HL Deb 08 November 1972 vol 336 cc346-437

3.6 p.m.

Debate further resumed on the Motion moved on Tuesday, October 31, by Lord Blake—namely, That an humble Address be presented to Her Majesty as follows:

"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."

and on an Amendment moved by Lord Beswick: to add to the proposed Address:

"but, noting the continuing rise in the cost of living and the present massive unemployment, humbly regret that the mistaken policies of Your Majesty's Government, particluarly in the fields of prices, housing, taxation and industrial relations, have added to the difficulties of evolving a national policy to deal with inflation and have greatly weakened the country's economic prospects."

LORD DIAMOND

My Lords, it may be the case that not all of your Lordships were present last night to hear the enjoyable speech delivered by the noble Lord, Lord Polwarth, from the Government Front Bench. Therefore, for those who were not as privileged as I was, I want to say how much I enjoyed that speech: I enjoyed the manner of its delivery, and I cannot pay the noble Lord a better compliment than by saying that I looked at our new monitoring device and saw the figure of "29" on it and I did not believe that it could have been anything like so long. Those of us who have suffered the other way round will know what a genuine compliment that is.

The noble Lord said many things which pleased us. In particular I was grateful to him, and indeed to other noble Lords, for welcoming back my noble friend Lord Beswick. On his behalf I should like to thank all noble Lords for that courtesy. I was particularly glad—indeed my heart leapt—when the noble Lord. Lord Polwarth, said that at long last he was presenting the Government's end of term report. I am waiting; I hope the announcement will come very shortly indeed.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD POLWARTH)

My Lords, what I said was that I was presenting the half-term report last night.

LORD DIAMOND

My Lords, I misunderstood the noble Lord. It shows how one's anticipation runs ahead of the facts.

Many interesting speeches have been made, and perhaps it would be more convenient and would save time if I were to refer to them as their contents emerge in relation to the facts which I am going to put before your Lordships' House. The Amendment to which we are addressing our remarks at the present time starts by noting the continuing rise in the cost of living and the present massive unemployment. Nobody can suggest that Her Majesty's Government have been unaware of this position. Indeed each of the last three gracious Speeches have referred to it. They have referred to curbing inflation and promoting full employment. So this is a matter which engages the attention of all sides of your Lordships' House. In July, 1970 it appeared in the gracious Speech as "my Government's first concern"; in November, 1971 it appeared as "my Government's first care"; in October of this year it appeared as "my Government's overriding concern". Well, there is consistency for you!

Now may I give your Lordships a short reminder of what the achievement has been in relation to those statements of "overriding concern"? With regard to unemployment, I must say to noble Lords opposite that I do not think they sufficiently appreciate the seriousness of it; I do not think they appreciate sufficiently the seriousness of the loss to the nation's production which is caused by such massive continuing unemployment. I would not allege that they do not appreciate the seriousness on the human side— that is something that I am sure we all share—but I doubt very much whether the Government are giving sufficient attention in their policies to this continuing under-employment, to this lack of creation of resources which, once missed can never be recovered. We are concentrating all the time on inflation. This is a very serious problem indeed, but I am bound to draw your Lordships' attention to the fact that under-employment means resources not created for all the purposes for which they are required.

Yesterday, the noble Earl, Lord Perth, spoke of urgent need for resources to go to Scotland. All could have been provided out of the additional production if unemployment had been kept to its previous figure. In fact, it has continued at massive levels. If one includes only a small allowance for those who are unregistered unemployed—and work on this subject indicates that they are many—one is bound to recognise that at the present time there must be well over 1 million who are willing to work but who cannot find jobs. Even the number of registered unemployed is some 37½ per cent. above the figure when the Conservative Party came to office, and the number of vacancies is four to one overall. In other words, four registered unemployed men are looking for each job. However, in the Northern Region there are 10 looking for each job and in Scotland—the noble Lord, Lord Polwarth, will be aware of this—there are 13 looking for each job. That is the position in regard to vacancies and that is the result of three gracious Speeches assuring the country that the question of unemployment was of overriding concern.

Let us now consider the question of the cost of living, which is linked in this gracious Speech, as in others, to unemployment. Since June, 1970, it has risen by 18.9 per cent., which is a figure of approximately 8 per cent. per annum. This compares with a figure of approximately one-half, 4½ per cent. per annum, throughout the period of the Labour Government. I am bound to refer to an extremely serious aspect of this because the noble Earl the Leader of the House yesterday treated this whole matter as if everything was going to be fine—that the balance of payments would be in surplus and that all the indications were that this and that would be fine. Indeed, if one believed the few things which the noble Earl selected to discuss with us one would be in some doubt as to why on earth the Government were seeking to introduce a statutory freeze.

We realise of course that the indications are very serious indeed. It is not only that the cost of living has started to turn bad—is going the wrong way again—but also that the wholesale price index has risen recently much higher than normal. Between June and September it rose by 8.6 per cent. per annum, which is an alarming rate, and the economy has not yet had to deal with the effective 10 per cent. devaluation which has occurred since the pound was floated in June and which will have its effect quite shortly on prices. Thus, the Government have not told us—although they must be aware of the anxieties of many of those who are concerned with the situation—that inflation is getting worse than the figures indicate, and the figures are bad enough. That is no doubt the reason why the Government have thought fit to introduce the freeze.

Against that background, I draw attention to the fact that the latest figure—for August, 1972—for the weekly increase in average earnings was 10.9 per cent. as against an 8 per cent. increase in prices, so it was 2.9 per cent. ahead of prices. In other words, it was a 2.9 per cent. real increase in wages less than the Government say has been the current rate of increased productivity. I must be fair to the Government and say that in the last few months and weeks they have not continued with the completely unjustified allegation that wages have been a major cause of inflation and that wage increases have been a major cause of unemployment. I hope they will no longer continue with either of those allegations.

I have put the facts to your Lordships. We now see a totally different situation, with the Government making the biggest U-turn they have yet effected, in terms of the Bill which is shortly to be before us and their statutory freeze. I am one of those who has previously said from this Box that it is much more difficult for a Government to change their mind than to stick to what is in their mind. Inasmuch as all these changes—and they are many—are changes in the direction in which we wish the Government to go, I can do no more than tell them that we are grateful that at long last they have been good enough to change course, and we must recognise that this is a complete change of course. When we table, as we do, a critical Amendment criticising the Government for their past policies, we do not need to offer arguments to justify our criticisms. There is no more authoritative argument than the Government's own action. They are saying, "What we have done we now see we must stop Going and we must do something else. Our policies have not been justified or fulfilled. We were wrong."

SEVERAL NOBLE LORDS

Totally mistaken.

LORD DIAMOND

My noble friends are right. The country was mistaken, too, and the government were wrong. I therefore do not need to be condemnatory. I welcome the change of heart but I must point out that these changes of policy, which the noble Lord, Lord Polwarth, was good enough to confirm and accept last night, are the most authoritative criticisms to which our Amendment refers.

We refer in our Amendment to housing, taxation, industrial relations and prices. Having dealt with prices, I must now trouble your Lordships with the reasons why we think the Government have followed mistaken policies in the context of what we are about to discuss. I understand that there is a likelihood that your Lordships may wish to consider housing in greater detail on a separate occasion, and therefore I will not go into that matter in too great detail. I must however point out the position after five years of the Housing (Finance) Act, and I will give the House the subsidies which are being paid for the different categories of occupier. For the council tenant, the subsidy amounts to £33 a year; for the private tenant it is more, £54 a year; while for the owner-occupier it is more still, £68 a year or more than double what is being paid out of State funds to the council tenant. I am giving the figures in that order because we recognise that, by and large, the least well-to-do live in council houses, that those with probably more income live as private tenants and that those who are better off live in owner-occupied houses.

I am bound to comment on the fact that this Government thought it wise, while the tripartite negotiations were going on, to insist that the increase in the rents provided under the Housing Finance Act should be effected—while the very discussions were going on and while attempts were being made by the Government to get agreement to sacrifices on behalf of all parties in the interests of allaying inflation. By the terms of the proposed Bill those increases in rents are specifically and precisely excluded from the effects of the freeze, so that the increased rents will have to be paid whether or not the councils in question have given effect to the increase. So much for housing.

We then come to taxation, and your Lordships will appreciate that I am limiting my remarks to those aspects which indicate the general surrounding circumstances and attitudes affecting agreement or consent to sacrifices, which is at the heart of what the Government are proposing. Whenever we mention taxation we are told of the Government's generous provisions under the family income supplement (F.I.S.) and, of course, that was mentioned again only last night by the noble Lord, Lord Polwarth. I must say that I was somewhat surprised that somebody with a similar capacity to mine to bear magnitudes in mind should wish to refer to the family income supplement, which this year is expected to cost the enormous sum of £8 million! That is a fleabite if ever there was one, and one that is totally incapable of having any measurable effect on poverty or on fairness or justice. The Government have increasingly subjected numbers of working families to the means test. They have trebled the number of working families who are now to be subjected to means tests. They now have 47 different varieties of means tests—and will get up to the Heinz target at any moment—with the result that a £2 increase across the board which is supposed to help the poorest families may help the poorest families least of all, because all these means-tested benefits are reduced, or extinguished, as income is increased.

It is easy to give examples. In the range of £19 to £21 a week the £2 increase will leave not a small amount in the pocket of the recipient, not a "nil" amount, but will leave him even worse off. That is what we mean by the "poverty trap". The Government, as a result of the fantastic extension of means-testing. have got themselves into a position where the deterrent, the disincentive to earning more, is far greater for all these low paid families in relation to a proportion of their income, than the highest surtax payer has to suffer on his income—and how many times have we heard the argument of what a great deterrent the surtax is, and how many more times will we hear it as we come nearer to the next Finance Bill! That is the way in which the Government have sought to spread fairness. The real fact is (and this figure has been given but it bears repetition) that the total effect of the Government's economic measures since they came into power has been to give the average worker—that is to say, the category of workers earning between £20 and £40 a week, between £1,000 and £2,000 a year, and who are by far the most numerous, being something over 50 per cent. of individual taxpayers—a cash benefit of £37 a head. So far as the man earning over £100 a week is concerned, that is the £5,000 plus a year category, the benefit is £1,890 a head: £37 to the working man and £1,890 to those earning over £5,000 a year, a figure some 50 times greater per person per year.

That is the background; that is the sum total. Noble Lords opposite will not make any impression at all by referring to the £8 million worth of F.I.S. or any other of these very minor reliefs. If we include all of them and all the tax provisions of the Budgets, the sum total is the figure I have given. We are complaining, therefore, that the taxation policies, the housing policies, and the prices policies of the Government have made matters more difficult.

The last item in the list is industrial relations, which I can deal with very shortly. The figures have been given before. Last year was the worst year for strikes since the General Strike of 1926. That was the achievement of the Government partly, though not entirely, as a result of the Industrial Relations Act. Not content with having broken that record, they are breaking it again and this year the number of strikes is running at a rate twice as high as that of last year. Last year saw the greatest number of strikes since 1926, and this year it is twice as high as that. That, then, is the picture so far as industrial relations are concerned. So, my Lords, that is the reason why we think it right to join in criticising the past actions of the Government.

We now come on to their present intention, which is the freeze. We all know that a freeze, by itself, solves nothing; it provides a breathing space. But what all of us who are concerned with the welfare of our country and everyone in it want to know is that, so far as may be possible, the best use of the breathing space will be made by providing a long-term solution to these difficulties, which are very great and which we all recognise. They are especially great in the sense that I suppose none of us has ever before experienced the situation where you have such massive unemployment and such a massive rate of inflation going on side by side. It is not easy to know the answer to this. I am sure that the Government are right, that the trade unions are right, and that the C.B.I. is right in their attitude that they must keep on talking and that the talks should continue in the hope of evolving some long-term policies. Everything that has been said in the debate so far indicates agreement on all sides of the House that these long-term policies must be based on a sense of fairness and justice in relation to all sections of the community, especially (making the point much more simple) as between rich and poor. I have already given the figure for the total effect of the Government's economic measures as being fifty times as much to the rich as to the average worker. If that does not give a fair indication, then I hope the Government will give us whatever figure they think is a fair indication. I hope in particular they will give us, if they have worked it out, as they no doubt have done internally, the Gini coefficient, how that has been affected since the Government came to office. No doubt the figure exists but I have not heard it disclosed, and I imagine the reason is that it does nothing but confirm the impression given by the figures I have mentioned.

The Government have in mind a £2 flat-rate increase throughout. May I remind the Government that one of the things which has been felt to be grossly unfair and has no doubt embittered many of the talks that have been going on has been the vast increases in remunera- tion at much higher levels? I want to ask the Government a naïve question, but I think it is appropriate. If it is right to give £2 across the board for all wage earners, is it not right to continue to have that thought in mind with regard to salary earners at all levels? What is wrong with giving a man who is earning £100 a week an extra £2? It is not a large percentage. It is a different thought. The justification hitherto has always been that salary earners have had to be given large increases, increases far beyond the total remuneration of most of the workers whose wage increases have been refused, because they are based on a percentage on the previous figure. What fairness or justice is there in that? Who needs the extra £2 more—the man earning £20 a week or the man earning £200 a week? The answer is, of course, the man earning £20 a week. So I hope the Government will bear in mind the damage which has been caused by the vast salary increases and will continue to think in terms of £2 a week across the board.

My Lords, I have painted a dreary picture so far as unemployment and increases in prices are concerned. I now want to turn to the brighter side, to the question of liquidity. This is a matter which has been touched on by many noble Lords, but I am going to refer to a different aspect of it. I am delighted to remind your Lordships of the figures of alcohol clearances during the first seven months of this year. This is against a background of vastly increasing prices, against food prices being at an all-time high, against a reduction in the total consumption of food in the country. The figures of alcohol releases, clearances—that is to say, in volume, not in value—are wines 16 per cent. up, brandy 28 per cent. up, and champagne over the year 34 per cent. up. So all is not lost, my Lords. We know that there has been a reduction in the consumption of food. We know how the old-age pensioners' cost of living index has mounted, far in excess of the reliefs given. We know that if the old-age pensioners had been given increases at the same rate as they were previously given, at the same point in the devaluation of their pensions, the revisions would have been moved not from 2-year to 1-year intervals, but from 2-year to six monthly intervals, in order to keep pace with the falling value of the monetary pensions. It is against that background that we are delighted to see how this aspect of liquidity has been dealt with.

I come to the most serious point of all, and that is the question of wealth, as to which the White Paper and the Bill say nothing. Against the background that the Government's economic measures have distributed fifty times as much benefit to the richest section of the community as to the average worker, your Lordships will, I know, agree with me when I say that over the last 18 months the capital values of British-managed companies quoted on the Stock Exchange have gone up by £28,000 million. That is the increase in wealth for the shareholders of those companies. It is against that background that wage earners judge the fairness of the situation. And it is against the background also of the speculative increase in the values of buildings and land to which so many of your Lordships referred in your speeches yesterday. The noble Viscount, Lord Amory, was concerned about these matters.

BARONESS EMMET OF AMBERLEY

My Lords, would the noble Lord allow me? Could he tell us whether the trade unions' investments have gone up equally?

LORD DIAMOND

My Lords, I am quite sure that those who look after the investments of trade union pension funds have as much skill as those who look after the investments of other pension funds. I am sure they have enough sense to be equally well advised, and I am certain that those pension trustees figure among the shareholders. I did not mean that the whole of the £28,000 million had gone into the pockets of the noble Baroness; I wish it had. I give it as a figure which has to be taken seriously, because it is totally omitted from the scope of the thinking of the Government, either in its White Paper or in its Bill, and it is the background to these discussions. It is one matter which inflames feelings. It is not right to say that it merely gives a sense of injustice; it inflames feelings, that those who are earning modest salaries and modest wages are asked to see to it that their sole source of spending is limited or frozen, whereas there is a large section of the community whose major source of spending is untouched.

One must not have any delusions about the capacity of share owners to sell their shares and spend the money. It is a source of spending as readily available as the weekly wage packet or anything else. What the Government are doing at the moment is to separate out those who have and those who have not, and to say to those who have not wealth but only earn, "You shall have your spending power limited or frozen", and to those who have, "To him that hath shall be given fifty times as much as to the wage earner". It is no use trying to balk these facts. This is what has happened and is happening under the Government's measures and the Government's proposals. When I asked, as I did time and time again yesterday, that there should be some comment, I received no reply. It was not the first thing (I hope that the noble Lord, Lord Polwarth, will not mind my putting it this way) that was on the noble Lord's mind. In fact, to be quite fair, he was not briefed about it at all. Those who were briefing him on behalf of the Government had not thought at all that this was a matter which might interest the people of this country.

Noble Lords behind had of course thought about mergers and takeover bids, and many of them had referred to these in very worried terms. I have no doubt that again they were thinking about these in terms of speculation. One noble Lord referred to them as "strippers", as opposed to taking over a business from the point of view of running it more efficiently. These are matters which are giving great concern, too. Then there is the question of the price of houses and the price of land. The price of houses is making it impossible for young people coming into the housing market for the first time to find a home. As a result, education authorities in the South and the South-East find it impossible to get staff, because people come along and apply for jobs, see the price of the house, and then go back again. We all know about this kind of experience.

There was the example which the noble Lord, Lord Hawke, so helpfully and so valuably gave to us: of agricultural land being sold at 100 times its agricultural value, so that it could be used for development purposes for building land, yet nothing proposed in the Bill, or in the gracious Speech, to limit, or share with the rest of the population, these benefits. As the noble Lord, Lord Hawke, pointed out, when a man sells his agricultural land for these purposes and makes this profit of 100 times the original agricultural value, all he has to do is to buy another farm and he escapes tax completely. He has merely transferred money, multiplied 100 times, from one piece of land into a much bigger piece of land, and no tax has to be paid on his gains. It is against that background that we are discussing whether or not there is fairness surrounding the discussions which are at the moment taking place.

My Lords, I will finish by saying two things only. We are agreed that these discussions should continue. We hope that they will continue, so far as possible, with a real sense of justice and fairness. The Government have gone a long way, but they have a lot further to go before they will convince those round the table that there is a real sense of justice in their minds. They can answer the question by searching their own hearts as to whether this is what they require. There are two simple questions. First, the Government must ask themselves are they approaching the T.U.C. and the C.B.I. as real partners. There is no doubt about their relationship with the C.B.I. Are they approaching the T.U.C. as a real partner, and have they departed from their desire, as expressed so clearly in your Lordships' House by so many speakers on the occasion of the Industrial Relations Bill, to control, curb and reduce the powers and responsibilities of the unions. Are they looking at them as partners.

The second, and much more difficult, question is: do those round the table want to see an increase in the comparative standard and share of the working man? We on this side take the view that the working man has had a raw deal for centuries, decades, and in recent years, and that he is entitled to have a greater share for his efforts than those who have not worked for their benefits but who have succeeded to them. We want to be very frank about this. We want to be sure that the Government recognise that all who work in this way are entitled to an increase in their share of the nation's pro- duction and the nation's wealth. If that feeling is engendered, and if that feeling is really held, then these talks will succeed. But if the Government continue on their present basis of keeping down the share of the worker, of keeping down the power and the responsibilities of the unions, they will not. It is our hope that they will look the other way, and that their exercise may result in success.

3.46 p.m.

LORD BYERS

My Lords, as one Member of your Lordships' House who heartily supported the installation of the clock system, I must admit that I am beginning to lose confidence in it. I think that 39 minutes is quite a long stint; but the noble Lord, Lord Diamond, as usual made an interesting speech. He gave us some very interesting statistics on alcohol releases which have been made in the last few months. I do not quite know what conclusion we were meant to draw from these figures. Whether the country has taken to the bottle—as obviously it has—in celebration or in solace I would not know. But when I contemplate what is happening in society to-day, I become tremendously depressed. When one sees the real opportunities which are open to us as a nation, it is inconceivable the number of occasions when we go out of our way to avoid taking them. It is as though there were a sort of suicide wish on society at the present time.

One of the troubles is that our root problems go very deep. Inflation or deflation, growth or stagnation, are surely the outward signs of something much more fundamental. I am not depressed that the tripartite talks have temporarily broken down, or that we have had to substitute a statutory for a voluntary system. What does depress me is that Parliament has been wrestling with this problem of growth in a free society for so many years with no apparent success at all. I think we have really to try to identify the reasons for this continual failure, not in order to be critical or to attribute blame, but to see whether we cannot make some sort of a breakthrough in what appears to be an intractable situation.

I think my first point would be to deplore the constant role of the Government and of the Opposition, whichever Party is in power. Ever since the days of Selwyn Lloyd's attempts at some form of control, it has been taken for granted that it is the duty of the Opposition to oppose, whatever their policy was in power. I believe this to be a weakness. I believe that there are some matters which ought to transcend Party politics. War is one of them; the environment is another; and I believe that this, the future of the country, is in the same category. I believe that on a matter as grave as this, it is vital that there should be the closest possible rapport among the political Parties as well as among the Government, the C.B.I., and the T.U.C. It is for that reason that I think, if I may say so in an uncritical way, that the Opposition Amendment to-day is mistimed because it must be seen in the context, and against the background, of the failure of the Downing Street talks.

I appreciate that it is a perfectly natural, and indeed traditional Amendment for any Opposition to put down to the loyal Address. It is not difficult for any Opposition to make a list of the shortcomings of any Government, and I do not dissent from many of the terms of the Amendment. But I believe that this debate is so closely connected with the White Paper proposals and the draft Bill that I cannot recommend my noble friends to vote for the Amendment to-night.

LORD SHACKLETON

My Lords, I wonder whether I might interrupt the noble Lord. As a matter of fact, this Amendment was very carefully worded in such a way as not to interfere with the talks. I hoped that the noble Lord would appreciate that.

LORD BYERS

My Lords, I am grateful to the noble Lord. I am not suggesting that it interferes with the talks, but it puts us in the position that if we voted for the Amendment it might be thought that we were not giving full support to the freeze and the Bill which is coming forward, and we believe it is right that these measures should be taken at this particular time.

Having said that, may I apologise to the House for not being able to be present at the Vote to-night—at least, I do not think I shall; it depends when the Vote is taken. This may be some consolation to the Opposition, but I have an engagement in Rome at the European Foundation where I have to take the chair at one of the sessions. But the point which I want to make to the noble Lord, Lord Shackleton, is that I think we ought to be looking at this problem with as little Party prejudice as we can, and that is not an easy thing to do. I do not believe that there is any choice to-day between a voluntary agreement and a statutory system. What we are trying to do is not to agree on a statutory solution but, as so many noble Lords have said, to buy time, because none of us has yet hit on a proper solution to the problem that is facing the nation.

I say this with no sense of elation, but I think the Government must be supported on the temporary freeze until we have had time to find an agreed solution to what has been a most elusive problem over more than a decade. Our eyes and minds must now concentrate on what we can achieve during the freeze which will carry confidence after the freeze. I think we have to consider very carefully the transition phase after the freeze comes off, because we have to avoid the normal pressure cooker effect, after deciding to get rid of the freeze, of getting the biggest explosion that you have ever seen. I believe that, as a nation, we have to give careful thought to how this policy is phased out in favour of whatever solution we come to agree.

In detail, I would offer the following comments with some humility. It is a brave man who offers infallible recipes to a problem of this sort. But I would say that any agreed solution, if it is to work in practice, must be seen against a background of genuine social justice. For the Government, this means that a halt must be called to the policy of reducing taxation for the higher income groups while there is so much to be spent on social priorities. I think the level of taxation had become too high, but this is just as much a psychological matter as a fiscal one and it is a matter of social confidence. For business and industry, I think it means that effective systems of fair pricing must be seen to exist, quite apart from the measures of statutory control, and it must be seen that there is no cheating and no "smart Alec" tactics in dealing with prices in this country over the coming months.

For the trade unions, I think there must be recognition of the fact that social justice and fair play cannot be achieved if the big and powerful union is constantly sharpening its knife and taking large slices of the national cake, while the weaker unions are left with the crumbs and a perforated spoon to pick them up with. The T.U.C. must surely take responsibility for sorting out the priorities in what has become a frightening jungle, in which we know that the weaker unions are getting a raw deal. If they do not do this, then somebody else will have to. I think there must be agreement among all responsible leaders in all walks of life that, at all costs, we must preserve the rule of law. By all means change the law or change the Government, but our whole system will be lost if existing law is contantly defied.

I was horrified to read yesterday the remarks of a trade union leader for whom I have the greatest respect, who said, "I do not doubt that every trade union, including my own, will pay no attention to this, which has nothing to do with our deep structural problems of power and property". I hope that this view will not prevail. If that attitude had been adopted by an industrialist, the unions would have made mincemeat of him, and rightly so. I would appeal to the Labour Party to use their political influence on the trade union movement so that we preserve the rule of law and so that whatever is decided in Parliament is supported until Parliament changes, whatever the law may be.

I think also that it is about time we had some agreement on the assumptions we make in trying to discover the root causes of our inflation. It is claimed in some quarters that substantial wage increases have very little effect in increasing prices and on inflation. Personally, I just do not believe that, but I am willing to be convinced. We are told that the major factor in inflation is the Government's policy of putting more and more money into circulation—printing it. I believe that this is a very big factor, but I am willing to be dissuaded. I should like to know. I should like to know, too, what were the assumptions on which the economic model which was used as a basis for the tripartite talks was founded. What were the assumptions made on investment and consumption? What factors, in combination, resulted in the conclusion that the nation could afford an across-the-board increase of £2 or £2.60 a week? And, what is more important, were these mathematics agreed by all the people at the talks, or were there some reservations? And if there were, can we know what they were?

I believe it is essential that the public opinion formers, at least, should be taken into the confidence of the Government and told exactly what are the issues and what are the assumptions and bases upon which the discussions and arguments are taking place. If all this were appreciated and known it would form a basis for the deliberations of the type of tripartite national council to which my noble friend Lady Seear referred yesterday. But until we know how far the constituent bodies of the recent talks will go on agreeing the mathematics and, even more important, whether, having come to some conclusion on them, the C.B.I. and the T.U.C. can deliver the goods, we shall indeed be in real danger of having bought this precious time at the cost of very rough justice, of tension, of social frustrations and a political and economic cul-de-sac at the end. As so many noble Lords have said, we have solved nothing at the moment. We have bought this precious time. We must use it to find a solution with which the whole nation can live, and this, I believe, is the responsibility of all political Parties and organisations in this country.

3.58 p.m.

LORD DRUMALBYN

My Lords, we are in some difficulty in this debate because, as the noble Lord, Lord Byers, has pointed out, we have devoted most of our time in the course of the discussion over the past two days to the question of the Chequers talks, and very little to the Amendment on the Order Paper. Indeed, I think it is true to say that it was not until the noble Lord, Lord Beswick, spoke yesterday and the noble Lord, Lord Diamond, spoke to-day, that the debate has had very close relevance to the exact terms of the Amendment on the Order Paper. This places me in some difficulty in replying to the speeches that have been made, which have gone into great detail, and I hone that I shall be able to contain my remarks to a reasonable time. I hope, also, that I shall be able to say something about both the Amendment and the question of the Chequers talks and the position on the standstill in which we now find ourselves.

It is reasonable to say that on taking office in June, 1970, the Government inherited an economy suffering from an unprecedented rate of wage and price inflation. Throughout the last two years it has been the prime objective of the Government to reduce this unacceptable rate of inflation. The noble Lord, Lord Diamond, quite rightly pointed out that this objective has been reiterated in successive gracious Speeches. The Government have acted on many fronts against the rate of price increases. Public sector prices have been held down over a broad front. In July, 1971, the Government made massive cuts in S.E.T. and purchase tax, and thereby reinforced the C.B.I.'s initiative on prices. The C.B.I. scheme for price restraint, which ended on October 31, 1972, made a major contribution towards containing manufacturing prices. Taken together, the C.B.I. scheme and the unprecedented reduction in indirect action have played an important part in bringing down the rate of price increases over the last 15 months. The rate of increase in the six months from July, 1971, to January, 1972, was reduced to under 5 per cent., compared with 10.9 per cent. in the six months prior to July, 1971; and despite the troubles in the early part of the year the increase in prices in the 12 months to August was 6½ per cent., as compared with 10¼ per cent. in the previous 12 months.

This dramatic de-escalation in the rate of price increases was not accompanied by a similar de-escalation on the wage front. The full impact of the actions taken by the Government and the C.B.I. on the prices front was thereby considerably eroded, and continuing wage pressure has begun to work through into prices more recently. That is why the Government decided to reinforce their policies to contain inflation by engaging in tripartite talks over the last three months. Throughout these talks, all three parties have been conscious of the need to break the infla- tionary spiral which is damaging to the competitive power of British industry and bears most heavily on the weaker members of the community. In the tripartite talks, we reached agreement on three objectives: faster growth in national output and real incomes; an improvement in the relative position of the low-paid groups; and moderation in the rate of cost and price inflation. These were, I think, common objectives; and we obtained firm undertakings from manufacturers and retailers to restrain prices. Unfortunately, we were unable to agree on positive joint measures, and the Government have therefore decided to act unilaterally to establish a new programme for controlling inflation.

My right honourable friend the Prime Minister outlined in another place on Monday the first stage of this programme. The immediate standstill on all increases in prices, rents, dividends and pay provides us all with a breathing space to join together in working out a more rational approach to the problem of inflation along the lines of the proposals discussed in the tripartite talks. Meanwhile, the Government have accompanied the standstill with action to alleviate the pressure on those members of society who suffer most from inflation. Within the Department of Trade and Industry a special Prices Unit has been set up to assist manufacturers, retailers and members of the public to understand the implications of the standstill and to note complaints. The unit has been gathering information on prices raised since midnight on November 6, and they will be examining the evidence offered in each case to see whether, when the Counter-Inflation (Temporary Provisions) Bill receives the Royal Assent, these increases should be rescinded.

The establishment of a Prices Unit reflects the importance that the Government attach to the control of manufacturing and retail prices. The standstill applies to all increases in all prices after November 6. The intention is that there should be as few exceptions to this rule as possible. Enterprises will be required to absorb cost increases to the maximum extent possible. Cost reduction should be fully reflected in prices. Wholesalers and retailers should not increase their cash margins during the standstill; and, as an additional measure to assist retailers to keep prices down in the transitional period from purchase tax to V.A.T., the Chancellor announced yesterday that purchase tax already paid on goods in retailers' stocks on April 1, 1973, will be rebated against the retailers' initial V.A.T. liability. My Lords, where it is impracticable for costs to be absorbed, firms will need to submit details of proposed price increases to the relevant Government Department and obtain its consent, or run the risk of having price increases reversed by notice or order. Exceptions to the standstill will generally be confined to cases where raw materials or raw agricultural produce account for a high proportion of total costs.

Wholesalers and retailers will not be required to apply to Departments before changing prices for goods for which they have had to pay more, but they will be expected not to raise prices unjustifiably. Enforcement will to a large extent be dependent on the co-operation of manufacturers and retailers, given the multiplicity of outlines and variety of products. The D.T.I. has already obtained agreement to such co-operation from the C.B.I. and the Retail Consortium, who represent over 90 per cent. of retailers in the United Kingdom; and both the retailers and the manufacturers recognise the importance of restraining prices in the new climate created following the proposals made by the Prime Minister on September 26.

The public will expect retailers and manufacturers to contain prices, and they will be backed by the powers conferred on Ministers by the Counter-Inflation (Temporary Provisions) Bill. The programme for controlling inflation offers the country a new opportunity to join together in overcoming inflation. The acceptance by the C.B.I. and the T.U.C. of the Government's invitation to join in discussions on the objectives and methods of national economic management marked a major change in the execution of economic policy in this country. It is the Government's hope that these discussions should be renewed to lay the foundations for the longer-term policy to ensure the agreed tripartite objectives.

My Lords, I entirely understand and sympathise with what the noble Lord, Lord Byers, has said about the necessity for planning carefully in advance the transition from a standstill to whatever may be decided should be the future arrangements. But until we decide what the future arrangements are, it is rather difficult to say what the transition to them should be and therefore I am afraid I cannot follow him in that.

LORD BYERS

My Lords, if the noble Lord will allow me to say so, I was not putting it as a question: I was putting it as a warning.

LORD DRUMALBYN

My Lords, we always take note of the warnings given by the noble Lord, Lord Byers. It is not that I want to attribute to him a Cassandra-like role, but we carefully take on board what he says.

My Lords, I turn from prices to unemployment; and, of course, I would not for a moment deny that unemployment is at a quite unacceptable level. Nevertheless, we can take some comfort from the fact that the total number of registered unemployed in October was 80,000 lower than in October, 1971. The figure included 23,000 school-leavers and 2,600 adult students seeking work in their vacation, so that the seasonally adjusted percentage of unemployed was 3.4 per cent. Here again, this trend has not come by chance. Over the last two years the Government have taken a whole series of measures designed to set the economy back on the road to expansion and prosperity after the period of stagnation and decline that followed devaluation in 1966. The Amendment criticises Government policy on taxation, but the massive reductions in personal allowances and taxation have left people with more of their own money to spend, so that consumer expenditure last quarter was at a level nearly 6 per cent. higher than a year ago. This, in turn, affected industrial output, and in June, July and August manufacturing production was running at an annual rate of 8 per cent. above that of the previous three months. The signs are that the economy is on target to achieve the 5 per cent. growth rate set in the 1972 Budget.

As the noble Lord, Lord Balogh, observed yesterday, it was possible to achieve this measure of growth without increasing investment because capacity was under-used. But productivity has been increasing faster in Britain during the past year than in most other countries, including Germany and the U.S.A., and there is now good hope that the level of investment will rise in 1973. The one thing that has been standing in the way of the necessary restoration of confidence is that our export prices have been rising much faster than those of our competitors abroad. That is one of the main reasons why it is so essential that we should moderate wage increases, which have been pushing up our prices and standing in the way of the expansion which we need to increase employment.

My Lords, I was asked yesterday to say something about training opportunities. In launching the Training Opportunities Scheme, known familiarly as TOPS, the Government intend that it should complement, and not supplement, industry's responsibilities, particularly with regard to the initial training of young people entering employment. This is why TOPS requires a minimum interval of three years away from full-time education before making training facilities available. However, in order that these rules do not operate harshly against certain classes who suffer disadvantages, special arrangements outside TOPS have been made for unskilled young people, redundant apprentices and young people who are unemployed and without reasonable prospects of employment. The throughput for Tons this year is 30,000 and we aim at a figure of 100,000 as soon as possible. In 1971–72, nearly 4,000 redundant apprentices took up training places under award schemes operated by industrial training boards. In 1972–73 a further 4,000 awards are offered. Well over 900 unemployed young people were given limited skill courses in engineering construction and nearly 500 are currently in training. The raising of the school-leaving age will reduce by over a quarter million the number of young people leaving school to enter employment next year, but this does not affect the problem of providing job opportunities for school-leavers in the longer term, and the National Youth Employment Council has set up a working party to investigate this problem. It is expected to report about the middle of next year.

A good deal of concern and criticism has been expressed during the debate on what one could describe as land speculation. Probably it is not widely enough appreciated how heavily, and rightly so, profits from property speculation are taxed. Profits from any deals where property was acquired solely or mainly in order to realise a gain on disposal are taxed as profits from trade and not merely as capital gains. A company pays corporation tax at 40 per cent. on such profits and shareholders pay income tax and surtax in the normal way on any dividend. The personal tax rates of shareholders can be as high as 75 per cent. In August, the Governor of the Bank of England asked the banks to restrict their lending to property companies and for purely financial transactions. The latest figures show that this request has met with success in restraining lending for speculative transactions in land.

The new legislation does not imply another concession to the well-off business man. It provides a simple method for a company to give its employees incentive rewards related to its own performance—and here I am talking about share option schemes. But the conditions and limitations on benefits under approved share option and incentive schemes will ensure at the same time that the schemes provide genuine incentives and are not simply used for tax avoidance. This is the reason for their restriction.

LORD BESWICK

My Lords, if what the noble Lord says about the taxation of profits from land speculation is held to be an answer to what has been said, can he confirm that the rate of taxation is higher on profits earned by such activities than on profits earned in more constructive business?

LORD DRUMALBYN

My Lords, the tax on profits is, of course, on general lines, not discriminatory in that particular sense, and I was not suggesting that it was. All that I would say is that transactions of this kind are subject to the normal rules and that if carried out by an individual will be treated as personal income and taxed accordingly.

The noble Lord referred to house prices; and I come to that. There is no doubt that housing prices have recently risen very steeply. In the second quarter of 1972, prices of new houses mortgaged with building societies were 23 per cent. higher than in the second quarter of 1971. The origins of this problem lay in the situation we found when we took office in 1970. The demand for owner occupation did not then reflect the increase in incomes that had taken place and there was little confidence in the future. We took immediate steps to restore confidence. Pent-up demand for owner occupation was released. The industry responded by increasing their output of new houses, but new homes cannot be produced instantaneously in response to demand, and meanwhile prices have inevitably risen.

We must put the increase in house prices in perspective. Despite these increases, Government policies for the private housing market have meant a continuing rise in the number of people who can afford to become owner occupiers. The young and the less well off have not been losing ground in relation to borrowers generally. As between the first half of 1970 and the first half of 1972 32 per cent. more mortgages have been issued by building societies to first-time purchasers; 30 per cent. more to borrowers under the age of 25; and 40 per cent. more to borrowers with incomes up to the average industrial manual worker's earnings. During the same period all mortgages issued have gone up 39 per cent. in number. These are national figures and the picture regionally is much the same. In other words, the prospect of home ownership in recent years has widened and not narrowed. But prices must be stabilised. The way to do this is to increase the supply of new houses. So far the signs are good. There were 43 per cent. more new houses started in the first six months of 1972 in comparison with the first six months of 1970. In the first three quarters of 1972, 14 per cent. more new private houses were started than in the first three quarters of 1971. These are encouraging figures, but we cannot be satisfied until the supply of new houses comes into balance with the rising demand. The problem is one of local markets rather than a national shortage. We are determined that enough land should be released for home building in the right places to meet the needs of the private market into the forseeable future.

LORD ROBBINS

My Lords, does the noble Lord ask us to believe that any conceivable increase in the supply of houses will keep pace with the demand for them unless the inflation is very substantially moderated?

LORD DRUMALBYN

My Lords, obviously the theme of what I am saving is that it is the Government's intention to do just that: to moderate inflation. I would agree that if inflation continues at the present rate and if the demand for houses goes on at the present rate, it will be hard for the supply of houses to keep pace and we shall be found to have almost a special inflation so far as the housing market is concerned.

I understand the natural anxiety over housing land price increases; but the facts are that the average price for a house plot has risen by an annual average rate of 35 per cent. between the first half of 1970 and the first half of this year. The prime cause of the increase is the excess of demand for land; and rather than stifle the demand for land, we believe that the most efficient and equitable solution is to increase the supply. This we have been able to do. It might be helpful if I mentioned some of the measures that have been taken. For instance, we have just issued a circular, Land Availability for Housing—17 October, which, as well as giving details of a special borrowing allocation of £80 million to finance the acquisition of land by local authorities, asks local authorities to make publicly known the details of sites on which residential development can be started within the next five years. Already some £34 million of the fund has been provisionally allocated. We have also been pressing nationalised industries and Government Departments to release more land and to set up working groups in the regions where local authorities, builders and the Department of the Environment officials have been able to thresh out common problems; and have announced that we are hoping to give loan sanction for sewerage works even in advance of need. It is also hoped to release some 5,000 acres of land for private housing in the New Towns in the South East. Clearly we must press on with these policies. Meanwhile, progress has been most encouraging. For instance, planning approvals for private houses by local authorities in the South East in the first six months of 1972 are up by about half compared with the same period in 1970.

My Lords, to control house prices is quite impracticable. No Government have tried it. The last Government did not do it during the 1966 standstill. The then Minister of Housing, Mr. Crossman, said on August 2, 1966, that "it would clearly be difficult to establish a basis for statutory control" of house prices. This is because houses and building sites are very individual things with widely differing values. In the second-hand market no clear price level exists for many houses which may not have been sold for many years. Any attempt to control house prices would freeze the market and dry up the supply of new houses. But the Government expect the building industry to keep down the prices of new houses during the standstill and, in particular, not to increase advertised prices for new houses before contracts are exchanged. There is no question of the Government overlooking the other many aspects of the housing problem apart from owner occupation. The cornerstone of present policy is the reform of housing finance. This, together with progress on improvement and slum clearance, ought to enable the main objective of a decent home, within their means, for every householder to be realised within a reasonable time.

My Lords, I turn from the question of housing to that of industrial relations. The noble Lord, Lord Diamond, referred in particular to the days lost in strikes. No one, certainly no one on this side of the House, may be complacent about the present level of strikes and other forms of industrial action and the loss of production that these entail. Nevertheless, the last two years have seen a dramatic fall in the number of strikes. In the first nine months of this year there were 1,795, and the figure for 1971 was much the same. But compare that with the 3,248 in the first nine months of 1970, or the 2,248 in the same period in 1969. I am not in any way underrating the seriousness of the very high number of working days lost this year. No one may be proud of the fact that so far this year we have lost 22 million working days from strikes. But nearly two-thirds of that total is due to two strikes—in coal-mining and building. The larger the number of people involved the greater the responsibility of those who call strikes. But let no one use these two incidents to disguise the fact that over industry as a whole the number of strikes has dropped remarkably.

I would be absurd, even perverse, to attribute the number of working days lost to the Industrial Relations Act. These two strikes were about pay. Apart from the need to get a proper and up-to-date framework for industrial relations, the main emphasis of the Act is upon conciliation. There has been no decline in the willingness of trade unions to seek the help of the Department of Employment and I should like to take this opportunity also to say that while it is a pity that the services of the Commission have yet to be invoked, as intended by the Act, the report of its inquiry on the disclosure of information has been published, and organisations have been consulted. The proposed revision of the Code will be issued in draft as a consultative document, with a view to submitting it to Parliament after further consultation and with the advice of the Commission.

A good deal has been said in the debate about fairness and my noble friend Lord Colville of Culross, in a notable contribution, made it clear that the keynote of the gracious Speech is fairness. He left to me the task of showing how this applies in the sphere of the Department of Trade and Industry. First, the gracious Speech referred to areas of special social need. We intend to use the powers in the Industry Act to spread prosperity more fairly, in the sense of more evenly, throughout the country. Second, there is the reference to legislation to promote fair trading and competition, and in this connection I would mention also the Supply of Goods (Implied Terms) Bill shortly to be discussed by your Lordships. It will provide that any exclusion clauses in contracts of sale to consumers will be void and so will give better protection to consumers. The Insurance Bill is also designed to improve the protection given to consumers; that is, to policy holders.

My noble friend Lady Elliot of Harwood and the noble Baroness, Lady Phillips, referred earlier in the debate to the promise in the gracious Speech of legislation on fair trading and competition. Over the last year we have been giving careful thought to means of strengthening the machinery to prevent the abuse of market power and to protect the consumer. We have been concerned to identify the real problems of the consumer and to find practical ways of assisting or protecting him or, more usually, her. This will be one of the primary aims of legislation shortly to be introduced. My right honourable friend the Prime Minister has already described this in another place as the toughest and most important range of measures on the subject ever proposed in Britain. He has underlined the importance the Government attach to this matter by appointing my right honourable and learned friend Sir Geoffrey Howe to be Minister for Trade and Consumer Affairs. It is the first time in our history, I believe, that a Cabinet Minister has had the protection of the consumer as a specific and principal field of responsibility. But not all measures taken in the consumer's interest need have a statutory hacking. As the noble Baroness, Lady Burton of Coventry, continually reminds us, we should give high priority to the provision of better information to enable consumers to make a proper choice from what the market offers and, when things go wrong, to the provision of advice which is more accessible, and that means local. When the time comes to publish the details of our proposals I am confident that your Lordships will not find them wanting in these respects.

The noble Lord, Lord Diamond, spoke of takeovers. As was foreshadowed in the gracious Speech. the Secretary of State for Trade and Industry hopes shortly to introduce new competition in legislation; and under the existing legislation—the Monopolies and Mergers Act 1965—each merger involving the acquisition of gross assets of£5 million or more which involves the creation or intensification of a monopoly—one-third or more of the United Kingdom supply of goods or services in question—is considered for possible reference to the Monopolies Commission. It is our policy, as it was that of the previous Administration, to look at each case on its merits and to refer to the Commission any merger proposal which in our view raises public interest questions which require closer examination. In this connection one of our main concerns is, of course, the extent to which competition is diminished, but we have full regard also to the wider factors of the public interest.

Certain major bids have recently attracted a great deal of attention in the Press and Parliament, notably the bids by Trafalgar House Investments for Bowaters and by the British-American Tobacco Company for International Stores. These bids are under consideration by the Department and decisions on whether or not they are to be referred to the Monopolies Commission will he announced in due course. We seek in all cases to reach a decision as soon as is reasonably practicable. None the less, some mergers of this sort have to be considered in detail and with care before a decision is reached. The general question of takeover bids by a conglomerate is one which is much in people's minds at the moment. The Monopolies Commission expressed some general views on this in their Reports in 1969 on the proposed mergers between Unilever and Allied Breweries and Rank and de la Rue. We have very much in mind the need to keep an eye on conglomerates but each case must of course be looked at on its merits. There have been five merger references to the Monopolies Commission since July 1, 1970. There were six references in the roughly similar period from July 1, 1968, to June 30, 1970, under the previous Administration.

There can be no doubt that inflation more than almost anything else produces unfairness. It is the purpose of Her Majesty's Government, and has been all along, to reverse the trend towards inflation and unemployment which we inherited, and to that end we have been working out policies which will achieve that purpose. For that purpose we need faster and sustained growth. That is why we have committed ourselves to going for a rate of growth of about 5 per cent. a year over the next two years. We cannot achieve that unless we maintain a satisfactory balance of payments. That means that we must not price ourselves out of the markets of the world by paying ourselves too much. There can be no doubt that the country as a whole now realises this and is fully prepared to accept the need for a standstill in wage and price increases while a longer-term policy is being worked out. I am gratified to find that it is the general feeling of the House that they are prepared to accept this lead. We certainly could not afford to continue to talk indefinitely before we took action. But now there is no reason why the talks should not start again.

My Lords, we certainly should have preferred a voluntary system. But a voluntary system depends upon a common concept of what is fair. Everyone has his own idea of what is fair in his own particular case, and in the end there must either be agreement or someone must decide. Some very revealing things have been said in this debate. The noble Lord, Lord Brown, said last night at the end of an interesting speech: I do not believe that a voluntary agreement on prices and incomes will work, because I do not believe that trade union leaders, with the best will in the world, can maintain the necessary control over their own members."—[OFFICIAL REPORT, 7/11/72; col. 311.] The noble Lord, Lord Balogh, said that it dawned on him in 1943 that free collective bargaining and full employment were incompatible. We remain optimistic, and we shall do all we can, despite opposition, to devise a voluntary system acceptable to the vast majority: and one can rarely, if ever, achieve unanimity in a free society.

Meantime, I sense that the House as a whole accepts the standstill, which, after all, is not very different from the previous standstill, except that it is taking place in an atmosphere of expansion and hope and not one of deflation and disillusionment. Until the legislation becomes law, the standstill will depend on the good will and public spirit of everybody. True, the monitoring system for prices has already been established, and those who do not play the game are likely to be obliged eventually to come into line. But I believe that the force of public opinion and the general will to take this opportunity of breaking the vicious circle of inflation and unemployment will prevail.

LORD DIAMOND

My Lords, before the noble Lord sits down, may I ask him to deal with a matter of which I gave him notice last night, and to which his noble friend promised he would reply? He has said a word or two about houses and land. He says that the Government propose to do nothing about spending from capital gains of that kind. What do the Government propose to do about spending from capital gains of other kinds?

LORD DRUMALBYN

My Lords, I do not recall the noble Lord having put that question to me. If he had, I should have endeavoured to answer it. I cannot answer him now, but I should like to look into it.

4.33 p.m.

BARONESS GAITSKELL

My Lords, I have long regarded this noble House at its best as an excellent institution for further education, and the quality of this debate, on such an intractable subject as inflation, has reinforced my views on that. I am afraid that my own contribution will be more thoughtful than instructive. I do not quarrel with the Prime Minister's change of policies, because I guessed from the beginning that the Conservative Party's Election Manifesto had paved the way for continuing strife between the trade unions and the Government, and that there would have to be changes. On "Panorama" the other day the Prime Minister stoutly denied that he had alienated the trade unions. But perhaps he was joking, and had decided on a standstill when the kissing had to stop! Imagine the difference in climate during the tripartite talks if the Industrial Relations Act and the Housing Finance Act had not been the curtain raisers to these talks? I believe that we might now have had not a statutory freeze on prices and wages, but the beginning of a prices and incomes policy. Anyone who watched "The Money Programme" on B.B.C.2 recently, in which the noble Lord, Lord George-Brown, certain members of the T.U.C. and the C.B.I. and shop stewards took part, would have been horrified at the bitterness of the trade unionists towards the Government and dismayed by the complete absence of trust. This should make us think.

My Lords, the word "confidence" is one that has been appropriated by management and employers. A lack of confidence is used to justify any shortcomings, like a disinclination for industrial investment. But if trade unionists do not have confidence in the Government of the day, of whichever Party, there can be no safeguard against industrial anarchy, for the exercise of power by any particular section of the community is not sacrosanct.

So now this Government have imitated the Americans and have likewise performed an economic somersault, introducing a freeze with the more benign name of "standstill". Not all economists and politicians are sanguine about the long-term effects of a freeze. The very words are revealing. They speak of the "cost push" or "demand pull" inflation, followed up by an "over-heating" of the economy. The fairness of a freeze can be accepted only if the freeze on wages is matched by a reduction in prices and is not merely a reduction in living standards for certain groups in the country. It would be surprising if trade unionists had forgotten the very large increases in salaries awarded to top civil servants and heads of nationalised industries, among others. Perhaps it would have helped them to forget this if the White Paper had contained any suggestion for dealing with property speculators and capital gains of various kinds, not to speak of rent increases.

No one underrates the difficulty of controlling food prices in the circumstances of our going into the Common Market. But when the Prime Minister said that there was to be a price freeze on food prices, except for meat, fish, fresh fruit and vegetables and dairy produce—because of seasonal fluctuation—I hope we all realise that these particular foods are essential for the health of the nation, and need special protection and monitoring.

Many politicians and economists have written about the phenomenon of inflation, a disease of democratic countries not of dictatorship countries. The coverage in the national Press has been an education in itself, and The Times has included articles from men of the Left, Right and Centre. Mr. Maudling has conceded that there must be changes in the capitalist system itself. Whenever I have heard Mr. Campbell Adamson of the C.B.I. I have detected a greater understanding of the realities of power and understanding of the trade union position. But it was an article in reply to Mr. Maudling by a man who was Deputy Prime Minister in Czechoslovakia when Mr. Dubcek was the Party Leader that I found most stimulating and illuminating on this subject. This article, by an "excommunicated" Communist, Dr. Ota Sik, now teaching in Switzerland, brought out the whole truth about the fact that wage earners have no direct interest in the growth of capital, profits or investment, and that until the social and economic causes of inflation are removed there is little chance of a successful prices and incomes policy, voluntary or statutory. Dr. Ota Sik made a great plea for the education of trade unionists about the need of a prices and incomes policy.

Here, my Lords, is a task for the mass media. I think that both management and the T.U.C. have shown no imagination about this need. The T.U.C. seem to me to behave as if they have nothing to lose from inflation. It requires not only experts but men of vision on both sides of industry and politics—men not hemmed in by their Party ideologies—to tackle the corrosion of inflation. Few people were as clear-sighted as my noble friend Lord George-Brown about these matters, though his efforts were bedevilled by a balance-of-payments problem which the Conservative Party—and I wish to stress this—did not inherit. There have been no orchids from the Conservative Party in this debate for the whacking balance-of-payments surplus which they received from the Labour Government.

I support the Amendment of my noble Leader Lord Shackleton, so ably introduced by my noble friend Lord Beswick. I support it on various counts. I dislike the way in which the Tories always speak as if they had the public in their pocket and are the only people in the country who have the national interest at heart. It is not an edifying package that is presented to us in the White Paper. I have long shared the view of many people in the Labour Movement that at this time there has to be a great surge towards more equality of opportunity in our society—what my noble friend Lord Brown spoke of as a "shift in the distribution of the gross national product". His speech yesterday was a remarkably original one, and I learned a good deal from it. In this standstill the Government have gone some way towards changing their minds, but I detect little change of heart.

4.43 p.m.

LORD THORNEYCROFT

My Lords, I intervene for a few moments in this rather complicated and controversial matter, and I propose to restrict my remarks rather narrowly to the issue of inflation and the present package that we are debating. The noble Baroness, Lady Gaitskell, was, if I may say so, both informative and thoughtful, and I appreciated the tenor of her speech. Indeed, I do not want to quarrel much with what has been said in the debate. I think the whole House shares the view of the noble Lord, Lord Diamond, about unemployment, and the whole tenor of what I want to say is that we have to devise measures to deal with our problems without giving a damaging blow to our policies on employment.

With regard to eroding the powers of trade unions, I can assure him of this: I do not think anybody, certainly anybody I have met in recent times, has wanted to erode the power of the trade unions. There has been some lamentation as to the lack of power of the trade unions and some wish to build up that power, but no wish to weaken what constitutes a really critical part of the fabric of the State. I agree with the noble Lord, Lord Byers, that here we have to go to the heart of the matter. We are either for this package or we are against it. It is no good talking round and round it, and I think at the end of the debate we had better make up our minds where we stand and then be prepared to stand up and be counted.

As to the contribution made by the noble Lord, Lord Drumalbyn, I suppose that all I have to do is to thank him, because in a sense he has accepted a suggestion that a number of us have been putting forward for quite a long time. The noble Lords, Lord Robbins, Lord Plowden, and Lord Roberthall, and I myself in a modest way, have all said that some form of statutory incomes policy appeared to us to be increasingly necessary. We have all asked the Government not to go on saying that such a policy is impossible, because an increasing body of opinion in the country felt that it was really bound to come. I therefore think the Government are right to take the initial steps that they have taken and are taking at the present time. I think it is a matter of total irrelevance that they have reversed their policies. Indeed, very often the best thing that a Government can do is to reverse its policies. The job of a Government, like that of a Prime Minister, is not to take a package of proposals at the beginning of a Parliament and stick rigidly to it. The job of Governments is to govern the country in changing and difficult seas and to try to steer the ship as best they can amidst the various storms that arise on the way. I think the Government are absolutely right to adjust themselves to this new posture.

I believe there are certain pluses even in the way it has been done. In having these talks, they have managed to get, through them, a very large measure of public support, and anybody who was prepared—and I notice the Front Bench opposite are rather careful not to do so—to go out and attack what they are doing would in fact lose a good deal of public support. I think the public have been waiting for some sign of government in this direction and that at this moment they would be behind the Government. They have some measure of trade union support: let there be no doubt about that. One gathers it very quickly from talking to trade unionists, not in the whole of their policies but in the general line they have taken here and in the patience with which they have pursued their objectives. The parties to the talks broke without any bitterness and I think that is a great credit to the Government. It is also a great credit to Mr. Vic Feather, who has conducted himself in an extraordinarily difficult situation with immense dignity and loyalty to the movement which he serves.

Time has been given for moderate opinion to assert itself, and that is something always worth doing, because opinions are changing all the time and new approaches are being taken. There is a great force of moderate opinion, not only in the country but also, in particular, in the trade union movement. This should be given a chance to exercise itself. Time has also been given for a number of rather quick settlements which were reached just before the freeze was announced; and if some of them were perhaps a little too quick or a bit over the odds, I have the feeling that they have saved us a very great deal of trouble in the cold winter months that lie ahead. So, in a way, the decks have been cleared for a new approach and some new thoughts.

I suppose, as a minus, one must admit that we have paid and will pay a very big price for the delay which we have had to accept in tackling more fully the growth of inflation in this country. I believe that what we need to do now is to learn the lessons of what has happened and to set the objectives. I speak with hesitation—I do not claim any absolute wisdom or knowledge in these matters—but I myself do not believe that a voluntary effort had much chance of success. I am bound to say that. In a way, it was a non-event. There simply are not the volunteers available. Power does not rest with the C.B.I. in that kind of way, and still less, perhaps, does it lie with the T.U.C. The T.U.C. is not a wage-fixing body; no individual trade union would ever concede that right to the T.U.C. So, in a sense, the Government have been talking not with principals, or even with accredited agents, in the matters they were dealing with. Therefore I think a measure of consensus is possible and perhaps immensely valuable; but the idea that you could somehow achieve voluntarily a policy which really bit is very much more doubtful.

I hope the Government will go on meeting the T.U.C. and the C.B.I. I am all for co-operation and consultation on these matters; let them discuss the Industrial Relations Act—it probably needs discussing. I hope that they will discuss with others the Industrial Relations Act. If I may follow something my noble friend Lord Molson touched upon, we have many people outside the C.B.I. and the T.U.C. who have strong views on, for example, picketing laws. I remember during the passage of the Industrial Relations Bill putting down an Amendment which proposed that picketing should be limited to those people normally employed upon the site. I withdrew it at the request of the Government because I must admit that we were sitting late at night, and there was some reason for not pressing Amendments which would not be accepted. But I would certainly put it down again. I believe, whether in this House or outside, that it would have a good deal of support. There are many matters, but in the last resort we are governed not by meetings between the Government, the T.U.C. and the C.B.I.; we are governed by Parliament. It is in these Houses of Parliament, Parliament itself, that the final decisions and the responsibilities for what is done about inflation must eventually be taken.

Now they have acted and we have a freeze which, in my judgment, will do no harm to anyone for a few months. But at the end of the freeze some decisions will have to be taken, and I think it is fair to ask my noble and learned friend the Lord Chancellor, who is to reply to this debate: where do we go from here? What are we going to do next? This is not a final solution to our problems. We ought to begin to think about where we are going and to begin to talk about the various options that are open to us. None of them is ideal, and I doubt whether any are passionately advocated by any political Party in the House. But we had better talk about them and see what they are.

I suppose that the object of the freeze. or of any thaw which follows it, must be this: it must be to put a gradual brake—and I emphasise the word "gradual"—upon the money supply in order that we can deal with the inflation without causing savage unemployment. I suppose that is the object that most of us on all sides of the House would have in mind. What would be rather foolish would be to imagine that three months from now we can go back into what I conceive to be the rather dream world in which we have been living up to now: a world in which we suddenly could have a voluntary wages policy, or settle it all by a few talks. I wish we could do that, but I do not believe it. I did not believe it a year ago, and nothing that has happened now persuades me to believe it at this moment.

Therefore I think it would be wrong for the Government not to take a very close look at the realities of the scene. Where do we go? What steps could reasonably be taken? As a first step, I imagine we will try to get wages moving up again because wages have to move up. In point of fact, this is a rather underpaid, unproductive country. As wages in Europe move up it is quite right that ours should move up. The managers in my businesses are underpaid compared with their counterparts on the Continent of Europe. I do not say that they work less for that purpose, but as we go into the Common Market it is reasonable for them to assume that they will be getting rewards which are roughly the same. I talk of managers because I happen to deal closely with managers.

But the same story can be told about workers in many industries. So we have to get to a stage where wages can move up, and prices can be adjusted, but within the limits and conditions that the Government lay down. I do not think they can let it go to a free-for-all. My guess is that they will have to lay down limits and conditions, and they will have to have machinery for monitoring those limits and conditions. It takes time, thought and determination to set up machinery of that kind. I admit that all this is very far from the market mechanisms which adhere to the hearts of many of us on the Conservative Benches. It must be very far from anything that the Labour Party want since they are voting against this thing this evening. I think it is pretty far from the Liberal economies which—

LORD SHACKLETON

My Lords, may I interrupt the noble Lord? What does he mean about the Labour Party voting against this "thing" this evening? I do not understand what he means. This Amendment was put down long before this "thing"—whatever it was—came about.

LORD THORNEYCROFT

My Lords, I think the rebuke is justified. I apologise to the House for a remarkably loose phrase. I was trying to blur the enormity of the noble Lord's conduct. What I meant was that he has put up a superb smoke screen which concealed the fact he was casting a vote against the package which really mattered; which, as the noble Lord, Lord Byers, said, went to the root and heart of the matter. This was, as I said earlier, something on which men ought to have the courage to get up and be counted. That is what I really meant.

LORD SHACKLETON

My Lords, the noble Lord is blurring it so much that he has blurred his own mind. We are not voting against any package to-night; we are making a criticism in this Amendment of the Government's past policy. Suitably, the package has come into the debate, and a number of noble Lords are making very interesting speeches. I think if the noble Lord just moves on a little it will help.

LORD THORNEYCROFT

My Lords, if I have been unjust to the noble Lord, who is always so fair in these matters, I apologise. He is voting about something else; but the rest of us are going to vote about this package.

What are the alternatives? One alternative is a quick use, in a robust form, of monetary policy. Monetary policy has a role: but anybody who urges the harsh use of monetary policy immediately applied to-day is asking for a deal of trouble in this country. If we did that the 5 per cent. growth rate would go out of the window straight away. All the hopes that the noble Lord, Lord Diamond, was expressing about unemployment would be lost. All these things would cause a savage upturn in the levels of unemployment. If that is the alternative, I would beg noble Lords—and I know there are many people, and many people in the Conservative Party, who urge these things—to think twice about it. I speak as one who is an advocate of monetary policy, one who has used monetary policy. I know a little—not much—of what I am talking about in the field of monetary policy. I urge a certain caution.

Another alternative is a free-for-all. I have already dealt with that. I do not think we are anywhere near the world when we can go back to the situation which has persisted over recent months. A country would be remarkably unforgiving of a Government who attempted to do anything of the kind. Another alternative urged sometimes by Labour Members and sometimes by trade unionists is rigid price control unaccompanied by wage control. I want to spend a few minutes talking about price control. I know that we all have to pay lip service to price control. I know that in public places, for political purposes, and in the newspapers, we all have to say that it matters frightfully; but I do not see why I should say it here. I have got too old to bother about anything except saying what I think about these things.

Price control is largely irrelevant to the problem that we are talking about. Over the years profits have sharply fallen as a percentage of the national product. Trading profits, net of stock appreciation, were running at 10 or 12 per cent. of the gross national product in 1964; they were down to 7 per cent. in 1970. They may have risen a little since then. Those were gross profits. But the net return on capital, after allowing for inflation in this country, is at a dangerously low level. I honestly think that only a visionary could say that this inflation was a profit-push inflation. While I admit that we must do something about prices, and I am not at all opposed to it, those of us who fix prices are not going to be in a much different position to-morrow than we were in yesterday. Our prices are fixed by competition. That goes for the vast majority of prices in this country. The idea that managers or boards of directors walk gaily into the office and say, "Let's put them all up by 5 per cent." is one of the biggest myths that ever happened. It is not like that in the business world. We are closely held and closely fixed by a great deal of competition from home, and of course increasingly in the year ahead it will be competition from Europe as well. This has some relevance to the measures which are to be adopted in the future.

Therefore I would, in conclusion, say this. I would ask the noble and learned Lord the Lord Chancellor to give us, if he can—I do not want to press him too much—some reflections on where we might go after this package is over. What kind of a set-up are we looking for? Obviously it must be an arrangement which allows wages to go up in some measure. It must have more flexibility, but it must fall short of a free-for-all, which would indeed be disastrous. Prices, in the political scene in which we live, must be subject to some measure of control. But let the control, I would urge, be concentrated on monopoly prices or strongly price-led prices, because these at least are fairly ascertainable and definable and could be the subject of strict monitoring. The rest, quite honestly, can look after themselves and will be determined by competition. We shall then move into a world which is not completely free, which is not the market mechanism, which is imperfect in some respects and unfair; but it will be a great deal better than what has gone before and a good deal better than most other people are trying to do at the present time. It could help the poor as well as the rich by putting a check on the inflation which has damaged both—and I wish it well.

5.3 p.m.

LORD GEORGE-BROWN

My Lords, I hope the noble Lord, Lord Thorneycroft, will forgive me if I say that that was really a very peculiar speech. He obviously got the thing wrong. He proceeded to say that wages should go up—that was his opening point—and then spent a long time making it quite clear to us that in fact the only thing he thought should be kept down was wages. At the end he was in favour of prices being under some degree of control, but he spent a long time in the middle of his speech showing why they could not be. And his other alternatives which he advanced to the noble and learned Lord the Lord Chancellor he knocked down one by one. I was not clear where he was at the beginning in the middle or at the end of his speech except that he seemed to think that this package deal—this freeze, or standstill, or whatever it is—is somehow a new policy, or the beginning of a new policy. It is to that point that I want to address most of what I have to say because, with respect, I think he is completely wrong about it.

The noble Lord said one thing that amused me very much, with my perhaps distorted sense of humour. He said, "Of course, there is nothing wrong with Governments' changing their mind, even if they go on changing mind as often as this Government do." My Lords, that depends on how often they get it wrong. I agree with him that if they get it wrong all the damn' time there is a lot to be said for changing their mind all the damn' time. But the last time I was in Government, may I just tell him, I would have given anything for a Government that had just stuck to the mind they had made up and did not change it quite so much. It makes life awfully complicated if your colleagues keep changing around you.

Yesterday I listened to the opening by the noble Earl, Lord Jellicoe (he is not here; no doubt quite properly so), and after him the noble Viscount, Lord Amory, giving us, in the case of the noble Earl, a somewhat pained lecture upon what decent chaps ought to do in a situation such as this. He said he had little doubt that a few loud voices would be raised over here, on this side of the House, on political issues, but he thought—or hoped—that there would not be too many of them. The noble Viscount, Lord Amory, went a little further and said he had no doubt that some of us would engage in vituperation. He thought that that could be just tossed off and that noble Lords did not have to bother about anybody who engaged in vituperation. Both noble Lords made interesting comments in a debate upon a prices and incomes policy, in a debate upon whether we should have a freeze or not, because I could not but recall the notable restraint on vituperation and personal abuse that they conducted when I was trying to do exactly the same thing from 1964 to 1966.

I could not but recall Mr. Heath's sneer at the ex-officials of the D.E.A., most of them now leading luminaries and advisers to this Government—which of course may be why this Government are changing their mind. I could not but remember the Prime Minister's sneer because they had held a reunion of all those officials who were in the D.E.A. in a certain inn not far from where the office of the D.E.A. used to be. He thought that was a suitable subject for a sneer. I think that getting advice from them about how we should conduct ourselves in this situation is not in itself the best of taste. I hope that we shall not engage in vituperation; I hope that we shall be responsible, and I hope that we shall deal with this matter in the atmosphere in which it has been caused to come about. But it does not lie with them, who not only abused us up hill and down dale for trying, and in terms of scurrilous personal abuse, but also went out and deliberately incited employers and trade unionists not to comply with what we were doing. I simply say, without making too much of a meal of it, that I do not abuse them for changing their mind—in many respects I welcome it, if indeed they have changed it—but I think they owe a greater humility to this House and to some of us for their past behaviour.

I start with the proposition, which I did not think the noble Lord, Lord Thorney- croft, held, that a freeze or a standstill is not a policy. It may have a part, a role, to play in the working out of a policy in the stages by which you get to it, but it is not itself a policy; and one simply cannot welcome it. Even if it did not have other defects I am going to try to explain in a moment, one simply cannot welcome it as though it itself is in any sense whatever a policy action. If I felt that the Government had a productivity, prices and incomes policy then I could view the standstill as a move towards its ultimate working out. But, as the noble Lord said, quite properly (I know it to be his view and I suspect it to be the Government's view, but they do not say it as openly as he does), they do not believe that a productivity, prices and incomes policy can be worked out in agreement and can be operated by agreement. If they do not believe that, then a freeze is in fact a step to nowhere; it is indeed a step back to where we were before.

When the noble Lord said, with a certain charming humour, that he rather hoped the three parties would go on talking and he was rather pleased that the talks had broken off without too much bitterness, he did not have the advantage, as I did, of having looked on the tape just as he got up to speak, where I read that the T.U.C. had unanimously decided in just about the bitterest statement I have ever heard come out of that place, not to resume talks. You do not get a unanimous decision without them all taking part, and therefore it is not all due to Mr. Jones and Mr. Scanlon. It is because they have managed to persuade everybody in the trade union movement that they do not have a policy that the Government, by this freeze, are rapidly getting us nowhere but only back to where we were.

I do not think either that they have a clue as to how one would get back to a productivity, prices and incomes policy, even assuming that they wanted to. Even if we assume that I am doing them an injustice in thinking that they do not want to, I do not think they have a clue as to how to go about it. I listened to a number of speeches yesterday and I read every one that I was not able to hear, and they brought home to me—and with respect to the noble Lord, Lord Drumalbyn, he did so again to-day—the fact that even though I have my own personal rows with certain of the trade union leaders, and even though I believe some of them think that it would be better to pull the temple in and start again, which is not a thought I myself share, nevertheless, they have managed to convince me that the unions were probably right in thinking that in those talks the Government were not discussing with them a policy, a way for running this country, in which the relation of prices and incomes to productivity would apply; that all that the Government were really asking the unions to do was voluntarily to impose upon their members a wage restraint. I feel that they probably were not badly wrong in thinking that, because this is how the Government must have persuaded them.

Of course the noble Lord is absolutely right: there is no way by which the T.U.C., or certain members of its General Council, can impose a wage restraint upon its members. He says that they are not set up to do it even if it were proper for them to try. So if you want an incomes restraint because you think that is the beginning of something better, then I agree entirely that it is better to do it by way of an ordered freeze, because then those trade union leaders who might be tempted to co-operate in a voluntary scheme but would be taken advantage of by certain of their colleagues, get a certain measure of cover out of an ordered freeze. If that is what the Government were after from the beginning—I suspect it was, and I suspect that even the moderate (so-called) trade union leaders now believe it was—then frankly the way to do that is to impose it. But if you impose it, you must make it effective. The noble Lord said in passing that so many have got through in the first three days, over the week-end, and have even managed to keep it dark. The employers promised not to tell their chaps and the unions promised not to tell their chaps, and presumably somebody promised not to tell the Government. Agreements are made on Friday and are ratified on Monday, but payments have already been made under them as from Friday.

The point is that the way in which the Government have imposed this freeze is, frankly, as inept and ill-thought-out as was their approach to the talks in the first place, and as appears to be still their approach to the idea of a policy. I saw a fellow on a television broadcast over the week-end who, when asked about this policy, said it was a "great lash-up". I was not quite clear what a "lash-up" meant, but I gather from my more trendy children that it is a phrase similar to one that we used to use but which began with a different letter. I think that is really what it is, and if "lash-up" is the trendy term, so be it. The Government are quite inept. I will say this, and will take a chance on it, having been once involved in one freeze (but I will say in a minute why I think that differs from this one). They have in fact let so much through in the interval between deciding to do it and announcing it and making it operative that they have busted it already. I reckon this is a "busted" freeze from the very beginning. So much has gone through that we cannot expect other fellows who for some reason or another could not get in last week, to say to their members, "Sorry, old boy, you pay me to be your general secretary, but their general secretary was quicker off the mark than I was and I cannot do anything for you now". Others will find their way through. Therefore I think it is an inept freeze, even if a freeze was in fact the right means to adopt.

Equally, with respect to noble Lords opposite—the noble Earl did this yesterday and the noble Lord, Lord Drumalbyn, did it a little to-day—I think it is silly to go on moaning about the hope that at some stage we shall all get together again and all be decent chaps. It is not decency which is at stake, nor is decency an issue. This is a real world, and union leaders and industrial managers have to live in a real world. We cannot live in the Government's Cloud Cuckoo-land. Having created such an absolute all-time sense of frustration, of irritation, of annoyance, of distrust in industry, as we now to a large extent have, we must face the fact that even managements and unions that have got along exceedingly well for years are now being pushed into conflict. If you allow that to happen—or if you, as I think, deliberately create it; but let us say allow it to happen—as a result of 2½years of choosing confrontation, of thinking that the public wants it—the noble Lord, Lord Thorneycroft, has just said that public opinion wants you to stand up, wants you to take people on, without having thought on about what, and in what way and for what purpose—then you create the sort of situation in which fellows cannot act normally.

We keep talking as though wages going up, incomes going up, salaries going up is because trade unions insist that they do. I also mix quite a bit with managers now, although not quite at the same exalted level as the noble Lord who preceded me, and I realise that it takes two to make an unreasonable wage settlement. There is the chap who asks for it and the fellow who agrees to pay it. Managements are being forced into making unreasonable settlements (if you like to call them that) because they cannot afford the cost of resisting them. They are as hamstrung by the Government's policies, and as confused and bewildered by them, as are the unions. So we get connivance. That is why you get secret agreements on the Friday which are not made known until the Monday. It was not just the trade unionists (wicked chaps!) who connived at it; the other fellows connived at it because they did not want to be forced into a confrontation. Any one of us who mixes with management knows that week after week someone says, "but really you ought to stand up to them".

When one uses the phrase "stand up and be counted" it means little in this House, but it means a hell-of-a-lot for the general manager of a weaving shed, or something like that, with£15 million of capital invested in it. When he is told, "You should now stand up and be counted", he replies, "That is all very well, but it means £15 million-worth of machinery standing idle and that, considering the cost of money nowadays and the results of all the other economic policies which the Government have hung round my neck, including the imports of textiles from all over the world, I cannot afford". That is why these things happen, and the Government are pushing managements as well as the unions into a position in which things that should not be done are being done. It is no good just reading a lecture to trade union officials, even those whom one thinks one does not like or one regards as too extremist. The lecture must go back to the beginning, and in this instance it all began on the Treasury Bench.

If the country lacks a credible social policy—I will not belabour the point on this occasion; the issue was made abundantly clear yesterday by my noble friend Lord Beswick and to-day by my noble friend Lord Diamond—or a credible economic policy, the situation in which we find ourselves is bound to be produced. I therefore try to follow the noble Lord's example and ask where we go from here—what do we do when what I regard as all this stupidity and futility has come to an end in 90 or 150 days or when it has been blown up, as I think it will be, in less than half that time? What are Ministers to do? If I were one of them I would want to get the social policy right again. I hope that this does not sound old hat: and noble Lords will be aware that I do not these days go in for a lot of what is, strictly speaking, Party politicking.

The Government must recognise that there are clear evils happening in society to-day. We know what they are, and they have been enumerated in the House. There are, however, things happening which are not quite as evil in their total effect but which are psychologically so important that they, too, must be stopped if we want to get the social policy looking right as well as being right. Noble Lords know what they are. Take, for example, land exploitation. Some noble Lords are standing on their heads trying to prove that one cannot deal with something which we all know is irritating people throughout society, and not just extremist trade unionists. It is irritating even Lord Amory, and it takes a lot to get him steamed up. It is felt by people throughout society that unseemly land exploitation is going on and the Government must be seen to be making some effort to stop it. If they do not wholly succeed, no matter. We do many things in which we do not wholly succeed. We are asking the unions to do something about wages, but we know full well that we shall not wholly succeed. Some of us are willing to support a freeze being imposed, knowing that it will not wholly succeed. Let us be seen to be making an effort in the land exploitation sphere even though we know we shall not wholly succeed.

I am reminded of the merger mania. Some mergers are proper. Partly because I was involved with the I.R.C. I would certainly not say that I was against all mergers. Nevertheless, they are not all right or done for the right purpose. When people read of someone boasting about sitting on a£15 million profit because he has bought a big stake in this or that company, and they do not know whether Bovis is buying P. and 0. or Inchcape or what or for what purpose, or why Trafalgar House wants to run the Savoy—one may have a good suspicion of the reason but one cannot be sure—and when people read that somebody is buying up other people's companies with paper rather than with money, they are bound to feel anxious. The city editor of one of the evening newspapers advised Lord Inchcape, whom I do not think I have the pleasure of knowing, to "Put his bankers' money where his mouth is." The elegance of the writing in our financial columns does not seem to improve with the passage of time, but that is how the writer put it, meaning not that Inchcape should buy P. and O. but that Inchcape should borrow a lot of money from somebody which would enable them to appear to buy P. and O. whose tills they could then rifle or assets sell off in order to repay the bankers. They would thereby have bought P. and O. with P. and O.'s own money. It does not look to me as though it would be any different in the case of Bovis, either. In the course of all this, some gentleman would come out with a vast cash profit when all he started with was a piece of money. This is no laughing matter. People are saying that it is wrong and that if we want to create a climate in which we can talk seriously to workers and managers, be they white or blue collared, we must be seen to be dealing with this matter because it is bothering them very much indeed.

We hear much about capital gains and how taxation is taking care of them. I do not know whom noble Lords on the Treasury Bench think they are kidding. I assure them that they are kidding nobody on these Benches or outside this House because we all know what is going on and the people are being told about it. Every day they are reading about it in the newspapers. The Government must reverse the tax advantages that were given in the Budget. They were ridiculous. I am a good deal better off than most of the people about whom we are speaking, particularly in terms of the freeze and having a wages and incomes policy. On the other hand, I am not nearly as wealthy as many others. In any event, why did I have to be given a gratuitous tax rebate in the last Budget? There was no point in picking me out for that benefit. There would have been a lot in the Government saying at the time, "If we cannot do it for all the others, because so many people are poor, we will not do it at all." This is the problem which the trade unions have been fighting for years. If only God had not made so many poor people it would have been easy for us to take care of the troubles of the poor. But the Government should not have selected the minority who need it least. All that could be stopped right away by the Government reversing the tax arrangements they made in the last Budget. I urge them to change their mind on this matter.

Equally, the Government should stop finding every meticulously detailed logical reason for not intervening in these matters. It all sounds so beautiful if one is not involved and I appreciate that I may be told that it is easy to say these things when sitting on these red Benches. Nevertheless, if it is right to resist matters on the sort of legalistic logic-chopping in which the Government are indulging, then it cannot be right to tell the trade unions that they had better stop logic-chopping, which is what some of them are doing. At least let us drop it if we want them to drop it, and then perhaps we can start talking again in a reasonable situation.

I have explained that first we must get the social policy right and reverse some of the decisions which the Government have taken and which clearly do not fit. They may have fitted the lame duck philosophy of the former Secretary of State for Trade and Industry. Those policies have been changed but the Government have forgotten to change the social policies which went with them. Then we must get a proper productivity, prices and incomes policy—and we must for once remember that it must be a productivity, prices and incomes policy. First, of course, we must have a plan. I know how ludicrous the National Plan was made to sound and what fun it was in all sorts of circles to decry it. Nevertheless, we must have a plan stating our aims and how they are to be achieved. We must state what resources will be given to this, that and the other. Having done that. we can then set about trying to decide how prices should behave and how much incomes might be allowed to move in such a situation. I would urge that we get back to that.

At the risk of it being said, "Oh, he has got set in a groove and cannot think afresh", frankly, having thought about it and talked about it a great deal, I would urge you to go back to 1964. After all, what we started in 1964 was a continuation of a long process which, as one noble Lord I listened to yesterday said, did not begin with the Labour Government in 1964. Just as Maudling grew out of Selwyn Lloyd, so did 1964 grow out of Maudling. It was another stage in the continuing process of trying to find where we could get to. We must recognise where the Labour Government went wrong. I think I know, but others may have different ideas. We certainly went wrong because we did not realise that if there is an economic plan many other things have to fit it, and one of them is monetary management. The idea that monetary management can be left free of an economic plan is nonsense, with respect. I do not like using that word, as in my view it does not fit, but you have to fit your monetary management policy, your taxation policies, your overseas payments policies, the prestigious projects into which you are willing to pour a thousand million pounds (if you do not want to offend your ally across the water) into the economy and make them subordinate to it. So if we have the basis of a socially fair approach to what is done with what is in the national kitty and how we shall distribute it, and we have a basically justifiable economic policy about how we make the kitty grow, and how to make a pint into a quart, then you can talk seriously to trade unionists or anybody else about how much more they can expect to get out of it. It is only when you do it that way round that you can use phrases like, "wages must go up". You are trying to kid people. Wages cannot go up, incomes cannot go up in total unless what has gone into the kitty has gone up. You then have the argument about who gets most out of the kitty and who stands still. That is what a prices and incomes policy should be all about.

I vote that we start listing the failures. I am happy to stop chiding the Government for having changed their mind; I only wish I thought they had. Do not go abusing those who tried and failed. I remember those vast hoardings (how could I not?) outside the Labour Party conference hall at Brighton, paid for by the equivalent of Mr. Maurice Stans' fund which is also quite successful. On those hoardings it said—and it was thought to be very clever—"Don't say Brown, say Hopeless". All we need to do now is to put up "that blasted Heath" and we shall match it absolutely straight. But I hope we do not approach it in that way. People have tried and failed, but let us see why there are the failures. What part of the policy was right? We have to go back to a productivity prices and incomes policy. The freeze has relevance—and for reasons which I have tried to give I do not think it will have very much relevance—only if it were just a halt while we found out how to restart. It needs so many changes of policy by the Government that I do not have much belief in (nor would I have were I a so-called moderate trade union leader) the willingness, let alone the ability of the Government to do it. If they are to do it, may I suggest one last thing: while they are about it why not reactivate, or recreate, the instruments we left behind which they so wilfully and, as I said in an earlier debate, so stupidly got rid of. You need a Prices and Incomes Board. If you do not want an ex-Conservative Minister as the chairman, that is all right, have an ex-Socialist Minister; but you do need that monitoring body, so bring back the I.R.C.

You are wasting untold hundreds of millions at the moment, doling it out in order to recover from Mr. John Davies's "Dame Luck" philosophy—lame duck philosophy—it is all right either way, as a matter of fact. I know that you did not destroy the regional economic councils, but reactivate them and put them back into action; and even—dare I say it?—you might go the whole hog and bring back the D.E.A. May I say to the Lord Chancellor that it would be very nice to think that the Prime Minister, were he to do these things, so eminently reasonable, so clearly logical and moderate, could be the joint guest of honour at the next D.E.A. reunion which would be held at the hostelry appropriately named, "The Two Chairmen".

5.36 p.m.

LORD HEWLETT

My Lords, I crave the indulgence of your Lordships in this my maiden speech. Five months ago to the day I was introduced to your Lordships' House, and since then I have, whenever possible, sat and listened to your Lordships' views. This is not the place (though I sometimes wonder why) nor, I am told, the time for exaggeration, so I will not claim that my quiet apprenticeship has always, on every occasion, been in a state of rapt attention to everything that has been said. But I have come to realise that my earlier high respect of the background experience of speakers in this House has been still further enhanced by attendance at your debates. I am indeed grateful, and I thank your Lordships.

I have been adjured not to be controversial, no matter how seriously provoked, in this debate, nor to speak on any controversial issue. Alas! I am the sort of person who invariably manages, without intent, to sound controversial, even when discussing the weather. But it may be thought that the subjects of economic and industrial affairs which are to be covered to-day in the debate in reply to the gracious Speech from the Throne must mean for me "instant transgression". My Lords, in all seriousness, is it not regrettable that such an impression occurs almost as a reflex action? Is it not an indictment of our time and of our society that the "us" and "them" syndrome applies most of all to industrial relations, or to human relations in industry, as I prefer to refer to them.

I should like to speak to a much narrower aspect of industrial relations and to the practical aspects of them within one company and one industry. Since I left the Corps of Her Majesty's Royal Marines in 1946 and then the University of Cambridge in 1948, where I read economics and politics, I have spent all my business life in a small to medium-sized independent company in the chemical industry. It was founded by my grandfather 80 years ago, and I have not forgotten the Lancashire phrase "of clogs to clogs in three generations". But we do continue to develop, to diversify and to expand, more recently by building ourselves a successful plant in Northern Italy. How was I to know that four years later your Lordships' House would accede so readily to the wishes of the other place that we should join the Economic Community of Europe? In regard to our own business, let me just tell you that we have a turnover of about £8 million; we have 450 employees, and the company went public in 1938. It is what is known as independent. What I think may interest this House is the fact that in our 80 years' experience we have as a company not had a single strike, lock-out, or serious dispute of any kind. Only in times of national emergency or as a result of enemy action have we been stopped. More recently there have been some very tough wage negotiations, but with good will on both sides these have been fairly and happily resolved, and without any stoppage at all.

How has all this come about? There should really be nothing remarkable in a record of 80 years of continuous harmony—probably there is not. But the media of communications, sense of values, which perhaps reflects those of the readers, listeners and viewers, find it unsensational, and so it is not news; only trouble is news. Forgive me, my Lords: I think that, regrettably, it is news to have such a record; and more perhaps for the causes than for the sake of the record itself. For I maintain that many hundreds of other medium and small-sized companies have the capability to maintain industrial harmony and in many cases have done so—not of course, in many instances for 80 years; but at least for long periods of time they have had that degree of success. My noble friend Lord Harvey of Prestbury has just retired from the chairmanship of the chemical company, literally across the road from us in Manchester, which had a marvellous record of success in industrial relations. For how long, I cannot say exactly, but I know that for a quarter of a century it had no trouble whatever; and probably for a great deal longer than that.

There are many successful relationships but masochistically, this country seems to want to hear only of trouble and strike. I attribute our own success to a condition of mutual confidence and respect. There is a reasonableness in negotiation, and I express the view that the country is sick and tired of those, whoever they may be or claim to represent, who are unreasonable, be they from management, from the trade unions or from neither, and that is perhaps the sector from which the greatest trouble is going to come, from those who do not recognise what are the proper functions in running a company.

In our own company we do not consider, and still less treat, labour as a commodity; nor do the shop floor treat management as a door mat to wipe their feet on. All employees are individuals, and I reckon to know almost every one as a person; and so do all my colleagues. I try to make time to go round the plants and offices frequently. Since the company was founded in 1892 we have, in so far as Governments have allowed, annually reviewed salaries and wages individually for all employees. More recently the trade union has preferred bloctype negotiation, which of course tends to reduce greatly individual assessment of industry, hard work, responsibility and merit. For 50 years, at least, all employees have been invited to attend an annual review of the company's results, and in so far as good security permits, to hear the plans for the future of the group. The chairman of the company has almost always made the report, and at that meeting the whole board has been present to amplify in detail or to make special reports.

This, my Lords, is not co-partnership, but it is co-operation and exceedingly good sense. Thirty-five years ago, in 1937, the company started, and still maintains, a profit-sharing scheme for all employees, staff and shop floor alike. Thirty years ago my forebears gave a large block of shares in trust to the employees, who receive the dividends outright and individually. Not from them comes complaint of increased profits or improved dividend payments. Their disappointment if the profit share bonus is not up to expectation is real and genuine. Particularly in the last ten years we have tried to destroy old barriers existing between works and staff employees. Management is not only expected to help but does help the employee with problems of almost any description in his private or his company life; he or she has only to ask for assistance and it is, wherever possible, readily given. I am talking about the sort of problems with Government Departments or local authorities, over education, or whatever it may be, where people with less advantage of sustained education, and perhaps less opportunity in life, are, to say the least, perplexed, if not terrified, by some of the circumstances in which, comparatively easily, they can fall prey to great difficulty.

All this sounds very idealistic, maybe even paternalistic, indeed old-fashioned, if not old hat. I do not mind what it is called so long as it renders real help; and if it assists in bringing freedom from possible dispute, all well and good. Such is not the purpose of trying to give help, but I think it is a genuine responsibility of industry and management within industry to try to do so. It is, I suggest, the genuineness of the attempt to help which may have a useful spin-off benefit to the enterprise in the preservation of harmony and goodwill. Never, of course, should one interfere, or, worse still, work for the wrong motive. We all understand that and no-one is every patronising. But if one analyses the position I have tried to describe to your Lordships, I think that the key concepts of 80 years of harmony are two. The first is identification of the individual with the enterprise—and I mean every individual, not just directors, not just managers; I mean that every single person within the company should be made to feel part of the company and should enjoy working with the company. The second is a proper and frequent communication within the company in every direction, to and from the shop floor, to and from the board room, whichever way you like to describe it, and, of course, close collaboration with the union. A sense of responsibility on all sides is indispensable to success, and of course it is the duty of Government to create the conditions in which industry can prosper.

I recognise that our problems in a small, or comparatively small, company are nowhere near so difficult of solution as those in the giant units of industry or the even larger nationalised concerns. I am worried about the problem of size. I agree so warmly that merger for itself is quite frequently for its own particular purpose, whatever that may be, and, unfortunately, is frequently the bringer not of great success to the constituent elements, not of great harmony, but of great disappointment to the individuals participating in the company, whether they be employees or shareholders. Alas, I have no experience to offer those larger undertakings that I have just described. But there are so many less large units of production and distribution who in aggregate contribute enormously to the gross national product, and to them I say that until one has found a more successful formula I for one will not favour any change from a proven way of success. I personally do not feel that silly generalisations help, like the one reported in the Press last week, of a well-known and successful business man, or for that matter, a trade union leader who might say something indiscreet; in this case the business man was making criticism such as that the managers and directors are drunken and slothful. And how many times have I heard the fatuous comment that, of course, the shop floor employees are all layabouts. These comments help no one in the slightest degree, least of all this country at this time. The only people who gain anything are the utterers of such comments, and they gain only notoriety.

Frankly, if one is prepared to work—if, as the "boss", the "gaffer" (however one describes the chief executive) one is seen to work—the effects of example, I find, are powerful. I start at the company well before eight o'clock in the morning, and often before seven, in order among other reasons these days to make time to be here, and I have no doubt many of your Lordships sacrifice much to exercise the same privilege of attending in this Chamber. Most things worth the doing mean a sacrifice to the individual. This is one factor, I think almost a prerequisite, of true responsibility.

So, my Lords, may I conclude by expressing my fundamental confidence, based on experience, in much of what I find in management and labour too—not only in my company, but in the industry we serve. I appeal to both constituent elements in industry to act responsibly, for the sake of their own future as well as for that of their country. Our national inventive genius, great skill and good sense must be allowed to prevail, and may the extremists of any and every hue receive the very little attention their comments deserve! May I add that I think that the Press, radio, and television have an important role to play here in helping the country to gain some perspective of how industry is in fad run and how business is conducted, for surely the issue of human relations in industry is truly vital. It is one of the keys to our successful prosecution of membership of the European Economic Community, and surely one of the greatest challenges—and, as I believe, one of the greatest opportunities—in the whole of our peacetime history. I thank your Lordships for so kindly listening to my contribution to this debate.

5.52 p.m.

BARONESS BURTON OF COVENTRY

My Lords, it is my good fortune to follow the noble Lord, Lord Hewlett, and to have the pleasure of telling him, on behalf of the House, how much we have enjoyed his speech. I was about to say that it was a breath of fresh air; perhaps I should say a breeze of fresh air. If he thinks that I am being unduly complimentary, may I say that as it comes from a native of the white rose county to one of the red rose county he will realise that we do not pay compliments one to the other in either of those. We have enjoyed the noble Lord's speech. and we hope that we shall not have to wait another five months before he speaks again. We shall look forward to some lively controversy if we have a debate on the weather.

My Lords, it seems to me that it would be entirely wrong for this debate on the gracious Speech not to include some contribution on consumer affairs I hope that your Lordships will bear with me on this, but this subject was mentioned in the gracious Speech and there are one or two things that I should like to say. I experienced problems that we all understand in trying to make notes on what I wished to say before I knew what was the Government's intention. However last week, before the Government changes were announced, I put my name on the list of speakers. Apart altogether from the Amendment in the name of my noble friend Lord Shackleton, I thought that the House would agree that consumer matters had a place in any debate on economic and industrial affairs.

The Press has been stating categorically for some time now that a new deal for consumers was to be announced by Mr. John Davies, the Secretary of State for Trade and Industry, in the debate on the Queen's Speech. As we all realise, neither the former Secretary nor the new one spoke on this aspect during the several days of debate in another place, although Sir Geoffrey Howe is speaking to-day. The additional day of debate in this House has meant that we have had the pleasure of hearing the noble Lord, Lord Drumalbyn, although he did not add a great deal to what is already known on this particular matter. I hoped that he would go a little further. The Speech itself told us that: Legislation will be introduced to promote fair trading and competition", and that, Other measures to protect the consumer will be proposed. I realise that much play could be made on this further evidence of conversion by this Government, but I am not concerned with that to-day. The real point would seem to be: what have we all learned from mistakes of the past in this area of consumer affairs.

My Lords, I welcome the First Reading of the Supply of Goods (Implied Terms) Bill in our House on November 1 last. It is a well known saying that a week, or even a day, is a long time in politics. Ten years is longer still. On November 14, 1962, I had the privilege of introducing in this House a debate on the findings of the Molony Committee: the first debate in either House on that Report. Quite honestly, fundamentally my thoughts have not changed. Whether that is because they were particularly good ones, or because I am particularly obstinate, is not for me to say. But concerning those opinions I should like to say how pleased I am that in the not-too-distant future it will be safe to fill in the guarantees we get with goods. I say that particularly because, in the debate some 10 years ago, at columns 621 and 622, I stressed that I found the relevant recommendations (Nos. 90 and 91 to be exact)— well-wishing of the worst quality, and worth exactly nothing. These referred to the inadvisibility of doing' anything about guarantees. It was a most retrograde statement, and I am glad that the Government have decided to deal with the matter.

This year, on March 1, we had an excellent debate in this House. It was based on the necessity for a reappraisal of consumer affairs and education consequent upon the withdrawal of grant to the Consumer Council. The debate was excellent because Party points were not made. I think every speaker tried to analyse the then present position and what might be done to improve it. Out of this debate, agreed by everyone, emerged the gap. In other words, the removal of the Consumer Council (although I had long thought it should be changed) had left a vacuum at the centre. I thought the outstanding need was to fill this vacuum, and suggested the establishment, by Royal Charter, of an Institute of Consumer Affairs. I felt then, and feel now, that we need something much wider, of much greater stature than ever before. We need it at home and we shall need it in Europe. Such an institute could be the central link we lack. It could fill this gap. Since then I have been trying to add flesh to the bones of an institute. Mr. John Davies himself said that a future set-up must be the best and most widely respected representative and guide for consumers. In my view, as Molony said, it must be a co-ordinating agency and have the supreme position in consumer affairs.

I found myself with three fundamentals. This central organisation should not be within Government. It should be financed not from industry but from Government, and possibly some foundation or trust. All movement, or most of it, should be from the circumference to the centre. May I just try to explain this last point. I have drawn on this piece of paper two circles. The inner one is my Institute of Consumer Affairs; the outer one is, obviously, the periphery. Movement is from this periphery to the centre. On the periphery, and the list is not intended to be complete, I have placed, for example, industries and the trade associations. It seemed to me that we should aim at trade associations drawing up codes of practice which would be accepted by their members; and then subsequently be accepted as fair trading practice by the central Institute of Consumer Affairs. Many instances come to mind, but perhaps I may cite two—the Retail Trading-Standards Association and the Association of Mail Order Publishers (in which I declare an interest).

Then I have placed the Citizens' Advice Bureaux as dealing with the complaints aspect of consumer affairs; also, the information and advice centres now being set up by the Consumers' Association in conjunction with the local authorities. I can think of no better way to give advice to people. These centres should be established throughout the country. My plan here would have taken care of complaints and advice in general, for most people. Also listed, of course, are other consumer organisations and the National Trading Standards Service—formerly the weights and measures organisation.

Then—and I must not take up too much time on this—I have the Advertising Standards Authority and the advertising bodies; with a two-way flow from the circumference to the centre and from the centre to the circumference. There must be the research organisations and those occupied mainly with testing. I do not believe that we need to set up new organisations here. It seems to me that we have enough, of repute, to cover the needs and requests, both from my periphery and from my central body. Then there is the question of the consultative councils. I think they must be drawn in. If I may take the example of POUNC—which is the Post Office Users' National Council—where my noble friend Lord Peddie has done such an excellent job of work, what is done and decided by POUNC must be conveyed to my central body, so that they know, officially, what is being done in that field. And so on, right through the orbit of consumer affairs. It would be disastrous if people were simply told what to do; I want them to co-operate. And I have left a wide section of my periphery, which the House will be glad I do not intend to pursue, for the European aspects of consumer affairs as these affect this country and as we affect Europe.

Now, my Lords, what have we got?—and I am saying this before any Minister has told us, but after the Government changes have been made. I regret that this matter has been placed within Government, and I also regret that this would seem to be within the Department of Trade and Industry. However, I did not want a Ministry for the consumer. As those interested in consumer affairs will know, the Labour Party has proposed the establishment of a National Consumer Authority. This proposal envisaged the Authority as an independent body financed by Government and run by an independent board. It would have much larger resources than the Consumer Council and a correspondingly greater function. Although neither I nor the Labour Party wanted this within Government, I must say that I welcome the important fact, which the noble Lord, Lord Drumalbyn, mentioned, that the Minister responsible is to have Cabinet rank. What has been wrong here for many years is that consumer matters have not ranked nearly as high as they should. They have been classed as something for housewives or shoppers, or as a section not as important—and I put the word "important" in quotes—as other far more important affairs, and this has been infuriating as well as wrong.

I do not know whether any of your Lordships saw a discussion on television last night, where one of the usual reporters had some people in the studio to discuss the Government's White Paper. The reporter did not really know the White Paper. I am not quarrelling with that, but he had it there and he was endeavouring to take a discussion on it. He had four women there as housewives, and also a couple of men. His first aim with the housewives was to get them to say that they did not think housewives should be expected to help the Government on the policing of prices, and his second aim was that they should say that they did not understand the White Paper. Everything else was subsidiary. The one woman who understood the White Paper, and said so, was dismissed very quickly. When the one man who very obviously knew the business thoroughly was asked about the White Paper and proceeded to speak about it, he was told that it was a general matter and it was left. Then the whole matter was written off by talking about "the ladies". Now if there is one thing which is infuriating to all of us—although we hope that we are ladies—it is to be described as such by that type of interviewer, and I hope that the media will find out who it was (I will not mention him) and will run the programme through again and take it to heart. Quite seriously, consumer affairs are as important an aspect of trade, of industry, of economics and of social justice as any other area of modern society. I really think that is true.

One thing which gives me much pleasure is the designation of Sir Geoffrey Howe as the Minister for Consumer Affairs. The whole House knows for how long I have been trying on this point to wean public opinion, and that of Government and of your Lordships, away from what is usually known as "consumer protection" to consumer affairs. While I do not flatter myself that the designation given by the Government is due to me, I feel that it is a significant starting point. In my view, the phrase "consumer protection" is not only an out-of-date term but reflects an attitude of confrontation, of "we and them", of those in favour of protection and those against. This is something else which has been wrong within the area of consumer matters for a long time. I believe that industry wishes to co-operate, and that our whole attitude for the future should be one of co-operation.

We have no further information. I should have liked to know more about the future set-up before speaking but, as stated earlier, I do not think that consumer affairs should be omitted from this debate. We have had various prognostications by various papers. They may be right; they may be wrong. But it seems to me that the Minister for Consumer Affairs must set up some organisation, some separate body, to work with him in this area which has now been given a higher status—Cabinet status. I hope that this will not be a departmental committee within the Department of Trade and Industry. What I have been trying to say to-day is that I believe we need a central organisation, be this my Institute or a creation of the new Minister. Let us call it a centre. This centre would have two functions of overriding importance. The first would be to co-operate, to co-ordinate. I want information, advice, requests feeding into this centre from all the organisations on the periphery—what they are doing, what they think needs doing, what help or assistance they would welcome either by way of research, of testing or of public action from the centre. Such a process would enable the centre to know what was taking place in the whole area of consumer affairs. This has been fragmented for far too long, which is why progress has been so slow. Then, and only then, would the centre be in a position to decide what action was essential on various aspects, bearing in mind the whole general background.

The second function of overriding importance would be the taking of action obviously entailing the proviso that the centre had the power, the status, the authority to take what action seemed necessary—a power of decision which I feel very strongly ought not to be limited by Government approval, by any Government. Can the Minister for Consumer Affairs bring about such a development? Whether or not he can, whether or not he thinks such a development the right one, I hope that at long last we shall find ourselves with a co-ordinating agency having the supreme position in consumer affairs here at home, and with the resultant status in Europe.

6.10 p.m.

VISCOUNT CALDECOTE

My Lords, I should like to add my congratulations to the noble Lord, Lord Hewlett, on his splendid maiden speech. It was vigorous, constructive and encouraging: and I hope we shall often hear him in your Lordships' House.

I listened with great interest, as I always do, to the speech of the noble Lord, Lord Diamond, but I must admit that on this occasion I found him much less convincing than usual. He seemed to be badly informed when he said that increases in pay were not a major cause of inflation. He seemed to be contradictory when he then supported the continuation of the Downing Street talks, with their objectives of restraining inflation through moderating increases in incomes. He was disappointing in that he made no mention of increasing the wealth of the nation, but only of sharing it out. His speech seemed to me to be mainly non-constructive criticism of the Government.

My Lords, at times like this, when the welfare of everyone in the country and, indeed, the whole future of our free democratic society are in jeopardy, it is more than ever important that we should speak carefully and with responsibility. I think we have one particular duty: as always, to give our views sincerely, but now particularly without bias and without political dogma. I regret very greatly the attitude that the Opposition have adopted. They seem obsessed by the dogma to which the noble Lord, Lord Byers, referred, that it is the duty of the Opposition to oppose. It would be easy, and it is very tempting for me, to pursue that theme much further, but I want to make only one point in this connection. I totally reject the criticism of this Government and of the Prime Minister for changing their policy in the new circumstances which have arisen; and I am glad that the noble Lord, Lord Diamond, the noble Lord, Lord George-Brown, and others agree with me on that. But others have not agreed. Others in the Party opposite have made strong criticism and have mocked the Prime Minister and his colleagues for changing their policy in these present grave circumstances. It is especially absurd, it seems to me, that this criticism should come from the Party opposite, who first introduced their policy In Place of Strife, which was never mentioned in their Election Manifesto, and then changed their minds and retreated from it because they had no courage to oppose the opinions of those who paid the piper. It is quite another matter to change your policy in the national interest and to have the courage to stick to that new policy through thick and thin, as this Government are doing.

My Lords, the really important question is: are we now going in the right direction? The Downing Street talks came very close indeed to agreement. If that agreement had been achieved, a period of voluntary restraint would have followed. I believe that that would have been effective. It would not have been totally effective, because in a free democratic society no policy of this kind can possibility be totally effective, but it could and would have been effective only if it had had the massive support of public opinion and if those who went far outside that policy came into the glare of full publicity. In my view, the fact that the very distinguished group of people who met at Downing Street failed to agree should not be the determining factor in future policy. The vital achievement of those talks, I believe we all agree, was to rally the opinion of the vast majority of the public behind the policy and objective of restraining inflation.

In my view, therefore—and I know this is a minority view—it has been a mistake to impose statutory restraints; not because of fear, but because, on balance, I believe that better results would have flowed from a voluntary policy of restraint of prices and pay. It would have worked, as I have said, only if it had been strongly backed by public opinion, as it would have been if there had been agreement at Downing Street. The trouble with the statutory policy is that it will involve a great bureaucracy, a great machinery of approvals in Government Departments. It will prevent our rewarding good work in industry; it will stultify negotiation, which inevitably involves compromise; it will produce frustration and inequity between different groups and between different people, which will generate bad personal relationships—relationships on which so much depends in industry, as your Lordships well know; and, finally, it will, in my view, divert too much effort to the symptoms rather than to the causes of inflation.

My Lords, one can broadly divide people into two categories. There are those who want a society based on law and order and reasonable prosperity in which to live and bring up their families; and there are those others who want anarchy and chaos to destroy the free democratic society in which we live. The former are in the vast and tremendous majority in this country, thank God! They will support any reasonable policies put before them. They want to be protected against the anarchists or the extremists, whatever you like to call them—those who want chaos. But whatever policy is adopted, whether it is voluntary or statutory, the extremists or anarchists will attempt to destroy it, and they must be fought. In that sense, confrontation is inevitable and desirable, but not, I believe, in other senses. Confrontation with those people must be accepted and they must be fought. We must concentrate on winning that battle, because if we fail, whether we are poor or wealthy, young or old, we shall all go down the drain together.

So, my Lords, the question is: how do we fight that battle? In my view, we must make it less easy for extremists to persuade others to strike in support of unreasonable demands. We must take action to redress the balance of power through over-generous handouts to strikers. We must take action to prevent the intimidation of people of good will who want to work—and there have been many examples of that over the last few months. We must take action to stop violent picketing and rigged meetings, where so-called unanimous votes for continuing strikes are taken. In my view, the Government have taken far too long to tackle those problems. Whenever we have asked them what they are doing about them, they have said, "They are under active and vigorous consideration". My Lords, the time has long passed for consideration: the time has come for action. I know I am repeating what other noble Lords have said, both to-day and yesterday, but I think it will do no harm to repeat it.

We must also take action to stop abuses of freedom in the financial field which contribute nothing to national wealth and merely cause dissatisfaction among large numbers of people. We must take action on asset-stripping operations, where human considerations very much take second place to money and quick profits; and let us not be deluded by those who claim excessive advantages for those operations. We must take action on the ludicrous price of land sold for desperately needed housing, and on the gigantic profits that accrue from it to individuals. We must take action on vast mergers which contribute nothing to national wealth and give no advantage to prosperity or to the quality of life, and very often the reverse. My Lords, I could go on with a much longer list, but noble Lords more experienced than I have already mentioned other matters. Surely it is better to concentrate political effort and the time of legal experts and civil servants on those problems, rather than on setting up great machineries and bureaucracies to carry out and administer a statutory policy on prices and incomes.

My Lords, I know that this is a minority view and against the view of many much more experienced noble Lords than I who have spoken. In passing I must say that the speech of the noble Lord, Lord Thorneycroft, with all his great experience, seemed to me to imply that we must have a statutory policy for keeps. From his argument I could not see any way out of it. But I appreciate that the die is cast. The Government have decided that they are going to have a statutory policy, and we shall have to make that statutory policy work as best we can. But I hope that in the preoccupation with making it work we shall not forget to give attention to the very important and serious problem that I have already mentioned. We shall have plenty of time when we come to consider the Counter-Inflation (Temporary Provisions) Bill to talk about those details; to-day is not the time to discuss them.

Finally, I would say that I support fully the Government's intention to continue the talks between the T.U.C. and the C.B.I. There is a strong desire in men of goodwill in the T.U.C., in the trade union movement as a whole, in the C.B.I. and throughout industry, to restrain inflation. We know that this is vital for every one of us. I suggest that it is industry and the unions who know best how to negotiate; I do not believe that Governments and the Civil Service are very good at it. They have not had the experience possessed by the people in industry and the trade unions in working and negotiating together in that way. Would it not be better if the C.B.I. and the T.U.C. were left for a while to get on with it, to get agreement towards an objective which they all want to see achieved: to restrain inflation? Might it not be better for those two bodies to get together and to thresh out an agreement that they could then put to the Government as something on which they both agree, and that they should then do their best to persuade the Government that that was the policy which should be followed? I believe that that would have a better chance of success than the tripartite discussions that have been going on in the past—although no one has greater admiration than I for the way in which the Prime Minister has handled them. I believe that we all owe a tremendous debt of gratitude to the Prime Minister and to his colleagues in Government for what they have tried to do over the past month. That they have failed is sad, but it should not be taken as a great criticism. For that reason I shall certainly vote against the Amendment to-night.

My Lords, I have spoken frankly as I see the situation. I know that there is room for widely different views in this House and throughout the country, in industry, in the unions, outside industry and everywhere; but whatever course is ultimately decided upon when we pass the legislation which the Government are bringing before us in a few days' time, I would add my appeal that we should all support it loyally, wholeheartedly and effectively in the interests both of our children and of the maintenance of our free democratic society.

6.24 p.m.

LORD SHACKLETON

My Lords, I should first like very sincerely to congratulate the noble Lord, Lord Hewlett, on his maiden speech. If I may, I would say to him that if all of industry had managers and bosses with his enthusiasm, directness and human feeling we should not be in our present trouble. He did make very clear—as did my noble friend Lord Brown who, similarly, has been a very successful industrialist and a wise leader—the extent to which we still have to go in our society. The noble Lord said that he might be thought to be old-fashioned. I do not agree. I think his attitude is not old-fashioned but highly contemporary; and his contribution to this debate was equally contemporary and relevant. We shall look forward to hearing more from him. We in this House like people with direct experience about which they can talk as forcefully as did the noble Lord but in a way that gives no offence.

In rising now at the end of this four days of debate on the humble Address, I should like to remind your Lordships of the Amendment which is actually before us. It is customary in the debate on the humble Address for noble Lords to take their opportunities to speak, and while I am glad there have been a number of speeches to-day which did not bear directly on the Amendment I want to draw attention to it partly because of the speech of the noble Lord, Lord Thorneycroft, who said either that he was not going to vote for "the thing" or that he was going to vote for "the thing". I am not sure whether "the thing" is the new Government package or whether it is our Amendment.

THE LORD PRIVY SEAL (EARL JELLICOE)

My Lords, I assume that the noble Lord means the Government's new package.

LORD SHACKLETON

My Lords, I am not even sure what is the Government's new package; there have been more serious developments since we began this debate. But I should like to remind noble Lords of the purpose of the Amendment. I would ask noble Lords to treat it seriously. I do not think it does much credit to us if we assume that noble Lords on both sides of the House are merely indulging in some kind of political ritual, gambit or trick. I was a little surprised that the noble Viscount, Lord Amory, who is the kindest and wisest of men, should have tended to dismiss this Amendment as a piece of ritual. This rather disturbs me—and I say so to him without bitterness. The fact remains that there are very clear differences of view (representing different political philosophies) between the two sides of the House; and that where these differences of opinion exist we have our democratic system, our Parliamentary system, by which to thresh them out within the rules of the game. We do criticise; and in this House we criticise, I think, with moderation.

My noble friend Lord Beswick made a very moderate and wise speech, and I hope therefore that noble Lords opposite will not treat this Amendment as a mere gimmick. Admittedly, they used to do this sort of thing to us. I always thought they meant what they said. I believe they did; but perhaps they did not and therefore assume that we do not mean what we say. I do not believe that to be so. I prefer the attitude of the noble Lord, Lord Polwarth, who last night said: I do not pretend that I agree with all, or, indeed, with a great deal of what he"— my noble friend Lord Beswick—

said on the subject, although I sense that he, along with other noble Lords opposite, had the interests of the country greatly at heart"—[OFFICIAL REPORT, 7/11/72; col. 324.] I appreciate that this is so and I think that we shall get on better if we assume it to be so. Obviously, we shall all of us at times say things which will violently irritate the other side; but I slightly object to being lectured by the noble Lord, Lord Byers. I know he has gone to Rome and I applaud his going there. I am not being personal about this, but he said that somehow we all ought to unite in the interests of the country. We all want to unite in the interests of the country; but if we disagree, and we do disagree fundamentally, it is our duty to point out the basis of this disagreement.

My Lords, we have had during this debate a number of notable speeches particularly from my noble friends on this side. To-day, we had very interesting and expert speeches from my noble friends Lady Burton and Lady Gaitskell. Yesterday, we had the speech of my noble friend Lord Brown and that of my noble friend Lord Davies of Leek who. as always, charmed us with his style and fervour. To-day, the noble Lords, Lord George-Brown and Lord Thorneycroft, were, so to speak the "heavyweights" of the debate. They came in at the moment that the Conservative Party emerged from their private brainwashing exercise in time for the main bout. Even if the noble Lord, Lord Thorneycroft, was not quite sure what "the thing" was, none the less his debate was interesting and also caused the Government to think. No one more than the noble Lord, Lord Thorneycroft, has shown in public life a personal devotion to good principles in government—as Chancellor the noble Lord felt so strongly that he resigned—and now there is his acceptance of the Government's curious and miraculous conversion (I do not wish to echo that happy metaphor employed by Mr. Michael Foot in another place), this acceptance of something which we, from these Benches, have been urging on the Government for the last two years. I regret that there is a certain repetitive quality about the debate and indeed about the criticism of the Amendment, but this is an issue on which we have been consistent. We have been pressing the Government. The Government have been extraordinarily consistent in resist- ing it until, suddenly, this important change of policy has come about.

In a very interesting speech my noble friend Lord Balogh described the Government as being, instead of "a row of extinct volcanoes", a "row of hencoops filled with the rotting corpses of the chickens that have come home to roost". I thought my noble friend described the Government very accurately. I thought it a good remark, but I am not sure that every noble Lord quite understood it when he said it, and I thought it worth while repeating. Like many of us, and longer than most of us, he has been a strong supporter of a system of prices and incomes.

As my noble friend, Lord Beswick, made clear, we try, within human limits, to be fair in your Lordships' House, and so although I shall have some criticisms to make I am bound to say that it is a fact that the Prime Minister has shown both courage and resolution over the total reverse of Conservative policies. Although there are fatal handicaps in the record of his efforts in the past two years, I am sure that the right honourable gentleman has tried, with all the energy and resolution for which he is famous, to bring about a satisfactory solution. But in some areas it is just not possible for this Government to put back the clock, and in certain areas they have shown that they are still unwilling to try to do so. I do not propose to-night to start to discuss the new package, or indeed the Bill which in due course will come before us, but it was obvious that what has now happened was going to happen. It has been obvious to many of us for many months. For once, I should like even to quote myself, because in July I said that I suspected that too many sad prophesies had come true, and that unless there were successful talks and the Government were prepared to make concessions, particularly on the Industrial Relations Act, they would be driven to a wage freeze in the same way that they had been driven to devaluation, however much they had stated their opposition to it.

While, therefore, we should acknowledge that the Government have tried to reach a tripartite agreement with the trade unions and the C.B.I.—bearing in mind, of course, that the C.B.I. can speak only in relation to a proportion of prices—I am amazed that the Government have been so blinkered as to the consequences of the actions they have taken during these last two years that they have thought that, desperate though at times they suggest the need is, they could get an agreement without reversing other aspects of their policy and undoing some of the damage of the last few years. The noble Viscount, Lord Caldecote, said, in effect, that it did not lie in the mouths of members of the Opposition to criticise the Government for changing their policy. It is a fact that whenever we changed our policy we were told we had broken a promise. Apparently when this Government do it, it is an act of wisdom and courage and a matter for self-congratulation.

I think we are entitled to congratulate the Government on their conversion, but I am not sure how far noble Lords opposite are entitled to do so, when they are supporting a policy which the Government have now adopted and which is in flat contradiction, not only of what the noble Lords said in this House but also of what was in the Government's Election Manifesto. I am not particularly given to quoting from Election Manifestos of any kind—after a while they get a bit boring—but, my goodness! the number of times we have had ours quoted at us and the number of times the word "honour" has been used about my right honourable friend, Mr. Wilson! I do not propose to fling that sort of insult at the Prime Minister, but it is worth while saying, as Mr. Enoch Powell pointed out—and not just in Parliament—that the Conservative policy statement was, "We utterly reject the philosophy of compulsory wage control." And in a more complete part they said, "We shall not repeat it." Well, I do not know whether one could call that a broken promise or whether it is just a sign of the fruits of repentance, even though the Government are reluctant to admit it.

The noble Lord, Lord Drumalbyn, who knows what respect we have for him, went pretty fast to-day. I believe he reckoned that he had to get through that lot of rather comfortable phrases. It is striking that there is still an echo of some of the many anodyne statements that we have had in the past. I remember the noble Earl, Lord Jellicoe, saying as far back as November, 1970, "We are determined to rein in the wild horses of inflation. "I am sure that that was not written by one of the officials in the noble Earl's Department. I am not even sure that he wrote it—it may have come from the Conservative political centre. The noble Earl also said that those who seek to spell out a case for an incomes policy carry much less conviction. In March, 1971, the noble Lord, Lord Drumalbyn, told us that the situation had been stabilised. In June, 1971—I looked these references up myself—the noble Lord, Lord Aberdare, told us, "The country is on the right course." Those tired old phrases came tumbling out, yesterday and to-day. I know that the Government are in a difficult situation. They do not like to admit that their policies have been mistaken, as is described in the Amendment, but the fact is that we know that they have been, and the Government have demonstrated it themselves. We do not need to argue the case, because it is apparent in the policies that they have adopted.

My Lords, we are getting tired of the "U-turns". All right. Your Lordships might say either that this is an obstinate Government or one that can be pushed around more easily than anyone. But we know that some action has been taken. John Davies has been banished to Europe and I genuinely hope that he will do well there. I think that probably he will. They have created new instruments, a Ministry for Industry and a Minister for Trade and Consumer Affairs. The noble Lord, Lord Drumalbyn, said, in glowing terms, that it was the first time that there had been a Minister responsible for the welfare of the consumer. Well, l do not know what the noble Lord, Lord Drumalbyn, was doing when he was a Minister at the Board of Trade and I do not know what other Ministers were doing.

LORD DRUMALBYN

My Lords, I did say a Minister in the Cabinet; I was not in the Cabinet.

LORD SHACKLETON

But, my Lords, there were in the Cabinet Ministers who were responsible. Why did the Government have to do it this way? Of course they have had all those fatal decisions to make which were pointed out by my noble friend Lord George-Brown. There was the decision to abolish the N.I.R.C. and the National Board for Prices and Incomes. Now they have to go back to the same policy. But they have got to make it look different, and in making it look different they have produced something which is not as good as the original instrument. It has brought Government more directly into matters which properly they ought to hive off to other people. Ministers are busy enough, anyway, without being directly involved in this connection. This is a criticism not just from the Labour side: it comes from the City and from industry, as well. The Government may now be bringing forth fruits of repentance, but none of their speeches to-day suggest that they are repentant sinners.

My Lords, we shall shortly be receiving the Government's emergency Prices and Incomes Bill, and we shall deal with this, I hope, efficiently. We never seek to filibuster in your Lordships' House, but we shall certainly want to debate the Bill because I have a feeling that at last we are beginning to educate the Government a little. We have two Members of the Cabinet here. The noble and learned Lord on the Woolsack I regard as perpetually youthful, and therefore perpetually educable; and I think the noble Earl.Lord Jellicoe, sometimes listens to us, too. However inevitable it was that the Government should adopt this course, I repeat with all the seriousness at my command that to many people it appears to be fundamentally unfair to the greater part of the working population. It is no use noble Lords assuming that because we think this it is some sort of original sin on our part. A large number of the public think it also.

The speeches from this side, and some from the Liberal Benches—we had a notable speech from the noble Viscount, Lord Simon; and I still do not quite understand how, in the light of that speech, the Liberals can vote for the Government to-night—have indicated that there are a number of aspects of the Government's policies which seem to be unfair. I think the case was fully made. It was made by my noble friends Lord Beswick and Lord Diamond, and also by some noble Lords opposite. The fact remains that wages will be frozen if the Government succeed; restraint over prices will in some degree limit profits; but profits will go on, and share values will be protected. I should not like now to forecast the movement of equities, but I suspect that gradually they will rise, at least in proportion to the amount of inflation, which, even if it is reduced, will still continue.

As we know, there are still areas which will not be affected, and with which the Government's White Paper and their Bill do not attempt to deal. The standstill does not apply to the Housing Finance Act; but obviously tenants will have their wages frozen, and some of them will have to bear the large price increases. Where there is an increase for the lower paid, then as my noble friend Lord Diamond made clear, once they are caught in the so-called poverty trap, even if they get an increase of £2, or whatever may be allowed, they will be worse off, because certain of the means-tested benefits will not be available. The figures are there, and I have not heard anyone satisfactorily answer this.

Furthermore, we know that council rents are only part of the problem. The real national disgrace, which has been mentioned in speech after speech from all sides of the House, is the rise in land prices, which has reached a level which can only be described as offensive. My noble friend Lord Beswick gave some examples, and we all know of others. The noble Lords, Lord Caldecote, Lord Hawke, Lord Vernon, and many other noble Lords have said that this really is wrong: and I doubt whether any noble Lord in this House thinks that this situation is right. I was mentioning this to a friend only a day ago, and he told me that he had bought a house for £5,000 in 1955, and that he had recently been offered £250,000 for it. Near my home in Dorset there is some land which was originally worth £200,000, and now the owner expects to get £26 million for it.

When we asked the noble Lord what the Government were doing about this situation, in effect he said that this is liable to the same taxation as any other profit. But these are not the profits of industry. We do not criticise the making of profits in industry; we recognise that they are necessary, particularly for investment—though it is notable that investment prospects and investment intentions are extremely bad at the moment. This is something which can only be described as a national scandal. It is one of the reasons that has led to the startling increase in the price of houses. Prices went up in the days of the Labour Government, but they went up at a reasonable and controlled rate, and nothing like the fantastic figure of 40 per cent. in 1972.

My Lords, the Government know that this situation is unsatisfactory. They have no policy for dealing with it. They point out that it is a difficult problem with which to deal, and I accept that. But it is unfortunate that history shows that the Conservative Panty have always been opposed to attempts to deal with this problem. First, we had the efforts made by the Liberal Party over many years which they opposed. Subsequently, when Lord Silkin's Act was brought in, the Conservatives repealed it. They got rid of the special levy that we introduced on certain types of land transactions. Then they abolished the Land Commission—which I admit that we as a Government had not fully developed, but which did offer a possible means of providing the land, which is still in short supply. We know that the Government have the matter under active consideration. We know that they say they are taking action. But all their action consists of asking other people to do something about it—land in the possession of local authorities, Government or the nationalised industries.

One could go on at length about this record. Other noble Lords have dealt with the Industrial Relations Act. We warned the Government of the consequences of it, and I regret to say that those prophecies have proved to be true. And we know that the effect of the counter-redistribution of income again is regarded as unfair. As one commentator asked: how can the trade unions make a pact with what has easily been the unfairest Government of modern times? I do not believe that noble Lords opposite wish to be unfair in this way. But we put down an Amendment in order to focus their minds on what exactly has happened. I believe that the careful wording of the Amendment represents legitimate criticism of the Government. There is a fundamental difference when it comes to decision-making between the two sides. I know that most noble Lords opposite would also like to see—at least I hope they would—a spread of a peaceful social revolution. But they have turned back the clock; they have provided the encouragement for the extremists, the Trotskyites and others. I believe, since they have moved so far, that they could still make a further conversion of their views. If they would follow the advice of my noble friend Lord George-Brown, I am sure that he would, if necessary, be willing to tell the Minister for the Civil Service how to recreate the Department of Economic Affairs. I suggest that this is a policy which they should follow. They should seek to turn the clock back and adopt the policies which were being pursued by the previous Government.

6.50 p.m.

THE LORD CHANCELLOR

My Lords, after two days of debate, I obviously suffer from an excess of material, and even if I submit myself to the sternest discipline it is clear that I must try the patience of your Lordships more than I wish to do. But I shall submit myself to the sternest discipline, and I begin by addressing myself, in accordance with the invitation just issued by the noble Lord the Leader of the Opposition, to the Amendment, which I am glad to note was carefully worded. That means that I must pass by, either wholly or largely without comment, a number of the most constructive and interesting speeches which have been made because, as the noble Lord the Leader of the Opposition said, many of them, although they were constructive and interesting—perhaps precisely because of that—did not bear directly on the Amendment. It would, I think, be invidious to mention them all. We heard the noble Baroness, Lady Burton of Coventry, this afternoon on consumer affairs: we heard the noble Baroness, Lady Seear, yesterday, and also my noble friends Lord Molson and Lord Hawke. I could in fact list a large number of speeches which I cannot in detail comment upon, for the reason that I have given. I will ask my advisers to see that they are studied. Their suggestions will be carefully noted, and if it is felt that there is something about which I should write to them, I shall seek to do that.

Equally, my Lords, I must decline to be led astray into the question of capital values, notwithstanding the reiterated emphasis by the noble Lord the Leader of the Opposition in the last part of his speech. Whether one deals with the level of equity share prices or the site value problem, which was a feature of the speech made by the noble Viscount, Lord Simon, and that of the noble Lord, Lord Diamond, earlier to-day, it is, I think, notable that although they have emphasised it, it had no separate or distinct mention in their carefully worded Amendment. It did not—and I think rightly—feature in the tripartite talks as a separate issue; and it is also noticeable that, at any rate in the opening speech of the noble Lord, Lord Beswick, reference to it took a passing paragraph, which was largely concerned with the value of a suppositious art treasure. I would only refer the noble Lord, Lord Shackleton, to what I thought was an unanswerable, and was certainly an unanswered, intervention during our debate in July by the noble Lord, Lord Robbins, who pointed out that the excessive value which has come to be placed on material objects (of which land is perhaps the most notable example but equity shares can be said to be another) is in fact a reflection of the very subject that we are discussing—the flight from currency as an object to be prized. If we could in fact curb inflation, which is the subject we are discussing, that problem would be likely to disappear. I am certainly not encouraged, despite the reference to it by the noble Lord, Lord Shackleton, by the previous efforts of dealing with it through taxation, and still less by some device of law reform, if inflation is not to be curbed at its source.

Before I turn to the Amendment itself, perhaps I may be allowed in parenthesis to join with those noble Lords who congratulated my noble friend Lord Hewlett on his maiden speech. He is, if he will allow me to say so, an old friend of mine and I hope he will enjoy his presence in the House as much as we shall enjoy hearing him on many subsequent occasions. I should also like to join with those who have welcomed back the noble Lord, Lord Beswick. He and I have crossed swords politically over the last 43 years, I think, in a number of different fora; and although we have seldom agreed I hope he will believe me when I say that I have never had anything for him but sincere affection and regard. I hope he may be spared to be with us for many years in perfect health, to give vent to his sincerely-held and deeply patriotic, but otherwise utterly detestable, political views.

The noble Lord, Lord Beswick, began by uttering what he described as a good resolution. He said that he was going out of his way to give credit where credit was due; and he proceeded to give us credit in the fields of Northern Irish affairs and those of the Uganda Asians. I must say that I thought, with my noble friend Lord Amory, that he would have been more persuasive had he approached the subject with a little more candour as to the extent of the failure of the Government of which he was himself an ornament in the very field we are discussing to-day. In particular, he seemed to me to be breaking totally new constitutional ground in attributing the failure of the declaration of intent of the noble Lord, Lord George-Brown, to murder by the Treasury. He appeared to forget that, as a Minister himself, he was as much responsible for the policy of the Treasury as he was for the policy of the noble Lord, Lord George-Brown. I also thought, with my noble friends' Lord Orr-Ewing, Lord Balfour of Inchrye and Lord Harvey of Prestbury, that the noble Lord, Lord Beswick, would have been carrying out the spirit of his good resolution if, instead of confining his praise of our policies to the Uganda Asians and Northern Ireland, he had given more credit where credit was due to us in the economic fields, which are the subject of this debate, and particularly in the fields of taxation, housing and social services. I will explore this point a little later in my speech.

However, what I thought was the principal weakness of the speech of the noble Lord, Lord Beswick, was his failure—and this failure was repeated in all the speeches in support of the Amendment—to offer any coherent or constructive policy as an addition to the Government's present measures. I do not believe that his Party will form a credible alternative Government until it provides such an alternative policy. The noble Lord sought to explain his failure to provide a coherent alternative by the oft-repeated story of the Irishman at Maam Cross who, on being asked the way to Monaghan, said, "Well, if I were going to Monaghan I would not be starting from Maam Cross".

My Lords, the point is that we are starting from here, whether we like it or not. The Labour Party is starting from here, no less than the Conservative Party, and the trade unions no less than the C.B.I. If we are to criticise the present set of proposals I think we are under an obligation to offer a constructive alternative. In stating that he would not be starting from here, the noble Lord, Lord Beswick, did not remind us exactly where we did start from. I think it is worth while—not for the purpose of recrimination, because I agree with my noble friend Lord Amory that this is undesirable—and important to remind the House exactly where we did start from and what we have tried to achieve.

It is sometimes easier to say some rather serious things in a slightly apparently jocular form. I think I am indebted to Mr. Harold Macmillan for the analogy of describing the economic policies of successive Governments since the war, of different political colours, to the efforts of a juggler trying to keep four balls continuously in the air. The names of the four halls are: growth, full employment, the balance of payments and the value of money. It is fair to say, as the noble Lord, Lord Byers, pointed out, that no Government have so far succeeded in keeping all four balls airborne for any considerable period of time. He was also right, despite the rebuke administered in his absence by the noble Lord the Leader of the Opposition, in saying that every time one of the balls has fallen to the ground the Opposition of the day, of whatever colour, has danced up and down with glee to the accompaniment of gleeful if rather childish cries of "butter-fingers".

It is a mistake to underestimate the extent of one's own failures in criticising the failures of the other side. The point is—and the noble Lord, Lord Byers, made this point—that the analogy of the juggler breaks down in two vital and important respects. The four aims of policy which I have enumerated have proved to be, at any rate in part, incompatible with one another. Economic policy, like other objects of policy, is basically an attempt to reconcile or compromise the incompatible requirements of divergent principles. If you wish to concentrate on growth and full employment, it is manifestly obvious that you may put in jeopardy the balance of payments and the value of money. If you concentrate on the balance of payments and the value of money, you may jeopardise both growth and full employment. This is what our debates have been about over a period of years. It may require a rather unskilful operator to lose all four balls simultaneously; but to keep them all continuously in the air is something which has so far defied the united genius of this nation.

There is another point at which the analogy breaks down, and this is also very close to what we are talking about. Whereas the remedies for lack of growth and unemployment are often popular and often pleasant to the taste, the remedies for weakness in the balance of payments, and a decline in the value of money, are sometimes unpleasant and unpopular, with the result that from time to time the first have been taken in excessive quantities and too soon, and the latter in insufficient quantities and too late.

LORD BALOGH

My Lords, will the noble and learned Lord on the Woolsack explain how it is that he is so severe on the previous Government, when the previous Government's rate of inflation is exactly represented by the present Government's target? That is the first point.The second point is: how does he reconcile his very learned words with the fact that unemployment during the previous Government was about half of what it is now, and that the balance of payments were on the way—

SEVERAL NOBLE LORDS

Order, Order!

THE LORD CHANCELLOR

My Lords, as the noble Lord sees my argument develop he will probably acquit me of missing the more obvious points. I will therefore tell him that I was not seeking to be severe, either on him or anybody else, but perhaps I was philosophising—I hope not too prosily.

LORD BALOGH

My Lords—

THE LORD CHANCELLOR

If the noble Lord will contain himself with patience I will seek to satisfy him within the bounds of my logical conception. I was about to say that nevertheless, and in spite of the relative unpleasantness of the remedies for the two evils that we have been discussing for most of the day, the evils which result from a failure in the balance of payments, and a failure to maintain the value of money, are so vitally corrupting to the society which fails to correct them, and ultimately so catastrophic, that all Governments have ultimately felt it necessary to take measures to correct them.

If I may now return for a moment to my original metaphor, in the summer of 1970 when we took office, partly from good luck and partly from policy, for which I give him credit, the then Chancellor of the Exchequer had managed to raise one of the four balls into the air: namely, the balance of payments, and there it has remained ever since. It had been on the ground pretty continuously since 1964. By June, 1970, it was in the air, and the figures given by my noble friend Lord Jellicoe established that point yesterday.

LORD BESWICK

My Lords, would the noble and learned Lord refresh our memories? What is the current balance of payments, and how does it compare with the balance of payments that the Government inherited?

THE LORD CHANCELLOR

My noble friend gave those figures yesterday. I can only refer the noble Lord to what my noble friend said.

LORD SHEPHERD

My Lords, will the noble and learned Lord say what the balance of payments was in 1964 when the Labour Government succeeded in office?

THE LORD CHANCELLOR

My Lords, I am not giving particular figures; I am giving the Labour Government credit for having achieved a favourable balance of payments as a result of the Chancellorship of Mr. Jenkins by June, 1970—though I pointed out that it had taken them rather a long time to do it. What I was about to say was that they had achieved it at a very high cost indeed in human suffering which I think they gravely underestimated in the debate yesterday and to-day.

LORD BESWICK

My Lords, can the noble and learned Lord be more precise in his figures? Would he remind us that in 1964 we inherited a deficit of £800 million, whereas at one time the surplus which the present Government enjoyed was plus £1,000 million on the balance of payments? Would he also say what the comparative unemployment figures were when we left office and what they are now?

THE LORD CHANCELLOR

My Lords, I am under a promise to the noble Lord the Leader of the Opposition to confine my remarks within a limited space. I have already said on a number of occasions—for reasons which I had then explained and which on some other occasion I will explain again—that I have regarded the £800 million alleged deficit as a myth, and I shall continue to say that.

I now propose to say what I was about to say about unemployment. The fact was that the balance of payments had been put in credit by the summer of 1970 by continuous surplus budgeting at a rate of about £1,000 million a year for three years, by cruelly high interest rates and by savage restrictions on credit that had produced a state of unemployment which was rapidly rising, and which has been escalating ever since, and an almost total stagnation of growth. Therefore these two other objects of policy were firmly on the ground. What was more serious from the point of view of to-day's debate, as my noble friend Lord Harvey of Prestbury pointed out, was that from the summer of 1969 onwards the then Prime Minister, the Leader of the Labour Party, had allowed wage settlements to rise to an extent to which they have escalated ever since and created, to my mind, an unacceptable rise in the cost of living and fall in the value of money. So three out of the four objects of policy were left firmly on the ground. Despite all that the noble Lord, Lord Diamond. said, I think he underestimated his own responsibility for the escalating situation which he then left behind.

I have always taken the view, as your Lordships will remember, that any serious economic policy may take as much as two years to work its way through the economy. My noble friend Lord Jellicoe pointed out yesterday that at least on the three fronts of rate of growth, employment and investment, there were definitely hopeful signs that we were on the road to a distinct recovery. If so, it was not fortuitous; it was due to the distinct and deliberate purposes which the Government have sought to carry though in the period of their term of office. It was due to the reduction by £3,000 million of the burden of taxation; it was due to the short-term projects of £1,700 million; it was due to the raising of social security benefits and various other projects to help the regions and to assist industry which were referred to yesterday by my noble friend Lord Polwarth and my noble friends Lord Balfour of Inchrye and Lord Orr-Ewing.

I am not concerned at this stage to rehearse them all, but what I am concerned to deal with is the charge that these policies were unfair. May I deal first with the remissions in taxation? Of those remissions £655 million went into remissions of indirect tax; of the remissions of direct tax nearly three million people at the lower end of the tax-paying band were removed from taxation altogether; about £960 million was expended on giving flat-rate increases in the single and wife's allowances. If we come to the approaching simplification of direct tax next April, surely a policy which was long overdue for some Government with the courage to undertake it to carry out, £200 million out of the £300 million spent on this worthwhile project will go to those whose incomes are less than £5,000 a year—a band whose needs and requirements I will revert to in a moment—and 11 per cent. to those who have already retired.

That brings me to the social services, another field in which, at any rate in my submission to the House, our policy has been completely misrepresented in the course of this debate. I begin by pointing out, as did my noble friend Lord Orr-Ewing yesterday, that the standard rates of pension and social security have been put up by between 32 and 35 per cent. It is easy to say that that is not enough. It is easy to say that it has been eroded by the increase in prices. But it is enough to reply that it has been more than the increase in prices and more than has ever been given before. And it must be added, since it is material to the subject of this debate, that it is the pen- sioner who suffers most from inflation and the pensioner who stands to gain most by containing it, and our lump sum offer was designed as a sign of our continuing concern with this section of the community.

It is the fact that from the first to the last we have designed our social policy precisely to help the lowest paid. This was the direct purpose of the family income supplement. Those who criticise our social policy on school meals and milk and on rents fail to understand that these do not represent net reductions in the total of Government expenditure, which has been going up all the time. Every penny has been redeployed, usually within the service concerned and either to improve the quality of the service or to extend the rebates and exemptions to more people than have ever enjoyed them before. So, far from being, as T submit, wanting in fairness and compassion, we have been pointing out from the start that the developments of the last 25 years have left unprotected certain ascertainable classes in the community—for instance, the tenants of private landlords or the parents of large families or the permanently handicapped—who could not be helped adequately by increasing standard rates of benefit and who have not the economic power to stand up for themselves like, for instance, the semi-skilled factory worker, the miner or the railway-man.

May I say in passing that although I listened to the elaborate series of figures which were deployed by the noble Lord, Lord Diamond, earlier this afternoon to give the impression of the opposite conclusion, I myself have seen in the debate this week in the other place a set of figures deployed by one of my colleagues there, Mr. Patrick Jenkin, demonstrating that over the ten years of Labour Government from 1964 onwards the real income of the average wage earner—

NOBLE LORDS

Ten years?

THE LORD CHANCELLOR

I beg your Lordships' pardon—eight years.

NOBLE LORDS

Six years.

THE LORD CHANCELLOR

The average income, during the whole of the period of Labour Government, of the average wage earner rose by only 31 per cent., whereas in the last two and a half years of Conservative Government it has risen by a real figure of 10 per cent.; and I am quite prepared to give the noble Lord, Lord Diamond, the calculation upon which this is based.

That brings me to the field in which we have admittedly not yet succeeded and to the emergency measures to hold inflation. It is fair to say that until July, 1971, we maintained, more or less unaltered, the purely voluntary policy we had announced at the Election. I do not myself repent of having tried that policy, or of having reversed the policy of the previous Government which, as my noble friend Lord Amory pointed out, had wholly failed. But in July, 1971, as a result of discussion, there came the C.B.I. initiative in voluntary restraint, and it succeeded. By July, 1972, it was clear, on our side, that the growth rate we were aiming at of 5 per cent. was going to be achieved. As a result of the C.B.I. initiative in voluntary restraint in prices, prices had by that time risen by only 5¾ per cent. But the question was: Could it be continued? We had hoped that the voluntary restraint in prices would be met or balanced by a voluntary restraint in wage demands. At that time, whereas prices had risen by some-where about 6 per cent., wage demands were rising very rapidly and in fact were rising, in comparison with the 12 months previously, by something like 12 per cent. a year; in September I think the figure was 17 per cent. It was obvious, therefore, by July of this year that the C.B.I. initiative on voluntary price restraint could not succeed unless there were tripartite talks. I agreed with the noble Viscount, Lord Simon, when he asked us: "Why not earlier?" I think it would have been highly desirable; but it was a very good thing, in my opinion at any rate, that those talks took place in July. And they took place precisely in the context of a continuation of the policy for a further year.

I will not, with several noble Lords on the Labour side of the House, analyse the question as to how far inflationary wage settlements have been the cause of inflation in the past 25 years. I have argued this point many times before. I agree with my noble friend Lord Caldecote that they have been in fact a substantial cause of inflation. But whether this be so or not, what is beyond question is that during the last 12 months wages have risen in comparison with prices at a rate which makes inflation inevitable and which made the unilateral components of the C.B.I. initiative impossible. Hence the talks.

At the beginning of those talks the Government put forward what have been called the Chequers proposals and at the outset I thought they were warmly welcomed (since I heard him on the radio) by Mr. Victor Feather. At the end they were rejected by the T.U.C. as being not even a basis for discussion. I will not rehearse them all at length at this stage. They were based on a careful calculation of the minimum stops necessary to achieve certain agreed objectives, to contain prices within 5 per cent. on the basis of a 5 per cent. growth rate. These objectives were agreed and themselves involved a 5 per cent. inflationary model so there was not much room for manceuvre. What I point out is that 2 per cent. across the board represented a 13 per cent. or more increase for those earning £20 or less a week, and that for anybody earning £40 or less the proposal provided a distinct and absolute advantage over the status quo. I cannot believe that this lacks the "trace element", as the noble Lord, Lord Beswick, called it, of fairness or justice. On the contrary, it seems to me to be well within the agreed purposes and it was based on a calculation of what was necessary to achieve it. Obviously in a sense everything which was brought before the tripartite discussions was capable of being altered but there were two parameters which were limited in the capacity for manœuvre.

As my noble friend Lord Jellicoe pointed out yesterday, it is no good producing an alternative package which would demonstrably have yielded a result different from the agreed objective, and for that reason it is no good demanding a figure much bigger than £2, unless the arithmetic can be shown to be wrong, nor was it much good counting double and adding to the £2 a number of fringe benefits which would have destroyed the anti-inflationary character of the package as a whole. In other words, what we were dealing with was not a conventional wage negotiation between the employers and employed. What we were discussing was the means whereby to achieve an agreed objective. Both the demands which were made of us did in fact infringe those two parameters. For instance, if you ask for a suspension of the housing finance policy, you overlook the fact that the £2 wage increase (13 per cent. for those earning £20 or below) already took account of the rent increases—and more than took account of the rent increases under the Housing Finance Act with the rent rebates which were proposed—and the increased rebates proposed took account of them again, and the threshold agreements which were proposed as part of the package took account of them over the entire field.

It is no good talking about a long-term policy until we recognise that an improvement in the standard of living of the people has to be contained within the rate of growth of productivity. I do not mean that it ought to be; I do not mean that it is desirable. I do not even mean that it is desirable to be done compulsorily. What I mean is that it is only possible to do it this way. The leading article in The Times the other day quoted from a long-forgotten paper by the late Lord Keynes. He said: For this reason a demand…for an Increase in money rates of wages to compensate for every increase in the cost of living is futile, and greatly to the disadvantage of the working class…They lose the substance in grasping at the shadow. It is true that the better-organised sections might benefit at the expense of other consumers. But except as an effort at group selfishness, as a means of hustling someone else out of the queue, it is a mug's game to play. In their mind and hearts the leaders of the trades unions know this as well as anyone else. They do not want what they ask. But they dare not abate their demands until they know what alternative policy is offered. This is legitimate. And that is in fact what we sought to do in the talks. But to quote from the same article in The Times: People can only improve their combined standard of living by the equivalent of 2½ to 5 per cent. per annum compound, whatever monetary arrangements they make for paying themselves. Wage demands above the level that economic growth can support are an attempt at ' hustling someone else out of the queue '. If it is desired to say that the package we offered at Chequers was not worth even discussing, some element of mistake must be shown in the calculation, because it was based on a careful calculation of what was required in order to achieve agreed objectives. No one can regret more than the Government that we received an uncompromising "No" to that. In the meantime, we have the standstill. No one this evening and no one yesterday, with the possible exception, although I did not quite understand him to say it definitely, of the noble Lord, Lord George-Brown, thought that the standstill was not necessary. Of course it was. There were only two policies between which we could choose: the one was to go back to a totally voluntary policy in the absence of discussions of any kind, and I think that that would have lacked the essential ingredient of credibility. The second was to go for a long-term policy which would have taken, we thought, at least 90 days, but it may be longer, to work out. But if we did that without an interim measure we should, I think, have left the door wide open to the wildest kind of speculation, both in prices and in wage settlements. That is the genesis of the standstill for 90 days.

With my noble friend Lord Thorneycroft I believe that in proposing that standstill we shall be supported by public opinion. I believe the nation will realise that there is more at stake than simply the "pound in the pocket". I believe profoundly that what is at stake in the last resort is the future and effectiveness of Parliamentary democracy in this, its home. And in this spirit I ask the House to reject this Amendment.

7.30 p.m.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided: Contents 68, Not-Contents 134.

CONTENTS
Addison, V. Fiske, L. Morris of Kenwood, L.
Archibald, L. Gaitskell, B. Nunburnholme, L.
Ardwick, L. Garnsworthy, L. Pargiter, L.
Arwyn, L. Geddes of Epsom, L. Peddie, L.
Bacon, B. George-Brown, L. Phillips, B.
Balogh, L. Gifford, L. Platt, L.
Bernstein, L. Greenwood of Rossendale, L. Popplewell, L.
Beswick, L. Hale, L. Royle, L.
Blackett, L. Henderson, L. Sainsbury, L.
Blyton, L. Hoy, L. Serota, B.
Bowden, L. Hughes, L. Shackleton, L.
Brockway, L. Jacques, L. Shepherd, L.
Burntwood, L. Kennet, L. Shinwell, L.
Burton of Coventry, B. Leatherland, L. Slater, L.
Caradon, L. Lee of Asheridge, B. Stocks, B.
Champion, L. Llewelyn-Davies, L. Strabolgi, L. [Teller.]
Crook, L. Llewelyn-Davies of Hastoe, B [Teller.] Summerskill, B.
Davies of Leek, L. Taylor of Mansfield, L.
Diamond, L. Lloyd of Hampstead, L. Walston, L.
Donaldson of Kingsbridge, L. Longford, E. Watkins, L.
Douglas of Barloch, L. McLeavy, L. Wells-Pestell, L.
Douglass of Cleveland, L. Maelor, L. White, B.
Evans of Hungershall, L. Milner of Leeds, L. Williamson, L.
NOT-CONTENTS
Aberdare, L. Dulverton, L. Monk Bretton, L.
Ailwyn, L. Dundonald, E. Mottistone, L.
Aldington, L. Eccles, V. Mountevans, L.
Alport, L. Elliot of Harwood, B. Mowbray and Stourton, L.
Amherst of Hackney, L. Emmet of Amberley, B. Nairne, B.
Amory, V. Ferrers, E. Nelson of Stafford, L.
Amulree, L. Ferrier, L. Newall, L.
Ashbourne, L. Fortescue, E. Northchurch, B.
Atholl, D. Fraser of Lonsdale, L. Nugent of Guildford, L.
Auckand, L. Gage, V. Orr-Ewing, L.
Balerno, L. Gainford, L. Pender, L.
Balfour of Inchrye, L. Garner, L. Poltimore, L.
Barnby, L. Goschen, V. Polwarth, L.
Barrington, V. Gowrie, E. Rankeillour, L.
Belstead, L. Grenfell, L. Reay, L.
Berkeley, B. Grimston of Westbury, L. Rhyl, L.
Bessborough, E. Hailes, L. Rothermere, V.
Birdwood, L. Hailsham of Saint Marylebone, L. (L. Chancellor.) Ruthven of Freeland, Ly.
Blake, L. St Aldwyn, E. [Teller.]
Bolton, L. Harvey of Prestbury, L. St. Just, L.
Boyle of Handsworth, L. Harvey of Tasburgh, L. Saint Oswald, L.
Bradford, E. Hawke, L. Sandford, L.
Brentford, V. Henley, L. Savile, L.
Brougham and Vaux, L. Hereford, Bp. Seear, B.
Caccia, L. Hewlett, L. Selkirk, E.
Caldecote, V. Hylton, L. Sempill, Ly.
Carnock, L. Inglewood, L. Somers, L.
Carrington, L. Jellicoe, E. (L. Privy Seal.) Stamp, L.
Coleraine, L. Killearn, L. Stonehaven, V.
Conesford, L. Kilmany, L. Strang, L.
Cork and Orrery, E. Kinloss, Ly. Strathcarron, L.
Cottesloe, L. Lauderdale, E. Strathclyde, L.
Courtown, E. Limerick, E. Sudeley, L.
Craigavon, V. Lothian, M. Suffield, L.
Craigmyle, L. Loudoun, C. Terrington, L.
Cranbrook, E. Lucas of Chilworth, L. Thorneycroft, L.
Crathorne, L. Lyell, L. Trefgarne, L.
Crawshaw, L. Lytton, E. Tweedsmuir, L.
Cromartie, E Macleod of Borve, B. Tweedsmuir of Belhelvie, B.
Daventry, V. Margadale, L. Vernon, L.
De L'Isle, V. Masham of Ilton, B. Vivian, L.
Denham, L. [Teller.] Merrivale, L. Wakefield of Kendal, L.
Derwent, L. Milverton, L. Wolverton, L.
Drumalbyn, L. Molson, L. Yarborough, E.
Dudley, E. Monck, V. Young, B.

Resolved in the negative,and Amendment disagreed to accordingly.

On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.