PRICE CODE

HC Deb 24 July 1975 vol 896 cc1095-165

8.15 a.m.

Sir Geoffrey Howe

I beg to move Amendment No. 35, in page 3, line 15, leave out from 'section' to end of line 17.

This is the first amendment we shall consider which bears on Clause 3. The effect of the amendment is to delete from subsection (1) the words after the word "section", and, therefore, eliminate the whole of the rest of the subsection.

The purpose of the words which the amendment seeks to eliminate is to extend the power under which the Price Code may be made or varied, in order, as I understand it, to enable that power to be used to set up jurisdiction whereby questions about the extent to which remuneration exceeds the limits may be determined by the Secretary of State. It is not clear to me exactly what that means. It appears that the scope of legislative changes, or sub-legislative changes, that may be made under the Price Code is being substantially exceeded here. The words appear to give the Secretary of State, in laying a new Price Code before the House, power to do almost anything in terms of establishing a new jurisdiction or tribunals which will help him determine whether any remuneration exceeds the limits set out in Clause 1.

What disturbs me about this is that the whole of the present structure of industrial tribunals—healthy and valuable as that no doubt is—sprang from one short subsection in the Industrial Training Act 1964. It was a splendid subsection, designed to allow tribunals to be set up simply to determine how much industrial training levy should be paid by different employers. But from it has grown a great undergrowth of agencies now determining many questions of different kinds.

The purpose of my moving the amendment is to ask the Secretary of State for Prices and Consumer Protection to explain just how wide are the powers conferred by the words to which I have referred. What may the Secretary of State do by way of establishing jurisdictions to enable questions about remuneration to be determined by him? Perhaps the right hon. Lady will be kind enough to explain, and then we may consider the position further.

The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams)

Perhaps the most helpful thing I can do is to outline the procedure which would be used when a firm sought an increase in prices, and which would involve the Secretary of State for Employment in deciding whether the limits had been exceeded. A number of the details appear in the consultative document which has been laid before the House, but it may be helpful if I briefly explain the procedure.

The larger manufacturing and service firms, those in categories 1 and 2, will be required to include in their applications for price increases in future, or in periodic reports to the Price Commission, details of any pay settlements which affect their prices. The Price Commission will then seek the advice of the Department of Employment on whether the settlements conform with the pay limit. This relates to the reference in subsection (1) to remuneration exceeding the limits to be determined by the Secretary of State.

The commission will be informed whether the Department considers that the application reflects a pay settlement that exceeds the norm. If it does, the Department will certify that the settlement is outside the limit, and the commission will then ensure that the appropriate disallowance is made. That disallowance refers to the whole of any excessive pay settlement, and not just to that part which exceeds the norm—the £6. Therefore, the commission will also be able to roll back any price increases which have already been implemented, including any which take place before 1st August and which are in breach of the 12-month settlement.

Distributors will also have to show details of settlements in written reports to the commission. Because they are subject not to the allowable costs régime but rather to the control of their margins, they will be obliged to show that they observe the code, by details that they provide. In any situation in which they exceed the code, the Price Commission would also, of course, be able to make sure that they were held to this agreement, and this would apply regardless of any safeguards below which they might have fallen.

The safeguards at present operating for a number of firms are the minimum profit safeguard and the gross and net profit safeguard for distributors. Although normally they apply, they will not apply in cases of excessive pay settlements. The Committee will appreciate that those firms are less likely to be able to make excessive pay settlements.

I will make an explanation, which has not yet been given, of the procedure to be followed. The answer to the question asked by the right hon. and learned Gentleman the Member for Surrey, East (Sir G. Howe) is that the Secretary of State for Employment must, if the policy is to be successful, be in a position to be able to indicate where, in his view, a pay settlement exceeds the norm, and it would be quite impossible, as the right hon. and learned Gentleman will probably appreciate more than anybody else in the Committee, for the Price Commission to do this because it has neither the information nor the expertise to undertake it. He will also know that information to the Price Commission is not information about settlements or income increases but information overall about labour costs which do not necessarily reflect whether a settlement is within or outside the norm laid down in the White Paper.

I hope that the explanation will go some way to show the right hon. and learned Gentleman that the clause to which he has tabled the amendment, presumably in order to discover what is behind it, indicates that there is a stringent restraint on the powers of the Secretary of State and that it is only a preliminary to what is described in Clause 1.

Mr. Cormack

I want to ask a question rather than make a speech. This is a terribly complex procedure. I should be grateful if the right hon. Lady would tell us, by quoting an example, how this would work if a firm got into trouble. Perhaps she will also tell us how many extra people she will need to police this effectively.

Mrs. Williams

I will describe as clearly as I can what would happen to an individual firm. It will be affected within categories 1 and 2 because category 3 and below are subject to spot checks and not to the full procedure.

It will be open to a firm, if it wishes, to seek talks with the Department of Employment 20 to 30 days before making a price application. There is no requirement for it to do so, but I would advise that it should if it is in any doubt about a settlement being outside the norm. The firm would be asked for details, as laid out in the document, about cash settlements made and about any non-cash settlements like fringe benefits and so on. That would be sent to the Price Commission or direct to the Department of Employment if the firm so decided.

It then makes a price application, providing with that the information I have described for the broad details of the settlement. The Price Commission seeks the advice of the Department of Employment. Within the 28-day period, the period laid down in the Price Code for a price application to be furnished, the Department of Employment will inform the Price Commission whether in its view the settlement is outside the norm laid down in the White Paper. If it so informs the commission, the commission will automatically make disallowance of the price application based upon that settlement. The entire settlement will be set aside. If it is a settlement for only a group or subsection, it is the settlement in respect of that group or subsection that will be set aside and not the whole of the firm's pay bill, if the larger part of that bill does not exceed the norm.

We are talking about the particular bargaining group for which the application reflects a settlement outside the norm. The commission will allow no part of a price increase based upon that excessive settlement. That will be the end of the story, save that if the firm comes back within 12 months for another settlement any group of price applications will be taken as cumulative, so that a firm would not, for example, be able to say that by having split a price application into several fractions over the course of the year it could escape the provision under which the price settlement would be disallowed.

I hope that indicates to the hon. Gentleman how it works. It is not so complicated. This would be for any settlement involving more than 100 persons.

Mr. Hurd

I wonder whether there is not an assumption in this clause which might not be wholly realistic; namely, that any firm which makes a major breach of the policy would then go to the Price Commission asking for a price increase. The right hon. Lady mentioned category B firms, and we understand the position there. We could conceive of a firm which was a major exporter and would be able to "hike" up its export prices and thus cope with the consequences of a pay settlement in breach of the policy. A firm which had sold some assets, maybe property in a city centre, and had the money might, if it was under pressure, prefer to settle beyond the limits of the policy rather than go to the Price Commission. Once this began to develop it would be seen to be inequitable as between one firm and another. One firm, for purely accidental reasons, might be in a position to breach the policy and the clause would not be able to reach it because it would not go anywhere near the Price Commission

Mrs. Williams

The clause cannot apply where a firm does not make a price application. The hon. Member will appreciate that in present market conditions that will be a rather exceptional situation. We have already said in the consultative document that in the sort of case the hon. Gentleman has in mind—for example where labour constitutes a small part of the total costs of the firm because it is a capital-intensive firm—there is the possibility of a sliding scale to take that into account, building on the existing sliding scale which at present applies under the Price Code where a capital-intensive firm has to pay a larger productivity deduction than a labour-intensive firm if its labour force is below a certain proportion. We have endeavoured to meet the point made. I confirm that if there is no application the sanction does not operate.

Sir Geoffrey Howe

I am somewhat astonished at and almost ashamed by the devices that the right hon. Lady is constructing upon the foundations for which I was, not to my great enthusiasm, responsible—a sliding scale being built upon a sliding scale. It sounds a superb pre-school playgroup arrangement. As far as I know we have not yet got the answer to the question whether the basis on which employers are meant to settle as a result of this voluntary policy is the £6 per head flat rate or upon a payroll calculated basis.

If the Secretary of State employs 1,000 employees is she entitled to take the crock of gold, the £6,000, and distribute it in negotiated settlements as she pleases among the 1,000 employees? It seems that that is inevitable if we look at this sliding scale structure. Paragraph 21 of the White Paper says that employers will have to notify details of any pay settlement underlying the application. Presumably all that they will certify is, "We, Williams and Williams Ltd., employing 1,000 people, have increased our pay bill by £6,000. Therefore we are within the limits. The settlement complies."

8.30 a.m.

The Department of Employment would say whether or not, in its view, that comes within the limit. Does it go beyond that? Does the notification of the settlement have to say that no more than £6 a nob has been paid to the 1,000 people working for Williams and Williams? References to discussions outside the limits in nationalised industries imply negotiability and that the payroll basis will be used there.

Mrs. Williams

We are not discussing the Price Code, but if we were I would point out that a number of simplifications have already been made over the past 18 months. In normal settlements, details of individual settlements above £6 per head would have to be given to the Price Commission. The exceptions are age and stage increments, and it has been made clear in the White Paper that these will be dealt with on a payroll basis. Incremental scales are normally considered to be self-financing. As some people drop off the top, others come in on the bottom. This is in line with what was done under the prices and incomes legislation of 1966 and under the right hon. and learned Gentleman's Government's Act of 1972.

Mr. John Cope (Gloucestershire, South)

Will an employer be able to get in advance a definitive judgment on a prospective settlement he may be negotiating with his employees? If he cannot, he could be placed in great difficulty. He could sit round a table and negotiate what he believes is within the code, but if he cannot clear it in advance and get a definitive judgment, which will stick, he might make a statement which he will later have to undo if the judgment goes against him.

Sir Geoffrey Howe

This is precisely the point raised in Amendment No. 76, which raises the problem in a more definitive form. My hon. Friend might wish to postpone receipt of the answer till that amendment is reached.

Mr. Giles Shaw (Pudsey)

May I draw the right hon. Lady's attention to two aspects of the Bill that cause me concern? The first is the concentration of individual power of interpretation in the Secretary of State. This subject has already been debated, particularly on Clause 1(5) where the Secretary of State for Employment has a similar power. I must place on record my anxiety that increasing power is to be given to an individual Secretary of State over such a significant matter.

Secondly, has the Secretary of State any view to express on the suggestion in the TUC annex—admittedly in relation to employment—about the possibility of jointly examining problems where there are serious difficulties and of submitting them to an arbitration procedure? This procedure would not exactly commend itself to me, but the complexity of remuneration, particularly if it does not include a £6 increase as so clearly defined by the right hon. Lady just now, can cause problems. For example, one thinks of benefits in kind, pension arrangements and specific emoluments that may be arranged and are not easily defined. Simple interpretation of the Act may not help. I ask, therefore, whether there might not be some provision within her Department for arbitration when the employer and the Department do not agree on the interpretation of the scale of remuneration under the policy.

Mr. Cormack

How many people will be involved in policing this provision?

Mr. Buchan

The apparent and deceptive simplicity of this provision has me worried. Will my right hon. Friend comment on the situation where a remuneration exceeds the limits to be deter- mined by the Secretary of State in the extremely involved settlements with differing groups within one firm where there are different pay structures which leave some people getting nothing? This will particularly affect the incremental side of pay. The situation in the food industry could be immensely complicated, and yet there appear to be no guidelines being issued. If guidelines are to be issued they will be complex and we shall not have, as we had in the past, the Prices and Incomes Board to examine the matter and report to the Secretary of State.

Mrs. Williams

If I gave the impression that this question was very complicated, that was complexity on my part rather than a reflection of the policy. This is in general an individual limit policy, with the single exception of incremental scales. People may take a non-wage or a non-income increase in the form of a fringe benefit, but that will not arouse as many complexities as people suspect. There will, however, be small groups who will be covered by the individual pay limit just as large groups would, so the matter is not as complicated as was the case with other incomes policies.

It is the view of the Department of Employment that the additional staff required would not be more than 100, and that would also cover the question of giving advice in advance of settlements being made. No additional staff will be required for the Price Commission. The Government, the TUC and the CBI do not believe that this will be an extremely complex procedure, and the mechanics that I have outlined should be able to cope with it.

Mrs. Sally Oppenheim (Gloucester)

I believe that a misunderstanding has arisen, because in answer to my right hon. and learned Friend the Secretary of State launched into an explanation of the consultative document on the amendments to the Price Code. Of course, we shall want to debate this matter in detail when the order comes before the House.

Annex B contains criteria which are to be followed in respect of provision of information on settlements. It is precisely on this point that my right hon and learned Friend was complaining about the imprecision. Unless much clearer guidelines are issued, people on both sides of negotiations will find themselves in great difficulty and caught by the penalties when it is too late for them to retract.

Mrs. Williams

I apologise for going up and down like a yo-yo. I outlined the procedure to the Committee because I took it that the amendment was a searching amendment and I thought it only polite to describe the procedure, since otherwise it would have been difficult to seek information.

On the hon. Lady's second point, the consultative document is just that. It has already been drawn up after consultation with both sides of industry. If she is right and there are further detailed guidelines sought by industry, it is absolutely open to industry to indicate in representations to my Department what it wishes, I cannot yet report to the Committee that that is what it wishes, because we have not yet received representations on the matter.

Sir Geoffrey Howe

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Lawson

I beg to move Amendment No. 36, in page 3, line 15, after 'section', insert: 'after giving any person or persons paying such remuneration an opportunity of making representations'. Clause 4, the parallel clause to this one, contains certain sanctions which can be invoked against a local authority after it has been given the opportunity to make representations. However, nothing in Clause 3 gives a company the right to make representations to the Secretary of State before it faces possibly Draconian sanctions. A company is in a far more serious position than a local authority, which can pile any financial penalty on the rates and the ratepayers suffer. The company cannot pile it on prices because the sanction is through the Price Code: the company could be bankrupted.

We do not know what sanctions the Government have in mind, but it is clear that, as with any statutory policy, there will be financial penalties. They will be exacted not as a fine but as stringent price control. This is very serious for companies, and most of us wholly oppose it. If there is to be this form of Draconian price control, it is a matter of natural justice that the companies should be given the same right as local authorities to make representations.

The Secretary of State spoke just now as if the matter of the pay limit were so simple that no confusion could arise. If she had sat here throughout the afternoon, evening and night and heard the difficulties the Secretary of State for Employment got into, she would have realised that this matter is much more complex and less clear than she imagines.

There should be the right to make representations where it is alleged that a company has exceeded the pay limit and is liable to a penalty which may bankrupt it.

We learn that £800,000 a year is to be made available to determine whether any remuneration exceeds those limits". I have been informed that the bulk of that £800,000 a year will be used for the monitoring referred to in Clause 3. Perhaps a small proportion of it might be devoted to the administrative expense of allowing natural justice to flourish so that those who may be affected can make representations to the Secretary of State, who, I am sure, will hear them sympathetically.

8.45 a.m.

Mr. Fairbairn

I think that my hon. Friend the Member for Blaby (Mr. Lawson) put his case too kindly. After all, the persons who will be found guilty under this clause of a crime they may not know has been outlined before they have committed it and sentenced by a Secretary of State whose judgment is final and single will also be fined by increases in the rate proportion because the fine on the local authority will be passed on.

Therefore, it is reasonable that, in a measure which contradicts every form of natural justice, we should at least be able to appeal to the executioner, who is to find us guilty of an unknown crime and impose a penalty on us, and say "We are sorry that we committed a crime that we did not appreciate we were committing. We regret that you are going to pass a sentence which we have yet to understand. Perhaps we can appeal to you."

There was a recent difficulty which affronted this Parliament when justice as arbitrary and as offensive was taken into the hands of a single man and pronounced against a single citizen. This is a form of justice which will be pronounced arbitrarily by the Secretary of State against companies for offences which they may never know they are going to commit until the Secretary of State has decided that they have committed them. It would seem only reasonable, therefore, that those companies might at least make representations to the Secretary of State. Although the Secretary of State will, if the amendment is successful, contradict the first rule of natural justice, that he is judex in sua re, nevertheless, we might be able to appeal to Caesar not to turn his thumbs down on every prostrate gladiator he should see in the ring.

Mr. Giles Shaw

In an earlier intervention I suggested to the Secretary of State that there might be occasions when some kind of appeal procedure would be relevant. I think that it arises in the area covered by the amendment. Surely we are dealing with a process the interpretation of which will be crucial. It will be crucial not only to the company, as it were, which refers the case to the Price Commission, but to every employee in that company because the main sanctions to be imposed—at least those so far disclosed—will be the disallowance of the total price request being made by the company. That must mean bringing wages down to the current level.

Mrs. Shirley Williams

There is no question of the disallowance of the total price application, much of which could be based on other costs. This is the disallowance of the settlement in so far as that is reflected in the application.

Mr. Shaw

I accept that we are discussing the disallowance of the labour cost element within the price application. The labour cost would be frozen at its existing level in the company concerned, but this would be enjoyed by many people in the same profession, craft or union in adjacent companies. Those working in a company not affected by the disallowance would not attract this penalty. This would be a matter of the greatest concern to those working in the company and to the company itself. Therefore to say that it will have the opportunity to make representations is a mild way of putting it. I put down a further amendment on this subject, which was not selected. The Secretary of State should consider most seriously the provision of an appeals procedure, not only for the interpretation of remuneration difficulties but to consider matters raised under the Price Code, where there are provisions to allow the Secretary of State power to relieve the commission of the necessity of applying the code in special cases.

In the area of wage claims, special cases could be made out for low-profit-earning companies, when there would be room for representations to be made.

My main anxiety in pressing the Secretary of State on this issue, in support of the amendment, is that the measure will affect the employer and the liquidity of his company. Where the consequences are either bankruptcy or the necessity of reducing wages, the employer will find himself in a difficult position vis-à-vis his employees. Employers and employees should have the same rights of making representations. That is why I favour a procedure of this kind.

Mr. Cormack

The more I look at this clause the more I say "Come back, retail price maintenance; all is forgiven." It illustrates what an enormously complex web we are weaving. This is an extremely sensible amendment, which if pressed to a Division I shall support. However, the clause is virtually incapable of being improved, and should be deleted from the Bill. We are creating thickets of law in which ordinary people will become entrapped, which they will not understand, and which need not exist This is the ultimate in bureaucracy and interfering absurdity.

I thank my hon. Friend the Member for Blaby (Mr. Lawson) for this amendment, which sheds a little light on a great darkness. I hope that he will press it to a Division.

Mr. Ian Gow (Eastbourne)

It is extraordinary that Clause 3(1) provides no opportunity for representations to be made, whereas under Clause 4(1) there is an opportunity for representations to be made by local authorities. I hope that the Secretary of State will say why there is discrimination in favour of local authorities.

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)

To clear aside one matter which has not been raised, Amendment No. 36 would have an effect somewhat different in practice from that which the hon. Member for Blaby (Mr. Lawson) and other hon. Members who have spoken intend, in that it would appear to provide an opportunity to companies to make representations at the point of time in the chain of events when the Secretary of State is proposing to make changes to the Price Code. That possibility exists, and that process is in action at the moment. With the publication of the consultative document and with representations being able to be made, that provision would be otiose.

I address myself to the desire rather than achievement of the wording of the amendment. The hon. Member for Blaby sought to formalise the right of those involved in a settlement to approach the Secretary of State to make representations about the ruling. There is a degree of uncertainty as to his intention in that respect in the language of the amendment, in that it does not specifically refer to making representations to the Secretary of State. In so far as the hon. Gentleman seeks to enable the company to have the opportunity of making representations about the sanction, that is provided for already by the Counter-Inflation Act 1973. Under an order or notice given by the Price Commission, which must allow for a period of 14 days, specific representations against the sanction can be made to the Price Commission. The amendment in terms of the legislation from which it stems is unnecessary.

The hon. and learned Member for Kinross and West Perthshire (Mr. Fair-bairn) spoke of the importance of natural justice being observed. By that I think he means that the employer who grants a wage settlement—or the employees—should have an opportunity to be heard. That is the central aspect of natural justice which he had in mind. That opportunity is implicit in the procedures of the Price Commission for issuing a notice or an order which would have the effect of rolling back the increase.

Mr. Fairbairn

I fully appreciate that in the ordinary situation of the Price Code that would be so, but now we are introducing penalties. What right has the employer to be heard before he is charged with penalties for an offence which the Secretary of State will decide he has committed?

Mr. Maclennan

Under the parent Act of 1973, the disallowance of a proposed price increase will operate in principle in precisely the way we propose here. There is, in effect, no difference.

Mrs. Sally Oppenheim

I think that the Under-Secretary of State has misunderstood my hon. Friends and the purpose of the amendment. The amendment is not to do with making representations either to the Secretary of State or to the Price Commission. We know that there is that possibility within the existing legislation. Because entirely new and unknown sanctions are to be imposed, the purpose of the amendment is that there should be a right of appeal to an independent body outside the Department and outside the Price Commission. We do not yet know the nature of these sanctions in relation to Clause 3. We were referring not only to employers but to representatives of employees or unions who may wish to make an appeal. As the hon. Gentleman will know, there are a number of precedents for such appeals procedures in contemporary legislation.

[Mr. George Thomas in the Chair]

9.0 a.m.

Mr. Maclennan

I must say to the hon. Lady that she is causing confusion on her own side. Further, it is not plain from anything that the hon. Member for Blaby said that he had in mind such an elaborate appeals procedure as the hon. Lady is suggesting. If that is what the hon. Lady and her hon. Friend had in mind, it was open to them to table an amendment along those lines. However, they have not done so.

I think that the hon. Member for Blaby made a fair point worthy of consideration when he suggested that there should be a formal opportunity of representation. He did not say whether that should be to the Price Commission or to the Secretary of State. I have pointed out that opportunity of representation to the Price Commission is embodied in the legislation. As my hon. Friend the Minister of State, Department of Employment said during our proceedings on Clause 1, there is full opportunity to consult the Secretary of State for Employment during the period of 20 to 30 days when the Commission is notified by the employer of the proposed settlement. That is the position if there is any doubt about the terms of the proposals. In the period of 28 days which follow, these matters can be thrashed out.

I do not deny that there may be situations of complexity and difficulty that arise in interpreting the guidelines, but I am bound to say that they will not be of such complexity or difficulty that they will be unable to be resolved by those seeking to resolve them. That is the whole basis of this legislation—namely, to help those who are anxious to act within the framework of the agreed policy. As I have said, any difficulties can be resolved by discussion with the Secretary of State at the appropriate stage.

The hon. Member for Pudsey (Mr. Shaw) sought to build an appeals procedure upon the amendment of his hon. Friend the Member for Blaby. That does not flow from his hon. Friend's amendment. If he has such a procedure in mind there are other stages when such a proposal can be considered.

Mr. Giles Shaw

The Minister will be aware that an amendment was tabled to that effect which has not been called. Is the Minister suggesting that it might be possible to discuss such an appeals procedure with his Department should that be wished by the parties concerned?

Mr. Maclennan

I think that to take up that point would be to stray beyond the bounds of the amendment. Like the hon. Gentleman, I am bound by the rules of order. I believe that I would be out of order in considering hypothetical questions which do not relate to the matter now being discussed.

The hon. Gentleman raised another matter which I want to deal with because I believe it to be germane. I think we are entitled to know what sort of representations he has in mind. Were hon. Members who spoke to the amendment seeking to provide the opportunity for those concerned to depart from the rules and from the limits set out in the pay policy? If that was their objective, it is plainly unacceptable. On the other hand, if there is some issue of obscurity which presents difficulty as regards interpretation, I would submit that that can be fully ironed out by the Department of Employment with the applicant in the discussion period, which is quite lengthy.

Mr. Fairbairn

What I think the Under-Secretary of State is confusing is that this is not just a question whether one admits or refuses an increase in prices. That is not what the clause says at all. What it says is that The changes made in the price code … may include such changes as appear to the Secretary of State appropriate to provide a sanction …". In other words, the Secretary of State has an arbitrary sanction, and that sanction will be applied against the payment of remuneration in excess of the limits mentioned in that section"— that is Section 1— and to enable questions whether any remuneration exceeds those limits to be determined by the Secretary of State. Therefore the Secretary of State will determine whether one has sinned and decide how one is to be punished. It has nothing to do with the Price Code. It is an arbitrary crime and an arbitrary punishment. At least in ancient Rome a man had to right to say Morituri salutamus.

Mr. Buchan

We are concerned not only with sanctions. The question to be determined by the Secretary of State is whether the remuneration exceeds the limits and whether the sanctions should be called into operation.

This could be, particularly in the food industry, extremely complex. It is very relevant to that industry because it includes many low-paid workers and a large number of women, so that the question of equal pay also arises. It seems to me that there is a case particularly here to have representations made.

I agree with the Under-Secretary of State that if an appeal had been intended the Bill should have said so. The Government have not made clear at all what they meant. I am trying to stick to the terms of the amendment in suggesting that it should be possible for both workers and employers to make representation on the question of remuneration. As to whether there should be an appeal, I am fairly sure now that there should be some kind of avenue for making such representations over and above the normal decision-making of the Secretary of State's apparatus. The opportunity for error in the food industry in particular seems to me to be quite high.

Mr. Giles Shaw

The hon. Member for Renfrewshire, West (Mr. Buchan) has obviously associated, quite rightly, with this question the problems of the food industry. The Under-Secretary of State may not have read Amendment No. 90, but we have sought to indicate that an appeal procedure could be important in those areas in which food is involved. There are powers given to the Secretary of State, where there are problems of distribution or where shortages of products occur, to withdraw the Price Commission's ruling. It seems to me highly appropriate that in questions of shortages, of interpretation of remuneration and of sanctions, and what they might mean, there could be cases where an appeals procedure or a representational procedure could be essential.

Mr. Maclennan

I am grateful to my hon. Friend the Member for Renfrew-shire, West (Mr. Buchan) for drawing the distinction between an appeal procedure and the opportunity to make representations. I will simply say that there is, as we have set out in the consultative document, a period of time during which representations can be made to the Secretary of State about the pay settlement, and if there is any doubt or difficulty the fount of wisdom on this matter—the deciding authority—will be in a position to make plain that that is so. It can be argued out between the company and the Secretary of State. But, in answer to the hon. Member for Pudsey, if there is any feeling that this opportunity is not sufficient, it is open to the CBI, or whichever other interest takes this point, to make formal proposals in reply to the consultative document that we have published already and on which consultations are going ahead. These matters will be looked at, and we shall bear in mind what the hon. Gentleman said.

Full opportunity exists under the consultative procedure for these representations to be made by those who are most affected by them.

Mr. Gow

May I return to one matter with which the Under-Secretary did not deal? It is clear that under Clause 3(1) the Secretary of State has power to decide whether remuneration exceeds a certain limit. He decides that under this provision. But under this clause he is not giving the opportunity for the employer to make representations about whether the amount of the remuneration exceeds the limits, yet, when we deal with local authorities in the next subsection, there is power to make representations. Can the hon. Gentleman explain why that is so?

Mr. Lawson

I must apologise to the Committee. When I moved this amendment, in the interests of progress—I know that the Government are anxious that we should make rapid progress—I spoke only briefly. It seems that the Minister was not able to understand fully what I was getting at, so perhaps I ought now to explain at greater length.

The first point is that I am happy that there should be some form of appeal tribunal. If the Minister thinks some form of appeal tribunal appropriate, I am sure that he will table an amendment on Report stating the sort of tribunal the Government think appropriate.

I tabled this "freelance" amendment and chose these words because they were the words that the Government chose to insert in Clause 4, and I thought that if they were good enough for Clause 4 they were good enough for Clause 3.

The point at issue here is that of representations to the Secretary of State. We are concerned not just about a penalty. We do not know what it might be. We are given an indication in the White Paper of the sort of penalty that the Government have in mind. But Clause 3 goes far beyond that. It nowhere mentions the White Paper, unlike Clause 1 which does.

Clause 3 says: The changes made in the price codeֵ may include such changes as appear to the Secretary of State appropriate to provide a sanction". In other words, any financial penalty of any kind. It could go far beyond what is adumbrated in the White Paper.

This is a very serious situation. The Minister says and I think that inadvertently he is misleading the Committee—" Anyone already has the opportunity to appeal to the Secretary of State for Employment when there is a case in dispute as to whether a pay increase is above the limit or not." This is nowhere stated in the Bill, and we are debating the Bill. The relevant provision here is Clause 1(5). It states quite clearly: Any question arising under this section whether any remuneration exceeds the limits mentioned therein shall be referred to and determined by the Secretary of State.

9.15 a.m.

That is the end of it. There is no question of time being allowed for representations or anything else. It may well be that the Government have in mind that time should be allowed and that representations should be made, although I cannot, for the life of me, see how the Secretary of State will have time to look at all the representations, unless he has a considerable amount of help. Perhaps that assistance should be given to him. Perhaps there should be a special appeals tribunal partly for this reason.

If it is intended that there should be the opportunity of making representations to the Secretary of State for Employment it should be stated in the Bill. If it is not in the Bill, we cannot take the Minister's word that this will be the law. It is not there, and it is misleading to pretend that it is there. I hope that the Minister will address himself to this, now that he has a fuller understanding of the purpose of this amendment, and will satisfy the point that I and my right hon. and hon. Friends have made.

The Chairman

The Question is—

Mr. Lawson

On a point of order, Mr. Thomas. I was hoping that we would receive a response from the Minister. If he is not prepared to reply, then this matter would be better discussed further on Report. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Ian Percival (Southport)

I beg to move Amendment No. 118 in page 3, line 17, at end insert: '() The powers conferred by this section shall not include power—

1. (a) to make provision for any payment by the employer by way of penalty or otherwise; or
2. (b) to create any new criminal offence directly or indirectly; or
1114
3. (c) to make any provision taking effect from a date earlier than the date on which the provision itself is effectively made; or
4. (d) to confer any power to legislate by means of orders, rules, regulations or other subordinate instrument;

and any change in the price code made under or in purported pursuance of the provisions of this section shall to the extent that it does or purports to do or but for these provisions would do any of those things be null and void and of no effect.' I am sure that the Committee wishes to make progress and I shall assist by moving this amendment briefly. I must first make very clear to the Committee that, although it may not take me a great deal of time to move it, it is an amendment to which we Conservatives attach a great deal of importance.

The object of this amendment is quite simply to limit the powers which are given to the Secretary of State under this Clause. It is necessary, therefore, to look at those powers. The power we are most anxious to limit is the power to make changes in the Price Code, which may include such changes as appear to the Secretary of State appropriate to provide a sanction". That power is undefined and unlimited. The purpose of the amendment is to place what we regard as the minimum of limitations on those powers which are, as I have said, at present quite undefined and wholly unlimited.

I should like now to draw the Committee's attention to the four limitations which we seek to put on those powers. These are simply matters of common sense and judgment and, therefore, we would hope that every hon. Member with common sense and judgment would be led to the same conclusions, namely, that these are the minimum limitations and that they ought to be acceptable.

I should remind the Committee of the opening provision of the amendment. It is that: The powers conferred by this section shall not include power— then we go on (a) to make provision for any payment by the employer by way of penalty or otherwise". I hope that the Secretary of State or the Under-Secretary will tell us that the Government have no intention of permitting the Secretary of State to make provision for any payment by the employer by way of penalty or otherwise. If that be so, as I hope it will be, there can be no possible reason why the Government should not accept that part of this amendment.

The second power which is not to be included in this new power is power to create any new criminal offence directly or indirectly". I shall make no more than a passing reference to the phantom Bill, but I assume that if there is to be any question of any new criminal offences, which may be committed by anyone in connection with what we are now discussing, that is where they would be created. The Opposition think that it would be quite unreasonable if the Government had at the back of their mind that the sanctions to be provided under these powers in Clause 3 might be criminal sanctions.

We hope, therefore, that the Government will welcome this opportunity of making clear, not merely to the Opposition but to everyone else who is concerned about it, that they have no intention of using the powers conferred on the Secretary of State under this clause to create any new criminal offences, directly or indirectly. On that hypothesis, again there seems no reason why the Government should not accept that part—indeed, no reason why they should not welcome that express limitation.

The third matter is a limitation to the effect that the clause shall not include power to make any provision taking effect from a date earlier than the date on which the provision itself is effectively made; in other words, that the changes made under these powers shall not have retrospective effect. Again, I hope that the Ministers will be able to say that they welcome this opportunity to make clear to the Committee and to everyone concerned that they have no intention of trying by an indirect means such as this to make provisions having a retrospective effect.

The last objective is to ensure that the powers given under the clause shall not include a power to confer any power to legislate by means of orders, rules, regulations or other subordinate instrument. One can recognise the temptation sometimes, in a complicated exercise such as this, to confer such powers as we are dealing with under paragraph (d). It would be reassuring to us and all concerned to have the acceptance by the Government of this limitation, and thus have put at rest any suspicion that it might be in the minds of the Government to do what is there excluded from these powers.

The rest of the amendment—merely for the avoidance of all doubt—says that if the Secretary of State, in the purported exercise of these powers, does anything which is contrary to them, then that shall be null and void and of no effect.

I have felt able to take this matter quite shortly because these are all commonsense limitations which ought to be imposed and accepted. Because I have taken it so shortly, however, I hope that the Committee will be in no doubt as to the importance we attach to the amendment. We hope very much that the arguments in favour of it—and I could have added many more—are so compelling that the Government will be glad to accept it.

Mr. Mikardo

Since the opening batsmen have left the Front Bench and the lower order batsmen have come in, and since the fierceness has gone out of the wicket and the bumpers have stopped flying around head-high, we have got through the innings a good deal faster. Nevertheless, I hope that the other fieldsmen will forgive me if I take a minute or two to trundle down a gentle over of left arm spin.

I want to comment in support of the amendment. I entirely share the view of the hon. and learned Member for Southport (Mr. Percival) that this is a very important amendment. I do not say that I would go to the stake for every word in it, but I think that this is really the test of the Government's sincerity about whether what they are up to is voluntary or statutory. We have spent about 16 or 17 hours listening to Minister after Minister telling us that all the provisions of the Bill are non-statutory. They all sounded a bit like King Solomon saying "I freely admit that I have a thousand wives. I strongly deny that I am a polygamist." It is all statutory, and we know it. If Ministers want to convince us that they mean what they say, they can best do it by accepting the amendment—its intention, if not its words.

If Ministers will not accept the amendment and will make no concessions, if they will not say that they will produce an amendment of their own on Report, or at least give clear-cut assurances, they will make it very hard for anyone to believe them when they say that they have no intention of turning the policy into a set of full-blooded statutory restraints. If my right hon. Friends do not want to let their colleagues down, if they want people to believe what their colleagues were saying for the first umpteen hours of this debate, they will not do it if they express a flat opposition to the amendment.

Mr. Tim Sainsbury (Hove)

On joining in this rather cricket-metaphored discussion, I should declare an interest which is probably fairly well known to hon. Members on both sides of the Committee. The hon. Member for Bethnal Green and Bow (Mr. Mikardo) got it wrong. When the bumpers are flying we normally get through the innings quicker. When they stop, the batsmen are well dug in, and we go on for a long time.

I support the amendment, two aspects of which are of no little importance. Paragraph (b) says that the powers conferred by the clause shall not include power to create any new criminal offence directly or indirectly". That must be regarded as of no little importance by all those who work in companies that might be affected by the Bill. It is not clear whether any criminal offence that might be created would be restricted to the chairman, the secretary, the directors, directors who are also shareholders, or work right down the line. If we have a statutory system here, as the hon. Member for Bethnal Green and Bow said, we must see that it is at least reasonable and fair, and that nobody, in whatever position in a firm—[Interruption.]—

Mr. Cormack

On a point of order, Mr. Thomas. It is almost impossible to hear my hon. Friend, even though he is standing next to me.

The Chairman

Order. We are all anxious to hear the hon. Gentleman.

Mr. Sainsbury

I am grateful to you, Mr. Thomas. I trust that your words will find sympathy everywhere else.

The matter that I have raised is important to those who work in firms that might be involved in the legislation. People at all levels will want to know whether they personally might be involved in anything that could in any way constitute a criminal offence. Therefore, I particularly commend paragraph (b).

Paragraph (d) is also of particular importance. It is only common sense. If it is accepted, we can at least see that no dubious, uncertain powers are conferred on any Secretary of State in effect to make legislation by orders, rules or regulations which will not necessarily be subject to the processes of consultation, which I know the Secretary of State for Prices and Consumer Protection is always willing to follow. Those concerned would like to be assured that any action will be accompanied by the proper consultation.

Paragraph (d) may only be making clear something which is the intention of the Secretary of State. If that is so, I hope it will be an amendment which will particularly commend itself to the Secretary of State as one it would be proper to accept.

9.30 a.m.

Mr. Buchan

I agree with what my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) said. This is a crucial discussion, but it may not necessarily be the case that the amendment is the right solution. There is no doubt of the importance of the ideas and the argument.

My hon. Friend was doing himself an injustice when he described himself as a slow left-hand bowler, and he is certainly not an underhand bowler, because he raised openly the whole issue. Are the proposals to have sanctions of the law? Is this the statutory element of a prices and incomes policy? It clearly is. If this clause means what it says it can encompass all the things the amendment seeks to exclude. The clause says: may include such changes as appear to the Secretary of State appropriate to provide a sanction against the payment of remuneration in excess of the limits mentioned in that section". We are apparently to have a change in the Price Code and that change could bring in sanctions. Sanctions, by definition, means penalty, and that offences, criminal and otherwise, have been created. It does not seem appropriate. I am appealing to the Secretary of State rather than arguing with her, to recognise the problem if it is here. We are in the course of saying, in the change we are bringing in, that there are new criminal sanctions. I do not think we can pass a law in this form. It must be taken back and the real intention of the Government made clear so that the intention can be properly understood and examined.

The first question the hon. and learned Member for Southport (Mr. Percival) raised was that of creating in the amendment 'any new criminal offence directly or indirectly". It is intolerable that there may be sanctions which we all recognise may be in respect of a new criminal offence. The question of retrospective legislation must also be taken care of because there are retrospective elements in the legislation, although they are not referred to specifically in Clause 3. The Opposition have raised three points and the Secretary of State must say that she will take away this clause. It must spell out the sentence and how it will be imposed, and the guidelines must be stated.

I shall not pursue this further, except to say that I expect my right hon. Friend to accept, if not the amendment, at least the spirit of it. We must know what we are dealing with.

Mr. Fairbairn

I have one simple question. If this amendment is not accepted, is there any limit to the penalty which may be imposed or to the form it may take not in what the Secretary of State may decide to do but under the word "sanctions"?

Mr. Gow

It is astonishing that in the interpretation clause of this Bill, although there is a definition of the word "remuneration" there is no definition of the word "sanction". It is far more important, when we are giving what appear to be unlimited powers to the Secretary of State, to define precisely what is meant by "sanction". I hope that the Minister will consider the point carefully.

I have one other question. Under Section 2 of the Counter-Inflation Act 1973 a statutory instrument is required to amend the code. Under Clause 3(1) of the Bill changes can be made if they appear to the Secretary of State to be appropriate. Will the Minister tell the Committee whether, if an amendment is to be made, or a change is to be made by the Secretary of State, it has to be done by statutory instrument as is provided in the 1973 Act or whether it is simply done by order?

Mr. Sainsbury

It is not irrelevant to note that Section 1 of the 1973 Act says: Before making an order under this section the Treasury shall consult— (a) such representatives of consumers, persons experienced in the supply of goods or services, employers and employees and other persons as they think appropriate. This is particularly important because this element of consultation, to which I know the Secretary of State attaches importance, should not be lost because of anything incorporated in the Bill.

Mrs. Shirley Williams

I will not engage in what appeared to be a bit of body-line bowling on the cricket field. As a member of the second eleven it might be unwise for me to tangle with others.

I am not quite sure how much hon. Members are aware that they are still living under the aegis of Part II of the Counter-Inflation Act 1973. If hon. Members are aware of this they will be aware that nothing proposed in the Bill goes beyond that Act with respect to the possibility of the creation of criminal offences or the possibility of penalties against employers or employees.

Before proceeding to deal with the amendment I should like to read from the 1973 Act those parts that are still in existence. The Committee seems unaware of the existence of these powers. Section 6 of the Act, which has not been repealed reads:

1. "(1) The Price Commission shall exercise the powers conferred by this section in such ways as appear to them appropriate for the purpose of ensuring that the provisions of the code which concern prices and charges are implemented.
2. (2) For the said purpose the Price Commission may restrict any prices or charges for the sale of goods or the performance of services in the course of business, where the relevant transaction is effected at a time when this Part of this Act is in force."

That part is still in force.

Section 17 of the same Act, also still in operation, reads: (1) If a person contravenes any of the provisions of Part II or Part III of this Act, or of any order or notice under Part II or Part III of this Act, he shall be liable—

1. (a) on summary conviction to a fine not exceeding £400, and
2. (b) on conviction on indictment to a fine."

That is still the law of the land. It is a law passed by the previous Conservative Government. The right hon. and learned Member for Surrey, East (Sir G. Howe) who tabled the amendment should be aware that this law is still in existence. I assure the Committee that there is nothing in the amendment under (a) or (b)— I will come to (c) and (d) later, since different provisions apply—which goes beyond what is already in the Act. If it is the intention of the Opposition that Amendments (a) and (b) should override the provisions of the 1973 Act, that would be unacceptable to the Government. It would destroy the final sanction that has existed in the Price Code since it was first introduced. There is nothing new in the way of sanctions in this legislation, despite what some hon. Members seem to think.

Mr. Buchan

Maybe my right hon. Friend has a better memory than I. What she has said may be true and her stricttures on the Opposition Front Bench may be justified, but did she and I vote for the 1973 Act or did we oppose it?

Mrs. Williams

We opposed the Counter-Inflation Act, 1973, but we never opposed the Price Code sections of it. From the moment the Government came to office, we have always accepted the Price Code sections of the Act and this has been made clear repeatedly when amendments to the code have been brought forward and some hon. Members have tried to question whether the code should continue. At no stage have the Government ever suggested that the code should be weakened by removal of the sanctions. I do not accept what appears to be the implication of my hon. Friend's renewed in order to control wages and we on this matter has altered.

Mr. Buchan

It was slightly underhand, slow bowling, because I knew we had opposed the Act. Our support for it in relation to the Price Code was for the control of prices. It is now being renewed in order to control wages and we never accepted that.

Mrs. Sally Oppenheim

I may be able to add some clarification to the argument if I remind the right hon. Lady of the words of the Chancellor of the Exchequer when he said: As it is central to enforcement of the limit that the sanction should be imposed through the Price Code, we need to strengthen the powers in the 1973 Act which did not contemplate such a sanction. This is achieved by Clause 3, by virtue of which the sanction need not be limited to disallowance of the excessive remuneration for pricing purposes; it may be such as the Secretary of State considers "appropriate"—total disallowance of offending pay, or more severe if necessary." —[Official Report, 23rd July 1975; Vol. 896, c. 580.]

Mrs. Williams

My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) was saying that he does not like the White Paper, and I understand that. If the White Paper is to be advanced, there have to be economic sanctions on the private sector as there are on the public sector. Anything less would be regarded by the country and the trade union movement as wholly unfair. Those hon. Members who accept the broad policy of the White Paper must accept the logic that there have to be sanctions in the private sector to complement those in the public sector.

The hon. Lady the Member for Gloucester (Mrs. Oppenheim) quoted what the Chancellor of the Exchequer said, but he was speaking about financial sanctions. The amendment is concerned with criminal or legal sanctions. Clause 3 strengthens the financial sanctions, but the criminal sanctions are no different from the 1973 Act.

9.45 a.m.

Mr. Heffer

My right hon. Friend appeared to be suggesting that, because some of us were not happy with the way things are going, we are not in favour of the Government fighting inflation. Does she also believe that because we were not happy with the Tory Government's prices and incomes legislation we were not in favour then of fighting inflation? We were in favour of fighting inflation, but we felt that the use of legislation against wages was not the way to do it. That is precisely the position of my hon. and right hon. Friends today.

Mrs. Williams

My hon. Friend—and I use that word advisedly—knows perfectly well that I am not suggesting that he does not want to fight inflation. I only say that he does not believe that the policy set out in the White Paper is the way to do it. Those who accept the policy must accept that it has to apply to the private as well as the public sector.

Mr. Fairbairn

Now that the Secretary of State has the words of the Chancellor of the Exchequer ringing in her ears perhaps she will answer my question. Is the maximum sanction she can apply to reduce the selling price of an article to nil, or can she impose monetary sanctions in addition?

Mrs. Williams

The hon. and learned Gentleman could not have been listening. I read out carefully the precise words of the 1973 Act—

Mr. Fairbairn

What about this Bill?

Mrs. Williams

Will the hon. and learned Gentleman please wait long enough to allow me to explain the point? The penalties about which he was asking are penalties of a criminal nature, and in so far as they apply they are identical to penalties which appear in the 1973 Act.

Under the Price Code the position is as it has always been. The Price Commission cannot create any direct penalty or any direct criminal sanction. It is not that kind of a document. It is essentially a guidance document. If someone breaches the Price Commission's guidelines—if a firm decides to charge prices above the level at which the Commission has advised, the Commission is then required to get an order under Section 6 of the Counter-Inflation Act. That situation is unchanged after two years.

That order is then enforceable on the firm. It is only in the situation in which a firm disregards an order that any further sanctions apply. Those sanctions are the criminal sanctions that I have read out. That situation is unchanged from the original Act. The financial sanction on firms has gone beyond disallowing that part of the cost allowance which is not permitted by the terms of the present Price Code to, in addition, disallowing the wage or income settlement which is a breach of the norm. At no time under the Counter-Inflation Act 1973 were these final sanctions ever brought into play, and we see no reason why they should be now.

Mr. Gow

The right hon. Lady will agree that she was referring to the powers of the Price Commission. We are now talking not about prices but about pay, and the right hon. Lady implied that if there was a breach of Clause 3(1) of her Bill if an employer paid more than £6 a week, it would be possible under the old Price Commission regulations and the 1973 Act for an employer to be fined, and presumably, in default of paying the fine, for there to be a prison sentence. It is nowhere spelled out in Clause 3 that that penalty can apply only to the employer. Is that right? Would there be a possibility of going to jail, bearing in mind that we are now dealing with pay and not with prices?

Mrs. Williams

But the point is exactly the same. Under the old Price Code, the Price Commission had the right to deduct a productivity allowance—originally of 50 per cent. and now of 20 per cent. If an employer, having been told what his price increase could be in the light of that productivity deduction, had then increased his prices by more than was permissible, and if the Price Commission had then made an order—which it has never done—and if that order were disobeyed—which it has never been because it has never been made—then indeed the sanctions that the hon. Member has described would have applied from 1973 onwards. This is in respect of pay, because the productivity deduction is leviable only upon labour costs.

It is true that there is now an addition to that in the sense of payments and settlements above the norm being brought within the scope of the Price Commission, but in the past it was equally true that an employer who disregarded the guidance of the Price Commission with regard to his costs and put up his prices by more than the cost was subject at the end of the day to criminal sanctions—I repeat, the employer only.

Section 17(2) of the Counter-Inflation Act says: If an organisation of workers, or any other organisation or other person, by taking any action described in subsection (3) below, exercises any pressure on an employer to contravene section 5 or 7 of this Act, that person shall be liable— (b) on conviction on indictment to a fine." exceeding £400, and (b) on conviction on indictment to a fine. But that subsection has been repealed and therefore no longer applies. The answer to the hon. Member is that this could be applied only in the circumstances I have outlined to an employer. In the past it could be applied to an employer or to an organisation of labour.

Paragraph (c) of Amendment No. 118 is a little hard to follow, but if what it is trying to say is that there shall be no retrospective penalties, I am happy to give that assurance. The Price Code cannot relate to previous prices. It relates only to prices to be charged for the future. There is no way in which a provision of the Price Code can operate retrospectively. If a price is consistent with the Price Code today no future change can make that price illegitimate. All that we can say is that the price code can lay down rules for the future calculation of prices. These rules may take into account such things as retrospective recovery of costs.

There is at present a provision for retrospective recovery of costs over a period. Hon. Members who are familiar with the code will know that that is rolled on from time to time so that the period of retrospective recovery does not become a period of three, four or five years, or some period in which it would be impossible to calculate whether the recovery was properly based or not. In that sense and that sense only can the code have a retrospective characteristic.

That is still true at present and the only possible alteration which might be dealt with is, as we have already said, where a settlement is made between the publication of the White Paper and 1st August, when it comes into operation, which breaches the 12-month rule. Then that will be taken into account for price application purposes. The Government have made this clear from the first moment of laying the White Paper and the White Paper itself makes that clear, but there is no element of retrospection. I can give the hon. and learned Member for Southport (Mr. Percival) the assurance that I think he seeks by means of paragraph (c).

On paragraph (d) I can also give the hon. and learned Gentleman the assurance that he seeks. The Price Code is a piece of subordinate legislation which is contained in an order made under Section 2 of the Counter-Inflation Act. As the Committee knows, it would be completely unconstitutional for a piece of subordinate legislation to spawn or generate further subordinate legislation. There is no intention whatsoever, therefore of making orders, rules, regulations or other subordinate instrument of the kind that he quite properly feared.

On paragraphs (c) and (d), I do not think there is any difference between us. On paragraphs (a) and (b), I have explained the provisions of the ruling legislation.

Mr. Graham Page

Towards the end of her speech the right hon. Lady confirmed that any order under Clause 3 would have to be by means of a statutory instrument under Section 2 of the 1973 Act. The difficulty is that Section 2(2) provides: The code may include practical guidance for those concerned in decisions on levels of prices and pay. Therefore, any order made—I think that originally it was made by the Treasury, but it is now in the right hon. Lady's power—must comply with Section 2(2) of the 1973 Act.

When such a statutory instrument is referred to the Joint Select Committee on Statutory Instruments, the Committee turns to that subsection to see whether it is within the right hon. Lady's powers when it is made. But in future it will not be controlled by that subsection. I understand that the Secretary of State will be able to provide any sanction which appears to her to be appropriate. Therefore, that removes from the House and the Select Committee set up by the House to study statutory instruments all power to say that the instrument is not within the power of the Secretary of State. The answer will be "But it appears to be and, therefore, it is within Clause 3."

10.0 a.m.

That is the difference. That is why my right hon. and hon. Friends wish to put certain restrictions on the wide power that is given to the Secretary of State here. I appreciate that a change in the code will have to be made by statutory instrument after consultation with the various people set out in Section 2 of the 1973 Act and that it will require affirmative resolution by the House, but it will not be subject to the kind of scrutiny to which orders are now subject. It is a different animal altogether. It is an animal which appears to the Secretary of State to require such a sanction as seems to her to be appropriate in any case. Therefore, it requires the further restrictions which are set out in the amendment.

Mr. Percival

We have had a very disappointing reply from the Secretary of State. She read out the powers given by Parts II and V of the 1973 Act. I think that she might have known that we were aware of those provisions. She then said that she would not allow anybody to make a monkey out of those powers. I think that she forgot, or was not told, that this amendment does nothing to those powers. It relates specifically and only to the powers conferred by Clause 3. It has nothing to do with the exercise of any of the powers in the 1973 Act. The right hon. Lady, the Price Commission and everybody else could go on exercising all the powers to which she referred so long as they do so under the 1973 Act. Our amendment would not affect that situation Therefore, there is no question of anybody making a monkey of or interfering with the provisions of the 1973 Act in any way.

But the right hon. Lady overlooked the fact that as she already possesses those powers under the 1973 Act we are bound to ask—why does she require further powers? Unless these powers are additional to the existing extensive powers of which she has reminded us, these new provisions are unnecessary. That has put hon. Members on both sides of the Committee on their guard. We spotted that the right hon. Lady already had an extensive and powerful armoury. We are suspicious of provisions which seek to add to those new powers without defining or limiting them. We are suspicious of this power to provide additional sanctions. The right hon. Lady did not address her mind to that aspect of the matter. Perhaps she did not realise that our amend- ment did not touch the existing powers in any way but applied only to the new powers. Viewing it in that light, I hope that she may understand why I say that her reply was disappointing.

Amendment No. 118 contains four paragraphs. Paragraphs (a) and (b) are directed expressly to the creation of sanctions. The first which spring to mind are a financial penalty or a new criminal offence. I invite the attention of the right hon. Lady to the wording. The amendment was carefully worded. It makes clear that the powers given under the clause shall not be used for the purpose of creating any new criminal offence. That emphasisis our recognition of the fact that criminal offences were created under the 1973 Act. We say that the extra powers given under Clause 3 shall not be used to create any new criminal offence.

The Opposition feel strongly about paragraphs (a) and (b). Far from having our fears allayed, if anything they have been multiplied, as we have received no answers to our questions on the problems with which we were concerned.

Paragraph (c) and (d) are not as important as paragraphs (a) and (b). Nevertheless they are still important. I am surprised that the right hon. Lady found paragraph (c) hard to follow as I pinched it from the European Communities Act, with which she is familiar. My right hon. Friend the Member for Crosby (Mr. Page) gave reasons why (d) should stay in the clause.

For those reasons I must ask my hon. and right hon. Friends to vote on this amendment unless the right hon. Lady, even at this late stage, is prepared to take a very different line. To give her a moment to do that, may I just say how much we appreciated the extra bowling; we appreciated the help of these new bowlers in the field, and we hope that they will join us in the pavilion in a moment.

Mrs. Millie Miller (Ilford North)

I join in the appeal to my right hon. Friend the Secretary of State to look again at the provisions contained in the clause. Many of my hon. Friends on the Government benches are seriously concerned about the possibility of what we are told is a voluntary arrangement gradually sliding into a statutory one and the 1973 Act provisions moving across the board to affect an entirely different area. We are not consoled by the fact that the sanctions may apply to the employer rather than the employee. It is the principle of a statutory policy being introduced disguised as something else which we find distasteful. It would be extremely helpful to my hon. Friends and me as we are not in sympathy with the Opposi

Division No. 303.]	AYES	[10.5 a.m.
Aitken, Jonathan	Gow, Ian (Eastbourne)	Oppenheim, Mrs Sally
Alison, Michael	Grant, Anthony (Harrow C)	Osborn, John
Arnold, Tom	Grieve, Percy	Page, John (Harrow West)
Atkins, Rt Hon H. (Spelthorne)	Griffiths, Eldon	Page, Rt Hon R. Graham (Crosby)
Baker, Kenneth	Grist, Ian	Pardoe, John
Banks, Robert	Hall-Davis, A. G. F.	Parkinson, Cecil
Bennett, Sir Frederic (Torbay)	Hamilton, Michael (Salisbury)	Pattie, Geoffrey
Bennett, Dr Reginald (Fareham)	Havers, Sir Michael	Percival, Ian
Benyon, W.	Hawkins, Paul	Peyton, Rt Hon John
Bitten, John	Hayhoe, Barney	Pink, R. Bonner
Biggs-Davison, John	Hicks, Robert	Powell, Rt Hon J. Enoch
Blaker, Peter	Holland, Philip	Prior, Rt Hon James
Boscawen, Hon Robert	Howe, Rt Hon Sir Geoffrey	Pym, Rt Hon Francis
Bottomley, Peter	Howell, David (Guildford)	Raison, Timothy
Bowden, A. (Brighton, Kemptown)	Howell, Ralph (North Norfolk)	Rathbone, Tim
Boyson, Dr Rhodes (Brent)	Hunt, John	Rees-Davies, W. R.
Braine, Sir Bernard	Hurd, Douglas	Renton, Rt Hon Sir D. (Hunts)
Brotherton, Michael	Irvine, Bryant Godman (Rye)	Ronton, Tim (Mid-Sussex)
Brown, Sir Edward (Bath)	James, David	Rhys Williams, Sir Brandon
Buchanan-Smith, Alick	Jenkin, Rt Hon P. (Wanst'd&W'df'd)	Ridley, Hon Nicholas
Budgen, Nick	Johnson Smith, G. (E Grinstead)	Roberts, Wyn (Conway)
Burden, F. A.	Jones, Arthur (Daventry)	Rossi, Hugh (Hornsey)
Butler, Adam (Bosworth)	Jopling, Michael	Rost, Peter (SE Derbyshire)
Carlisle, Mark	Kellett-Bowman, Mrs Elaine	Sainsbury, Tim
Carr, Rt Hon Robert	King, Evelyn (South Dorset)	Shaw, Giles (Pudsey)
Chalker, Mrs Lynda	King, Tom (Bridgwater)	Shaw, Michael (Scarborough)
Channon, Paul	Kirk, Peter	Shelton, William (Streatham)
Churchill, W. S.	Knight, Mrs Jill	Shepherd, Colin
Clark, Alan (Plymouth, Sutton)	Lamont, Norman	Shersby, Michael
Clark, William (Croydon S)	Lane, David	Sims, Roger
Cockcroft, John	Latham, Michael (Melton)	Sinclair, Sir George
Cope, John	Lawrence, Ivan	Smith, Dudley (Warwick)
Cormack, Patrick	Lawson, Nigel	Speed, Keith
Corrie, John	Le Merchant, Spencer	Spicer, Jim (W Dorset)
Critchley, Julian	Lester, Jim (Beeston)	Spicer, Michael (S Worcester)
Crouch, David	Luce, Richard	Sproat, lain
Davies, Rt Hon J. (Knutsford)	McCrindle, Robert	Stanbrook, Ivor
Dean, Paul (N Somerset)		Stanley, John
Douglas-Hamilton, Lord James	Macfariane, Neil	Steen, Anthony (Wavertree)
Drayson, Burnaby	MacGregor, John	Stewart, Ian (Hitchin)
Durant, Tony	McNair-Wilson, M. (Newbury)	Stokes, John
Eden, Rt Hon Sir John	McNair-Wilson, P. (New Forest)	Stradling Thomas, J
Edwards, Nicholas (Pembroke)	Madel, David	Tapsell, Peter
Elliott, Sir William	Marten, Nell	Taylor, R. (Croydon NW)
Emery, Peter	Mates, Michael	Taylor, Teddy (Cathcart)
Eyre, Reginald	Maude, Angus	Tebbit, Norman
Fairbairn, Nicholas	Mawby, Ray	Thatcher, Rt Hon Margaret
Farr, John	Meyer, Sir Anthony	Thompson, George
Fell, Anthony	Miller, Hal (Bromsgrove)	Townsend, Cyril D.
Finsberg, Geoffrey	Mills, Peter	Trotter, Neville
Fletcher Alex (Edinburgh N)	Miscampbell, Norman	Tugendhat, Christopher
Fletcher-Cooke, Charles	Mitchell, David (Basingstoke)	van Straubenzee, W. R.
Fookes, Miss Janet	Moate, Roger	Vaughan, Dr Gerard
Fowler, Norman (Sutton C'f'd)	Montgomery, Fergus	Viggers, Peter
Fox, Marcus	Moore, John (Croydon C)	Wakeham, John
Fraser, Rt Hon H. (Stafford & St)	More, Jasper (Ludlow)	Walker-Smith, Rt Hon Sir Derek
Freud, Clement	Morgan, Geraint	Weatherill, Bernard
Fry, Peter	Morgan-Giles, Rear-Admiral	Wells, John
Galbraith, Hon T. G. D.	Morrison, Charles (Devizes)	Winterton, Nicholas
Gardiner, George (Reigate)	Morrison, Hon Peter (Chester)	Young, Sir G. (Ealing, Acton)
Gilmour, Sir John (East Fife)	Neave, Alrey	Younger, Hon George
Glyn, Dr Alan	Nelson, Anthony
Goodhart, Philip	Neubert, Michael	TELLERS FOR THE AYES:
Goodhew, Victor	Newton, Tony	Mr. Anthony Berry and
Goodlad, Alastair	Normanton, Tom	Mr. Michael Roberts.
Gorst, John	Nott, John

tion amendment, if my right hon. Friend would reconsider the matter carefully, so that we should not be forced to take decisions which we do not want to take.

Question put, That the amendment be made:

The Committee divided: Ayes 192, Noes 222.

NOES
Archer, Peter	George, Bruce	Orme, Rt Hon Stanley
Armstrong, Ernest	Golding, John	Ovenden, John
Ashton, Joe	Gould, Bryan	Owen, Dr David
Bagier, Gordon A. T.	Gourlay, Harry	Padley, Walter
Barnett, Guy (Greenwich)	Graham, Ted	Palmer, Arthur
Barnett, Rt Hon Joel (Heywood)	Grant, George (Morpeth)	Park, George
Bates, Alt	Grant, John (Islington C)	Parker, John
Bean, R. E.	Grocott, Bruce	Parry, Robert
Benn, Rt Hon Anthony Wedgwooo	Hamilton, James (Bothwell)	Peart, Rt Hon Fred
Bishop, E. S.	Hamilton, W. W. (Central Fife)	Pendry, Tom
Blenkinsop, Arthur	Hardy, Peter	Phipps, Dr Colin
Boardman, H.	Harper, Joseph	Prescott, John
Booth, Albert	Harrison, Walter (Wakefield)	Price, C. (Lewisham W)
Boothroyd, Miss Betty	Hart, Rt Hon Judith	Price, William (Rugby)
Boyden, James (Bish Auck)	Hatton, Frank	Radice, Giles
Bradley, Tom	Hayman, Mrs Helene	Rees, Rt Hon Meriyn (Leeds Si
Brown, Hugh D. (Provan)	Healey, Rt Hon Denis	Roberts, Albert (Normanton)
Brown, Robert C. (Newcastle W)	Hooley, Frank	Roberts, Gwilym (Cannock)
Brown, Ronald (Hackney S)	Horam, John	Roderick, Caerwyn
Buchanan, Richard	Howell, Denis (B'ham Sm H)	Rodgers, William (Stockton)
Butler, Mrs Joyce (Wood Green)	Huckfield, Les	Rooker, J. W.
Campbell, Ian	Hughes, Rt Hon C. (Anglesey)	Roper, John
Cant, R. B.	Hughes, Robert (Aberdeen N)	Rose, Paul B.
Carmichael, Neil	Hunter, Adam	Ross, Rt Hon W. (Kilmarnock)
Carter Ray	Irving, Rt Hon S. (Dartford)	Sandelson, Neville
Carter-Jones, Lewis	Jackson, Colin(Brighouse)	Shaw, Arnold (Ilford South)
Cartwright, John	Janner, Greville	Sheldon, Robert (Ashton-u-Lyne)
Castle, Rt Hon Barbara	Jenkins, Hugh (Putney)	Shore, Rt Hon Peter
Clemitson, Ivor	Jenkins, Rt Hon Roy (Stechford)	Short, Rt Hon E. (Newcastle C)
Cocks, Michael (Bristol S)	Johnson, James (Hull West)	Silkin, Rt Hon John (Deptford)
Cohen, Stanley	Johnson, Walter (Derby S)	Silverman, Julius
Coleman, Donald	Jones, Alec (Rhondda)	Skinner, Dennis
Conlan, Bernard	Jones, Barry (East Flint)	Snape, Peter
Corbett Robin	Kaufman, Gerald	Spearing, Nigel
Cox, Thomas (Tooting)	Kelley, Richard	Spriggs, Leslie
Craigen, J. M. (Maryhill)	Kilroy-Silk, Robert	Stallard, A. W.
Crawshaw, Richard	Kinnock, Neil	Stewart, Rt Hon M. (Fulham)
Cronin, John	Lambie, David	Stoddart David
Crosland, Rt Hon Anthony	Lamborn, Harry	Stott, Roger
Cunningham, G. (Islington S)	Lamond, James	Strang, Gavin
Cunningham, Or J. (Whiten)	Lestor, Miss Joan (Eton & Slough)	Summerskill, Hon Dr Shirley
Daiyell, Tam	Lewis, Ron (Carlisle)	Swain, Thomas
Davidson, Arthur	Luard, Evan	Taylor, Mrs Ann (Bolton W)
Davies, Bryan (Enfield N)	Lyon, Alexander (York)	Thomas, Mike (Newcastle E)
Davies, Denzil (Llanelli)	Lyons, Edward (Bradford W)	Tierney, Sydney
?avis, Clinton (Hackney C)	McCartney, Hugh	Tinn, James
Deakins, Eric	McElhone, Frank	Tomlinson, John
Dean, Joseph (Leeds West)	MacFarquhar, Roderick	Torney, Tom
de Freitas, Rt Hon Sir Geoffrey	McGuire, Michael (Ince)	Urwin T. W.
Dell, Rt Hon Edmund	Mackenzie, Gregor	Varley, Rt Hon Eric G.
Dempsey, James	Maclennan, Robert	Wainwright, Edwin (Dearne V)
Dormand, J. D.	McNamara, Kevin	Walden, Brian (B'ham, L'dyw'd)
Douglas-Mann, Bruce	Magee, Bryan	Walker, Harold (Doncaster)
Duffy, A. E. P.
	Mahon, Simon	Walker, Terry (Kingswood)
Dunn, James A.	Mallalieu, J. P. W.	Ward, Michael
Dunnett, Jack	Marks, Kenneth	Watkinson, John
Dunwoody, Mrs Gwyneth	Marquand, David	Weetch, Ken
Eadie, Alex	Marshall, Dr Edmund (Goole)	Wellbeloved, James
Edwards, Robert (Wolv SE)	Marshall, Jim (Leicester S)	White, Frank R. (Bury)
Ellis, John (Brigg & Scun)	Mason, Rt Hon Roy	White, James (Pollok)
Ellis, Tom (Wrexham)	Meacher, Michael	Whitehead, Phillip
English, Michael	Mellish, Rt Hon Robert	Whitlock, William
Evans, loan (Aberdare)	Millan, Bruce	Willey, Rt Hon Frederick
Evans, John (Newton)	Miller, Dr M. S. (E Kilbride)	Williams, Alan (Swansea W)
Ewing, Harry (Stirling)	Mitchell, R. C. (Soton, Itchen)	Williams, Alan Lee (Hornch'ch)
Fernyhough, Rt Hon E.	Molloy, William	Williams, Rt Hon Shirley (Hertford)
Fitch, Alan (Wigan)	Morris, Alfred (Wythenshawe)	Wilson, Alexander (Hamilton)
Fletcher Raymond (Ilkeston)	Morris, Charles R. (Openshaw)	Wilson, William (Coventry SE)
Fletcher, Ted (Darlington)	Morris, Rt Hon J. (Aberavon)	Woodall, Alec
Foot, Rt Hon Michael	Mulley, Rt Hon Frederick	Woof, Robert
Forrester, John	Murray, Rt Hon Ronald King	Young, David (Bolton E)
Fowler, Gerald (The Wrekin)	Noble, Mike
Fraser, John (Lambeth, N'w'd)	Oakes, Gordon	TELLERS FOR THE NOES:
Garrett, John (Norwich S)	Ogden, Eric	Mr. Laurie Pavitt and
Garrett, W. E. (Wallsend)	O'Halloran, Michael	Miss Margaret Jackson.
	O'Malley, Rt Hon Brian

Question accordingly negatived.

10.15 a.m.

Mr. Michael Neubert (Romford)

I beg to move Amendment No. 76, in page 3, line 19, at end add— (3) Where a company negotiates with any person new levels of remuneration for that person within the limits imposed by the policy set out in the documents laid before Parliament by command of Her Majesty's Government in July 1975 (Command Paper No. 6151) that company may apply to the Secretary of State for a certificate of conformity stating that such new levels conform with the document and the Secretary of State shall announce his decision as to whether to issue such certificate within one month of such application such certificate to be made available thereafter on demand by the company. (4) Any company in possession of a certificate of conformity shall on presentation of such certificate to the Prices Commission be entitled to reflect the additional cost of such agreement within its prices in compliance with the prices code existing prior to the publication of (Command Paper No. 6151) in such manner as that company may agree with the Prices Commission". The amendment seeks to clarify, amplify and define an important issue which, despite its importance, received only the benefit of a 15-word statement in the White Paper. The purpose is twofold: first, to ensure that any employer negotiating a wage settlement can secure a certificate of conformity within the limits laid down by the White Paper, and can do so at a time when he is negotiating the wage settlement, in order to be in no way deceived as to the correctness of the procedure; and, secondly, to ensure that once that certificate is obtained by an employer the settlement would automatically be allowable under the Price Code.

It might be thought that such an amendment is unnecessary, given the deceptive simplicity of the Government's proposals, which, when they were first announced, were headlined in at least one newspaper "£6—that's your lot", but, as we have seen in the last few days an apparently simple policy is [...]en on examination to be highly complex and uncertain.

Every employer interested in these matters since the Chancellor of the Exchequer's statement on 1st July, and the Prime Minister's firm announcement on 11th July, will have been studying and scrutinising very closely, as we of Her Majesty's Opposition have been doing, not only the document now pub- lished in the form of a White Paper but ministerial statements thereupon. On Monday the right hon. Lady had this to say concerning such a Government policy, that the great merit of a flat-rate approach is that it is simple, that it can be easily understood, and that it has about it … all the characteristics of fairness."—[Official Report, 21st July 1975; Vol. 896, c. 210.] The right hon. Lady may well believe that, but, like the Lord Privy Seal, it proves to be none of the three things that it claims to be.

It cannot be said to have the great merit that, at a time of difficulty, everyone is entitled to the same but no more. The right hon. Lady will know that, as my right hon. Friend the Leader of the Opposition has pointed out, this flat-rate maximum of £6 will mean only £3.57 to people paying income tax at the standard rate, and even less to people on higher rates of tax. So there at once is an ambiguity in the statement. As subsequent statements by the Secretary of State for Employment reveal, these policies are neither simple nor clearly to he understood.

The right hon. Gentleman attempted to clarify these matters when he said: There are one or two matters on which we have differences of view or differences of emphasis, and those differences still prevail… in the case of the £6 entitlement as against the £6 upper limit. There are differences of emphasis in this respect, but we believe that, if we examine these matters carefully and state them carefully, the country will understand. There, he may have been exuding an altogether exaggerated optimism. He went on: In particular, we do not wish that these matters should be incorporated in specific legal enactments…"—[Official Report, 23rd July 1975; Vol. 896, c. 683–4.] What a recipe for imprecision that is. It may be the way to run a Department of State, but it is not the way to run a business. One can understand the concern of executives in industry and commerce at the lack of clarity to have emerged over the past two days.

Although the right hon. Lady was claiming as recently as this morning that this policy was straightforward and not complicated, evidently that is not the case, in that she may not have been in close collaboration with the Secretary of State for Employment. However, it does the right hon. Lady credit that she is still saying on Friday morning what she said on Monday night. A week is a long time in politics.

The matter is seen to be anything but straightforward when one examines all the evidence on the record, starting with the White Paper. In paragraph 7 we have the indication that the Government attach great importance to the extract on the development of the social contract, the TUC statement adopted by the General Council on 9th July.

As an hon. Member who counts his experience in as many months as a number of hon. Members do in years, I express my astonishment that a TUC paper should be adopted as a Government White Paper and given legislative force, but, putting that to one side, the Government have sought to set out the requirements that should be observed by those determining pay. The Government recommend only one modification of this guidance.

On the subject of the £6 limit, which is relevant to employers trying to establish whether they are within it, what the TUC says on the subject is: Adopting a flat rate approach, fixing the pay limit at 10 per cent. would give £6 a week to all full-time adults …". If that were not clear enough it says later: The General Council therefore conclude that there should be a universal application of the figure of £6 per week. That might be thought to be a very sweeping statement, but, looking back to paragraph 6, we find that the Government regard £6 as a maximum within which negotiations will take place; some employers may not be able to pay it. Starting with a document which has apparently within it a self-contradiction, and adding to that uncertainty the further uncertainty created by ministerial statements by the right hon. Lady and by the Secretary of State for Employment, we see established the great need for employers and others negotiating wage settlements to know exactly where they stand.

It is for this reason that the amendment presses for a so-called certificate of conformity so that there shall be no doubt in the negotiators' minds that they are coming within the Government's intentions. This is necessarily done, not after the event and not merely for the process of securing a price increase approval from the Price Commission, but in order that before the wage settlement is concluded the employer and employee may know that it is within the limits set out by the Government.

While these limits remain so unclear it is legitimate to ask the Government to allow employers, before they enter into what is, in other terms, a contractual arrangement with their work force, to be sure that they will not unwittingly or inadvertently incur penalty for so doing. Thereafter, if they have such a certificate they can regard it as part of their allowable costs and, again, have no doubt about it. These matters must be made clearer than they are at present.

It will be understood by the Committee that until now all Ministers have spoken of is whether the wage settlement reached will incur a sanction. That clearly is inadequate. It demonstrates that this matter has not been thought through. Once an employer has entered into a commitment with his work force, presumably he cannot go back on it unless it is claimed that by an earlier clause of the Bill he may be relieved of that contractual obligation as well as any previous complications that he may have. It is important that in the negotiating process the employer should be assured, preferably in writing, by the Department of Employment that his settlement is within the Government's intentions. I shall remind the Minister that what is at stake here is whether the employer will incur the sanction.

As that sanction, as disclosed by examination and scrutiny, is a sanction of potential bankruptcy or unemployment, or both, it is a serious matter for both the employer and the employee. For this reason we feel justified in moving this amendment to put to the Government the real need to clarify their own uncertain intentions.

Mr. Maclennan

I am grateful to the hon. Member for Romford (Mr. Neubert) for the brevity with which he has made his case. However, it stems from a misunderstanding of the whole nature of the procedure to be adopted in giving effect to the policy laid down in the White Paper. To follow his suggestion which is embodied in the amendment would be to import into the whole business a degree of formality which would be quite unnecessary in the light of the relative simplicity of the pay limits as they have been set out in the policy.

I concede that there will be a certain number of cases at the margin where there may be elements of difficulty. The question is whether we should establish a procedure that takes account of those difficulties and as a result enormously complicates the process for the vast majority of cases where there would be no difficulty. I suggest that it is not justified, principally for that reason.

10.30 a.m.

The hon. Gentleman invoked a further argument that shows the danger of accepting his proposal. If the Secretary of State were to issue a certificate of conformity, that would be done during the procedure of negotiating a settlement, and that very fact, it seems to me, would indicate that the process of finalising the settlement was not complete. The certificate of conformity would be given in advance of completion of the negotiations and, therefore, would not be very worth while, and certainly could not be binding in relation to the Price Commission. For that reason also I must advise the hon. Gentleman that this is not an appropriate amendment to make.

We are anxious that there should be a measure of informality in dealing with this matter. That does not necessarily mean that there will be any less certainty. As my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) stated earlier—I have referred to this before—if there are these difficulties it is open to the employer, after he has notified the Price Commission, not of his full case for a price rise but of the pay settlement, which will form part of the increase in wages costs to be taken into account, to enter into discussions with the Department of Employment in the subsequent period of 28 days to try to clarify any difficult issues, if there are any.

I think that the only formal way of dealing with the status of a settlement for Price Code purposes is the way set out in the consultative document—that is, advance notification to the Price Commission. I hope, therefore, that the hon. Gentleman will see the merit of retaining the informality of the procedures and not seek through the back door to erect a complicated bureaucratic structure, which I cannot believe would be particularly welcome to industry.

10.30 a.m.

Mr. Norman Lamont (Kingston-upon-flames)

The Under-Secretary of State has not given an entirely convincing reply to the proposal so skilfully presented by my hon. Friend the Member for Rom-ford (Mr. Neubert).

It is important that, in a bureaucratic edifice such as the one we are lumped with here, there should be certainty for the industrialist when he is confronted with having to assess how far he can pass on wage costs through the Price Commission. It has already emerged in our debate—the hon. Member for Renfrewshire, West (Mr. Buchan) made this point—that there are many instances in which it will not be clear whether a wage claim or settlement is definitely within the policy laid down by the Government. The hon. Gentleman referred, in particular, to the food industry as one in which many complicated problems could arise, and other examples have been given during the debate.

Despite the simple £6, limit, that is not the end of the matter. There can be difficulties, and it is important that industrialists should have an element of certainty. This is all the more important when there are no proper appeal procedures. We had an unsatisfactory answer from the Under-Secretary earlier in response to our proposals for a proper appeals procedure.

The last thing we want to do is to make this tangled web even more bureaucratic than it is. That is not the road down which we wish to go, but if we are to be lumped with this great web of bureaucratic regulation, it is essential that there be certainty and that people know where they stand.

The Under-Secretary referred to the Informal procedures whereby, in advance of actually making an application to the Price Commission, people could give details of their settlements and get advance clearance. However, if I understood him aright, he poured cold water on the idea that a settlement might have been discussed with the Department before it had actually been finalised. This was one of the reasons why we were particularly anxious that the procedure set out in the amendment should be adopted—precisely for the reason that the hon. Gentleman was so doubtful about —since there will be cases in which people may want to get their claim cleared with the Department before it is finally settled, because once a claim has been settled it will be very difficult for the matter to be unscrambled.

I assure the Minister that this amendment raises a point which the CBI is anxious to see incorporated in the legislation. I say that only because in so many other instances the Government have responded by saying that such-and-such a proposal had not been put to them by the CBI. I do not think that everything which the CBI puts forward—or does not put forward—gives sufficient reason in itself, but, considering that that approach seems to have such tremendous appeal for the Government, I suggest that they should seriously consider doing something here which the CBI strongly supports, and I ask the Under-Secretary to give the matter further consideration.

Sir John Eden

I have been trying to envisage how this policy will work out in practice, and I have a question to put to the Minister arising out of what he has said. He stressed the need to preserve informality in the way this part of the Bill is implemented. By that I assume him to mean that there should be fairly free and easy approaches to the Price Commission, or perhaps even to his Department, by those who wish to obtain advice on whether an increase they are proposing would be justified.

In an earlier debate on another part of the Bill, the Minister of State at the Department of Employment made clear that employers would be able to approach the Secretary of State for Employment for advice on whether a proposed rate of remuneration which they were about to agree with their work people would be compatible with the broad guidelines of the policy.

I have visions of employers queuing up at the Department of Employment and then having to queue up at the Price Commission or even the right hon. Lady's Department. The Secretary of State for Employment stated that all approaches on the pay aspect of this matter should be directed to his head-quarters Ministry in St. James's Square. I fear that this will lead to congestion. I hope that there will be considerable simplification of the procedures adopted and that, since the hon. Gentleman has stressed the need to preserve informality, there will be, or there is already, a special unit in his Department at the very least which it sufficiently manned and adequately equipped with telephone services to ensure that there is a quick response given to employers and others who seek advice and guidance.

Mr. Graham Page

To say nothing of the parking space in St. James's Square.

Sir J. Eden

That also is a bit worrying, but I hope that it will be possible to achieve communication by other means. In spite of the congestion of the telephone service, of which we are only too acutely aware, there are means of approaching Ministers and getting advice from Departments.

I hope, therefore, that the hon. Gentleman will look again at this aspect of the matter at least and that, if he cannot accept the suggestion so clearly proposed by my hon. Friend the Member for Rom-ford (Mr. Neubert), he will ensure that there are effective arrangements made to prepare his Department and the Price Commission for the spate of inquiries which is bound to ensue.

Mr. Buchan

I am still thinking about my hon. Friend's earlier reply. Perhaps I did not listen to it as carefully as I should have done, but I hope that he will direct special attention to subsection (4) of the amendment. In my view, this is a suggestion which must be rejected—and, more than that, we ought to go in the opposite direction.

The Opposition are suggesting that a certificate of conformity should be a convenient way of coping with problems which arise, but they say also that such a certificate should be used to allow a firm possessing one virtually automatically to be able to increase its prices. In my view, during a period of price restraint there should be no such automaticity. On the contrary, there should be even stricter application of the Price Code, and I urge that no such principle as a wage increase automatically entailing a price increase should be accepted.

Mr. Cope

I dislike the informality which the Under-Secretary of State seems to think is a great strength of this whole procedure. I also feel sorry for the hundreds of individuals, as yet unselected, presumably, who will have to run this thing on the £8,000 a year for each of them—although I presume that that includes some other costs. They will have to sit at the Department answering informally questions from a large number of people. Perhaps they will be sitting in shirt sleeves or cardigans chatting up others who come in person, or over the telephone, giving informal advice. Then these employers will have their negotiations and will afterwards return asking for a certificate, because they have to get a certificate at some time to take to the Price Commission.

It would be much better if there were more formality and if an employer could get a certificate in advance while still at the negotiating stage. He could then say to the unions "This is the deal we are settling upon", and he would not have to come back 28 days later, or whatever the period is to be, and tell the unions "I am sorry, but we must unpick the settlement because St. James's Square does not like it". There should be more formality about the process. The employer should be able to get a certificate in advance and not just after the event when his negotiations are finished.

There are precedents in the tax legislation. One can get tax clearance in advance of certain transactions so that one knows what the tax conditions will be. This is a great advantage to those dealing with complicated tax problems. The same should apply to those wage negotiations.

Mr. Maclennan

I think that the hon. Member for Kingston-upon-Thames (Mr. Lamont) slightly exaggerates the difficulty of the situation. In any such debate it is always easy to do so, and I understand the technique. There will be problems, but the question is whether it is right to set up a procedure of such elaborate formality that it takes account of all these problems, perhaps thereby creating difficulties and unnecessary com- plications for those not affected by those problems. That is the gist of my argument.

I do not know whether the right hon. Member for Bournemouth, West (Sir J. Eden) was here earlier when my right hon. Friend, speaking on Amendment No. 35, described the procedure which would be followed. If he consults Hansard he will see how the procedure is to work and how the consultative document procedure can be followed to allow the kind of consultations he wishes to see.

I should emphasise that no one should look for guidance on pay limits to the Department of Prices and Consumer Protection. That is a matter for the Department of Employment, and it is equally not a matter for the Price Commission. This issue of wage-cost increases and pay settlements will be referred directly to the Department of Employment.

10.45 a.m.

Mr. Eldon Griffiths

I can understand why the hon. Gentleman is anxious to shuffle off the responsibility for giving this guidance to the Department of Employment. On behalf of the Secretary of State for Employment, who is not here, can the hon. Gentleman say how many people will be sitting in St. James's Square specifically to deal with the problems of giving guidance?

Mr. Buchan

On a point of order, Mr. Thomas. It is a bit much when hon. Members who have only arrived recently put points which those of us who have been sitting here for 17 hours have heard explained and disposed of already.

The Chairman

Order. I thought the Committee had agreed earlier that the Under-Secretary of State need not sit down when interrupted.

Mr. Maclennan

I am grateful, Mr. Thomas. The substance of what my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) has said is right. We have already explained precisely the number of people involved in the Department of Employment to handle this process. There is already an inquiry unit, and it has dealt with about 500 inquiries daily since the White Paper was published. Its purpose will be to offer advice informally in any situation brought to it, particularly on the question of wage claims. These proposals are for the convenience of industry and I believe that in practice they will prove very workable.

Mr. Cope

I apologise for delaying the Committee by rising again, but the hon. Gentleman said that the amendment would create complications for others. It would not. No obligation is intended on employers to go early to get a certificate. The amendment merely specifies that an employer "may apply". Where there is clearly a good case, an employer will not need to apply. No one would be put to extra trouble, but some employers would have trouble cleared up for them by being able to get a certificate in advance.

Amendment negatived.

Question proposed, That the clause stand part of the Bill.

Mr. Powell

I take advantage of this motion to draw attention to a point which think has not been made in relation to this clause, despite the relative thoroughness with which various aspects of it have been discussed. The theory which underlies the whole of this legislation is the proposition that inflation is largely caused by excessive wage increases. It is not my purpose at this point to challenge that proposition, although I entirely dispute it in fact. That dispute was the subject of an exchange earlier, which amused those who were here, I think, between myself and the hon. Member for Wolverhampton, South-East (Mr. Edwards).

I shall, for the purpose of the argument I have to put, accept hypothetically the theory upon which the legislation is based, and still assert that the sanction which is embodied in this clause is unfair, unjust and inappropriate. Even upon the view of the Government, the fact that an increased price can be asked and obtained must be due not only to the increase in wage costs on the part of the applicant but also to the increase in wage costs in that industry in general, and particularly, surely, to a change, and, in particular, a rise, in demand for that good or service.

It amounts, therefore, to the fact that only a fraction, and probably in most cases a small fraction, of the increased price which is demanded or obtained can be attributable to the ex hypothesi excessive wage settlement which the applicant has previously been guilty of making. It is, therefore, inappropriate that he should be subjected to the sanction of the disallowance, not merely in part but in the whole of the increase in price which he seeks.

The hon. Member for Eastbourne (Mr. Gow) earlier drew attention very pertinently to the word "sanction" in this context, and to its meaning. He did so not out of pedantry or on a drafting basis but because that word does, in fact, show up what is wrong with the principle of this clause. A sanction properly means a penalty whereby the principle of a law is established. It is connected with the root of "sanctified", and it means that which establishes the principle of a new law or maintains an old law. For that purpose the punishment must fit the crime. The sanction must be related to the offence and not, as here, be a proceeding taken from an entirely different context; namely, the restraint of prices and not of wages.

The correct term for what is being done here is not a sanction but a retaliation. It is essentially the nature of a retaliation that it is something else that is done from another area in order to punish or repress a misdeameanour or form of behaviour that has incurred disapproval.

It so happens that this sanction or reprisal required a clause in the Bill, but it is not the only one. It is one of three or four that are set out in the White Paper. The denial of assistance to industry is another, and the denial of public contracts is a third. It is equally unreasonable, and equally unfair to the employees concerned, who, on the hypothesis of the Government, are in any case innocent of the offence, that procedures established for an entirely different purpose and powers given to the executive for an entirely different purpose should be wrested from their proper context and used as retaliations in order to make this policy in the Bill stick.

There is, therefore, something inherently improper in what Clause 3 is doing, and it would be clear that the other sanctions were equally improper if we had the opportunity of debating them in legislative form. The reason why we have this improper legislation before us is the desperate anxiety of the right hon. Gentleman the Secretary of State for Employment and the Government as a whole to maintain that this is a voluntary and not a statutory wages policy. He is using statutory sanctions by misusing other powers in other statutes and in other fields.

We are told that the object of the clause is to impose sanctions to buttress a new law by penalties. If that is the purpose, the penalties ought to have been penalties appropriate to the offence and directly designed to apply to the supposed offence of an excessive wage increase going beyond the limits. Once again, in order to keep up the pretence that this is voluntary and not compulsory, we are making bad law and introducing injustice and unfairness that will strike just as much, if not more, at employees as at employers. It is a bad clause for that reason.

Mrs. Sally Oppenheim

It may be for the convenience of the Committee if I speak now. I hope that it is in order for me to record that the House has now been sitting for about 20 hours and to congratulate all hon. Members who have taken part in the debates, and the Officers and servants of the House, for the way in which they have performed, because I do not think that there has been any sign in any of the debates so far that it is having an unduly trying effect upon them. I shall now probably proceed to demonstrate precisely the opposite.

I think that it is fair to say that the theme that has come out in all the debates we have had this week since the first debate on the White Paper is the question whether we are discussing a voluntary or a statutory policy. In each debate it has become clearer and clearer that it is either or neither or both, depending on who is speaking from the Government benches. What it boils down to is that the Government have introduced what is an extension of the social contract with specific pay limits and with a statutory sanction. Clause 3 is the crunch clause, because there are in this Clause sanctions permitting amendments to the Price Code and the new powers in the clause providing the means to impose compulsion and make this a statutory policy.

If any hon. Member thought that the sanction referred to in the clause was merely a disallowance of excessive pay for pricing purposes, we have not yet had that made clear. Nor have we yet had made clear the expression in the statement by the Chancellor of the Exchequer when he said that there would be disallowance of price increases and that "more severe penalties" might be imposed. So far we do not know what those more severe penalties might be.

This is an enabling clause that gives sweeping and unlimited powers to the Secretary of State, but the precise nature of those powers and the extra sanctions are as yet unknown to the Committee. They are in addition to the powers set out in the draft document on the amendments to the Price Code. It is monstrous that we should have to debate the clause when we have not had an opportunity to debate the draft document, which is germane to the clause and which I see hon. Members studying. We should have debated that before debating the clause, and I shall return to that subject later.

Overhanging the Bill and this clause especially is the shadow of the secret powers Bill, the effect of which could be to intensify the powers and the sanctions of Clause 3. We are being asked to debate Clause 3 containing unknown sanctions upon unknown sanctions and to consider what our approach should be in that light.

Nobody is in any doubt any more that the secret powers Bill, which sits in the dark in a drawer under lock and key, half drafted, redrafted and undrafted, in its present state of non-existence, represents, above all, a colossal piece of subterfuge, because as long as it does not see the light of day it is intended to be all things to all people. To the TUC it can be dismissed as inconsequential and unlikely, to employers it can be described as a means of reinforcing their position, and to the country it can be represented as the iron fist in the velvet glove.

There is one thing we know—and I am pleased that the Secretary of State for Employment is here—and it is, in the Secretary of State's own words, "that it would be a Bill that he would hardly be the proper person to introduce". That says more than almost anything else about what is likely to be in that Bill. Taken together with the unspecified sanctions in the clause, and we are discussing the two together, it constitutes powerful sanctions that may potentiate each other one way or another.

11.0 a.m.

There can be no appeal or redress, and precious little pre-information can be given, in connection with the sanction in this clause. As my hon. Friends have said, it is intolerable that companies cannot be told authoritatively by the Department of Employment whether a pay settlement which they propose to make is likely to be caught when it is processed, whether in the voluntary way or not, in advance of their making the settlement. What will they do if the settlement has been made and they are caught and are subject to the sanction? It cannot be rescinded, and the company could be seriously damaged, as could be the chances of employment in the company.

I hope that the right hon. Lady the Secretary of State will reconsider this question of appeal and that we shall be able to table an amendment on Report which will enable an entirely independent appeal process to take place in which employees and employers are represented. The Government have refused our request so far largely because they refuse to admit that in the Department of Employment, certifying to the Price Commission whether settlements have exceeded the limits, there will be nothing more nor less than a phantom Pay Board. Whether they call it a Pay Board or not, that is precisely what it will be. It will lurk in the shadows, unnamed and pretending not to exist. The Government will not allow it to take any significant shape or to make any public pronouncements, because if it did it would be clear to everybody that what was in the Department of Employment was a Pay Board which was in reality solid in substance.

Somewhere in the Department these 100 people—and soon there will be a great many more—will be lurking. They will be issuing or withholding certificates to the Price Commission saying whether pay settlements have been legally or statutorily approved. That is the crux of the matter. That is what is in the clause, what is in the proposed amendments to the Price Code, and what the Committee should be clear about. Despite the claims of the Chancellor of the Exchequer on Second Reading about the beauties of parliamentary accountability, under the Bill there will be no parliamentary accountability for this little department in the Department of Employment fulfilling the functions of a Pay Board. As far as we know—the right hon. Lady may tell us differently, but as far as I can see it—it will not tell the country why it has ruled that the limits have been exceeded or vice versa.

In addition, the Department of Prices and Consumer Protection, in its liaison with the Price Commission, will not publish reports showing why certain price increases have been refused on the basis of excessive settlements. Therefore, behind this cloak of secrecy, there will be inter-departmental certification which will flow backwards and forwards between the Department of Prices and Consumer Protection and the Department of Employment until the two Secretaries of State end up certifying each other, because it will all be done behind closed doors.

Some amendments cannot be made to the Price Code without the powers in the clause. If people do not avail themselves of the optional or voluntary scheme in the draft paper in which details of settlements can be given in advance, what is to stop a log-jam of settlements coming before the Department of Employment which could not be scrutinised properly with sufficient time being devoted to examining them? Inevitably there will be unfairnesses and anomalies which will lead to resentment. Insufficient time will be allowed as set out in the draft document for a full investigation of the settlements.

The nature of a great deal of the information required under Annex B of the paper is very imprecise. Certainly it is not precise in the way in which paragraph 35 of the Price Code is precise with regard to productivity deductions. I know that this is only a draft document, and no doubt the right hon. Lady will want to say something about this matter and indicate whether she is likely to amend it so that it is as precise as paragraph 35 or whether it will supersede and override paragraph 35 or run alongside it.

If the Secretary of State thinks that the draft amendments, or even the amendments of paragraph 35, are precise enough, will she or the Secretary of State for Employment say whether such perks as low-cost mortgages, low-interest loans, houses decorated or provided by employers, agricultural cottages, presents, payments to private medical insurance schemes, facilities by which employees may purchase the goods made by the company wholesale, or even subsidised canteen mean meals will be covered. It would be helpful if that could be clarified. These are a few examples of the anomalies which could arise unsuspectingly for employers and lead to use by employers and employees of the appeal procedure to which we have referred.

There is also the question of the much more limited requirement for disclosure in the case of companies employing 100 or fewer people. That covers a substantial number of companies. I am not suggesting that because less precise information may be required from those companies they will seek to hide matters which they should make clear, but it is plain that mistakes might be made and not traced which could give rise to grounds for resentment when other settlements are made which may seem to fall short of settlements made in the smaller companies. I am sure that that is not the intention.

The right hon. Lady the Secretary of State did not answer my question on Monday night—I hope that she will answer it today—on what would happen about export prices if excessive claims were financed through higher export prices. Provision for this may be made in amendments which have not been drafted. We should like to know more about this matter and about industries and undertakings subject only to profit control and not to price control.

These fears bring me to a consideration of the amendment to the Price Code. There will be considerable variations in settlements, however much monitoring takes place and however tightly the guidelines may be drawn, so that whatever happens in enforcement is bound to be sporadic in some cases and extremely punitive in others, once again giving rise to resentment.

Perhaps most unsatisfactory of all were the points raised in Amendment No. 36. If an appeal procedure is not agreed to on Report, the anomalies will be exacerbated and more onerous conditions will be placed on companies and employees who are caught in a substantial web of bureaucracy, which will add considerably to costs. Presumably they will be allow- able costs which will be passed on in price increases.

On Monday night the right hon. Lady the Secretary of State said that she would have considerable sympathy with lower-paid people who pursued the £6 limit as a norm. Therefore, will she say what the position will be about those shopping basket items which are particularly affected—[Interruption.] The right hon. Lady shakes her head. She may say that I have misunderstood the situation, and that is possibly so. I hope that she will clarify the situation.

Another important point which arises on the draft amendments to the Price Code which can be made under the clause is the proposition in the White Paper, which presumably could be one of the sanctions under this power, that if the Secretary of State does not obtain the co-operation from industries which she wants she can increase the pre-notification date from three months to six months. I am sure the Committee will accept that this not only would be blackmail in the case of the companies concerned, but would constitute a means of manipulating the retail price index to such an extent that it would look like a political expediency whether it was or not.

I should like to pay what I hope is not an uncharacteristic tribute to the right hon. Lady the Secretary of State for Prices and Consumer Protection by saying that in all the meetings that we have had with various sections of the industry we have been impressed by their appreciation of the consideration and sympathy that she has shown to them at all times and her readiness to listen to their problems. I am sure that she would not want to embark on a course of action which would end up in the bankruptcy of some of these companies, with the consequent considerable unemployment.

Finally, may I express, as 1 am sure many of my hon. Friends will want to do, great concern about the open-ended powers in this clause? We can have considerable confidence as long as the right hon. Lady is in her present position, but what happens after the next Cabinet reshuffle or the next new deal? What happens if her right hon. Friend the Secretary of State for energy replaces her and has these open-ended powers? That is a very frightening prospect, and we shall want to discuss that when we discuss the amendments to the Price Code.

It is to these that these powers and sanctions apply. I hope that when the right hon. Lady winds up she will give us a clear answer on the working of these additional sanctions, referred to by the Chancellor of the Exchequer, over and above the amendments to the Price Code, in relation to the disallowance of price increases. Unless we have a clear undertaking about that, I do not know whether I can persuade my hon. Friends to refrain from forcing this clause to a Division.

Mr. Buchan

I agree with what the hon. Lady the Member for Gloucester (Mrs. Oppenheim) said and, more important, with what the right hon. Member for Down, South (Mr. Powell) said in his analysis of the clause. It was the gravamen of the earlier discussion that we had when I was in some dispute with my right hon. Friend. I was glad to hear how sympathetic she was to the companies. I wish she had been equally sympathetic and considerate to some of my hon. Friends, because I believe she was in error in not agreeing to have another look at the points raised in the amendment. These points are still relevant and I hope that before the morning is out she will reconsider the clause, particularly for the reasons advanced by the right hon. Gentleman.

I believe in a prices and incomes policy. I remember that I had my leg pulled by Lawrence Daly of the National Union of Mineworkers who said to me "What is all this, in view of what you used to say about a prices and incomes policy?" I never advocated a prices and incomes policy in which the prices were used in order to cover wages, as is happening in this clause. Of course, it is a statutory policy. It is not good enough for my right hon. Friend—indeed, I would say my dear right hon. Friend—the Secretary of State for Employment to say that it is a purely semantic matter. It is not semantic. This Clause 3 makes this a statutory policy. Clause 1(1) removes the contractual problem, and that is the first thing that was necessary. Having done that, the clause then lays down the controls, and that is what makes it a statutory policy.

To argue that all we are doing is to rest on the relevant section of the Counter-Inflation Act 1973, as my right hon. Friend the Secretary of State for Prices and Consumer Protection said, is not worthy of her. That section, which, incidentally, was opposed by this side of the Committee, including my right hon. Friend, was used for one specific purpose, namely, to control prices. That is not the point at issue here.

11.15 a.m.

The purpose of the price control provision is to bring about such changes in the Price Code as appear to the Secretary of State appropriate to provide a sanction against the payment of remuneration—not a sanction against prices but a sanction against the payment of remuneration. It is a very strange prices and incomes policy indeed. It is a control over prices which is used expressly for exacting control over wages.

It is in the Price Code that we see some of the complexities of statutory control. Annex B of the Consultative Document sets out some of the information which is required in connection with notifications of price increases. The annex states: Notifications of price increases: Information required on pay settlements. There then appear the following words: The following further information will be required for all other settlements listed and point (iv) states: Details of any forward commitments under any previous settlements, e.g. staged increases, threshold and indexation arrangements.

These are extremely complicated matters. They have to be decided by the Secretary of State, not even in consultation with the Prices and Incomes Board, the value of whose report no one doubts, in spite of one's objections to the policies which operated earlier. This will be decided by the Secretary of State.

The next item in the annex is: Details of any improvements in pay or conditions which are, or are likely, to come into effect during the currency of the reported settlement as a result of any other settlement or award.

There are two other points of information required, as set out in the document: (vi) Details of any other improvements in pay or conditions afforded or to be afforded the employees concerned. (vii) Details of any explanation of any individual pay increases which exceed the pay limit of £6 per week.

A pay and prices policy cannot operate if there is no sense of fairness. Clearly this is a statutory policy. It is not a semantic matter. It is a statutory policy operated by using a control over prices.

Mr. Ron Thomas

I am grateful to my hon. Friend for giving way. Could he clear up a query in my mind? He has described this as a form of price control to clobber wages. Could he not imagine—even if it is only a hypothetical situation—a situation in which a firm, because of a change in market conditions or capital intensity and the low cost of wages, could pay more than £6 a week and not wish to put up its prices? If the firm did not wish to put up its prices it could put up its wages as high as it liked? Could my hon. Friend not imagine such a situation?

Mr. Buchan

Yes. That is one of the problems which I drew to the Minister's attention earlier. This cannot be seen as an automatic—I used the horrible word "automaticity" earlier—excuse for price increases. The two things could be operated separately.

Clause 1 (1) releases employers from the sanctions. Clause 3 introduces the actual sanctions. I appeal to my right hon. Friend. I understand that she has seen some kind of paper in which she has read that we shall automatically abstain. We shall not. We want a re-discussion of this problem. We say that, now that we can see the effect of the clause and understand its purpose, the criminal effects and financial penalties and so on have to be expressed more fully and clearly in the Bill. It is not enough merely to bring in sideways a new kind of concept of punishment, sanctions, penalties, of crimes committed in this way. That is what we want the Government to reconsider.

We do not like the clause, which is the crunch clause. I should like it out of the Bill. Otherwise I want it to be reworded, first, so that people understand what the Bill is about, and secondly, in order that its effect can be reduced as much as possible. I hope that even in the dying hours of this debate my right hon. Friend the Secretary of State can win yet another round on the rejigging of the clause before Report. Let us have a proper voluntary policy instead.

My particular interest is in the food industry, where there are low wages and many women workers. It is precisely here that we have the most sensitive area, because a big element in food prices is the distribution costs, including wages. This is a part of the wages front on which we must concentrate, because of the low level of wages that there has been among such workers, particularly those in USDAW. The sensitivity of food prices must not be a barrier to proper wages for those in the industry.

My right hon. Friend the Secretary of State for Prices and Consumer Protection, who has been boomeranged into a pay situation, has another responsibility with regard to food. In addition to dealing with the Price Code she has to handle food prices and costs during a period of wage restraint. There is the problem that we are on an automatic escalator of food price increases, first because of our having to make the transitional steps up to the Common Market food prices, and, secondly, because of the further increases that occur every year within the Common Market. Therefore, there are automatic price increases ahead of us in this particularly sensitive sector. We saw the third round yesterday, with £100 million of additional costs because of the devaluation of the green pound.

My right hon. Friend the Secretary of State for Prices and Consumer Protection, despite the financial stringencies, has preserved the food subsidies, but in this situation it is not enough to say in the White Paper that the Government propose to spend £70 million more in food subsidies during 1976–77. That went yesterday; the £100 million increase has taken it. The additional cost is a political and not a market cost. It is not a market-conditioned increase, but an increase as a result of a political decision, and it must not be put on the consumers. It must be borne by the Exchequer.

I hope to return to something closer to our traditional food price structure, along with our traditional farm support system. Failing that, we need Exchequer support, difficult as that may be.

Mrs. Sally Oppenheim

The hon. Gentleman must not blame his right hon. Friend for price increases which are occurring for the only and simple reason that in the food industry profits have been eroded to a point where she is unable to hold them down any further without causing widespread unemployment.

Mr. Buchan

I was not blaming my right hon. Friend at all. On the contrary, I was trying to give more strength to her elbow. Of course, she has a difficult problem as long as we have the massive private sector, the market economy, responsible for distribution in the food trade. I apologise to the hon. Member with the distinguished name in the trade, the hon. Member for Hove (Mr. Sainsbury), but I must consider the 50 million people of this country before the private sector's profits, which are of interest to me only in so far as they provide food for the people and employment for the workers. That is the only reason why my heart would bleed for the hon. Gentleman and his family, even though I shop at their shops.

I expect my right hon. Friend to put up a fight and to say that the additional cost must be met from the Exchequer. I hope that my right hon. Friend the Secretary of State for Employment will back her up, because he will have the most difficult task of all in the coming months. Foreheads of men have bled where no wounds were. Many foreheads will bleed in the coming 12 months, and much of the blood will involve my right hon. Friend. I hope that he will back her, and that she will back him, and that they will try together to ensure that my right hon. Friend the Chancellor of the Exchequer does what is necessary.

I have called for the redrafting of the clause. I deal finally with the point about control over the appeal structure. We cannot leave the complexity in the food code, and particularly the finer points in Annex B, merely to be decided in secret by the Secretary of State, even if he is my dearest political friend in the House. There must be some kind of appeal structure. I do not believe that it is impossible to achieve that by Report stage next week.

Mr. Cormack

The clause illustrates that this is a bogus and bad Bill. The best that can be said for it is that the Secretary of State for Prices and Consumer Protection and her right hon. Friend the Secretary of State for Employment are trying to do the right things, or at least have the right things in mind. But they are doing the wrong things to get there.

I remind both Ministers that the road to hell is paved with good intentions. If the Bill reaches the statute book we shall certainly be on the road to administrative and bureaucratic chaos. That is clearly illustrated by the clause. The Secretary of State can take undefined and, to a degree, unlimited powers. The Secretary of State is in the position of the cricket umpire who is able to go on to the pitch and change the rules without telling the teams. The Bill can do nothing but disfigure the statute book, if it reaches it. It is an attempt to coerce and threaten through prices in order to restrain wages. It is deceptive, bad and bogus.

Although the Secretary of State for Employment may have fought a battle in the Cabinet which he thinks he has won, the quickness of the hand does not deceive the eye. The hon. Member for Renfrewshire, West (Mr. Buchan) and his hon. Friends are as unhappy about the Bill and many of its aspects as many Opposition Members.

Mr. Heifer

More so.

Mr. Cormack

I bow to the hon. Member for Liverpool, Walton (Mr. Heifer). We shall not have a competition in that regard, but no doubt he will add his comments later.

This is a statutory Bill which pretends to encapsulate a voluntary policy. The Government should have had either the confidence to rely on a voluntary policy or the guts to bring in a statutory policy, It is as simple as that. In attempting a marriage of convenience they have pleased few people, and I fear that they have doomed their effort to failure.

It is wrong for any Government to embark on any legislation which, with the type of open-ended provisions contained in clause, is calculated to make felons out of ordinary, decent people, with unspecified and unknown penalties in store.

11.30 a.m.

I hope that there will be a Division on the clause, unless we have an assurance from the Government. I am in a quandary as to which Secretary of State will reply. The Secretary of State for Employment seems to be indicating that he will not. That underlines how uncomfortable the right hon. Gentleman still feels about this clause and its implications. He is tired; we are all tired. We have been here through the night and have done our best, but the Bill has not been altered. It remains as it was when we embarked on this long and arduous course at 4 p.m. yesterday. No amendments or improvements have been made, and it is devoutly to be hoped that we shall have some sensible Government amendments on Report that will take into account points made from both sides of the Committee.

Whatever the case may be for wage control, there is no case for this bogus sort of Bill which pretends to be one thing when it is in fact another.

Mr. William Molloy (Ealing, North)

Is the hon. Gentleman saying we can get a Bill of this sort through without any form of price control? Is he saying there can be no form of control on prices that could make a contribution to a voluntary scheme for wages?

Mr. Cormack

The hon. Gentleman knows I am not saying any such thing. I am addressing my remarks to this bad, bogus and dangerous clause with its far-reaching implications. It gives enormous, swingeing powers to the Secretary of State and uses the mechanism of price control to control wages. It is wrong in every way. I am not in favour of price control. I believe it to be total nonsense, but I will not be side-tracked by the hon. Member for Ealing, North (Mr. Molloy) or I shall be called to order.

The best that can be said for the Bill is that the Government's intentions are good, but they have translated their intentions into a very bad Bill. I hope the points made from both sides will be heeded, that this clause will be deleted and that something more satisfactory and honest will be put in its place.

Mr. Hal Miller

I wish to examine the efficacy of the Price Code and how it is to work if a company does not wish to raise its prices.

One can conceive of a situation where innovations and new machinery are introduced and bring a substantial cost advantage, enabling the firm to pay much higher wages. It might, by keeping down its prices, increase its turnover and produce at a much lower marginal cost and, therefore, be able to afford higher wage increases than the level set out in the Bill.

The efficacy of the clause is dubious, quite apart from the question of principle, the administrative procedures involved and the complexity of the clause. We have so many angels dancing on the pinhead of parliamentary control that I hope a rather heavier-footed interjection will bring a clearer response from the Secretary of State than I have been able to secure up to now.

Mrs. Shirley Williams

The hon. Lady the Member for Gloucester (Mrs. Oppenheim) referred to statements in Annex B of the consultative document. Consultations on this document are taking place with the CBI, the Price Commission and other interested bodies. The details are open to change and are likely to be filled out before an order is made. There will be a closer definition of what is meant by a settlement and how large a group will constitute a group for the purposes of a settlement. All the matters will be discussed by Parliament.

The hon. Lady also raised, in a rather complex way, the remarks of the Chancellor of the Exchequer on Wednesday when he referred to disallowance of the whole wage settlement or action which might be more severe if necessary. She was worried this might constitute a new form of penalty. But my right hon. Friend was referring to the possibility of a labour-intensive firm reaching a settlement which might be beyond the limit. I hope she will not seek to find more in those remarks than is actually there.

It will not be the function of my Department under the Bill to give guidance to the Price Commission. The Commission would very much resent any such guidance. The exemption certificate procedure by the Department of Employment would be applied where a settlement went beyond the terms of the White Paper. The procedure will be automatic. My Department would not seek to interfere. It would be quite improper to do so.

On construction contracts, paragraph 3 of the consultative document and paragraph 11 of the annex make quite clear that in clearing an increase of price under an escalation or variation of price contract, any element in the claim for payment which went beyond what is acceptable in terms of the White Paper would be taken into account in assessing the variation price of the contract and would not be allowed for in settlement of the price. This affects the construction industry above all and is a fairly effective sanction.

I accept the sincerity of my hon. Friend for Renfrewshire, West (Mr. Buchan) on these matters, and I am sorry he felt my previous reply was unsympathetic. No one is denying that the policy we are looking at carries certain financial sanctions. If there were no financial sanctions in the private sector, the policy would be slewed against the public sector. Both the CBI and the TUC were prepared to accept the disallowance of the whole of a settlement that went above the White Paper guidelines because they recognised that in a situation where there are cash and other controls in the public sector, it would be wholly unfair if there was no similar form of restraint for the private sector.

That is why I said it would not be possible to mount the White Paper operation at all unless there was at least some degree of control in the private sector in parallel to that in the public sector. By the nature of things, this must be through prices. But as my hon. Friend the Member for Bristol, North-West (Mr. Thomas) pointed out, if there is no price application based upon a settlement, that settlement itself is not, therefore, able to be dealt with by any other form of sanction, and that is the distinction between a statutory policy and the policy of the kind we are putting forward.

Mr. Buchan

Is my right hon. Friend saying that if there is no price application a firm can pay over the £6?

Mrs. Williams

The price application is what brings the sanction into effect. If there is no price application, a sanction cannot be brought into effect by this system, or any other that I know of. But this is the whole effect and nature of a voluntary policy. This policy is voluntary, and it depends upon the full and massive support of the TUC and the CBI, and if it does not succeed as a voluntary policy, and only then—and we are totally committed to its success as a voluntary policy—it might have to become a statutory one. We wish to avoid that situation. That is why I say to the hon. Member for Gloucester that it would be pointless to publish the reserve Bill because it is not required and we believe that the voluntary policy will work.

Mr. Giles Shaw

The Secretary of State has been talking about the importance of having, sanctions within the private sector because otherwise the procedure would be loaded against the public sector. She will be aware of the Price Commission's report, which, belatedly, has now become available, and which shows that there has been a dramatic increase in the percentage of total price increases attributable to the nationalised industries. It shows that this is attributable not to catching up after the effects of price restraint, but to a lack of cost control. How does the right hon. Lady propose to strengthen the writ of the Price Commission within the nationalised industries?

Mrs. Williams

The writ of the Price Commission applies the same in the nationalised industries as in the private sector. Price increases will be notified in the same way as in the private sector, and any settlements which go beyond the White Paper proposals and lead to price increases will be dealt with in the same way. There is, therefore, no distinction. When I spoke earlier about a distinction between the public and the private sectors, the point I was making was that there is an additional range of financial sanctions in the White Paper for the public sector. On the next clause we shall be coming to one of those important sanctions on local government. As I have pointed out, if there was no similar sanction in the private sector, the policy would be unacceptably unfair in all parts of the Committee and to the TUC and the CBI.

I turn now to the comments of my hon. Friend the Member for Renfrewshire, West concerning the food industry. I agree with him that the £6 limit in the food industry represents a very much higher level than the 10 per cent. applied for other sectors of industry. It is more of the order of 15 to 20 per cent., the latter figure being particularly applicable to women workers. It is partly because its effect will be redistributive that we urge the policy upon my hon. Friends and why the TUC has urged it upon its membership.

My hon. Friend referred to the green pound. As a former junior agriculture Minister he will know that the farming industry asked for a great deal more than the settlement it got in terms of the green pound. This was not entirely due to the EEC, but stemmed from the view of our farmers that they could not continue to expand the dairy herd unless there was an alteration in the green pound relativities.

The right hon. Member for Down, South (Mr. Powell) said he regarded the Bill as inherently improper, and he mentioned in particular this clause. He singled out my right hon. Friend the Secretary of State for Employment in that respect. However, if there is am impropriety I must plead guilty to the charge to a much greater extent than my right hon. Friend. As long ago as eight months I made a proposal which was not entirely different from the one being put forward in the Price Code revision, to the effect that there should be the possibility of increases over the norm under the then social contract provisions being set off against price applications. In that sense I must, therefore, perhaps take a degree of responsibility. It would be wrong for the right hon. Gentleman to look at my right hon. Friend through me. He had better look at me. If he regards this move as inherently improper, the alternative ways of dealing with inflation which may be advanced by those of the more purist economic turn of mind appear to me to have been inherently improper in the past, depending, as they were bound to depend, on slashing cuts in public expenditure and an even higher level of unemployment than that we find hard to accept today. I do not accept that our approach is inherently improper.

11.45 a.m.

Mr. Ridley

The recent economic package of which the Bill forms part is slightly inflationary because it involves the spending of £150 million which the Secretary of State has not got, and so the net economic effect of it is a very small increase in inflation. We are all broadly satisfied that that increase is so small because we are so used to bigger increases

Mrs. Williams

These are not increases; they are restorations of part of a cut which was proposed at an earlier stage.

The clause does not create criminal sanctions or any new direct penalty. The Price Code has been extended in the way suggested, and the same penalties are there as for the rest of the Price Code. There is nothing new in the policy being put forward in that respect.

We have had a long debate, and I congratulate the hon. Member for Gloucester on appearing to have survived it better than most.

A good part of the debate up to now has been very much a case of looking at the trees and neglecting the wood. Many people do not seem to appreciate the effort which is required in a democracy to mount a counter-inflation policy iii a situation where it is absolutely crucial for the health of the country that it should succeed, and to base that policy on a substantial measure of consent from both sides of industry. That is, not something that the Committee should suddenly try to negative, because it is essential if this country is to pull out of its desperate situation of the last few years.

Mr. Norman Lamont

As we approach the twenty-first hour of consideration in Committee on this Bill we are actually coming to the nub of the whole legislation. This clause is the central part of the legislation, and it is not surprising that we should have raised again the question whether this is a statutory or voluntary policy. We believe that it is very definitely a statutory policy. It is not convincing for the Secretary of State to say that the policy is not a statutory one because the control is being administered at a stage once removed. Pressure is being put on employers with sanctions, The hon. Member for Renfrewshire, West (Mr. Buchan) quoted the clause: sanctions against … remuneration. Sanctions are used to put employers in a position where they cannot pay out wages in excess of the limits the Government have laid down. If that is not a statutory policy it is difficult—

Mr. Hal Miller

That is not quite the whole position because we have learned that employers can also be subject to pressures from employees who may demand an increase in wages above the limit provided that the firm does not increase its prices.

Mr. Lamont

There are in the present situation, as the Secretary of State has said, very few firms which will be able to put up prices. Pressure is being added administratively to the pressure that is already there. The Government are taking sanctions through the Price Code to make it a belt and braces approach, to make sure that even if it were possible to put up prices in the existing economic climate companies would not be able to do so because of the penal productivity deduction. Even if we suspend disbelief for a moment and believe that this is not technically a statutory policy, is there any difference between a statutory policy and a policy which is imposed with the threat that if it is not accepted a statutory policy will be imposed?

It might be argued that there is one difference, namely, that it could be said that it is, perhaps, a useful function to persuade people that they are voluntarily accepting what they are being compelled to accept. That is hardly an argument that could be advanced by the Secretary of State for Employment or anyone else who has repeatedly made clear his fundamental opposition to a statutory policy.

There was during the debate some confusion to a large extent due to the bland way in which the Secretary of State for Prices and Consumer Protection argued her case when she described a world in which apparently nothing had changed. She spoke of how we had been living under the aegis of the Counter-Inflation Act 1973. There was no mention of the fact that substantial alterations had taken place to that Act. There was no mention of the disappearance of the Pay Board, no mention of the great rush to get rid of restraint on wages.

What would have been much more convincing, instead of this bland and unpersuasive talk, would have been the right hon. Lady's saying that the Government had changed their policy. That would have been a more convincing argument. The right hon. Member for Down, South (Mr. Powell) put his finger on it when he pointed out that what is happening is that the code, which had existed for other reasons, was now being used to enforce pay restraint. That is not what it has been used for in the past few months. It is not what the code has been used for since the Pay Board was abolished. It is no use the right hon. Lady pretending that nothing has changed and that we are continuing under the aegis of the Counter-Inflation Act.

One of the problems is that the Government say one thing for one audience and act in a different way for a different audience. Consider what the Chancellor said on Monday, which was so different from what he said at his Press conference. He advanced the astonishing view that what the Bill did was remove the obstacles to the effective operation of a voluntary policy. That cannot be the consequence of the wording of this clause with its talk of sanctions against remuneration and the Government's pay limits.

It was not a very happy spectacle to see the Secretary of State for Employment the other night obviously unconvinced about this policy. We all came in expecting to hear his usual shafts against the Conservative Party and we were disappointed. He simply stood there trying over and over again to argue that this is a voluntary policy. Silver-tongued as he is, he can apparently persuade many people of many things and himself apparently of anything. One of the problems of the Government is that they talk Tribune but they are increasingly acting manifesto. The trade unions will say that this is a voluntary policy, but to our international creditors it is a compulsory policy. The Secretary of State is adopting a Janus-like stance. It would be much more honourable if he were to make it absolutely clear that this is nothing other than a statutory policy.

This is an unfair clause about which many criticisms have been made. We have attempted by our amendments to rectify some of them. Although we do not propose to divide the Committee at this stage I make it clear that we regard this clause as fundamentally unsatisfactory.

Question put, That the clause stand part of the Bill:—

The House proceeded to a Division. MR. DONALD COLEMAN and MR. JAMES HAMILTON were appointed Tellers for the Ayes but no Member being willing to act as Teller for the Noes, The CHAIRMAN declared that the Ayes had it.

Clause 3 ordered to stand part of the Bill.