivity deduction. The Green Paper proposed that enterprises should absorb 50 percent. of allowable labour cost increases. This was one of the points about which a number of hon. Members felt most concerned during our discussions in March on the Green Paper. After consultation with those interests concerned, it was agree that where—we were thinking especially of service industries—labour costs exceeded 35 percent. of total costs a reduced productivity offset would apply on a sliding scale to ensure that these industries were not treated more harshly than those where labour costs were a lower proportion of total costs. There again, there has been a change in the definition of allowable costs to include certain, but by no means all, bought-in services. This was made because it would have been unfair, especially to certain sectors of industry 1343 depending heavily on bought-in services, to exclude such costs as transport, contract maintenance, which is increasingly important in process industries, and the hire of equipment, all of which may be important elements in total costs.
§ Mr. Orme
The Chief Secretary is giving us all this paraphernalia about the control of prices. But why is it that despite all these controls there is such a tremendous increase in prices occurring in the shops? It affects food, we have just had a petrol increase, and now there is to be an effect on hotel charges for this year, among many other factors. If one goes into a shop one hears constant complaints from people about the weekly increase in prices. What the Chief Secretary is saying means nothing in terms of what is happening in reality.
§ Mr. Jenkin
I believe that the hon. Gentleman was in the Chamber when I referred to the pattern of the movement of inflation during the standstill period. I indicated that two-thirds of the rise in the price index during the standstill period was attributable to matters which were outside the control of this country—imported food prices, seasonal food prices and so on. Only four-fifths of 1 per cent. of the rise in the retail price index has been due to prices within our control. My hon. Friend the Under-Secretary may refer, for instance, to the petrol position, about which the hon. Gentleman has just spoken.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I am a little mystified about this point In the block of flats where I live in London I am told that I have to pay so much per month for VAT which I did not pay before. Will the right hon. Gentleman explain how that has come about as a result of prices outside the control of this country?
§ Mr. Jenkin
The hon. Gentleman has been present during many of our debates on VAT. He knows that there have been many changes in prices, with some up and some down and many others staying the same. There is no reason why the introduction of VAT should have had any substantial effect on the general level of prices. Of course some services which hitherto were not taxed are now being taxed. Many goods which were taxed at a high rate are now taxed at a much 1344 lower rate, and prices have been reduced accordingly.
§ Mr. Leslie Huckfield (Nuneaton)
There is some need for further clarification here. Is the right hon. Gentleman saying that the prices to which he has referred as going up by four-fifths of I per cent. do not include food and imported commodities? Does he realise that he is saying that the four-fifths of 1 per cent. covers only prices which do not include food and do not include imports and that, in fact, the four-fifths of 1 pet cent. applies to a small range of products only?
§ Mr. Jenkin
Over the past four months industry has had to absorb considerably increased prices of commodities. This factor has not been reflected in prices in the shops because of the controls in force.
The other group of important changes since the Green Paper relates to investment. We have always recognised that the maintenance of a high level of investment was important in sustaining the growth in the economy. The code reflects that belief fully.
The circumstances in which the Price Commission can recognise the special needs of investment have been extended. In particular, the requirement to reduce prices if increased turnover lowers unit costs has been dropped. That was widely criticised as being directly opposed to the encouragement of investment. The Price Commission will have discretion to modify the application of the allowable cost increase rules and the application of the net profit margin if their application would deny a company funds essential for investment or would deter it from making the investment by reducing the prospective rate of return to an un-acceptably low level. Rising profits from higher turnover will provide resources for investment, and, in the main, business men base investment decisions on a long-term view. Here the key to confidence in the longer term is the prospect that inflation will be successfully controlled and that the growth rate of the economy will be maintained.
Those are the main changes in the code from the version in the Green Paper.
1345 On pay, the code allows levels of increase which are by no means ungenerous compared with past experience, though rightly a good deal lower than the wildly inflationary settlements which were becoming the pattern during the summer and autumn of last year. For prices, the régime is stricter than anything attempted before. This is essential if the policy as a whole is to be acceptable to the main body of wage and salary earners. But it is also sustainable by industry and commerce, because the policy is being operated in an atmosphere of growth and expansion.
It cannot be stressed too often that the code does not put an upper limit on profits as such. It is profit margins which are subject to the reference level of the best two of the last five years. There is nothing in the code to prevent any firm expanding its business and so increasing the profits that it earns.— [Interruption.] I hope that the hon. Member for Nuneaton (Mr. Leslie Huckfield) applauds that as much as I do.
The Government are determined to maintain the growth of the economy, and this will of itself do more to ensure the success of our counter-inflation policy than any other single step we are taking.
I should like to mention the status of the code. The exchanges in the House on Monday after the statement on petrol prices by my right hon. Friend the Secretary of State suggested that there still seems to be some doubt in the minds of some hon. Members, particularly about the status of the code in relation to the smaller firms which are entitled to determine pay and to fix prices without having to get the prior consent of the Pay Board or the Price Commission.
It may be helpful if I spell out the position again, because it is important. The Act provides that it is the duty of the board and the commission to have regard to the code in operating the pay and price controls. However, the preamble to the code makes it clear— Articles 1 and 2 of the order—that the code is addressed to all those concerned with the determination of pay and prices and that they should have regard to it.
It is these final words which appear to have caused the difficulty. I say again 1346 —it was said often enough during the passage of the Bill upstairs, as the right hon. Member for East Ham, North (Mr. Prentice) will recall—that to fail to observe the code does not of itself constitute an offence. It is right that this should be made clear. There must be no doubt about it. That can only arise for a small firm when one of the agencies makes an order or serves a notice under Sections 6 or 7 of the Counter-Inflation Act.
For firms which have to pre-notify —the largest firms—the agencies will have an opportunity in advance to consider whether the proposed increases conform with the code. Those which do not have to pre-notify are free to go ahead and implement their increases, but they are expected to do so only in conformity with the code. If a firm which does not have to pre-notify makes a price increase which does not conform with the code, it puts itself at risk, because the agencies could subsequently issue an order or notice to ensure compliance with the code. If the order or notice were not then complied with that would constitute an offence. Until that happens no offence is committed. I want to make that clear because it is important.
§ Mr. Jenkin
There is power—this is not always possible—in the case of a price increase to make an order or notice retrospective and to order repayment.
§ Mr. J. Bruce-Gardyne (South Angus)
My hon. Friend referred to confusion on this point among hon. Members. I suggest that the confusion seems to extend to the Price Commission itself. Is my hon. Friend aware that on Sunday the Price Commission was reported as having stated that garages that put up prices on that day were acting illegally? Will he ensure that the Price Commission does not in future make statements of that kind for which it has no authority whatsoever?
§ Mr. Jenkin
I did not hear that broadcast, because I was with my right hon. Friend the Minister of Agriculture in Luxembourg. I will see that my hon. Friend's point is drawn to the attention of the Price Commission. It may be that there was some misunderstanding. I am 1347 sure that the members of the Price Commission are well aware of the position as I have just put it to the House.
§ Mr. Atkinson
The hon. Gentleman has just said that it is possible for these orders to be retrospective. How can that be? Is he suggesting that sales are recorded in a book? How do we find out who bought what at what time? How can it be retrospective?
§ Mr. Jenkin
I should qualify that by saying "where practicable ". One can imagine a situation where an identifiable product—for example, a machine tool-has been sold by a machine tool manufacturer in circumstances which would amount to a breach of the code. There would be no difficulty about the manufacturer making a repayment if subsequently a notice or order were issued staling that he had to reduce his price. Clearly, there are practical limitations on what can be done. I hope that I have made the position clear on the status of the policy.
In devising the policy we recognised that it was not only undesirable but totally impossible to try to impose a tight statutory control on each and every transaction in the economy. The system that we have established therefore concentrates primarily on the largest firms, in the knowledge—this is borne out by the American stage 2 experience—that if these firms are strictly controlled competition will ensure that this restraint is reflected more widely through the economy. The code is also there to guide the smaller firms, and in the last resort they can be required to conform.
§ Mr. Leslie Huckfield
I must press the hon. Gentleman again. What about the situation of those garages which last week, knowing that the price of petrol was to go up at the weekend deliberately bought additional stocks of petrol and oil at the old prices and put an extra penny a gallon on petrol on Sunday? That situation will happen again and again. As my hon. Friend the Member for Tottenham (Mr. Atkinson) pointed out, how are we to know when they bought in their stocks?
§ Mr. Jenkin
The hon. Gentleman has asked a detailed question which falls squarely within the remit of my hon. Friend the Under-Secretary of Stale for 1348 Trade and Industry, so I will leave him to deal with it. I believe that he intends to refer to some of the points which have been made about the petrol and oil situation. The hon. Gentleman will get a better answer from my hon. Friend than from me.
I turn now to the Counter-Inflation (Notification of Increases in Prices and Charges) Order, which is the subject of a Prayer by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). This order gives effect to the arrangements for the pre-notification of proposed price increases outlined in Section 5 of the White Paper, Cmnd. 5267. The requirements are defined mainly in terms of the value of sales in the domestic market in the last completed year of account. Where an enterprise forms part of a larger group its sales will be aggregated within the sales of the group as a whole. Certain prices and charges, notably those relating to exports, are excluded. Manufacturers with domestic sales exceeding £50 million and service enterprises with sales in excess of £20 million are the major pre-notifying enterprises, and about 180 firms are likely to be covered.
In addition, the order specifies 39 enterprises which either have a relatively large share of the market in which they operate or are of special importance in the market for particular goods of interest to the consumer. These are required to pre-notify, as are the four clearing banks. Wholesalers, distributors and retailers are not required to pre-notify proposed price increases, but they will be required to make quarterly reports and to keep records as specified in a separate information order which has been published.
I do not wish to say anything more about the notification order. I shall listen with interest to what my hon. Friends may say about the order should they be able to catch your eye, Mr. Speaker.
§ Mr. John Biffen (Oswestry)
May I ask my hon. Friend to take this opportunity to indicate whether an order has yet been made specifying the requirements on the category 2 companies mentioned in paragraph 7 of Command 5205? Will he also indicate whether the House will have an opportunity to discuss that document, which will be of no less importance than the order we are now discussing?
§ Mr. Jenkin
Offhand, I am unable to give my hon. Friend an answer, but I will see that he gets an answer before the end of the debate.
Both these orders are essential components of the counter-inflation machinery. In the code we have devised rules for stage 2 for both pay and prices which, though detailed, are basically fair—fair to producers, fair to distributors, fair to employees and fair to consumers. Of course, all right-minded people wish that none of this was necessary. Of course, many dislike the intrusion into their freedom of action which the policy represents. But it is increasingly clear that the great majority of the people of Britain support the policy.
"Reluctant and resentful acquiescence" on the part of some is probably a fair description of their attitude, but it is the acquiescence that is crucial, and acquiescence or consent, which is probably the word that is used more often, has always been an important element in the democratic process.
§ Mr. Arthur Palmer (Bristol, Central)
Does the hon. Gentleman see this code as a permanent feature of his Government's policy?
§ Mr. Jenkin
It has been made clear over and over again from this Dispatch Box that this is a code for stage 2 and that stage 3 will begin in October or thereabouts. Consultations will take place on stage 3, and we hope that all sides of industry will participate. Consent is an important element in the democratic process, and this policy undoubtedly has consent. If some give it resentfully and reluctantly, I ask them to bear in mind the appalling alternative of an uncontrolled inflation with all the injustice and hardship which it brings in its train.
I believe that the country recognises that at this time, even with all its anomalies and illogicalities—and I admit that they are bound to exist—a statutory policy is right and necessary. I believe, too, that the country recognises that we have striven to be fair, and I feel sure that most people realise that a policy of counter-inflation must apply to pay as well as to prices. The Opposition are seeking to pretend that that is not so, but in their hearts most of them know it to be true.
1350 While there will always be arguments about the details, the principles of the code and of the counter-inflation policy enjoy far more support than the Labour Party is willing to admit, and because the code is both fair and necessary I ask the House to support the order.
§ 7.53 p.m.
§ Mr. Reg Prentice (East Ham, North)
This short debate is the second example this week of the undemocratic process by which the Government's prices and incomes policy is being implemented. The first example was the series of questions and answers on Monday to the Secretary of State for Trade and Industry, when it was made clear that the answers about the increase in petrol prices were considered unsatisfactory by hon. Members on both sides of the House. It should have been possible for that matter to be the subject of a specific debate and vote, as such matters were in the days of the prices and incomes policy of the Labour Government.
This debate is a further example of that undemocratic process, because although we have before us the question of giving final approval to a code consisting of 153 paragraphs, many of them of great significance to the community, there is time for only one short debate covering the whole subject matter. Indeed, we are taking another order with this one. There is to be no opportunity for a separate decision.
It is possible for hon. Members to approach this brief debate in various ways. The Chief Secretary approached it mainly by giving explanations of the minute details in which the final version of the code differs from the draft version. Some Government Members will want to take up the time of the House with special pleading for vested interests which are close to their hearts. My brief contribution will be along different lines.
We have the opportunity today to consider where we stand about a month after the ending of the freeze on incomes and a couple of days after the end of the "freeze' on prices, and to discuss the way in which this set of rules is likely to work between now and the autumn.
1351 The Chief Secretary gave the House a rosy picture of the increase in prices during the period from November to March. I am sure that the House came to the conclusion that the hon. Gentleman had been highly selective in his figures, first, because he excluded food, which is the most important item in the family budget, and, secondly, because he concentrated on the items controlled by the freeze powers, many of which will be the subject of applications for price increases now and in the coming weeks and which are bound to increase to a greater extent than they were allowed to do during the freeze.
Anyone taking an objective view of the price situation now—of the way in which prices have developed during the last few months and the way in which they are likely to develop between now and the autumn—is bound to come to the conclusion that the Government's estimates of a few months ago have been knocked sideways and that the price explosion is greater, and will in future be greater, than anything that Ministers were suggesting when these policies were first brought before the House.
The Economist of 21st April said:By next November 6th, therefore, apart from fringe benefits and drift, nobody will have a money income that is more than about 8 per cent. above what it was exactly a year ago. The Government had been hoping that by this anniversary, in the week after stage three is due to start, retail prices would be only 5-6 per cent. above their level a year before, so that people would feel that they had continued to have some rise in real earnings. It is now clear that they will not … British retail prices by next November will still be around 8 pet cent. higher than a year before.Whether or not that forecast of a price level of about 8 pet cent. higher than a year ago is a good one, I do not know. Looking at the situation, admittedly on incomplete evidence, my guess is that the price level next November will be more than 8 pet cent. higher than it was a year before then. But even if we take that as a likely figure it is clear that the Government's own objectives for price stability have already been upset. They have been upset by developments in the last few months and a likely continuation of those developments into the coming months. Perhaps I may mention just a few of them.
First, during the so-called freeze, since November food prices have risen by about 8 per cent., with a further increase 1352 to come. Secondly, during this period there has been a continuing rise in housing costs, in the form of house and land prices, mortgages, rates and rents. Due to the Government's own legislation, rents have deliberately been forced above the level at which they would otherwise have been. There were compulsory rent increases last October and in April, and there is to be another increase next October. Thirdly, in the last six months there has been an increase of about 20 pet cent. in the cost of imported materials and food, and much of this increased cost has still to be passed on to the consumer.
The Chief Secretary fairly said that inflation was a world-wide disease and that no Government could insulate themselves from this process. If that is so—and I am sure that it is—no political party has the right, at an election, to claim that it will reduce prices at a stroke. When we deal with price increases, therefore, we are dealing with increases which are only partly within Government control. I am seeking to give a complete picture of the trend.
Fourthly, we have had the surrender of the Government to the EEC on the crucial question of steel prices. This is bound to lead to increased costs throughout the whole of industry, and is bound to affect the prices of goods of all kinds. Fifthly, we have had the statement from the Price Commission this week, as it begins its new duties, that it now has about 80 applications in the pipeline for price increases and that, of course, is only a beginning. Those applications relate only to the 177 major companies which are bound to seek approval in advance. They do not apply to the other increases of the very much larger number of companies to which the Chief Secretary referred at the end of his speech. In addition, new applications are coming along all the time.
In the Evening Standard tonight I read that British Rail is to apply for a 5 pet cent. increase in fares, and that there are likely to be applications from the coal, gas and electricity industries. It is clear that the increase in petrol prices approved a few days ago was only the beginning of a long list of increases, many of which will have multiplier effects and will affect the cost of living in the months ahead.
The position can be summarised, therefore, as one in which retail prices will 1353 have risen more than the Government estimated during the 12 months of the freeze plus phase 2, to an extent at least equal to if not more than the rise in incomes during that year. By the autumn, the whole policy will be seen, if it is not already so regarded, as a failure in terms of prices, because the Government can no longer use the trade unions as a scapegoat. It will have been a period in which incomes were held effectively to the limits of the policy while prices were not. The Labour Party has always suggested that the policy would bear effectively on incomes but not on prices.
I want to explain what worries me most about the position of incomes as it will develop in the next few months against the background of rising prices. The Chief Secretary was wrong in suggesting that the Opposition have said they could have a counter-inflation policy without any form of income restraint. We have not done that. The hon. Gentleman has heard us time and time again in debates in the House and in Standing Committee refer to the need for a voluntary incomes policy and the case for such a policy, which we believe would be practical given the right background of other policies with it. The Chief Secretary must not suggest that we have ever tried to pretend otherwise.
§ Mr. Patrick Jenkin
I actually used the word "control". I said that it was impossible to have an effective counter-inflation policy which sought to control prices but not incomes.
§ Mr. Prentice
If I misheard the Chief Secretary to any extent I apologise, but the impression given by Conservative spokesmen and certain newspapers is that we are trying to dodge the issue. We say that the requirements of an incomes policy are different from the requirements of a price policy, because the nature of the problem is different.
§ Mr. Orme
I hope that my right hon. Friend, who I am sure does not wish to mislead the House, will refer to the TUC-Labour Party agreement on prices and incomes. It does not specify that we should have an incomes policy. Surely my right hon. Friend does not want to mislead the House. We talk about 1354 prices and about getting a correct climate, but the agreement does not mention an incomes policy. [Laughter.]
§ Mr. Prentice
What many of us have made clear and what was made clear in the presentation of that policy by my right hon. Friend the Leader of the Opposition, and by Mr. Vic Feather, speaking on behalf of the TUC, was that if the policy set out in that document were pursued by a Government it would be possible for the TUC to pursue an incomes policy which would have a reasonable chance of being accepted by the unions and would involve that measure of restraint which would help towards a solution of the problems. No one is suggesting, or could suggest, that a counter-inflation policy must not include an approach to incomes.
Experience in this country and abroad proves that a successful incomes policy is not provided by statutory powers alone, that the whole incomes problem is so complex and that there are so many variations of the ways in which wages, salaries and other incomes are arrived at, that it has a chance of success only if it has a measure of good will and voluntary co-operation behind it. Voluntary co-operation is more important than statutory powers.
I wish to reiterate what I have said in previous debates—and experience is bearing it out—that the real weakness of the £1 plus 4 percent. formula is that it contains no chance of flexibility and no chance of making adjustments such as are needed by a modern industrial society. There are three examples of this. The formula contains nothing to benefit the lower-paid. In spite of the lip service which Ministers keep paying to the lower-paid, the simple fact about the formula is that it means a smaller increase for this category of workers than for the higher-paid. The application of this formula across the board will widen and not narrow the differentials.
The second weakness of the formula is that it contains no provision for those large groups of workers whose pay has always been based on comparability with other forms of employment. I believe that the betrayal of the Civil Service by 1355 the Government is likely permanently to have damaged relations with the public service. There is a sense of betrayal and resentment among civil servants which I believe will assume a permanent nature.
The third weakness is the complete failure of the formula to make any provision for productivity deals or to measure changes in working practice which might lead to higher productivity. Many of the cases of a few weeks ago about which there was the greatest controversy —some of which cases led to industrial action, in the gas and other industries— were cases in which there had been considerable improvements in productivity over a period and the workers had made sacrifices and major adjustments to their working practices with the promise from their employers and unions that the benefit would be passed on in the form of higher incomes. What worries me is the possible permanent effect of what the Government are doing. Given the 12-months' period of the freeze plus phase 2, if there is no upward adjustment of incomes for productivity arrangements, except within the narrow limits provided, I wonder whether the Government will not inflict permanent damage on progress towards productivity in British industry.
§ Mr. Atkinson
We should make it brutally clear how we see the Government's policy at the moment. It is a policy aimed directly at a wage cut. As Ministers have said and as my right hon. Friend reiterated once or twice, unless someone has a take-home pay increase this year of not less than 8½ per cent. that person is bound to be worse off and will therefore suffer a wage cut. Under the terms of the policy it is not possible for a worker to have a take-home pay increase of anything like 8½ per cent. Will my hon. Friend confirm that?
§ Mr. Prentice
The arithmetic of the matter cannot be worked out until the end of the period. However, it looks as if average increases in salary will be under 8 per cent. The figure most quoted has been 7.8 per cent. For the reasons I gave earlier, price increases are likely to be greater than that, and for that reason my hon. Friend is probably right.
§ Mr. Atkinson
Will my right hon. Friend give way again? I know that time is getting on, but some of us will be 1356 unable to get into the debate at all. The point is that unless gross pay increases by 12 per cent. at least it will not be possible to get an increase of 8½ per cent. in take-home pay.
§ Mr. Prentice
The danger in the Government's attitude—certainly the attitude expressed by the Secretary of State for Employment and, to some extent, the Prime Minister—is their dangerous tendency towards self-congratulation, on the ground that their policies have now been accepted, that all is well, that everything can settle down, and that they can sit back and enjoy what they consider to be the success of those policies.
I am bound to warn the Government— in the words of an intervention by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer)—that acceptance and acquiescence are two different things. We now have acquiescence only in the sense that working people are beginning to recognise that the Government's policy does not allow employers to pay over the limits. Working people recognise that as a fact of life with which they will have to live for the time being. That is not consent.
It should further be recognised that prices between now and November will be going up and that the anomalies and injustices of the pay aspect will become more and more resented as time goes on. Resentment is building up. There will be an explosion in the autumn and a great deal of industrial unrest. There will, perhaps, be greater industrial unrest than there has already been under the Government. That is saying quite a lot, because industrial relations under this Government have been worse than under any Government since the war. Certainly the pressures are building up, and they will continue to do so between now and November.
An explosion of industrial unrest in the autumn can be avoided only if between now and then the Government are able to secure agreed policies with the TUC, the CBI and the people. Such policies will not be made to work by small groups of 1357 leaders meeting together. They can work only if they are recognised by working men and women as reasonable and fair.
Last year, during the joint talks, the Government failed. They tried to blame other parties, when the blame belonged fairly and squarely with them. In the last few days the newspapers have been full of stories about the resumption of the talks. I am bound to say that we might have heard something about that in the House. The Chief Secretary might have had something to say about that matter this evening. It is not good enough to read in the newspapers that things are likely to happen and to hear nothing said about them in the House.
I hope and believe that the talks can be resumed. I emphasise that if there is to be any chance of success the Government must seriously consider the reasons for last year's failure. They must learn the lessons and take a different line on several basic points in the talks this summer. Those points have been put from the Opposition Dispatch Box and from the Opposition benches many times in recent months. I shall not take the time of the House by reiterating all of them.
I shall mention three matters, because they seem to be key points. First, the Government must reverse every policy which has been leading to higher prices. It is not a tenable proposition that the Government should ask for the people's co-operation in fighting inflation if they still pursue policies that lead to inflation. The most important example is the Housing Finance Act. The Government should freeze all further increases under that Act.
Secondly, the Government must have a more convincing policy of price control, including some control of fresh food prices. It must include, in time, the use of selective subsidies to try to keep prices increases within a reasonable range. No one can pretend that fresh food prices can be stabilised completely in an unstable world. What the Opposition have said consistently is that the Government should make an effort and that the use of subsidies should be a weapon that the Government should not reject.
Thirdly, if there is to be a deal it can best be reinforced by the Government announcing either the repeal or the drastic 1358 amendment of the Industrial Relations Act. Yesterday, listening to the Secretary of State for Employment, I was appalled at the extent to which he still seems completely insensitive to the deeply offensive nature of the Act to trade unionists. He has been doing his job long enough to be aware of that. It is not good enough for him and his colleagues to sit back and say, "We will consider amendments put by other people." The vital fact is that the Act has damaged the country. It was the Government's Act, and the Government must be responsible. They must take the lead to get rid of it.
We shall divide the House, as we have done at every stage of the counter-inflation legislation. We shall do so because we want a stronger counter-inflation policy. We do not think that this one measures up. We are prepared, as a party with strong links with the trade union movement, to call on that movement to make its own contribution towards fighting inflation. The Government cannot sit back and ask other people to do that job. Their policies must measure up—and the policies contained in the code which we are discussing manifestly do not measure up—to what is needed.
§ 8.18 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
I beg to move,That an humble Address be presented to Her Majesty—
§ Mr. Deputy Speaker
Order. The hon. Gentleman need not move his Prayer. He can discuss it with the motion on the order.
§ Mr. Ridley
That is why I raised a point of order, Mr. Deputy Speaker. How is the Prayer to be put if I am not to move it now?
§ Mr. Deputy Speaker
The hon. Member can move it formally subsequently and divide the House if he wishes.
§ Mr. Ridley
In that case I shall not move it.
I complain strongly that we should have the curious situation of discussing two orders at once in limited time. They are orders of great importance. The situation does not meet entirely the spirit of the undertakings given by my right hon. 1359 Friend the Secretary of State for Employment in Committee that adequate time would be provided for the House to debate these important orders.
It seems that the Prayer, which I have not moved, would properly form the subject of a separate debate, with a vote, if necessary, at the end. I hope that my speech will not sound too confused. I am forced to discuss both orders in one speech. I shall take up some of the wider points which the right hon. Member for East Ham, North (Mr. Prentice) has raised at the end of my speech.
It is worth recording that it is a great pity that we cannot amend the order which my hon. Friend moved. If ever there was a document of great and detailed importance which should be amended, it is the code. I hope, that in any future legislation on this subject, codes of this sort will be subject to amendment in Committee. I have some strong criticisms of the code, even though it is a great improvement on the draft which was first put before us.
Depreciation in the prices section is mentioned once but not in connection with prices. There is no reason for manufacturers not to increase depreciation. Many of them want to do so in any case in order to reduce their profit margins, to increase allowable costs and to justify higher profits if they wish to make them. Depreciation is a loophole to the directors. When we have inflationary times, there is a case for faster depreciation. That so great an element in the costs of an industrial company should be left out of the code altogether is an obvious loophole, and I hope that the industrial companies will take it in order to secure their profitability as best they can against the extraordinary hurdles put up in the prices part of the code.
My second point of criticism concerns the whole question of profit margin control. How is a company to know what profits it is going to make during a coming year? The idea that in some way it will be able to convince the Price Commission that it is either going to make inadequate or too great profits is incredible, especially when the operation has to be done in advance. It can always, of course, greatly affect the likely profit margin by changing its depreciation or 1360 by changing the stocks it holds. Indeed, no one will know what profit has actually been achieved until perhaps a year or 18 months after the time when it comes before the Price Commission. This gives the commission an impossible job.
My next point of criticism concerns paragraph 29—the "profitability" paragraph. The formula laid down in it is quite arbitrary. Although I acknowledge that it is a great improvement on the original 50 per cent., it will mean that companies which, given a particular year, do not make an increase in productivity will be penalised, whereas those which might make enormous increases in productivity through making very big investments will not get the full benefit of those big investments either. I think that this is where the whole of the prices side founders on the question of trying to force companies to pass back the benefit of higher productivity, which is really higher investment, not to the shareholders or to the workers but to the consumers. I hope that the Government will think again about paragraph 29 and try to get it right.
Curiously, the Government rely upon competition. As my hon. Friend said, he believes that if he can control the prices of the leaders the rest of the economy will have to fall into line on prices. That is the biggest declaration of faith in the value of competition I have heard for some time. Yet, at the same time, we are here denying competition any part through controls on prices based on arbitrary figures about what will happen to productivity—a process which must in the end become completely unfair.
The 4 per cent. plus £1 per week is being taken as the starting point in all wage negotiations, and it is not possible to purchase any improvements in working practices or productivity for this increase of 7.8 per cent., or however it works out, because every union knows that it has to be granted anyway. In fact, productivity increases are diminishing in so far as they are to do with labour agreements as opposed to capital investment. It is becoming extremely difficult to get further co-operation from workers because they know that they will get 4 per cent. plus £1 and that there is no need to sell anything for it.
1361 The policy of holding down the large firms' wages is to some extent succeeding, but what is developing now, and is very worrying, is that smaller firms which believe they can get away without being caught by the Pay Board are putting up their wages considerably and poaching labour, particularly skilled labour, off the big firms—quite properly from their point of view—and this will hurt some of the big firms very much.
There was a case the other day of a Midlands company which gave a £4 a week rise backdated to last September, which was way above the criterion laid down in the White Paper. I have here a letter from a firm in the North of England, which must remain anonymous. It says:There are undoubtedly now however a number of aggressive organisations who, in my view, are deliberately taking advantage of the current situation by making offers approaching 20 per cent. to some classes of employee knowing full well that the existing employer is inhibited from meeting this offer.This is becoming widespread. I could give other examples.
§ Mr. Ridley
It is in an intermediate area. I cannot tell my hon. Friend more than that. It is not in the overheated South. This situation is going to develop into one of gross unfairness and to loss of labour in certain vital sectors of industry. It is the way in which higher earnings, even with the 8 per cent. allowed for in the policy, are actually taking place.
I turn now to the Notification of Increases in Prices and Charges Order, which is the subject of my motion. Article 8 gives the information which is required to be put before the Price Commission by companies which have to notify. I ask myself how long it will take to put together all this information. Not only does it require many details of costs and sales and future predictions, but it requires future projections of profit margins which will involve a great deal of complicated work. When one comes to the thought of how the Price Commission is to check whether any of the information is accurate, the mind boggles at the bureaucratic morass into which we are likely to get.
1362 Article 9 gives the Price Commission 42 days to consider whether a price increase should be granted. Here I criticise Article 9 very strongly. It gives the Price Commission power to ask for ever more supplementary information. If after eight weeks it has not delivered its verdict, it can do no more and the price increase is not granted. Therefore, simply by prevaricating and asking for ever more complex information, the commission can deny the firm the right to what may be a perfectly justifiable increase.
Article 10 gives the Price Commission power to revoke permission for a price increase or to demand some of it back if after a period of time the net profit levels turn of to be excessive. This kind of power goes too wide and too far and is too irresponsive to Parliament to be granted in a statutory instrument of this sort. I would like the Government to look at Article 10 very carefully to see whether they do not agree that to give the commission power to come back at any stage in the future and say "We have decided that we were wrong in allowing you a price increase because you have made too much profit, so you must give us back that profit or reduce your price", is going beyond what is reasonable in this strange world that we are entering.
The particular difficulty concerning this order is the food industry, because a very large number of companies are scheduled and also because of the companies with over £50 million turnover in food processing. They are dealing with perishable goods which fluctuate highly and quickly on market price. The idea that it is possible to wait for eight weeks for an answer, having assembled all this information, and put it before the Prices Commission, by which time the price of the raw material has gone up further—or has gone down—does not take account of the fact that prices are fluctuating considerably month by month. To use this complicated machinery will cause grievous difficulties in the food processing industry. If any given price of a foodstuff were to fall it would be with extreme reluctance that that processor would admit it and would be allowed to make a reduction because he would know full well the problem of getting the price up again if prices rose later.
1363 We have these many complicated problems. I am inclined to think that the price control will be extremely ineffective because the machinery is so complex and difficult. As my hon. Friend said, in the first four months prices rose by 2.4 per cent. That means an annual rate of about 7.2 per cent. I believe, with the right hon. Member for East Ham, North, that that is a beginning and that there will be a further escalation in prices. I cannot accept that we can blandly declare that increasing prices caused by overseas suppliers' prices rising has nothing to do with us, that it is outside the control of the Government and that we are innocent of what is happening.
Why are overseas prices rising? They are rising because the value of the pound is sinking relative to other currencies. In some cases, in Germany, in France and in Japan, it has fallen by a considerable amount. The value is sinking because we are increasing the money supply at home at such an alarming rate that foreigners do not want to hold pounds. This is a consequence of the long period of overspending which is coming through in the form of prices. It is not entirely the cause; there are other causes. One is that of joining the European Economic Community, which I personally supported. I always expected that food prices would rise as a result and I never believed that it would be possible to stop that because it was a conscious act of policy from which we knew we would have some suffering, but the sinking of the value of the pound was also due to domestic financial policies.
There is no way of stopping inflation because, as the right hon. Member for East Ham, North has said, prices will go on rising and wages cannot be contained within the formula. That may be being done at present but if prices accelerate it will be more difficult to contain wages and we shall have more increases in wages and prices during the coming year than we had in the past year. We must look to the economic causes of present inflation. We can no longer blame the trade unions; in my humble submission we can no longer blame foreigners either.
§ 8.32 p.m.
§ Mr. Stanley Orme (Salford, West)
I can certainly agree with the last words of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). He has given 1364 a detailed explanation of what is happening and what will happen over prices. This we have to face. Only last week when I was in a shop an assistant said to me "Isn't it terrible the way prices are increasing"—she meant prices in her shop—"week after week, but wages are frozen?"
One can pick out selected products or commodities and bring them within the purview of the Price Commission, or one can exclude them, as my right hon. Friend the Member for East Ham, North (Mr. Prentice) said with reference to steel, or petrol and allow increases to take place. Commodities can be brought into a survey, and if food is allowed to go free from that survey and the prices of other commodities are allowed, particularly on the retail side, to be continually increased, no control can bring them within the purview of the commission.
If the Price Commission goes on in the lamentable way in which it has started, I can see the day coming when the present chairman will write a book like that written by Mr. Aubrey Jones about the Prices and Incomes Board, showing that everybody was wrong but Mr. Aubrey Jones—"There goes Jesus Christ; everyone else was to blame." If he had only been allowed a free hand, he would have solved all our problems——
§ Mr. Orme
I do not know whether Sir Frank Figgures will handle things in the same way, but if he makes as much of a botch of things as he has done on petrol prices, he will be able to write the same sort of book. [Laughter.] We can laugh about these things, but we are dealing with factors in our society affecting the living standards of millions of people.
The hon. Member for Cirencester and Tewkesbury talked about wage control evasion. I do not doubt that some employers, faced with the increased heat in the economy and the shortage of skilled labour, may be offering more than the norm of £1 plus 4 per cent. But this does not apply to the vast majority of wage earners. It is easy for an employer to hide behind the Government's norm.
1365 The Chief Secretary said that unless price increases are referred to the commission the law is not broken. The same would apply, I assume, to wage increases if they are not referred to the Pay Board, but employers do not interpret the law in that way. To my knowledge, in many sectors of British industry the wage limit is being rigidly applied; this is what is aggravating the dissatisfaction of the workers.
However we argue about the May Day protest, there is no doubt that millions of key workers demonstrated against the Government's policy—
§ Mr. Orme
Take those 1½ million out of the economy and there would be no British economy. I would guess that more than 1½ million were involved. When one talks about engineers, building workers, miners, dockers and railway workers, one is talking about the workers on whom the economy basically depends.
I have disagreed with Vic Feather over many things that he has said about the May Day stoppage, but I agree with him that that demonstration was the beginning and not the end of the protest against the Government. As Hugh Scanlon said at the engineering conference of my union only a fortnight ago, the Government may feel that they have had some victories, but they cannot really be proud of victories over hospital and gas workers who leaned over backwards to ensure that they did not put people in real distress—an act of unselfishness which damaged their fight. They put the nation first. This unselfishness is shown by many groups of British workers who are so often criticised.
Hugh Scanlon said that the Government might congratulate themselves on their victories, but ultimately—with the present price increases and the growing aggravation over food prices, VAT, the second stage of the Housing Finance Act, the continued escalation of land prices and the extra cost of mortgages—they will see what the response of working people will be.
British workers are not easily moved. They do not demonstrate at the drop of a hat. They need conviction that the 1366 policy being advocated by their own unions and by the trade union movement is correct. But when they fight, as was demonstrated by the National Union of Mineworkers last year, they mean business.
The present policy of the Government is inequitable because we know that it is not being applied across the board. What about self-employed workers? We raised this in the Committee on many occasions. What about the people who are getting all sorts of other fees? I know from the people who approach me that there are large sectors and groups of people who are completely oblivious of the fact that the Government have a policy in regard to incomes or prices. It is being ignored. But certain key sectors of the economy, certain groups of key workers, are trapped and are having to pay the price.
As my hon. Friend the Member for Tottenham (Mr. Atkinson) has said, workers getting the maximum of around 7½ per cent. increase on their gross pay, when they have had the reductions and are left with their take-home pay, are faced with a continuous increase in prices. The hon. Member for Cirencester and Tewkesbury underlined the point, as did the Minister himself, that these price increases are going to continue, because of many outside circumstances— world conditions, the floating of the pound, and many other factors. If they continue, workers will not be maintaining their present standards. They are going to take a reduction in real earnings this year. While the economy is going to start to increase, there is going to be growth and the profit factor in our economy is going to improve, the workers who have produced this wealth are going to experience really severe attacks upon their standards.
Mixing with these workers yesterday, as I did in Manchester, with engineering workers, building workers, and so on, it was clear that they were not taking a selfish attitude and saying that they wanted an increase irrespective of what the hospital workers or the gas workers got. If they could see some kind of climate in which those workers were getting an increase, as the miners and other groups of workers have shown in the past, they would be prepared to co-operate.
1367 I come now to the point made by my right hon. Friend on the question of an incomes policy and where the Labour Party stands in regard to this. We are continually told that we are not viable unless we have an incomes policy. I have read learned dissertations by my noble friends Lord Kennet and Lord Chalfont in another place—experienced trade unionists in their own right, no doubt—about the necessity for an incomes policy. We are told that the Labour Party is naked without it, and so on.
That is an absolute fallacy, and I think that is the central point. In this regard perhaps my right hon. Friend and myself are not so far away on the ultimate point that, instead of starting with an incomes policy, what has to be done to get an equitable society is to start at the other end, not by exhortation, not by crippling legislation, but by example. One does not have a Housing Finance Act, one does not have prices rocketing, one does not have rents rocketing, one does not have land prices rocketing, and one does not have mortgage rates or travel costs rising. One needs a free health service, with the abolition of prescription charges and everything that goes with them, a climate in which the necessities of our society are available. That might be anathema to many Conservative Members, but that is where I start from in the argument, seeking to create a just society, redistributing the wealth in our society and some of the basic economic ownership, so that we can plan the type of society I am talking about. Then the Government can start telling workers "We can balance your earnings and your value in society, X against Y and Y against Z, and so on". Then they can start talking about people's contributions.
Despite all the paraphernalia of the Price Commission and the Pay Board, we are in a mixed economy. Many Conservative Members want a free market economy, and object when they see piffling obstructions, mere irritants that do nothing but make the whole matter more difficult. Certain groups of workers are trapped and penalised. We experienced that situation under a Labour Government. That is what creates the anger. Bitterness and frustration are caused when we see all sorts of things 1368 going wrong in society and those that create the wealth being penalised—not only not being allowed to receive their just rewards but being held back, taking a reduction in real earnings. That is what many millions of workers will do this year. That is the sort of climate the Government have created.
The Government failed with the freeze. They hoped that in phase 2 they could, bring—not coerce—the TUC into an agreement with a form of respectability, creating a corporate approach, with the trade unions recognising their place but the Government's policy continuing. I hope that the trade unions will talk fully and frankly with the Government but that they are not prepared to accept anything less than the minimum that has already been laid down—the repeal of the Industrial Relations Act and action on housing, rents and food.
I cannot see the Government agreeing to that minimum under any circumstances, because the Prime Minister said at the end of the Downing Street talks "Get off the grass. These are political issues. This is what the Government were elected for, and we shall decide these policies". If that is so, the trade unions have nothing to gain. They must fight not only industrially but politically and get over the message that there are alternative policies.
That is why I believe that the TUC-Labour Party economic statement is a sound basis, a springboard for a Labour Government. That is in the future. We are talking now about the Government's policy, which is in disarray, which is unacceptable to millions, and which, in consequence, must be defeated. I hope that the Opposition will take the first steps tonight by voting against it.
§ 8.50 p.m.
§ Mr. John Biffen (Oswestry)
Connoisseurs of these debates have by now learned to expect a fair degree of discussion of the Housing Finance Act, the Industrial Relations Act, and much other legislation that has characterised the programme of the present administration.
The faintly disagreeable fact remains that this evening we are strictly here as law makers on the two orders that we are debating and, much as I am tempted to follow the hon. Member for Salford, West 1369 (Mr. Orme), I think that it is the character of the two orders that so fully deserves the time and attention of the House.
I join my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) in regretting that the debate must proceed in tandem. As my name appears, together with that of my hon. Friend, in praying against Statutory Instrument No. 664—the Counter-Inflation (Notification of Increases in Prices and Charges) Order —it is to that aspect of the debate that I shall direct most of my remarks. I shall make one comment in respect of what was said by my hon. Friend the Chief Secretary about the Price and Pay Code, which is incorporated in the first order.
It is dangerous ground when a Government commend a statutory instrument as some kind of popular self-executing piece of law. It will not work out that way. We must ask ourselves only this question: if this is to be treated as self-executing law by the commercial and industrial citizenry throughout the country, how many copies are popularly available in the post offices? The answer is, "Absolutely none". The order is strictly for the specialists—for the accountants, and for the company secretaries. It is not capable of ordinary popular interpretation, and we deceive ourselves if we suggest otherwise.
I turn to the order against which my hon. Friend the Member for Cirencester and Tewkesbury and myself, and others of my hon. Friends, are praying. I say straight away to the right hon. Member for East Ham, North (Mr. Prentice) that of course we have, as he put it, a vested interest. It is a vested interest that there shall be freedom under the law. That is no bad vested interest to proclaim. To react against random and arbitrary power is to react in the tradition which I should have thought would encompass many who are proud to have served in the Labour movement.
I shall confine my remarks to three aspects of the statutory instrument. First, have we much of an idea how it will work in practice? I want to refer to a topic that was mentioned by the right hon. Member for East Ham, North, and subsequently taken up by others, including the hon. Member for Salford, 1370 West, namely, the increase in steel prices. The prices of those steel products covered by the Treaty of Paris are allowed to move without let or hindrance, in terms of United Kingdom legislation. What happens when those Treaty of Paris steel products are subject to very modest subsequent engineering work—perhaps a degree of cold drawing or rolling—and become Treaty of Rome steel products or Treaty of Rome engineering products? From that moment onwards they fall within the notification procedure.
If the company has a turnover in excess of £50 million per annum as prescribed in the order the full notification procedures have to be undertaken, whereas the identical products of a smaller company are not subject to such procedures. We are dealing with a degree of economic and industrial activity which barely transforms or alters the character of the product. Almost certainly 80 per cent. of the cost is contained in the raw material—the Treaty of Paris-designated steel products.
In a highly volatile and changing market situation such as we now have, with a strong industrial demand and an identifiable shortage in many sectors of the steel and engineering industries, the degree of delay content within these differential notification procedures is something which will have substantial and serious industrial consequences for a limited number of companies. Their mere limitation in numbers does not absolve us from seeking some kind of justice in the administration of this system.
I turn now to education. I would like to know whether this applies to school fees. Yesterday's Financial Times said:About 350 independent fee-paying schools have been allowed to increase their fees by between 5 per cent. and 50 per cent.It goes on:Asked why Mrs. Thatcher had allowed increases as high as 50 per cent. in some cases, a Department of Education spokesman said that some of the schools had not increased their fees for three or four years.So be it. But we are not here to pass value judgments on private education and those who like to take advantage of it; we are here to inquire whether there is any legal requirement on schools to 1371 obtain permission from the Government in the terms set out and quoted by the Department of Education spokesman.
We have only to look at Article 1 of Statutory Instrument No. 664 to see that a provider of services—God knows this cannot be considered a manufacturing activity! —means:a person who carries on in the course of business activities falling within minimum list headings 864 and 865 of Order XXIV or within Order XXV of the Standard Industrial Classification;I have to inform the House that education clearly falls within list heading 872 of Order XXVI of the Standard Industrial Classification. It does not fall within the notification procedures with which we are concerned. Will someone somewhere in this administration make sure that one Government Department knows exactly what law is being applied by another Government Department? It is not too much to ask.
§ Mr. Biffen
If it is, it is perhaps one of the permanent features of all Governments and applies without consideration of party affiliation. We ought to have some regard for our craftsmanship as lawmakers. We ought to see that the law that is made in this Parliament is being administered as such. Once we surrender to administrative agencies—and I would have thought that our experience with the Price Commission in the last day or two would have underlined this—we surrender something vital to this institution.
My third point is one of the greatest topicality. It relates to the notification procedure as it applies to something that we can identify as a popular issue, namely, the price of bread. We are assured—and I believe this to be wholly accurate—that an increase in the price of bread is imminent. Indeed, there have been inspired suggestions that the Price Commission has already confirmed that an increase may proceed.
We might as well ask ourselves, as we are entitled to under the order, how that will work out, bearing in mind our experience with petrol price increases. Let us take Spillers. That firm will have notified the price increase, as it is required to under the citation contained in paragraph 1 of a "manufacturer", and the price increased is allowed. Suppose the 1372 bread is sold through Sainsbury's. Is Sainsbury's then supposed to obtain permission for the prices it will charge? Sainsbury's, as a major retailer with a substantial turnover—the figures are elaborated in paragraph 14 of the White Paper "The Programme for Controlling Inflation: The Second Stage"—would be subject to the so-called margins control. Let us suppose that the bread is sold in a small corner shop. The answer surely must be that it is not even subject to margins control.
It is as well for us to understand this, because there was confusion on Monday, caused by the widespread belief that garages were subject to the same kind of control as were petrol companies. Although garages, ironically, are considered as carrying on a service activity which falls within the Standard Industrial Classification Order XXVI and therefore, in selling petrol, come under the notification procedures, whereas those who sell bread do not, it is evident that the scale of the operation completely alters the degree of control.
The Explanatory Note to Statutory Instrument No. 664—which is the only part which anyone who is not a lawyer or an accountant can reasonably understand— reads:Subject to specified exemptions, all manufacturing enterprises and all service enterprises having sales in the United Kingdom market exceeding respectively £50 million and £20 million together with the four largest banks are required to notify all such increases.How many companies are involved? A figure of 177 has been quoted, but I have never seen a list of the companies involved. May not there be placed in the Library a list of companies, showing the volume and expected application of price increases that will derive from this control? We know how many there are to process the information in the Price Commission, but unless and until we can get some concept of the actual volume of price increase notifications which will be pouring into the Price Commission we cannot even begin to have a proper working concept of the effectiveness of this policy.
It touches upon credibility, and as we proceed towards stage 3—whether stage 3 is to be more relaxed or more stringent —the question will be whether it will be more fairly and effectively implemented 1373 than was stage 2, and whether it will take more account of the working realities of the industrial and commercial world in which we live.
Distasteful as it may be to Tribune members of the Labour Party, and perhaps to some Conservatives, we have a mixed economy, and what the House will have to discover—and fairly soon, if it wants to hold its good reputation—is just how practical, against the working realities of today, are the policies that are elaborated in the orders.
§ 9.5 p.m.
§ Mr. John Pardoe (Cornwall, North)
I agree with the hon. Member for Oswestry (Mr. Biffen) that many of us who intend to vote for the code—and indeed many who do not intend to vote for it—feel that the notification procedures and a large part of the structure of the prices part of the policy are likely to be ineffective. The trouble is that if the Government wanted to control prices they would not be congratulating themselves, as the Chief Secretary did in his speech today, on the fact that this code is not as complicated as was the American code. If the code had to cover all the anomalies which the hon. Member for Oswestry mentioned, in a destructive but effective speech, it would have to be a great deal more complicated than it now is.
Quite apart from the question whether this code is more complicated than the American code, I hope that it will be a great deal more effective. We now have the figures showing the rate of inflation in the United States for the first three months of this year. President Nixon expected an annual inflation rate of about 2½ per cent. But in the first three months of the year America has had an inflation rate of about 7 per cent. Therefore, Her Majesty's Government are not alone in making optimistic forecasts about rates of inflation, because the President of the United States has done exactly the same.
Any suggestion that the House or any Government of this country can control prices effectively by direct intervention on them is dangerous, for the reasons given by the hon. Member for Oswestry. The Government want to be seen to be fair. Therefore, they feel that they have to say that they are controlling prices as 1374 vehemently as they are controlling incomes. That is the sole reason for Part I of the code set out on pages 2 to 20. It is what politicians feel is expected of them, but I doubt whether the Government believe that they can control prices with this policy.
In a free society there is always a way round price control. If that were not the case, it would lead to shortages and we should see queues, rationing and all the paraphernalia that we experienced in the war. The price control set out in Part I will be ineffective, but it will probably be as effective as it can be—and indeed as effective as any price controls can be. It will be very much better if Government spokesmen said to the country "Prices cannot be controlled more than to a certain extent." Any talk of controlling prices at a stroke, as was promised by the Prime Minister in an unfortunate off-the-cuff remark which he must have come to regret, is absolute nonsense.
What can be done about the situation? I want to question the Government's competition policy. The Government undoubtedly believe in a competition policy because during the last election they said that such a policy would be the main weapon by which they would effect a reduction of price increases.
I turn to one aspect on which I should like to have a reply from the Government. It concerns the matter of petrol prices.
There may be very good reasons why the companies need to put up their petrol prices. We all know about the world shortage of energy resources, about some American oil companies having to ration their clients, and even about some American airlines having to ground their aircraft for this reason. But the Government should have used the companies' desire and need for higher prices to enforce a tough and sensible competition policy. They should have told the companies that they could not have their price increase until they had satisfied the Government that they had abided, and were abiding, by the letter and spirit of the undertakings that they gave the Government following the recommendations of the 1965 Monopolies Commission's report. The fact is that these companies have been allowed by the Government to put up their prices when the Government had the power to stop 1375 them doing so, yet the companies every day are side-stepping and evading in a disgraceful manner the recommendations of the Monopolies Commission's report and the undertakings that they gave.
I give just one instance of that. It relates to the number of petrol stations which should come under the direct ownership of the oil companies. In 1965 the Monopolies Commission reported that the proportion of petrol stations under the direct ownership of the companies was not at that time at such a level as to be against the interests of the consumer. It went on to say that if the proportion increased significantly, then it would work against the interests of the consumer.
I want to know from the Under-Secretary what rôle his Department fulfils in following through such a report. Does it keep a continuing watch on the situation in an industry on which the Monopolies Commission has reported in order to ensure that this kind of evasion does not take place? We have very little on which to go in the Government's competition policy. We know very little about the criteria that they use in referring matters to the Monopolies Commission. I have no doubt that hon. Members will be very pleased to see exactly what criteria will be used in deciding whether to refer the Slater Walker-Hill Samuel merger to it.
The other action that the Government can take is on subsidies. But I ask the right hon. Member for East Ham, North (Mr. Prentice): how much? How do any Government limit the sum once they have embarked on a policy of subsidies? Whose pockets will be invaded to pay for the subsidies? They will have to be raised in general taxation, and, through our system of taxation, general taxation largely comes out of the pockets of ordinary average industrial earners. If the Opposition argue for open-ended subsidies or even subsidies limited to fresh foodstuffs, they must be prepared to say how much they will cost and how much they are prepared to spend, quite apart from the source from which it is to come.
The third alternative, which I maintain is probably the best coupled with the competition policy, is for the Government to state categorically that they 1376 are prepared to enact legislation which will protect wages, pensions, family allowances and all welfare benefits against the rise in the price of food. As everyone says in these debates, food is of the essence. It is so vitally important in the family budget that if we can only protect people against the rise in the price of food by automatically increasing wages and welfare benefits in line with the effect of the price increase in food on the wages of the average industrial earner we shall have bought the conditions in which a sane prices and incomes policy can work.
On the provisions about prices, therefore, I am extremely sceptical about whether they can work, as I have always been——
§ Mr. Sydney Bidwell (Southall)
The hon. Gentleman has just used the words… conditions in which a sane prices and incomes policy can work.Are we to gather, therefore, that to his mind this is an insane prices and incomes policy? Is that the policy which he intends to support in the Division Lobby?
§ Mr. Pardoe
I am going into the Lobby to support, as I have throughout the Committee stage and in other debates on these matters, the only prices and incomes policy we have before us, which is the Government's policy. It is neither more insane nor more sane than was the prices and incomes policy of the Labour Government which I also supported. It depends on the politics of the next Government whether we have a sane or insane prices and incomes policy in future.
On pay the Government's policy has been effective so far, but I do not think that it will be very effective in future. The Chief Secretary made play of the changes in the methods by which the lower-paid can be looked after in these negotiations. I am not impressed. I do not believe that within the bargaining set out in the code the lower-paid can be effectively helped. I do not believe that people can be effectively helped by means of anything called free collective bargaining, even with an upper limit of this kind. The only way to protect the lower-paid is through a minimum earnings guarantee of about two-thirds of average industrial earnings, a regional 1377 employment premium or some regional subsidy on earnings, and the Government each year fixing a maximum earnings rise and policing it by means of fiscal penalties.
Despite my reservations about the code, I shall vote for it tonight as I did when it first came before us. I have always said that we must have a prices and incomes policy. Phase 3 will be the most important part of that policy. I hope that the Government are working towards a long-term strategy for prices and incomes which does not, heaven help us, include what the right hon. Member for East Ham, North euphemistically refers to as a voluntary incomes policy. There ain't no such beast.
§ 9.17 p.m.
§ Mr. J. Bruce-Gardyne (South Angus)
The hon. Member for Cornwall, North (Mr. Pardoe) has, as he frequently reminds us, always been consistent in these matters. Tonight, he carried his enthusiasm for the legal paraphernalia for the so-called prices and incomes policy several stages further. Rather than advocating the subsidisation of food, over which I share his objections, he favours some kind of legal guarantee of recoupment to those in receipt of up to average earnings for increases in food prices. If this guarantee is to be honoured and financed by employers, I can think of a number of areas in which the unemployment rate will rise sharply. If, on the other hand, it is to be financed by the taxpayer, I am not clear that we should stop at food. We should soon find that there were many other things. This is in pattern with what the hon. Gentleman has always argued, but he must appreciate that I view these matters from a different standpoint.
I reiterate what my hon. Friends the Members for Cirencester and Tewkesbury (Mr. Ridley) and Oswestry (Mr. Biffen) said about the timing and nature of the debate. I hope that the attention of my right hon. Friend the Lord President of the Council will be drawn to the fact that the debate hardly fulfils the undertakings that we were given at numerous stages in our discussions on this legislation. To have a tandem debate about the code and an order against which some of my hon. Friends and I have prayed is a thoroughly 1378 unsatisfactory way of proceeding. If the Government want to carry legislation of this type through the House they must provide adequate time for it to be discussed. In my view, we have not got that tonight.
My hon. Friend the Chief Secretary, in his opening remarks, told us about the success of the freeze period in abating the rate of inflation. The Government are entitled to claim that much, and perhaps rather more. I hope my hon. Friend will recollect that in days gone by we used to say that a freeze would work but that it was like damming a flood with a dam of ice, and that when the spring came the flood would be the worse for the dam that we had imposed. The real test lies not in what has happened so far but in what is to happen in the months ahead.
I want to address a few remarks, first, to the order against which some of my hon. Friends and I have prayed—the Counter-Inflation (Notification of Increases in Prices and Charges) Order 1973. I want particularly to draw the attention of the House to Part I of Schedule 1, which lists 33 companies which have been picked out for special favour. They are the companies whose sales do not achieve £50 million a year but which have nevertheless been informed that they will be expected to give the Price Commission prior notification of any price increases in respect of individual named products.
I should not dream of suggesting that my right hon. and hon. Friends have picked these names out of a hat, but I confess that the logic of the selection was not immediately apparent to me. That being so, I made one or two inquiries, and I am grateful to the Library for the help which I have received from it. The Library tells me that it was informed this afternoon by the Department of Trade and Industry that these companies were those which either held 50 per cent. of the market for the named product—which is fair enough—or where the product was particularly sensitive. I hope that in answering the debate my hon. Friend will tell us what "sensitive" means.
Why, for example, are non-electrical carpet sweepers sensitive, but electric carpet sweepers, presumably, are not? Why, for example, is Teacher (Distillers) Ltd.—a well-known and successful 1379 blender of Scotch whisky—sensitive, but Messrs Bell, another well-known and successful blender of Scotch whisky, which claims to have a dominant share of the domestic market in Scotland for its excellent product, is non-sensitive?
Again, what purpose is achieved by saying that Harp Lager Ltd. is to give prior notification of any increase in the price of its lager when, owing to the adjudication of the Monopolies Commission, every tenanted house in the land which sells Harp lager is entitled to charge whatever price it chooses without in any sense infringing the law?
There are many other examples which one could quote from this rather bizarre list, and I hope that my hon. Friend will tell us more about it when he replies to the debate.
Secondly, on the issue of pricing, we ought to watch very closely what is happening in the nationalised industries. The scale of taxpayer subsidisation necessitated by the observance, first of price restraint, then of the freeze, and now of phase 2, is growing more and more dramatic day by day. The British Steel Corporation has estimated that this is costing it £400 million and that any question of its being able to finance even half its future investment programme from retained resources is out.
Those are serious propositions, but a rather more interesting point arises from a letter which I received from my hon. Friend the Minister for Industry on the subject of the effect of price restraint on the gas and electricity industries. I had queried with him how exactly the taxpayer subsidy was to be distributed between the area boards, and he said, in reply:'Both the gas industry and the electricity industry have argued that compensation"—that is compensation for price increases forgone—should be on the basis of revenue forgone. But we were unable to accept this principle because to do so would have invited claims for compensation from firms in the private sector which had followed the CBI initiative.My hon. Friend concluded by saying:In all the circumstances I was forced, albeit most reluctantly, to conclude that actual deficits must be the basis for calculating compensation both for the industry as a whole and for individual Area Boards.1380 In other words, we are rewarding the least efficient on the basis of their inefficiency. That is not totally out of conformity with some other aspects of this policy.
I wish to refer to the activities of the Pay Board. Since we discussed the draft code we know something more about its nature. We know, for instance, which individuals will dominate its activities. We know, for instance, that Mr. Derek Robinson has been appointed Deputy Chairman of the Pay Board, with special responsibility for advising the Government on relativities. What are Mr. Derek Robinson's views on relativities? I wonder whether the Government know—because they should. He has expressed his views clearly.
At the time of the first Wilberforce inquiry in 1971, Mr. Robinson gave evidence to that body in January of that year. He had interesting things to say about relativities. He said:What I think is extremely difficult or impossible is to seek to have a policy accepted by trade unions which would say ' Do not deal with this particular wage claim on its merits but deal with it from the viewpoint of the repercussions it might have on some subsequent wage claims which might not possess the same merits.' … This is a view of wage determination that I think no trade union movement can accept.He went on:I believe that this would be contrary to the national interest.Does Mr. Robinson still think that it would be contrary to the national interest, because if he does he will find himself facing something of a conflict of interest when he carries out his responsibilities in these matters.
Another aspect of the Pay Board's activities deserves closer scrutiny—and I am glad to see two of my hon. Friends from the Department of Employment listening to the debate. I was intrigued to see a report in The Times about an industrial dispute involving 203 toolmakers at GEC's Coventry plant. These toolmakers —members of the Amalgamated Union of Engineering Workers—have rejected an offer from the management which was in line with the £1 plus 4 per cent. formula under phase 2. The report says:They would be prepared to accept a fairly small increase at the outset with each of the succeeding rises getting larger, to culminate in a total increase of £5.76 … They argue that the initial increases would be well within the 1381 Phase Two ceiling and that by the time the one-year agreement expired and the final payment was due, Phase Two would have ended. The Department of Employment has given the company some guidance, and the management claims that this makes it clear that the arrangement would not be permissible under the present legislation.May we be told precisely under which section of the legislation that agreement would be rendered not permissible? I have no doubt that there must be a clear answer to that, but I confess that in my investigations of the legislation I have been unable to come up with it.
I am not so deeply concerned as, perhaps, some other hon. Members about the inherent contradictions and implausibilities of the codes which we are approving tonight. As the summer wears on they will gradually fritter away and collapse in the face of the real world, which is catching up with us very quickly. We are seeing the rapid appearance of labour shortages in numerous industries. As those shortages develop, the real course of pay negotiations will be affected much more by competition for labour.
I was interested by some of the comments made by Mr. Brian Tritton, which were reported yesterday in The Times. Mr. Tritton was formerly with the Commission on Industrial Relations. Talking about the shortage of labour in the building industry he said:It has also made nonsense of the Government's control of incomes because the escalation of payments does not seem to have been affected by the Government's measures, apparently continuing unchecked throughout the period of the standstill…. One large site in north-west London advertised for bricklayers at £1.15 an hour in mid-January. By the end of that month the advertised rate was £1.20. By the beginning of April it was £1.25, and the current level is £1.35.Was Mr. Derek Robinson on the site, examining the relativities in that case? He would presumably have his time cut out if that was what he was trying to do.
I have no doubt that we shall give our endorsement to the code and the order. I suppose that some of us will be disturbed by the implications of this legislation and, above all, by the accumulating evidence that neither Departments nor the delegated authorities—the Price Commission and the Pay Board—understand the legislation. Perhaps we can console ourselves with the thought that as labour shortages develop, and as the 1382 economy moves up rapidly—or, as Mr. Michael Clapham said this morning, moves up "like a rocket"—towards full capacity, the attempts to manipulate prices and wages by law will soon fade away in the light of day.
§ 9.33 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
One of the points which the hon. Member for South Angus (Mr. Bruce-Gardyne) made was precisely the point that I intended to make. I am delighted that he made it. He referred to bricklayers receiving increased payment, but he did not say that the article he referred to points out that that is primarily due to the development of "the lump" in the building industry.
The code is really the green light for self-employment in the building industry and many other industries. Workers who are members of trade unions will have their wages held back because they are bound by national, local or district agreements. They will find that somebody working on the same site or on the next site can totally ignore the national agreement and receive sometimes more than twice their pay. Such workers are not confined by £1 plus 4 per cent. That means utter and complete chaos in industrial relations.
§ Mr. Albert Roberts
Does not my hon. Friend think that the situation is due to the speculative builders who make 90 per cent. or 100 per cent. profit on any house which they build? That is why builders can afford to give bricklayers that money. The general public, of course, is exploited.
§ Mr. Heffer
I am certain that high profits are being made by speculative builders. I am not arguing that at present. I am confining my remarks to the code.
The Chief Secretary made an interesting and characteristically smooth speech. His speeches are always smooth. He always glosses over all the problems with which we are faced. He says that all the problems are due to the increased costs of raw materials from abroad, that world prices are to blame. All these things are really responsible for inflation, he says, and he glosses over all the difficulties and ends by saying "What we are doing is fair and equitable." Of course, 1383 it is the very opposite. It is neither fair nor equitable.
If one is a member of a trade union bound by a national agreement, one is caught by the pay policy and confined to the £1 plus 4 per cent., because that is what will be agreed under duress by the union and the employers. It is equally true that where there are highly organised workers so will there be employers who will hide behind the code in order to stop any further increases.
The unorganised, or disorganised, workers in the building industry now total nearly 500,000—a fantastic level. They are supposedly self-employed and will be receiving well above the norm laid down in the code. So the code is neither equitable nor fair. As a result of this policy, there is a complete breakdown in organisation and in industrial relations agreements in the building industry in particular.
One need only look at the realities. If a worker has to meet the rising cost of food, rising council house rents, and the increases brought about by value added tax, it is obvious that if he can see a way out by becoming self-employed and getting above the norm he will take it, unless he is an absolutely dedicated member of the Union of Construction, Allied Trades and Technicians or of the Transport and General Workers Union and will not accept the concept of "labour only". What are the Government going to do about the problem of "the lump"? They cannot do anything about it in relation to the code. They can only deal with it in another direction.
Part 2 of the order applies toall pay including wages and salaries at whatever level, allowances, payments by results, payments in kind, fringe benefits and lump sums".Who will determine the lump sum? At what level will it be determined? How can it be determined when an agreement is made by an individual or group of individuals on a particular job on a construction site? It is the biggest hole in the code, and it cannot be plugged unless the question of "the lump" in the building industry is tackled at another level and in a different direction. But we still have to hear whether the Government are prepared to do anything about it. It comes down to the fact that if one 1384 is organised, if one is a member of a union and agrees with proper industrial relations agreements, one is caught by the code, whereas if one is unorganised one can go free.
I shall not go on because my hon. Friend the Member for Bristol, Central (Mr. Palmer) wishes to speak, and I understand that the Under-Secretary of State is to speak at 9.45 p.m. [Interruption.] Surely hon. Members opposite would allow time for a colleague to make a brief speech when he has something to say. But I protest against the fact that we have not a full day for debate on this subject. It is wrong that hon. Members, who have many things to say about the code, are having to confine their remarks so much and are unable to develop their arguments fully because of this stupid situation.
§ 9.40 p.m.
§ Mr. Arthur Palmer (Bristol, Central)
It is difficult to speak at this stage when at least a little of the subject has been covered, but I am obliged to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) for arranging this concession for me.
When the pay code was being debated during an earlier stage of the legislation, I moved two amendments on Report. One dealt with differentials and the other with the worsening of the real value of wages and salaries. Needless to say, those amendments did not succeed, but, quite apart from the merits of the arguments I used on that occasion, I was anxious to limit the influence of the Pay Board and the freedom of the board to please itself in the exercise of its powers. As is often the case—this applies to Governments of all parties—the Minister argued that it was better for the board to have flexibility and as much freedom as possible and not to put a limitation in the statute. I always think that a dangerous argument to be used by any Minister because, when it is used it means that one extra small piece of the powers of this House is eroded away. I wish that there had been much more in the legislation and that far less had been left to the Pay Board which is to operate its vast powers under the pay code.
A second and practical point I make is from an experience known to me in the electricity supply industry. When the 1385 pay code was first issued, it was issued as a consultative document. All and sundry were invited to make their contributions towards its improvement, to make it more acceptable, presumably, and more workable. But I warn hon. Members that one needs to have a long spoon if one is to sup with present Ministers. Trustingly—perhaps too trustingly—my union, the Electrical Power Industry Association, raised the question of shift pay improvements. We also raised the question with the Ministry of night duty hours pay improvements. Those who have any familiarity with the operation of the electricity supply industry will know that night duty call out and shift working are of the greatest importance. I hope that the Undersecretary will take careful note of this, because he is partly responsible for the electricity supply industry. The first draft of the code left these points out in the general phrases which were used. It seemed a reasonable proposition that men in the industry who have to work all night under shift conditions and may be called out in all weathers to put things right after breakdowns should be free to have new scales if need be. But once the subject was mentioned, zealous Government officials took care that any loophole was closed against a concession. My union is feeling sore about this and perhaps wishes that it had not spoken.
The words in the preamble to the order,… there was consultation before the passing of the Act with representatives of consumers persons experienced in the supply of goods or services, employers and employees",are something of a deceit, judging from that practical experience. In this legislation, to this Government and this set of Ministers, consultation apparently means taking down the evidence of willing persons who come to help and then using that evidence against them. It does not help the Government to inspire confidence and win friends.
§ 9.46 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)
I shall try to answer as many of the detailed points that have been made in this fairly short debate as I can, but the House will realise that they have ranged over a wide field. One matter which is for the Leader 1386 of the House and not for myself is the linking of the two orders. I will draw to my right hon. Friend's attention both this fact and the complaints about the time allowed, so that he can clearly know the views of my hon. Friends.
It is immensely important to get clear the principles behind the stage 2 control of prices. The general principles relating to prices, outlined in paragraph 3 of the code order, are: to limit the extent to which prices may be increased on account of increased costs, and to secure reductions as a result of reduced costs; to reinforce the control of prices by a control of profit margins while safeguarding investment; and to reinforce the effects of competition and secure its full benefits in the general level of prices. I should have believed that, overall, these were objectives which were generally acceptable to the House.
The code applies, therefore, in some measure, to nearly all goods and services produced, sold and consumed in the United Kingdom. It limits the extent to which prices may be increased and reinforces the control on prices by a control of profit margins. The Price Commission and the Pay Board are required to ensure that it is implemented, and all concerned with the determination of prices must have regard to it.
Unless allowable costs and total costs per unit of output increase, no increase under the code is generally allowed. Profits per unit of output may not be increased except in special circumstances relating to investment or to past reconstruction.
The Government's stage 2 policies do not end with the manufacturer. They extend to virtually all distributors, whether wholesale or retail, and distributors' gross percentage margins must not be increased above the level prevailing in a recent 12-month period. As with manufacturers, there is a back-up control on net profit margins.
The right hon. Member for East Ham, North (Mr. Prentice) suggested that the whole of the Government's policy on inflation was a fraud. He said it more nicely than that, but that is what he meant. He prayed in aid the Economist. The right hon. Gentleman is usually fair with the House. May I just read to the House the headlines to the article in the 1387 Economist of 28th April 1973. What were they? They were:It is working.The Government's stages one and two have brought the rate of inflation in Britain down from one of the highest to one of the lowest in the industrial world.That is really what we set out to achieve.
Therefore, the main features of the stage 2 controls embodied in Statutory Instrument No. 664 is the pre-notification of price increases by manufacturers and providers of services whose domestic sales —excluding exports, or course—exceed £50 million and £20 million respectively. This means that the approval of the Price Commission is required in respect of price increases covering approximately 50 per cent. of manufactured goods.
At this stage my hon. Friend the Member for Oswestry (Mr. Biffen) asked who the companies were and if the House could be informed. I would suggest that I draw the attention of the Chairman of the Price Commission to this request with a view to his publishing this list in his first report to the House.
I think it must be seen that the clear rôle and responsibilities of the Price Commission have been given by the Government in order that the job of ensuring that the provisions of the Price and Pay Code are fully and properly implemented. This is an executive function to be carried out within the quite narrowly defined limits laid down in the code and the associated orders made under the Counter-Inflation Act.
If a proposed price increase meets the conditions set out in the code the commission must approve it and Ministers may not disapprove it. The powers of Ministers are, in fact, only to increase, not to decrease, a price increase that has been allowed by the Commission.
If the policy is to work efficiently and equitably an enterprise must know where it stands, and this is one of the reasons why we have gone into such detail to try to set out the structure of the code in this order. It is still of great importance when one talks about complexity to know that the vast majority of firms within this country want to be able to abide by the code, to use it as a factor so that it can be self-policing. However, the argument put forward by my hon. Friend the Member for 1388 Oswestry that this must be available at every post office or it really is not going to be effective and people are not going to be interested in it is stretching the imagination a little, because most bodies are being advised by their accountants and professional associations as to the way they may be able to react, and should react, to the code.
Therefore, having set quite clear and rigorous policy guidelines and having appointed the Price Commission to ensure that they are followed, the Government propose to let the Price Commission get on with the job that it has been appointed to do.
§ Mr. Emery
The factors in the debate which I believe need particular answers are those raised by the right hon. Member for East Ham, North, when he was asking about the provision for comparability. As promised in paragraph 33 of Command 5205, the Government have asked the Pay Board to consider and report on the best ways of dealing with the problems of anomalies and relativity. These recommendations will be discussed with both sides of industry with a view to action in stage 3.
In the same way, the right hon. Gentleman and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) discussed productivity deductions. The restriction on productivity agreements and productivity reductions is in paragraph 39 of the code. Productivity arrangements were a major loophole in the Labour Government's policy. The Government have decided that they should not be allowed in stage 2. Consequently, we have sought to ensure that a substantial share of the benefits of improved productivity are passed on to the consumers. That means that everybody will benefit. I agree that the arrangements for achieving it are to a certain extent arbitrary. But further consideration will be given to the whole subject before we reach stage 3.
My hon. Friend the Member for Cirencester and Tewkesbury suggested that the food industry could not stand delays of eight weeks on application to the Price Commission. The normal period 1389 for the Price Commission to deal with applications is 28 days. Paragraph 200 of the White Paper on the operation of stage 2 makes it clear that an application may be treated as approved unless the commission informs the applicant within 28 days from its receipt either that it will not approve the proposals or that the application is still under consideration. In the latter case, the exception, the consideration of the decision can be extended for a further 14 days. In paragraph 201 we made it clear that for particular products it would be open to the commission to make special arrangements for special decisions.
My hon. Friend said that there was nothing about depreciation in the prices section of the code. Depreciation is not mentioned in the allowable costs section because it is not an allowable cost. In the consultations carried out by the Government there was little pressure for it to be included. Paragraph 51 of the code refers to accepting acceptable accounting principles consistently applied by the enterprise concerned. I hope that my hon. Friend will not continue to hold the view that that gives a big loophole that people could try to exploit.
The power in article 10 which so concerned my hon. Friend is needed to allow the Price Commission to correct an approval based on incorrect information, whether innocently provided or not. Without that power the commission would be powerless to require a reduction when the error came to light.
In answer to the points raised by my hon. Friend the Member for Oswestry, where there were unfair and discriminatory effects on pre-notification of the Treaty of Paris the position is exactly the same as on the pre-notification of the 28 days to which I have already referred.
The hon. Member for Liverpool, Walton (Mr. Heffer) spoke about "the lump". As is stated in paragraph 224 of the White Paper, a special construction panel is being established to consider how the requirements of the code can most effectively be applied to special problems of the construction industry, and "the lump" will be dealt with specifically there.
1390 My hon. Friend the Member for Oswestry asked about school fees. The increases announced recently by the Department of Education and Science were authorised under stage 1. The educational services are not subject to pre-notification under Statutory Instrument No. 664, but they are subject to the code unless they are non-profit-making organisations covered by paragraphs 98 to 100 of the code.
§ Mr. Biffen
Is my hon. Friend saying that any school can increase its fees without notifying the Department of Education and Science?
§ Mr. Emery
I am saying that there is no pre-notification requirement in the order. Therefore, any educational establishment carries on, as with anybody else, there is no pre-notification, but it must abide by the provision of the code.
Paragraph 69 of the code deals with distributors' stocks of petrol and requires distributors to adhere to the practice that they have followed consistently for pricing purposes and at the relevant gross percentage margin. If a distributor applies price increases to stocks bought at old prices, and if this leads to an increase in the gross percentage margin, the Price Commission can require him to reduce prices if the matter is brought specifically to the commission's attention.
Therefore, in conclusion——
§ Mr. Bruce-Gardyne
If my hon. Friend is coming to a conclusion, may I ask him to deal in slightly more detail than he has so far with the order as opposed to the Price and Pay Code, which we are supposed to be discussing also, and in particular with the way in which firms selected for special treatment have been selected?
§ Mr. Emery
May I deal with one point at a time. I thought that it was probably for the convenience of the House that I should draw my speech to a conclusion.
Nobody would suggest that Part I of the schedule—I least of all—is a comprehensive list. However, it covers a considerable number of firms which have a price leadership position in the whole of the United Kingdom, not just in Scotland, and it is to try to ensure that in these areas it is clear that the Government are paying specific interest to price rises that might 1391 be brought about by these firms which are in a position of price leadership.
If it is for the convenience of the House, I will return to my conclusion by saying that the introduction of these powers and their use within the Counter-Inflation Act are not the way in which the Government wish to proceed.
§ Mr. Palmer
To assist the hon. Gentleman, I was obliged to condense my remarks into a very few moments. Will he deal with the substantial point I raised about the rather curious methods used by his Department in consulting the trade unions?
§ specific point on this that he wishes to raise with me, I shall be only too delighted to meet him to discuss it in detail.
§ For the third time let me return to my conclusion. The introduction of these powers and their use in the Counter-Inflation Act are not the way in which the Government would wish to proceed. The Government wanted, and still want, to deal with inflation by agreement with industry and the trade unions. If this proves impossible, we believe that countering inflation is so important that we cannot abrogate our responsibilities. We are, therefore, prepared to act, and for this reason I ask for the support of my hon. Friends tonight.
§ Question put:—
§ The House divided: Ayes 285. Noes 258.1395
|Division No. 118.]||AYES||[10.6 p.m|
|Adley, Robert||Crowder, F. P.||Hall, John (Wycombe)|
|Alison, Michael (Barkston Ash)||Davies, Rt. Hn. John (Knutsford)||Hall-Davis, A. G. F.|
|Allason, James (Hemel Hempstead)||d'Avigdor-Goldsmid, Sir Henry||Hamilton, Michael (Salisbury)|
|Archer, Jeffrey (Louth)||d'Avigdor-Goldsmid, Maj.-Gen. Jack||Hannam, John (Exeter)|
|Atkins, Humphrey||Dean, Paul||Harrison, Brian (Maldon)|
|Awdry, Daniel||Deedes, Rt. Hn. W. F.||Harrison, Col. Sir Harwood (Eye)|
|Baker, Kenneth (St. Marylebone)||Digby, Simon Wingfield||Haselhurst, Alan|
|Baker, W. H. K. (Banff)||Dixon, Plers||Havers, Sir Michael|
|Balniel, Rt. Hn. Lord||Dodds-Parker, Sir Douglas||Hawkins, Paul|
|Barber, Rt. Hn. Anthony||Drayson, G. B.||Hay, John|
|Batsford, Brian||du Cann, Rt. Hn. Edward||Hayhoe, Barney|
|Beamish, Col. Sit Tufton||Dykes, Hugh||Heath, Rt. Hn. Edward|
|Bell, Ronald||Edwards, Nicholas (Pembroke)||Hicks, Robert|
|Bennett, Dr. Reginald (Gosport)||Elliot, Capt. Walter (Carshalton)||Higgins, Terence L.|
|Benyon, W.||Elliott, R. W. (N'c'tle-upon-Tyne,N.)||Hiley, Joseph|
|Berry, Hn. Anthony||Emery, Peter||Hill, John E. B. (Norfolk, S.)|
|Biffen, John||Eyre, Raginaid||Holland, Philip|
|Biggs-Davison, John||Farr, John||Holt, Miss Mary|
|Blaker, Peter||Fell, Anthony||Hooson, Emlyn|
|Body, Richard||Fenner, Mrs. Peggy||Hordern, Peter|
|Boscawen, Hn. Robert||Fidler, Michael||Hornby, Richard|
|Bossom, Sir Clive||Finsberg, Geoffrey (Hampstead)||Hornsby-Smith, Rt. Hn. Dame Patricia|
|Bowden, Andrew||Fisher, Nigel (Surblton)||Howell, David (Guildford)|
|Bray, Ronald||Fletcher-Cooke, Charles||Howell, Ralph (Norfolk, N.)|
|Brinton, Sir Tatton||Fookes, Miss Janet||Hunt, John|
|Brocklebank-Fowler, Christopher||Fortescue, Tim||Hutchison, Michael Clark|
|Brown, Sir Edward (Bath)||Foster, Sir John||Iremonger, T. L.|
|Bruce-Gardyne, J.||Fowler, Norman||James, David|
|Bryan, Sir Paul||Fox, Marcus||Jenkin, Patrick (Woodford)|
|Buchanan-Smith, Alick (Angus, N&M)||Fraser, Rt.Hn.Hugh(St'fford & Stone)||Jessel, Toby|
|Buck, Antony||Fry, Peter||Johnson Smith, G. (E. Grinstead)|
|Bullus, Sir Eric||Galbraith, Hn. T. G. D.||Jones, Arthur (Northants, S.)|
|Burden, F. A.||Gardner, Edward||Jopling, Michael|
|Butler, Adam (Bosworth)||Gibson-Watt, David||Joseph, Rt. Hn. Sir Keith|
|Campbell, Rt.Hn.G(Moray & Nairn)||Gilmour, Ian (Norfolk, C.)||Kellett-Bowman, Mrs. Elaine|
|Chapman, Sydney||Gilmour, Sir John (Fife, E.)||Kershaw, Anthony|
|Chataway, Rt. Hn. Christopher||Glyn, Dr. Alan||Kilfedder, James|
|Chichester-Clark, R.||Goodhart, Philip||Kimball, Marcus|
|Churchill, W. S.||Goodhew, Victor||King, Evelyn (Dorset, S.)|
|Clark, William (Surrey, E.)||Gorst, John||King, Tom (Bridgwater)|
|Clarke, Kenneth (Rushcliffe)||Gower, Raymond||Kinsey, J. R.|
|Cockeram, Eric||Grant, Anthony (Harrow, C.)||Kitson, Timothy|
|Cooke, Robert||Gray, Hamish||Knox, David|
|Coombs, Derek||Green, Alan||Lambton, Lord|
|Cooper, A. E.||Grieve, Percy||Lamont, Norman|
|Cordle, John||Griffiths, Eldon (Bury St. Edmunds)||Lane, David|
|Corfield, Rt. Hn. Sir Frederick||Grylls, Michael||Le Merchant, Spencer|
|Costain, A. P.||Gummer, J. Selwyn||Lewis, Kenneth (Rutland)|
|Critchley, Julian||Gurden, Harold||Lloyd, Ian (P'tsm'th, Langstone)|
|Crouch, David||Hall, Miss Joan (Keighley)||Longden, Sir Gilbert|
|Loveridge, John||Page, Rt. Hn. Graham (Crosby)||Sproat, lain|
|Luce, R. N.||Page, John (Harrow, W.)||Stanbrook, Ivor|
|McAdden, Sir Stephen||Pardoe, John||Steel, David|
|MacArthur, Ian||Parkinson, Cecil||Stewart-Smith, Geoffrey (Belper)|
|McCrindle, R. A.||Peel, Sir John||Stoddart-Scott, Col. Sir M.|
|McLaren, Martin||Percival, Ian||Stokes, John|
|Maclean, Sir Fitzroy||Peyton, Rt. Hn. John||Stuttaford, Dr. Tom|
|Macmillan,Rt.Hn.Maurice(Farnham)||Pike, Miss Mervyn||Sutcliffe, John|
|McNair-Wilson, Michael||Pink, R. Bonner||Tapsell, Peter|
|McNair-Wilson, Patrick (New Forest)||Pounder, Rafton||Taylor, Sir Charles (Eastbourne)|
|Madden, Martin||Price, David (Eastleigh)||Taylor, Edward M.(G'gow, Cathcart)|
|Madel, David||Prior, Rt. Hn. J.R. M.L.||Taylor, Frank (Moss Side)|
|Maginnis, John E.||Proudfoot, Wilfred||Taylor, Robert (Croydon, N.W.)|
|Marples, Rt. Hn. Ernest||Pym, Rt. Hn. Francis||Tebbit, Norman|
|Marten, Neil||Raison, Timothy||Temple, John M.|
|Mather, Carol||Ramsden, Rt. Hn. James||Thatcher, Rt. Hn. Mrs. Margaret|
|Maude, Angus||Rawlinson, Rt. Hn. Sir Peter||Thomas, John Stradling (Monmouth)|
|Mawby, Ray||Redmond, Robert||Thomas, Rt. Hn. Peter (Hendon, S.)|
|Maxwell-Hyslop, R. J.||Reed, Laurance (Bolton, E.)||Tilney, John|
|Meyer, Sir Anthony||Rees, Peter (Dover)||Trefford, Dr. Anthony|
|Mills, Peter (Torrington)||Rees-Davies, W. R.||Trew, Peter|
|Mills, Stratton (Belfast, N.)||Renton, Rt. Hn. Sir David||Tugendhat, Christopher|
|Miscampbell, Norman||Rhys Williams, Sir Brandon||Turton, Rt. Hn. Sir Robin|
|Mitchell,Lt.-Col.C.(Aberdeenshire,W)||Ridley, Hn. Nicholas||Vaughan, Dr. Gerard|
|Mitchell, David (Basingstoke)||Ridsdale, Julian||Vickers, Dame Joan|
|Moate, Roger||Rippon, Rt. Hn. Geoffrey||Waddington, David|
|Money, Ernie||Roberts, Michael (Cardiff, N.)||Walder, David (Clitheroe)|
|Monks, Mrs. Connie||Roberts, Wyn (Conway)||Walker, Rt. Hn. Peter (Worcester)|
|Monro, Hector||Rodgers, Sir John (Sevenoaks)||Wall, Patrick|
|Montgomery, Fergus||Rossi, Hugh (Hornsey)||Walters, Dennis|
|More, Jasper||Rost, Peter||Ward, Dame Irene|
|Morgan, Geraint (Denbigh)||Royle, Anthony||Warren, Kenneth|
|Morgan-Giles, Rear-Adm.||Russell, Sir Ronald||Wells, John (Maidstone)|
|Morrison, Charles||St. John-Stevas, Norman||While, Roger (Gravesend)|
|Mudd, David||Scott, Nicholas||Wiggin, Jerry|
|Murton, Oscar||Scott-Hopkins, James||Wilkinson, John|
|Nabarro, Sir Gerald||Shaw, Michael (Sc'b'gh & Whitby)||Winterton, Nicholas|
|Neave, Airey||Shelton, William (Clapham)||Wolrige-Gordon, Patrick|
|Nicholls, Sir Harmar||Shersby, Michael||Woodhouse, Hn. Christopher|
|Noble, Rt. Hn. Michael||Simeons, Charles||Woodnutt, Mark|
|Nott, John||Sinclair, Sir George||Worsley, Marcus|
|Onslow, Cranley||Skeet, T. H. H.||Wylle, Rt. Hn. N. R.|
|Oppenheim, Mrs. Sally||Smith, Dudley (W'wick & L'mington)||Younger, Hn. George|
|Orr, Capt L. P. S.||Soref, Harold||TELLERS FOR THE AYES:|
|Osborn, John||Speed, Keith||Mr. Walter Clegg and|
|Owen, ldris (Stockport, N.)||Spence, John||Mr. Bernard Weatherill.|
|Abse, Leo||Clark, David (Colne Valley)||Ellis, Tom|
|Allaun, Frank (Salford, E.)||Cocks, Michael (Bristol, S.)||English, Michael|
|Archer, Peter (Rowley Regis)||Cohen, Stanley||Ewing, Harry|
|Armstrong, Ernest||Coleman, Donald||Faulds, Andrew|
|Ashley, Jack||Concannon, J. D.||Fernyhough, Rt. Hn. E.|
|Ashton, Joe||Conlan, Bernard||Fisher, Mrs.Doris(B'ham,Ladywood)|
|Atkinson, Norman||Corbet, Mrs. Freda||Fitch, Alan (Wigan)|
|Barnes, Michael||Cox, Thomas (Wandsworth, C.)||Fletcher, Raymond (Ilkeston)|
|Barnett, Guy (Greenwich)||Crawshaw, Richard||Fletcher Ted (Darlington)|
|Barnett, Joel (Heywood and Royton)||Cunningham, G. (Islington, S.W.)||Foot, Michael|
|Baxter, William||Cunningham, Dr. J. A. (Whitehaven)||Ford, Ben|
|Beaney, Alan||Dalyell, Tam||Forrester John|
|Benn, Rt. Hn. Anthony Wedgwood||Darling, Rt. Hn. George||Freeson Reginald|
|Bennett, James(Glasgow, Bridgeton)||Davidson, Arthur||Galpern, sir Myer|
|Bidwell, Sydney||Davies, Denzil (Llanelly)||Garret, W. E.|
|Bishop, E. S.||Davies, G. Elfed (Rhondda, E.)||Gilbert, Dr. John|
|Blenkinsop, Arthur||Davies, lfor (Gower)||Ginsburq David (Dewsbury)|
|Boardman, H. (Leigh)||Davis, Clinton (Hackney, C.)||Gourlay, Harry|
|Booth, Albert||Davis, Terry (Bromsgrove)||Grant George (Morpeth)|
|Bottomley, Rt. Hn. Arthur||Deakins, Eric||Grant, John D. (Islington, E.)|
|Boyden, James(Bishop Auckland)||de Freitas, Rt. Hn. Sir Geoffrey||Griffiths, Eddie (Brightside)|
|Bradley, Tom||Dell, Rt. Hn. Edmund||Hamilton, James (Bothwell)|
|Bottomley, Rt. Hn. Arthur||Dempsey, James||Hamilton, William (Fife, W.)|
|Broughton, Sir Alfred||Dempsey, James||Hamling, William|
|Brown, Robert C. (N'c'tle-u-Tyne,W.)||Doig, Peter|
|Brown, Hugh D. (G'gow, Provan)||Dormand, J. D.||Hannan, William (G' gow, Maryhill)|
|Brown, Ronald(Shoreditch & F'bury)||Douglas, Dick (Stirlingshire, E.)||Hardy, Peter|
|Buchan, Norman||Douglas-Mann Bruce||Harrison, Walter (Wakefield)|
|Buchanan, Richard (G'gow, Sp'burn)||Driberg, Tom||Hart, Rt. Hn. Judith|
|Butler, Mrs. Joyce (Wood Green)||Duffy, A. E. P.||Hattersley, Roy|
|Callaghan, Rt. Hn. James||Dunn, James A.||Healey, Rt. Hn. Denis|
|Campbell, I. (Dunbartonshire, W.)||Dunnett, Jack||Healey, Rt. Hn. Denis|
|Cant, R. B.||Eadie, Alex||Heffer, Eric S.|
|Carmichael, Nell||Edelman, Maurice||Horam, John|
|Carter, Ray (Birmingh'm, Northfield)||Edwards, Robert (Bilston)||Houghton, Rt. Hn. Douglas|
|Carter-Jones, Lewis (Eccles)||Edwards, William (Merioneth)||Howell, Denis (Small Heath)|
|Huckfield, Leslie||Mahon, Simon (Bootle)||Rose, Paul B.|
|Hughes, Rt. Hn. Cledwyn (Anglesey)||Mallalieu, J. P. W. (Huddersfield, E.)||Ross, Rt. Hn. William (Kilmarnock)|
|Hughes, Mark (Durham)||Marks, Kenneth||Rowlands, Ted|
|Hughes, Robert (Aberdeen, N.)||Marquand, David||Sandelson, Neville|
|Hughes Roy (Newport)||Marsden, F.||Sheldon, Robert (Ashton-under-Lyne)|
|Hunter, Adam||Marshall, Dr. Edmund||Shore, Rt. Hn. Peter (Stepney)|
|Irvine, Rt. Hn. Sir Arthur (Edge Hill)||Mason, Rt. Hn. Roy||Short, Rt. Hn. Edward (N'c'tle-u-Tyne)|
|Janner Greville||Mayhew, Christopher||Short, Mrs.Renée (Whampton. N. E.)|
|Jay, Rt. Hn Douglas||Meacher, Michael||Silkin, Rt. Hn. John (Deptford)|
|Jenkins, Hugh (Putney)||Mendelson, John||Silkln, Hn. S. C. (Dulwich)|
|Jenkins, Rt. Hn. Roy (Stechford)||Mikardo, lan||Sillars, James|
|John Brynmor||Miller, Dr. M. S.||Silverman, Julius|
|Johnson, Carol (Lewisham, S.)||Milne, Edward||Skinner, Dennis|
|Johnson, James (K'ston-on-Hull, W.)||Mitchell, R. C. (S'hampton, Itchen)||Small, William|
|Molloy, William||Spearing, Nigel|
|Johnson Walter (Derby. S.)||Morgan, Elystan (Cardiganshire)||Spriggs, Leslie|
|Jones, Barry (Flint, E.)||Morris, Alfred (Wythenshawe)||Stallard, A. W.|
|Jones Dan (Burnley)||Morris, Charles R. (Openshaw)||Stewart, Donald (Western Isles)|
|Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)||Morris, Rt. Hn. John (Aberavon)||Stewart, Rt. Hn. Michael (Fulham)|
|Jones, Gwynoro (Carmarthen)||Moyle, Roland||Stoddart, David (Swindon)|
|Jones, T. Alec (Rhondda, W.)||Murray, Ronald King||Stonehouse, Rt. Hn. John|
|Judd, Frank||Oakes, Gordon||Strang Gavin|
|Kaufman, Gerald||Ogden, Eric||Strauss, Rt. Hn. G. R.|
|Kelley, Richard||O'Halloran, Michael||Summerskill, Hn. Dr. Shirley|
|Kerr, Russell||O'Malley, Brian||Swain, Thomas|
|Kinnock, Neil||Oram, Bert||Thomas, Rt. Hn. George (Cardiff,.W.)|
|Lambie, David||Orbach, Maurice||Thomas, Jeffrey (Abertillery)|
|Lamborn, Harry||Orme, Stanley||Tinn, James|
|Lamond, James||Oswald, Thomas||Tomney, Frank|
|Latham, Arthur||Owen, Dr. David (Plymouth, Sutton)||Torney, Tom|
|Lawson, George||Palmer, Arthur||Tuck, Raphael|
|Leadbilter, Ted||Pannell, Rt. Hn. Charles||Urwin, T. W.|
|Lee, Rt. Hn. Frederick||Parker, John (Dagenham)||Varley, Eric G.|
|Leonard, Dick||Parry, Robert (Liverpool, Exchange)||Wainwright, Edwin|
|Lestor, Miss Joan||Pavitt, Laurie|
|Lewis, Arthur (W. Ham, N.)||Peart, Rt. Hn. Fred||Walden, Brian (B' ham, All Saints)|
|Lewis, Ron (Carlisle)||Pendry, Tom||Wallace George|
|Lomas, Kenneth||Perry, Ernest G.||Watkins David|
|Loughlin, Charles||Prentice, Rt. Hn. Reg.||Weitzman David|
|Lyon, Alexander W. (York)||Prescott, John||Wells, William (Walsall, N.)|
|Lyons, Edward (Bradford, E.)||Price, William (Rugby)||White, James (Glasgow, Pollok)|
|Mabon, Dr. J. Dickson||Probert, Arthur||Whitehead, Phillip|
|McBride, Neil||Radice, Giles||Whitlock, William|
|McCartney, Hugh||Reed, D. (Sedgefield)||Willey, Rt. Hn. Frederick|
|McElhone, Frank||Rees, Merlyn (Leeds, S.)||Williams, Alan (Swansea, W.)|
|McGuire, Michael||Rhodes, Geoffrey||Wilson, Alexander (Hamilton)|
|Machin, George||Richard, Ivor||Wilson, Rt. Hn. Harold (Huyton)|
|Mackenzie, Gregor||Roberts, Albert (Normanton)||Wilson, William (Coventry, S.)|
|Mackie, John||Roberts, Rt. Hn. Goronwy (Caernarvon)||Woof, Robert|
|Mackintosh, John P.||Robertson, John (Paisley)|
|Maclennan, Robert||Roderick, Caerwyn E. (Brc'n&R'dnor)||TELLERS FOR THE NOES:|
|McMillan, Tom (Glasgow, C.)||Rodgers, William (Stockton-on-Tees)||Mr. John Golding and|
|McNamara, J. Kevin||Roper, John||Mr. Joseph Harper.|
§ Question accordingly agreed to.