HC Deb 12 June 1974 vol 874 cc1688-719
Mr. Channon

I beg to move Amendment No. 5, in page 4, line 33, leave out Clause 3.

Mr. Deputy Speaker (Mr. Oscar Murton)

With this amendment it will be convenient to take the following amendments: No. 11, in page 5, line 4, at end insert— '( ) No direction shall be given under this section unless the Secretary of State has first obtained from the Price Commission a report, which she shall publish, showing cause why a direction would not lead to the diversion of articles subject to the direction from the United Kingdom market to markets overseas', No. 12, in page 5, line 8, after 'implemented', insert: 'so long as such implementation had not occurred earlier than three months prior to the Secretary of State's direction'.

Mr. Channon

We had a debate on Clause 3 in Committee but I am still somewhat at a loss to know why it is necessary to have the clause in the Bill. The Committee was not satisfied by the reasons which were advanced by the Government. We had a tie on that occasion.

The powers given to the Price Commission in Clause 3 are extremely wide. If there are exceptional circumstances the Secretary of State can direct that the powers shall be exercisable. That can only mean that people who act legally can in exceptional circumstances, and in spite of the fact that they were acting legally, find themselves penalised for something which they were entitled to do. We find that objectionable.

7.0 p.m.

In Committee the hon. Member for Colne Valley (Mr. Wainwright) suggested that the clause should not apply if the implementation of a price rise had taken place earlier than three months prior to the Secretary of State's direction. It is surely a reasonable minimum requirement that if the Secretary of State and the Commission are to act in these unprecedented ways people who have done something should know that, after the expiry of three months, it is reasonable to assume that they will not exercise their power. Without this amendment, the commission will be able to prevent or restrict price increases which were perfectly legal within the code when implemented, because it will be able to say that exceptional circumstances apply. If the commission is to be able to take action on increases which have already been implemented, it should not be able to do so if implementation has been carried out more than three months earlier.

I shall be interested to hear the reasons for the clause. Even if the Government convince us that it should be included in the Bill, why cannot they accept amendments relating to a time limit? I leave my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), who is responsible for Amendment No. 11, to make his own rather special points, which he raised pungently during the debate on the code. We certainly need from the Government a clear explanation why they think it necessary to have Clause 3.

In Committee the Under-Secretary of State said that he would bear this point in mind and consider it. Even if the clause must be in the Bill, the minimum that the Opposition can tolerate is acceptance of Amendment No. 12, which would impose a time limit of three months on the ability to push back something which was wholly legal. It is a reasonable request. But, even if these powers are to be used with the greatest discretion, I am not sure that such powers should be given to any Secretary of State or to any commission without the most careful scrutiny by the House.

Mr. Bruce-Gardyne

To me, Clause 3 is one of the most offensive in the Bill. I do not like retrospective legislation at any time, and Clause 3 is retrospective.

Mrs. Shirley Williams indicated dissent.

Mr. Bruce-Gardyne

Of course it is. The very wording of the clause is retrospective. If the right hon. Lady does not think it retrospective she does not understand the English language.

I do not mind Amendment No. 12, which would limit the element of retrospection to three month, but I would prefer Amendment No. 5 which would delete Clause 3 altogether. As far as I know, no case has ever been made out for Clause 3. We have not been told how it is to be used or about its use.

I have studied carefully what was said in Committee by the Under-Secretary of State, and it amounts to a long roll call of sweet nothings—except that the nothings are not particularly sweet. The Under-Secretary of State said in Committee: The circumstances in which it will be invoked are those in which the Price Commission itself considers that the Price Code, in respect of a particular case, is adequate in some respects. It is intended to be employed in situations in which the problem is not so much the difficulty of applying the provisions of the code, but rather that the application of the code produces an anomalous result. Anomalous to whom? Anomalous I suppose, according to the superior wisdom of Sir Arthur Cockfield and his chums, and I have no confidence in them.

The hon. Gentleman went on: Plainly, it is impossible"— impossible except by him— to predict precisely the sort of situation in which this might happen. If it were so possible, I might be able to accept the hon. Member's argument that the appropriate way of dealing with this would be by an amendment to the code itself. The nearest the hon. Gentleman got to a definition was: Again if I may put it in a very generalised way, one set of circumstances might be that the effect of the proposed price increase would be exceptionally harsh upon a peculiarly vulnerable section of the community, although it would be conformable with the provisions of the code."—[OFFICIAL REPORT, Standing Committee D, 21st May 1974; c. 374 and 402.] One's mind boggles at the implications. Let us assume that there is a by-election pending and the Department suddenly discovers a very high incidence of alcoholics in the constituency—a group who are peculiarly vulnerable to an increase in the price of whisky. So, retrospectively, the Price Commission is given a nod or a wink to ask for the activation of Clause 3 to reverse a price increase on whisky. This is the sort of proposition which is conjured up before us by the operation of Clause 3, and we should have none of it.

Mr. Dan Jones

The hon. Gentleman has an alcoholic imagination.

Mr. Bruce-Gardyne

That is a very constructive intervention which I hope the hon. Gentleman will feel strengthened to elaborate upon in a speech of his own. I hope that he will forgive me if I turn now to Amendment No. 11.

Mr. Dan Jones

At last.

Mr. Bruce-Gardyne

Amendment No. 11 is a modest proposition and one which I would imagine that the right hon. Lady would be happy to accept. All it asks her to do is, before she accedes to a request, however motivated, from the Price Commission to make a direction under Clause 3, at least to assure herself that such a direction will not have the effect of diverting into export markets goods which are required for the domestic market.

This is not entirely a fanciful proposition. It is my contention that the Price Commission, that worthy body, is contributing hundreds of millions of pounds a year to the balance of payments deficit. I am surprised that the commission, which is not slow to chant its own achievements in the popular journals, has not seen fit to draw attention to this achievement, which is perhaps rather more important than some of the other things to which it lays claim. I have no doubt, and there is no doubt in the minds of people in industry today, that the fact that the profit margin and price controls apply exclusively to the domestic market is having an effect of diverting goods which are required for the domestic market to export markets, whence they have to be purchased back, the sole consequence being an additional burden on the balance of payments in respect of all single and several transactions.

Ministers have frequently appealed for evidence of this practice. I must say quite frankly that I am reluctant to provide evidence because I do not consider it to be anything other than the most proper and patriotic proceeding for companies to maximise their profitability through the export market to sustain future investment. I would not dream of facilitating either the right hon. Lady or the Price Commission in catching companies which are succeeding in evading the snares of the Price Commission by diverting goods to export markets in this way.

Nevertheless we must contemplate the implications of what is going on. From time to time evidence has come to public notice. Perhaps I could refer to one or two of these occasions. There was the case of the warning issued by Shell Chemicals that it would divert supplies of polypropylene and polystyrene, urgently needed for the United Kingdom market, to overseas markets because the commission was treating its application for price increases in such a manner that it would be the height of irresponsibility for it to continue to sell these products to United Kingdom customers.

I remember that the hon. Gentleman at Question Time the other day claimed that there was no supporting evidence for this. I do not know what sort of supporting evidence he wanted. I suppose that he will not be satisfied till he can see an enormous increase in the trade returns for United Kingdom exports of polypropylene and polystyrene and on the other side of the balance sheet a substantially higher figure for imports, once again hitting the balance of payments deficit.

There is an instance which has been drawn to my attention—and I do not intend to give any evidence of any kind which would enable the right hon. Lady or the Price Commission to follow it up—of a company which traditionally supplies raw materials to a United Kingdom customer. It found that those raw materials were being made up into goods which were being exported. The end products were free from the malign attentions of the Price Commission but the raw materials were subject to price and profit margin control.

Understandably the manufacturer felt that this was a mug's game. He has been able, I understand, to identify the overseas customer for the end product He has gone to that customer and said "Look, I will sell the raw material to you direct under a contract by which it is made up by my United Kingdom customer who sells you the end product." This was agreed and arranged. The consequence is that the United Kingdom customer for the raw materials has to pay the real market price for the product and not the price dictated by Sir Arthur Cockfield and the right hon. Lady.

This is of no particular concern to that customer, because if he sells any of the end products in the United Kingdom market, since his raw material price is now an import price, it is an allowable cost and he can get his price increase from the Price Commission. If he sells overseas he is selling in a free market and can sell for the best possible price.

The only sufferer in this circumstance is the balance of trade because the raw material, which is really for internal consumption, has had to be exported at one price and then imported at a higher price to amuse Sir Arthur Cockfield and his admirers. I do not know the precise cost of this manipulation to the balance of payments but I dare say that if it lasts for any length of time it will run into millions, possibly tens of millions, of pounds.

7.15 p.m.

The other day in the House I cited the example of a major manufacturing company which was seeking to obtain an essential chemical from its usual suppliers. It required four tons of this chemical and was eventually offered half a ton from its traditional United Kingdom suppliers. Eventually it was offered all that it needed from a Dutch concern at eight times the United Kingdom market price. When the goods were delivered they turned out to be of United Kingdom manufacture. The cost of that particular item to the balance of payments may well have run into £1 million or so.

The steel industry is fairly notorious. There was a time last autumn when Dr. Monty Finniston was denouncing the steel stockholders for pushing out to overseas markets in the rest of the Community scarce supplies of steel which they had obtained from the British Steel Corporation. As I understand it, the stockholders were denouncing BSC for doing the same thing. Unfortunately no one could identify who was doing what. What was indisputable was that supplies of steel required for the home market were being exported and then imported again simply because of the distortions imposed by price control.

I know that some steps have been taken, not before time, to reduce the discrepancies between the United Kingdom controlled price and free prices in other parts of the Community, but the aftermath of what has been going on is still with us. I was visiting an offshore service depot in Scotland the other day and was told that the main contractor had been waiting for months for a supply of steel. He eventually managed to track down what he required—again, I think, in Holland. When the steel was delivered it was found that it came from the British Steel Corporation. The process is still very much with us.

Under Clause 3 the Price Commission has to go to the Secretary of State and say "Here is a particularly vulnerable group which will cause you electoral embarrassment if you do not retrospectively restrict the price increase which is perfectly in accord with the provisions of the code by which we are supposed to operate." It is a matter of pure speculation which commodities this sort of direction might affect. We might find the right hon. Lady becoming alarmed about distress signals coming from young married couples so that she would decide that furnishing would be a suitable commodity about which to make a dramatic intervention under Clause 3.

In this context I draw the attention of the House to what happened last year under the more relaxed provisions of the Price Code then in operation. United Kingdom imports of miscellaneous furniture went up in volume terms by 67 per cent. while United Kingdom exports of miscellaneous furniture went up in volume terms by 21 per cent. I challenge the right hon. Lady to argue that there was nothing artificial about the scale of that stimulation of trade and that it had nothing to do with the effect of the antics of the Price Commission in artificially depressing the price at which furniture was allowed to be sold in the United Kingdom market.

Unless the right hon. Lady is prepared to accept my amendment she will be reinforcing the activities of the Price Commission in this respect and she will be enabling it to say that it agrees that an increase in the price of furniture is justified under the terms of the code. But that increase would nevertheless be embarrassing to newly married. It might, for instance, be known that a by-election is due and that newly-married are a high proportion of floating voters. It would be pointed out in such circumstances that the right hon. Lady would slaughter the Price Commission if it were not to take action to stop the price increase. Therefore, the Price Commission would apply for an order and obtain a direction under Clause 3. These are not fanciful projections of the way the clause could be used further to exacerbate the appalling problem of our balance of payments deficit.

I realise that Sir Arthur Cockfield and his chums get an enormous amount of job satisfaction, and, no doubt, the right hon. Lady also enjoys herself rushing from one end of the price dyke to the other sticking her finger in every available hole. I must confess that life would be rather duller if she and the Price Commission were not around.

However, we must at least occasionally consider what I dare to call the broader national interest and I wonder how the Treasury enjoys the prospect of the right hon. Lady's acting under Clause 3 to add an additional £10 million or so per annum to the balance of payments deficit. The right hon. Lady ought to have a word with her right hon. Friend the Chancellor of the Exchequer. I cannot believe that he can be thoroughly grateful for her activities and those of the Price Commission in shoveling out goods needed for the United Kingdom market and then reimporting them at higher prices. It is an odd way to assist in the balance of payments problem and I hope that the right hon. Lady will at least give us the modest assurance of accepting my amendment.

The activity of the Price Commission in adding to our balance of payments deficit will continue, but at least we may have done something to avoid adding a further dimension to the problem if we can have this modest amendment accepted. I hope that the right hon. Lady will be able to accept it—or, better still, let us sweep the clause away. It is a bad Bill, but this is a wholly indefensible clause. If the right hon. Lady really believes that it is not retrospective I hope that she will be able to give a clearer explanation of what the wording means than I have been able to get from subsection (1). No case has been made out for the clause, nor has an explanation been given as to how it would be used. Bad as the Bill is in general, it will be infinitely worse unless we delete the clause.

Mr. Gwilym Roberts

I intend to be brief, and I shall not follow the argument about the balance of payments deficit. I regard right hon. and hon. Gentlemen opposite as experts in creating balance of payments deficits. This was clearly shown by their record when in power.

However, I am a little concerned about what the hon. Member for South Angus (Mr. Bruce-Gardyne) said about goods coming into the country and thus adding to the balance of payments deficit. My right hon. and hon. Friends should seriously look at this point, although not in the way in which he proposed in his amendment. If the situation which the hon. Gentleman described exists, there is further scope for legislation by my right hon. and hon. Friends to ensure that prices and profits restrictions can also be applied as far as possible in this respect—

Mr. Bruce-Gardyne

Has the hon. Gentleman contemplated what that means? Does he realise that the purposes of such legislation would be to reduce export prices which United Kingdom manufacturers were obtaining, therefore adding that factor to our balance of payments deficit and turning the terms of trade against ourselves?

Mr. Roberts

I would not accept that point, but I do not wish to follow the hon. Gentleman closely. I am pointing out to my right hon. and hon. Friends who are involved in this matter that if there is validity in the hon. Gentleman's argument something should be done about the situation. I am sure that I am speaking for all hon. Members on the Government side when I say that we would be very worried if there was any question of removing Clause 3 from the Bill. Many of us feel that the powers of my right hon. Friend are already pretty limited in the Bill, and we would certainly not want to see any diminution of her powers.

Although I congratulated my right hon. Friend earlier today on securing certain voluntary arrangements, many of us still have doubts as to what the future will bring in these terms, and we, at least, are concerned that the power to act should lie in her hands as far as possible.

I noted that in the Counter-Inflation Act the Tory Government were prepared to override the code upwards—and no concern was then expressed about that. But now that there is a question of overriding the code downwards there is immediate concern from the Opposition. That is typical of their attitude to the Bill. They are prepared to bark in one direction, but are pretty quiet when the other side of the coin is involved.

I am sorry that the hon. Member for Staffordshire, South-West (Mr. Cormack) is not here. He has said that there is an election gimmick involved here, and he has talked about window dressing for electoral purposes, but it is nothing of the sort. The people of this country are crying out for a Bill of this kind. I remind the Opposition that there is a prospect of an election this autumn, and I advise them that they are, by their attitude to the Bill, misreading the whole feeling of the electorate. The people have wanted action of this sort for a long time. They want all possible powers to be in the hands of my right hon. Friend

The Opposition's attitude to the Bill, particularly on these amendments, clearly shows that they wish to diminish my right hon. Friend's powers to combat inflation. The period 1970–74 christened the Conservative Party as the party of inflation. The Opposition's attitude to the Bill strengthens the public's view that that is their general philosophy.

7.30 p.m.

Mr. Richard Wainwright (Colne Valley)

Liberal Members support Amendments Nos. 5 and 12, on both of which the Government were unable to muster a majority for their view in Standing Committee. Both were settled only after a tied vote, with the Chairman acting in accordance with the convention that he should vote to keep the Bill in the same condition as when it arrived in Committee. I hope that on this occasion we shall be backed with enough votes to teach the Government a lesson.

One reason among many why the Government failed to muster a majority in Committee was the miserable paucity of the arguments which their spokesman adduced. The Under-Secretary, the hon. Member for Caithness and Sutherland (Mr. Maclennan), speaking for the Government, did not cite one factual example of the need for the special powers in Clause 3. In spite of all the work which the Price Commission had been doing since it was ill advisedly set up by the Conservative Government, the hon. Gentleman was not able to produce one case to suggest that the Price Code was inadequate.

Mr. Bruce-Gardyne

The hon. Gentleman has made a most important statement Are we to understand—if so, it will be a joy to many of us to hear it—that the Liberal Party has abandoned its nonsensical belief in extreme forms of price and pay control?

Mr. Wainwright

It must be well known in the House—although I had not the privilege of being a Member at the time—that there was strong Liberal criticism of the device of a Price Commission proposed by the Conservative Government, taking the whole matter outside the control of Parliament. However much we may be chastised by the hon. Member for South Angus (Mr. Bruce-Gardyne), we continue to believe in a price and pay control policy but one conducted within Parliament and not farmed out to extra-parliamentary bodies with arbitrary and dictatorial powers.

On Amendment No. 5, all that the hon. Member for Caithness and Sutherland could do, in spite presumably of the possibility of obtaining ammunition from the Price Commission, was to express the hope that Hon. Members will recognise the value of giving a flexible twist to the operation of the Price Commission.—[OFFICIAL REPORT, Standing Committee D, 21st May 1974; c. 403.] We are opposed, as we were in Committee, to giving a flexible twist to a body outside the control of Parliament. The commission should not have been set up. It should have been aborted before birth. The last thing to do with a monstrous body of this kind, once conceived and born, is to give it a flexible twist.

Sir Harmar Nicholls (Peterborough)

Is it a new dance?

Mr. Wainwright

The hon. Member for Caithness and Southerland must speak for himself, unless his right hon. Friend the Secretary of State wishes to intervene in his support.

On Amendment No. 12, which the hon. Member for Southern, West (Mr. Channon) was good enough to acknowledge was tabled by myself in Committee and was supported by the Opposition, and again on which there was a tied vote, I am to this day at a loss to know why the Government opposed the amendment. In Committee the hon. Member for Caithness and Sutherland clearly understood the amendment's effect. He said: its effect would be that the Secretary of State could give a direction in relation to a completed price increase only within a period of up to three months after its implementation. That was a precise and accurate interpretation of the amendment. He went on to say: We certainly take the view that firms should not be left vulnerable to the procedures under Clause 3 for an indefinite period after implementing a price increase."—[OFFICIAL REPORT, Standing Committee D, 21st May 1974; c. 387.] In Committee, therefore, the offer was made to the hon. Gentleman that, if he could give a reason why a period longer or shorter than three months would be more amenable for administrative purposes, he should give it and we would gladly give way on the period. In spite of his denunciation of the amendment, however, he was unwilling to suggest any time which would not be a straitjacket or any time which would not be too relaxed. I am puzzled about the real ground on which he felt that he must resist the amendment.

I hope that unless much more direct and understandable arguments against both amendments are adduced by the Government the House will, in its wisdom, carry them.

Mr. Sainsbury

I am glad to be able to agree with the hon. Member for Colne Valley (Mr. Wainwright) and with my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) about the merits, or perhaps the lack of merits, of the clause. Unfortunately I cannot entirely agree with them that we were not given examples of how the clause might be operated. In Committee the Under-Secretary of State said: Again if I may put it in a very generalised way, one set of circumstances might be that the effect of the proposed price increase would be exceptionally harsh upon a peculiarly vulnerable section of the community, although it could be conformable with the provisions of the code."—[OFFICIAL REPORT. Standing Committee D, 21st May 1974; c. 402.] If that was meant to be an example of the circumstances in which the clause would operate, it was the most unfortunate example which could have been produced because it was a threat to any manufacturer, or indeed retailer, that if he was supplying something which was of particular importance to a vulnerable section of the community, those provisions of the code which allowed him to make a reasonable profit on his business might not apply and he might be required by the clause to operate without a profit. An example more designed to drive people out of the business of providing goods and services to vulnerable sections of the community could scarcely have been contrived. If the clause were to stand part and if the threat were not withdrawn there would be a great danger that a person whose products might be held to be of importance to a vulnerable section of the community might consider whether it was right for him to continue to provide those goods and services.

Mr. Gordon Wilson (Dundee, East)

The debate on the clause has been interesting. I had not intended to speak, but I should like to comment on the statements made by the hon. Member for South Angus (Mr. Bruce-Gardyne). I do not know whether the same information has been percolating through to our two constitutencies, which are contiguous, but there may be a risk that by enforcing controls too tightly in respect of certain products which are capable of export shortages may appear which could be of disadvantage to industry generally and might lead to the closure of a factory of which I know.

We are living in an age of resource limitation and shortage. If a black market situation affects some parts of the world and people are prepared to pay enormous sums for certain petro-chemical products, the basic supplies necessary for industry may go to other countries. The Government should pay particular attention to the implications of the matters brought to their attention by the hon. Member for South Angus. I do not necessarily support him in the amendment because I do not think that a report of that sort would necessarily add much to the position, but it is something to which the Price Commission and the Government should pay attention.

What has been said by the hon. Member for Colne Valley (Mr. Wainwright) on the limitation of Clause 3 is apposite. I agree with the Government that at a time of hyper-inflation limitations may be necessary. There should, however, be some restriction on the limitations, otherwise it might be easier to come to arbitrary decisions. Not many people in the United Kingdom would be in favour of arbitrary decisions. In passing legislation it behoves the House to pay close attention to the freedom of the subject.

On the question whether Clause 3 should stand part of the Bill, I await with interest the reply by the right hon. Lady. Not having had the advantage of being a member of the Committee, and not having heard the arguments put forward by the Under-Secretary of State, my support or otherwise for the clause will be determined by the arguments put forward by the right hon. Lady and the official Opposition.

Mr. Michael Latham

The House should certainly not pass the clause. It is without doubt one of the most objectionable clauses I have ever seen. In Committee my hon. Friend the Member for Hove (Mr. Sainsbury) said that this was a "Catch 22" clause—"If we cannot get you one way, by God we will get you another way, if necessary making up the rules as we go along."

The only explanation for the exceptionally wide powers under Clause 3(1) was given by the Under-Secretary of State, when he said in Committee: The circumstances in which it will be invoked are those in which the Price Commission itself considers that the price code in respect of a particular case is inadequate in some respects. It is intended to be employed in situations in which the problem is not so much the difficulty of applying the provisions of the code, but rather that the application of the code produces an anomalous result. Plainly, it is impossible to predict precisely the sort of situation in which this might happen."—[OFFICIAL REPORT, Standing Committee D, 21st May 1974; c. 374.] It is simply not good enough for Ministers to offer that as a reasons for bringing forward Draconian powers of this kind. If they are not satisfied with the price code, their duty is to redraft it so that it contains the provisions they want and to bring it back to the House. In spite of the parliamentary provisions which the right hon. Lady is proposing in a later amendment, I am far from satisfied that powers of this sort should ever appear on the statute book, and I hope that the House will resist them.

7.45 p.m.

Mrs. Shirley Williams

The hon. Member for South Angus (Mr. Bruce-Gardyne) still persisted in regarding Clause 3 as being a retrospective clause. Yet, his hon. and right hon. Friends in the course of long discussions in Committee to which he was not a party fully accepted that they were incorrect in believing that the clause had retrospective force. I begin, therefore, by reassuring the House, as did the right hon. Member for Southern, West (Mr. Channon) on 21st May in column 399 of the Committee proceedings, that the clause cannot be retrospective.

The reason why it was believed in some quarters that the clause had retrospective powers, interestingly enough, relates to what may have been thought to be the defective drafting of the Counter-Inflation Act, which was the responsibility of the previous administration. Clause 3 relates directly to the powers under Section 6 of the Counter-Inflation Act, and, therefore, if there is any element of retrospection, it must have been there before the clause was drafted. We are satisfied that there is no element of retrospection, but if there were, or if there were believed to be, it would be due to defective drafting of the Counter-Inflation Act.

Mr. Bruce-Gardyne

I thought that the right hon. Lady would explain why the clause was not retrospective, but she has not done so. My understanding of the operation of the clause is that a manufacturer obtains clearance for an increase in price under the provisions of the existing code, and the Price Commission comes to the right hon. Lady and says "That will cause a lot of trouble in that constituency where a by-election is pending. A Labour majority is very dicey. Do you not think that you had better impose a directive under Clause 3?".

Mrs. Williams

The hon. Gentleman has mixed up several things. I was talking about retrospection at the time. Perhaps if he would be kind enough to read the Committee proceedings from column 397 to column 401 he will, like his right hon. and hon. Friends, be satisfied that the clause is not retrospective. It would be otiose for me to repeat the arguments all over again to the many members of the Committee who are present tonight.

Subsection (4) reads: This section does not apply to any increase implemented before the passing of this Act". That also helps to make the position absolutely clear.

While I am fully aware that there are many honorable Members opposite who do not like Clause 3, none of them has repeated the many safeguards that exist to show that the clause is intended to be wholly exceptional. I will repeat them briefly.

First, the Price Commission has to be satisfied that the circumstances are exceptional. Secondly, the Secretary of State has to agree with the Price Commission. Thirdly, there has to be consultations with the person or persons selling the goods or providing the service to which the price or charge relates. Fourthly, there has to be consultation with any other persons who appear to the Secretary of State to be concerned. Fifthly, there has to be the issue of a direction. Sixthly, full details of that direction have to be carried in the Gazette.

No Government would go through so many hoops in circumstances that were not intended to be exceptional. I repeat that the circumstances envisaged are intended to be purely exceptional. Like Section 6 of the Counter-Inflation Act, which has not yet been used, it is intended —as the Government at the time made clear—to regard this as a procedure which would be used only in the most exceptional circumstances.

I have been asked what sort of "exceptional circumstances" might be involved. Let me give two examples. One might be a situation—a situation which the CBI recognises might give some ground for the Government to seek powers under Clause 3—in which a firm deliberately chose to seek all possible loopholes in the code for the purpose of facilitating increases in charges or prices.

Mr. Bruce-Gardyne

Why should it?

Mrs. Williams

I shall leave the hon. Gentleman to argue his own case. The majority of us, including members of the Conservative Party who set up the Price Code, would not like to see the present situation made nonsense of. The argument appears to be between those who, in good faith, supported the concept of the Price Commission and the code, including most Conservatives, and those who dislike it on any terms, including the hon. Member for South Angus. I repeat that those who support the Price Commission would not like to see any organisation attempt to link together all the loopholes to make nonsense of the situation. There are circumstances of that kind which are exceptional but which would quickly bring the code and the commission into disrepute.

Secondly, there are exceptional circumstances which could involve unpredictable movements in raw material costs. There were such movements not long ago which could not be catered for by a code based on a historical period of five years, from which any two years could be chosen in deciding what the profits reference margin should be. It is these exceptional circumstances—not the kind of circumstances which the hon. Member for Hove (Mr. Sainsbury) had in mind, which I agree would involve a "Catch 22" situation—which the Government had in mind in Clause 3.

Mr. Biffen

It is surely extremely dangerous if the code is to be treated as something which on the whole one can interpret as one goes along. There is no point in the right hon. Lady seeking to pick and choose between those Conservatives who viewed the commission favourably and those who did not or to imply that one could have recourse to courts of law where there was a conflict of interpretation. This is what is happening now between the GEC and the Price Commission. It is undesirable if any recourse to courts of law is to be under the shadow of a situation in which the rules of the commission can be altered by the Government during the process of time.

Mrs. Williams

I know that I cannot reassure the hon. Gentleman completely on this matter, but I assure him that the phrase "exceptional circumstances" could be taken to a court of law. I also assure him that the power, which is parallel to the power possessed by the Conservative Government, could override the Price Code in certain exceptional circumstances, although in a different direction.

Mr. Bruce-Gardyne

The right hon. Lady has advanced a remarkable proposition. She said that a company could string together loopholes to evade the operation of the code. It is a longstanding principle of British law that the subject is entitled to take all the opportunities which are open to him under the law. There is nothing in the least reprehensible about that.

Mrs. Williams

The hon. Gentleman and I must keep to our own opinions on that point.

I should like now to deal with the points made on Amendment No. 11. I first reassure the hon. Member for South Angus—although he will not like this very much—that the contentment of industry and the good cheer of the economy will, as he wishes, long be sustained by the presence of Sir Arthur Cockfield and myself on the scene.

The hon. Gentleman raised the question of the possibility of the risk of trade distortion. Amendment No. 11, which has been tabled by the hon. Gentleman, attempts to deal with the risk of trade distortions in any particular case. I have enough respect for the hon. Gentleman to know that he believes that this provision would make the working of the Price Commission virtually impossible. My hon. Friend the Under-Secretary of State and I have repeatedly asked the hon. Gentleman for evidence on this point, but so far we have received none. The hon. Gentleman uses an argument which is frequently adopted by many people who do not wish their propositions to be tested; namely, that they do not trust the testers enough to advance their side of the argument. I repeat that we have asked the hon. Gentleman for such evidence, but he has refused to give it. He believes that he cannot trust the probity and conscientiousness of either the Price Commission or me. My experience of the Price Commission is that it is a body of the utmost probity and rectitude, and that there would be no question of any firm or individual company being victimized if a case were made out that distortions of this kind were occurring.

The hon. Member for South Angus referred to furniture, but there is no evidence that there have been increases in the imports and exports of furniture flowing from anything done by the Price Commission. There is evidence that the first cut in EEC tariffs has had its effect on the imports of furniture into this country, together with the amount of advertising in respect of imported furniture. I will concede that there have been reports in the newspapers suggesting that one or two chemical products and some semi-processed goods may have been sold abroad in certain circumstances because of Price Commission decisions. I repeat our willingness to investigate any such claim. We have received two or three such other cases from other hon. Gentlemen and are investigating them, and we shall take them into account in any revision of the Price Code. However, the hon. Member for South Angus should at least be willing to test the good will of the Price Commission and of my Department in this respect before he tables amendments on the basis of evidence which he is not prepared to reveal to the House or to anybody else.

Mr. Bruce-Gardyne

May I put the position to the right hon. Lady in the following way. One instance I gave without giving any details—and I confirm that I have no intention of giving any details—concerned a firm which found it necessary to supply a customer with raw material via the end-customer who made up the goods overseas. I am not prepared to divulge the details in this case. I was given them in confidence, and it would be a breach of confidence to reveal them. In any event, there appears to be a distinct possibility that in the circumstances the Price Commission will say that this is not a genuine export and, therefore, that the goods are subject to price control.

8.0 p.m.

My belief is that it is essential for firms to be able to make a good profit in order to finance necessary future investment and to sustain the economy that we need. I cannot see that that purpose would conceivably be served by putting the right hon. Lady and the Price Commission in the position of being able to say to this firm that it is not a genuine export and, therefore, that it is subject to the operation of price controls.

Mrs. Williams

The hon. Gentleman may have a perfectly fair point and one which is in the national interest. But the difficulty is that his attitude of totally distrusting the Price Commission and my Department, despite pledges that he has been given of our willingness to respect confidentiality, puts us in a position in which he continues to berate us but he does not allow us to put right the situation of which he complains. If that is not a "Catch 22" situation, I do not know what is.

I appeal to the hon. Gentleman once again. I give the pledge that the confidentiality of the firm involved will not go beyond me and the Price Commission. But I ask the hon. Member for South Angus for the opportunity to investigate what he describes as a serious distortion of trade. Until he does, I must advise the House not to accept his amendment, because he has not shown it to be necessary.

I come finally to Amendment No. 12. I see what the hon. Member for Colne Valley (Mr. Wainwright) is getting at, but it is an amendment that we cannot accept in the terms in which it is expressed.

The effect of Amendment No. 12 would be not to bind the Price Commission or the Government to act speedily but in practice to tempt the firm to act slowly by setting up a period of three months over the period by which implementation would have to be completed. The hon. Gentleman's original amendment and the Opposition amendment which is now in its place would put the greatest possible premium on a firm which indulged in delay.

The Government cannot accept a situation in which it would be in the interests of that firm to delay at every step the procedures necessary to bring about the operation of the clause. Furthermore, I appeal to the hon. Member for Colne Valley to look at it from the point of view of his party, which has called upon me to insist upon full consultation. The way in which the amendment is phrased might make it impossible in any complicated case to indulge even in the consultation processes which we have now laid down as a safeguard.

I repeat them. They are the satisfaction of the Price Commission, the requirement on the Secretary of State to be satisfied, the requirement on the Secretary of State to consult the firm or firms or individuals concerned, the requirement on the Secretary of State to consult any other interested bodies, and the requirement to publish in the Official Gazette. All these steps, which we genuinely intend to carry out, in these very exceptional cases might be jeopardised by the requirement of a three months' total limit in the case of any action involving complicated submissions by the firm.

I hope that the hon. Member for Colne Valley will accept from me that what is his intention, which is that the Price Commission shall act separately, agrees with the Government's intention. I give him the assurance that it is our intention that the Price Commission shall act separately. However, the way in which that amendment is phrased would bring about the extreme difficulty of consulting adequately in any complicated case.

Mr. Channon

I am sure that the House wishes to reach a decision on this matter. I do not think that the Opposition wish to waste time by dividing the

House on more than one amendment. We have had an adequate explanation of the purpose of the clause. I advise my right hon. and hon. Friends to divide the House on Amendment No. 5, which is the first of the group before us.

Question put, That the amendment be made:—

The House divided: Ayes 226, Noes 264.

Division No. 38. AYES 8.4 p.m.
Adley, Robert Fookes, Miss Janet McCrlndle, R. A.
Aitken, Jonathan Fowler, Norman (Sutton Coldfield) Macfarlane, Neil
Alison, Michael (Barkston Ash) Fry, Peter MacGregor, John
Allason, James (Hemel Hempstead) Galbraith, Hn. T. G. D. McLaren, Martin
Ancram, M. Gardiner, George (Reigate&Banstead) Macmillan, Rt. Hn. M. (Farnham)
Archer, Jeffrey (Louth) Gardner, Edward (S. Fylde) McNair-Wilson, Michael (Newbury)
Atkins, Rt.Hn. Humphrey (Spelthorne) Gibson-Watt, Rt. Hn. David Madel, David
Awdry, Daniel Gilmour,Rl.Hn.Ian (Ch'sh'&Amsh'm) Marshall, Michael (Arundel)
Balniel, Rt. Hn. Lord Gllmour, Sir John (Fife, E.) Marten, Neil
Banks, Robert Glyn, Dr. Alan Mather, Carol
Bell, Ronald Goodhew, Victor Maude, Angus
Bennett, Dr. Reginald (Fareham) Goodlad, A. Mawby, Ray
Benyon, W. Gorst, John Maxwell-Hyslop, R. J.
Biffen, John Gow, Ian (Eastbourne) Mayhew, Patrick (RoyalT'bridge Wells)
Biggs-Davison. John Gower, Sir Raymond (Barry) Meyer, Sir Anthony
Boscawen, Hon. Robert Grant, Anthony (Harrow, C.) Miller, Hal (B'grove S R'dltch)
Bowden. Andrew) Brighton, Kemptown) Gray, Hamish Mills, Peter
Boyson, Dr. Rhodes (Brent, N) Grieve, Percy Mi8campbell, Norman
Braine, Sir Bernard Griffiths, Eldon (Bury St. Edmunds) Mitchell, David (Basingstoke)
Brittan, Leon Grimond, Rt. Hn. J. Moate, Roger
Brown, Sir Edward (Bath) Grist, Ian Money, Ernie
Bruce-Gardyne, J. Hall, Sir John Monro, Hector
Bryan, Sir Paul Hall-Davis, A. G. F. Moore, J. E. M. (Croydon, C.)
Buchanan-Smith, Alick Hampson, Dr. Keith More, Jasper (Ludlow)
Buck, Antony Hannam,John Morgan, Geraint
Bulmer, Esmond Harrison, Col. Sir Harwood (Eye) Morrison, Charles (Devizes)
Burden, F. A. Harvle Anderson, Rt. Hn. Miss Morrison, Peter (City of Chester)
Carlisle, Mark Hastings, Stephen Mudd, David
Chalker, Mrs. Lynda Havers, Sir Michael Neubert, Michael
Channon, Paul Hawkins, Paul Newton, Tony (Braintree)
Chataway, Rt. Hn. Christopher Hayhoe, Barney Nicholls, Sir Harmar
Churchill, W. S. Henderson,Barry (Dunbartonshire, E.) Nott, John
Clark, A. K. M. (Plymouth, Sutton) Heseltine, Michael Onslow, Cranley
Clarke, Kenneth (Rushcliffe) Hooson, Emlyn Oppenheim, Mrs. Sally
Clegg, Walter Hordern, Peter Orr, Capt. L. P. S.
Cockcroft, John Howe, Rt.Hn. Sir Geoffrey(Surrey,E.) Page, Rt. Hn. Graham (Crosby)
Cooke, Robert (Bristol, W.) Howell, David (Guildford) Parkinson, Cecil (Hertfordshire, S.)
Cope, John Howell, Ralph (Norfolk, North) Percival, Ian
Cormack, Patrick Howells, Geraint (Cardigan) Pink, R. Bonner
Corrie, John Hutchison, Michael Clark Price, David (Eastieigh)
Costain, A. P. Irvine, Bryant Godman (Rye) Pym, Rt. Hn. Francis
Critchiey, Julian James, David Quennell, Miss J. M.
Crouch, David Jenkin, Rt.Hn.P. (R'dgeW'std&W'fd) Redmond Robert
Crowder, F. P. Jessel, Toby Rees, Peter (Dover & Deal).
Davies, Rt. Hn. John (Knutsford) Johnson Smith, G. (E. Grinstein) Rees-Davles W. R
Dean, Paul (Somerset, N.) Johnston, Russell (Inverness) Renton.Rt. Hn. SirDavld(H't'gd'ns're)
Dixon, Piers Jones, Arthur (Daventry) Renton. R. T. (Mid-Sussex)
Dodsworth, Geoffrey Joplin, Michae Rifkind, Malcolm
Drayson, Burnaby Kaberry, Sir Donald Roberts, Michael (Cardiff, N.-W.)
du Cann, Rt. Hn. Edward Kellett-Bowman, Mrs. Elaine Roberts, Wyn (Conway)
Durant, Tony Kimball, Marcus Rossi, Hugh (Hornsey)
Dykes, Hugh King, Tom (Bridgewater) Sainsbury, Tim
Eden, Rt. Hn. Sir John Knight, Mrs. Jill Shaw, Giles (Pudsey)
Edwards, Nicholas (Pembroke) Lamont, Norman Shaw, Michael (Scarborough)
Elliott, Sir William Lane, David Shersby, Michael
Emery, Peter Langford-Holt, Sir John Silvester, Fred
Eyre, Reginald Latham, Michael (Melton) Sims, Roger
Fairgrieve, Russell Lawrence, Ivan Skeet, T. H. H.
Farr, John Lawson, Nigel (Blaby) Smith, Cyril (Rockdale)
Fell, Anthony Lester, Jim (Beeston) Spence, John
Fanner, Mrs. Peggy Lewis, Kenneth (Rtland & Stamford) Spicer, Jim (Dorset, W.)
Finsberg, Geoffrey Lloyd, Ian (Havant & Waterloo) Spicer, Michael (Worcestershire, S.)
Fisher, Sir Nigel Loveridge, John Sproal lain
Fletcher, Alexander (Edinburgh, N.) Luce, Richard Stan brook, Ivor
Fletcher-Cooke, Charles MacArthur, Ian Stanley, John
Steel, David Tyler, Paul Winstanley, Dr. Michael
Steen, Anthony (L'pool, Waver tree) van Straubenzee, W. R. Winterton, Nicholas
Stewart, Ian (Hitchin) Vaughan, Dr. Gerard Wood, Rt. Hn. Richard
Straddling Thomas, J. Viggers, Peter Woodhouse, Hn. Christopher
Taylor, Edward M. (Gl'gow, C'cart) Waddington, David Worsley, Sir Marcus
Tebbit, Norman Wainwright, Richard (Colne Valley) Young, Sir George (Ealing, Actor
Temple-Morris, Peter Wakeham, John Younger, Hn. George
Thatcher, Rt. Hn. Margaret Walder, David (Clitheroe)
Thomas, Rt. Hn. P. (B'net.H'dn S.) Wall, Patrick TELLERS FOR THE AYES
Thorpe, Rt. Hn. Jeremy Walters, Dennis Mr. Marcus Fox and
Townsend, C. D. Weatherill, Bernard Mr. Spencer Le Marchant
Trotter, Neville Wails, John
Abse, Leo Ellis, Tom (Wrexham) Lee, John
Allaun, Frank English, Michael Lestor, Miss Joan (Eton & Slough)
Archer, Peter (Warley, West) Evans, Fred (Caerphilly) Lever, Rt. Hn. Harold
Ashton, Joe Evans, loan (Aberdare) Lewis, Arthur (Newham, N.)
Atkins, Ronald (Preston, N.) Evans, John (Newton) Lewis, Ron (Carlisle)
Atkinson, Norman Ewing, Harry (St'ling.F'kirk&G'm'th) Lipton, Marcus
Baggier. Gordon, A. T. Faulds, Andrew Loughlin, Charles
Barrett, Guy (Greenwich) Ferny Hough, Rt. Hn. E. Lyon, Alexander W. (York)
Barnett, Joel (Heywood & Royton) Fitch, Alan (Wlgan) Lyons, Edward (Bradford, W.)
Bates, Alf Flannery, Martin Mabon, Dr. J. Dickson
Bennett, Andrew F. (Stockport, N.) Fletcher, Ted (Darlington) MacCormack, lain
Bishop, E. S. Foot, Rt. Hn. Michael McElhone, Frank
Blenkinsop, Arthur Forrester, John MacFarquhar, Roderick
Bcardman, H. (Leigh) Fowler, Gerry (The Wrekin) McGuire, Michael
Booth, Albert Fraser, John (Lambeth, Norwood) Mackenzie, Gregor
Boothroyd, Miss Betty Freeson, Reginald Maclennan, Robert
Bottomed, Rt. Hn. Arthur Galpern, Sir Myer McNamara, Kevin
Boyden, James (Bishop Auckland) Garrett, John (Norwich, S.) Madden, M. O. F.
Bradley, Tom Garrett, W. E. (Wallsend) Magee, Bryan
Broughton, Sir Alfred George, Bruce Mahon, Simon
Brown, Bob (NewcastleuponTyne, W.) Gilbert, Dr. John Mallalieu, J. P. W.
Brown, Hugh D. (Glasgow, Provan) Ginsburg, David Marks, Kenneth
Brown, Ronald (H'kney, S. &Sh'dilch) Golding, John Marquand, David
Buchan, Norman Gourlay, Harry Marshall, Dr. Edmund (Goole)
Buchanan, Richard(G'gow,Springbrn) Grant, George (Morpeth) Mayhew, Christopher (G'wh,W'wch,E)
Butler, Mrs. Joyce (H'gey.WoodGreen) Grant, John (Islington, C.) Meacher, Michael
Callaghan, Jim (M'dd'ton & Pr'wlch) Griffiths, Eddie (Sheffield, Brightside) Mellish, Rt. Hn. Robert
Campbell, Ian Hamilton, James (Both well) Mendeison, John
Cant, R. B. Hamilton, William (Fife, C.) Mikardo, Ian
Carmlchael, Neil Hamling, William Millan, Bruce
Carter-Jones, Lewis Hardy, Peter Miller, Dr. M. S. (E. Kilbride)
Castle, Rt. Hn. Barbara Harper, Joseph Milne, Edward
Clemitson, Ivor Harrison, Walter (Wakefield) Mitchell, R. C. (S'hampton, Itchen)
Cocks, Michael Hart, Rt. Hn. Judith Molloy, William
Cohen, Stanley Hattersley, Roy Morris, Charles R. (Opens haw)
Coleman, Donald Hatton, Frank Morris, Rt. Hn. John (Aberavon)
Colquhoun, Mrs. M. N. Heffer, Eric S. Moyle, Roland
Concannon, J. D. Henderson,Douglas (Ab'rd'nsh're,E) Mulley, Rt. Hn. Frederick
Conlan, Bernard Hooley, Frank Murray, Ronald King
Cook, Robert F. (Edinburgh, C.) Horam, John Newens, Stanley (Harlow)
Cox, Thomas Huckfleld, Leslie Oakes, Gordon
Craigen, J. M. (G'gow, Maryhill) Hughes, Rt. Hn. Cledwyn (Anglesey) Ogden, Eric
Crawshaw, Richard Hughes, Mark (Durham) O'Halloran, Michael
AWT, John Hughes, Robert (Aberdeen, North) O'Malley, Brian
Crosland, Rt. Hn. Anthony Hughes. Roy (Newport) Orbach, Maurice
Cryer, G. R. Irvine, Rt. Hn. Sir A. (L'p'I.EdgeHIII) Ovenden, John
Cunningham, G.(lst'ngt'n,SAF'sb'ry) Irving, Rt. Hn. Sydney (Dartford) Owen, Dr. David
Cunningham, Dr. John A. (Whiteh'v'n) Jackson, Colin Padley, Walter
Dalyell, Tam Janner, Greville Park, George (Coventry, N.E.)
Davies, Bryan (Enfield, N.) Jeger, Mrs. Lena Parker, John (Dagenham)
Davies, Denzil (Llanelli) Jenkins, Hugh (W'worth, Putney) Parry, Robert
Davies, Ifor (Gower) John, Brynmor Peart, Rt. Hn. Fred
Davis, Clinton (Hackney, C.) Johnson, James(K'ston upon Hull.W) Pliipps, Dr. Colin
Deakins, Eric Johnson, Walter (Darby, S.) Prentice, Rt. Hn. Reg
Dean, Joseph (Leeds, W.) Jones, Barry (Flint, !:.) Prescott, John
de Freitas, Rt. Hn. Sir Geoffrey Jones, Dan (Burnley) Price, Christopher (Lewisham, W.)
Dell, Rt. Hn. Edmund Jones, Gwynoro (Carmarthen) Price, William (Rugby)
Dempsey, James Jones, Alec (Rhondda) Radice, Giles
Doig, Peter Judd, Frank Reid, George
Dormand, J. D. Kaufman, Gerald Richardson, Miss Jo
Douglas-Mann, Bruce Kelley, Richard Roberts, Albert (Normanton)
Duffy, A. E. P. Kerr, Russell Roberts, Gwiiym (Cannock)
Dunn, James A. Kilroy-Silk, Robert Robertson, John (Paisley)
Dunnett, Jack Kinnock, Neil Roderick, Caerwyn E.
Dunwoody, Mrs. Gwyneth Lamble, David Rodgers, George (Chorley)
Eadie, Alex Lamont, James Rodgers, William (Teesslde, Stockton)
Edge. Geoff Latham, Arthur(CltyofW'minsterP'ton) Rooker, J. W.
Edwards, Robert (W'hampton, S.E.) Lawson, George (Motherwell&Wlshaw) Roper, John
Ellis, John (Brigg & Scunthorpe) Ledbetter, Ted Rose, Paul B.
Ross, Rt. Hn. William (Kilmarnock) Stott, Roger Weitzman, David
Rowlands, Edward Strang, Gavin Well beloved, James
Sandelson, Neville Strauss, Rt. Hn. G. R. White, James
Sedge more, Bryan Summerskill, Hn. Dr. Shirley Whitlock, William
Selby, Harry Swain, Thomas Wigley, Dafydd (Caernarvon)
Shaw, Arnold (Red bridge, lllord, S.) Taverne, Dick Willey, Rt. Hn. Frederick
Sheldon, Robert (Ashlon-under-Lyne) Tierney, Sydney Williams, Alan (Swansea, W.)
Shore, Rt. Hn. Peter (S'pney&P'plar) Tinn, James Williams, Alan Lee (Hvrng, Hchurch)
Short, Rt. Kn. E. (N'ctle-u-Tyne) Tomlinson, John Williams,Rt.Hn. Shirley(H'f'd&St'ge)
Silken, Rt. Hn. John (L'sham.D'ford) Tomney, Frank Williams, W. T. (Warrington)
Sllkln,Rt.Hn.S.C.(S'hwark,Dulwich) Torney, Tom Wilson, Gordon (Dundee, E.)
Sillars, James Tuck, Raphael Wise, Mrs. Audrey
Silverman, Julius Urwin, T. W. Woodall, Alec
Skinner, Dennis Varley, Rt. Hn. Eric G. Wool, Robert
Smith, John (Lanarkshire, N.) Wainwrlght, Edwin (Dearne Valley) Wriggles worth, Ian
Snape, Peter Walden, Brian (B'm'ham, Lady wood) Young, David (Bolton, E.)
Spearing, Nigel Walker, Harold (Doncaster)
Spriggs, Leslie Walker, Terry (Kingwood) TELLERS FOR THE NOES
Stallard, A. W. Watkins, David Mr. Laurie Pavittand
Stewart, Donald (Western Isles) Watt, Hamish Mr. Tom Pendry.
Stoddart, David (Swindon)

Amendment accordingly negatived.

Mr. Maclennan

I beg to move Amendment No. 9, in page 5, line 2, at end insert: 'and the Secretary of State shall, for the purposes of any consultation under paragraph (a) above, furnish to the person or persons there mentioned particulars of the grounds submitted to him by the Commission as justifying intervention under this section'. The amendment honours an undertaking given by the Government in Committee, to ensure that those firms whose price increases were at issue under Clause 3 would know the case they had to answer. It ensures that the firm will have at its disposal during the consultations which will be statutorily required the relevant details of the case so that it is fully equipped to put its own side. The Secretary of State is required for the purposes of the consultations which have to be undertaken to let the firm know the details of the Price Commission's reasons justifying the Secretary of State's intervention in exceptional circumstances.

The Opposition moved a similar amendment in Committee, and my hon. Friend the Under-Secretary of State for Employment undertook to look at the matter closely. We think that this amendment is an improvement on that tabled by the Opposition, in that it safeguards commercially confidential information and thus protects the interests of the firm concerned, confining the statutory obligation to the giving of relevant information to the firm immediately concerned. This is a reasonable safeguard, and I hope that the amendment will be acceptable.

Mr. Channon

I thank the Government for having put down this amendment, which substantially meets the point that we raised in Committee. I think it will be extremely satisfactory.

Amendment agreed to.

Mr. Maclennan

I beg to move Amendment No. 10, in page 5, line 3, leave out subsection (3) and insert: '(3) The power to give a direction under this section shall be exercisable by statutory instrument, and a statutory instrument containing a direction under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament'.

Mr. Deputy Speaker

I think it will be convenient to take sub-amendment (a) to Government Amendment No. 10, in the name of the hon. Member for South Angus (Mr. Bruce-Gardyne), to leave out from 'by' to end and add: 'order, and no such order shall be made unless a draft of it has been laid before, and approved by resolution of, each House of Parliament'.

Mr. Maclennan

Once again this amendment deals with a point raised in Committee, to which I promised to give further consideration; namely, the question of parliamentary accountability under Clause 3.

It will be recalled that the hon. Member for the City of Chester (Mr. Morrison) moved a somewhat similar amendment in Committee. The Government amendment provides that any direction given by the Secretary of State authorising the Price Commission to exercise its powers as if a price increase were not in accordance with the code shall be contained in a statutory instrument subject to negative resolution procedure.

The amendment takes full account of the Opposition's understandable concern about parliamentary accountability, and we trust that it will be acceptable to the House. The amendment is drafted in slightly different terms from the Opposition amendment in Committee. It deletes the express requirement to publish the direction in the Gazette, as a statutory instrument would automatically be widely available.

May I now deal with the amendment of the hon. Member for South Angus (Mr. Bruce-Gardyne). His proposal would substitute affirmative for negative resolution procedure in the statutory instrument containing the direction. The hon. Member was not a member of the Standing Committee which considered the Bill, and I take it that he may not appreciate that his hon. Friends proposed the negative procedure. We take the view that the Government Amendment No. 10 fully meets the undertaking which we gave in Committee, and I could not advise the House to modify the procedure still further in the way that the hon. Gentleman suggests.

Mr. Deputy Speaker

May I suggest to the hon. Member for South Angus (Mr. Bruce-Gardyne) that if he desires to discuss his proposed sub-amendment to Government Amendment No. 10, it should be done on the substantive Government amendment rather than by moving his sub-amendment separately.

Mr. Bruce-Gardyne

I bow to your wisdom in these matters, Mr. Deputy Speaker. 1 thought that where a sub-amendment to an amendment on the Order Paper was selected, it was the normal procedure for the sub-amendment to the amendment to be moved. However, I fully accept your ruling.

Mr. Deputy Speaker

In fact, it can be, but it does not necessarily need to be moved separately. I was hoping that it would be for the convenience of the House to deal with the whole matter on the substantive Government amendment.

Mr. Bruce-Gardyne

I take the point, and I am happy to accept your ruling, Mr. Deputy Speaker.

The Under-Secretary has correctly explained the difference of view between us. I am aware that the step that he has taken was in response to a request from my hon. Friends in Committee. As he says, 1 was not privileged to be on the Committee, and I am always anxious to try to improve on the golden work that is done elsewhere, where this is possible. I am sure that my hon. Friends were making a very modest and reasonable proposal, and I will advance a word or two to explain why my alternative suggestion is by no means immodest.

We are giving in this clause a further extension to the already wide, sweeping and Draconian powers of this extra-parliamentary body, the Price Commission. When the Price Commission was originally set up, hon. Members opposite fiercely criticised my hon. Friends for the fact that the Price Commission was not effectively answerable to Parliament. It would be dishonest of me to pretend that there were not some of us then on the Government benches who shared some anxieties on this score. Therefore, I find it hard to understand how the present Government cannot miss an opportunity further to extend the activities and the powers of this extra-parliamentary body.

I can only say that for my part I remain totally unconvinced by the right hon. Lady's statement—because it was not an explanation—that the powers in this Bill are not retrospective, in view of the fact that they are designed to enable the Government and the Price Commission to reverse a price increase which was perfectly legitimate under the code. I would, therefore, argue that the powers under Clause 3 are far-reaching.

Of course, it is nice to know from the right hon. Lady that the powers are to be used only in exceptional circumstances. I wish that she would at some time explain how the courts will decide what can be classified as exceptional and what cannot. In any case, exceptional or not, I submit that these are far-reaching powers which need the fullest possible parliamentary scrutiny. The hon. Member knows as well as I do that the opportunities for praying against an order which is subject to the negative resolution procedure are very restricted, and there is no guarantee that an order under Clause 3 would ever be properly scrutinized by the House. It might be, but there is no guarantee. I believe that such orders should always be scrutinized, and the only way to ensure that is to make them subject to the affirmative resolution procedure.

8.30 p.m.

The Minister might suggest that if we adopted the affirmative resolution procedure the Order Paper would be cluttered up with orders. There is a simple answer to that proposition. The Secretary of State spent some time telling us how wholly exceptional the orders would be under this clause. If that is so, there is no earthly reason why on the very rare occasons—once every two years, if, Heaven forefend, the legislation should last that long—the House should not be invited to give its judgment on an order under Clause 3 under the affirmative resolution procedure. Therefore, the argument that the House could not cope does not apply, and if the Government invoke that argument it proves that the Secretary of State was hardly being completely fair with the House when she said that the orders would be wholly exceptional.

Will the Minister say what sort of information he expects the Government will be giving the House to enable it to judge the suitability or otherwise of an order under Clause 3? On Amendment No. 9 the Secretary of State told us how she would explain to people who were the subject of an order under the clause the charge sheet leveled against them by the Price Commission. As I understand it, there does not need to be a charge sheet. The Price Commission could simply say that the increase was perfectly bona fide, that there was ample justification for it, but that it would embarrass a small group of the Secretary of State's supporters in the country in a delicate political situation and that, therefore, it ought to be banned. That does not add up to a charge sheet; it is a simple political act. That is the sort of circumstance in which the Price Commission, if it wished to curry favour with the Secretary of State, could presumably operate.

Nevertheless, the Secretary of State told us that those who were the subject of an order would be informed of the charges leveled against them. Will the House be informed of the charges upon which such an order will be based, whether under the negative or the affirmative resolution procedures, because if the House is not to receive that information, which will be given to the victims of the order, I do not see how the House can come to a clear decision? I hope that the Minister will make it clear just what information will be provided for the House.

In view of everything that we have been told about the wholly exceptional nature of the proceedings under Clause 3, and given the Draconian nature of the powers under the clause, I believe there is an overriding case for these orders to be dealt with under the affirmative resolution procedure. We therefore need a clearer explanation than we have so far had from the Minister of why he proposes to resist my sub-amendment to his amendment.

Mr. Maclennan

I do not want to weary the House by repeating at length the arguments with which the hon. Member for South Angus (Mr. Bruce-Gardyne) will be familiar, and which were canvassed in Committee, about the circumstances in which an affirmative procedure is appropriate and those in which a negative procedure is appropriate. I think that both sides of the House are agreed—it is reflected in practice—that this is a matter of difficult judgment. In the case with which we are dealing the hon. Gentleman's right hon. and hon. Friends accepted that the negative procedure was appropriate.

The evidence that we have of the use of the affirmative procedure in recent years suggests that it is now the exception rather than the rule, although there are some fluctuations from year to year. In the most recent period for which figures are available it has been used in only about 20 per cent. of the cases in which we have introduced statutory instruments

I appreciate that in making his suggestion the hon. Gentleman is simply seeking to underline the totality of his opposition to the clause and the importance he attaches to it. It would not be appropriate at this stage to reopen the arguments the hon. Gentleman and his hon. Friends have already canvassed in respect of earlier amendments, or to seek to go further than my right hon. Friend did in describing the circumstances in which the clause would be invoked. She has made it abundantly clear that it is a highly exceptional procedure, which will be used very rarely.

I think that the hon. Gentleman's first argument in favour of the affirmative procedure was that the clause had retrospective effect, and he reopened the question discussed on an earlier amendment. I do not want to go far beyond what my right hon. Friend said. I direct the hon. Gentleman's attention to what I said on this point in Committee: If, following a direction from the Secretary of State, the Price Commission sought to restrict a price increase by an order or notice under Section 6 of the Counter-Inflation Act 1973, it would affect future and not past transactions. The Secretary of State … cannot by direction affect the validity of a transaction which has already occurred. There is a further and wider point, which is more persuasive. As a canon of statutory interpretation, if a Bill is to be construed retrospectively, it is a highly unusual situation, and if a power is to be construed as being capable of having retrospective effect, it is necessary that that should be explicit."—[OFFICIAL REPORT, Standing Committee D, 21st May 1974; c. 388–9.] I do not think that even the hon. Gentleman would claim that it was so in the Bill.

I shall not weary the House by extending the debate on the amendment. I think that it has met with the broad approval and acceptance of the House.

Amendment agreed to.

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