HL Deb 23 November 1972 vol 336 cc1045-95

3.30 p.m.


My Lords, on behalf of my noble friend the Leader of the House, whose indisposition we all regret—and none more than I—I beg to move that this Bill be now read a second time. My noble friend explained to the House in his speech during the debate on the Address on November 7 the circumstances—which we all regretted—which had led to the breakdown of the tripartite talks between the Government, the T.U.C. and the C.B.I. In the debate on the Address, those circumstances and the underlying causes were fully discussed and I do not think your Lordships would wish me to go over the ground again this afternoon. What I think there was general agreement about was the need that had arisen, because of the breakdown of the talks, for the Government to take immediate action.

It is, as my noble friend said then, the Governments firm intention to bring forward as early as may be possible proposals which will be designed to work towards objectives on which all were agreed in the tripartite talks. Let me remind the House what these objectives are. First, faster growth in national output and real incomes; secondly, an improvement in the relative position of the lower paid; and thirdly, moderation in the rate of cost and price inflation. My noble friend also explained then why in the circumstances a standstill was urgently needed to provide a breathing space for the Government to prepare and bring before Parliament the longer-term measures that will be needed to achieve those objectives. Hence the need for this interim Bill to which I ask the House to give a Second Reading to-day and which provides for a short standstill period for prices, pay, rents and dividends. The standstill is to be as complete as is practicable, but for reasons to which I shall refer later it cannot be absolutely all-embracing.

I emphasise the temporary nature of the legislation because I believe that this justifies us in seeking wide powers to ensure that the standstill is to operate fairly during the short period for which it is to be applied. May I make one further point here. We are confident that the standstill will operate firmly and fairly, but of course we recognise—as previous Administrations have had to recognise—that no standstill can be absolutely comprehensive. The White Paper pointed out that certain prices, especially those for fresh food and for imported raw materials, are subject to fluctuations arising from external or seasonal causes. The United Kingdom economy is not a closed system, and the prices of many of our raw materials are determined on world markets. The Government have therefore recognised from the start that in some cases there may be increased costs which it is impossible to avoid. It is open to enterprises in such cases to approach the relevant Department and to seek consent for an increase. But this practical recognition of the economic realities is wholly consistent with the general principle that all concerned should do everything possible to avoid any increase in prices. In particular, no fluctuations in costs are regarded as a justification for any increase in cash margins.

I believe that the fact that this is a measure of strictly limited duration—for in no circumstances can the standstill for which it provides run for more than 150 days—is an added reason, along with the urgent need to end the inflationary climate in this country, for getting this Bill through quickly, so that we can then proceed with our longer-term measures. The Government are very grateful to the Opposition for agreeing to take the various stages of the Bill in eight days.

The standstill had of necessity to operate from the date of the Prime Minister's statement and the publication of the White Paper (Cmnd. 5125) on November 6. The alternative to that would have been widespread forestalling in any or all of the fields of prices, pay, dividends and rents to which the Bill applies. If that is accepted, and I think that in the debate last Wednesday it was generally accepted, in principle at least, it is obviously sensible and reasonable that Ministers should have the powers to back up and if necessary to enforce the standstill as soon as possible. It would moreover be unfair to those many firms and individuals who have demonstrated clearly their readiness to observe the standstill if we were to prolong any uncertainty about the legal position.

I come now to the Bill itself. The general effect of the Bill is to give Ministers powers to impose the standstill described in the White Paper A Programme for Controlling Inflation; The First Stage (Cmnd 5125) for 90 days from the passing of the Act, subject to possible extension for up to 60 further days beyond that.


My Lords, the Minister will forgive me for interrupting so early in his speech. He used words which would indicate to those not as familiar with the Bill as he is that the freeze, to put it shortly, applies as from the passing of the Act. Surely the case is that it applies in fact as from November 6 and the number of days are the days from the passing of the Act; so that the total period of freeze that we are considering is virtually the period mentioned plus the number of days (the three weeks) from November 6 to the end of November.


My Lords, I would not altogether demur from that The situation is that, so far as enforcement is concerned, the acts of enforcement, as I shall be showing in the course of what I have to say, date from the passing of the Act, because there are no powers before that. But the Government expect that there will not be increases in prices at the present time, and if there should be increases in prices that it would be possible after the passing of the Act to make orders or to give notices requiring those prices to revert to what they were before November 6. That is the situation. I am grateful to the noble Lord. I am sorry there was any misapprehension but the very next sentence that I was about to say might have clarified the position. I was about to say that during this period, Ministers will be able by notice or order to require those concerned to reduce prices or pay to the levels at which they stood before November 6, and to prevent increases in dividends and rents.

Clause 1 sets a limit on the period of operation of the Bill. This is to be 90 days in the first instance. There is also a power to extend this for not more than a further 60 days by means of an Affirmative Resolution order. But an extension order must be made not less than 30 days before the 90-day period ends, and such an order will lapse if Affirmative Resolutions to both Houses have not been obtained within 28 days of the making of the order. The Government believe that 90 days is the absolute minimum needed for the purpose in view and that it is sensible to provide for an extension of 60 days should this prove to be necessary.

Clause 2 is the main operative provision of the Bill. It deals with prices, pay, dividends and rents. It provides that once the clause has been applied to any price, pay level, dividend declaration or rent, the level of payment may not exceed the level before November 6. And it empowers the appropriate Ministers to apply the clause, either by order or by notice. I may say at this point that it is our intention to make certain orders as soon as the Bill becomes law. In particular, a general order will be necessary to apply Clause 2 to dividends; and various orders about rents will also be made. As to the distinction between orders and notices, it is intended, broadly speaking, that orders will be made to cover a general class of case, whereas notices will be given to individual persons or firms.

The clause also provides, however, in subsection (3). that there can be no contravention of the law in relation to prices, pay or dividends if what has been done is authorised by order or notice applied under the clause or by the written consent of a Minister. I am sure it is right to expect that in general there will be voluntary compliance with the standstill without there being any necessity to make orders to apply the mandatory provisions of the clause. But Ministers will, of course, be ready to use the powers if this proves to be necessary to protect the standstill.

Clause 3 is required to relieve employers of any contractual obligations to increase rates of remuneration. Without this clause it might not be possible for them to observe the standstill voluntarily. While employers could of course have been relieved of their obligations by order, it seemed right to the Government to make the point clear in the Bill itself at the outset. Clause 3(3) excepts from this relief certain pay increments relating to age and service which may be paid during the standstill.


My Lords, may I ask the noble Lord whether the Government have made any estimate at all as to the number of people who will be affected by subsection (3) of Clause3?


My Lords, I take note of what the noble Lord, Lord Beswick, has said. I am not aware of the answer to his question, but I am sure that my noble and learned friend who is to reply will be able to deal with the matter.

My Lords, it is the Government's intention that agreements subject to deferment under the clause should operate in full from the end of the standstill. But it would be inconsistent with the objectives of the standstill, and unfair to those who would normally be expected to negotiate increases during this period, to allow increases under staged agreements to proceed during the standstill. Clause 4 empowers the appropriate Minister to require the information that he needs to establish whether a price pay level, dividend or rent has been unjustifiably increased.

Clause 5 gathers together in one part of the Bill a series of provisions dealing with offences. There are provisions for fines for contravening a notice or order under Clause 2 of the Bill, and corresponding provisions for similar fines for anyone who tries to compel or influence someone, by threat or otherwise, to contravene Clause 2. There is provision for a smaller fine for wilful failure to produce information under Clause 4 of the Bill or for producing false information or documents.


My Lords, again may I interrupt the noble Lord?—and I am grateful to him for giving way. I know that he is keeping an eye on the clock, but is he not going to say any more about the meaningless word, "influence"? The Bill is here providing for a fine not exceeding £400 on summary conviction, or to an unlimited fine on conviction on indictment, for one person influencing another to do a certain thing. What exactly is meant by this term, "influence"?


My Lords, I should have thought that was self-explanatory. I do not want to give my noble and learned friend who sits on the Woolsack too much to do in replying but he will be replying to legal questions and I should have thought that this was eminently a legal question. My Lords, there is provision in subsection (6) of Clause 5 for proceeding against a responsible officer of a corporation, as well as against the corporation itself, where it can be proved that an offence under the Bill permitted by the corporation has occurred with the consent of connivance of that responsible officer. In subsection (8) there is a reference to the Industrial Relations Act. The effect of this subsection is that there shall be no "double liability" for offences under this Act. In other words, if a person charged under one Act, he cannot be charged under another as well. There is a self-explanatory safeguard in the clause, in that proceedings for an offence under the Bill will require the consent of the Attorney General. It is fair to say that no offence under the Bill need lead to imprisonment unless someone is quite determined to flout the authority of the courts. But that does not mean that failure to comply with the Act or notices or Orders made under it would not be a very serious matter, appropriately punishable under the law.

Clauses 6 and 7 make the necessary provisions for the Bill to apply in Scotland and Northern Ireland, in order to accord with the legal provisions which apply there. Clause 8 contains various definitions and technical provisions, and Clause 9 enables administrative expenses incurred by Government Departments in administering the Act to be met out of Annual Votes.

My Lords, the Schedule contains various provisions, a number of them of a technical nature, supplementing the main clauses of the Bill. Broadly speaking, the Schedule sets out to provide the means whereby the standstill can be applied in such a way as to take account of the circumstances and practices of particular cases. In particular, it allows a good deal of flexibility in the framing of orders, which will be subject to Parliamentary control by the Negative Resolution procedure. No doubt your Lordships will wish to seek clarification of the more detailed provisions of the Schedule, and indeed in the main body of the Bill, on the Committee stage, and I do not propose to-day to go into detail.

Bearing in mind the specific, temporary purpose of the Bill, its provisions are well designed for their purpose. They are stringent; but they are also fair. They are necessary if we are to halt the expectation of a steadily accelerating inflation which had begun to take a hold on the country. I am sure that all sections of the community will welcome the breathing space that it will afford. The Government, for their part, are determined to use the period of the standstill to prepare and to bring into operation our longer-term measures for achieving faster growth, for improving the relative position of the low paid and for moderating the rate of inflation.

My Lords, this is a short Bill to cover a short period and I have introduced it in a fairly short speech. There are most encouraging signs that the spirit of the Bill is already being observed. The more people who act voluntarily in the spirit of the Bill the more chance there will be of us reaching the Government's objectives, which experience has shown are shared by both sides of industry and the country at large. Nobody likes this kind of Bill, but we strongly believe that it is necessary and urgent, and I therefore commend it to the House. I beg to move.

Moved, That the Bill be now read 2a.—(Lord Drumalbyn.)

3.47 p.m.


My Lords, the noble Lord, Lord Drumalbyn, and I share the regret that his noble friend and Leader is unwell and therefore unable to be with us. I hope I may say that my motivation is at least as Christian as his in regretting that absence. The noble Lord, Lord Drumalbyn, need have no fear in coming here, as he so regularly does these days, to apologise for the past efforts of the Government. He does it with such charm and courtesy. He comes forward with, "Peccavi! peccavi!" on his lips. He puts his head with such distinction on the chopping block that we fail to take the necessary action and this I dare say will be another occasion when we shall discipline ourselves in the same way. But I am afraid that I must go into this Bill and what lies beyond it a little more closely than did the noble Lord. I can well understand the reasons why he thought it convenient to deal with the matter very shortly indeed.

My Lords, I want first to discuss the background and the purpose and the defects of the Bill itself and, perhaps much more importantly, where the Bill is leading and what the Government have in mind, and to what they call "Phase B". I very much hope that the noble and learned Lord who sits on the Woolsack will be able to tell us a great deal of what is in the mind of the Government for the consultations and for the content of the legislation and the measures which they are preparing on a longer term basis.

First of ail, so far as the Bill itself is concerned, and in particular so far as the background is concerned, I think it right that I should say that, notwithstanding that the Government have for many months put the whole blame for inflation on to increases in wages, it has now become quite clear that that is not the cause in any substantial measure. In fact, there are several causes which have been made clear and I would list them very shortly. First, there are import prices of food, to which the noble Lord referred. That is the fact that during the course of this year alone the price of Australian wheat has risen by 56 per cent., New Zealand lamb by 41 per cent., and wool by 110 per cent. That is some indication of the food import prices; and, as the noble Lord said, there are all kinds of imports other than food the prices of which have risen, and are rising, as a result of the effective devaluation which recently took place.

Then, at home, there are the increased profit margins which we see resulting in improved trading results week by week. There has been a most extraordinary increase in the money supply—and I am delighted to see the noble Viscount, Lord Massereene and Ferrard, in his place, because I am going to quote him as one of the accepted authorities on this topic. The noble Viscount referred to this matter of the money supply in our debate on November 7, and said at col. 320: … I understand that we are now increasing at the rate of 25 per cent. A noble Lord says 'More'. Surely not! Good Heavens! The noble Lord leaves me speechless. I thought I might be exaggerating. We appear to have thrown overboard all the well-tried economic theories and economic laws. The noble Viscount will be delighted to know that he was not exaggerating; that this fantastic figure of 25 per cent., which he thought was overstating the position, was understating it, and the figures that we have had since show that on the M3 basis, with which all your Lordships are familiar, the figure increased by some 8 per cent. in the three months to July, which is four eights, approximately 32 per cent. per anuum during that period: considerably more than the 25 per cent. I can now disclose that the noble Lord who caused the noble Viscount to be more or less speechless was myself, when I indicated that it was more than 25 per cent. So I think the noble Viscount and I have served a useful purpose in drawing the attention of your Lordships' House to the fact that, not only was the money supply allowed to get out of hand, but it got so to an extent which was }not believed even by the noble Viscount.


My Lords, would not the noble Lord agree that the reason why Her Majesty's Government have to increase the money supply is that if there are excessive wage claims, with no increase in productivity, the money supply has to be increased to pay the wages? The Government have no option. You cannot have the position of a factory going on Friday to draw the wage cheque and, if they are late in the queue, the bank perhaps not having the cash to pay them.


My Lords, the noble Viscount must learn, as I am equally slow in learning, that sometimes the less one says on these matters the more are we thought to be knowledgeable and wise. To answer his question, I am afraid I cannot agree that that has not much to do with it, and I do not think the noble Viscount was listening as carefully as he normally does to what I was saying about the rise in wages. In fact, in our earlier debate I demonstrated that the increase in wages in the first year in office of this Government was no greater than the increase in prices; and in the second year it was no greater than the increase in prices, plus increase in productivity. Those are the figures, and if the noble Viscount has any doubt about that he will see the whole of the argument set out in previous speeches. These took up a fair amount of time, and I imagine that the House would not wish me to repeat them.

Those, my Lords, are some of the reasons. But there are two more which I must mention. First, we have the soaring prices for land and land speculation. These are not limited to capital profits, because, as your Lordships know, the price of the land, and the property when built on it, gradually spills over into the rent; and it is a regular experience now, particularly in the City, to find a lease coming to an end and the lessee being required to pay sometimes ten times as much rent as was provided for in the previous lease. That of course affects his overheads, his charges and so on. This is now becoming a regular experience, and many people are having to move out. Then there are council rents, which are directly attributable to the Government, and which accounted for one-half of the phenomenal increase in last month's increase in the cost of living. These are the main causes of the inflation, and they result largely from deliberate Government policies, and partly from the Government when they assumed office having deliberately destroyed our defences against inflation.

So much, then, for the background of the Bill. As to its purpose, one can deal with that quite shortly. It is, as has been said, to provide a breathing space: and unless that breathing space is made use of and is followed by some longer term arrangement, then of course the Bill serves no useful purpose; it merely allows a head of steam to be built up which will burst upon us when the days of restraint come to an end.

As to the defects in the Bill, there are many, but I can categorise them shortly. It was admitted by the noble Lord, and has been by others of his colleagues, that this Bill involves rough justice. It involves a good deal worse than that: it involves grave injustice. It involves grave injustice between the haves and the have-nots (and this is our main complaint); between those who have wealth and means of spending and those who have income only, which when frozen means that they have no means of keeping up with the increasing cost of living while the freeze is on. In the one case their spending power is frozen, and in the other case it is very liquid indeed and totally unrestricted. There is grave injustice as between the lower paid and the well paid. Many of the lower paid will suffer hardship as a result of this Bill. Those who are well paid will not. There is great unfairness as between tenant and tenant: some rents are frozen and some are not. And, above all, there is great unfairness between prices and wages—prices being allowed to rise for a variety of reasons to which the noble Lord referred, and wages being frozen. We shall do what we can in Committee stage, having regard to the shortness of time and the difficulties involved, to improve some of these matters and remove some of these injustices: and we hope that the Government will listen with greater care having regard to the history of this Bill in the other place. When a Bill is railroaded through the other place under the guillotine, so that more than half of it has not been considered in Committee, I suggest that your Lordships' House has a special responsibility for seeing that the democratic processes prevail.

So much, my Lords, for the Bill. I want now to turn on to what I regard as a far more important aspect; that is, phase B, what will happen when the restraint period comes to an end. I am hoping that the Government will be able to tell us that they are shortly having discussions with the two parties involved, and that those discussions will prove fruitful. Perhaps I can put before your Lordships, and in particular the Government, the way in which I think the Government might proceed in order that agreement can be reached and that the discussions should prove fruitful, which I am sure is what we all desire.

First, I want to make the point that the choice before the Government is not simply between a voluntary and a compulsory arrangement; it is between a voluntary arrangement which is acceptable to all sides, on the one hand, and a compulsory arrangement which is broadly acceptable to all sides, on the other hand. It is just not possible for the Government by legislation to impose a system which is not broadly acceptable. It will not work: and the Government have had plenty of opportunity of learning about that. One recognises that there are many occasions when a Government have to accept the responsibility, and perhaps the odium, of legislating for something which, although broadly acceptable, the parties concerned cannot admit to be acceptable. This is the necessity which frequently arises for Governments to take responsibility in their own hands. But I am not talking about that; I am talking about the Government's attitude of describing their choice as being between a compulsory and a voluntary arrangement. Where you have, as here, many millions of citizens involved, the Government cannot escape their responsibility for discussion and negotiation and thereby arriving at some measure of agreement with all concerned. I say this because I read with some disappointment what the Chancellor of the Exchequer said on this point in another place on November 8, 1972, at column 1007 of the OFFICIAL REPORT. He said this: The purpose of the present interim Bill is to make it possible for there to be a short standstill on prices and incomes so that the agreed objectives will not be prejudiced while the main legislation is being prepared and brought into operation. There is nothing there about consultation or about an endeavour to reach broad agreement, but simply that it is to be a breathing-space to enable the main legislation to be prepared. So I hope that the learned and noble Lord will be able to tell us that part of the purpose and the preparation of the main legislation will be the holding of discussions and the earnest seeking after broad agreement with all the parties concerned.

Again, I do not take much joy from such indications as we have so far regarding what is in the Government's mind for Phase B. On November 20, in winding up the debate in another place, the Chancellor of the Exchequer said this, at column 927: I think it right also that I should explain our approach to negotiations during the standstill. The White Paper makes it clear that if negotiations take place during the standstill, the implementation of any settlement must be deferred until the end of the standstill and will then be subject to the second stage of the policy. The Government recognise that a number of negotiations were already in train when the standstill began and that others would in the normal course of events have begun shortly afterwards. I must emphasise again that the outcome of such negotiations will have to conform to the requirements of Stage 2. It can therefore be in no one's interest to take the negotiations very far until the guidelines for the second stage are known. So there is the Chancellor of the Exchequer saying, with the full authority of his office, that certainly so far as wages are concerned, there is very little point in having discussions or negotiations during the standstill period until the Phase B policy is known. These warning noises are exclusively related to wages. Nothing is said about prices or about dividends; nothing is said about boards meeting to declare dividends during this standstill period for payment after the expiration of the period—nothing is said about that at all. This is purely directed to wages and it is warning those who negotiate wages that it would not be in their interests to take negotiations very far until the guidelines for the second stage are known. I hope these were words which were loosely used and not very carefully considered, and I hope also that it is still the intention of the Government to have regard to the interests of all the parties concerned and to bear in mind the need for reaching broad agreement.

I think there are three necessary conditions to be fulfilled before that agreement can arise. I believe there must be, first, the background of social justice which is absent at the moment. The vast increase which is taking place in realised wealth—in particular regarding the Stock Exchange—and the vast redistribution in favour of the well-to-do which has resulted from measures taken since the Government took office do not create the conditions necessary for a sense of social justice. I am asking once more, as the noble Lord did not refer to this point in his speech, how the Gini co-efficient has moved. That is a very simple and straightforward question. The Government have the answer in the Box, or they can ring up the Treasury and find it within 30 seconds: how has the Gini coefficient moved as a result of Government measures since the Government came into office? This is "Gini"—I am being fairly precise about this because the previous request has met with no answer at all. So I hope we shall be told the answer to my question. The reason I want it is because this is the best indicator of social justice and fairness that is known to exist. It is well known. It is prepared within the Treasury every time there is a Budget or a major alteration in social legislation; so all one is asking is that somebody should be kind enough to get on the telephone and give us the answer. It is a very relevant answer and we are not going to be satisfied until we get it. I am putting that as clearly and as courteously as I can to the Front Bench opposite.

So the first condition is a sense of social justice. The second condition is that there should be basic agreement on the moral attitude of helping where help is needed most. Again I should like to quote from a speech by the Chancellor of the Exchequer on November 8, 1972, in another place at column 1009, where he said: The greater the co-operation, the quicker we can replace this standstill by a fair and just longer-term policy designed to share the benefit of growing prosperity among all sections of the community. We have no complaint about that phrase, so long as it is understood that the sharing of benefit means fair shares—and fair shares on any moral basis, as I have already indicated, means giving more to those whose needs are greatest. That means, in turn, improving the lot of the lower-paid in relation to the higher-paid—which is accepted by the Government—and it also means improving the lot of the average worker in relation to the average rentier, which I do not think the Government have yet fully understood. But the moral standard is the same, and we are pressing it. We see no reason why the worker should not enjoy, especially after completing a day of dangerous and often very dirty work, his fair share in the sun as much as the rest of us.

The third condition which I think is essential is a willingness to discuss all the relevant issues as between partners; and I emphasise "as between partners". We now know why the tripartite discussions broke down. They did in fact peter out—I think that is the best phrase which has been used about them by one of those present—because there was nothing left which the Government were willing to discuss and negotiate about. I know this has been put forward as a very difficult problem vis-à-vis Parliament: it is said that it is a delegation of Parliament's responsibility. I do not share that view. I believe this is exactly similar to many other negotiations which are held by Governments, by trade unions and by the C.B.I. The negotiations are ad referendum, each negotiating party having to get confirmation of its decisions and recommendations. The Government come to Parliament and Parliament then has, or should have, a full opportunity of discussing and approving, or otherwise, what the Government are recommending. Therefore I do not see that there is any difficulty, so far as Parliamentary privilege, prestige or responsibility is concerned, in the Government's discussing, as partners, all the relevant issues with the C.B.I. and the T.U.C.

While I am on this topic, it is far better that we should be frank and recognise that the situation has changed. There has grown up a new, powerful estate in the realm: the organised worker. Previously power was effectively shared in varying proportions among Monarch, Church, Parliament and big business—big business represented by the City, the Governor of the Bank of England, the financial institutions, and so on. They were all co-operating, no doubt in a very useful way, and sharing power. Now the organised worker is there as well and the Government must recognise that. They have tried so far to avoid this recognition. They have tried confrontation over the past two years and all they have secured for themselves is a bloody nose. They have tried legislation; they have tried to legislate for a vast reduction in the power of the organised worker, and have failed to get acceptance of it. It is far better that we should now recognise that here is a power and we should clothe it in responsibility, because naked power is a very dangerous thing indeed.

These are the conditions upon which agreement could be reached for a longer-term policy and arrangement which could result in what I might call self-disciplined growth, prosperity and industrial peace. I am bound to recognise that the Government have moved a considerable distance along this path, but they have to move somewhat further. I want to encourage them in moving a good deal further. If they are unwilling to do that, then all I suggest to them is what was suggested to them by their own numerous rebels: that they should move out.

4.13 p.m.


My Lords, much of the subject matter of today's debate was dealt with in the economic debate on the Queen's Speech, and I shall be brief in speaking from these Benches. But I will attempt to add one or two points to the matters that were then raised. As we have said, we accept the necessity—regrettable though it is—for this period of standstill. We are primarily interested, as was the noble Lord, Lord Diamond, in what is to come after the standstill. May I make one or two points which were not made either in the earlier speeches this afternoon or in the debate on the Queen's Speech?

The first, I have no doubt, is a minor point to most Members of your Lordships' House, but it is one that I should not like to go by default while these discussions with regard to pay are taking place. Your Lordships will not be surprised that I am raising this point. It is known that under the Equal Pay Bill the Secretary of State for Employment has power to say that by the end of 1973 the basic rate in women's pay shall be not less than 90 per cent. of that for men. It is also recognised that if the Secretary of State decides to use his powers in this regard he will have to say so in a few weeks' time, at the most, because it will be necessary for employers to prepare themselves for the change that will be involved. I hope that in the sacrifices which everyone is being asked to make at the present time it will not be a case of "Ladies first", and that it will not be considered desirable to overlook the Secretary of State's powers at the present time merely because he would be called upon to make this decision during the period of the standstill.

I would point out to those who are concerned, and rightly concerned, about the position of the low-paid that the overwhelming proportion of the low paid are in fact women, and that the degree of lowness of pay among women is vastly greater than that which afflicts men. The bringing forward of the improvement will not take place until the end of 1973, so that this change will take place after the standstill has ended; but, as I have said, it is necessary that the decision should be made at this time. I directly and specifically ask the Minister to give attention to this point, about which a great many women are very much concerned.

In addition, I should like to follow what the noble Lord, Lord Diamond, said on the question of property prices. We from these Benches have for a long time urged the advantages of site value taxation. It has surely been demonstrated beyond peradventure during recent months that if that policy had been adopted, although it would not have been a total cure, it would have modified very substantially the evils arising from the fantastic property price increases which have taken place; and to a very considerable extent the community as a whole would have benefited accordingly. We also believe that the time has come to look again very seriously at the tax advantages given for mortgages for, at any rate, second houses, and for the more expensive levels of property. There can be no question that the availability of a mortgage is in itself an incentive to a price increase in a property area. It is very hard indeed to see why tax advantages should be given to the better off section of the community in order to enable them to encourage these dramatic increases in property prices.

Having said that, my Lords, may I turn to the second phase and the conditions under which we can move into a more satisfactory method of dealing with the fixing of pay at all levels? The noble Lord, Lord Diamond, said that a condition for a future satisfactory settlement is fairness. The only difficulty with this concept is the difficulty of definition. I would wager that we could argue for a long time in this assembly as to what we mean by fairness when, as is always the case in matters of pay, concepts of fairness have to be translated into differences of cash, differences which are often in themselves quite small. I suggest that while the concept of fairness is something which must always be taken into account in terms of pay, many of the problems of the lower paid—although level of pay is of course an important aspect—are best approached for certain sections of the lower paid through the proposals that the Government have in their tax credit scheme. For example, the low-paid young man aged 20 or 21, with no family responsibilities, is not to me an object of the greatest concern. The rather better-paid family man of 35 with three or four children to look after, is of concern.

I am suggesting that many of the worst problems at the lower levels are problems that are better dealt with through improvements in social benefits, rather than by attempting to deal with them, either in their entirety or to any large extent, through changes in pay. After all, it is a principle of pay that we pay basically for the value of work carried out. Equal pay for work of equal value is a slogan much acclaimed; but it means that we are paying for the value of the work done. It would be a great mistake to move too far away from that concept. On the other hand, the Government's tax credit proposals as they stand do not appear to deal adequately with the need to improve social benefits for those groups of people most in need. The question of pay and the question of changes in the tax credit scheme and in social benefits must surely be considered together. It is in this area that the problem of fairness is best dealt with.

As we move to the next phase there is before us a choice. We can either go forward to the idea of far more detailed control of pay at the centre or we can reject that idea and look to new institutions for settling the problem of pay. My "enemy" has written a book—I say that in quotation marks because the "enemy" in question is in fact a much respected academic acquaintance of many years standing: I refer to Professor Clegg, much concerned with questions of pay and who was deeply involved in the Prices and Incomes Board. He has endeavoured to tell us how a new incomes policy should operate. He, as a result of his study and experience, has been forced into saying that there should be one central body to which all pay claims should be submitted; that this body should give the decision and explain the reasons for the decision, and that it should be backed by law. I ask the House to reflect on the amount of power that such a body would be given and the enormous difficulty of carrying out such a mandate with anything that begins to approximate to accuracy and fairness.

Secondly, Professor Clegg says a great deal about fairness. He does not at any point define it. Indeed, at one point he uses the curious expression that a certain settlement was "more than fair". I should dearly like to discuss with him what concept one has of fairness when one can have something which is "more than fair". Then, he goes on to say that, in the interests of fairness, the better paid must be required to receive no increase at all. He gives us, courageously, a list of those who should not receive any further pay increases. It includes doctors, dock workers, car workers and workers in the newspaper industry. Well, that is his shopping list. But anybody else can produce another, and I ask your Lordships again to reflect on the kind of argument that will go on if we attempt to produce a list of people of this kind who are to be excluded from pay increases. However, he is a kind man and proceeds to say that, although they must not be given an increase, they must suffer no reduction in their standard of living. Therefore, they are to be given an increase to keep their standard of living in line. I would simply point out to your Lordships that this means percentage increases widening the gap between those whom he wishes to control and those at the lower level.

I am giving these points from this study of a much respected academic in this field to underline the difficulty, I would say the impossibility, of a scheme of this kind. If such a scheme is out—and, if Professor Clegg cannot put up a better case for it than that, I submit to your Lordships that it is out—then what is in? I attempted in a previous debate to suggest an approach. I believe, with the noble Lord, Lord Diamond, that we must put the responsibility where the power is. It is perfectly true that organised labour is, in my view rightly, extremely powerful to-day. But it does not at present carry the responsibility; nor are our institutions designed to give it that responsibility.

I am not going through the suggestions I made last week, but will elaborate one very briefly. I am sure that we need something along the lines of a Grand Council of Industry—not just the C.B.I., the T.U.C. and the Government, but bringing together into a more august assemblage the main personalities, both on the employers' side and on the trade union side, who are in fact going to make the decisions. At this assemblage there must be representatives of Government speaking for the public interest. The facts must be available and intelligently interpreted. We are all too short of facts. The facts must be given to this body and they must be confronted with the choices—the very narrow choices as in many cases they are—and must make up their mind what it is right and proper to do. At the end of the day the Government must, if necessary, and if things go wrong, have a veto. But I believe that far more authority must be given to this body, made up of people who have then to go out and make the deals at the different levels inside industry—at the industry-wide level and at the level of the company. I do not believe that there is any other alternative than to build institutions which match the realities of power to-day. I will not proceed further, my Lords, but merely say that time is running out; tempers are exacerbated, and we cannot go on like this. We must establish new ways of meeting these old and intractable problems.

4.27 p.m.


My Lords, I always thought that I was by far the worst offender in bringing before your Lordships' House academic discussions, but after the speech of the noble Baroness I concede pride of place to her. I will not follow her in the academic discussion about Professor Clegg, who changed his views several times so that one would have to discuss him as "Clegg Mark I", "Clegg Mark II", et cetera. Nor do I want to follow the noble Baroness in discussion of the implications of "Women's lib." on the wages question, which is not the subject of to-day's debate. My Lords, we have assembled here, so to speak, in front of a grave, and in that grave is the lacerated body of the Government's main economic policy. The fact that no one from the opposite side is speaking on this occasion, except the two unfortunate Ministers who have to, is no surprise to me.

The noble Lord, Lord Drumalbyn, said that this was a short Bill. It is a short Bill and it is a short-term Bill. However, I fear that it is a short-term Bill with a difference: that is to say, it has been influenced very much by the long-term past and it will influence the long-term future. It is from the viewpoint of how we regard this Bill as a preliminary to a more permanent arrangement that we have to discuss it. I have been on my feet on this sort of business ever since I joined this august House. I criticised my own Party for failing to live up to their duty in 1969 and 1970 in this matter; and I criticised this Government for, first of all, not at all believing in it. After all, it is but yesterday that they put out a Manifesto in which they relied on general pressures and wanted to hand back the job of dealing with this question to where it belongs. That was not at all the sort of responsibility which we have now in the hands of Ministers.

I have always thought that full employment and stability could not be combined unless there were a consensus on prices and incomes, and that there could be no consensus on prices and incomes if we did not have a general social consensus—if there were no firm basis on which one could ask people to overlook minor difficulties and injustices; because there would be minor difficulties and injustices. No matter whether we decentralise, as the noble Baroness wishes, or whether we centralise, whenever there is a systematic way of dealing with incomes there will always be anomalies. It is obvious: all the people will expect there to be anomalies. They will be passionate in maintaining and equally passionate in narrowing wage differentials. Therefore we must have a situation in which people can be asked for this sort of sacrifice.

The problem before us is a complex one. It is complex because our situation is a complex one. It is complex because although certain food prices have risen very much, wages have gone up very much more. The terms of trade have not worsened; they have improved. I do not know how the latest devaluation will affect them, but at the moment I fear that we are again very much on the knife edge so far as the international productivity and competitiveness of the country is concerned.

That brings me to a theme which was completely omitted by the Minister. Of course we have been in these difficulties because there have been two devaluations, and these two devaluations have caused some prices to rise. The prices had to be put up, but the explosive character of this has been caused by the fact that the higher incomes have been to a large extent compensated and that through the monetary policy of the Government (or the absence of it) we have been confronted with a situation in which assets have risen very much further than prices and thereby released purchasing power where it should not have been released. This is a problem with which this Bill does not deal, and so far as I could make out when the Prime Minister made his earlier manifesto about the package, that package did not deal with any of these problems. So we have been asked to give our blessing to past and present mistakes on the assurance that mayhap in the future a better policy will be followed. But there was no guarantee of that and there is now no guarantee of that. Neither in the Lower House nor in the Minister's speech have we had any indication whatsoever as to what the Government are going to do in order to get the consensus that they want.

The injustices which are perpetuated in this Bill are of various characters. In the first place, some incomes are exempt. For instance, I was one of the "profiteers"; I received an income increase of 7½ per cent. on October 31, just before the gates closed. So assets are completely out. What about dividends? The Government say that dividends will be frozen, but we have seen the case of Unilever. They have frozen the dividends which they would normally pay out now but they have already voted a dividend to be paid as soon as the freeze ends. How does one negotiate with Unilever's manpower in an attempt to get them to mitigate their wage demands when, at the moment when everybody is speaking about moderation and restraint, there is a large advance voted in dividends? It seems to me that the Government will have to consider the establishment of some fund by which the workers can benefit with postponed dividends, because if dividends are frozen obviously ploughed back profits will accumulate, and those ploughed back profits ought to belong partly to the workers.

It is very easy for the Chancellor of the Exchequer to say, "Ah!, Budget secrets—we cannot go into Budget secrets now". But the take-home pay is influenced by the Budget. Our criticism of last year's Budget was that it exacerbated social differences and social diffi- culties. Social services come into the picture because obviously they are part of the income, especially of the lower-paid workers. But what have we seen? We have seen a systematic increase in charges, to be compensated by social services which are means tested, and we know very well what "means tested" means. On all these things nothing has been said.

I am very much distressed because, after all, we are all in the same ship. Somehow or other all possibility of an agreement on a permanent basis is now being prejudiced by one step after another of the Government, and we need to have a permanent arrangement. Let there be absolutely no mistake: the changes in the structure of industry, in the structure of society, have brought about a situation in which automatic market forces cannot possibly maintain balance. The balancing mechanism of the old type has vanished. It could be re-established, but only at a cost which would be absolutely prohibitive from the social point of view. What you would have to do would be to shoot pickets, stop benefits to the strikers' wives and children, and so on. Nobody could contemplate that. I am generous enough to assume that nobody on the Government side would want to do that.

But if they do not want that, then they will have to have some conscious policy which establishes the bare conditions of a consensus on which we can build. How that machinery should be arranged is a secondary question. We must first reestablish the sentiment of trust between the various parts of the economy. We must do that quickly, because with our entry into the Common Market we must at all costs increase our investment, which is not increasing. What is increasing is consumption, and especially luxury consumption. We must increase our investment because otherwise we shall be naked in a very perilous situation indeed.

4.38 p.m.


My Lords, we have just listened to a very sincere and thought-provoking speech. In the course of my professional career I have often felt myself to be the victim of the controversial severity of the noble Lord, Lord Balogh, but I have seldom listened to him, or read what he had to say, without being stimulated to new thought, and I am sure that those who have listened to him this afternoon have had a similar experience. I, too, wish to make my contribution to this debate, which will not be a long one, concerned as much with the general background as with the minutiae of the different clauses.

It is the tradition in this House that we should seek so far as possible to establish a consensus—that we should not only brings out points of difference but points of agreement. I take it that we are all convinced at the moment that the value of money has been diminishing, is still diminishing and that that diminution must be arrested, if not completely stopped. In this connection, I was surprised to hear the noble Lord, Lord Diamond, to whom I always listen with respect and interest, base his indictment in this context entirely on what has happened in the last two years. If one takes the retail price index for 1963 as 100, the price in August of this year was 165, and although I should be the last person to wish to defend what has been allowed by Ministers in the last two years, I should have thought, speaking with the utmost friendliness and deference, that those who sit on the Opposition Benches would feel no reason to be altogether proud of what happened while they were in control. After all, the tremendous increase in the rate of increase of money supply began before the last General Election.

Returning to the point of consensus, I hope we agree that the recent rate of change, which would reduce the purchasing power of the £ by 90 per cent. in 30 years, is something which we should not put up with. Disagreement begins to arise when we discuss causes. I listen with interest to the diagnoses of the noble Lord, Lord Diamond, sometimes with agreement, sometimes with neutrality and sometimes with a little eyebrow raising. My feeling in this respect is that if at the point of a pistol I had to choose between falling in behind the noble Lord, Lord Diamond, or behind the noble Lord, Lord Balogh, I should find myself in the Baloghian ranks, so to speak.

These personal differences apart, I wish to comment a little further on the question of property prices and the price of land. In recent debates I have noticed a growing tendency on the Labour Benches for noble Lords to pick out extraordinary cases of vast increases, which no one in his senses would deny, and to suggest that these were not only indicative of something wrong in the economy, which again no one would deny, but also that they constituted as it were one of the main causes. I have no doubt that the spectacle of the rising prices of land and real property is a cause of irritation and disquiet and may contribute to the general atmosphere of mutual distrust which makes grown-up and amicable discussion of these matters very difficult. I have no doubt also that there may be elements in the tax system favourable to an increase of demand in certain parts of the market for real estate. But, in the main, I suggest that to diagnose the rising prices of real property, or indeed of durable goods in general, as being one of the origins of the recent acceleration of the decline in the value of money is an absolutely classic case of mistaking effects for causes.

There is, of course, a certain amount of speculation in the narrow sense of the word—professional people cleverly attuned to the tendencies of the market making a "bob" or two now and then—but I would be so hold as to say that, viewing the economy as a whole, the effect of this speculation in the narrow sense is quite negligible when compared with the effect of the surge into goods caused by the expectation of still rising prices. The fact is that one cannot fool all the people all of the time and that although at the beginning of the post-war period the decline in the value of money was not so perceptible, except to people living on fixed incomes, as to cause serious alarm—one shrugged one's shoulders and said, "It all comes out in the wash and a little of that does not do much harm"—people are now aware that something serious is happening. This inclines men's minds, be they rich or poor, to seek some more stable repository for whatever they have.

What the Government have been doing—perhaps I should not refer solely to the Government but should widen the indictment and say what those who rule over us have been doing—in the last decade is to turn most of us into "bulls" in real things and "bears" in money; and to indicate the results of this sort of market movement as being one of the causes of what is happening seems to be as futile as if, when sticking a thermometer into a bowl of boiling water, one says, "What a wonderful heater it is!"


My Lords, the noble Lord, Lord Robbins, began with what I understood to be a defence of what is happening to land prices. He then suddenly left that subject for a number of others, and the last thing I heard him say about land prices, if I remember rightly, was that they are not the cause of other things happening. Knowing much about the noble Lord and how he began, may I ask him to return to the point at which he lost himself in his notes and explain why what is happening to land prices is not a major factor in what is happening to other prices?


My Lords, it was extremely kind of the noble Lord to suggest that I had lost my way in my argument. In fact, although as noble Lords can see I am speaking without great reference to notes, I have followed quite closely what I intended to say. If the noble Lord wishes me to expatiate a little further on that point—


Yes, please.


—I will give him an example. I know a youngish couple who came into a very few thousand pounds only a month or two ago. What did they do? Did they buy Savings Certificates or Savings Bonds? No. Did they go to some sober stockbroker and ask for a selected bunch, even of equities, which would perhaps maintain the value of the money they had come into? No. At the weekend they got into a car with their young family and they sallied forth into a part of the country where they thought that land prices had not risen as much as elsewhere because they felt confident that there, at any rate, they would have something which, in default of a total social revolution, might have some chance of keeping its value. That is what I am saying. The general bearishness with regard to money that is driving us all into goods and land is simply the leading species of a large genus.

What then can I say regarding the causes of inflation? As the noble Lord, Lord Balogh, has said this is a very com- plicated matter indeed. Inflation can come on the demand side from increased spending by individuals or, what is much more likely, by Governments. It can come, too, on the cost side as a result of demands for increased emoluments at a high or low level, such demands influencing costs and eventually influencing prices. In the last twenty years many influences have been operative and I am sure that, if we were to get down to details, those of us who, like the noble Lord, Lord Balogh, and myself, have devoted a good deal of time to studying these matters would still find ourselves in some state of disagreement about the interpretation of particular phases. There certainly was a time when Lord Balogh was insisting—perhaps rightly—more on the cost-push element when I was insisting on the existence of forces on the demand side. That is still a matter for detailed investigation, and I know of only one book that I would recommend to your Lordships—and it is now many years out of date—which, to my way of thinking, represents a scientific investigation of the problem.

But, my Lords—and this is the point I want to make—none of these influences could operate as they have operated unless there was undue elasticity of the credit base. Spending would not increase for long unless the money supply was increasing at a rate disproportionate to the increase in productivity. Firms could not put up prices effectively in order to meet increased costs unless there was plenty of money about; and that has been the state of affairs during the last few years. To explain the contemporary rates of inflation without mentioning that is to get one's explanation completely out of perspective. When I hear minute discussion of this and that social evil—and there is usually something wrong somewhere, even if it is only the weather—adduced as explanations of the main evil from which we are suffering on this side, without mentioning the increase in the credit base, I am reminded of the parable of the American who could see the fly on the barn door but could not see the barn door itself.

I suggest that what I am talking about now is something that is very serious. How increases in the money supply affect prices is clearly a matter of great difficulty, and one about which professional opinion is by no means united, even at the present day. But confronted with the vast increases of the last few years, these differences are nothing—they are dust in the balance. Since the last months of the Labour Government the increases of the credit base have been such that it would be a miracle if there were not inflation. Over 20 per cent., as the noble Lord, Lord Diamond, reminded us, with present growth rates is just a recipe for trouble; and when the noble Lord, Lord Balogh, the other day, in a question to the noble Earl, the Lord Privy Seal, pointed out the rate at which the present deficit is running (which may easily amount to £4,000 million, or something like that) it is very difficult to understand the frame of mind which questions it as a cause, or the frame of mind which continues to permit it. It is no exaggeration to say that at the present time present measures are not successful. We are in a position reminiscent of the beginning of the great Continental inflations of this century. To my way of thinking it is incredible that Ministers are not more alarmed than they allow themselves to appear in public.

If that is so, my Lords—and I am putting this question dispassionately at the moment and not as necessarily representing my own view—is not the obvious cure to stop the excess increase, to decree forthwith that the rate of increase of money supply shall not be greater than the anticipations of increased productivity; or, perhaps to allow just a little elbow room for such degree of secular inflation as may relax the grip of the rentier and not do a great deal of harm to anybody within the lifetime of any person who is now aged, let us say, 35. That rhetorical recommendation is of course the serious recommendation of some, the serious recommendation of the extreme monetarists, the sort of overtone which emerges when Mr. Enoch Powell makes one of these monolithic pronouncements on the principles of economic liberalism, which, I will confess to your Lordships in this House, usually make me want to stand on a chair and sing "The Red Flag". Alas! I do not think that things are as easy as the Powellite pronouncements would suggest. I do not deny—and I believe that in this I could carry the noble Lord, Lord Balogh, with me—that inflation might be stopped by violent measures of this sort; but much else would be stopped as well.

These are controversial matters, but, speaking personally, I have no doubt at all that, with so many expectations in the economy geared up to continuing inflation at rates which have been prevalent in recent years, to put on the brakes as suddenly as that, with no other accompanying measures, would precipitate unemployment and stagnation of a kind not witnessed since the war. I suggest that all economic history bears out that view. When has a great inflation been stopped by purely monetary measures without precipitating difficulties of that sort at the same time? This is, if you like, a middle-period judgment. In the end one might hope that the machine will start again. There is a great deal of ruin in a nation. But in the meantime, how much suffering, how much social division and how much chaos will be engendered! It is for that reason, my Lords, and not because I have very great enthusiasm, or indeed confidence, that I support the Bill now before your Lordships' House. I have no illusions about freezes. I have no illusions about more complicated measures operating directly on prices and incomes. Freezes tend to disintegrate; people find a way round. Orthodox prices and incomes measures tend to be ineffective in the long run. But in the situation in which we find ourselves now, these measures, I submit, are the main hope of a diminution of the rate of increase of money supply without an undue check to growth and employment. If nothing is done, either we get catastrophic depreciation or we get catastrophic unemployment. The justification for the measure which the noble Lord, Lord Drumalbyn, has laid before the House this afternoon, with all its possible imperfections, is that it affords a breathing space in which to think out better ways of procedure.

I will conclude with this point. I do not think that this policy is going to be at all easy. I have little hope myself that 90 days will be sufficient to devise measures which will lead us into the new Jerusalem, or even perhaps 150 days. The frame of mind of some people—some of them friends of mine—who believe that after this period of freeze it will be possible just to relax into a free-for-all, much as I should like to agree with them, unregenerate economic liberal though I may be, seems to me to be an entirely unreal one. There is too great a head of inflationary steam in the economy for us to get out of our troubles as quickly as that. So I personally am convinced that when the freeze comes to an end there will still need to be some measures of control for some time. I retain the view that in a more rational atmosphere control of aggregate expenditure via some combination of control of money and the Budget, such control being directed to maintaining the increase of aggregate expenditure more or less in line with the increase in anticipated productivity, is the ideal. But I doubt whether a state of affairs which would permit reliance alone on that kind of policy is likely to come quickly.

So what is to happen? I confess that at this stage I become very puzzled. I listened with great respect to the speeches which preceded mine. I agree in principle, needless to say, with the sentiment expressed by Lord Diamond, that we must create an atmosphere in which it is felt by a sufficient number of people that there is fairness and justice all round. But we are a very long way, even among ourselves, from agreeing on what degree of fairness and justice can be expected at this time in history in this imperfect world. Take, for instance, the proposal of the Prime Minister which was unacceptable in the negotiations, that there should be just a flat rate of increase so far as all incomes are concerned. I doubt very much whether a proposal of that sort, or a proposal perhaps permitting a slightly easier position for the higher incomes, would be immediately acceptable to, let us say, Mr. Clive Jenkins. The fight for relativities is quite as strong a social force as the fight on the part of more disinterested people for fairness and justice. And in the main I must say I am inclined to agree with the noble Baroness, Lady Seear, that when it is a question of helping the lower paid (apart from the question of abolishing structural imperfections such as the abominable restrictions on women's employment, with which she knows I am heartily in favour of what she has in mind) the best way is through revision of taxation rather than overmuch distortion of the labour market itself.

My Lords, I must not go on. I conclude that we have to do a lot of open-minded thinking on Stage 2, and that most suggestions which have been made up to date, particularly the suggestions to which the noble Baroness, Lady Seear, drew our attention, of totally centralised wage fixing, à la Clegg Mark IV, to use Lord Balogh's phrase, are not the most hopeful way. The one thing of which I am certain is that if steps are not taken to reduce deficit spending and the rate of increase of money supply no policy, however ethically enlightened, is likely to succeed; the money will get out somehow. The second point on which I am also clear is that if there is no restraint on the increase of incomes then a reduction of expenditure will lead to a degree of unemployment which will cause us all grave anxiety. Therefore, if this Motion is pressed to a Division, which I hope it will not be, I shall vote for the Bill with the melancholy with which one votes for a pis aller.

5.8 p.m.


My Lords, this debate has become rather alarmingly professional; I am following a former Chief Secretary of the Treasury and three distinguished economists, and I am tempted in a kind of defensive frivolity to say that I hope the Government have rubbed their Aladdin's lamp and before this debate ends the Gini co-efficient will arrive, speeding along the M.3, and we shall have the benefit of his wisdom. This Bill itself is of limited importance; it is a stop-gap measure with a very brief expectation of life, and like all stop-gap measures its justice is a pretty rough justice. The cries of disappointment and frustration extend from the farmworkers to the provincial journalists who are members of the trade union to which I belong. And the answer to these cries, of course, perhaps a fairly satisfactory answer, is that if the Government had continued on the path along which they were going it might have meant even rougher justice for a larger minority who lack the bargaining power or the resources to hedge themselves against inflation. I think that the real importance of this Bill is largely symbolic—symbolic of the Government's complete change of front. The analogy used by the noble Lord, Lord Blake, from the other side, was that a U-turn has been made by the Government, and often in politics such turns are an excuse for ribald comment among the Opposition. But not to-day.

Throughout most of the two and a half years this Government have held office noble Lords in all parts of the House have been urging them to take a different economic and industrial course. For it was obvious long ago, if not to the Government, that the direction in which they were travelling at ever-increasing speed was leading them inexorably to a minefield. It is months, however, since it became obvious that the Government were cautiously applying the brakes—not to the inflation itself but to the harsh policies of confrontation, on which they had so rashly embarked at the beginning of their spell of power. Now there is an attempted return to consensus politics, and we must welcome it, even if we can achieve only the kind of wry smile which perhaps Mr. Macmillan and the noble Lord, Lord Butler of Saffron Walden, must now be wearing—and they are two of the wryest smilers that I know.


My Lords, would the noble Lord allow me to interrupt? Surely it would not be quite true to say that the Opposition Peers have, ever since June, 1970, advocated an incomes policy on the lines which they themselves abandoned at the end of 1969. It would not have been logical to start advocating that six months after they had abandoned it.


My Lords, collectively they have not done so; but I have a distinct impression that from time to time there have been individual voices from that side of the House which have been advocating some kind of voluntary incomes policy.

We must welcome the change, first because we must be concerned with the national interest, and secondly because the next Labour Government do not want to spend their period of office dealing with either of the legacies they might have inherited—the burning chaos of inflation, or the cold chaos which would result from the alternative remedy, the savage remedy of severe deflation. Labour spent too many anguished years in their last period of power coping with the legacy left by the Sir Alec Douglas-Home Administration, engaged on the ungrateful task of getting the balance of payments right and so having to forgo many of the things that a Socialist Government want to do. Once in a lifetime is enough of that kind of experience. But we should be happy if our next legacy were only half as good as that which we bequeathed the present Government and which they have largely squandered.

Of course, my Lords, the outline of the Government's new policy is one which many of us would find it very difficult not to accept: the pursuit of growth, full employment and stable money, with special concern for the poorly paid. What one doubts, however, is the Government's capacity to achieve all this. It is extremely difficult in itself, formidably difficult; but in addition they are carrying the burden of their own past, and they are carrying a Party which is by no means united in the means which the Government have decided to employ and of which this Bill is a precursor. As the debate in the other place showed, and as the elections to the offices of the 1922 Committee also revealed, there is something like a "True Blue" backlash at hand, and perhaps last night's vote in another place may be only the first of a series of policy revolts which could involve the prices and incomes policy on which the Government are now embarked.

The national dilemma which the Government are beginning to face was very well described only yesterday by Sir Frank Figgures, the Director-General of the National Economic Development Office. He said that for years we have had three economic objectives: a more satisfactory rate of growth so that we can improve living standards; reasonable stability of purchasing power because without it confidence will be destroyed; and a satisfactory level of activity—which means a satisfactory level of employment—because we cannot achieve a higher standard of living for everyone if a large part of our resources are idle. But everything that has been tried to achieve these gaols has had only the most limited success. We have been unable to obtain all three objectives at the same time. We can stabilise money, but at great cost in terms of employment and growth. We can get growth and high employment, but at great cost in terms of inflation. Now we are beginning to recognise, as Sir Frank said, that in our society it is beyond the power of Government to achieve, in the long term, all these three objectives without the co-operation of those who have the power to fix the level of incomes and prices. I do not, however, go so far as Sir Frank in saying that this requires, a move towards tripartite management of the economy. "Management" is a very strong word. We are still, and we must remain, a Parliamentary democracy. Indeed, it would be putting far too great a strain on either the C.B.I. or the T.U.C. to involve them in anything so formal or so rigid as "management", but what we certainly need is some kind of tripartite consensus. Can the Government get it?

This is a rather odd Bill. It is an emergency Bill which has been made necessary because an emergency agreement could not be reached at the Downing Street talks. But what is to happen next? Sometimes, as my noble friend said, the 90-day period of grace which the Bill is designed to give is described as the time needed to work out new legislation. One hopes that it is a good deal more than this; that the Government are not simply getting the draftsmen to work on the final offer—if offer there was—in those rather mysterious Downing Street talks. I hope that their energies will be spent in getting the policy right rather than on the problems of legislative form.

The accounts of a disappointing meeting of the T.U.C. yesterday are rather varied, but I should be astonished if the T.U.C. were to refuse a further invitation from No. 10, if sent at the right time and in the right spirit. It looks as if the T.U.C., though reluctant to enter tripartite talks, might be happy to talk with the Government alone. This is not to suggest that there is any bad blood between the T.U.C. and the C.B.I.; but there is a substantial difference in outlook, and it might be more easily resolved by the Government's talking separately to the parties. It is perhaps too much to hope that even in the end the three parties will be able to reach a meaningful agreement, but what might be hoped for is the next best thing—a meaningless disagreement. Because if it is to work, as my noble friend said at greater length, a prices and incomes system, even when backed by law, must not be totally unacceptable to large masses of people.

If there is to be a consensus, the Government have to do a lot more hard thinking about prices, about rents, about taxation, and about land. I am sorry that my noble friend who assumed the leadership of the Liberal Party is not here to back me up on that. Fortunately, however, 90 days brings us nearer to the time of the Budget, and will give the Chancellor of the Exchequer a natural opportunity to show that the Government have turned their backs on the past. For example, even after the concessions that he made last year, there are still many people, poor by the rather high average standard of to-day, who are paying income tax. They ought to be taken out of the direct taxation system. In fact, the first step towards tax credits should be to stop levying income tax on the comparatively poor.

My Lords, if this harsh, rather crude Bill can be accepted, it is simply because, in the end, the present Government had left themselves no alternative way of getting out of difficulties which they ought to have tackled long before. Although there may be joy in Heaven more over the one sinner that repenteth than over the famous ninety "just" persons which need no repentance, the Government must not expect too much from us here below. If they want to know why our trumpets are a little muted to-day and our harps are silent, all they have to do is look at what they have said and done over the past two and a half years.

5.20 p.m.


My Lords, I shall not detain your Lordships long, but I want to make a brief intervention on only one point. The noble Lord, Lord Robbins, quite rightly pointed out that this Bill is solely a holding operation, working for 90 days or, at the most, 150 days, and during that time it is essential that the correct atmosphere should be created so that the right policy can then be implemented—two things: think out the policy and create the atmosphere to make it possible. I want to talk only about the atmosphere. Many noble Lords, including my noble friend Lord Beswick in a notable speech a short while ago, have pointed out the overriding importance of creating a feeling of fairness and social justice before this problem can in any way be solved. Before there can be any form either of voluntary restraint which is effective, or legislated restraint which is effective, the people of the country as a whole must be in favour of it. I think there is common agreement that the people who are hardest hit by our present inflation are those who are economically the weakest; in other words, the pensioners and those who receive the lowest wages. The pensioners have been helped in a meagre way, but at least they have received some help, by the £10 Christmas Box—not sufficient in the view of many of us, but at least it is a gesture.

Prominent among the lowest paid are the farm workers of this country. Their present wage—£16.20 for a 42-hour week—is way down at the bottom of the scale. It is not very easy to live on a wage of that sort at the present time, and the recent rise in the cost of food falls heaviest upon the farm worker and his wife and family. Not only that, my Lords; although the farm worker is down at the bottom of the scale when it comes to wages, he is way up at the top of the scale when it comes to increase in productivity, and right at the very top of the scale when it comes to his record of strikes. No farm worker strikes at all. Yet these people, having been granted by the Agricultural Wages Board a rise of approximately 20 per cent.—something over £3 a week—bringing them up to about £20 a week to take effect from January 22, are caught by this wages freeze. An action of that sort cannot lead to a feeling among workers as a whole, among the country as a whole, that this policy is being pursued with fairness and with justice.

Just look, without going into enormous detail, at some of the figures. What would this 20 per cent. rise mean, in terms of the country as a whole, to the cost of food and to the cost of living? By and large, one can say that the cost of home food production is divided into various sectors of which wages take up about 15 per cent. Therefore, a 20 per cent. rise in wages would result in somewhat less than a 3 per cent. rise in the cost of food at the farm gate, if it were passed on entirely. But the price of food at the farm gate is less than half the price of food in the shops, so that, when it gets into the shops and the housewife has to "fork out" for it, instead of the rise being 3 per cent. it would be something under 1½ per cent. But home-grown food is only about 60 per cent. of our total food purchases, so the figure of between 1 per cent. and 1½ per cent. is further reduced to something between ½per cent. and 1 per cent. That is the effect that the rise would have over a whole year on the cost of food to the consumers of this country, and although I do not know exactly what proportion the cost of food is of the total cost of living, I have it in mind that it is something of the order of 20 per cent. So one can say that although this rise to the farm worker is minimal in its effect upon the cost of living, it is, if not maximal, at least extremely important in its effect upon people as a whole, to show that the Government are trying to pursue a policy of justice and compassion.

There is one further point, my Lords. As I said, this increased wage awarded by the Agricultural Wages Board to the farm worker is due to come into effect on January 22; in other words, if it were allowed by the Government, it would pre-date the end of the freeze by a matter of only a few weeks. Surely, for that insignificant effect upon the country as a whole, it is worth allowing it. It would create an enormous fund of good will, not only among farm workers but throughout the whole country, and would give a real earnest of the intention of the Government to treat those with lowest pay in a fair manner. I have talked only about farm workers, because they are the ones I know best, but I know that there are other workers whose wages fall below £20 a week. I would strongly urge upon the Government that in the passage of this Bill through this House very serious attention is given to the exemption from this restraint of all workers' wages which fall below the £20 limit, so that all of them can at least go up to that low level to enable them to meet the great hardships which the present sharp rise in the cost of living as a whole, and in the cost of food in particular, is having upon those poorest paid families.


My Lords, may I take up something the noble Lord said? I think it is a point which I have taken up with him earlier. I quite agree that we should do everything we can to help the farm workers, but it is not strictly fair to say that they have only £16.20 a week. As the noble Lord knows perfectly well, if you are prepared to pay your farm workers only £16.20 a week you will not get any farm workers. Furthermore, they have the advantage of a free house, they have all sorts of other perquisites, they usually get free milk, and they get free potatoes and free fuel. It is always the minimum wage which is quoted, but very few employers—and, certainly, no employers in my experience—ever pay the minimum wage. I just wanted to make that point, but I quite agree with the noble Lord in his sentiments that we should help the farm worker.

5.28 p.m.


My Lords, it is possible to argue that the sooner this Bill gets on to the Statute Book, the sooner we begin to tick off the 90 days, the sooner we get down to a real policy, the better it will be for Britain. That is the argument, as I understand it, which the noble Lord, Lord Drumalbyn, put forward at the beginning of his speech. But there are also arguments for the proposition that even a temporary piece of legislation ought to have regard for the human beings that it affects, and ought to make more than a little effort to observe principles of fairness.

This legislation will have a life that is nasty, brutish and short, and I do not believe that it is sufficient excuse for the first two of those qualities that it also includes the third. Moreover, its short existence can so sour the atmosphere that agreement on a longer term policy will be made more difficult, if not impossible. That is probably the biggest single criticism that can be made against this Bill. What matters is not only the substance of the Bill but, as my noble friend Lord Diamond said, the manner in which it is being pushed through the Parliamentary processes. The guillotine was brought out again in the other House. Here we have more sophisticated but equally effective means of stifling constructive discussion. Again, as with the European Communities Bill, we have a Government timetable which means that no Amendments can be accepted, and I should be interested to know whether the noble and learned Lord the Lord Chancellor would challenge that statement. I say that the timetable which has been laid down by the Government for the passage of the Bill will not enable us to amend it in any way.

I wonder whether the Lord Chancellor realises the damage that is being done—the deep damage that is being done—to our Parliamentary institutions. It may well be (and I hope some of my very good friends will excuse me if I put it in this way) that there are some who believe that Parliament has fulfilled its historical role and that now we have to leave decisions to some elitist bureaucracy in a suitably removed capital on the Continent. But they may well be mistaken. It may well be that Parliament will have the last say in this and in other matters. As my noble friend Lord Ardwick said, the decision of yesterday can be a very significant decision. I refer to the defeat which the Government experienced in the other place. That was on a particular issue, but I do not believe that it was that issue alone which caused the revolt in the other place. There is beginning to simmer a feeling that we are being asked as a Parliamentary institution to push through legislation without proper consideration, and that goes for this important, even if temporary, little Bill.

My Lords, I do not wish to go over the ground which we covered in the economic debate, as the noble Baroness, Lady Seear, said, but one point was made in that debate which the Lord Chancellor sought to answer but which I submit he failed to answer, and which I think the noble Lord, Lord Robbins, who was called in aid by the Lord Chancellor on the previous occasion, raised again to-day. I We have said, and said repeatedly—and we have advanced a certain amount of argument to support our case—that you cannot pin the blame for inflation upon a single factor, and it is certainly wrong to try to pin it upon wage claims alone. We have said that it is wrong to seek a solution on the wages front alone, and we have referred to other inflationary elements, including increased rents and land prices. In the previous debate, the noble and learned Lord the Lord Chancellor excused himself from dealing with this issue alone because he said that no specific reference was made to it in the Amendment to the humble Address, which I moved. He further said, I would point out to the noble Lord, Lord Robbins, that in any case I had devoted only a paragraph to it, although to hear what the noble Lord, Lord Robbins, says it appears that we are pinning our whole case upon the problem of land prices.

My Lords, we have never said this. But we do say that it is wrong when the noble and learned Lord on the Woolsack says that the land price problem would be cured if inflation could be curbed, as if the speculation in land can be separated from the problem of inflation. The noble and learned Lord actually said, and the noble Lord, Lord Robbins, comes very near to saying it, that you have to curb inflation first. We would say that at this stage all the factors detailed by my noble friend Lord Diamond are both causes and effects.


My Lords, I do not wish to enter into argument with the noble Lord on that point, but I should like to put this question to him. Would he assert that, if the general level of prices had behaved in such a way as to maintain a fairly constant value of money, there would be any likelihood at all that land prices would have risen by a fraction of the amount by which they have risen?


Of course they would not, my Lords. But we have now reached the stage when we do not have anything approaching a constant value of money, and one reacts upon the other. It is rather like the story I once heard of hounds chasing a fox round a coppice. It was said that they were chasing round so fast that at times, said an observer, it was impossible to determine whether the hounds were chasing the fox or the fox was chasing the hounds. All these factors now react one upon the other. That is what we are saying; and we are saying it is wrong to isolate one, as this Bill does—and it does not even isolate it very efficiently, as I shall endeavour to show—and say that it is this factor which we have to cure.

I would say further to the noble Lord, Lord Robbins, and I say it with some feeling because I get a little—I was about to say "a little tired" of it at times, but at any rate a little exasperated at times when we have these lectures from economists who do not appear (and I say this to him as kindly as I can) to understand human nature. They do not seem to understand that all these economic factor, are affected by the necessarily unpredictable behaviour of human beings, and unless we take this human factor into account we shall not solve this problem of inflation.


My Lords, with respect to the noble Lord, I certainly would not pretend to understand human nature in all its amplitude, but before I made my remarks on certain respresentations which had been made from his Bench I said that I fully appreciated that the spectacle of rising prices of real property caused irritation and aggravated the atmosphere in which other questions were discussed. I am sure that if the noble Lord will look at Hansard he will see that, and then perhaps his feelings towards me will resume their normal level of kindliness.


My Lords, I have no need to refer to Hansard because I remember very clearly what the noble Lord said. He did, I agree, make this reference, but the burden of his speech was that one had to turn to other factors. "Something called inflation" is how the noble and learned Lord who sits upon the Woolsack put it in the last debate; and what I am trying to say is that we cannot accept that the money supply alone, and certainly not the wage demands alone, can be isolated from other manifestations of the problem with which we have to deal. As the noble Lord, Lord Balogh, said, an incomes policy is needed, but it is only feasible if we deal with a wide range of other social factors. That is what I believe, and that is what we are trying to put over to the Government.

My Lords, there is a good deal of evidence which suggests that if these other factors, including land prices, had been brought into the Downing Street discussions we might well have got a voluntary agreement. It is a sad fact that the goodwill which was there on the trade union side has been dissipated or frustrated by the Government. No one can say that the General Secretary of the Trades Union Congress has not shown himself ready to be constructive. It is said that there are others among the leaders of the big unions who are less cooperative than Mr. Feather, but I doubt whether this is fair. Consider what Mr. Jack Jones has said. He is reported in the Financial Times of November 9 as saying that, The T.U.C. had gone into the talks 'warily but not cynically … '", and that The unions had wanted an understanding … Then, again, when he was addressing the Press Gallery here, he said: We are as concerned as anyone to grapple with inflation, but he explained that if it involves further talks about package deals, certainly it must be understood that the trade unionists cannot negotiate about wages or even prices in isolation"— and this is a factor which will have to be driven home and which will have to be taken into account on phase two.

I quote one other remark which Mr. Jack Jones made in that same speech on November 8. I was rather moved by this, because I thought it gave an indication of the sort of forces which could be liberated if we had the right policy from the Government. He said, among other things, that something more decisive had to be done on pensions. Then he went on to say: I would have been ready to tramp the country asking for sacrifices to meet that demand and I believe responsible, ordinary working men and women would have been overwhelmingly in favour. That is the kind of spirit that we must generate in this country, the kind of spirit shown by the leader of one of the biggest trade unions when he says that he is prepared to mobilise the working people of this country to make sacrifices if they believe them to be in furtherance of a policy which shows signs of being fair.

My Lords, I go on record as saying—I have made this speech before, and will not enlarge upon it—that so far it seems that the Government are not capable of understanding the importance, if not the overriding considerations, of the human factor as against the narrower economic theory. I am not sure that the noble and learned Lord who sits on the Woolsack even understands the economic theory on some of these matters. I come to that judgment on the basis of what he said in the last debate. I said that I would return to it. In the last debate he made the case—and I listened with great interest—that in the lifetime of the present Government there had been a considerable increase in the disposable income of the ordinary wage-earner in this country. He argued in some detail—and he was good enough subsequently to send me the statistics on which he based his argument—that the average income had gone up far faster under the Conservative Government than under the previous Labour Administration.

Then, having convinced himself that this was true, that the disposable income (and therefore, presumably, the standard of life) of the average wage-earner had gone up in this way, in another part of his speech he argued with equal conviction that the real trouble was that wage demands had been going up so much faster in recent years and had become intolerably high. But, my Lords, it was precisely because these wage demands had gone up that he was able to claim that the disposable income was higher. It seems to me that if that is the basis of the economic judgments of this Government there is something left to be desired.

My Lords, may I say again to the noble Lord, Lord Robbins, that we do not say, and have never said, that land prices are the main cause of the current inflation. There are a whole range of social and economic factors. Our criticism of this Bill is that, crudely and unfairly, it seeks to deal with too limited an area of trouble. It deals with some prices; but not with all. It does not deal with the range of prices with which the housewife is most concerned; namely, food prices. It does not deal with council house rents. It deals with some incomes; but it does not deal with all incomes. It does not deal with the incomes which go to the better-off section of the community. Clause 3(3) enables most of the comfortably off to escape the consequences of the freeze; and I hope we can do something to deal with that subsection. The Bill does nothing to touch those who live on capital appreciation.

It is true that while it is limited in the main body of the Bill—and this is a point that I tried to raise with the noble Lord, Lord Drumalbyn—it gives extraordinary powers to the Government "in the small print" of the Schedule. Paragraph 1(1) states: An order or notice under section 2 of this Act may be framed in any way whatsoever, may prescribe any method of comparing prices, charges, rates of remuneration, dividends or rents … I repeat that it states: An order or notice under section 2 of this Act may be framed in any way whatsoever, … That is an extraordinary range of powers to give to a Government—almost as an afterthought in the Schedule to the Bill.

Again, in paragraph 4(1) it is stated: This Act, and any provision made under this Act, shall have effect notwithstanding anything in any other Act or statutory provision passed or made before this Act. May I ask the noble and learned Lord who sits on the Woolsack whether he will be good enough to tell us if this really means what it says? Is it really the case that in a Bill which is being rushed through in a few days in the other place under the guillotine, and here in a week or so, that we are being asked to give power to the Government to make a provision under its quite wide powers that will upset anything in any other Act or statutory provision passed or made before this Act? A little while ago we spent a certain amount of time discussing the European Communities Bill. May I ask the noble and learned Lord whether the power in paragraph 4(1) of the Schedule really gives authority, legal power, to the Government to upset any provision which is included in the European Communities Bill? I cannot really think that this kind of legislation should go through in this kind of hurry.

We shall not vote against the Second Reading because our practice is not to vote against Second Readings in this House; but we shall invite noble Lords (including the noble Lord, Lord Robbins) to join with us in amending it on Committee stage. I hope that on this occasion, as against earlier occasions, the Government will be ready to listen to the arguments that we put forward.

5.47 p.m.


My Lords, when it was discussed who would reply to this debate all my colleagues said that this is a Bill which will raise a great number of legal problems. This was not my view; and I think I may claim that I have turned out to be right. However, they were so convinced that it would raise a great number of legal problems that they insisted that the Lord Chancellor should reply to the debate; so he is replying to the debate in his own fashion and with the limitations of knowledge that he possesses.

As a matter of fact, I have been asked only two legal questions. The first was addressed to my noble friend Lord Drumalbyn, and was about the meaning of the word "influence" in Clause 5(2). The question was put by the noble Lord, Lord Beswick. I can only draw his attention to what the draftsman has evidently been doing. The great art of draftsmanship is plagiarism. If the noble Lord will look at subsection (4) of Section 16 of the Act of 1966, which was passed by the Government of which he was an ornament and in which the meaning of the word "influence" must have been at least apparent to them then, he will see that the draftsman has mutatis mutandis quoted the clause exactly. I suggest that the word has its dictionary meaning. Its ultimate meaning will be for the courts to decide.

The fact is that most of this debate has really been, if not a repetition, at least a prolongation of the debate we held only ten days ago on the Opposition Amendment to the Queen's Speech. I think that I said on that occasion everything I was disposed to say about the matters that were then raised. We are now faced with a Bill which imposes a standstill, a standstill that we believe to be necessary in the national interest and a standstill that we believe it to be necessary to put upon the Statute Book in the national interest at the earliest possible moment in order for it to be effective. If it is not put on the Statute Book at the earliest possible moment it will not be effective; the mice will get at it; and we are determined that that shall not be done.

The noble Lord, Lord Beswick, suggested that we were doing a great deal of harm to Parliamentary government by legislating in this way. But he failed to suggest any alternative to what we were doing, and I venture to put before him the view, which I myself hold rather strongly, after 35 years experience in Parliament—even longer I think than his very long experience in Parliament—that Parliamentary institutions do themselves more harm by dithering than they do by acting. And on occasions of national danger, and danger to the national interest, dithering is a far more dangerous fault than acting quickly and firmly. My view, for what it is worth—and it is held sincerely—is that national interest and the urgency of the matter takes precedence over legislative perfection, the ideal for which the noble Lord, Lord Beswick, with his customary force is doubtless contending. However, that is a matter of opinion. I hold it strongly, but I would go there with the noble Lord, Lord Robbins.


My Lords, may I ask the noble and learned Lord, are we to deduce from this that he is saying that it would not be possible to contemplate an amendment of this Bill because of the time factor?


My Lords, I am prepared to contemplate anything, even including Amendments, if they will assist the national interest. But any Amendments proposed by the noble Lord in the national interest must be judged by that standard, and they will be judged by the standard which I have endeavoured to state.

Now, my Lords, it being the case that nobody has suggested an alternative, and nobody has suggested that the matter is not urgent, I suggest it is not merely a question of not voting against the Bill because, as a matter of high constitutional principle the Labour Party do not vote against Second Readings; it is a question of not voting against the Bill because they know that it is necessary, and that is a very different reason from that which the noble Lord adduced at the end of his speech. There is one thing that the noble Lord forbore to say. I agree with him that a standstill of any kind causes injustice between man and man. Some people just get through the gate; the gate shuts without any justice in it at a particular moment of time and excludes other people. But what the noble Lord did not say was that we have chosen, very much against our will, to utilise a weapon as part of our ad hoc legislation which was enacted permanently on the Statute Book by the Statute of 1966 of the Government of which he was a Mem- ber. And if it was right for them, in a moment of national danger, to make permanent provision for a standstill, I do not think that they are really doing themselves justice by uttering too many ululations about the hardship which a standstill imposes between man and man.

My Lords, I debated the question of fairness in the Amendment to the Queen's speech. The noble Lord, Lord Diamond, debated the question of fairness in the Amendment to the Queen's speech. He made no attempt whatever either to refer to, or in any way criticise, my argument. We all agreed that during this period of standstill we must look for a consensus which is fair. But we must take account of each other's ideas of fairness, and I could see not the smallest trace in what the noble Lord, Lord Diamond, said that he was willing to take the smallest account of any conception of fairness except his own. Nor did he refer to the fact, nor would anyone, I think, infer from his speech or from the speech of the noble Lord, Lord Beswick, that, as I pointed out during the last part of the debate on the Queen's speech, the earnings of the average wage-earner have risen very much more quickly, in terms of real income, than they did during the Labour Government; and if one chooses to take the lower-paid worker—that is to say, the lowest-paid worker trying to live on £15 a week—I am told that the figure has been going up twice as fast in that period as for people with a more comfortable income.


My Lords, does the noble and learned Lord realise that his Government also "blued" £1,000 million pounds export surplus, and that, on that basis—"blueing" in a year £1,000 million export surplus—anybody can produce a little prosperity?


My Lords, I should like to know exactly where I stand in this matter. I was answering the noble Lord, Lord Beswick. He was not arguing, as the noble Lord, Lord Balogh, seems to be, that this was all done by the mirrors of export surplus. That is another general subject which again has nothing to do with this Bill. What the Front Bench of the Labour Party was seeking to do was to accuse us of not benefiting the lower paid worker; and that is factually incorrect. That was the only point I was on; it was the only point, I think, which has immediate relationship to the subject matter of this Bill.

Perhaps I should answer one or two of the other points made by the noble Lord, Lord Diamond. I do not think that this particular member of the Government is the person to let the "Gini" out of the bottle: my second name is not "Aladdin". I cannot understand why the noble Lord, Lord Diamond, if he wants this particular piece of esoteric information, cannot put down a Question; when no doubt he will be given an Answer. If the matter has not been published that is the right way to do it in relation to Treasury information. If it has been published, perhaps it is that he is only trying to catch me out. If so, the noble Lord succeeded, because I had never heard of the Gini coefficient until he told me about it, I think last time. At any rate, what I am told about it by those who know more about it than I do is that this is a very crude statistic since very different distributions between groups are consistent with the same value of the coefficient. Nevertheless, what I am told is that, for what they are worth, the latest figures show that the inequality of wealth, measured on this basis, has declined steadily since 1961, and the figures for wealth are published annually in Social Trends.


My Lords, I am sorry to interrupt the noble and learned Lord again, but the Gini coefficient does not refer to wealth at all; it refers to incomes—a very different matter.


My Lords, that only goes to show how foolish I was to try to answer Lord Diamond's question. I shall have to refer the noble Lord to my advisers. I do not intend to indulge in a dispute with him about matters which I am not fully equipped to handle. But I have given him the best information at my disposal, which evidently does not meet with his approval. I will only say that, as a matter of fact, there is a substantial body of informed opinion which does not agree with him and then I will stand down.

My Lords, I do not think we intended to say that inflation has only one cause. I do not think anyone has suggested that. I do not know how many noble Lords read the rather remarkable speech (I may not quote from it, owing to our rules of order) of my right honourable friend and former colleague, Mr. Reginald Maudling, on Second Reading of this Bill in another place, but he seemed to argue on these lines. You have to make up your mind in relation to a particular bout of inflation whether it is a cost push or a demand pull. He said that it was cost push, and I fancy, without committing myself to another bout of exchanges with the noble Lord, Lord Balogh, that I am in the same camp as my right honourable friend. He went on to say, as indeed The Times (which I think is slightly independent of him, even now) had also said in its leading article, that the cause of the cost push inflation, in so far as it might be said to be a major cause, was the monopoly powers of the unions. Again I expressed my own opinion about that last time. There is at any rate a respectable body of opinion that would say that the speeches from the Front Bench opposite, in which this fact was either obscured or denied, were really nothing more than a smokescreen if those be the true views they hold.

The noble Lord, Lord Diamond, said—and I agree with him absolutely—that people have to recognise that organised labour is one of the main Estates of the Realm. But I think organised labour must realise, as this House has had to realise at one time or another in its long history, that you cannot have it all your own way all the time. If you are going to ask to enter into discussions—and there is nobody who wants that more than the Government—you must be prepared some of the time to make concessions of your own; to recognise that there are other Estates of the Realm besides yourself; and to recognise that the immense inconvenience and damage to the public which can be imposed by a relatively small group of people is something which other people have to bear, and is a weapon which should be invoked only when the gain to be gained is commensurate with it. I think that a number of people who had to walk to work this morning might well be reading Lord Diamond's speech tomorrow with rather a wry smile.

One must recognise, my Lords, that in this world there has to be a little give-and-take. So far, I have not seen from the Opposition Bench the smallest recognition of the fact that we speak for a very large number of people; that we are very eager to enter into discussions again; and the reason why the discussions were broken off some days ago—a result which we deeply regret—was that it was said by one party that our proposals, which had originally met with the warmest praise from Mr. Victor Feather, were not even worthy to be treated as a basis for further talk. That being so, I do not know that I need say much more in reply to the speeches about the freeze. No case has been made against this Bill. Few, if any, legal points have arisen on its draftsmanship, and those, I feel, can be dealt with in Committee. I think that the House ought to be in a position to be ready to come to a conclusion.

On Question, Bill read 2a, and committed to a Committee of the Whole House.