HC Deb 29 July 1975 vol 896 cc1579-621

(1) The Secretary of State may, in such cases as may seem to him appropriate, by order make provision to ensure that he receives notice of—

  1. (i) claims presented to employers by their employees or by their employees' representatives for increases in remuneration, and
  2. (ii) settlements made between employers and employees or employees' representatives for increases in remuneration.
so that he may determine whether the claims and settlements are in respect of increases in remuneration which are within the limits imposed by the policy set out in the document laid before Parliament by command of Her Majesty in July 1975 (Cmnd. 6151).

(2) The order may provide that notice of a claim or settlement shall be given within a specified period from the date on which the claim is presented or the settlement is made.

(3) If a person contravenes any of the provisions of an order made under this section, he shall be liable on summary conviction to a fine not exceeding£400.

(4) An order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.—[Sir G. Howe.]

Brought up, and read the First time.

7.15 p.m.

Sir Geoffrey Howe (Surrey, East)

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

Mr. Speaker

With this we are taking new Clause 2—Terms and conditions of employment:

'1.—(1) The Secretary of State may by order apply this section to any pay claims or other claims relating to terms and conditions of employment made on behalf of employees.

(2) Notice of a claim to which this section applies shall be duly given to the approprrte Minister within a period of seven days beginning with the day on which the claim is presented to the employers or employers' organisation concerned.

(3) The notice may be given—

  1. (a) by the trade union or other person by whom the claim is presented, or by any trade union or trade union organization acting on behalf of that person, or
  2. (b) by the person or any of the persons to whom the claim is presented, or by any employers' organisation representing the interests of employers to whom the claim is presented.

(4) The responsibility for ensuring that notice of the claim is given in accordance with subsection (2) above shall lie both on the person by whom the claim is presented (or the trade union or trade union organisation substituted for that person under the following provisions of this section) and on the employers or employers' organisation to whom the claim is presented, and if there is a failure to comply with subsection (2) above all of those persons shall be liable on summary conviction to a fine not exceeding£50.

(5) If a trade union or trade union organisation by notice to the Secretary of State accepts responsibility for persons specified in the notice subsection (4) above shall apply while the notice has effect as if the trade union or trade union organisation giving the notice were substituted in subsection (4) above for the persons specified in the notice. A notice under this subsection shall take effect on notification by the Secretary of State in the Gazette of his approval given on being satisfied that the persons for whom the trade union or trade union organisation accept responsibility concur, and shall have effect subject to any varying or revoking notice taking effect in accordance with this subsection.

(6) An order under subsection (1) above may frame the descriptions of claims to which this section applies in any way, and in particular—

  1. (a) may apply this section in relation to employees in specified kinds of work, or in specified localities, or working in specified undertakings or for specified employers,
  2. (b) in applying it in relation to employees working in specified undertakings or for specified employers, may make distinctions as regards those undertakings and persons by reference to the regions or localities where the undertakers or employers carry on business, or the number of employees working in the undertakings or for the employers, or by reference to any other different circumstances, and may be made 1581 so as to apply to named undertakings or persons,
  3. (c) may make distinctions by reference to the subject matter of the claims, including in particular, distinctions between claims relating to pay and claims relating to other terms and conditions of employment, or by reference to the amount of any increase in pay which is claimed.

(7) This section shall not apply in relation to a claim presented before the coming into force of the order bringing within this section claims of the description embracing that claim.

2.—(1) The Secretary of State may by order apply this section to awards and settlements relating to terms or conditions of employment.

(2) Within seven days of the making of an award or settlement to which this section applies the employers affected by the award or settlement shall duly give notice, with particulars of the award or settlement, to the appropriate Minister and an employer failing to comply with this subsection shall be liable on summary conviction to a fine not exceeding fifty pounds.

(3) The notice to be given as required by subsection (2) above may be so given by a trade union or other person representing the employees affected by the award or settlement, or by a trade union organisation acting on behalf of those employees, and, if so given within the period specified in that subsection, shall absolve the employers affected by the award or settlement from the responsibility imposed by that subsection; and notices to be given by any employers under subsection (2) above may be so given on their behalf by any one of them, or by any employers' organisation representing their interests.

(4) The receipt by the appropriate Minister of a notice duly given under subsection (2) or subsection (3) above shall be notified in the Gazette.

(5) An award or settlement to which this section applies shall not be implemented unless the notice required by this section has been duly given to the appropriate Minister'.

Sir G. Howe

As this is the first debate at this stage of the proceedings on the Bill I hope that I shall be allowed to say a word or two about the framework within which the Opposition ask for this pair of amendments to be considered. The amendments have many similar qualities.

Throughout the proceedings on the Bill we have adopted the proper role of a parliamentary opposition. First, we have welcomed the Government's recognition of the seriousness of the problem of inflation. Secondly, we have supported the Government and, indeed, sought to fortify them where we think that they have adopted the right approach. Thirdly, we have challenged their errors, as we see them. Fourthly, where the Government have shown themselves determined to persist in those errors, we have pointed out—and will continue to do so—the bad impact of those errors not just on the rule of law as an academic concept but upon the people who will have to try to live with the statute when it is on the statute book. That is why we have tried to improve the Bill. We have fulfilled the proper role of Parliament in pointing out where the Government are right and where they are wrong, and we shall continue to do so.

Some have said of the proceedings in the past week or two "Good gracious me, there is not to be found from the Opposition benches a distinctive alternative to what the Government are doing". It is worth dwelling for a moment on the concept of a distinctive alternative. We are all here discussing the approach which the Government should make to a common objective the defeat of inflation. Inevitably, a package of policies, a vehicle designed to attain that objective, must have certain common features. It may be possible to produce some unique and totally undreamed of solution to this serious problem, but that is very unlikely. Certain elements appear to be essential to the right policy. The policy needs to be heading in the right direction and needs to have certain elements which will make it work. When those elements are there we have approved the policy and when they are not we have criticized it. We have also criticised wrong policies.

When the Government have produced a vehicle described as "The Attack on Inflation" it would be odd for us to denounce its existence, to obstruct the Secretary of State for Employment when he gets into the driving seat, or to stand in the way of the vehicle which, however curious in some respects, he is struggling to drive. That is why we have not opposed the policies to which the Government have committed themselves. Over many weeks we have argued for the policies that we regard as necessary and right—policies some of which the Government have now accepted.

Mr. Nick Budged (Wolverhampton, South-West)

Does my right hon. and learned Friend agree that if we thought that the vehicle was going in the wrong direction it would be right to stand in its path?

Sir G. Howe

My hon. Friend makes a lucid point, but we are not asserting that the vehicle is going in the wrong direction. It is lurching off in some respects in the right direction.

Mr. Budgen

In some respects.

Sir G. Howe

My hon. Friends must harken to me, otherwise they will do less than justice to the effect of their rhetoric in recent months and weeks.

For example, the Government have admitted that the vehicle they previously had—the so-called social contract—was wholly ineffective for their purpose, judged from every aspect. The Government have accepted the importance of the role of monetary policy as part of any set of measures designed to deal with inflation. They have accepted the need at least to restrain the growth of public spending, and, as we would argue, to reduce its size. We would say that they have not gone anything like far enough in that direction. The Government have accepted the need for cash limits on public sector budgets. They have accepted the need for a willingness to stand firm in respect of public sector pay claims. We shall hold them to both propositions. We welcome their movements in that direction and, because we welcome those measures and because the Government have repudiated some of their illusions and accepted our advice, there is that much common ground.

It has emerged from debates in the House that there is wide agreement that in the course of defeating inflation an increase in unemployment is inescapable. The breadth of agreement on that ranges from Ebbw Vale to Down, South via Surrey, East, Sidcup and several other places on the way. It is an important feature to have secured the acceptance of that proposition. We have also secured acceptance of the equally unattractive proposition that a reduction in living standards is inescapable if we are to get inflation under control.

We still think that the Government lack candour and courage in spelling that out. However, we have made some progress. There has been acceptance by the Government—it is still incomplete, and they are pulling back from it to some extent— that there will be a reduction in living standards in the immediate future, and that prices must continue to increase faster than wages. There is no escape from that by the indefinite extension of subsidies. Price control can do no more to help.

There are three points that we should make which are by no means accepted by the Government but which are important when considered in terms of a policy which is to succeed in the long term. First, profits must be restored as part of the total balance of the economy, as a means of saving jobs and promoting investment. Secondly—there should be no illusions about this—the tighter control of dividends is no more than a cosmetic, and probably a counterproductive one at that. Thirdly, the present policy of price control—and clearly the Government must have some powers, not least over the nationalised industry, through the Monopolies Commission—cannot and must not endure as a permanent feature of our economy. On all those matters our position has been clear. On some of them—particularly the ones to which I first referred—the Government have been persuaded by the arguments that we have put forward.

What about the policy for incomes on which the clause bears particularly? There are some areas in which the degree of common ground has been extended. There is agreement on the need for the Government to establish a method of determining the pay of their own employees that is consistent with available resources. There is growing agreement on the need for important changes in the way in which the labour market works.

We come to the question immediately before us, of the role of the statutory or institutional policy for incomes generally against the present background. In that context there are two matters worth noting. First, there is a tendency in some quarters—generally those quarters with little direct experience of the problem at first hand—towards gross over-simplification of the answer. Some people will assert, with curious enthusiasm, such phrases as "I have always been a statutory man myself", or "I have never been a statutory man myself". I suspect both attitudes profoundly. Anyone who adopts such an approach can never have studied closely the problems involved.

The second observation worth making is that in all quarters, inside and outside the House, and in all parties, it is clear that when discussion turns to the question of what, if anything, is the role of an incomes policy, formalised or statutory, almost nowhere do we find complete agreement. I doubt whether there is any editorial conference room in the land that can claim an approach resembling complete agreement. Quite apart from the tensions which the Secretary of State has so candidly disclosed from within the Cabinet Room, we have seen wide disagreement about this issue of principle even within the Tribune Group. We have heard the hon. Member for Bethnal Green and Bow (Mr. Mikardo) asserting his own version, founded 20 years ago, of the need for the extensive regulation of incomes. Therefore, it is not surprising that in the course of the debate, and from all quarters of the House, we have heard from people who cherish the ambition of a long-term statutory regulation of income.

It is important to recognise that there are very few who take that view who have tried at close quarters to sustain the task for any length of time. That is why—this does not serve to discredit right hon. and hon. Members on either side of the House—the past two Governments came into office obliged to avoid such a proposition. They were pledged to keep away from statutory incomes policies, and certainly incomes policies of a long-term character. That is why my right hon. Friend the Member for Sidcup (Mr. Heath) spelt out the difficulties as they confronted him in his experience and in the experience of many of us who participated in the previous Conservative Government, of trying to live with the detailed regulation of incomes for any length of time.

Most people who contemplate such a policy—this applies to Members on both sides of the House—now regard it, at best, as a weapon to which they can reluctantly resort, but not a weapon in which we should put very much faith for overlong. It is certainly not a weapon that should be regarded as an excuse for inaction on the other vital fronts of an economic policy. Sustained action on those fronts is the key to the conquest of inflation, if anything is.

When, against that background, this kind of policy is resorted to, it is the function of the Opposition to ensure—this has been our role and it must continue to be so—that it is carried out as far as possible consistent with the rule of law. I do not use the rule of law as some anaesthetic slogan but as a description of the essentials of life for ordinary people in an orderly society. Real people, both employers and work people, will have to live with the consequences of this policy as it emerges from the Bill. It is right for us to ensure that it shall be made possible for that to happen. That is why we have pressed, and will continue to press, for greater clarity about Government intentions as embodied in the Bill.

It would be wrong to say that there is any lack of logic in our approach. We are not, in the terms of another superficial comment, approaching this quasi-statutory policy with a lack of enthusiasm but, at the same time, trying to make it more statutory. Any analysis which attempts to define that a policy is more or less statutory than another fails to have regard to the nature of the draft statute before us.

What we are doing is making two points by way of criticism of the way in which the Government have approached this matter. The first criticism relates to their failure to publish the reserve powers on which this policy eventually is said to depend. I support that argument by quoting what a leading article in The Times put forward on 22nd July. The article reads: notice has been served on employers that unless they observe the official limits for pay settlements to be operative for a year from August 1 legislation may be introduced giving the Government power to countermand their actions; and that they may be punished for transgression of a law which has not only not been enacted, but has not even been made known. That is a most objectionable procedure. That is one of the arguments that we have been putting forward, and we have behind us the impressive authority of New Printing House Square.

Mr. Ron Thomas (Bristol, North-West)

Is the right hon. Gentleman suggesting that new Clauses 1 and 2 have been proposed so as to inject some clarity? It would seem to me that the new clauses base this policy clearly and unambiguously under the heading of a statutory policy.

Sir G. Howe

That is right, but the hon. Gentleman is not under any real illusion that this policy is not already unambiguously a statutory policy. The Secretary of State has told us that it is a voluntary policy, which needs to have this statute to enable it to succeed. Upon that basis it is a policy that depends upon a statute. That is one of the points that we have been making by way of criticism of the Bill.

A further point is that the Bill as published is the wrong way of proceeding, whether one looks at it from the point of view of Labour hon. Members or from the point of view of any other quarter of the House. The passage of this statute is necessary for the effectiveness of the Government's policy. Again, I quote from a letter written to The Times on 26th July by one of our former colleagues, Sir John Foster: The Minister then decides, without appeal or outside reference, whether any payment by an employer exceeds the prescribed limits…the Minister can also alter the price code to enable him to make his unappealable decision that these limits have been reached. The present, as opposed to the future position, is equally objectionable. The Minister decides, without appeal, what limits the TUC laid down when it considered the Social Contract. Any employer held to be paying more than these limits will be punished according to some hitherto unpublished law. The whole of this Bill is a flagrant disregard of the rule of law. That is the second point which we put forward to justify the changes which we seek in the Bill.

7.30 p.m.

This consideration does not involve any question of making the policy more or less statutory. It is statutory. The question is, what shape of statute should be allowed to pass from this House to embody the policy on the statute book? The point raised by our proposal is important and it relates to matters which real people—employers and work people—are entitled to know.

The Chancellor of the Exchequer has twice explained to the House—once on Monday 21st July, at column 57 of the Official Report, and again on Wednes- day 23rd July, at column 575—that this is why the Government believe they can rely on the implementation of this policy and on their existing voluntary notification scheme. Those who have to live with the situation are unhappy.

It is also acknowledged that the voluntary scheme covers only 60 per cent. of pay settlements. The Government will not know, nor will anybody else, when the policy as defined will be endangered so that the new sanctions will come into existence. Most important, employers and work people will have no means of securing protection against the possibility at a later stage of having to break agreements into which they have entered, because they exceed the limits set out in the statute.

New Clause 1 requires the parties to claims and settlements to notify the Secretary of State so that he may determine whether the claims and settlements are within the limits imposed by the policy as set out in the White Paper. In that way we would enable people on either side of the collective bargaining process to discover whether they were complying with the Government's policy. We should free them from the possibility of having to repudiate those agreements retrospectively.

For these reasons people outside the House as well as in it have put forward the case for a statutory policy of prenotification and certification. That would take the Secretary of State further into the transformation of the system into a pay board. We understand that he has conscientious objections to assuming that role too explicitly, but that should not be allowed to stand in the way of the logical consequences of the statutory policy to which he is committed. If that is the statute that is necessary to enable the general policy to succeed, the statute should be sufficient for that purpose. It would not make life impossible for those who had to comply with the provisions of the policy. We are not at present satisfied that it matches up to those needs.

The Secretary of State will recollect the article on the front page of The Times on Monday of this week which said: Ministers and government officials are hastily trying to complete an agreement…on a system of notification of wage increases in time for an announcement in the Commons tomorrow. We look forward with interest to the announcement foreshadowed in The Times.

The Secretary of State for Employment (Mr. Michael Foot)

The right hon. and learned Gentleman is surely not taking for granted what he reads on the front page of The Times or indeed on any page of that newspaper, except perhaps its crossword puzzle.

Sir G. Howe

I am by no means taking that view. Quite a lot of what I said on the subject has been directed to the same point made by the Secretary of State for Employment. Apart from what The Times says on the matter, there are good reasons for anxiety on both sides of the House and we expect the Government to have some further thoughts on the matter.

Mr. Eric S. Heller (Liverpool, Walton)

I shall not detain the House for long, but I should like to make one or two comments on these clauses. If they were accepted, it would take the Government policy much further than it has now gone.

I do not deny that the present policy is a statutory policy of a kind. I have already argued that point very strongly, but that is somewhat different from the clearly laid down procedures suggested in the two clauses, which are reminiscent of the previous income, wages and prices legislation which we have had under previous Governments. I am not certain, but it appears to me that some of these provisions have been extracted from previous legislation. I have not yet checked on the situation but, from memory, I believe that this is what happened in the past.

I oppose statutory policies for a very serious reason. The other day my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) said that he was in favour of a policy involving the planning of wages, provided that it meant that the whole of society in relation to industry and economic policy was planned also. On the surface that is an attractive argument, but personally I do not think that a great plan covering the whole of society is a type of society in which I want to live. On the contrary, I feel that we would all become automatons to be moved around according to whichever political leaders were in power at that moment of time.

I take a somewhat different view from that adopted by some of my colleagues. I want trade unions to be free to negotiate, whether in a publicly-owned socialised society or whether in industries in the hands of private enterprise. The greater the strength and power of the State, the more important it is to have democratic power bases which can offset the growth of the power of the State.

One of my criticisms of the Russian system is not that it has a socialised basis but that a vast bureaucratic machine has grown up under which the working people, or indeed anybody in that society, must be slotted in and must accept that society, whether they like it or not. That form of society has no checks or balances or any democratic power base which can offset the enormous power of the state. That is why I am a democratic Socialist. That is a very different situation from believing in a bureaucratic society which is not genuinely collective. I must make these things clear at the outset because they are important.

Many people seek to suggest that we on the Left of the Labour Party want to build a vast bureaucratic society. On the contrary, that is the last thing we want. We want to see an expansion and a flowering of democracy—not the other way round. We want a greater involvement of the people.

This was the basis of our argument on the Industry Bill on the subject of information. We believe that the people need more information. That is why I personally and most of my colleagues are opposed to statutory policies, irrespective of the type of society concerned. Statutory policies mean that the ordinary people do not have the opportunity through a democratic power base, such as the trade unions, to fight freely for their wages and conditions.

This is a matter of great importance and we must understand the situation if we believe in an extension and development of democratic society. That is my basic objection to these clauses. They imply a regimentation of society of the kind we had in previous years. It will not work in our type of pluralistic society. It cannot work because, sooner or later, we shall reach a situation at which we either have to get rid of the system or have to take it a stage further.

We can take it a stage further in two directions. One is in the direction of the corporate State, and the other could be in the direction—I do not mind what we call it—of State Socialism, perhaps, but at any rate a bureaucratic system, which is not what is wanted by those who believe in democratic Socialism.

That is my basic theoretical objection to the type of proposal being made by Conservative Members. It has always been my theoretical objection, and I think it is a very important point, because we are now reaching a stage, in relation to the policy upon which the Government have embarked, where they have taken one step, and if it is not successful, they will be faced with taking the next step. If that does not work, then the further step will be to bring in increasingly repressive legislation, and we shall end up with trade unionists, fighting for higher wages and conditions, being imprisoned, and, if there is a great upsurge because of that, the repression will grow and grow, until we abandon the democratic process, as has happened before in democratic societies.

I suggest that we should not begin on that path again. We have taken one step in that direction, even with this first Bill. I hope that we are not going to make it worse and compound the mistake already made by accepting clauses of this kind.

Mr. Douglas Hurd (Mid-Oxon)

I do not wish to follow closely the speech of the hon. Member for Liverpool, Walton (Mr. Heller), but I think I speak for rather more hon. Members than myself when I say how much, during these debates, we have appreciated the calm and philosophical way in which he has made his interventions. If that is what transfer to the back benches brings about, Sir Myer, perhaps it is a path which others might profitably follow.

It seems to me that the new clauses moved by my right hon. Friend bring us to the heart of this matter, for few of us who have sat through much the greater part of these debates feel in our hearts tonight that the half-way house of the Government measure can be effective in bringing about the result the Government want.

The argument about notification illustrates this, because it is quite clear to me that, without some system of compulsory notification, as set out in my right hon. Friend's new clauses, the Government simply will not have the information they need in order to make a policy effective in the private sector. I emphasise the words "in the private sector" because this is the irony of the whole business. The real need and the real danger over recent months has built up not in the private but in the public sector. In the private sector the disciplines of the market are very visibly at work. We can already see them in the level of earnings now being reported. The recent figures, published last week, showed that this is so in regard to earnings, and, looking ahead, there can be very few firms which can think with equanimity of granting 25 or 30 per cent. wage increases of the kind which have frightened us.

In the public sector these disciplines do not apply, and it is here that the change of heart by the Government is most important and most encouraging. It is here that the degree of co-operation they have received from the TUC is, in my view, a major achievement that we should all welcome. If it is the case that the unions in the public sector are now reconciled to this kind of restraint on wage increases, this is a major development both in incomes policy and in public expenditure.

But in order to bring this about there is no need for compulsory notification. There is no need for a Bill. There is no need for the Secretary of State to seek extra powers. The powers are there by virtue of the fact that the State in the public sector is the ultimate employer. The information is there, as the Chancellor of the Exchequer told us quite clearly last Monday in the House.

The heart of the irony of it all, Sir Myer, is that what have been lacking are not the powers and the information but the will to use them, and it is precisely this Secretary of State, who now seeks these extra powers, who has come to the House frequently, since he assumed office, and told us in ringing terms that it is entirely within the rights of a nationalised industry—and indeed it is wise of the nationalised industry—to make the kind of highly inflationary settlements for one reason or another which we have had in the last 16 months. He has had in the public sector the powers and the information. What he has lacked is the will.

In the private sector, Sir Myer, it is entirely the other way round. He now has the will to do it but is still not asking for precise enough powers to achieve his purpose. There may be an argument—

Mr. Deputy Speaker (Sir Myer Galpern)

It is not important as far as I am concerned, but we are now at the Report stage and one disappears entirely as an individual and shelters behind the anonymity of "Mr. Deputy Speaker".

7.45 p.m.

Mr. Hurd

I must apologise.

There may be an argument, and obviously is, in all parts of the House, whether in the private sector we need a pay policy at this time, but I should have thought there was a proposition on which we could all agree, namely, that if we are to have a pay policy it needs to be universal, it needs to be effective—and that means that it must be based on adequate information—and it must be equitable as between one employer and another and one set of employees and another. Unless the right hon. Gentleman and the Government accept these new clauses, or put in something like them, the policy they propose will have none of these necessary attributes.

Mr. Philip Holland (Carlton)

One of the many deficiencies of this legislation arises from the Government's failure to incorporate any machinery for the provision of a definitive judgment whether a particular claim or settlement will fall within the limits imposed. I should like to give the House an example of what I am talking about.

Early last week, having heard of the existence of a special advisory unit at the Department of Employment—a unit which we were informed was operative and had already answered a number of queries—I telephoned the Department and asked to speak to the advisory unit, wishing to raise a query. A very obliging and helpful telephonist said she would put me through, and after some delay a male voice cautiously advised me that he was the Department of Employment. I then said that I wanted to speak to the advisory unit. He asked "Who is that speaking?" I identified myself, and he said, "Well, of course, I cannot give you a definitive judgment on a case. I can only offer you advice."

I said, "I want to get clear in my mind the significance of the three dates this year, 11th July, 1st August and 1st September, and in order to do that I should like to put a case to you and take your advice on it, which will give me the information I require". I put the case to him of a negotiation which had taken place between the 1st and 11th and a decision which had taken place shortly prior to the 11th to implement later in the month. He advised me that, subject to having a longer lapse than 12 months from the previous settlement, and taking into account a number of other criteria, it would normally be possible to implement any settlement reached prior to 11th July. Indeed, paragraph 8 of the White Paper seems to confirm this, where it states: and that settlements may also be implemented for groups which, before the date of publication of this White Paper, have reached agreements for annual settlement dates not later than 1 September, provided that they have had no principal increase under the existing TUC guidelines within the last 12 months. That seems to confirm the advice I was given.

It is a pity that paragraph 7 of the White Paper does not agree with this. After referring to the annexed TUC statement, adopted by the TUC on 9th July, paragraph 7 goes on to say: This extract sets out the requirements which should be observed by those determining pay over the whole period from the date of this White Paper until 1 August 1976. So I turn to the TUC's annex, which says in paragraph 3: The policy will operate from the beginning of the next pay round, which is about 1 August. Those who have settlement dates before then should settle within the existing guidelines. That is, under the social contract.

The situation now is that the advice of the White Paper, as borne out by the TUC statement, is that it is possible to continue making settlements and to pay them between 11th July and 1st August, unless the Government in their White Paper make an exception to that part of the Bill as declared by the TUC. But when we look back to paragraph 7 of the White Paper, we see: The Government recommended only one modification of this guidance. The Government consider that the upper limit for the£6 increase should be£8,500 a year rather than£7,000. I mention this as an example of how confusing it is for anyone reading the White Paper, where no definitive guidance can be given by the unit, where ministerial statements seem to be at variance with my reading of the White Paper, and where anyone who has not had the benefit of attending this House and listening to ministerial statements will take it as it reads—in other words, that any settlements should be reached and settled before 1st August.

This is one of the many glaring examples which need adjudication. Like the whole of the Government's anti-inflation policy, the Bill has been so hurriedly put together that it is full of opportunities for the barrack room lawyers in the army of dissenting trade unionists to drive the old TUC cart horse through the middle of it. Without a pre-settlement monitoring requirement, the opportunities for large-scale promotions, re-classifications and re-gradings are limitless. Without post-settlement monitoring, no one will know about them. Without firm and detailed decisions on the application of the policy, the opportunities for adjusting basic levels for those working on incentive schemes are limitless.

Mr. John Biffin (Oswestry)

And all these arrangements are entirely legal.

Mr. Holland

That is exactly my point—unless we have some definitive decisions taken and brought into law to make them illegal.

We are given a long list of vague pronouncements by a Government through a White Paper which is not legal but which is made quasi-legal by supporting legislation which is enabling and not definitive. So we are in this muddle and so are managements in industry throughout the country who face these problems without knowing how to cope with them.

In this situation, we need a strengthening of the Bill if we accept that any part of the Bill is moving in the right direction. It has been suggested that some Opposition Members believe that parts of the Bill may be moving in the right direction. If we believe that we ought to try to fill the gaps in it. That is why I believe that we need something like the monitoring procedure proposed in the clause. I support it for that reason, and I nope that the Government will have second thoughts about it, recognising that it strengthens what they are trying to do.

Mr. Eddie Loyden (Liverpool, Garston)

I want first to take up the point made by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). During his speech, I was disturbed to see Opposition Members nodding their agreement with what he was saying about democracy in industry and about the problems which my hon. Friend sees presenting themselves in the process of dealing with the economic crisis. I am sure that when the Opposition were acquiescing in my hon. Friend's argument, they were receiving wrongly the wave-lengths of his thinking. My hon. Friend's intention was to point out that we face a situation in which the democratic forces in society are being challenged by the social and economic forces, and he was arguing that there has to be some rethinking about the position of economic and social power.

When we argue whether the Bill is necessary in the first instance, and when we discuss the clauses which allegedly are fine-tuned to the economic situation, we discover many contradictions. We see at the moment the inability of the system that we live in to continue to operate in a democratic form. The challenge to this society is its inability to continue with democracy. That poses a question, and this is where I shift a little away from the thinking of my hon. Friend the Member for Walton about the way in which democracy must proceed from that point onwards.

I welcome State intervention which is based on a political concept which is both meaningful and fruitful for the future. I have no fears about the needs for greater State intervention, provided that it is based upon the premise that State intervention is necessary because the society in which we live is failing to fulfil the democratic processes to which we are committed. That is a very important question when we are considering this Bill—

Mr. Deputy Speaker

Order. The hon. Gentleman is creating a difficulty for me. I fail to see how he is relating his remarks to the clause. He says that this is the Bill before the House. But this is not a Second Reading debate. We are discussing a new clause proposed by the Opposition.

Mr. Loyden

I hope that that is the point that I am discussing. The discussion has ranged over the matters that I have dealt with so far. I am not introducing any new subject matter. I have been referring to the points made by my hon. Friend the Member for Walton, and I was about to refer to those made by the hon. Member for Mid-Oxon (Mr. Hurd).

The hon. Member for Mid-Oxon wanted to separate and isolate the public sector from the private sector of industry. He ignored what I consider to be a well-known fact, namely, that there is a complete and utter interdependence on the two sectors in a mixed economy. Any Opposition Member who tries to argue that the two are completely independent, economically and socially, does not understand the processes which have been operating from 1945 onwards in the concept of nationalisation or public ownership.

Mr. Hurd

I do not think that the hon. Gentleman is quite seized of my point. At present, in an acute gathering recession, we need not be too worried about wages in the private sector, because growing unemployment inevitably is pushing them down. The same does not apply in cases where the State is the employer and where the disciplines of the market do not apply. Therefore, it is to the public sector that in this situation the greatest attention needs to be paid.

Mr. Loyden

My point is that in my view there was a deliberate attempt to seperate the two sectors of the economy and to deal with them in isolation, although we know that there is an interdependence which has been cleverly designed and which has been operating from 1945 onwards. The most fruitful and profitable parts of industry were not taken into public ownership in the postwar period. Those industries which were the buttress of the economy were taken into public ownership in order to redress the balance that existed between the public and private sectors.

8.0 p.m.

The scales in a mixed economy are constantly being altered or biased in favour of the public sector, because of the constant failure of the private sector to produce the goods, provide the bacon, and so forth. In that sense the whole policy of the Labour Party has leaned towards the purely reformist idea that at present the scales are not balanced correctly. Therefore, we must move towards the situation in which there is greater State intervention and need for investment, and all the things that follow from that. We require a great deal more State intervention to correct the balance in our society.

In my view we have heard a great deal of hypocrisy and cant about the revolutionary and Marxist rôle, and all the other terms that have been used about the Labour Party's mild reformist policies. It behoves the Opposition to consider what the situation would have been had the Government stood back and allowed with no intervention on their part, the general economic situation—

Mr. Deputy Speaker

Order. I have allowed the hon. Gentleman to go far enough. He may refer to some of the contributions as being hypocrisy, but what he is contributing is irrelevant to the clause under consideration. I ask him to address himself to the subject matter of the clause.

Mr. Loyden

The object of the clause, as my hon. Friend the Member for Liverpool, Walton has clearly pointed out, is to move stealthily. This is where the Opposition have been coy in their approach. On the one hand they have said that they do not support more statutory policies—at least, that is what we have heard from one section of the Opposition—and on the other, that we are stealthily moving towards statutory policies. We have reached the point where we should come out clearly and say what we mean.

I am opposed to statutory policies and to the Bill. The clause, with all its imperfections and faults and its complete rejection of philosophy, indicates that the Opposition are arguing for a much more stringent statutory policy, comparable with the Industrial Relations Act and its obvious consequences. The sooner the House realises that the paths that have been followed previously are not only not acceptable but counter-productive, in terms of industrial relations, the better it will be served.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

If I have to choose between the hon. Member for Liverpool, Garston (Mr. Loyden) and the hon. Member for Liverpool, Walton (Mr. Heffer) I would be an out and out "Waltonite". I shall come to the philosophical differences between them, which have been most fascinating. Indeed, the House is much better for having heard those two points of view.

First, I should like to say a word about inflation. It is perhaps worthy of note that in the past 10 years the two periods when the rate of inflation has turned down have been 1971 and the period we are now living in. It is coincidence, but worth remarking, that those are the only two periods in the past 10 years when there has not been either a statutory or a non-statutory policy in force. The inevitable conclusion is that the Bill is not about inflation at all. Indeed, it is worth asking the academic question, how did we get as far as 1965 without serious inflation and any policy at all? How is it that every time we have had a policy the rate of inflation has increased? These questions are easily avoided, because Labour Members do not like turning their minds to the reality of the situation. The reality is that the Bill and the clause are not concerned with inflation at all. Indeed, it should be out of order to mention the word "inflation" in conjunction with the Bill. I am grateful to you, Mr. Deputy Speaker for allowing me to get as far as I have.

Mr. Deputy Speaker

I am glad that the hon. Member has volunteered that self-criticism, because I was on the point of asking him what it had got to do with the clause.

Mr. Ridley

Luckily I had just drawn my remarks on that subject to a close. I leave the policy by saying that it is mildly inflationary because it involves the spending of a further£150 million, which will have to be printed.

I turn to the Bill and the new clause. The Bill is about the redistribution of income. The quantum of the income is decided by the Chancellor, in his Budget. The Bill is about who shall have more and who shall have less. In my view it is a strange way of going about the reallocation of income for the Secretary of State to take it upon himself to decide whom to stop and whom not to stop.

Unlike my hon. Friend the Member for Carlton (Mr. Holland), I do not think that anyone will take any notice of the provisions in the Bill, because it will soon leak out that they are voluntary and that we do not have to do anything about them. Therefore, unless the Secretary of State is to impose an order prohibiting some price increases, nothing will follow from getting more than£6 a week. To that extent he says that it is voluntary.

I do not want to get enmeshed in the statutory-voluntary argument because in my view it is not real. What is real about the Bill is that the right hon. Gentleman, of all people—dearly though we love and admire him—has taken upon himself the duty of deciding upon whom to vent penalties because they have paid more than the limit specified in the White Paper. He is taking on an awesome responsibility which, but for his high moral principles and high purist—I was almost going to say "puritanical"—attitude to life one would be a little edgy to grant to anyone, namely, to specify which increases should be allowed and in which cases punishment should be meted out. He has taken an inordinant amount of power on himself.

The hon. Member for Liverpool, Walton was right in saying that the Government are shifting into Whitehall one more area of power which has been diverse and diffuse, and giving to the bureaucracy that further element of coercion against the citizen on the matter of pay increases.

I do not know what criteria will be used. I imagine that if, for example, three people employed in a small shop or business get£8 a week and it comes to the notice of the Secretary of State, he will not make an order reducing the prices of whatever they produce or sell. How can it work? Let us take the example of a newsagent's shop. Let us assume that the three people employed in that newsagents get an increase of£10 a week. Will an order be made under the Price Code restricting the profits or the retail prices of newspapers for the whole of the industry in order to hit that one firm, which employs three people? It cannot be so. That is far from the right hon. Gentleman's intention.

The right hon. Gentleman is looking for the big battalions—the large quantities of troops who seek to storm his barricades. Who will they be? Will they be the low-paid? No. There is a later amendment dealing with the low-paid. I cannot see the Secretary of State, with his record, putting a stop order on a vast group of low-paid workers. Therefore, we are getting to certain selected political targets—people who are politically sensitive such as miners, stockbrokers, Members of Parliament, bureaucrats, and all the rest. There will be a political manipulation of the power publicly to limit the increases which certain sensitive groups may or may not seek to demand.

Mr. Holland

Will my hon. Friend bear in mind that, although there is no legal sanction for this voluntary system, real economic sanctions are threatened by the Government on many firms in the private sector which have Government contracts, development area grants, and so on. These are real sanctions. Companies in that situation must try to observe the right thing according to the Government's decision. Therefore, we require a definitive judgment from the Government on what is wanted.

Mr. Ridley

I wonder whether my hon. Friend is right. Suppose I were a manufacturer of pumps. Would the margin which pump makers put upon their products be reduced under the Price Code for the whole industry, or would the pumps which my tiny firm makes be singled out for a price reduction? Obviously that would be highly discriminatory, but it would have awkward effects because, with my reduced prices, I would destroy all my competitors. I would sell so many pumps that I would be able to take on more people. It would do me a lot of good. It would be beneficial, in a sense. The idea that orders will be made against one firm here and another there is not credible.

Suppose I export all my pumps. It will not matter what the Price Code determines, because its writ does not run in Abu Dhabi—or not yet, anyway. Therefore, I fail to see how severe the sanctions will be, except in the case of of a monopolist private sector employer, who will be the last person who will wish to take on the Government.

What will happen if the Government are short of shorthand typists in the Civil Service? If, having paid the limit of£6 a week, they run out of shorthand-typists, I do not see how they will recruit more for all the people who will be working for the Land Commission, administering the Petroleum and Submarine Pipe-lines Bill, which we have just passed, and administering shipbuilding and aircraft and the back-up staff to the National Enterprise Board. The vast army of bureaucrats who will be recruited to administer the Government's programme will need at least one if not two shorthand typists each. Yet, if there is a limit on wages, they will be short of shorthand typists. But they will be allowed to get through, because the Government will realise that they must have the employees that they need.

The one faint glimmer of hope in this absurd and murky situation is that the Government should obtain a little more information and publish it. This is where I part company with the hon. Member for Liverpool, Walton who argued so strongly for the disclosure of more information in private industry during our proceedings on the Industry Bill. But when we make a request for a little more information to be published about the Secretary of State's prejudices regarding incomes, the hon. Gentleman seems to turn against the disclosure of more information.

The new clauses seek to ask the Secretary of State to inform himself who has got how much and who is claiming how much and, perhaps, to add slightly to public knowledge about who is seeking to increase his wage and how. In a free society the more information there is about the market, particularly the labour market, the better. I support the new clauses. To some extent I disagree with the drafting of them. However, with an incomes policy it is useful to have information about the labour market, wages, and activities of that kind.

As the policy unfolds, and as the Secretary of State starts to administer it, we shall want to know whom he has refused a higher wage increase than£6 a week by using his sanctions and whom he has not refused such an increase. The most interesting point will be to see whom he has not sought to chastise by using his sanctions.

8.15 p.m.

I submit, first, that we shall see the total failure of the policy because, in nine cases out of 10, the right hon. Gentleman will not be able to use his powers. They will be inoperable. Secondly, we shall see where his political spite begins to break out, because it will. At some stage, some group of people—it will probably be bankers, although it may be stockbrokers, or even company directors—will be made an example of. The House will recall that on a previous occasion Mr. Jocelyn Hambro was the unfortunate victim of a special reference to the National Board for Prices and Incomes for putting up his salary. We shall watch all this with the greatest of care. It seems to me that the House would make an impossibly bad Bill one-quarter of 1 per cent. better if it were to add the new clauses to it.

Mr. Ron Thomas

I think that most hon. Members below the Gangway on the Government side who have spoken in the debate have done so in opposition to this pay policy for a number of reasons. We believe that the Government have failed to come forward with any economic or industrial analysis to support their premise that wages, wage claims and wage increases are responsible for inflation. Indeed, from most respectable journals, whether it be Economic Trends, the Bank of England Quarterly, The Times or The Financial Times, or even replies to Questions from Ministers to myself and others of my hon. Friends, it is clear that during last year and the first two quarters of this year there has been no real increase in income from employment. Therefore, the suggestion that wages, wage claims and wage increases comprise the only stimulating force behind the inflation from which we are suffering is not supported by any economic or industrial analysis.

Nor is it supported by any understanding of collective bargaining. I am sure that my right hon. Friend will agree that the main consideration in a wage or salary claim is the erosion of the standards of workers since the last pay settlement. Few employers will discuss many factors beyond that, and very few groups of workers have achieved anything beyond a compensatory payment for the erosion of their pay packets since the last pay settlement.

Therefore, how can we accuse work people and trade unionists of creating inflation? Trade unions are for the purpose of defending their members. It seems that it is the defender, not the attacker, who is arrested and that he or she is regarded as responsible for our inflationary situation. We feel that the Government's proposals represent a fundamental shift from what we said during the last two General Elections—

Mr. Deputy Speaker

Order. I am sure that the hon. Member fully appreciates that we are not having a rerun of Second Reading. I warn him that I will not allow a general discussion on what has been or could have been discussed on Second Reading.

Mr. Thomas

I apologise, Mr. Deputy Speaker. There are a number of reasons why I hope the House will throw out new Clauses 1 and 2. It has already been said that the involvement of working people in collective bargaining is a fundamental part of democracy. As soon as trade unions become involved in the State apparatus, in whatever country, democracy for working people has already ceased to exist. My hon. Friend the Member for Liverpool, Garston (Mr. Loyden) suggested that these clauses represented a statutory policy by stealth. If burglars behaved in this way, we would catch them all tomorrow. I could hear this coming across Westminster Bridge. If this is stealth, heaven help us when they become frank and honest. What will they propose then?

New Clause 2 goes further than new Clause 1 and proposes that every pay claim or other claim relating to terms and conditions of employment should be registered with the Secretary of State or one of his officials. It goes on in recondite detail to talk about registering these claims. Why do the Opposition not suggest, as their new clauses imply, that we should recruit another 100,000 civil servants and that they should go in and negotiate for the trade unions and management? We are almost there. They suggest that unions should go into negotiations, go through some kind of charade with the management, reach a figure and then go post haste down the road to a civil servant in the Department of Employment who will make a decision on the application or pass it on to the Secretary of State. Hon. Members should remember that we are talking about any pay claims or other claims". The Secretary of State will have to examine it and publish it. The cost of publishing all these claims will probably add another couple of points to the level of inflation. I do not know whether the Opposition Front Bench are doing this deliberately, but they fail to appreciate the thousands of different levels of bargaining units in which negotiations take place day in and day out. There are at least 5,000 or 6,000 firms within the Engineering Employers' Federation which each negotiate separately for manual staff, piece workers and ancillary staff. There must be literally hundreds of thousands of separate bargaining units satisfactorily negotiating about pay and conditions. These clauses suggest that each one should be registered with an omnipotent Secretary of State or civil servant who will decide whether a claim should go forward. I very much hope that the House will throw out these clauses because they are absolute nonsense.

Mr. Biffen

The hon. Member for Liverpool, Walton (Mr. Heffer) has said that aspiration for the statutory control of prices and above all the statutory control of incomes when it falls into the hands of revisionist Fabians is all too likely to end as some kind of centralist Stalinism. In a sense he was a good deal nearer the truth than perhaps we care to admit. Experience of State determination of pay teaches us that visibility is the crime.

I was uneasy in listening to my hon. Friend for Carlton (Mr. Holland) when he was referring to what might or might not be done. Every situation he described was perfectly legal determination which could be prosecuted by the trade union officials and concluded by the employers. There was no question of anything illegal unless one came to the point where an employer was refused a price increase because of the way in which he had conducted a wage negotiation.

Mr. Holland

Business he might have been doing for the Government prior to that could be taken away from him.

Mr. J. Enoch Powell (Down, South)

That is not illegal.

Mr. Biffen

As my right hon. Friend the Member for Down, South (Mr. Powell) says, that is not illegal. The House would do well to examine in future the whole question of how the Government should exercise these powers in their rôle as a purchasing agent.

I am determined to remain ruthlessly within the rules of order. The topic of notification is of such central importance that the House does not do itself a service by diverting into a wider and more general debate. Why is the CBI now seeking increased notification? It is because it knows that increasingly it will be under very understandable pressure from its members who see the sanctions and applications of the policy through the Price Code as an absurdity and nonsense because in the real world they conclude wage agreements which add to costs and which at a certain point, when taken with other increased costs, such as rates and raw materials, mean they have to go to the Price Commission and ask for permission to increase their prices.

They may discover that an increase will not be admitted because of a wage settlement some months ago. The settlement would now be concluded and might be in respect of the non-wage element of remuneration. They will say to the CBI that they must be rescued from this absurdity by a system of pre-settlement notification.

From there it is one short step to the Secretary of State not merely being notified, but giving a nod, a wink or assent for it to go ahead. There will be no question at any subsequent stage of that settlement being trapped when the commission examines any claim for price increases based on that wage determination. From that moment, the Secretary of State is in the worst and most intractable trap of all as far as an incomes policy is concerned. He will be taking upon himself the say-so whether a settlement falls within the ambit of the Government White Paper. He alone can determine remuneration under the very wide measures and extensive powers which are at his disposal in the Bill which, seeking to be a non-statutory policy, seeks to compromise and therefore becomes a most intolerably bad statute.

That is the reality of this debate. It is the debate which all hon. Members have been requesting, the debate on the reserve Bill. This power will be one of the central powers of the reserve Bill. Once the Secretary of State accepts the responsibility for notification he will inevitably be pushed and pummelled, pre- or post-resignation, into accepting the responsibility for judging whether individual claims fall within the policy. Then we shall have, for all to see—even the most innocent Labour Members on the bench below the Gangway—a statutory policy in full panoply.

8.30 p.m.

Mr. John Mendelson (Penistone)

I wish to address myself to the clauses and the remarks by Conservative Members about them. I do not wish to follow some hon. Members into the wider realms which they covered. Hon. Members have sought to use this debate in order to air views which they did not have the opportunity to express in the main debate on the White Paper. Having been in a similar position myself, I can well understand why they have done so.

The Opposition find themselves in a peculiar difficulty over these new clauses. The right hon. and learned Member for Surrey, East (Sir G. Howe) used to be the closest collaborator of the right hon. Member for Sidcup (Mr. Heath). Although the right hon. Gentleman is not physically present tonight in his new seat below the Gangway, his presence is at least as powerful as that of the ghost at Banquo's feast. The right hon. and learned Gentleman must be mindful, although he speaks under the sovereignty of the present Leader of the Opposition, of his past and of the sovereign under whom he used to work and for whom he used his wonders to perform.

The right hon. and learned Gentleman was the prime architect of the most carefully prepared, closely argued and fully developed Prices and Incomes Bill, a measure which was tailored down to the last detail. He toured the world in search of provisions to put in the legislation. He visited 15 States in the United States in search of labour laws which he could introduce into the House of Commons in order to please his former master.

The right hon. and learned Gentleman cannot now forget his task. Even if he tried to bamboozle the House by forgetting, we would not let him. We would remind him of the formulations he used in the past. Being a clever man, therefore he has not sought to bamboozle us.

Mr. James Prior (Lowestoft)

The hon. Member, in trying to suggest that my right hon. and learned Friend cannot forget his past, has got it slightly wrong. I think that he is confusing the Industrial Relations Act with the Counter-Inflation Act.

Mr. Mendelson

Not at all. I have it exactly right because I am referring to the legislation for which the right hon. and learned Gentleman was responsible. I shall come to the part played by the right hon. Member for Lowestoft (Mr. Prior) in a moment. I have not overlooked him—

Mr. Deputy Speaker

I hope that in the course of his wanderings the hon. Member for Penistone (Mr. Mendelson) will come to the terms of the two clauses.

Mr. Mendelson

I have not overlooked your authority in what I have sought to say, Mr. Deputy Speaker. I started off discussing the clauses which have been selected and I am now analysing the attitude of the right hon. and learned Member for Surrey, East in the way in which he moved the clause. I am not discussing the philosophy behind the Bill or the general economic situation, but I am within my rights in analysing the attitude of the mover of the clauses.

The right hon. and learned Gentleman wants a very strict statutory policy. He sees no merit in what my right hon. Friend the Secretary of State is trying to do. Another close political collaborator of the right hon. Member for Sidcup has spoken in the debate. He represents Mid-Oxon. He used to be a bureaucrat and now he is a politician. He was right at the elbow of the right hon. Member for Sidcup when this legislation was prepared. He was one of his chief political advisers—may heaven forgive him because he has a lot to answer for—as the historians will have to report in great detail when the time comes for this period to be written up.

Behind this new clause, innocent though it may be, is the demand to go back to the disastrous policy that ended in the country having a three-day week. That is the real intention behind the political motivation of the right hon. and learned Member for Surrey, East.

Mr. Biffen

Will the hon. Gentleman put forward the same accusation when this measure is introduced subsequently, in the autumn, by his own Front Bench?

Mr. Mendelson

I dealt with that matter in the contribution that I made during the Second Reading debate. I have great regard for the hon. Gentleman and I shall refer him to the page in Hansard as soon as we leave this debate. However, I do not want to fall out with Mr. Deputy Speaker by repeating my Second Reading speech this evening.

The new clause should be rejected, not only because of its architect and supporters—that is important enough—but, even more important, because of its results and purposes.

The right hon. Member for Lowestoft, who is now the official spokeman for the Opposition on labour matters, should be a little more careful about the way in which he conducts himself on these matters. I do not believe that his intentions are evil. I have never suspected him of having evil intentions. He knows that these are the most sensitive areas of our national economic life. He knows very well, as do all Conservative Members, what the Government are trying to do in this extremely difficult situation. There are so many divisions on the Opposition side. The right hon. Lady the Leader of the Opposition, the Opposition Chief Whip and the business managers had a tough job to get most of their Members into the same Lobby the other night.

Why have this pretence instead of openly matching up to the situation and saying to the nation "We are facing an extremely difficult economic situation. There are those among the Government who argue for a statutory policy and there are those among the Government who argue, not for a statutory policy, but for a voluntary policy agreed with the trade union movement"? The trade union movement has said quite clearly that it is prepared to back a voluntary policy and will offer bitter opposition to a statutory one. Why does not the Opposition take a stand in the face of these realities instead of playing about with all these semi-diplomatic subterfuges that we have heard so much about tonight?

Mr. Hurd

The hon. Gentleman is having his fun although he gets his nuances of opinion on this side of the House completely wrong. I ask him to address himself to this serious point. The House has given a Second Reading to this Bill. We are considering in this new clause—and we shall do so later this evening also—whether we prefer the Government's policy to be executed by the Secretary of State who will have vague and arbitrary powers or whether we prefer it to be exercised, as it has to be exercised, by open powers clearly assumed by permission of this House and set down by agreement with this House. Is he saying that he prefers the vague and arbitrary exercise of power?

Mr. Mendelson

I deny that this is a serious point because there was nothing arbitary in the proposals made by my right hon. Friend the Secretary of State in his conduct of these debates, either during the main debate or in Committee. It is a subterfuge which the hon. Gentleman has now repeated in order to cover up the attitude that he is adopting. As an article in the Daily Telegraph said the other day, these clauses will introduce unnecessary powers in order to smoke out Her Majesty's Government and the Secretary of State for Employment. The purpose is purely tactical. It is not serious, it is not meant to be serious and the new clauses should be rejected on that ground alone.

That brings me to my final point. My hon. Friends have no reason to be afraid of what this legislation contains. The trade union movement has got it in its own hands to determine what happens to it. If we have learned anything from the experiences of the last 10 years, either under my right hon. Friends in Government or under a Conservative Government, it must be that no industrial policy is worth the paper on which it is written unless the trade union movement is prepared to co-operate in it. My right hon. Friend stands or falls with the policy of willing co-operation with the trade union movement. In that I back him. We all ought to back him. That is the only policy that makes sense. These new clauses try to destroy that policy. The House ought to reject them with contempt.

Mr. Budgen

I join my hon. Friend the Member for Mid-Oxon (Mr. Hurd) in his warm congratulations to the hon. Member for Liverpool, Walton (Mr. Heffer) on his remarks of a general and philosophical nature, although I believe that his remarks were perhaps best directed towards State control of wages generally and not towards the new clauses we are considering.

I am no great friend of State control of wages—or if I am a friend, I am a very candid friend of State control of wages. I agree with the hon. Gentleman in his general observations. State control of wages is a very severe affront to individual freedom and it leads to a great enhancement of the power of the State over each and every individual. But the question we have to decide now is surely, after the decision of the House that we shall enter another period of State control of wages, what sort of control we are to have.

First, we have to decide whether to have voluntary State control of wages or statutory State control of wages. If we are to have this fundamental interference in individual liberty for many of our citizens, I should prefer to see it done by statute rather than by some form of so-called voluntary agreement, because a so-called voluntary agreement is no more than rule by nudge, bribe or patronage, or some form of control which is outside the law. Indeed, rule by so-called voluntary agreement, quite apart from leading towards the corporate State which the hon. Member for Walton abhors, as I do, also leads to the undermining of the rule of law which is basic to the fabric of our society.

Therefore, if we are to have a statutory State control of wages that control must have the essential characteristic of law, which is clarity and certainty. I am thus drawn to the conclusion that the basic propositions put forward by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) are correct. He rightly says that notification is necessary and that the proposals put forward in the new clause are to be preferred to the highly arbitrary powers which are given to the Secretary of State—to any Secretary of State, and possibly a Tory Secretary of State in the future. Those powers, which are shown so clearly in Clause 1(2) and (5), are of a very wide nature, giving to the executive unparalleled powers over one of the most sensitive of the individual freedoms of our fellow citizens.

I therefore believe that it is right that we should prefer new Clause 1 to the vague powers which are suggested by the old Clause 1. This means, of course, that the present attempt at State control of wages is bound to failure, because the essence of law, with its clarity and certainty, is that it leads to rigidity. Rigidity in this area means a total denial of market forces, which are based on flexibility and trillions of individual choices by individual citizens. Therefore, inevitably, if we have the proper qualities of law, which are clarity and certainty, enshrined in new Clause 1, we bring this attempt at State control of wages towards a rather earlier death. I do not mind that too much.

But approval of the new clause also means that we bring before the public more information about this attempt at State control of wages. Information will allow ordinary citizens to know about the injustices and anomalies inherent in any State control of wages. I believe that if we are to have a policy of State control of wages it is better that it should be statutory, that it should be clear and certain, rather than it should enhance the power of the State.

8.45 p.m.

Mr. Foot

I hope that it will not be thought too pedantic on my part if in replying to the debate I concentrate on new Clauses 1 and 2 and am not tempted to follow too far the arguments of some of my hon. Friends and Opposition Members who have indulged in more philosophical reflections on the situation. I should like to say a word or two about them at the end, but first I shall concentrate on the new clauses.

As my hon. Friend the Member for Penistone (Mr. Mendelson) noted, the clauses have achieved the remarkable political result of uniting, as far as one can see, those on the Opposition benches who have extremely different views on the whole question of wages policy. Those who have listened to the debate, as I have done, have been fascinated by the large numbers of those who adopt certain attitudes. I will not use the word "monetarist", because I know that it is supposed to be a dirty word. Perhaps the proper description is "laissez-faire". I am not sure what is the comprehensive term that should be used in these circumstances, but I believe that an old-fashioned term such as laissez-faire is satisfactory. Apparently, the clauses have rallied the monetarists, or the "laissez-fairites", or whatever one cares to call them, to the cause of the right hon. and learned Member for Surrey, East (Sir G. Howe), who is much more of a supporter of statutory provisions.

The right hon. and learned Gentleman said that he had read in The Times that we had been engaged in devising a general system of notification and had had great difficulties in doing so. I interrupted him to say that he would be unwise to suppose that The Times had an accurate account of what was happening, but I acknowledge, although I do not think that it was printed in The Times, that it is true that the CBI made representations to us on precisely the question of notification. They have anxieties about that matter, which they expressed to us strongly. We have listened to what they said, though we cannot agree with their approach to the matter, just as we do not agree with the approach of most Opposition Members.

Let me outline the position as the Government see it. I hope that this will assist all concerned who wish to make the policy a success. In paragraph 28 of the White Paper the Government stated the need to have accurate information about pay settlements, in order to make regular reviews of progress towards the objectives of the policy set out in the White Paper. Such information is needed not only for that purpose, for seeing what is going on, but because it can help in giving early warning of potential breaches and help to enforce the price control sanctions.

There is no question but that compulsory notification is needed for the exercise of the price control sanction under Clause 3. The consultative document on amendments to the Price Code, issued by my right hon. Friend the Secretary of State for Prices and Consumer Protection the other day, has described the procedural requirements we have in mind for collecting information for this purpose. The document also says that amendments will be made to the information and notification of increase orders made under the Counter-lnflation Act so as to require firms applying to the Price Commission for price increases to notify it of the details of pay settlements underlying the increases. There is, therefore, no need for this clause in order to secure this information.

I come now to the information that has been more generally discussed—the information for other purposes. The TUC has expressed its intention to consider with the CBI arrangements for the collection of relevant information about pay settlements and the Government have expressed the hone that it will be able to devise an effective scheme for these purposes on a completely voluntary basis. Whether it decides to extend this collection to claims as distinct from settlements is something for the TUC to consider in the first instance.

It must be remembered, however, that although power was taken in the Prices and Incomes Act 1966 for notification of claims to the Government no order was ever made requiring notification of claims under that provision. That part of the Act was, in effect, superseded before it came into operation. After the subsequent freeze and period of severe restraint the voluntary early warning system which provided information about claims and proposed settlements during the years 1965–70 proved sufficient to avoid any need to activate a compulsory power of notification.

No doubt the TUC and the CBI will consider whether it is worth collecting information about claims in present circumstances. Those who advocate this should have in mind that in many cases "claims" are not at all meaningful. They are often not given precision until well after discussions have begun with the employers. Annual conferences of trade unions may decide months in advance to make a claim for a substantial wage increase when there is no question of negotiations beginning for some time. Indeed, even where claims are excessive in themselves the process of negotiation often leads to settlements well below them. Claims are not, therefore, a necessary sign that the policy will be breached.

Mr. Hurd

The right hon. Gentleman has skated rather quickly over the issue of settlements. He has led the House to believe that the CBI may have agreed to the joint monitoring service. Is that so?

Mr. Foot

If the hon. Gentleman will wait for a moment he will see that I am stating the situation. I am not saying that the CBI have agreed to the proposals. We have had discussions this week in which CBI representatives put their views to us. I did not misrepresent those views in any way in what I said at the beginning. We hope that the CBI will also be prepared to agree to the kind of arrangements which the TUC has in mind and that it will have discussions with the TUC. We shall see what the outcome is. That is what we said in the White Paper. That is the present situation and it is what we stressed to the CBI at the beginning of the week.

I have said that claims are not necessarily a sign that the policy has been breached. These are substantial arguments for not requiring notification of claims even under a voluntary system. I see no value in compulsory notification of claims. That would simply mean further additions to the staff of my Department to examine such claims without any significant gain in terms of the efficacy of the policy as a whole. Over the years of voluntary and statutory policies the Department has maintained its contacts with negotiations in the public and private sectors. They will be continued.

The extension which is taking place in these long-standing arrangements will add to my Department's knowledge of settlements in the private sector. In the public sector we have extensive information about negotiations and settlements. Altogether, under this arrangement, my Department can expect to obtain information on an informal, voluntary basis covering up to 60 per cent. of the workers. That will be buttressed by the information flowing from the price notification requirement and will be adequate to ascertain whether the policy is generally being honoured and to monitor the developing economic situation. The Government therefore see no need for compulsory notification other than of pay settlements which are relevant to price applications.

I do not accept the argument that the requirement to notify will exercise a significant discipline in support of the policy. That policy can succeed only if it enjoys the wholehearted co-operation of the community. Any small employer who is intent on evading it will hardly be disuaded from doing so by the need to notify his settlement.

The main effect of the clauses, if accepted, would be to place an extra burden on employers on pain of penalty, to supply information which is unnecessary in most cases to persuade them to comply with the policy and would require an increase in the bureaucratic labour force in the vain quest for complete information. As with all compulsory requirements of this kind, a penalty is included for non-compliance. A summary fine of up to£400 on summary conviction is included in the right hon. Gentleman's proposals.

The tenor of the Opposition amendment is contrary to the voluntary approach of the policy. The power to monitor the policy is unnecessary and the importation of penalties, under notification requirements, across the board is unacceptable to us for those reasons.

I know that some members of the Opposition favour that provision and hanker after a full statutory policy. Some Government supporters also hanker after such a policy. I do not refer to my hon. Friends sitting below the Gangway. They hanker after something else. I know what they have in their minds. I also know what their objections are to the statutory system. In our discussions I made no secret that I shared many of their doubts and anxieties. I say this in general conformity with what was said by my hon. Friend the Member for Penistone. Those with whom we drew up this policy shared those fears and anxieties.

My hon. Friend the Member for Bristol, North-West (Mr. Thomas) thought that those who drew up the White Paper, or the guidelines which appear at the end of it, might not have understood the vast number of wage settlements involved. I acknowledge that I have no detailed experiences. My hon. Friend knows that those with whom we discussed these matters, and those with whom we concluded this agreement, have a vast knowledge of exactly that character. The people with whom we reached these conclusions have spent their lives in the trade union movement.

Mr. Ron Thomas

I refer to those who put their names to new Clauses 1 and 2. I do not suggest that the TUC leaders have not had vast experience, although I shall never have such experience.

Mr. Foot

I apologise to my hon. Friend for any misapprehension on my part. I did not think that he included us in his indictment.

When we embarked on this policy we agreed to the guidelines which were annexed to the White Paper and which we agreed with the representatives of the General Council of the TUC. They were aware, as much as my hon. Friends, of the evils, difficulties and dangers of a statutory policy. They were as much aware of the anomalies and awkward decisions that would be provoked by it. They were as much aware of the consequences that they and we did not wish to see. But they accepted that they had to take some action and that the Government had to work out something sensible. They concluded that there would have to be a fairly rough-and-ready way of doing it, and that it would have to be done by the£6 across-the-board method because that was the simplest way.

They came to the conclusion that all these steps had to be taken not to solve the whole question in that way—nobody claims that—but to make a major contribution to overcoming the inflation danger during the coming 12 months. They agreed to the proposition on that basis and understood the difficulties that would be involved. They also wished to refrain as far as possible from importing a statutory element.

I am not entering into the argument of what is or is not statutory. The TUC wanted to make an agreement with the Government to try to assist the Government and save the country, and to that end it agreed that the proposition should be carried through as far as possible without resort to statutory means. But they knew that some statutory provisions would be required, among them Clause 1. I shall not go over the arguments which I have put about that on many previous occasions, apparently without receiving universal acceptance of my view; but the TUC knew that such provisions would be unavoidable if it proceeded with this policy.

I know that there are some Opposition Members who are opposed to any such arrangements. The right hon. Member for Down, South (Mr. Powell) and the hon. Member for Oswestry (Mr. Biffen) have put forward appealing arguments which are attractive to some who oppose a statutory policy for quite different reasons, whether or not for the philosophical reasons of my hon. Friends below the Gangway. But those people must be careful, because what is not stated in these debates is the remedy of the right hon. Member for Down, South and the hon. Member for Oswestry—and they would be out of order if they did state them in this debate. If their remedy were to be stated it would be found to be even worse than that of the Conservative Front Bench—and I cannot say anything worse than that.

9.0 p.m.

Mr. Prior

The right hon. Gentleman's last remarks I find difficult to understand. Until recently the policy which the Government aimed to pursue was precisely the policy of the free market which is totally acceptable to the right hon. Member for Down, South (Mr. Powell) and my hon. Friend the Member for Oswestry (Mr. Biffen) in that they believe, as do a large number of Government supporters, that the best way to run the economy is to allow wages to find their own level and, if they go up too quickly, for the Chancellor of the Exchequer to tax them more heavily and to put more people into unemployment. That is precisely the policy which the Labour Party has pursued for the last 16 or 17 months. Now the Government come along and have the effrontery to say that their new policy will reduce the level of unemployment and that only a few of my hon. Friends are sticking to the old policy.

That is neither entirely fair nor entirely correct. The more the Secretary of State seeks to explain what he is trying to do, the greater the forebodings of failure of the Opposition benches. The more I have heard the Secretary of State explain that this is not a statutory policy and that he does not wish to have powers of notification and so on, the more convinced I become that the Bill will have so little effect on the level of inflation that any decline in the level of inflation that takes place will be due to other forces working within the economy much more than to this factor.

The reason is twofold. Given the level of unemployment and the depth of the recession we are now experiencing, there is no doubt that many people who might have wanted to obtain a large wage increase this coming year will value their jobs a good deal more than such an increase. From that point of view, the Government may find the level of inflation abating a good deal more.

What we have tried to do briefly and simply is to save the Government from a little of their own folly. The Secretary of State has stood at the Dispatch Box a good many times within the past few months and faced questions about the social contract. We have said to him "Under the social contract, what has happened? What are wage increases doing? Can you tell us whether they are conforming to the social contract?" The right hon. Gentleman has always said "I cannot possibly give you any of that information. It is not available to my Department and it would be a waste of time for my Department to try to find it. I have no intention of trying to get that information." The right hon. Gentleman may want to say now that the information has been available at his Department for a long time and that his officials have been collecting it, but he still admits only to being able to find out about 60 per cent. of the settlements that are made. That 60 per cent. will presumably cover the whole of the public sector and, as my hon. Friend the Member for Mid-Oxon (Mr. Hurd) has pointed out, the right hon. Gentleman already has all the powers that he needs over the public sector.

The new clause would help the right hon. Gentleman to find out a good deal more about what is happening in the private sector. It is my understanding that employers are worried about what will happen when a firm does not bother to notify and pays out an extra eight quid, nine quid or 10 quid a week, as some undoubtedly will do, when other firms are trying to stick to the line. When that happens there will be unfairness and bitterness. Such an approach would be greatly to the detriment of all those people in Britain who will want to play ball and stick to the policy.

What we are putting forward is that the Government should say to firms "Notify your claims, notify your settlements and everyone will be on an equal basis." One is driven to the conclusion from what the right hon. Gentleman has said that in many respects the Government do not want to know. If that is so, why bother to have the Bill? So much of what the right hon. Gentleman has said time and time again must lead one to the conclusion that he does not believe that the Bill will count for much.

Has the Bill been introduced to keep the Arabs or the Nigerians quiet? Has it no practical purpose? Is it right that the right hon. Gentleman believes that the Bill will not have a major effect and will not prove to be a practical success? We say to the right hon. Gentleman that because of confidence factors, and because we believe that the£6 limit might help to preserve employment when otherwise there will be further unemployment we think that the Bill is a mild step in the right direction. We believe that the Minister is missing the opportunity to write into the Bill at least some form of parity.

The right hon. Gentleman in commenting on the Prices and Incomes Bill in 1966 said, on Third Reading, My right hon Friend says that he wishes to carry out all these measures by voluntary means. The method he adopts to carry it through by voluntary means, however, is govment by minatory exhortation, and that is not a good way of governing."—[Official Report, 10th August 1966; Vol. 733, c. 1772.] In other words, the right hon. Gentleman has set out on a course which in previous incarnations he condemned. He now hopes that it will succeed. The new clause would have given him the chance of ensuring fairness between individual employers and employees. I am sorry that he has not taken that chance.

Question put and negatived.

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