§ 3.50 p.m.
§ LORD SHEPHERDMy Lords, I wish to repeat a Statement that has just been made by my right honourable friend the First Secretary in another place, and I will use his own words:
"As I explained to the House on March 22, the Government are determined to work for an effective policy for productivity, prices and incomes on a voluntary basis, and they attach great importance to the role of the Confederation of British Industry and the Trades Union Congress in making such a policy successful. The wide powers taken in Part IV of the Prices and Incomes Act in support of the standstill and severe restraint will lapse on August 11, 1967, and will not be renewed. The Government consider however that it is necessary to have some 29 more limited powers available during the period of transition in which we are seeking to establish an effective voluntary policy.
"As announced in the White Paper published on March 22 (Cmnd. 3235), we propose to activate Part II of the Prices and Incomes Act, which provides for advance notification of proposed increases in prices or pay and for temporary standstills in appropriate cases during which proposed increases are examined by the National Board for Prices and Incomes.
"In addition, the Government propose to introduce a short Bill designed to facilitate a smooth progress from the standstill and Part IV to observance of the principles set out in the White Paper (Cmnd. 3235). This will give the Government powers, exercisable for a further period of twelve months, to lengthen the period of standstill on prices or pay under Part II, in cases in which this is recommended by the National Board for Prices and Incomes, to a maximum of six months from the date of the reference to the Board, and, in addition, to secure the temporary suspension of price or pay increases which are implemented before it is possible to make a reference to the Board.
"Since the Government intend to rely on the voluntary principle so far as possible, the power to secure temporary suspensions of prices or pay increases is needed in order to ensure that those who are co-operating in the voluntary notification and standstill arrangements are not placed at a disadvantage compared with those who refuse to do so. The extension of the maximum period of deferment to six months after a reference has been made will help to ensure that the parties will, before proceeding to implement any increases in prices or incomes, pay full regard to the Board's findings and recommendations in the national interest.
"The new powers which will replace Part IV will therefore be strictly limited, of temporary duration, and specifically designed to support and encourage the voluntary principle within a framework of reference to and examination by the National Board for Prices and Incomes.
30 "The Government are confident that they can look to the nation to support the policy of moderation in prices and incomes which is essential for our future prospects of securing sound economic growth based on full employment and a strong balance of payments."
My Lords, that ends the Statement.
§ LORD HARLECHMy Lords, we are grateful to the noble Lord for repeating the Statement which has been made in another place, although, as is becoming rather usual, we had already read the main provisions of it on the front page of the Evening News. The Statement, of course, contains that "double-talk" which is now becoming characteristic of this Government. There is mention of an effective voluntary policy, followed almost immediately by proposals for extending the compulsory powers of the Government and of the Prices and Incomes Board. We on this side of the House do not agree that the compulsory powers, going well beyond what is already contained in Part II of the Prices and Incomes Act, are necessary or required at the present time.
Are we right in thinking that this new Bill will not only extend the period of standstill from an effective four months under Part II to an effective seven months under the Bill but will also increase the powers of the Board and enable it to recommend a standstill for six months—powers which, I think, the Board does not at the present time possess? Secondly, can the noble Lord tell us whether, after this Bill, when it becomes an Act, ceases to operate, which I understand is at the end of twelve months, the Government will then, in perpetuity, operate Part II of the Prices and Incomes Act? And, even as regards this new Bill, are we to understand that an Order made at the end of the period of twelve months, for instance, would be effective for another six months, so that in fact what the Bill contains is powers of compulsion over prices and incomes extending to virtually eighteen months?
§ LORD SHEPHERDMy Lords, if I may, I would reply to the noble Lord, Lord Harlech, first. I do not think there is anything that divides your Lordships' House, another place or the country about the need for a prices and incomes 31 policy, which in the end can be achieved only by a voluntary acceptance and a voluntary application by all sides of industry. But the noble Lord appears to be both blind and deaf to history over the years, which has shown that, with all the protestations and all the claims, we have consistently failed to achieve that. Consistently over the years we have been paying ourselves more than we have been able to earn. We know this is one of the causes of the very heavy deficit in 1964 and again, I recognise, in 1966; but if we are to get growth, we can get growth—consistent growth—only if we in some way contain what we pay ourselves.
The Government have felt it right, in view of the circumstances of 1966, to give support to what we call voluntary agreement by certain statutory machinery, in order that those who are willing to co-operate shall not be placed at a disadvantage compared with those who refuse. And let us recognise the fact that, pretty well throughout the trade union movement, the trade unions have supported a voluntary prices and incomes policy. When we passed the Act last year we heard a great deal about how many trade unionists would end up in gaol or in the courts, being fined. We know that that has not happened. To the best of my knowledge, no trade union leader or official has in fact been in front of magistrates or courts. We have had this voluntary agreement, but it may be that the statutory provisions helped towards it. So far as we are concerned we feel that as we move from this period of restraint we need the minimum of statutory provisions, and we believe the Statement and the Bill that we shall be placing before Parliament embody the minimum needed in the circumstances. But we well recognise the great efforts that are being made, both by the C.B.I. and the T.U.C., to create their own machinery for the vetting of increases in pay and increases in the prices of goods and services.
It is quite true, as the noble Lord, Lord Harlech, has said that by the Bill we shall be extending by three months the period which, under the Prices and Incomes Act, was given to the Board to examine the circumstances and make its report. What we are now saying is that if the Prices and Incomes Board say that an increase, whether in pay or in 32 the price of goods or services, is too high and is contrary to the national interest, we shall have power to postpone the effectiveness of such an increase for a period of six months. On the other hand, the Government could permit these payments to be made if in their judgment these payments or increases were right. In regard to Part II, if the noble Lord, when he leaves the Chamber, will look at Section 6 of the Prices and Incomes Act he will see that an Order to bring Part II into force covers a period of twelve months. Therefore, if we had wished to keep Part II going after this first period of twelve months a fresh Order in Council would have to be made.
§ LORD BYERSMy Lords, I think things have come to a pretty pass when we have to congratulate ourselves that no trade union leader or official has come before the magistrates recently as a result of Labour Party legislation. I hope that the noble Lord will not be surprised if I say that we on these Benches find this Statement very disappointing indeed. It portrays an attitude which is negative and restrictive; and the noble Lord will be aware, I think, that there is a general feeling in the country of frustration largely because Government policy so far as wages and prices are concerned is lacking in any sort of imagination. Can we not have a real drive to try to get people to earn higher wages through greater productivity and through increasing their talents by much bigger retraining schemes, and get something dramatically imaginative into our wages and incomes policy? This Statement is not going to help the country to get out of its balance-of-payments difficulties or to see ahead, as it should.
§ LORD SHEPHERDThe noble Lord has, perhaps, made part of the speech that he will be making, I think, in some ten days' time. I would only say to him that he must take this Statement, not in isolation, but with all the other measures which the Government have in mind and which have already been announced. I agree with the noble Lord that a prices and incomes policy should not be of a negative character. This is right. What we wish to see is growth of income. As the noble Lord said it should be in line with increased productivity. But increased productivity is not entirely within the power of the Government to 33 achieve; it is basically dependent upon the efficiency of management and the workers in the companies. The Government can help, and they are already helping in the field of special grants to the manufacturing industries and to the development areas. We issued a Paper the other day which made another suggestion by which the manufacturing industry could be helped, particularly in the development areas. This is a matter which, in view of the interruption of the Committee stage, it would be wrong for me to develop. I look forward to debating the subject with the noble Lord, Lord Byers, on a later occasion.
§ LORD HARLECHMy Lords, we are grateful to the noble Lord for the second and third statements. The second statement was almost longer than the first one. Is he aware that it contained almost as much "double-talk" as the original? It is perfectly possible to be in favour of a prices and incomes policy but to believe that a major part of such a policy should be to see, on the part of the Government, that there was a limitation to the demands made on the economy by the Government. It is in this respect that the Government have failed in their prices and incomes policy. It is this which has forced them to introduce these compulsory measures into their prices and incomes policy.
§ LORD SHEPHERDMy Lords, the noble Lord accuses me of "double-talk". May I say that I am going to listen with great interest to the debate to be initiated by the noble Lord, Lord Byers. I hope that the noble Lord, Lord Harlech, will participate in it. Then I hope to hear from him, on behalf of his Party, what is the alternative to the Government measures, and a little concrete evidence about how the Party now in Opposition believe that an incomes policy can be achieved.