HC Deb 23 October 1979 vol 972 cc220-76

Order read for resuming adjourned debate on Question [23 July], That the Bill be now read a Second time.

4.17 p.m.

The Secretary of State for Trade (Mr. John Nott)

If I may resume, Mr. Speaker, may I say that there is sometimes a tendency in politics to dress up minor changes in gaudy clothes and to describe policies of some inconsequence as turning points in history. As politicians we have all been guilty of that offence. Yet when an annoucement of great significance is made, often within a day or two, it becomes a recognised or even accepted fact of economic life, almost as if no change had been made. I believe that the statement which the Chancellor of the Exchequer made at this Dispatch Box today was, by any measure, a major event. It signifies greater freedom and a more outward-looking economic policy. There is no reason why my right hon. and learned Friend's announcement should not have a profound effect on business attitudes in this country; only time will tell. I believe that it is evidence that politicians can change attitudes and influence the climate of opinion.

Not more than a year or two ago, the suggestion by my right hon. Friends and I, then in opposition, that we could and would remove exchange controls—and, indeed, price controls, one of the subjects in this Bill—was greeted with disbelief in many circles, including many circles in the City. Today it is not only accepted but greeted with enthusiasm, and copyright to such a major liberalisation in our economic affairs is now claimed by countless economic commentators. Therefore, it is a privilege to follow my right hon. and learned Friend the Chancellor by reopening a debate which signals the removal of one control, and also a burden, on our domestic economy, the burden of price controls, just as the abolition of exchange controls signals the ending of another control and a burden which has persisted for the past 40 years.

The House must excuse my enthusiasm for my right hon. and learned Friend's statement, but it represents, as does the Competition Bill, an important step away from the recent trend in this country towards an inward-looking, control-ridden and over-centralised society towards an environment of greater freedom, with perhaps a touch of risk and adventure—certainly there is some risk attached to these policies—that I think was the embodiment of an earlier and more successful period in our history.

I noted the reaction from the right hon. Member for Leeds, East (Mr. Healey), the former Chancellor of the Exchequer. Where we move step by step towards greater freedom of thought and of action, I regret that the Labour Party seems to move away from it. In overseas trade, where competition and open markets remain the greatest stimulus to trade abroad, just as greater competition remains the greatest protection to the consumer here at home, I feel that the Labour Party has resiled from these positions.

The hon. Member for Tottenham (Mr. Atkinson), interrupting my right hon. and learned Friend today, made what I thought were some characteristic comments. A few years ago, the hon. Gentleman said: import controls are not temporary expedients to effect protection. They are essential instruments of planning. If the whole of the Socialist case is about planning the economy, how can we plan it in the absence of controls on our external trade?"—[Official Report, 3 Nov. 1975; Vol. 899, c. 10.] That was a characteristic statement, and I quite understand that it came perfectly sincerely from the hon. Gentleman. But it is a pity that one of the two great political parties in our country should now be dominated by what I might call a sort of ration-book mentality which is the privilege of little minds.

Mr. John Smith (Lanarkshire, North)

I take it that the Secretary of State recollects that he is speaking by leave of the House because of his failure to explain the Bill, although he was given an opportunity to do so, on an earlier occasion. Will he now concentrate at least part of his speech on an explanation of the Bill that he is recommending to the House?

Mr. Nott

Of course I will. I do not want to go on for too long. I have already spoken on the Bill for about 23 minutes, and I am sure that the right hon. Gentleman would not like me to go on very long today. But I want to say that a protected Britain—by which I mean a Britain with price controls, exchange controls and import controls—would inevitably be a Socialist Britain, with planning agreements, rationing and central controls.

I respond to the right hon. Member for Lanarkshire, North (Mr. Smith) by recalling that when we began the debate before the Summer Recess I was asked to place the Bill in the broader context of the Government's economic policy. I will respond to that request in a moment, but before doing so perhaps I should remind the House, in view of the three months which have elapsed, of the three principal elements of the Bill.

First, it strengthens the power of the Director General of Fair Trading and the Monopolies and Mergers Commission to investigate practices which 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 undertakings to the Monopolies and Mergers Commission for an investigation into their efficiency and costs and into any possible abuse by these public sector bodies of their monopoly power which might work adversely for the consumers. It is under these powers that the Monopolies and Mergers Commission will investigate the London commuter services of British Rail. Thirdly, the Bill abolishes the Price Commission.

When the debate began on 23 July, I explained the new procedures which we are giving to the Director General of Fair Trading to investigate anti-competitive practices. They are on the record in Hansard, and I will not go through them all now, but for the benefit of those hon. Members present who were not here on that occasion I should explain that we have avoided in the Bill the approach embodied in the United States anti-trust legislation. We have avoided it partly because it would have involved a very long statute setting out an extended list of anti-competitive practices. That would have brought the whole procedure into the courts and created most of the burdens on industry and commerce which are a well-known feature of the American practice.

Instead, we decided to build on the approach, already embodied in the Fair Trading Act, of taking a broad definition of anti-competitive pratice and then seeking in each case to establish by a short investigation without sanctions whether a prima facie case of limited competition was evident or not, and if it was, whether it was appropriate for a fuller investigation by the Monopolies and Mergers Commission as a practice which might operate against the public interest. That is the principal basis of the Bill.

What is new in the legislation is that, for the first time, an individual practice by an individual firm can be investigated to see whether it is anti-competitive, and if it is found to be against the public interest it can be stopped. Formerly, it was necessary to involve every firm in an industry in order to decide whether a monopoly situation existed. Furthermore, the Bill allows the Director-General of Fair Trading in his investigation into anti-competitive practice to treat the public sector and the private sector alike.

Mr. John Fraser (Norwood)

Example is always a good educator. Can the right hon. Gentleman say whether these practices would be regarded as referable?

Mr. Nott

I shall come to that point. Clearly the House would like a few examples.

I believe that the new procedures will considerably strengthen competition policy without imposing the uncertainties and burdens on industry of temporary price restrictions and pre-notification, which, of course, were two of the main elements of the Price Commission Act.

I understand what many Labour Members feel about the Price Commission. They feel strongly about it. I suppose I felt the same when HMS "Ark Royal" was towed, with flags flying and hooters hooting, to the breakers' yard in Devonport. I felt a pure nostalgia that a great British institution, our aircraft carrier, had made her last journey. The Conservative Party feels the same pride and affection for the Board of Admiralty and the Royal Navy as hon. Members below the Gangway opposite seem to reserve for the Board of Inland Revenue and the Price Commission. I can understand that, but I think that the difference of view across the House somewhat explains the voting swing of 10 per cent. to the Conservatives from Labour among skilled and unskilled workers between 1974 and 1979, which is evidence that we now speak for the Labour Party's traditional constituencies.

Mr. Douglas Jay (Battersea, North)

Do I gather from the right hon. Gentleman's remarks that the Government are proposing to abolish the Inland Revenue also?

Mr. Nott

If it was in my power to abolish taxes I certainly would. I am sure that the right hon. Member for Battersea, North (Mr. Jay) would like to see all taxes go as well. I do not expect quite to achieve that ambition, but it is one that I hope never to abandon. But we are making a good start.

It would, however, be appropriate at this stage for me to acknowledge the final report of the Price Commission, on car spares, published yesterday. My right hon. Friend the Minister for Consumer Affairs and I spent many hours endeavouring to bring forward what is a very good report, and I congratulate the Price Commission on it. I believe that the report demonstrates one of the greatest areas of consumer concern—cars. In passing, may I say that I wish that all husbands in the country treated their wives as well as they do their cars, because the pride of the great British public in their cars is, I think, second to none.

My right hon. Friend and I had a considerable dilemma. We wanted to bring the report forward because we thought it important, but we did not at the same time wish gratuitously to damage British interests. The right hon. Member for Lanarkshire, North, if confronted with that great problem, would have made similar deletions. It would clearly have been better from the consumer aspect had we made none at all, but we felt that we did not want to damage British interests in the process.

The publication of what is a good report is not a reason for keeping the Price Commission in being. Under our proposals, where anti-competitive behaviour exists, the Monopolies and Mergers Commission would not merely be able to expose it but would have powers to deal with it. The Director General of Fair Trading may seek to look into the practices set out in the report. I do not accept the arguments advanced by the hon. Member for Norwood (Mr. Fraser) on the radio this morning that the abolition of the Price Commission will in any way adversely affect our capacity to make useful reports and investigations.

Mr. Charles Williams, who has now left the Price Commission, his board and all his staff deserve not necessarily our approval of the policies set forth for them by the previous Government—as the House knows, we did not approve of those policies—but they should have the gratitude of the House for conscientiously fulfilling their duties. Mr. Williams handled the difficult task of running down the Commission with discretion and tact, and I am grateful to him.

Clause 2 defines an anti-competitive practice and provides the power to make exceptions. I have it in mind to exclude firms with a turnover of less than £5 million unless they have more than a 25 per cent. share of a particular market, but I do not intend to use the powers to exempt particular areas of industry or commerce in other than special circumstances. Any such exceptions would be far more limited than those in the Restrictive Trade Practices Act. I am concerned with the areas primarily involved with international jurisdiction, and they can be discussed in Committee.

On the subject of the Restrictive Trade Practices Act I should mention that the findings of the court take immediate effect. I propose to amend the powers of the Restrictive Practices Court to enable it, should it so decide, to defer the effect of its declaration so that the parties to a case have time to make revisions in the light of the findings. A revised agreement would then have to be submitted to the court for clearance.

Mr. John Fraser

Are the anti-competitive practices revealed in the report the sort of practice that could be investigated under Clause 2(1)? Is it such a practice that, if carried on by a multitude of persons or companies, could have been investigated by the Price Commission?

Mr. Nott

I do not wish to be drawn into a debate on what is or is not an anticompetitive practice so far as the report is concerned. It will be for the Director General of Fair Trading to make these judgments and not for Ministers. He will have the option of deciding, as he does now, whether he should refer a particular practice for major monopoly investigation based on the existing Fair Trading Act procedures or adopt the new procedures in the Bill. He will be free to carry out a prima facie investigation into some of the practices illuminated in the report and decide whether they might be appropriate for investigation by the Monopolies and Mergers Commission as being against the public interest.

There are two criteria in the Bill. There is first the question whether a practice is anti-competitive, but it is only if it is acting against the public interest that the Commission under existing legislation will make a recommendation.

Several possible examples of the kind of practice that the Director General might seek to investigate were set out in chapter 6 of the Labour Government's Green Paper. I should make it clear, however, that the decision as to what might constitute an anti-competitive practice that might operate against the public interest is not for Governments but for the Director General of Fair Trading. Consumers and business men adversely affected by what they believe to be an anti-competitive practice must take their complaint to him.

We believe that conduct that imposes a barrier to a new entrant into a market is a good example of a possible anticompetitive practice. Powerful firms may try by certain practices to eliminate competition from small firms. Powerful firms may insist, for instance, that wholesalers or retailers stock the full range of their products so that the wholesaler is unable to stock a rival product. A manufacturer may insist that a stockist does not sell the products of a competing manufacturer. A manufacturer may not allow a retailer to advertise his product except at a minimum price specified by him. I can go on and on. Anticompetitive practices may lie in the conditions of supply, in a refusal to supply or, indeed, in such areas as predatory pricing.

Mr. Tim Sainsbury (Hove)

Does my right hon. Friend agree that the definition in clause 2 of anti-competitive practice is wide? In Committee we should look at the defences that might appropriately be advanced by those accused of such a practice and relieve them of uncertainty. A company that is merely pricing competitively may be fearful of being accused of predatory pricing.

Mr. Nott

We are aiming not at a particular practice but at its effect. That is the key distinction. Industry is concerned at the broadness of the definition in the Bill, but I hope that it has taken the point that I made. If we try to set out a full list of anti-competitive practices in a legally defined sense we should have legislation similar to anti-trust legislation in the United States and that in Germany, and that would be a far greater burden to British industry.

I emphasise that the Director General of Fair Trading is merely asked here to carry out a prima facie investigation and not to accuse anyone. There are no sanctions. It will be a quick investigation as to whether he believes the effect of a particular practice might be appropriate for further examination by the Monopolies and Mergers Commission as being possibly contrary to the public interest. Although there is concern, it is not a procedure that will be shown to be onerous or difficult for industry. It can be debated at length in Committee.

Clause 11 introduces new powers for public sector industries. Powers existed under the Fair Trading Act for the investigation of public sector industries, but they were inadequate and never used. If there is a single area of public concern about inefficiency and cost, I believe that it is the large statutory monopolies.

We have widened the definition in the Bill to include the water industry, bus undertakings and the agricultural marketing boards, as well as the nationalised industries which are already dealt with in the Fair Trading Act. We believe that as public sector bodies are not subject to the normal sanctions of bankruptcy, acquisition by other firms and the wider sanctions of competition in the market place, they need to be subject to an investigation of the service which they provide to consumers, the occasional investigation into their efficiency and costs and possibly sometimes the occasional abuse of their monopoly position.

Of course, this kind of inquiry into efficiency and costs, as well as possible abuse of the monopoly position, which will take six months and could possibly extend to nine months, could have been undertaken by a different body.

We considered the possibility of creating a new body for this purpose. We considered asking the Exchequer and Audit Department to carry out this work but we came back to the Monopolies and Mergers Commission as being the most suitable body in a new form to conduct this kind of efficiency audit. The Commission already has experience of investigating large monopolies and in its new form we thought it would be the best body to build up experience in this very difficult and important field.

I am anxious not to overburden the Monopolies and Mergers Commission immediately with a great weight of new investigation. It must have time to develop its practice and build up experience.

Mr. Hugh Dykes (Harrow, East)

May I take my right hon. Friend from the public sector back to the industries to which he was referring when the hon. Member for Norwood (Mr. Fraser) intervened earlier—that is, those which practise self-regulation. This is a very important matter because there is a possibility of amending the existing Act to stop a finding from having immediate effect in the court. I welcome that possibility and the Secretary of State's promise to draft an appropriate amendment. For example, if it appears in due course that adequate regulation is put at risk while the Stock Exchange's practices are being investigated, as they are now, will he reconsider the stance he has adopted not to lay an exemption order? The Stock Exchange has already officially requested that this should be done.

Mr. Nott

I realise that this is an important question. I shall come to the Stock Exchange in a moment and answer my hon. Friend's point then. I understand his concern.

Mr. Stephen Dorrell (Loughborough)

Could my right hon. Friend deal with the point that I raised in the debate in July when I asked him why the Government want to limit the section 11 powers to the public sector? Are there not also private sector monopolies in which the nation has just as much at stake? Will the Government consider extending that power to cover some parts of the private sector as well?

Mr. Nott

I noted my hon. Friend's remarks in that debate and I have re-read them. However, if there is a monopoly operating in the private sector it is subject to the existing legislation embodied in the Fair Trading Act. If a particular firm indulges in an anti-competitive practice, it will be subject to investigation under the clauses in this Bill if the Director General of Fair Trading considers that such a situation exists.

In this Bill we are treating the public sector and the private sector exactly alike. I have been asked why we have gone further and instituted what I might call an efficiency audit for the public sector but not for the private sector. The answer to that is exactly as I have just given it. There is a fundamental difference between a statutory monopoly which under legislation normally has been given a right—such as the Post Office, whose monopoly we would like to reduce—and a private sector firm. A statutory monopoly does not have the same sanctions of bankruptcy and it is unlikely to be taken over by a large private firm. Because of the fundamentally different nature of these activities we believe that the additional procedure is required which is not relevant in that sense to the private sector where monopolies do not exist, or if they do, we have procedures for undoing them.

I shall refer briefly to the way in which we hope to strengthen the Monopolies and Mergers Commission. I am trying to develop this speech a little because I was criticised for being brief last time. Therefore, I am anxious now to make a reasonable but not long contribution. I have had a number of talks with the chairman of the Monopolies and Mergers Commission and with his full agreement I hope to appoint one, or, if possible, two deputy chairmen on more of a full-time basis than hitherto. The chairman is also anxious to co-ordinate more closely the several groups working on reports. He is setting up a co-ordinating committee of senior members for this purpose. The Commission has recently recruited a small nucleus of highly qualified senior staff to conduct the new investigations and recently we have appointed a new secretary as the official head of the Commission.

I accept and agree that the new procedures require, in some parts of the Commission's activities, a rather different kind of approach and I believe that the chairman is now moving in that direction.

There is a further point relating to the comments made by my hon. Friend the Member for Harrow, East (Mr. Dykes) about the Stock Exchange agreement, which has been referred to the Restrictive Practices Court under the Restrictive Trade Practices Act. Several months ago the Stock Exchange requested that its agreement should be removed from the scope of the legislation on the ground that the Restrictive Practices Court is not an appropriate body to investigate its activities. There has been a considerable amount of correspondence between Ministers and the Stock Exchange and a great weight of evidence has passed between us.

I regret to tell the House that I cannot meet the request of the Stock Exchange. However, I am concerned that adequate regulation of the security markets should be preserved. I recognise the value of self-regulation in which the Council of the Stock Exchange has a central role to play. I believe that the amendment to the Act to which I referred earlier, and which will give this breathing space following the announcement of the finding by the court, may be of help to the Stock Exchange should the court make certain findings at the end of its investigation. However, the small amendments I am making to the court's arrangements will apply across the board.

We must not assume that the Restrictive Practices Court is not as capable as other bodies of making a sensible finding in the public interest. There has been a feeling that this court will not consider the public interest. We must see what happens. I do not think those fears are justified.

Mr. Dykes

If the principle of adequate regulation to which the Minister has already paid tribute were put at risk by these processes in the months ahead, would he reconsider his decision not to lay an exemption order?

Mr. Nott

The power to lay exemption orders is part of the law. Any Minister is always open to considering anything. I do not intend to lay an exemption order and I have made that clear. I have said that I cannot meet the request of the Stock Exchange. However, clearly I am always prepared to receive representations about exemption orders, and if some dramatic situation arises I shall be willing to see my hon. Friend at any time.

Mr. Jay

As the right hon. Gentleman has referred to the Stock Exchange, will he make clear how the legislation will affect the professional services generally? Will restrictive practices in the legal or medical professions be covered? If not, how does the Bill exclude them?

Mr. Nott

In the last resort it will not be the judgment of Ministers—they are not excluded. The Director General of Fair Trading will normally consider it more appropriate that professional services such as those referred to by the right hon. Gentleman should be subject to investigations through the existing procedures under the Fair Trading Act and the Monopolies and Mergers Commission investigation. The Director General has the power to use the new procedures, but I believe that he is more likely to use the existing arrangements under which some of the learned professions and others have already been looked into by the Monopolies and Mergers Commission.

Mr. D. N. Campbell-Savours (Workington)

With reference to clause 11, will the right hon. Gentleman tell me in which subsection I will find a reference to the legal profession?

Mr. Nott

With respect to the hon. Gentleman, I believe that he has the wrong clause. Clause 11 is concerned with what I have described as the efficiency audit of the public sector bodies. I fear that the hon. Gentleman will have to look at the Fair Trading Act, which lists all the bodies. In this measure all we have done is to add the water and bus undertakings and the agricultural marketing boards to a list which is already included in the Fair Trading Act.

I turn to the abolition of the Price Commission. I should tell the hon. Member for Norwood that it is no use searching in our policy for a modified system of price control; it does not exist. Nor does the pre-notification of prices and the associated paraphernalia of a great bureaucracy which employed over 500 persons and which would have cost nearly £8 million this year and led to countless burdens on British industry and commerce. For what purpose did it exist in the past? The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) assured us that the Price Commission was not an agency for holding down the RPI. Indeed, its powers were limited to deferring price increases and it performed that role successfully and visibly—not for political purposes—in the period leading up to the election.

The previous Government's counter-inflation policy rested not on price control but on voluntary pay controls negotiated with the TUC. The TUC wrote the Government a letter and that letter was incorporated in a White Paper. Through that White Paper the letter from the TUC became the law.

Mr. John Smith

If it is a bad idea to attempt to investigate price increases, will the right hon. Gentleman explain why in clause 13 such a power is included to refer to the Director General an increase in prices? Will he explain to the House what is the point of the Secretary of State having the power to refer a price increase for investigation when it is clear from the face of the Bill that he has no powers to act upon that reference, even if it is discovered to be against the public interest?

Mr. Nott

The right hon. Gentleman asks the question at precisely the right moment. Clearly it is a good question. Clause 13 enables the Government to ask the Director General of Fair Trading to produce a report where, as defined in clause 13, there is a matter of "major public concern" and the Secretary of State considers it to be of general economic importance or special significance to consumers. We do not intend to use that power in any but the most exceptional circumstances. If that power did not rest in the Bill, the power to conduct an investigation of that sort—as the right hon. Gentleman says, there are no sanctions attached to it—would probably be given by any Government to an ad hoc board. If the Government wish to investigate a particular case they will do so. However, I do not want the Government to be in the business of setting up ad hoc boards to investigate matters of this sort. I prefer to keep such investigations within the context of competition policy whereby no powers, controls or sanctions are attached to the procedure unless the reports produced by the Director General show up evidence of an anticompetitive practice. In that case, the relevant powers of the Bill would apply.

Mr. John Smith

Surely it is an unreasonable price increase which is allowed under clause 13. When the Secretary of State receives a report from the Director General of Fair Trading which states that there has been a totally unjustified price increase, what will he do with the report? Will he paper his bedroom with it? What can he do with it?

Mr. Nott

The purpose of the report is to illuminate the facts. Earlier in my speech I said that if the right hon. Gentleman is looking for a system of price controls and sanctions in the Bill with which he is familiar he will not find it. The reason clause 13 is in the Bill is that, being a realistic sort of chap, I thought that it was better for such an investigation to take place within the context of competition policy rather than by the setting up of ad hoc boards by Governments which would involve conducting such illumination of the facts outside competition policy. However, if it was revealed in the report that an anticompetitive practice existed, the Director General, if he thought it appropriate for investigation—being contrary to the public interest—would refer that to the Monopolies and Mergers Commission for a full report. From that report the sanctions which exist in the Fair Trading Act would flow.

Mr. Ioan Evans (Aberdare)

The purpose of the Price Commission was to have price restraint because the Government were seeking wage restraint. Is the right hon. Gentleman saying that if prices increase by leaps and bounds and let rip he will leave the matter to market forces and that the Government will not intervene?

Mr. Nott

That leads me into wider areas. While the hon. Gentleman's Government were in power and we had the Price Commission, prices doubled and the value of the pound was halved. All the bureaucracy existed and the powers for the deferment of prices were there, but is the hon. Gentleman telling the House and the country that that prevented the industrial chaos of last winter? It had no impact on wage demands.

Mr. Evans

I believe that the problem with the wage demands was that the trade unions responded for three years but the Government asked for too much in the fourth year. That might well have been the mistake that the previous Government made. However, the trade unions did respond over that three-year period because the Price Commission existed. Because of its existence, those manufacturers who wished to increase prices had to refer those increases to the Price Commission. That reference was a restraint in itself. The Price Commission had powers to restrain price increases for at least three months. That is how the inflation rate which had stood at 25 per cent. was brought down last year to an average of about 8 per cent.—half its present rate since this Government removed the Price Commission.

Mr. Nott

I understand that that is the view of the hon. Gentleman, but it does not coincide with the view of the right hon. Member for Sparkbrook, who was the Secretary of State for Prices and Consumer Protection. I have here a copy of an interview that he gave some time ago to Mr. Gordon Leak of the News of the World. The right hon. Gentleman was asked in that interview, which was conducted at the time of the introduction of the Price Commission Act: Would the price of any product be lower today if these controls had been introduced three years ago? The right hon. Gentleman replied: Some prices certainly would, but not overall. Had we had this prices policy a year or two years ago it might have made some marginal difference to the rate of inflation, but it would not have produced a great improvement such as we will have towards the end of this year. Of course that did not happen. The right hon. Gentleman continued: That will only come about because of a general economic improvement. The hon. Member for Aberdare (Mr. Evans) is saying that the trade unions exercised wage restraint for three years and would not have done so if all this paraphernalia had not existed. That is a subjective judgment with which I do not agree. We do not have a structure of the sort that I have just been describing. The TUC has not written the Government a letter and we have not incorporated it in a White Paper and made it law.

The policy of voluntary wage restraint, which was the key counter-inflation policy of the previous Government—let us be frank about that—was determined to ensure that workers received no more and no less than the letter from the TUC specified, regardless of changing demands, skills and markets. It is that lack of flexibility in the system, of which price controls were a major part, that we are trying to get away from. The previous Government had price controls which did not work and pay controls which led to the worst industrial chaos in post-war Britain. We are espousing neither.

I apologise for the length of this speech—I seem always to be apologising for shortness or length—and I shall come quickly to the place of the Bill in the broader context of economic policy.

I am an understanding person and I appreciate that the Opposition Front Bench feel a deep sense of shock that neither our policies nor the policies of their party conference represent a comfortable and secure resting place. That goes for their parliamentary seats as well.

Following the failure of the botched-up policies of the social democrats who used to occupy the Government Front Bench—the value of the pound halved, unemployment doubled and the national debt virtually doubled—there were only two alternative economic policies. We could not go through again what we went through during the previous five years.

One alternative was for economic policy to follow the route chosen by the hon. Member for Tottenham, who has been joined in the House by an hon. Member of equal intellectual distinction, the hon. Member for Vauxhall (Mr. Holland). That is the route of a much more centrally controlled and regulated economy. The hon. Member for Vauxhall has written a pamphlet which I recommend to hon. Members. It is called "What went wrong?" and is the story of the previous Government. The pamphlet has a picture of the present leader of the Labour Party on the front and the hon. Member for Vauxhall describes the previous Government as involving progressive liberal welfare statism within the power centres of the system. The hon. Gentleman's students would drool in admiration at that brilliant Marxist phraseology. I think that what the hon. Gentleman really means is that he wants to do down the former Chief Secretary to the Treasury.

However, that is one logical route—a centrally controlled economy, with planning and the bringing back of exchange controls and price controls and more rules and regulations. It is a logical and consistent economic argument. The only alternative to that is not the botched-up job of the past five years but our policy of greater freedom, less regulation, more choice and fewer controls.

I think that the Government should confine their activities more to those areas of policy where they can be effective. They can restrict the money supply available to finance inflation and can ensure the greatest possible competition and freedom of choice.

At the heart of the Bill lies the fact that the consumer cannot be free to choose unless producers are obliged to compete, and because economic freedom rests on competition the task of grappling with monopoly—the denial of choice—is an important part of economic policy. Indeed, it must pervade every part of it.

The Government intend to stimulate the improvement and performance of our economy by encouraging enterprise, by persuading entrepreneurs to look for new opportunities and by persuading business men to go for new products and to enter new markets. This Bill, which will ensure the denial of monopoly and therefore greater freedom of choice, is central to our objectives and I commend it to the House.

5.7 p.m.

Mr. Dennis Canavan (West Stirlingshire)

I have listened with interest and patience to the Secretary of State, but I have listened in vain because I am still awaiting an adequate justification for the Bill. This is the Secretary of State's third effort. When the House first debated the Bill, the right hon. Gentleman spoke for two minutes and sat down like a petulant little schoolboy. When hon. Members ticked him off, he rose just before the debate was adjourned and spoke for 17 minutes. He has just rambled on for more than three-quarters of an hour, but I am still awaiting a justification for the Bill.

The Bill has nothing to do with creating fairer competition. Its essence is contained in clause 1 which provides for the abolition of the Price Commission. That is what it is all about.

The Price Commission is the only body with the statutory power to intervene in escalating prices. Its abolition was not set forth in the Tory Party manifesto and no commitment to abolish it was made during the election campaign. Indeed, when the right hon. Member for Gloucester (Mrs. Oppenheim) was challenged during the campaign, she prevaricated as usual and said that a Conservative Government would review the work of the Commission. We know now that in the Tory Party a review of work is synonymous with abolition. The abolition of the Price Commission was announced during the debate on the Address and this tawdry Bill was brought before the House shortly afterwards.

It is interesting to note the background to our debate. Inflation is increasing and everyone is rightly concerned about that. The Government inherited an inflation rate of 10.1 per cent. and the inflation rate was in single figures for 15 months before the general election. That is a fact which even Conservative Members would not have the audacity to challenge.

Since the general election inflation has accelerated. When the Chancellor of the Exchequer presented his Budget he said that inflation would probably be at 16 per cent. in October. That was an underestimate because the Secretary of State for Trade told us yesterday that the rate is already over 16 per cent. and there is a possibility that it will reach 20 per cent. by the turn of the year.

Indeed, if this trend continues this Government may become the first in history virtually to double the rate of inflation in their first six months of office. Yet what steps are they taking? They are abandoning their responsibility in respect of controlling prices and abandoning even the pretence of fighting inflation. I do not know where on earth Conservative Members spend their weekends, but when I go around my constituency I discover that even many of those who voted Tory want more State intervention in relation to prices. They want more Government control of prices, not less. That goes for people such as housewives, those with families and all who are faced with the rising cost of living. Yet here we have this Government, a few weeks after coming into office, dismantling the only piece of apparatus there is to ensure statutory control of prices.

As I said, even the Government's own supporters are beginning to have doubts about the wisdom of their policy. Indeed, The Daily Telegraph—the mouthpiece of the Tory Party—just a few days after the general election, on 26 May, contained an article expressing public concern about price increases in commodities such as milk, petrol and bread. The article went on to refer to the concern of the Paymaster General, who perhaps more appropriately should be called the Minister for Propaganda. Indeed, the right hon. Gentleman has the most difficult job of any member of the Government because he must act as the propaganda Minister for the rubbishy policies that his colleagues produce. In referring to the Paymaster General The Daily Telegraph article said: Party officials— that is, Tory Party officials— told him that the abolition of the Price Commission followed by the announcement of a range of price rises … had provoked an adverse public reaction and called Conservative policy on inflation into question". It is little wonder that there is concern among even their own supporters, because to my mind a huge section of the public who voted for a Conservative Government were deceived by the propaganda that was put out during the general election campaign.

It would not be so bad if it were just a refusal on the Government's part to intervene in order to stop rising prices, but this is probably the first Government in history actually to intervene in order to increase prices. We need only look at some of the steps that have been taken. Only a few days after the general election they intervened to give permission to Rank Hovis McDougall to put up the price of bread. That was not surprising to some Labour Members because, after all, Rank Hovis McDougall is one of the biggest contributors to the Tory party. We were told by the Minister for Consumer Affairs that this bread price increase had been allowed because not enough profit was being made. Let it be noted that the Rank Hovis McDougall's pre-tax profit for last year alone was more than £32 million, and the company was able to give £30,000 to the Tory party, £7,500 to the Tory front organisation called the Economic League, and £5,500 to that other Tory front organisation Aims of Industry, now called "Aims".

Mr. Nott

If it is such a dreadful organisation, why did the hon. Gentleman's Government allow Rank Hovis McDougall to put up the price of bread by 1p just a few months earlier?

Mr. Canavan

The fact that the previous Government allowed certain things to happen is no justification at all for the Secretary of State to argue that, because the price of bread had gone up in the past, he should allow another increase. At least there is no unhealthy liaison between the Labour party and the likes of Rank Hovis McDougall with regard to putting money into our coffers. That argument also applies to the brewers. Lately the brewers have been allowed another massive increase and, of course, many of the large brewers are well known contributors to the coffers of the Tory party.

That same edition of The Daily Telegraph to which I referred contained another article about prices. It should be remembered that this was just prior to the Budget. That article stated: The spiral of price rises bedevilling the first weeks of the Conservative Government took two new turns yesterday, with petrol becoming up to 6p a gallon dearer, and the cost of milk increasing by 1½p a pint. Shell, Esso and Texaco followed the lead set 24 hours earlier by BP and Burmah, bringing the £1 gallon close in many parts of the country".

The Minister for Consumer Affairs (Mrs. Sally Oppenheim)


Mr. Canavan

Perhaps the right hon. Lady will wait for a moment. I am sure that many drivers who unfortunately were deceived into voting Tory now look back almost nostalgically to when they could buy petrol for as little as £1 a gallon, because many are now paying more than £1.20 a gallon.

Mrs. Oppenheim

Is the hon. Gentleman aware that the petrol increases about which he complained were allowed by the Price Commission?

Mr. Canavan

We have heard all this nonsense before about so many price increases being in the pipeline. Had this Government been determined to tackle the rise in prices as soon as they got into office, they could have stopped that pipeline. The reason why they did not was that the pipeline was shovelling money into the coffers of the Tory party and its friends.

Mr. Ioan Evans

It is not just a question of the petrol companies, because in the Budget this Government deliberately put a tax of 10p on a gallon of petrol. That was not a Labour pipeline: it was a Tory pipeline, and every time someone buys a gallon of petrol he now pays 10p tax to the Tory Government.

Mr. Canavan

I am grateful to my hon. Friend. In fact, he has anticipated my next point, because my notes read "petrol duty and VAT". A few days after the publication of that article in The Daily Telegraph we had the Budget. As my hon. Friend said, the Budget raised the price of petrol even more—if one likes, by State intervention—by imposing a higher petrol duty and a higher rate of VAT. Of course, the latter had a devastating effect on the rate of inflation, not just on goods such as petrol but on many other household goods and services that are important to practically every family, in the country.

Yet during the general election campaign the Daily Mail—another Tory propaganda sheet—contained an article headed "Labour's Dirty Dozen". That article, which appeared on 26 April, claimed that the Labour Party was telling 12 lies during the election campaign. I should like to refer to alleged lie number four, where the article stated: 'To pay for income tax cuts the Tories would have to double VAT on clothing, shoes, essential kitchen goods, furniture, cars and so on'—Mr. Callaghan, April 23. TRUTH: 'We will not double it'—Mrs. Thatcher. We have now been told that an increase from 8 per cent. to 15 per cent. is not really doubling. How pedantic can one get? Very well—instead of multiplying by two the Tories have multiplied the figure by one and seven-eighths. I and my colleagues are not thick. We all understand arithmetical niceties. We did not have the disadvantage of going to fee-paying public schools that cannot teach adequate arithmetic. Any statistician would be able to say that an increase from 8 per cent. to 15 per cent. is tantamount to doubling the rate of VAT.

I turn to another act of deceit that was committed during the election campaign, shortly after a Labour broadcast when Shirley Williams listed price increases on various goods and services that would automatically follow if a Tory Government were elected. The Chancellor of the Exchequer then said: Shirley Williams's figures have no basis in reality. She was assuming that VAT goes up to 15 per cent. In other words, the Tories virtually denied during the General Election campaign that they would put up the rate of VAT to 15 per cent. They have not yet stopped this process of State intervention to increase prices. The next step will be devaluation of the green pound. They will be under tremendous pressure from the farming interests. There are many farmers on the Conservative Benches and farmers in the Cabinet. It will not require a great deal of persuasion to achieve a massive devaluation in the green pound which will increase the price of food despite the fact, as the Financial Times revealed recently, that the average family budget over the past year has increased by 15 per cent.

It is clear to me that this Government have abandoned all responsibility in the battle against inflation. Indeed, at Question Time yesterday my right hon. Friend the Leader of the Opposition asked the Minister for Consumer Affairs if it was her party's policy to reduce inflation to single figures. He is still awaiting an answer. So is the House awaiting an answer. Is it the policy of the Tory Party at least to try to reduce inflation to single figures? What is the timetable? How on earth do they hope to achieve this by abandoning any form of price control? I am beginning to wonder, if this Bill is passed tonight, whether there will be any Ministerial responsibility for price control. We know already that the right hon. Lady has been reduced to the ranks. She hoped to get a place in the Cabinet, but the Prime Minister says that one woman in the Cabinet is enough. Some would maintain that one like the Prime Minister is one too many. The hon. Member for Rochester and Chatham (Mrs. Fenner) is objecting because she is another ambitious lady.

The point is that there is no spokesman, male or female, in the Cabinet with responsibility for fighting inflation and rising prices. In the last Government, the Secretary of State for Prices and Consumer Protection was a member of the Cabinet. Now the right hon. Lady who hoped to succeed has been reduced to the ranks. That is perhaps a measure of the lack of importance which this Government attach to the matter.

I would like you, Mr. Deputy Speaker, to pass on the following remarks to Mr. Speaker. If the Bill is passed tonight an eventually becomes law, will the Table Office be allowed to accept questions from us about rising prices? Will we be able to table questions to a Minister about the rise in the price of coffee, beer, bread or fares? Or will such questions be blocked at the Table Office? It would be helpful if we could hear a reply from Mr. Speaker about how the rules of the House can be adapted to the changing circumstances of the Bill if the measure is passed tonight and eventually becomes law.

The Secretary of State claimed earlier that the Price Commission had not helped in the battle against inflation. I admit that it was not strong enough. But it was the only weapon available. I maintained consistently during the last Parliament that the weapon should be strengthened. Yet the Government are discarding it completely. Our manifesto promised during the election to strengthen the powers of the Price Commission. But even in its inadequate existing form it provides some control and even a temporary freeze power in certain situations. Also, it has the power to give information to the Secretary of State, to Parliament and to the country. Probably the last report the Commission will make was published yesterday. It dealt with spare parts for motor cars. The report states clearly that the exclusive franchise system operates against the consumer. It also says: We found instances where the manufacturing costs were less than a quarter of the retail price". What will happen about that report? In the summary at the front of the report I counted 144 paragraphs almost half of which were marked by an asterisk. The asterisk means that in the Secretary of State's opinion it is contrary to the public interest to reveal the information. The onus is on the Secretary of State to tell the House why he thinks that. Many members of his party in the last Parliament. like myself, supported the idea of freedom of information, including a Freedom of Information Act. Yet here we have an absolute travesty of freedom of information.

Within the first few months of this Government's period of office, this report is published, with the Secretary of State putting his blue pencil of censorship through almost half the paragraphs in the summary. My fear is that this report, some of which is interesting and useful, will simply be referred to the Director General of Fair Trading who will allow it to gather dust on the shelves and nothing will be done despite the clear injustices to which the factual part of the report refers.

It is clear from the Secretary of State's speech today that the Government are abolishing the Price Commission for doctrinaire reasons. They claim that prices can be magically controlled by returning to competition within an unbridled free market economy. They claim that price control is irrelevant to the battle against inflation. What this competition within a free market economy has achieved as regards the growth of monopoly makes me shudder. It should make us all shudder. In 1950, the top 100 manufacturing companies in this country represented about 20 per cent. of the output. Twenty years later, the top 100 manufacturing companies represented about half of the output and that trend is still increasing. There is also a deliberate price-fixing mechanism within companies and groups of companies.

I am not talking only about international price-fixing rings such as OPEC over which we have little or no control. There are others over which we could take control. There was the case of Pirelli last year, a well-known company which was involved in a price-fixing ring which deprived the Post Office of £9 million. Who was the chairman of Pirelli at the time?—the chairman of the Tory Party. Do we seriously expect people like that to be in the forefront of the battle against inflation?

The Tory Party is far more interested in filling the pockets of big business at the expense of ordinary working people and their families. Its doctrinaire monetarist policy represents a two-pronged attack on working people in an attempt to make them the scapegoats for inflation that they did not create and in an attempt to sacrifice them to defeat that inflation.

This monetarist policy, on the one hand, means savage cuts in public expenditure in housing, health, education and other essential social services and now, in the second part of the two-pronged attack, allows prices to escalate so that people have to pay more for food, clothing, heating and transport and virtually everything else essential for themselves and their families.

The only people who will benefit from this squalid Bill are the profiteers and the racketeers. For the vast majority the Bill represents yet another attack on their living standards. That is why I hope that the House will reject the Bill.

5.30 p.m.

Mr. Michael Shersby (Uxbridge)

I always enjoy the speeches of the hon. Member for West Stirlingshire (Mr. Canavan). He delivers them with his tongue in his cheek. I can only believe that he lives in a totally unreal world. It is extraordinary that the hon. Gentleman should make such remarks without reference to the substantial cuts that have already been made in taxation or without reference to the substantial increases in the retirement pension and other pension benefits which amount to an increase in expenditure of over £2.7 billion in the coming year. The hon. Gentleman's remarks should, therefore, been seen as nothing more than a rather poor attempt to discredit an important Bill.

There is only one way to keep down prices in the high street—by competition in the shops and between manufacturers. That is more successful than any artificial Commission such as that which existed recently and which cost about £8 million a year to administer. How much better it would be to spend that money more efficiently.

I hope that my right hon. Friend will be able to give me one or two assurances about matters which should be considered in Committee. I turn first to the question of the determination of the public interest. I am sure that my right hon. Friend will understand my uneasiness about the concept that a nonelected, non-judicial body, however eminent, should be entitled to determine what is the public interest. The advice of such a body would be useful but determination of the public interest should be for Parliament or the courts.

I am particularly worried about clause 7(6) of the Bill. I hope that the Secretary of State will consider introducing a wider interpretation of the public interest beyond those matters listed in section 84 of the Fair Trading Act. They were intended to guide the Commission when determining whether a particular matter operated against the public interest. They represent an attempt by Parliament to establish parameters of the public interest in the context of consumer protection. I believe that the public interest extends beyond consumer protection.

According to the explanatory memorandum the Bill provides for the selective investigation and control of practices which restrict competition. I cannot accept that the public interest in regard to these practices should be considered to be no wider than that which relates to the narrow concept covered by the Fair Trading Act. That should be examined.

The Commission is enjoined to have regard to the desirability of five specific conditions. Three involve the promotion of competition, one the promoting of consumer interests and one the maintenance and promotion of a balanced distribution of industry and employment in the United Kingdom.

I am disappointed that there is no suggestion in the Bill that the maintenance of viable manufacturing industries is an essential element in the public interest. I am sure that that must be in my right hon. Friend's mind.

Mr. Nott

I hope that my hon. Friend appreciates that if we were to accede to his request we should have to abandon all our existing monopoly legislation and take everything into the courts. That is a consistent view but his suggestion would lead to us being involved in the same procedures as in the United States with antitrust legislation. Is that the way that my hon. Friend wishes to go? It would be a big step for us to take.

Mr. Shersby

We should certainly examine this in terms of competition policy. I sincerely believe that the determination of public interest is such an important matter that it is not easy to accept that it should be the responsibility of a body such as that proposed. Perhaps it might be better if the courts determined the public interest since they operate independently and impartially.

There is no suggestion in the Bill that the proper interests of industrialists are as important to the general welfare of the country as those of consumers, although I am sure that my right hon. Friend is concerned about the welfare of industry generally. I am particularly worried about that omission.

The long-term viability of industry is essential to the public interest. My right hon. Friend might consider that the obligation upon the Commission to take into account all matters which appear to it to be relevant will ensure that the Commission is mindful of such matters but there is no guarantee of that.

Clause 7(6) of the Bill should not refer simply to section 84 of the Fair Trading Act but should, in addition, require the Commission to take account of the contribution which the body concerned makes to the public interest in the long term. Clause 11(4) would then also have to be re-examined.

There is genuine anxiety about the lack of a right to appeal by companies which are not satisfied, first, with the reasonableness of the Commission's conclusions and, secondly, with the recommendations made as a result of the Commission's investigation.

There is no mention of the Commission's report being made available to the bodies which have been investigated. It is possible that a company might be accused before Parliament of acting against the public interest without that company knowing the interpretation of the public interest upon which the investigation was based and without the opportunity to contest that interpretation.

If a company were not asked for an undertaking under clause 9 it could be accused of acting against the public interest without pre-knowledge of the accusation and when it believed that it was doing no such thing.

There is no opportunity for a company to challenge possibly unjustified charges in advance of those charges being published. That is not in accord with most concepts of justice. Innocence should be assumed until guilt is proved. In a climate which could in the future be politically hostile to business, my right hon. Friend must concede that accusations could be made on contestable grounds.

I hope that provision will be made for a copy of each report by the Commission made under clause 8(1) to be sent to the body which is under investigation and for that body to have the statutory opportunity, within a given period, to make representations to the Secretary of State about the effect of its operation on the public interest. I hope also that the Bill will provide that the Commission's report should not be laid before Parliament, and thereby be made public, until these representations have been considered and that the Secretary of State should be required to inform Parliament of the gist of those representations when the matter is eventually laid before Parliament.

Clause 13 of the Bill provides power for the Secretary of State to direct the Director General of Fair Trading to investigate prices, or charges, of a major public concern. My right hon. Friend has already dealt with that clause in his reply to an earlier intervention. It would be most desirable for any undertaking where these powers were to be used—before that direction was given under this clause—to have the opportunity of being consulted. In the past there has been considerable consultation between the Secretary of State and industry in general. I hope that that will continue and will be a prerequisite whenever it is felt necessary to operate the powers under clause 13.

My right hon. Friend has made it clear that he expects to use those powers very rarely, if at all. I warmly welcome that and entirely accept his assurances on that point, but I suggest that such restraint by future Secretaries of State could not necessarily be assured. I hope, therefore, that an undertaking to the effect that prior consultation would take place, if ever clause 13 was used, could be written into the Bill. That would be an improvement and would be welcomed by industry.

I welcome the Bill in general, and I hope that my right hon. Friend will not feel that I am in any way carping or complaining about its general tenor. On the contrary, I think that it is one of the most important steps he has taken in this Parliament to dismantle an apparatus which was entirely bogus in its operation, which did not succeed in keeping prices down and was merely part of the illusion used by the last Labour Government in an attempt to delude the electorate as prices doubled during their administration. I wish him success in carrying the Bill through swiftly and putting it on the statute book.

5.42 p.m.

Mr. Ioan Evans (Aberdare)

I oppose the Bill. This has been an interesting adjourned debate because we have seen the need for the Government to give active support to some kind of Price Commission as a result of what has happened during the Summer Recess. I am sure that the Minister approaches the Bill with mixed feelings. During the time I have been in this House I have never attended a Second Reading debate where a Minister made a two-minute speech at the Dispatch Box and then sat down as though he were not quite sure that he was doing the right thing.

After that two-minute speech—during which the Minister never spoke about the principles of the Bill—he joined in at the end of the debate and instead of addressing himself to the terms of the clauses he gave a reply to what hon. Members had said about the Bill. That was a task which, one might think, should have been given to the Minister for Consumer Affairs.

This is a difficult measure. The promise to abolish the Price Commission was not made to the electorate during the election campaign. Time and again members of the then Opposition stated that they had no intention of removing the Price Commission. According to the Tory manifesto it was intended to review the workings of the Commission. A review does not imply abolition.

We returned to the House and looked for any mention of a review in the Queen's Speech. There was no mention of it. The Prime Minister came to the Dispatch Box saying, as an aside, that the Price Commission was to be abolished. It was a sad thing because the Price Commmission was not set up by a Labour Government. It was set up by a previous Conservative Government. When we were previously in difficulties with inflation, a Tory Government, between 1970 and 1974, printed money to get us out of our difficulties. The Tories wanted to be seen then to be doing something about prices. So the Price Commission and the pay code were set up by a Tory Government. The Labour Government carried on with the Price Commission, and one could argue that more might have been done to deal with prices. We must recall that prices in this country are not wholly and completely determined by Governments. There are other external factors. The last Labour Government lived through a period when there was a 400 per cent. increase in the price of oil. Did we see any recognition from the Tory Benches at that time that the Government and the nation were facing problems because of that 400 per cent. increase?

We were told that all our problems were due to Socialist policies. I wish that Socialist policies had been pursued by the Labour Government. I feel that their policies were not Socialist enough. For a long period of that Parliament we were dependent upon Liberal Party support. The Labour Government had no majority. In an attempt to deal with prices and inflation, the previous Government sought to restrain wage demands.

We have recently seen the examples of wage settlements in ITV and The Times. I do not know whether the Government are concerned about the percentage increases that have been agreed in both cases. From what I hear in this debate, the Government are not concerned. They want market forces to operate. If those employed in ITV can, quite justifiably, point to the massive profits being made by the independent TV companies, they are entitled to say that it there is to be a free-for-all and vast profits are to be made, they want a share of them. Those workers are, therefore, putting in for substantial wage increases.

What are the Government doing? They are sitting on the sidelines. Soon we shall have demands from workers in local government. They, and lower paid workers, will soon be making applications and the Government will be involved. Will the Government say that local authority workers are not to have any, or only minimal, increases? It has been leaked out that the Secretary of State for Industry has said that the going rate is 17½ per cent.—that inflation is at 17½ per cent. and that workers are, therefore, justified in putting in for a 17½ per cent. wage increase.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

My right hon. Friend said nothing of the sort. One can listen only to so much of this rubbish. It is a complete travesty of what the Minister said. Where is the money to come from? The hon. Member for Aberdare (Mr. Evans) talks of prices, but how can we force people to produce if producing sends them bankrupt? That is typical of the rubbish which led to the downfall of the previous Labour Government.

Mr. Evans

We can analyse why the last Government were defeated. The Tory Party promised that it would reduce the cost of living—though it has since pursued deliberate policies aimed at increasing the cost of living. This has made the vast majority of people in this country feel that they have been greatly cheated. The biggest "con" trick ever perpetrated on the people of this country is represented by the policies being pursued by the Tory Party.

The main question is whether the procedures in the Bill will be better than those already operated by the Price Commission. The Bill proposes a two-stage investigation procedure aimed at competitive prices. If in the first stage of the investigation the Director General obtains information which shows that an anti-competitive practice is being followed by a business, he can seek an undertaking from the business that the practice will cease.

Failing receipt of a satisfactory undertaking, he can make a competition reference to the Monopolies and Mergers Commission. If, following the receipt of this report, an anti-competitive practice is proven, the Secretary of State may make an order prohibiting the practice or remedying its adverse effects.

The Price Commission's investigations were aimed at determining whether prices or profit margins were reasonable in the light of certain criteria. There are seven such criteria. The first is an allowance for costs unavoidably incurred in the efficient supply of goods and services, taking account of the maintenance of the value of the business. The second is the encouragement of the reduction of costs by improving the use of resources while ensuring that the consumer shares in the resulting benefits. The third is the earning of profits giving a real rate of return on capital employed sufficient to meet the costs of finance, including compensation for the business risk, and to sustain investment in expansion and the creation of technical improvements. The fourth is the maintenance of quality and the satisfaction of changing consumer demands for goods and services. The fifth is the encouragement of competition as a contribution to price stability or, where competition is unavoidably limited, the protection of the consumer from the abuse of market power. Sixth is the promotion of equilibrium between supply and demand and the avoidance of serious shortages or adverse effects on the balance of payments. The seventh criterion is the maintenance and expansion of the British share of world markets.

The proposed procedures in the Bill, which abolishes the Commission as set up by the previous Conservative Government under good and fair criteria, are far too narrow. Is it inconceivable that a company may not be engaging in an anticompetitive practice but simply may be inefficient? Equally, is it to be considered an anti-competitive practice if a company engages in profiteering? The Price Commission's terms of reference allow for a far more positive contribution to improving the British economy than do the new terms of reference which are to be given to the Director General of Fair Trading.

The Bill assumes that the presence or absence of competition is the main determinant of price, but that is wrong. Scale inhibits the entry of new firms to certain sectors. Reports of the Monopolies and Mergers Commission in the past have concluded that a monopolistic or oligo-polistic situation in the home market may be in the best interests of exports. In other words, large scale is necessary to compete in world markets. The ethic of the Bill is that so long as a firm is competitive, as determined by its critereia, it is quite irrelevant how it goes about pricing its goods and how often it raises its prices.

Prices are an inherently inequitable and socially divisive allocatory mechanism. If the prices of goods are increased not everyone can afford to buy the goods—for example, people on fixed incomes, pensioners, students and so on. Price increases make no difference to the people who before the Budget were paying 83 per cent. in income tax and are now paying only 60 per cent. Such people are not so concerned about price increases. The ethic of the Bill, therefore, is to those who have will be granted choice, while those who have not will have no choice.

Where goods are in short supply increased demand can only bid up the price. The truth of that fact is writ large in the spiralling of petrol prices in the past few months. In such cases we need not more competition but planning—a system which has socially just priorities with supply allocated according to the priorities. In other words, we need enlightened intervention in the economy, not simply less intervention.

The Government have announced two measures for the investigation of public industry. The first concerns the railway monopoly in commuter traffic in London. I do not know what proposals for competition the Government have in mind. Is another railway to compete with British Railways? I am pleased to see the Minister shake her head and indicating, apparently, that that is not to be the case. The railways always have had a monopoly.

The second aspect concerns the Post Office, and that reference is causing deep anxiety among Post Office workers. I believe that it will also cause deep anxiety among users of the Post Office service. I have a lengthy letter from a group of workers belonging to the Post Office Engineering Union. They say It is right that a critical eye should be passed over the Post Office. The Post Office is a publicly owned corporation and should be accountable to the consumers it serves. But criticism should be informed and constructive, and much of the criticism aimed at the Post Office is neither. The Post Office is only 98 per cent. perfect "— that may be a bit of an exaggeration— but we believe that the services it provides are very impressive and are improving all the time. The members of my branch, in common with the Post Office workers, are saddened by the regular and inaccurate attacks made upon them. It is because of these attacks that the Government have referred the Inner London postal monopoly to the Monopolies Commission. The postal monopoly is in good hands. To end this monopoly would damage the Post Office seriously, permanently and to the detriment of consumers and employees. I believe that that is right. The Post Office service has always been in public ownership. Are the Government now suggesting that a separate postal organisation should work in competition with the Post Office? Or do they propose that the more profitable sectors of the Post Office, such as in the inner London area, should be hived off to private enterprise, leading to the stupid situation of half a dozen postmen employed by different postal authorities, some of them in the private sector, covering the same ground?

The Government are living in cloud-cuckoo-land if they think that competition at home will solve the problems that face us abroad. British Airways, for example, faces sufficient competition internationally. It will be a backward step if the Government now seek to hive off certain sectors of the airline and hand them back to private enterprise which will exploit them, contrary to the interest of the consumer.

There is also the example of the Post Office. There are Labour Members who believe that the postal service and the telecommunications sector should be separated. But do the Government propose that the labour-intensive postal service should be retained in the public sector while the highly profitable, increasingly mechanised telecommunications side is handed to private enterprise on a plate to enable speculators to make vast profits?

There is a tremendous move by the Government to sell off vast areas of the public sector. Those assets are owned by the British people. During the past year the Post Office made a profit of over £350 million—£1 million profit a day coming back to the British people through the Exchequer. Now the Government, with all the financial support of big business, are considering carving it and other public enterprises up to hand over to private enterprise. That is what the Bill is partly about.

I do not believe that the Bill will be defeated tonight. There are numbers, if there are no arguments, on the Conservative Benches. I hope, however, that before this Session is out the Government come to realise that they cannot allow market forces to determine prices and wages. They may have to introduce another Bill, just as the Conservative Government did in 1970–74 in connection with the Price Commission. I hope that when the Minister replies she will bear that in mind, because so far she has not played a good part in defending the consumer, although that may be no fault of her own. She was a Shadow spokesman on prices, but it is not her fault that the consumer affairs Department has been abolished.

The Government will not intervene in in prices. We heard from the Secretary of State that prices may rip. Companies will be free to increase the price of their products and we shall depend on market forces to determine the price of an article. I believe that the Government will regret the words they have uttered in the debate. They will come forward very soon with a measure to restore the Price Commission although the replacement body may have a different name. A good Government who are concerned with the interests of the consumer have to intervene rather than allow market forces to permit prices to rip.

6 p.m.

Mr. John Fraser (Norwood)

First, congratulate the two hon. Members who made their maiden speeches in a debate that has been spread over three months. My hon. Friend the Member for Glasgow, Govan (Mr. McMahon) made a passionate and forceful speech about not the Bill but his constituency. My hon. Friend made no apology for doing so. Bearing in mind what has happened since the Government took office, his constituency will need such a champion.

The second maiden speech was made by the hon. Member for Loughborough (Mr. Dorrell). It was an impressive and thoughtful speech and extremely realistic. It was along the lines of the speech of my hon. Friend the Member for Aberdare (Mr. Evans). The hon. Gentleman said "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 lay down hostages to fortune." The hon. Gentleman may find that we are rather nearer to fortune taking a hostage than we were in July.

It is extraordinary that in July, when we started the Second Reading, the rate of inflation was 11.4 per cent. After a further three months of Conservative Government, and towards the end of Second Reading, the rate is 16.5 per cent. Is there any precedent for the rate of inflation increasing by almost 50 per cent. during the Second Reading of a Bill designed to abolish any form of price control? It is an extraordinary situation.

That situation is matched only by the extraordinary speech of the Secretary of State on the first day of the debate. On that occasion he treated the House with discourtesy and contempt. We have cause to worry about that attitude and the discourtesy and contempt with which he now treats consumers. In a rather lengthy speech today the right hon. Gentleman said, in effect, that he abdicates any possible responsibility for the control of prices apart from the operation of competition. He seems to have gone out of his way in the past few days to abuse consumers. He has talked about arrogant consumerism and referred to price control as bureaucracy and bumf.

The right hon. Gentleman means what he says about cutting out verbiage. He has certainly cut out some verbiage from the report on the manufacture and distribution of car parts. In a report which is its swan song the Price Commission stated: In practice the exclusivity of supply of car parts resulting from the vehicle franchise system is an unreasonable restraint on competition and is a matter which ought to be rectified. That is adequate evidence that the Commission dealt with anti-competitive practices. In fact, it developed an extremely good system for rooting out practices that operated against competition.

The car companies should have been competing against one another. We are not talking about a monopolist. A number of car manufacturing companies should have acted competitively and they did not. It is the production of reports such as the one on the manufacture and distribution of car parts that makes me regret the passing of the Price Commission, or more particularly the passing of the Commission's powers.

I should not object to the abolition of the Price Commission if its powers, responsibilities, investigative techniques and ability to act quickly were to be transferred to another body. In fact, such a transfer was under consideration when the previous Administration left office. It is a great mistake to abolish all the Commission's power and expertise. The right hon. Gentleman, who cannot be bothered to listen to speeches and who cannot be bothered to make them on occasions, put his blue pencil through the report.

One of the most interesting parts of the report is found on page 83. The Commission stated: We therefore illustrate the major types of pricing behaviour found. There are a number of illustrations, but paragraphs 8.11, 8.12, 8.13 and 8.14 are asterisked. The report continues: Any understanding of why the differentials we have illustrated"— I shall not read any further. There has been an extraordinary degree of removal.

Mr. Nott

The hon. Gentleman is being silly.

Mr. Fraser

The right hon. Gentleman says that I am being silly, but I was responsible for a long period for studying Monopolies and Mergers Commission reports and Price Commission reports and for approving deletions. I cannot remember any occasion when we exercised responsibility for confidentiality and went to the degree of excision which the right hon. Gentleman has exercised.

Mr. Nott

rose— —

Mr. Fraser

No, I shall not give way. The right hon. Gentleman had about an hour and I shall have my turn. He will have a chance to advance his argument on another occasion.

Mr. F. A. Burden (Gillingham)

Why does not the hon. Member for Norwood (Mr. Fraser) give way?

Mr. Fraser

I shall exhibit the degree of bad temper that the right hon. Gentleman displayed at the beginning of the debate.

The purpose of the Bill is to abolish the Price Commission and to substitute a small amount of window-dressing. The Bill has a great deal to do with the inflation prospect. I wish that we knew what the inflation prospect was. The Minister for Consumer Affairs was not able to say anything about it yesterday. She was pressed by three hon. Members, including my right hon. Friend the Leader of the Opposition. She was asked to tell us when we would return to single-figure inflation. She said that she could not make wrong forecasts. When she spoke from the Opposition Front Bench she used to boast a great deal about the ability of the then Opposition to make forecasts. On one occasion she said: may I offer him the services of the Conservative research department statisticians to explain … why my forecasts … are proving right and his are proving wrong?"—[Official Report, 5 March 1979; Vol. 963, c. 887.] The right hon. Lady has the advantage of the statisticians at Conservative Party Central Office as well as the advantage of the Government's statistical service. However, she has become shy. The boasting has ceased. She cannot tell us—I am willing to bet some money that she will not tell us—when inflation will return to single figures. If she cannot do that, perhaps she will give us a categorical assurance that inflation will not reach 20 per cent. within the next six months. Perhaps she is able to give us that sort of assurance.

The Bill is directly relevant to the inflation prospect. Inflation is a serious enemy. That is recognised by all right hon. and hon. Members. It is an enemy of full employment. It is an enemy of our competitiveness and the value of our currency. It is an enemy of social stability itself.

We all know that there is no single cure. The control of money supply, a monetary policy, or anything of that sort, is not in itself a cure. There is no one cure for inflation. We all know that there is no single cause of inflation. As the previous Administration learned, the problems of inflation are extremely difficult to tackle. Some of the causes are beyond our control. If there is an oil price rise or a raw materials price rise in imported goods, there is little that we can do. Imported costs are an element in inflation as are wages. The value of the pound can be an element in inflation for good or evil according to whether the value of our currency increases or decreases. Interest rates have an effect on inflation. We cannot legislate inflation away. The one area where we can have some responsibility is price control and the control of monopolies and anticompetitive practice, and the Government are choosing to abandon one of the methods of controlling inflation.

I agree that the value of the Price Commission could never be measured by the specific prices that it froze. I agree that we cannot measure the value of safety legislation by the number of prosecutions that take place. However, the existence of the Commission had two overwhelming advantages. The first advantage was that the mere existence of the power to investigate prices acted as a deterrent. Indeed, that was one of the accusations made by the right hon. Lady. The mere power to investigate acted as a deterrent to those who would seek to exploit consumers.

The value of the Price Commission could not be measured by the number of times that it or the Secretary of State exercised its powers. Its real power was measured by the number of times that firms did not apply for a price increase because they did not want to be held publicly to account. There was real value in the number of times that it did not have to use its powers.

That was the first overwhelming advantage. The second overwhelming advantage of the existence of the Price Commission was that it demonstrated that Governments were concerned about prices and were prepared to do something about them. When the Government talked about the restraints on companies and trade unions—a difficult task—and when they undertook the job of discussing the inflation prospects with both sides of industry, they had something to offer in return. They were able to offer their own power to control prices.

The repeal of price controls is not merely the elimination of bumf and bureaucracy. It is much more than that. It is total abdication of a responsibility. This is what the Government are saying: "The era of co-operation and discussion with the trade unions, in particular, has disappeared. From now on we are declaring a holy monetary war upon the ordinary working people of this country." However, once the Bill becomes law the Government will have abandoned their ability to carry out their side of the bargain.

The second matter I want to examine is the effect on competition of abolishing the Price Commission. Firms which genuinely competed—there are many sectors which genuinely compete, especially the food retail sector, which is a fine example—had nothing to fear from the Price Commission. Firms that genuinely compete have nothing to fear from the Bill. The firms that must worry are those that do not compete. All the evidence of Price Commission reports is that the Commission intervened when competition was not working or could not work. Most of the work of the Commission is about noncompetitive situations—I refer to the latest report—where there should be competition but it does not exist. As a result of its investigations, the Price Commission stung the brewers, the bakers, the bankers, the biscuit manufacturers and many others, including the friends of the Tory Party and the monopolists. It acted effectively. The most serious allegation that the Conservative Party could make against the Price Commission was that it did its job and was effective and speedy in doing it. That is why it is for the chop—because the Commission had the impertinence to challenge the power and prerogatives of big business, especially the monopolies.

The idea that competition alone can restrain prices in the private sector as much as in the public sector is a nonsense and a myth. Let me give one example from the review of monopolies policy, to which the Minister referred. By 1968—circumstances have changed much for the worse since then—the five largest firms accounted for 90 per cent. or more of the domestic net output in nearly one-quarter of all separately identifiable product groups. That is one example of the existing degree of concentration.

It is well known that the 100 largest firms in the country account for about 50 per cent. of all United Kingdom manufacturing output. Even as long ago as 1972 they accounted for 36 per cent. of employment in the private sector. There cannot be perfect competition in those circumstances. We must have a body that intervenes and brings public accountability to monopolies and concentrations and those circumstances in which competition should, but does not, work.

I welcome some of the provisions of the Bill, such as those for anti-competitive practices. However, they are not an adequate substitute for the present powers. Nor is the existence of the Monopolies and Mergers Commission an adequate substitute. Time and again the Minister reverts to the argument that, if we do not have the Price Commission but discover that a monopoly is making a monopoly profit, we can refer it to the Monopolies and Mergers Commission. However, that is a grossly unsatisfactory alternative.

I give one example comparing the work of the Monopolies and Mergers Commission and the Price Commission. British Gypsum Limited has a complete monopoly of gypsum-based products, including plasterboard. As a monopoly in that area it was referred to the Monopolies and Mergers Commission on 4 September 1972, after about three or six months' consideration by the Government. The Director General of Fair Trading did not exist then. The report of the Commission was published on 21 January 1974. Taking the period of investigation and selection before the investigation, and negotiation after the investigation to obtain an undertaking, a period of something like two to three years elapsed for the Monopolies and Mergers Commission investigation of British Gypsum Limited. The only recommendation was an end to delivered prices.

The Price Commission also looked at British Gypsum Limited. It described British Gypsum Limited, as did the Monopolies and Mergers Commission, as a complete monopoly. However, it was able to investigate the price structure of British Gypsum Limited within three months. On the one hand, the Monopolies and Mergers Commission took three years, but the Price Commission, dealing with exactly the same firm and phenomenon, took three months. If I must say which process involved bureaucracy and bumf, I would use those words about the operations of the Monopolies and Mergers Commission, not about the Price Commission.

If there was a price abuse by a monopoly there was neither benefit nor relief for the consumer during the entire period of the investigation. Indeed, it was only some months after the report was published that there was any relief. On the other hand, where there was a Price Commission investigation there was a freeze at the beginning of the investigation, subject to interim price rises, and the possibility of an immediate freeze or restraint on prices immediately after the publication of the report. I could make other comparisons. However, I shall not detain the House with them. That demonstrates that in many situations the Price Commission was far more effective and rapid in dealing with a monopoly situation.

It is not only monopolies that we must worry about—it is all those situations where there should be but is not competition. For instance, there was a Price Commission investigation into funeral charges. There are many funeral directors who should be competing against one another. In fact, the Price Commission discovered an umbrella prices arrangement. The human circumstances of paying for a funeral mean that competition does not operate. When someone dies one does not go from one funeral parlour to another obtaining quotations. The person who seeks a quotation is often sad and bereaved. He does not try to obtain quotations. The answers to that problem flowed from investigations into price displays and quotations.

I cite the case of domestic television rentals. Six large firms are involved. There should be massive competition between those six leading firms, with 58 per cent. of the market between them. However, they did not behave in a competitive way. Time and time again we see such price parallelism.

I cite an example where competition does not work but where there could not be a monopoly reference. I refer to footwear. The largest footwear outlet—the British Shoe Corporation—controls, according to the Price Commission, 20 per cent. of the market. There is no possibility of a Monopolies and Mergers Commission reference there as the firm does not enjoy a statutory 25 per cent. control of the market. However, the Price Commission discovered that competition was not working as it should. As a result of the report on retail footwear we were able to negotiate changes in recommended prices and prices charged to bring about a greater degree of competition.

The same was true with tea blending, where four firms possessed 85 per cent. of the market. They ought to have been competing against one another. Competition was not taking place. The intervention and report of the Price Commission led to a tumbling in price.

Mr. Dorrell

The hon. Gentleman has given a long list of places in the private sector in which he says that competition is not taking place. Are not those precisely the spheres of activity covered completely under clause 2 of the Bill, and which have never been covered by any legislation in the past?

Mr. Fraser

No, they are not, and will tell the hon. Gentleman why they are not covered. We have to explore the interpretation of clause 2, which speaks of a person engaging in an anti-competitive practice. We are talking here of the discovery of practices on the part of a number of firms. We have not been told, for example, that the worst offence is price parallelism. There may be no restrictive agreements between the firms concerned and no exchange of information, but they behave as if they were a monopoly. That is the practice of price parallelism.

It is extremely difficult in practice to nail price parallelism. The best way to nail it and to nail monopoly profit is to put on a price restriction. The practice that one is complaining about is that of making too much money by charging too much. Perhaps the right hon. Lady will answer this question. Suppose that a monopolist makes a monopoly profit. If that is all he does, and if he does not engage in refusal to supply or in any other such practices—in other words, if he engages in no anti-competitive practice at all, apart from charging too much for his goods—is that an anti-competitive practice which can be investigated under clause 2?

Perhaps the right hon. Lady will also answer the question put to her by the hon. Friend the Member for Loughborough. If a group of companies does nothing except engage in price parallelism, without agreement, and makes too much profit, charging prices which are too high, is that an anti-competitive practice under clause 2? The answers to those questions would elucidate the debate considerably.

The Bill has three faces. First, it has the face of fraud. Secondly, it has the face of truth. Thirdly, it has the face of self-deception. The fraud is a fraud upon the electorate. There was nothing in the Conservative Party election manifesto about the abolition of the Price Commission, yet the decision was taken within days of the Tories coming to power. Coupled with the increase in rates of VAT, no one, having listened to the quotations given by my hon. Friends, can defend the charge that the public were defrauded by what was said about VAT by the present Chancellor of the Exchequer. There is a saying that dead men cannot lie, but dead sheep can.

Paradoxically, the Bill represents the truth as the Tory Party sees it. I do not believe that it is the truth. I believe that it is a heresy. But the Bill represents the Tory Party's blind belief in the forces of competition, which, as I have demonstrated, frequently cannot work. It represents the Tory Party's blind belief that the use of monetarism alone can bring about a reduction in the rate of inflation.

The Bill has the quality of self-deception, because the Government deceive themselves if they believe that competition can work in all circumstances. It does not. I shall mention two cases from my experience as a Minister to demonstrate the difficulties involved. One industrialist conveyed a message to me that, if I did not stop a prosecution by the Director General of Fair Trading under the resale prices legislation, he would stop a great deal of investment in North Wales, where there was very high unemployment. That was a very large British company.

A very large electrical company in this country informed me that, if I did not automatically approve a merger that would give it a very large share of the market, it would immediately reconsider its plans for investment in a branch of electrical goods in this country.

I am not attacking the people concerned. I think that they had genuine problems about employment. There was a genuine difficulty. But if the Government imagine for one moment that they can constrain prices merely by competition, they are deceiving themselves and deceiving the country.

6.25 p.m.

The Minister for Consumer Affairs (Mrs. Sally Oppenheim)

I rise to reply to the debate, facing serried ranks of Labour Members who are deeply concerned about the abolition of price control. [Hon. Members: "Where are they?"]

I should like to be associated with the tribute paid earlier by my right hon. Friend, and by the hon. Member for Norwood (Mr. Fraser), to the hon. Member for Glasgow, Govan (Mr. McMahon) on his maiden speech. It was robust and sincere—two qualities that will stand him in very good stead in this House.

I am also very happy to congratulate my hon. Friend the Member for Loughborough (Mr. Dorrell). His was a very good speech, although not a maiden speech.

I congratulate my hon. Friend the Member for Romford (Mr. Neubert) on his well-informed and realistic contribution earlier in the debate. He knows perhaps as much as any of us about this subject, and his contribution was very valuable.

I am afraid, however, that the only thing that was clear from the contribution of the hon. Member for West Stirling-shire (Mr. Canavan) was that he is certainly not one of the doomed men referred to in the Sunday papers in the latest episode of the Labour Party's internal vendetta. He does not come into that category. I sometimes think that when Labour Members rise they should say which Labour Party they represent, because there are now two distinct Labour parties, one with its ideologies and policies deeply rooted in the 1930s and the other with its ideologies and policies deeply rooted in the 1920s.

The House has had an important debate on a measure which represents the first stage of the strengthened competition policy to which the Government are committed. Although the Bill is only a first stage, I must say to those hon. Members who have sought during the debate to denigrate the importance of the Bill that it is the most significant measure aimed at strengthening competition to be introduced in this House since the Fair Trading Act 1973.

In strengthening the Office of Fair Trading and the Monopolies and Mergers Commission, and giving them new powers which will complement their existing powers, we are bringing about a natural evolution in competition policy. We believe that the measure will give considerable stimulus to competition in this country.

Contrary to what the hon. Member for Norwood has said, consumer power—the only thing that matters in the end—depends on one thing alone, and that is competition. Where competition is limited or distorted, or where choice does not exist, the power of the consumer is undermined. When neither competition nor choice exists, the consumer is rendered powerless.

Example after example has shown that competition has a far more important part to play in reducing prices and raising standards than any short-term price controls can ever do. I put this question to those hon. Members who have sought to sneer at the benefits of competition as compared with price controls. When did any Price Commission reduce prices on the scale of the recent Marks and Spencer price reductions, without the help of any price control but with the benefit of market forces and competition?

The measure will make it possible for many of the uncompetitive practices, which artificially or unfairly prevent, restrict or distort competition, to be sought out and dealt with. It represents a progressive step. Some would even call it a radical step. We do not claim, however, that competition alone can overcome inflation. We claim that it is a very important component in any counter-inflation strategy and that, together with our economy policies, it will prove far more effective in combating inflation in the long term than the short-term superficial measures and the political policies of the Labour Party, all of which failed so dismally.

Predictably enough, during the debate we have had the ritual wailing and lamentation from Opposition Members about the proposed abolition of the Price Commission. But do they really think that their Greek chorus has any credibility? Do they believe that a body that cost £7½ million and that restrained the retail price index by one-tenth of 1 per cent. has any relevance in any fight against inflation? At best, it can temporarily disguise the symptoms, as I demonstrated yesterday.

However, I ask Opposition Members to pause for a moment in their hour of bereavement. They may wish to reflect whether their attitudes are consistent or their arguments valid. They are bewailing the removal of an institution which, in its first year, according to its own reckoning, restrained about £120 million of profitability in British industry, affecting the retail price index by about one-tenth of 1 per cent. But in August 1978 the Labour Government introduced a measure which released not £120 million, but £6,000 million of profitability with a potential, in theory, of affecting the retail price index not by one-tenth of 1 per cent., but by over 4 per cent. I say "in theory" because it never happened. Competition prevented it. However, on that occasion not one Labour Member raised a murmur of dissent. Not one Labour Member voted against it. It was not even taken on the Floor of the House; it was taken upstairs in Standing Committee. I am not criticising the action of the previous Government; I am highlighting the inconsistency of Opposition Members in their attitude to the debate today. The same goes for the validity of their arguments.

I do not question the sincerity of the Opposition's concern about rising prices, but I challenge their proposition that the Price Commission has any role whatsoever to play in restricting rising prices. Let me consider the record and remind the House of what I said in July. Out of 44 investigations which have taken place since the inception of the Price Commission, in only one case was a price increase, in effect, reduced as opposed to merely being deferred. During the Price Commission's first year—between August 1977 and 1978—in 18 out of 24 investigations the full increases were allowed either during or at the end of the investigations. From that we can only conclude that the vast majority of price increases were justified from the very beginning and that the investigations were an expensive waste of time and resources.

Therefore, in 1977–78, for £7½ million, involving the employment of 500 people and the use of an extensive building, the British taxpayer and consumer got in return a short-term marginal price advantage in things such as cement, plasterboard, some magazines and dry batteries, while more recently the Price Commission actually recommended that prices should be higher than the industries had asked for and, more recently still, we have a major manufacturing company announcing that it was able to reduce its prices as a direct result of the abolition of the Price Commission.

These were the achievements of the body to which Labour Members want to cling so desperately. These were the achievements of the body that the right hon. Member for Lanarkshire, North (Mr. Smith) described earlier as a vital part of the nation's defence against inflation. It is preposterous for Opposition Members to claim any such thing for the Price Commission and the role that it played.

The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), the former Secretary of State for Prices and Consumer Protection, who was responsible for the policy, not only said, as my right hon. Friend implied, that it had no significant effect on inflation but indicated in Committee that he did not envisage the long-term existence of the Price Commission in its original form. Indeed, the Labour Government's Green Paper recommended that the Price Commission should be merged with the Monopolies and Mergers Commission. We are strengthening the Commission not by merging the Price Commission with it but by giving it now powers more appropriate to competition policy and more relevant to a long-term counter-inflation strategy.

The difference in approach is fundamental. We are moving away from a policy aimed at disguising inflation once it has taken place towards a policy aimed at tackling one of the causes of inflation and trying to prevent it from happening in the first place. That is the principle upon which we shall be voting for the Bill tonight and that is the principle upon which the Opposition will be voting against it.

Having dealt with a number of general points arising from the debate, in the limited time available to me I should like to deal with some of the particular points that have been made.

The right hon. Member for Lanarkshire, North dwelt lovingly on the value of the pre-notification procedures. I refer him to the words of the ex-chairman of the Price Commission in an article in The Observer on 5 August in which he said: In reality, we intervened in less than 1 per cent. of the price increases notified to us. Does the right hon. Gentleman think that was a big disincentive to people to notify price increases?

At another point the right hon. Gentleman referred, as did the right hon. Member for Down, South (Mr. Powell) yesterday at Question Time, to the inconsistency of our claim that the Price Commission was holding back investment at the same time as postulating, as we do, that it did not restrain inflation.

The right hon. Gentleman fails to understand that what held back investment was not price controls but the uncertainty that they created. No one knew why or where the axe would fall next. That was the reason why investment did not take place, and that situatlon was greatly exacerbated by the removal of safeguards earlier this year.

Some Opposition Members, including the hon. Member for Norwood, have expressed doubts about whether the measure will be more effective in terms of competition policy than the Price Commission. Although the right hon. Member for Sparkbrook frequently made claims for the competition role of the Price Commission, particularly when it became clear that it had no counter-inflation role, and although, as the hon. Member for Norwood said, the Price Commission referred to various uncompetitive practices, the fact remains that the former Secretary of State referred only one of those practices to the Monopolies and Mergers Commission. He referred only one because it was difficult to refer those other instances to the Monopolies and Mergers Commission. When the Bill receives Royal Assent, those practices will be referable far more readily and easily. Therefore, this measure will enable the Director General of Fair Trading to act on those very cases to which the hon. Member for Norwood referred in a swifter and more realistic way than was possible before. If the hon. Gentleman contests that, perhaps he will say why so few references were made by his right hon. Friend as a result of recommendations by the Price Commission.

Mr. John Fraser

I was not going to say that. I was about to ask whether the right hon. Lady will now confirm that charging too high a price, particularly by a monopolist, could be an anti-competitive practice under clause 2.

Mrs. Oppenheim

I shall come to that matter. I should like to deal with the point made by the hon. Gentleman that, according to him—I may not be quoting him exactly—

Mr. Fraser

On this point.

Mrs. Oppenheim

On this point I was—the Price Commission dealt only in cases where there was a suspicion of anticompetitive practices or a monopoly situation. Is the hon. Gentleman seriously saying that, for example, Royal Doulton was occupying a monopoly in the market?

As regards the car spares report, the exclusive dealing to which the hon. Gentleman referred will be capable of much swifter and easier action after the Bill has Royal Assent, if the Director General considers that it is relevant to make such an investigation, than under the old system.

My hon. Friend the Member for Uxbridge (Mr. Shersby) wanted an interpretation of the public interest to be codified by Parliament in the Bill. This was not an approach which commended itself to us when we were considering the provisions of the Bill, but I shall certainly take note of his points. The points that he made about the right of appeal are met, I think, by the fact that the Secretary of State has a veto at every stage, so that appeals can be made to him.

Since a substantial part of the Bill was based on a number of recommendations published in a Green Paper when the hon. Member for Norwood was a Minister, I should have thought that he would have been far less grudging than he was in conceding how useful a measure this is likely to be.

On the question that the hon. Member for Norwood raised regarding a high price charged by a monopolist and whether this would be referable, that might be as a result of an anti-competitive practice and the Director General of Fair Trading, on the basis of that high price existing in the case of a total monopolist, could undertake an investigation to see whether there were any anti-competitive practices leading to the high price, such as parallel pricing, to which the hon. Member for Norwood referred, and which, in fact, was already referable under the Fair Trading Act.—

Mr. John Fraser


Mrs. Oppenheim

I cannot give way to the hon. Gentleman. I have very limited time. I did not intervene during his speech.

The hon. Member for Norwood also dwelt mainly on the delusion—common in his party—that the controls that the Labour Government invented had some sort of beneficial effect. He dwelt very little, however, on the fact that those controls did not prevent prices from more than doubling when he was a Minister; and it is not a recipe to be recommended or copied by us.

A number of Opposition Members expressed scepticism about the Bill and whether the measures in it were likely to be important. The two new processes in the Bill which I emphasise relate to the uncompetitive practices, which can obviously be dealt with more swiftly, and the referral of public sector monopolies. This is where the hon. Member for Aberdare (Mr. Evans) got it all wrong, because the whole basis of the reference of abuse of competition would be in relation specifically to the question of costs, efficiency and service to consumers. Indeed, the Monopolies and Mergers Commission will be able to report, and the order-making powers under the Fair Trading Act will be available in this context.

We attach very great importance to this provision in the Bill because here we are dealing with a situation where choice is limited. It is not tolerable for consumers of goods and services of the nationalised industries to subsidise through high prices, inefficiency, waste or over-manning, if these exist because the disciplines of competition are missing. We believe that this adds a valuable measure of consumer protection and we are surprised that the right hon. Member for Lanarkshire, North complained of a measure which merely redresses the balance in favour of the consumer. I make no apologies for that, because the consumer is at a disadvantage under the present system.

As I said at the beginning, the Bill is only a first step and not the last word on competition policy. The proposals in the Bill represent a genuine and fundamental initiative which we believe will stimulate competition considerably. It is not a cosmetic policy. The benefits will not be found overnight, but we believe that competition is a potent weapon, both in the fight against inflation and in the establishment of consumer sovereignty. We saw that the short-term manipulation of prices which characterised the policies of the last Government did not work. We have inherited the backlog of that failure. We believe that our approach offers a more realistic chance of longterm and sustained success. I have no hesitation in commending the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 302, Noes 235.

Division No. 83] AYES [6.45 p.m.
Adley, Robert Butcher, John Fookes, Miss Janet
Aitken, Jonathan Butler, Hon Adam Forman, Nigel
Alexander, Richard Cadbury, Jocelyn Fowler, Rt Hon Norman
Amery, Rt Hon Julian Carlisle, John (Luton West) Fox, Marcus
Ancram, Michael Carlisle, Kenneth (Lincoln) Fraser, Rt Hon H. (Stafford & St)
Arnold, Tom Carlisle, Rt Hon Mark (Runcorn) Fraser, Peter (South Angus)
Aspinwall, Jack Chalker, Mrs Lynda Freud, Clement
Atkins, Robert (Preston North) Channon, Paul Fry, Peter
Atkinson, David (B'mouth, East) Chapman, Sydney Galbraith, Hon T. G. D.
Baker, Kenneth (St. Marylebone) Churchill, W. S. Gardiner, George (Reigate)
Baker, Nicholas (North Dorset) Clark, Hon Alan (Plymouth, Sutton) Gardner, Edward (South Fylde)
Beaumont-Dark, Anthony Clark, Dr William (Croydon South) Garel-Jones, Tristan
Belth, A. J Clarke, Kenneth (Rushcliffe) Gilmour, Rt Hon Sir Ian
Bell, Ronald Clegg, Walter Goodhart, Philip
Bendall, Vivian Cockeram, Eric Gorst, John
Bennett, Sir Frederic (Torbay) Colvin, Michael Gow, Ian
Benyon, Thomas (Abingdon) Cope, John Gower, Sir Raymond
Benyon, W. (Buckingham) Cormack, Patrick Grant, Anthony (Harrow C)
Best, Keith Corrie, John Gray, Hamish
Bevan, David Gilroy Costain, A. P. Griffiths, Eldon (Bury St Edmunds)
Biffen, Rt Hon John Cranborne, Viscount Griffiths, Peter (Portsmouth N)
Biggs-Davison, John Crouch, David Grimond, Rt Hon J.
Blackburn, John Dean, Paul (North Somerset) Grist, Ian
Blaker, Peter Dickens, Geoffrey Grylls, Michael
Body, Richard Dorrell, Stephen Gummer, John Selwyn
Bonsor, Sir Nicholas Douglas-Hamilton, Lord James Hamilton, Hon Archie (Eps'm&Ew'll)
Boscawen, Hon Robert Dover, Denshore Hamilton, Michael (Salisbury)
Bottomley, Peter (Woolwich West) du Cann, Rt Hon Edward Hampson, Dr Keith
Bowden, Andrew Dunlop, John Haselhurst, Alan
Boyson, Dr Rhodes Dunn, Robert (Dartford) Havers, Rt Hon Sir Michael
Bradford, Rev. R. Durant, Tony Hawksley, Warren
Braine, Sir Bernard Dykes, Hugh Heath, Rt Hon Edward
Bright, Graham Eden, Rt Hon Sir John Heddle, John
Brinton, Tim Eggar, Timothy Henderson, Barry
Brittan, Leon Elliott, Sir William Heseltine, Rt Hon Michael
Brocklebank-Fowler, Christopher Emery, Peter Higgins, Rt Hon Terence L.
Brooke, Hon Peter Fairbairn, Nicholas Hill, James
Brotherton, Michael Fairgrieve, Russell Hogg, Hon Douglas (Grantham)
Brown, Michael (Brigg & Sc'thorpe) Faith, Mrs Sheila Holland, Philip (Carlton)
Browne, John (Winchester) Farr, John Hooson, Tom
Bruce-Gardyne, John Fell, Anthony Hordern, Peter
Buchanan-Smith, Hon Alick Fenner, Mrs Peggy Howe, Rt Hon Sir Geoffrey
Buck, Antony Finsberg, Geoffrey Howell, Rt Hon David (Guildford)
Budgen, Nick Fisher, Sir Nigel Howell, Ralph (North Norfolk)
Bulmer, Esmond Fletcher, Alexander (Edinburgh N) Howells, Geraint
Burden, F. A. Fletcher-Cooke, Charles Hunt, David (Wirral)
Hunt, John (Ravensbourne) Montgomery, Fergus Sims, Roger
Jenkin, Rt Hon Patrick Moore, John Skeet, T. H. H.
Jessel, Toby Morris, Michael (Northampton, Sth) Speed, Keith
Johnson Smith, Geoffrey Morrison, Hon Charles (Devizes) Speller, Tony
Johnston, Russell (Inverness) Morrison, Hon Peter (City of Chester) Spence, John
Jopling, Rt Hon Michael Mudd, David Spicer, Michael (S Worcestershire)
Joseph, Rt Hon Sir Keith Murphy, Christopher Sproat, Iain
Kaberry, Sir Donald Myles, David Squire, Robin
Kershaw, Anthony Neale, Gerrard Stanbrook, Ivor
Kimball, Marcus Needham, Richard Stanley, John
King, Rt Hon Tom Nelson, Anthony Steen, Anthony
Kitson, Sir Timothy Neubert, Michael Stevens, Martin
Knight, Mrs Jill Newton, Tony Stewart, Ian (Hitchin)
Knox, David Nott, Rt Hon John Stewart, John (East Renfrewshire)
Lang, Ian Onslow, Cranley Stokes, John
Langford-Holt, Sir John Oppenheim, Rt Hon Mrs Sally Stradling Thomas, J.
Latham, Michael Osborn, John Tapsell, Peter
Lawrence, Ivan Page, Rt Hon R. Graham (Crosby) Taylor, Robert (Croydon NW)
Lawson, Nigel Parris, Matthew Temple-Morris, Peter
Lee, John Patten, John (Oxford) Thomas, Rt Hon Peter (Hendon S)
Lennox-Boyd, Hon Mark Pattie, Geoffrey Thompson, Donald
Lester, Jim (Beeston) Pawsey, James Thorne, Neil (llford South)
Lewis, Kenneth (Rutland) Penhaligon, David Thornton, Malcolm
Lloyd, Ian (Havant & Waterloo) Percival, Sir Ian Townend, John (Bridlington)
Lloyd, Peter (Fareham) Peyton, Rt Hon John Townsend, Cyril D. (Bexleyheath)
Loveridge, John Pink, R. Bonner Trippier, David
Lyell, Nicholas Pollock, Alexander Trotter, Neville
McAdden, Sir Stephen Powell, Rt Hon J. Enoch (S Down) van Straubenzee, W. R.
Macfarlane, Neil Prentice, Rt Hon Reg Vaughan, Dr Gerard
MacGregor, John Price, David (Eastleigh) Viggers, Peter
Mackay, John (Argyll) Prior, Rt Hon James Wakeham, John
Macmillan, Rt Hon M. (Farnham) Proctor, K. Harvey Waldegrave, Hon William
McNair-Wilson, Michael (Newbury) Pym, Rt Hon Francis Walker, Rt Hon Peter (Worcester)
McNair-Wilson, Patrick (New Forest) Rathbone, Tim Walker, Bill (Perth & E Perthshire)
McQuarrie, Albert Rees, Peter (Dover and Deal) Walker-Smith, Rt Hon Sir Derek
Madel, David Rees-Davies, W. R. Waller, Gary
Major, John Renton, Tim Walters, Dennis
Marland, Paul Rhodes James, Robert Ward, John
Marlow, Tony Ridley, Hon Nicholas Warren, Kenneth
Marshall, Michael (Arundel) Rifkind, Malcolm Watson, John
Mates, Michael Rippon, Rt Hon Geoffrey Wells, John (Maidstone)
Mather, Carol Roberts, Wyn (Conway) Wells, Bowen (Hert'rd & Stev'nage)
Maude, Rt Hon Angus Ross, Wm. (Londonderry) Wheeler, John
Mawby, Ray Rossi, Hugh Whitelaw, Rt Hon William
Mawhinney, Dr Brian Rost, Peter Whitney, Raymond
Maxwell-Hyslop, Robin Royle, Sir Anthony Wickenden, Keith
Mayhew, Patrick Sainsbury, Hon Timothy Wiggin, Jerry
Mellor, David Williams, Delwyn (Montgomery)
Meyer, Sir Anthony St. John-Stevas, Rt Hon Norman Winterton, Nicholas
Miller, Hal (Bromsgrove & Redditch) Shaw, Giles (Pudsey) Wolfson, Mark
Mills, Iain (Meriden) Shaw, Michael (Scarborough) Young, Sir George (Acton)
Mills, Peter (West Devon) Shelton, William (Streatham) Younger, Rt Hon George
Miscampbell, Norman Shepherd, Colin (Hereford)
Moate, Roger Shepherd, Richard(Aldridge-Br' hills) TELLERS FOR THE AYES:
Molyneaux, James Shersby, Michael Mr. Spencer Le Marchant and
Monro, Hector Silvester, Fred Mr. Anthony Berry.
Abse, Leo Campbell, Ian Davis, Terry (B'rm'ham, Slechford)
Adams, Allen Campbell-Savours, Dale Dempsey, James
Allaun, Frank Canavan, Dennis Dewar, Donald
Anderson, Donald Cant, R. B. Dixon, Donald
Archer, Rt Hon Peter Carmichael, Neil Dobson, Frank
Armstrong, Rt Hon Ernest Carter-Jones, Lewis Dormand, Jack
Ashley, Rt Hon Jack Clark, Dr David (South Shields) Douglas, Dick
Ashton, Joe Cocks, Rt Hon Michael (Bristol S) Douglas-Mann, Bruce
Atkinson, Norman (H'gey, Tott'ham) Cohen, Stanley Dubs, Alfred
Barnett, Guy (Greenwich) Coleman, Donald Dunn, James A. (Liverpool, Kirkdale)
Barnett, Rt Hon Joel (Heywood) Concannon, Rt Hon J. D. Dunnett, Jack
Benn, Rt Hon Anthony Wedgwood Conlan, Bernard Dunwoody, Mrs Gwyneth
Bennett, Andrew (Stockport N) Cook, Robin F. Eadie, Alex
Bidwell, Sydney Cowans, Harry Eastham, Ken
Booth, Rt Hon Albert Cox, Tom (Wandsworth, Tooting) Ellis, Raymond (NE Derbyshire)
Boothroyd, Miss Betty Craigen, J. M. (Glasgow, Maryhill) Ellis, Tom (Wrexham)
Bottomley, Rt Hon Arthur (M'brough) Crowther, J. S. English, Michael
Bradley, Tom Cryer, Bob Evans, Ioan (Aberdare)
Bray, Dr Jeremy Cunliffe, Lawrence Ewing, Harry
Brown, Hugh D. (Provan) Cunningham, George (Islington S) Faulds, Andrew
Brown, Robert C. (Newcastle W) Cunningham, Dr John (Whitehaven) Field, Frank
Brown, Ronald W. (Hackney S) Dalyell, Tam Fitch, Alan
Brown, Ron (Edinburgh, Leith) Davies, Rt Hon Denzil (Llanelli) Fitt, Gerard
Buchan, Norman Davies, E. Hudson (Caerphilly) Flannery, Martin
Callaghan, Rt Hon J. (Cardiff SE) Davies, Ifor (Gower) Fletcher, L. R. (Ilkeston)
Callaghan, Jim (Middleton & P) Davis, Clinton (Hackney Central) Fletcher, Ted (Darlington)
Foot, Rt Hon Michael Mabon, Rt Hon Dr J Dickson Roper, John
Ford, Ben McCartney, Hugh Ross, Ernest (Dundee West)
Forrester, John McDonald, Dr Oonagh Ryman, John
Foster, Derek McElhone, Frank Sheerman, Barry
Foulkes, George McKay, Allen (Penistone) Sheldon, Rt Hon Robert (A'ton-u-L)
Fraser, John (Lambeth, Norwood) McKelvey, William Shore, Rt Hon Peter (Step and Pop)
Freeson, Rt Hon Reginald McMillan, Tom (Glasgow, Central) Silkin, Rt Hon John (Deptford)
Garrett, John (Norwich S) McNally, Thomas Silkin, Rt Hon S. C. (Dulwich)
Garrett, W. E. (Wallsend) McWilliam, John Silverman, Julius
George, Bruce Magee, Bryan Skinner, Dennis
Ginsburg, David Marshall, David (Gl'sgow, Shettles'n) Smith, Rt Hon J. (North Lanarkshire)
Golding, John Marshall, Dr Edmund (Goole) Soley, Clive
Gourlay, Harry Marshall, Jim (Leicester South) Spearing, Nigel
Graham, Ted Martin, Michael (Gl'gow, Springb'rn) Spriggs, Leslie
Grant, George (Morpeth) Mason, Rt Hon Roy Stallard, A. W.
Grant, John (Islington C) Maxton, John Stewart, Rt Hon Donald (W Isles)
Hamilton, W. W. (Central Fife) Maynard, Miss Joan Stoddart, David
Harrison, Rt Hon Walter Meacher, Michael Stott, Roger
Hattersley, Rt Hon Roy Mellish, Rt Hon Robert Strang, Gavin
Haynes, Frank Mikardo, Ian Straw, Jack
Healey, Rt Hon Denis Millan, Rt Hon Bruce Summerskill, Hon Dr Shirley
Hogg, Norman (E Dunbartonshire) Miller, Dr M. S. (East Kilbride) Taylor, Mrs Ann (Bolton West)
Home Robertson, John Mitchell, R. C. (Soton, Itchen) Thomas, Dafydd (Merioneth)
Homewood, William Morris, Rt Hon Alfred (Wythenshawe) Thomas, Jeffrey (Abertillery)
Hooley, Frank Morris, Rt Hon Charles (Openshaw) Thomas Mike (Newcastle East)
Horam, John Morris, Rt Hon John (Aberavon) Thomas, Dr Roger (Carmarthen)
Howell, Rt Hon Denis (B'ham, Sm H) Morton, George Thorne, Stan (Preston South)
Huckfield, Les Moyle, Rt Hon Roland
Hughes, Mark (Durham) Newens, Stanley Tilley, John
Hughes, Robert (Aberdeen North) Oakes, Rt Hon Gordon Tinn, James
Hughes, Roy (Newport) O'Halloran, Michael Torney, Tom
Janner, Hon Greville O'Neill, Martin Urwin, Rt Hon Tom
Jay, Rt Hon Douglas Orme, Rt Hon Stanley Varley, Rt Hon Eric G.
John, Brynmor Owen, Rt Hon Dr David Wainwright, Edwin (Dearne Valley)
Johnson, James (Hull West) Palmer, Arthur Walker, Rt Hon Harold (Doncaster)
Johnson, Walter (Derby South) Park, George Watkins, David
Jones, Rt Hon Alec (Rhondda) Parker, John Weetch, Ken
Jones, Barry (East Flint) Parry, Robert Welsh, Michael
Jones, Dan (Burnley) Pavitt, Laurie White, Frank R. (Bury & Radcliffe)
Kaufman, Rt Hon Gerald Pendry, Tom White, James (Glasgow, Pollok)
Kerr, Russell Powell, Raymond (Ogmore) Whitehead, Phillip
Kilroy-Silk, Robert Prescott, John Willey, Rt Hon Frederick
Kinnock, Neil Price, Christopher (Lewisham West) Williams, Rt Hon Alan (Swansea W)
Lambie, David Race, Reg Williams, Sir Thomas (Warrington)
Lamborn, Harry Radice, Giles Wilson, Gordon (Dundee East)
Lamond, James Rees, Rt Hon Merlyn (Leeds South) Wilson, Rt Hon Sir Harold (Huyton)
Leadbitter, Ted Richardson, Miss Jo Wilson, William (Coventry SE)
Leighton, Ronald Roberts, Albert (Normanton) Winnick, David
Lestor, Miss Joan (Eton & Slough) Roberts, Allan (Bootle) Woodall, Alec
Lewis, Ron (Carlisle) Roberts, Ernest (Hackney North) Wright, Sheila
Litherland, Robert Roberts, Gwilym (Cannock)
Lofthouse, Geoffrey Robertson. George TELLERS FOR THE NOES
Lyon, Alexander (York) Robinson, Geoffrey (Coventry NW) Mr. Joseph Dean and
Lyons, Edward (Bradford West) Rooker, J. W. Mr. James Hamilton.

Question agreed to.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).