HL Deb 11 August 1966 vol 276 cc1799-825



Power to bring Part II into force

6.—(1) Her Majesty may by Order in Council of which a draft has been laid before and approved by a resolution of each House of Parliament—

  1. (a) bring the provisions of this Part of this Act into force for a period of twelve months beginning with the date specified in the Order,
  2. (b) from time to time extend or further extend that period by a further period of twelve months,
and if the Secretary of State proposes to lay a draft of an Order in Council under this subsection before Parliament he shall first consult with such organisations or bodies as he thinks fit, being organisations or bodies which appear to him to represent to any substantial extent the interests of those particularly concerned with the Order.

2.16 p.m.

LORD WADE moved, in subsection (1)(d), to leave out "twelve" and insert "six". The noble Lord said: In moving this Amendment, it might be convenient to your Lordships if I were to make some reference to the following Amendment, Amendment No. 4. This is more than a probing Amendment, although it will provide an opportunity for spokesmen of the Government Front Bench to explain why these new compulsory provisions headed "Notices and standstills" are being introduced, and why it has been decided that these provisions should be introduced by an Order in Council which will be in force for a period of twelve months, with power from time to time to extend or further extend that period by a further period of twelve months. The object of this Amendment is to reduce the period from twelve months to six months; and that of the other Amendment, No. 4, is to delete the provision for further extensions. This is the first of the Amendments in relation to Part II, the Part of the Bill which introduces these new powers whereby the Government will attempt to enforce a standstill and to do so by the procedure of an Order in Council.

The object of the Amendments to which I have referred is to give Parliament a greater say in these matters. Some noble Lords may take the same view as was expressed in an article in the Economist on August 6, which was very critical of the Government's policy. The article contains this sentence: While the new temporary incomes policy is two-thirds based on muddle, the prices policy is nonsense through and through. Some noble Lords may feel in those circumstances that the only course one could adopt would be to oppose the Bill root and branch, but whatever views one may have about the Bill, even if one considers that it is ill-thought-out, and even if one considers that it may lead to confusion, we have a duty to try to amend it. That is what we are attempting to do.

I do not think that it is any answer to this particular Amendment to say that these provisions may never come into effect. We must assume that they will be, or may be, acted upon. If an Order in Council is laid introducing these new powers dealing with prices and dividends and wages the Order in Council will be unamendable; I do not think that is in question. This also applies to the controversial Part IV which we shall come to later. Parliament can only approve or disapprove. If one turns to Clause 6(1) one reads as follows: if the Secretary of State proposes to lay a draft of an Order in Council under this subsection before Parliament he shall first consult with such organisations or bodies as he thinks fit, being organisations or bodies which appear to him to represent to any substantial extent the interests of those particularly concerned with the Order. In other words, the Secretary of State is under some obligation to consult all kinds of organisations, except the Houses of Parliament.

I suppose someone might make the debating point that if Parliament is asked to say "Yes" or "No" to an Order in Council, Parliament is being consulted. I do not think the noble Lord who replies to this debate on behalf of the Government will make that point, because I do not think it would be accepted as a serious argument. I think it is clear that the only real opportunity for Parliament to put forward any constructive Amendments, and to be seriously consulted, is now. Afterwards, once this Bill is on the Statute Book, it will be too late. It is fair to say that there has been precious little time for Parliament to consider this Bill as a whole.

It may be said that we are in a state of emergency, and therefore drastic measures are required. I agree that the situation is serious. Why it has got into this unfortunate state is another matter—and we discussed that at some length in our debate last week. I en- tirely agree that the economic state of the country is too grave to permit of any action that is merely destructive, and I would make it clear, as I think it has been made quite clear already by my noble friend Lord Ogmore and my noble friend Lord Byers, that our intention is not to be destructive but to try to improve the Bill, which in our view contains a great many errors. It is all the more important that the right action should be taken at this time when the economic situation of the country is so serious.

Again, it may be said that what the country needs is a breathing space. It seems to me that overhanging these debates in the last two weeks two questions have not been answered; namely, how long is a breathing space, and what is a breathing space for? Surely it should be to provide time to produce a constructive and properly thought out policy. That has not yet been done. If the intention to use this Order in Council procedure and bring in these powers under Part II is claimed to give a breathing space, then I would say that it is too long. I believe that there is a very real danger that the Government, having obtained its attempted pay pause by the passing of this Bill with the period provided by Part II and the provisions in Part IV which we shall discuss later, will be tempted to regard, and make others regard, that as a solution. It is not a solution.

I do not believe that the provisions of this Bill, which are extremely complicated—the more I study them, the more confused I find myself—will provide a solution. Therefore I think that at the outset of our discussions on Part II we ought to try to ensure that the Government will be required to come back within six months at the latest; otherwise there will be temptation to sit back and say, "Well, we have got the Bill through; now we can carry on, and that will do as a solution." It will not. There is a point of detail on which I should like to pose a question at this stage, which perhaps could be answered from the Front Bench. I notice that in Part II it is provided—


Will the noble Lord help me? He refers to Part II, but we are dealing with Clause 6. Is he speaking to Clause 6 or another clause?


I am referring to Clause 6, in Part II. At the very beginning of Part II there is the provision that: Her Majesty may by Order in Council of which a draft has been laid before and approved by a Resolution of each House of Parliament— (a) bring the provisions of this Part of this Act into force for a period of twelve months beginning with the date specified in the Order. In Part IV, again, there is reference to a twelve-month period. Clause 25 provides that the period of twelve months shall begin with the date of the passing of this Act and may by Order in Council be continued in force for the remainder of the said period of twelve months. It would be interesting to know why there is this difference between the procedure in Clause 6 and that in Clause 25.

The more fundamental objection, however is the one that I have mentioned, the fear that this will be regarded as a breathing space—it is certainly too long a period—with the result that the long-term policy will not be worked out and Parliament will not be consulted. I think also that this has some bearing on the subject of productivity which was raised by my noble friend Lord Byers and will be discussed later in the debate on this Bill. I will admit at once that there is a distinction between, on the one hand, a vague declaration of intent in a nation-wide agreement, to the effect that there will be better productivity, and, on the other hand, agreements at company or plant level as a result of which there will be increased productivity which must be of benefit to the economy as a whole. It would appear that during the six months pause no such agreements will be approved.

Furthermore, if the new powers under Part II, and in particular under Clause 6, to which I am referring, are introduced, discussions about productivity will be deferred for very much longer than six months. It may be argued that during the six months period there is nothing to stop management and union representatives from discussing new agreements dealing with productivity and higher pay which might come into effect at the end of six months, but it would appear to me that if we embark on the procedure under Part II as proposed in Clause 6 these discussions are far less likely to take place. Discussions on the Fawley type of agreement will not, I fear, take place if Clause 6 of Part II is in operation. That is how I see it. I think those who get round the table will say to themselves, "There are these powers which are going to last a year, and maybe another year, and maybe yet another year, so it is not much good coming to an agreement because it may not be approved." I think that this clause will seriously prejudice the chances of these productivity agreements.

I should like to conclude by repeating the remarks I made at the outset. We are not trying to throw a spanner in the works. I recognise that we are dealing with a serious situation, so far as the economy is concerned. There are many of us who have very grave doubts as to the way in which the provisions of this Bill will work out. It seems to me that the proposals in Part II and those later on in Part IV will tend to make the situation worse, rather than better. Furthermore, it is essential that Parliament should be consulted at every possible stage, and therefore I believe that this period of twelve months, with power to extend it a further twelve months, is too long. So I beg to move the Amendment.

Amendment moved—

Page 5, line 39, leave out ("twelve") and insert ("six").—(Lord Wade.)


The noble Lord, Lord Wade, has expressed doubts two or three times during the course of his speech. If I may say so, his doubts really stem from the fact that he does not understand the purposes and functions of either Part II or Part IV. He seemed to get them completely mixed up. That may be due to the fact that the noble Lord has not yet had an opportunity to study the Bill fully. Therefore, since this Amendment clearly raises the broad issue of Part II, I think I should try to explain it to the noble Lord and to the Committee.

One should first realise that Part II will remain a permanent feature of the Bill, when it becomes an Act. This does not mean to say that it will be enforced, but it will be a permanent feature, whereas Part IV will die within twelve months of the passing of this Bill into an Act of Parliament. That is the first answer that I would give to the noble Lord as to the reasons why Clause 25, the operational clause (if I may use that term) of Part IV, and Clause 6 are so framed. Clause 25 reads as follows: (1) At any time in the period of twelve months beginning with the date of the passing of this Act…". This means that Part IV dies. There is nothing which you and I can do about it: Part IV dies automatically twelve months from the date of the passing of this Act. If Part IV had to be continued, it would be necessary for the Government to come to both Houses of Parliament with a new Bill. There is no way whatsoever—and we have done this deliberately—by which Part IV can be continued, other than by a new Act of Parliament.

Part II, however, is a permanent feature of the Bill, though it will not necessarily be in operation. It would be brought into operation by an Affirmative Resolution of both Houses of Parliament. Initially, it would be for twelve months. That is an arbitrary figure, but in the view of the Government it is sufficient to deal with some of the basic difficulties, to which I shall come shortly, for which we need Part II. Because we recognise that we may need to extend the period, we have included power to extend it, again by Affirmative Resolution; that power is in paragraph (b) which the noble Lord wishes to exclude. But that does not mean to say that, having invoked this power, it necessarily has to continue for twelve months, because subsection (5) says: Her Majesty may…at any time revoke an Order in Council made under subsection (1)…". So the Government are taking power for twelve months, and they have power to extend the period by legislation; but they also have power to revoke the Order if they think it right and proper so to do.


I do not want to keep interrupting the noble Lord, but it is therefore clear that at no stage will these powers be amendable by Parliament.


It is true that there is no means of amending the Order, but Parliament has power to reject it. My experience is that the Order will be made only after there has been consultation, and the whole basis of this Bill is voluntary agreement to exercise general restraint. There can be consultation and there will be consultation, just as consultation is taking place continuously in Parliament. Consultation is always possible. Certainly, in this House at least, it will always be possible to raise this matter and to have it debated.

I should not have thought it could be said that the Government were taking extreme powers. The Government would bring Part II into operation only if it was considered fundamentally necessary. The Government believe—and I have stressed this time and time again—that we can get voluntary agreements under Schedule 2, which covers the Declaration of Intent agreed between the C.B.I. and the T.U.C. last April, and that we shall be able to get the necessary restraint.

Is this course necessary? The noble Lord, Lord Harlech, referred to the "economic mess" into which the Government have got the country. I do not propose to go through many of the distasteful figures which I have given in previous economic debates regarding the increasing seriousness of our economic situation which culminated in the events of October, 1964. It is interesting to note that, during the period of the Conservative Government, our share of world trade dropped from, I believe, 20 per cent. to 13 per cent., largely due to inflation and inability to keep our prices basically competitive in the world markets. I do not intend to make any Party point, as I hope the noble Lord will accept; I seek merely to stress that we are not dealing with a short-term matter. In fact, we are dealing with a deep-rooted malaise in terms of the rise in incomes outstripping increased earnings from production.

In 1961 the increase in money incomes was £1,300 million, yet the earnings by way of increased production were £800 million; in other words, in 1961 there was a deficit of £500 million. In 1962 the increase in incomes was £1,100 million, yet the increase in production was £200million—a deficit of £900 million. In 1963 the increase in incomes was £1,600 million, but although the increase in earnings was infinitely better it still showed a deficit of £600 million. In 1964, which was the last year that noble Lords opposite were in office, incomes increased by £2,300 million, whereas production rose by only £1,500 million—a deficit of £800 million. Therefore, during those four years, 1961 to 1964, the increase in money incomes outstripped the earnings from increased production by £2,800 million. This is a very serious situation, and the real significance of it is that it is a continuing one. Again, 1965 was not good. The pressures were there from a booming economy and, let us be quite frank about it, the pressures are still there. If we did not obtain a voluntary incomes restraint during the next twelve months, we should again see a very large increase in incomes over production. The Government cannot stand idly by.

I would remind the House of the speech which was made by the noble Lord, Lord Brand, during an earlier debate, in which he drew attention to a report of the O.E.E.C. That Report said that the Government: must have a wages policy for dealing with the problem of wages just as they must have monetary or fiscal policies for dealing with the problem of demand. We are fully aware that to do so requires a decision at the highest political level and a political understanding of the need for it". That was 1961. As I said, we set out on August 3 to try to obtain a prices and incomes policy. I would not accept that we have failed. Certainly the T.U.C. set up this early-warning system, and so did the C.B.I. It would be wrong to say that both organisations have failed, but I think it is generally agreed that we did not meet with all the success that both parties deserved, due to the very heavy pressures that lay within the economy. Therefore, we have had to take these special powers.

Let us consider Part II. We do not strike at the voluntary agreement or at voluntary negotiation. The noble Lord, Lord Harlech, was utterly wrong when he said that this Bill struck at the very principles of freedom. If I may say so to the noble Lord, I am not sure what we mean by freedom. If we mean the freedom of living in a jungle, where the strong can beat the weak, that to me is no form of freedom. There is freedom where the weaker are protected. Perhaps the noble Lord, Lord Harlech, will read what my right honourable friend who is now the Foreign Secretary said the other evening in a fifteen-minute speech of tremendous emotion—he was really speaking, suppose, not to the House of Commons but to his trade union friends throughout the country. In that speech he said to the unions, "Of course, you are strong. You can do what you like. Some unions are stronger than others; but there are some that will suffer for it." That, to me, is not freedom, and I am quite sure that to the noble Lord, Lord Harlech, it is not, either.

This Bill does not strike at anybody's freedom. All it asks, in Part II, is that the unions and management should continue their voluntary restraint, and that they should voluntarily notify their two organisations, the T.U.C. and the C.B.I. But if that should fail, then the Government say, "All right. We must take these powers", and we make an Order that the claims of that particular section of industry or particular section of workers are clearly out of line with the principles of Part II. By making that Order we say, "You must notify us of your increase, and for thirty days you shall not proceed with it". I do not believe that that strikes at any man's freedom—at least, not freedom as I understand it.

What does the Order mean further than that? It means that, if the Government refer a claim to the Prices and Incomes Board, the Board shall have three months in which to consider the case and all the facts that are behind it. Does that strike at any individual's freedom? I should not have thought so. Then, at the end of that three months, whether the Board has or has not reported, it is up to the parties to the claim, taking into account the report, if available, and taking into account the national interest, to decide whether they should proceed, fully or in part. This Part does not strike at collective bargaining or at collective agreement. I would hope that your Lordships' Committee will understand that this lies behind Part II.

The noble Lord asked us to agree that the period of operation of the Order should be reduced to six months. That would not help the noble Lord in terms of Parliamentary discussion, because, whether it is six months, nine months or twelve months, the noble Lord does not suggest that the matter should be dealt with in any way other than by an Order. It seems to me that twelve months is the right period—and, let us face it, we are dealing only with the operation of the Order, not with the operation of the Part. The Part, in fact, may never be brought into operation; this may well be so. If we get the voluntary agreement, then it will not be brought into operation.


I am sorry to interrupt the noble Lord. I appreciate the fact that, if the voluntary proposals work, this provision may not be brought in, but, after all, it is there in the Bill, and we have to consider the possibility that it will be brought in. The noble Lord suggested that, in moving this Amendment, I was admitting that this must be dealt with at all times by the Order-in-Council procedure. By virtue of our procedure, I can amend only in this way, but I do not want it to be thought that I admit that the Order-in-Council procedure is desirable or necessary.


I, like most noble Lords, enjoy making a debating point, and I was doing so then. But this is the point of the noble Lord's Amendment. It does not, even if it is accepted, give to Parliament increased powers or opportunities of consultation over and above what is in the Bill; and, therefore, we really come down to whether it is six or twelve months. I would suggest that twelve months is the right period.

I sit down with this thought—and my mind goes back to this particularly because I see the noble and gallant Viscount, Lord Montgomery of Alamein, sitting opposite. We are in some economic difficulty. We need a period of restraint—and particularly will this be seen when we come to Part IV. I agree with the noble Viscount—and he has said this to me many times—that we should not talk about the Dunkirk spirit, in the sense that Dunkirk was a defeat. I think that most of us have in mind that Dunkirk was a great display of guts and grit by the British people, fighting back from adversity, but, seeing the noble Viscount opposite, I would rather refer to one of his earlier battles, if not his first battle, in the desert—Alam Halfa. This, noble Lords may remember, was a battle in which the Germans made their last attack upon the Alamein line. The noble Viscount fought it with 25-pounders against their tanks. It was a victory, even though we did not chase them afterwards; we had to wait a few weeks. But that battle made Alamein and the future campaign possible.

I take up the point of the noble Lord, Lord Wade, that if we fail to make use of this period of restraint when we get it, we shall have failed, even though in one sense we shall have succeeded. We have to make a special effort to get that productivity about which the noble Lord, Lord Byers, spoke. But I do not believe that, if parties are really determined to get productivity agreements in the interests of the workers and of the companies, that depends upon getting something now; I believe that the men who are prepared to make those agreements are prepared to wait. I have perhaps digressed a little, but we are dealing with the spirit of Part II.


May I congratulate the noble Lord on his knowledge of the conduct of the war?


It is only because I read the noble and gallant Viscount's books. I hope that the Committee will not accept the Amendment of the noble Lord, Lord Wade. I hope that the Committee now has a clearer understanding of the position, after my few words upon the spirit of Part II, and with that, I hope we may proceed to the next Amendment.


I had not intended to speak on this Amendment—indeed, I do not hold any particular brief for it—but we have had from the noble Lord, Lord Shepherd, something of a homily about not confusing Part II of the Bill with Part IV. Indeed, he rather castigated the noble Lord, Lord Wade, for muddling the two up. I must say that he then went so wide in his speech that it seemed to me that, for the most part, he was talking about Part IV rather than Part II.

Certainly, in my speech on Second Reading (if I can call it that, because we were supposed to take the Second Reading formally) I said that certain provisions in this Bill—and I was dealing particularly with Part IV—were an infringement of our normal freedoms. And when I said that, I had particularly in mind the power that was going to be given to the First Secretary to interfere in wage agreements that have already been concluded between management and labour and, indeed, in agreements between the Government and certain sections of the community like the doctors. If this is not an infringement of our normal freedoms, I do not know what is. That is what I was referring to in my Second Reading speech. I do not feel that it really arises at present on Clause 6 of the Bill.


May I ask the noble Lord, Lord Shepherd, a very simple, elementary question? Let us suppose that in October, 1966, the National Incomes Board reports on the question of the rates of interest that should be charged by the building societies. If Part II is in operation, is it open to the Minister acting on that report—I do not say that he will do so—to make an Order that those rates of interest must be reduced? It is a simple question.


This is the trouble. The noble Lord is now on Part IV.


No, I am not—


Let me finish. If the noble Lord reads Part II, he will see that the only power the Government or the Ministers have is to refer the claim to the Prices and Incomes Board. Once the Prices and Incomes Board has made its report then it is up to the parties, taking the public interest into account, to decide what to do. The point that the noble Lord made really arises on Part IV and not on Part II.


If I have the permission of the Committee to speak again, I should like to say that we have been told that the building society rates of interest do not come within Part IV at all.


May I be quite clear on this? I am thinking of the man on the shop floor. We have this necessity to increase productivity. If on the shop floor the production is increased, can the workers get more money in less than twelve months? I hope I am not egotistical in referring to my own experience: but I may be the only Member of this House who has been a member of a trade union and who, while at work, was exceeding the rule of the production line. I did not get any more money for it. My shop steward came and checked me and said I was not to do it. Coming to the present-day man on the shop floor who, with his trade union colleagues does more work, can he get more money in less than twelve months?


May I intervene before the Minister replies? He went very wide in his speech; in fact at one moment I thought he was going to blame the noble and gallant Viscount, Lord Montgomery of Alamein, for the economic mess we are in. I think we should remind the noble Lord—


I thought they were trying to get me to get them out of a mess.


I was going to say that in those days, one should remind the Committee, we had brilliant leadership, both military and civil, which we have not got to-day. But I want to ask the noble Lord this question because he certainly confused me when he said the Government will bring in Part II only if it is proved to be necessary. What was it that the Prime Minister was stating on July 20, when he said we were definitely going to have a wages standstill for six months followed by a period of restraint? If we are not going to bring in Part II unless it is necessary, and if we are not going to bring in Part IV unless there is a disaster, are we not wasting a little time?


I think the noble Lord, Lord Harlech, was right in his complaint about the shortage of time and that perhaps noble Lords have not really had the opportunity of understanding the Bill. Part II is nothing to do with the standstill announced by my right honourable friend on July 20. Part IV refers to the standstill. Part II is concerned with the "early warning" system and with the reference of such claims, in the judgment of the Secretary of State, to the Prices and Incomes Board. The matter of the six months' restraint does not arise in Part II. The reply that I would give to the noble Marquess, Lord Aberdeen and Temair, is that his speech could well be repeated to my noble friend Lord Champion on Clause 28.


Please do not bother.


The noble Lord will surely clear up this point. From what he said, if Part IV is to implement what the Prime Minister said on July 20, there is no doubt that Part IV is going to be implemented. This is not what the Goverment have said. The Government have said that Part IV will be implemented only if the voluntary system does not work.


The noble Lord is not so naïve as he is trying to make out. I am quite sure that the noble Lord, Lord Byers, knows what Part II does. If he does not, after what I have said, then Heaven help him! Part IV could be used to implement the statement made by my right honourable friend the Prime Minister; but we do not wish to invoke it unless the voluntary agreement (which we believe we can get and which we are hopeful of getting) is not forthcoming. If we get that agreement, Part IV will not be necessary. But Part IV will be brought in only to deal with those people who are not working in the national interest. Does that satisfy the noble Lord?




Then I cannot help him.


The noble Lord, Lord Shepherd, appears to be a great militarist. Has he ever heard of the Sword of Damocles?


I must say that I cannot square the Explanatory Memorandum with what the noble Lord, Lord Shepherd, has explained to the Committee. Paragraph 16 of the Explanatory Memorandum, which is attached to the Bill, says: Clause 15 empowers the Secretary of State or…another Minister…to direct that any award or settlement referred to the Board shall not…be implemented until the Board's report has been published or until three months after the reference… So there is a temporary standstill, whether we like it or not, for three months. I am not dissenting from this; but I think it is confusing to mix the standstill referred to in Part IV with that in Part II where, without doubt, we have a temporary standstill while the Board considers the matter and until the report is made. I do not dissent from that: but it is a matter of clarity.


I am afraid that some noble Lords will be even more confused now than at the outset of this Amendment. I would direct the Committee's attention to the fact that the heading of Part II is "Notices and Standstills" and also to a reference to the Board making a resolution in a standstill which is the object of Part II. How this cannot be a standstill at all, I do not understand. I am afraid that while recognising, perhaps, that the major battles will come on some of the other clauses, I still must say to the Committee that the reply of the noble Lord, Lord Shepherd, has been far from clear.

On Question, Amendment negatived.

Clause 6 agreed to.

Clause 7 [Notice of intention to increase prices or charges]:

7.—(1) The Secretary of State may by order apply this section to any prices for the sale of goods and to any charges for the performance of services, including charges for the application of any process to goods.

(3) When notice of intention to increase prices or charges to which this section applies has been duly given to the appropriate Minister—

  1. (a) those prices shall not be increased until after the expiration of a period of thirty days beginning with the date on which that notice of intention is so given, except that if at any earlier time the person giving that notice of intention receives written notice from the said Minister stating that it has been decided not to refer the notice of intention to the Board, this paragraph shall apply only until that earlier time,
  2. (b) if under section 2(1) or 2(3) of this Act the notice of intention is referred to the Board by a reference published in the Gazette within the said period of thirty days, those prices or charges shall not without the written consent of the Minister or Ministers who referred the notice be increased until the date of publication of the Board's report on the reference.

3.0 p.m.

LORD DRUMALBYN moved, in subsection (1), to leave out "for the sale of goods and to any charges for the performance of services," and insert: at which goods are normally sold or charge sat which services are normally performed".

The noble Lord said: I beg to move the Amendment standing in my name; and perhaps it would be convenient if we discussed Amendment No. 6 at the same time. This Amendment assumes that the Government continue to believe in competition and that they do not intend to hamper it by interfering with normal marketing promotions. At any given time some firms are likely to be launching new products, or offering special introductory discounts; others will be making sales drives with special offers and others will be disposing of old stock at reduced prices, and so on. It would be absurd were they to be condemned to go on selling at these abnormal prices, even for another thirty days, if the special promotion was due to end right away. It would be equally absurd if they could not return to normal trading conditions without the consent of the Minister. I hope that the Government do not intend to entangle industry in any red tape of this kind.

There is the additional point about normal prices. They are obviously prices of general application; you can move from one normal price to another by increasing or reducing the price. It sometimes happens that firms or manufacturers make contracts or agreements that certain prices should run, but in the meantime the normal price may be raised. The contract price may run on until the end of the contract and that price will then also be raised. It may well happen that a price has been increased before July 20 but that some contract prices which are still running on are due also to be increased to bring them into line with the normal prices after July 20. As the contracts come to an end, so the prices would automatically be increased. It would be absurd if the prices of contracts were to be held down with the effect that some people would be getting the same goods at cheaper prices than others.

As I read the Bill, Part IV deals with this point quite satisfactorily, but Part II does not seem to do so. I hope that in respect of the point I am on now the noble Lord will be able to say that common sense will prevail and that when they talk about prices they mean the normal prices; and that this is the way the Government, and if necessary the Attorney General, will interpret this phrase. Even though it is not actually in the Bill, they must surely refer to normal prices and not to particular trade promotions, and not, so to speak, to surviving prices of a previous era of the general price level. With that explanation I beg to move the Amendment.

Amendment moved—

Page 6, line 38, leave out from ("prices") to ("including") in line 39 and insert the said new words.—[Lord Drumalbyn.]


I am glad I managed to guess the intentions of the noble Lord. I should like to separate my reply into two halves, because the noble Lord, Lord Drumalbyn, asked two separate questions. The second point I was preparing to cover is the Amendments on Clause 26 and Clause 27. This question is on contracts, and so, with the permission of the Committee and that of the noble Lord, I shall deal with the Amendment as it stands on the Order Paper.

The noble Lord is quite right in thinking that the Government do not wish to hamper normal commercial methods of sales promotion, and perhaps it will be of assistance to the Committee if I say at this stage that Clause 10 is an attempt to cover this point. When first read the Bill, I was a little confused about what would happen and how one would compare the sale prices of blouses at Harrods and the prices of blouses at Marks & Spencer, but in fact this is a hazard which does not exist. The Amendment is unnecessary because of Clause 10, which specifies which prices shall be taken for comparison in ascertaining whether a particular price represents an increase. There is a provision in Clause 10 for making comparisons between transactions which are not in all respects comparable, if there are no transactions which are exactly comparable. It is very unlikely that a Clause 10(3) comparison would ever need to be made, say, between sales prices and out-of-sales prices. If it were needed, the subsection insists that a "fair adjustment" must be made "to take account of the differences". This is really rather a theoretical argument.

But although—and I think that this is the key point in answering the Amendment of the noble Lord—the Government intend that the "early warning" system should continue to apply mainly to manufacturers' prices and not to wholesale or retail ones, and no problem therefore will generally arise from the sales promotion campaigns of retailers, introductory offers, et cetera, the Government do not renounce the right to raise these particular facts. But they do not in normal circumstances intend to use the powers. In the main they are intended for use against rises in manufacturing prices.


I am obliged to the noble Lord, Lord Winterbottom, for his explanation. I did not think that Clause 10 entirely covers the point. It seems to me to deal with a rather different form, the case where a manufacturer changes his packing or changes his design a little, and pretends that the product is entirely new and charges a much higher price. Surely that is the case which is dealt with in subsection (3), not the point that at any given time the prices of certain firms—even manufacturing firms, because some manufacturers sell direct to the customer—may be below normal. I think I may take it, from what the noble Lord, Lord Winterbottom, has said, that although, in my view, it is not actually in the Bill, the Government do not intend to be unreasonable about this matter; and as we have now established that, I think I may safely ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD DRUMALBYN moved, in subsection (3), to leave out paragraph (b). The noble Lord said: I think this is an important Amendment because here, as the noble Lord has said, we are dealing with a more permanent aspect of the policy than is covered by Part IV. The fact is that under Part II undertakings will be able to increase their prices, or do whatever they think fit, after the report of the Board is published, whatever it says. The compulsory aspect is purely, as the noble Lord, Lord Shepherd, has said, to impose a delay, so there is no reason why a reference to the Board of the proposed increase should result in a standstill of up to three months in respect of prices. This may mean that prices will have to be increased at the end of the period by more than they otherwise would have been increased. Obviously, the firm may have to recoup the amount it has lost in the intervening period. It could mean, in the meantime, severe difficulties for the undertaker. There does not seem to be any provision for the Minister to allow a smaller increase than proposed, pend- ing the Board's report, yet it may be very urgent to have at least some increase.

It seems to me that the provision in regard to prices is far too inflexible. It could result in an artificial scarcity, due to the disinclination of the industry to sell until the standstill period is ended. One can see why it is in the Bill. It is due—I say this not in a critical spirit, because I quite understand it—to the refusal of trade unions to admit that, as the noble Lord, Lord Shepherd, said on the consideration of the "White Bill", price increases and pay claims cannot reasonably be treated in the same way. If prices are not increased in an industry where profits are not excessive and costs are rising, that industry may well see its profits disappear and turn into losses. It is deprived of what it has, and what it must have if it is to carry on at all. That is quite different from wages at a time when prices are increasing. People may be marginally worse off for a time, but they can carry on, at least unless they have been excessively imprudent in the past.

It is impossible to build a successful policy on a falsehood, and to act as if prices and wage claims can be treated alike is to practise a falsehood. It would be much better if the Government dropped paragraph (b) altogether. That would not prevent them from referring suggested increases in prices or charges to the Board. If the Board considers it necessary, as it probably would in almost every case, the industry or profession would defer in time to the Board's opinion. Let me say, in passing, that the Board's opinion may not always be right. I have moved this Amendment because it is extremely important that it should be realised that wages and prices cannot be treated on exactly the same basis. One understands that if prices go up, we run the risk of pressure for an increase in wages; but, as I said on Second Reading, there are lean years and fat years. It is important that everyone in the country should recognise that and that wages should not go up automatically because prices go up. We ought to know that, particularly in an island such as we inhabit, where we are so dependent on overseas trade and prices and international influences. I should like to see this paragraph removed from the Bill, because I do not think it will help. I beg to move.

Amendment moved—

Page 7, line 13, leave out paragraph (b).—(Lord Drumalbyn.)


I agree with the noble Lord that this clause will cause difficulties to individuals, companies and organisations, but doing nothing at this stage will also cause a different set of problems to the same people and organisations. I think every one agrees that action must be taken now, because within our economy over the last months and years an inflationary chain reaction has been building up which has imposed upon us the unpleasant necessity of taking drastic action against forces which might well destroy our economy. The Government have framed a policy in this Bill, which is only a continuation of earlier policies, to enable us to use administrative delay as one of the factors for bringing our economy under control. We admit that there is delay, and that this may cause hardship; but the hard fact is that it is necessary; otherwise it would not be in the Bill.

The noble Lord has rightly pointed out the relationships between prices and incomes. My noble friend Lord Champion will be dealing with the wages aspect, but I would say that it is utterly impossible to have a wages standstill if we do not do our best beforehand to ensure a prices standstill. These two elements in our economy are interlinked and must be controlled together. For this reason the Government resist this attempt to remove paragraph (b) from the clause.


Before the noble Lord leaves that matter, would he give consideration to this point? He said that action must be taken now; otherwise it would not be in the Bill. But this is a long-term provision. The provisions for standstill are in Part IV and have nothing to do with this. Surely we can deal with the long-term aspect, apart from Part IV.


If it becomes necessary, through lack of ability to co-operate, to bring Part II into effect, then these powers of delay will become necessary. That is why we must retain them. I assure the noble Lord that reasonable men would be administering this Bill when it becomes an Act. Under the Bill it is not necessary that the freeze should last for the whole period of three months. There is a provision in Clause 7(3) for the Minister to end a temporary standstill at any time, and I am absolutely convinced that if a firm or individual came to the administrators of the Bill with a properly prepared and documented case, showing that goods would be withdrawn from the market, the standstill would be removed at an earlier stage than the three months envisaged in the Bill.

On Question, Amendment negatived.

3.17 p.m.

LORD REAY moved, in subsection (3)(b), after "until" to insert "thirty days after". The noble Lord said: I beg to move Amendment No. 8, and with the Committee's permission I will speak also to No. 9. This is a modest Amendment, which I expect will arouse a certain amount of sympathy in the noble Lord, Lord Shepherd. In return, I trust that he will not remind me that I am not speaking to Part IV of the Bill. I feel tempted to ask for some initial clarification. The Amendment is based on the assumption, about which I am now confused, after the exchanges that have taken place between noble Lords opposite, that prices and wages cases can be held until the moment the Board reports. The noble Lord signifies his assent and on this assumption, I move this Amendment.

In one sense, the Amendment might be said to strengthen the Bill. It deals with the period between the ending of any freeze and the reversion to the ordinary incomes policy as outlined in Part I of the Bill. What is likely to happen after a freeze? What has tended to happen in the past, where the Board has reported that there is a particular claim for a rise in wages or in prices which, in their view, is outrageous and highly inflationary, is that under the provisions of the Bill from the day that the report is made public the union or industry can totally disregard the recommendations of the Board and implement the rise which the Board has said it would be against the national interest for them to have.

The purpose of the Amendment is to provide for thirty days to elapse between the publication of the report of the Board and the date when it will be possible for the firm or the union concerned to disregard the recommendations of the Board. After the period of thirty days there is no question of further statutory control. The object is simply to provide a "cooling-off" period when it will be possible to debate in various media—letters to the newspapers, debate in Parliament—and to test public reactions to the threat of a rise in wages or prices. It seems to me that this might have a salutary effect, because while it would be open to the institution concerned, after thirty days, to defy the recommendations of the Board, it would do so with the greater knowledge of public opinion, of Parliamentary opinion and what the Government thought about it, and also of any threat of legislation that might follow.

The point is that we do not have a long-term prices and incomes policy at the moment, and no real step has been taken to lay the foundations of one. I think this is a modest Amendment, and that it should command a certain amount of sympathy from noble Lords opposite. I do not claim that it makes the smallest movement towards establishing a prices and incomes policy—which I hope will be one of the functions of the Government in the future—but it is a step towards bridging the gap between the freeze and the time when such freeze gives way to an ordinary incomes policy. I hope that the Amendment will have the support of your Lordships as a reasonable one. I beg to move.

Amendment moved—

Page 7, line 18, after ("until") insert ("thirty days after").—(Lord Reay.)


Initially, this Amendment is one that I should have thought would command considerable sympathy from those who recognise some of the advantages of the legislation in the United States and in other countries on the Continent. The use of the phrase "a cooling-off period" might attract sympathy, but I think there would be some difficulty and, if I may say so, some danger. Perhaps I may clarify one small dispute that arose between myself and noble Lords opposite as to what we refer to as a standstill. The standstill that I had in mind when I was talking about Part IV was the six months' standstill announced by the Prime Minister and the restraint that follows. I gather that the noble Lord, Lord Reay, was thinking of the standstill the noble Lord, Lord Wade, referred to; that is, the three months while the Board is considering the matter referred to it, and the thirty days after the Secretary of State has been notified of an intended rise in prices. The noble Lord, Lord Reay, is now considering a standstill period for consideration before a claim is sent to the Board. This standstill period is not being regarded as a means of delaying either a pay increase or a price increase as a period of delay in itself. This, I think, would be wrong. If we were to do this, I think we should say clearly that this is what we have in mind.

The object of the thirty days period is for the Secretary of State to consider the matter before sending it to the Board, and then to give the Board three months in which to make its Report. In most cases, it reports before the three months are up, and this is a remarkable performance on the part of the Board. I feel that to tag on to what is clearly a period for consideration another statutory period for delay would raise considerable difficulty with those organisations, upon whom we shall depend for co-operation within the prices and incomes policy. I hope that the noble Lord will see that we are sympathetic to the idea, but that it would endanger the whole position of the Board with the C.B.I., the T.U.C. and other organisations which from time to time will be asked to submit information.


I do not understand the distinction in principle which the noble Lord is trying to draw between various parcels of delay. One is the notice to the Secretary of State before it is referred to the Board. The second is while the Board considers it. I am now suggesting a third. This does not seem to me to differ in kind from the other two delays, but seems to extend them, and for a particular purpose, for which I have given the reasons and will not repeat. If the noble Lord is saying that this would make the period too long for one to be able to retain the co-operation of these bodies, this is obviously a different reason.


The noble Lord must recognise that if his thirty-days period were included there would be a standstill for a different reason from the standstill which we have felt necessary for consideration. It would mean there were two different types of standstill. I am sure that if we accepted, as the noble Lord now suggests, a further thirty days, this would raise considerable difficulties with the two organisations upon whom we are dependent for this voluntary agreement, and also for their support of the National Prices and Incomes Board. There will be two different types of delay, and I think this would be wrong.


May I put it to the noble Lord that it might be absolutely right to have two different types of standstill? As I understand it, the thirty days is first required for the Department to have a look at the matter. The next three months is the maximum required by the Prices and Incomes Board for consideration. What my noble friend is suggesting is that when the decision is given, there should then be a period of an entirely different form whereby public opinion can be moulded one way or the other. But what we have in the Bill as it stands is an immediate invitation to the parties to put into practice what they wanted to do, despite the fact that the Board will have ruled against them. I should have thought that a cooling-off period was an important thing to have in a Bill of this nature.


The noble Lord, Lord Shepherd, will be aware that Mr. William Rogers, speaking on behalf of the Government when this question was debated in another place, made some favourable remarks about this Amendment. I should have thought that this would be the kind of Amendment that might well be accepted. I will not go over all the ground about the different kinds of standstill. We have established the fact that there is a Part II standstill and a Part IV standstill, and we are now talking about the Part II standstill. But there is the reference to the Board, and

what is suggested here is that when the Board have reported there should be a cooling-off period of thirty days. I should have thought that this would be helpful. Incidentally, if it is a decision of vital importance affecting the country as a whole, then there would be an opportunity for Parliament to give it consideration. I come back to my old point that we are tending to forget Parliament altogether. Surely this proposal of a thirty days period would be the kind of suggestion that the Government might well accept.


There seems to be a complete misconception of what is intended by Clause 2, and I am amazed to hear the phrase "cooling-off period" brought into debate. The whole purpose here is, first of all, to oblige the trade union movement and business people to give notification if they intend to claim more, and for a month we are not allowed to do anything at all. Then if the Board wish to look into the situation, a period of three months will elapse before we are allowed to do anything. But this was never intended to be the end of collective bargaining and the significance of the three months' period is that it provides for an assessment: the Prices and Incomes Board within three months can at least have made an adjudication. The purpose of the adjudication is to try to persuade employers and unions to have some regard to the public effect of the actions they may take. It would be most unfortunate to drag the time out any longer than is necessary, and four months is quite adequate for this purpose.

3.30 p.m.

On Question, Whether the said Amendment (No. 8) shall be agreed to?

Their Lordships divided: Contents, 19; Not-Contents, 72.

Airedale, L. McNair, L. Saye and Sele, L.
Amherst, E. Meston, L. Sherwood, L.
Asquith of Yarnbury, Bs. Moynihan, L. Sinha, L.
Barrington, V. Ogmore, L. Swaythling, L.
Byers, L. Ponsonby of Shulbrede, L. Terrington, L.
Carnock, L. Reay, L. [Teller.] Wade, L. [Teller.]
Gladwyn, L.
Addison, V. Blyton, L. Brockway, L.
Archibald, L. Bowden, L. Brown, L.
Attlee, E. Bowles, L. [Teller.] Burden, L.
Campbell of Eskan, L. Latham, L. Segal, L.
Caradon, L. Leatherland, L. Shackleton, L.
Champion, L. Lindgren, L. Shepherd, L.
Citrine, L. Llewelyn-Davies, L. Sinclair of Cleeve, L.
Clwyd, L. Lloyd of Hampstead, L. Sorensen, L. [Teller.]
Cohen of Brighton, L. Longford, E. (L. Privy Seal.) Stocks, Bs.
Collison, L. Maelor, L. Stonham, L.
Cooper of Stockton Heath, L. Morris of Kenwood, L. Stow Hill, L.
Crook, L. Moyle, L. Strabolgi, L.
Darwen, L. Nathan, L. Strang, L.
Faringdon, L. Peddie, L. Summerskill, Bs.
Francis-Williams, L. Phillips, Bs. Taylor, L.
Gaitskell, Bs. Plummer, Bs. Twining, L.
Gardiner, L. (L. Chancellor.) Rathcreedan, L. Walston, L.
Granville-West, L. Ritchie-Calder, L. Wells-Pestell, L.
Haire of Whiteabbey, L. Rhodes, L. Williamson, L.
Harvey of Tasburgh, L. Robertson of Oakridge, L. Willis, L.
Henderson, L. Royle, L. Winterbottom, L.
Hilton of Upton, L. Rusholme, L. Wise, L.
Iddesleigh, E. St. Davids, V. Wootton of Abinger, Bs.
Kirkwood. L. Sanderson of Ayot, L. Wynne-Jones, L.

Resolved in the negative, and Amendment disagreed to accordingly.


My Lords, I beg to move that the House be now resumed for the purposes of making a Statement.

Moved, That the House do now resume.—(Lord Champion.)

On Question, Motion agreed to, and House resumed accordingly.