Lords Sitting of 2 June 1965

Preamble
The House met at two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Wakefield

BARONESS PLUMMER
Beatrice Plummer, widow of Sir Leslie Plummer, having been created Baroness Plummer, of Toppesfield in the County of Essex, for life—Was (in the usual manner) introduced.
LORD WELLS-PESTELL
Reginald Alfred Wells-Pestell, Esquire, having been created Baron Wells-Pestell, of Combs in the County of Suffolk, for life—Was (in the usual manner) introduced.
LORD LLOYD OF HAMPSTEAD
Dennis Lloyd, Esquire, having been created Baron Lloyd of Hampstead, of Hampstead in the London Borough of Camden, for life—Was (in the usual manner) introduced.

COURTS' POWERS TO ORDER RESTITUTION
2.36 p.m.
LORD SWAYTHLING: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will introduce legislation to enable criminal courts to award restitution in cases which are "taken into consideration" by the court, when it passes sentence.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OE STATE, HOME OFFICE (LORD STONHAM): My Lords, the Criminal Law Revision Committee are making a comprehensive review of the law of larceny and related
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offences. I understand that they have nearly completed the review, but my right honourable friend the Home Secretary has drawn the Committee's attention to the noble Lord's suggestion. The question of legislation on these matters will be considered in the light of the Committee's recommendations.
LORD SWAYTHLING: My Lords, while thanking the noble Lord for his Answer, may I say that I hope that when the Committee consider this matter they will remember that courts almost never refuse to take cases into consideration, unless they concern quite a different type of offence. Is it fair on an injured party—someone, for instance, who has had his goods stolen—that whether or not an order is made for restitution of the property depends on whether it is concerned with part of the original charge or only with an offence which is taken into consideration? I hope that that will be borne in mind when the Committee consider this matter.
LORD STONHAM: My Lords, as the noble Lord will be aware, when cases are taken into consideration, and are not therefore pursued, there is no conviction. But in all such cases the greatest care is taken by the police to ensure that the aggrieved person is at no disadvantage. But I would submit, my Lords, that these and other points can quite properly, and will quite properly, be considered by the Criminal Law Revision Committee.

APPEALS IN ROAD TRAFFIC CASES
LORD SWAYTHLING: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will introduce legislation to enable courts hearing appeals against orders of disqualification from driving to review, and, if so minded, to alter, any part of the whole sentence imposed, since appellate courts at present, if the appeal is against the order of disqualification only, cannot review any other part of the sentence.]
LORD STONHAM: My Lords, an Interdepartmental Committee under the

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chairmanship of the noble and learned Lord, Lord Donovan, is at present considering, inter alia, what changes, if any, are desirable in the powers, practice, and procedure of the Court of Criminal Appeal. It would be premature to propose any modification of the powers of that Court, or of the corresponding powers of quarter sessions, before the Committee has reported.
LORD SWAYTHLING: My Lords, I thank the noble Lord for his Answer.

ERIDGE-HAILSHAM RAIL SERVICE
LORD MERRIVALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will request Marplan, Ltd., when carrying out the sample survey on railway passengers using the Eridge-Hailsham service, to ascertain the passengers' views regarding a modern light railway service which could be operated on the existing track, as outlined in the study of the line undertaken by the Committee of the East Sussex Travellers' Association in conjunction with the proposals of Mr. J. P. Cunliffe, Consulting Engineer.]
LORD BESWICK: No, my Lords. This would be inappropriate to the purpose of this survey.
LORD MERRIVALE: My Lords, I thank the noble Lord for that very short Answer. But is he aware that the study to which I referred in my Question states fairly authoritatively that, with an overall capital expenditure in the region of £44,000, the annual income could be around £60,700, and the annual outgoings around £60,200, instead of a net loss of around £85,600 per annum, as at present?
May I ask the noble Lord one more question? If the results of the survey tend to show that alternative road transport does not compare favourably with rail transport, will the Minister of Transport request the Railways Board to consider implementing the proposals which I mentioned in my Question, so that a modern rail service may be introduced again?
LORD BESWICK: My Lords, if the survey showed that there is a good deal of inconvenience, then it would be possible for the Minister to vary the conditions of his original sanction. But as for the plan which the Association submitted, I am afraid that it was not based upon an accurate economic assessment of the situation. The cost of laying the new track required would have worked out at something like £18,000 or £20,000 a mile, and the Association did not make any allowance for the cost of the diesel multiple units which would be required.
LORD MERRIVALE: My Lords, is it not a fact that the diesel multiple units are quite readily available in other parts of the country? Also, I believe I am right in saying that there is no question of laying any track; it is just a question of the long-welding of the rails.
LORD BESWICK: My Lords, it would be just a question of the long-welding of the rails, if they were not worn out and unsuitable for being welded. As for the diesel units, if they are in other parts of the country they are, I hope, being used. But I assure the noble Lord that these proposals were carefully considered and, as I say, the economics did not appear to support the suggestion put forward by the Association.

RACIAL DISCRIMINATION IN TOILET FACILITIES
2.41 p.m.
LORD WILLIS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they are aware that some firms in the Midlands are providing special toilet facilities for workers of different races, and whether they will take steps to end this practice.]
LORD SORENSEN: My Lords, I presume my noble friend has based his Question on a recent newspaper report, which has been brought to the Minister's attention and a copy of which, indeed, is now before me. It is felt that this type of question is best left for arrangement

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between the management, the workers and the unions concerned.
LORD WILLIS: My Lords, I thank the noble Lord for that reply. Would he not agree that this is a most unsatisfactory piece of sordid apartheid, and that the Government should make it quite clear where they stand on this issue? Would he not also agree that the Government ought to indicate that they are in favour of multiracial facilities being provided, and not this kind of seclusion, which can lead only to the sort of apartheid that exists in South Africa to-day?
LORD SORENSEN: My Lords, in fact, the Minister has no power to prohibit the separation of conveniences of this kind. I really think, if I may say so to the noble Lord, that this matter might best be left to negotiation between all those concerned, with a view to a suitable and amicable settlement.
BARONESS WOOTTON OF ABINGER:
My Lords, even if the Minister has no power in this connection, does the noble Lord not agree that the Government have a very strong responsibility to make it perfectly plain where they stand on issues of this kind?
LORD SORENSEN: I am not sure, my Lords, whether the noble Baroness—or, indeed, the questioner himself—fully appreciates that there are different types of sanitary arrangements in different parts of the world. It is not a question of one being better than the other: it is simply a question of usage, custom and tradition. In these circumstances, I suggest that this rather delicate matter—as it is, in more ways than one—might be left to negotiation among. those concerned.
LORD WILLIS: My Lords, is it not wrong for the Minister to assume that, in putting down this Question, I was not aware of the different arrangements that are made in different parts of the world? Is it not perfectly possible for the Minister to make known his views on the matter, even if he has no power? And is it not possible to provide these different types of toilet facilities in one building instead of in separate ones?
LORD SORENSEN: My Lords, different types are already supplied. I hope the noble Lord does not feel hurt because I wondered whether he was fully acquainted with this fact. I just mentioned it because it is one of the factors which must be borne in mind. I want to assure the noble Lord that there is no sense of resentment at his Question, but I would plead with him to appreciate that this matter might be settled quite amicably if left to those concerned, without undue publicity.
BARONESS SUMMERSKILL: My Lords, may I ask the Minister, just for information, whether there is more than one type of sanitary convenience supplied in the schools which serve these areas?
LORD SORENSEN: I have no knowledge of that, my Lords. Perhaps the noble Baroness would care to put down a Question on the subject.

BUSINESS OF THE HOUSE
LORD SHEPHERD: My Lords, at a suitable moment after 3.30 p.m. my noble friend Lord Snow will be making a Statement on the Report of the Committee on Social Studies.
DEVON COUNTY COUNCIL BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

MATRIMONIAL CAUSES BILL [H.L.]
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg leave to introduce a Bill to consolidate certain inactments relating to matrimonial causes, maintenance and declarations of legitimacy and British nationality, with corrections and improvements made under the Consolidation of Enactments (Procedure) Act, 1949. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

SUPERANNUATION BILL [H.L.]
THE LORD CHANCELLOR: My Lords, I beg leave to introduce a Bill to consolidate the Superanuation Acts, 1834 to 1965, and certain other enactments relating to the superannuation of civil servants and other persons employed in the civil service of the State. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

CONSOLIDATION BILLS
2.47 p.m.
THE LORD CHANCELLOR: My Lords, the Motion that stands in my name on the Order Paper proposes to add four more noble Lords to the Joint Committee on Consolidation Bills. I am extremely grateful to these four noble Lords for their willingness to serve on this important Committee. If the House passes this Motion, I hope that another place will quickly pass a similar Motion on their own account, so that these two Motions together will have the effect of reinforcing the Joint Committee with four more Members from each House, making a total of twelve from each House.
This reinforcement is necessary because of the number of Consolidation Bills which are now coming forward. Thirteen such Bills have already been introduced, and I am hoping to introduce one more at an early date. Most of these Bills, if not all, started under the previous Administration, and of course I gratefully acknowledge their initiative in the matter. There is no hope of getting all these Bills through before the end of July unless the Joint Committee can sit more frequently than it is doing at present. It is already making considerable and, I might almost say, unreasonable demands upon the time of the noble and learned Chairman, Lord Morris of Borth-y-Gest, to whom the House is greatly indebted for all the care and expertise that he brings to hear upon this highly technical subject.
So far as the members of the Committee are concerned it is sometimes difficult, especially in view of the state of
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business in another place, to achieve the necessary quorum of members, which is three from each House. The additional membership which I am now proposing to your Lordships should ease the strain, both for the Chairman and for the present members of the Committee, and will enable us, I hope, to achieve our objective, which we may otherwise fail to obtain. I beg to move.
Moved, That the following Lords be added to the Joint Committee on Consolidation Bills.

L. Douglas of Barloch,

L. Alport,

L. Wilberforce,

L. St. Helens.

—(The Lord Chancellor.)
VISCOUNT DILHORNE: My Lords, I should like to thank the noble Lord for explaining what lies behind this Motion, and to say that we welcome it. I know that the Committee has a very great deal of work to do—work which often appears dull but is none the less extremely important. I am sure that the strengthening of this Committee by the addition of more members will indeed be helpful. There are a great many Bills ready for its consideration now, which were started, as the noble and learned Lord said, a considerable time ago, and no doubt the flow will be kept up in the future.
On Question, Motion agreed to.

PRICE INCREASES AND GOVERNMENT POLICY
2.50 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE rose to call attention to price increases which are occurring, wholly or partly, as a consequence of steps taken by Her Majesty's Government; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing on the Order Paper in my name. Your Lordships will doubtless recall many of the things said during the last General Election campaign. I think one of the most striking sentences was that uttered by Mr. Brown at Swadlingcote on September 27 when he said, in the course of his speech:
"The continual rise in the cost of living can, must, and will be halted."
This was an unequivocal statement, without even a saving phrase to the effect that taxation increases should not be taken

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into account. It is hardly to be expected that he would say such a thing in the heat of an Election campaign; but, nevertheless, here was an unequivocal statement, repeated in different forms by many other members of what was then Her Majesty's Opposition and repeated in much the same form in the Labour Party Election Manifesto.
What has happened since then? In the last six months we have seen the index of retail prices rise by more than four points. Most of the increases, when they are analysed, come back to definite actions or steps taken by Her Majesty's Government. We started with an import surcharge of 15 per cent. (it is now, of course, 10 per cent.) on a wide range of imported goods. This not only put up the prices of a wide range of imported goods but had the effect of providing a climate in which the home manufacturers could, if they wished, raise their prices by a little. Petrol went up 6d. a gallon in the Autumn Budget. In March we found that National Insurance contributions went up by 5s. 3d. a week; while the April Budget put up the cost of goods vehicle licences by 50 per cent. and of private cars by £2 10s. The price of cigarettes went up 6d. on a packet of 20; beer went up 1d. a pint; spirits were up 4s. a bottle, on average. Subsequently, there was the increase in postal charges, which is now bearing on everyone, of an extra 1d. on the inland letter rate—an increase of no less than 33⅓ per cent.—with a corresponding increase for parcels and second-class mail. For good measure the Government have put up the television licence fee by £1, while the radio licence is to cost another 5s. Rail fares are up by an average of 8 per cent.; and for electricity, according to which Area Board the customer happens to come under, the price increases from 8 per cent. to as much as 14 per cent.
These extra burdens imposed by Socialism amount to about £1 a week on the average family budget. For these increases, because they stem from direct Government action, Her Majesty's Government, in my view, must take full responsibility. I should mention here that there is one happier side to this story: the Resale Prices Act, which was passed by the previous Conservative Administration has, by intensifying competition, reduced some prices
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—notably the price of Scotch whisky. But what would have been a reduction to the public has been more than offset by tax increases.
There is also the added cost to industry caused by the increased Excise duties; because higher Excise duties have to be paid when tobacco or spirits, for example, are withdrawn from bond. I estimate—and it can only be an approximation—that an extra £30 million additional working capital will have to be found by the firms concerned in order to finance their stocks which have borne tax at the new higher rate until they are repaid by their distributors. And not only has this capital to be found—a difficult enough undertaking, in conditions of the credit squeeze that we have at the present time—but it has also to be serviced: interest, in one form or another, has to be paid on it. This represents another substantial and additional cost burden. I mention this because here is a matter in which Her Majesty's Government could help the manufacturer, if they so wished. They could help by permitting the payment of Excise duty several weeks in arrear, so that there would not be the same requirement of additional working capital. This would not be creating a precedent, for this is already done with purchase tax, which is paid quarterly in arrear.
I found two other examples of price increases which I thought might interest your Lordships. In the very week in which Mr. Brown announced his Declaration of Intent on prices and incomes policy the Ministry of Labour pushed up the price of the Ministry of Labour Gazette by not less than 40 per cent. This is not a very serious matter, but it is an indication, in a small way, of what little regard the Government's own Departments have for the policy of the Government as a whole. Then, as we have debated here in the last few weeks, and as has been accepted, I think, by noble Lords opposite, the legislation on control of offices has put up office rents in the London area. And it is interesting to see that a Government agency proudly announced this fact in its current advertising. Underneath the excellent picture of the lower part of a young typist the caption runs:
"The dearest legs in London are even dearer now."

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And the announcement goes on:
"In 1963 … one sq. ft. in a central London office cost 45s. a year … To-day that sq. ft. of central London office rents at 55s. And tomorrow"—
it says—
"who knows?"
Who knows, indeed, my Lords? But it seems ironical to me that a Government agency could use public funds in order to advertise in a newspaper that Government actions are, in fact, forcing up prices.
I have received information from departmental stores that in many cases their prices have not gone up. Here I would like to say a word or two in explanation, particularly with reference to the words of my Motion, because I am concerned not only with prices in the shops but with prices of products sold to other manufacturers for further processing; that is to say, with industrial prices and industrial costs. Although I have been able, I hope your Lordships will agree, to give examples of some striking price increases, we must also remember in this debate that price increases are going on all the time, some little, some great; there is a steady movement of prices. While I think that the majority of price increases are taking place at present in the industrial field—that is, in goods sold to other manufacturers for further processing—these price increases are bound to result, sooner or later, in higher prices in the shops. So, in my Motion I deliberately used the present tense—"price increases which are occurring"—because although they may not yet be visible to the average shopper, they will become so in due course.
I should like to put to noble Lords two propositions. The first is that all increases in costs are ultimately borne by "John Citizen". The second is that the proposition which has been used a great deal by the Government in the last few months, that manufacturers should absorb increased costs by greater efficiency, is, in fact, a delusion. In the first place, everyone has been trying to do that very thing. In a competitive country like ours, manufacturers and distributors are extremely reluctant to put up prices if they can possibly avoid doing so. Secondly, the greater efficiency which
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we are hoping to achieve by adherence to these ideas would result in lower prices if that greater efficiency were not mopped up by increased costs. While most of us think of the increased postal charges as affecting only our personal correspondence, nevertheless the increased postal charge rate, the increase in insurance stamps, the higher rates and the higher electricity charges together represent very substantial increases in overheads for firms throughout this country. They simply cannot absorb increases on this scale. In a few cases, where they may be able to do so, it is done at the expense of what otherwise might prove to have been price reductions.
But, my Lords, of all the forces driving up industrial costs and the retail prices of goods and services applied to the public, the greatest force is pay rises. I state this on the authority of the Progress Report of the Department of Economic Affairs in its No. 1 Bulletin of January, 1965. The Bulletin says:
"The selling price of goods and services making up the final output can he broadly divided into three components, money incomes … imports, and taxes on expenditure."
This is the point I wish to impress on noble Lords:
"Of these, money incomes are by far the most important, accounting for nearly three-quarters of the total."
Here in the field of money incomes Her Majesty's Government have a clear and direct responsibility. They should set a firm example by sticking to their own figure of 3½ per cent. as the norm. But what has happened? Something very different indeed.
Here I would ask noble Lords to bear with me for a moment while I mention some of the price increases which the Government have permitted to take place in the public sector and in the field of the Civil Service, over which they could have a direct and continuing responsibility. On December 14, a 9 per cent. rise to a quarter-of-a-million railway workers; December 21, pay rise of up to 10 per cent. for 18,000 civil servants; December 23, rise of 9·6 per cent. to 13 per cent. for 77,000 G.P.O. engineers; January 14, 80,000 British Rail engineers get a 9 per cent. pay increase; March 13, 15 per cent. rise to 6,000 G.P.O. supervising engineers; April 14, increases of up to 12½per cent. per year for 200,000 nurses;

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April 14, 1,100 B.E.A. pilots get a 17 per cent. rise; April 17, 120,000 postmen get 20 per cent. increase for three years—at a cost to the Post Office of £20 million—January 1964 to 1966; April 30, 70,000 gas workers get 10 per cent. pay rise; May 7, 9½ per cent. increase for prison officers. They also got a reduction in the working week.
From The Times of May 19 comes the headline "Bus fares in provinces may go up by 10 per cent." The report states that a 15s. per week pay rise was recommended by the committee set up by Mr. Gunter, Minister of Labour. A Government responsibility once again.
There are also about 2 million workers whose pay is linked to the price index and who automatically get a rise when the index goes up a little more. Here I have a small suggestion to make to the Government which they might like to consider. It is the desirability of compiling a separate index of retail prices which would omit changes in direct Excise duties up or down from an earlier base year, perhaps quarterly, as a guide to see what changes in taxes were causing fluctuations in the price index; and then one might have some reliable system of comparing changes in the purchasing power, giving the true value of money incomes.
When the Labour Government came into power last October, I thought to myself that they might succeed on the wages front where we had not. The trade unions boycotted our National Incomes Commission; but surely, I thought, they would co-operate with the Government which they had helped to bring into power. I thought that the trade union leaders would at least support their Government in public, and would respond to the appeal made by the Government to educate their own followers about the 3½ per cent. norm for pay increases. But one has only to look at what they are saying in public and to their own followers.
I hope I am not wearying noble Lords by making so many quotations, but this is material from which we can begin to see the shape of policy in the future. The Government and the T.U.C. had a special conference in London on April 30 to discuss Mr. Brown's wages and
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incomes policy. Mr. George Woodcock, T.U.C. General Secretary, openly acknowledged that:
"… there is not the remotest possible chance that incomes and wages will be kept down to 3½ per cent. in this year."
He went on to say:
"This is not a plan. It is not even a policy. Let us not make any false claims. These words are much too grandiloquent to describe what we are putting before you. A policy may come out in time. This is only the first cautious and sensible step in that direction."
A few weeks earlier Mr. Clive Jenkins, ASSET General Secretary, said:
"We're only too willing to talk about an incomes policy once we put right what's wrong … 3½ per cent. to the technical salariat is derisory."
Mr. Will Paynter, Secretary of the National Union of Mineworkers, said:
"If we accepted 3½ per cent. in the present circumstances we couldn't survive as a trade union leadership."
Mr. Greene, General Secretary of the National Union of Railwaymen, added this comment at the same debate:
"The new Board has not been set to cut across free negotiating machinery. If it does, it will be out of the window."
Incidentally, the biggest union in the country, the Transport and General Workers' Union, flatly rejected Mr. Brown's policy at the T.U.C. conference on April 30. And Mr. Frank Cousins, now Minister of Technology, on leave of absence from his post as General Secretary of that Union, commented that his union
"have always been realistic about their approach to the whole question of wages policy."
There has been no change in the attitude of responsible trade union leaders since that conference took place. Mr. Woodcock, on the B.B.C. T.V. "Gallery" programme on May 20, 1965, said:
"There is a very noticeable tendency on the part of many people … to think that an incomes policy meant that we would be able or that we would try and restrain the growth of incomes within a certain percentage level, in this case 3½ per cent. Well, if you're trying to do that, of course, forget it. You can't do it."
In the face of such an attitude by union leaders, and with such a bad example set by Her Majesty's Government, how can private employers hope to settle pay claims anywhere near the norm?
One can say that there is the Prices and Incomes Commission but this, it must be remembered, is a tender plant. It will take several years to establish its authority. It is essentially a long-term affair. It is certainly no instrument for the short-term crisis which we have on our hands. So far, as noble Lords may have observed, there have been three price references made to this body and one pay reference, making four in all, and all dealing with the private sector. There is not one reference in respect of the public sector where some of the biggest pay increases of all have taken place or are about to take place.
What is going to happen about these four references? For all four of them there are three possible outcomes. One outcome might be that the increase was justified, so clearly there would be no need for further action. The second possibility is that the increase was partly justified and partly not. This could only lead to months of further argument and no action. The third possible outcome is that the increase, whether in price or pay, would be condemned; and what action could then be taken? In the last resort, only price control. Legislation would be needed and so at least a year would elapse before the product could be controlled, because of the time it would take to pass the necessary legislation and draft the Statutory Instrument to institute price control for the product. As to the condemned pay rise, I know of no proposals for dealing with that. I hope that the noble Lord who is going to speak for the Government in the debate will let me know how the Government propose to deal with pay rises which are condemned by the Prices and Incomes Commission.
Furthermore, the Prices and Incomes Commission cannot deal with wage drift. I will not burden your Lordships this afternoon with a description of wage drift. We all know, broadly, what it means, how small wage increases are arranged on a local basis in order to attract labour or keep labour from leaving certain works, and how a certain amount of "poaching" takes place in some cases between one firm and another. As a result, the general wage level in a district or locality is gradually edged upwards. The Prices and Incomes Commission can do nothing to deal with
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that sort of thing, nor with what also takes place, the prices drift, because it is clear that prices tend to rise locally to meet increased incomes. When I was searching for an example of this for the purpose of this debate, I had to go no farther than the other end of this building. Shortly after the Members of another place had voted themselves a substantial pay increase, the price of the three course table d'hôte lunch in the Members' Dining Room went up from 4s. 6d. to 6s. 6d., with no increase in quality. Much the same thing goes on, I am sure, in cafés and shops of the more prosperous parts of Britain to-day.
LORD RHODES: What about luncheon vouchers?
LORD ERROLL OF HALE: My Lords, the Prices and Incomes Commission, if they are to succeed at all, can succeed in the long term only if Her Majesty's Government create the right economic climate—and this it is certainly not doing at the present time. Government actions are almost wholly responsible for price increases which are occurring and which, as I have shown, will affect John Citizen in the weeks and months ahead. Their incomes police, and therefore their prices policy, is breaking up before our very eyes.
Is there anything which can save the situation? It is possible that events may come to the rescue of Her Majesty's Government. Those who say that we are heading for depression, deflation or the stop of a "Stop—Go" policy may well be proved right. If so wage demands will be postponed and intensified competition in a cautious home market may keep prices from rising. But this will be achieved only at the cost of thousands of unemployed and suffering in all walks of life. My Lords, I close, as I began, with a reference to the last Election. Noble Lords will recall the slogan, "Let's go with Labour, and we'll get things done." Some went with Labour, and now we are getting done—well and truly done! I beg to move for Papers.
3.13 p.m.
LORD BYERS: My Lords, we are all indebted to the noble Lord, Lord Erroll of Hale, for initiating this discussion, and I think that the House can congratulate itself on a good attendance, because there

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is a well-known race taking place to-day. I think it improves the image of the House to see how many Members are prepared to attend when an important subject of this kind is being discussed. The only doubt I have is how to understand the significance of what I believe to be true: that we are to enjoy only one speaker from the Conservative Benches on this Motion. I do not know whether they have run out of speech-writers, of material or just of speech-makers. But I should have expected that we should have far more speakers from that side of the House.
A NOBLE LORD: They may be at the race meeting.
LORD BYERS: I do not think so, because I see that we have on this side of the House a number of noble Lords who know a lot about racing matters.
LORD RHODES: My Lords, they are more experienced in starting prices.
LORD BYERS: I take it that the noble Lord is referring to selling prices.
LORD CONESFORD: My Lords, according to the list I have before me, there is more than one Conservative speaker, but I cannot detect more than one Liberal speaker.
LORD BYERS: I am grateful for that assurance from the noble Lord. The Liberal Party usually confines itself to one very pointed contribution, but from a Party which has something like 800 members, one would have expected a proportionate representation in a debate of this importance in your Lordships' House.
A sharp increase in prices is, unfortunately, nothing new in this country, whichever Party is in power. From the fourth quarter of 1963 to the fourth quarter of 1964 the total of retail prices, according to the National Institute's Economic Review, rose by 4 per cent. It now looks as though the effect of the Budget from the Party opposite, and other measures, is going to put up consumer and retail prices by more than 4 per cent. But what is worrying about this situation, as the noble Lord has said, is that the General Election Manifesto of the Labour Party specifically said that
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high priority would be given to checking the rise in the cost of living. But in fact their policy so far has had the opposite effect. The exact quotation, which I looked up, is rather an interesting one. The Manifesto said:
"The success of the national plan"—
something we are going to get very soon, I believe—
"will turn not only on the new partnership between Government and industry,"—
one wonders what sort of partnership this is going to be—
"but on the success of new and more relevant policies to check the persistent rise in prices. Labour will attack"—
this problem—
"at its roots."
It is to this I wish to turn my attention to-day.
The cost of living is a vital factor in all our plans, but it is a problem that has never been tackled with success by either Party since the war. Under the post-war Labour Government, the pound, worth 20s. in 1945, dropped to 14s. in 1951. Then the pound, worth 20s. in 1951, dropped, under the Conservatives, to 13s. by October, 1964. It is true that this was a longer period, but it was also longer after the post-war recovery and after devaluation. But, given the emphasis placed by the present Government, at the time of the Election, on the importance of reducing the cost of living, we are entitled to ask why so many of the Government's actions have had the opposite effect. Not only is the national plan dependent on checking the persistent rise in prices, but so are our pensions. All our welfare policies are effected by this; and, above all, a sensible incomes policy. And this is what is worrying so many of us on these Benches.
I think that it is fair to say to the Government that they should now genuinely give priority to reviewing the ways in which prices can be reduced, or at least held for a sufficient period to give an incomes policy some chance of success. As I say, we have not had much success so far. No one, surely, can blame people for demanding more salaries or wages if the purchasing power of the pound continues to diminish. If prices are rising at the rate of 4 per cent. per annum, it is not much use telling the wage-earner that the wage increase norm

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ought to be 3½ per cent. For at that rate he will never catch up.
I would make the following suggestions to the Government. First, they should examine immediately their own policies, from the point of view of reducing or holding prices. For instance, can any more be done now in the anti-monopoly field? If I might make a suggestion here, ought we not to have perhaps an authority which can eliminate any restrictive practices by management or unions that result in higher prices or in preventing the reduction of prices? Next, will the Prices and Incomes Commission be able to work quickly enough to make a real impact on the problem? I have grave doubts about this. But if that is so, ought we not to have more sub-committees? We had a statement from the noble and learned Lord the Lord Chancellor to-day, about the way he is tackling the law consolidation problem. Is it possible that we ought to have more people working on this subject and have better machinery for co-ordinating the small committees? This is the sort of problem with which we were faced in monopolies earlier and on restrictive practices.
Next, we want to make sure that the Board of Trade is prepared to make tariff cuts to prevent price increases and to improve competition. So far is has done just the opposite. We have had the imports surcharge, which has been a gift to the inefficient company. I can see the dilemma in regard to the balance-of-payments situation, but this must he weighed up on balance to see whether we are not losing more than we are gaining. Again, in this frustrating circle of events, wage increases unconnected with productivity put prices up, so that more wages arc demanded because the cost of living has increased. What are the Government going to do about this in their own sphere? I do not suggest, as the noble Lord, Lord Erroll of Hale, seemed to suggest, that there should not have been some increases in the wages and salaries in Government Departments. But I am worried as to whether or not there was an assessment of the increased productivity likely to occur when the Post Office workers were given this large increase, which, coming from the Government, under the direction of a Cabinet Minister, must have set a serious precedent indeed in weakening the structure of the
1110
incomes policy. Can we be told a little more about what was done? Was there a productivity bargain here? What is the exact increase? How much more is it than the 3½ per cent. norm?
I think that the same can be said about the railways, because here increased efficiency and increased productivity could be obtained in return for higher wages. I am glad to see that in this connection a productivity bargain is being extended once again. We have had it at Fawley; I believe British Oxygen are doing it, and now there is a report that I.C.I. are taking it up. It seems to me that here the Government have an opportunity to create a series of teams from management and trade unions, and particularly the trade unions, to go round the country explaining to the not so progressive managements and unions how to tackle this; what to get out of it; and how to set about bargaining for productivity. I hope that something will be done in this respect.
I do not accept the implication from the previous speaker that greater efficiency cannot result in lower prices. Marks and Spencer have shown a remarkable example of what can be done by planning, efficiency and productivity. I believe that in this productivity bargaining the one thing we must remember is that not all the benefit of productivity increases should go to the wage earners. Something has to be left over for the so-called non-productive workers, some of whom are doing a most important job; and something has to be left over to reduce prices as well. It is this sort of incomes policy which I think has a chance to succeed, because it is expansionist and not restrictive. Therefore, I hope the Government will turn their minds in this direction; I am sure that here is great scope for improvement.
I now want to refer to other forms of increased productivity which could result in lower costs and prices. As I mentioned last week, I believe that one of the obvious fields to be explored here is that of roads and major installations, like the docks. We suffer in this country from being an island. The cost of crossing to Europe is an additional cost which countries with land frontiers do not have to incur. It is all the more important, therefore, for us to ensure that internal

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transport costs in this country are kept as low as possible. There is ample evidence of the costs of congestion on our roads. In 1957 Sir William Glanville estimated these at something like £500 million a year. This is a heavy burden, and it is largely a burden on industry. If we could get a really efficient and effective motorway network, with proper feeder routes coming into the motorways, we could, I believe, get a considerable reduction in costs and prices. I would suggest, once again, that the Government should consider the possibility of improving the roads by way of an independent road corporation, such a corporation having the right to raise money from the public and being able to service loans from tolls levied on motorways. This proposal has been advocated from these Benches since 1910, and there is no reason why it should not have matured by now. The net result should be a reduction in costs all round.
Finally, I would suggest to the Government that they might consider whether, against all this background of prices, cost of living and incomes policy, it might not be better to think and talk, not so much in terms of percentages. but in terms of hard cash. I do not know whether it is possible. It is quite clear that few people really appreciate what is meant by 3½ per cent. as the norm or "guiding light". If the total of personal incomes before tax—that is to say, salaries and wages—as given in the Economic Report on 1964 of £17,550 million is right, then what we have to distribute in a year in the way of increased salaries and wages is, if my arithmetic is correct, about £614 million. But that is not an awful lot. I do not know what the wage demands in the pipe-line at the moment amount to, but these would have to be added in the next year to those that have already been satisfied. I am willing to prophesy that we must have exceeded £614 million by the middle of this year—that is, by to-day. The Institute of Economic Affairs has estimated, I believe, that wages and salaries in 1965 will increase not by £614 million, but by over £1,363 million: in other words, by a 7 per cent. increase, instead of 3½ per cent. It must be clear, if these figures are anywhere near right, that somebody has to hold back.
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This is where I believe the T.U.C. must accept some responsibility. They have far more authority over their members than any other section of the community. We have got back again to the inflationary vicious circle which can be broken only by the Government's getting their priorities right and concentrating on holding, or reducing, the cost of living in order to give the incomes policy a chance. If we are not careful, either we are going to have runaway inflation again, or we shall find that what we can afford is scooped up by the strong unions—the "me firsters", getting there first—and there is going to be nothing left over for the deserving cases coming later in the queue. I think that if we can put this over to the people in terms of cash, rather than as 3½ per cent. or 4 per cent., it becomes much more dramatic and understandable. We from these Benches wish the Government well, because nobody since the war has solved this problem.
3.30 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, I must start by thanking the noble Lord, Lord Erroll of Hale, for initiating this debate. It is courteous to start in that way, even if it has completely occupied me for a week-end when otherwise I might have been in the garden, or even at another place on this Derby Day—but that is rather unlikely.
We are welcoming to the debate today two maiden speakers. One of them, the noble Lord, Lord Killearn, I do not know. He follows a father who was tremendously respected in this House, and who made forceful contributions on the matters in which he was particularly interested. I notice that the noble Lord follows his father in physical stature, and I hope that he will achieve the same success as did his father before him. The noble Lord, Lord Hilton of Upton, is an old personal friend. He was a colleague of mine in another place, and we have also been interested together in the agricultural field. He has followed me as a director on the British Sugar Corporation. I wish him well in that. I wish both the maiden speakers to-day well in their maiden efforts.
The noble Lord, Lord Erroll of Hale, has invited us by his Motion to discuss

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in isolation certain price rises attributable to Government action, though he strayed into a much wider field in what I am bound to regard as a thoroughly unhelpful and unfair speech. This was very much in contrast with the speech of the noble Lord, Lord Byers. He was balanced, as always, although he did lay about him and gave both sides a considerable amount of "stick"—
LORD BYERS: Neutrality.
LORD CHAMPION:—in his neutrality of which he boasts. I suppose it is one of the advantages of neutrality that one can do this sort of thing. I am bound to say that the noble Lord also made a number of suggestions which deserve, and I promise him will receive, consideration by the Government. I suppose that is the purpose of a debate of this sort—not only that we shall be "bashing" one another, but also that there will emerge from it considerations that will be helpful in the national interest; and I thank the noble Lord for his speech.
The fact is that the problem that be-devilled most of the first half of this century was that of matching purchasing power to production capacities. In that period, and especially in the inter-war years, the problem was not solved, and the result was deflation and massive unemployment. The problem that is be-devilling the second half of the century is that of ensuring that production matches up to the distributed purchasing power. Our failure so far to solve that problem results, by and large, in a scarcity of labour, in inflation, and a chronically weak balance of payments.
An article in the London and Cambridge Economic Bulletin tells us that
"The total output of goods and services per head of the population has risen by some 25 per cent. in ten years, which is not as fast as in many European countries. … On the other hand, prices have risen every year, with an aggregate increase of 35 per cent. to 40 per cent. for the decade."
The article concludes the paragraph with these words of warning:
"This rise does not, of course, take away from the reality of the increase in production, and its effect on the distribution of real purchasing power has been largely negatived by induced changes in monetary incomes; but it has weakened our competitive power in world markets, to the extent that corresponding rises have not taken place in other countries."
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What the figures given in that article make doubly clear is the fact that had the country improved upon its annual increase in productivity by a not impossible amount, inflation over that period would have been avoided. A little extra effort by all concerned—and I include all the factors in production here, management as well as trade unions, those responsible for the services as well as those responsible for the production of goods—over that period would have enabled us to avoid the position that we find ourselves in to-day. The present position is that our economy is operating at or near full capacity, which is leading inevitably to a heavy inflationary pressure.
What does this mean for us? Surely not that we dare contemplate deflation and its concomitant of massive unemployment leading to a halt, or even a check, in our growth rate, but rather that a new degree of skill is going to be required in managing our economy so as to secure a high growth rate, while keeping prices and costs in check. It is to this task of improving our techniques of economic management that the Government have set their hand. If we fail in our productivity, prices and incomes policy, what will remain will be either the old remedy of deflation and high unemployment and a faltering in our growth rate, or continued inflation which will surely completely price us out of the world's markets. We shall be back to square one.
The policy that we are attempting to put into operation demands a high degree of restraint by the unions—and this has been rightly stressed by both the noble Lord, Lord Erroll of Hale, and the noble Lord, Lord Byers—and we agree completely that it will demand a high degree of restraint by the unions. But it will also demand a pricing disciplined by manufacturers and others—one which is not imposed by the markets in an inflationary situation. The markets do not provide that, and despite all that I have said—and I praise the effect and the wisdom of the last Government in introducing their Act which has to some extent cut out resale price maintenance—we still do not have a sufficiency of competitiveness in our pricing arrangements and selling arrangements.
What we are asking will also inevitably mean painful adjustments by everybody

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concerned to the new technologies. It is going to be difficult for managements, for trade unions and for everybody involved to adjust themselves to these new ideas which, we hope, will be increasingly accepted. But they must be accepted if this country is to be saved from some of the difficulties that I pointed out at the beginning of my speech. All these policies must be linked into one indivisible whole, and if the Government had not made clear their determination to consider them together the trade unions and employers could not reasonably have been expected to lend their support in the way in which they have already done. To have got so far as the signing of the Joint Statement of Intent is an excellent start.
But, my Lords, the real test is yet to come. The whole business of perfecting the techniques of economic management and securing their acceptance in a free society is bound to be a long, long haul. It is not a matter which can be solved in six months of a new Government; it is going to be a long job. But we have got to try it. If we do not succeed, the difficulties this country will face will be enormous. I have been a trade unionist since the age of fifteen, and I know the difficulties facing us. Something more than exhortation is necessary. To yell, "We're pricing ourselves out of the world's markets" is just about as effective as was the cry of "Wolf!" after the first couple of times that cry was used. To create a climate in which we can reasonably expect the co-operation of the trade unions, there must clearly be a guarantee of the Government's determination to make prices and incomes policy work, a removal of the fears that make workers reluctant to accept the consequences of economic change, and a removal of the fears that make them anxious to cling to the restrictive practices for which there is no good justification. But, nevertheless, I know that these fears still exist among the men with whom I worked for so many years.
It is not only in the interests of social justice that we have policies for legislation to provide reasonable compensation for workers who become redundant; for wage-related unemployment benefits; improved transfer allowances for workers who have to work away from home, and
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a consideration of the wider tranferability of occupational pension schemes. These are designed also to encourage labour mobility and the acceptance of economic changes.
The noble Lord, Lord Byers, said in a striking speech last Wednesday that we have a greater influence with the trade unions than the previous Administration had. He said it again this afternoon. I think that is right. That does not mean that our policies will be easily or automatically accepted. We have to show that this is the right thing, and we have to go on showing that it is the right thing. We have to do what the noble Lord, Lord Citrine, said here last week: we have to educate not only those at the top to the acceptance of this policy but also the man on the shop floor, who is always pressing the man above him to do a little more than has been done up to this time. I know these pressures; I have experienced them in the past. But the noble Lord, Lord Byers, also said last week that we probably could not have as much influence with the business side of the community. This is probably true; but by our policies and actions we must clearly show that for managements and undertakings which help to create a virile economy there will be fair, even generous, rewards.
My Lords, I have said that these policies will take a considerable time to show a real effect, but in the meantime, until the Government's policies win general acceptance within industry and the trade unions and begin to take effect, we have to use such tools as are ready to hand. Many of these tools have not yet been fashioned: they cannot have been in this short time. They have not been accepted. This means, in the short term, using fiscal and monetary policies to stimulate growth whenever economic circumstances permit, and also using fiscal and monetary policies to take excessive pressure out of the economy when this is obviously necessary. As I said at the outset, at present the economy is under excessive pressure, and the Exchequer rightly decided to decrease the pressure on our resources through a strict review of public expenditure and higher taxation, by £250 million.

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The noble Lord, Lord Erroll of Hale, mentioned price rises in the nationalised industries. In spite of all that has been said and written on the subject of the nationalised industries, there often still seems to be a failure to grasp the basic fact that the prices charged by those industries have to get over some pretty stiff hurdles before the final decision is taken to raise the prices of their products and services. The noble Lord knows this perfectly well. He was a member of a Government which had to help to take decisions on these matters in the past, when price rises were made by the nationalised industries, but I will not waste the time of the House in describing them here. If anyone is interested he will find the whole process described in the speech of my right honourable friend the First Secretary in the other place on May 11.
In practice, pricing decisions of the nationalised industries are infinitely more constrained than those of private industry. Even so, the Government have not ruled out the possibility of referring a price increase by a nationalised industry for investigation by the National Board for Prices and Incomes. Although there has been no action as yet to refer to the Board any of the increases in prices by the nationalised industries which have taken place in recent months, the inquiry by the Board into road haulage rates will inevitably extend to British Road Services. I am bound to say here, my Lords, that it is something of a pity that increases in prices which take place in private industry do not have to surmount the same obstacles and hurdles as they do in the nationalised industries. It would be a good thing for this country if in fact they had to do so. I am hoping that, by a further extension of the National Board for Prices and Incomes, and perhaps a greater number of sub-committees, more private industry will in fact find itself having to justify its increases before the Prices and Incomes Board.
Turning to the recent price developments, I would say that between mid-October and mid-April the retail price index rose by 3·8 per cent. Something like two-fifths of the increase represents the direct effect on the index of the November and April Budgets. Another part, about one third of a point, represents the increase for 1965–66 in local authority rates. For the rest, the increase has been a fairly normal mixture of
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seasonal changes and increases reflecting the persistent underlying upward pressure of wage costs, which still persists, as both noble Lords have pointed out. Import prices have not changed a great deal. The underlying trend of rising wage costs is a legacy which is bound to continue until the Government's policy on prices and incomes begins to take effect.
As for the part reflecting higher indirect taxes, the short answer is that, given the need to contain the pressure of demand on the economy, the choice lay between yet another rise in direct taxation on top of the increase of 6d. on income tax in November of last year, and an increase in indirect taxation. In the field of indirect taxes the choice was between a tax on drink and tobacco or purchase tax. In his consideration of this field the Chancellor of the Exchequer came down on the side of drink and tobacco. I have seen it argued that it would have been preferable to put the indirect taxes on luxuries by means of purchase tax increases. But what are the luxuries upon which the Chancellor could increase purchase tax? Upon cars? That seems to be the most obvious one; but the car owners are already being hit to the tune of £2 10s. 0d. a year on the vehicle Excise duty, and although the Chancellor must have considered raising purchase tax on cars he, wisely I think, decided that this important export industry can best be maintained by having a good home sales base.
We recognise that increases in indirect taxation add to the cost of living and aggravate wage claims, but we also know that direct taxation reduces the amount of "take-home" money in the wage packet and also leads to wage claims. The choice as between drink and tobacco rather than purchase tax or direct taxation was a difficult one, but the Government felt, on balance, that it was putting the tax where it could best be borne. In taking their decision the Government recognised, as the First Secretary told the other place on May 11:
"… that the consequential increase in the cost of living can aggravate wage demands and make more difficult the prices and incomes policy, but that has to be balanced against the other risks to economic stability. On that balance we decided to face the

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problem and explain why."—[OFFICIAL REPORT, Commons, Vol. 712 (No. 112), col. 302, May 11, 1965.]
Despite the challenge of the noble Lord, Lord Erroll of Hale, I am not this afternoon, going back in any detail, over the years of Tory administration, for if I did I should be challenging the noble Lord to justify the continuous rise of the Retail Price Index when import prices were actually falling, when the terms of trade were to our advantage. Yet the prices still continued to go up; they went up during and over the whole period. In the years 1957–62 the index of import prices fell from 111 to 99, but during those same years the Index of Retail Prices went up by some 13·2 per cent. I must mention, too, the fact that the April Budget of last year, the Tory Budget imposed increased tobacco, wine and spirits duties, calculated to add slightly under one whole point to the Retail Price Index. Did the noble Lord, Lord Erroll of Hale, from his position in the Board of Trade, protest against this, that it might force wages up? If he did, certainly nothing ever leaked outside. I never heard of him making any such protest, although perhaps it would not have come to me.
The November Budget's increase on motor fuel added 0·2 of a point, and the increases in indirect taxation of the April Budget a further 1·4, whilst the February abolition of prescription charges reduced the index by between 0·1 and 0·2 of a point. The noble Lord, Lord Erroll of Hale mentioned that there has been an increase in postal charges which will bear hardly in individual cases, but it is not expected that these increases, which came into effect on May 17, will add more than 0·07 of a point to the Index.
The White Paper on Post Office Prospects, 1965–66 sets out clearly the reason for the increases, in these words:
"At current tariffs, postal services are likely to fall short of an 8 per cent return during the first three years of the target period by more than £60 million."
It goes on to point out that at the tariffs operating before May 17 the estimated shortfall for 1965–66 was £32 million, and it explains this at the beginning of paragraph 7 when it says:
"The reason for this increasingly unsatisfactory performance lies partly in the pricing decisions taken in the past few years and partly in the character of the resources employed."
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Who was responsible for the pricing decisions taken in the past few years? Who was responsible for the pricing decisions which would have led to the shortfall by £32 million of the figure, the 8 per cent., set out in Command 1337? I agreed with Command 1337 and its policy for the nationalised industries. But it was no good the Government producing a White Paper of this sort and setting out a policy unless their pricing decisions made that 8 per cent. possible. These things must follow. If you set out a policy you must enable the industries to follow that policy.
The increased postal charges led on inevitably to a consideration of wage and hour settlements in the Civil Service, to which the noble Lord, Lord Erroll of Hale, quite rightly referred. I have carefully examined the list of wage and hour settlements where the numbers involved exceed 50,000, and find, as the noble Lord pointed out, that they involve percentage increases ranging from 5 to 13·2 per cent. With the sole exception of what are called "Government industrials" all of the claims leading to those settlements were in the pipe-line before the Government took office.
The question is bound to arise here—and it has been posed this afternoon by the noble Lord, Lord Byers—how can the Government hope to secure a wages policy which has a close relationship to the nation's production when they themselves grant such increases? A fair question, my Lords, and certainly not an easy one to answer, especially as there are always claims in the pipe-line. My right honourable friend the First Secretary said recently:
"We do not intend to put the policy and its principles in abeyance until all existing claims in the pipe-line have been settled. Nor will we be foolish enough to try to impose a wage freeze. The policy will work unevenly at first and the effects will show themselves gradually."
The problem here is that of finding the point at which we can break into the wages-prices cycle. The Tory Government tried to intervene at the Government employee level, and the result was injustice to the nurses, injustice to the teachers and injustice to the weaker groups in the Civil Service. They had to suffer some of the consequences. The Government stepped in at the wrong point

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in the wages-prices cycle. Before becoming a Minister in October last, I was for 3½ years a director of an undertaking in which wages and conditions followed other industries rather than led them. Time after time in that short period we were faced with the dilemma of exceeding the recommended Government figure for wages and conditions increases or losing valuable employees attracted by better wages elsewhere. This was because other industries had exceeded the recommended figure by considerable amounts.
This is the problem of the Civil Service and all the other services and industries which follow, not lead, in the matter of wage increases. The difficulty here is how are we to break into this cycle of private industry leapfrogging in order to hold or attract employees, and its accompaniment of the public services just having to follow to catch up with the relative position which their employees previously occupied. If we cannot break into that cycle at some point, the disaster of a worsening balance-of-trade position, through pricing ourselves out of the world's markets, will inevitably fall upon us.
Much of this speech seems to have been directed towards my friends in the trade unions, but they have the remedy only partly in their hands. In an inflationary situation, a situation in which there is not pretty fierce price competition, there is always the tendency for manufacturers, wholesalers and retailers to put up prices with every increase in costs, no matter how small. Moreover, there is always the temptation to add that little bit over and above the increased costs; and particularly, it seems to me, is this the case where increased costs have been due to Government action. This temptation must be resisted if we are to call a halt to the wages-prices spiral. In the national interest, not only must every effort be made to absorb increases in costs through greater efficiency, but also price reductions ought to follow where increases in productivity make such reductions possible, for only in that way can the consumer share in the fruits of the improvements in productivity.
It is not only in prices and wages increases that we ought to be careful at this minute. I find some of the recent
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dividend increases pretty disturbing. According to the Financial Times, dividends in the last quarter of 1964 were 17·7 per cent. higher than a year earlier, and in the first quarter of this year 18·8 per cent. higher. I do not propose to go through the list of companies which have raised their dividend distribution, but these distributions are well above what the Government feel ought to be distributed in the way of higher incomes.
LORD BYERS: My Lords, will the noble Lord allow me to interrupt him? Is this really a fruitful line of attack? It is the Tribune line. Is it not one of the objects of the capital gains tax, which we support, to take something away from the shareholder? And that must be borne in mind when the noble Lord is talking about 17 per cent. increases.
LORD CHAMPION: Yes, my Lords; I am bearing that in mind. Nevertheless, taking that into consideration, some of these are rather startling increases, and they ought to be carefully considered by the companies that make them, having regard to the national interest and the effect of creating a climate of opinion which will make it even more difficult for the trade unions to restrain their demands. This is the problem, and it is one that I am sure is recognised by the noble Lord. I thought it wise to call attention to this, having regard to the fact that this is all part of the position as we see it, and some of the difficulties which we are in.
LORD BYERS: My Lords, would the noble Lord not take this point? If this is a psychological problem he ought to give proper balance to the fact that the capital gains tax has now been accepted, at a very high rate.
LORD CHAMPION: Yes, my Lords; I was going to mention the capital gains tax as part of this consideration, and, indeed, a part of the preparation for the climate of opinion necessary for the acceptance of a wages-incomes policy. I hope that the House, and particularly my noble friends, will forgive me if this has not been a particularly lively or partisan speech. What I have been trying to do is to state the problem and emphasise some of its aspects, in the hope that my words will add a little to the education of all concerned. This is not a Party matter; it is a matter for the nation as

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a whole—the unions, the men on the shop floor, businessmen and management alike; for we are all in it together. The whole future of this country depends on the solution of the problem of productivity, prices and incomes, and unless we solve it the future looks pretty dim.

SOCIAL SCIENCE RESEARCH COUNCIL
4.4 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF TECHNOLOGY (LORD SNOW): My Lords, with the leave of the House, perhaps I might take this opportunity to make a Statement which is being made in another place by my right honourable friend the Secretary of State for Education and Science.
The Report of the Committee on Social Studies is being published to-day. The Government wish to express their gratitude to the noble Lord, Lord Heyworth, and the members of the Committee for the time and effort which they have devoted to a thorough survey of a wide field, and for the care and thought with which they have prepared their recommendations. The social sciences are concerned with people and the way they live. These sciences have an important contribution to make to the development of a progressive society, and to the solution of the social problems of modern life.
The Government accept in principle the main recommendation of the Committee that there should be a Social Science Research Council, to be appointed by my right honourable friend the Secretary of State for Education and Science. They accept that there is considerable scope for stronger support and better co-ordination of research in the field of social studies, and they believe that the Committee are right in concluding that this could best be done with the help of a Social Science Research Council, while also maintaining support through the University Grants Committee and, where appropriate, Government Departments.
This proposal raises a number of detailed issues which will require further consideration, including the new Council's terms of reference, its scope
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and membership, and the arrangements for budgetary control. Moreover, the Government, while accepting that further provision should be made for research in the field of urban planning, do not believe that the Committee's proposal for a Joint Board of the various Research Councils would be satisfactory. They are considering what provision should be made for this purpose. The Government accept that some increase in financial support for social science research is desirable. Before committing themselves to detailed plans, however, they propose to await the advice of the Council itself. The scale on which additional resources can be made available will have to take into account other claims on our resources.
The Government will not at this stage be expected to comment in detail on the various other recommendations of the Committee. But they recognise the important rôle which social scientists can play in the formulation and execution of policy, and they intend to ensure that Government Departments are so organised and staffed that information and advice from social scientists are available on an adequate scale.
LORD ABERDARE: My Lords, I am most grateful to the noble Lord for repeating that Statement to us. It is not possible at present to make any sensible comment on it because, of course, we have not yet had an opportunity of reading the Report or its recommendations. But we shall study it with great care, and no doubt at a future date we shall be able to debate it in more detail. In the meantime, I should like to associate myself and my noble friends with the expression of gratitude to the noble Lord, Lord Heyworth, and the other members of the Committee for the work they have done in preparing this Report. I think it is appropriate that we should be particularly grateful from this side of the House, as the Committee was, of course, established under the previous Administration.
LORD REA: My Lords, may I re-echo what the noble Lord, Lord Aberdare, has said, particularly in our thanks to the noble Lord, Lord Heyworth, and his Committee? Of course I agree that we cannot profitably discuss this matter until we have seen the printed Report. Therefore, I would only say that it seems as

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if, as they say in the nursery, the Government are all in favour of social science. I hope that I may say to Lord Snow, in a friendly way, that I think that we probably would have had support for this subject from every political Party. Therefore, I think the Government are in a particularly strong position.
LORD SNOW: My Lords, I am grate-to both noble Lords for those remarks. I think the point is well taken that this Committee was set up under the previous Administration; and, of course, adequate occasion will be given to Parliament to discuss the Government's proposals when they are formulated.

PRICE INCREASES AND GOVERNMENT POLICY
4.9 p.m.
Debate resumed.
LORD KILLEARN: My Lords, to say, in the time-honoured phrase, that it is with some trepidation that I address your Lordships' House for this first time is certainly no empty form of words. However, I know from the few months I have been here the great courtesy and consideration which your Lordships habitually extend to newcomers on these occasions, and this knowledge has emboldened me to intervene in this afternoon's debate. I know, too, that on these occasions it is customary to avoid controversy. This I certainly hope to do, even though the subject of this afternoon's debate is, by its very nature, of a somewhat controversial character.
I am also mindful of the excellent precept preached by two Members of your Lordships' House, neither of whom is with us this afternoon, though I believe that it is in order to mention their names. One is the noble and gallant Viscount, Lord Montgomery of Alamein, who speaks with such forthrightness and effect from these Benches, and under whom I had the privilege of serving in the Western desert during the war. Secondly, I have in mind the equally praiseworthy example of the noble Baroness, Lady Gaitskell, who speaks with such insight and charm from the Benches opposite. Their precept is that of brevity. I hope that to-day and on other occasions in the future when I may intervene I shall adhere to what I may call the "ten-minute-rule", which
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they both not only preach but so admirably practise.
To declare an interest in the subject of this afternoon's debate is superfluous. I believe that we all have an interest in this subject. I am the servant of one industrial corporation, and a part-owner in others. There can be few inhabitants of this country who have not in some form or other, direct or indirect, an interest in the subject which we are debating this afternoon—a subject of major importance to the nation and of importance to each and every one of us. This brings me to the first of the three points which I want to make this afternoon. All of us wear several hats. We are both sellers and buyers; we are employers and employees; we are producers and consumers. We can none of us, whether we be members of the F.B.I. or of the T.U.C., whether we be townsmen or countrymen, members of the Government or private citizens, dissociate ourselves from "the other side". In the immortal words of John Donne
"No man is an Iland."
More colloquially, to use almost the words used by the noble Lord, Lord Champion, "We are all in this thing together."
My second point is this. The economic unit—the smallest economic unit which really has any validity—is the nation: the nation, not the State. That, I think, is an important point. The nation has to pay its way in the world in exactly the same way as does every man-Jack of us, whether we are employers or employees. Nobody owes us a living, let alone a comfortable living. The complex mechanics of national, and indeed international, finance may appear to plug leaks, restore buoyancy; keep the ship afloat and the crew safe from immediate danger. As often as not, however, I feel that this is only a palliative, a temporary expedient. The ship's crew may still wither away and perish from starvation, vitamin-deficiency or from the effects of exposure to the elements. This is what can, and inevitably will, happen to us if we allow the further uncontrolled development of cost-inflation. This dangerous spiral has become horribly evident in the past few months—and I say "the past few months" without apportioning blame. It has been growing for some time, but it is getting worse In the past few months cost-inflation has

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been growing at a faster rate, and, if unchecked, may very soon develop into a strangling growth.
My third point is that we must "think big". The present dangers of overspending, of which we are all aware, should not cause us to cut back on necessary and desirable capital replacement, modernisation and expansion. It is the uncontrolled increases in "revenue" expenditure, wages, salaries, social benefits, and the like, without an equivalent or greater real increase in productivity, production and national wealth, that undermine the only true bases for expansion—a firm currency and stable prices. If "thinking big" means closer integration with the Common Market or with EFTA, or replanning and redeveloping trade with the old and the new Commonwealth and other members of the sterling area, then we must accept and welcome such rationalisation. It will in any case come on us gradually and inexorably, no matter what view we take now of inevitable political and/or other complications that we shall meet along the road.
To recapitulate my three points, they are these. We all wear several hats: employer and employee, producer and consumer. Secondly, the economic unit is the nation, and nobody owes us a living, let alone a comfortable living. Thirdly, we must concentrate our efforts on containing increases of "revenue" expenditure, within the real growth of productivity and national wealth.
In conclusion, my Lords, may I just reiterate what I am sure will seem very obvious to many of your Lordships? The wealth of the nation, as of any individual, comes from production, not from consumption; that is, from producing more and better goods and services, goods and services that the world wants, and at the price the world wants. This, in the long run, and also in the short run, is the only possible approach to the problem which your Lordships are considering to-day. It is a problem that is always with us and, I fear, always will be with us. It is ultimately the most important problem of them all, to us as a nation and as individuals. If we wish to maintain and raise our national standard of living, we must face up to, and solve, the problem of maintaining stable prices and a firm currency.
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Whether this is regarded as an end in itself or merely as a means to an end, I believe that there is no other way.
4.18 p.m.
LORD SAINSBURY: My Lords, it is my privilege and my pleasure to be the first to congratulate on his maiden speech the noble Lord, Lord Killearn, son of a very distinguished father who graced this House. On behalf of all your Lordships, may I say that we hope that he will frequently participate in our debates?
SEVERAL NOBLE LORDS: Hear, Hear!
LORD SAINSBURY: As a retailer, I am naturally concerned with the movement of prices, whatever the cause. Therefore, I should perhaps declare an interest. But, as the noble Lord, Lord Killearn, has said, we are all, of course, interested in prices: the producer, the housewife, the economist and the politician. As with most difficult subjects, it is easy to simplify and generalise and to quote figures which confirm one's particular view.
We would all agree, I think, that the aim of policy should be to achieve a general stability of prices. No one would suggest that this can be done commodity by commodity. For example, agricultural products are affected by weather hazards, such as droughts and severe winters, which in recent years have affected the supply of both meat and dairy produce. I realise that members of the previous Administration are sometimes sensitive to references to thirteen years of Conservative rule, but if the question of price movements is to be kept in perspective it is fair to point out that during this period the cost of living rose by about 50 per cent. or 10d. in the pound per year. My authority for the figures is the Official Index of Retail Prices compiled by the Ministry of Labour. Therefore, one would think that Opposition speakers were on delicate ground in criticising the present Government.
The Labour Government inherited an overheated economy, a most serious balance-of-payments deficit, and an inflationary situation. Surely it is obvious that any policy dealing with prices and incomes, which are inevitably interrelated, needs time to prove itself and to prove its effectiveness. The latest Cost of Living Index, that of April, is 5·6 per cent. up on

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the April figure of a year ago. The most important item in the household budget is obviously food, amounting to nearly one-third of total expenditure. Food prices in April were 3·9 per cent. higher than they were a year ago. However, last August under the Conservative Government food prices were 6·3 per cent. up on the previous year. Consequently, recent figures could be claimed to be relatively more favourable.
My experience as a trader is related to food. Food prices can be divided into three groups. The first covers manufactured foods and here, taking the field as a whole, prices rose continuously year after year under the last Government, more or less in line with wage rates. There are thousands of lines belonging to this group. As individual items account for a very small part of the household food bill the manufacturer does not necessarily meet much resistance on the part of the housewife when he puts up prices. If criticisms are to be made, they can be made perhaps of some firms who pass on wage increases too easily, rather than seek means of reducing unit costs by greater efficiency. But I admit, and hasten to add, that there is no evidence that these firms are not in a minority.
The second group comprises primary commodities, which by and large follow world market prices. I have in mind such items as meat, bacon and dairy products which form a large part of the family's food budget. When the prices of these primary products—meat, for example—show dramatic changes, either up or down, it has far more effect on the housewife's purse than the steady upward trend of prices of manufactured foods to which I have already referred. Unfortunately, it is these manufactured and processed food price increases which often receive more publicity in the popular Press, than the movements in prices upwards or downwards of the basic foods.
The third group consists of very seasonable items, which can sometimes be affected by weather conditions as well as the time of the year, such as fruit and vegetables. At the moment the trend of some wholesale food prices appears to be in the right direction. Since April, the
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wholesale prices of butter, cheese, poultry and sugar have dropped and these changes have been reflected in the retail prices, as reported in to-day's Financial Times under the heading, "Many food prices lower in recent weeks". In addition to sugar, another important raw material—namely, cocoa beans—has fallen in price very considerably since the beginning of the year and, as the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food pointed out last week, this should soon bring about some retail price reduction in confectionery lines.
A week ago during the debate on Economic Affairs the Government were, I think, wrongly accused of inconsistency in their policy. May I suggest that the Opposition is sometimes guilty of inconsistency? During the debate at the end of March on the Agricultural Price Review, there was strong criticism from the Benches opposite on the smallness of the increase in the milk price to producers. If the farmers' request for a much larger increase had been accepted, the Government would have been faced with either a large increase in the consumer price, or the reintroduction of a very heavy milk subsidy.
A breakdown of the Cost of Living Index reveals, as the noble Lord, Lord Champion, has pointed out, that the increase of 5·6 per cent. is due partly to tax increases in the Budget on alcoholic drinks and tobacco. In point of fact, if one excludes alcoholic drinks and tobacco the increase is only 3·7 per cent. A Chancellor of the Exchequer faced with the need to raise additional revenue should surely choose non-essentials. In my view, an addition to the duty on both alcoholic drinks and tobacco was preferable to, say, a general increase in purchase tax, as the noble Lord, Lord Champion, has said, which was the obvious alternative. The Conservative Party is hardly in a position to throw stones in this connection, for between 1956 and 1964 they raised the duty on tobacco four times, and on alcoholic drinks twice.
My Lords, we would all agree that to achieve a general level of price stability is one of the most difficult tasks of all

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the many tasks facing modern government. We on these Benches believe that it cannot be achieved in isolation, but only in conjunction with an incomes policy which includes wages, salaries and dividends, and increased productivity. Where does the Conservative Party stand on this issue? They certainly speak with more than one voice. The Times political correspondent last Monday headed his weekly article, "Tories at Sixes and Sevens." What is its official policy? Is it the voice of the anti-planner, the arch-priest of laissez-faire private enterprise, the former Minister of Health, who described the whole conception of a prices and incomes policy as dangerous nonsense and escapism? Or is it the attitude of another former Conservative Minister, now Chairman of the new National Board for Prices and Incomes, who believes that this is something so worth while, however difficult?
The "sixty-dollar" question is surely this: whether it is possible, in a free world, to have full employment in an industrial society with relatively stable prices. It is a great challenge, and no one should under-estimate the difficulties, but surely it is a challenge worth accepting, and certainly one accepted by the present Government.
4.32 p.m.
LORD HILTON OF UPTON: My Lords, having served my apprenticeship for a number of years in another place, a few days ago I was greatly honoured to join your Lordships here in this House; and I must confess that it is with rather wobbly knees that I rise to my feet now to make my first speech in your Lordships' House. However, this feeling is eased a bit when I see a number of former colleagues from both sides of another place. I appreciate that it is customary, when making a maiden speech in your Lordships' House, to be, first of all, non-controversial, and, secondly, brief. I have watched pretty closely the subjects which have been discussed in this House in recent days. and have found that on most of them it would have been very difficult not to be controversial—and, in particular, the subject we are discussing this afternoon is in that category. So I cannot promise not to be controversial, even though I
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can promise I will try not to be, but I can give an assurance that my speech this afternoon will be brief.
My Lords, I am sure that this House is very grateful to the noble Lord, Lord Erroll of Hale, for introducing for discussion in this House today what is, after all, a very important subject. It has given us the opportunity to debate this important subject of increased prices; and, even though many of your Lordships, I am sure, like myself, would find it difficult, if not impossible, to agree with the conclusions arrived at by the noble Lord, Lord Erroll of Hale, we are still indebted to him. To listen to some parts of his speech one would come to the conclusion that this problem of high prices had arisen in this country only during the past six or seven months, or since last October, with the coming into power of a Labour Government. The noble Lord, Lord Erroll of Hale, appeared at times to lay the blame almost entirely on the Labour Government. In fact his Motion calls attention
"to price increases which are occurring wholly or partly as a consequence of steps taken by Her Majesty's Government.…"
To read this Motion one could get the impression that Her Majesty's Government have set out on a deliberate policy to increase prices. This is one of the reasons why I find it extremely difficult not to be controversial this afternoon. Personally, I doubt very much if the noble Lord himself believes all the things he had to say on this subject and in the way he blamed the Labour Government for what has happened since October. Surely he cannot so soon have forgotten that for thirteen years before October we had a Conservative Government in this country and that the noble Lord himself was in fact an important Minister in that Administration. I remember in recent years in the other place a number of debates taking place on this very issue of high prices, criticising the Conservative Government.
Having said this, my Lords, I would readily agree that the subject we are discussing this afternoon is a very important one, and I am sure we all agree that prices are far too high. I am equally sure that nobody realises this more than the members of Her Majesty's Government. But do not let anyone try to "kid" us that this is something new.

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If I may say so, I personally am very conscious of the magnitude of this problem of high prices, and, like yourselves, I am concerned about it. For a number of years I was privileged to represent in another place an important Norfolk constituency which is almost completely rural, where there is the average number of pensioners and people on low fixed incomes and where the majority of workers are farm workers on almost the lowest rung of the wages ladder. These are the people I have always worked with and lived with and still live among, and who are hit as hard as any section of the community in the country. So I am not allowed to forget the seriousness of the problem of high prices.
My Lords, I repeat that I am conscious of this problem. There is a theory held by some people who I contend have not given really sufficient thought to the matter, that some high prices are caused by workers and trade unions who have asked for and succeeded in getting higher wages for workers in different industries, and that higher wages have pushed up prices. My Lords, I wish to say here that there are some workers in this country who are entitled to higher wages now but who are being refused them. I refer in particular to farm workers—and here I must declare an interest, in that I am very much concerned with the National Union of Agricultural Workers. This grand body of workers, the farm workers, with a splendid record, still have a national minimum wage of only £10 2s. 0d. for a 45-hour week, with average earnings about £5 a week less than workers in industry, despite working 4 hours longer each week.
Recently a claim for a shorter working week for farm workers was rejected by the Agricultural Wages Board. I appreciate that to deal with this problem of farm workers' wages is not the prerogative of your Lordships' House. The point I want to make is this: that, in my opinion, in view of the importance of the job which is being done by farm workers—that of food producing—and in view of their splendid record and in justice, this matter must soon be put right. Farm workers ought to receive wages and working conditions which compare favourably with those of workers in other industries. At the moment, these people are doing their best to increase food production, but,
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because of their low wages, they are not able to share in the benefits. I realise that the problem of prices and incomes is like the question of the hen and the egg—Which comes first? In this instance, I contend that it is proper that incomes, especially of the people in the lower income group to whom I have already referred, should first be adjusted. High prices hit every section of the community, but hit hardest those to whom I have referred.
The noble Lord, Lord Erroll of Hale, was very critical of the Labour Government and, in particular, of my right honourable friend, Mr. George Brown, the First Secretary of State; and he would put the whole of the blame on the shoulders of Mr. Brown, the Chancellor of the Exchequer, and the Labour Government. But we should remember that when the Chancellor of the Exchequer put the 6d. increase on petrol, many traders soon increased the price of many goods very considerably and quite unjustifiably. It was they, in many cases. who made a great profit out of the increase which had been put on petrol. The noble Lord really could not blame my right honourable friend or the Labour Government for that. I use this instance merely as an example. In my opinion, my right honourable friend, Mr. George Brown, has shown real vision and great initiative in attempting to solve the problem with his proposal for a prices and incomes policy. It is not possible, in my opinion, to deal effectively with either prices or incomes in isolation; they are so closely linked. I should like to see all sides of your Lordships' House and of another place and all sides of industry, for a change, co-operating with my right honourable friend in his policy; because I believe that by this method we can effectively deal with the problem we have been discussing.
4.43 p.m.
BARONESS PHILLIPS: My Lords, it is my privilege and pleasure to compliment the last speaker on his excellent maiden speech. My father was a sturdy Norfolk man, and it gives me great joy to hear this sound in your Lordships' House. I hope that we may hear it on many occasions. We are debating to-day the subject of price increases and I am, as always, a little puzzled by the fact

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that the debate has been widened, as I am rather used to keeping to the subject of a Motion on the Order Paper. However, I shall no doubt get used to this practice.
I have received, in common with other noble Lords, this little document called The Assault on Free Enterprise, and because of some of the statements contained in it I feel I must make a declaration of interest. One particular statement says:
"The Government institutes a vindictive tax policy—'unearned income' is an attractive catchword for those with neither the wits nor the thrift to acquire it."
I should like to make it clear that I certainly have indulged in thrift. I am not a large investor; I occasionally receive notes which tell me that I have the princely sum of £3 6s. 0d. or so to my credit; but I have used my wits throughout my life to make money—not for myself but, generally, for movements or to help the community. But I feel that it is impudent to suggest that those who differ from some of the policies put forward in this document have neither wits nor thrift.
We are debating to-day price increases resulting from Government action, and I think that to see the effect of this action it is necessary to see how people spend their money—and several of my colleagues have already spoken on this point. I take my figures (and the noble Lord, Lord Byers, will be glad to know that I do not speak in percentages) from the Family Expenditure Surrey published by the Ministry of Labour. The last one issued was for the year 1963, and it described the make-up of household income and budgeting. In 1963, the average weekly income was £22—although, as the previous speaker told us, there are still, unhappily, far too many people who do not collect that sum in their weekly wage packets. Out of this sum, the highest item of expenditure was food, which took Ills. The amount spent on alcoholic drinks was I4s., and on tobacco, 21s. One other item which I selected was durable goods, on which the expenditure was 22s. I think it is reasonable to assume that this pattern has continued and therefore it is interesting to see how Government action has affected those particular items.
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The Budget taxed tobacco and drink. I would say that I enjoy both these. I like to smoke and to take a drink; but I am happy to see tax on this, as I am happy to see tax on lipstick, since, in the last resort, I could do without lipstick, tobacco or drink. But I should not like to see tax on tea, sugar or staple commodities. There was a certain musical play by a certain Cockney gentleman recently in which was expressed the theory, "You don't get nothing for nothing". I feel that we have always to remember that if the State is to help the weaker members of the community then the State must raise taxes from somewhere.
I spoke to a few people about their budget. This seems to be a very popular occupation, judging by the debate in another place, which I read. But it is important to recognise the effect on people not only of what they spend but of what they receive. First of all, I asked a widow whether she had felt any effect from Government taxation, or any effect of the Budget in regard to price increases. She said that her rates had been increased by 3s., but she pointed out, quickly and fairly, I thought, that she attributed this to the rating system rather than to the Central Government. But she also said that she was now able to earn more money, because of the relaxation of the earnings rule, which had been one of the first actions of the Government when taking office, and one which many of us had requested for a very long period should be dealt with by the previous Administration.
Then I spoke to a retirement pensioner. Again, I found that her rates had increased. Some food commodities, she said, were a little more expensive; but again she told me (though I did not ask for the information) that she had been in the habit of spending between 4s. and 6s. on prescriptions, and that this Government had relieved the prescription charges on this group of the community. As to my own budget, I am one who earns my living. I am paying more tax. I make no complaint about this. I am happy that I am healthy enough to earn money and to be able to pay the tax. I would rather be on the paying end than on the receiving end in any system. I recognise the principle that we shall have to pay a little more if we are to assist

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certain people. The next budget I looked at was that of a single young man, who also said that he had had certain increases in his clothing bills and in some of his food. He pointed out, quickly, that the rent of the flat he occupied in Central London would most certainly have been increased, had it not been for the legislation introduced by the Government.
My Lords, have prices really begun to rise only in the last six months. What nonsense! I checked a few food items and prices, and I selected the period from January, 1964, to September, 1964. During this period the price of biscuits rose all the time. They are not a staple commodity, but it is some reflection of the increase in flour and bread prices. The prices of jams and packet soups rose. The price of beef rose steadily. One rather curious and significant rise in September was that in the price of Christmas puddings. I do not think this can be attributed to the fact that we were to have a change of Government. It is significant that these things have been going on slowly, but very steadily. It is also significant that whenever there is a price change, or a surcharge is imposed, it is passed on with curious rapidity to the consumer, but it is slow to be lifted when, as in the case of the surcharge, some part is lifted by the Government. I remember an occasion when the price of coffee went up 4d. a pound, and the very next day, at a little shop where I go for my cup of coffee, the price had increased by 1d. a cup. One would wish that this efficiency were reflected in other fields of industry.
What are some of the other factors which contribute to rising costs? We have heard mention of restrictive practices, and I am entirely behind those who say that restrictive practices are part of our difficulties with relation to industrial workers. But I suggest, also, that restrictive practices still persist in industrial concerns. I know that the previous Government introduced the Resale Prices Act, and for that I commend them. I have also noticed that 654 applications have been received for exemption. I gather that one legal gentleman has suggested that these may well take a quarter of a century to get through, so that those at the end of the queue will certainly be able to continue
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to operate. Recently I had a case of a small business man who appealed to me because he has had to pay £75 for the wicked crime of under-charging under the resale price maintenance arrangements. What was the situation? He sold a mop for 18s. 6d., instead of 22s. 6d. He pointed out to me that the mop cost 11s., and that although he was quite happy with a profit of 7s. 6d., he was forced to make this much more profit. Here is a field of operation where there are no published margins. Everyone can find out what wages are paid, but very few can find out the margins of profit permitted to retailers in certain fields of operation.
My Lords, you may be heartened to note—I feel sure that our Ministers will be—that some people do not seem to be quite so disturbed as the noble Lord, Lord Erroll of Hale, about price conditions under the present Government. I have selected a few examples from yesterday's papers. I am happy to say that I read a large number. I look at the financial pages, although I do not always understand them. There is the Bovis Group. I do not know what they make, but the group profits are "the highest yet achieved", and the present indications are "that the profit for 1965 will show a further increase." In the case of Fairy Dyes the figures show "an all-round increase compared with last year" and the chairman, it was stated,"had every reason to believe that a substantial increase in profits could be expected this year." Northern Petroleum reports "a sharp profits recovery." The Associated Portland Cement Manufacturers tell us of "increases in capacity to meet growing demand" and that earnings in 1964 "reached a new peak."
So I could go on. There is one interesting cutting which says that earnings from Scotch whisky continue to soar, so it does not appear that the tax which has been placed on them has stopped whisky drinkers from drinking their favourite beverage.
LORD BRECON: My Lords, would not the noble Baroness agree that in fact profits are related to increased out put and productivity? Surely it is welcome that companies should increase their profits because of increased output and increased productivity, of which most of the companies she has mentioned are an example.
BARONESS PHILLIPS: I quite agree. I am delighted to know that they are making greater profits. I am using this only as a quotation, because I feel that, the noble Lord, Lord Erroll of Hale, was suggesting that in the existing circumstances some restraint had been placed on business which was a detriment to business. I am suggesting that perhaps business people do not find it is so. I am delighted to see profits rise. I am equally delighted to see wages and salaries rise, but I still suggest that the lot of a whisky manufacturer is happier than that of a postman.
LORD BRECON: It depends whether he drinks whisky.
BARONESS PHILLIPS: I have one other cutting which seems to suggest that the noble Lord, Lord Erroll of Hale, needs to direct his attention elsewhere and to other countries than this one, if he is to go completely into costs and price increases. This cutting from yesterday's paper says:
"U.S. cost of living goes up again."
I suggest that they have not a Socialist Government in America; but presumably the same trends are operating there. I believe, with others who have spoken, that the only way we can deal with this problem is to look at the matter both in relation to incomes and prices, and equally, I believe that we can all pull our weight. We must not seek to evade that responsibility if we ace to help some of our weaker members of the community. This is the responsibility of all of us—consumers, earners and those who manufacture the goods we wish to buy.
4.57 p.m.
LORD LEATHERLAND: My Lords, I have always had a soft spot in my heart for women. When I reflect that the women of Britain have thrown up a person like Baroness Phillips as one of their spokesmen, I feel that they have, at least, earned the right to equality. Her speech was like a breath of fresh air flowing through this House.
Since the present Government came to office some prices have gone up. They have been put up by manufacturers and by landlords. Many prices have not gone up: any increased costs have been absorbed by greater efficiency and greater productivity. And, my Lords, since the
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present Government came in many prices have gone down. We heard nothing about that from the noble Lord, Lord Erroll of Hale, in his speech. Let us get this situation in perspective. In the month of November the Retail Price Index went up by 0·8 per cent. and part of the month was incorporated in the tenure of office of the previous Government, so that we had to carry in that month's figure the hangover from the terrible night before. In the next month, December, the increase went down to 0·4 per cent. In January it went down to 0·3 per cent. In February it was all square, no increase, no decrease. My Lords, please notice the diminuendo.
There was an increase in April, when it went up by 1·9 per cent., but the greater part of that increase was in respect of luxuries, such as drink and tobacco and, perhaps to a lesser extent, motor cars. Those luxury taxes were imposed as part of the strategy to enable us to get away from the shattered economy we had inherited from the last Government. I am sorry to have to refer back to those thirteen years, but it is a hard fact. The remainder of that increase in the month of April was due to higher rents, imposed largely by Tory landlords and not by the Labour Government, and rates, imposed largely by Tory-controlled councils under a system of rating which they had inherited from a Tory Government.
I wish sincerely to thank the noble Lord, Lord Erroll of Hale, for having given us the opportunity to have this discussion to-day. His was a most amiable speech and a courteous speech, which is what we expect from him. I think he made the best of a very poor case and I will say something later about that. As to the noble Lord, Lord Byers, I have nothing to say about his speech, except that I agree with a great deal of it. I hope that my noble friends on the Front Bench will take note of many of the things he said, although he tended to get rather fierce on one occasion. I felt that somebody had "put a tiger in his tank", but he calmed down afterwards and the sensible tenor of his speech continued.
I must congratulate the noble Lord, Lord Erroll of Hale, on his newly-found zeal for the task of tackling rising prices. He could have done this many years ago, during any of those thirteen years

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when he was vociferously supporting the Tory Government or else administering their policy in successive stages of ministerial office. But it seemed that in those days he was too busy putting prices up to have much time left to think about bringing prices down. We all remember those famous cartoons in the Daily Express. not a paper of which I am enamoured, illustrating rising prices, which appeared at the time when the noble Lord was President of the Board of Trade, one of the offices of State which is directly responsible for the question of prices.
The noble Lord gave the House a lot of information, figures and facts, but no doubt he did not have sufficient time at his disposal to give us all the facts that are available. In helpful mood, I will try to supplement them. I know that the noble Lord will not object to this, because only a year or two ago he said that he was a kind of political Oliver Twist. Wherever he went, he asked for more. So, for once, I will give him some more. The first thing that needs to be said is that under the Tory Government of unhappy memory the Retail Price Index went up in this country more than in almost any other country in Western civilisation. It went up by 50 per cent. At the top of the international league table was France, then the high priest of the Common Market.
While our Retail Price Index was going up by 50 per cent., our import prices were coming down by 15 per cent. Although I am not so naïve as to think that a fall of 15 per cent. in import prices is enough to bring retail prices down by that amount, because other factors are involved, I should have thought that would be an inhibiting factor qualifying some of the big rises that actually took place. What did the Government of those days do in trying to hold prices? Absolutely nothing. with one exception. They did introduce the Resale Prices Bill, which is worthy of its promoters. But it took them thirteen years of dillying and dallying before they could finally make up their minds to introduce even that measure; and then to counterbalance that they sought to plunge this country headlong into the Common Market without adequate preconsideration. To have gone in would have had the effect of
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forcing prices up to the level where we see them in France to-day.
One of the claims which the noble Lord made during his period of office as Economic Secretary in 1959 was that the pound, which was worth 20s. of purchasing power when the Conservative Government came in, was worth 15s. 2d. We know that at the end of that period of Tory rule it was down to 13s. 2d. or 13s. 4d. If the noble Lord is going to appear as chief witness in the prosecution of the Labour Government for exceeding the speed limit in putting up prices, he must expect to be reminded of his own previous convictions.
LORD ERROLL OF HALE: My Lords, is the noble Lord referring to my previous police convictions?
LORD LEATHERLAND: Not police convictions, my Lords. The noble Lord is too noble a character to have anything like that. I am talking about the scandalous convictions that appear in his record of increased prices. In the very last year of the Conservative Government, when the noble Lord was President of the Board of Trade, Lord High Priest of the Price Department, tobacco went up by nearly 10 per cent., drink by 8 per cent., housing costs by 6 per cent., and food by 5 per cent., and there were thousands of other increases as well. The daily Press made no such song about them as it does to-day, but that is quite understandable.
I will now be a little more specific. In the last year of Tory Government it is a fact that 5,000 separate items which are bought by housewives in grocers', chemists' and hardware shops were increased in price. In January of last year the journal The Grocer said:
"One thousand items have increased in price during the past ten weeks."
I will not weary your Lordships by reading out the thousand items that went up in January, 1964, but they included frozen garden peas, margarine, sugar, Shredded Wheat, Marmite, tea cake mix, Fairy Snow, Campbell's soups, Daddy's sauce, Walls' steak pies, Sugar Puffs, and so on. It was not only in the grocers' shops that things went up; they went up in chemists' shops as well. Gibb's toothpaste went up from 2s. ld. to 2s. 3d., Pepsodent from 2s. 1d. to 2s. 3d. and Colgate's from 2s. ld. to 2s. 3d., and every other item through the whole gamut to Beecham's

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powders and Beecham's pills. And the Government did nothing whatever to try to stem those rising prices
One thing I want to make clear is that I do not blame the retail shopkeepers—grocers, chemists and hardware men—none of them. Grocers, for instance, are working on a very small margin of profit on turnover and recently many of them have had to take to stocking non-food goods in order to boost up their profits to a reasonable level, because the profit on foodstuffs is so very low. One is in duty bound to exculpate the grocers, whether the little men, the chains or the supermarkets, from any suggestion that they are profiteering. It is not only over the whole range of merchandise that we have been experiencing these phenomenal price rises during the Conservative Government; it is also over what I might call our "domestic invisible imports "—rents, for instance. The effect of the Rent Act, passed by the Government of which the noble Lord was a Minister, has been terrific. Rents of privately-owned houses have gone up 50 per cent. since 1957. As for council houses, the Conservative Government took a double blow at them. First, they cut down the subsidies and then put up the interest rates, thus greatly increasing council house rents. Rent is one of the basic items of expenditure of working class householders. They can do without tins of mustard or pickles, but not without paying the rent. Rent is for them the very basis of the Retail Prices Index.
House purchasers also were dealt a double blow: first, because the prices of their houses were forced up, and, secondly, because of the higher interest rates that came in as an accompaniment of the economic policy of the Government of the Party opposite. In 1951 it was possible to buy a certain kind of house with a mortgage of about £1,500; by 1964 one needed a £2,500 mortgage to buy a similar house. In 1951, on a £1,500 mortgage at 4 per cent., as it then was under a Labour Government, repayments were about £8 a month. In 1964, after those thirteen beneficient years of keeping down prices, on a £2,500 mortgage at 6 per cent., which was what it had gone up to during those thirteen years, a householder had to pay £16 a
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month. Just as a matter of record, when the Labour Government went out mortgage rates were 4 per cent., or just under, whereas when the Conservative Government went out they were in the region of 6 per cent.
Before any noble Lord interrupts me to say that they have gone up still further since the Labour Government came in, let me say that this is purely a temporary increase, which the Government are trying to tackle. Under the Conservative Government, it was a permanent increase, which they did not try to tackle at all. This particular increase now is only a temporary one. We know that the Minister of Housing and Local Government is applying himself assiduously to this matter, and that in a few months we shall be back on a lower rate of interest. And when we talk about this recent increase in mortgage rates, we have to bear in mind that it was on the way before the Conservative Government went out of office. It was a Tory cuckoo's egg dropped into the Labour Government's nest.
Where is the evidence of this? Before the General Election there were warnings given by expert writers in the Press, and warnings given by many of the building societies, and perhaps I might mention one or two of them. On September 30—that is well before the General Election—the chairman of the Leek and Moorlands Building Society, one of the biggest in the country and a member of the Council of the Building Societies Association, said:
"I cannot see us holding current rates much longer."
On October 1, again before the Election, the Financial Times said:
"Members of the Building Societies Association are likely to be recommended by their Council within the next few months to raise their interest rates if present trends continue."
In September the Observer said:
"Dearer mortgages after the Election are forecast."
On October 5, the Daily Express said:
"Building societies have recently been lending out in a single month almost as much as they were able to borrow over three months. If this goes on, the mortgage rate charged to home buyers will have to be higher than the present 6 per cent."
All this was happening while the Conservative Government were in office. It was a warning to us that, irrespective of any Government that might emerge from the General Election, mortgage rates would rise.

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If I may go back a little, and switch to 1952, we had the noble Lord, Lord Erroll of Hale, saying:
"Rising interest rates and high price levels "—
and this, as I say, was in 1952, not under a wicked Labour Government, but under the noble Lord's own Government—
"make home ownership to-day for young members of the middle class almost impossible."
If that is so, he is indicted out of his own lips.
I think I should say a word or two about land prices, because they have contributed so much to the increase in house prices, shop prices and office prices, and to the consequent increase of overhead charges for most kinds of establishments. The last Government deliberately encouraged the soaring of land prices. They not only put up the price of houses, but they put up the price of schools and other municipal buildings, and thus contributed to the increase in rates. I have knowledge of one or two examples within my own local government experience. We wanted to buy a playing field in a little Essex village. The value of it was £6,500 a few years before. We were asked £65,000; that is, the original value multiplied by ten. More recently, we wanted to build a road and we required a piece of land. It was valued expertly at £10,000. When we bought it, it cost £100,000. That kind of thing has percolated through every transaction in every business in the land.
As for rates, they have increased enormously during the last thirteen years. Time after time my Party said to the Government in another place: "Please do something about reforming the basis of rates ". And time after time one Minister after another answered: "No, there is nothing that we need to do."—and, in fact, one of them said: "There is nothing that we can do". I have been involved as finance committee chairman of a local council, and finance committee chairman of a big county council, and chairman of a county council, and have presented a paper on rates to the Rating and Valuation Association. I have been involved in rates for so long and so intimately that I know all the juggling that can take place with figures. So I am not going
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to quote any figures that have been compiled by the erudite experts. Instead, I am going to compare the actual rate bills of people in two ordinary houses in 1951 and in 1964. One of them is in a London suburb, and the other in a Northern town. The Londoner paid £30 under the Labour Government in 1951; he paid £75 under the late Government last year. The man in the North paid £23 in 1951, and £54 last year. I have the rate bills in my possession here to-day. And the Northerner comes from the constituency which was so admirably represented for so many years by the noble Lord, Lord Erroll of Hale.
Everything during those thirteen years was going up and up, and even during the last eighteen months of the last Government's life car insurance went up by rates varying from 10 to 30 per cent. All these things happened in the economic climate that had been created by that Government of which the noble Lord, Lord Erroll of Hale, was one of the senior Ministers. But they were not content just to scourge the ordinary householder with Tory economic whips; they decided to do it with Tory Budget scorpions as well, and in Budget after Budget additional burdens were placed on the ordinary people of this country.
Let us look at a few of them. In their very first Budget they swept away at one stroke £160 million of food subsidies, and they put up the price of food by that extent and a little more by putting 141. on a loaf, 1¼d. on flour, 4d. on meat, 1d. a quart on milk, 8½d. on tea, and corresponding increases on fats, cheese, butter, sugar, bacon and eggs. That represented about 1s. 6d. a head for every member of the population. But that was not all. In the same Budget they put up the purchase tax on clothing and furniture; they put up the car licence from £10 to £12 10s., and they put up the cost of the parcel post, telephones, telegrams and telephone charges.
In the next Budget they abolished the sugar subsidy and put up the price of sugar. In the following Budget they did nothing, but said it was a "carry-on Budget". In the Budget after that, which came just before an Election, naturally we were told there was prosperity all round, and there were cuts in taxation. But a few months later they discovered that there was a national

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crisis, and they had to introduce an emergency Budget which put up purchase tax on kitchen goods, clothing and footwear. The charges on telephones and postal rates were increased, and housing subsidies were cut so as to put up rents. Then we move on to the next Budget, when there were a few more cuts because it was thought an Election was coming.
In the Budget after that, cigarettes were put up 2d. In the Budget after that the poor car owner was punished again by the Tories. Not content with putting up his car licence from £10 to £12 10s. three years before, up it goes again from £12 10s. to £15: 2d. a gallon was put on fuel oil and paraffin, there was 10 per cent. extra on all forms of purchase tax, and 10 per cent. extra on tobacco, whisky and beer. But in the following year they felt so proud of having put these taxes on oil, drink and tobacco that they consolidated them. A 15 per cent. tax was imposed on sweets and ginger pop. Thirty million pounds was taken by that particular tax out of the pockets of the working-class people. Fourpence a quart was put on cider, and purchase tax increased on furniture and clothing.
In the Budget after that, they had to give it a rest, and there was no increase. But last year wine went up by 6d., spirits by 3s. and beer by 1d.; cigarettes went up 3d. or 4d. and tobacco by 4½d. or 5d. All these increases were executed by the instrument of the hand of the Conservative Government. Altogether in these Tory Budgets drink has gone up three times—four times if you include cider, and five times if you add my little grand-daughter's bottle of ginger pop; tobacco went up five times, petrol went up three times, fuel oil once, postal charges twice, sweets once, purchase tax three times and car licences twice. But I want to be fair—fairness is my middle name. They have reduced purchase tax on occasions, too; but I am talking about this deliberately preconceived plan of forcing up prices by increasing taxes.
In addition, bread prices went up twice because of their deliberate act in cutting the subsidy. Other main foods went up for a similar reason; and prescription charges were increased three times. By other means outside the Budget they carried on this work. They put the bank rate up twice to 7 per cent., and
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they forced the mortgage rate up, as I have already said, to 6 per cent. They imposed enormous increases in rents, both private and council, approximately 50 per cent. on an average. They increased the National Health contribution from 5s. 1d. to 14s. 1d.
I should like to say a word about the prescription charges. They are very interesting, as they reflect the kind of Government which has failed to keep down the cost of living of the working classes. In 1952 there was a fee imposed of 1s. for each form; in 1956 that was increased to 1s. for each item; and in 1961 it was doubled to 2s. for each item. Again, in 1961 the charge for teeth went up to 15s. and for spectacles to 5s. The charge for amenity beds was doubled; orange juice was put up 1s.; and there was a charge for cod liver oil for the first time, at 1s. a bottle. Out of the mouths of babes and sucklings they took their taxation.
That year, 1961, by some peculiar coincidence was the year in which the noble Lord, Lord Erroll of Hale, was promoted to become President of the Board of Trade. I know that I have been quoting quite a lot of figures, which is something I do not like doing, because it is difficult to keep them in one's head. Therefore I have reduced to graphical form a curve showing the increase in the cost of living during the thirteen years of Tory Government, which I exhibit as Exhibit No. 1 for your Lordships. Your Lordships will note a rather steep rise at the year 1961. That, by a coincidence, is when the noble Lord, Lord Erroll of Hale, became President of the Board of Trade. But I will proceed. I have just noticed the clock. "Fast falls the eventide," and I do not want to delay your Lordships too long. But although "fast falls the eventide," I hope the darkness does not deepen. I have been trying to shed a few shafts of light on this situation.
I prefer always to be constructive rather than destructive, and I have noted half a dozen constructive items to which I think the Government ought to devote their attention. Some of these have been mentioned by my noble friend Lord Champion, and I am sure my noble friend Lord Rhodes will want to mention others, so I will say nothing about them except

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to assure your Lordships that I have seriously devoted my mind to an attempt to work out constructive policies to meet this situation. I should never like to be thought of as one who was prepared to wreck but not himself prepared to build.
No doubt there are other steps that can be taken, but I do not like some of them. I do not like the suggestion of toll roads put forward by the noble Lord, Lord Byers. I am afraid that would be just another step in putting up the rising spiral of prices. I do not like very much the suggestion put forward by the noble Viscount, Lord Eccles, in our debate last week, when he wanted to impose a levy on all imported textiles. I do not like the proposal put forward by the former Prime Minister yesterday, when he wanted us to take another headlong, blindfold, dive into the Common Market, before we realise what effect that would have in putting up prices in this country.
I certainly do not like the traditional Tory remedy that they operated twice during their period of office (Mr. Macmillan was instrumental on one occasion) of deliberately creating unemployment in order to bring down the cost of living. I rather like the position where people have money in their pockets and are able to spend it, even if a penny or twopence has gone on this or that. That is the position to-day—I will not say "thanks to this Government". This Government has been in office for six months, and the unemployment figures are now the lowest for four years.
Where did Tory policy get us? I always like to read authoritative analyses of this situation, and my bank manager sends me the Midland Bank Journal which, in its review of 1964, said this:
"The rise of 5 per cent. in retail prices during 1964 was, in fact, the largest annual increase since 1961."
Then Local Government Finance, another very reputable journal said:
"… the autumn was a time for swift decisions and strong measures, and it is to the newly-elected Government's credit that it did not fail to take them."
It is because they took those bold measures that they found it necessary to impose these small increases in taxation which have had the effect of putting up the cost of living index figure for the month of April.
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I have already thanked the noble Lord, Lord Erroll of Hale. I think he has given us a very useful afternoon. Even Members of your Lordships' House who have absented themselves to-day have probably realised the importance of prices of one kind or another. In his speech, the noble Lord made a number of prognostications about the horrible future that lies ahead of us. I do not think we should take him too seriously, because he made one of these in 1955. He tried to frighten us then, and he said:
"If you return a Labour Government you will see the return of the ration book."
A Labour Government was not returned. A Tory Government was returned, and we had ration books back for petrol; and the Government of which the noble Lord was a member introduced and enforced those measures.
I want to close with a query to the Government. Is it necessary still to continue this high bank rate? The bank rate is a very clumsy instrument. It is a classical monetary instrument, but it operates clumsily and indiscriminately over those industries which need to expand and those which do not need to expand; on the essential, basic industries on the one hand, and the luxury, dispensable industries on the other. If it were reduced it could bring prices down by one swoop. We cannot hope for it until the Finance Bill has passed through another place, but the sooner it can be done safely the better. I shall be reinforced in putting this forward to my noble friends on the Front Bench by the wonderfully fine gold figures that have been announced to-day. In some of the other measures the Government have to take—and in which I shall support them, in so far as they have already been announced—we may have to employ some patience. In any case, it takes nine months to create a baby, and in six to twelve months you cannot expect to see the complete rebirth of a nation's economy.
5.28 p.m.
LORD SEGAL: My Lords, there are occasions when the absence of a time limit to speeches comes in very useful, and I think that many of us on this side feel that it operates particularly usefully in cataloguing some of the sins of the

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previous Conservative Government. If time were taken, as my noble friend Lord Leatherland has just done, to catalogue all the price increases that have occurred during the last thirteen years, then assuredly the absence of a time limit on speeches will be most welcome.
Perhaps I may be allowed also to add my own words of congratulation to the two maiden speakers we have been privileged to hear this afternoon. After his maiden speech to-day many of us will realise that the noble Lord, Lord Killearn, shows promise of becoming a distinguished son of a very distinguished father. Those of us who had the privilege of serving in the Middle East during the war know how his father's name was almost legendary during those years of stress, trial and hardship. Especially do we owe him admiration and gratitude for the way in which he championed, at times almost single-handed, the cause of those who were dispossessed after Suez. We welcome the presence of his son among the company in this House, and we hope not only that we shall be privileged to hear him on many future occasions but that, since he has already whetted the appetite of this House, his next intervention in our debates will not be too long deferred.
Equally in the case of the noble Lord, Lord Hilton of Upton, what has been the loss of the other place has certainly been the gain of your Lordships' House. He speaks with a particular knowledge of his own subject and with a particular authority in the counsels of the Labour Party, and I am sure that his presence here is extremely welcome to all sections of the House and that his intervention in our debates also will be greatly looked forward to. The noble Lord, Lord Erroll of Hale, was in many ways an obvious choice for opening this debate, and noble Lords on all sides of the House will be grateful to him for having raised this subject. He speaks with many years of experience as a former President of the Board of Trade, and also as representative for many years in another place of the constituency of Sale. So we can, I think, regard him as an authority on stable prices, and can feel sure that he has no intention of altering them.
Having said this, may I add that it is hard to imagine any gathering at this par-
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ticular juncture more gifted with the attribute of hindsight after the very brief period which this Government have so far had in office? But I would ask the noble Lords opposite: what would a Conservative Government have done? Can anyone assert that prices would not have risen also had a Conservative Government been in office? Everywhere else prices have risen. In this country they were steadily rising long before the advent of the Labour Government. As has been already pointed out, in the twelve months prior to 1964 there was a rise of 4·2 points in the cost-of-living index, but under this Government at least we have had a rising rate of production, instead of stagnation, instead of a period of waiting for the outcome of the General Election.
Prices of essential commodities in this country still compare extremely favourably with those abroad—for example, in France, Belgium, Germany and Italy. Would noble Lords opposite assert that in the case of France this was also due to the measures of a Socialist Government? General de Gaulle has been called many names in his time, but I have yet to hear anyone call him a Socialist. In fact at one time prices in France rose so high that the Government had to intervene and impose price controls. This has not yet happened in this country, under this Government, and I hope that it never will; but it requires the active co-operation of private industry with the Government, which we have not yet fully had.
In their White Paper on the Machinery of Prices and Incomes Policy the Government have stated most emphatically that persuasion and pressure of public opinion will be relied upon to ensure that the findings of the Board will be accepted. It is in the tradition of this country that the voluntary method should always be tried. Whatever may be needed in France, it is to be hoped that in this country no alternative measures should have even to be contemplated. Some large firms have, indeed, set a fine public example and have actually lowered their prices and cut their profits. Some others have deliberately held their prices, despite rising costs. All credit is due to them, and one can only wish, in the country's interests, that their example would be more widely followed. So let not noble

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Lords opposite blame it all on the Labour Government. Prices would most certainly have risen, perhaps even more under a Conservative Government.
After all, by whom have the prices been raised? Not only by the Government, but by private industry; and it is in the sector of private industry that the rises have been most marked. In the public sector any rise in prices has been controlled, and the facts have been fully investigated. Then price rises were sanctioned only after public industry had passed through the most careful scrutiny. But rises in private industry have been uncontrolled. At least this Government have, in all fairness, established the National Board for Prices and Incomes, to try to stabilise prices where rises may be unjustified, and with the backing and approval of the country as a whole. Yet this is still violently opposed by the Wolverhampton School of the Tory Party. Surely all parts of this House can now lend their good will and their active support to this part of this Government's policy.
The difficulty has arisen where prices have been raised without justification. When I went to get a suit cleaned last week I was told that the cost had gone up from 8s. 11d. to 10s. 11d., a rise of 22 per cent. When I asked why it had risen so much, I was told, "Prices are going up all round, so we have to raise ours as well. After all, what can you expect under a Labour Government?". It is no good saying, as was said so often in another place, that everything will adjust itself if we allow free competition. Free competition is possible only in a free economy, and the temptation to cash in on higher profits is far too great. Prices have been raised unfairly, not because of any actual increase in costs but because of fear that further cost increases are yet to come; on the basis of "Let's all make hay while the sun shines and before the clouds begin to gather This is so manifestly unfair that the Government are right to bring the full facts out into the light of day and bring the pressure of public opinion to bear. I have no doubt that at the next General Election the people of this country will deliver their verdict, and the policy of this Government will be seen to have been justified.
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In its illuminating series on "The Shopping Revolution", The Times of two days ago gave this instance of rising prices in the supermarkets:
"An American survey has shown that a decrease of price by 2 per cent. and no change in sales cut net profits by 80 per cent. With a price rise of 2 per cent. and volume of sales dropped by 10 per cent., profit rose by 29 per cent."
What private enterprise can resist such a temptation to cash in on the chance of quick profits, even at the risk of a reduced turnover, and let competition go by the board? The plain fact is, my Lords, that competition alone is not enough to bring prices down, despite the abolition of R.P.M. It might be enough in a free economy, but to-day we are living in an artificial economy where some restraints have to be placed on imports. There is still a risk of our being flooded by cheaper manufactured imports—cheaper because in some areas labour is cheaper and the standards of living are lower.
What would be happening to-day if we had followed Tory advice and joined the E.E.C.? Certainly prices would have gone up, even under Tory rule, to a level around those prevailing in other E.E.C. countries. Noble Lords cannot deny this fact. They would have accepted these rising prices willingly; and so, I believe, would the country as a whole. The small sacrifice of a controlled rise in prices would have been felt to be worth while, if only to link our economy with the wider economy of a united Europe, and in order to afford ourselves greater markets and a larger field of enterprise.
Meanwhile this year, even without a Channel Tunnel, we seem to be facing a still greater influx of visitors from Europe here in the summer months, from France, Germany, Italy, Belgium and Scandinavia, all eager to buy our quality goods which, despite our rise in prices, they know they can buy so much more cheaply here than in their own countries. Let us not blink facts. This is still a good country to live in and a very good country indeed to shop in. The plain fact is that the electorate now realise that in certain glaring instances private industry has not always been playing the game and not always working in the interests of the country as a whole. I hope it is not too late for all

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sections of private industry to make a fresh approach to the Government and agree to collaborate in a wages and incomes policy, and to forgo the immediate prospect of a sudden rise in profits by making an arbitrary rise in prices. I believe that such a step would be to the direct long-term and short-term advantage of private industry itself, because at once it would increase the feeling of confidence abroad and would go a long way to stabilise the pound sterling.
Of course mistakes may have been committed, mistakes on both sides, as was pointed out in the Financial Times of yesterday. Labour sympathisers are still suspect in private industry and not welcome on many boards of directors. But surely it is not yet too late for private industry to sink some of its doctrinaire antipathies, some of its traditional free-for-all, open-competition, and "Let the Devil take the hindmost" attitudes, and to make a genuine approach to the Government, so that both sides of industry can pull together for the welfare of our country and the strengthening of the pound abroad.
Some striking examples have been seen of late in the export field, such as the efforts of I.C.I. to further its trade into China. Many of the heads of industry have a fine record of public service, some even as former Treasury officials. Let them throw their whole weight behind the Government's policy when they realise that the Government's motives are right. Let them come forward and support this policy where they see that it is in the interests of the country as a whole and not in the interests of one section alone. We are privileged to have here as Members of this House leaders of many sectors of private industry, in agriculture, engineering, textiles, the distributing trades, the national Press and many others. Indeed, there are few sectors of private industry that are not represented here among us. Instead of hatchets being swung around in all directions, let us go in for a policy of hatchet-burying. Then indeed we need have no fears about the stability of the pound or the future prosperity of our country.
5.43 p.m.
LORD CITRINE: My Lords, although my name is not down on the list of speakers, there are one or two comments
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I should like to make. In view of what is to follow, I will make them as brief as possible. First, I join in the congratulations to the noble Lords, Lord Hilton of Upton and Lord Killearn, who made their maiden speeches, and I am sure they will make their mark in this House in the days to come.
I knew Lord Erroll of Hale as a good electrician, a good electrical engineer, and, in later days, as a capable Minister of Power. I had not heard him as a politician, but now I have a somewhat better idea of his capacity in that direction. I want to make only two comments on his speech. One is on the question whether the nationalised industries are likely to be brought within the purview of the incomes division in the machinery that has been set up. So far as I know, yes, most certainly that is likely to take place. I think they would prefer it. They have always been under the searchlight. First of all, there is the Minister who keeps close observation on what they do and exercises considerable influence behind the scenes; there are the consumer councils; then there is the Press and the public, and there are the debated Reports submitted to Parliament, besides which there are periodic inquiries by ad hoc committees and Select Committees of Parliament. I wish private industry were subject to the same sort of scrutiny. The time will come, perhaps, when they will be; it may be that the voluntary methods that are now being suggested to be employed in the scrutiny will develop into something of that kind.
The industry I was mainly concerned with was electricity and we deliberately operated a low prices policy until we were required by the Government of the day, a Conservative Government, to make 12½ per cent. on our assets for the purpose of providing a larger proportion of capital from our own resources than formerly. That was the cause of price increases by, I think, every Board in the country. This occurred either in the beginning of Lord Erroll of Hale's period of office, or shortly before. Still the price increases in electricity are very much less than those charged in industry and commerce generally. The only exceptions that I know, where increases in prices have been lower, are in public lavatories and weighing machines. I do not think there has been any material increase there.

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The second point I want to speak about is wages. I am sure it is not realised, particularly by people who have not had first-hand experience of the trade union movement, that the plan that is now being brought forward, and which the unions, through the T.U.C., have accepted, represents a revolution in collective bargaining. I tried to bring something of that point out when we first debated the subject of co-operation in industry under a Motion some years ago. It has got to be realised that the main purpose of a trade union is to get increases in wages for its members. Let that be understood. And if this policy is seriously modified in any way or other there is bound to be reaction from the members themselves. It is quite inescapable. We must be very careful how we go about operating a policy of this kind.
They can increase production only to a limited extent. They can abandon restrictive practices such as exist, but I think when scrutiny is made of this it will be found that restrictive practices of one kind or another on the part of employers and those engaged in commerce are very much greater than those operated by the trade unions. They have no guarantee that, if the chaps work harder or more efficiently, that will be reflected in lower prices; there is no guarantee of that at all, and consequently it is a matter of taking the policy very much upon trust. So far as my judgment takes me—and I dislike saying these things—with a rising price level, I do not think there is any likelihood that the trade unions will refrain from pressing upon employers demands for increases in wages. They are accustomed to negotiating with a body of employers in particular industries. They base their case on particular factors like the demand for labour, comparability with other occupations and industries, the ability of industry to pay, and basically a living wage for the people employed therein.
Now they have got to condition themselves to a quite different policy. They have now got to base their claims upon national productivity, which at times is very hard to analyse and to assess until some considerable time, maybe years, has gone by. They are now geared up to this policy, and through the T.U.C. they have by a majority endorsed it and are
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ready to go forward with it. But remember, the T.U.C. itself has only a moral authority over its trade unions; and, as I see it, they cannot compel any union to conform, and I think there are bound to be divergencies in the future.
I echo what Mr. George Woodcock, the General Secretary of the T.U.C., said. I do not see any hope in the first twelve months of this policy operating as it will ultimately operate. The Government are relying upon voluntary methods, and unless the rest of us try to make these voluntary means succeed, some measure of compulsion will have to be applied on somebody. That means a struggle with our traditions, both in the trade unions and in industry and commerce. That means a struggle that I do not like to contemplate. As I said in a previous debate, the eyes of the workers or focused upon prices. If the control of prices fails, then I do not believe for one moment that it will be possible to restrain the unions from making wage applications. I am as conscious as any trade union official can be that real wages should be the basis of the policy; but it is a much more difficult thing to get that understood by the average member.
LORD CHAMPION: My Lords, I beg to move that the House do adjourn during pleasure for the Royal Commission at six o'clock.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
6.0 p.m.
The following Bills and Measure received the Royal Assent:

Industrial and Provident Societies,

Rivers (Prevention of Pollution) (Scotland),

Cereals Marketing,

Dangerous Drugs,

Airports Authority,

Museum of London,

War Damage,

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Teaching Council (Scotland),

Criminal Evidence,

Development of Inventions,

Glasgow Corporation Order Confirmation,

Barclays Bank D.C.O.,

Walton and Weybridge Urban District Council,

Saint Anne, Soho,

Liverpool Exchange,

Port of London,

Saint Mark, Camberwell,

Durham Markets Company,

Saint Mary, Alverstoke, Burial Ground,

Benefices (Suspension of Presentation) (Continuance) Measure,

House adjourned during pleasure.
House resumed.

PRICE INCREASES AND GOVERNMENT POLICY
6.17 p.m.
Debate resumed.
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): My Lords, I must confess to a surge of pride in our institutions, which went through me when I heard the last Act before the Lord Chancellor vacated the Woolsack, but I hope that will not prevent me from saying what I have to say to the noble Lord, Lord Erroll of Hale, who at the moment is absent, in as straightforward a way as I can possibly manage. The usual rule on which I have tried to work is that I answer only the people who are in the House at the time when I speak. On that basis I ought to be sitting down, but I see that the noble Lord is coming.
Only two noble Lords who are members of the Party opposite had a "go" inside the House of Lords this afternoon, but they may have been having "goes" somewhere else. They are probably more interested in starting prices than in rising prices. I think that the noble Lord, Lord Erroll of Hale, has been adequately answered this afternoon
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by practically everybody who has got up on this side of the House. I thought, too, that he was adequately answered by the remarks of the noble Lord, Lord Byers, who made a particularly good speech. There may have been a few things with which I did not agree; nevertheless I would accept most of what he had to say. I am not going to make a long speech; I do not need to. We have had an important debate, when the life of the country is at stake so far as prices and everything that goes with them are concerned, but there have been only two speakers from the Opposition side and one from the Liberals. Here, on this side, are the people who are really interested and who have given of themselves this afternoon.
Now the noble Lord, Lord Erroll of Hale, started off by talking about our Election promises. In all conscience, the noble Lord, Lord Leatherland, has gone back far enough, but I will go back just one stage further. Do you remember that poster about "Mend the hole in your purse"? The noble Lord had it up in Altrincham. Do you remember what they did afterwards? He was nodding at the time the noble Lord, Lord Leather-land, was talking, but if he will read it in Hansard to-morrow it will be nice bed-time reading.
There is one matter on which I want to take up the noble Lord seriously and on which I want to get him right, because there will be times when we shall be facing each other across this House in the months and, I hope, years to come. He said, as I remember it, that it is a delusion that the Government can expect manufacturers to keep down prices by efficiency. I give the noble Lord the opportunity to deny that or alter it, just as he wishes, and I will take him up on it or let him go.
LORD ERROLL OF HALE: My Lords, I do not wish to take up too much of the noble Lord's time, because he has a commendable reputation in this House for brevity. I was going to refer to this matter in my own final remarks.
LORD RHODES: Oh! The noble Lord is just like the noble Earl, Lord Dundee—catching up on himself after he has made a bloomer. That is precisely what happened last Wednesday—and I have been reading Hansard for last Wednesday. What a debate!
LORD BYERS: My Lords, may I interrupt the noble Lord? Will he not exert more pressure on the noble Lord to get an answer out of him? We cannot leave it like that.
LORD RHODES: In that case, I will.
LORD ERROLL OF HALE: If noble Lords will not object to my intervening yet again, I will say perfectly clearly now that what I said was that it was a delusion to expect firms to absorb increased costs imposed by the Government through increases in efficiency, because they were already doing this very thing all the time; and, secondly, that any increases in efficiency should be passed on to the public in the form of lower prices, which will be denied to John Citizen through the Government's increasing of industrial costs.
LORD RHODES: Unless the noble Lord is good at getting Hansard to alter what he has already said, that will not he as it will appear in Hansard tomorrow.
LORD ERROLL OF HALE: I must intervene immediately on that point. I never have Hansard altered except to deal with grammatical changes.
LORD RHODES: It is very nice to hear that, because we are assured now that we shall get in Hansard to-morrow morning exactly what he said. I stand by my interpretation, and I am sure the noble Lord, Lord Byers, will corroborate it.
My Lords, it is possible to hold prices by efficiency. The noble Lord, Lord Byers, was talking last week about directors and business experience, and I will give him one of my own experiences. I was in Germany attending the Inter-staff Fair last week, and, on the Thursday morning I read the most garbled version of a speech of a noble Lord in this House that I have ever read. It represented the noble Lord, Lord Byers, as patronising the Labour Party because it had no businessmen in it, because it had no directors in it. But he was not patronising at all. What he was doing was stating a fact. He was stating a fact, not only for his own Party but for ours. This is something which has been going on for ages. I remember, if I may say this to the noble and learned
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Lord the Lord Chancellor, learning the part of the Lord Chancellor in Iolanthe, when I used to be in amateur theatricals. I can see myself bouncing about the stage now, saying—and it was because of his disappointment that he had not been allotted a beautiful maiden, who was his ward:
"There is one for thou and one for thee,
But never, oh never, one for me".
I think it is a gross mistake; but I consider the noble Lord, Lord Byers, overrated the importance of awarding that kind of distinction. It is necessary to acquire the knowledge that goes with that kind of office, but I think that it can be overrated.
LORD BYERS: My Lords, the noble Lord was not here. I asked only for two or three people of the stature and experience of the late Dick Stokes. That is all I asked.
LORD RHODES: There is chance for some of us yet!
Now let me say this to the noble Lord, Lord Erroll of Hale. From the end of the war (and this is in line with his speech) my company held prices against wage increases until 1961. We did it by investment in efficiency and productivity, doing more on the same floor space with less labour, and doing it better. We failed in 1961 for the first time, and the reason why we failed is right at the centre of this problem.
This is a personal experience, and I will describe it. The demand for an increase in the wage rate that year was 3 per cent. That is near enough to the norm to which we have got accustomed now—accepting a 3½ per cent. yearly increase for the sake of my illustration. At the same time, it had been agreed between the employers and the employees that there should be a reduction of 2¼ hours in the working week. The working week was 45 hours, so that meant it was to become 42½. Anybody can get a pencil out now and can work out for himself what the percentage really was. In theory, it was 5·88 per cent. By the time we had had it in operation for six months and had analysed it on a good costing basis, we found that it was nearly 8 per cent., and the reason for that was that the departures from work and the little acts that go on in the course of the

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working day were still as numerous in a shorter working day as they were in a longer one. So it is the extraordinary happenings in terms of hours plus wages that can give a twist to the upward spiral which is the despair of many manufacturers in this country to-day. They are looking to the Labour Government to get them out of this dilemma—and we are hoping to do it.
The noble Lord dealt with nothing else but pay rises. He never mentioned the question of capital gains or anything else which had to do with the other side, as he himself indicated to the House—nothing whatever. Does the noble Lord not see that one section of this population has had the advantage of being able to offset inflation the whole time since the war? If you had the money to put into equities, you would put it into equities. A person like myself did very well. If you had the money you could offset the inflation. This was seen to be obvious. Everybody knew that the people who had money were able to offset inflation. The truth is that this has had one of the most salutary effects on the Tory Party. I will come back to that in a minute.
I want to say to the noble Lord, Lord Byers, that some of his ideas were good. I think it would be a good idea if teams were to go around explaining this, because in the last thirteen years nothing was done in the way of explaining to the people what this policy means. Will the noble Lord come with me?—because on this I will go with him, and not be ashamed to do it.
On his point about the postmen, I can say that a study of the problem of greater efficiency of the postal services is already being tackled, as is explained in the White Paper on Post Office prospects. This has been put into operation. In addition to inquiries already in hand, industrial consultants have been called in to conduct a widely-based investigation into ways of raising the level of productivity and profitability of the postal services. I think that really adequately answers the noble Lord's question. If I did him an injustice when I thought hardly about him, nevertheless, after reading in Hansard his full statement, I both admired it and got a little laugh because after that this document in my
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hand argued that 40,000 directors cannot be wrong. They refer to what we are doing as "woolly". And then—and this is the most (shall I say?) curious set of metaphors in juxtaposition that I have ever read in my life—the ones who say the Labour Party policy is woolly go on to say this to the people who have not seen the light of day, those who are not as enlightened as the noble Lord, Lord Erroll of Hale, and seem not to have noticed the crack in the ice, the plume of smoke from the volcano, the shifting of the landslide. It curdles the blood.
LORD BYERS: My Lords, surely the noble Lord is not attacking me. If he reads my speech he will see that I particularly dissociated myself from this Right-wing nonsense.
LORD RHODES: My Lords, I am saying that I am indebted to the noble Lord for drawing my attention to it. It could have been, as I go abroad from time to time, that I missed it.
To the noble Lord, Lord Killearn, who made his maiden speech to-day, may I say that we hope we shall have the pleasure of hearing him often in the future? And then we heard from the noble Lord, Lord Sainsbury, to whose knowledge of the retail trade I bow. Who is there in this House or outside that has a better knowledge of the retail trade than he? His speech was sound, experienced and statesmanlike. I liked his crack about the Tories, the way in which they had discriminated in their increases. They four times raised the price of tobacco, but only twice did they raise the price of alcohol. They ought to have spread it out more evenly than that. But his knowledge and his statements about the incidence of prices were quite correct.
I should like to apologise to the noble Lord, Lord Hilton of Upton, who joined us from the House of Commons and who was a first-class colleague in that place, for not hearing his maiden speech. I apologise also for not hearing the noble Baroness, Lady Phillips. To the noble Lord, Lord Hilton of Upton, I would say that we look forward to hearing from him in future, because I know the fund of experience that he has in all things to do with the labour side of agriculture, and also in other practical matters. The noble Lord, Lord Leatherland, gave a

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long recital of price rises and the rest. I am certain there is no Member on this side of the House who will not reach for his Hansard to-morrow and put it in his knapsack ready for the next election.
To the noble Lord, Lord Segal, may I say that I thought his lead-in about the direction was excellent. The noble Lord, Lord Citrine, finished off the debate and spoke about the pressing of wage claims. He qualified his remarks by saying that new conditions now meant that the trade unions were conditioning themselves to national productivity. There is indeed a new air about.
My Lords, I should like to end on a serious note. The history of the present situation has been well understood. We are all in danger of embarking on a series of platitudes or going round in circles until we are sick and weary of hearing ourselves talk on this subject; that is, if we do not believe in it. It is the easiest subject to moralise on. There are five categories: public investment expenditure, private investment expenditure, public consumer expenditure, private consumer expenditure, and the last, the fifth, the balance of payments. The cycles have gone on through the years. We have had "stops" and "goes", and everything that has gone with them which I do not want to labour; but they have always ended with the last category, with balance-of-payments deficits. And what a whacking big one it was when we took office! It is now admitted by the noble Earl, Lord Dundee, to be £745 million. Anybody reading the Hansard of last week would wonder at Opposition speakers getting as involved as they did last week.
We have had experience of devaluation, of full employment, of pressure on prices. We have had numerous experiences of "stop" and "go"; of depression, of reaction reducing wages and profits and slowing down the rate of economic growth. Devaluation, "Stop-Go"—all are examples of our failure to be able to cope. Nobody can deny this. For thirteen years the Tory Government used its series of "Stop-Go" measures. I do not blame them for that—they did not know how to tackle it. When they found out they were not able to do it. They tried three types of remedy. First, the"Guiding
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Light", under Mr. Thorneycroft; next, the pay pause, under Mr. Selwyn Lloyd; and then the National Incomes Commission. There were genuine efforts to do something, but they could not get to grips with the situation. I say to the noble Lord who initiated the debate that if the Party which formed the last Government were faced with the problem to-morrow, they would not be able to cope with it again. It is beyond them.
It is interesting that the Royal Warrant instructed the Commission to study and report on the case history referred to them and to have regard to:
"the desirability of keeping the rate of increase of the aggregate of money incomes within the long-term rate of increase on national production."
It also told them to take into consideration the fairness of wages according to work done—productivity, if the noble Lords wish—and to the need for efficient deployment of manpower; to consider profits as well as wages, and to take into account the repercussions on other employments of any particular settlement. Everything to do with incomes; but never, oh never, a mention of prices—not one.
May I ask the Opposition whether they repudiate any of those desirable objects? Is the noble Lord, Lord Erroll of Hale, one of those who suffer from schizophrenia on this matter, as do the rest of the Tory Party? Does he believe in an Incomes Commission, or does he not? I am hoping that when the noble Lord winds up this little debate he will be able to say to us, "I, at least, am pure". After all is said and done, he tackled my noble friend very vehemently about his conviction—that is not quite right, about the likelihood—or was it convictions in a police court about which the noble Lord was talking? Perhaps he will tell us whether he is a believer in an incomes policy or whether he is in the other camp; whether he knows in his heart of hearts that it cannot be done.
There is a big difference between what has been done in these last few months and what was done at the National Incomes Commission. There are two outstanding and highly important differences. One is the definite commitment in the 1965 White Paper to an expanding

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economy, to overall economic growth and to an
"annual increase of money incomes per head which is consistent with stability in the general level of prices"
and
"distributed in a way that satisfies the claims of social need and justice."
The other difference between the policies of 1963 and 1965 is that whereas the former was merely the stated policy of the Government, the latter is the deliberately stated intent of all the principal organisations of business and employers, as well as of the Trades Union Congress.
I do not think that the noble Lord and his friends ever really understood the importance of this action on the part of the unions. The noble Lord does not understand the mistrust that has been in the minds of the trade union people for many, many years. The sort of thing they experienced has been bred in them. The noble Lord, Lord Segal, was talking of the victimisation of the old days. My Lords, let me tell you something from my personal experience where this sort of thing sinks deep. When Victor Grayson stood for Colne Valley in 1907 I was twelve years of age, and I had just began work. The noble Lord, Lord Byers, knows Colne Valley very well—
LORD BYERS: We nearly won it.
LORD RHODES: We shall have to watch the noble Lord.
Two years after that, my father attended a political meeting, and for his pains, although he was a marvellous workman, he was dismissed. Unfortunately, I was unemployed, too—at the age of fourteen. We walked to every mill from where I lived. The noble Lord, Lord Byers, will know the village; he came to speak there in the election. We called at every single mill between Saddleworth and Huddersfield. I do not care who knows it now. I am not ashamed—indeed, I have a kind of inverted pride about it, although it sank deep for a long while. We called at every mill and they lifted their little inquiry windows and then slammed them down. We walked to Huddersfield, and we stood on the platform at Huddersfield station. I looked at my father and I saw that he was crying. I had never seen a man cry before.
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My Lords, when you see you own father cry, you learn something. He said, "Nobody seems to want us." That is what went into the hearts and minds of these people. That is what the Tory Party could not see when they were going, in their sort of superficial way, to ask the unions to join. That is what they will never do.
But there are other things besides this, if there is full employment. I say this to everyone—and I am perhaps old enough for some advice from me to be accepted. As there is full employment, with more vacancies than unemployed, then it follows clearly that increase of productivity is essential if income per head—the declared objective—is to grow. The noble Lord said that we were under a delusion that we could become efficient, What has to be realised is that, while in the newer industries productivity is reasonably easy, in the industries which have a long tradition it is not easy.
Previous Governments have neglected to see that there was an endeavour to make quite certain that the productivity of machines should at least match the wages that were paid extra, year by year. I do not say that can be done year by year. I do not think that it can be done in four years. It may be done in five years, or in ten. That is what we have to work for and what the people of the country have to understand. That is why the industries, the traditional ones, are looking for the increased productivity of the machine. They should be able to get it. That is one reason why the Labour Government set up the Ministry of Technology.
The Tories perceived the resentment aroused by "Stop—Go". They saw the resentment caused by the pay pause which they adopted, and the policy of the "Three Wise Men", the "Guiding Light", and the N.I.C. They could do nothing about it. But when we have a really decent, first-class effort to do something about this impasse, and break through it, what do they do? They come here this afternoon with a mean, little squalid attack on it. I say that there are different sorts of patriotism and different reasons for having a Union Jack on the table at Election time. We must remember Nurse Cavell's words, "Patriotism is not enough"; and in my view an attack on this policy by the Opposition is unpatriotic.
6.50 p.m.
LORD ERROLL OF HALE: My Lords, we have had an interesting and stimulating debate this afternoon and I hope that your Lordships will permit a few final remarks, although, by the nature of things I cannot possibly reply to all the many and interesting points which have been made. Before I go further, I should like to congratulate my noble friend Lord Killearn on an outstanding maiden speech, and to say, as others have done before me, that we hope to hear him contribute to our deliberations on many occasions in future. The noble Lord, Lord Hilton of Upton, of course was a colleague of mine in another place, and although I did not feature very much in agricultural debates I remember hearing him on several occasions. I was delighted to hear him make his maiden speech to-day, although I should like to apologise to him for not being able to listen to all of his speech this afternoon.
I thoroughly enjoyed the speech of the noble Lord, Lord Leatherland, because obviously he had done his homework under the file named "Erroll". I do not know whether he secured it from the office of the Sun or from Transport House, but I must congratulate his organisation on keeping a very good file of Press cuttings and hand-outs over the years. I admit frankly that I had forgotten about some of the things I was reminded about this afternoon. I should like to correct only one thing for the record. He said that the Board of Trade was the Department responsible for prices under successive Conservative Governments, but we dismantled the outworn apparatus of price control which started during the war and was continued by the Labour Government after the war, as we were determined to let competition play its part in keeping prices down. While I was President of the Board of Trade, the Board of Trade had no statutory control over prices whatsoever. I have been interested to notice that the Labour Government has not so far seen fit to take measures of price control, and that, as I mentioned in my opening speech, is going to be one of the weaknesses of the Prices and Incomes Commission. When it is set up, the Government will not have any means at hand
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of enforcing any of the Commission's pronunciamentos.
I am sorry that the noble Lord, Lord Citrine, has not been able to stay, but I should like to thank him for the kind remarks he made about me. I have always held him in high regard, both as head of the Central Electricity Board (as it was then called) and also as one of Britain's greatest trade union leaders in his day. It was significant, I thought, that in his speech he was cautious in his attitude towards the Prices and Incomes Commission. He spoke out of his wealth of practical experience and also out of his share of bitter memories, as did the noble Lord, Lord Rhodes. He realises that what is desired is not going to be achieved easily. And I thought that he was right to say so as a supporter of the Front Bench opposite.
I should like to apologise for not having resumed my place when the noble Lord, Lord Rhodes, first stood up, but I was in the Library, looking quickly at the evening newspaper, in which, on the front page—it is almost daily news nowadays—I read that electricity is up 2s. in the pound in the London area: just one more increase which industry is expected to absorb and which, of course, will not matter very much to the housewife, because, as I am sure will be put out, it represents an average increase of only 3d. per household per week in the months to come. Of course, some industries and efficient firms within particular industries are able to absorb certain increases in costs, but for all of them there comes a point when those increases cannot be absorbed any longer. The noble Lord, Lord Rhodes, gave a striking example from his own industrial experience, experience for which I have the greatest respect. But, even so, it does not help industry if increased overheads are loaded on to it by Government actions. It makes the struggle just that much harder. Not only is it less likely that it will be possible to hold prices, but it certainly rules out any hope of securing price reductions through increased efficiency and increased production.
The extreme example is to be found in the Post Office which, as we accept, is a labour-intensive industry and is peculiarly sensitive to increases in labour costs. We know why the increases of

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postal rates came about. The noble Lord and others referred to the White Paper, but noble Lords opposite are singularly silent on the speech made by the Postmaster General, Mr. Wedgwood Benn, a few days ago, when, doubtless thanks to the preliminary report of his American consultant firm, he is already foisting on the public the idea that there should be only one delivery and one collection a day, and that the public, as distinct from business, should get their letters last. This is a low standard, to which the Americans are accustomed in their postal service, as distinct from their telephone service. I am not surprised that already we are not only having to pay higher prices for our letters by post, but are also being prepared for a further deterioration in the standards of service provided by the Post Office.
On the price of alcohol, which was referred to as having gone up twice in the course of thirteen years of Conservative government, I noticed that noble Lords opposite made no reference to the year 1959, when the price of beer was reduced by 2d. a pint. They also made no reference to many other tax reductions—far too many for me to list this evening—for which we were responsible. Were we able to have a longer debate to-night, I could provide a list which I am sure would impress noble Lords on all sides of the Chamber, including even the noble Lord, Lord Byers, whose speech I very much enjoyed.
Some reference was made to the way the prices of the services provided by the nationalised industries have been kept down, in contrast to the easy way in which private enterprise could often put up prices. On this point, I would say, for the Record, that from October, 1951, to May, 1964, the Retail Prices Index showed an increase in the field of clothing, footwear and household durables of 18 per cent. During the same period all other goods, except the services provided by nationalised industries, went up by 60 per cent., while the price increases of nationalised industries amounted to no less than 95 per cent. This shows, indeed, how nationalised industries have been able to put up their prices, and if noble Lords will look at their evening
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papers to-day they will see the latest example of that.
I have only one short comment to make on the two interesting speeches of the Government spokesmen to-day. I should have liked to observe a greater degree of humility in their approach to this problem. The noble Lord, Lord Rhodes, suggested that we had failed three times in this matter. I would not say so much that we had failed as that we had made three attempts, which had still to prove themselves successful. But we on this side of the House know from our own experience how very difficult it is to achieve the objectives which the present Government have in mind. All we learned from the Government spokesmen to-day was that the Government are hoping desperately, whistling to keep up their courage—
SEVERAL NOBLE LORDS: No, no! Not at all!
LORD ERROLL OF HALE: Whistling to keep up their courage, windy—[Interruption.]—windy, worried and fearful that they may be on the way out, that they may be dismissed from office by a public outraged at the difference between their promises and their performance.
I am sure your Lordships will appreciate that I do not wish to end on a controversial note. I will close by thanking all noble Lords who have so courteously taken part in the debate this afternoon. I hope that everyone feels we have had a good, constructive afternoon; and in that spirit I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

WRITERS TO THE SIGNET WIDOWS' FUND ORDER CON FIRMATION BILL
Brought from the Commons; read 1a. and (pursuant to the Private Legislation Procedure (Scotland) Act, 1936) deemed to have been read 2a and reported from the Committee.
BRITISH RAILWAYS BILL
The Queen's Consent signified, and Bill reported, with Amendments.
NATIONAL INSURANCE (INDUS TRIAL INJURIES) BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills, with Amendments, and recommitted to a Committee of the Whole House.
FAMILY ALLOWANCES BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills, with an Amendment, and recommitted to a Committee of the Whole House.
NATIONAL HEALTH SERVICE CONTRIBUTORS BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills, without amendment, and recommitted to a Committee of the Whole House.
STATUTE LAW REVISION (CONSEQUENTIAL REPEALS) BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills, with Amendments, and recommitted to a Committee of the Whole House.

SOLICITORS (SCOTLAND) BILL [H.L.]
7.2 p.m.
House in Committee (according to Order).
House resumed: Bill reported without amendment: Report received.

MAGNA CARTA CELEBRATIONS
LORD CHAMPION: My Lords, I beg to move the Motion on the Order Paper standing in the name of my noble friend the Lord Privy Seal.
Moved, That the Lord Chancellor do represent this House at the Service to be held on Thursday the tenth of June next in St. Paul's Cathedral to commemorate the 750th anniversary of Magna Carta.—(Lord Champion.)
On Question, Motion agreed to.