COUNTER-INFLATION (CONTINUATION OF ENACTMENTS)

HC Deb 27 July 1977 vol 936 cc753-73

9.2 p.m.

The Secretary of State for Employment (Mr. Albert Booth)

I beg to move, That the draft Counter-Inflation (Continuation of Enactments) Order 1977, which was laid before this House on 22nd July, be approved.

Mr. Deputy Speaker (Sir Myer Galpern)

I understand that it will be convenient to discuss at the same time the following two motions: That the draft Limits on Remuneration Order 1977, which was laid before this House on 22nd July, be approved. That the draft Price Investigation and Examination (Exceptions) Order 1977, which was laid before this House on 22nd July, be approved.

Mr. Booth

Yes, Mr. Deputy Speaker.

It will be necessary to continue the provisions in relation to employers in the Remuneration, Charges and Grants Act 1975 to the extent needed to support and enforce the TUC guidance for the 12-month rule. The Limits on Remuneration Order has been laid for that purpose. The order is framed on the same basis on the order that the House approved last year. The original pay limits for the purposes of Section 1(1) of the Remuneration, Charges and Grants Act were set out in "The Attack on Inflation", Cmnd. 6151, which provided for what was known as the £6 policy.

Under the powers in Section 1(2) of the Act, the Limits of Remuneration Order 1976 added to those limits a reference to the limits set out in "The Attack on Inflation: the Second Year", known as the £2.50 to £4 policy. This order thus refers to the pay limits set out in the new White Paper "The Attack on Inflation after 31st July 1977".

It is specifically stated in the annexe to the White Paper that the statement of the TUC General Council of 22nd June about the 12-month rule constitutes the pay limits for the purposes of Section 1 of the Remuneration, Charges and Grants Act 1975. The only additions mentioned in the TUC statement are self-financing productivity agreements and the improvements in occupational pension schemes.

I should point out that the order also underwrites the TUC guidance for negotiators who seek to defer due settlements under the current policy until after 31st July, and any settlement so deferred would, on the basis of the current guidelines, have to be within the pay limits. The effect of setting pay limits is the same as in the last two years. It will protect the employers from a claim for breach of contract if they can keep within the pay limits only by breaching contractual obligations. Secondly, if the Secretary of State certifies that the pay limits have been breached, sanctions will be applied.

But, unlike the last two years, the order affects particular negotiators for different periods. It affects them only for 12 months after the date of their settlement under current agreements. Therefore, for negotiators who concluded a settlement under the guidelines on 1st October 1976, this order limits their freedom to negotiate only up to 1st October this year.

The Government attach the greatest importance to the guidance of the TUC which constitutes the pay limits for the purposes of the order, since its observance will go far towards enabling an orderly return to collective bargaining to take place over the next year.

Mr. Timothy Raison (Aylesbury)

May I ask the Secretary of State to clarify a point about which I am not clear? As I understand it, the annex applies only to Section 1 of the Remuneration, Charges and Grants Act 1975. Section 4 of the Act says that If it appears to the Secretary of State that any action taken or likely to be taken by a local authority in Great Britain may result or has resulted in the payment, for any period during which section 1 of this Act is in force, of any remuneration in excess of the limits mentioned in that section he may, after giving the authority an opportunity of making representations.… dock the rate support grant, in effect. Is it the case that the new White Paper affects only those things referred to in Section 1—namely, the business of letting off employers from the duty of fulfillling their contracts—or does it also affect local government? In other words, does it have a general purpose for all things that the Government want, or is it solely to do with employers' liability?

Mr. Booth

It is not the case that it would affect solely employers' liability. It has the same effect as in the previous two years. The only essential difference is that the time period of calculation is changed. I shall try to help the House by explaining the somewhat technical interaction between Sections 1 and 2 of the Act.

Mr. Raison

But the footnote to the annex in the White Paper states: This statement alone constitutes the pay limits in this White Paper for the purposes of Section 1 of the Remuneration, Charges and Grants Act 1975. The purposes of Section 1 are defined by the rubric as being "Remuneration under existing agreements." But Section 1 is really all about the question of employers' liability and has nothing to do with whether a local authority should get rate support grant. What is the meaning, therefore, of the phrase "for the purposes"? Is the right hon. Gentleman sure that the new White Paper will not have general application and will be limited to what on the face of it appear to be the purposes of Section 1 and nothing else?

Mr. Booth

The other orders were introduced in the same form relating to section 1. The practice of the Government under the combined effect of orders such as those we are considering was to take into account arty breaches of the pay policy in deciding matters such as discretionary grants and rate support grant. The Government, where they had discretion, used this as the guideline by which they operated a sanction for the enforcement of the pay policy. Under Section 4 of the Act the Secretary of State may reduce and … without any sums payable to the authority by way of rate support grant under Section 6 of the Local Government Act 1974". That is If it appears to the Secretary of State that any action taken or likely to be taken by a local authority in Great Britain may result or has resulted in the payment, for any period during which Section I of this Act is in force". That power derives from Section 4 of the 1975 Act. The powers are laid for the Government to do that, but what we are doing is to continue a practice that has applied over the past two years as covered by the pay policy.

It is proposed to prolong powers to control dividends under Section 10 of the Counter-Inflation Act 1973 This arises from the Government's White Paper "The Attack on Inflation" after 31st July 1977.

Mr. Raison

I understand that what the Secretary of State has just said is that the new White Paper, and in particular this new and rather odious annex, does not apply only to Section 1 in its operation but to Section 4 as well. The sentence that appears under the annex states: This statement alone constitutes the pay limits in this White Paper for the purposes of Section I of the Remuneration, Charges and Grants Act 1975. If that had occurred in the explanatory note that goes alongside the order I think I should be right in saying that it did not have any legal force. I believe that an explanatory note does not have any legal force However, as I read it the statement that appears underneath the annex has legal force. Except for one line there is nothing that I can see to detract from that statement having legal force. It may or may not be the case that this is a faulty statement. I suspect that it is an imperfect statement. I suspect that it is rather a vague statement and one that should be amended, but here we come up against one of the crucial difficulties. Under the appalling procedure adopted by the Government we cannot amend. We must proceed on a take-it-or-leave-it basis. Will the right hon. Gentleman tell me whether the sentence that comes after the annex has legal force? Does he have any reason to doubt that it is perfectly correct and viable as it stands?

Mr. Booth

Without trespassing beyond the rules of order, I do not think that I can reply to all those questions. It is not the case that the Government introduced the practice of not being able to amend affirmative orders. The hon. Gentleman is utterly mistaken if he thinks that that is so. As for the note that appears at the bottom of Annex A of the White Paper, it has no legal effect in itself. It is the passing of the order tonight that will give that annex the effect of constituting the pay limits. The purpose of the note is to make it clear that it is only the annex that constitutes pay limits for the purpose of the order, not the preceding pages of the White Paper.

Having constituted limits for the purpose of a continuation of that part of the Remuneration. Charges and Grants Act. The effect for those pay settlements covered by the limits is precisely the same as in preceding years. The sanctions attached to it are in no way looser or greater than they have been in the preceding two years. It was the case with the two preceding White Papers that the advice for the purpose of determining whether there had been a breach of pay policy was contained within only a limited part. In no case was the whole of the White Paper the basis on which I or my predecessor tested whether there had been a breach of the pay limits.

Mr. Raison

Section 1(1) of the Remuneration, Charges and Grants Act 1975 refers to limits imposed by the policy set out in the document laid before Parliament by command of Her Majesty in July 1975 (Cmnd. 6151)". It does not say that the policy set out in this document is confined exclusively to the annex. I do not think that the word "annex" appears in this document. It refers to the policy set out in the White Paper. I understand the effect of the order to be that there is a new White Paper, which has a new policy. But there is nothing in the new order implementing it. It refers only to the annex as opposed to the whole of the new White Paper that came out the other day.

On the face of it, this is talking about the whole of the new White Paper. The Secretary of State said that that is as may be, but underneath the annex another sentence mysteriously appears, which is by way of being an explanatory memorandum. I have never seen an explanatory memorandum or note, or whatever it is called, appear in the order before. I cannot see how the Secretary of State can say that bits of the White Paper are part of the law of the land and other bits are not. It does not seem to be defined in any proper way.

Mr. Booth

The hon. Gentleman is demonstrating that he has not read many orders. It is the general practice for Ministers laying orders to append explanatory memoranda.

Mr. Raison

With respect, I am aware of that. I have read quite enough orders. I have here the order that we are debating now. This order has an explanatory note on the back. That is the normal practice. I am talking about an annex to the White Paper. Underneath the statement by the TUC on the last page of the White Paper is a line and then the sentence that I have already read twice. As far as I can make out, the Secretary of State is saying that this is an explanatory note, but there is nothing to show that it is an explanatory note. It appears as part of the White Paper. There is no statement saying that it is an explanatory not. I cannot understand why there is no statement saying that.

Mr. Booth

For the hon. Gentleman's benefit, I shall try to explain it again. Both he and I are agreed on the proposition that the explanatory note attached to the order in itself has no legal effect. The legal effect that flows from the passing of the order is to provide pay limits by which the extension of the Remuneration, Charges and Grants Act can be operated. Therefore, it is essential to be able to identify which parts of the White Paper constitute the pay limits for the purpose of the order. In this case it is of greater consequence than in previous years. There is a distinction to be drawn between the practice in this year and that in previous years. The advice relates only to pay settlements that come within the 12 months after phase 2. The other matters referred to in the White Paper relate to post-phase 2 settlements, which are not covered by the legal effect of the order.

Mr. Raison

The right hon. Gentleman is being extremely patient and is obviously trying to meet my point. Surely, if we are defining which parts of the White Paper will be part of the law of the land and which parts will not, the proper pace to do that is in the order that brings them into effect. The Limits on Remuneration Order 1977 does not, as far as I can see, say that some parts will apply and other parts will not. It does not specifically give a legal basis to this sentence here and no legal basis to the rest. The order is, to say the least, imperfect.

Mr. Booth

The order refers to all the pay limits in the White Paper. There is a reference in the order to pay limits at large. I have sought to make clear the part for which there is legal sanction for a continuation of the Remuneration, Charges and Grants Act power, and that is contained in the text of Annex A. It is put there to make clear the way in which the order operates and gives legal sanction for the continuation of the pay policy with the limits defined in Annex A. By the same process, it makes clear that the statutory powers do not continue in respect of other parts of the White Paper. The text of Annex A makes perfectly clear that the TUC statement alone consitutes the pay limits for the period after 31st July.

Mr. Giles Shaw (Pudsey)

I think that the way in which the Secretary of State has sought to answer questions on this point is understandable, because he says that this is all part and parcel of the same proposition, but the fact remains that the fourth paragraph of the order that we are debating tonight states: And whereas Her Majesty has caused to be laid before Parliament a document (Cmnd. 6882) which sets out limits on remuneration for the period beginning on 1st August 1977 and so on.

The Secretary of State's comments to my hon. Friend suggest that the limits for remuneration do not in any way apply, because the only power of Cmnd. 6882 which applies to the Remuneration, Charges and Grants Act is the reference to the TUC statement, which does not contain any guidance whatever in relation to pay but only in relation to the 12-month application. Is there not a basic conflict, as my hon. Friend has suggested, between the White Paper, which refers to total pay, and the annex, which refers only to the 12-month rule?

Mr. Booth

There is no conflict, because neither document can operate in isolation. The White Paper pay limits cannot have any effect in relation to the Remuneration, Charges and Grants Act without the order. Similarly, the order itself cannot be react by anyone in such a way as to find out what the limits are. The limits can be found only by reference to the White Paper. The order makes this completely clear. It is not possible by reading the White Paper alone to deduce or find the way or the mechanism by which it is given legal effect under the Remuneration, Charges and Grants Act. That can be done only by the order before the House.

Mr. Giles Shaw

I understand what the Secretary of State is saying, but the fact remains that only a portion of Cmnd. 6882 is relevant to the Remuneration, Charges and Grants Act. That portion is clearly listed in Annex A, but we have here an instrument that says that Cmnd. 6882 sets out the limits on remuneration for the period, whereas it would be more correct to say that it sets out in Annex A the part under which Section 1 of the 1975 Act will heretofore apply. It does not suggest in that particular phrase that only the 12-month rule applies but states that only remuneration advice contained in Cmnd. 6882 applies.

Mr. Booth

No. If the hon. Gentleman reads the whole order carefully he will sec on the front page of the order that it is made very clear that the order does not refer to all remuneration for the year from 1st August 1977 to 1st August 1978. The first page makes clear that it applies only to remuneration determined under phase 2 for the period in which they run. It refers to a date up to 31st July or 12 months after the previous settlement, whichever is the earlier. Therefore, that reading is the ordinary, simple, common sense intelligent reading of the English of the order.

One cannot deduce that it applies to all remunerations in the period from 1st August 1977 to 1st August 1978. It is set out quite clearly that it applies only to different periods for different remunerations. Therefore, I think that one cannot but deduce that one has to read the order in conjunction with the White Paper to see what are the limits for those periods covered. As I have made clear in describing the purpose of the order, those periods are the periods of 12 months from the conclusion of the phase 2 settlements.

Mr. Ron Thomas (Bristol, North-West)

I am concerned about paragraph 4, which refers to Cmnd. 6882 setting out limits on remuneration. Leaving aside the increase, the other part of Cmnd. 6882 which sets out limits is on page 3, which contains repeated references to 10 per cent. I want an assurance that the order will not be interpreted in such a way as to set out limits on remuneration which in general terms will be 10 per cent. I do not want to give employers the excuse to say that they cannot exceed the 10 per cent. limit because a Statutory Instrument to that effect has been passed. Paragraph 4 refers to setting limits on remuneration, and it says also that those limits are contained in Cmnd. 6882. What are the limits in Cmnd. 6882 which apply to that paragraph?

Mr. Booth

I must refer my hon. Friend to the part of the order to which I referred the hon. Member for Pudsey (Mr. Shaw). That is the fourth paragraph, which reads And whereas Her Majesty has caused to be laid before Parliament a document (Cmnd. 6882) which sets out limits on remuneration for the period beginning on 1st August 1977 and ending with 31st July 1978 or twelve months after the date of the last pay settlement under Cmnd. 6507, whichever is the earlier. Therefore, the part to which those limits apply in the order can apply only for 12 months from the date of the phase 2 settlement. They cannot apply to the whole of the order and, therefore, they must be the part covered by Annex A. It would be nonsense to say that as a result of the order the 10 per cent. applies to phase 2 settlements. The order makes it clear that the phase 2 pay limits are amended only in so far as that is set out in Annex A to the order.

There is no possibility under the order in this form—I took great care to ensure that this would be the case—that it can apply to any other settlement. In other words, the statutory effect of the order cannot apply to a post-phase 2 settlement. It can only qualify a phase 2 settlement. The extent to which it can do that beyond the existing limits of phase 2 are the references in Annex A to self-financing productivity agreements and to pension settlements which, unless the order is passed tonight, will be cut off at the contracting-out point. If the order is passed, that limit will be removed and pension settlements can be made above the contracting-out limit.

The effect of the fourth paragraph is to make it quite clear that the continuation of the powers under the Remuneration. Charges and Grants Act is possible only in respect of those periods for those particular settlements and that the only way in which limits can be varied is according to what is set out in Annex A.

I omitted to answer the hon. Member for Pudsey on the relationship between Section 4 and Section 1 of the 1975 Act. The relationship is to be found in the reading of Section 4 which refers to the limits on Section 1. Therefore, this order adds new limits to Section 1 and in so doing has that effect on Section 4 by the reference in Section 4 to Section 1.

Mr. Arthur Lewis (Newham, North-West)

I am a little puzzled as to what "remuneration" really means. For example, does the 10 per cent. limit apply to top civil servants who have an office in Whitehall and who are supplied with a car to take them to Charing Cross Station or Victoria Station, even though the bus stops outside their office? That car is worth hundreds of pounds a year. I do not want to get at the civil servants. Ministers are in the same boat. They have houses, flats, furniture, heat and light and so on. Is that not remuneration? If I tell my constituents that Ministers get thousands of pounds a year in kind, how can I then tell them that they must ask for nothing extra in their remuneration? Would my constituents be allowed to ask that their house or car be supplied tax free?

Mr. Booth

My recollection is that the ministerial office what I occupied did not involve an increase in salary under phase 1 or 2. No right were granted to any Ministers to have their houses paid for.

I turn to the 10 per cent. earnings increase, to which the White Paper refers. It is not within the terms of the order. I would therefore be out of order were I to discuss it. I can discuss only the pay limits affected by the order. They are the pay limits for the period of phase 2.

The main purpose of the draft order on dividend control is to prolong powers to control dividends under Section 10 of the Counter-Inflation Act 1973. It arises out of the Government's White Paper "The Attack on Inflation after 31st July 1977" which was approved by the House in what I might term the confidence debate last week.

The reference to dividends is in paragraph 15. The draft order prolongs the controls until 31st July 1978, after which all legislative authority ceases. There are no changes in the form of controls compared with those in phase 2. The statutory limit remains at 10 per cent. with a range of provisions for dividend increases above the limit in certain circumstances, notably for the raising of new capital for investment.

The order also prolongs Section 8. This gives power to the Government to modify statutes relating to prices. It was used to ensure that the price control could override any previous statutory provisions in relation to prices, but it has not been needed for some years. It is unlikely to be needed for the forthcoming year. The only reason for continuing this is because it is necessary to maintain the validity of orders made under that section.

The philosophy behind the Prices Investigation and Examination (Exceptions) Order is that there are certain sectors which, for one reason or another, are not susceptible to control under the powers provided in the Price Commission Act This is not a new concept. Successive Price Code orders have also made provisions for exceptions where particular prices or charges could not be meaningfully controlled under the Price Code.

The exceptions order and the Price Code share another idea in common—namely, that the number of exceptions should be kept to the bare minimum. We promised that exceptions would be minimal, and they are. To do otherwise would detract from the effectiveness of the controls. The exceptions order covers only a fraction of economic activity, and there are no major changes. There are only two exceptions—car parking charges levied by public authorities and local authority trading services which are not excluded from examination.

Mr. Michael Neubert (Romford)

The right hon. Gentleman should not play down the significance of exceptions, because under paragraph 7 of the Treaty Establishing the European Coal and Steel Community the sale of coal and steel is excluded. Does that not have a significant effect upon our economy?

Mr. Booth

I was not playing down the exceptions. I shall seek to describe briefly the reasons for the exceptions, including the particular one to which the hon. Member referred.

Article 2(1) provides that prices and charges specified in Parts I, II and III of the schedule to the order are to be outside the scope of investigations into price levels under subsection 5(1)(a) of the Act. These same prices and charges will not be subject to any requirement to prenotify increases to the Price Commission. As a result, they will automatically be outside the scope of investigations into price increases under Section 4. The effect, therefore, of the exceptions made by Article 2(1) is to take prices and charges listed in the schedule out of all forms of investigation.

The coverage of the order is much the same as for exemptions from the Price Code. It falls into three broad categories.

First, there are those areas which are subject to international obligations, such as those to which the hon. Member for Romford (Mr. Neubert) referred—coal and steel—or are just simply outside United Kingdom jurisdiction; for example, the price of exports, and the price of imports on first sale into the United Kingdom.

Secondly, there are the areas in which prices and charges already letermined by a way as to make it impossible to control them—for example, goods sold by auction and prices determined by, or in relation to, commodity markets.

The third type of exception relates to prices and charges already determined by bodies other than the Price Commission—for example, bus fares determined by the traffic commissioners and domestic air fares determined by the Civil Aviation Authority.

It makes no sense in that sort of case to double bank controls when there are already other bodies with responsibility for supervising and controlling prices or charges.

We do not propose to carry over all the exceptions from investigation into exceptions from examination. There are two reasons for this. There are sectors in which, although prices or charges at the level of the individual firm cannot be controlled, the whole sector could be subject to meaningful control through an examination. The second reason is that there will be times when there is a strong case for sectoral examinations of a purely fact-finding nature, of the sort that the Price Commission has carried out under the powers contained in the Counter-Inflation Act 1973.

It is also likely to be the case that particular examinations will range over a wider field of investigations into individual firms. In such cases, the Commission will need fairly general terms of reference if it is to carry out a successful examination. If we cast too wide the net of complete exclusion from examination, we run the risk of inadvertently preventing the Commission from looking at prices and charges about which it needs information if it is to make a comprehensive report on other prices which are actually the subject of examination.

We therefore propose two types of exception from the provisions of the Bill dealing with examination. A very small number of sectors will be exempt, under Article 2(2) of the draft Order, from Section 10 of the Act and therefore totally outside the scope of examinations. These are set out in Part I of the schedule. Hon. Members will see that the exceptions consist basically of the areas in which prices or charges are already determined by other bodies.

The second category of exceptions is set out in Part II of the schedule. These are the sectors which will be liable only to fact-finding examinations. The exceptions in Part III of the order are exempt from investigation but remain fully susceptible to the examination system.

Knowing that there are time limits on this debate, I have tried to describe briefly the purpose and mechanisms of the orders. My hon. Friends the Minister of State, Treasury and the Minister of State, Department of Prices and Consumer Protection are with me on the Front Bench to listen to hon. Members' comments, which we shall take into account in the administration of the orders if they are passed by the House, and to ensure that the three Departments concerned with the orders can contribute in the reply to the debate.

I commend the orders to the House.

9.39 p.m.

Mrs. Sally Oppenheim (Gloucester)

There were times during the exchanges which have just taken place when I thought that perhaps I might be winding up the debate instead of speaking during its opening stages. I listened with great interest to the remarks of the Secretary of State for "Unemployment" It is perhaps unfair to give him that particular title. It should be more appropriately given to his right hon. Friend the Secretary of State for Prices and Consumer Protection, because that is where the trouble will lie one year after the Price Commission Act has been enacted.

I am, however, glad that the right hon. Gentleman directed most of his remarks to one of the orders that we are debating which is known as the so-called "pay sanction" order. He has demonstrated in a way that no one could have demonstrated better that the pay sanction itself is so translucent and ephemeral that it should have been written in invisible ink on cellophane paper.

Nowhere is it better illustrated than in the relationship between the order and the White Paper "Attack on Inflation after 31st July 1977" that phase 3 is dead and buried. Whichever school of thought one belongs to with regard to pay policy, two facts are inescapable. The first is that the Government have said categorically that phase 3 of wage restraint was crucial to their survival and to economic success. The second fact is that there is no phase 3 and that this order and the White Paper are merely window-dressing.

The White Paper itself, to which the order closely relates, is merely a sheep in wolf's clothing. The situation that has arisen is one that I predicted as long as nine months ago when I warned that prices were still rising so fast that the outcome of any wage negotiations this summer would be in jeopardy. My right hon. Friend the Leader of the Opposition predicted it from the first moment that the Government produced their "Attack on Inflation" White Paper and embarked on their pay policy. She warned of the difficulty of re-entry, particularly if it occurred at a time when inflation had not been brought under control. That is exactly what has happened, and that is why we have this white sheep of a White Paper and this order tonight.

It was inevitable from the beginning that differentials would have to be restored at this stage, but the continuing high rate of inflation has added to the pressures that would have been there in the first place. Of course, there is nothing in the White Paper or in the order—as the Secretary of State has confirmed, because it is impossible—to set the single-figure limit for pay settlements on which the Chancellor of the Exchequer and the Prime Minister have laid SD much emphasis.

The Secretary of State confirmed in a reply to his hon. Friend the Member for Bristol, North-West (Mr. Thomas) that there is nothing whatever in the White Paper which imposes a single-figure pay settlement requirement. Now we have the Government producing an order which is supposed to impose a sanction against a breach of the Pay Code which is so diaphanously clad that it is almost indecent.

Nowhere are any pay limits defined or agreed—I stress the word "agreed"—outside the short-term 12-month rule, and even that will have very little effect after 1st August this year.

Mr. Ron Thomas

On many occasions in the House the hon. Lady has made it clear that she is absolutely opposed to any kind of control on prices. She is now saying that she wants to see control over wage increases. Is that still the case?

Mrs. Oppenheim

The hon. Gentleman should have listened more carefully to what I have said. I said that at this moment of time it was an inescapable fact of life that we would not get the type of pay agreement which the Government set out to get because it was absolutely impossible in the circumstances that prevail today. I have said, and my right hon. Friend the Leader of the Opposition has said, that at this stage in the proceedings there has to be a restoration of differentials, but inevitably, because of the levels of inflation, they will be higher than they would have been otherwise and this will have an effect on every pay sector.

What I am now saying is that this White Paper and this order do not constitute a pay policy at all. They are merely a whitewashing act to disguise the fact that the Government have not got a phase 3 of pay policy.

As my right hon. Friend the Member for Lowestoft (Mr. Prior) said in a letter on 25th July, 'In the first place, the TUC advice attached as an Annex to the White Paper"— to which my hon. Friends the Members for Aylesbury (Mr. Raison) and for Pudsey (Mr. Shaw) have referred— only says that negotiators should have settlements not sooner than 12 months from their Stage 2 settlement and that they should not postpone their Stage 2 settlement till after 31st July in the hope of getting more than. … What it does not say is that settlements in the coming year should last for 12 months. In other words, it says "You can have two, three or four settlements—as many as you like—during the next 12 months" and that is what the Government are representing to the House as being a pay policy.

If we look at the order itself, we see that it refers to limits set out in the White Paper. We look at paragraph 11 of the White Paper to see what the Government intend. The most that we get is that they seek to ensure that the national target is met. Is that a pay policy—seeking to ensure?

Then we turn to the back page of the White Paper and to the sentence to which my hon. Friend the Member for Aylesbury referred. We see that that in turn refers to a statement by the General Council of the TUC. There we see not a word about agreement with the Government. All that it says is that the General Council attaches the utmost importance to the continued observance by negotiators of the guidelines laid down—

The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser)

Does the hon. Lady advocate a statutory numerical pay policy? If not, what is her policy?

Mrs. Oppenheim

It appears that the Minister of State has not been listening either. I am saying that the Government have not got a pay policy at all. What they are presenting as a pay policy is not a pay policy.

If we compare the White Paper which we are discussing in relation to this order with previous White Papers, we see that last year there was a definite agreement between the TUC and the Government and that it was referred to. If we look at the White Paper of the year before, we see that there were to be limits specifically described by the Government in the White Paper itself.

The Government are saying that they have a pay policy. There is no pay policy in this order, and there is no pay policy in the White Paper. What we have in the White Paper is a veritable morass of ambiguity and weasel words attempting to cloak the reality that there is no pay policy.

I am pleased that the Minister of State, Department of Prices and Consumer Protection will be replying to this debate. He will have the responsibility in his Department for the imposition of the pay sanctions, such as they are, through prices. Of course, he was formerly in the Department of Employment before his very well deserved promotion. He knows all about pay policies because he had special responsibility back in 1974, during the proceedings on the 1974 Prices Bill, for the abolition of the then Pay Code.

In Committee the Minister of State waxed eloquent on the subject. In one speech he said: a statutory policy has proved with experience to be unworkable.… It does not work. Day after day, Ministers in my Department are faced by delegations with problems about the statutory incomes policy. Not just one or two but sometimes as many as five delegations in five minutes. The Department must have been very busy over the past two years. He went on to say, with remarkable prescience: One can so often create a situation in which ordinary reasonable people, because of the unworkability of the policy and frustrations it causes, suddenly become Samsons bringing the temple around them down in ruins. That was a marvellously prescient statement. But that was not all. His prophetic insight went further than that. He went on: the longer the statutory policy remains in force, the more difficult it is to rehabilitate free collective bargaining, and the more difficult it is to redress the anomalies and grievances and the inequalities which would have grown up during the period of the statutory policy."—[Official Report. Standing Committee D, 21st May 1974; c. 465–7.] I am delighted that the Minister of State will bring his expertise to tell the House exactly how pay policies do not work. After he has told us that, no doubt he will say how his Department will operate a pay sanction through a prices policy.

Mr. J. W. Rooker (Birmingham, Perry Barr)

On a point of order, Mr. Deputy Speaker. Will you please confirm to those of us on the Back Benches that we shall have an opportunity to indulge in the same long-ranging debate on pay policy and counter-inflation policy as that which we are hearing from the Opposition Front Bench at present?

Mr. Deputy Speaker

It is very difficult to anticipate what line a debate can take, but the Chair will certainly give fair play within the terms of the matters under discussion.

Mrs. Oppenheim

As it happens, I had intended to turn now to the aspect of the order that disturbs us on this side of the House more than anything else. We warned on each occasion that a pay sanction was imposed that it was unfair and wrong to place the onus for keeping within the pay limits on employers and to punish them for something over which, in all good faith, they might have no control. It is like putting two boxers in a ring with one having his hands tied behind his back.

It is true that both sides of industry have a responsibility in this matter. But this sanction makes it a very one-sided affair. It is potentially all the more serious since this provision overrides the already inaccurate safeguards in the Price Commission Act itself. Very often smaller companies which are near safeguard levels will have to pay more merely to keep up with the perks and pension advantages offered by bigger companies. We warn very emphatically of the serious effect that this sanction can have if it is applied against companies with very low levels of profitability. We are in any case utterly opposed to this principle.

We should also like to hear more from the Secretary of State, and from the Minister of State when he winds up, about how the rules are to be applied to public sector employers as opposed to private sector employers, because public sector employers are not held to any percentage limits under this order. They are held only to a short-term time factor. What sanction will apply to public sector bodies if they merely go further and further into deficit to finance pay claims in breach of the albeit very flimsy provisions in the order? Or will it be a question of the Government bailing them out year after year by writing off their loans, without coming in any way under the cash limit provisions which will he operating in the next year and a half?

I honestly do not suppose that this order is to be taken seriously by anyone. In laying it the Government are merely going through the motions of acting out the charade that phase 3 have now become. It is for us to denounce this subterfuge for what it is.

As for the other orders, the Price Investigation and Examination (Exceptions) Order 1977 is unexceptional and self-explanatory. I think that the Secretary of State explained it very well. The order providing for dividend control will be dealt with fully by my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson), who will wind up for the Opposition.

I know that the Labour Party would like to see all equity investment in the hands of institutions, but unless we can encourage small investors to go into equities there will be very little of the fundamental expansion that we need if we are to return to fuller employment. When we talk about individual investors we are not talking about big individual investors, because dividends make no difference to them. They pay a great deal of tax on them. We are talking about the small individual investor and the pension funds. Dividend control makes a great deal of difference to them.

It is true that this dividend control will last only for another year, but it was intended to be a quid pro quo for a year of pay policy, and the Secretary of State for Prices and Consumer Protection has already made clear that there is no formal pay policy in the sense meant by the right hon. Gentleman when he made that proviso. Therefore, it is inconsistent not only to continue profit margin control but to continue dividend control. However, it is an inconsistency which I do not expect Labour hon. Members to appreciate.

It is perhaps appropriate that we should have a clutch of orders in practically the last debate on Government business this Session, orders which are so characteristic of what has preceded them from the Government throughout the Session. They represent subterfuge, injustice, inequity and distortion. They will do nobody any good, and they have a potential to do a great deal of harm. As such, they constitute a very fitting epitaph for the Government's business at the end of this Session.

9.55 p.m.

Mr. Ron Thomas (Bristol, North-West)

Whenever the hon. Member for Gloucester (Mrs. Oppenheim) speaks in the House, she says that she is completely opposed to any control on prices, but by implication she makes it clear that she would like to see control on wages. I find it nauseating that Opposition Members should continue to shed crocodile tears about the number of people unemployed when it is essentially the Tory laissez-faire policies that the Government have been pursuing that has created the unemployment. If the Government take much more advice from the Opposition, the unemployment figure may go well above 2 million.

One myth which the figure of 1.6 million unemployed has exploded, I hope once and for all, is that one man's wage increase means another man going on the dole queue, or rubbish of that sort, which occasionally we hear from hon. Members on both sides of the House. Working people have accepted cuts in their standard of living and have seen stagflation biting deeper into it.

Although I have been advised by my hon. Friends that I am chasing something that is not there, I would point out that the fourth paragraph of the Limits on Remuneration Order refers to setting out limits. If we are concerned only with the 12-months limit, we need have regard only to Cmnd. 6507.

Mr. Booth

Had I referred only to Cmnd. 6507 and not to Cmnd. 6882 it would not have been possible, within the provisions of phase 2, to extend claims for pension improvements beyond a certain time or to negotiate within phase 2 a self-financing productivity agreement. It was necessary to make the reference to the other White Paper so that the adjustments could take place within phase 2 settlements.

Mr. Thomas

I thank my right hon. Friend. I take it from what he said that I can advise shop stewards and trade union negotiators in my constituency that nothing in the order in respect of phase 3—if I may use that term—negotiations will enable an employer to say that he cannot give an increase of more than 10 per cent. I want to be able to advise negotiators in my area of Bristol and in the West Country that they can legitimately make and pursue wage claims of more than 10 per cent. without the Government calling in aid Section 4 of the Remuneration. Charges and Grants Act or any other legislation. I should like the Minister who replies to the debate to make that clear.

I am not happy with the 12-month rule. It hits at workers in local authorities and those who come within joint industrial councils and wages councils who negotiate pay claims once a year. They tend to be lower-paid workers, because these pay policies—

Mr. George Cunningham (Islington, South and Finsbury)

On a point of order, Mr. Speaker. At 10 o'clock you will be obliged to put the motion on the Order Paper for the suspension of the rule. I wonder whether you can tell us about the situation on the Housing (Homeless Persons) Bill, because the suspension motion as drafted includes not only the Bills specifically mentioned therein but any other messages from the House of Lords. The message that matters is that which contains the amendments from the Lords on the Housing(Homeless Persons) Bill Are these amendments available? If not, when will they be available? Also, am I right in saying that there are about 60 amendments to the Bill for the House to consider?

10.0 p.m.

Mr. Speaker

I shall put the business motion and then I shall reply to the hon. Member's point of order.