§ Order for Second Reading read.
§ 7.21 p.m.
§ Mr. Cryer
My point of order arises from the comments of my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved). He said that he was opposed to the amendment to the previous business, moved by my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) and he made an interjection during the speech of my hon. Friend. The general rule of the House is that interjections are kept to a minimum. They are merely to elicit information. That is a rule that all of us follow. If we break that rule either you, Mr. Speaker, or a Deputy Speaker, will call us to order and say that the interjection has been too long. That is quite right. My hon. Friend the Member for Erith and Crayford made the point—and I do not question your decision, Mr. Speaker, but point out an issue of fact—that no opposition had been vented to the proposed amendment.
§ Mr. Speaker
Order. The hon. Gentleman is going back to a point of order on which I have ruled. We are making nonsense of procedure in the House.
§ Mr. Robin F. Cook (Edinburgh, Central)
On a point of order, Mr. Speaker. I ask you to elucidate a remark that you made twice during the previous points of order but which remains elliptical to new Members such as myself. You have twice said that you cannot anticipate what will happen at 10 o'clock. I have been unable to find the correct reference in "Erskine May", but may I ask whether you have any discretion as to what you do at 10 o'clock? If you come to the view that the House has not had a full debate on an important Bill, do you have any discretion whether you put the Question to the House? If you do have such discretion, would it not be provident for the Treasury Bench to find 107 adequate time for the House to debate the measure in full?
§ Mr. Speaker
When I made that reference I was replying to the right hon. Member for Ebbw Vale (Mr. Foot) on a point that he had raised.
§ Mr. Michael Foot (Ebbw Vale)
On a point of order, Mr. Speaker. I fully accept what you have said on all these questions. In order that the House of Commons may deal with the matter would not the best solution be that at five minutes to 10 o'clock—or whenever it may be—a motion for the adjournment of the debate should be moved by the Government, or by the Opposition, and be accepted by the House? If that motion were acknowledged and accepted in advance, we would have a guarantee that there would be a later opportunity for the full debate that we are embarking upon. If the Leader of the House responds to that request now, we shall be able to proceed with the issue. That would put the whole question in order and we would secure the full debate on the Bill, which the Leader of the House insisted was his orginal intention.
§ Mr. David Stoddart (Swindon)
On a point of order, Mr. Speaker. During the raising of points of order I distinctly heard my hon. Friend the Member for Newham, North-West (Mr. Lewis) say that he had made representations to you to speak in a certain debate. I am puzzled by that because I had always believed, and acted upon that belief, that hon. Members, when they wish to speak, sit in their places and try to catch Mr. Speaker's eye. If they do not succeed, they are unlucky.
The new idea and practice that is creeping in of Members writing to you, Mr. Speaker, before a debate, and apparently often before Prime Minister's questions—and perhaps other questions—is most unfair and detracts from good debates. If hon. Members are told that they will be called to speak, or have an indication of that, they may go along to the Tea Room, or somewhere else, and have a meal and not stay and listen to the debate.
I am sure you will agree, Mr. Speaker, that it is vital that when hon. Members wish to take part in a debate they should 108 sit in the Chamber and listen to all points of view. I am sure my hon. Friend the Member for Newham, North-West would agree that it is intolerable that hon. Members do not listen to opening speeches or subsequent speeches. They go away all day and come here at six o'clock, or eight o'clock, and speak without having the courtesy even to listen to the hon. Members who follow them. They then clear off, having made their speech, perhaps to have a drink in Annie's Bar. Often they are so discourteous that they do not come back to hear the winding-up speeches on important debates.
This is a valid and reasonable point of order. It is an issue which gives concern to all hon. Members, the general public, and the press, which often notes the emptiness of the Chamber. It is scandalous that Members do not sit in the House and listen to other Members when they wish to take part in a debate. That is not in accordance with our constitution or practice. Our practice is that the House is a place in which hon. Members debate and talk to each other, and not at each other.
§ Mr. Speaker
Order. That is a good note for me to rise on. The hon. Gentleman knows that he was not raising a point of order.
§ The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas)
On a point of order, Mr. Speaker. May I respond to the suggestion of the right hon. Member for Ebbw Vale (Mr. Foot)? When I announced during business questions last week the reasons for taking the Competition Bill today, I said that it was to give the House an opportunity to express its thoughts on the subject of the Bill. I have listened carefully to all that has been said, including the important intervention made on behalf of the minority parties. In view of the advanced hour, it would not be right to press ahead for a Division tonight. I accept the constructive suggestion of the right hon. Gentleman that we should start the debate and that the Government should move the adjournment before 10 o'clock. We shall not proceed to a vote this evening. That would be in the best interests of all Members.
§ Mr. Arthur Lewis (Newham, North-West)
On a point of order, Mr. Speaker. I know that everyone likes to try to shut me up, but I shall not be shut up on this occasion.
I agree with many of the views put by my hon. Friend the Member for Swindon (Mr. Stoddart), but he made one vital mistake when he said that I had written to you, Mr. Speaker. In fact, I made my request in the House at 4 p.m. I want to make that clear. I do not believe in jiggery-pokery and fiddling. I raised the point on the Floor of the House, but I still did not get called.
§ Mr. Speaker
Order. I am sure that the hon. Gentleman will co-operate now. The hon. Member for Newham, North-West (Mr. Lewis) had not written to me.
§ Mr. Stoddart
Further to the point of order, Mr. Speaker. All that I wish to do is to apologise to my hon. Friend the Member for Newham, North-West. Clearly, I misunderstood his position.
§ Mr. Denis Skinner (Bolsover)
On a point of order, Mr. Speaker. I have been trying to catch your eye for a considerable time. It is a genuine point of order and a matter on which I need clarification, and it has not been outdistanced by the fact that there has been an amicable arrangement between the two Front Benches.
I should like to know what is the situation facing the minority groups on this side of the House and, if there are any, such groups on the Government side. I am concerned about how much time will be available to the Liberal Party and other parties and to hon. Members such as myself who have a point of view to express.
It has been clear throughout our proceedings today that there has been no co-operation between the Front Benches. Now that there is co-operation between them, where do the rest of us stand? For instance, how long will the Front Bench speakers take in opening the 110 debate on the Competition Bill? What time will be available at the end?
That is a genuine point of order, and I need an answer in order to be able to take part in, or listen to, the debate.
§ 7.32 p.m.
§ The Secretary of State for Trade (Mr. John Nott)
I beg to move, That the Bill be now read a Second time.
The Competition Bill has four main elements. First, it strengthens the power of the Director General of Fair Trading and the Monopolies and Mergers Commission to deal with practices that restrict or limit competition in both the public and private sectors.
Secondly, it gives a new power to the Secretary of State to refer nationalised industries and other public bodies to the Monopolies and Mergers Commission to investigate their efficiency and costs, the service that they provide to consumers and any possible abuse of monopoly power by those organisations.
Thirdly, the Bill creates a new procedure to enable the Secretary of State to ask the Director General to investigate prices of major public concern. Finally, it abolishes the Price Commission and repeals the associated legislation.
Had our debate commenced at a proper hour I would have taken the opportunity to explain the role of stronger competition policy within the overall framework of the Government's monetary and fiscal policies. However, as the hour is late I am sure that the House would wish me to hear the comments of Labour Members on the Bill. Therefore, in order to give the House the maximum possible amount of time to express views on the Bill, I do not propose to say more at this stage.
§ Mr. Cryer
On a point of order, Mr. Deputy Speaker. We have just witnessed the trampling of the democratic rights of hon. Members by an outrageous speech from a representative of a Government who seem to care little for the rights of hon. Members duly elected to the House. Even on the Government side there may be some who are not so sycophantic that they do not have criticisms of the Bill. It is a major Bill. 111 It is a convention of the House that the Front Bench speakers are given special facilities for speaking. They have no other rights or privileges because we are all elected on a basis of equality. The Front Benches are given special rights of access for speaking.
§ Mr. Cryer
The point of order is that there has been a breach of the convention of the House that you, Mr. Deputy Speaker. are here to enforce. The unwritten sections of our constitution, as well as provisions in "Erskine May", have been broken because no adequate explanation has been given for this massive Bill. The Minister is abusing his rights.
§ Mr. Nott
Further to that point of order, Mr. Deputy Speaker. I am perfectly prepared to speak at length on the Bill, if I have the permission of the House to do so, when we have the adjourned debate. The reason I am not prepared to speak at any greater length now is that hon. Members should have an opportunity of speaking on the Bill. With permission, I shall speak again on Second Reading at a future occasion.
§ Mr. Douglas Jay (Battersea, North)
On a point of order, Mr. Deputy Speaker. Surely the Secretary of State has misunderstood the situation. We have had an assurance from the Leader of the House that a little before 10 o'clock he will move the adjournment of the debate so that it may proceed on a later date.
In that case, there is no reason to think that the time available for today's debate will be curtailed and therefore, on every precedent and principle of parliamentary debate, the Secretary of State, the senior Minister responsible for this major Bill, should open the debate by explaining the 112 Bill and defending the policy of the Government.
It will not be possible to have a serious and dignified debate unless that is done. As the right hon. Gentleman appears to have acted under a misconception in believing that the whole debate will terminate at 10 o'clock, is it not possible for you, Mr. Deputy Speaker, and the House to appeal to the Secretary of State to make the speech that he must have with him and for which there is adequate time?
Mr. Deputy Speaker
It is not for the Chair to indicate to a Minister what he is to say or not to say.
§ Mr. Stoddart
Further to the point of order, Mr. Deputy Speaker. The Secretary of State was either not here for, or not listening to, what the Leader of the House said in response to my right hon. Friend the Member for Ebbw Vale (Mr. Foot). It was clear that the Leader of the House had accepted that the debate had been delayed and should therefore proceed in the normal manner except that the vote would be taken not tonight but after further debate on another day.
Mr. Deputy Speaker
Order. That is nowhere near a point of order for the Chair. If the hon. Gentleman wishes to raise a point of order, will he please come to the point as quickly as possible?
§ Mr. Stoddart
No. I will not be heckled by my hon. Friends on the Front Bench or anywhere else. My point of order is that the form of debate in the House is that the Minister outlines and explains a Bill before we discuss it.
Mr. Deputy Speaker
Order. The hon. Gentleman has been in the House on many occasions when Ministers have not outlined a Bill in detail.
§ Mr. St. John-Stevas
On a point of order, Mr. Deputy Speaker. At this time of the year tempers in the House tend to get frayed, and there are also some misconceptions around.
I do not think that my right hon. Friend the Secretary of State for Trade understood exactly the proposal that I 113 put, namely, that we should commence the debate this evening but should not proceed to a vote and that we would find extra time at a later date to complete our consideration of the Bill. I suggest, therefore, that, the misconception having been cleared up, my right hon. Friend should proceed with his speech.
§ 7.40 p.m.
§ Mr. John Smith (Lanarkshire, North)
The speech—if that is what it can be called—just given by the Secretary of State for Trade must be the most contemptuous delivered to the House for many decades. Not only has he the responsibility—which any Secretary of State has who is conscious of the responsibility his office lays upon him—to explain to Parliament, the only law-making institution in the country, the contents of legislation put before it; we were told by the Leader of the House only last Thursday that one of the important reasons why the Bill had to be discussed today was that the Government could inform the country fully about it by means of what he called a "full debate" in this House.
The Leader of the House also said that it was important that hon. Members with different views on the Bill should have an opportunity to express them, but today, while there may well be different views on both sides of the House—and I intend to explain fully and in detail the views of the Opposition, because the country is entitled to know them—the only people we will have heard from in the debate will be the Government, through the Secretary of State for Trade, who carries responsibility for the Bill and whose name appears on it.
I do not know what kind of judgment or tactic was in the mind of the Secretary of State in choosing to treat the House in this contemptuous fashion. I do not think it can be the case that he thought that the debate would be curtailed at 10 o'clock, because, like all of us, he listened to the exchanges and heard the Leader of the House say that the Government will not press for a Division at 10 o'clock and therefore the Secretary of State will have opportunity to speak. I hope that the Secretary of State will take the opportunity, if he catches your eye, Mr. Deputy Speaker, and if the House gives its permission—it may be that it will not do 114 so—to remedy this very grave discourtesy that has been done to the whole House and, indeed, to the country, and explain the Bill adequately to the House.
§ Mr. Smith
I must not be the arbiter of the right hon. Gentleman's sense of responsibility. He must be the arbiter of it himself. The Opposition are entitled to complain, as, indeed, are hon. Members on both sides of the House and people in the country at large—and volubly—that the Government do not seem to have either the courage or the sense of principle and dignity to defend their proposals before the House.
I want to get on and deal with the Bill myself. All that we were told by the right hon. Gentleman was that it had four purposes. First, it is the most misleadingly named Bill to have come before the House for a very long time. It is not the Competition Bill; it is the abolition of the Price Commission Bill. If ever there was a case for reference to the Director General for Fair Trading for a misleading trade description, it is this Bill's title. If the right hon. Gentleman is thinking of doing intelligent actions like that, rather than fail to inform the House of the Bill, we shall at least have made some progress.
We are really debating the abolition of the Price Commission. In his very short speech the right hon. Gentleman mentioned that as the final objective of the Bill. But it is the principal purpose of the Bill. During the general election, the question of the Price Commission raised itself from time to time. I recall the celebrated television debate between my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and the right hon. Lady who is now Minister for Consumer Affairs. She was repeatedly asked whether the Tories intended to abolish the Price Commission. She took refuge in the weasel words of the Conservative manifesto that a Conservative Government would review the activities of the Commission.
At no stage did any Conservative spokesman say that the Commission 115 would be abolished as soon as the party was returned to office. But within a matter of days, in the debate on the Gracious Speech, the Prime Minister announced the abolition of the Price Commission. That must have been either the fastest review of policy to have taken place in modern history or it was the preconceived intention of the Conservative Party—I believe that that is the case—to abolish the Price Commission. I believe that it was the Conservative Party's intention before the election and during the election but that it was concealed from the electorate in case the public would not support the Conservatives. I believe that, as a result, the Conservative Party was able to delude the public into thinking that all that was proposed was a review. [Interruption.] I should be grateful if the Government would pay attention to what the Opposition are saying. It is one thing for the Secretary of State not to explain the Bill to the House; he might at least do the Opposition the courtesy of listening to what they have to say about it.
§ Mr. Anthony Grant (Harrow, Central)
Will not the right hon. Gentleman accept that the word "review" certainly does not mean "maintain in perpetuity"? It means that a thing may be maintained or removed. I am glad that the Price Commission is being removed.
§ Mr. Smith
The point that I was putting did not concern the mental attitude of the hon. Member for Harrow, Central (Mr. Grant). I can quite see that in all probability he was all along in favour of the abolition of the Price Commission. In the Conservative election manifesto it was said that a Conservative Government would review the Price Commission. During the election, the Conservative Party was asked specifically if it would abolish the Price Commission. The answer was equivocation after equivocation. Yet within days of the election the Prime Minister, in her first speech to the House, announced that the Price Commission would be abolished. Any reasonable jury would convict the Government of deluding the public in the matter.
§ Mr. Michael Neubert (Romford) rose—116
§ Mr. Smith
I do not feel any obligation to give way to hon. Members on the Government Benches when the Secretary of State would not make points in respect of the Bill. I do not think that he should be rescued by his hon. Friends. But in the interests of fairness and to outline the differences between the two approaches, I will give way.
§ Mr. Neubert
I am indebted to the right hon. Gentleman. Will he confirm that the prospect of the absorption of the Price Commission into the Monopolies and Mergers Commission had already been anticipated in a Green Paper published by the Labour Government, and therefore is nothing new?
§ Mr. Smith
That is a different matter. There may well be a case for merging the Price Commission with other bodies, provided that its price control function is maintained. The Labour Party manifesto considered such a possibility, but it was never part of our intention that the price control function should be completely dropped from the legislative apparatus available to the Government. That is precisely what is proposed in clause 1 of the Bill, the most important clause.
§ Mr. Joan Evans (Aberdare)
The House is in a serious difficulty. The Secretary of State's contribution was too short to interrupt him with questions, but what concerns many of us is that there are those in the Price Commission whose contracts are coming up for renewal while Parliament is in recess. This is an important matter. The Price Commission is to go on until the Bill passes through all its stages, but many members of the Price Commission do not know what their future is to be. We thought that that point would be elaborated by the Secretary of State in his opening speech.
We on the Opposition Benches cannot speak with authority on the matter, and so Parliament will be going into recess without knowing what the Government's decision is to be. We have merely had this sign of temper by the Secretary of State because there have been two Ministerial statements today.
§ Mr. Smith
The question of the staff who have served the Price Commission is extremely important. The only information that we have concerning them is 117 in the explanatory and financial memorandum to the Bill. I think that there have also been the odd press statements, because the right hon. Gentleman chose to speak at greater length to the press when he presented the Bill than he has done to the House of Commons, which has the responsibility of deciding whether the Bill is to be made law. That, after all, is one of the most important features. I thought that one of the reasons why the Government were pressing ahead with Second Reading was that there would thereby be some clarity about the future of people employed by the Price Commission, but they have been treated as discourteously as the House by the Secretary of State.
§ Mr. Evans
Clearly, I am concerned about the staff, but I am also concerned about the members of the Commission whose contracts are expiring. If we do not get clarification from the Government, what will the situation be? Is action to be taken during the recess? Is Parliament to be told who is to be appointed to the Commission?
§ Mr. Smith
I apologise for not being in a position to answer my hon. Friend's penetrating questions. Only one person can do so—the Secretary of State. Since he did not choose to speak at any length, no doubt he will have listened to what my hon. Friend has said and will send him a letter by first post tomorrow answering the important questions that he has raised. I hope that if he does not listen, he will at least read Hansard and answer my hon. Friend's question.
One would have thought that of all the times to abolish the Price Commission this was the most inappropriate. In the terms of the Budget Statement, we are heading for 16 per cent. inflation by October this year. In terms of the statement made to the House by the Secretary of State for Social Services, 17 per cent. inflation is predicted by November. There is hardly an economic commentator in the country who does not believe that we are heading fast for 20 per cent. inflation by the end of the year. We are not in a position in which inflation is dropping to the level at which one might argue from the Government Benches that there was no necessity for the Price Commission. The degree of inflation has been largely induced by the Government own 118 measures, and particularly by the Budget. We see the authors of increased inflation putting forward a proposal that one control against it should be removed.
The main instrument for the recent increase in prices was the Budget increase in value added tax. That increase was not referred to in very explicit terms in the Conservative Party manifesto, but no doubt the House will remember that the present Chancellor of the Exchequer on 21 April, when taxed with the possibility that VAT would be substantially increased, said:We have absolutely no intention of doubling VAT—so all the claims made about the price of household goods, shoes, cars, etcetera are utterly false.If a rise from 8 per cent. to 15 per cent. is not tantamount to doubling the rate of VAT, I believe that the English language has lost its meaning. Much more interesting, my hon. Friends will recollect a very effective press conference conducted during the election campaign by Mrs. Shirley Williams in which she demonstrated the likely increase in the price of household goods as a result of an increase in VAT. That drew from the Chancellor of the Exchequer a comment that is almost unbelievable when we consider the events that have occurred since. The right hon. and learned Gentleman said:The figures Shirley Williams gave at this week's Labour Press Conference have no basis in reality … she was assuming that VAT goes up to 15 per cent.It is high time that the Chancellor of the Exchequer, if not the Secretary of State for Trade, came to the House and explained what that statement was meant to mean. Either they did not intend to increase VAT to 15 per cent. or it was another case of deliberately knowing what the plans were and concealing them from the British public during the election.
What will be the effect of the abolition of the Price Commission? Not only will the Commission itself, and the expertise that has been assembled, be dissipated to the four winds; we will lose all the powers of prenotification and the automatic prenotification of price increases by firms with a turnover above a certain amount. The Secretary of State will have no power to freeze prices while they are being investigated and no power to take any action consequent upon an investigation. The ordinary consumer will be left 119 defenceless against price increases. I fear that Ministers from the Department of Trade speaking at the Dispatch Box will say that they have no statutory responsibility, because that responsibility will have been removed by the Bill. This means that Members of Parliament will be weakened in their capacity to attack the Administration or call them to account for increases in prices.
I believe that the Price Commission is a vital part of the nation's defence against unjustified price increases. The Bill will remove it at one fell swoop.
From time to time, the Price Commission has been criticised by Conservative Members who have demanded proof that it reduced the increase in the cost of living. They produced a number of figures deduced from the actual reductions and freezes that the Price Commission carried out. At the same time, they said that it was holding back investment in British industry on an enormous scale. They cannot have the argument both ways.
An important part of the Price Commission was its deterrent effect in discouraging injustified price increases which companies knew would be subject to rigorous scrutiny. To be fair, the Government do not throw away completely all pretence at controlling prices. If hon. Members look at clause 13 of the Bill, they will find that the Secretary of State has a power, or proposes that Parliament should give him a power, to refer certain price increases not to the Price Commission but to the Director General of Fair Trading. But hon. Members will see that this power is hedged with severe conditions. It should also be remembered that the Secretary of State does not have the Price Commission to do the work for him. There is simply the Director General of Fair Trading.
Before the Secretary of State refers anything, a price or charge must be of major public concern, defined as being "of general economic importance". That is a let-out for Ministers not to refer hosts of unjustified price increases. I predict that Ministers answering at the Dispatch Box, or through written replies, will say that they do not think that any particular price increase is of general economic importance or of major public concern. What is more, it is not an automatic 120 investigation carried out by the Price Commission. It can be initiated only on the political decision of the Secretary of State.
Even more staggering—I would have put this to the Secretary of State if he had made a proper speech—the right hon. Gentleman appears to have absolutely no powers to act upon an investigation made by the Director General of Fair Trading. Parliament is being asked to give the Secretary of State power to refer to the Director General a price increase of major public importance. He has to report, after which the Secretary of State has no power to take any action whatever, even if the report discloses something of disgraceful proportions. I predict that there will be very few references to the Director General as a result of clause 13.
We are left with a fig leaf of price controls, a mere camouflage that will disguise permission to let prices drift, because companies will be under no restraint. They will not have to justify themselves to the Price Commission. They will not be subject to notification or freezes and the consumer will stand defenceless against inflation largely promoted by the Government's taxation and fiscal policies.
In place of the apparatus of price control on a proper scale the Government advance a new theory—the device of the anti-competitive practice, whereby a so-called anti-competitive practice can be investigated by the Director General of Fair Trading to be followed by a reference to the Monopolies and Mergers Commission. I have grave doubts about the Government's sincerity in wishing to make a reality of a thorough investigation of the commercial practices of some companies and what they call their anti-competitive practices. Not that there is a lack of such practices. Many hon. Members know about them. They include tie-in procedures, full-line forcing and all the other devices used by dominant producers to create a captive market for themselves.
While the Government set up a new form of investigation, they do not give the proper resources either to the Director General of Fair Trading or to the Monopolies and Mergers Commission to carry out their task. Hon. Members will see in the explanatory and financial 121 memorandum that the extra money is £1¾ million and a reference to some staff increase for the Director General of Fair Trading. If he is to take over responsibility for prices and also anti-competitive practices, one would have thought that the Government would have put forward proposals for refashioning and strengthening the Monopolies and Mergers Commission.
If the Director General does not get an undertaking from a company which he has investigated, the only action that the Secretary of State can take is to refer the matter to the Monopolies and Mergers Commission. That is a quasi-judicial body. We know how long its procedures take. It proceeds at a fairly slow pace, takes evidence from all and sundry and sometimes many years elapse before a reference to the Monopolies and Mergers Commission is reported to the Secretary of State.
I believe that many firms that wish to brazen it out will refuse to give an undertaking to the Director General, make the Secretary of State take them to the Monopolies and Mergers Commission and then dilly-dally—there will be plenty of opportunities—for years before the Monopolies and Mergers Commission reports. It may be that we reach the end of this Parliament before the Monopolies and Mergers Commission has reported to the Secretary of State about any single reference made to it under the terms of this legislation. That does not seem a mighty engine for tackling anti-competitive practices.
There is a fundamental mistake of philosophy in the Government's approach. One cannot run an anti-competitive policy and neglect the prices element of that policy completely. One must fight anticompetitive practices and unjustified prices at the same time. They are both often intricately connected.
One further part of the Bill to which I hope the House will pay attention both on Second Reading and in Committee is clause 11 that was advertised by the Secretary of State in his press statement as an important added safeguard for the public in terms of nationalised industries. The right hon. Gentleman takes power to refer to the Monopolies and Mergers Commission certain bodies in relation to their efficiency, the service provided by them and the possible abuse of a monopoly position. It may be that there is a 122 case for referring some of these public bodies to it. But if there is a case for that, why is the power restricted to nationalised industries and certain public bodies such as transport and water undertakings? There is one rule for the publicly owned industries and another rule for those who finance the Conservative Party. I give notice to the Secretary of State that if this power is to remain in the Bill the Opposition will seek to widen its scope to ensure that the Monopolies Commission has power to make wider investigations.
I suspect that the intention behind clause 11 is not to strengthen the protection of the consumer but to indulge the animus which the Government have against the public sector. They will seek to make constant references to the Monopolies and Mergers Commission under clause 11 so that they can seek to persuade the public that the abuse of economic power exists only in the public sector, whereas we all know that there are many rampant abuses in the private sector.
What in essence the Bill adds up to is a blatant abandonment of the apparatus of price control which has been built up over the past few years. A Government who were genuine about controlling prices would retain the Price Commission and, what is more, seek to strengthen its powers, as the Labour Party proposed during the election campaign. There may be a case for adapting the institutions and merging the Price Commission and some of the other bodies, including the Monopolies and Mergers Commission and the Office of Fair Trading. But a Government who were genuine would design a vehicle for effective action against anti-competitive practices and price increases which were unjustified. What there is not a case for is the throwing away of effective powers against prices and the substitution for it of a half-hearted, ineffective and half-baked policy on competition.
§ Mr. Smith
I really do not think that it lies with the Minister of State to make seated interventions. Colleagues of the Secretary of State would be well advised to keep quiet during a speech by a member of the Opposition since the right hon. Gentleman did not have 123 the courtesy to expose himself to any kind of criticism, whether seated or standing.
If this Bill passes into law, we shall see the passing of a milestone in the Government's rapid retreat from the fight against inflation. As prices soar in the unchecked scandal which their policies promote, so will the justified resentment of the public increase to a stage at which they will speedily sweep this Government from office.
§ 8.3 p.m.
§ Mr. Anthony Grant (Harrow, Central)
I want, first, to commend the approach of my right hon. Friend the Secretary of State to this debate. After the ludicrous waste of time to which we were subjected by the Opposition earlier this afternoon, my right hon. Friend's desire to enable as many right hon. and hon. Members as possible to take part in the debate by truncating his remarks was highly commendable. The right hon. Member for Lanarkshire, North (Mr. Smith) knows that the usual practice is for a Minister to make a long-winded speech which attracts the attention of the press and then to leave the Chamber. On this occasion my right hon. Friend has not done that. His intention is to allow right hon. and hon. Members to speak, and he will speak in reply. I am certain that if he had made a long speech we should have heard endless noise from Opposition Members complaining that he was speaking at too great a length and denying the rights of Back Benchers, with the result that we should have had an early-day motion tabled.
§ Mr. Ioan Evans
The hon. Gentleman is making an unfair attack on the Opposition. My hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) raised a question on the business motion, and his argument was so telling that the Leader of the House accepted his amendment. That justified completely my hon. Friend's asking for more time for the Northern Ireland debate.
We have to bear in mind that the Second Reading debate on this Bill could have started at half-past three o'clock. That did not happen because there were two Government statements. It is not 124 in the hands of the Opposition to determine whether the Government make statements. That is the responsibility of the Government. It is very unfair of the hon. Member for Harrow, Central (Mr. Grant) to criticise the Opposition.
Finally, the Minister—
Mr. Deputy Speaker
Order. If the hon. Member for Aberdare (Mr. Evans) intends to try to catch the eye of the occupant of the Chair, he is not proceeding very favourably.
§ Mr. Grant
Obviously it was unwise of me to be so generous as to give way to the hon. Member for Aberdare (Mr. Evans). I have no intention of engaging in a repeat performance by rehearsing all the arguments that we heard earlier about Northern Ireland. All I say is that my right hon. Friend the Secretary of State showed that he was conscious of the time factor in this debate, and I applaud him for it.
For my part, throughout the election campaign I said repeatedly in public that I wanted the Price Commission to be abolished. As a result, I looked a little askance at the remarks about "a review". Nevertheless, I accepted that that was perhaps the more moderate approach, although it was one which I did not accept. When I saw that the Gracious Speech did not refer directly to the abolition of the Price Commission, again I wondered what was happening. But now I am delighted that my right hon. Friend has taken this course because I believe it to be right. I have advocated it for a long time.
It must be said that one cannot interpret the word "review", no matter how one strains the language, as meaning the maintenance of something in perpetuity. A review means exactly what it says.
I am sure that the members of the Price Commission are worthy, honourable and well-meaning men. They desire to do their best for the country. They pay their taxes and they do not beat their wives. All in all, they are worthy bureaucrats. However, at best their activities have been futile. At worst, they have been positively mischievous.
It is perfectly obvious that the Commission failed to contain the price explosion and the inflation that we saw under the previous Government. Probably 125 the biggest praise that can be given to the Price Commission is that perhaps it succeeded in containing one-thousandth part of the considerable increase in prices which took place under the previous Government.
It is also fair to say that virtually no other country in the industrial world has anything like a price commission, and their records on inflation have been far better than our own under the previous Government. So I do not believe that the Price Commission can claim any credit for containing prices.
After all, prices are only the thermometer of inflation. It is impossible to reduce the temperature of a patient by employing a man in a bowler hat to force down the mercury in the thermometer. That is not the way to approach matters. In that sense, the poor, worthy Price Commission was just like the man in the bowler hat trying to push down the mercury in the thermometer.
Even more damaging is the way that its absurd and ludicrous reports meddle with industry.
§ Mr. Robert Maclennan (Caithness and Sutherland)
Before the hon. Gentleman leaves the point about the futility of the Price Commission, which, in his view, does not have a measurable effect on the retail price index, may I ask whether he takes the view that the Monopolies and Mergers Commission and the Director General of Fair Trading are to be similarly regarded as futile, and that they will have no appreciable effect on the retail price index following the passage of the Bill?
§ Mr. Grant
The Bill will create exactly the sort of climate necessary to protect the consumer—something that has been forgotten by Opposition Members—namely, competition in industry.
I give an example of meddling in the alarm system industry that affected a small company. I declare an interest, as I am a director of that company. The Minister at the time—I wonder whether he—or she—takes decisions when he is in the bath wondering what to do with the Price Commission—proposed an inquiry because there had been four complaints from Members of Parliament and eight from the general public. That, in an industry in which there are 350,000 alarm 126 system installations, gives a measure of the importance of the issue.
The Price Commission selected 34 firms as subjects for the inquiry, including my company. It produced a form with 29 pages of foolscap packed with questions. We examined the form at great length and came to the conclusion that at least half the questions were not applicable to our industry. We informed the Price Commission, which replied courteously and sent someone to help us. The result was that two directors of my company, one executive and two well-paid and very nice officials of the Price Commission spent a total of 18 hours poring over the form. They came to the conclusion that it was not the appropriate one.
The officials went away saying that they would do better. They sent a different form, which consisted of 59 pages of closely typed foolscap, with five annexes. We looked at that form—with more executive time wasted—and came to the conclusion that some of the questions did not apply. Before we were able to reply to the Price Commission it produced its report, so the forms were not relevant at all. The amount of executive and bureaucratic time wasted that could have been put to more productive activity was disgraceful.
The report itself, so far as it was accurate, was already known to the industry, and, so far as it was not known, it was wholly inaccurate. It was a monumental waste of public-spirited, publicly paid people, together with private industry, on a ludicrous activity. That has been multiplied throughout the country in all types of industry, and I am glad that the Price Commission is to be abolished.
The Government's approach has brought a welcome breath of freedom to industry. The control of monopoly and the maintenance of fair trading is the other side of the coin of free enterprise. Smaller firms have always been subject to the chill wind of competition. Larger firms must realise that they have also to be exposed to the bracing air of competition.
I am pleased that the Government have decided to include the nationalised industries in this exercise. Under the previous Government the prices of nationalised industries rose faster than those in 127 the private sector. I hope that the Secretary of State will heed my point that the Bill should be strong enough for the activities of nationalised industries, in what I describe as "fringe activities", to be investigated. There has been far too much meddling and pursuing of fringe activities by nationalised industry over the years.
It is not the business of British Railways to run hotels. That could be done better by others. It is not the business of British Airways to set up shops in high streets to sell tickets. It is not the business of the electricity business to engage in the alarm system industry without having to maintain the standards that have to be maintained by the private sector. It is impossible to discover the financial basis—with taxpayers' money—on which it is working. It is in the consumers' interests that such outside activities should be subject to the same disciplines as the private sector, and I hope that they will be trapped by clauses 2 and 11.
I do not expect an answer tonight on my next point, but perhaps it will be answered when the Minister winds up the debate. Some industries, particularly international shipping, are exempted from the Restrictive Trade Practices Order 1976. That industry is concerned about the Bill and wants some assurance that international shipping activities will be specifically exempted. Without such an assurance its activities will be subject to the new controls. The right hon. Member for Lanarkshire, North, who had responsibility for shipping, will understand the implications of conference agreements, and so on. This is a matter of international trade, and I hope that the Minister can satisfy this industry, on which so much of our trade depends.
This is an excellent Bill which will shake up complacent and monopolistically minded private industry. It will help the consumer and shake up the nationalised industries. I hope that the 450 worthy civil servants involved will find other employment. If I have any criticism, it is that they will still be employed in the public service, when they should be employed in productive service. The Bill will command the support of the House and, I believe, of the country.
§ 8.16 p.m.
§ Mr. Andy McMahon (Glasgow, Govan)
It is the custom in a maiden speech to pay tribute to one's predecessor. I do so without hesitation. Mr. Harry Selby, who represented Govan in the previous Parliament, did an excellent job. I am sure that my return to represent Govan reflects the work that Harry did over the last five or six years.
Today has been a day of doom and misery for Govan. I was not overwhelmed by what I heard today, but I was concerned and a little afraid about the nauseating class character of the policies announced by the Government. In particular, as a boilermaker and someone who has been a victim of the so-called winding down of shipbuilding on Clyde-side, I must say that no Tory Member can tell me that I should find a job elsewhere. I wonder how many Government supporters can tell me how one finds a job in an area such as Govan where 80 per cent. of a ship is built outside the shipyard and the costs for shipbuilding fall on the whole community.
I laugh when I hear about selling parts of shipbuilding back into private hands—the hands of those who have claimed God's gift to look after the industry. I can tell the House from personal experience what happens when a shipyard worker is subjected to a so-called "family" shipyard. There was a slight recession in Govan in 1946. A ship was lying on the stocks red with rust and the shipyard workers' only consolation was to put their tools in a pawnshop.
After a period, one of the family saw a carpenter in the yard opening his toolbox. Looking in, he said "Chippie, your tools are very rusty." Back came the logical reply "Yes, but you should have seen my bloody frying pan."
That is a measure of the crime that can be committed by the policies of this Government. If, after six short weeks, they are prepared to throw down the gauntlet of face-to-face confrontation with the trade union and labour movement, I advise them to speak to the right hon. Member for Sidcup (Mr. Heath) who as Prime Minister tried it with UCS in 1971. The tactics may be different, but the result will be the same.
We are prepared to fight for our jobs. Already we have taken steps to unite the 129 trade union and labour movement. One cannot discard a man's skilled job in the same way as one can throw away a cigarette packet. Men depend upon their jobs. The Government must not demoralise people.
The class conscious character of the Government was revealed today when the announcement was made about the aerospace industry. They were all for that industry but nothing was said to help shipbuilding because there is no profit to be made at present in shipbuilding. It is worth remembering that we spent £14 million a day in the last war. That was on a struggle for democracy and for decency. Today's Government should try to provide financial support for our basic industries. We have invested £35 million in Govan. It was a good investment for Govan and for the western central belt of Scotland.
If the Government fail to recognise the crucial consequences of their action, I urge them to take heed of the warning from Govan. God help the Government if they try to close the Govan, or any other, shipyard in Scotland.
§ 8.22 p.m.
§ Mr. Stephen Dorrell (Loughborough)
It is ironic that I, a new Member, should speak immediately after the maiden speech of the hon. Member for Glasgow, Govan (Mr. McMahon). We were all impressed by his passion and fluency. All who heard that speech will agree that the electors of Govan have found themselves an able and eloquent spokesman. I am sure that he will be an effective representative in the House of their interests.
I am pleased to be able to take part in the debate. I am grateful to my right hon. Friend the Secretary of State for curtailing his speech so that some of his hon. Friends, who may be less convinced than he is of all the details in the Bill, can argue other important matters.
The right hon. Member for Lanarkshire, North (Mr. Smith) said that the Bill was named wrongly. He thought it should be called "The Abolition of the Price Commission Bill ". He will be aware that Conservative Members like to think positively. Our prices policy is directed at using the competitive forces of the market to keep prices down. In the long run that is the only effective way 130 of controlling prices. That is why we regard the abolition of the Price Commission and the strengthening of competition as the most effective steps towards keeping prices under control. That solution is more widely understood outside the House than in certain parts of it.
I welcome the Government's decision to abolish the Commission without further ado. However, I express my support in a critical manner because I do not think that the Government must never control prices. I hope that I am enough of a realist to know that if I am involved in politics for any length of time the chances are that at some time in my career I shall vote for price control. I shall not, therefore, lay down too many hostages to fortune.
In both my speeches in the Chamber I have argued that the Government have a role in deciding the cost and price levels in the economy. I am certain that one cannot have effective price controls which produce the goods without cost controls. Prices, largely, are governed by costs. Without effective cost control it is impossible to have effective price control.
My charge, therefore, against the Price Commission as it was constituted by the Labour Government is not that it is wrong to say that the Government have no role in these matters but that the function and constitution of the existing Price Commission were not properly thought out. One has only to read the Price Commission Act 1977 to find there a garbled collection of worthy sentiments but no real policy or guiding light giving the Price Commission a job that it is possible for it to do. One can read the Act in an effort to ascertain the purpose of the Price Commission governed by it but be none the wiser at the end.
The ostensible function, laid down, I believe, in section 2 of the Act, is that the Price Commission is supposed to be responsible for directly controlling prices. As I have said, I cannot see how that is possible if one does not at the same time control costs. Moreover, the debates at the time when the Act was introduced reveal that that agument found a lot of sympathy with the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), for the whole purpose of his introduction of the Act was to do away with the Price Code, the effective teeth of the 131 original Price Commission, and to introduce what was called a more flexible approach to prices.
The right hon. Member for Sparkbrook said that the Price Commission did not exist or would not exist to hold down prices. That was not supposed to be its primary purpose. One is then left with the question which I have already posed; what on earth was its primary purpose? The right hon. Gentleman, who introduced the measure and piloted it through the House, seemed, at any rate on the surface, to be uncertain about the real purpose of the Price Commission which he was in process of creating.
Some of the statements made since, especially during the past four or five months, have revealed the true purpose of the Price Commission Act. The right hon. Gentleman wanted to introduce a facade of price control as something which, while actually having no teeth, would be good for trade union leadership consumption and good for the constituency Labour parties. It was something put about merely to make it appear that the Labour Government were continuing to control prices, yet what I call the teeth which the right hon. Gentleman gave to the Price Commission to control prices had little or no reality.
The ultimate irony of that policy, of course, is that the right hon. Gentleman devoted a lot of time to introducing a Price Commission which was supposed to impress the electorate and bring the trade union movement behind the Labour Government, yet we are now sitting on these Benches precisely because the trade unions were wholly unimpressed and the only people impressed were his hon. Friends behind him at that time.
When the matter was researched by an opinion poll 12 month ago, 66 per cent. of the electorate, when asked whether they knew whether the Price Commission still existed, replied "No". If it was a cosmetic measure designed to convince people that prices were being held down, its ultimate condemnation is that two-thirds of the electorate did not even know that it existed. Moreover, a further 15 per cent., although realising that the Price Commission existed, realised also that it was ineffective.
132 Thus, 80 per cent. of the electorate in all were totally unconvinced by the cosmetic nature of the Price Commission introduced by the right hon. Member for Sparkbrook, and the reason why I am pleased to see its departure is that at least we are now returning to honesty. At least, we accept that one cannot control prices if one does not at the same time control costs. We are not at present embarking on a policy of controlling costs, any more than the Labour Government controlled costs. We are not doing that. We must therefore come clean with the electorate.
§ Mr. Dorrell
It has been shown to be perfectly possible in the short term to control costs. It has been done through statutory wages policies many times in the past. It is not a policy which I believe can work in the long term, but it is something which, in certain circumstances, we have to accept as a fact of life. Governments of both parties have introduced it, and in all probability they will do so again.
I turn to a second function of the Price Commission that was made clear in the 1977 Act. It is one that the Government and Conservative Members fully support and are vesting in the Monopolies and Mergers Commission. We are introducing the function to the Commission and strengthening it as well. I refer to the function of the Price Commission in the promotion of competition policy.
As I have already said, our policy during the next few years will be to rely on the competitive forces of companies and on companies competing one with another to keep prices under control. That is a feature that was written into the 1977 Act. The Green Paper that the right hon. Member for Sparkbrook produced to Parliament last March contemplated the possibility of such powers being vested in the Monopolies and Mergers Commission. That is precisely what we are suggesting in the Bill, and that is what the majority of the Bill is devoted to doing.
It is true that the Green Paper contemplated a long list of practices that the Monopolies and Mergers Commission should be on the lookout for and 133 should try to stamp on when they occurred. The Government take a much more pragmatic approach. They believe that the Monopolies and Mergers Commission should be on the lookout for anything that is anti-competitive. It is for the Monopolies and Mergers Commission, as the expert on competitive policy, to determine what is anti-competitive and what is not. That approach seems much more likely to catch any serious breach of competitive practice than a long list of practices of which the Government of the day may not approve.
§ Mr. John Fraser (Norwood)
Does the hon. Gentleman recognise that the Monopolies and Mergers Commission does not decide what it investigates? That is a matter that rests with the Director General of Fair Trading. There is a difference between the Monopolies and Mergers Commission and the Price Commission. The Price Commission could pick up a reference from the notification of a price increase. A further difference is that the Price Commission was generally able to report within three months. In practice, it is rare for the Monopolies and Mergers Commission to get through its business within three years.
§ Mr. Dorrell
The hon. Gentleman is right to say that under the proposals in the Bill the Director General of Fair Trading will be responsible for referring cases to the Monopolies and Mergers Commission. Surely that is a splitting of the function of the Price Commission. The Price Commission could initiate its own inquiries, and we are now saying that there should be an initial inquiry for precisely the reason that the hon. Gentleman advanced in the second part of his intervention, namely, to establish whether there is a prima facie case of anti-competitive practice. That task will be performed by an independent organisation. The Price Commission was independent, and the Director General of Fair Trading represents an independent organisation. He will perform the same function as the Price Commission.
The proper organisation to investigate real anti-competitive practices is the Monopolies and Mergers Commission. That is where the expertise lies, and that is where the proper procedures are established for arriving at the truth. It is a 134 long process. One of the greatest complaints about the Price Commission was that its emphasis on speed meant that some of its decisions were open to criticism. We are saying that there should be an initial examination to establish whether there is a prima facie case of anticompetitive practice. Once that initial sieving process has been completed, the Monopolies and Mergers Commission should be concerned with a proper and thorough investigation of the anti-competitive practices. I hope and believe that that is the reason for the split of function. It is a split which is eminently justifiable and reasonable.
The contents of clause 11 relate to efficiency audits for nationalised industries. It is a concept that I support and welcome as an inclusion in the Bill. It is the State that is obviously ultimately interested in the economic success of the nation. The State has a legitimate role in doing all that it can to ensure a proper degree of industrial efficiency. I am concerned about the limited nature of the power that my right hon. Friend has placed in the Bill, or the power that he is hoping to take, to refer nationalised industries to the Monopolies and Mergers Commission for efficiency audits. If that power is justifiable for the nationalised industries, surely it is justifiable to exactly the same extent for large private sector companies on which our national wellbeing rests.
We must accept that large parts of British industry are inefficient. That is why our standard of living is below that of the rest of Western Europe. It is not clear to me why the British Gas Corporation, or the postal or telephone side of the Post Office, should be subject to an efficiency audit, but not Plessey or GEC. I ask how this clause will apply to companies such as British Airways and British Aerospace, which the Government rightly—I am 100 per cent. behind them—want to float off into the private sector. How will this power under clause 11 apply to those companies?
There is an old argument that outsiders can never know as much as insiders about the running of a company. I do not think that is a sufficient answer. First, if it applies to the private sector, exactly the same objection is open to the efficiency audit of the public sector. Secondly, there is no need for the Monopolies and 135 Mergers Commission or its personnel to undertake those efficiency audits themselves. There are good management consultancies which have just as much expertise, in many cases, in the running of specific industries as the managers of those industries. In some cases the international consultancies presumably are better at the job than the managements, otherwise they would not be able to earn their living as consultants. I hope that the Government will look again at the limitation of that efficiency audit power to the public sector. Our future as a country relies on all our big industries.
§ Mr. Nott
My hon. Friend will appreciate that where there is a statutory monopoly in the private sector it will find its way, through the existing processes under the Fair Trading Act, into the process of investigation, as things now stand. We seek to ensure that where a statutory monopoly in the public sector exists there is a process to enable the same thing to happen. My hon. Friend may not have quite taken that point on board. The Monopolies and Mergers Commission will be undertaking its inquiries in six months. It will be a much shorter inquiry than in the past.
§ Mr. Dorrell
The limitation of the Monopolies and Mergers Commission's investigations is welcome. That answers the criticisms made by Opposition Front Bench Members. I take the point that my right hon. Friend makes about the existing powers under the monopolies legislation. I rephrase my hope, namely, that he will look at the treatment of the public and private sectors and ensure that they are treated on equal terms.
Our future as a country relies on the success of all our industries. The nation has just as much at stake in every big productive enterprise, whether it is owned by the public or the private sector.
§ 8.38 p.m.
§ Mr. Richard Wainwright (Colne Valley)
The hon. Member for Loughborough (Mr. Dorrell) made a most interesting, well informed and frank speech from the Conservative Benches. He has a much more realistic understanding of the world of business and buying and selling than have the occupants of the Government Front Bench or some of his colleagues who have had the misfortune 136 to be locked up for a longer period than himself in this Palace and who have not been exposed to the bracing experience of the world outside. I hope that what was said by a Government supporter has penetrated the comprehension of the Government Front Bench to a greater degree than the Secretary of State showed a minute ago, when, in his intervention to the hon. Gentleman's speech, he did less than justice to the queries that were raised.
I agree heartily with the hon. Gentleman—my party has said this over and over again for 50 years—that big business requires watchful investigation by the State just as much as do public corporations. In my view, it is legalistic nonsense for the Secretary of State to take the point, as he tried to do just now, that this sort of thing should come into play only when, in the private sector, there is a statutory monopoly. It is not statutes that count in business; it is the degree of market dominance.
Speaking from experience of auditing the accounts one week of a nationalised body and the next week, so to speak, of some large concern, I found very little to choose between the degree of inefficiency and waste in each type of corporation. It is where a large business has acquired the sort of market dominance that enables it to lie back on its laurels and indulge in just the same practices as those of nationalised corporations that there should be much greater powers of investigation.
I very much regret that in the Bill—as far as I understand it, without having had the benefit of any interpretation—there are no provisions to deal with a position of sheer market dominance of a company if it does not happen to be caught by the legalistic definitions in the Bill. I hope, therefore, that the Secretary of State will have something to say about large corporations which have, in practice, a dominance over the market, even though they may not be caught by the wording of the Bill.
In another of his points the hon. Member for Loughborough was on to something even more significant. He was asking his Government what they intend to do about prices when the moment comes—as it surely will; it always has in the past—that they have to control pay, 137 either by a freeze or by another of the succession of wage controls.
§ Mr. Dorrell
The hon. Gentleman slightly misrepresented the point that I was making. I was not asking my Government what they would do in the event of controlling pay. That is a purely hypothetical question. The Government, completely with my support, are not controlling pay or costs; therefore it is entirely unrealistic even to pretend that the Government will control prices.
§ Mr. Wainwright
I am very glad that the hon. Gentleman has even further elucidated his point of view. I still find it very interesting and would like to return to it.
If I may first revert, Mr. Deputy Speaker, to the ambience of this unfortunate debate for a moment, by common consent, both inside and outside this House, it is surely one of the main duties of the Commons to enlighten and inform the public about the policy of the Government of the day in a situation in which the Government can be fully criticised and made to clarify their intentions. I submit that some press conference, organised by a Government Department and addressed, without critics being present, by the Secretary of State, who announces that he is introducing a Bill—which is all that the public has had so far—is no substitute at all for the enlightenment of the public through the proper procedures of this House, when a Minister has to suffer interruption, when there are requests for clarification, and speeches from the Opposition Benches and the Conservative Benches.
I find it quite astonishing that the Secretary of State—who usually has a very keen appreciation of the feelings of the House—should have behaved in this extraordinary manner. I can only attribute it not to his being unnerved—he is a man of very strong nerve—by the extraordinary task that he has set himself of selling off a very small minority of shares in a public corporation with a very dubious record, but simply to his embarrassment at introducing a Bill that is wholly at variance with the economic climate that his Government have helped to induce.
I am now really repeating—perhaps with much less skill—the sort of Conservative oratory that we had when the 138 Conservative Party was in opposition. What is the use of introducing Bills when they run completely contrary to the economic climate of the time? It is no use the Monopolies Commission—even if it works rather faster than in the past—calling for competition and telling the big boys that they must move up and make way for competitors if the economic climate prevents those competitors from coming forward.
I hope that the Secretary of State will tell us, if the House permits him to make his real speech, exactly how he supposes that when the Bank is requiring 17 per cent., when public demand is being ruthlessly depressed by a series of depressing inflationary measures, and when world trade is going through the bottom and we persist in administering our own currency in such a way that our goods are very highly priced in the depressed markets of the world, eager beavers will come forward and say that they will take on some of the giants and act as competitive gadflies. I do not see this happening in the present economic climate, except in the form of action by people whose bravery borders on commercial recklessness. That must be at the root of the Secretary of State's obvious embarrassment in not wanting to advertise the Bill.
We cannot wholly exempt the previous Government from the situation that they now deplore. They had the opportunity to introduce legislation to merge at least two of these bodies. Former Labour Members declared themselves repeatedly in favour of these bodies being merged. Indeed, I understood that the previous Secretary of State for Prices and Consumer Protection was in favour of all three bodies being brought—I quote his words—"under one roof".
I ask the Secretary of State when he comes to explain his measure, if the House gives him leave, why only two of the bodies are merged under the Bill and why the Office of Fair Trading apparently retains a wholly separate existence. The Secretary of State has to justify taking a rather less radical stance than the previous Government who were willing to consider bringing all three bodies under one roof.
To avoid any accusation that my approach is entirely sour, I commend the 139 Government for adopting a broad definition of anti-competitive policies rather than following the unhappy example of several other major trading nations in legalistically spelling out every conceivable offence against competition. I am glad that the Government have, so far, been robust—I hope they will be equally robust in Committee, if the Bill gets to Committee stage—in rejecting the request by those bodies which speak essentially for those in possession of industry, who, like the CBI, wanted those practices that would be caught under the Bill spelt out in more detail. It is very wise of the Government not to listen too closely or obediently to those big organisations that essentially represent the established parts of industry and that do not speak for the up and coming people who can be relied upon to provide some competition, if they are ever given the chance to get off the ground.
The capacity of the Monopolies and Mergers Commission was raised today. It is reassuring to hear that its processes will be speeded up and that we shall have no more of the "three year" nonsense. I hope that the Secretary of State will also tell us that he will not repeat the previous Government's fiasco by referring nuts and bolts to the Commission, whose investigations had to be abandoned after three years because the Commission said that it could not discover what a screw really was. I hope that that sort of thing is behind us, but we want to know how it will be done. It is not sufficient to take the Secretary of State's word that, in some extraordinary way, he will transfer to the Monopolies and Mergers Commission that spirit of entrepreneurism, the get-up-and-go, which the Government hope to pass on to the rest of the country.
We need some reassurance that this will not be a cut-price operation by the Government. The proud explanation in the memorandum to the Bill that nearly £7 million will be saved, compared with the operation of the Price Commission, gives me no joy whatever. I should like to believe that the new body would not only have a very competent staff but would be able to employ the best professional brains to carry out its investigations and to make sure that it enjoys the fear and genuine awe and respect of the business community. I am not sure that 140 that can be done on the slender resources that the Government are apparently setting aside.
The Government must understand that in resisting the Monopolies and Mergers Commission business will not proceed on a cut-price basis. Business will go to the best and most acute international professionals, who will fight these public organisations in these matters. It will be most unfortunate if the Government take on business with one arm tied behind their back through an undue attention to a false economy.
My right hon. and hon. Friends and on the Liberal Bench are quite prepared to let the Bill go to Committee so that there can be further discussion, but if it is to have our support on Third Reading we shall need a great many more explanations and a good deal more reassurance.
§ 8.51 p.m.
§ Mr. Michael Neubert (Romford)
I hope that I am right in seeing the Bill as the prologue to act 1, with the rest of the play to follow after the interval. Excellent though it is, so far as it goes, and commendable though it is for the Government to have brought it in and for it to have reached Second Reading within three months of the new Administration taking office, it can be only the first part of a new competition policy. It can administer a short sharp shock to the economic system, but it cannot be a substitute for a sustained and vigorous new regime of commercial and industrial fitness.
There is much to welcome in the Bill, but I wonder whether it is not too late in some respects. We have unemployment now in seven figures and rising, inflation in double figures and rising, the visible trade deficit into ten figures, trade union leaders dogged by dogma and assorted historical recollections, punch drunk management reeling from one industrial confrontation to another and productivity so bad that motor car workers on the Continent with the same equipment and the same power to their elbows can produce twice as much as their British counterparts.
In those circumstances, I wonder whether it is not too late to administer the shock to the system, to open up the British economy to the bracing winds 141 of greater freedom and of fierce competition. I wonder whether we are not seeking to prescribe a cold shower for a patient suffering from pneumonia.
I am sure that the Bill will have results. It will lead either to rapid improvement or to relapse. It is certainly our last chance of breaking into the kind of prosperity enjoyed by our fellow members of the Western industrialised world.
The centrepiece of the Bill is the abolition of the Price Commission. I shall weep no tears at the funeral. Nor do I think that the throng of mourners will be very great. Manifestly the Price Commission, whatever its intentions, has not achieved any significant lessening in the rate of inflation. Therefore, even those who support it have little confidence in it.
During its existence prices more than doubled. Therefore, any pretention that it might have of being able significantly to reduce them is belied by that cold sombre fact. In some ways it restricted prices, but almost always at the expense of profits. If costs are to be allowed, the only margin left is the profit. If that is held back, that is done only at the expense, first, of investment and then, in turn, of jobs. That is why it is possible, despite what the right hon. Member for Lanarkshire, North (Mr. Smith) said, to condemn it for being both ineffective and damaging—the former in some cases and the latter in others.
I have seen no legitimacy in the existence of the Price Commission since the abolition of the pay board. They were linked like Siamese twins, and it was against the laws of nature that one should exist without the other. It also defied the laws of logic that if control of prices was sought the pay board should be abolished, thereby abolishing control over the major price factor—the cost of labour.
It is not within the power of Parliament, or even of the Government, to control the economy in that way, certainly not in our representative parliamentary democracy. If Governments intervene in the economy they can do so successfully only if they are able to manipulate every factor in that economy. That would require a self-sufficient dictatorship. The only notable experiment in controlling inflation by Government 142 action by indexation and by control of as many factors within the country's economy as possible is Brazil. That country has an entirely different system of Government from that of Britain.
In our system, Government interference with the workings of a market economy has the same calamitous effect as a weekend driver interfering with the engine of a highly tuned racing car. With each subsequent adjustment another distortion is created. In the end the car does not go at all. In this country we have nearly reached that point.
I welcome the abolition of the Price Commission. It will confer much greater freedom on British industry and, above all, it will relieve industry and commerce of the burden of administration in meeting the needs of the Price Commission investigations. I should like to see more Government measures brought forward, in order to be convinced that they, unlike previous Governments, are thoroughly persuaded of the virtues of real competition. Although in their more inspired moments the previous Government advocated competition as a friend of the consumer and were prepared to encourage it on occasions, when it came to the crunch their nerve failed at least three times. First, when Tate and Lyle sought to take over Manbre and Garton, the two cane sugar refiners in this country, the bringing, together of those two companies created a 100 per cent. dominance in that market and a 50 per cent. dominance in the markets for starch and glucose. However, the Government decided to make no reference to the Monopolies and Mergers Commission because they felt that the overriding interest was that of jobs.
On another occasion the Price Commission intervened in the pricing of bread and Spillers found that it could not go on. The Government were prepared to allow the remaining two major bread manufacturers, Associated British Foods and Ranks Hovis McDougall, to merge with a substantial share of the market. Prior to that action the three companies dominated 60 per cent. of the bread-baking market and 80 per cent. of the flour market. The merger was allowed, on the undertaking that jobs would be saved and that, of the 8,000 workers who were made redundant, at least 2,000 would be taken on by the two companies.
143 More recently, in the autumn of last year, Allied Breweries was allowed to take over J. Lyons, again, in the Government's reckoning, in order to safeguard jobs. Therefore, on all three occasions, when it came to the crunch, the overriding consideration of the previous Government was that of jobs and not the consumer interest in the immediate sense of market dominance.
I hope that we shall recognise that if there is an over-concentration of industry in this country, that if we have had over the past years a spate of conglomerates and over-large concerns, it has often been because successive Governments have encouraged that coming together. I hope that the new Government, committed as they are to the prosperity of small businesses, will realise that one of the implications of that policy is not to respect large size for its own sake, and that they will see the merits of a greater diversification in our markets, which have a long way to go before they match the diversification of other major, prosperous, competitor countries.
§ Mr. John Fraser
The hon. Gentleman referred to some very difficult cases—Tate and Lyle, Allied Breweries and the baking industry. Can he say whether a Conservative Government would have come to any different decisions about saving jobs?
§ Mr. Neubert
I do not deny that those were three critical issues for the previous Government. Nor do I claim that a Conservative Government would have come to a different conclusion. But it was significant that on none of those three occasions did the Government choose to refer the issues, which were very important and of undoubted public interest, to the Monopolies and Mergers Commission. I hope that if, by the mechanisms proposed in the Bill, we are creating a more effective and faster mechanism within the Commission, it will also deal with matters of public interest other than the competition references envisaged in the Bill.
The next feature of the Bill that attracts me is the opportunity to investigate practices within the nationalised industries. For too long these public sector monopolies have been above the laws of supply and demand, in many cases above the 144 normal laws of fair competition, and certainly not accountable, except in the ultimate sense, to the people who are said to own them.
I concede that the management of those industries is charged with the responsibility of seeing that from day to day they are run in the public interest. But we, as Members of Parliament, have little opportunity to scrutinise the internal practices of those industries. The Director General of Fair Trading, under the terms of the Bill, will now have that opportunity if he thinks it appropriate.
§ Mr. Cryer
Will the hon. Gentleman accept, however, that, unlike the private sector, the public sector has consumer councils which cover most of the major consumer public enterprises? All those councils have on them representatives of the Conservative Party, who would presumably, because of their philosophical attitude, be only too eager to expose the flaws, discrepancies and perhaps exploitation of the consumer, if it takes place. Therefore, the hon. Gentleman must accept that the public sector is subject to more scrutiny than the private sector.
§ Mr. Neubert
I am not convinced of the effectiveness of consumer councils in safeguarding the consumer interest. I can give an illustration of my reasons for that lack of confidence. It is one of my concerns about the Bill that, although we are promised the opportunity of investigations in the nationalised industries, the Government retain the right to hold sacrosanct any cash limits, any financial targets, which they may set for a nationalised industry. That in turn will have an obvious repercussion on the public interest and the consumer interest, particularly in terms of price.
My illustration is the British Gas Corporation, which not only was required to put up its prices on 1 April 1977, against its own wishes, in order to reduce the then Labour Government's borrowing requirements, but more recently has had to respond to the target of a 6½ per cent. return after tax and depreciation in the current financial year. That has had the effect of the Corporation's having to bring forward to April this year a price increase that it might otherwise have introduced in October this year. That is pre-empting the right of the consumer council in the gas industry to have any say about what 145 should be done, and it is one reason for my not having too much confidence in consumer councils' effectiveness in dealing with public monopolies.
The anti-competitive practices that are to be identified and investigated as a result of the Bill are in the main those which have been revealed by past Monopolies and Mergers Commission reports. It is clearly a good thing that they should be examined, although I think that they will prove not to be of such significance as, say, market dominance and the question of public monopolies.
I reinforce the point made by my hon. Friend the Member for Harrow, Central (Mr. Grant) concerning the fringe activities undertaken by public monopolies under the name of nationalised industries. That point is given added importance by the recent exciting announcements by the Government that the public will be allowed to participate in those public monopolies.
It is not right that the public should be allowed to participate in the profits that accrue to public sector monopolies that are engaged in activities that are properly the concern of free enterprise. There would otherwise be unfair competition at the fringe of public monopolies. My hon. Friend mentioned British Airways. I wish to use that illustration also, and I declare an interest as a travel consultant. British Airways have travel shops in premium high street sites. They also operate holidays through their tour-operating companies.
§ Mr. Neubert
That is the difficult dilemma which the Government must decide. How far should a public monopoly go in engaging in those activities? I will make my point clearer. The gas and electricity industries are allowed to sell their appliances in their high street shops. British Rail runs hotels successfully. That is not integral to the operation of a major transport system, but only incidental to it. British Rail also operates engineering workshops. The Post Office also engages in activities that are on the fringe of free enterprise.
§ Mr. Cook
I find it difficult to become emotionally committed to the fact that British Rail runs hotels. I have no particular desire to insist that Gleneagles 146 hotel should remain in the public sector. I cannot afford to eat there, and nor can my constituents.
I find the hon. Gentleman's point and that of his hon. Friend the Member for Harrow, Central (Mr. Grant) at variance with their general theme. It is exactly in those activities to which they have referred that the State monopolies are entering into competition with the private sector. British Airways are not operating travel arrangements without competition from other companies. British Rail is running its hotels very successfully in competition with other hoteliers. If Conservative Members want to foster competition, I see no reason why they should constantly crib when State monopolies seek to compete in a mixed economy.
§ Mr. Neubert
The hon. Gentleman has misunderstood. We are advocating not just competition, but fair competition. I ask whether it is fair for a major nationalised corporation, such as British Airways—soon to become a company under the Companies Act—to have a right to routes, the prestige of public money behind it and cross subsidies available to it through the complexity of its operations world wide to compete with other travel agents, or tour operators, and be said to be competing fairly. That is the question. I do not adjudicate, but it is the question which will arise on the fringe of public sector monopoly activities.
I hope that the Government will turn their attention in the months ahead to the fact that no mention is made in the Bill of restrictive trade practices. Certainly no mention is made in the Bill of restrictive labour practices. I hope that any competition policy will comprehend the activities of trade unions and the monopolies of labour that they can establish in their markets. I have in mind the monopoly of the National Union of Mineworkers. The union is apparently denying to the NCB the opportunity of importing foreign coal at a price well below that at which it is available to the NCB in this country. That is happening at a time when the NCB cannot get enough coal for its own purposes, and one has to ask whether the public interest is served by such a monopoly.
§ Mr. Cryer
Is the hon. Gentleman seriously suggesting that it would be in 147 the public interest to put more people on the dole? Mines are closing, our energy resources, which everyone accepts are enormously precious, are diminishing, and there is a decreasing amount of energy available to the world. Would it make sense to wreck the coal mining industry, which has experienced many redundancies over the past 20 years, through the importation of cheap coal? Surely it is in the public interest to keep people off the dole. The resulting loss of taxation revenue, payment of unemployment and supplementary benefits and the cost of retraining would mean that the public would be worse off.
§ Mr. Neubert
That is where the crunch comes. No one is suggesting that an industry should be allowed to collapse, but when it insists on having a monopoly that prevents the importation of any cheap coal we must question whether that is in the public interest. It is a matter of puzzlement to the public how it is possible to import coal all the way from Australia and for it to be cheaper than British coal. It may be a matter of easier access to the coal in Australia, but it is brought a long way and still sold more cheaply and the public want to be assured that they are getting the best of the bargain.
I understand the argument that we may benefit in the short term and suffer in the long term, but we must examine the monopolies in our society. They do not exist only as capitalism, red in tooth and claw. All sorts of monopolies are built into our economy. They need to be examined, and I hope that the Government will not shirk from taking the necessary action if they think it appropriate.
Another growing trend is the power of the retailing organisations. We have an efficient distribution service, and we should thank the major retailers for being in the front line of keeping prices down. However, I must remind the Government that the power to which I refer is increasing to the point where it may become monopolistic in itself.
We have already seen in the baking industry that the ability of supermarkets—which will be enhanced in the case of hypermarkets—to screw down the manufacturer by even bigger discounts, to the 148 detriment of other customers of that manufacturer, may not ultimately be in the long-term public interest.
That is happening with the brewers. They are facing such pressure from supermarket sales of alcoholic drinks that they are having to give preferential discounts to the supermarkets at the expense of other customers. That illustrates the changing pattern of the British economy and the changing balance between the right to trade freely and to exercise free competition, and that right going beyond the point where it can be allowed to continue without Government intervention. The Government have a role.
I welcome the Bill and think that it will provide a sharp stimulus to the British economy. Competition is not comfortable and is not popular with the public, but it is necessary if we are to get away from being bottom of the European league.
The Budget has provided many incentives for business to prosper. I look to my right hon. Friend the Secretary of State for Trade for further opportunities, and I hope that he will bring forward the necessary mechanisms by which business may prosper in a mixed economy such as our own. I commend the Bill and hope that it will receive a Second Reading.
§ 9.15 p.m.
§ Mr. Stuart Holland (Vauxhall)
I want to address my contribution to the debate especially to clauses 1 and 2 of the Bill—that is to say, the clause pertaining to the abolition of the Price Commission and that quite remarkable clause pertaining to what is called "anti-competitive practice".
We have had a series of contributions by hon. Members on the Government Benches which are in character with that statement from the Secretary of State which we regret we have not got, in the clear sense that he told us, for example, that if he had had the time he would have explained the overall context of the Bill in relation to the Government's monetary and economic policies. In practice, what we have just had from the hon. Member for Romford (Mr. Neubert) and other hon. Members opposite is exactly that.
The philosophy behind the Bill is not only to "roll back the frontiers of the 149 State" and "disengage the public sector", but also to undermine the bargaining power of labour by contributing to a higher level of unemployment. I am much indebted to the hon. Member for Collie Valley (Mr. Wainwright), who made the relevant point that to introduce legislation which actually claims to increase competition in a climate of industrial recession, which, with the Government's expenditure cuts and the other deflationary elements in the Budget, actually threatens us with slump, is to raise the question, "competition for what?".
Is it competition for investment? Competition in the middle of a recession? I hardly think so. The Bill reflects a philosophy which assumes that the competitive process, freed from State intervention, or, as the Conservatives prefer to call it, State interference, works at least in the long run over the medium term. The Bill assumes that if the State withdraws there will be a reality of price competition.
We have heard hon. Members looking forward to this new flourishing of price competition in the economy. But the Bill, in its very wide definition of anticompetitive practice, fails to distinguish price from non-price factors or the structural conditions for competition which have been stressed for centuries now, certainly since the time of Adam Smith and by virtually every theorist in the market, including—dare I repeat it?—Professor Milton Friedman, who has written a book called "Price Theory" and assumes that monopoly is an abuse of competition.
The Bill, like the statements of economic philosophy that we have had from the Government elsewhere—unfortunately, we have to refer to those other statements since we have had no statement from the Secretary of State—assumes that monopoly is in a subjective sense an abuse of competition rather than faces the reality that monopoly objectively arises from competition—because competition itself is an unequal process between firms and industries, in which the gains and the advantages go to those already established, to those who are already strong, versus those who are initially weak or later starters in the economy.
The other main element that the Bill does not refer to at all—here, I would 150 have much preferred the Bill at least to have followed the practice of some Community legislation, which at least begins statements on policy by saying" in view of factors such as monopoly abuse of power"; "in view of problems posed by multinational companies"—is the kind of major change in the structure of international trade and international prices which profoundly qualifies the assumed competitive process on which the Bill is implicitly based.
Take, for example, the element of competition. Take the phrase in clause 2(1) "restricting or preventing competition". It does not seem to be grasped by the Secretary of State that the kind of established structure that we already have in British industry of itself restricts or prevents competition through the simple fact that, as was well put in a debate in the House by the hon. Member for Havant and Waterloo (Mr. Lloyd), the entry cost, for example, into the large-scale integration or microcircuitry fields in the world today is somewhere near $1 billion at a time.
These entry barriers, through sheer size and scale alone, are major problems. They were hardly answered by the reply that day from the Secretary of State for Industry—the guru in absentia in much of this debate—that there are other minor, or smaller, areas of competition in electronics where it might be possible for the competitive process to achieve the end of production, distribution and export without State support. Although not reflected in any statement from the Conservative side of the House, the simple fact is that we are in a situation of unequal competition where prices no longer necessarily reflect costs; where one cannot assume that a normal profit has been made or that when productivity gains have been introduced into the economy these will be reflected in lower prices.
This is an interesting phenomenon, to which it appears that the Government have paid no attention but which is well appreciated elsewhere in Western Europe and the United States. If an established firm wishes to obstruct the entry of a new firm, it can do so either by not raising prices in inflationary conditions or by temporarily lowering prices in such a way as to establish, in effect, a barrier to the entry of the smaller firm. Even 151 if both firms in that product have equal costs, if the bigger firm has access to more finance and more financial muscle, and can get the backing of the market because it is more established, it can ride out, in practice, the period of lowering its prices longer than the firm that it seeks either to eliminate or to prevent entry into the market.
We get a paradox. If we pursue the kind of policy that the Government seek, believing in the transparency of the market and believing that prices reflect costs and productivity, the Secretary of State will no doubt give the Queen's Award to Industry to a company that has lowered its price temporarily or has refused to pass on a cost increase in order to eliminate competition. If this appears paradoxical to some Conservative Members, who appear totally ignorant of the scale and range of intervention pursued by those I understand they wish to see as their sister parties in the European Assembly, it is only to the loss of consumers in this country.
An hon. Member claimed that no other country has anything like the Price Corn-mission. But the prices and consumer affairs division of the French Ministry of Finance and Economic Affairs is the size of a major Department. It has had such importance, not least under President Giscard d'Estaing, in the whole role and mechanism of the functioning of the economy that the man whom Giscard chose to appoint straight from the Civil Service to the role of Finance Minister in one of his first Governments was the former head of that directorate of prices and price control. The price controls and the range of criteria that such a division inside the equivalent of the Treasury in the French planning system employs for them are, and have been, more wide ranging than those so derisorily dismissed by a Conservative Member who has not had the courtesy to remain for the rest of the debate.
It is interesting to see how, in an economy such as the French or the Belgian, a whole policy is based on the concept called contrat de programme—programming contracts. These are negotiated price agreements with big business based on a specific investigation of the cost and profit structures of that busi- 152 ness. They are both wide ranging and involve a great deal of sophistication. Far from employing the equivalent of three men and a dog in the manner of the Office of Fair Trading, they involve senior civil servants and sophisticated economists in those respective economies.
Despite my considerable misgivings on the French economy and its form of State intervention, one of the great achievements is that the French are at least realistic about intervention. At least they have achieved a higher rate of growth of investment and output in such an economy, through a policy of rigorous price control and through frequently imposing total price freezes on a whole range of products. When they relax price freezes, they do so on a selective basis through what amounts to the equivalent of a Price Commission.
If the Government are to claim, as one hon. Member opposite did, that the Price Commission could not be said to have had an impact of one-thousandth of one per cent. on reducing price inflation, it is incumbent upon the Government to explain why their sister parties of a similar political persuasion—though I regret to say not identical in their philosophy since they are more committed to State intervention—choose to intervene across the range of prices focused on big business in such an extensive manner.
The other main area on which it is incumbent upon the Secretary of State to comment, if he intends to make a speech at all, covers the facts and figures of the real position of the British economy where in practice two or three firms too often dominated the existing structure of production, distribution and exchange.
How can the British public seriously be asked to believe that the introduction of a Bill which has one of the loosest definitions of "anti-competitive practice"—in fact one of the loosest definitions ever to have escaped platonic philosophy—will do more than weaken State power for intervention since it fails to give real powers to the Office of Fair Trading? How can the Secretary of State in all integrity offer this to the British people when the monopoly domination of the British economy is so real?
Let me give some examples. It is well known that in deposit banking some three companies account for 90 per cent. of 153 trade. In insurance, some half dozen companies represent more than half the assets. There is a similar position in construction. When have we seen rigorous competition on interest rates between the deposit banks or between the building societies which have a high level of concentration, whether or not it has been in a period of Conservative Government? Recently we have seen a state of affairs where the Prime Minister declared her intention of entering into what amounted to an offer to negotiate with the building societies on whether they would put up interest rates. In practice, it amounts to an offer of negotiation with a cartel, which is what we have in banking, in insurance and in the building societies.
I regret very much that the Secretary of State has not explained the economic philosophy behind the Bill. But if we take the kind of economic philosophy which is implied by the statements of the Secretary of State for Industry in a related area—and one can hardly say that he has been slow to make philosophic statements in this area—he draws attention to the "millions" of so-called entrepreneurs who are waiting to be unleashed by the withdrawal of the State and the removal of the heavy mantle of repression which it appears to him that State intervention lays upon them.
Let us consider such a structure. Not only in banking, insurance, construction and the building societies do we not find it. We do not find it in manufacturing industry. There is a marked and increasing tendency to monopoly concentration which is not checked even by the more powerful provisions for anti-monopoly and anti-trust intervention by the State in the British economy which the Secretary of State wishes to reduce.
In 1950, for example, the top 100 companies in the manufacturing sector represented about 20 per cent. of output. By 1970, that had already increased to nearly half of output.
There is what amounts to monopoly power in the kitchen, where in many goods, one, two or three firms control between 85 and 95 per cent. of output. With wallpaper, the companies are ICI and Wallpaper Manufacturers; in frozen fish and food, they are Unilever and Findus; in tinned soups, Nestlé, Heinz and Campbell; in powdered soups, 154 Nestle, Unilever and Knorr; margarine, Unilever and Kraft; in condensed and evaporated milk—
§ Mr. John Watson (Skipton)
Is the hon. Gentleman aware that often the greatest competition comes in markets dominated not by 10 companies but by three? Will he explain exactly how the Price Commission affected the monopoly situation, as he described it, of interest rates, banks and building societies?
§ Mr. Holland
That is an interesting argument. The Secretary of State for Industry has talked about millions of entrepreneurs. That was defined as a competitive situation. Any textbook on economics will tell one that competition depends on multiple entry. Now we have a new Conservative definition, under which competition is not monopoly or duopoly but triopoly. With three firms dominating the market, we shall have competition. That argument is ludicrous.
§ Dr. Jeremy Bray (Motherwell and Wishaw)
Is it not the case that the assumption about a competitive economy is that the price set by any one trader cannot shift the market price? In the example that the hon. Gentleman just gave, that is palpably untrue.
§ Mr. Holland
I am grateful for that intervention. When two or three firms dominate the market, there is hardly a financial journalist in Britain who by falling out of bed cannot earn his £10,000 or £15,000 a year, when the price of a major company goes up, whether it is in the financial sector or in manufacturing, by predicting that in the next two or three days the price of its competitors will rise.
To continue with my argument, in other areas in the household sector—in condensed and evaporated milk, instant coffee, detergents, soap, salt, virtually anything within the reach of the housewife—two or three firms dominate between 85 and 95 per cent. of the market.
In a written reply to me on 11 June, the Secretary of State for Trade said that separate information for retail food concentration in the upper half of the industry could not be given because of the "disproportionate cost" of calculating it. What is the disproportionate cost? The figures that I have given, which were published in 1974 by G. Walsh in a study by the National Institute 155 of Social and Economic Research, would have been available to any civil servant sufficiently familiar with the literature. It must call in question the seriousness of that reply, just as questions have been raised about the seriousness of the Minister not making a statement earlier, if he says that information is not available when it is of such a damning level of concentration as I have described.
§ Mr. Dorrell
May I refer the hon. Gentleman to the second part of the question of my hon. Friend the Member for Skipton (Mr. Watson)? His right hon. Friend the Member for Lanarkshire, North (Mr. Smith) dubbed the Bill the "Abolition of the Price Commission" Bill. The hon. Member prefaced this development of his argument with the statement that the abolition of the Price Commission would somehow weaken the Government's pro-competitive stance in relation to these industries. How has the Price Commission affected any of those industries? How would the powers vested in the Commission and no longer to be vested in the Monopolies and Mergers Commission have helped the Government in that respect?
§ Mr. Holland
The hon. Member seems to be living in a world which is typical of the Conservative Party. If Tory Members say something to each other often enough, they eventually believe it. The public, who may not have been aware of the detailed interventions made by the Price Commission before the election, were made well aware of them shortly after the election. Within days of the Government coming to power and their announcement that they would abolish the Price Commission, the price of petrol rose by nearly 20p a gallon. The price of bread and coffee went up by several pence, as did several other household items.
It is important to stress the reality of monopoly power which Conservative Members refute or appear to ignore. God knows, that task must be getting harder for them as fewer firms dominate any sector of British industry. The mass of detailed EEC concentration studies over the 10 years 1964–1974, before inflation was affected by the OPEC price rises, were carried out by statisticians of seriousness—whatever one might think 156 about serious statisticians, or whatever doubts one might have about statistically significant correlations.
The fifth report on competition policy of the EEC states that this series of studies over a decade covering a wide range of industries in the Community showed that price inflation is rife in the more concentrated sectors of industry. In seeking to abolish the Price Commission the Government wholly ignore such evidence.
Further, the proposed abolition of the Price Commission is combined with a deflation policy. The Government do not appear to have taken into account the Maldague report on inflation to the EEC, which argued persuasively that when there is a reduction in the number of firms in an industry, and there is a fall in demand and sales because of a recession in the economy, business is now big enough to compensate for that fall in sales and demand by raising prices in order to maintain its cash flow.
It is interesting that this report should argue in such a way, and that it bears some relation to the arguments which are emerging from the EEC Commission. For it corroborates the approach and implicit philosophy in the work of the Price Commission and many of its reports.
Also it can be demonstrated that the British economy today is utterly different in price competition terms from the economy of the 1930s. This is relevant because much reference is made by the monetarists and the allegedly pure marketeers to the pre-war period before the rise of the so-called regulatory State and State intervention.
Thus, it is instructive to look at what happened to prices during the recession in the 1930s. It was a marked feature from 1931 to 1938 that prices in the British economy fell for a start, and then fell faster, lagging behind the fall in output in the economy in the 1930s and rising slower than it right through the decade. Those hon. Members who can remember that decade may be well aware that in that period there was a remarkable stability in prices and, although the economy was depressed, there also was a stability in real earnings.
The situation now is one where the transformation of the power of big 157 business has exhibited a classic vicious syndrome—inherent in the Government's economic philosophy—namely, that the more one deflates demand the more one inflates prices, because we have moved from a situation of consumer sovereignty to one of producer sovereignty. These are issues to which the Government hardly address themselves in this Bill. Certainly, the Bill does not resolve or remedy them in any way, given that it aims not to strengthen the Price Commission, which many of us on these Benches regard as necessary, but seeks to abolish it.
§ Mr. Cryer
On a point of order, Mr. Deputy Speaker. I wish to place on record that, while I do not intend to object to the Government spokesman speaking again, the debate was opened in an incredible manner, with a great deal of contempt for the House. We are interested to hear what the Secretary of State has to say—
§ Mr. Deputy Speaker (Mr. Richard Crawshaw)
Order. Will the hon. Gentleman come to his present point of order, without discussing what happened earlier?
§ Mr. Deputy Speaker
Order. With the greatest respect, I must remind the hon. Gentleman that a desire to put something on the record is not a point of order.
§ Mr. Cryer
But, Mr. Deputy Speaker, it is important that debates in the House follow the usual convention, and the convention is that the Minister provides adequate information on which to base the debate. Because of the lack of information. which I assume is about to be filled, I am not exercising my right as a Member to shout "Object" so as to prevent the right hon. Gentleman from speaking at this stage, but I wish to point to the objection that we made at the beginning of our proceedings and the fact that he made a thorough hash of things at the opening.
§ Mr. Ioan Evans
On a point of order, Mr. Deputy Speaker. I do not understand this procedure. We are to adjourn the debate tonight and an opportunity 158 will be given to the Minister to speak when the debate resumes. There have been whole periods of the debate when the Secretary of State has not been present. Some of us have sat here throughout—
§ Mr. Deputy Speaker
Order. The hon. Gentleman has made an incorrect assertion. The Secretary of State may speak again now or later only with the leave of the House.
§ Mr. Deputy Speaker
Objection taken. It would therefore appear that the Secretary of State does not have the unanimous leave of the House to speak again. Mr. Beaumont-Dark.
§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
Obviously, there are many of us who do not understand—
§ Mr. John Smith
On a point of order, Mr. Deputy Speaker. I think that it would be for the benefit of the House if the Secretary of State were to explain why he did not speak earlier. If he were allowed to speak again, I think that it would be helpful to the House as a whole.
§ Mr. Deputy Speaker
If the hon. Member for Aberdare (Mr. Evans) insists on his objection, I have no alternative but not to allow the Secretary of State to speak at this point.
§ 9.43 p.m.
§ Mr. Nott
I start by complimenting the hon. Member for Glasgow, Govan (Mr. McMahon) on a very eloquent and robust maiden speech. I am sure that we shall hear many more penetrating contributions from him. Although I did not know him, I know that many of us remember his predecessor. He was certainly held in affection by the House and we all hope that he has a happy retirement. I do not doubt that his 159 successor, the present Member for Govan, will be as robust as he was in representing the people of the Clyde.
I shall now answer the hon. Member for Aberdare (Mr. Evans). He will he aware that I came to the House ready to open the debate at the normal time. As a result of earlier proceedings and a speech by the hon. Member for Kingston upon Hull, Central (Mr. McNamara), which went on for a rather long time, my ability to give the full speech that I should like to have given—naturally, I had prepared it—was frustrated. It was because of that that I felt it would be a good idea to give the House the maximum opportunity to comment on the Bill. That has proved to be quite a wise course.
It has been a short but useful debate. We had an excellent speech from my hon. Friend the Member for Harrow, Central (Mr. Grant), who went to the heart of the Bill and explained what we are trying to achieve. My hon. Friend the Member for Romford (Mr. Neubert) made a useful contribution, as did my hon. Friend the Member for Loughborough (Mr. Dorrell).
I regard the Bill as an important measure. I am grateful to the House for giving me the opportunity to answer some of the questions that have been raised during the short debate that we have been allowed today.
§ Mr. John Fraser
The right hon. Gentleman said that he would answer some of the questions raised in the debate. The House has given him leave to speak again and I think that he owes the House an apology for his behaviour and an explanation of the Bill. We shall get on better if he adopts that approach.
§ Mr. Maclennan rose—
§ Mr. Cryer rose—
§ Mr. Cryer
I made my position clear. I said that I would not exercise my constitutional right to object to the right hon. 160 Gentleman speaking a second time. However, I want to hear his explanation of the Bill and not his reply to the debate. As I understand it, the debate is to continue. I want to hear what he would have said at the beginning of the debate.
§ Mr. Nott
I shall do my best to satisfy the hon. Gentleman in that regard. First, I shall answer a few of the questions asked by the right hon. Member for Lanarkshire, North (Mr. Smith). The right hon. Gentleman asked about the staff of the Price Commission. The contract staff represent about 70 per cent. of those on the staff side of the Commission. They have been given, or are being given, four months' pay in lieu of notice. A large proportion of the non-contract staff are members of the Civil Service. They will remain in the Civil Service and will return to other posts. All but two of the members of the Price Commission have terms of appointment that expire on 31 July. The names of the members who will serve from 31 July until the abolition of the Commission will be announced shortly. The minimum size of the Commission has been reduced from five members to three.
The right hon. Gentleman asked me about the speed of inquiries. Embodied in the Bill is the determination to enable the Monopolies and Mergers Commission to conduct inquiries more speedily than hitherto. The Commission is being required to undertake its reports into anti-competitive practices within six months. That period is subject to only one extension of three months. We hope that through the Bill we shall be able to ensure much speedier inquiries than hitherto.
§ Mr. MacIennan rose—
§ Mr. John Fraser rose—
§ Mr. Fraser
There is no great hurry. The right hon. Gentleman will be able to continue subsequently. There appears to be nothing in the Bill that sets a six months' limit. Is the right hon. Gentleman saying that he will use the powers under the Fair Trading Act 1973 to set a six months' limit for investigations into anti-competitive practices? Am I right in saying that he is not telling the House that there will be the same time limit for 161 a full-scale monopoly references to the Monopolies and Mergers Commission?
§ Mr. Nott
The existing Monopolies and Mergers Commission investigations are continuing—as the hon. Gentleman knows, they can continue for three years—and will continue in the normal way. Those are investigations into what I have described as statutory monopolies. As the hon. Gentleman rightly says, under the Fair Trading Act we are allowing much speedier investigations to deal with anticompetitive practices. We are using the time limits in that Act for the purpose of these investigations.
The hon. Member for Keighley (Mr. Cryer) asked me to give a short description of the Bill. I am happy to do so. I begin with the area of the Bill that was referred to by the hon. Member for Colne Valley (Mr. Wainwright), who is not in his place at present. The hon. Gentleman talked about anti-competitive practices. We could have strengthened powers in that area by taking two approaches. First, we could have listed in the Bill a variety of anti-competitive practices and prohibited them, introducing penalties for breach of the prohibition. That would have implied that certain practices were invariably anti-competitive and invariably against the public interest.
By proceeding in a similar way to the anti-trust legislation in the United States, we should have brought the whole procedure into the courts. That would have much more nearly approached the United States procedure. I am answering the point raised by the hon. Member for Colne Valley. The alternative was the new approach in the Bill of taking a broad definition of an anti-competitive practice and then seeking in each case to establish by a short investigation, without any sanctions, whether a prima facie case of limited competition was evident—and, if it was evident, whether it was appropriate for a fuller investigation as a practice that might operate against the public interest.
If the Director General of Fair Trading thought that prima facie there was an anti-competitive practice in existence and, secondly, that it was appropriate that it should be investigated to see whether it was against the public interest or not, he could refer it to the Monopolies and Mergers Commission, under the Fair Trading Act, for a six-months' investigation, with 162 an extension of three months should that be required by the chairman, who would be allowed to ask for that single extension. That is the framework for investigating anti-competitive practices. We chose those procedures from the outset as we were determined not to impose unnecessary burdens and uncertainties on industry.
My hon. Friend the Member for Harrow, Central illustrated well some of the burdens and uncertainties that were placed on industry by the pre-notification of prices and the powers of the Price Commission to defer price increases for three months. The Opposition talk of the Commission as though it had power to stop prices going up. The Commission's powers to defer price increases were limited to three months. It had no further powers. Superimposed around the structure of the Commission was an enormous procedure for the prenotification of all prices above a certain level. That caused some of the burdens of which the Government were anxious to dispose by means of the procedures that we now seek to establish in the Bill. We did not want to embark on a course similar to that of the United States. We wanted a new approach. I genuinely believe that it will be looked at with interest by the other countries that are seeking to change their legislation in this area.
The hon. Member for Vauxhall (Mr. Holland) referred to the French and other cases. The French had a price commission of a kind, but over the past year they have progressively withdrawn price controls. Their present body is called the directorate of competition and consumer affairs. They have moved much closer to our approach. With respect, the hon. Gentleman's textbook—perhaps he wrote it himself—is a little out of date. He will find that other countries will move nearer to our kind of investigation.
§ Mr. Stuart Holland
Surely the right hon. Gentleman is well aware that in France since the war there have been periods of total price freeze, relaxation of price controls, price freeze again, changes in institutions, sometimes inside the plan and sometimes inside the Ministry of Finance. The interesting feature of the past 25 years is that there has been a consistent policy of statutory price control in France.
§ Mr. Nott
The swings of policy in France are not totally unfamiliar to all of us in this House. I understand that there have been changes in policy in that country. The hon. Gentleman specifically referred to a price commission being in operation and I was pointing out that the French are probably moving nearer to our way.
§ Mr. Neubert
Did I not read somewhere that the French had recently removed the control on the price of bread, which had existed for nearly 200 years since the Revolution?
§ Mr. John Smith
It is now 9.55 p.m., and it may be that the Secretary of State has the intention of terminating his speech shortly. He will be aware that hon. Members have many questions to ask him about his explanation of the Bill and the various clauses. Indeed, I have some myself. Had things proceeded in the usual manner, we would have been able to put questions. I think that we shall all he content if the Secretary of State will assure us that he will not conclude his speech at 10 p.m. but will continue it when the debate on the Bill is resumed.
§ Mr. Nott
The procedures in this House have always, alas, been a mystery to me. I shall continue with my speech and endeavour to answer as many of the questions posed by the right hon. Gentleman as I can. But in reply to requests made from the Opposition Front Bench earlier in the day, my right hon. Friend the Leader of the House has agreed that the debate should be adjourned. There will therefore be plenty of opportunity for answering all the questions that the right hon. Gentleman and his hon. Friends wish to ask.
§ Mr. Maclennan
When the right hon. Gentleman opened the debate with his speech of three minutes, he said that had he had time he would have taken the opportunity to explain to the House the interrelationship of competition policy with the Government's monetary, financial and economic policy. Simply to answer, in the course of a few minutes, some of the questions raised by some of the hon. Members who participated in the 164 debate is to go much less far than he indicated to the House that he would wish to go. That being so, I hope that the Secretary of State will take up the point made by my right hon. Friend and accept the invitation to conclude his remarks not tonight but on a later occasion.
§ Mr. Nott
I will carry on with what I wish to say, because I am trying to satisfy Opposition Members by answering their questions on the Bill. If I had opened the debate and spoken for half an hour or an hour, there could have been complaints about the length of my speech, bearing in mind that there were only two and a half hours left in which to hear what hon. Members had to say.
What is new in this legislation is that for the first time an individual practice by an individual firm can be thoroughly investigated, and if it is an anti-competitive practice it can be stopped should that practice be found to be against the public interest. Then, of course, consequences flow from the existing powers held by the Government under legislation which is on the statute book at the present time.
A new departure in the Bill—and one that I should have thought the whole House would welcome—is that we are bringing in new legislation to enable the Government to refer specific practices that we believe might abuse the monopoly power of the statutory corporations, and we are arranging that these can be brought before the Monopolies and Mergers Commission for investigation.
I should have thought that the whole House would welcome the fact that statutory corporations are being treated in the Bill in exactly the same way as the private sector. This is the first time that this has happened. The Director General of Fair Trading has the power under the Bill to look at anticompetitive practices in the nationalised industries in exactly the same way that he has the power to do in the private sector. This seems to me to be a major advance and one that right hon. and hon. Members should genuinely welcome.
As I said, we do not even feel that the power which we will give to the Director General of Fair Trading to treat the private and public sectors exactly alike 165 goes quite far enough. We wish to bring in new powers on public sector industries and we have included in the list—
§ It being Ten o'clock. the debate stood adjourned.
§ Debate to be resumed tomorrow.