HL Deb 02 June 1965 vol 266 cc1125-58

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 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 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.

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 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 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 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 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. 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, 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 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.

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 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 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 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 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 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 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 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.

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 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 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 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 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.

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 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- 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 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.

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 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 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.

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 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.