HC Deb 22 January 1980 vol 977 cc350-60

No. 57, in title, line 8, leave out 'modification of' and insert— making of grants to certain bodies; to amend and provide for the amendment of sections 83 and 135 of and'.—[Mrs. Sally Oppenheim.]

Motion made, and Question proposed, That the Bill be now read the Third time.

10.22 pm
Mr. John Smith

Before the House parts company with the Bill we should reflect on what we are doing. One of the features of the Government noticed by those who study legislation is the use of misleading titles for much of the legislation. This Bill is no exception. It is about the abolition of price controls. The Price Commission is abolished. The only reference in the Bill to the Government's capacity to control unjustified price increases appears in clause 13. That gives power to the Secretary of State to refer to the Director-General an unjustified price increase that he may investigate. But this is hedged about with qualifications. It has to be a matter of major public concern. It must be of general economic importance.

The Secretary of State will find it easy not to make any references under this heading. It is unlikely that any references will be made. Even if the Secretary of State did decide to make a reference, there is precious little that he can do if an unjustified price increase is discovered. As I read the Bill, all that can happen is that a certain amount of publicity would be given to the fact that the Director General had made such a finding. Any power of the Government to control unjustified price increases, discovered in the past by the Price Commission or now by the Director General, is wiped out. The real title for the Bill should not be the Competition Bill but the Abandonment of Counter-Inflation Policy Bill.

Our debates today and those in Standing Committee have shown that the Government do not possess a counter-inflation philosophy, policy or strategy. The damage started with the doubling of VAT from 8 per cent. to 15 per cent. There occurred contemporaneously the abolition of the Price Commission. We have since seen escalating price increases. We are at the moment on a most unfortunate price inflation escalator. I am sure that connoisseurs who read Hansard will enjoy the explanation given by the Minister for Consumer Affairs about the Government's attitude to gas price increases in which she said, as I understood her, that the Government were acting as a moderating influence and that if gas were under private control the increases would be much more severe. I dare say that may be true. It is just as well that the previous Government took power to make British Gas Corporation a monopoly purchaser for gas in the North Sea. We would otherwise no doubt be paying the sort of prices paid for oil. That was a wise exercise of nationalisation. It was also wise of us to take into public ownership the oil under the North Sea.

Those hon. Members who did not have the privilege of listening to the Minister's explanation of the Government's attitude to the gas price increases should read Hansard. She made an entertaining contribution.

The Government have added 10 per cent. to the rate of inflation, and the gas price increases indicate Government thinking about counter-inflation. There is an energy case to be weighed against the counter-inflation case. I am afraid that the Ministers responsible failed in their duty to thrash that out properly in the Government. As a result, another savage price increase will affect many poor people who are particularly vulner- able to energy price increases. It is hard to avoid buying energy, since it is one of the essentials of life. In the policy announced last week the Government indicated how genuine is their desire to counter inflation.

That is a pity, because we have gone a long way in educating the public about the importance of counter-inflation. Under the last Labour Government, there was a wider and deepening understanding of the paramount need to bring down the inflation rate below that of our major competitors. Today we have the highest inflation rate of all the Western industrialised countries. The rate shows no sign of diminishing and the Government have no power to deal with it. For that reason, we shall vote against the Bill's Third Reading.

10.27 pm
Mr. loan Evans

It is astonishing that on Second Reading, in Committee on Report and on Third Reading the Government failed to describe a policy for prices. The Conservatives were elected on the basis of their promises for dealing with the cost of living and prices. Now they say that market prices are sufficient. The Government are sitting on the sidelines in the steel strike. Apparently they will not allow market forces to operate in the steel industry and yet they have deliberately intervened in order to increase prices.

The catalogue of price increases caused by Government policies can be seen by all in Hansard. Those increases were not in the pipeline when the previous Government were in office. They have been caused by VAT, the Budget and nationalised industry prices. The Government have intervened to increase those prices.

The previous Conservative Government proposed similar policies but they realised that they must change them. They introduced the Price Commission and a counter-inflation policy. They tried to deal with incomes. Inflation has risen to l7. per cent. and now threatens to reach 20 per cent. What will the Government do to assure working people who are trying to retain their living standards? They can see their standards being reduced by the Government. An increase in prices will lead to an increase in wages.

I urge the Government to think again and to come forward with a constructive policy for prices. If they do not do that, their difficulties will become worse in the months and years ahead.

10.29 pm
Mrs. Sally Oppenheim

We are approaching the end of our consideration of the Bill. We have discussed it at great length and in great detail both in the Chamber and in Committee. I do not intend to speak at length now.

Although we have discussed the Bill exhaustively, and at times exhaustingly, the discussion has not always firmly focused on the real issues. We have discussed multinational companies, leasehold reform, transfer pricing and taxation. We have discussed prices endlessly. At times I felt that we had discussed everything except competition. Whatever Labour Members may say, competition is the central issue of the Bill.

I shall conclude our consideration of the Bill by bringing the attention of the House back to the central issue of competition and its importance for the economy. Competition is an essential ingredient for a dynamic economy. It is the cornerstone of consumer sovereignty. It maintains and increases choice, lowers prices and raises standards. It is a spur to greater efficiency and innovation. Competition aids the process of adaptation to meeting changing demands and changing situations. It has a profound influence on prices and profits. One of the most important functions of competition is to act as a restraint on pricing decisions, ensuring that firms do not take the easy way to higher profits by producing a smaller output at a higher price.

The role of competition in a dynamic society is essential. If, as a nation, we fail to recognise the need for adaptation and adjustment to the challenge of a rapidly changing world economy, we shall sink deeper into the relative economic decline. It is vital that we learn to adapt quickly to changing patterns of consumer demand, changing methods of production and the introduction of entirely new types of product if we are not to decline into a provincial backwater.

Competition is an important safeguard for consumers, but it has wider economic implications. The strengthening of competition policy in this measure will also benefit many smaller businesses that may suffer from the effects of some of the very practices that the Bill is aimed at preventing. It could help them, too, in their dealings with public sector industries, in terms of the services provided and of the practices that may be affecting them adversely.

The larger enterprises in the economy must take care not to become ossified. Although large enterprises are vital to the economy, it is also vital that new and energetic smaller enterprises are able to get a foothold in the market.

The economic system must provide the incentives to encourage the adaptability that I have been urging. The Government can play an important role in creating the right framework for incentives. All too often Governments have done the reverse, namely, putting barriers in the way of initiative and enterprise, suppressing incentives and distorting the economy through arbitrary controls. The Government have already shown their determination to break away from such short-sighted policies. We have reduced controls and increased incentives.

The Competition Bill is part of that general approach. It removes the artificial distortions of an ineffective price control policy imposed by the previous Government. It provides the means of removing obstacles and distortions created by enterprises themselves. We do not deny that even in a free market economy some problems of that nature may arise.

The powers in the Bill enabling the Director General and the Monopolies and Mergers Commission to investigate anti-competitive practices in both the public and private sectors are intended to strengthen the pro-competitive forces at the expense of the anti-competitive. These powers provide a new, swifter and highly flexible instrument for that purpose. Indeed, the hon. Member for Norwood (Mr. Fraser) himself, in speaking of this aspect of the Bill in Committee, described it as revolutionary and beneficial in terms of competition policy.

The Bill also provides new powers to prevent anti-competitive practices on the part of public sector industries, new powers to pursue uncompetitive practices in the case of local monopolies more easily, and, last but not least, new powers to investigate and report on efficiency and standards of service in public sector in- dustry. There is the power for sponsoring Departments, in consultation with the Secretary of State, to require certain action arising out of the reports.

When the Bill receives Royal Assent, the first of the references, the London commuter services of British Rail, will be made. It is an important new measure of consumer protection and represents a significant advance in the sector of competition policy.

The Opposition have made a great deal of the fact that the Bill will mean the end of the Price Commission. They say that we do not have a strategy and that we have not put plans forward. We have seen their strategy and what it did, and we have no intention of repeating their mistakes. I do not intend to prolong the debate in order that, once again, we debate something that we have debated almost ad nauseam already.

As a result of the abolition of the Price Commission, the distribution of responsibility among Ministers for issues concerning prices is affected. It means that my right hon. Friend has no general responsibilities for prices in future. Prices issues will normally be handled by the Ministers responsible for the policies to which they relate.

Finally, we do not make any claims—

Several Hon. Members


Mr. Deputy Speaker

Order. I cannot allow several hon. Members to be on their feet at once.

Mrs. Oppenheim

We do not make any claims such as those made by the

Opposition so often and so fraudulently when in Government. We do not claim that the Bill is the final answer to inflation or that its benefits will be felt overnight. We claim that it is a useful new measure, which will give considerable impetus to competition policy. To ensure that it is implemented vigorously and consistently, we are strengthening the Office of Fair Trading and the Monopolies and Mergers Commission. It is a measure that will certainly benefit consumers in the longer term to a far greater extent than the Act that we have repealed. I commend the Bill to the House.

Mr. John Fraser

The Minister, towards the end of her speech and the proceedings of the Bill, has committed an act of parliamentary cowardice. Despite what she said in Committee, she saved to the last second telling the House that she is trying to disown responsibility for answering questions and dealing with matters on prices and inflation.

During the course of the Committee proceedings, she told us that every Minister in the Government would be responsible for restraining inflation. Apparently there is now one exception—the Minister for Consumer Affairs. It is a disgrace. It is the wrong way to treat the House to leave it until the last seconds of the debate—when she thought that she would not be questioned—to abdicate, as we always thought that she would, the responsibilities that the title of her office presumes.

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

The House divided: Ayes 178, Noes 130.

Division No.143] AYES [10.37 pm
Alexander, Richard Bradford, Rev. R. Clark, Hon Alan (Plymouth, Sutton)
Alton, David Bright, Graham Clark, Sir William (Croydon South)
Aspinwall, Jack Brinton, Tim Clarke, Kenneth (Rushcliffe)
Atkins, Robert (Preston North) Brooke, Hon Peter Cockeram, Eric
Atkinson, David (B'mouth East) Brown, Michael (Brigg & Sc'thorpe) Colvin, Michael
Banks, Robert Browne, John (Winchester) Crouch, David
Beaumont-Dark, Anthony Bruce-Gardyne, John Dickens, Geoffrey
Beith, A. J. Buck, Antony Dorrell, Stephen
Benyon, Thomas (Abingdon) Budgen, Nick Douglas-Hamilton, Lord James
Benyon, W. (Buckingham) Butcher, John Dover, Denshore
Berry, Hon Anthony Butler, Hon Adam Dykes, Hugh
Best, Keith Cadbury, Jocelyn Eggar, Timothy
Bevan, David Gilroy Carlisle, John (Luton West) Fairgrieve, Russell
Biggs-Davison, John Carlisle, Kenneth (Lincoln) Faith, Mrs Sheila
Blackburn, John Carlisle, Rt Hon Mark (Runcorn) Fenner, Mrs Peggy
Bonsor, Sir Nicholas Chalker, Mrs. Lynda Finsberg, Geoffrey
Boscawen, Hon Robert Chapman, Sydney Fletcher, Alexander (Edinburgh N)
Boyson, Dr Rhodes Churchill, W. S. Fookes, Miss Janet
Fraser, Peter (South Angus) Mather, Carol Shepherd, Colin (Hereford)
Garel-Jones, Tristan Mawhinney, Dr Brian Shepherd, Richard(Aldridge-Br'hills)
Glyn, Or Alan Maxwell-Hyslop, Robin Silvester, Fred
Goodhew, Victor Mellor, David Sims, Roger
Gorst, John Meyer, Sir Anthony Skeet, T. H. H.
Gow, Ian Miller, Hal (Bromsgrove & Redditch) Smith, Cyril (Rochdale)
Gower, Sir Raymond Mills, lain (Meriden) Speed, Keith
Greenway, Harry Mills, Peter (West Devon) Speller, Tony
Griffiths, Eldon (Bury St Edmunds) Miscampbell, Norman Spicer, Michael (S Worcestershire)
Griffiths, Peter (Portsmouth N) Moate, Roger Sproat, lain
Hannam, John Molyneaux, James Stanbrook, Ivor
Haselhurst, Alan Morrison, Hon Charles (Devizes) Stanley, John
Havers, Rt Hon Sir Michael Morrison, Hon Peter (City of Chester) Stevens, Martin
Hawkins, Paul Murphy, Christopher Stewart, John (East Renfrewshire)
Hawksley, Warren Myles, David Strading Thomas, J.
Hayhoe, Barney Neale, Gerrard Tebbit, Norman
Heddle, John Needham, Richard Temple-Morris, Peter
Henderson, Barry Nelson, Anthony Thompson, Donald
Hicks, Robert Newton, Tony Thorne, Neil (Ilford South)
Hill, James Onslow, Cranley Thornton, Malcolm
Hordern, Peter Oppenhelm, Rt Hon Mrs Sally Townend, John (Bridlington)
Howells, Geraint Page, John (Harrow, West) Trippier, David
Hunt, David (Wirral) Parris, Matthew Vaughan, Dr Gerard
Hunt, John (Ravensbourne) Patten, Christopher (Bath) Viggers, Peter
Johnson Smith, Geoffrey Patten, John (Oxford) Wainwright, Richard (Colne Valley)
Jopling, Rt Hon Michael Penhaligon, David Wakeham, John
Kellett-Bowman, Mrs Elaine Percival, Sir Ian Walker, Bill (Perth & E Perthshire)
Kershaw, Anthony Pink, R. Bonner Waller, Gary
Langford-Holt, Sir John Pollock, Alexander Ward, John
Latham, Michael Porter, George Warren, Kenneth
Lawrence, Ivan Powell, Rt Hon J. Enoch (S Down) Watson, John
Le Marchant, Spencer Price, David (Eastleigh) Wells, Bowen (Hert'rd & Stev'nage)
Lennox-Boyd, Hon Mark Proctor, K. Harvey Wickenden, Keith
Lloyd, Peter (Fareham) Raison, Timothy Wilkinson, John
Loveridge, John Rathbone, Tim Winterton, Nicholas
Lyell, Nicholas Rhodes James, Robert Wolfson, Mark
McCusker, H. Rhys Williams, Sir Brandon Young, Sir George (Acton)
Macfarlane, Neil Ridley, Hon Nicholas Younger, Rt Hon George
MacGregor, John Rifkind, Malcolm
MacKay, John (Argyll) Ross, Wm. (Londonderry) TELLERS FOR THE AYES
Major, John Sainsbury, Hon Timothy Mr. John Cope and
Marlow, Tony St. John-Stevas, Rt Hon Norman Mr. David Waddington.
Mates, Michael Shelton, William (Streatham)
Allaun, Frank Dunn, James A. (Liverpool, Kirkdale) Lyons, Edward (Bradford West)
Anderson, Donald Dunwoody, Mrs Gwyneth McCartney, Hugh
Archer, Rt Hon Peter Eadle, Alex McElhone, Frank
Armstrong, Rt Hon Ernest Eastham, Ken McGuire, Michael (Ince)
Ashton, Joe Ellis, Raymond (NE Derbyshire) McKay, Allan (Penistone)
Atkinson, Norman (H'gey, Tott'ham) Evans, loan (Aberdare) MacKenzie, Rt Hon Gregor
Bagier, Gordon A. T. Evans, John (Newton) McWilliam, John
Bennett, Andrew (Stockport N) Field, Frank Marshall, David (Gl'sgow, Shettles'n)
Booth, Rt Hon Albert Flannery, Martin Maynard, Miss Joan
Boothroyd, Miss Betty Fletcher, Ted (Darlington) Mikardo, Ian
Bray, Dr Jeremy Foot, Rt Hon Michael Millan, Rt Hon Bruce
Brown, Robert C. (Newcastle W) Foster, Derek Mitchell, Austin (Grimsby)
Brown, Ronald W. (Hackney S) Fraser, John (Lambeth, Norwood) Mitchell, R. C. (Soton, Itchen)
Brown, Ron (Edinburgh, Leith) Garret), W. E. (Wallsend) Morris, Rt Hon Charles (Openshaw)
Buchan, Norman Golding, John Newens, Stanley
Callaghan, Jim (Middleton & P) Gourlay, Harry Oakes, Rt Hon Gordon
Campbell-Savours, Dale Graham, Ted Orme, Rt Hon Stanley
Canavan, Dennis Grant, George (Morpeth) Palmer, Arthur
Carmichael, Neil Hamilton, James (Bothwell) Parry, Robert
Carter-Jones, Lewis Hamilton, W. W. (Central Fife) Powell, Raymond (Ogmore)
Cocks, Rt Hon Michael (Bristol S) Hardy, Peter Prescott, John
Coleman, Donald Harrison, Rt Hon Walter Race, Reg
Concannon, Rt Hon J. D. Haynes, Frank Radice, Giles
Conlan, Bernard Hogg, Norman (E Dunbartonshire) Richardson, Jo
Cook, Robin F. Holland, Stuart (L'beth, Vauxhall) Roberts, Albert (Normanton)
Craigen, J. M. (Glasgow, Maryhill) Home Robertson, John Roberts, Ernest (Hackney North)
Cryer, Bob Hooley, Frank Rooker, J. W.
Cunliffe, Lawrence Hughes, Robert (Aberdeen North) Ross, Ernest (Dundee West)
Dalyell, Tam Hughes, Roy (Newport) Rowlands, Ted
Davis, Clinton, (Hackney Central) Jones, Rt Hon Alec(Rhondda) Sheerman, Barry
Davis, Terry (B'rm'ham, Stechford) Jones, Dan (Burnley) Shore, Rt Hon Peter (Step and Pop)
Dean, Joseph (Leeds West) Lamond, James Silkin, Rt Hon John (Deptford)
Dempsey, James Leighton, Ronald Smith, Rt Hon J. (North Lanarkshire)
Dewar, Donald Lestor, Miss Joan (Eton & Slough) Snape, Peter
Dixon, Donald Lewis, Arthur (Newham North West) Soley, Clive
Dobson, Frank Lewis, Ron (Carlisle) Spearing, Nigel
Dormand, Jack Litherland, Robert Spriggs, Leslie
Douglas, Dick Lofthouse, Geoffrey Stott, Roger
Dubs, Alfred Lyon, Alexander (York) Strang, Gavin
Taylor, Mrs Ann (Bolton West) White, Frank R. (Bury & Radcliffe) Young, David (Bolton East)
Thorne, Stan (Preston South) Wigley, Dafydd
Torney, Tom Wilson, Gordon (Dundee East) TELLERS FOR THE NOES
Wainwright, Edwin (Dearne Valley) Winnick, David Mr. George Morton and
Weetch, Ken Woolmer, Kenneth Mr. James Tinn.
Welsh, Michael Wright, Sheila
Question accordingly agreed to.
Bill read the Third tune and passed.