PAY POLICY (GOVERNMENT POWERS)

HC Deb 07 February 1978 vol 943 cc1247-378

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn]

4.0 p.m.

Mr. Robert Adley (Christchurch and Lymington)

On a point of order, Mr. Speaker. I shall detain you only briefly because I realise that parliamentary hypocrisy is not within your sphere, but the voice and vote rule in "Erskine May" is clear. I raise the question of the hon. Member for Bristol, North-West (Mr. Thomas), who is not in his place but who, so far as I can ascertain, voted against the Bill proposed by my hon. Friend the Member for Ashfield (Mr. Smith). It will be within your knowledge, Mr. Speaker, that the hon. Member for Bristol, North-West is one of those who has purchased his own council house. Would you care to give a ruling on the ethics of this?

Mr. Speaker

Every hon. Member in this House is free to vote as he decides.

4.3 p.m.

Mr. John Nott (St. Ives)

I must open this debate by declaring an interest. [Interruption]. No, I am not a director of the Sun Alliance, nor, if I may say so to the Chancellor, of a Liberian consultancy company nor, for that matter, am I a director of an equally and perhaps more respected company—the Commercial Bank of Wales. What is perhaps more relevant to this debate is that I am not and nor are my right hon. and hon. Friends lickspittles of the trade unions, allowing negotiators, particularly in the road haulage industry, to force up wages way beyond the 10 per cent. guidelines and then kick the crippled company and workers in the teeth with sanctions when they are on the floor. This is a new kind of Liberal principle of the kind that no doubt cements the Lib-Lab pact together.

My declarable interest is that, together with millions of other citizens, I have a greater respect for the rule of law than for the "Committee on Public Safety" which sits on the Government Front Bench. Together with those millions of other people I have my savings invested in a life assurance policy. That is probably an appropriate place to start.

Last Thursday, before the Government began their rather hasty retreat from their position—

Mr. Max Madden (Sowerby)

On a point of order, Mr. Speaker. Twice in the course of his opening remarks the hon. Member for St. Ives (Mr. Nott) mentioned a declarable interest. I did not detect what that interest was. In the Register of Members' Interests, which, alas, was last published in May 1976, the hon. Member for St. Ives was listed as having one directorship and as being a legal and financial adviser. Is it not in order for him to declare for which firms he is legal and financial adviser? In the business background of MPs prepared by Mr. Andrew Roth the hon. Member was listed—

Mr. Speaker

Order. Every hon. Member takes responsibility himself for any declaration of interest.

Mr. Nott

I shall respond to the hon. Member for Sowerby (Mr. Madden). I shall be happy to give him a complete list at any time.

Hon. Members

Now.

Mr. Speaker

Order. I object strongly to hon. Members barracking from a seated position. That is unfair in this House.

Mr. William Hamilton (Fife, Central)

On a point of order, Mr. Speaker. Even if the House does not request it, the hon. Member who is addressing the House is, by convention, obliged to give details of his interests, which the hon. Member for St. Ives (Mr. Nott) has not given.

Mr. Speaker

Order. The hon. Member for St. Ives (Mr. Nott) might have been about to declare his interests, but it is up to him.

Mr. Nott

Every declarable interest that I have is in the Register of Members' Interests. Every single one is there.

Mr. Madden

Further to that point of order, Mr. Speaker. I should be grateful for your guidance. I have always understood that, regardless of what an hon. Member enters in the register, it is incumbent on him to declare his pecuniary interests. I referred earlier to the publication which shows that the hon. Member for St. Ives was a company chairman and director of six companies. Would it not be better for him to clear up this matter now and give the House all the information about the directorships that he holds?

Mr. Speaker

Order. I can repeat only what I have already said. It is up to the hon. Member who is addressing the House to decide what he wishes to declare. It is not for me to say.

Mr. John Mendelson (Penistone)

Further to that point of order, Mr. Speaker. On such occasions, when you or your predecessors have been in the Chair, it has never been sufficient for an hon. Member to say either that his interests are in the register or that he will tell an hon. Member privately about them. The hon. Member for St. Ives (Mr. Nott) was called upon to declare his interests in the House. We are asking you, Mr. Speaker, to say whether it is custom and practice for an hon. Member to declare his interests before he makes the speech.

Mr. Speaker

I have never known an hon. Member who was not allowed to speak because of the way in which he declared his interests. This is a matter for the hon. Member concerned.

Mr. Nott

I was going to say that I happen to have an endowment policy with the Sun Alliance insurance company, and I do not know whether there is anything reprehensible about that. A great many other people in this country also have endowment policies with that company. As for the six directorships mentioned by the hon. Member for Sowerby (Mr. Madden), I no longer hold any of them.

Mr. William Hamilton

May I ask the hon. Gentleman when he gave them up and whether he holds any others?

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

On a point of order, Mr. Speaker. My hon. Friend has made it clear that he declared his interest when he opened his speech and that all of his interests are contained in the Register of Members' Interests. In view of that, will you kindly ask hon. Members to withdraw the disgraceful slurs, which were made simply in order to try to disrupt my hon. Friend's speech, because hon. Members are so acutely sensitive to the issue we are debating this afternoon?

Mr. Speaker

Order. I believe that the hon. Member for St. Ives is well capable of looking after himself.

Mr. Nott

Thank you, Mr. Speaker, but I am not necessarily in any hurry to pass over this matter. If Labour Members wish to spend much of the debate discussing the Register of Members' Interests, I am perfectly happy with that. If they ask me what they want to know, I shall gladly tell them, but not, I think, on this occasion.

Last Thursday, before the Government began their retreat on the black list question—yesterday they found the opportunity in the Court of Appeal to impart blame for their errors on to junior civil servants, which was hardly a courageous thing to do—the Prime Minister found the case of Sun Alliance rather entertaining. I mention it at the outset. I have an endowment policy with that company because I consider it to be a large company which is well able to defend itself, unlike most of the Chancellor's other victims. In this way I think that Sun Alliance provides a rather useful test case for the House.

Mr. Robert Kilroy-Silk (Ormskirk)

Given that the black list has been in operation for two years and that the majority of companies on it have been small or minor companies, why has it taken the Opposition so long to arouse their indignation and talk about this issue? Is it because we are now dealing with a company on the board of which sit two Conservative Members and a former Conservative Member? Is it just that the Opposition are concerned about the interests of their friends rather than the interests of the workers?

Mr. Nott

My hon. Friend the Member for Melton (Mr. Latham), to whom we owe a great deal, raised this matter as much as a year ago. My right hon. Friend the Member for Lowestoft (Mr. Prior) raised the general background to this matter with the Chancellor of the Exchequer in August last year. I referred to the first company that was blacklisted —James Mackie and Sons of Belfast—shortly afterwards on 7th November, as reported at column 296 of the Official Report. If the hon. Member is asking why we have not devoted a Supply Day to the subject before, the answer is that we have had the Polish shipbuilding order, unemployment at record levels and a series of other scandals, and we have to take our Supply Days as they come along.

I come back to the case of Sun Alliance. In saying that I believe that this would be a good test case for the courts, I am not saying that the people of this country want to be governed by judges. They do not. Even less, however, do they wish to be judged by administrators—and I paraphrase, I think, a fine comment of Lord Devlin.

However, since Parliament is being denied, in this whole question of the black list, its proper function, I think that the powers of Government to direct the level of insurance premiums for reasons of public policy unconnected with those premiums, raise very interesting legal questions. They are somewhat similar to the Tameside case, and other cases in which the Government have recently been involved.

I therefore say to the Secretary of State for Trade and his Under-Secretary that instead of threatening action under Section 9, will the Government please go forward with their threat? We are still waiting. What is the delay? Sun Alliance has said that it is not going to change its pension scheme. Why are we still waiting for the Government to take action in the courts under Section 9 of the Counter-Inflation Act? The threat has been made let it be brought forward into the courts. We are waiting for it.

I would be confident in the legal outcome of such a case, fortified primarily by the knowledge—and I am not a lawyer—that the Attorney-General takes the opposite view to myself. With his track record I do not think that the Opposition need counsel of their own. I must confess that the position of the Attorney-General in this whole matter is becoming more and more obscure. Originally he was to wind up the debate, but he is not now to do that. The Attorney-General, who has been awarded already, for his Services to Socialism, the Clay Cross—

Mr. Dennis Skinner (Bolsover)

It is time we put paid to this myth about Clay Cross badges being awarded to the Attorney-General. The facts are that the Clay Cross councillors have been cleared out of office as a result of legislation. They have had their possessions taken away and they have been made bankrupt. Those are the facts. It is time that the Opposition understood that their actions, aided and abetted by a few Labour Members, have led to the current position.

Mr. Nott

We have quite enough to deal with in this House without actually engaging in private quarrels between the hon. Member for Bolsover (Mr. Skinner) and the Attorney-General. However, there seems to be a political aspect to this case as well. The Under-Secretary of State for Trade is threatening a company which is the guardian of the lifetime savings of hundreds of thousands of families, saying that he will vary premiums for an entirely unrelated object of public policy. That, I suggest, is just the tip of the iceberg. For what the people of this country need to be reminded is that it is still the official policy of the Labour Party not just to vary insurance premiums but to direct savings and to nationalise the insurance companies. That is no doubt in order that people's savings can be invested in building ships for Poland in Labour marginal seats and factories for Ford in South Wales.

The ancient mariner who, I am afraid, is not able to be here and has courteously apologised for the fact—[Laughter.]—I mean that seriously. I have a courteous apology from the Prime Minister for his absence. However, he may be sure that the albatross of insurance nationalisation will not starve for want of food from us. It is the Labour Members below the Gangway who want to pluck it and hang it around his neck.

My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) introduced a new clause into legislation on Report in 1973 in the wake of the Vehicle and General collapse and as part of a full body of law to control prices and incomes. There was disagreement with that policy at the time. However, in 1973 there was no doubt as to the intentions of the Executive. Nor was there any lack of opportunity for Parliament to amend the legislation. The policy was specific, even-handed and clear. And, of course, it is a proper subject of debate—which we could argue for the umpteenth time today—whether it is the business of the Government to dictate individual private sector settlements.

We have made it clear that we are against individual limits. But if the Government claim to be in this business, as the present Government do, I think that the proper question for them today is whether they should operate by force of law or operate by blackmail, and in both cases, whether they should proceed by stealth or by publication of the facts.

Just a few moments ago, at Question Time, the Prime Minister said that he could not see that there was anything secret at all about the so-called black lists. Yet only yesterday the Chief Secretary, who is to wind up this debate, answered a Question on this very point from my hon. Friend the Member for Blaby (Mr. Lawson). My hon. Friend asked whether the Chief Secretary would list the names and addresses of the 19 firms referred to as blacklisted, and specify the Government discretionary action taken or threatened in each case. The Chief Secretary answered No".—[Official Report, 6th February 1978; Vol. 943, c. 419.] However, only a few moments ago the Prime Minister said that he saw no reason for any secrecy in this case, so still it is quite unclear what the Government's policy actually is.

Mr. Adley

Does my hon. Friend recall that just now the hon. Member for Ormskirk (Mr. Kilroy-Silk) told us that the black lists had existed for two years? Can he recall hearing, as I have heard on a number of occasions, the Prime Minister denying that there was any blacklist?

Mr. Nott

I think that is right. The Prime Minister no longer denies it.

Of course, if a Government operate by force of law, their quarrels are often chosen for them, whereas if a Government operate by blackmail, by threat, by intimidation and by ministerial edict, the Government are free to choose their own quarrels, to pick off their own victims, to make up the rules, and even to cheat as they go along.

For instance, if Ford wants to build a plant, with £70 million of taxpayers' subsidy, just outside the Prime Minister's constituency, no sanctions are imposed. If the miners near my constituency in Cornwall freely negotiate through the Transport and General Workers' Union an agreement for new underground working and a settlement far below that now offered by the Government to the National Union of Mineworkers, sanctions are applied against their jobs.

Mr. Thomas Swain (Derbyshire, North-East)

Will the hon. Gentleman please define whether he is referring to coal miners, to tin miners, or to gold miners?

Mr. Nott

The hon. Gentleman knows quite well that these are tin miners. With his reputation, we should be delighted if he came there at any time. The point that I wish to reaffirm is that no sanctions were taken against Ford but sanctions are taken against miners in Cornwall for no reason that anyone can yet understand.

If one is a Midlands haulier and surrenders without a whimper to the threats of Mr. Alan Law and settles at 15 per cent. without informing the Department of Employment, possibly one escapes the sanctions. But if one holds firm in an attempt to meet the present guidelines and tries to withstand a strike, without any help whatsoever from the Government, one is then picketed, threatened and bludgeoned, with the help of the Government's own legislation to strengthen the power of the trade unions, and if in the end one is forced to cave in, one is placed on the black list. That is the nature and the arbitrariness of the policy that we have before us.

What then is our charge against the Government? It is not that they do not possess wide-ranging discretionary powers under Section 2 of the Export Guarantees Act or under the Counter-Inflation Act, and of course, they possess great powers in relation to public purchasing and employment subsidies. The Government possess these powers, and it is for the courts to decide how these discretionary powers may be exercised in accordance with the rule of law.

Our contention is that the Government are abusing the law, political practice and our whole tradition, by hinting, implying and threatening the use of these powers to uphold a pay limit of 10 per cent. which has no statutory foundation whatsoever, and that they are doing so in the most arbitrary way. They are protecting their political friends, attacking their political enemies, favouring Labour-held constituencies, abusing Conservative-held constituencies, upholding the right of one side of industry to picket and to force excessive settlements, and then punishing the workers and the other side of industry for giving in. At the centre of this exercise is one man, the Chancellor of the Exchequer, who thinks like a Marxist and behaves like a bully.

Let me examine for a moment the basis of the so-called limit of 10 per cent. The limit of 10 per cent. is said to stem from Cmnd. 6882, issued in July 1977. The relevant paragrahs read as follows: The Government must therefore urge that the general level of pay settlements should be moderate enough to secure that the national earnings increase is no more than 10 per cent. In a period which must mark an orderly return to normal collective bargaining, the Government agrees with the TUC that it is not possible to stipulate a specific figure at which individual negotiators should invariably settle but it must seek to ensure that the national target is achieved. Then, the much-quoted paragraph 16—this paragraph is quoted in all the blacklist summonses that have gone out throughout the country—states: Where a firm has reached a settlement which is quite clearly inconsistent with the policies set out in this White Paper, the Government will take this into account in public Purchasing", —and so on. It says: the policies set out in this White Paper —and the White Paper makes it absolutely clear that the Government agrees with the TUC that it is not possible to stipulate a specific figure". It could not be more clearly stated than it is in paragraphs 10 and 11.

Mr. Skinner

The hon. Gentleman supported it and voted for it.

Mr. Nott

In order to be absoutely sure that we understood correctly the Government's White Paper "The Attack on Inflation after 31st July 1977", my right hon. Friend the Member for Lowes toft wrote to the Chancellor of the Exchequer, and he had a reply on 10th August, just after publication of the Government's latest White Paper on pay. This letter was published in the Press. In answer to my right hon. Friend, the Chancellor said: First of all let me say that I am glad to see that the Opposition endorses the Government's guidance that the increase in total earnings in the economy over the next twelve months should not exceed 10 per cent.…the right course is to restore a system of responsible pay negotiations, free from direct control: that at any rate was the message conveyed by Sir Geoffrey Howe…He went on to suggest —the Chancellor was referring to my right hon. and learned Friend the Member for Surrey, East that there needed to be an understanding about the total increase in pay that the economy could afford, but that it would be 'unthinkable' to translate that into an individual flat-rate figure. The Chancellor then said: I share this view as you know. That was on 10th August.

The Chancellor's letter then went on to say: We believe in a voluntary policy", and that notifications to the Department of Employment should be on an entirely voluntary basis. The Chancellor also said: Negotiators are free to make up their wage settlements in the coming round in whatever way best suits their circumstances. The letter concluded: the implication is that most settlements will have to be well within single figures. But it is common ground between us that we cannot specify the level of particular settlements in this transitional period, and so it is misleading to talk of 'exceptions' as though there was some rigid imposed level of settlements. There is not the slightest doubt in anybody's mind that the 10 per cent. guidelines were never intended, either in the White Paper or in the Chancellor of the Exchequer's confirming letter, to relate to specific settlements. The matter is clear beyond peradventure.

So, do not let us confuse, or let the Government confuse us about, the essential difference in law, as I see it, between stage 2 and the 12-month rule, and the 10 per cent. guidelines, because they are of a fundamentally different nature. In the latter case—and several of the companies on the black list come within stage 3 because they have settled over 10 per cent. but have not breached the 12-month rule—we contend that we have the most questionable use of discretionary powers, possibly contrary to the law—and that will have to be tested in the courts—applied in an entirely arbitrary manner, and used in support of a pay limit which the Government and the Chancellor of the Exchequer have said does not exist.

What is the excuse for this behaviour? Why—it is the national interest! I must tell the House that to invoke the national interest, to invoke necessity. is the most pernicious aspect of the whole affair, and to imply that the opponents of the blacklist policy are unpatriotic, are obstructing the fight against inflation and that they do not care about prices is a calumny that is characteristic not of Westminster but of the Kremlin.

I expected that to produce some merriment on the Government Benches because the same look of stupefaction comes across the faces of some Labour Members when we talk about the rule of law as flits across the face of a Marxist when one talks of human dignity. Some Labour Members simply do not comprehend what we mean by the rule of law.

What is happening is that it is being said that the "end" of lower prices justifies any "means" of obtaining them; that those who disobey the ministerial diktat should be punished and other dissenters who agree with those who have broken the 10 per cent. are unpatriotic for supporting them. It is not the Constitution upholding rights which matters, but the security of the State—precisely the type of argument that we hear in many other countries of the world.

For Ministers who have presided over record price rises in this country, record unemployment, a record slump in industrial production and a record fall in living standards to preach to us about success in the battle against inflation, when they fought the last election on the basis that inflation was down to 8.4 per cent. and it then leapt to 30 per cent., is the supreme use of doublespeak. I repeat, it is the supreme use of doublespeak.

What is the lesson of the past few weeks? It is that the Government and their Ministers have no real understanding of or respect for the traditions and laws of this country. When Ministers cheat in the Division Lobbies to prevent a vote of constitutional importance, they do not resign. One man comes along and apologises for them in the House.

When they threaten and intimidate employers to abandon contracts into which their workers have entered, the Attorney-General is sent to the court to deny that that is the Government's intention, and he does so, in my view, by fudging the issue by apparently referring only to awards by wages councils. That is my definition of what the Attorney-General said yesterday, and in the process he laid some blame on, or apologised on behalf of, some poor official in the Department of Employment. I should not have thought that it was necessary to mention him. The Government are responsible for their own policies.

When the Government threaten and their bluff is called, they retreat, but when they see a small company, with perhaps 12 employees, that is unable to challenge them in the courts, they move forward. In spite of that, there are thousands of business men and hundreds of large companies that are frightened and intimidated by the "Committee for Public Safety" sitting on the Front Bench opposite, and it is only because of that that they have been able to get away with this kind of policy for so long.

I say to the business men and to the workers whose jobs are at stake in those companies that have been blacklisted, and also to the business men and workers in the companies that have not yet been blacklisted, that if they are incapable of seeing what will happen to this country if they do not speak up, I am sorry, indeed, because this is an interesting example of what Socialism is all about.

4.35 p.m.

The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley)

I want to concede, and perhaps admit, at once that the charges that have been made against the Government over the past week are serious, and I propose to respond to them seriously. The House will therefore understand why I shall not spend very much time dealing with the speech that preceded mine. Frankly, I find that "Reichstag fire" sort of speech rather embarrassing, not because it is remotely relevant but because it is demeaning to the entire House, as I shall show towards the end of my speech. The Leader of the Opposition does it far better than does the hon. Member for St. Ives (Mr. Nott), and did so on Saturday afternoon.

Two serious charges are made against the Government. The first is that we have used our powers to place contracts and to purchase goods and services and to provide and withhold discretionary financial assistance in support of our counter-inflation policy. That allegation is correct. We have done so and will continue to do so whenever the law and constitutional propriety permit. I think that Conservative Members find it difficult to support the rule of law by shouting down Government speakers. There is a certain inconsistency.

What we have done we describe in paragraph 16 of the White Paper "The Attack on Inflation after 31st July 1977". That White Paper was debated and approved by the House last summer. It remains our policy to do what we can to encourage and induce companies to make wages settlements that are within the guidelines set out in our White Paper. That is the first charge.

The second charge—and I have no doubt that Tory Members will want to cheer every time I describe the elements of it—is that the use of our powers is not justified in law, that they are applied furtively or even secretly, that they are used capriciously and that the companies to which they are applied are not told or are not given an opportunity to complain or appeal. Those accusations are wholly preposterous.

I do not for a moment propose to argue that ends justify means or that occasionally that which is wrong is necessary. I intend to demonstrate that what the Government have done they have done under the law. They have done it as part of their successful policy to contain inflation, and a word about the background to that policy is appropriate.

First, inflation—

Mr. Peter Rost (Derbyshire, South-East)

The right hon. Gentleman has now admitted that there is a black list. Will he tell us why, if it was not a secret black list, the companies that were blacklisted were not informed?

Mr. Hattersley

The difficulty about giving way to the hon. Gentleman is that he always asks a question so obvious that I intend to deal with it later, as I propose to do on this occasion, not being diverted from what I have to say about the background, which is our successful campaign against inflation.

Measured year on year by the retail price index, inflation in this country is today running at single figures. [Interruption.] The hon. Member for Lancaster (Mrs. Kellett-Bowman) did not screech loudly enough. Would she like to say it again?

Mrs. Elaine Kellett-Bowman (Lancaster)

How, then, does the rate of inflation compare with the 8.4 per cent. at which the Chancellor of the Exchequer alleged it was running when Labour fought the second General Election in 1974?

Mr. Hattersley

The six-month annualised figure is just slightly better, and it will get better still. The retail price index for February, published in five weeks' time, will confirm that, on the year-on-year RPI, we are at last down to single figures and that inflation is falling and will continue to fall fast.

Mr. Adley

rose—

Mr. Hattersley

I shall not give way to the hon. Gentleman.

The achievement of that great success, which has ensured that during the year there will be a real increase in the standard of living, is in no small measure—perhaps largely—the result of a policy of wage limitation, which has ensured during the present pay round that while standards of living do not fall, inflation is contained in single figures.

The Government are absolutely determined that the great prize of a stabilised price level, on which prosperity and expansion can be built, shall be achieved and maintained. That is the Government's position. During these debates the Opposition should determine and tell the country which side they are on.

Let me ask the Opposition some specific questions so that the hon. Member for Blaby (Mr. Lawson), who is to reply for the Opposition, I am sure in his usual thoughtful way, can answer them.

Do the Opposition believe that the Government should give guidance about the appropriate level of earnings? If they believe that the Government should give guidance, as the Shadow Chancellor of the Exchequer either said or implied in the summer, do they believe that the only pressure we should bring to bear for the observance of those guidelines is pressure on the public sector, or do they now, after the Glasgow speech, believe that the control of the money supply is the only remedy for inflation? If they do, they are certainly preaching in Opposition something they never practised in Government.

Mr. Ridley

Another great prize for the Government would be if they were able to smash the Scottish National Party. Would the right hon. Gentleman therefore think it right to withdraw credit facilities under ECGD from a firm which made a political contribution to the SNP? If the first is legal, there is no difference in doing the second.

Mr. Hattersley

My advice on legality is clearly not the same as that which the hon. Gentleman has received. As I propose to make serious points, I should have realised that to give way to the hon. Gentleman was folly.

The three questions that I have already asked do not seem to be receiving an answer. Therefore, let me ask a fourth, which is directly relevant to the narrow point on which this debate is based. If there is a general view about which wage settlements are consistent with the national interest and which are outside the guidelines and will promote inflation, do the Opposition believe or not believe that such inflationary wage settlements should be subsidised from public funds? Should taxpayers, who are in general observing a degree of restraint, contribute their taxes towards Government expenditure supporting companies that are breaking the guidelines?

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

Does not my right hon. Friend agree that this whole row has done more than Transport House has ever done to make clear to the public that our so-called free enterprise system depends, in the case of many hundreds of companies, on public sector contracts?

Several Hon. Members

rose—

Mr. Hattersley

I can give way to only one hon. Member, not several at a time.

Mr. David Price (Eastleigh)

Is the right hon. Gentleman aware that in public contracts what really matters is unit costs, not wage settlements, and that the question asked by the Public Accounts Committee in report after report is "Is it good value for money?" Surely the wage settlement is totally irrelevant to the unit cost.

Mr. Hattersley

That is exactly why the guidelines allow the possibility of productivity agreements and why such agreements have been encouraged.

Mr. Michael Latham (Melton)

rose—

Mr. Hattersley

I am sure that the House will forgive me if I do not give way. I have a number of things to say.

Mr. Michael Latham

rose—

Mr. Deputy Speaker (Sir Myer Galpern)

If the Secretary of State does not give way, he does not give way. The hon. Member for Melton (Mr. Latham), who is anxious to speak, should contain himself until he is called and make his contribution then.

Mr. Hattersley

I have asked a number of questions, and I look forward to the answers in the Opposition's winding up speech. But I have no great faith that they will be provided, because it is clear that in the whole area of inflation and of wages policy the Opposition are hopelessly divided. There are those who still talk about and advocate a statutory wages policy. There are those who still talk about and advocate a free-for-all, controlled only by the money supply. There are those—the Shadow Chancellor comes into this category—who flit uncomfortably from one extreme to the other.

I must congratulate the hon. Member for St. Ives on his prudence in telling the House in a remarkably revealing phrase that "at the moment" the Opposition do not believe in any form of wage control. We look forward to another change of mind and heart.

I have said, and I repeat, that the Government believe that a moderate wage round is in the country's interests. I have said, and I repeat, that we shall do all we can within the law to achieve that wage round.

To demonstrate that being within the law is an essential criterion of our behaviour. I need to describe our policy in two distinct ways. The first is the placing of Government contracts and the second is the operation of discretionary powers, including the giving or withholding of industrial assistance.

The placing of contracts for goods or services is in law a matter which is simple and unambiguous. Like anyone else, the Government may place their contracts with whomever they choose. In the Court of Appeal yesterday, my right hon. and learned Friend the Attorney-General made clear our intention to do so in a manner which will best serve the national interest and hence take into account…the White Paper guidelines for the purpose of controlling inflation". My right hon. and learned Friend also made it absolutely clear that: it is not now and never has been the policy of the Government that it should take any action with the intention or consequence of causing a breach of contractural or other obligations". Thus, he demonstrated the Government's determination not to be associated, either by implication or by injudicious language, with any unlawful act. My right hon. and learned Friend also reiterated our determination to continue our wholly lawful policy.

We want both those points to be clear beyond doubt. I must therefore tell the House that we propose to add explicit clauses to all new Government contracts. The acceptance of those clauses, necessary for the acceptance of the contracts, will mean that the contracting parties agree to observe the pay guidelines set out in the current White Paper.

Earlier today I told the Director General of the CBI of that intention and that a similar provision would in future be included in offers of industrial assistance. The TUC has also been informed. A copy of the new contract clauses has been placed in the Library.

Mr. Doug Hoyle (Nelson and Colne)

Will my right hon. Friend give way?

Mr. Hattersley

I shall give way when I have finished dealing with this point. The House should also know that the inclusion of those clauses in Government contracts considerably extends the application of our policy. If there were any force in the point made by the hon. Member for St. Ives about companies in the West Midlands not being caught, I should point out that if they sign contracts with the Government under the new clauses they certainly will be caught.

Mr. Hoyle

I hope that my right hon. Friend will take no notice of the synthetic anger that is coming from the Conservative Party. There are many of us who are very concerned about the statement that he has made. I should like to remind him that many of us believe in free collective bargaining, and, indeed, the TUC is committed to it. It could well mean that many unions will have to rethink their policies in the light of the statement made by the Secretary of State.

Mr. Hattersley

I am very conscious that on some of these matters my hon. Friends and I have different views. I am equally conscious that I must accept that because of that, some of them may either not join us in the Lobby or may do so with reluctance.

I take my hon. Friend's original point. The distinction between my hon. Friends below the Gangway and the Opposition—I regret the position they have taken—is that they believe in this matter and are not engaged in party games.

Mr. Norman Lamont (Kingston upon Thames)

Earlier, the Secretary of State said that he would deal with the accusation that the Government had behaved furtively. He has now admitted that the black list exists. Will he, therefore, explain how it was that on 1st January the Prime Minister, in his interview on "The World This Weekend", said clearly that the black list was a figment of the media's imagination"?

Mr. Hattersley

The Prime Minister said that the black list to a very great extent was a figment of the media's imagination". Those are the Prime Minister's words, which anyone with any respect for accuracy understands. That is absolutely true.

Mr. Peter Emery (Honiton)

rose—

Mr. Deputy Speaker

Order. I appeal to the House to allow the Minister to continue. There are many right hon. and hon. Members wishing to take part in the debate. My horoscope said today that I would have a day's work in a peaceful atmosphere.

Mr. Hattersley

You, Mr. Deputy Speaker, and I must have different birthdays. My horoscope did not say the same.

The second legal challenge which the Government face concerns the withholding of discretionary assistance.

Mr. Kenneth Clarke (Rushcliffe)

Will the Secretary of State give way?

Mr. Hattersley

No. I have given way on many occasions. I am sure that the House wants to hear the Government's case and the speeches which follow. Therefore, I do not propose to give way again.

I turn to the allegation that the withholding of discretionary assistance is in itself in some ways unlawful. I want to make absolutely clear that the legal advice is firm and absolute. By its nature and by definition, discretionary assistance allows the Government to use their discretion either to provide or to withhold assistance. Assistance is offered according to the general judgment that the Government make about the national good and the general economic well-being. It is reasonable and right, and right under the law, that in making that judgment the general interests weighed by the Government should include their opinions on how the fight against inflation will best be encouraged to prosper.

It may be that some of the decisions that we have taken under statutory powers—[HON. MEMBERS: "Ah."]—under discretionary powers; they are actually statutory discretionary powers—it may be that some of the decisions that we have taken under statutory discretionary powers are, as the hon. Member for St. Ives promises, eventually challenged in the courts. That, in the present atmosphere, may be unavoidable. I want to make it absolutely clear that the Government believe that what we have done has been wholly lawful, and that certainly applies to the application of the 1973 Counter-Inflation Act in the case of Sun Alliance.

Even when the legality of our position is confirmed, Opposition Members and the newspapers that support them will continue to argue that while we have behaved lawfully we have also behaved furtively or secretively. I want to deal with that point next.

Sir Derek Walker-Smith (Hertfordshire, East)

Will the right hon. Member give way?

Mr. Hattersley

No.

Mr. Deputy Speaker

Order. I think that the Secretary of State has made it abundantly clear that it is at his discretion, whilst he is addressing the House, whether he gives way.

Mr. Hattersley

I am turning to the point that even though the policy is lawful, say some hon. Gentlemen, it is applied furtively or secretively. First of all, the policy was described in paragraph 16 of the White Paper. Secondly, it was described in very great detail in a letter sent from the Chancellor of the Exchequer to the hon. Member for Henley (Mr. Heseltine). Anything that we want to keep secret we do not tell to him.

Thirdly, as the intention of the policy is to persuade companies which are on the point of making agreements outside the guidelines to refrain from doing so, its strength is that the company, the moment it is being considered for discretionary action, should know of it at once.

Companies have invariably been warned and told that—[HON. MEMBERS: "John Lewis."] Having heard the name John Lewis mentioned, I shall deal with that point straight away. I shall deal with it with some clarity, which I feared earlier in the day would not be possible. The Treasury and my Department have spent some time during the day on the matter, and it has not been easy to persuade the John Lewis Partnership that the entire correspondence between the Government and the company can be published. We have eventually persuaded the company that that is right. I propose to put it in the Library at the end of my speech.

For the convenience of the House, I shall summarise four points from that very protracted correspondence. Irrespective of what has been said by anyone on any occasion, on 27th June 1977 the John Lewis Partnership was told that, if it pursued the line that it proposed to adopt in a wage negotiation, certain consequences might follow. That was reiterated in a letter in August.

All the talk of apology with which we have been regaled in television programmes, in newspapers and on the radio over the last four days is a reference to a letter written not yesterday or the day before but in the first week of January in which the Government, with what some of us would regard as formal courtesy, expressed regrets that the John Lewis Partnership had not been told that the Government had done what the Government told the John Lewis Partnership they were going to do. [HON. MEMBERS: "Might do."] I ask hon. Members to read the letters when they appear in the Library, and if there is any doubt in that correspondence I believe that they will have the greatest difficulty to demonstrate it.

I turn to another cause celebre which, when examined, turns out to be an even more pathetic example of the Opposition's case. I refer to George Wimpey. This is another company which, we are told, has been half notified and has somehow discovered surreptitiously by some strange means that it was on a black list without being formally notified by the Government. The position is very clear.

Mr. Tim Sainsbury (Hove)

On a point of order, Mr. Deputy Speaker. Before the Secretary of State turns to his other correspondence, which he may also say he wishes to place in the Library, I am sure that he will not want to mislead the House, but I understood him to say that he had placed in the Library the new contract clauses. I have ascertained that the Library has not got them. I have ascertained from his private office that they will not be there later this evening. The Secretary of State may wish to place the blame for this, in the usual Government way, on some minor civil servant, but I am sure that he would not like to continue to mislead the House on other correspondence.

Mr. Hattersley

I shall gladly take the blame for that. Whilst I am not able to refer to people who may be listening but who are not in the Chamber, if the message is passed on, as no doubt it will be, to my private office that I wish the contract clauses to be there immediately, they will be placed there immediately.

Perhaps I may now turn to George Wimpey. The position with George Wimpey, about which at least one hon. Gentleman—

Mr. Michael Morris (Northampton, South)

On a point of order, Mr. Deputy Speaker. I wonder whether it would be for the convenience of the House if we adjourned for 20 minutes to allow the right hon. Gentleman to place the documents in the Library.

Mr. Deputy Speaker

Order. It would be extremely convenient for the House if we got some peace and quiet and could hear the Minister.

Mr. Hattersley

I still propose to explain to the hon. Gentleman, who made such a fuss about George Wimpey over the weekend, what the position is. A wholly owned subsidiary of George Wimpey—Brightside Heating and Ventilation—seemed likely to become party to an agreement outside the guidelines. George Wimpey was told that, in that event, certain action might ensue. [HON. MEMBERS: "Might"] Might ensue.

Mr. Michael Latham

That is not true.

Mr. Hattersley

The hon. Gentleman has made a serious charge. No doubt, if he catches Mr. Speaker's eye, he will substantiate it.

George Wimpey was informed that certain action might ensue. That action was not necessary because the agreement outside the guidelines was not made. The company was told that, in consequence, no action would follow. There is no more and no less to it than that. But I understand that, even though individual companies know what is happening and are told necessarily at an early date, some of the disquiet in the House stems from the fact that the House is not told when discretionary action is applied against companies without the companies having opportunities to contradict or deny it. I understand the enthusiasm of newspapers to know about these matters.

I want now to confirm and explain what the Prime Minister said earlier this afternoon. I begin by telling the House why in the past it has been our practice not to name companies at the moment that action was contemplated or taken. Very largely—indeed, entirely—that has been done in the interests of the companies themselves. I cannot put in the Library all the correspondence that I have received on this subject. However, I notice that the right hon. Member for Stafford and Stone (Mr. Fraser) is smiling, so I should tell him that the chairman of Sun Alliance wrote to us pointing out that, as soon as the Sun Alliance dispute with the Government was made public. 10 per cent. was knocked off the value of that company's shares. We have other such examples. It was to avoid exactly that kind of situation that in the past we did not publish the names of companies against which discretionary action was taken.

Mr. Eric S. Heffer (Liverpool, Wafton)

Will my right hon. Friend give way?

Mr. Hattersley

No.

Mr. Heffer

rose—

Hon. Members

Oh.

Mr. Heffer

Is my right hon. Friend aware that, when companies apply to the Department of Industry for assistance of one kind or another, they make it absolutely clear that they do not wish their names to be published and that Ministers of both Labour and Tory Governments have consistently argued that it would be wrong for companies to be named? I did that when I was a Minister. In marked contrast to the demand by the hon. Member for Henley (Mr. Heseltine) that we should name companies, the CBI, the companies and others with intelligence have argued that companies ought not to be named. Therefore, my right hon. Friend is acting in line with normal Government procedure in this matter.

Mr. Hattersley

I am grateful to my hon. Friend for making that matter clear. We believe that we are behaving in the best interests of the companies. However, I understand the great concern within the House and outside.

The Government do not want to give the impression that their behaviour in this respect is in any way furtive. Therefore, we propose at once to begin discussions with the chambers of commerce, the Confederation of British Industry and other employers' organisations. If in their judgment the interests of affected companies will not be harmed by publication of their names when such action is taken, we propose to publish those names. But, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) made clear, there are obligations. The CBI, the chambers of commerce and other employers' organisations must decide what they want, and we shall be guided by them.

Mr. Nott

I read out extracts from the Chancellor's letter. It seemed that the whole debate turned on whether there was a specific 10 per cent. limit applying under the present stage of incomes policy to each settlement. The Chancellor's letter said that there was not. I should like an answer to that question.

Mr. Hattersley

I promise that the hon. Gentleman will get one. Indeed, I shall give it to him now. Certainly there would have been great advantage in this pay round if there had been some flexibility within the 10 per cent. ceiling and some had got rather less than 10 per cent., thus allowing others to get more. However, the way that it turned out made that impossible, not least because the Opposition have always been prepared to nominate candidates for getting more than 10 per cent., but not for getting less.

I turn now to the fourth accusation—the accusation that our policy is applied in a discriminatory fashion. I hope that the leader in The Daily Telegraph yesterday, with its references to Imperial Chemical Industries, has convinced the Opposition that we do not discriminate under the law in favour of the mighty against the weak. But I do not run away from the fact that the policy that we apply is discretionary. The Government apply the policy according to their best judgment—a judgment that differs from circumstance to circumstance and from situation to situation. Often—indeed, usually—the demands of our counter-inflation policy will be our paramount consideration, but there will also be occasions when other considerations have great force.

Mr. Kilroy-Silk

Will my right hon. Friend give way?

Mr. Hattersley

Yes, but for the last time.

Mr. Kilroy-Silk

My right hon. Friend and his colleagues have made it clear that the whole point about the attack upon inflation is not only to bring down inflation but to sustain jobs. Given what he has just said, is it not counter-productive to take discriminatory action against firms, for example, in my constituency—an area of high unemployment—which results in the loss of jobs? Will he use the policy far more sensitively in future?

Mr. Hattersley

There are two matters that I should make clear in answer to my hon. Friend. The first is that, in terms of promoting employment opportunities throughout the country as a whole, nothing is more important than containing inflation. However, I accept that from time to time there may be an area or a location where employment problems are so gross that the obligation to preserve employment must take priority over the obligation to hold down inflation.

As my hon. Friend knows, the position about the Otis Elevator Company in Kirkby is open to some dispute, but in my judgment there has been a breach of pay policy. However, we granted temporary employment subsidy for three months in order that employment prospects should have paramount importance. I have no doubt that we were right to do that and that we shall be right to do it on other occasions.

It is the Government's duty on such occasions to make choices and judgments. I know that making choices and judgments is difficult. It would be much easier to apply the policy with some kind of rigidity with everybody falling inside or outside the policy. But we have chosen to make a series of difficult and painful choices in the national interest, as we see it, and we shall continue to do so. I believe that our willingness to make those difficult choices and to face the painful consequences demonstrates the gulf that divides the Government and the Opposition.

The technique—it is a technique, not a policy—which the Opposition apply to all these debates on inflation is to be always in favour of tough action in general but always against tough action in particular, especially when there are a few votes or political contributions involved. To pursue their end, the Government today have allied themselves with the people who want to see inflation in this country improved. The Opposition have allied themselves with the people who want to see our counter-inflation policy fail.

It is not a new phenomenon. Each month at Question Time I implore the Opposition to express even qualified pleasure that the inflation rate is lower than it has been for the last four years, but all we get is sour grapes and suppressed hysteria. I at least believe that we ought to rejoice in our success, but I do not believe that success can come about without some difficult decisions which we yet have to face.

The Opposition have for some time opposed the more difficult of the decisions and have attacked us whenever tough choices have to be made. They have certainly mentioned sanctions before. A voice has been crying from the Worcester wilderness for almost a year. There was a letter from the hon. Member for Henley who constantly forgets that he is no longer the Opposition's industry spokesman—to which I referred before. But the occasion for the debate, and its elevation into a Supply Day debate, is that the Government are in dispute with Sun Alliance, and there can be no controverting that fact.

Let me make my position absolutely clear. Under the law, Sun Alliance is entitled to take on the Government if it chooses to do so. The right hon. Lady the Leader of the Opposition is entitled to come galloping to the support of whomever she chooses, but if she does that I hope that her hon. Friends will spare us the claptrap about supporting the humble and meek. When I look at the board of Sun Alliance, I find its members very doubtful candidates for that category of human beings.

I repeat that I believe that Sun Alliance was the occasion for the debate, although I do not believe that it was its cause. Its cause is part of a plan revealed by the right hon. Lady last Saturday, at the end of a week in which she had scraped the absolute bottom of the political barrel. It was revealed in a speech that she made to London Conservative councillors. She spoke to them in terms so intemperate and preposterous that even the newspapers which normally help to co-ordinate her campaigns could not bring themselves to report her speech in any detail.

Last week the Conservatives decided that the tactic was to portray the Government as arbitrary and operating behind closed doors. I said at the beginning and say again at the end that they have used the embarrassing language of the Reichstag fire. Conservative councillors, who are not among the most intellectually fastidious members of the community, may enjoy that sort of thing, but I do not believe that the country as a whole is impressed. I believe that the country as a whole prefers a Government who are prepared to take the hard decisions necessary to put the economy right, and we are that Government.

Mr. Madden

On a point of order, Mr. Deputy Speaker. You may be aware that at the outset of the debate there were some exchanges about the obligations of Members to declare their interests. You have drawn the attention of the House to your horoscope. May I draw the attention of the House to Appendix II of "Erskine May", at page 1086, where it is stated that On 22 May 1974 the House of Commons agreed to two Resolutions relating to the declaration of interests by Members:—` That, in any debate or proceeding of the House or its committees or transactions or communications which a Member may have with other Members or with Ministers or servants of the Crown, he shall disclose any relevant pecuniary interest or benefit of whatever nature, whether direct or indirect, that he may have had, may have or may be expecting to have.' I ask your guidance whether that obligation has been varied and, if not, that you will ensure that all Members speaking in the debate, where the declaration of interest is most important, shall declare any interest they may have.

Several Hon. Members

rose—

Mr. Deputy Speaker

The position has not been altered. All hon. Members are fully aware of their responsibilities regarding disclosure. As Mr. Speaker said earlier, I am sure that right hon. and hon. Members will respect the order and practices of the House.

5.5 p.m.

Mr. Hugh Fraser (Stafford and Stone)

The speech made by the Secretary of State for Prices and Consumer Protection amazed me, especially in its inaccuracy, when he said that the Sun Alliance company, of which I happen to be a director, had brought this row into the open at the behest of the Tory Party. The people who brought it into the open were the Government, and if the Government propose to take further steps we are perfectly prepared to meet them in a court of law.

The debate fills me with a certain sense of historic melancholy, not just because of the lamentable speech just made by the Minister and not because I, as a director of the Sun Alliance company, am on my way to The Tower. But, looking back upon history, I find that an ancestor of mine was actually accused in Westminster Hall of being a traitor and executed at Tower Hill. If the right hon. Gentleman the Attorney-General had been the Attorney-General of the day, my ancestor would certainly have got off scot-free. However, doubtless at the same time the Attorney-General would have wrapped up this amazing decision in the aftermath of the Jacobite rebellion by saying that the Hanoverian legitimacy was nevertheless totally in order and that the Government's position was unchanged by any apparent surrender, and things would have gone on as before.

Under the present Administration the pursuit of a pay guideline is rather like the pursuit of the Snark, after the confusion brought to the matter by the Government in the last few days. As you doubtless remember, Mr. Deputy Speaker, those who pursued the snark frequently ended by finding that it was nothing but a Boojum and were destroyed in the process. That might well be happening to the Government in this matter.

The right hon. Gentleman admitted this afternoon that the guidelines should be more codified, and will no doubt at any moment be placing in the Library certain conditions for Government contracts. But present guidelines flow not so much from the Government action as from the appendices to the three White Papers that we have had on incomes policy, as laid down by the Trade Union Congress. I think that the right hon. Gentleman must agree that this is the basis of the three guidelines in the White Papers of 1975, 1976 and 1977.

It is perfectly clear that there has been a complete change of Government policy concerning two of the matters in those appendices. There has been a change of trade union policy, and there are now two exceptions. One relates to the question of improvements from pension schemes and the other to increments earned by extra effort. These are the two areas, under the guidelines of the Government, which are no longer specific. I believe that this is where a great deal of the present error arises, with the various interpretations which the Government are attempting to make of these two issues.

The issue between my company and the Government lies purely in the words contained in the back of the White Paper, which simply say that there shall be exceptions to the 12-month rule relating to occupational pension schemes and self-financing productivity agreements. That is where there has been a variation. That is where—if needs be—if the Government challenge my company we shall take them to court, because it is quite clear that what we are proposing is an improvement to the occupational pension scheme, and the word "improvement" quite simply means something which is to the benefit of the employee. That is that, and that point can be decided in a court of law.

Mr. Cranley Onslow (Woking)

On a point of order, Mr. Deputy Speaker. You will recall having heard the Secretary of State a few moments ago tell the House that he would arrange to have placed immediately in the Library the correspondence between the Government and John Lewis. I have to tell you that I have just made inquiries and it is not yet there.

Mr. Deputy Speaker

I did hear the Secretary of State and I think that we can accept his assurance that the correspondence will be there as speedily as possible.

Mr. Hattersley

Further to that point of order, Mr. Deputy Speaker. If my recollection is right, I gave two assurances. One was that the contract clauses would be placed in the Library immediately. I understand that that has been done. That was more easily done because it was under the control of my Department.

During my speech I told the House that there had been some difficulty in securing agreement for the John Lewis Partnership correspondence to be placed there. Since that agreement was forthcoming from the company only shortly before I left for this House, copies of the letters have taken rather longer to produce. However, they will be ready as soon as possible and we shall put them in the Library before the debate concludes.

Mr. Fraser

I should like to return to my point, following my hon. Friend's useful interjection. The issue is a simple one. If the right hon. Gentleman wants to have this issue taken to the courts, so be it, but I can assure him that my company, which is now threatened either with having to renege on an agreement entered into with its employees or paying a fine of some £750,000—which is indeed a Star Chamber dilemma—is not in business to build its own scaffold by way of further negotiation. If the Government want it in the courts, let them have it in the courts. We shall win.

But a much wider issue has been raised in the debate this afternoon. It is an issue on which the Government have come some way towards admitting that they are conceivably in the wrong. I refer to the use of extra-statutory powers, and the threat of extra-statutory powers, It is an area in which the Government deserve to be condemned. I hope that some of the followers of the hon. Member for Ormskirk (Mr. Kilroy-Silk) will join us in the Lobby this evening, because this entails the use of executive powers by the Government over which this House has no control.

I believe that it is only right that these powers, when used, should be used equally between those persons who may be involved. There must be even-handedness, if not open-handedness, in the way in which these powers are exercised. It is now quite clear that there is no such even-handedness in the way that they have been used.

Admittedly, the great problem facing us is the problem of inflation. It is a problem to which no one has contributed more than the present occupants of the Government Front Bench. But there is an even stronger issue—an even more important issue—than the question of economic policy or economic theory. The Secretary of State wasted some time at the beginning of his speech going into grander economic platitudes, but there is a far more important issue to be considered by this House. That is the danger of the misuse of the power of the State —a State which now controls 40 per cent. of employment, 40 per cent. of investment and more and more of the pay of the people of this country.

If, by subterfuge, nod, wink or nudge—either by plot or conspiracy, or by the misuse of ministerial powers—the Government can so abuse those powers—and are in danger today of so doing—then indeed there is no exaggeration in saying that these are the first steps on the road to serfdom.

That is why—quite apart from the issue of the Sun Alliance insurance company, which is no more a tool of my right hon. Friend the Leader of the Opposition than it is of the Prime Minister—I believe that the great issue before the House now is the potential abuse of power by the Government. That potential abuse of power should unite all sides of the House tonight. However weak the motion may appear to be, it is voting down a Government who have set themselves above the law—beyond the law—and are in danger of undermining the constitution of this country.

5.28 p.m.

Mr. Robert Kilroy-Silk (Ormskirk)

I and some of my hon. Friends have made abundantly clear over recent months our position with regard to the use of discretionary powers by the Government. I stand by a large part of what I have said previously both in this House and outside.

I should also like to make clear that my concern—and the concern of my hon. Friends who are co-signatories of an Early-Day Motion—is with workers and not with the firms that have preoccupied the two speeches from the Opposition Benches. They have used the title of my Early-Day Motion, yet the major proportion of both speeches—almost all the speech of the right hon. Member for Stafford and Stone (Mr. Fraser)—have been devoted to the problems of Sun Alliance.

We are concerned about the use to which the Government have put their discretionary powers because of the possible effects upon employment prospects. I am concerned individually because I do not happen to accept or agree with the 10 per cent. guideline which in any event has become a 10 per cent. ceiling. We do not have a statutory pay policy. Nevertheless, the Government are using a battery of measures and sanctions to enforce a pay policy which has not been approved by this House and which is disapproved of by many of my hon. Friends and myself.

Given that some of my hon. Friends, and even Opposition Members, happen to agree with the 10 per cent. guideline or ceiling, I must say that the case that my right hon. Friend made out today seemed to be a very powerful one. I say that in the sense that many of the criticisms that I intended to make have been taken from me.

It is the case that the policy is not totally even-handed. It seems to be totally unreasonable and unfair that one should operate it against the small firms but leave the Fords to escape unscathed. It is unreasonable that it should be used against very small firms, such as High Speed Turnings, in Kirkby, in my constituency, and also to threaten the same kind of sanctions—the withdrawal of the temporary employment subsidy—against Otis Elevators, also in my constituency.

I am pleased that my right hon. Friend today gave the kind of assurance that I and my hon. Friends have been looking for, namely, that these sanctions will not be used to endanger jobs—particularly jobs in areas like Merseyside, where we have a high level of unemployment—and that in practice the discrimination will be used sensitively and flexibly.

Mr. Peter Hordern (Horsham and Crawley)

I thought that the hon. Member said that one of the firms threatened in his constituency was the Otis Elevator Company, and that it was threatened by the potential withdrawal of the temporary employment subsidy. If that took place, how would it not jeopardise jobs in his constituency?

Mr. Kilroy-Silk

That has been made quite clear by my right hon. Friend and myself. The temporary employment subsidy was not withdrawn, even though the Government have acknowledged that the company has broken the pay guidelines. The Government have used their discretionary power and not withdrawn TES, because of the high unemployment in Kirkby.

That is a principle that I applaud. However, it is a dangerous precedent for the Government to use discretionary powers in this way, because these powers could be used in really dangerous ways by a future Conservative Government. I am not against sanctions per se. I want them to be used against employers to further the aims of the low-paid workers. I want them to be used against employers to further the aims of the disabled. I want the Government to pursue positively a policy that discriminates. However, I will not tolerate the Government using sanctions in a way that increases unemployment in any part of the United Kingdom. I find it totally unacceptable and unreasonable that sanctions should be used in areas of high unemployment, such as Kirkby and Merseyside.

I have no time at all for the Conservatives' sudden new-found synthetic concern, and their Johnny-come-lately attitude. It would have been more reasonable and believable if they had shown concern about protecting jobs at Chryslers or A. P. Herbert, and if they had been in favour of the TES and other measures to combat unemployment. They were not concerned with the small firms that have been on the black list for the past two years, but suddenly they found a lot to be concerned about when the black list affected Sun Alliance. They have two Members of Parliament on the board of directors of Sun Alliance as well as an ex-Tory Member. They pretend that they are sincerely interested in the effect of the abuse of Government powers on workers, but all they have done is to demonstrate their major preoccupation with their friends in the City. The Opposition have demonstrated clearly today that the Tory Party in Parliament is no more than a parliamentary extension of big business outside.

My Early-Day Motion was tabled on 30th November. If the Opposition felt that they could support it, why did they not sign it, instead of just stealing it for the title of today's debate? Not one Opposition Member has managed to put his or her name to my Early-Day Motion—not even the hon. Member for Melton (Mr. Latham), who has been a critic of the Government on this matter.

Mr. Michael Latham

Of course the hon. Member for Ormskirk (Mr. Kilroy-Silk) will mention my amendment to his Early-Day Motion.

Mr. Kilroy-Silk

Not only have the Conservatives not talked about this matter for two years and not signed my Early-Day Motion; they did not help when I sought an emergency debate in the House over the Government's threatening to withhold the TES and the effect of this on 1,000 workers in my constituency. I got no support at all from Conservatives. In fact, they took a great deal of delight in thwarting me. Where was she then, the Lady in Blue? It is all right to talk with indignation about Sun Alliance, but nowhere has there been any evidence of Opposition concern when 1,000 workers in my constituency had their jobs placed in jeopardy. If the Leader of the Opposition has a valuable contribution to this part of the debate I shall gladly give way to her. If she will defend her action in not supporting an application for emergency debate on the Otis Elevator Company, I shall give way.

There is no defence for the right hon. Lady except that she is here today seeking to make political capital. She is a political opportunist of the first order and I am not prepared to go into the Lobby today simply because the Opposition see my hon. Friends and myself as doing their dirty work for them. [HON. MEMBERS: "Chicken."] It is not a matter of being chicken. The chicken, if that accusation should apply to anyone at all, must be levelled at the Leader of the Opposition, because she had the opportunity in her hands to sign my Early-Day Motion.

Mrs. Margaret Thatcher (Finchley)

I did not agree with it.

Mr. Kilroy-Silk

The right hon. Lady says she did not agree with it, but she still stole the title. She knows that if she had put down my motion for today's debate, many of her hon. Friends would not have followed her into the Lobby. I shall not dance to the Opposition's tune, no matter what reservations I have about the Government's actions. I do not see any reason why I should play the right hon. Lady's dirty game and follow her into the Lobby. I hope that my hon. Friends will all follow me in supporting the Government tonight.

5.38 p.m.

Mr. Michael Latham (Melton)

I am pleased to follow the speech of the hon. Member for Ormskirk (Mr. Kilroy-Silk) because I know that he takes a great interest in these matters. I am only sorry that he came to the conclusion that he did.

The register of interests shows that am a non-executive director of Lovell Homes Ltd. That firm is not on the black list and I hope that it never will be.

The first serious attempt by the Government to define the ground rules for a blacklisting procedure to support their voluntary pay policy was on 15th December 1975 when the Department of the Environment published Circular 123/75. This circular told local councils to "request" building contractors to vary existing contracts which they were undertaking for the council so as to include a new clause saying that pay increases above £6 could not be reclaimed by the contractor. Ministers later admitted to me that this "request" had no legal force at all.

The circular also said that future contracts were to contain a clause promising not to break the limit and that councils were to withhold payments to contractors on existing contracts if they had paid over the odds, and report them to the Price Commission. As for future contracts, a tenderer who refused to sign an undertaking was to be denied the work even, it seems, if his tender was the lowest. This seems to be a rather odd way of containing inflation.

The circular then listed the threats. The Department of Employment, Branch 1E was responsible for deciding whether a particular pay award breached the limit. If it did so decide the Treasury would then decide whether the firm should be barred from future Government contracts. If that decision was taken the Department of the Environment or the Welsh Office will inform local authorities of the names of any firms so barred. In general, no new tenders should be invited from them, nor should any new contract or significant extension to existing contracts be awarded to them. The list will be kept up to date by circular. Incidentally, the staff of Branch 1E of the Department of Employment on 16th December 1975 numbered 38. By 31st January 1978 the branch responsible for the same work had a staff of 69 and was costing £809,155 a year in administrative costs.

The concept of a list of firms barred from Government contracts for breaching a voluntary policy seemed sufficiently disturbing to prompt a number of questions.

On 26th January I asked the Chief Secretary whether he would give an assurance that any such firms would be permitted to be heard in their own defence under some proper appeal procedure in accordance with natural justice before any such blacklisting decision was taken. The right hon. Gentleman replied: Firms will be heard in the circumstances described."—[Official Report, 26th January 1976; Vol. 904, c.74.] But when on 10th March 1976 I asked him to submit his proposals on the conduct of such hearings to the Council on Tribunals and publish them, the Chief Secretary refused to do so, and said: The way in which firms will be heard will be effective but informal."—[Official Report, 10th March 1976; Vol. 907, c. 254.] The Chairman of the Council on Tribunals subsequently wrote to me on 24th March 1976 to say that his council could not intervene because these hearings were non-statutory, and its powers were limited to statutory inquiries.

On 8th June 1976 the Attorney-General declined to change the law so as to allow the council to intervene, and added in his reply to me: The Lord Chancellor agrees that … a building contractor should have ample opportunities to make representations on his own behalf and the Chief Secretary has assured the hon. Member —referring to me— that this will be done."—[Official Report, 8th June 1976; Vol. 912, c. 614–5.] It was 14 months later, in August 1977, that we first learnt, thanks to The Sunday Times, that three firms had in fact been blacklisted for breach of stages 1 and 2. We later learnt, from parliamentary answers, that one of those three had breached stage 1 and all three had breached stage 2. This decision was communicated secretly to health authorities last August and the firms concerned were named in a confidential departmental circular, a copy of which is now in the Library but was not put there before December 1977.

I have been unable to get any sense out of the Government as to what "effective but informal" procedure, in the words of the Chief Secretary, or "ample opportunities to make representations", in the words of the Attorney-General, actually took place for those three firms to be heard in their own defence.

When I asked the Chief Secretary, on 9th December last, what form of hearing took place and whether the firms concerned were represented by counsel at it, the Chief Secretary replied: The exercise of discretion is an administrative action and not formalised in the way the Question suggests."—[Official Report, 9th December 1977; Vol. 940, c. 924.] Therefore, between March 1976 and December 1977, the "effective but informal" procedure—in itself secret, non-statutory and outside the scope of the Council on Tribunals—had become an administrative action and not formalised about which the Chief Secretary was not prepared to give details to the House.

Let us now have a simple answer to these questions. Who saw those three companies before blacklisting them? Was it a properly convened meeting, chaired by Ministers, with a formal record taken which the companies could contest in the courts if necessary? If so, why not say so? Or was it an "effective but informal" visit or letter from a locally-based civil servant, say, in the Department of Employment, uttering threats? Or was it, perhaps, the type of exercise described by an industrialist in The Daily Telegraph on 23rd December, when he said: nothing is being put into writing. Companies are merely being told by telephone."? Or was it perhaps what seems to have happened over the John Lewis Partnership? We shall have to examine the correspondence in the Library before we go further. [AN HON. MEMBER: "When it comes."] If it comes. Is that good. open, competent government? Is that what the Secretary of State and the Chief Secretary are hoping to get the hon. Member for Ormskirk and his hon. Friends who signed the Early-Day Motion to support in the Lobby tonight?

Let us now examine the less-than-helpful behaviour of the Attorney-General, who told me on 8th June 1976 that there should be ample opportunity to make representations and that the Chief Secretary had assured me that this would be done. Surely the House would think that the Law Officers of the Crown would be particularly scrupulous to ensure that a non-statutory and secret blacklisting procedure was fairly and properly carried out by Ministers. The Attorney-General's enthusiasm for monitoring this matter seems to have waned a little as the Government got further into the mire, because on 26th January this year I asked him, referring specifically to his earlier answer in June 1976 whether he is satisfied that companies blacklisted by the Treasury have had ample opportunity to make representations on their own behalf. The Solicitor-General replied on behalf of the Attorney-General and said: whether companies have had the opportunity to make representations is a matter for my right hon. Friend the Chancellor of the Exchequer."—[Official Report, 26th January 1978; Vol. 942, c. 711.] Therefore we have a Catch 22 situation, because the Chancellor is not prepared to say anything about the matter anyway. This is open government in 1978.

That brings me to George Wimpey and Company. I apologise to the Secretary of State for Prices and Consumer Protection for loudly interrupting his speech, but I was carried away in the heat of the moment. I had hoped that it would be unnecessary to give further information about the internal affairs of that great company, winner of the Queen's Award for Export in 1977, but since the Treasury apparently gave guidance to the news papers last Sunday, repeated today by the Secretary of State following what I believe to be the completely factual report in the Sunday Express, that the whole group had not been blacklisted, but only its heating and ventilating subsidiary, I must now give further facts to the House. I would stress that these were all provided to me officially knowing that they would be used by me, three weeks ago by a director of the company with whom I have discussed the matter, constantly on the telephone and as recently as yesterday.

The company approached me, not vice versa, and, indeed, I had a simultaneous approach from the Deputy Director-General of the National Federation of Building Trades Employers, in which he made it clear that there have been two cases where the Treasury has applied sanctions against major construction companies which happen to own subsidiaries in one of the trades affected. I know the name of the other company that he had in mind, but I have not given it, since it has not approached me direct.

The only thing which I am not prepared to do today is to name civil servants, although I know their names and will give them to the Chief Secretary tomorrow if he continues to dispute the accuracy of the Wimpey story.

This is the factual situation. On 5th January a senior official of the contracts division of the Department of Transport rang one of Wimpey's civil engineering estimators and said that, on instructions received from the Treasury, no inquiries for job awards were to be made to Wimpey as the whole group had been placed on the "tender black list". [HON. MEMBERS: "Oh."] This action was said to be due to a Wimpey subsidiary, Bright-side Heating and Engineering, being in membership of the Heating and Ventilating Contractors' Association, which had negotiated a pay deal outside the Government guidelines.

On 6th January, a director of the company, Mr. Ralph Cowan, rang that civil servant and explained that neither Wimpey nor Brightside had broken the guidelines and, indeed, that they supported the guidelines. A letter was sent that day to the Department of Transport, with a copy to the Treasury.

On 9th January the chairman of Wimpey, Mr. Smith wrote to the Chief Secretary, and the letter was delivered by hand that day. In it Mr. Smith said: I am astonished to learn that because one of Wimpey's subsidiary companies … is in membership of the HVCA, an association which has negotiated a pay deal outside the Government guidelines, that the whole Wimpey group has been placed on the tender blacklist. Mr. Smith confirmed his support for the guidelines and asked to meet the Chief Secretary urgently. No reply was received from the Treasury on the 10th, 11th, 12th or 13th January, so the chairman sent a telex.

Later that day, 13th January, one of the Minister's private secretaries telephoned to promise a reply by 16th January. This did not arrive, and Mr. Cowan of Wimpey rang the Minister's private office five times on 16th and 17th January. In his telephone call at 3 p.m. on 16th January he advised the Minister's private secretary that the matter might be raised in the House the following day if it was not cleared up forthwith. He had already discussed the whole issue with me by then, and I had deliberately kept silent, so that a solution could be found without publicity.

There are, however, two telephone conversations to which I must refer. At 12.30 p.m. on 17th January the Minister's private secretary was asked whether this had been an embargo of Wimpey or a blacklisting of all members of the Heating and Ventilating Contractors' Association. The official replied that he preferred not to use the expression "black list", but preferred "holding operation" until the HVCA deal had been cleared. It was not aimed solely at Wimpey.

On the other hand, a little earlier the Department of Transport official who had started the whole matter off 12 days before rang to say that the embargo against Wimpey had been lifted, and details of jobs and contracts could be released. He could speak only for the Wimpey position, and could not say whether it applied to anyone else who was in membership of the Heating and Ventilating Contractors' Association. He was not prepared to pursue that matter.

At 2.04 p.m. on 17th January the Chief Secretary telexed the Wimpey chairman. For the sake of accuracy I have obtained a copy of the telex. It states: Thank you for your letter of 9th January. I appreciate the assurance that your company is in full sympathy with the Government's pay policy, and neither it nor its subsidiaries has stepped outside the Government guidelines. I understand that the Heating and Ventilating Contractors' Association have now promulgated a new pay settlement in accordance with the Government's pay guidelines. No further action by the Government will therefore be taken. I am glad that this matter has been resolved satisfactorily for us both. Joel Barnett". The House will note that in the telex there is no suggestion that the company had been wrong to believe that it was blacklisted. There was no apology that it had not been asked in advance if it had broken the guidelines. There was no regret expressed that it had taken 12 days to resolve the matter. In short, there was the same dreary and deplorable secrecy and muddle that the whole episode had manifested throughout.

If the Secretary of State and the Chief Secretary are right and George Wimpey was not blacklisted, as we are now asked to believe by the Government, why did the Department of Transport think that it was, and why did it take 12 days to clear up the matter? That is the epitaph of this whole monstrous sanctions business. There has been confusion in Whitehall, secrecy by Ministers, embarrassment to honest companies and no information given to Parliament.

If the majority of the House votes to support the Government, the Government will doubtless try to claim the authority of Parliament for the future secret operation of the black list. I believe that they should not have that authority. I believe that Ministers have already greatly abused the powers of their high office I hope that the hon. Member for Ormskirk and his hon. Friends will stick to their principles and vote against the Government.

5.52 p.m.

Mrs. Audrey Wise (Coventry, South West)

I am interested that the hon. Member for Melton (Mr. Latham) has invited us to stick to our principles. It is not a principle to vote against the Government and to join the Opposition. It is our principle to stick to the attitudes and words that we have used.

If the Opposition had cared to table a motion that said something, they might have been able to invite us to take note of the words on the Order Paper. However, they have deliberately chosen to table a motion that is meaningless. It is a motion that would simply prevent us from carrying on with any more business today. In the circumstances I do not think that it becomes the hon. Gentleman to talk about principles. Nor does it become the hon. Member for St. Ives (Mr. Nott) to talk about doublespeak. What we are hearing from the Opposition is doublespeak of the highest order, though perhaps not very well executed.

The right hon. Lady the Leader of the Opposition explained from a sedentary position that the reason she had not tabled a motion such as that which my hon. Friends signed is that she does not agree with all of it. With which part does she not agree? Our motio stated: That this House condemns the use by the Government of economic sanctions against those firms and workers who have negotiated pay settlements above the guidelines. Those are the words with which I agree. Those are the words which embody a principle. The motion runs for only two and a half lines. With which part does the right hon. Lady not agree?

Mr. Kilroy-Silk

Tell us.

Mr. Deputy Speaker

Order. The hon. Member for Ormskirk (Mr. Kilroy-Silk) has already spoken.

Mrs. Wise

It may be that the right hon. Lady does not agree with the injection of the word "workers" into the motion. It may be that for her that is a sensitive word. On the other hand, she may not like a motion which states something firmly and clearly in two and a half lines, and which could be held to commit the Opposition. The hon. Member for St. Ives said that the Opposition do not like these guidelines and the pay policy for the present.

Mr. Nigel Lawson (Blaby)

Is the hon. Lady saying that if a manuscript amendment were to be tabled that included those words she would vote with the Opposition?

Mr. Kilroy-Silk

Sheer opportunism again.

Mrs. Wise

I am not talking about hypothetical instances.

Mr. Deputy Speaker

Order. I think that I can help the hon. Member for Coventry, South-West (Mrs. Wise). No such amendment would be in order.

Mrs. Wise

I was about to say, Mr. Deputy Speaker—

Mr. Kilroy-Silk

Table it.

Mrs. Wise

I am getting rather a lot of help from my hon. Friends. I was about to say that I should be prevented in two ways from taking the course that the hon. Member for Blaby (Mr. Lawson) puts before me.

First, such an amendment would not be in order. Secondly, the Leader of the Opposition would not even attempt to table such an amendment. After all, this is not an emergency debate. There was time enough.

As I have said, our motion consists of two and a half perfectly clear lines. Whoever had tabled it, I should have supported it. What I do not choose to support is a technical motion for the Adjournment that is blatant opportunism. It uses a title that has not much meaning away from the subject to which it first referred. Further, it carries with it no instruction. No instruction is being given to the Government to abandon the rigid application of the so-called 10 per cent. guidelines. I have made it clear that I regard the so-called guidelines as being used as a straitjacket both inside and outside the public sector. I have objected to that and will continue to do so.

Mr. Lawson

The black list does not extend to the public sector.

Mrs. Wise

There we have it. It is clear that Opposition Members are not interested in workers in the public sector. It so happens that my hon. Friends and I are interested in workers inside and outside that sector. We are interested in workers in general. That is exactly what Opposition Members are not.

Mr. Kenneth Warren (Hastings)

If the hon. Lady is so interested in workers in both sectors, will she address herself to the Government's new terms of conditions that will not apply to private companies, that will give exemption to them and discriminate against British workers?

Mrs. Wise

I should have been grateful for the opportunity to cast a vote for a meaningful motion. My voting record on meaningful and effective motions is well known. Any attempt to accuse some of my hon. Friends and me of being reluctant to stand firm does not hold much water. However, we like to vote on issues, and that is what the Opposition are afraid of doing. They do not want to be committed to a policy that is for free collective bargaining, or to a policy that is even looking for a rational and fair wages policy. That is because the Tory Party throughout its history has never been in favour of free collective bargaining or a fair wages policy.

The talk that is now taking place from the Opposition Benches is simply an attempt to woo workers who are being reluctant to go back into the Tory fold. It is a pity that the time of the House is wasted on non-substantive motions from people who do not have the guts to say what they mean or to mean what they say.

There are things which do need saying to my Front Bench and I intend to take this opportunity to say them. I do not want Ministers to draw any false conclusions from the fact that I shall be voting in the "No" Lobby. I shall be saying "No" to the Tories and not "Yes" to the 10 per cent. guideline, or to the powers that are being used. I am pleased that my Front Bench seems to recognise this fact and to welcome it in the spirit in which it is intended.

The questions that I have to put to Ministers relate to employers who are underpaying. We are told that some employers are paying workers too much. I find that concept difficult, if not impossible, to credit, but if we accept, for the sake of argument, that the Government believe some employers to be overpaying, I take it that they also accept that many employers pay wages that are too low.

What sanctions are used against those employers, some of whom are paying wages that are below legal requirements? In case Ministers intend to tell me that they are dealt with by the full rigour of the law, as I believe they should be, I warn them that I have here the answer to a Question I asked on 13th December last year. I asked how many employers who had broken the law by paying workers less than the statutory minimum wages fixed by wages councils had been prosecuted. The answer was that only seven prosecutions had taken place in 1977. I have not been joined by Tory Members in expressing concern about that fact.

The Government seem unwilling to be as ruthless with these employers as they are with the employers who are accused of overpaying. I should feel a lot happier if I could be convinced that the Government were as concerned about the robbing of workers as they are about the breaking of the so-called guideline. They owe it to all my hon. Friends, whatever their view on wages policy, to act with all possible firmness and ruthlessness against employers who rob workers of the wages to which they are legally entitled. So far, the Government have not done this.

Hon. Members will notice that the Conservative Benches are silent now that I am talking about people who are paid £40 or less a week. The lower the wages, the less the interest shown by the Tories.

I am not talking just about the past or about the flouting of wages council orders and the lack of prosecutions. I regret to have to draw the attention of the House to the fact that the Government have been objecting to fresh wages council awards to the lowest-paid workers—and these are workers for whom an increase of £4 a week breaks the 10 per cent. guideline.

It is astonishing that any Labour Minister can bring himself to write to wages councils objecting to increases of £4 a week for the lowest-paid. It is monstrous. My hon. Friends and the trade union movement would have united to say that no one should fall below a £4-a-week increase when such an increase exceeded the 10 per cent. guideline.

This is not an isolated incident; it is not just a momentary blinking of the eye. The Government have objected to 10 of the 23 most recent wages council orders. My figures may even be out of date, because at the time they were given to me, the Government were objecting to a wages council award relating to laundries. We know that workers in laundries are among the lowest-paid and most exploited workers. They always have been. It is work next to slavery. If we are to take seriously the Government claims that they are working towards any sort of rational wages policy, we cannot be persuaded of that while they are refusing to make exceptions even of this kind. Everyone in the Labour movement would applaud increases in the wage levels of these workers.

The Government are laying themselves open not to accusations from the Opposition—they are silent on this point—but to accusations from our movement and from the people who support us loyally through thick and thin that the Government are not concerned about workers' wages in the way that a Labour Government should be.

I do not believe that the fight against inflation would be imperilled if workers in the artificial flower and ostrich feather industries, or in restaurants and the retail food industry, were given pay rises of more than 10 per cent.

Many fortunes have been made in such trades and there is a good deal of money around which the Opposition would not like to see going into workers' pockets, but which we would. There need not be any adverse effect on prices by ensuring that workers get at least £40 a week.

I very much regret that his Cabinet colleagues have apparently forced the Secretary of State for Employment to object to these wages council increases. If we are to discuss wages policy seriously, the points that I have put need to be answered.

It is all very well to have knockabout stuff from the Opposition. It is easy for the Government to deal with that and it can sometimes be quite entertaining, but the really serious questions will be put from the Government Benches and we have a right to look for answers.

For myself and some of my hon. Friends, there is no Lobby in which we can express what we should like to express. It is no solution to vote with the Opposition for the Adjournment. They are scornful and careless of workers' interests and care only for private profit. Nor is it a solution for me to express my view by staying out of the Lobbies. I am not abstentionist on this issue; I am positively opposed to the rigid application of the pay policy.

There is no way of expressing that Opposition tonight, but there is a way of expressing my scorn and detestation of the Opposition. After considerable careful thought I have decided that that is what I shall do. I shall go into the "No" Lobby, saying "No" to the Tories and "No" to the right hon. Member for Finchley (Mrs. Thatcher). But that does not let the Government off the other hooks.

We are talking not in terms of bluff but about the serious issue of impressing upon our Front Bench the need for workers to be able to negotiate decent wage increases and for our Front Bench to do nothing which will impede that.

I look to the Government to explain what type of sanctions they intend to use against those employers—they amount to about a quarter in the trades covered by wages councils—who are breaking the law by underpaying.

Mr, Deputy Speaker

Approximately 20 hon. Members wish to take part in the debate. I appeal for brevity.

6.12 p.m.

Mr. Maurice Macmillan (Farnham)

I thank the hon. Member for Coventry, South-West (Mrs. Wise) because she has shortened my speech by referring to the 14 examples of how pay policy has been broken, all of which involve wage council awards and about which the Government can apparently do nothing.

I cannot declare an interest in the debate because I do not know whether I have one. As chairman of my family publishing business, I might have an interest if I knew whether we had a 10 per cent. guideline or a 10 per cent. maximum. Some awards which appear to be wrong are judged to be right and other awards that appear to be right are judged to be wrong. I do not know whether it is meant to include consolidation with previous £6 and 5 per cent. awards or whether these should not be taken into account. Are there guidelines or ceilings? What is the difference between a bogus and a genuine productivity deal? If the Chief Secretary can answer these questions clearly and coherently, some of us might know where we are. The Secretary of State, with his curious mixture of arrogance and flippancy, failed to answer these or any other points.

This debate is not about prices and incomes policies or unemployment, important as those matters are. It is about the rule of law and the supremacy of Parliament. It is about nothing else. The Secretary of State did his best to obscure this issue. I shall reopen it again by referring to Sun Alliance. I have no interest in that company except I believe that my company does not now use it for insurance purposes. I quote it because it is threatened under the Counter-Inflation Act 1973 and I had some small responsibility for the details of that Act.

The Government are not using but merely threatening to use Section 9 of that Act. I do not believe that they can properly act under Section 9. They can threaten to act, but I do not believe that they can legally use that section. Section 9(2) states: The powers conferred by subsection (1) above shall be exercisable by order, or by notice given to the insurer, or each of the insurers, affected by the notice. Subsections (4) and (5) state that notice must be given to the persons concerned or that, if this is impracticable, the Secretary of State should publish his intention to make an order in the Gazette 14 days before he makes such an order. This was to give the opportunity to those affected to make written representations. Now, however, the Government appear to be totally ignoring all the protection that is given to the subject.

It is wrong to use some of Part II, which is the compulsory part of the 1973 Act, after abolishing a great deal of it. The Government are keeping alive selectively parts of the compulsory element of the Act. Originally in Section 4 there was a time limit which ended the Government's compulsory powers in 1976. But some sections were extended by the Remuneration Charges and Grants Act 1975 and by the Price Commission Act 1977. I believe that the extension goes only to 1st July 1978. Perhaps we might be informed about whether these bogus powers under which Sun Alliance has been threatened are partially legal only until July 1978. This whole process is a gross abuse of ministerial discretion, and misusing the 1973 Act.

In a review of counter-inflation legislation, Professor Valentine Korah, of University College, London, said: The Counter-Inflation Act, 1973 has conferred on Ministers and on the Price Commission very substantial powers to create criminal offences which are subject to very little parliamentary control. The defining power and the Henry VIII clause are unusual, but the criteria according to which these coercive powers are exercised are however subject to regular parliamentary debate. I remember the discussions in Committee on the need to have regular parliamentary debate to keep these coercive powers under parliamentary rather than ministerial control. The arguments for so doing are true now, and they are as true now as when the Donoughmore Committee stated in 1932 that The precise limits of the law-making power which Parliament intends to confer on a Minister should always be expressly defined in clear language by the statute which confers it. When discretion is conferred, its limits should be defined with equal clearness. By partially taking from the 1973 Act some of the compulsory sections, altering them by subsequent legislation and extending in time only some of them selectively, this Government have gone far beyond the definition which is accepted to this day of how discretion should be used and defined with the same clarity with which ministerial powers are defined in the statute.

This Government have a pretty bad track record. One has only to think of the trouble that the Home Office got into in 1975 about television licences and of the Tameside affair in 1976, to name but two.

I shall give the House one more quotation: from a statement in 1970 by Lord Reid in Westminster Bank Limited v. Minister of Housing and Local Government. He said: When we are seeking the intention of Parliament, that may appear from express words but it may also appear by irresistible inference from the statute read as a whole; if there is reasonable doubt, the subject should be given the benefit of the doubt. That quotation is wholly apposite to what I regard as the total abuse of the discretion given to Ministers under the export credit guarantees legislation.

The context in that legislation makes it quite plain that the discretion is not intended to be used to enforce other parts of Government policy. Section 2 of the Export Credits Guarantees Act 1975 is headed Guarantees and other arrangements in national interest and it authorises the Secretary of State, with the consent of the Treasury, to make arrangements for giving guarantees to … persons carrying on business in the United Kingdom as appear to him to be expedient in the national interest". The title of that section and the whole context of the Act make it plain that the discretion given to the Secretary of State, with the consent of the Treasury, by the words as appear to him to be expedient in the national interest refers to national interest in the rendering of economic assistance to countries outside the United Kingdom.

The section begins: For the purpose of encouraging trade with other countries … or rendering economic assistance to countries outside". I do not see how provision which starts in that way and has that sort of title can be so stretched in meaning that the national interest is held to include under that particular legislation Government pay policy, which has nothing to do with the national interest in relation to export credits.

During the debate on the order which abolished, rather foolishly, the Pay Board legislation in the 1973 Act, I spoke in defence of Part I, which was the voluntary apparatus, carefully distinguished from the compulsory element in the Act. In urging the Minister not to abolish this part of the legislation, I said that he was limiting possible future action of any Government by destroying what could remain as a valuable and useful piece of machinery. I said, as reported at c. 728 on 18th July 1974, that it was useful for any pay or prices and incomes policy, not only a formalised voluntary policy but the sort of voluntary policy that the Government intended to operate.

I referred to the then new conciliation and arbitration services, saying that they were unsuitable in dealing with matters of pay as opposed to the settlement of disputes. They were, I said, a rather syndicalist type of organisation which was even less responsible to this House than any type of board or agency that we might have had before. The justification of exceptional powers which the very critical review that I have already quoted of the Counter-Inflation Act 1973 gave was that the coercive powers were subject to regular review and debate by this House.

The Secretary of State abolished the framework which enabled the House to be brought into the discussions and has left to himself alone some of the selective powers to enforce by various means the Government's will on people and businesses. On that occasion, in criticising the Government's policy, I said I do not believe that it will be possible to bring the necessary degree of control over the present level of inflation without the danger of seriously damaging investment and job prospects and causing unemployment. Even the hon. Member for Coventry, South-West will admit that those words were prophetic and true, and how she can, after listening to them, accuse Conservative Members of not being concerned at the level of unemployment, I do not know. I went on to say that such a policy as the Government were proposing to follow meant that the effect of the policy on different groups of workers was uneven, depending upon their relative strength. I said: The effect of the guidelines on different groups of negotiators will depend very much on the industrial strength of the unions and of the industries involved."—[Official Report, 18th July 1974; Vol. 877, c. 729–30.] That, too, has been proved true. The Secretary of State has maintained some elements of compulsion. He has abolished the framework within which some sort of voluntary guidelines could perhaps have been operated on the basis of overt agreement instead of covert threats.

The Secretary of State referred to letters sent to firms. I have had some experience in business of letters from Her Majesty's Government under Labour direction. Under a previous Labour Government, I received a letter with a strong hint of threat which could be taken to mean, if one did not study it carefully, that the Government had powers to inflict certain penalties upon my firm. The Government at the time did not actually go so far as to say that they had those powers. Careful use of the words "might in certain circumstances" and so on meant that no court of law could have held that letter to be an assertion that the Government were claiming those particular powers. But it took a hell of a lot of careful reading not to get that impression, and certainly one was intended to get the impression that the Government had got the powers.

The Secretary of State went on to talk about the need to keep matters private in order to protect companies. That was part of the safeguards that we wrote into the 1973 Act. They dealt with having to give notice and so on before making facts public. But I am not impressed by arguments from the Government Front Bench, whichever party might be occupying it, which depend upon what for me is an entirely false concept. This concept is that, if a certain course of action is in the interests of the Government and has the sanctions of the big firms and the large organisations which claim to represent many firms, it is necessarily in the interests of the country, the workers, the people and the customers.

I have faced this argument before from Tory Governments when they have claimed, for example, that, because the Building Societies Association agreed with the Government, no one had the right to object. That is a "phoney", syndicalist and basically Fascist argument. It is an argument which no hon. Member should accept.

The Minister has claimed that he is governing by the use of discretion. I have tried to show, as briefly as I can, that he is governing by the abuse of discretion. Perhaps the most important factor is that we are now seeing a deliberate extension by the Government of the prerogative to an extent which, when it was tried on by an absolute monarchy on an earlier occasion, led to civil war in which Parliament took its stand against the Executive.

We have not reached the point yet at which Parliament and the Executive are at such loggerheads. I hope that the House can stave it off for a bit longer by voting solidly with my right hon. Friends tonight in condemning this extension of the prerogative and condemning government by threat, by innuendo and by hint.

6.30 p.m.

Mr. Richard Wainwright (Colne Valley)

The Secretary of State, armed with his welcome report of the rate of inflation coming down fast, was, in effect, appealing over the heads of his own Left wing and over the heads of his much smaller problem, the Conservative segment of the Opposition, to public opinion which has for the last two years been overwhelmingly in favour of Government restraint on incomes as well as on prices.

But I say to the right hon. Gentleman that he really should not presume on that advantage too far, because I reckon that when, for instance, within a few days of the Government's White Paper in July, "The Attack on Inflation", the Gallup poll of the next month reported that 75 per cent. of its respondents were in favour of Government restraint of incomes, the public then were expecting and asking for a workmanlike policy which would carry out that restraint in a thorough and proper manner.

It seems to me that the Government are in danger of losing a most remarkable and priceless asset, namely, overwhelming public opinion in favour of sensible restraint. There seems to me to be a danger that, as the ramshackle nature of the Government's apparatus—I do not say of their policy—becomes more apparent—I am speaking particularly of productivity deals—and comes under the microscope of the Press, there is real danger that public opinion will lose faith in the restraint that it has so admirably backed till now.

One wished that a bold and far-seeing Government, fortified by that expression of public support, would, in the summer, when admirable attempts with the TUC had largely although not wholly failed, have set themselves to the introduction of a workmanlike policy, bringing back a Prices and Incomes Board to do the job in a thorough manner.

In the debate on the White Paper on 20th July, my hon. Friend the Member for Cornwall, North (Mr. Pardoe) said: The Chancellor's statement last Friday is not a policy; it is a statement of objectives—objectives which we share, but none the less they are no more than objectives … The Liberal Party believes that in the foreseeable future an enforceable prices and incomes policy is essential if we are to have stable prices and full employment."—[Official Report, 20th July 1977; Vol. 935, c. 1671.] That remains our view, as it has been for at least a decade. To do it requires that the Government shall bring back into being an independent and highly expert body with powers to get at the facts and to assess the various claims, both on the pay front and on the prices front.

It is not a question of the confidentiality, which I think proper and would hate to see undermined on the advice of the chambers of commerce referred to by the right hon. Gentleman, and which the Press chooses to call a black list, or the penalties, which we think are proper, but the lack of adequate policing and the lack of independent judging which we find remiss in the Government's present arrangements.

I am sure that the Government would agree that their powers are intended as a deterrent. Like the schoolmaster, they will reckon that when they have to inflict a penalty they have failed, because the purpose of the whole apparatus is to keep people on the straight and narrow path. I have never known a less advertised deterrent than this one. If one has a weapon with which to try to keep people in order—a sanction—surely one proclaims it from the housetops.

I give the point at once to the Government that the famous paragraph 16 of the White Paper is a splendid weapon. I sent it to various companies in my constituency which had asked me what the position was last summer. It was a splendid recital. It said: Where a firm has reached a settlement which is quite clearly inconsistent with the policy set out in this White Paper, the Government will take this into account in public purchasing policy and so on. It was splendid stuff. Yet it has been so little invoked and referred to by Ministers in public utterances or even in debates in this House. Subject, as always, to correction, I can only believe that this lack of reference to their deterrent is because of their own lack of confidence in the very slender detective force that they have called into being.

Mrs. Jill Knight (Birmingham, Edgbaston)

Might not the reason for that be the suggestion that this is still a voluntary pay policy?

Mr. Wainwright

It is not a voluntary pay policy in my book—it is an unfortunate half-way house between a voluntary pay policy and the proper, genuine statutory pay policy which we should have.

On the same point of the coy attitude of the Government over their very proper deterrent, there is the question of now putting the extra clause into eon tracts. But why now? Why wait until February 1978? The Government had a flash of wisdom when they did the deal with Chrysler. In the Chrysler documents, there is an express requirement upon Chrysler at all times to abide by whatever is the current Government policy on pay restraint. Armed with that precedent, surely such provision should have been introduced into the general documentation many months ago. I choose my words with as much care as I can muster when I say that this policy, for all its deficiencies, is a very great deal better than nothing—and it is nothing, literally nothing, that we are offered by the Conservative segment of the Opposition. Therefore, our hope tonight is that the Government will see that this may be part of their last chance. They are good at brinkmanship, and they have had a lot of good leadership advice on it.

Our hope is that the Government will realise that the mess they may have got themselves into in one or two cases, with the prospect of productivity deals rising up to haunt the Secretary of State in his bed, means that, being men of sense and judgment, they must put their house in order and bring back a statutory prices and incomes policy, putting it in the charge of the Secretary of State, who, I may add, was more at ease as a junior Minister at the Dispatch Box standing up for Mr. Aubrey Jones's judgments than he was today. In the meantime, however, I recommend my right hon. and hon. Friends not to support this meaningless attack by the Conservative Party and to vote for the Government

6.38 p.m.

Mr. Eric Moorman (Basildon)

There are a number of lessons to be learned in all quarters. I make my intervention about the lesson that the Government should have learned, and which one hopes they have learnt, from the exchange of views in the past couple of hours and—perhaps even more important—from the experience that they have gained over the past week.

If the Government have had a bad Press, it was not because the Leader of the Opposition was particularly original or successful with her remarks last weekend, but because of what the hon. Member for Colne Valley (Mr. Wainwright) described as their coyness in communicating their policy. That is unforgivable. When a Government, particularly a Labour Government, introduces policies which involve some shared decision-making with industry they must ensure that they fulfil their responsibility to communicate such policies to the public and to the affected firms. If they fail to do that, not only will they cause dismay among their own supporters—we have heard one or two very important points raised on that ground—but they will lose public support. The present policy associated with the industrial and economic strategy is very fragile, and has no legal binding, so that public understanding and discussion are all the more crucial. I shall return to that point.

But perhaps it is the Opposition's attitude that one must examine rather closely, because the unconvincing aspect of the Opposition's attack on the Government today is that it is a deliberate attempt to isolate one element of Govern ment industrial strategy and to destroy it, and thus, by implication, the whole of the industrial strategy. It was said a moment ago that this was a debate not about industrial strategy but about the rule of law. That is a convenient phrase for Opposition Members to use, and the present Opposition are inclined to do that most days of the week. No doubt we shall hear it again on Friday. We heard it about 10 days ago during the rather extraordinary debate about the size of Hansard.

One can make out a case about the rule of law on any single aspect. On this occasion I think that most reasonable Members are quite clear that this debate is not specifically about blacklisting and not specifically about the rule of law; it is a deliberate attempt by a weak Opposition—the opening speech, for instance, was quite deplorable—to challenge the present Government's industrial strategy. The strategy is a much bigger prize for the Opposition to go for than merely to concentrate on the so-called blacklisting, just as the newspaper story on this aspect of policy which began last week will end in about two days' time, because the newspapers recognise that it is a seven-day wonder. The Opposition have a leader who is inclined to give them a story a day. If there are votes in those stories, the right hon. Lady will announce them just as quickly as her colleagues will provide them.

However, the particular reason for this debate also reveals the inconsistency of the Tory Opposition over the past few years. Since the admittedly unambiguous style and tactics of the Health Administration in the winter of 1974, the Opposition have been inconsistent, because earlier criticism of the present Government's strategy has been the fear that Labour would not hold firm. The Opposition Front Bench has warned us that the present Government would yield too easily, that they would not be firm or courageous enough to resist wage claims. Yet the central feature of today's charge by the Opposition is that the Government have acted too strongly and wilfully against companies.

That indicates that the Opposition, despite their attitude about showing greater experience of industry and business than Labour Members—indeed, at times they argue that they have a greater experience than almost anyone around—simply had not thought through the consequences of the way in which the Government had to introduce and to impose some sanctions if they were to succeed in an industrial policy.

If the Opposition want not a consistent industrial policy but merely a total free-for-all on every conceivable aspect of industrial life—not only on pay—they ought to say so. We certainly did not hear that expressed in their vague opening speech. Perhaps we shall get something better in the closing speech. One is inclined to be rather optimistic.

Because the debate is about industrial strategy rather than blacklisting, it is necessary to examine the way in which the present Government have introduced this approach. I turn to a key argument in the document "The Attack on Inflation after 31st July 1977": the Government is responding to the TUC's request for action to create a climate favourable to an orderly return to normal collective bargaining. In particular, it is proposing measures which can give working people confidence that their living standards can be generally maintained by moderate settlements at twelvemonth intervals. These measures are designed to give special help to the low paid and to families with children. One of my hon. Friends argued very convincingly that such aid and protection of the lower-paid has not been achieved. However, it seems to me that the aims of broad strategy are being pursued seriously. What is clear is that inflation was seen to be a major target and that, learning from other policies and experiences, the Pay Code was formulated.

Several references have been made today to what my right hon. Friend the Chancellor said last September. He did not lay down a hard line with regard to the 10 per cent. He said, Our guidance to negotiators is that when we look at the economy as a whole we see that we cannot afford to increase our total earnings by more than 10 per cent. if we are to bring inflation under control … Negotiators are free to make up their wage settlements in the coming round in whatever way best suits their circumstances, but we have asked them to remember what we have said about the economy as a whole. What we are referring to in the pay policy and the sanctions is part of a very fragile structure. As the hon. Member for Melton (Mr. Latham) said, there is no legal basis for it. But to provide it with the legalistic requirements would make the Pay Code very different from what it is today. The Government must, however, have some reserve powers or sanctions, otherwise they would be failing to act for the nation as a whole, and no one would benefit if the inflation figures leapt ahead again. It is thus in this context that the question of sanctions against firms which knowingly break these rules must be seen.

While I shall be critical of the way in which the rules have been applied. I can legitimately see their usefulness. If the Government, through their contracts and purchasing, cannot discriminate against those who ignore the claims of the national interest, we are a million miles away from a just society, let alone a Socialist society.

That is what the debate is primarily about. It is not only about the rights and the opportunities of a group of companies. They preferred to negotiate without reference to the nation as a whole. The Government's response to that, acting on behalf of the nation, is to insist that in certain types of contracts those who place those contracts shall have regard to whether a firm has breached the pay limit. I quote from the document produced by the Department of Health and Social Security, which says: No tender should be invited from, nor any contract or extension to any existing contract be awarded to, a firm in breach of the pay limit unless the prior approval of the Department has been obtained. That is very different from the sort of allegation that we have seen in the Press, and very different from the charges and counter-charges that have been made by the Opposition.

It is the Government's responsibility to protect the national interest. I believe, therefore, that when those who make the criticism are arguing the case for the companies concerned they are, by that very action, ignoring the nation's interest.

My criticism of the Government concerns the method and manner of implementing such discriminatory sanctions. It is perhaps the most fundamental part of the discussion. The Opposition have misjudged the mood of the country in terms of the battle against inflation. It is a far greater battle, and more serious, than any reference to the arguments surrounding black lists.

However, there are some matters associated with the companies concerned which are still very unclear. We have had from the Opposition Front Bench the suggestion that an apology has not been given to the John Lewis Partnership. From reports appearing in all the newspapers this morning, it seemed to me that John Lewis had received an apology from the Treasury. We have heard from the Dispatch Box that no apology has been given within the past week. I think that that is the first very critical question that needs to be clarified before the end of the debate.

Mr. Ridley

I had not intended to interrupt the hon. Member until he had finished his moralising about the incredible importance of a statutory or quasi-statutory policy for the control of inflation. However just for the record, may I ask whether at the last General Election he put in his election address, as did most of his Front Bench colleagues, the promise that Labour would not introduce an incomes policy?

Mr. Moonman

The point has been made that what we have is neither a statutory nor a totally voluntary policy. The hon. Gentleman can draw whatever conclusions he likes. If hon. Members and certainly the Tory Party are arguing for a statutory policy, that is something which the hon. Gentleman would have difficulty in accenting. If the hon. Gentleman is saying that there is to be a grand free-for-all, it would be a dangerous route to high inflation yet again.

What was said in the manifestos of most Labour Members at the last election was that the need to beat inflation was of prime importance. Some may disagree with the way in which the Government have acted, but the target is clear. What I am not certain about is the Opposition's targets. I am unable to recognise the method by which they would achieve these vague targets, and if I reflect that, it must be the view of many people outside. I have said that there are lessons for the Opposition in this whole exercise, but perhaps they are not the lessons that they are prepared to admit. I stress the importance of this, because it is the Government who will have to stand the charge.

The way in which companies have been informed of the sanctions has been both poor and unfair. I believe that it is necessary to have sanctions and to have these powers. What troubles me, and will no doubt trouble many people outside, although they understand the Government's dilemma, is that although negotiations and discussions should be going on—and the point made by my right hon. Friend was that there had been a great deal of correspondence with the John Lewis organisation over many months—that is not the same as saying to a company that it is now on a particular list and discriminatory practices will be exercised against it.

If we are determined to make a success of the individual elements of our industrial strategy, the Government cannot get away with this. Not only is it bad management—my right hon. Friends would not tolerate it in their own business—it is poor psychology, because if there is anything meaningful in the sanctions we ought to be able to say to the public "We have these sanctions. A particular company has been shown to have fallen in a particular way, and here is our sanction". We ought to be able to do that, and if we cannot get this technique right, God help us when we introduce planning agreements, because both sides of industry will demand the sharing of information.

I offer this advice to my right hon. Friends in the most constructive sense. They will have to learn to live with an open communications system, because the people who are participating have a right to know what is being done. Many of my hon. Friends are with the Government, but we have a right to go one step further and say that this is poor psychology.

Instead of being able, in this debate, to justify the merits and purposes of the sanctions against firms—we have heard little of that—Ministers have had to explain defensively what is meant by a secret list, the numbers informed, and those not informed. But there are lessons to be learnt, and I hope that the many companies that are uncertain about whether they are on a particular list will, at the earliest opportunity, be informed where they stand by the Department.

Although my right hon. Friend made some play this afternoon of the importance of maintaining confidentiality with firms which are liable to be discriminated against, he did not satisfy me. I think that most companies would recognise the importance of the vulnerable nature of the stock market and what it would mean if they lost an order, or the possibility of getting one, but I still believe that more important than that is the ability to explain to the company and for it to be given information that it has been put on some list. It is of prime importance to tell companies what they have done. Unless we are able to meet that obligation, more and more companies will feel frustrated.

I believe that the John Lewis organisation, even at this moment, is unaware of where it stands. The correspondence might be published and be available, but the company has a right to know where it stands. The one thing that troubles me about this debate is that we have reached this point without clarifying what the position will be in future. My right hon. Friend said that there would be stronger measures, and before the debate ends we ought to know what those measures are likely to be.

The fundamental approach in the industrial strategy is right, but it is limited. I hope that when my right hon. Friend replies to the debate he will set out the other initiatives which the Government feel would be appropriate to buttress the efforts which are being made to keep wages within some general range of priorities. We have been forced, as a result of the debate, to work within narrow limits of discussion, but I hope that my right hon. Friend will use this opportunity to show that there is some new thinking on the matter; that there are other ways in which we can overcome some of the problems associated with prices and wages, because a new imaginative approach is required.

I think that collective bargaining is ill-managed. There is an enormous waste of effort and resources, with few set periods for review incorporated into agreements. Perhaps many of the problems with regard to discriminatory practices and the way in which companies are providing a percentage increase are merely cosmetics. The fundamental problem is still the way in which companies are able to adapt their policies to the contemporary environment.

That being so, perhaps the views of David Basnett and others on wage claims are worth noting. It is up to hon. Members on the Government side of the House not only to widen the issues about lower-paid workers and the cause and the case that they have, but to be more positive, so that when the Government attempt to explain their industrial policy they are able to show not only to the House but to the wider public that they understand the detailed implications of what is proposed. If we fail to do that we should not be surprised if, at the end of the day, the public turn us down.

6.57 p.m.

Mr. Kenneth Baker (St. Marylebone)

I agree with many of the things said by the hon. Member for Basildon (Mr. Moonman), and the House had plenty of time to reflect upon them during his speech.

This is an interesting and important debate, and for Hattersley watchers it has been an interesting day because some of us remember hearing the Secretary of State for Prices and Consumer Protection 10 years ago defending a statutory incomes policy from that Dispatch Box, a year later defending the withdrawal of a statutory incomes policy, then attacking our N-1 in 1970 and 1971, then attacking and voting against our introducing a statutory policy in 1973, and then speaking against that statutory policy and withdrawing it when he was in Government. The wheel has gone full circle, and no charge of consistency can be laid against the Secretary of State this afternoon.

This is yet another debate along the rocky and stony road of incomes policy, and I have come to the conclusion that there are only two kinds of policy. One is a statutory policy which is rigid, inflexible and with the full authority of penal sanctions against the employer or the work force—I gather that that is what the Liberal Party would welcome—but, having trod that rocky road, I should not want to tread it again, and I dare say that most hon. Members would agree with me.

The alternative seems to be a truly voluntary policy which must depend on the arts of persuasion of Ministers, of the Government, of Chancellors of the Exchequer and of Prime Ministers. Successive Governments have had some success with such a policy. We had a voluntary policy from 1970 until the spring of 1972, and most economic commentators now say, on reflection, that it worked.

What the Government are trying to do is to find some position in no-man's-land between a statutory policy and a voluntary one. Being in no-man's-land is an uncomfortable position. One is shot at from both sides, and the only argument that the Secretary of State was able to adduce this afternoon was "If you know a better hole, go to it."

The Government are trying to operate in this twilight area. Trying to give statutory authority when they are seeking only voluntary acquiescence leads any Government into the position in which the present Government find themselves. It has led them into a nightmare of furtive actions which have slowly squeezed out one Company after another. My hon. Friend the Member for Melton (Mr. Latham) spoke of Wimpey, and I shall speak of the John Lewis Partnership. Trying to be apologetic, the Government have placed in the Library documents which do not support thier case over the John Lewis Partnership.

Added to such a policy is plain Government inefficiency. It is impossible to police a policy in the way the Government are trying to police theirs, with a few civil servants in the Department of Employment and a handful of civil servants in the Treasury, one Department not knowing what the other is doing. On 1st January the Prime Minister said—I believe that this was generally his feeling—that the black list was a figment of the media's imagination. I do not believe that the system had thrown up to the Prime Minister the fact that a black list existed then.

There are all these difficulties and complexities. At the Dispatch Box this afternoon, the Secretary of State developed almost a new doctrine of administrative law, with which my right hon. Friend the Member for Farnham (Mr. Macmillan) dealt so well. The Secretary of State was, in effect, saying that we must now move to a form of administrative government in the discretion of particular Minis ters at particular times, the exercise of power without legality, to which they have added the imposition of penalty without the knowledge of those who are penalised.

I turn briefly to the case of the John Lewis Partnership, a leading company in my constituency. I was amazed that the Secretary of State spoke of the company this afternoon in such sneering and condescending terms. He was very condescending and tried to imply that John Lewis was at fault. There are few companies in this country with such a high degree of social responsibility as the John Lewis Partnership, which has developed over the years a form of co-operative ownership which is a model for many other companies.

The company also has a social responsibility which is well known to the public and its customers. It is extraordinary that a company of that standing, status and background should be driven to the position to which it has been driven by Government policy.

Why has that happened? The history is in the correspondence that I am holding. John Lewis reported to the Price Commission its pay award for last year under phase 2, and the Department of Employment picked the matter up. The award for a small group of the company's workers, 424 out of 24,000 on the payroll, exceeded the limit by about £1.50 a week. That amounted to £27,000 in an annual payroll of £54 million.

The matter was discussed in correspondence during last summer, and then on 16th August the Department of Employment wrote to John Lewis's director of personnel saying: Further to our conversation on Thursday. I confirm that I have no choice but to record that the company's pay settlement is technically in breach of the pay policy; and I am informing the Price Commission accordingly. Only the Price Commission—no other Government Department—was being informed. As you are aware, the White Paper Cmmd 6151 states in respect of settlements in breach that the whole pay increase will be disallowed for price increases'. That was where the matter rested. There was no suggestion that the company would be put on a black list or that other sanctions would be used against it, until it received an anonymous letter and one of the partners then took up with the Treasury the question whether it was on a black list. On 6th January the Government acknowledged that it was on a black list, in a letter stating: The results will not, I am afraid, be welcome to your Group and a number of other firms affected. The Government has decided that, in cases where firms have on their most recent settlements for groups of employees clearly exceeded the relevant guidelines, their names will for the time being be listed, and maintained on the list in the absence of other relevant developments until the occasion of the next settlement for the group of employees in question, when the position will be reconsidered in the light of arrangements then made for those employees. A more formal letter will be coming to you". For four months the partnership and many other companies on the list did not know that they were on it. That is a complete abuse of an administrative power. The Government and the Secretary of State for Employment owe it to a company with which the right hon. Gentleman's Department has been in a relationship over a specific matter to tell it of any sanctions specifically being used against that company.

This is where the hon. Member for Basildon (Mr. Moonman) is absolutely right. It is not possible to have this twilight area. One cannot cover it up, fudge it up, and have the Attorney-General apologising in another case, saying that the list had existed but that sanctions do not apply. That is where one is when one tries to live in no-man's-land, between statutory and voluntary policy.

Mr. Moonman

Is the hon. Gentleman, who obviously has most of the details of the John Lewis case, aware that within the past week or so John Lewis has had an apology from the Treasury? He will recall the point made by my right hon. Friend the Secretary of State.

Mr. Baker

I have just quoted the letter of 6th January from a Treasury official to the director of personnel. Since 16th August, John Lewis had believed that it was in discussion only with the Price Commission, and for four or five months there had been total radio silence from the Government.

I understand from the John Lewis Partnership that it believes that during this period it has probably lost two business contracts with a local authority and with an area health authority as a result of what has happened.

The Government cannot intervene in that sort of secret way. They have been playing a kind of poker game. The object of poker is to conceal from one's opponent the poor value of one's own cards, to increase the ante and bid up in the hope that the weak-hearted players and small men will drop out. That is exactly what the Government have been doing. I do not believe that Britain should be governed by the politics of the poker table or the ethics of the pool room, which is what has happened in this case.

Every Minister who comes to the Dispatch Box to defend the Government from now on will know that what I am saying is right. This Chamber came into being to check and stop the abuse of administrative power, which is still being used by the Government. They are using it to attain ends that they and many other people think desirable, but if they want powers they must ask the House for them, because only the House can give the Government those powers.

7.7 p.m.

Mr. Ted Fletcher (Darlington)

The hon. Member for St. Marylebone (Mr. Baker) spoke of the abuse of power and suggested that if the Government wanted powers they should ask the House for them. It would be interesting to know what would be the Opposition's attitude if the Government intended to introduce statutory powers to enforce wage restraint. We are in some doubt about where the Tory Party stands on this issue.

It is rather fanciful for the Conservatives to imagine that they are coming on a white charger to rescue the trade unions, because the unions have always recognised the Tory Party as the party that holds down wages. In 1973 we had a statutory wages policy designed by a Conservative Government. Now, the hon. Gentleman seems to suggest that the Conservatives are having second thoughts.

We know where the Liberal Party stands. Liberal Members, who, I notice, are not present, want a statutory policy. It would be interesting to know whether the official Conservative policy is to return to the 1973 Act and have statutory control or to allow a free-for-all.

Mr. Nott

The hon. Gentleman said that the trade unions believed that the Tory Party had held down wages. That view may be held in some parts of the trade union movement, but the trade unions should recognise that during the previous period of Conservative Government real incomes rose by 14 per cent., whereas since the Labour Government have been in office they have fallen by 1.6 per cent.

Mr. Fletcher

I cannot check those figures. I prefer to accept that during the past three years there has been an erosion in working people's standard of living.

During this debate two particular points of view have been put forward. In many ways it has been a "phoney" debate between those who want a statutory policy to hold down wage increases, to restrain wages by law, and those on my own Front Bench who want what they call a voluntary policy, although, as one of my hon. Friend reminded us the other day, it is a voluntary policy without volunteers. It is a voluntary policy backed by the economic muscle of the Government to ensure that it is carried through.

However, there is a third point of view, the point of view held by the trade union movement which wishes for a return to collective bargaining. The TUC has co-operated with the Government in the first two stages of its pay policy. agreeing first of all to the £6 minimum and secondly to the 4½ per cent. On the third occasion, when approached by the Government the TUC said that it was not prepared to enter into any sort of wage bargaining with the Government other than to allow a period of 12 months to elapse between wage settlements.

As a consequence, the trade unions believe that they should now have the opportunity freely to bargain with the employers on their wage increases. I have always been an opponent of a statutory wages policy, going back 10 years to the time when the Labour Government first introduced their prices and incomes policy. My view, which is held by very many trade unionists, is that fundamentally wage policies are unfair in their application. They cannot be policed because we can tackle only those groups of workers who are parties to a national agreement.

It is fairly easy to have a wages policy for miners, railwaymen or other groups of workers who have national wage rates. It is very much more difficult in. for example, the engineering industry, which employs almost 3 million workers, mainly on payment-by-results, bonus and piecework systems and jobs are constantly timed and retimed. As a consequence, wage increases come by what is known by the economists as a wage drift. It is impossible to police this vast area in which a wages policy does not apply. It does not apply in smaller firms. By and large it does not apply to small employers, particularly in the distributive industry.

A wages policy concentrates on those upon whom the Government can enforce their policies but leaves behind large sections of the population on whom they are unable to exercise their authority.

Executives or higher administrative staffs can overcome a pay policy by the provision of medical services, educational facilities for children, a motor car and so on. Generally, economic policies on pay matters followed by the various Governments have proved a failure. They have held down wages in one section of industry but not in other sections.

When the Government embarked upon their present so-called voluntary wages policy, they suggested first an increase of only 5 per cent. Some of the speeches made by my right hon. Friends on the Treasury Bench suggested that there should be a 5 per cent. increase. They said that with wage drift, with overtime payments and so on, it would end up by being 10 per cent. They have moved from that position. They are now suggesting that the increase should be not more than 10 per cent.

One would like to know where that arbitrary figure has been taken from. It has never been discussed, as far as I know, in the House. We have never publicly debated the matter and passed any law stating that it should be 10 per cent. It has not been discussed in the Parliamentary Labour Party, for instance. I doubt whether it has been discussed by the junior Ministers. It is a Cabinet decision. One would like to debate whether 10 per cent. is too much or too little.

One needs to know the economic factors involved in the statement by the Government that it is essential to stand and die by the 10 per cent. There has recently been a firemen's strike, after which the firemen returned from being on strike for eight weeks. They have come back humiliated and forced into the ground, whereas, had the Government's wages policy been more flexible, it would have been possible to stop the strike in its early stages by offering some inducement on the periphery of wage bargaining to take account of the fact that firemen work 48 hours a week and the majority of people work a 40-hour week.

However, the Government wanted to test their strength. They wanted to show their muscle. They have now sent back to work about 40,000 workers who are disillusioned with the policies of the Government. I stress that the Government must be flexible in their attitude towards a wages policy. They cannot and will not be able to go to the stake in other disputes. They will not be able to fly the flag for the 10 per cent. as they did in the firemen's dispute. If we are to avoid a confrontation between the organised trade union movement and the Government, the Government will need a more flexible approach on the wages front.

In talking about free collective bargaining, one should not imagine that it is free. Certainly it is collective, and it is bargaining. But, in the years before we had statutory wages policies, wages were held down because trade unionists could not submit their demands and expect them to be met. They have had to bargain and fight for every advance that they have made. They have done this for the last 150 years. Wage increases are not offered on a plate.

Because of the type of society in which we live, it is necessary for labour to be highly organised and to fight for its rights. We are living in an industrial jungle in which, because of the type of capitalist system of society in which we live and because of greed and avarice, it is necestary for every section of the population to fight for its own benefit.

If we lived in a rational and planned society, it would be possible for us to institute an incomes policy. We do not live in that type of society. The Government have to come to terms with the fact that the organised trade union movement is no longer prepared to go along with them in their wages policy.

My final plea to the Government is at least to bring into the discussion some flexibility in their approach to the unions. I ask them to disregard the contributions made to the debate by the Conservative Party, because it is engaged either in political opportunism or in putting forward a "phoney" argument to try to convince some sections of working people that the Tory Party is at last on their side, which is not so. No doubt the Conservative Party has had pressure put on it by the Sun Alliance and London Insurance Group to bring the matter to the attention of the House.

I ask my hon. Friends—I address my remarks mainly to the Government Front Bench—to consider carefully the road along which they are going. I ask them not to turn the screw too hard, to have some flexibility and to reach some agreement without crucifying themselves on the 10 per cent., in the hope that they will reach a rational conclusion with the organised trade union movement on the advances that are to be made in the future.

7.20 p.m.

Mr. Joseph Godber (Grantham)

I do not wish to follow the hon. Member for Darlington (Mr. Fletcher) in what he said. I am sure that he believes entirely in what he put forward. If I were to seek to cross swords with him it might take a long time, and I wish to be brief.

I start by declaring my outside interests, all of which are affected to a greater or lesser extent by the success or otherwise of the Government's policy of restraint on incomes. Tonight, I want to draw special attention to my position as chairman of the Retail Consortium, because I wish to refer in particular to one of the cases that has come to light affecting a large retail concern.

I make clear straight away that I am not opposed to any Government seeking to restrain income increases more in line with increases in productivity. The answer to what the hon. Member for Darlington was saying is that they have to be kept in line in the interests of trade unionists as well as of others.

I was once Minister of Labour, before the Department changed its name to "Employment" and before statutory incomes policies had been brought in by either party. In those days we talked about a "guiding light" on wage and salary increases. The Government of the day certainly tried to discourage both employers and unions from exceeding that light. So there was an attempt, even at that stage, at some form of restraint.

Later we had statutory incomes policies from both parties, and I was involved directly as the Minister responsible for food prices in enforcing one of them. Thus, the principle is in no sense new to me, and I am not against what the Government are seeking to achieve. What I criticise is the method that they have chosen to adopt.

The Government cannot be very proud of their tactics, because until recently they have denied the existence of a black list. That is what I condemn. They have openly brought pressure to bear on some firms, and I for one do not necessarily condemn them for that. It is the secrecy and the furtiveness, which are now coming to light, that I condemn utterly, and in this brief intervention it is that on which I want to concentrate.

I reminded the House that I am chairman of the Retail Consortium. One large retailing enterprise—the John Lewis Partnership—has figured prominently in the Press in the last few days. My hon. Friend the Member for St. Marylebone (Mr. Baker), in whose constituency the company has its headquarters, has rightly brought the matter to the attention of the House. I also wish to refer to it briefly. The offence committed by the John Lewis Partnership, in the Government's eyes, arose over a very minor infringement of phase 2, not the present phase 3. We are told in the Press that it amounted to 480 staff receiving £1 a week more than the phase 2 limit. The cost was £27,000 a year, which was negligible having regard to the total wage bill.

The amount and the degree of the infringement were, of course, trivial, but that is not the point I wish to stress. The Sunday Times gave the full story over the weekend. I do not want to dwell on that, particularly as my hon. Friend the Member for St. Marylebone has already dealt with it in some detail. The point is that John Lewis did not know that it had been blacklisted until months after this so-called offence had taken place. That is the serious and damaging fact that Ministers must take into account. In addition, we were told that an apology had been given to John Lewis. But that apology would not have been given had the case not been exposed as it has been. This was not a mistake made by the Government. It was the pressure of the last week or two that exposed the case and, presumably, forced the apology to be given. Therefore, this is clear evidence that nothing would have been heard of the matter had it not come to light in the Press and elsewhere.

What I want to know is, if this can happen to one retailer, how many other retailers are on the Government's black list without knowing anything about it? If one is kept in ignorance, what evidence have we that others are not similarly listed without any knowledge of that fact?

Mr. Hordern

I do not think that my right hon. Friend was able to get to the House to listen to the Secretary of State's remarks. If he was not, I wonder whether I might tell him that the Secretary of State tried especially to make out that it was the reluctance of John Lewis to provide the transcripts of the evidence and the letters that had caused him some difficulty in laying the papers before the House. I have now had an opportunity to read the correspondence. The reason why John Lewis was reluctant is plain. There was some commercial evidence of extreme importance to the company which made it reluctant to release the correspondence.

Is my right hon. Friend aware that, in the correspondence, the Department of Employment said that the policy was voluntary, although the Government had expressed the hope that firms would feel able to comply? At no stage was the company ever told by the Department that it was to be put on the black list.

Mr. Godber

I am grateful to my hon. Friend for filling me in with that information. I apologise to the Secretary of State for not being present to hear his speech. That was for reasons that I had earlier explained to Mr. Speaker. In fact, that reinforces the point I was making. I regret it very much if the right hon. Gentleman in his speech sought to lay the blame on John Lewis.

Mr. Hordern

He did.

Mr. Godber

It seems that the evidence is clear. It is not necessarily the fact that the Department of Prices and Consumer Protection was wholly to blame, but clearly it was involved equally with the Department of Employment. Whatever justification the Secretary of State may advance, he would do well to look at the matter again.

Mr. Hattersley

The right hon. Gentleman indicated that he was not here when I spoke. Before he tells me that my justification was wrong, perhaps he would like to know what it was. In the summer, two letters were sent to John Lewis pointing out that if it persisted with a course of action it would be liable for the discretionary action applied by the Government.

Secondly, as I know the right hon. Gentleman wishes to be accurate in all particulars, the apology, which he might care to look at in the correspondence, was not the result of public pressure. It was made at the latest during the first week in January—five weeks ago—and several weeks before the name John Lewis reached the newspapers.

Mr. Godber

I am grateful to the Secretary of State for his explanation. We have been given the date 6th January, which was after the Prime Minister publicly said that he was not aware of a black list.

Mr. Hattersley

That is a wholly different matter.

Mr. Godber

That may be, but there seems to be a degree of similarity.

The point I want to re-emphasise, which has not been dissipated by what the right hon. Gentleman said, is that John Lewis claims that it was left with the firm understanding that no action would be taken. It was not told that it was to be placed on a black list. Whatever the Secretary of State may say—I gather that he does not deny that—John Lewis had no written statement that it was on a black list. That is what I suggest should have been done if there were to be any action of that kind. That is why I ask, if this has happened with one retailer, what confidence can we have that it has not happened with others who equally have not been told? The gravamen of my charge is that secrecy has been invoked in a way that is damaging to the prestige of the Government and is disquieting to everybody who is engaged in commerce.

Mr. Alexander W. Lyon (York)

Is the right hon. Gentleman saying that the Government's policy would be acceptable to him provided that the firms on the black list were notified, at least privately, that they were on the list?

Mr. Godber

No. The hon. Gentleman must not put words into my mouth. I did not say that. I made it clear that I was not opposed to the principle of restraint. That does not necessarily mean that I have to accept every aspect of what the Government are doing. The main part of my charge is secrecy, because that is dangerous to the community as a whole.

We have always prided ourselves on the fact that we are a law-abiding community, but we are a law-abiding community only because our laws are openly debated and confirmed in this House. But when the Executive starts operating secret constraints which, while not being against the law, do not have the force of law, we are returning to the realm of the Star Chamber. We should understand that these are the dangers when the Executive starts to operate in that way.

When we consider the way in which the power of the Executive has been extended in recent years and the percentage of the gross national product which comes under Government control, it is essential that secret constraints, however worthy their objective might be in the Government's view, should be condemned and abolished.

My argument has been based on a case arising under phase 2. The arrangements in regard to phase 3 may be different, but the principle of banning secrecy is exactly the same.

In my view, Ministers have been guilty of a cover-up operation which cannot be excused. Their attempt to hide it is discreditable and has rightly been exposed. We need an absolute guarantee that in future neither they nor their officials will attempt to hide such actions. If they are confident that their actions are right, secrecy is unnecessary. That is the basis on which we should proceed. Those who have power should exercise it fully and openly, and we should not then have cases of this kind.

7.30 p.m.

Mr. Alexander W. Lyon (York)

In 1975, when the first pay policy was inaugurated, Cmnd. 6151 gave a warning, in paragraph 20, that in order to back up the powers which the Government were taking they would also use a number of economic weapons with which to support the pay policy. Those economic weapons were listed in the subsequent paragraph, and they are the ones about which we are talking in relation to the alleged black list.

It is true that at the beginning of this period of pay policy, the White Paper "The Attack on Inflation after 31st July 1977", Cmnd. 6682, did not specifically refer to the preceding White Paper, but that White Paper was still in effect. Any hon. Member doubting this should read paragraph 16 of the White Paper, Cmnd. 6882, which applies to this period of pay policy, where it says that Where a firm has reached a settlement which is quite clearly inconsistent with the policies set out in this White Paper, the Government will take this into account in public purchasing policy and the placing of contracts, and also in the consideration of industrial assistance. It is quite clear from that paragraph that from the beginning of this year, since when the 10 per cent. has operated, the Government gave public notice to everybody in the country that they intended to use whatever power they had in order to operate a policy of restraint. I believe that the country has benefited by a policy of restraint and that it wishes the Government to fight the battle of inflation and to win it. The Government want to use whatever powers seem to be available to them in order to win it.

We are all agreed that another period of statutory pay policy would be unacceptable, and it is clear from the attitude of the trade union movement in the summer of last year that even a so-called voluntary pay policy, such as that operated for two years with the consent of the Trade Union Congress, would not now be acceptable. But that is not to say that the Government have no power or that the Government should not use any of their power to try to battle for the reduction of inflation. Of course, the Government have power.

There is no doctrine of English law which says that one may not do something unless Parliament has authorised the power for one to do it. That has never been a doctrine of English law. One may do whatever one wishes, provided that it is not forbidden in English law. The Government are just as much within that area of legal policy as any individual, unless bound by an ultra vires application of policy, and that is not true in relation to the area with which we are now concerned.

We are concerned now with the question whether the Government as a contractor should be allowed to say that they will choose one firm with whom to contract rather than another. In that respect, the Government are operating in no different capacity from that of any individual or company. They can discriminate between one company and another in their contracting policy, just as any individual in the country may, provided that they remain within the law.

The Government cannot contract in a discrimatory way against women, they cannot contract in a discrimatory way against blacks or against any other racial minority, but they can contract in a discrimatory way as between one company and another within the law, if they so wish, on any ground that they wish. They could, in fact, decide not to contract with any company which proved money for the Conservative Party. Such a policy would not be illegal.

It is not, therefore, illegal, and could not be claimed to be illegal, if the Government, dedicated to reducing inflation and doing what they can with the powers that they have, tell companies that if they put up their employees' pay by more than 10 per cent. the Government will take action against them. Equally, in my view, the Government can apply the same test to any of their other powers to grant credits or to grant help in terms of industrial assistance, or to give the kind of assistance that is expected from Government, provided that the power to give such assistance is defined in the Act as a discretionary act which is not capable of being limited by any qualification.

If the power to give assistance is earned by the recipient by the provision of some qualification which he can show that he has earned and undertaken clearly the Government's discertion is limited, and they cannot use their power in discrimatory way which overrides a statutory provision about the qualification.

Mr. Peter Rees (Dover and Deal)

Since the hon. Gentleman and I are both members of the legal profession, will he address his mind to one question? Where there may be fine questions of definition whether a company is within or without the policy that is apparently laid down, is the hon. Gentleman suggesting that the Executive should be judge in its own cause?

Mr. Lyon

If I do not like the hon. and learned Member for Dover and Deal (Mr. Rees) very much. I can make a decision whether to enter into a contract with him or with you, Mr. Deputy Speaker, whom I personally prefer. If I take that view, there is nothing in English law which says that I must prefer the hon. and learned Gentleman to you.

The same argument applies to the contracting power of the Government in relation to government as a whole. If the Government were to use their un-fettered discretion in a way that was discriminatory, that would not be illegal. I shall come in a moment to the question whether it is desirable. For that reason, much of the blather that has been talked in the newspapers and by the Opposition over the last week is simply unfounded.

Mr. Ivor Stanbrook (Orpington)

In all those cases where the hon. Gentleman said that a Government may discriminate in the granting of contracts, provision is already made under the fair wages clauses. In other words, this House has already provided for discriminations of that nature. When the hon. Gentleman talks about discriminating on other grounds quite outside any of the classes already covered by the fair wages clauses, he is not entitled to say that this will be lawful.

Mr. Lyon

Either the hon. Gentleman did not listen to what I said or he did not comprehend it. I am sorry if he did not comprehend it. It may be that I am not sufficiently lucid, but I ask him to think about it, as a lawyer, a little longer. The truth of the matter is that the Government as a contractor are in no different position from that of any person or company as a contractor. They are not fettered in what they seek to do unless there is some statutory fetter, and I should have thought that it was unarguable that there is a statutory fetter for most of the cases that we are discussing.

Certain kinds of industrial assistance has to be given, of course, under the regulations of the statutory provision. If the statutory provision says that it must be given without any discretion at all, when certain provisions are made concerning the recipient, the Government cannot use that power to sustain their pay policy. That is the only point that I am arguing.

Mr. Timothy Raison (Aylesbury)

One of the things that the Government appear to have done is to tell local authorities that they may not give contracts to certain firms. That seems to be a rather different matter. If it be true, do the Government have the power to soy to local authorities "You may not give contracts to certain firms"? Furthermore, is there any reason why a local authority should obey them if it does not wish to?

Mr. Lyon

My understanding is that the Government have given no such direction. I have reason to doubt whether that would be lawful. A local authority can make its contracts in the same way as the Government. I do not think that the Government have any power to restrict the way in which a local authority exercises its discretion. I do not believe that that is one of the ways in which the Government are using their power at present.

Mr. Raison

We do not know.

Mr. Lyon

I accept that the hon. Gentleman does not know. He may have reasons of his own for wanting to know. All I am arguing at the moment is that the Government have power over a wide area to back up their present pay policy in a discriminatory way against people who have offended against that pay policy. The exercise of such power is not illegal.

The Government do not have the power to use all their range of powers in pursuance of that policy because some of their powers are restricted by statutory provisions or by ultra vires policy or other systems of restriction of power. But where their power is totally discretionary the Government could and should use their power.

I come to "should", because that brings us to what is desirable or moral.

Mr. Onslow

rose—

Mr. Lyon

If I give way some of my hon. Friends will not have a chance to speak. I want to argue whether it is desirable that the Government should use their power. Of course, it sets a precedent. It sets a precedent which in some ways I am rather happy has been set. I have long argued that Governments ought to use their contract powers to ensure an equal opportunities policy. I have long argued that they ought to use their contract powers, and other powers, to discriminate against firms who invest or trade with South Africa. Those arguments have always been rejected on the basis that Government ought not to undertake discriminatory policies which are outside the immediate range. If that is thought by Conservative Members to be undesirable, they will not like the present exercise of power.

I do not see why the Government should be restricted in that way, particularly in the pursuance of a national policy which is eminently in the interests of the country as a whole—which the pay policy is. I believe that the Government are involved in what has been called free collective bargaining almost despite themselves. They are a major employer. In addition, they must have a view about what is desirable in the national interests in order to have a proper level of earnings consistent with a proper level of productivity. The Government are therefore bound to be in the market place in order to achieve their objectives.

Free collective bargaining does not mean that a trade union and an employer can simply knock out an agreement between them. No one in the trade union movement believes that it is unthinkable that an employer should say "If we make this inflationary settlement we lose our major customer and our major customer will turn to some other supplier". They regard that as part of the pressure upon them in restricting the limit by which they can reach an agreement.

If Government, rather than an independent contractor, say "If you do this we shall not contract with you" why is that thought to be a denial of free collective bargaining? It is simply that the Government are part of the market and can use their powers within the market to induce restraint.

Mrs. Wise

Does my hon. Friend accept that restraint would normally be exercised through the price that could be charged, so that if a trade union could persuade an employer to channel more profit in the direction of wages the customer would not normally be involved?

Mr. Lyon

I accept that that is part of restraint, but also part of restraint is a threat by a major supplier or customer not to contract with an employer if the inflationary settlement goes through. My hon. Friend will be the first to recognise that this is common experience in industrial practice. If that customer happens to be the Government, why should not the Government say "We are not going to contract with you"? It is only desirable and right that they should.

The final question that we come to is whether the practice that has been applied by the Government in pursuance of their policy over the last few months is the right one.

Mr. Ron Thomas (Bristol, North-West)

I do not think that my hon. Friend answered the question put to him by my hon. Friend the Member for Coventry, South-West (Mrs. Wise). It would be a question of another supplier deciding between final prices. A company that supplies to the Government might well insist that having a package that is above the 10 per cent. guidelines could, in fact, bring about a lower price.

Mr. Lyon

I thought that I dealt with that point at the beginning. A contractor can discriminate on any grounds that he cares to. If he decides that he does not like the product, for whatever reason, he can discriminate. The Government are in the market as a customer and can say "We do not like your products because you are acting against the national interest by putting up your wages above 10 per cent.", if they feel that they have the right to do so. In my view the policy is desirable. It is morally right that they should try to use their powers in the way that they have.

The final question is whether they have done this secretively and furtively, in a way that undermines the effectiveness of this policy or is a denial of natural justice to the people affected by it. There is bound to be argument about the detail, but my understanding is that everyone who has been affected by this policy has in general been given notice that they are affected by it. Where there have been examples—a great many have been quoted in the debate today—that notice has not been given, it has been due to administrative error similar to the one by a clerk in the Department of Employment referred to in the Court of Appeal the other day.

As an ex-Minister I am the first to recognise that administrative error exists in the Civil Service at every level. Even with the best policy—even with a statutory policy—an official might well make a mistake about the application of that policy. Where there is legitimate cause for concern—because until today it has not been expressly laid down in a Government statement, or in a White Paper. what the Government were seeking to do, or what their methods were intended to be—is that conceivably doubt exists not only in the minds of Conservative Members, or the firm concerned, but also in the minds of civil servants who have to apply the policy. A junior civil servant in such circumstances might make a mistake in interpretation, as a result of which the policy would not be the policy that the Government wished to pursue.

It is therefore desirable that a clear statement should be made about what the policy is, where it will be applied, and what are the ways of indicating to an offender that he is one of the persons who is being penalised. I should have thought that that is about as much as can be asked. It surely is not intended by Conservative Members that if there is such a thing as a black list it should be printed in the morning newspapers for everyone to see, nor can it be intended that the reasons why people are on the black list should be promulgated for the public to see. If that is what Conservatives are asking it will be highly dangerous for the commercial relationships of those firms with Government. If that is what is wanted I would be grateful if the CBI would indicate that and tell us what its firms intend.

Firms can ask quite legitimately whether they are to be discriminated against, and the Government must indicate whether they are. Then it is up to the firms whether they seek publicity. I understand that the Government have done that in all cases that are the subject of this blacklisting operation. The only cases in which it has not been done have been the results of administrative error.

If that is the position, I think that this debate has clarified policy clearly, and the means by which the policy is carried out are perfectly acceptable.

It is hypocritical of the Opposition to cry and beg for a pay policy and then, when it is applied, by whatever means the Government can apply it, to try to undermine it by their attitudes as displayed in this debate.

7.51 p.m.

Mr. Peter Hordern (Horsham and Crawley)

I do not think that the hon. Member for York (Mr. Lyon) needed to take 21 minutes to tell us that we were hypocritical. One minute would have been enough.

The Secretary of State said earlier that John Lewis was most reluctant to produce the correspondence which existed between the company and the Government, and he implied that the company had been told quite plainly of the position on pay guidelines. I can well understand the company's reluctance because of commercial confidentiality.

When the Secretary of State intervened again in the speech of one of my hon. Friends, he said that the company had been told quite plainly early in the year of the particular sanctions in the White Paper. I shall quote from the letter concerned, which was dated 16th August 1977. It says: As you are aware, the White Paper Cmnd. 6151 states in respect of settlements in breach that 'the whole pay increase will be disallowed for price increases.' That has nothing whatever to do with blacklisting or anything else

In a letter of 6th January it is clear that the Department had not even formed the black list at that time. That was why John Lewis said that it had not been informed. It is quite disgraceful for the Secretary of State to refer as he did to the John Lewis Partnership, which has given a fine example of selflessness and good co-operation with workers over many years.

I wish to refer to a company in my constituency which has already been mentioned by my right hon. Friend the Member for Stafford and Stone (Mr. Fraser)—namely, Sun Alliance. This company is the largest employer in my constituency. This case refers not to black lists as such but to the particular position of the Secretary of State for Trade to cause Sun Alliance to reduce its premiums unless it conformed with the incomes policy.

To conform, the company must know what the policy is. The only guide is that referred to in the new contract to be signed by every new company undertaking work for the Government. This is to be found in paragraph 11 of Cmnd 6882, which states: The Government agrees with the TUC that it is not possible to stipulate a specific figure at which individual negotiators should invariably settle. That is the only incomes policy of which anyone can be aware. The Government's new proposals affecting the contracts to be signed refer only to paragraphs 10 to 12 of that whole policy, which is embodies in paragraph 11.

In the case of Sun Alliance, it has paid a sum which is actually lower than 10 per cent. but it has then referred to pensions. It is well known that the insurance industry feels that pensions should be non-contributory. Sun Alliance has for some years been pressed to make that applicable to its employees. It has now done so. Before it did, the company referred to Cmnd 6882, and what it saw there was quite specific. The White Paper says in Annex A: Self-financing productivity agreements and improvements in occupational pension schemes should however be negotiable at any time after July 31st. Annex A goes on to say that this statement alone constitutes the pay limits in the White Paper for the purposes of Section 1 of the Remuneration, Charges and Grants Act 1975.

It seems to me that Sun Alliance was quite ready to follow the best possible advice that it could get when it sought to change its pensions policy exactly to conform with the Government's pay policy.

Mr. Rooker

Is there not a difference in the fact that Sun Alliance changed its contribution arrangements, whereas I understand from a detailed article in either the Daily Express or the Daily Mail last October or November that the company did not actually change the benefits? I think that the White Paper also referred to benefits provision. Sun Alliance seemed to operate on one side of that equation only.

Mr. Hordern

What the White Paper said was: Self-financing productivity agreements and improvements in occupational pension schemes.… This applies to contributions and benefits, and it was on this basis that the staff negotiated with the company.

The Financial Secretary tried to make out that it was an improvement only in the pension provisions that was required, but that was not stated in the White Paper as the sole provision of the Government's pay policy. It is the improvement in an occupational pension scheme that is in question. In that regard, Sun Alliance is right. I do not know how the Government propose to proceed, but I understand that it will be under the Counter-Inflation Act 1973, possibly under Section 9. My right hon. Friend the Member for Farnham (Mr. Macmillan) dealt with this point. At least, an order must be placed in the House before this can be done, and that would mean that it would have to be debated. The power is to restrict insurance premiums and not to reduce them. No doubt the Government will find themselves challenged in the courts if they persist in this action, and the courts will decide the outcome.

Yesterday, the Attorney-General made an important statement referring to a great many companies. He said that there was no intention of inducing companies not to honour their contractual obligations. What would be the position of Sun Alliance if the employees were to strike because their contractual obligations were not being carried out? Exactly the same thing happened in the courts yesterday.

The Government are trying in a large number of cases to bully small firms. They are not taking on big firms; they did not touch Ford. Instead they decided to take on the small firms, and they chanced their arm with Sun Alliance. They have not done very well, and I hope that the issue will be brought before the courts.

On the application of the incomes policy by pressure, I must say that I have been opposing this ever since the Labour Government brought in such a policy in the 1960s. I also opposed it under my own Government. The correlation in the White Paper on pay and prices between the level of earnings and the level of prices is simply not there at all. For example, in 1976 and 1977 prices rose higher than earnings. so there cannot be any correlation.

This is no time to enter into an economic debate, but the principle on which the Government are operating an incomes policy, in which the end appears to justify the means, is intolerable particularly in the method which they have sought to use. In any case, the Government do not want a statutory pay policy, for good reasons. They could not get it past the unions, and they could not get it past the hon. Member for Liverpool, Walton (Mr. Heffer) and his hon. Friends or past the Leader of the House. A statutory pay policy would be inconceivable. Therefore, it suits them well to have this black list arrangement. It is in the nature of a Socialist Government to have this sort of arrangement. It is government by threat and unwritten word. It is government by sneaks and informers. It is government by nudges and winks. It may be that the hon. Member for Walton does not like it, but that is what the Government are now saying.

Mr. Heffer

The hon. Gentleman should know that people such as myself, who have been engaged in trade unionism all our lives, know all about black lists operated by employers. Because of their trade union activities, people have been ground into the dust by employers. Therefore, the hon. Member must not suggest that there is anything new about black lists. What the Government are doing is nothing compared with what employers have done to trade unionists.

Mr. Hordern

I made a mistake in giving way to the hon. Gentleman. It is clear that he has not been present during the debate. We are discussing this black list which the Government are operating.

The Guardian said recently: In the case of food the deciding factor was the net cost to the economy". What a definition of democracy that is. It does not matter that there should be unequal treatment between one company and another or as between small companies and large ones. This is the Government behaving without the law. It is government by the bully boys. I see the Secretary of State for Prices and Consumer Protection as a Billy Bunter who has been put in charge of the school tuck shop and who is solely responsible for doling out the sweets to the school. That is what Government policy is like. The sooner it is brought to a halt, the better.

8.4 p.m.

Mr. William Hamilton (Fife Central)

The extravagant language used by the hon. Member for Horsham and Crawley (Mr. Hordern) makes no contribution to what has been a nit-picking, niggling kind of debate. The Press gave us reason to believe that this debate was to be a rough, tough and rugged affair. It has been as exhilarating as a ruddy Sunday school tea party. It has made no contribution to solving the overall problem with which the Government are now grappling.

The right hon. Member for Farnham (Mr. Macmillan), who causes hon. Members to leave the Chamber more quickly than anybody I know, in a most and speech tried to convince the few who remained about the rule of law, parliamentary control, and all the other twaddle we have heard from the Opposition in this debate.

My hon. Friend the Member for Coventry, South-West (Mrs. Wise) put her finger on the problem. I do not often agree with her, except in regard to the way in which we share our national wealth. That is what the debate is about. She rightly drew attention to the rule of law in a broad context. The Opposition never take a Supply Day to discuss the flouting of the law by employers who exploit launderette girls, or the way in which Inland Revenue workers are exploited by the Government in the task of filling in Inland Revenue forms. At the same time, the Government are giving £55,000 to people such as Princess Margaret. The girl in the launderette is of much more social consequence and social importance than is Princess Margaret. The Government must understand that that is the kind of action that works up their hon. Friends on the Back Benches. When people talk of the rule of law, that is the kind of law that operates in reality.

I see present the hon. Member for Aberdeen, South (Mr. Sproat), who talks about breaches of law in social security. He has five, six or eight companies.

Mr. Ian Sproat (Aberdeen, South)

Wrong.

Mr. Hamilton

I would be glad to be corrected. Has the hon. Member provided accounts in accordance with the Companies Act? The last answer given in the House on this matter informed us that he had not filed his accounts, and was in breach of that law.

Mr. Sproat

Wrong again.

Mr. Hamilton

Will the hon. Member rise and deny it?

Mr. Sproat

I have not got any companies, and those that I had submitted all the returns they were required to do.

Mr. Hamilton

I shall immediately table a Question to the Department concerned to test the veracity of that remark.

Let me return to the basic argument in this debate. There might be legitimate criticism of the Government in what is likely to be a long and punishing war. It is legitimate for the Opposition and for Labour Members to scrutinise and criticise the manner in which the battle on these narrow issues is being waged. I hope that there will be a general consensus in this House and outside about the vital need for us to win the war. Whatever may happen about that battle, it is important for us to win the war, and it is being won.

My right hon. Friend the Secretary of State for Prices and Consumer Protection indicated that for the first time for a long while we are down to single-figure inflation. It will go down in the coming months. The policies by which that is being achieved have overwhelming public support. This is what frightens the Opposition. It is not in their party political interest that that should be so. To them that party political interest comes much higher in importance than does the national interest.

By hurling mud wherever they can in the hope that some of it will stick the Opposition are trying to defeat the Government's overall purpose in fighting inflation. We have had examples of that policy in the past few weeks and months. We have seen it in the Opposition's tactics over forces' pay, police pay and firemen's pay. We have also seen it in their attitude to university teaching staff, and even the farmers. It is reflected in their whole strategy. The Tories say "Give them a lot more than 10 per cent." In the same breath they say "Let us cut public expenditure." It is not a credible posture to take up.

Many Labour Members can legitimately express doubts about the apparent sympathy and inconsistency, if not irregularity and illogicality, with which pressure has been put on companies to enforce observance of guidelines which have no legitimacy in law.

Those are the words that I wrote before I heard the speech of my right hon. Friend. I have not altered a word of my remarks. My right hon. Friend turned to the other side of the coin. I am not convinced that there is a great area in which the Government are open to serious criticism on this matter. My hon. Friend the Member for York (Mr. Lyon) correctly said that the Government have an absolute right, in fact, a responsibility, to use whatever sanctions they wish, by legal processes, to ensure that their policy aims are achieved and not thwarted. The operation of sanctions at the discretion of the Government, whether in awarding contracts or in withdrawing grants, or whatever it may be, immediately lays the Government open to charges of arbitrariness, inconsistency and injustice.

Earlier in this Session speeches were directed to the Government's behaviour to the Ford Motor Company as compared with the smaller number of firms dealt with in such a way in Northern Ireland. I referred to this matter not many months ago. I thought at that time that the big boy, because of the very fact that he was big, was getting away with it and that the small lad in Northern Ireland was not getting away with it because he was small and helpless. I find that unacceptable. However, having said that, I must state my view that we must accept an incomes policy of this kind or none at all. If we did not have an incomes policy there would be economic and social injustice, because a free for all is a jungle. It has no regard for social justice, equity, or anything else. It is a pretty rough world in which we live, whether or not we are trying to implement an incomes policy.

As The Guardian said this morning, whatever sort of policy we are trying to operate, whether voluntary or statutory, it will be a messy and unscientific business. Let nobody be under any illusion about that. However, given that the public are desperately anxious that a Government—this Government are in charge at the moment—should defeat inflation. there is overwhelming public opinion in support of what the Government are trying to do.

The Opposition are trying to create the impression that the Government are pursuing their policies by cloak-and-dagger methods. There is a feeling that information is being kept from the House, from the public and from the companies that are being blacklisted. Of course, "blacklisted" is an emotive term. I think that "black" comes from the Leader of the Opposition in an immigration context. There is the feeling that there is something secretive about what the Government are doing, and that feeling is not confined to the Opposition Benches. Some Labour Members have serious misgivings about the way in which the problem has been handled.

I say to my right hon. Friend the Chief Secretary to the Treasury that I shall be in the Government Lobby tonight. However, I think that the debate will have done some good if for no other reason than that the Government are now aware, or should be, that the House has the right to have access to much more informa tion about how the so-called black list is operated. It has a right to much greater access than it has had hitherto.

If the so-called black list of companies affected by this aspect of the policy is to be disclosed—it may be, at the corn-panics' insistence—my hon. Friends and I will insist that the subsidies and grants that every company receives from the Government are also published. We shall insist that the amounts be published. Some companies are receiving hundreds of thousands of pounds, if not millions of pounds. Public money is being poured into their coffers, but they insist on great secrecy. There is no word from the Opposition Benches about open government in that respect. It seems that that information has to be kept secret.

We shall insist that if the black list is to be disclosed in full, all the loans and grants being made available to other companies should be available to us. The debate has served a useful purpose, as it has made clear that the House must be given more information. However, there must be two-way traffic. If there is disclosure on one side, we must insist upon it operating on the other. The debate has been worth while in that context, if in no other.

8.14 p.m.

Mr. Ivor Stanbrook (Orpington)

I believe that the use of ministerial discretionary powers to enforce an unofficial incomes policy, a non-statutory incomes policy, is unlawful. I shall tell the House why I believe that to be so.

In my opinion, it is not possible for a Minister to use discretionary power granted to him by an Act for purposes or for objectives outside the provisions of that Act. I can best illustrate what I have to say by reference to special cases. We know that certain companies are included in the black list. The first one to which I refer is High Speed Turnings of Kirkby, Liverpool. The company granted a wage rise to its employees less than 12 months after a previous wage rise. At that time it had been in receipt of the temporary employment subsidy, which meant about £600 a week for it. That meant that it was employing a comparatively large number of employees by virtue of that assistance.

After six months, the company had to reapply for the subsidy. It was refused on the ground that it was in breach of the pay guidelines because it had given a fresh increase within 12 months. The ground for that refusal was that the firm was in breach of the incomes policy, but the refusal was under the terms of the temporary employment subsidy rules. The rules apply under the Employment and Training Act 1973. The Long Title reads: An Act to establish public authorities concerned with arrangements for persons to obtain employment and with arrangements for training for employment and to make provision as to the functions of the authorities; to authorise the Secretary of States to provide temporary employment for unemployed persons; to amend the Industrial Training Act 1964 and the law relating to the provision by education authorities of services relating to employment; and for purposes connected with those matters. The whole object of the Act was unrelated to the reason chosen by the Minister for not granting a further temporary employment subsidy. I understand that he told the firm that it need not bother to apply as the subsidy would not be granted.

The other firm to which I refer is James Mackie & Sons of Northern Ireland. It granted a pay increase to its employees which was more than 10 per cent. That was its crime. It was told that, because of that action, it would not receive an export credit guarantee. The guarantees are granted under the terms of the Export Guarantees Act 1975. The provisions under which the Secretary of State was operating reads as follows: For the purpose of encouraging trade with other countries or for the purpose of rendering economic assistance to countries outside the United Kingdom, the Secretary of State may, with the consent of the Treasury, make arrangements for giving such guarantees to, or for the benefit of, persons carrying on business in the United Kingdom as appear to him to be expedient in the national interest". Again, that relates to a purpose wholly unrelated to incomes policy. That was being used as a reason for depriving the firm of something to which under the Act it would otherwise be entitled. It would have been so entitled if it had come within the proper limits.

Mr. Alexander W. Lyon

rose—

Mr. Stanbrook

I shall develop my argument, after which the hon. Gentleman will no doubt wish to take me up on my whole theme.

It is possible, no doubt, for a Secretary of State to agree to award a grant for purposes such as those contained in the two Acts to which I have referred without setting any conditions. It is possible, no doubt, for him to award the grant on conditions—for example, that the employer employs more people, goes elsewhere or makes an offer of employment to another class of employee. It is possible for the Secretary of State to refuse to award a grant because conditions have not been fulfilled or because the appropriate circumstances in the area relating to local unemployment do not apply. It is possible for him to refuse without giving a reason. However, I do not believe that it is possible for him to refuse on the ground of something wholly outside the contemplation of Parliament when the Act was passed.

When we were dealing with the Employment and Training Act, we were not—notwithstanding the wording of the provision—dealing with ministerial discretion aimed at achieving some other political objective which was not in the mind of Parliament at the time the Act was passed.

Mr. Alexander W. Lyon

What possible wider discretion is there than that the Secretary of State should take into account the national interest in deciding whether to give a guarantee? What statutory power is there for a Government to contract? There is no statutory power of contracting. It is a common law power. Any individual may contract if he wishes.

Mr. Stanbrook

I knew that I should have persuaded the hon. Gentleman to wait until I had finished my submissions, because I shall be taking up those points later.

Parliament does not pass Acts and give power to Ministers to use their discretion in an absolute sense. What is discretion? It is awarded to Ministers in cases where judgment is required and where it is not possible to specify in the Act the particular circumstances or conditions under which something may be done. We say, therefore, that a Minister "may" take certain action. In every case there is a judgment.

It follows that where there is no judgment, where a case is not even entertained on its merits and where an a priori decision is made before an application comes in, that cannot be regarded as the exercising of discretion. I am putting forward a concept which is well known to authorities throughout the country. Discretion is not exercised when Ministers say that they will not even receive applications. No doubt this point will be brought home forcibly to the Government when these matters come before the courts.

I have dealt with the award of grants and financial assistance in this sort of case, but there is another aspect that relates to Government contracts. It is significant that when the Attorney-General was dealing with this matter in the Court of Appeal his reference was only to Government contracts. This is where the hon. Member for York (Mr. Lyon) had a point. If one is contracting, the conditions of the contract are matters at large and what goes in has to be agreed between the parties. If the Government want to insert a particular provision, they may do so. Contracts are concluded only by consent of both parties. I do not doubt that the Government are entitled to insert certain provisions that may be designed to influence policies other than those for which the contract has been designed.

Let us look at the history of these matters. In 1891 the House passed the Fair Wages Resolution, which for the first time interfered in the rights of free contracting between the Government and firms for the purpose, oddly enough, of raising wages to produce fair wages.

Until then, it had been assumed that Governments who put out work to contract would necessarily want to get the lowest price. The result, naturally, was that people who won contracts often paid low wages. The Fair Wages Resolution was not an Act or a statute. It was a direction from the House to the Executive that "in future" contracts should be awarded on the basis that the employees concerned should be paid a fair wage by reference to the wages prevailing in the industry as a whole. That was an interference with the free bargaining process which had gone on with industry.

We followed that in 1909 by refining the resolution and we refined it further in 1946 by providing that contracts should include a provision that employees of the contractor should have the right to join a trade union. That was a perfectly legitimate way of using that sort of power to influence firms and industrial policy. It has been well recognised and successfully applied.

The Secretary of State told us that the Attorney-General had to say that clauses would be inserted in contracts in future. That means that the Government had overlooked the importance of the Fair Wages Resolution.

The resolution guarantees something which is known and certain. The conditions, the arrangements for third parties coming into a dispute and provisions for appeal are all there. Under the resolution, we know what we are talking about and what is at large between the parties. If there is a dispute about applicability of any section of the fair wage clause, an appeal is provided for.

Mr. Rooker

Does not the hon. Gentleman remember that during the passage of the Remuneration, Charges and Grants Bill in 1975 there was a debate on my amendment to ensure that the operation of the Fair Wages Resolution continued? An explicit guarantee to this effect was given by the present Leader of the House, and that concession has been granted every year since then, so that there has been no problem about the operation of the resolution under phases 1, 2 or 3.

Mr. Stanbrook

Of course it applies, but, if the Government wish to start inserting into contracts a provision which was not previously there, the right way to proceed is to include it within the Fair Wages Resolution. That is also the answer to the hon. Member for York, who said that any individual might do as he pleases as long as it was not illegal. That does not apply to Governments. The whole point of our being here is that we exercise control over the Executive, who are bound to observe certain norms and standards which we impose upon them. The Executive cannot go out as an ordinary individual and do as they please merely because there is no law against it. Their action is rightly circumscribed by the House.

When the Government wish to impose a duty by reference to some matter of public policy, such as racial discrimination, it should be inserted in contracts, as fair wages clauses are inserted. If we do not get that approach, and if these things are not clearly established and set out so that we can see them clearly, we shall get despotism in this country and contracts may be refused for reasons quite unconnected with the purposes of the contract. We shall come to the situation where conditions will be imposed upon contracts on the ground, for example, that the managing director has certain political opinions or that a firm trades with South Africa. That is exercising a tyrannical, despotic power. It is true to say that Star Chamber methods are being exercised. They should be restrained by the House.

It is a case of law and order. If Labour Members thought of themselves as being on this side of the House, experiencing an equivalent situation with a Conservative Minister using his so-called discretionary powers in this way, they would feel the same as we do.

8.29 p.m.

Mr. Robert J. Bradford (Belfast, South)

I apologise to both Front Benches for not being here to hear the opening speeches. This was due to air travel timing over which I have no control.

I should like to descend from the heavy heights of jurisprudence and return to the realities of unemployment and low wage levels, which is what the debate is about. I have no vested interest in gaining political capital from the debate, because no hon. Member from Northern Ireland will be returned to the House at the next election on the basis of whether he supports the case that is being made.

I return to the question of James Mackie and Sons Ltd. of Belfast. In this case there is a real argument in favour of the use of discretionary powers by the Government. We are told that there has been a withdrawal of the company's credits, which underwrite confidence in its export activities, because it has exceeded the wage limit.

Unfortunately, the company pays the lowest wages in the Northern Ireland engineering industry. When one considers that, along with the fact that wages in Northern Ireland are three-quarters the national level, one has an argument for exercising this discretionary power. Unfortunately, the Government are beginning to be regarded as the exponents of both unemployment and low wage levels. That is not a reputation that they want, but they have it in Northern Ireland.

A short time ago an Act which set up the Fair Employment Agency was passed. That Act is smattered with little words such as "may" and "shall". We did not all agree with the concept of setting up the Fair Employment Agency. It was brought into being by the Government because it was the best way to secure employment and proper standards of living for the whole community. The necessity for exercising discretion was apparent in the debate on that legislation. I plead with the Government to agree that the same kind of discretion should be exercised in areas of the United Kingdom where wages are tragically low. We cannot see much justification for the Government to apply this rigorous policy in the situation that I have outlined.

I do not like sanctions of any kind, because I come from a part of the United Kingdom where muscle is often used instead of persuasion. In Northern Ireland we long for a return to the use of logic, reason and argument in place of muscle.

I listened with interest to the hon. Member for York (Mr. Lyon) as he argued that there was a legal warranty in the Government's action. I found his argument persuasive and cogent. But does that exhaust the responsibility of the Government? Is it not true that, although there might be a legal warranty of sorts, there might be a moral warranty?

This kind of approach by the Government embodies just about the worst of the EEC practices, that of taking the moral right to impose on this country, irrespective of what its sovereign Government decide, certain limitations. Labour Members who share my view about the Common Market should consider this question of moral warranty. It is right to argue that the Government are acting as a contractor and are exercising the right of any contractor, but it must also be understood that the Government are using public money and that many of the taxpayers who contribute that money may not agree with the imposition of any kind of sanctions.

My hon. Friends are totally committed to free collective bargaining. That has always been our stance, and it remains so tonight. I believe that incomes policy has been overrated as a means of tackling inflation in the kingdom as a whole. I come from a part of the kingdom where relativity is not the order of the day. There is a certain existentialism about Ulster, particularly Ulster industry and Ulster workers. It is a question there of life or death—is an industry to survive, or is it to go to the wall? In that existential situation there are two groups of people, the trade unions and the CBI or the employers. They realise that, unless they face up to the question of wage levels and fair profits, and unless there is give and take on both sides, the existential situation is death.

I do not believe that the trade union movement or the CBI in this part of the kingdom is any less realistic than it is in the North of Ireland. I therefore ask the Government to reconsider their attitude to Mackie and to return as quickly as possible to free collective bargaining.

8.38 p.m.

Mr. Ron Thomas (Bristol, North-West)

I wish to address my remarks to my Front Bench because I am convinced that a new Tory Government would not hesitate to bring in controls over wage increases or another Industrial Relations Act. If they they did not do that they would not hesitate to bash the public sector and use their militant monetarism in the creation of unemployment as an economic regulator in an attempt to deal with the whole question of wages and salaries.

It is wrong for so many hon. Members to refer, as they have, to an incomes policy. There is control over wages and salary increases, but no control over other forms of income, such as profits and dividends. There is no control over the issue of shares—script issues, free shares on. say, a one-for-three basis, and all the other dealings that we read about in the Financial Times.

We do not have an incomes policy; we have only control over wages and salaries. We are able to have that control because the Tory Party, the media and, to a large extent, the Government have been able to create the myth that trade union bargaining has been the sole reason for the level of inflation. There has been a great propaganda exercise for many years now to suggest that increases in wages and salaries have brought about the high level of inflation.

I do not think that that theory stands up to any kind of rigid economic analysis. To sustain such a view means ignoring the devaluation of sterling, the effect on prices of the common agricultural policy, and the effect of decades of lack of capital investment in British industry, which has resulted in far lower productivity and far less efficiency than we would otherwise have had. It also ignores the Treasury policy of high interest rates, bank charges, and so on. It also ignores the fact that a good deal of our inflation is due to the low level of effective demand, which means higher unit costs. My right hon. Friend admitted that in his last White Paper.

When firms move towards a higher level of capital utilisation, their unit costs should be falling dramatically, and therefore the cutting back of consumer expenditure—in other words, the standard of living—has made an important contribution to the higher level of prices.

We are told ad nauseam that only if we get the rate of inflation down can we deal with the question of unemployment. When, then, is West Germany going to deal with the question of unemployment? Unemployment there has risen again, this month, by another 200,000. Yet West Germany has the lowest level of inflation in the capitalist world, and it has sent back 1 million immigrant workers. It is also sitting on a mass of gold and currency reserves. But still it has 1¼ million unemployed.

It is no good saying that we can deal with the level of unemployment, without oher Socialist measures, when we have the level of inflation down. Let us consider the index of retail prices. It may be high time that we had a debate on the index, how it is compiled, and what it means. A lot of people see it as the rate of inflation. It is not increases in wages and salaries that have put up the cost of fuel and electricity. The cause was Treasury policy dictated by the IMF. It is not wages and salaries that have put up the cost of school meals, or have put up rents. Let us look at each of these items in the index to see how they are weighted, and then consider how we can sustain the argument that inflation is due to increases in wages and salaries.

Trade union negotiators chase prices. They have to prove that prices have already risen before any employer will even begin to look at a wage or salary claim. We are told that there is to be a real increase in the standard of living in the months ahead. I see no evidence of that. When one knocks off the marginal rate of income tax, and when extra pension and national insurance contributions are taken into account, together with rises in prices, I do not think that we shall see an increase in the standard of living of working people.

We have at least a financial improvement in our situation, but what has happened there? The Chancellor of the Exchequer, who continually says, quite rightly, at the Dispatch Box, that the sacrifices of the working people have brought about the improvement, yet during the Christmas Recess, he relaxes exchange controls, thereby giving increases in earnings to the speculators, the rentiers and the rest. Then he has the cheek to say that it will cost only about £200 million a year across the exchanges. The sacrifices of the working people are dissipated in this way.

Mr. Donald Stewart (Western Isles)

Will the hon. Gentleman give way?

Mr. Thomas

I had better continue, because other hon. Members wish to speak. I want to make my points as quickly as possible.

As for the sacrifices that working people have made, we know that under phase 2 prices rose twice as fast as incomes. This policy has been outlined today. Having heard my right hon. Friend the Secretary of State for Prices and Consumer Protection, I am even more convinced that it is simply a re-emphasis of the fact that we shall have a continuation of wage and salary controls.

Mr. Donald Stewart

That is right.

Mr. Thomas

There are some Labour Members who believe in it and support it. Good luck to them. The trade union movement and the Labour Party are opposed to wage and salary controls. We do not call it incomes policy, because all it involves is control over wage and salary increases. I do not accept this policy, because I do not accept that wage bargaining is responsible for inflation, as has been suggested. In any event, I find this policy indefensible.

Let us consider this policy. First, goodness knows how many firms are not affected at all because they do not have to go to the Government for permission to increase their prices, or to get any grant, or to get Government contracts. But the whole of the public sector is affected by Government controls and by the Government's cash control policy, as are those companies, seemingly, which have to go to the Government and those which attempt to push up their prices following a wage increase.

What is quite clear about this sort of policy—we have had enough of these policies since the war—is that ultimately, when any kind of analysis is made, one finds that the low-paid workers still come out worst of all. My hon. Friend the Member for Coventry, South-West (Mrs. Wise) has already said that under this 10 per cent. policy the Government have attempted to interfere with the work of wages councils. When certain wages councils were working out settlements, the Government told them that their proposals could not be reconciled with the guidelines and asked them to reconsider their proposals. What were the massive wage increases that the councils were asked to reconsider? For button manufacturing it was an award of £3.60 a week, which would have brought the workers in that industry the princely sum of £30 a week as a basic rate. The wages council concerned was asked to look again at licensed residential establishments because the workers concerned would be getting an extra £4 a week. That would have given them the princely sum of £34 a week. I could go on and on with that kind of example.

I want to comment on the whole question of publication. I am not worried about publication. It is not often that I disagree with my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). He said that there might be good reasons for not publishing the information. I wish to goodness that the Government would publish a list of all those firms that get any kind of public money. How can one have public accountability without it? In my judgment, it would show that without that public money, this capitalist system of ours would have collapsed a long time ago.

Mr. Heffer

Will my hon. Friend take it from me that I did not say that I was opposed to publication? My point was that when I was a Minister at the Department of Industry it was the CBI as well as certain associations and some Conservative Members of Parliament who were horrified by the very suggestion. All that I said was that my right hon. and hon. Friends were doing precisely what the Conservatives had done when in office and that the Opposition were hypocritical now because of their protests.

Mr. Thomas

I am very pleased to hear that.

Mr. Deputy Speaker

The hon. Member for Bristol, North-West (Mr. Thomas) was kind enough, when he refused to allow an intervention, to say that he realised that other speakers were anxious to take part in the debate. The winding-up speeches are due to start at 9 o'clock.

Mr. Thomas

I shall make my final point as quickly as I can. Mr. Deputy Speaker.

I am not opposed to publication. I think that all these facts ought to be published. I think that we ought to use these sanctions to try to get planning agreements.

I should like my right hon. Friend to tell us why universities have been dragged into this and are to be told to which buyers they can go. Whenever we seek to ask Questions about universities we are told that they are completely independent and that we cannot ask Questions about them.

If Sun Alliance and banks are not to be allowed to pay salaries that are negotiated, what will happen to the massive profits made by those companies, bearing in mind that they have resulted from Government policy?

I am concerned about the new clause, because it brings in not only contractors but sub-contractors ad infinitum. I should like my right hon. Friend to explain what will happen if a firm enters into a contract with the Government and it is later found that it exceeds 10 per cent. Who will be penalised? Will it be the original contractors, or will it be the subcontractors? Will the contractor be responsible for all the sub-contractors? I suspect that most firms are sub-contractors to somebody.

For those and many other reasons I doubt whether my right hon. Friend will find me voting for this policy, unless I receive some reasons from him to show why I should do so.

8.52 p.m.

Mr. John Moore (Croydon, Central)

I much appreciate the opportunity of speaking at the end of a debate which I have attended throughout. Although I do not have a personal interest in the matter, the company called Holliday Hall is in my constituency and therefore I follow its activities closely. I am pleased with the situation that existed as of yesterday, especially as it will allow the company to pay its employees the remuneration that it seeks to pay them.

I think that the hon. Member for Coventry, South-West (Mrs. Wise) ought to remember, when making the remarks that she did, that throughout finance debates some of us have consistently argued, and will continue to do so, that one of the prime problems of this country is the low pay of employees.

The debate has taken two basic routes. Hon. Members on the Government side have been seeking, quite legitimately, to put a cloud and a smoke-screen across the understandable concern of some us us who are not so cloistered in our relationship to Westminster.

Let me introduce a slightly external note. During the past three years I have had the privilege of visiting, and being involved in debates with, more than 250 universities and places of advanced education. I assure the House that those on both sides who participate in those debates know that the relationship between democracy and totalitarianism is more crucial than some of the remarks of Labour Members have suggested.

It is ridiculous to suggest that the Opposition are being hypocritical. There are those of us, not only in the House but outside, who regard the issues involved here as crucial, whatever our views on prices and incomes policy. I suggest that there are those on both sides who seek, in university debates, to try to argue for democracy. We have had considerable difficulties in seeking to argue that case. The cause of totalitarianism has been winning the ideological debate for some time.

Today's debate on the black list is crucial to that whole argument. It is saddening to those who argue as I do, in many ways on a non-partisan basis, in universities for the democratic pattern to face the realities of what the black list has produced. Those watching the fight have legitimately argued in universities about the efficacy of our system of democratic debate, about the system of law passed by an elected legislature, about those laws being enforced without fear or favour, and finally about the prospect of a peaceful non-revolutionary solution to our economic ills. This is a matter of great concern to all of us who argue the case in a democratic sense. What is now being done puts all our arguments in jeopardy.

Let me briefly examine the Government's actions in this light. First, the Government clearly believe in their policy. They have believed in it throughout, and I do not have any disrespect for them for that. But they did not think that they could obtain parliamentary approval, so they ignored the need for it and sought to act without it.

Secondly, the Government tried to carry out their policy, however laudable that policy, by the use of other laws and other powers not initiated for the purpose and not approved by Parliament for the purpose. There have been lengthy contributions from hon. Members such as my right hon. Friend the Member for Farnham (Mr. Macmillan) about the background to the whole role of ECGD credits. The hon. Member for Colne Valley (Mr. Wainwright) spoke effectively of his own views about a statutory policy, for which I respect him, even though I may disagree. But let us bring the law to Parliament, judge it here, and then enact and uphold it. Then we shall have something more important and responsible to uphold.

My attention was taken by the Attorney-General's comments about Holliday Hall yesterday. I was particularly concerned with his comment, quoted in The Times Law Report today that: the Government ought wherever possible to avoid the devotion of public money to enterprises which conducted their business in a manner likely to fuel the fires of inflation. What do legitimate companies such as the company in question do when it comes to trying to argue, as many of us think they should, for higher wages for their employees, when, with the right levels of productivity, they can produce for the State better tenders at lower prices, giving value for money? That is pre-empted by that comment.

Thirdly, in applying their policies the Government are using powers and laws with fear and favour in their application, depending on the power of those to be restrained.

Fourthly—this is fundamental to those of us on both sides of the House who consistently argue that we should be concerned with the rights of Parliament as opposed to the rights of the Executive in Parliament—the Government seek to do all this without the authority and scutiny of Parliament; in many cases, as we have learned today, without the knowledge of those most affected and in most cases without the knowledge of the general public.

I can only remind the House of the words of the Secretary of State, who spoke earlier about the arbitrary, capricious and oppressive use of State powers. Those words confirm the fears of those of us who detest collectivism in whatever form, who do not necessarily see the State as a benign power, and who are determined to reduce the role of the State in our lives.

The danger is constantly illustrated. It is illustrated by the judgment in regard to Holliday Hall, the company in my constituency. Let me remind those who are concerned, as I am, about the employment of people who work for such companies, about the jobs of the men at risk in Holliday Hall. I remind them of the courteous legal language in The Times Law Report of 4th February: the Department threatened, though in courteous terms, that if that fall-back part of the settlement was implemented the company would be in jeopardy of discriminatory sanctions referred to in the White Paper … It had no statutory force but it had"— the words are so delicate— great coercive force for a company which received 75 per cent. of its business from government or government-related bodies. When do I say in all my meetings when we try to explain what democracy is all about in the context of that kind of illustration? For what purpose has this been argued? As one of my hon. Friends said, it has been argued for not as the price of pragmatic success but to keep in office a Government more economically disastrous than any since the great Depression.

What do I say in all the meetings with the students when we try to argue about democracy? The Government by their action—it is hard for the Labour Party to swallow the words—have told students that Parliament, in the eyes of the Government, is impotent and irrelevant. Their action has told students that laws are malleable weapons to be used according to the wishes of the enforcer, and ultimately that democrats cannot even abuse their system effectively. I ask the Government to help democracy, not to hinder it. The Government should introduce laws for us in the Chamber to support or to defeat. If those laws are passed, uphold them. If they fail, resign. That is what democracy is about. This is cowardice.

Mr. Madden

On a point of order, Mr. Deputy Speaker. I regret having to return to this matter, but, to clear up any misunderstandings about financial interests held by the hon. Member for St. Ives (Mr. Nott), may I ask whether he can confirm information which is on the register upstairs, and which I have consulted since earlier interventions, which shows that he holds a directorship in Andrews Hydraulics International Ltd.? The register indicates that on 10th June 1976 he became an adviser to a firm called E. Bailey and he has shareholdings in Andrews Hydraulics International Ltd.

For the sake of the record, and to clear up any misunderstandings which may have existed from the earlier statement that the hon. Member made that he had relinquished certain directorships, this may be the opportune moment for him to clear the record so that there is no misunderstanding.

Mr. Nott

Those are the interests which I registered at the proper time. Those are the interests which I now hold. The matter is entirely above board and proper. The hon. Member for Sowerby (Mr. Madden) should now apologise and withdraw the slurs that he made earlier.

9.3 p.m.

Mr. Nigel Lawson (Blaby)

It is regrettable that the hon. Member for Sowerby (Mr. Madden), having made an unfounded accusation by innuendo, is not man enough to apologise. However, we shall have to leave it there.

Let us be clear at the outset what the debate is about. It is not about inflation. That is an important subject which we have debated many times before and will, no doubt, debate many times in the future. The debate is about the precise and grave charge that appears on the Order Paper, namely: The misuse of Government discretionary powers. The Secretary of State for Prices and Consumer Protection, who, behind his arrogant bluster this afternoon, which we are used to, seemed unusually ill at ease, asked four questions—to which, if he does not want to know the answers, I shall not give them. He asked four questions and dropped what he presumably considered to be one bombshell. His four questions were all the same—namely, a request to know the Opposition's anti-inflation policy. That policy was set out at some length in "The Right Approach to the Economy", which I commend Labour Members to read.

Sir Geoffrey Howe (Surrey, East)

For some it is bedside reading.

Mr. Lawson

As my right hon. and learned Friend says, it is bedside reading for some. It was also encapsulated somewhat more crisply in the letter to my right lion. Friend the Member for Lowestoft (Mr. Prior) written by the Chancellor of the Exchequer on 10th August. I shall not read it, because my hon. Friend the Member for St. Ives (Mr. Nott) has already read part of it. But in a few paragraphs, which were partly a paraphrase of what my right hon. and learned Friend said and partly a direct quotation of what he said, he summed up our policy. At the end of it the Chancellor wrote: I share this view, as you know". He shared that view then if he does not share it now. That is our policy.

The bombshell that the Secretary of State dropped relates to the new contract clauses that he deposited in the Library today a little later than he had intended, and which he intends to insert in all future public sector purchasing contracts. There is one question on this matter before I deal with the document itself about which I am not clear. How far does the Government's writ run regarding public sector purchasing contracts? For example, local authorities might not wish to insert in their contracts clauses of this kind that might lead them to have to pay more for whatever they are purchasing than would otherwise have been the case. Perhaps the right hon. Gentleman will also inform us about the status of universities, which traditionally have been given considerable freedom under our system.

At any rate, in this curious document which was launched today, the Government have got even further into the mire than they were to begin with. I know that it is an attempt to clarify the position, but I do not think that it does.

In the second paragraph, the contract condition reads: Any question whether any settlement complies or fails to comply with the incomes policy is a matter for decision by the Secretary of State for Employment. It is no wonder that only the Secretary of State for Employment is arbitrarily to decide, because nobody knows what the policy is. What is the policy?

What is more—I hope that the Chief Secretary will pay attention and address himself to this matter—many public sector contracts last for considerably longer than a year. If a contract in this form is signed, does it mean that the supplier who signs it is obliged to adhere to the provisions of the next incomes policy after July, whatever that may be? In other words, he is signing in the dark. In that event, and I believe that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) is right in suggesting that this is implicit, it is monstrous and absurd.

According to paragraph 12, if the Secretary of State for Employment thinks that a contract runs foul of the incomes policy—whatever that may mean—all he has to do is to give a certificate that in his opinion—that is all—the settlement fails to comply with the incomes policy. The paragraph states that that shall be final and conclusive. There is no right of appeal of any kind whatsoever.

If a breach is certified in that way, solely by the Secretary of State, then, among other things, any contract in being can be cancelled at one month's notice. That is all. There is no word about compensation.

Mr. Norman Tebbit (Chingford)

Has my hon. Friend been able to assess whether a local authority that chooses to buy more expensive goods than it needs would render its councillors liable to a surcharge? Secondly, has he considered whether a nationalised industry might be in breach of its statutory obligations if it purchased items which were more expensive than they would otherwise have been?

Mr. Lawson

Those are important matters on which I shall be touching later.

The Secretary of State, echoing the Prime Minister earlier today, said that publication of the black list would be considered but that the CBI would have to be consulted first and its approval sought. I wonder whether the CBI was consulted about this document. I notice that the right hon. Gentleman makes no reply. I suspect that the CBI was not fully consulted. Certainly the CBI has made it clear that it wants no part in any contracts of this kind. Knowing the TUC's view on the 10 per cent. limit, which it has rejected, I suspect that the TUC would not be too keen on any contracts of this kind either. Therefore, it seems that the Government have got themselves even deeper into the mire as a result of this démarche. Certainly, we wholly disapprove of the attempt to enforce contractual terms of this kind on Government purchasing policy.

A number of very good speeches were made by my hon. Friends. My hon. Friend the Member for St. Marylebone (Mr. Baker) made an absolutely outstanding speech in which he mercilessly exposed the Secretary of State's opportunistic inconsistency over the years on the issue of incomes policy, and statutory policy in particular, and he was able to put the right hon. Gentleman right on the John Lewis affair, as, indeed, was my hon. Friend the Member for Horsham and Crawley (Mr. Hordern). We also had a contribution of great value going in depth into the case of George Wimpey by my hon. Friend the Member for Melton (Mr. Latham). We are all deeply indebted to him for the ferreting that he has done over a considerable period.

At the end of the debate there was a short but excellent contribution from my hon. Friend the Member for Croydon, Central (Mr. Moore), who very rightly emphasised the absolutely crucial and fundamental nature of the issue that we are debating this evening.

What is at stake tonight is nothing less than the fundamental principles of our liberal parliamentary democracy—I use the word "liberal" advisedly with a small "1", for never have I heard a more illiberal speech than that of the hon. Member for Colne Valley (Mr. Wainwright)—and it is also about the protection of the subject from the arbitrary powers of the Executive.

If the Government feel that they need a compulsory pay policy, let them come before Parliament openly and ask for the statutory powers to enforce that compulsion and to back it. That would be a perfectly proper way to behave—although we should, of course, equally properly oppose it. But not even the most fervent devotee of a statutory pay policy can feel obliged to support the Star Chamber course on which the Government have now embarked—secret, arbitrary, probably illegal and certainly contrary to both the rule of law and natural justice. Every single thing that has been clone has been done not merely behind Parliament's back but with the deliberate attempt to deceive Parliament.

Let us look back briefly to the genesis of the present policy in 1975, when we debated this at some length, as the hon. Member for Perry Barr has reminded us, in the Committee stage particularly of the Remuneration, Charges and Grants Bill. During that Committee stage the right hon. Gentleman who was then Secretary of State for Employment, now Leader of the House, said this: Whatever criticisms may be made of the procedures we have devised, they are designed to be swift, easy and effective, and to ensure that we do not get entangled in great legal difficulties. He had reckoned without the Attorney-General, obviously. The right hon. Gentleman went on: They do not mean that we are seeking totalitarian powers, and certainly not that we are seeking to go behind the House of Commons. At that point there was an intervention from the right hon. Member for Down, South (Mr. Powell), who asked: Will the right hon. Gentleman answer my first question: how will his decisions be known and promulgated? The reply from the then Secretary of State was: By the same method available to every hon. Member—the ability to table Questions, or for the Minister to make statements to the House. There is no difficulty about it."—[Official Report, 24th July 1975; Vol. 896, c. 948–9.] Is there not? Until recently, until Mr. Speaker's ruling, the Questions could not even be tabled. Now that they are being tabled, they are being answered by a blunt "No": every single one of them. So much for the assurances given to the House right at the beginning by the right hon. Gentleman.

Again, we were told only last July that we were then returning to free collective bargaining. The Chancellor of the Exchequer said it on 15th July, and on 20th July the Prime Minister said that no national pay increase would apply throughout the country during 1978. Again, it was said in the White Paper—as my hon. Friend the Member for St. Ives pointed out—that it was not possible to stipulate a specific figure on which individual negotiators should invariably settle.

And only a fortnight ago the Prime Minister told the House at Question Time that There is free collective bargaining now."—[Official Report, 19th January 1978; Vol. 942, c. 661.] Yet all the while there has been operating, under cover of secrecy, and directed by a Cabinet committee presided over by the Chancellor of the Exchequer, the most odious form of statutory pay policy, enforced in a wholly arbitrary manner by statutes approved by Parliament for wholly different purposes, with no debate, no discussion and, for the individual victim whose entire livelihood and that of his employees is at stake effectively no appeal.

As for the black list itself, as my hon. Friends have reminded the House, on New Year's Day, not so long ago, the Prime Minister was still maintaining that it was a figment of the media's imagination. As recently as Question Time last week, when challenged by my right hon. Friend the Leader of the Opposition, he refused to admit that there was any black list at all. Yet all that time the black list has been there and growing. Indeed, there are several black lists. They proliferate. I have one here which is headed "Counter-Inflation Measures—Road hauliers: Black List—Local Purchase Notice". That is the official title, yet the Prime Minister said that there was no such thing. All of these black lists were to be kept from Parliament at all costs. That was the great thing they had in common.

The sanctions were to be used to enforce a policy that was never approved by Parliament. Indeed, it was not even placed before Parliament, because the rigid phase 3 10 per cent. pay policy now being enforced is something wholly different from the policy set out and contained in the White Paper Cmnd. 6882. It is totally different as, indeed, the Secretary of State for Prices and Consumer Protection made all too clear today.

If a strict 10 per cent. pay limit—which, incidentally, has been explicitly rejected by the TUC—is now in operation, the Government should have the guts to come out and say so openly. Moreover, it is being enforced in the most arbitrary way with Ford and Vauxhall going scot free and the Prime Minister explaining it away on television by saying: No one will say that the country will be ruined because Ford's settled at 12 per cent.". Yet when small firms settle at 12 per cent. that would evidently ruin the country and the Government come down on them like a ton of bricks.

So much, too, for the Government's contention that the whole purpose of their pay policy is to prevent the lions from getting the lions' share. One reason why the Government quite understandably feel a little reluctant to bully the big boys—even those big boys who happen not to provide work for the Prime Minister's own constituents—is that they might be a little more likely to fight back in the courts.

Despite what the hon. Member for York (Mr. Lyon) said, there can be little doubt that the legality of the Government's actions is, to say the least, highly questionable. At the end of the day this will be decided in the courts. But the Attorney-General yesterday was significantly back-tracking fast.

What are the sanctions involved? I think it is worth going through them. They were given in an answer by the Chief Secretary—the keeper of the sanctions, the keeper of the black list, who is about to reply to the debate—on 24th November. They were listed as follows: Public Purchasing and the Placing of Contracts. Industrial Assistance under the Industry Acts. Temporary Employment Subsidy. Section 2 Export Credit under the Export Guarantees Act 1975. Other possibilities are considered in the light of individual cases."—[Official Report, 24th November 1977; Vol. 939, c. 854.] I hope that the Chief Secretary will tell us what these "other possibilities" are. We have a right to know.

I shall come back to public purchasing in a moment, because it is in a different category. But, with regard to ECGD credit, I would draw the attention of the House to an article last month in the New Law Journal which came firmly to the conclusion that the use of ECGD credit under Section 2 as a sanction in pay policy was ultra vires. That was based on a whole corpus of law. I shall quote just one important dictum from the House of Lords. According to that article, Lord Reid said: Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole, and construction is always a matter of law for the court". That was what my hon. Friend the Member for Orpington (Mr. Stanbrook) was getting at when intervening in the debate. Of course, that dictum applies equally to the use of temporary employment subsidy and its withdrawal as a sanction and also with regard to industrial assistance used as a sanction.

Those of us who recall, as most of us do, the Attorney-General's advice, and the outcome, over television licences, Tameside and Skytrain, will know how much faith to put in the Government's assertions that what they are doing is within legal bounds. It is difficult to imagine a more perfect case of the Government's anti-inflationary posture than that they should have done their best by illegal means to prevent cheap flights across the Atlantic.

Even if, as the hon. Member for York has maintained, it is found in the courts that these actions are legal, that is not the end of the matter by a long chalk. This is something that Ministers fail to understand. I quote once again, this time from Heuston's "Essays on Constitutional Law"—

Mr. Alexander W. Lyon

They are good.

Mr. Lawson

The hon. Member says that they are good. Indeed, they are very good. Page 38 states: What is authorised by the law cannot indeed be illegal within the framework of that particular system, but it may very well be contrary to the Rule of Law as a principle of constitutional government. That is what we are asserting is the case with Government policy tonight.

As for public purchasing, this is in a different category. While no doubt the sanction is strictly legal, it is the most bizarre of all. The sanctions arise only if the company concerned has sent in the lowest tender. If it had sent in a higher tender, it would not get the contract in the first place. Therefore, the counter-inflation policy in this area rests on forcing public bodies to pay higher prices. This is the ultimate lunacy.

But, once again, the real objection is constitutional. The Chief Secretary said in a revealing Written Answer on 16th November last year: It remains our policy not to reward firms who breach the pay policy with contracts."—[Official Report, 16th November 1977; Vol. 938, c. 273.] Public purchasing is not a reward; it is a duty which has to be performed in the interests of taxpayers and ratepayers. It is not a reward at all. That is the language of despotism. It is the language of absolute monarchy in which the king's favourites are the recipients of the largesse at his command. It has no place whatever in our parliamentary democracy.

The Government's defence of all this is that the ends justify the means—the cry of the despot throughout the ages. Of course, the Secretary of State for Prices and Consumer Protection was careful to come to the Dispatch Box this afternoon and deny that he was saying that the ends justified the means. Having said that, he went on to argue precisely in that vein. Once it is accepted that the ends justify the means—and the fight against inflation is undoubtedly a very important objective—where will it all end? What other means will be invoked? We have already had the Price Commission investigation in the West Midlands Road Hauliers affair. The hauliers paid their workers more than they strictly should have done. The Price Commission was thereupon asked to investigate the road haulage industry, wholly contrary to undertakings given when the Prices Bill was going through the House.

Again, we have the possibility—and this will be meat and drink to the Chief Secretary—that the Inland Revenue will be crawling over potential breakers of pay policy, under the powers given in Schedule 6 to the Finance Act 1976. This discretionary use of Inland Revenue powers is not all that fanciful. This is what happened in the United States under the Presidency of Mr. Nixon. A special section of the Internal Revenue was set up to monitor the tax records of what were described as "political radicals".

In his recent book "Before the Fall", William Safire defines the Watergate phenomenon, which went far beyond a single burglary or break-in, as the government's unlawful use of the law". This again is the path upon which the Government are embarking.

Of course, President Nixon also believed that the ends justified the means. He saw himself as struggling for an important goal—an honourable end to the Vietnam war and a new relationship with Russia and China. That was far too important a matter to be allowed to be jeopardised by carping critics at home. That was Mr. Nixon's justification, too.

Mr. Heffer

Will the hon. Gentleman explain: are we on this side a bunch of Communists, or are we all Nixons?

Mr. Lawson

He whom the cap fits can wear it.

Once the doctrine of the end justifying the means is accepted in the battle against inflation, for what other ends will unconstitutional means be felt by the Prime Minister, no doubt with equal sincerity, to be justified next? I am glad to see the Prime Minister in his place. Against what form of legal dissent will the next round of sanctions be invoked? That is the issue before Parliament tonight.

The Prime Minister likes to pose as the father of the nation [HON. MEMBERS: "Hear, hear."] The truth of the matter is that he is more like the Godfather, presiding over an Administration with the morals of the Mafia. There is a stink of corruption in the air, and only Parliament can cleanse it. I see that the Chancellor of the Exchequer, Al Capone himself, has just come into the Chamber.

Other nations have their written constitutions to prevent such arbitrary government as this black list-imposed incomes policy has become. In this country, which is without a written constitution, it is Parliament alone that has the power and the ability to check and prevent the abuse by the Executive of the frighteningly extensive discretionary powers which it has accumulated over the years. It is Parliament that must be ever vigilant in defence of natural justice and our ancient constitutional freedoms. It is Parliament that must do its duty tonight.

9.27 p.m.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

Having heard the hon. Member for Blaby (Mr. Lawson) and the hon. Member for St. Ives (Mr. Nott), who opened for the Opposition, one would never think that this country had a serious problem of inflation. They were prepared to concede that this was an important problem, but what did we have from the Opposition? We had accusations about Nixon, the Mafia, the Godfather and all the rest of it. The hon. Member for Blaby even accused me, of all people, of being a bully-boy or a despot. Can anybody believe such accusations? The hon. Gentleman knows that that is no way to have a serious debate in the House.

What we had from the hon. Gentleman and many Conservative speakers was the parading of a series of niggles. There was not one serious speech. They were totally destroyed by the speech of my right hon. Friend the Secretary of State for Prices and Consumer Protection. That was not a very difficult task. On the other hand, we had a series of serious speeches from the Labour Benches. My hon. Friend the Member for Coventry, South-West (Mrs. Wise) made a serious contribution.

I understand the sincerity of my hon. Friend's views about incomes policy generally. She did not have to assure me, of all people, that she was not "chicken" in voting for the Government. I am well aware of that, and I appreciate that she and many of my hon. Friends have their misgivings—I shall deal with those later—but they should not be prepared to be taken for a cynical ride by the Opposition in attempting to dragoon them into their Lobby tonight.

It was interesting to note that when my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) challenged the right hon. Lady the Leader of the Opposition why she had not tabled the same motion as that in the name of my hon. Friend, she said that she does not agree with it. That is what she said, although it was sotto voce. At any rate, she did not deny it.

Mr. Ridley

As the Chief Secretary is prepared to chat up his hon. Friends, will he now say whether he believes that the ends justify the means?

Mr. Barnett

That is a little pathetic even for the hon. Gentleman.

I turn to the whole argument that was deployed, if that is the word for it, during the debate.

Mrs. Knight

Answer.

Mr. Barnett

The hon. Lady must not squeak at me in that way.

That which we have heard from the Conservative Opposition has been an acceptance—it is something that they have always accepted—that pay is central to the problem of inflation. They could not deny that. However, they have not mentioned one alternative to the policies that were deployed. At least we had something from the hon. Member for Blaby, in his typical manner. He quoted to us something from his right hon. Friend the Member for Lowestoft (Mr. Prior), the Shadow Secretary of State for Employment. He quoted that as policy. I hope to refer to some of the right hon. Gentleman's statements—

Mr. Lawson

I was quoting a letter from the Chancellor of the Exchequer to my right hon. Friend the Member for Lowestoft (Mr. Prior), which quoted at some length my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and agreed with him. The right hon. Gentleman might as well get that right, if he gets nothing else right.

Mr. Barnett

I shall shortly be quoting the right hon. Member for Lowestoft. I understand that he is Shadow Secretary of State for Employment and that he has some say in policy. I assume that what he says is Conservative Party policy. I assume so, although I have the feeling that the hon. Member for Blaby does not altogether agree with him.

Throughout the debate we heard a wholly irresponsible set of speeches, taking no account of the national interest. The hon. Member for St. Ives said that to use the national interest is simply an excuse. If that is an excuse, I do not mind using it. I do not mind acting in the national interest within legal policies.

Mr. Nott

We all agree that the national interest is important, but does not the right hon. Gentleman think that the national interest might at least be tested in the House?

Mr. Barnett

That is what we are doing tonight. However, it has taken the Opposition Front Bench two years even to deign to do that. They have not been prepared to discuss it. It is no use the Opposition pretending. They know that the central problem that is crucial to the national interest is that of inflation.

They want moderation in pay claims, do they not? At least I thought that is what they wanted. It seems that they do. The hon. Member for Blaby is nodding. He is always ready to nod. They want us to succeed in our efforts to overcome inflation. I am sure that that is what they want. Conservative Members are not nodding now, but I am sure that is what they want. However, everything that we have done they have sought to attack. They have taken delight in every breach of the pay policy They are seeking to sabotage the whole policy. That is what it is about. If we are to reduce—

Mr. Nicholas Fairbairn (Kinross and West Perthshire)

rose—

Mr. Barnett

I thought that we were having a serious debate.

Mr. Fairbairn

Does the Minister appreciate that there may come a time—we have probably reached it—when there is a superior interest to the national interest, and that is that we should not be governed by arbitrary power, tyranny and despotism?

Mr. Barnett

If the hon. and learned Gentleman wants to refer to those phrases and some of the phrases that were used by the hon. Member for St. Ives, such as "returning to the Kremlin", on which the right hon. Lady the Leader of the Opposition is so keen, I must tell him and the Opposition Front Bench that the hurling of that sort of accusation did not do Winston Churchill any good in 1945 and that it will not do them any good, either.

If we are to reduce the level of inflation and protect jobs, there is no doubt that we need lower industrial costs and unit costs. No one disputes that. I am sure that not even the Opposition Front Bench would dispute it. Fortunately, many of the elements in industrial costs are under control. Costs of materials and fuels purchased by manufacturing industry in January this year were 3½ per cent. lower than last year.

The main element is pay. The Opposition Front Bench and every Opposition Back Bencher who has spoken in the debate are seeking to destroy everything that we are doing to bring down the rate of pay inflation.

The Government have an overriding duty and responsibility to use their legal powers, their discretionary powers, in the national interest and there is no greater national interest than to bring down the rate of inflation. We have had a synthetic clamour and nothing more from the Opposition in an attempt to destroy the effectiveness of the policy.

A number of complaints have been made during the debate and previously. The first is that the policy is uncertain and that the guidelines are not known. The Opposition Front Bench Members are the only 'don't knows" in this Poll. Everyone else knows. I will tell the House one firm that knows. Sun Alliance, which has been referred to in the debate and which has two Conservative Members on its board, does not pretend that it does not know the guidelines. It claims that it has not breached them. I am blessed if I know how it can say that it has not breached them if it does not know them. Of course it knows. The only people who do not know are those on the Opposition Front Bench.

The real truth, as we all know, is that the Conservatives do not like guidelines of any sort.

Mr. Lawson

What is the guideline?

Mr. Barnett

Now that the hon. Gentleman asks, I shall tell him. One of the guidelines is the 12-month rule. Let me quote the right hon. Member for Lowestoft. Hon. Members may well yawn. Let them just wait until they hear what the right hon. Gentleman said. I quote from the transcript of the BBC2 television programme "Newsday" that was shown at 7.30 p.m. on 5th December last year. The right hon. Gentleman said: Any country which throws away a 12-month rule is just seeking disaster. I assume that the Opposition do not want to breach that guideline, but they are prepared to condone breaches. We believe that it is the Government's duty and responsibility to ensure that we do not have that sort of disaster.

The other guideline is the 10 per cent. earnings growth. Of course, the Tories detest a norm of any sort. I read in the Press at the weekend that that four-letter word cannot be used in the presence of the right hon. Member for Finchley (Mrs. Thatcher). I do not know whether that is true, but if it is, the right hon. Member for Lowestoft is in the most terrible trouble, because I must quote again from what he said on television in reply to Mr. Charlton. Yes, guidelines may be necessary. So, they are in favour of guidelines. The right hon. Gentleman was then asked: Is this one of the real distinguishing marks then that you will do without norms of any kind? Mr. Prior: I would do without norms, certainly in the private sector. I would do without norms as far as possible in the public sector. I do not think you can avoid norms altogether. But if one is trying to develop a new relationship in the public sector one has to have comparabilities rather than norms. But the Government would always have to operate within some norm. I am sorry if I upset the right hon. Member for Finchley. I shall try not to do that again. But if she does not want guidelines and norms she will just have to drop the right hon. Member for Lowestoft.

The next point that was made in the debate was that the policy is illegal. The Opposition have not been able to prove that it is illegal. In an excellent speech my hon. Friend the Member for York (Mr. Lyon) said that it was nothing of the sort.

We are talking about purchasing contracts. Everyone is agreed that the Government have a right to give purchasing contracts at their discretion. It would be an absurdity to give a purchasing contract to a firm which was deliberately seeking to increase the rate of inflation. The same applies to employment subsidies, Industry Act assistance and export credit assistance.

Much has been said about abuse. It would be abuse or misuse of power for a Government to ignore the problems of inflation and allow firms to create a massive increase in inflation. That would be an abuse and misuse of their duties. There could be no worse problem for the social order of this country than if we returned to the rapid rates of inflation that would apply if the Opposition had their way. What they are suggesting is a policy for disaster. To allow a breach of the 12-month rule and do nothing would be disastrous.

There is also the question of secrecy. There is a serious problem. Despite a firm not wanting a particular piece of information to be published it should still be published. Different views have been expressed about this. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) sank without trace the hon. Member for St. Ives. In terms of Industry Act assistance and employment subsidies some firms do not want to have information disclosed, but if the firms want their names to be disclosed we are happy to oblige them. We shall see what they want.

The Opposition's complaints have been a sham. Of course they do not like the policy. I am bound to accept that. But what is their alternative? If we are to eliminate a particular policy the Opposition have a duty to tell the House what they will put in its place. Do they believe in incomes policies?

Mr. Russell Kerr (Feltham and Heston)

Do they hell.

Mr. Barnett

At least my hon. Friend is honest about these matters. Do the Opposition believe in incomes policies? I am not sure. I am talking of the Opposition generally. I believe that the Government have to have some policy for incomes.

We are now seeing what kind of policy the Opposition would use to replace the present one, because I understand that the right hon. Member for Lowestoft speaks for the Opposition on these matters. He said in the interview I think this country will always have to have an incomes policy of a sort. That is the Opposition view, as expressed by the right hon. Member who is, for the moment, their spokesman, though I am bound to make clear that the policy he referred to is not of the sort we have before us. He was talking about an incomes policy for the public sector. The private sector would be left to look after itself. This afternoon hon. Members frequently used the word "discrimination", but in this instance the discrimination is to be against the public sector. Of course, in referring to incomes policy in the private sector the hon. Member for St. Ives chose his words very carefully. I noted the words he used. He did not say "We are not going to have an incomes policy, ever." He used the phrase "for the present time". I assume that that means that it is possible at some other time, if words have any meaning.

There is a serious problem here about incomes policies and about what happens in the private sector. I suggest to the Leader of the Opposition that the next time she has one of her instant television policy-making sessions she will need to show how she will not discriminate against 15 million workers and their families in the public sector. How is she going to do that if she is to allow the private sector to go free and settle for itself, which is what the right hon. Gentleman said? He said that the private sector would have to look after itself.

Sir D. Walker-Smith

I thank the right hon. Gentleman for his characteristic courtesy in allowing me to put a point that his right hon. Friend the Secretary of State, in opening the debate, with his equally characteristic arrogance, flatly refused to allow me to do. The point concerns the policy which the Government are putting forward, which is, after all, the subject of the debate. It concerns the document that the right hon. Gentleman has put in the Library governing the conditions of purchase. Does he agree that the conditions in Clause 3 in regard to compliance with an incomes policy which is not precisely defined, the requirements in Clause 8 which require a contractor to furnish particulars at his own expense, and the requirements in Clause 13 which make the Secretary of State an absolute judge in his own cause, are wholly contrary to the rule of law and proper practice in this matter? Is the right hon. Gentleman not ashamed to put them forward tonight?

Mr. Barnett

Actually, I am not. The right hon. and learned Gentleman spoke of what this debate was all about, but I say to him with the greatest possible respect that he does not know what the debate was all about, because he has not been here. The debate was about a series of niggles. [HON. MEMBERS: "Answer the question."] I know that the Opposition want me to be diverted from the question of alternative policies, but I will not be diverted. [HON. MEMBERS: "Answer."] I will come to the alternative because I think that Conservative Members would like to know what their policy is. [HON. MEMBERS: "Answer."] Whether they like it or not, I shall tell them what their policy is.

The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) is a serious man and he likes serious arguments. Regardless of the nonsensical arguments of his right hon. and hon. Friends, he will vote with them tonight. He has decided on that. But if there is not to be the present policy, there has to be something else. I am seeking to elicit what that something else is, and, unfortunately, I am not having a great deal of success in finding out from the Opposition Front Bench.

Mr. Skinner

Before my right hon. Friend gets carried away with the idea that the debate is about continuing an incomes policy for ever, as distinct from an argument about the rule of law, will he understand that the reason why he is placed in this predicament is that the incomes policy being pursued is fraying at the edges, and that if we are to win the election and he is to get back on that Treasury Bench we have to return to free collective bargaining?

Mr. Barnett

I know my hon. Friend's enormous regard for me and his desire to have me sitting on the Treasury Bench. He knows my great regard for him and my desire to have him sitting on the Government Bench below the Gangway. I promise my hon. Friend that I am aware of his view of free collective bargaining, and if I can only stop the rabble on the Opposition Benches for a few minutes, I shall return to my hon. Friend's view.

The Conservatives' idea is not to have a strict incomes policy, although the right hon. Member for Lowestoft has said that he wants one in the public sector. Their idea is to have rigid monetary policy to deal with these matters. Let us be clear what they are asking for. With their record in office, it is strange that one should be expected to believe them, but let us assume that they are to be believed. If their policy is to be credible, what percentage guidelines would they have for their monetary policy at the time—5 per cent., 6 per cent., 7 per cent.? Normally the hon. Member for Blaby is ready to tell me something at the drop of a hat, but he is very quiet.

Mr. Lawson

rose—

Mr. Barnett

Do not wave your finger at me, sonny. I shall give way to the hon. Gentleman because I want to put this point to him. It is important. If the Conservatives are to have guidelines for a monetary policy, presumably it will not be a secret incomes policy. Surely they would not do that after all they have said. If they are to have a rigid monetary policy, as anything above certain guidelines for wages would result in massive unemployment, presumably they will tell the country what the guidelines are.

Mr. Lawson

The right hon. Gentleman is good at only one thing—trivialising everything he does. This is an important debate, on a very serious matter. Will he at least answer the question put by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) and also have the courtesy to answer the questions that I put to him?

Mr. Barnett

I am always ready to be as courteous as the hon. Member for Blaby. As he is not prepared to tell us, I have an idea what the Conservatives want to do about monetary guidelines. They would have monetary guidelines and leave it to the unions to decide what wages were going to be. Once again I have the evidence of the right hon. Member for Lowestoft. In the television interview to which I have referred, Mr. Charlton was also curious about what the policy would be in relation to monetary guidelines. Mr. Charlton asked the right hon. Gentleman: You believe that the Treasury should set the limits of the money available and you want to leave it to the unions to decide, do you, as to what these settlements should be among themselves?' The right hon. Gentleman replied: No, I do not think so entirely. I think the Government as an employer is bound to have a big part to play but if we can develop a new, if you like, a new guidance system in the public sector— I am sorry. I have nearly done it again. I nearly used the horrible word "norm" again. However, I am afraid that under the right hon. Lady's policy, although she may not be aware of it, the Conservatives will be having rigid monetary guidelines, norms, review bodies and all the rest of the trappings, and discrimination against workers and their families in the public sector.

The fact is that the Opposition have no policy. They are devoid of policy. I am surprised that the only thing on incomes policy that has not been mentioned as an alternative is that other piece of instant demagoguery used by the right hon. Lady. It was instant demagoguery referred to in another context by The Economist last weekend as—"a genteel demagoguery". I am not sure whether I would have used that particular phrase, but that was the description of this instant policy-making.

On the question of the referendum, is that a serious policy as a substitute for what one does about incomes? Is that really what the Opposition have it in mind to do?

Mr. David Price

Will the Minister give way?

Mr. Barnett

No, I shall not.

Mr. David Price

rose—

Hon. Members

Sit down.

Mr. Speaker

Order. The Minister is not giving way.

Mr. Barnett

I am desperately trying to find out what the alternative policy is, Mr. Speaker. I am sure that you are as keen as I am to know about it. I do not know what has upset Opposition Members. They must know what is coming next. The right hon. Member for Lowestoft was asked about the right hon. Lady: One of the suggestions I believe made by Mrs. Thatcher was the referendum. Did she mean that seriously? Mr. Prior: 'Yes, I think she mean it seriously, but I do not know that you would have a referendum on that in time to do anything about it'. Probably the best thing for the right hon. Lady to do, if ever she has the misfortune of leading a Government, is to have a referendum early on, lose it and, instead of dropping the right hon. Gentleman, drop herself.

Mr.David Price

Does the Minister—

Hon. Members

Sit down.

Mr. Barnett

I can now see the right hon. Member for Farnham (Mr. Macmillan).

Another alternative was put forward today by the hon. Member for Colne Valley (Mr. Wainwright) on behalf of the Liberal Party. He put it in a slightly less vociferous way than his hon. Friend the Member for Cornwall, North (Mr.

Pardoe), whom I am more accustomed to hearing. The hon. Member for Colne Valley knows how very much I dislike disagreeing with him, but he suggested that what is needed is a workmanlike statutory policy. I know that that is the view to which the Liberal Party has always adhered, and I appreciate it, but I am bound to say that it is not a serious proposition, and certainly there is no question of the present Government introducing a statutory policy.

However, what the hon. Member went on to say was that he assumed that the policy that we now have would work as a deterrent. Of course it is working as a deterrent. Sanctions are being taken against only a very small number of firms. The rest, to the chagrin of the Opposition, are complying with the guidelines.

Mr. Richard Wainwright

The Chief Secretary claims that very few firms are breaking the guidelines. How on earth does he know that?

Mr. Barnett

If the hon. Member looks at growth of earnings on any reasonable basis over the last few months, he will see the number of firms that have settled within the guidelines and he will see that the policy has been remarkably successful.

The fact is that the Opposition have not made a case today. They have no alternative policies. They are a bankrupt Opposition. I hope that my right hon. and hon. Friends and everyone in the House who has a thought about getting down the rate of inflation will dismiss the Opposition's carping, niggling criticism with the contempt that it deserves and will vote against them tonight.

Question put, That this House do now adjourn:—

The House divided: Ayes 278, Noes 292.

Division No. 101]	AYES	[10.00 p.m.
Adley, Robert	Bennett, Sir Frederic (Torbay)	Brittan, Leon
Aitken, Jonathan	Bennett, Dr Reginald (Fareham)	Brocklebank-Fowler, C.
Alison, Michael	Benyon, W.	Brooke, Peter
Amery, Rt Hon Julian	Biffen, John	Brotherton, Michael
Arnold, Tom	Biggs-Davison, John	Brown, Sir Edward (Bath)
Atkins, Rt Hon H. (Spelthorne)	Blaker, Peter	Bryan, Sir Paul
Atkinson, David (Bournemouth, East)	Boscawen, Hon Robert	Buchanan-Smith, Alick
Awdry, Daniel	Bottomley, Peter	Buck, Antony
Bain, Mrs Margaret	Bowden, A. (Brighton, [...]emptown)	Budgen, Nick
Baker, Kenneth	Boyson, Dr Rhodes (Brent)	Bulmer, Esmond
Banks, Robert	Bradford, Rev Robert	Burden, F. A.
Bell, Ronald	Braine, Sir Bernard	Butler, Adam (Bosworth)
Carlisle, Mark	Hunt, David (Wirral)	Pink, R. Bonner
Chalker, Mrs Lynda	Hunt, John (Ravensbourne)	Prentice, Rt Hon Reg
Channon, Paul	Hurd, Douglas	Price, David (Eastleigh)
Churchill, W. S.	Hutchison, Michael Clark	Prior, Rt Hon James
Clark, Alan (Plymouth, Sutton)	Irving, Charles (Cheltenham)	Pym, Rt Hon Francis
Clark, William (Croydon S)	James, David	Raison, Timothy
Clarke, Kenneth (Rushcliffe)	Jenkin, Rt Hon P. (Wanst' d&W' df' d)	Rathbone, Tim
Clegg, Walter	Jessel, Toby	Rawlinson, Rt Hon Sir Peter
Cockroft, John	Johnson Smith, G. (E Grinstead)	Rees, Peter (Dover & Deal)
Cooke, Robert (Bristol W)	Jones, Arthur (Daventry)	Renton, Rt Hon Sir D. (Hunts)
Cope, John	Jopling, Michael	Renton, Tim (Mid-Sussex)
Cormack, Patrick	Joseph, Rt Hon Sir Keith	Rhodes, James R.
Corrie, John	Kaberry, Sir Donald	Rhys Williams, Sir Brandon
Costain, A. P.	Kellett-Bowman, Mrs Elaine	Ridley, Hon Nicholas
Craig, Rt Hon W. (Belfast E)	Kershaw, Anthony	Ridsdale, Julian
Crouch, David	Kimball, Marcus	Rifkind, Malcolm
Crowder, F. P.	King, Evelyn (South Dorset)	Roberts, Michael (Cardiff NW)
Davies, Rt Hon J. (Knutsford)	King, Tom (Bridgwater)	Roberts, Wyn (Conway)
Dean, Paul (N Somerset)	Kitson, Sir Timothy	Rossi, Hugh (Hornsey)
Dodsworth, Geoffrey	Knight, Mrs Jill	Rost, Peter (SE Derbyshire)
Drayson, Burnaby	Knox, David	Sainsbury, Tim
du Cann, Rt Hon Edward	Lamont, Norman	St John-Stevas, Norman
Durant, Tony	Langford-Holt, Sir John	Scott, Nicholas
Dykes, Hugh	Latham, Michael (Melton)	Shaw, Giles (Pudsey)
Eden, Rt Hon Sir John	Lawrence, Ivan	Shaw, Michael (Scarborough)
Elliott, Sir William	Lawson, Nigel	Shelton, William (Streatham)
Emery, Peter	Lester, Jim (Beeston)	Shepherd, Colin
Evans, Gwynfor (Carmarthen)	Lewis, Kenneth (Rutland)	Shersby, Michael
Eyre, Reginald	Lloyd, Ian	Sillars, James
Fairbairn, Nicholas	Loveridge, John	Silvester, Fred
Fairgrieve, Russell	Luce, Richard	Sims, Roger
Farr, John	McAdden, Sir Stephen	Sinclair, Sir George
Fell, Anthony	McCrindle, Robert	Skeet, T. H. H.
Finsberg, Geoffrey	Macfarlane, Neil	Smith, Cyril (Rochdale)
Fisher, Sir Nigel	MacGregor, John	Smith, Dudley (Warwick)
Fletcher, Alex (Edinburgh N)	MacKay, Andrew (Stechford)	Smith, Timothy John (Ashfleld)
Fletcher-Cooke, Charles	Macmillan, Rt Hon M. (Farnham)	Speed, Keith
Fookes, Miss Janet	McNair-Wilson, M. (Newbury)	Spence, John
Forman, Nigel	McNair-Wilson, P. (New Forest)	Spicer, Jim (W Dorset)
Fowler, Norman (Sutton C'f'd)	Madel, David	Spicer, Michael (S Worcester)
Fox, Marcus	Marshall, Michael (Arundel)	Sproat, Iain
Fraser, Rt Hon H. (Stafford & St)	Marten, Neil	Stainton, Keith
Fry, Peter	Mates, Michael	Sianbrook, Ivor
Galbraith, Hon T. G. D.	Mather, Carol	Stanley, John
Gardiner, George (Reigate)	Maude, Angus	Steen, Anthony (Wavertree)
Gardner, Edward (S Fylde)	Maudling, Rt Hon Reginald	Stewart, Rt Hon Donald
Gilmour, Rt Hon Ian (Chesham)	Mawby, Ray	Stewart, Ian (Hitchin)
Gilmour, Sir John (East Fife)	Maxwell-Hyslop, Robin	Stokes, John
Glyn, Dr Alan	Mayhew, Patrick	Stradling Thomas, J.
Godber, Rt Hon Joseph	Meyer, Sir Anthony	Tapsell, Peter
Goodhart, Philip	Miller, Hal (Bromsgrove)	Taylor, R. (Croydon NW)
Goodhew, Victor	Mills, Peter	Taylor, Teddy (Cathcart)
Goodlad, Alastair	Miscampbell, Norman	Tebbit, Norman
Gorst, John	Mitchell, David (Basingstoke)	Temple-Morris, Peter
Gow, Ian (Eastbourne)	Moate, Roger	Thatcher, Rt Hon Margaret
Gower, Sir Raymond (Barry)	Monro, Hector	Thomas, Rt Hon P. (Hendon S)
Grant, Anthony (Harrow C)	Montgomery, Fergus	Thompson, George
Gray, Hamish	Moore, John (Croydon C)	Townsend, Cyril D.
Grieve, Percy	More, Jasper (Ludlow)	Trotter, Neville
Grist, Ian	Morgan, Geraint	van Straubenzee, W. R.
Grylls, Michael	Morgan-Giles, Rear-Admiral	Vaughan, Dr Gerard
Hall-Davis, A. G. F.	Morris, Michael (Northampton S)	Viggers, Peter
Hamilton, Michael (Salisbury)	Morrison, Charles (Devizes)	Wakeham, John
Hampson, Dr Keith	Morrison, Hon Peter (Chester)	Walder, David (Clitheroe)
Hannam, John	Mudd, David	Walker, Rt Hon P. (Worcester)
Harrison, Col Sir Harwood (Eye)	Neave, Airey	Walker-Smith, Rt Hon Sir Derek
Harvie Anderson, Rt Hon Miss	Nelson, Anthony	Wall, Patrick
Haselhurst, Alan	Neubert, Michael	Walters, Dennis
Hastings, Stephen	Newton, Tony	Warren, Kenneth
Havers, Rt Hon Sir Michael	Normanton, Tom	Weatherill, Bernard
Hawkins, Paul	Nott, John	Wells, John
Hayhoe, Barney	Onslow, Cranley	Whitelaw, Rt Hon William
Heath, Rt Hon Edward	Oppenheim, Mrs Sally	Wiggin, Jerry
Heseltine, Michael	Osborn, John	Wilson. Gordon (Dundee E)
Hicks, Robert	Page, John (Harrow West)	Winterton, Nicholas
Higgins, Terence L.	Page, Rt Hon R. Graham (Crosby)	Wood, Rt Hon Richard
Hodgson, Robin	Page, Richard (Workington)	Young, Sir G. (Ealing, Acton)
Holland, Philip	Paisley, Rev Ian	Younger, Hon George
Hordern, Peter	Parkinson, Cecil	TELLERS FOR THE AYES:
Howe, Rt Hon Sir Geoffrey	Pattie, Geoffrey	Mr. Spencer Le Marchant and
Howell, David (Guildford)	Percival, Ian	Mr. Anthony Berry
Howell, Ralph (North Norfolk)	Peyton, Rt Hon John
NOES
Abse, Leo	Evans, John (Newton)	McElhone, Frank
Anderson, Donald	Ewing, Harry (Stirling)	MacFarquhar, Roderick
Archer, Rt Hon Peter	Faulds, Andrew	McGuire, Michael (Ince)
Armstrong, Ernest	Fernyhough, Rt Hon E.	MacKenzie, Rt Hon Gregor
Ashley, Jack	Fitch, Alan (Wigan)	Mackintosh, John P.
Ashton, Joe	Flannery, Martin	Maclennan, Robert
Atkins, Ronald (Preston N)	Fletcher, Ted (Darlington)	McMillan, Tom (Glasgow C)
Atkinson, Norman	Foot, Rt Hon Michael	McNamara, Kevin
Bagier, Gordon A. T.	Ford, Ben	Madden, Max
Barnett, Guy (Greenwich)	Forrester, John	Magee, Bryan
Barnett, Rt Hon Joel (Heywood)	Fowler, Gerald (The Wrekin)	Mallalieu, J. P. W.
Bates, Alf	Fraser, John (Lambeth, N'w'd)	Marks, Kenneth
Bean, R. E.	Freeson, Rt Hon Reginald	Marshall, Dr Edmund (Goole)
Beith, A. J.	Freud, Clement	Marshall, Jim (Leicester S)
Benn, Rt Hon Anthony Wedgwood	Garrett, John (Norwich S)	Mason, Rt Hon Roy
Bennett, Andrew (Stockport N)	Garrett, W. E. (Wallsend)	Mayn&rd, Miss Joan
Bidwell, Sydney	George, Bruce	Meacher, Michael
Bishop, Rt Hon Edward	Gilbert, Rt Hon Dr John	Mellish, Rt Hon Robert
Blenkinsop, Arthur	Ginsburg, David	Mendelson, John
Boardman, H.	Golding, John	Millan, Rt Hon Bruce
Booth, Rt Hon Albert	Gould, Bryan	Miller, Dr M. S. (E Kilbride)
Boothroyd, Miss Betty	Gourlay, Harry	Mitchell, Austin
Bottomley, Rt Hon Arthur	Graham, Ted	Molloy, William
Boyden, James (Bish Auck)	Grant, George (Morpeth)	Moonman, Eric
Bradley, Tom	Grant, John (Islington C)	Morris, Alfred (Wythenshawe)
Bray, Dr Jeremy	Grocott, Bruce	Morris, Rt Hon Charles R.
Broughton, Sir Alfred	Hamilton, W. W. (Central Fife)	Morris, Rt Hon J. (Aberavon)
Brown, Hugh D. (Provan)	Hardy, Peter	Moyle, Roland
Brown, Robert C. (Newcastle W)	Harrison, Rt Hon Walter	Mulley, Rt Hon Frederick
Brown, Ronald (Hackney S)	Hart, Rt Hon Judith	Murray, Rt Hon Ronald King
Buchan, Norman	Hattersley, Rt Hon Roy	Newens, Stanley
Buchanan, Richard	Hayman, Mrs Helene	Noble, Mike
Butler, Mrs Joyce (Wood Green)	Healey, Rt Hon Denis	Oakes, Gordon
Callaghan, Rt Hon J. (Cardiff SE)	Heffer, Eric S.	Ogden, Eric
Callaghan, Jim (Middleton & P)	Hooley, Frank	O'Halloran, Michael
Campbell, Ian	Hooson, Emlyn	Orbach, Maurice
Cant, R. B.	Horam, John	Orme, Rt Hon Stanley
Carmichael, Neil	Howell, Rt Hon Denis (B' ham, Sm H)	Ovenden, John
Carter-Jones, Lewis	Howell, Ralph (North Norfolk)	Owen, Rt Hon Dr David
Cartwright, John	Howells, Geraint (Cardigan)	Padley, Walter
Castle, Rt Hon Barbare	Huckfield, Les	Palmer, Arthur
Clemitson, Ivor	Hughes, Rt Hon C. (Anglesey)	Pardoe, John
Cocks, Rt Hon Michael (Bristol S)	Hughes, Mark (Durham)	Park, George
Cohen, Stanley	Hughes, Robert (Aberdeen N)	Parker, John
Coleman, Donald	Hughes, Roy (Newport)	Pavitt, Laurie
Colquhoun, Ms Maureen	Hunter, Adam	Pendry, Tom
Conlan, Bernard	Irvine, Rt Hon Sir A. (Edge Hill)	Penhaligon, David
Cook, Robin F. (Edin C)	Irving, Rt Hon S. (Dartford)	Perry, Ernest
Corbett, Robin	Jackson, Colin (Brighouse)	Phipps, Dr Colin
Cowans, Harry	Jackson, Miss Margaret (Lincoln)	Price, C. (Lewisham W)
Cox, Thomas (Tooting)	Janner, Greville	Price, William (Rugby)
Craigen, Jim (Maryhill)	Jay, Rt Hon Douglas	Radice, Giles
Crawshaw, Richard	Jeger, Mrs Lena	Rees, Rt Hon Merlyn (Leeds S)
Cronin, John	Jenkins, Hugh (Putney)	Roberts, Albert (Normanton)
Crowther Stan (Rotherham)	John, Brynmor	Roberts, Gwilym (Cannock)
Cryer, Bob	Johnson, James (Hull West)	Robinson, Geoffrey
Cunningham, G. (Islington E)	Johnson, Walter (Derby S)	Roderick, Caerwyn
Cunningham, Dr J. (Whiteh)	Johnston, Russell (Inverness)	Rodgers, George (Chorley)
Dalyell, Tam	Jones, Alec (Rhondda)	Rodgers, Rt Hon William (Stockton)
Davidson, Arthur	Jones, Barry (East Flint)	Rooker, J. W.
Davies, Bryan (Enfield N)	Jones, Dan (Burnley)	Roper, John
Davies, Denzil (Llanelli)	Judd, Frank	Rose, Paul B.
Davies, Ifor (Gower)	Kaufman, Gerald	Ross, Stephen (Isle of Wight)
Davis, Clinton (Hackney C)	Kelley, Richard	Ross, Rt Hon W. (Kilmarnock)
Deakins, Eric	Kerr, Russell	Ryman, John
Dean, Joseph (Leeds West)	Kilroy-Silk, Robert	Sandelson, Neville
Dell, Rt Hon Edmund	Kinnock, Neil	Sedgemore, Brian
Dempsey, James	Lambie, David	Selby, Harry
Doig, Peter	Lamborn, Harry	Sever, John
Dormand, J. D.	Lomond, James	Shaw, Arnold (Ilford South)
Douglas-Mann, Bruce	Leadbitter, Ted	Sheldon, Rt Hon Robert
Duffy, A. E. P.	Lestor, Miss Joan (Eton & Slough)	Shore, Rt Hon Peter
Dunn, James A.	Lever, Rt Hon Harold	Short, Mrs Renée (Wolv NE)
Dunnett, Jack	Lewis, Ron (Carlisle)	Silkin, Rt Hon John (Deptford)
Dunwoody Mrs Gwyneth	Lipton, Marcus	Silkin, Rt Hon S. C. (Dulwich)
Eadie, Alex	Litterick, Tom	Silverman, Julius
Edwards, Robert (Wolv SE)	Lomas, Kenneth	Skinner, Dennis
Ellis, John (Brigg & Scun)	Luard, Evan	Smith, John (N Lanarkshire)
Ellis, Ton (Wrexham)	Lyon, Alexander (York)	Snape, Peter
English, Michael	Lyons, Edward (Bradford W)	Spearing, Nigel
Ennals, Rt Hon David	Mabon, Rt Hon Dr J. Dickson	Spriggs, Leslie
Evans, Fred (Caerphilly)	McCartney, Hugh	Stallard, A. W.
Evans. Ioan (Aberdare)	McDonald. Dr Oonagh	Steel, Rt Hon David
Stewart, Rt Hon M. (Fulham)	Varley, Rt Hon Eric G.	Williams, Alan Lee (Hornch' ch)
Stoddart, David	Wainwright, Edwin (Dearne V)	Williams, Rt Hon Shirley (Hertford)
Stott, Roger	Wainwright, Richard (Colne V)	Williams, Sir Thomas (Warrington)
Strang, Gavin	Walker, Harold (Doncaster)	Wilson Alexander (Hamilton)
Strauss, Rt Hon G. R.	Walker, Terry (Kingswood)	Wilson, Rt Hon Sir Harold (Huytor)
Surmmerskill, Hon Dr Shirley	Ward, Michael	Wilson, William (Coventry SE)
Swain, Thomas	Watkins, David	Wise, Mrs Audrey
Taylor, Mrs Ann (Bolton W)	Watkinson, John	Woodall, Alec
Thomas, Jeffrey (Abertillery)	Weetch, Ken	Woof, Robert
Thomas, Mike (Newcastle E)	Weitzman, David	Wrigglesworth, Ian
Thorpe, Rt Hon Jeremy (N Devon)	Wellbeloved, James	Young, David (Bolton E)
Tierney, Sydney	White, James (Pollok)
Tinn, James	Whitehead, Phillip	TELLERS FOR THE NOES:
Tomlinson, John	Whitlock, William	Mr. Joseph Harper and
Tomney, Frank	Willey, Rt Hon Frederick	Mr. James Hamilton
Torney, Tom	Williams, Rt Hon Alan (Swansea W)

Question accordingly negatived.

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1. BUSINESS OF THE HOUSE 21 words