HL Deb 13 March 1973 vol 340 cc159-289

2.55 p.m.

LORD DRUMALBYN

My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.

Moved, That the House do again resolve itself into Committee.—(Lord Drumalbyn.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 5 [Notification of price and pay increases, and approvals and consents]:

LORD BESWICK moved Amendment No. 19: Page 4. line 7, leave out ("may") and insert ("shall").

The noble Lord said: I hope we shall not spend an undue amount of time on this Amendment. It was gone over pretty thoroughly in another place, without, I am afraid, getting very far so far as the Government were concerned. If noble Lords will bear with me for a moment, perhaps they will look at my Amendment and the point in the Bill to which it is proposed to apply. The Bill as it now reads says: The Minister may, in such cases as appears to him appropriate, by order make provison to ensure that the agencies receive notice of…". I should not have thought it was going too far down the revolutionary or radical path to say that the Minister, in such cases as appear to him appropriate, shall make an order to make provision et cetera. That is not asking very much. I am not saying that in every case he shall make an Order. I understand, of course, that there will be a number of comparatively minor instances where it will be quite inappropriate to make an order. But the Bill does say "in such cases as appear to him appropriate", and I am asking that in such cases as appear to him to be appropriate he shall make provision to ensure that the Agencies shall receive notice of any increases in prices, charges or remuneration. I beg to move.

BARONESS WOOTTON OF ABINGER

I should like to support my noble friend's Amendment. As implied in what he said, the Minister still has wide discretion. He may find in a large number of cases that it is not appropriate for him to act, but when he does think it appropriate, surely it is incumbent upon him to do what he himself believes to be appropriate. I would suggest to the Government that they should be grateful to my noble friend. Far from trying to destroy the Government's Bill, which is so often the occupation of these Benches, he is actually trying to strengthen it, to put more teeth into it. I hope the Government will see their way to accept the Amendment.

THE EARL OF GOWRIE

The Amendment has been put forward by the noble Lord, Lord Beswick, and supported by I the noble Baroness, Lady Wootton of Abinger, with such grace and brevity that it seems to me very churlish to resist it. If I do so, it is really because the effect of it, as we read it, would be to make j it mandatory for the Minister to ensure I that the Agencies receive notice of increases in any prices, charges or remuneration, and to block all such increases in prices, charges or remuneration until the Agencies have considered them. The administration of this would be extraordinarily difficult. To make notification mandatory on the prices side would be impractical. As noble Lords will be aware, there are over a million enterprises in the United Kingdom, and I cannot see that it would make any administrative sense to overburden the Price Commission with an unmanageable flood of price notifications. In the same way, to block price increases across the board before they have been considered by the Price Commission would mean a continuation of the standstill and would have nothing to do with Stage 2 at all. I must ask noble Lords to reject this Amendment.

3.1 p.m.

BARONESS WOOTTON OF ABINGER

That seems a quite extraordinary reply, because the Minister has discretion and acts only where it seems to him appropriate. Therefore, all these innumerable cases which the Minister has said would present an obstacle are out of the picture altogether. He looks at the information j available to him and says, "In this case I it is appropriate for me to act". I should have thought that any honourable Minister, when he has to decide that it is appropriate for him to act, has the obligation to act.

LORD SLATER

My noble friend Lady Wootton is on a good point here. If the position remains as set out in the Bill, then it is leaving the Minister in a position where he becomes judge and jury at all times. On the other hand, if the Amendment is accepted, then it becomes incumbent on the Minister to follow the directions contained in the Bill. Even if the Act had to go before a court for interpretation, it is for the court to interpret what the Act really means, and not to decide on what is said here or in another place. In order to comply with this clause in this Bill, I think that the Minister ought to give way on this Amendment that has been so ably moved, and so ably supported by my noble friend Lady Wootton.

LORD WIGG

It seems to me that it is at this point that the Government begin to wobble a little in their thinking. Yesterday, in proceedings before the Committee, the Government took a firm view, and although I do not agree with it I understand the doctrine which caused them to act as they were doing. It is clear that they were influenced by what has happened in the United States. I think, too, they are influenced by the lack of success of the Labour Government. The fundamental difference between what happened between 1965 and 1970 and the policies which the Government are now putting forward is that the Prices and Incomes Board of 1965 to 1970 was entirely advisory. It had to wait until matters were referred to it. They sat, their powers were discretionary, and they did not look at the problems in any comprehensive way. What happened in the United States was that they freed their two Boards from the incubus of Government oversight, and freed them to make it clear that they acted as they thought best. If they thought, or suspected, that they needed information, they could seek it.

I quite agree, and have sympathy with, the point of view put forward by the Minister over what is involved in a change from "may" to "shall". However, I should have thought that the Government need to be quite clear in their mind if they want their policy to succeed. Having got the policy worked out by the Government with the approval of both Houses, the two Boards should be free to get on with it. At this point in Clause 5 it looks as though the Boards have to wait until the Minister takes note, and in cases that appear to the Minister appropriate, that he ensures that the Agencies will take account of what happened. What I want to happen, accepting the Government's policy up to this point and sincerely hoping that it is going to work, is that the Agencies shall then be as free as possible, and that we should get away from what was a basic weakness in the operation of the Prices and Incomes Board as operated by the Labour Government.

Mr. Aubrey Jones, two or three weeks ago, drew attention to this point. He said that the weakness in 1965 to 1970 was that the Board had to wait for reference from the Government. The Government have turned their back on that course. They are going to have a Prices and Incomes Board which has really got teeth, and therefore what they should do is to accept the logic of their own position and act accordingly. I should have thought that in that case they would either accept my noble friend's Amendment or, being conciliatory men—and I am sure that my noble friends would accept this—they will say that there is something in what we have been saying, they are a bit doubtful about how it will work because they do not want those Boards inundated with masses of irrelevant information, but that between now and the Report stage they would go away and see whether they could find a form of words more acceptable than those on the Marshalled List. I am sure that my noble friends would be willing to accede to the Government's view on this point.

THE EARL OF GOWRIE

I am glad that the noble Lord, Lord Wigg, underlined to the Committee the difference between the Price Commission and the Pay Board and the Prices and Incomes Board, and that these are not advisory but executive bodies. I must say that I am grateful to him for saying that. The noble Baroness, Lady Wootton of Abinger, shook her head during my explanation, and said that what I was saying would not be the case under the Amendment. But, as I see it, if one substitutes "The Minister shall" for "The Minister may", so long as one keeps "in such cases as appear to him appropriate", there is no real necessity for the Amendment as it stands.

More importantly, looking ahead I think that the Amendment would preclude the Government—this is where I want to answer the noble Lord, Lord Wigg, particularly—from voluntary notification policies, should this become desirable at some later stage in the policy. To put it mildly it would be undesirable to restrict the ability of the Government to operate a voluntary policy (which it has so long sought), at some stage in the future. We all know that maximum flexibility is being sought during Stage 2, and I must ask noble Lords to resist an Amendment which would all too literally freeze that possibility.

3.7 p.m.

LORD BESWICK

I hope that noble Lords have come into the Chamber with a fairly open mind, if one may so put it, and one will be interested to see how they vote. Although the noble Earl who has just replied for the Government has said that he has no wish to be churlish, with respect to him he is giving a very good impression of churlishness when he turns this Amendment down, although he has turned it down in a very kindly way. Does not the noble Earl understand that the sort of feeling that was generated on both sides of the Committee in the other place, and certainly among my noble friends on this side of the Committee, is that the Government are not too serious when they say they are going into this business of controlling prices and wages. When they wrap things up like this, The Minister may, in such cases as appear to him appropriate, by order make provision to ensure… it looks as if they are a little less than determined, or definite, in what they are setting out to achieve.

As I understood the noble Earl, in his second reply he is saying that if we

put in "shall" it makes very little difference when read in conjunction with "in such cases as appear to him appropriate ". In his first speech he was suggesting to us that in some way that was inhibiting the Government. I beg noble Ministers opposite—and they represent a very formidable array of talent—to appreciate that on some occasions it would be refreshing if they tore up their briefs and just exercised their own judgment. If they exercised it on this occasion, I am quite sure that they would agree with us that "shall" is more appropriate. It does not in any way tie the Minister. It does not add to his burden, because if he has already to consider which cases are appropriate, he has to look at all of the cases before he can decide which are appropriate and which are inappropriate. Therefore, if it has no negative effect it is just conceivable that it may have a better positive psychological effect, and I suggest to my noble friends that we go into the Lobby in support of this Amendment.

BARONESS WOOTTON OF ABINGER

I must just take up the point of the noble Earl, that this Amendment would block a voluntary policy. I cannot see that it would block a voluntary policy at all. First of all, the Minister has to consider: is this an appropriate case for me to do anything? Having decided that it is an appropriate case for him to act, what action is he compelled to take? He is compelled to send notice— no more—to the Agencies, in time for them to consider whether the proposed increases conform to the Code and whether they wish to exercise the powers conferred upon them. If the word "shall" is written into the Bill, there is no obligation on anybody to take any compulsory action at all except to notify the Agencies and let them consider the matter.

3.11 p.m.

On Question, Whether the said Amendment (No. 19) shall be agreed to?

Their Lordships divided: Contents, 62; Not-Contents, 95.

CONTENTS
Addison, V. Beswick, L. Burntwood, L.
Airedale, L. Blyton, L. Chalfont, L.
Archibald, L. Brockway, L. Champion, L.
Ardwick, L. Buckinghamshire, E. Chorley, L.
Clwyd, L. Leatherland, L. Shinwell, L.
Davies of Leek, L. Llewelyn-Davies of Hastoe, B. [Teller.] Slater, L.
Douglas of Barloch, L. Snow, L.
Douglass of Cleveland, L. Maelor, L. Soper, L.
Fiske, L. Nunburnholme, L. Stocks, B.
Gaitskell, B. Ogmore, L. Strabolgi, L.
Gardiner, L. Phillips, B. [Teller.] Strang, L.
Garnsworthy, L. Platt, L. Summerskill, B.
Geddes of Epsom, L. Popplewell, L. Swaythling, L.
Gore-Booth, L. Porritt, L. Taylor of Mansfield, L.
Greenway, L. Royle, L. Walston, L.
Hale, L. Sainsbury, L. Wells-Pestell, L.
Hanworth, V. St. Davids, V. Wigg, L.
Henderson, L. Seear, B. Wootton of Abinger, B.
Hughes, L. Segal, L. Wright of Ashton under Lyne, L.
Jacques, L. Serota, B.
Janner, L. Shackleton, L. Wynne-Jones, L.
Kings Norton, L.
NOT-CONTENTS
Aberdare, L. Dundee, E. Merrivale, L.
Ailwyn, L. Eccles, V. Milverton, L.
Albemarle, E. Effingham, E. Molson, L.
Alport, L. Emmet of Amberley, B. Monck, V.
Amory, V. Ferrers, E. Monson, L.
Ashbourne, L. Ferrier, L. Mowbray and Stourton, L.
Auckland, L. Gage, V. Napier and Ettrick, L.
Balerno, L. Glasgow, E. Nugent of Guildford, L.
Balfour of Inchrye, L. Gowrie, E. O'Neill of the Maine, L.
Barnby, L. Grenfell, L. Onslow, E.
Belstead, L. Gridley, L. Rankeillour, L.
Berkeley, B. Grimston of Westbury, L. Redcliffe-Maud, L.
Bethell, L. Hailes, L. Reigate, L.
Birdwood, L. Hailsham of Saint Marylebone, L. (L. Chancellor.) Rockley, L.
Braye, L. Ruthven of Freeland, Ly.
Brooke of Cumnor, L. Hatherton, L. St. Aldwyn, E. [Teller.]
Brooke of Ystradfellte, B. Hewlett, L. St. Helens, L.
Carrington, L. Hood, V. Sandford, L.
Clancarty, E. Hylton-Foster, B. Strange of Knokin, B.
Clifford of Chudleigh, L. Inglewood, L. Strathcarron, L.
Cole, L. Ironside, L. Strathclyde, L.
Colville of Culross, V. Jellicoe, E. (L. Privy Seal.) Sudeley, L.
Conesford, L. Kindersley, L. Suffield, L.
Cottesloe, L. Kinloss, Ly. Thomas, L.
Craigavon, V. Kinnaird, L. Thurlow, L.
Cromartie, E. Kinnoull, E. Townshend, M.
Daventry, V. Lauderdale, E. Tweedsmuir of Beihelvie, B.
Davidson, V. Lothian, M. Vivian, L.
Denham, L. [Teller.] Lucas of Chilworth, L. Wise, L.
Derwent, L. Lyell, L. Wolverton, L.
Drumalbyn, L. MacAndrew, L. Wynford, L.
Dudley, E. Mar, E. Young, B.

Resolved in the negative, and Amendment disagreed to accordingly.

3.19 p.m.

LORD BESWICK moved Amendment No. 20: Page 4, line 9, at end insert ("including any scheme making provision for the purchase of shares on specially favourable terms").

The noble Lord said: Just reverting to the last Amendment and having some interest in Parliamentary procedures, I should be greatly interested to know what proportion of the 62 who voted for the Amendment were in the Chamber when we had the discussion, and what proportion of the 90-odd were in the Chamber before they decided to go into the opposite Lobby to oppose that Amendment. We now come to another Amendment which I hope will appeal to the reasonable Members of your Lordships' House. Again, it is by no means a wrecking Amendment; it is a reasonable Amendment. I do not complain that there is no reference in the Bill to the matter of which I speak, because of course the Bill was drafted before the Chancellor of the Exchequer spoke in his Budget Statement about these special share schemes. But now that he has indicated his intention to encourage these special schemes for advantageous share purchases, I have no doubt—at least, I hope there can be no doubt—that the Government will wish to take account of them in this Bill. I should be satisfied if an undertaking could be given that some mention will be made of them in the Code.

The motivation behind these special schemes of which the Chancellor spoke is no doubt political, or could be said to be one of dogma, but I am not disposed to argue against the schemes on that account. This Bill is not concerned with the merits of share ownership, but it is concerned with the question of remuneration. If, as the Chancellor says, these special schemes will have the effect of providing an incentive to employees, then clearly there must be an element of remuneration in them. In the Code (a copy of which I do not have handy at the moment, although possibly my noble friends can help me) there is a reference to various matters which need to be taken into account by the Pay Board: such matters as certain pensions, seasonal bonuses, lunch or other meal vouchers, responsibility allowances, shift pay, night duty allowances, London allowances, geographical allowances, stand-by payments and so on. I am suggesting that if those are to be taken into account, then similarly the special schemes of which the Chancellor spoke ought also to be taken into account.

Noble Lords will recall that it was proposed by the Chancellor that certain employees should be enabled to buy shares at a 30 per cent, discount. It is not clear from the information given by the Chancellor or made public so far who is to make good this 30 per cent.; and I know that it can be argued that in the S.A.Y.E. provisions an employee making savings over a period of five years would receive at the end of that period a 20 per cent, tax-free bonus on his savings. Therefore I assume that one might say that these share schemes are of a kind with S.A.Y.E., but, of course, it is not quite so. In any case, there is an extra 10 per cent, bonus in these schemes under the Chancellor's proposals as made known; and here we are talking of an interest in an equity share which not only will be bought at a 30 per cent. discount but over a period of five years, at any rate, ought to represent more than the 30 per cent, discount.

As I say, I am not arguing against these schemes at all. I do not think they come as to merits within the scope of this Bill; but the Bill here and all the principles that govern the Pay Board as provided in this Bill are designed to ensure fairness as between one category of workers and another, and clearly, workers in, say, the National Health Service—those now protesting about their low pay—cannot be given an equity share in the National Health Service. Possibly a majority of the workers in this country are engaged in work for a private company or for a public service company and cannot possibly qualify for a special scheme of this kind. I am suggesting, therefore, that the Pay Board ought to be advised when a particular category of employee can benefit from these schemes, so that the decisions of the Pay Board can be taken in the light of all the circumstances. It is, I suggest, a reasonable proposal, and I hope very much that the Government will be able to indicate that they can accept it. I beg to move.

THE EARL OF GOWRIE

It is the Government's view that share option schemes, like the catalogue of allowances enumerated by the noble Lord, Lord Beswick, should squarely be regarded as part of remuneration in a counter-inflation context. We agree with the noble Lord there, and I am very glad to be able to do so. He also said that he would be satisfied if mention were made in the Code of these schemes, and I can give that assurance: the Code will cover these, and the Green Paper already does. Our quarrel with the Amendment is over the issue of including this provision, which raises difficult questions of vires. There is no doubt that in our view that it seems unnecessary to amend the Bill in this particular way, since paragraph 1 of Schedule 3 to the Bill already allows the meaning of "remuneration" under Clause 5 to be defined to include any type of fringe benefit, including arrangements for the purchase of shares by employees on favourable terms. So I must ask noble Lords to resist the Amendment.

LORD SHINWELL

Surely it goes much further than my noble friend Lord Beswick has mentioned. I must say that when I heard him speaking on this Amendment I was somewhat astonished, because he seemed to suggest that, in spite of all the talk of everything being fair— I use the expression used by the Prime Minister, who said "everything has got to be fair "—the directors of some of the food companies, for example, or of some of the manufacturing or industrial firms, might take advantage of their exalted position to obtain goods, even food, at reduced prices, thus seeking to circumvent the principles underlying the whole purpose of the Government in this measure. Or, for example, they might be able to get food supplied without any payment at all, rather as part of their remuneration, as something which goes with the job. It seemed to me that my noble friend was making a suggestion of that kind—a horribly suspicious concept, I must say. One can hardly believe that those associated with industrial firms, whether directors, managers, under-managers or anybody else, would dare to do anything like that—anything so (if I can use the language of the Bill) "inappropriate".

Of course, you never know what might happen. After all, people are tempted. One can understand that; and, appreciating the possibility of temptation, one ought to guard against it. In fact, we ought to insert in the Bill, "Yield not to temptation ". But as the Labour Opposition have decided not to inject into the Bill a phrase of that kind, perhaps we ought to agree about this Amendment in order to safeguard those people who might be disposed—I would not put it higher than that—to take advantage of an elevated position in industry, or in food manufacturing and distribution, to get something "under the counter ", a kind of black market. I am sure that the noble Earl who is dealing with this matter from the Government Front Bench would not want anything of that sort to happen, and in those circumstances, in order to exercise prudence and caution and to safeguard the interests of these people who are likely to be tempted, I suggest that he accept the Amendment.

LORD BESWICK

The noble Earl says, as I understand him, that share option schemes are, in effect, remuneration. That is accepted. I have said that they should be taken into account. The noble Earl says that they are mentioned in the Code. In fact, they are not in the list as set out in paragraph 113. If the noble Earl is referring to paragraph 112, all it says is: There shall be no new 'share option schemes. That is presumably during Phase 2. It is not clear to what exent the special schemes to which the Chancellor referred on Tuesday are covered by paragraph 112, and the noble Earl might well have made that much more clear. In any case, if the noble Earl is resting his case on what is said in an oblique fashion in paragraph 112, that cannot possibly refer to Phase 3 and onwards, and we are saying that as a matter of procedure and fairness throughout the life of the Price Commission and Pay Board these share option schemes shall be taken into account. At the moment they are not so taken into account, and although I hoped for some assurance from the noble Earl he has not up to the moment given us that assurance.

THE EARL OF GOWRIE

The new Save-as-You-Earn linked share saving scheme announced by the Chancellor surely could not be introduced until the Finance Bill has passed through Parliament and the necessary adjustment to the S.A.Y.E. system made. This would not be until the autumn, so the question of implementing the scheme during Phase 2 is not likely to arise. As to the other points, I should have thought that, as the noble Lord, Lord Beswick, himself said, these are questions to do with the Code rather than with the Bill.

LORD BESWICK

I must ask the noble Earl whether he will give me an assurance that this share option scheme item will be put in the list with the other items in paragraph 113 when the Code is drawn up as a final report. That is what I am asking. At the moment it is not stated in the Code that they shall be taken into account. As for the story about the S.A.Y.E. linked scheme not being operative until September, that, of course, I can understand, but we are talking about a Price Commission and Pay Board that will go on beyond September. We want these matters to be taken into account beyond September, and therefore in my judgment it had better be in the Bill rather than in the Code. But if the noble Earl cannot go so far as to say that he will accept the Amendment to put it in the Bill, then I ask him to give us an assurance that it will appear in this Code and also the Code which will apply to Phase 3.

THE EARL OF GOWRIE

We have asked for suggestions as to what should be in the Code and we welcome them. I welcome the suggestions made by the noble Lord, Lord Beswick. I thought I had actually given him the assurance he wanted that this would be in the Code. If I was unclear about that, I apologise and I now give him those assurances. I only repeat that in our view this is a matter for the Code rather than for the Bill.

LORD BESWICK

On the definite understanding that in the Code as applying to Phases 2 and 3 there will be a reference to this, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 [Powers of Price Commission]:

BARONESS PHILLIPS moved Amendment No. 20A:

Page 4, line 39, at end insert— ("( ) The code shall provide for a special panel in the Prices Division to deal with the prices of food and drink. The panel shall have power to carry out enquiries into all circumstances affecting the price of food and drink, especially fresh food, and shall have power to make recommendations for any special action designed to control the price of food including as considered practicable, if necessary, subsidies.')

The noble Baroness said: This is a very simple Amendment and therefore I feel certain that the Government will accept it. It is, of course, a practical Amendment. It carries the name of two noble Baronesses. Despite what the noble Earl said yesterday about voracious females, I cannot call him a "noble Chauvinist pig", but there is no doubt that as a sex we are eminently practical and this is offered as a constructive Amendment to the Bill. I have the unique opportunity of mixing daily in close contact with housewives who do the shopping. I know that we are told frequently that men are also consumers, and this is true, but in the question of determining how the budget is to be allocated it is still primarily the housewives who have to do this. These are the wives who are being told daily about a freeze, but when they go to the shops they begin to wonder where the freeze begins and what is being frozen. If counter-inflation is to work at all, as we have heard throughout the discussion on this Bill, it must above all be seen to be fair and just. The reason why workers take industrial action may be that they see a clamping down on their pay increases, many of which had been promised prior to the freeze and which they need, not to improve their standard of living but indeed just to keep at the level at which they are now, while at the same time the goods they have to buy are not so controlled.

If we leave aside the increases to which we are all subjected in rents, rates and cuts in services like school meals and school milk, it is important to appreciate that 31 per cent, of average family income is still spent on food—food such as perishables which are not included in the freeze —meat, fish, vegetables, eggs and bread. If we look at the other prices which are also exempt for a variety of reasons set out in the Consultative Document, for example, prices paid to overseas suppliers for imports or prices of goods where the application of the control would be inconsistent with an international agreement, it is not difficult to see why there are so many prices which seem to be increasing and why an explanation can always be advanced why price rises are legitimate.

If we take the case of canned meat, I found in a branch of a well-known multiple, Marks and Spencer, two weeks ago that it was on sale at 52p in one branch, at 49p in another, and at 47p in another. The explanation given to me when I asked for one was that it was new stock in one case—giving rise to the rather frightening thought of what the other was. The assistant further advanced her case by saying, "There is, of course, the situation in which meat prices have advanced". I rather timidly suggested that it was not canned last week. This is an example of an increase which obviously can be easily justified under either of the points which we have in the Consultative Document— prices paid to overseas suppliers for imports.

The Minister, Mrs. Fenner, when replying to a Question on coffee, said: Wholesale prices of soluble coffee were increased in September and October of last year but because of stocks bought at lower prices the full effects of this increase are only now showing up in the shops. The change reflects an increase of up to 25p in world coffee bean prices in 1972". If these prices are only now showing up in the shops, this is exactly the argument that can be advanced about wages. Wages are going down because prices continue to go up. There is no freeze which is workable.

Again, on February 15 the Minister explained the reasons for the increase in the price of fish. She said—and this is one of the explanations that really rather baffle one— Fish prices change essentially in response to fluctuations in supply, and supplies have on average been…4 per cent, below catches of a year ago…".—[OFFICIAL REPORT, Commons; col. 1423.] Why do we wait until this year for prices to go up if this situation has obtained for the last two or three years? This does not explain why frozen fish has risen. We get the feeling that there is an excuse every time. I am not prepared to accept this, but even if it were accepted that fresh food cannot be exempted, since there does not appear to be a separate retail price index for fresh food—and again I take the words of the Minister who when asked about retail prices of fresh food said that there is no retail price index for fresh food as such —how can a Price Commission check whether prices are being effectively frozen if they do not know which prices come under the price index? There may be an answer to that, but it defeats me as a simple shopper. I know that the Minister will say that there is already a Department concerned with price increases. I was interested to read that action taken under the Counter-Inflation (Temporary Provisions) Bill resulted in 200 price increases being withdrawn in December. Splendid ! But I believe there were about 200 price increases immediately prior to the introduction of the freeze.

The consumer has never been more alert to prices than she is now; for she has to be. I must say to Her Majesty's Government, as one who believes in a prices and incomes policy, that it will work only if it does not appear to be one-sided. I understand that the Price Commission will have representation from the retail consortia. What repre sentation is there to be of the consumers' interests? How far are the retailers going to see this as a short-term policy? Our system is based on a competitive method of trading. Only this morning I heard on the radio, as I understood it, a spokesman of the C.B.I, say that they were to go to the Minister to ask whether they could have some exemption from this heavy price freeze. We shall get further rising prices long before the wages will be able even to catch up.

I would say to the Minister that I can offer him some consumers who would be very glad to operate this panel which I suggest for nothing; so that there will be no need to add to the 700 extra civil servants and the £300 million cost of operating the two Commissions. With my noble friend Lady Wootton, I must confess that I am puzzled as to why it is necessary to pay a man £16,000 a year in order to keep down prices. It appears to me, as a mere woman, that you will keep down a greater number of prices through subsidies by utilising some of this money.

LORD STRATHCLYDE

This argument really refers to every family in the country. The noble Baroness is talking about wage earners. Some of us have been wage earners over a long period of years and we are suffering just as much as anyone else.

BARONESS PHILLIPS

The distinction I have been making is the old-fashioned one between those who work for a living and those who do not. There are not many people who do not work for a living. Whether what one receives is called wages or salaries is a matter of choice. I receive wages although I receive them monthly. The noble Lord presumably receives wages.

LORD STRATHCLYDE

Some of us have retired and have worked all our lives. The noble Baroness seems to be differentiating between those who are working today and those who have worked in the past.

3.45 p.m.

BARONESS LLEWELYN-DAVIES OF HASTOE

I should like to support my noble friend Lady Phillips on a slightly different aspect of this question of the rise in the price of food. We often forget the effect that the rise in prices has on our national institutions. I propose to keep this intervention as short as I can and to refer only to two kinds of institutions with which we are all very familiar. In the first place I refer to our schools. I think that noble Lords in general will agree that school meals are of immense importance to our growing and maturing children, physically and socially. When we think of that, I should like the Committee to consider the cost of food in one quite typical county in what is described officially as "model costing for four weeks for a kitchen serving 100 meals for children of about 11 to 15 years". The prices are based on the average for the whole county. I shall not weary your Lordships with all the different categories of prices; but I should like to take the main course—that is, the main protein dish, fish, meat, sausages and the like. Looking at these figures, we find that in April 1972 the cost was £76.50 and in October 1972, £85.12. In February of this year, after the freeze, the figure was £105.54. I want to stress that this is the main course only. Other fresh food like vegetables, eggs and fruit I shall not bother the Committee with. That is the effect on one very essential part of our national life, the schools.

Let us turn now to the hospitals. Again, I shall not weary the Committee with too many figures. I have taken mine from the official figures for the acute hospitals' costs of provisions per person per week. These show that between May 1972 and November 1972 there was an increase of nearly 6.3 per cent, per person per week. The official figures are not yet out for after November to February; but the unofficial figures from the catering establishments in the hospital show a further rise of 6 per cent. In other words, the figures show a rise of 12 per cent, in under nine months. These figures are very serious; but apart from the seriousness of them in themselves there is a sidelight on them which I think the Committee will be interested to consider. Noble Lords may not realise that the meals served in hospital canteens have to rise in price in proportion to the general cost of provisions in the hospitals. Many noble Lords will have served in one way or another in the administration of hospitals and will know of the devotion and loyalty of those hospital ancillary workers who feature so much in the Press at the moment. We know of their loyalty and we know of the gap of £8 a week between their average earnings and those of other workers in industry. Surely this rise in the cost of their canteen meals must have contributed to their general feeling of unfairness and unrest.

This poses the whole question of food subsidies which is what we have referred to in our Amendment. Who will eventually pay for this rise in the cost of provisions in the hospitals? Will it come out of the hospital's block allocation —that is, out of the other welfare, medical and social, of the patients? Or will it, in fact, eventually be paid by the Department of Health and Social Security? The same goes for the schools. I am certain—I do not think there can be much doubt of it—that, in fact, the rate support grant will eventually cover the increase. In other words, we are paying food subsidies. Why should these subsidies be hidden? Why should not the Government grasp the nettle and say, "We must accept the fact that we have to control food prices and that one of the ways of doing that is probably by food subsidies"?

Noble Lords opposite asked where the money would come from. If we are going to pay something like £300 million to keep up the price of food, because of the European Community's agricultural rules, why not pay a smaller amount and keep the price of food down? I believe that there are quite serious divisions in the Party opposite over the question of food subsidies. In the Standing Committee on this Bill in another place, honourable gentlemen on the other side argued for food subsidies. I think that this is a matter of common sense, apart from anything else. In our debate on Second Reading the noble Lord, Lord Drumalbyn, dismissed the possibility of food subsidies. One of his main reasons was that, like rationing, it was far easier to put them on than to get rid of them. To us on this side of the Committee that seems an inadequate reason for dismissing such an important way of controlling prices at such a desperate moment for the national economy and for the political and social health of the country.

I am sorry that the noble Lord, Lord Robbins, is not in the Chamber. He also dismissed food subsidies. In that marvellously beguiling and paternalist way of his he said that because of the misguided misconception of 80 per cent, of the population I suppose we must stomach a certain amount of unnecessary price control to make the prevention of inflationary pay claims at all palatable."—[OFFICIAL REPORT, 5/3/73; col. 894.] We do not mind how "illogical "—that is the noble Lord's own word—this may seem. We believe passionately that we cannot control wages, salaries, anything of that kind, unless we control the vital and essential basis of our lives, and that is the price of food. I do not believe that workers, their wives, those who want our national institutions to work properly, can conceive of them doing so unless we control the price of food.

During the Second Reading debate, my noble friend Lord Beswick said that we must change the social climate if this policy of the Government is to work. This was referred to over and over again during the debate yesterday by speakers on both sides of the Committee. We on this side have always tried to do this. We have tried to seek the proper social priorities. During the war and since, until a Conservative Government came in, we have always had food subsidies in an attempt to keep the whole question fairly organised. But what can one think of a Government whose only present attempt to curb the price of food is a zero rating of the Value Added Tax on sweets and ice cream—the very things that cause tooth decay in our children —and who raise the tax on tooth brushes, when the regular use of them is the only sure way to prevent tooth decay? No wonder the dentists sent a telegram of protest to the Government, pointing out that over 90 per cent, of British children suffer from unnecessary tooth decay. Imagine it—four tons of teeth extracted from the mouths of British people, mostly from the young ones, every year ! And this could be avoided. Yet the Government's only positive attempt to curb food prices is by this fringe, gimicky approach—iced lollies and potato crisps!

It is a question of social priorities, but that seems to be going by the board. It seems to the people, I believe, that luxuries are going down in price and necessities are going up in price. I do not believe that our people will accept the control of wages policy which the Government want to get across without the control of basic essentials like food. I think that this must mean food subsidies. So far, we have not heard any good reasons from noble Lords opposite why we cannot have food subsidies. If it is true, as it may well be, that they cannot subsidise food even at the peril of not getting their own counter-inflation policies across, because of their commitments under the Common Market, I think it is time that the British people were honestly told that. Then they could make their own judgment on the matter. In the meantime, we believe that our Amendment is right and we beg the Government to accept it.

3.56 p.m.

BARONESS YOUNG

It may be for the convenience of the Committee if I intervene at this point. We have all listened with great interest and attention to the noble Baroness, Lady Phillips, who moved this Amendment and was supported by the noble Baroness, Lady Llewelyn-Davies of Hastoe. I should like to begin by saying that we on this side of the Committee appreciate and understand the very real concern of housewives about the price of food, and no one does so more than I do as I shop each week for my family. We recognise that food prices affect every individual in the country and we have therefore given much consideration to the whole question of food prices within the counter-inflation policy. I hope that in the course of what I say in reply to the Amendment I can show that what the Government are proposing goes a long way to meet at any rate the first part of this Amendment.

It seems to me that, broadly speaking, the Amendment would have two effects. First, it would require that the Code should provide for the appointment of a special panel of the prices division to deal with the prices of food and drink. Secondly, it would specify the powers of the panel additional to those possessed by the parent Price Commission or price division of the Commission; namely, to carry out inquiries into the circumstances affecting the prices of food and drink, including fresh food; and secondly, to make recommendations designed to control the price of food including making recommendations for subsidies. I think that the best way to look at this Amendment would be to consider first what the Government intend to do at present and to see how far these intentions coincide with the objectives of the Amendment, and, in so far as the Amendment goes further, whether or not it is desirable to do so. I should therefore like to begin by explaining what it is that the Government propose to do.

First, paragraph 137 of the Consultative Document states that a special panel of the Price Commission will be set up to deal with prices of food and drink. It will exercise the functions of the Commission in relation to the whole range of food and drink manufactured and processed in the United Kingdom, including such semi-processed products as butler and quick-frozen vegetables. These foods cover between half and two-thirds of consumer expenditure on food and drink. Their prices will be permitted to rise only if allowable costs rise, and manufacturers will have to allow for the adjustment for productivity referred to in paragraph 19 of the Consultative Document in fixing prices. The gross percentage margins of distributors of food and drink-merchants, wholesalers and retailers—will be held to the level of the last complete account year, less an appropriate deduction for the abolition of selective employment tax.

The net profit margins of manufacturers and distributors of food and drink will not be allowed to exceed the average level of the best two of the last five years of account. Secondly, Ministers have already made clear that they intend to make use of the powers contained in paragraph 2(2) of Schedule 1 to instruct the Price Commission to keep the prices of fresh food under continuous review. It will be the Commission's duty to carry out these instructions, or to see that they are carried out. And may I say, in answer to the noble Baroness, Lady Phillips, that the prices of fresh food are recorded and taken into account in the retail price index; and my understanding is that the total percentage of household expenditure which goes on food is 20 per cent., of which 8 per cent. is on fresh food.

To return to what the Government are proposing to do, the Price Commission may also carry out, on a reference from Ministers, special inquiries into the circumstances affecting the prices of any fresh food or drink; that is to say, if there is some unusual price movement which comes to the Commission's attention, such as an increase in the price of fresh vegetables at a time of year when normally such vegetables are plentiful, it could investigate this. It is also envisaged that the Commission will establish a system of advisory committees, whose members would include representatives of consumers, and that it will issue regular advice and reports to the Press and public along the lines of those which the Ministry of Agriculture, Fisheries and Food has been issuing in recent weeks. These functions could appropriately be delegated to the panel in respect of food and drink.

The panel will clearly have to watch prices of all food, imported and home produced, if it is to perform its functions properly. It could not know whether the margins of the importers were complying with the Code unless it knew what the import prices were. If there are abuses in the pricing of any food product, and if there is a tendency to which the Commission feel that they should draw the attention of the Government, no doubt they will do so either immediately as a matter of principle or in one of their quarterly reports. I hope that I have said sufficient so far to indicate that the Government have done far more than simply fix a zero rate of V.A.T. for sweets and ice-cream, as suggested by the noble Baroness, Lady Llewelyn-Davies.

BARONESS PHILLIPS

If I may interrupt the noble Baroness, can she explain how canned meat is allowed to rise? I cannot follow that. I have tried to work out under which clause it would be permitted. The explanation did not cover that. It is not fresh food.

BARONESS YOUNG

I speak subject to correction, but I believe it would be because the contents would be imported. It would presumably be canned beef, and it would be imported beef, and therefore would not fall in these particular categories.

I should like to turn to the point about import prices, because I accept that there is a genuine problem here, but I believe that we should put imports into perspective. About half of our imports consist of raw materials and foodstuffs; we do not, and in many cases we cannot, produce within the United Kingdom various products. Of the rest, a significant proportion consists of vital capital goods. World demand for raw materials and foodstuffs is putting up the prices of these commodities all over the world, and, short of major international agreements, there is virtually nothing we can do to control world prices.

I have gone into some detail here because I want to show that what the Government intend to do is, I believe, close to what is proposed in this Amendment. It may well be argued that if the differences that divide us are so slight, we could accept the Amendment. But in the second part of the Amendment there are two difficulties of principle, and it is for this reason that we are unable to accept it. The Amendment is proposing that the panel of the Commission should have a statutory right to carry out inquiries into all the circumstances affecting the price of food, especially fresh food; and furthermore, that it should have the right to make recommendations on policies to control the price of food, including subsidies. This is asking it to do something which is far beyond the functions which the Agencies are to be created to perform. I realise that the question of food subsidies is a major issue of policy between the political Parties. We consider that whether or not there should be food subsidies is a matter for the Government and Parliament, and that it would be wrong to delegate such a power to a subordinate body of the Commission to take the initiative in making recommendations on such issues as subsidies. We believe that it would be wrong, also, quite apart from the constitutional impropriety of doing so, to introduce such an important issue as food subsidies in this way, and it would not be appropriate to do so through the Code.

Although I appear to have been critical of the latter half of this Amendment, I should like to return to the point which I made at the start. We, too, on this side of the Committee are fully aware of the anxieties and worries that people have over the price of food. I hope I have said enough to indicate that the Government's measures go a long way to meet the first part of the Amendment, and that we take most seriously the question of food prices within the whole context of the counter-inflation policy.

BARONESS LLEWELYN-DAVIES OF HASTOE

Before the noble Baroness sits down, may I point out that she dealt in the first part of her reply with the food that we produce in this country, and then went on to say that the question of subsidies was not suitable for the Agencies because it was beyond their function. One small but important item of food which we produce in this country is bacon, and 40 per cent. of the bacon that we eat in this country is produced at home. That used to carry with it a rather substantial subsidy, which made it easier to sell here. Now, because of our commitments under the Common Market, that subsidy has been removed. If the Agencies cannot function in this kind of way, and bearing in mind a large increase in the price of some home-produced food—a matter concerning which the noble Baroness said the Government were very close to us in worrying about and in being effective about (I must say that I disagree with her nevertheless), then, in spite of assurances, I really cannot see that the Agencies are adequate for keeping down the price of food.

BARONESS YOUNG

What I believe I really cannot see that the Agencies cerned, is that we have the control powers over manufactured and semi-processed foods, and also that the Minister would instruct the Price Panel to monitor prices of fresh food. I do not think I gave a guarantee that under this system we could keep their prices down. What I say is that they will be able to do this monitoring, and to see where it is going: and, of course, Ministers could give directions on the matter as they thought necessary. The difficulty of this Amendment is that it would give power to the Panel to make recommendations about food subsidies, a power which rightly should belong to Government and Ministers and not to a subordinate agency of the Government.

4.7 p.m.

LORD BESWICK

We were of the opinion that the Government were serious in their intention to do something about the cost of living, and when the noble Baroness says that we are actually asking for this Panel to be empowered to make recommendations, of course that is precisely what we are asking for. We are not saying that they should have the power to make laws or to lay down statutory requirements; but we are asking that a body which will have professional expertise, and will be in day-to-day contact with these matters, should have the power to make recommendations, among other things on food subsidies. The noble Baroness says that we are actually suggesting that this panel should have statutory powers. If this is such a wicked thing to suggest, what does the noble Baroness say is the meaning of paragraph 137 in the Code, which says that The Commission will also be able to carry out special inquiries…"? Is that a meaningful requirement, or not? And if it is a meaningful requirement, why should it not be in the Bill? What is there wrong about that? Is this provision in the Code something less than real? And if it is real, why cannot we see it set out clearly in the Bill?

There is a difference between us on one or two matters here. The noble Baroness dismissed the importance of food as an element in the cost of living, and I have no doubt my noble friends will be able to deal with that point in rather greater detail. But I would put this to the noble Baroness. Whereas she gave one figure about the element in the cost of living represented by the price of food, the fact of the matter is that there are several figures in this country. It is a very low figure when one is talking of the higher incomes groups, but it is a very high figure when one is talking of the low income groups. The lower the income, the greater the proportion of the income that is spent on food. Therefore it is most important that we treat this matter as a special one.

My noble friend Lady Llewelyn-Davies said that (I quote her words) "luxuries are going down and prices of necessities are going up". This, unfortunately, is the fact to-day. The price of mink coats will go down after April 1; the price of jewellery will go down after April 1; and the price of motor-cars will go down. But the price of food and other necessities is going up all the time. If you take the less essential foods, they are not going up so much. I read last week in one newspaper that champagne corks were popping at an ice-cream conference in Llandudno because they had been let off by the Chancellor. That is the case with ice cream; yet when it comes to fresh food, the real essentials, the noble Baroness says they cannot do anything more about it. Let us get these actual words right because they will become very familiar to Parliamentarians over the years. I will tell noble Lords what the Government are proposing to do about fresh food prices: they are proposing to "keep them under continuous review ".This is the extent of their action there.

We are suggesting that this panel should have the statutory power to make special inquiries into all aspects of food prices, and that they should have the power to make recommendations if they consider it desirable and necessary for certain foodstuffs to be subsidised. The noble Baroness dismisses subsidies as something which is between us as a matter of principle. I wonder whether the noble Baroness is really wise about that. Let me quote from the Financial Times of March 9, which says this: The use of direct subsidies rather than high market prices to support farmers' incomes, far from being a dirty word, is I beginning to be actively pursued. A clutch of proposals for direct incentives for beef production and direct support of hill farming areas is now under active discussion with a view to their introduction in the coming year. My experience is that there is usually more of an element of truth in what the j Financial Times reports than in most I other newspapers. I think they are latching on to what is happening and I believe there are a lot of practical people in Whitehall who are now beginning to realise that the obligations of the Common Agricultural Policy are really adding to our problems. The sooner we realise this and do something about it, the better.

I end by saying this. I have occasion now to look at wage costs in one industry and I have the opportunity to compare them quite closely with the wage costs of certain other industries. I have found that our wage rates, compared with those of some other European countries, have been quite low. They are going up, but they have been quite low and they are still comparatively low. That is because in the past our food prices have been much lower than those of countries on the Continent—I repeat, much lower— and they have been much lower because of the policy we have pursued since that famous Act of Tom Williams in 1947, which was designed to keep down the cost of food. Incidentally, it had the effect of keeping down our wage rates as well. What is happening to-day is that we are endeavouring to keep down wage rates while embracing the Common Agricultural Policy in other matters, and our cost of living is going up. We shall find it quite impossible to accept European costs of living unless we go some way nearer to the European wage rates.

We are suggesting that, with our social and political wisdom, our experience and techniques, we must endeavour to do something to ameliorate this apparently relentless increase in the cost of living, including the price of fresh foodstuffs. To that end, we did not put forward a very revolutionary or radical proposal. We put forward a quite reasonable suggestion that there should be this special panel referred to in the Code, and that not only should it have the power to look at all aspects of food prices and their relation to the cost of living but it should have the statutory right to make recommendations. It is not an unreasonable suggestion to make, and I am very sorry that the noble Baroness has not been able to indicate rather more clearly why the Government feel they cannot accept it.

4.15 p.m.

LORD WIGG

It seems to me quite impossible for a nation with a complex society such as we have to steer a course unless we have a constant and clear vision in our minds of the destination at which we are seeking to arrive. Obviously, there are influences at work trying to blur our vision and sap our faith. I should like to say this to the noble Baroness who has just spoken. I do not think I have ever heard a Minister who had a worse brief or who made a better job of it than the noble Baroness did. I believe that what she should have said was that the present Government have embarked upon a policy of dear food. This is a reversal of the policy that has been at the heart of our country's affairs for the last hundred years. It is idle to deny that this represents only the first instalment—it will not be the last one—of the Heath policy of going into the Common Market regardless of the consequences. This is the truth. Of course I sympathise with the noble Baroness and with noble Lords opposite, but they have not the honesty to say, "Of course we cannot accept a policy of subsidies because if we were to do so the cost would run into thousands of millions of pounds". We are, of course, the cockshy of all world prices. We do not control this or that, and we cannot do anything about prices.

I must say, as a practitioner of many years' standing, that I get a queasy feeling in my stomach when I think of Conservative Government's saying that we are at the mercy of world prices. They did not say that at the time of Korea when a Labour Government was on the verge of breaking through the post-war malaise and then found themselves at the mercy of world prices. But the terms of trade changed. The Conservative Government had the good luck and this is why they stayed in power for thirteen years. After the settlement of the Korean War the terms of trade remained in their favour, and now they thave turned the other way. In my judgment, the terms have moved against us. This is bad luck for the Government and it is even worse luck for the country. The terms have turned against us permanently. The Government have committed us at the worst possible moment, as a result of going into the Common Market. They are pursuing a political will-o'-the-wisp and they have gone for a dear price policy.

I should like to take a bet—my pocket is at the service of all noble Lords—that what will beat them on the Common Agricultural Policy is sugar. M. Pompidou has won his election, and these Gaullists, with their certainty of La Gloire and their certainty of the Kingdom of Heaven, have to pay for it by a beet sugar policy which guarantees them £90 a ton. Of course, sugar comes into costs as a basic ingredient of almost every food and drink that is manufactured in this country. I will tell you, free and for nothing, of the extraordinary situation that in Jamaica, which is a natural hot-house and probably the world's No. 1 primary sugar producer, you cannot buy a pound of sugar. Sugar has vanished, because the coming of the Common Market has stultified or prevented capital investment that would make the production of cane sugar acceptable to the Jamaicans. They prefer to be unemployed rather than to cut cane.

There is another figure which I should like to quote your Lordships. I did not look up the figures before coming here, but I am sure that this is right. Last year, Jamaica was 31,000 tons short in her quota to the United States. It was redistributed all around the Caribbean, so what is bad this year is going to be much worse next year.

There is another factor: both Russia and China have a rising standard of living. So far as the Soviet Union is concerned the post-war reconstruction' is over; the nurturing of their heavy industries has passed to the point when they can look to a rise in the standard of living. They are in the market permanently for sugar, coffee and grain which has an effect not only on the cost of the primary products themselves, but, even worse from our point of view, it forces up freight rates. As the bulk of our commodities have to be imported into this country the results in the long run are quite catastrophic. I sympathise with the Government when they say: "We are hesitant on the policy of subsidies". They do not know what they are letting themselves j in for. I would advise my friends in the I Shadow Cabinet of the Labour Party to do a little sum to see what they are letting themselves in for.

If prices continue to rise and we subsidise them, we shall have nothing on poor old King Canute when somebody said to him, "Stop the tide coming in". It would be far more honest of the Government to say: "Sorry, we cannot accept this Amendment because it runs right in the face of all that we have been trying to do. We have set down a policy of having higher food prices, and they are going to go even higher yet". We have got rid of "Rule Britannia" and "wider still and wider "—we are going to have food prices going "higher still and higher". We shall not reach the ceiling this year or next year. Prices will go on rising. Do not let us be mealy-mouthed about this. This is an act of deliberate policy on the part of the Conservative Administration. So when faced with the logical consequences of that policy do not whine about it—the bills can be paid by the British public.

I repeat that there is absolutely nothing that we can do about it. I would have preferred the noble Baroness to have curtailed the debate and to have said: "Sorry, this is not a runner; the price is too high. In any case, we are not prepared to give open cheques for subsidies". The Government believe in higher food prices, otherwise they would not have backed that policy. It is a deliberate policy of higher food prices and the public have to pay the bill.

4.22 p.m.

LORD SHINWELL

NO one would doubt the sympathy of the noble Baroness in this matter of rising food prices. She stated that the matter of subsidies was not one for an Agency, but was a matter for the Government. She was speaking quite correctly in accordance with protocol. Of course it is for the Government to decide on this matter of subsidies. Nevertheless, it must be obvious to her and to other Members of your Lordships' House that in deliberations on food costs, and their effects, the matter of subsidies might emerge. I should like to have an assurance from her that there is nothing to preclude the Agency concerned from deliberating on this matter j of subsidies and making a recommendation to the Government. If they are to be precluded from doing so they are going to be hamstrung; they are going to be circumscribed in a fashion that is not in accordance with the principles that are embodied in this measure.

There is nothing objectionable about subsidies. There has been a great deal of discussion recently about the effect of subsidies. I understand that some Ministers—not in your Lordships' House—in the other place and outside on the public platform, and on television, have declared that food subsidies would have the effect of introducing food rationing and the black market. I should be interested to know why anybody in the Government feels that that is likely to happen. Subsidies are part of the policy of the Government. We have had subsidies in connection with Rolls-Royce, and I am not objecting. We have had subsidies in connection with the nationalised industries, and I am far from objecting to that. Time and again subsidies are necessary for the purpose of introducing new equipment into a service or industry that is nationalised. Subventions are necessary. Sometimes when the Government agree to reduce a debt associated with the nationalised services that is a kind of subsidy. There is nothing wrong with subsidies. For many years now the agricultural industry has been subsidised. I have never objected to that because it was essential in the circumstances, otherwise food prices would have risen substantially. Therefore, if there is no objection to having subsidies, why should the Agency concerned not be so empowered if it wishes to raise the matter of subsidies?

One could imagine a situation like this emerging: the question of food prices is under consideration; world food prices come into question and members of the Agency are faced with an obstacle; there is no solution to the problem so they turn their attention to subsidies. Why should they not do that and make a recommendation to the Government accordingly? If that is -the position, or ought to be the position, why not mention it in the Bill? I endorse entirely what my noble friend Lord Wigg said about the speech of the noble Baroness. Nobody doubts her sympathy in this matter, but her conclusion was unsatisfactory. This Amendment was ably moved by my three noble friends from the Front Bench. I say that because my noble friend Lord Beswick came to their assistance, although I think they could have done it even without his assistance—not that there was anything improper in what he said.

But why make heavy weather of this as if it was something almost obscene? It is nothing of the sort; it is very desirable in the circumstances. I deplore what I have to say: food prices are going to rise. In my lifetime, or in the lifetime of anybody in your Lordships' House, I doubt whether food prices will be reduced to any extent. This is inevitable. In those circumstances, sooner or later either this Government, or some other Government, will be faced with the need to bolster up the finance associated with food prices. They may find themselves in circumstances which obviously turn in the direc tion of subsidies. So we had better start now and make a proper job of it.

THE EARL OF ONSLOW

Perhaps the Committee might like somebody involved in beef production to say why prices have gone up. It is important that we should try to understand the situation. The price went up in January to approximately £22 a live hundredweight. Prices are now back by about 15 per cent. to £19 a live hundredweight. Unfortunately, this price reduction has not yet been reflected in the shops. Perhaps the Government could comment on that. The figure of £19 a live hundredweight is approximately the same price which was reached at last June's peak. In June this year it will peak again. I venture to forecast that it will reach £24 a live hundredweight.

There are these cycles in beef production. There are four or five reasons for this acute rise in beef prices. First, there is an enormous rise in the E.E.C. consumption; second, there is the Japanese consumption; third, there is the seasonal shortage which I have already touched upon; fourth, the Argentinians are producing less and eating more, and possibly one of the worst reasons—and I say this as an ardent pro-Marketeer—is the fact that when the "butter mountain" was in existence the E.E.C. Agricultural Commission encouraged the slaughtering of dairy cows. Somebody failed to realise that a lot of cows are normally necessary to produce a lot of calves. Perhaps if we had then been in the Market we could have encouraged them to give the subsidy which was then being given for slaughtering dairy cattle to single suckled calves and increase the production of beef, which then perhaps might have gone quite a long way to ease off the price rise which occurred in January this year and which I am afraid will again occur in June. Grain is down, too; wheat is off the top; barley is down— due to the denaturising of the wheat—£6 a ton to £33 a ton. I apologise if this sounds like a catalogue of woes.

As the noble Lord, Lord Wigg, and also the noble Lord, Lord Shinwell, have said, to introduce subsidies now would surely be extraordinarily costly, but we may have to think of it. However do not let us actually put it into the Bill at the moment. Let us think about it later if it becomes really necessary. The only real way in which the rise in the price of food can be slowed down, and possibly halted, is by an increase in world production. This means an increase in the efficiency of French and German cattle farmers and a decrease in the efficiency of the Argentinians in their beef production. Of course, this particular increase in food production has to take into account not only the rising populations but also the rising standard of living all over the world, so food production has to go on at an even higher rate than it would normally do if these other factors remained constant.

LORD BESWICK

Would the noble Earl allow me to intervene? Supposing the production was increased, supposing the price on the market went down, would he not agree that at £14.50 per live hundredweight the intervention price operates, beef is brought up and taken off the market simply to keep up the price?

THE EARL OF ONSLOW

I honestly do not know the answer to that question.

LORD BESWICK

The answer is, "Yes".

THE EARL OF ONSLOW

The noble Lord may think so, but I do not know the answer. The continuous review mentioned by the noble Baroness, Lady Young, must be rigorous because, as the noble Baroness, Lady Phillips, has said, the rise in the price of food affects the lower-paid worker much more than any Members of your Lordships' House and those are the only people who are intended to be protected by this whole Bill. I shall not support the Amendment but I hope the Government will be particularly rigorous in their review of the price of food.

LORD WOOLLEY

I rather agree with the noble Lord, Lord Wigg, that a policy of directly subsidising food prices on his premises would be an impossible undertaking because if, as he assumes, and many others assume also, the market price is going to remain at the present level, and possibly increase as time goes by, then it would be, as it were, giving a blank cheque which it might well be impossible to honour. On the other hand, my experience in agriculture is such that I cannot be as certain as many people are about what will happen, because I have seen so many things happen that one would not have thought at all likely. Undoubtedly we are going through a period when a combination of natural circumstances has created very high prices, and not only in food commodities but in primary commodities generally. We are suffering very much as a great importing country.

It is of course true that our Government have, quite deliberately and with immense determination, headed for a system which, among other things, carries with it the necessity for a high food-price policy. This has been an act of national determination—almost of national obstinacy, one might say—but we cannot complain if the chickens come home to roost. We might have expected that they would have had a little more time to hatch out, even to grow a few feathers, but they are almost coming home to roost before they are out of the egg. On the other hand, there are many factors that have come about which cannot be held to be directly attributable to this remarkable decision to bulldoze our way, regardless, into the E.E.C. I think it would be a mistake to assume—and I certainly could not make such an assumption, although one could say that it is a probability that this high level of prices will obtain.

I agree with the noble Earl, Lord Onslow, about the factors in the beef situation. I do not know whether I would even prophesy as far ahead as he would with regard to what the price will be next June. Speaking personally, I might say that I hope he was right, because I happen to have a yard full of bullocks, but I am not at all sure. I do know this: that yard full of bullocks is worth a good many thousands pounds less at the moment than it was about six weeks ago. This is where we have had great strength over many years in agriculture. We may not have had our prices but we have had stability and a considerable measure of security, and this has been of inestimable value to agriculture. It has been the basis on which agriculture has been able to get the finance: the basis on which it has been able to develop, but this I am sorry to say seems to be something of the past.

However, time moves on and circumstances and policies change, but as regards the idea of a subsidy and as regards the Agencies having the power to look into the matter, I do not think I could go along with the noble Lord, Lord Wigg, in saying that this is completely outwith—because the prices are going to be so high this would be a complete impossibility. It may be that in looking at the circumstances they will also have to look at the trends of prices. If, as I believe is at least possible, these particularly high prices may be a somewhat temporary phase, then one can also hope that the restraint on wages is going to be a temporary phase and is not something for all time either. Surely what is now being talked about is a mechanism to deal with current circumstances which are extraordinary.

There are two elements that are extraordinary in the present circumstances: one is holding down the negotiations and the natural right of people to improve their incomes by negotiation and within the practicabilities of the economy. That is an unnatural thing anyhow. The other extraordinary and perhaps temporary thing, though not perhaps unnatural, is the very high costs that are crashing up against this restraint and causing very intense pressure, dissatisfaction and great unease. It is no use people trying to wash this away and to say that the people who are upset are being unreasonable, irresponsible and so on. Undoubtedly there are some elements that are irresponsible—there always have been and there always will be. But this is not true of the majority of people involved. Therefore I think that there is a case here for the Government to consider. This is a case that is outside the general principles by which, for better or worse, they are bound within the E.E.C. The E.E.C. is considerably responsible for the intense need to counter inflation. That makes it absolutely imperative that we should do this. By the same token it is also open to us to take the practical steps to enable `those counter-inflationary measures to succeed.

4.42 p.m.

BARONESS YOUNG

I should like to begin by reiterating what I said at the beginning: that we regard the whole question of food prices as a very serious and a very important one. Many noble Lords have spoken in this debate and I should like to thank my noble friend Lord Onslow for his explanation on beef prices. It gives us one example of how food prices move. Of course, the other examples that have been given by the noble Lord, Lord Wigg, are ones that are known to us all.

The debate has centred on the question of food subsidies. This subject was raised by the noble Lord, Lord Beswick, and the noble Lord, Lord Shinwell, and again I think by the noble Lord, Lord Woolley. There are several general arguments against the whole principle of food subsidies which I am sure do not need any detailed elaboration from me. One is that everybody benefits from a food subsidy, whether he really needs it or not, and it has been the Government's view that those who need the help are the poorer members of the community. That, I think, was a point that was made by the noble Baroness, Lady Phillips, in her opening remarks, and she pointed out that the poorer people spend a larger proportion of their income on food than do the richer. It is for that reason that the Government have increased the family incomes supplement to help those who are poorer, and have also increased the old age pensions. I myself do not feel that this is a matter for which I should apologise, because old age pensions have risen by 55 per cent. since 1970—or will have done when the further increase comes in in October. That is considerably more than the comparable rise in food prices.

LORD BESWICK

The noble Baroness makes the point about the increase in the family incomes supplement. Supposing a National Health Service worker gets a £1.90 increase, how much of that will he lose in the family incomes supplement?

BARONESS YOUNG

I must apologise to the noble Lord. I cannot give him an answer to that one immediately. But I will let him know what it is. However, it sounds to me as if he has the answer.

LORD BESWICK

The answer is that when one takes the reduction in the family incomes supplement at the end of the current year, and when one takes into account the loss of free school milk and so on, the National Health Service worker with a £1.90 increase will probably be worse off.

BARONESS YOUNG

That would be very much of a marginal difference. The point that I was making is that we have taken steps to help the poorer people and we are looking forward to our tax credits system which will get rid of many of these anomalies, although I recognise that that will not come in immediately.

Perhaps I could now turn quite specifically to the Amendment before us which I do not think we have really looked at in very great detail. I said in my opening remarks that there was very little between us in regard to the first part of this Amendment. The debate, I believe, turns very much on the machinery of the Price Commission and the Panel. As I understand it, what the Amendment is asking for is that the Panel should have a statutory right to make these inquiries and to make recommendations about food subsidies. What we are saying is that the Panel could, if Ministers asked it to do so, inquire into food prices and, as I understand it, could, if a Minister asked it to do so, inquire into subsidies.

It may well be thought that this is a distinction without a difference, but I suggest that there are constitutional points here and that it is for Ministers, for the Government and for Parliament to decide on questions of food subsidies and whether they should be considered or not. We should get ourselves into great difficulties if the Panel, which is to be a subordinate body of the Price Commission, had powers to make recommendations about food subsidies so that one arm, as it were, of the Government was making recommendations in this way on a very serious matter of policy. I hope that I have said enough to assure noble Lords in all parts of the Committee that we take this important question very seriously. I give the assurance once again that the Price Panel would have power, if Ministers requested it to do so, to undertake these inquiries and, if necessary, to look at the question, if they are asked to, of food subsidies.

LORD HOY

May I ask the noble Baroness one question? Is she saying that if the Ministers do not require it or do not ask for it, then nothing can happen? Will the decision ultimately rest with the Minister, so that even if the whole of the public in this country want an inquiry to be made and if the Minister does not agree, then it will not take place? Is that what she is saying?

BARONESS YOUNG

What I am saying is that the Price Panel has certain functions but that it does not have a statutory right to make an inquiry into anything and it does not have a statutory right to make recommendations about food subsidies unless a Minister specifically asks it to do so. But I do not see that on such a very important and sensitive issue as food prices any Minister would be unaware of what the feelings of the public are.

LORD HOY

Indeed, if the Minister is saying that the Ministers would not be so insensitive, why does she take steps to prevent the Ministers from doing it and for the public to have any recourse? The noble Baroness said this afternoon that if the Minister decides not to do it, then the public cannot ask for it. If, as she says, they are so insensitive about it, obviously she ought to leave some power to the public to ask for such an inquiry.

BARONESS PHILLIPS

I should like to thank the noble Baroness for rather alone, it seemed to me, having to battle on against several very powerful arguments coming from this side of the Committee. I should like to thank all noble Lords who have made helpful contributions to the debate, including the noble Lord, Lord Woolley, the noble Lord, Lord Wigg, and of course my noble friend (on occasions) Lord Onslow. I appreciate very much the explanation of why the price of beef has gone up. I find that shoppers are very unreasonable people: they do not want to know why prices have gone up; they want to know why prices cannot come down.

What I find very depressing in the replies given by the Government is the fact that we seem to be totally in a cleft stick. If the prices to be exempt are to be prices paid to overseas suppliers for imports, I come back to my canned food again. If it is to be all fresh food, I am rather at a loss; I was trying to think what I would buy that would not be exempt. In other words, I find the Price Commission is a piece of nonsense, because it is not going to control the very things for which people need more money. You cannot control a man's right to have a little more wages or salary—call it what you will—if at the same time his basic needs are increasing in price, for whatever reason.

I am interested in the debate about what is natural and what is unnatural. I am glad that the Argentinians are eating more—good for them! But cannot we produce more beef? This is a mystery to me. It is like that other "mystery", that if immigrants come in they are taking the houses. The answer, surely, is to have more houses. Cannot we have more bulls? It seems to me that there is one clear thread running through this problem. If you do not have some form of subsidy you will have rationing by price. It is as simple as that.

I was very sorry that the noble Lord, Lord Strathclyde, seemed to think that I was excluding the pensioners. I hope I have spoken enough times in this House to show that I feel very strongly about the pensioners. Of course, the percentage of income that they spend on these things will be much higher. Even with the noble Baroness's excellent explanation about family incomes supplements, would she agree that there is very little difference whether the Government subsidise on food or through a contribution to a man's income? I am sure there is a subtle distinction, but it defeats me at the moment. If we say that subsidies on food go to everyone, so do pensions; a retirement pensioner can collect his pension even though he may have quite a lot

of money. He is only subject even to the earnings rule if he earns. So I do not think a subsidy would ever be selected as the answer. That we must recognise. But we do know that if you have a low income there will be a proportionately higher expenditure out of that income on food. That seems to be basic.

The noble Baroness made reference to the fact that provision for the special panel was made in the Code. But she did make a very strong point, which my noble friend Lord Hoy mentioned, that that hinges on whether the Minister asks for it. It does say here that the Panel of the Price Commission shall be able to carry out special inquiries. Well, this is splendid; but I am not quite sure what is the point of doing the research if, at the end of the day, you cannot make any recommendations.

I do not feel satisfied about this situation, and I offer a solemn warning to the Government. You will not make this Counter-Inflation Bill work if you do not control with the same firmness the prices the people have to pay as you do the wages that they are able to collect.

4.55 p.m.

On Question, Whether the said Amendment (No. 20A) shall be agreed to?

Their Lordships divided: Contents, 46; Not-Contents, 103.

CONTENTS
Addison, V. Gaitskell, B. Royle, L.
Archibald, L. Gardiner, L. St. Davids, V.
Ardwick, L. Garnsworthy, L. Segal, L.
Arwyn, L. Hale, L. Serota, B.
Bacon, B. Henderson, L. Shackleton, L.
Beswick, L. Hoy, L. Shinwell, L.
Blyton, L. Hughes, L. Slater, L.
Brockway, L. Jacques, L. Summerskill, B.
Buckinghamshire, E. Janner, L. Taylor of Mansfield, L.
Champion, L. Leatherland, L. Walston, L.
Chorley, L. Llewelyn-Davies of Hastoe, B. [Teller.] White, B.
Davies of Leek, L. Wigg, L.
Douglas of Barloch, L. McLeavy, L. Woolley, L.
Douglass of Cleveland, L. Peddie, L. Wootton of Abinger, B.
Faringdon, L. Phillips, B. [Teller.] Wright of Ashton under Lyne, L.
Fiske, L. Raglan, L.
NOT-CONTENTS
Ailwyn, L. Berkeley, B. Conesford, L.
Albemarle, E. Bethell, L. Cork and Orrery, E.
Alport, L. Boothby, L. Cowley, E.
Amory, V. Brentford, V. Craigavon, V.
Atholl, D. Brock, L. Croft, L.
Auckland, L. Brooke of Cumnor, L. Cromartie, E.
Balerno, L. Brooke of Ystradfellte, B. Daventry, V.
Balfour of Inchrye, L. Caccia, L. Davidson, V.
Barnby, L. Cole, L. Denham, L. [Teller.]
Belstead. L. Colville of Culross, V. Derwent, L.
Devonshire, D. Hyton-Foster, B. Onslow, E.
Dibgy, L. Inglewood, L. Porritt, L.
Drumalbyn, L. Jellicoe, E. (L. Privy Seal.) Redcliffe-Maud, L.
Dudley, E. Kilmarnock, L. Rockley, L.
Dundee, E. Kindersley, L. Ruthven of Freeland, Ly.
Eccles. V. Kinloss, Ly. St. Helens, L.
Ellenborough, L. Kinnaird, L. Sandford, L.
Emmet of Amberley, B. Kinnoull, E. Sandys, L.
Exeter, M. Lauderdale, E. Seear, B.
Ferrers, E. [Teller.] Limerick, E. Somers, L.
Ferrier, L. Lothian, M. Stamp, L.
Gage, V. Lucas of Chilworth, L. Strang, L.
Gisborough, L. Luke, L. Strange of Knokin, B.
Glasgow, E. Lyell, L. Strathclyde, L.
Gowrie, E. Macpherson of Drumochter, L. Suffield, L.
Greenway, L. Massereene and Ferrard, V. Swansea, L.
Grenfell, L. Merrivale, L. Teviot, L.
Gridley, L. Milverton, L. Thomas, L.
Grimston of Westbury, L. Molson, L. Tweedsmuir of Belhelvie, B.
Hailes, L. Monck, V. Vivian, L.
Hailsham of Saint Marylebone, L. (L. Chancellor.) Mowbray and Stourton, L. Wise, L.
Napier and Ettrick, L. Wolverton, L.
Hanworth, V. Northchurch, B. Wynford, L.
Henley, L. Nugent of Guildford, L. Young, B.

Resolved in the negative, and Amendment disagreed to accordingly.

Clauses 6 and 7 agreed to.

5.3 p.m.

LORD WIGG moved Amendment No. 21: After Clause 7 insert the following new clause:

Special Cases

".—(1)A Trade Union or other organisation of workers (hereinafter called 'the applicant') may apply to the Pay Board for exemption from the provisions of the code concerning remuneration on the ground that they are a special case and the Pay Board shall determine whether the applicant shall be included in a list of Special Cases within seven days from the date of the application.

Provided that any applicant so included shall be removed from the list of Special Cases at the expiry of thirty days after notice given by the applicant in writing to the Pay Board.

(2) If the Pay Board determines that an applicant shall be included in a list of Special Cases the Pay Board shall be exempted in respect of the applicant—

  1. (a)from the duty imposed on them by section 2(1) of this Act to have regard to the code for guidance of Agencies,
  2. (b)from the provisions of section 7(1) of this Act to ensure that the provisions of the code which concern remuneration are implemented.

(3) The Pay Board shall keep under constant review the pay and conditions of any organisation ircluded in the list of Special Cases and shall take such steps as will ensure that such pay and conditions do not contrast favourably or unfavourably with the pay and conditions of comparable groups of workers.

(4 Where an application to be included in the list of Special Cases has been made under subsection (1) above the applicant shall not call, organise, procure or finance a strike of any of the workers represented by the applicant or organise, procure or finance any irregular industrial action short of a strike on the part of any of the workers—

  1. (a)for the period during the consideration of the application by the Pay Board;
  2. (b) while included in the list of Special Cases, until the expiration of a period of thirty days from the date on which the applicant has given notice in writing to the Pay Board of intention of taking any industrial action referred to in this section.

(5) For any period between the commencement of this Part of this Act and the establishment of the Pay Board the provisions of this section shall apply as if for references to the 'Pay Board' there were substituted references to the Secretary of State'."

The noble Lord said: We have now got to the point in the Bill when the Government have taken powers to move, subject to the approval of the House, a code of conduct. The two Agencies will come into operation, and the Pay Board will have powers to exercise the powers conferred by what will one day be the Act, in such ways as appear to them appropriate for the purpose of ensuring that the provisions of the code which concern remuneration are implemented". What I want to do is to give the Pay Board the opportunity to solve perhaps the most vexed question in relations with not only unions but groups of work-people who feel that they are special cases.

Last night, when we were almost at the conclusion of our business, my noble friend Lord Beswick was challenged by one of the leaders of the Liberal Party to say what he would do about the special case, where he would draw the line. I propose to endeavour to answer that question; indeed, I have done it in the Amendment I am now moving. If we can find an answer to this question—and it would be presumptuous of me to suggest that I have succeeded, but at least I have attempted it—we should be well on the way to reaching the American position. Indeed I think it is not unfair to say that that is what the Government have striven for. They have been greatly influenced in their change of front—and I do not say that unkindly—by what has happened in America. There they have attained that great prize. They have a cooling-off period, and they have power to deal with the special case. The Nixon Administration, having set up the two Pay Boards, let them get on with it. They can seek information or take decisions, and they can look at what cases they want, and for the first five months of the new policy in America things went quite smoothly. Then the unions pulled out. But one thing that has not been challenged is the cooling-off period. Even at the height of the American Election Republicans and Democrats both accepted it.

This state must come about in this country if there is to be a cooling-off period which is effective. If one looks at the problem, not through the eyes of the C.B.I. or the T.U.C. but of the ordinary citizen going about his or her daily tasks, the attractions are very great. The commuters waiting for a long time for trains that do not come, or waiting at a bus stop in a "go-slow", would find it greatly attractive if they could feel that at that point in our economy that makes the greatest impact on an individual's personal convenience disputes could be dealt with in a sane and rational way. That would be a large step forward.

I hold the view—not that I claim any specialist knowledge, but I certainly have a very great interest in it—that the state of negotiating machinery in Great Britain is really at the bow and arrow stage. One of the least competent of the Ministries—and here I suppose the responsibility must lie with successive Administrations and Ministries—is the Ministry of Employment. Of course their conciliation officers are amateurs in the extreme. Many of them are estimable people, probably recruited from employ ment exchanges and the like, and if they are to play a role of conciliation they will arrange a meeting place and see that the fires are lit, the cups of tea are made (or whatever form the light refreshments take); they will see that the blotting paper is put out, the inkwells are full, and the pencils are sharp. Turning now to the United States, there the conciliator is a well-trained man, earning a high salary and having a first-class brain. The result is that a tremendous number of problems which might lead to strikes are solved on the spot.

In the early part of this year I had some discussion with trade union officials in leading unions. I found that they felt exactly the same way, and proposals began to emerge which one hoped the Government would pick up. I went a little further with two of my friends—both well-known public figures, and one of them, a man of great wealth, I found was sufficiently interested to talk about raising some money to enable conciliation officers to be trained as specialists in the art of conciliation. This is something that has to be tackled if we are speedily to get away from the nuts and bolts stage. One can easily fix on a percentage and say 80 per cent. or 90 per cent., but I am certain that with trained conciliation officers a considerable number of disputes could be solved almost on the shop floor and before they ever reached the point where people began to feel angry.

I am not suggesting that my humble and very amateurish, but what I hope will be regarded as public-spirited, effort, should lay the foundation; but I am certain that I am expressing the views of officials of very powerful trade unions, on the one hand, and of employers—men of great influence—on the other hand, when I say that here is a gap to be filled.

I do not want to keep your Lordships too long, and if the principles upon which this Amendment is based are wrong I hope very much that the Government will go away and do a bit better. But what do I set out to do? Here I am very conscious of the point that was made by the noble Lord, Lord Byers, who administered what he thought was the coup de grace to my noble friend Lord Bcswick last night when he asked: How will you deal with the special case? My Amendment deals with the special case in this way. A group of workers who claim to be a special case must say so. They must say, "Looking all around us, we think that our industry is a special case." Let us suppose that they are representatives of the nurses, the teachers, the gas men or the hospital workers, because I am thinking not only in terms of current disputes but right across the board.

Let us take a group of workers, such as the nurses, who are probably not in a very powerful position. They are public servants of great integrity whom we all respect. The nature of their calling does not make them spend very much time on their pay and conditions. They are not militantly minded; they are people who are conscious of their duty to society, which they discharge admirably, but in the nature of things they tend to fall behind. The nurses' representatives would go to the Pay Board and say, "We think that we should be treated as a special case". The Pay Board would then look right across the board and see whether, in their judgment, the nurses were a special case. I take the case of the nurses because they are not actively engaged in a dispute; a state of war does not exist at the present time. The nurses would then say, "Thank you very much. You accept us as a special case and we, for our part, will undertake an obligation. If we are treated as a special case we undertake not to finance, to engage in or to organise an industrial dispute without giving 30 days' notice." So in becoming a special case, they accept an obligation. The privilege of being regarded as a special case carries with it the obligation, which they invite and accept, that there will be a cooling-off period of 30 days.

In return for that, the Pay Board would be under an obligation to keep the pay and conditions of the nurses under constant review. In my Amendment I have used the balancing words" favourably or "unfavourably", but of course I should hope that such workers would do slightly better than that, and that if it was difficult to compare them with other workers the Pay Board would look after them and see that they at least kept up with other people and perhaps even did a little better. So that to be regarded as a special group in the first place, the initiative must come from the group of workers and the Pay Board would be required to deal with the case within a period of seven days.

I say that because I am conscious of the current disputes, and the way to get a reasonably quick decision is to lay upon the Pay Board the obligation to deal with a case within a specified period. But there is no magic about the period of seven days, and if the Government said that the period must be 14 days or 30 days I should accept that. But there must be a limit of time after the Pay Board has said that there is a prima facie case, when a group of workers have said that they will not undertake strike action, and I have tried to use words which make the situation absolutely watertight. Of course—

VISCOUNT AMORY

Will the noble Lord allow me to ask one question? Under this proposal, would a special case always be a special case or would it be a special case until it had been considered?

LORD WIGG

The noble Viscount and I are old political opponents, but I assure him that if ever he puts down an Amendment I shall always do him the courtesy of reading it. If he will do me the courtesy of reading my Amendment, he will find that I have tried to deal with that point. I have tried to think round it and through it, because I realise the danger, but if a group of workers wants to get off the special list they must give 30 days' notice.

VISCOUNT AMORY

But if they do not give notice, do they remain indefinitely on the special list?

LORD WIGG

No. I say that they accept an obligation. The noble Viscount has much wider experience than I, and has access to professional advice which I cannot afford. But this point could be covered by way of a bond. There are many ways of tying this in. Once they have applied to go on the special list, there they stay until they come off and before they come off they have to give 30 days' notice. I have suggested a period of 30 days, because I think that there must be a cooling-off period of at least 30 days. But if somebody suggests 40 days, 45 days or 28 days, I will accept that. But once they are on the list, they stay there until they ask to come off, or at least they stay there with an obligation. In terms of the words I have used, it would be a legal obligation. If the noble Viscount is not satisfied, there could be a guarantee or something of that nature that would make them liable to civil action. I want to create conditions whereby groups of workers, the withdrawal of whose labour would make a fundamental impact upon the convenience and wellbeing of our society, will be put in a position of special privilege, but at the same time they will have a special obligation.

VISCOUNT AMORY

I have read the noble Lord's Amendment. I think he is now saying that, once a special case, a group will remain a special case unless unilaterally it asks to be taken off. The point to which I want an answer is whether the Pay Board itself, having dealt with the situation, could then say, "We do not think you are any longer entitled to remain a special case."

LORD WIGG

Certainly I have not provided in my Amendment for a group being discharged from the special list, but I should have thought that any Government would be only too glad for the list of groups of workers who would accept a cooling-off period to grow longer and longer. That is what I am striving for, because this is at the heart of the success of the American policy. By painless methods, by consent, we want to introduce a cooling-off period. In a free society, it is fundamental that men and women should have the right to withdraw their labour. The right to strike is absolutely basic and we must at no time do anything that impinges upon that right. But, equally, society as a whole has claims. Just as we accept privileges we must also accept obligations, and the obligation here balances the special privilege that the Pay Board will look right across the board at a particular trade union group. But if the noble Viscount has any hesitancy on that point, I shall gladly meet him. I have no objection whatever to saying that, if for some reason which I cannot foresee, the Pay Board wanted to kick somebody off the special list, it could do so after giving notice. But I should have thought that to get groups to accept a cooling-off period deliberately and voluntarily, was the very object which the Government had in mind.

Having adumbrated the policy which has been stirring my thinking for some time, may I say at once that of course I have been influenced by the current difficulties—the difficulties of the gas workers, the hospital workers and the like. Again, it would be utterly unfair for me to claim specifically that I have the support of this group or of that group, but I have paid them the courtesy of sending them my Amendments and inviting their comments, and I think I can rightly say that they were not unfavourable. I claim to speak for nobody but myself in advancing this proposal, but I have drawn my Amendment in terms to deal with the current difficulties. I realise only too well that when you have a state of war and active operations are under way it is very difficult to draw up the terms of an armistice and to apply them with just a snap of the fingers.

Therefore, what I have in mind is this. There is going to be a gap between the passage of this Bill through this House—it will have to go back to another place—and its receiving the Royal Assent. So what my Amendment does is this. In subsection (5) it confers on the Minister the power that the Pay Board will subsequently have. So let us say that the hospital workers, for example, said, as they do say, "We should be treated as a special case". Then they would make an application—and the Government have indicated that they want the Pay Board, even before it is formed, to get on with the job. They would make an application to be treated as a special case, and if the Pay Board thought there was something in it—and they would look at the problem not only in the terms of the current dispute but in the long term—they would say, "All right, you can come on the special cases list". Then the Pay Board would presumably tell the Minister, under whose umbrella they are working at the present time, in which case the Minister would then be able to act and they would be accepted as a special case. But by marking the application to the Minister officially—this is the point—they would accept the obligation of the cooling-off period, so it would make it possible for industrial action to be suspended forthwith.

Again, of course, it may well be that in my clumsy, bumbling efforts to deal with the long-term policy and the short-term difficulties I have slipped between two stools, but what I have endeavoured to do is to think out a long-term strategy which will deal with those who claim to be special cases, and to draw the line. This is the difficulty that is constantly presented, not only by the leaders of the Liberal Party but by the Government: that if you let one special case through you let the lot through. Or, where do you draw the line, and how many more will you let in? In this case, the more that come into the net the better, because the more that come in the longer the list of those who have accepted the obligation of the cooling-off period. It seems to me that this is where we have to aim. I am not making any political point, and I am not making any point which is unkindly individual, but it is perfectly clear that the Government have changed their policy. We are all entitled to change our policy: Mr. Wilson changed his policy. Of course, there was a difference in the reactions of Mr. Heath and Mr. Wilson at the point of changing their policy.

I am prepared to accept that the Government are as convinced now as they were convinced in the opposite direction when they first formed their Administration. I am absolutely sure that the Government want to make this policy work. I am completely sure about it as regards the Leader of the House. I accept his sincerity without any question. I have watched him very closely during the last couple of days, and I am sure that there is no man in this Kingdom who is more anxious to make this policy work, and more conscious of the difficulties involved in doing it, than is the noble Earl, Lord Jellicoe. I want to help him. I am not one of those who believe that the heavens are going to fall if inflation goes on. That does not bring down nations. But what will happen if inflation is not cured in this country is that our democratic institutions may be called into question, because a society which, as I said yesterday, remains helpless in the face of grave economic difficulties is a ship without a rudder. Therefore, we all have an interest in so far as we accept the concept of democratic institutions. We all have a direct interest in seeking to make this work. I accept without any question that the Government want to make it work.

I am not throwing any bricks because their conversion was of recent date. I am absolutely certain that they have been no more than clumsy in their handling of the trade unions. I wish that in their discussions with the trade unions they would go back to fundamentals and discuss principles rather than a take it or leave it "attitude. But, again, I understand the difficulties. If they meet the trade unions, as they did last autumn, and think they are near agreement, and then find out that the trade unions want to discuss taxation and industrial relations, that is because the union membership —and, after all, union leaders are under tremendous pressure from their membership—is interested in those two subjects. When they come out of 10 Downing Street, no matter what they have agreed inside they have to present it in terms which are acceptable to their membership. Therefore, they have to be very conscious of that and have to raise these subjects. If they do not, they are destroying their own influence with their membership. They are just forced to do it.

Likewise, of course, the Government, too, when they have taken decisions, when they have finished discussions with the trade unions, are answerable to a wider electorate than the trade unions. Of course they are going to talk to the Confederation of British Industry. But their accountability goes far wider than that. I hope noble Lords will bear with me in this. A Government, when elected, have just commanded the Election they have got power. But obtaining power and putting their policies into operation are very different, because in all societies, be it Hitlerian, Stalinist or a democracy such as our own, government is always by consent. You get the consent in different ways—Hitler by the concentration camp, Stalin by terrorist methods. Here we do it by persuasion: but the Government suffer from a grave disability. So does the Labour Party. The disability is that you have a Press in this country and a media which is the reverse of objective. They do not see that a free Press and a free media in a free society have a fundamental task of educating pubic opinion; and every time they gloss it over, yes, they hurt the Labour Party, but (and this is perhaps God in his wisdom) the toll is exacted—they also hurt themselves.

Now, with the difficulties that are around us, we may be in sight of success. As I say, the Government, having backtracked, have now looked for help and inspiration to what happened in the: United States. I have had a look at it, 'too, on the spot. Of course, I have not got the access to information that the (Government have, but I used my powers of observation and I talked to people of influence. I have seen what the weaknesses are and how it works, and then I have looked to see what the problem is here. The problem here is amateurish conciliation machinery. But you have, on the one hand, the unions willing to develop a professional approach. They are most anxious to do it. On the other hand, I believe that the more enlightened employers want to do the same. That, I believe, would bring about fairly quickly, over a period of the next year or two, an enormous improvement in industrial relations in this country—a competent professional approach by highly-trained practitioners.

Then the question is how to deal with these points where the shoe rubs; the groups who claim to be special. When you look at their problems through the spectacles of intelligent men wanting to be fair, one must admit that they have a case. If I were a hospital worker, a gas worker or an engine driver, I should feel, and would probably react, in the same way as they do. But, equally, if I were a commuter, and not the fortunate possessor of an old car, I should feel as a commuter must feel, or as the woman who has to wait in the queue must feel, or as a patient who cannot get a bed in a hospital must feel. This is an effort to deal with the problem of the group which claims to be deserving of special treatment and to do so without opening the floodgates and creating the difficulty that if you admit one case where do you draw the line? I have tried to draw the line by putting the onus fairly and squarely on the groups themselves to make their claims. They claim to go on the list. If they go on the list the privilege they claim—and this is good democratic practice—is balanced by the obligation they undertake to society as a whole not to withdraw their labour without a cooling off period. I beg to move.

LORD DAVIES OF LEEK

It is a pleasure to support my noble friend. I shall be very brief. I do not want to make a Second Reading speech, but this has been an exercise in the art of conciliation. I have listened carefully to what my noble friend has said, and even if there is some drafting that does not quite fit in, nevertheless the purpose of the new clause is crystal clear. If I may use a figure of speech, its purpose is to be a social shock absorber in conciliation with special cases and low paid workers. That is putting it briefly. In the Bill as we have it, the Pay Board will approve or reject any proposed increases in accordance with the Code, though within this Bill the Minister concerned will be able, I take it, in exceptional circumstances to approve increases which may have been turned down by the Board. I understand that that exception also applies to the Price Commission. We are asking here that these special cases should be attended to. The noble Viscount asked my noble friend a question. I followed carefully the answer, and it is quite clear what will happen to the special cases over a 30-day period. It will have established a cooling-off period. It will also have its effect among the lower paid workers, some of whom have had a marvellous record of industrial peace for half a century, but who have suddenly become bloody-minded because of lack of information. That is one thing that we are paying the price for.

This Bill, we know, is modelled on American thinking and it is noticeable that the leniency of the Price Commission is in striking contrast to the severity of the pay control in the Pay Board. My noble friend's Amendment is an effort to achieve this cooling off period. If we are told that the Government do not like this phraseology I hope that before they reject it, or indeed if they accept it, that a formula will be introduced into the Bill to make clear that we are struggling to find an answer to this problem of social peace and the cooling off period. One of the things we are paying the price for to-day is the apotheosis of the planner, the apotheosis of the technocrat. They are becoming remote from the people at the point of production. Our social systems are spinning out of control because of the remoteness of people in swivel chairs drawing up and drafting Bills. This is where draftsmen and those of us in Parliament can get near to the people who are feeling the social cost of underpayment. There are dangers—political, cultural and psychological currents—being let loose in society, and passivity is passing because of neglect.

I would therefore beg the Government to look at the essence of this matter, because with all due respect I think there is a dash of creativity in the new clause that my noble friend has moved. It would help to quieten down or, shall I say, reduce the rising levels of uncertainty about the underpaid workers that are produced in society by the terrific acceleration of change which we are meeting to-day. I hope therefore that this Amendment will not be turned down in a peremptory manner, but that it will be dealt with in much the same way as my noble friend has drawn it up. He has obviously given a lot of time to this question and I am grateful to him for having presented to the Committee the opportunity of discussing it.

5.35 p.m.

VISCOUNT HANWORTH

I feel that this Amendment has an clement of inspiration about it, and though I do not suppose for one moment that the Government can accept it as it stands, I would appeal to them at least to give serious thought to it because we are dealing with a problem for which there is no obvious solution. As everybody has said, in the end you cannot fight a battle which neither side can win. It is this sort of confession—it is not even a confession—that might just free the atmosphere and start something better again. So I say once more, as has been said by the noble Lord, Lord Davies of Leek, that the Government should look at this matter really seriously, and perhaps discuss it or the possibility of it, later on with the trade unions.

5.36 p.m.

EARL JELLICOE

I should like to assure both the noble Lord, Lord Wigg, and the noble Viscount, Lord Hanworth, that I would be the first to agree that this matter touches on a very real problem, and I think it does so with a consider able degree of ingenuity and more than a dash of imagination. But I think the noble Lord, Lord Wigg, said he had thought round this problem and through it in drawing up his Amendment. I have thought round it and through it, though not to the same extent that he has, in considering his Amendment and reflecting on what he has said. I am going to say some softer things in a moment but I think it would be right for me to say that I am rather reminded of what he said to my noble friend Lady Young, to the effect that it would have been better in rejecting an Amendment if she had come out straight away and said, "No, this is not a runner. I am terribly sorry, but it runs counter to a very great deal of what we are about".

The idea which the noble Lord, Lord Wigg, has adumbrated could, I suppose, at a certain stage be a runner. I do not think it is a runner now; in fact I am quite certain it is not a runner so far as the Government are concerned. I think I must say why, because the Amendment has been seriously moved and seriously supported. The noble Lord, Lord Wigg, said that the Amendment was intended to bite upon our current difficulties and upon the present situation; and that is a situation which, if this Bill goes through, finds us on the verge of Stage 2 of our incomes policy. My first objection to the Amendment is that acceptance of it would, I am quite certain, despite what the noble Lord, Lord Wigg, has said, drive a coach and horses through our announced policy not to admit special cases during Stage 2. It is a comparatively brief stage, which starts at the end of this month or the beginning of next month and ends in the autumn.

I have made it clear on a great many occasions recently that we accept that the combination of standstill in Stage 1 and of the ceiling on pay increases in Stage 2 —a very different matter—will leave some groups with a real feeling that they have been treated harshly or unfairly. I accept that. I have also made it clear that not only I personally—which does not matter very much—but the Government are not unsympathetic to these cases. Your Lordships have shown that you are not unsympathetic to these cases. We are all aware of them, well aware of the trouble they are causing and the trouble which flows from them. Nevertheless, I sense that a great majority of your Lordships agree that it really is in the paramount national interest to bring inflation under control. That being so, we are not in a position to allow special cases under Stage 2. I, personally, entirely share the view of the missing doyen of the Liberal Benches, the noble Lord, Lord Byers, that one special case breeds inevitably another and that the admission of one is therefore likely to lead to the torpedoing of the anti-inflationary vessel almost before it is launched.

As I see it, despite what the noble Lord has said, the acceptance of his Amendment would mean acceptance from the start of Stage 2, whatever the safeguards, of precisely such special cases. I believe, despite what he has said, that it is bound to open the flood gates. Moreover, I very much doubt whether it would lead, that being so, to one objective which I think he has much in mind and which we all must have very much in mind, the lightening of the present murky industrial relations scene. If some special cases were accepted and others rejected —and this is bound to happen unless all are accepted— fresh grievances will arise which will give ground to further disputes and tensions within our industrial society.

I am the more confident in advising your Lordships to resist this Amendment because I am convinced that the way forward which the Government have proposed is the right one. We recognise that the concept of fairness is at the root of this problem and to a large extent this turns on the problems of relativities and anomalies (and I wish we could get away from this jargon) within groups of employees and between employers and employees. As the noble Lord, Lord Wigg, has said, this is perhaps the most vexed problem that we have to grapple with. This is one of the real nettles that we have to grasp in industrial relations.

We have decided to seek the help of the Pay Board in their advisory capacity to assist the Government in devising guidelines under which cases of this kind can be considered in relation to Stage 3. This is one of my difficulties over the Amendment of the noble Lord, Lord Wigg; for I see in it no guidelines which would help the Pay Board in deciding whether or not to admit a special case. The only guideline—and I hope that I am not being unfair—is whether or not a group of employers or employees are in a position to cause great difficulties for our society.

LORD WIGG

Not "great" difficulties. I took the nurses. If the noble Earl wants to put me on the spot and to think of another group, I invite him to do so. The nurses are quite a small group, badly organised and highly regarded, a group whose services, if withdrawn, would tear a gaping hole in our society. This House ought to give them the opportunity of opting out from industrial action and, in return for opting out, they would be given the privilege that their pay and conditions would be kept under objective review by a body in which society as a whole will have the complete confidence that it does not have at the moment.

EARL JELLICOE

I take the noble Lord's point. I think I had already taken it. I understand that the opting out would be short: only between thirty and forty-five days—whatever the period may be. The noble Lord, Lord Wigg, called in aid the nurses. I do not want to say anything that is going to inflame or further trouble our already troubled industrial scene; but since we are on the subject of hospitals let me refer to the National Health Service ancillary workers whose problems we read about every day in the newspapers. Let us take them. What we suggest is that if, as a result of the coming down of the chopper or the drawing of the frontier between the standstill and Stage 2, there is a problem of unfairness affecting that group of workers, this problem should be looked at, and looked at straight away, by the Pay Board. We propose that that study—it could embrace whole groups of workers and employees and need not be confined to those who are taking industrial action of one form or another at the present time—should have a high priority.

Formally, it must await the Royal Assent to this Bill, but I should like to remind the Committee that my right honourable friend the Secretary of State for Employment has already announced the proposed terms of reference for that study. He has already said that he is proposing to appoint Mr. Derek Robinson as Deputy Chairman of the Pay Board with special responsibility for handling that study. I think that those who know Mr. Robinson and who know of his knowledge of Whitehall, of the industrial scene and of the unions, know that he is admirably qualified to undertake that particular study. I should like to add that the Pay Board will be asked to report as soon as possible (and in any event not later than mid-September) on the treatment of those cases where anomalies have arisen, and particularly those which have arisen as a result of the impact of the standstill on groups like the hospital workers or the gas workers whose pay is linked with other settlements or other groups; for example, the Civil Service, whose pay is linked by formal procedures such as Pay Research for comparing their pay with other groups.

I am sure that this is the right way to proceed now. We need now to get at the facts and to get at them urgently, but we need to consider them as they affect one group of workers in relation to others. Only by proceeding in this way can we avoid a repetition of all that endless leapfrogging of wage claims to which we have all become far too well accustomed. It is also, I believe, the fair way of proceeding: to deal with these problems not in isolation, not as special cases, not singled out: on their merits but also in relation to the merits of other cases.

Meanwhile, those who feel aggrieved (and some have cause, possibly, to feel aggrieved) will be eligible for the April 1 or earlier (but not later than April 1) increase, the 4 per cent. plus £1—something between 7 per cent. and 8 per cent. This is an increase in pay not to be sneezeed at. I would also emphasise that once again we recognise the need for getting on with this study and we recognise the need for proper consultation. That is why the Board will wish to take full account of any view which individual citizens, employers or organisations such as the C.B.I. and the T.U.C. might wish to put to them on the matters covered in the terms of reference given to the Pay Board. My right honourable friend the Secretary of State for Employment has made it clear that the Pay Board in its present embryonic form is ready to receive that evidence. That we believe to be the right way of proceeding now at this stage in relation to what is termed the special cases.

In conclusion, to come back to what the noble Lord has said, I should be the first to agree that the proposal that he made is a far-reaching and a radical one. I think that what he has said about the need for improvement in conciliation machinery gives plenty of food for thought for us all. I would tend to dissent from what he has said about some of the conciliators, for some of whom I have the highest regard, and from what he has said about the cooling-off period and about this problem of matching power and responsibility in our industrial society, which is a very real problem. I believe that there may be a germ of an idea here which could be further developed. I am certain that this stage of the policy is not the moment for it, but I will undertake that the noble Lord's ideas will receive the due consideration of my right honourable friend the Secretary of State for Employment.

LORD BESWICK

I am sure we all appreciate the spirit in which the noble Earl, Lord Jellicoe, has replied to the case which my noble friend Lord Wigg has put forward. I was going to say that I agree wholeheartedly with what the noble Earl said. He told us he was quite certain that this was not a "runner" so far as the Government were concerned. It is the fact that the whole attitude of the Government, as distinct from the whole spirit of what the noble Earl was saying, has been absolutely negative and against the sort of creative approach which the noble Earl has shown.

EARL JELLICOE

I dislike intervening so early in Lord Beswick's remarks, but may I say that, whatever the inflexion in my voice may have been, what I was saying was square in line with Government policy.

LORD BESWICK

I do not know about the inflexion in the noble Earl's voice; I was referring to the words he used, and I was complimenting him on them. I meant that quite sincerely. I thought that the noble Earl had seized the essence of what my noble friend was saying and was responding to what he said. I said, and I say it again, that there is a difference —the noble Earl will have to take this—between his spirit and the action of the Government of which he is a member.

EARL JELLICOE

I must interrupt the noble Lord, Lord Beswick, to say again that there is no difference whatsoever between the policy which I have advanced and that which Her Majesty's Government are following.

LORD BESWICK

I am sorry that when I try to force a compliment down the throat of the noble Earl he should seem very reluctant to accept it. Here we have been talking about special cases and the difficulty in dealing with a dividing line. As my noble friend Lord Wigg said, there are some people in the Cornmittee who find it difficult to draw a dividing line. I agree, it is so much easier to say, "No"; to have no dividing line and to say that nothing should be done. That has been the attitude of the Government. The noble Earl himself said in an earlier speech that they were not prepared to give an inch in response to industrial action. As I have said, his right honourable friend the Prime Minister said on television that they were not prepared to give a penny in response to industrial action. It is much easier to adopt this negative, rigid approach. But I am reminded of something which the late Sir Stafford Cripps once said, and there are those in the Committee who may remember it. He was told that in making a certain concession he was breaking, if not a regulation, the spirit of a certain regulation. He said, "Yes, I have broken that regulation. It is necessary sometimes to make a choice. In this case I have decided that it is right to give way, and I propose giving way." He emphasised the moral attitude; that occasionally it is the duty of us all to make a choice.

I think there is a case for making a choice in respect of some of these issues before us. All of us would agree, I think, that there is a special case so far as the Health Service workers are concerned. It is a remarkable thing that we should have the whole of the Health Service, all the highly-paid people and all the skills and technical equipment, and yet it can all be set at naught because those who launder the linen have gone on strike. We have under-valued those Health Service workers, and it was not until they said that they would not do the work for that amount of money that we began to think about what was involved and to realise that we have under-valued them. What we on this side of the Committee have said during earlier stages of the Bill, and what my noble friend has said on this Amendment, is that it would be better to make provision for special cases; it would be better to make the moral choice; that here is a special case and we are prepared to look at it.

There is no reason why we should not look at special cases. Indeed, the noble Earl himself has said that, one way or the other, the Government are struggling to deal with things specially. He has told us about the arrangements set up under Mr. Robinson and that it is hoped that by September they will be able to give some sort of recommendation. There will be an attempt made to find a way, under the law, to come to an agreement with the gas workers. How much better it would be if there were a positive or a creative approach to these matters; if we looked at them above board to see whether we could come to some special arrangement. I think that the country would accept it if we said that there is a difference between the Health Service workers and, for example, the car workers; that we admit it openly and that we are proposing to make some special dispensation in the case of the one but not the other. We are all interested in combating inflation. I do not believe that any of us would say that an extra payment to the Health Service workers would be inflationary. It would not affect the fight against inflation at all if some special dispensation were made in their case, and I suggest that it would help the moral climate of the country if we went about things in that way. I should not like to claim that this clause and machinery which my noble friend puts forward is precisely the way to do it, but I agree with the noble Ear' that it contains more than a germ of an idea, and I hone that it will be considered.

5.58 p.m.

LORD WIGG

I will not embarrass the noble Earl by thanking him overmuch for the way in which he attuned his mind to what I said. If I could speak German I would use a word which illustrates a situation when the voltage is all the same, but I cannot pronounce the word. Obviously the noble Earl is the spokesman for Government policy and he cannot deviate, not even by a millimetre, from putting Government policy fairly and squarely, but as he has been kind enough to say that my thinking, or the words I have used, will be taken into account at some time or other, perhaps by the Secretary of State for Employment, I would put this to him. In the first two years the Government, clearly, were on attack. Let me not say that they were mistaken. I think I can explain that—at least, I can explain to my own satisfaction. The previous Labour Administration had not into difficulties over their labour relations, and the unions, at least from a Conservative point of view—not necessarily from mine—were a bit bloody-minded. Mr. Heath arrived at 10, Downing Street, and was faced with the same problems that faced the Labour Government. He said to himself, or if he did not others said it to him, "Well, if the trade unions are bloody-minded towards a Labour Government, we have no right to expect that they will be any less bloody-minded towards us." Therefore he proceeded to deflate; to attempt to solve the problem in the traditional Conservative way—deflate and create unemployment to get the little bit of elbow room which was so elegantly described by the late Mr. Hicks; a description which I found of the utmost use in my election campaign in Dudley. Mr. Hicks represented the Conservative interest in West Birmingham and he said that the only time when Britons will work is when there are ten men looking for nine jobs; or, put even more elegantly, empty bellies are the only things that will make Britons work. That is deep down in the Conservatism of yesterday. I am prepared to believe that the new disciples do not believe it now.

I could weary the Committee by repeating all the things that were said. It is a lengthy list if I quote just the Prime Minister. What he had to say about wages policy was all good coinage in political warfare. But every member of the Committee knows that the Government were mistaken, and the Government, rightly, in the national interest, changed their policy. If they have been mistaken from 1970 to 1972, is not just possible that they are mistaken again? But they are acting now as if they are certain that their present policy is going to pay off. I had in mind when drafting this Amendment the Government finding themselves in difficulties and how they can save face with their own supporters. I set out to achieve that end, and to make it possible to get those who are engaging in industrial action and strikes to go back to work. That was my first approach.

Perhaps I may even remind the noble Earl of some words used by Cromwell when he wrote to the Kirk: I beseech you, in the bowels of Christ, think it possible you may be mistaken. Just contemplate the possibility that the Government have made these blunders. They are like The Times, which has never been right on any subject. Just as an aside, I can assure your Lordships that there is no major issue in British politics since 1900 onwards on which The Times has not been wrong; and the Government obviously follow very slavishly the advice that they get from The Times. But I am prepared to believe now that, under the pressure of events, the possibility exists that they are right. But if they are wrong—they will agree that their popularity is comparatively unimportant—they will have landed the country in the most almighty mess, because the problems of inflation will not be that much better, but that much worse.

What again the Minister does not understand, I am quite sure, is that if you go along and look in the Cabinet Room at 10 Downing Street you will probably see that they have a record of victories. You look at the wall and there is probably a light over the victory over the Post Office workers. That was an empiric victory indeed! If we have not got the worst postal services in the world we are certainly heading in that direction, and it is not because of the postal workers. The costs rise; they are terribly short of labour. Go and talk to the chaps who have to run the South-West District Post Office, honourable gentlemen, who live in the heart of London. Post a letter in London on Friday, and see when you get it. Pay your 3p, and see when it will turn up. The more expensive, the more nuisance. Do not blame the Post Office workers. It is the Government who are to blame.

If the Government have an Election—and it is talked about; "Have an Election", they say; "win a great victory"—what will they have solved? Instead of a majority of 30 in the other place suppose they have a victory as great as in 1931. That was a great victory, was it not? It was a great victory that made 1945 absolutely certain. It would not solve a single problem. If the Government drive back the hospital workers and the engine drivers and they all go back and pull their forelocks and say: "We are glad to report back for work, sir; we are absolutely starving", the Conservative Government will have won, but what will they have solved? They will have left behind a legacy of bitterness and hatred that will last for two decades. It will last for a generation. Indeed, the bloody-mindedness of many of the groups of industrial workers is because of the memories of what happened to them in the Welsh valleys. The noble Lord, Lord Davies of Leek, and I come from the same part of the world, North Staffordshire. We know only too well the legacies that were left behind in parts of his constituency, and in Kidbrooke, where I lived for a long time, where there was not 20 per cent. unemployment, not 25 per cent. unemployment, but 100 per cent. unemployment. The memories of that do not die with the passing of one generation, or maybe the next generation.

If we are to survive, because our margins of strength are narrower we have to find a completely new basis. That is what I have attempted to do. I have attempted to find a new basis which the Government could accept with honour and without loss of political face. And they have said, "No". They have not shut the door in my face; they have banged the door in their own faces. They banged it yesterday when they rejected the first Amendment. They have banged it again now. A noble Lord said to me as we finished: "Well, George, they said No' to that one, but I tell you what you can do. They have given you the chance to turn round a bit later on and say, ' I told you so'."

I am not going to withdraw the Amendment. I hope that it will go to a Division, but in any event it will have to be negatived. Before this year is out. I will say to the noble Earl, if he is still sitting on that Bench: "I told you so." They are going to stand fast; they are going to stay put. They are not going to see even a chink of light. The point was made yesterday that they could have drawn the line much later and could have escaped if they had wanted to. But this is essentially the Heath hatchet policy. He has got to treat these chaps as he wants them treated. This is the strong, iron hand. He has never realised that there is no strength that way. The real strength is in saying: "Yes; I made a mistake. I have changed my mind. The facts are too strong for me. I am on a different tack." Not pretending that you have not changed your mind. That is the fundamental difference between Harold Wilson and Ted Heath—and I know them both fairly well. Indeed, I know who is the stronger man: and it is not Heath. For all the appearances, the strength he has is the strength of cast iron; it is brittle; it cannot bend. And our national character is that we bend. We are pragmatists.

Perhaps I can give a little story, born of my Service experience. If you marched a group of British troops up to a river, with no equipment of any kind, and said "Build a bridge", the language would be unprintable—I dare not repeat what it would be like. But they would scrounge around, "pinch" this and "pinch" that, and when you came back after a period you would see a most horrible contraption: but it would be a bridge. If you said the same thing to a group of Germans, they would assess the situation, draw blueprints, have conferences and so on, and then they would say that it was impossible. That is the difference. We are a race of pragmatists. We live by trial and error. But we are run at the present moment by a Prime Minister who is utterly out of keeping with the British character. He is always going to dominate, even when he is wrong: and then, when he is proved to be wrong, he pretends he is not. That is the difference between Harold Wilson and himself. Harold Wilson is always conscious of his imperfections and seeking to exploit them—

EARL JELLICOE

The noble Lord is, I am sure, entertaining the Committee with these auto-biographical and biographical vignettes, but he is departing a long way from our normal procedures in Committee.

LORD WIGG

I am sorry. I have not passed a very long way. I am explaining why the noble Earl is so uncomforable when he has to tell the Committee that he is speaking 100 per cent. for a Government policy which in his heart of hearts he knows lacks resilience.

EARL JELLICOE

No, I think I am extremely comfortable, listening to the speech that is being made by the noble Lord, Lord Wigg, in asking my noble friends to resist his Amendment.

LORD WIGG

Of course. That is the safe way out. That is in accordance with the brief that the noble Earl has been handed. I entirely agree, and I wholly accept that he has to discharge Government policy. But I did say a little earlier (I am coming to a conclusion) that this is the difference between us, because the point I am making is not a light one, as we shall see before the year is out. The noble Earl thinks that he is right and the Government think that they are right. The Government are going to stick their toes in and resist the Amendment; they are going to stay pat and try to pass the buck to the Pay Board. They will not

even give the Pay Board the chance to earn some popularity or to establish its competence. What the noble Earl does is to turn round and say, "You all know Mr. Robinson, and of course you can trust Mr. Robinson". I do not trust Mr. Robinson a bit. Mr. Robinson has got to prove his case. The fact that he has been to Ruskin College and is said to be a Labour supporter does not influence me. The Tories have introduced many such in the past; so I do not accept that argument. Mr. Robinson has been appointed and the Pay Board is a Tory institution, set up at a time of extreme difficulty in the hope of getting the Tory Government off a spot. The noble Earl thinks it is going to do that. I do not; so I will stop at that point and ask my noble colleagues to support me in this Amendment.

6.11 p.m.

On Question, Whether the said Amendment (No. 21) shall be agreed to?

Their Lordships divided: Contents, 40; Not-Contents, 86.

CONTENTS
Addison, V. Hoy, L. Segal, L.
Archibald, L. Hughes, L. Serota, B.
Arwyn, L. Jacques, L. Shackleton, L.
Bacon, B. Janner, L. Shinwell, L.
Beswick, L. Leatherland, L. Slater, L.
Blyton, L. Llewelyn-Davies of Hastoe, B. Stocks, B,
Brockway, L. Lloyd of Hampstead, L. Strabolgi, L.
Chalfont, L. Longford, E. Taylor of Mansfield, L.
Champion, L. Maelor, L. Walston, L.
Davies of Leek, L. [Teller.] Phillips, B. Wigg, L. [Teller.]
Energlyn, L. Popplewell, L. Wright of Ashton-under-Lyne, L.
Garnsworthy, L. Raglan, L.
Hale, L. Rhodes, L. Wynne-Jones, L.
Henderson, L. Royle, L.
NOT-CONTENTS
Aberdare, L. Cork and Orrery, E. Hanworth, V.
Ailwyn, L. Craigavon, V. Henley, L.
Albemarle, E. Croft, L. Hood, V.
Amory, V. Daventry, V. Hylton-Foster, B.
Auckland, L. Davidson, V. Inglewood, L.
Balerno, L. Denham, L. [Teller.] Jellicoe, E. (L. Privy Seal.)
Barnby, L. Digby, L. Kindersley, L.
Beaumont, L. Drumalbyn, L. Kinnoull, E.
Belhaven and Stenton, L. Eccles, V. Lauderdale, E.
Belstead, L. Emmet of Amberley, B. Limerick, E.
Berkeley, B. Exeter, M. Lothian, M.
Bethell, L. Ferrers, E. Lucas of Chilworth, L.
Bledisloe, V. Ferrier, L. Lyell, L.
Bradford, E. Furness, V. Massereene and Ferrard, V
Brooke of Cumnor, L. Gage, V. Merrivale, L.
Brooke of Ystradfellte, B. Gainford, L. Milverton, L.
Brougham and Vaux, L. Gisborough, L. Monck, V.
Caccia, L. Glasgow, E. Mowbray and Stourton, L. [Teller.]
Clifford of Chudleigh, L. Gowrie, E.
Cole, L. Grimston of Westbury, L. Napier and Ettrick, L
Colville of Culross, V. Hailes, L. Northchurch, B.
Colwyn, L. Hailsham of Saint Marylebone, L. (L. Chancellor.) Nugent of Guildford, L,
Conesford, L. Onslow, E.
Rankeillour, L. Strange of Knokin, B. Tweedsmuir of Belhevie, B.
Ruthven of Freeland, Ly. Strathclyde, L. Vivian, L.
Sandford, L. Sudeley, L. Wise, L.
Sandys, L. Suffield, L. Wolverton, L.
Seear, B. Trefgarne, L. Wynford, L.
Somers, L. Trevelyan, L. Young, B.
Strang, L.

On Question, Motion agreed to.

Clauses 8 and 9 agreed to.

Clause 10 [Restrictions on dividends]:

6.19 p.m.

LORD WIGG moved Amendment No. 22: Page 7, line 11, leave out ("companies") and insert ("those companies, designated by them, who shall be included in a list to be known as the Special Case list',").

The noble Lord said: I beg to move the Amendment standing in my name on the Marshalled List. This Amendment is a balancing Amendment with the previous one. The previous Amendment dealt with the special case list so far as the unions were concerned. Here the special case list deals with the other side of the picture, which is the provision in the Bill in Clause 10 for a restriction on dividends. Those who are going to look after this really will have a job on their hands because this part of the Bill applies to every company incorporated under the law in any part of the United Kingdom, so that the watch over dividends applies over the whole area of companies.

I have already taken up rather a lot of your Lordships' time, so I promise to be brief as regards this Amendment and I will talk in a kind of verbal shorthand. I want to say categorically that the Government's proposals to deal with dividends, and the complex problem of costs, are humbug—pure, unadulterated humbug; political window-dressing of the worst kind. We are living in a mixed economy. The argument is where to draw the frontier between private companies and public undertakings. Different Governments would draw the line in different places. What the Government are doing, doctrinaire as they are, having changed their front, having changed their policy and, as we have heard in the discussion which has just ended, being prepared to dig their toes in because they are afraid of the "horses" on their Back Benches, is to limit dividends and to police dividends and costs right across the board. They propose to take out the hairspring of the capitalist economy. How in the circumstances they ever expect to get the capital investment which is absolutely essential if the economy is to grow, is quite beyond me. They will not do it by the proposals in this Bill.

My Amendment sets out to eradicate this state of affairs. Instead of imposing the' policy right across the board on every incorporated company in the British Isles, the Government should seek to exercise their authority in, in the words that I quoted yesterday of the late Aneurin Bevan, "the commanding heights of the economy". The duty would be imposed upon the Treasury to nominate the companies that should be looked at, whose dividends should be watched, because they are the ones that set the example. I would include every bank and many of the merchant bankers in the City, because it is the financial interests that have gone wild. I would have, for want of a better expression, the hundred top companies. The Treasury would be required to put forward a list which would be limited by the ability and expertise which the Agencies would have to tackle the job. I would not impose upon them the responsibility of looking at every incorporated company in the British Isles.

I will not take up the time of the Committee further beyond saying that dividend restriction and dividend control in a capitalist society is tantamount—I am inspired by Cheltenham Races—to wanting, in order to get the economy to grow, somebody to back a 100-8 chance. This is the great capitalist theory which I have fought—risk capital. No one is going to back the 100-8 chance, if, when it has won, he only gets paid out even money. That will not work. We shall have a society which is only going to back odds-on chances. I can assure noble Lords, as one who once tried it, that backing odds-on chances is a sure way to go broke.

The whole idea of the City of London, and the Stock Exchange, is tied up with bookmaking and betting. The only thing is that bookmakers, and those who bet on horses, are much more honest than those people in the City of London. The City of London never does anything unless it has a contract; people will go on a racecourse and exchange hundreds of pounds on the strength of their word—they honour their word. What I am socking to try and rescue the Government from is the doctrinaire approach that is going to produce a vast amount of paper. The dead hand of bureaucracy is descending upon our economy.

I do not share the confidences of those on the other side of the Committee, but what must the Confederation of British Industry think about the Government (which they heavily subscribed to be returned to power) who "conned" them into accepting a price freeze? The price freeze lands them in a period of a legal freeze and they find their previous act of self-denial is completely ignored. I am certain —and Mr. Campbell-Adamson is always saying this—they are going to get a vast amount of bankruptcies. Industry can never operate that way; it certainly can never take risks. Why should they take risks when as a result of Mr. Barber's policy life is made easy for the surtax-payer because of the new funds that are available at a high rate of interest—10 per cent. quite easily? Why should somebody put his money into equities when, if he is successful, the Government will say, "No, you cannot take your winnings"? It is a piece of nonsense, and I go further: it is a piece of humbug.

I introduced this Amendment and I gave it as much thought as I gave previous Amendments. It is a balancing Amendment. a special case list. In the case of the unions, they would apply to go on the list. In the case of the special case list under Clause 10, or my Amendment if it is accepted, the Treasury would make the nomination; they would decide what the commanding heights of the economy should be, and they are the people who would be looked at, and I hope that they would be looked at by a beady and a competent eye. I have no doubt that I will get the same answer as previously: the Government will not do anything about it. This is one of their dummies in the shop window. This is my treble in these two days: there are three cases in which before the end of the year I shall be saying to the Minister, "I told you so". The policy on which this Bill is based is doctrinaire and unimaginative. It is designed to get out of political difficulties, and for that reason it will not work. I beg to move.

6.28 p.m.

LORD DRUMALBYN

The noble Lord has made his point very emphatically here. As I understand it, he is proposing that there should be a list of companies. He is doing this in order, as he puts it, that the Treasury should exercise control over the "commanding heights". If I have correctly understood him, he is not proposing that there should be any control of dividends in any other part of the economy. He seems to regard it as undesirable that there should be—

LORD WIGG

The noble Lord is quite right. But I did not use the word "undesirable"; I said "humbug".

LORD DRUMALBYN

The noble Lord said that the Government's proposals were humbug; I am taking it that he thinks that in the present circumstances it would be undesirable to do this. There is a distinction there.

I am sure I am right in saying that the Government would have been criticised if it had not provided for dividends to be restricted right across the board. The noble Lord argues that it is neither practicable nor desirable for the Treasury to exercise control over dividends on the scale that we intend. The scale, of course, is set out in the Code and I should make quite clear what we are talking about here. What the Code says is: Except as indicated in the following paragraph,"— which are the exceptions— companies incorporated m the United Kingdom will not be permitted, without the consent of the Treasury, to declare dividends for any company account year which exceed by more than 5 per cent. the amount of ordinary dividends declared by the company for the preceding company account year. We believe that in the context of the arrangements we are making on prices and pay that is a reasonable proposition, and indeed something that would be expected. The noble Lord may say that it is not reasonable because it just cannot be done, but I do not think it would be very easy to choose the special cases. Indeed, there would be nothing really very special about them except for the fact that the Treasury or Parliament had decided to put them on the list. That is the only thing that would make them special. The noble Lord suggested that the Treasury should try to choose those which are on the commanding heights, but on the noble Lord's own argument those that are on the commanding heights will exercise an influence throughout the economy. It is therefore probably equally undesirable that these should be controlled; so what he is proposing is, if I may say so, also humbug. Either you take the view that there should be a fair across the board control, or else you say, "All right, we will have a cosmetic, presentational measure and leave it at that." But this latter course is not the one we are taking.

As the clause stands, the Treasury is given power to restrict all dividends. As the Green Paper makes clear, it is intended that the Treasury will make an Order as soon as Part II comes into effect. The Green Paper itself says, in paragraph 129: Effect will be given to the control for quoted companies by making an order after Royal Assent applying the relevant provisions of the Bill to such companies, except where they are in the categories mentioned above"— that is the investment trust companies, trusteeships, and so on— The order will specify in detail the coverage of the control, the basis of comparison for purposes of calculation and other relevant factors. There will be no requirement for quoted companies to notify before declaration, but there is nothing to prevent companies who are in any doubt from consulting the Treasury, as indeed many, both quoted and unquoted, have been doing during the standstill. Quoted companies (of which there were 3,145 in June 1972) account for 80 per cent. of all dividends, and it is important that the control of dividends should not only be exercised, if this control is to be exercised at all, but be seen to be exercised.

It is true that the control powers over dividends contained in the 1966 Act were not exercised in the Labour Government standstill. This argument cuts both ways. No doubt the then Government thought that business could be relied upon to comply with the standstill without compulsory powers —or possibly just with the threat of compulsory powers. The global figures for dividends suggest that the restraint was generally observed. It is reasonable to suppose that the same will apply in the case of unquoted companies this time, more particularly as they will know that the bulk of dividends will be subject to control. Moreover, the Treasury have the power to make an Order in respect of unquoted companies or to serve a notice on a particular company if it is found to have exceeded the 5 per cent. limit. But in any case the circumstances are not the same as in 1967/68, and there is no doubt that the public this time expects control to be exercised from the start over the dividends of quoted companies.

As for unquoted companies, there is no case at all for excluding unquoted companies from the restrictions, even though the manner of control is different. Given that there are over half a million companies involved, many of them small, they are bound to be different. There is no case for excluding them, any more than there is any case for exempting small business from the restrictions on price, even though only the 200 or so largest companies will be subject to the prenotification provisions. Nor is there any case for picking on certain quoted companies and subjecting them to control and leaving the remainder of quoted companies outside the control.

I do not see any great difficulty in controlling the dividends, after declaration, of some 3,000 companies. As to the rest, it may be said that it will be difficult to gather information. However, infringements have a way of getting out, and I should have thought it would be possible to exercise control on that basis. Moreover there is the important point that there is the power to issue a notice, and also we know from experience that there is the manifest will of the companies themselves to keep within the law. Companies have been inquiring during the standstill about what they should do; how they should keep within the present temporary provisions Act, and there is no reason to think that they will not do so in future.

I say to the noble Lord in all sincerity that in this case he is wrong in thinking that this is humbug. We believe that this can be done; we believe that it should be done in the circumstances, and I hope noble Lords will not accept this Amendment.

6.37 p.m.

LORD DAVIES OF LEEK

The point about this Amendment was to establish something that I think is needed among the mass of the people. For instance, a survey in the Sunday Times of February 2 pointed out that the 3,473 companies which the Minister has just hinted about —public companies—reporting on the previous 52 weeks showed a pre-tax profit on average of 17.9 per cent. This survey covered companies where the financial year ended approximately on August 31 1971.

On dividends, the position is that the man in the street regards dividends as being different from wages in so far as they are not lost permanently. All my noble friend is trying to do is to get some kind of fairness. If a company is prohibited from paying higher dividends it will still have the money, which it can either retain until restrictions are over and then pay it out to shareholders, or else it can invest the money. This then raises the value of the company to the shareholders, and the value of the assets owned by the company will rise and so increase the share prices, and the new investment should generate higher profits and dividends for the shareholders. This is the nub of the unfairness as the man in the street sees it.

Those were the two best years, too, although I do not want to go into that in depth because noble Lords opposite know it to be true; the years that have been selected are two of the best years. I do not want to bore the Committee or to detain your Lordships too long, and therefore I have made what I call a Committee speech on this point. That is the nub, to try to introduce an element of fairness to the man in the street who is asked to suffer, and particularly the special cases and the lowest paid workers mentioned by the noble Lord in his last speech on Clause 7.

LORD WIGG

I am not going to press this Amendment to a Division but I must tell the noble Lord who replied to me that he read his brief so quickly and so badly that I did not quite understand what he was saying. The first part was a little slower and I think he said that my proposal was equal humbug. If so, of course I agree with him; it is complete humbug. But he misses the point. What is complete humbug, as he must surely know, is the whole proposal to have a limitation on dividends. He underestimates the skill of accountants; they will vary the amounts of depreciation and the like, and of course the big companies are not going to declare any extra dividend. Indeed I tried my proposal on the leader of a great company. He said, "Of course we want limitation on dividends. It gives me the excuse for not increasing the dividend in my company".

Surely the Government do not really think that they deceive anyone with a proposal of this kind. It is just plain, unadulterated humbug. What they ought to be dealing with is the question of rents, of speculation and of interest rates generally. They are the contributory causes of inflation. The pill that the Government are intent upon administering to the workers of this country is not made any easier to swallow by nonsense of this kind. I spoke yesterday of people who are "conned". The Chancellor himself is "conned" and he has obviously "conned" the Minister here into believing that this idea means anything. It is utterly and completely meaningless. He should have spent the last five years that I have spent, dealing with bookmakers' accounts, to know very well what accountants are capable of. I am under no illusions about that. Any good firm of accountants or any accountant with any qualifications at all can produce any kind of balance sheet you want: one with a little profit or with no profit or with a big profit. They will produce whatever you want.

If the Government imagine that by some proposal that they limit dividends this is going to become acceptable to the workers of this country, then they underestimate them. All that they will do will be to cause a lot of trouble, a lot of bureaucratic nonsense to no purpose at all. Try to limit it to the ones who can afford it. Let us limit it to the top one hundred. I should like to include in that a few of the bucket shops who call them selves merchant bankers. The idea that the Government can effectively alter the trend of our economy by a proposal of this kind is nonsense, except for this: if they damp down the profit motive then there will be no motive there at all, and that will perhaps be the great irony of history: that a Conservative Government elected with capitalist money is going to knock the bottom out of what passes for free enterprise in this country. All the way through I have tried to help the Government. I shall not keep your Lord-ships any longer. I shall withdraw my Amendment.

LORD DRUMALBYN

Before the noble Lord withdraws his Amendment I feel that I owe it to the noble Lord, Lord Davies of Leek, to reply to the points that he has made. There are two points here. First of all, dividends are incomes, just as wages are income, and if the one should be restricted, so should the other. In the case of dividends the limit is 5 per cent., and in the case of wages the limit is 7 to 8 per cent. That is by the way. The second point is that it is only by increasing its turnover that a company can earn more profits under this scheme. Profits can be distributed as a dividend, as income, or not distributed. We want to see as much of the profits as are necessary for investment retained. That is the nature of capital. It is only if more investment is put into business that we shall get the sustained growth for which we are aiming. I hope the noble Lord will not take the view that this is not as fair as we can make it in the nature of the case. There are differences, of course, between pay on the one hand and dividends on the other, and the position in the case of companies. But, after all, it is not everybody that wins; some people lose their money.

LORD WIGG

Does the noble Lord realise what he is saying? You limit wages and if you limit wages or incomes the worker does not get the money. Somebody does not come along later on and give it to him. He has not had it. In the case of dividends, if you do not want them distributed they go back into reserves and then later on, when the Government think their policy has succeeded, the company has a bonus issue. And that is what is called equality of treatment!

LORD DRUMALBYN

What I said was that we made it as equal as we could.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Clause 11 agreed to.

Clause 12 [Introduction of value added tax: temporary power to control prices and charges]:

6.44 p.m.

BARONESS YOUNG moved Amendment No. 26: Page 8, line 15, after ("reflect") insert ("— (a)").

The noble Baroness said: I beg to move Amendment No. 26 and to take with it Amendment No. 27. I am sure that the Committee will understand why this Government Amendment is tabled at this stage rather than at an earlier stage. The object of the powers set out in Clause 12 is to enable the Minister to ensure that prices and charges correctly reflect the abolition of purchase tax and selective employment tax and the introduction of value added tax. The effect that we want to achieve is that no price is increased by more than is strictly justified by reference to the incidence of indirect taxation, and that where the tax burden is reduced the benefit is passed on in full to the consumer. This Amendment extends the powers which the Government are seeking so that they can be used to ensure that prices and charges reflect all the changes in indirect taxes which are due to take place on April 1. The changes which the Chancellor has announced in the coverage of value added tax, particularly the zero rating of young children's clothing and footwear and food, which are currently liable to purchase tax, are being made by Statutory Instrument under the powers contained in the 1972 Finance Bill. So there the position is adequately covered by subsection (1) of Clause l2 as it stands. The other changes which the Chancellor is making and which will take effect on April 1 are the abatement of the revenue duties on spirits, beer, wine, British wine, tobacco, matches and mechanical lighters. All these goods will be subject to value added tax at the standard rate and the Customs and Excise duties are being reduced so that the total revenue payable by way of Customs and Excise duties and by way of value added tax will amount to roughly the same as it is now. The Amendment to this Bill is to ensure that the abatement in the Customs and Excise duties as well as the imposition of value added tax is properly reflected in the prices of these goods. I beg to move.

BARONESS YOUNG

I beg to move Amendment No. 27.

Amendment moved—

Page 8, line 17, at end insert— ("(b) alterations in the rates of customs and excise duties payable in respect of spirits, beer, wine, British wine, tobacco, matches and mechanical lighters, being alterations first having statutory effect by virtue of Resolutions of the House of Commons made in March 1973 under the Provisional Collection of Taxes Act 1968."). —(Baroness Young.)

Clause 12, as amended, agreed to.

VISCOUNT COLVILLE OF CULROSS moved Amendment No. 28: After Clause 12, insert the following new clause:

Power to modify subordinate legislation about prices and charges

". —(1) The Minister may, not later than 30th April 1973, by order direct that any order, regulation, byelaw or other instrument—

  1. (a) which has effect under any Act passed before this Act, and
  2. (b) which relates to prices or charges,
shall have effect subject to such exceptions, modifications or adaptations as appear to the Minister to be expedient for the purpose of ensuring that prices and charges correctly or sufficiently reflect the introduction of value added tax and car tax, and the abolition of purchase tax and selective employment tax, by the Finance Act 1972.

(2) An order under this section relating to a byelaw made by a local authority may authorise the local authority having power to amend the byelaw, or a committee of the authority, to amend it by resolution.

(3) Any amendment of an instrument made in pursuance of this section shall have effect as if made under the same power as that under which the instrument was made, and accordingly may be amended by a subsequent instrument made in exercise of that power.

(4) An order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament."

The noble Viscount said: On behalf of all my four noble friends I beg to move this new clause. It is designed to allow action to be taken quickly to deal with the consequences of the introduction of value added tax for a small, but nevertheless important, section of the community, the operators and drivers of taxicabs. It follows from my right honourable friend the Chancellor of the Exchequer's decision, which he confirmed in an Answer last Tuesday in another place, that taxi fares should be subject to value added tax at the standard rate. Last Tuesday my honourable friend the Chief Secretary to the Treasury announced that the Chancellor had carefully considered all the representations which had been put to Treasury Ministers (and I know about them and that this is of some importance to the taxi trade) but had decided that taxi fares should remain within the scope of V.A.T. But the announcement recognised that because in many areas maximum taxi fares are statutorily controlled, arrangements would have to be made for variation of those fares without delay in those places where it would be appropriate. So an Amendment in this Bill was promised to deal with the matter.

In London, as opposed to the Provinces on which this bites, my right honourable friend the Home Secretary already has powers to act quickly. Taxis are a form of public transport—and I owe the House a short explanation on this point, so that anybody may read it in the OFFICIAL REPORT. They are a form of public transport where there is control by a public authority of an enterprise in the hands of the private sector. In places where there is control, taxi fares are regulated by bylaws made by the local authorities. In all the areas in which the maximum fares are fixed by by-law—and in England at least this means virtually all urban areas —it is an offence for a driver to charge more than the permitted fare. I am advised that he would not be able to add the V.A.T. charge legally to that existing maximum fare.

In order to deal with this quickly—and this is the real point of this clause—we have got to get round the rigidity of the by-law making procedure. For instance, the procedure under the Acts of Parliament governing it require that the by-law must be placed on depositor one calendar month, during which time objections may be lodged against it; that in itself, of course, makes it impossible for these changes to occur by April 1. The local authorities could not start the bylaw making process before now, for obvious reasons; first of all, it was not known for certain until last Tuesday what the rate of V.A.T. would be; and, secondly, it was only on that day that my right honourable friend announced his decision about V.A.T. and taxis at all.

The Government appreciate that because taxi fares are statutorily controlled, and can be increased only by a complicated and lengthy procedure, the taxi trade is at a considerable disadvantage as against the rest of the trading community. Like other traders, the taxi operators will find themselves paying V.A.T. from April 1, but, unlike other traders, they will have no means of raising their charges to take account of this fact. The purpose of the new clause is to provide an early opportunity for local authorities to authorise increases in the fares to take account of the effect of tax changes, but for no other reasons (I emphasise this), at an early date after the 1st of next month.

The clause will do this by empowering the appropriate Minister—that is, my right honourable friend the Home Secretary, the Secretary of State for Scotland, also the Secretary of State for Northern Ireland—to make an order which will allow local authorities to amend their own by-laws by resolution without the need to go through the normal by-law making procedure. It is intended that the order will allow a local authority to increase fares by an amount not exceeding an amount which will be specified in the order for any one journey. The order will be made after consultations with the local authority associations and the representatives of the trade, which have already begun. If this House approves the new clause, consultation will go on; it started this week and it will be pursued urgently. Within the limits set by the order the local authorities will have a discretion to choose the amount of increase, if any, which will be authorised in their area.

This discretion is necessary because V.A.T. will not affect all taxi traders in the same way, and, because the structure of the trade varies from area to area, not every place will require the same increase. In some areas all, or very nearly all, the taxis will be operated by owner drivers who have one or perhaps two vehicles. Virtually all owner-drivers will have a taxable turnover of less than £5,000 a year, and, therefore, will not be required to register for V.A.T. purposes. This means that their fares will be regarded by Customs as being exclusive of V.A.T. But as unregistered traders they will not be able to claim back any V.A.T. paid as part of their input of tax for operating expenses, such as the cost of replacing parts. Neither will they be able to increase their charges to their customers to recoup this extra expenditure. Depending on the amount of input tax they pay, they may feel obliged to ask their local authorities for a small increase in fares to cover this increase in their operating costs.

The position will be very different in those areas where the trade is predominantly in the hands of larger operators paying wages to their drivers. These will be required to register for tax purposes, and their fares will be regarded by Customs as inclusive of V.A.T., and Customs will, therefore, want from these traders one-eleventh of their turnover, less the input tax they have paid on their operating expenses. In order to meet this new liability, the registered traders may wish to ask for somewhat larger increase in fares. There will, of course, be some areas where there is a fairly equal balance between the two types of traders I have mentioned. In those places, it will be the task of the local authority to find the increase which as nearly as possible is fair to both, and this is one of the issues that will be covered in the detailed advice which the Home Office will be giving to all local authorities in due course.

Powers given by this new clause are, of course, intended to be temporary. In due course it will be possible for the local authorities to take a longer look at the effects of V.A.T. on taxi operators in their area and produce a more sophisticated amending by-law. Fare by-laws which are made and come into operation after a resolution passed under the powers given by this clause, will be able to consolidate or revise increases which are authorised in a resolution under this particular clause. I am afraid that the powers in the new clause will create a somewhat crude but essential solution to the situation. We think it would be wrong to leave the taxi trade in a situation where the general level of earnings would fall as a direct result of the introduction of the new tax arrangements. The clause is designed to prevent this, and it will be able to be superseded by even more sophisticated arrangements under the normal procedure in due course. I beg to move.

BARONESS PHILLIPS

I do not want to detain the Committee, but I am not clear on this point. I got the impression that the owner-driver would charge one amount to meet V.A.T. and the others a different amount. Is that correct'?

VISCOUNT COLVILLE OF CULROSS

The noble Baroness is right. The owner-driver whose income is less than £5,000 a year will not have to pay V.A.T. on any of his turnover, but he will, of course, not be able to recoup the V.A.T. element of some of his expenses. Therefore, in a town where the taxis are predominantly owner-operated there may be a smaller increase to take account of this. The structure of the taxi trade varies widely. Where the town or the area concerned is provided with taxis by larger firms, who will be registered for V.A.T., they will pay V.A.T. to the Treasury on the income on the fares, and they will be able to recoup, and the balance will therefore be different. They may have to charge up more. The details of this will have to be worked out by the local authorities according to the structure of the taxi trade in their particular area. That is why we want to allow them to do it by their own resolution for this temporary purpose, which they can fine down and sophisticate in due course.

LORD HOY

May I ask the noble Viscount one question? In his concluding remarks in reply to my noble friend Lady Phillips, he said that this would be left to the local authorities. They in fact are going to be the deciding factor on increasing taxation, and that is a little unusual for this country. I put it that way simply because this is what the noble Viscount said. Earlier on he said that it will be permitted as a result of one increase in a single fare.

VISCOUNT COLVILLE OF CULROSS

A journey.

LORD HOY

A single journey; I hope I have got that correct. Supposing one takes a return journey, because it is not unusual in using taxis, even leaving this House, to say: "Take me to a particular destination and then take me back again". I could not understand from the noble Viscount whether the increase would be only on the single journey. What happens to the return journey? Is he saying that tax is payable on the outward journey, but on the return journey we do not pay tax at all?

VISCOUNT COLVILLE OF CULROSS

No. The resolution of the local authority will be subject to the maximum which will be laid down by the order. It will be only within that maximum that they will have the discretion to operate. What the maximum is to be in the various different circumstances is what we are at the moment discussing with the local authorities and the taxi trade as a whole outside London; we may have to do a separate consultation inside London, where the situation is different. The noble Lord asked about the return journey. I would not like to say exactly how this will be done. It may be that there will be an overall payment per journey, in which case, for all I know, the return journey will be separate, or there may be a graduated payment, according to the distance or the time the taxi is hired or something of that sort. Again I think it is likely to vary according to the type of journeys taxis make in different places. We shall allow for this sort of flexibility in the order procedure that we are going to adopt. I do not think that at this stage, in the very midst of these talks, it would be right for me to be too definite about it, except to say that there will be a maximum which local authorities will not be allowed to exceed.

LORD HOY

That looks as though it is going to be very flexible indeed. I am sure that we all look forward to the outcome of these flexible negotiations. The noble Viscount said that these orders will be laid by the Home Secretary. When he said that, I take it that he meant also the Secretary of State for Scotland, and I suppose the Home Secretary is responsible for Northern Ireland as well.

VISCOUNT COLVILLE OF CULROSS

To do me justice, this was not a point that I dropped. I did say the Home Secretary, or the Secretary of State for Scotland, or the Secretary of State for Northern Ireland. I think I should have added the Secretary of State for Wales.

7.1 p.m.

BARONESS YOUNG moved Amendment No. 29: After Clause 12, insert the following new clause:

Protected tenancies

".—(1) For paragraph (a) of section 1(1) of the Rent Act 1968 (protected tenancies) there shall be substituted the following paragraphs: —

  1. "(a) where the appropriate day in relation to the dwellinghouse fell before the date of the passing of the Counter-Inflation Act 1973,—
    1. (i) the dwelling-house on the said appropriate day had a rateable value exceeding, if it is in Greater London, £400 or, if it is elsewhere, £200, and
    2. (ii) the dwelling-house on the date of the passing of the said Act of 1973 had a rateable value exceeding, if it is in Greater London, £600, or, if it is elsewhere, £300, or
  2. (aa) where the appropriate day in relation to the dwelling-house falls on or after the date of the passing of the said Act of 1973, but before 1st April 1973, the dwelling-house on the appropriate day had a rateable value exceeding, if it is in Greater London, £600, or, if it is elsewhere, £300, or
  3. (aaa) where the appropriate day in relation to the dwelling-house falls on or after 1st April 1973, the dwelling-house on the said appropriate day has or had a rateable value exceeding, if it is in Greater London, £1,500 or, if it is elsewhere, £750, or."

(2) So much of section 89 of the Housing Finance Act 1972 as relates to the said section 1 of the Rent Act 1968 (being provisions superseded by subsection (1) above) shall cease to have effect.

(3) Schedule (Rent Restriction) to this Act shall have effect for supplementing this section, and in that Schedule this section is referred to as the principal section".

(4) References to this Act in sections 13 to 19 of this Act, and in Schedules 1 to 4 to this Act, shall not include references to this section."

The noble Baroness said: I beg to move the new clause, Amendment No. 29. It may be for the convenience of the Committee to discuss Amendment No. 41, the new Schedule, at the same time, I apologise for the length of these provisions. As anyone who has in the past been concerned with Amendments to the Rent Act will know, the most simple sounding measure becomes extraordinarily complex when translated into draft legislation. In this case the length of the provision is dictated by the need to integrate this measure with the existing Statutes, and there are a number of consequential amendments to the Rent Acts. Indeed, these provisions have themselves been drafted in haste, and it may be that some minor technical drafting Amendments will need to be made at a later stage to get the Amendment absolutely right.

When we were discussing the Housing Finance Act in the House less than a year ago, it was urged upon us then that measures should be taken to protect tenants in properties falling outside the Rent Acts. I am thinking particularly of the efforts made by the noble Lord, Lord Bethell, and the noble Marquess, Lord Hertford, on behalf of these tenants. More recently, honourable Members in another place, Mr. Tugendhat, Mr. Finsberg, Sir Brandon Rhys Williams and others have strongly represented their constituents' difficulties to the Government. I hope that this new clause will have the support of noble Lords opposite, as in another place the honourable Member. Mr. Prentice, speaking for the Opposition, said: "The new clause deserves support."

Under Section 1 of the Rent Act 1968, one of the criteria that disqualify a tenancy from the protection of the Rent Acts is that the dwelling in which the tenancy exists has a rateable value exceeding £400 in Greater London and £200 in the rest of England and Wales. These rateable value limits are expressed in terms of the current rating valuation. A tenant falling within the rateable value limits enjoys full security of tenure. Unless the rateable value of the dwelling is very low, the tenancy will also be a regulated tenancy, entitling the landlord or the tenant, either singly or together, to apply to the rent officer for a fair rent to be registered in accordance with Part IV of the Rent Act 1968. The rent officer, when determining a fair rent, takes into account all the relevant circumstances, other than the personal circumstances of tenant or landlord, and has to assume that the supply of and demand for the sort of accommodation under consideration is in balance—to discount scarcity, in other words. Fair rents are, in the normal way, significantly below market rents.

The current rateable value limits were determined in 1965. They brought within the Rent Acts some 1.2 million regulated tenancies, with the effect that 2.3 million tenants in unfurnished accommodation enjoy full security of tenure and some form of rent restriction. This left outside the Rent Acts some 20,000 tenancies in dwellings above the rateable value limits. We estimate that about half of these are in London and the other half largely along the South Coast. In earlier discussion of this Bill on February 27, 1973, in another place, the Minister for Housing and Construction referred to the problems now being faced by tenants of these properties; steeply increasing rents, rapid changes of ownership of the property and resulting insensitivity towards the tenants by some landlords, shortage of accommodation and fear of eviction. He said that the Government were considering what measures might be appropriate to meet these problems and gave at, assurance that the Government would propose Amendments to the Bill to give effect to their conclusions. This new clause and Schedule implement that assurance and will, I believe, be welcome to both sides of your Lordships' House.

The effect of these provisions, taken together, is quite simple: to raise the rateable value limits in Section 1 of the Rent Act 1968 from their present levels of £400 and £200 in London and elsewhere respectively to new levels of £600 and £300 respectively. This brings within the Rent Acts, for the first time, tenancies with rateable values between £400 and £600 in London and between £200 and £300 in the rest of England and Wales. The tenants of these dwellings will have security of tenure, and their tenancies will become regulated tenancies. This is achieved by amendment to the Rent Act 1968. Subsection (1) of the new clause provides for the new limits with effect from Royal Assent and has the effect of excluding from the protection of the Rent Act only those tenancies in dwellings which have a current rateable value exceeding £600 in Greater London or £300 elsewhere. This is at current rateable value. But the subsection also looks forward to rating revaluation on April 1, 1973, and provides that for tenancies in dwellings which first enter the valuation list at the new values after April 1, this year, the limits are to be £1,500 in London and £750 elsewhere.

The Government are also considering the possibility of raising the rateable value for existing tenancies in existing dwellings more directed to the new valuation lists to come into effect on April 1, so as to bring within the Rent Acts any tenancy in an existing dwelling which, on April 1, 1973, has a rateable value of not exceeding £1,500 in London and £750 elsewhere. Under the Rent Acts, at present, for example, a tenancy in a dwelling which has a rateable value over £600 in London and £300 elsewhere before April 1 this year would still be excluded from the protection of the Act on April 1. even if, as a result of rating revalution, the new rateable value of a building was less than the new limits of £1,500 in London and £750 elsewhere. The Government hope to bring forward further Amendments on this point on Report, and I hope that this may meet the case of the noble Lord, Lord Royle, on the point that he has made in his Amendments.

I should make it clear that rating revaluation has no effect whatsoever on the rights of existing tenants, and the current limits, or those of £600 and £300 if Parliament approves this measure, do not need amendment to preserve the rights of existing tenants. The figures following rating revaluation simply provide equality of treatment for new tenancies in new dwellings after April 1, 1973, being the £600 and £300 limits multiplied by 2.5, which is the average increase between the current and the new rating valuations. Previously, this multiplication would have been done, so far as the rateable value limits are concerned, by order under Section 89 of the Housing Finance Act 1972—hence the reference to that provision in subsection (2) of the new clause. Subsection (3) applies to these tenancies brought within the Rent Act, the proposed new Schedule.

Let me now turn to the Schedule itself. Paragraphs 1 and 2 are best considered together. As I have said, fair rents are, in general, well below market rents. Rents for these tenancies in London between £400 and £600 rateable value are currently market rents, freely negotiated in the light of demand and supply. Typically they may now, for a new letting, be around £2,000 a year for a property just over the current rateable value limit. A fair rent would be likely to be less—perhaps in some cases several hundred pounds less—than the market rent. The Government do not consider that it would be right or fair to landlords if rents which were freely negotiated with tenants were to be reduced overnight, presenting the tenant with an unexpected bonus of a significantly reduced rent. The effect on the finances of the landlords and property companies could be very serious. For existing tenancies, therefore, paragraphs 1 and 2 provide that the landlord may—where his contract allows—charge the tenant either the current rent or the fair rent, whichever is the higher. When these provisions are enacted, the current rent limit is to be the rent passing, broadly, on November 5, 1972, increases over which have been made irrecoverable by the landlord under Article 10 of the Counter-Inflation (Rents) (England and Wales) Order 1972, made under the Counter-Inflation Temporary Provisions Act. Only when a fair rent registered by the rent officer, or, after appeal to the rent assessment committee, is higher than the current rent limit and the lease agreement permits, will a landlord be able to take steps to increase the rent above the current rent. Thus, in due course, the current rent limit will disappear, and this whole sector will become consolidated on the fair rent principle. In the meantime, the tenant and landlord mark time so far as the rent is concerned, giving to the landlord the benefit of a rent higher than the fair rent where the tenant is already showing his willingness to pay, and to the tenant assurance against further rent increases.

Paragraph 3 enables a landlord to increase the rent recoverable above the current rent limit on account of any transfer of burden as between landlord and tenant relating to repairs, or where there is an increase of rates or for services. Of course, these increases can be charged only where the contract, lease, or tenancy agreement so provides; and any dispute as to the reasonableness of such an increase is to be resolved by the county court. Your Lordships will note that there is no provision for rent increases following improvements to the property —paragraph 4 makes express provision for this in respect of statutory tenancies. In the Government's view, the landlord should either absorb any such costs within the current rent limit, or seek a fair rent. Paragraphs 5 and 6 attract to these particular tenancies the provisions of the Rent Act 1968, or the alternative provisions of the Housing Act 1969 relating to premiums, enabling tenants when assigning a lease, to recover a proportion of premiums which they may legally have paid in respect of their tenancies before they come into rent regulation. There is no new point of principle here.

I come now to a particularly important provision, paragraph 7. Where a landlord wishes to obtain possession of his property at the expiry of a tenancy, he must, where the tenant remains in occupation, get a court order for possession. This is the law for all tenancies. This paragraph applies when a tenancy, which would have become a regulated tenancy had it been in existence at the time when these provisions are brought into effect, has come to an end before that date and the tenant or his widow is still lawfully in possession of the property. If a possession order has already been made, the court may vary or rescind the order if it considers that the order would not have been made if these provisions had been in force. This converts the tenancy into a statutory tenancy on the same terms as the tenancy which has come to an end, subject to any variation made by the court. If a possession order has not been made, then a tenant can be evicted only on the grounds for possession specified in the Rent Act; for example, non-payment of rent in breach of the terms of the tenancy. This should effectively guarantee that no tenant is dispossessed of his home as a result of these measures being brought forward between now and Royal Assent, and I confirm that these measures will come into operation immediately on Royal Assent. I do not think I need expand on the provisions in paragraphs 8, 9, 10 and 11 of the Schedule. These simply contain minor consequential amendments to existing legislation, and contain no new points of substance.

This has been a long account. I come back now to the main point, that the effect of these provisions is quite simple: to raise the rateable value limits to £600 and £300 for London and elsewhere in England and Wales respectively, thereby giving tenants in these properties security of tenure and access to the fair rent system. We calculate that this will bring about 80 per cent. of tenancies currently above the rateable value limits within the Rent Acts. Any borderline is, to some extent, arbitrary. In 1965 the current levels were, I understand, pitched at a point where it was felt that demand and supply were in sufficient balance to allow the free play of market forces. That is manifestly no longer the case. The proposed new levels of £600 and £300 will exclude the large mansion flat type of property with very high rents, and I do not think anyone has seriously suggested that they should be included.

The Government have reached this decision to extend the limits only after the most careful consideration. The whole history of rent control shows that, in the long run, it depresses the rate of return to landlords on their investment, and leads to rented accommodation being taken off the rented market and sold for owner-occupation. But a very serious situation exists for these tenants to-day. The supply of rented accommodation at these levels of rateable values is already rapidly drying up, both in London and along the South Coast. The property companies have discovered that there is a large unsatisfied demand for purchase of these flats on long leasehold. Sale prices are high. This has encouraged the process of "break-up", whereby whole blocks of flats are bought up and, when the tenancies have been terminated, the flats are sold off individually. Large speculative gains have been made by this operation. At the same time, the ensuing even greater shortage in rented accommodation has forced up rents as leases fall in. Many noble Lords will have heard of cases of rents causing particular difficulty for those retired and on fixed incomes. Of course there are good landlords and property companies operating in this area, whose record as managers of rented accommodation is impeccable. But there are others whose behaviour has left the Government with no choice but to give the tenants concerned security of tenure. As to the question of supply of accommodation, the truth is that this rented accommodation is already fast disappearing under the speculative process I have described. Security for existing tenants will at least ensure that their properties are kept available for renting so long as they remain in possession.

The Government believe that this measure, even though relating to perhaps 20,000 tenancies only, is necessary and just. It is an extension of the fair rent system initiated by the Labour Administration in 1965 and will, therefore, I hope, be common ground to both sides of the Committee. The need for this measure has arisen acutely in the context of the Government's counter-inflation policies, and hence in this Bill. But the problem is itself long-term. Thus if Parliament approves these measures, they will be a permanent addition to the Statute Book and a permanent amendment to the Rent Act. I commend this new clause and Schedule to your Lordships. I beg to move.

THE DEPUTY CHAIRMAN OF COMMITTEES (LORD MERTHYR)

The noble Lord, Lord Royle, has given notice of his intention to move an Amendment to the proposed new clause, and since your Lordships may not all have the terms of this Amendment I propose to read it out. It is Amendment No. 29A, which reads: Line 12, leave out ('£600') and insert ('£700').

7.20 p.m.

LORD ROYLE moved, as an Amendment to Amendment No. 29, Amendment No. 29A: Line 12, leave out ("£600") and insert ("£700").

The noble Lord said: I am sure it will be for the convenience of the Committee if I discuss the two Amendments which are down in my name at the same time because they deal with the same point, though they can be put separately if necessary. May I say straight away how deeply I personally appreciate the very clear explanation that the noble Baroness has given of the Amendments in her name. I was deeply encouraged by one sentence that she used when she said that she felt the case I had to put would probably be met by the Government; that they hoped to do something about it before Report stage. But I am not quite sure why, if that is the position, she cannot accept my Amendments. It is only the question of figures that divides us. Briefly, the Government's present suggestion in this new clause is that the limits should be put up from £400 to £600 in the case of London and from £200 to £300 outside London, and that within those figures tenants should be protected. The difference between my Amendment and the Government's new clause is that I want to go the other mile. I therefore suggest in my Amendments that, instead of it being put up to £600 it should be put up to £700 in the case of London, and that in the case of other places it should be put up from £300 to £400.

I shall be as brief as possible at this hour, but perhaps I may be permitted to say why I feel that this should be done. I know that, in another place, while Mr. Prentice gave his blessing, there are other people who did not, and I think about my ex-colleague in the representation of the City of Salford, who talked in terms of just looking after the wealthy people of Kensington. I could not disagree with him more, because that is not what this does. The new protection which the Government are now giving in this new clause covers about 80 per cent. of the 20,000 cases which the noble Baroness mentioned. This I take from the Press—the responsible Press—and the noble Baroness's figures seem to agree with it. This, in regard to unfurnished tenancies, would, I reckon, leave only 4,000 houses and flats in the country outside protection. So my appeal to the Government is that they should go the whole hog. My Amendment does not quite say that, but I should be very happy if they did. Do the Government really want these few left out of that protection, protection against (I use a strong term, and I mean it; it comes from experience which I am about to quote) property sharks? This is happening in London, and it is happening particularly, as the noble Baroness has said, on the South Coast.

I always feel that when I have a case to argue it is best to provide an illustration. The illustration I use is, I think, a very strong one. I know of three blocks of flats on the South Coast in the Borough of Hove, most of which have two bedrooms, a lounge with a dining recess, and the usual other offices. At the moment, they have a rateable value of £326 per annum. They are very highly rated indeed for that sort of accommodation out of London. What I want to point out to your Lordships is that, in the main, the people living in those flats are old folks, over 75, up to 85, and so on, without capital, and living on annuities and other forms of fixed income. When the threat of their lease finishing comes along and the owners want to sell the flats to somebody else, the tenants are not in a position to buy. They have not got the capital, and at their age they cannot go to a building society for a mortgage. From this side of the Committee this might sound rather surprising, but in the circumstances they are much worse off than many thousands of council tenants, and they are at their wits' end as to what they are to do when the threat comes.

These three blocks of flats are all in one ownership. They have changed ownership five times in 15 months, with each lot of owners taking a profit from the next. At the same time, the people in the flats have been given no opportunity whatever even to seek a method of purchase; they have been told that they have to go at the end of their leases. Then the property owner will try to do something about "tarting" the places up, and will put them on the market at high prices. I understand—and this is my example—that people who make inquiries about that sort of accommodation are being asked £23,000 to £25,000 for such flats. At the end of their leases, these people get their notice to quit and they do not know what on earth to do about it. I may say that in the South-East, and on the South Coast particularly, rateable values are in many cases as high as they are in good parts of London.

So this is the case I want to put. I want Her Majesty's Government to go further, and to give cover to that extra number of people, so that in the later part of their lives they might have some sort of real security and so that the tenancies that they occupy will be theirs for quite a long time. I would finish with a question to the noble Baroness. I have been looking at her new clause, and I am wondering whether paragraph (aaa) of subsection (1) would protect the people I am referring to because of the different values which are being fixed under the latest revaluation. I do not think I can say any more. I hope your Lordships will appreciate that I feel strongly about this, and that I am very anxious. These people I am talking about all voted Tory at the last Election, I am quite sure, and I am pleading for them from these Labour Benches. I hope I might have the support of the Committee. I beg to move the Amendment to the Amendment.

LORD JANNER

I rise to support my noble friend in the plea that he has made to the Government. It has been my lot ever since the 1915 Act, the first Rent Act, to watch the progress of these Acts which have been passed since for the protection of tenants, and much of what my noble friend has said has applied from time to time, as the Acts have progressed, in respect of the different sets of people who have been protected by raising the rateable values, and so on, during that period. There is no doubt at all that the vast majority of those who are occupying flats and houses which are rated at a higher rate than the one which prevailed up till now have been terrified by the kind of action that has been taken by speculators who, from day to day, have been drawing tremendous profits without having done anything at all in respect of the properties.

My noble friend Lord Royle is quite right. This is not a question of whether the person is poor or rich; it is a question of life and death—and I put it as strongly as that. These speculations have gone on and will go on unless and until the speculator realises that the whole of the people concerned are against these practices. Even so, some are going to be left out, but I think it will help in curbing the kind of action which is taking place and which I believe has horrified the whole country irrespective of the amounts of rent being charged or the rateable values. We have been looking for a way in which to stop that kind of action by unscrupulous people. After all, I have experience of this not only from knowledge of what is happening in certain areas but also in the course of practice. Every solicitor comes across these problems.

In my view, the only way in which you can prevent this great speculation going on is by making those who are utilising the present position in the way they do realise that they are not going to benefit and that they may even lose from the transactions in which they participate. Consequently, I hope that what the Minister has said with regard to the possibility of bringing in higher rated places will be considered by the Government between now and the Report stage. I should like to underline that it is not only the question of the protection of the tenant it is the question of the protection of the community against an inflationary action which is taking place and which does not produce benefit to the country but only a benefit to private individuals who have to be utilising the position for the purpose of creating highly inflated values in respect of accommodation.

This practice is bound to go on unless something is done, because if a rateable value is reached beyond which there will be no protection a new avenue will be opened for people to continue that kind of speculation against those who in many cases are prepared to pay anything in order to have accommodation. I think the country is confronted at the present time with a situation which demands drastic surgical operations (if I may put it that way) and this is the method which, although it may not entirely deal with the position, at least will create a situation in which people will be frightened to take the kind of actions that have produced such, as I think, universal disapproval in the country except among those who have been speculators in that sense. I hope noble Lords will forgive me for having taken up so much time, but I really feel—and I say in all humility; I have had vast experience of this particular subject of rent control—that now is the time to take this action, and I hope that the Government will accept the proposal that has been put forward.

7.37 p.m.

LORD BETHELL

I should like to congratulate the Government in taking a new view of this problem since about six months ago when the Housing Finance Bill was discussed by your Lordships. It was then thought by a large number of advisers to the Government that those who inhabited unfurnished flats with a rateable value of more than £400 in central London, £200 outside, must be comparatively well off, must in fact be quite rich and able to exercise choice in housing matters. Many people tried to show at that time that that was not always the case, but that genuine hardship was caused to people, particularly in central London, who lived in flats with rateable values slightly higher than £400 and who perhaps were of an age where mortgages were hard to obtain. Leases very often were not being renewed. They were being offered long leases, often in excess of £25,000, and were unable to purchase their leases and were in fact being evicted.

The Government now feel that in very many cases there is a genuine hardship and I wish to express my appreciation to them for bringing in this Amendment. There are just two quick points that I would make about this proposal; one is environmental. Even after this Amendment is carried there will, I suspect, remain a pocket of highly rated residential units in central London. The noble Lord, Lord Royle, spoke about the South Coast which is an area particularly affected. Another area which is particularly affected is Mayfair and certain parts of the City of Westminster, where there are flats and houses inhabited by tenants on an unfurnished basis which will be higher even than the proposed £600. They will not perhaps be exposed to hardship but may be threatened with eviction.

Whether this is a valid point on social grounds I would not care to argue, but on environmental grounds I would suggest there is severe danger to the character of the centre of London, because it is here that tile pressure is greatest for residents to move out and for itinerants to move in. By "itinerants" I mean diplomats who are prepared to pay very high rents for furnished flats; directors or visiting executors of companies who come to London for a month or even a shorter time and who are ready to inhabit flats on a short-term basis for extremely high rents, and even tourists who will find in Mayfair and other parts of the City of Westminster and also the Royal Borough of Kensington and Chelsea, clandestine hotels which purport to be blocks of flats but which in fact are places where one may walk in and take a room for the night.

This situation has been aggravated by the fact that tenants who used to inhabit highly rated flats have had to move out. It is particularly prevalent in blocks like Ashley Gardens in Victoria and I would suggest that a higher limit than £600 is appropriate in central London where a comparatively modest flat can, in certain areas right in the centre, exceed the limits proposed. The alternative is a continuing depopulation of the very centre of London, and one only has to look at statistics to see that in the ward of Mayfair, for instance, two-thirds of the population have left since 1939. The area is becoming something approaching a ghost town. This will continue unless some finger is put in the dam and something done to stop more and more residential units being vacated and more and more residential tenants being replaced by itinerants.

The other point that I want to make is on the question of anomalies which may arise, even under this Amendment which is a tremendous step forward. When this matter was discussed in the Housing Finance Bill it was pointed out that there can be glaring anomalies. For example, where there are two flats next door to each other, one with a rateable value of £398 and another with a rateable value of £402—and they can be identical flats—someone might have made an application and got his rates slightly reduced. He then has protection while his next-door neighbour in an identical flat has no protection. My noble friend who was replying for the Government pointed out that one must draw the line somewhere, and that whatever limit one sets there will be some on one side and some on the other. What I should like to ask now is this. Have we not reached a stage where the number of units without protection—and when I say "without protection" I mean without any protection, without even the protection given to furnished tenancies— is so small, 4,000 out of a total of many millions of residential units in the country, that it would be tidier and clearer to abolish this group of residential units altogether and to give protection under the fair rents system to all?

I know that there are many people in your Lordships' House who feel that extension of protection such as that now proposed by the Government is a violation of the law of contract and that the present situation is bad enough without being increased. One can argue this point; but I would suggest that since the fair rent system was brought in by the previous Government is has become very firmly established in the law of the country and is accepted as just by the vast majority of people, even by the present Government, and that it is here to stay. These 4,000 units if they remain will surely be something of a relic of a bygone age, a control of the period before rent control on unfurnished tenancies where market forces were the sole criteria of rent to be fixed. They will be something of a coelacanth, a prehistoric animal about to become extinct. It might be better, perhaps not during this Bill but in the near future, to abolish altogether this group. But in general I should like to say how pleased and encouraged I am that the Government have seen fit to bring in this Amendment which is a tremendous step forward.

THE EARL OF KINNOULL

I wonder whether I could talk about my Amendment without moving it. It is very much concerned with my noble friend's Amendment No. 29. Before doing so, I should like to congratulate my noble friend on his very clear introduction and on the official interpretation of both the new clause and the new Schedule, which is very complicated, and also to congratulate the noble Lord, Lord Royle, for the moving way in which he introduced his Amendment. The purpose of my Amendment is to simplify, if possible, this rather complex wording. At the outset, like other noble Lords, I would say that there is no disagreement on the new clause introduced by my noble friend. It is much to be welcomed. The argument that it would dry up the market is now shown to be nonsense as an economic factor. It is fundamental to the system that you can sell long leases at a greater profit than the old three, five or seven year leases for rental. Other speakers have referred to large-scale operations by property companies for the breaking up of flats. We have seen this in the case of Key Flats, of the St. George's Estate, Pimlico, and there have been cases in Hampstead. My noble friend spoke of hardship cases, of old tenants on fixed incomes having lived for years in certain areas, who being unable to purchase the lease have had to move. We have seen changes in the communities of these areas and the break-up of mixed-income inhabitants of the area which, from a good planner's point of view, is bad planning. Undoubtedly the break-up of flats has caused hardship.

I am grateful to my noble friend for introducing this clause tonight. My only doubt about the new clause and the new Schedule is that we seem to be tacking on to an emergency Bill with a maximum life of three years a fundamentally complicated housing matter. I believe that this sort of Amendment should really be the subject of a proper Housing Bill, carefully considered and drafted. Evidence of the haste of drafting is apparent, and my noble friend was good enough to say that she will be looking at the drafting again. I wonder whether there are any loopholes at the moment in the present drafting of the clause; for it includes three stages at which we must in future look at rateable values. The first is the 1965 rateable value of property; the second is the present, March, 1973, rateable value; the third is that of April 1, 1973. Houses which had a rateable value of £410 in 1965 would have been outside the protection. If in March, 1973, due to improvement of that property, it had been re-rated to £580, it would be inside. If then in the revaluation of April it was rated at £1,510, it would be outside. What will be the protection situation of that property? In 1965, a house of £395 rateable value would be inside; in March, 1973, with a rateable value of £610 it would be outside. In April it could be revalued to £1,510. What of that case? One could go on quoting cases which would confuse my noble friend. I am not intending to do this, but these are examples of arguments used by the noble Lord, Lord Royle, in favour of the 4,000 remaining units coming into protection. A property that could have been a cottage in 1965, but has since been converted into a mansion could to-day still claim protection under the protected tenancies net.

The purpose of my Amendment is to simplify the words, to put into this Bill the wording of the 1968 Act. I hope that my noble friend will be able to say that this matter is going to be looked at again and will invite any noble Lord who is interested in it to help to redraft the clause in relation to the limits. I was going to say that I accepted the Government argument; but having heard the noble Lord, Lord Royle and my noble friend behind me, I am convinced now that the 4,000 units should come within the protection network. I wish to ask my noble friend three questions. The first refers to redevelopment. There will be old blocks of flats at present outside the rateable value protected tenancy where, due to redevelopment, under the protected tenancy the owner or developer would have to offer suitable alternative accommodation. I believe that this could cause problems in respect of certain old types of flats, particularly in London, where there is a genuine case for redevelopment, and I ask that this matter may be looked at to see whether an exception could be made on a limited scale within the present clause.

My second point is, what happens in Scotland? I do not think that Scotland is referred to in the clause or the Schedule and I think that it should be. Thirdly, on the question of appeals, on April 1, 1973, we shall have come to the publication of the new revaluation. Many people will appeal against their rating assessment and many of the appeals will not be heard perhaps for 12 months. I wish to ask whether the original assessment will be the one on which the rateable value will be assessed or whether it will be the final assessment. That is an important point for tenants who are in a borderline situation. Otherwise I welcome what my noble friend has said, and wish to thank her again for her clear exposition.

BARONESS YOUNG

I am sure that we all listened with sympathy to what was said by the noble Lord, Lord Royle, and what was said in supporting him by the noble Lord, Lord Janner. As I said in moving the new clause, one of the particular difficulties about setting a limit anywhere is that it must up to a point be an arbitrary limit, and there always will be hard cases on the borderline. This was found to be true when the limits were set in 1965. The Government have taken into account the arguments which have been put in this Committee and in another place about the hardship caused to about 80 per cent. of the tenants remaining outside the Rent Acts. They have fixed these limits to bring in those tenants. They feel it would be wrong to abolish the limits altogether. Although the number of excluded tenants may be small, probably about 4,000, the Government do not feel that it would be reasonable to bring within the fair rent system many of the mansion flats and penthouse-type flats with rentals of several thousand pounds a year. They consider the limits that they have set will meet the case in respect of the majority of tenants affected and do not feel they can go beyond that.

The noble Lord raised a particular case and I should like to confirm that subsection (1)(aaa) of the new clause does not include the case he mentioned. However, I said that he might be able to take some comfort from the fact that, as a result of the rating revaluation, the tenants about whom he has spoken may find that the rateable value of their flat is less than £750 on April 1. I believe that the case he quoted was of a flat which in March had a rateable value of £326 thus bringing it outside the ambit of the 1965 Act and protection. Assuming the arithmetic to be more or less correct the value, when multiplied by 2.5, would bring the figure to somewhere about £605. These cases could come within the protection of the Rent Act if, as indicated in my speech, we are able to find a way to amend these provisions on Report and bring them within the Rent Act, with the tenancies with a rateable value on April 1 not exceeding £1,500 in London and £750 elsewhere.

I apologise to the Committee, because I realise now that I have not got my arithmetic quite right. But I think it is the kind of case which could be dealt with, and I gave an undertaking that we might be able to bring forward an Amendment on. Report to meet that point. I am grateful for what was said by the noble Lord. Lord Bethell. I am glad that he derives some comfort from the fact that we have been able to meet part of the case he made, and I think the argument that I have just advanced to the noble Lord, Lord Royle, applies also to him.

LORD BESWICK

I wonder whether the noble Baroness would explain her arithmetic. If the rateable value of the case mentioned by my noble friend is £326, and one multiplies that by 2.5, surely one gets a figure in excess of £750.

BARONESS YOUNG

The noble Lord is absolutely right and I apologise. I looked at it in rather a hurry and arithmetic never was my strong point. I do apologise for making a mistake.

LORD BESWICK

Is the noble Baroness then saying that my noble friend may take no comfort from this, and that his case will not be covered?

BARONESS YOUNG

I was going to say that it entirely depends on how the arithmetic works out. The 2.5 is an average figure. It could well be that on revaluation the new rateable value would be below £750 a year. Then the Amendment we hope to be able to move on Report would cover it. I am not saying this will cover every case, but it could well be that it would cover this particular case.

My noble friend Lord Kinnoull raised a number of points and I should like to make clear that the new clause will be a permanent addition to the Rent Act. I imagine that one day the rent legislation will be consolidated, but in the meantime it will remain on the Statute Book. Regarding the detailed examples he gave about rateable values, I should like to write to him when I have had an opportunity to study the cases he made out. The noble Earl put three specific points. In the case of redevelopment, where there are still tenants in some of the flats, once the Act comes into force and they are eligible under the fair rent scheme, they will have security of tenure, as other tenants do under the fair rent scheme. I confirm that this new clause does not apply to Scotland. On the question of rating appeals, I hope that I made clear in my second answer to the noble Lord. Lord Beswick, the position about the Amendment we hope to bring forward on the question of new rateable values which would come in on April 1. Having made the point quite clear I hope that the noble Lord, Lord Royle, will feel able to withdraw his Amendment.

LORD ROYLE

I am grateful to the noble Baroness. In her last few sentences she gave me a lot of comfort, but I hope she will forgive me if I say that I shall await with great interest what transpires when we get to the Report stage. I want to reserve my position, and if I am not made as happy as at this moment I feel that I could be, I must come back to this matter on Report. I want to make sure that the noble Baroness's arithmetic is right and that the people I have mentioned are protected. If, when we get to Report stage, I see that the protection is there, I shall be happy; otherwise I shall have to come back to this point. Meanwhile, I beg to ask leave to withdraw the Amendment to the Amendment.

Amendment to the Amendment, by leave, withdrawn.

LORD JANNER

I assume that we are now dealing with the new clause itself. I did not speak on the Amendment but there are one or two points which I want to make. I should like first to add my congratulations to the Government. I do not want to appear difficult about the matter, but it is a little unfortunate that this was not brought in when inflationary action was being taken some considerable time ago. Nevertheless, I should like to congratulate the Government for bringing in this particular clause. However, there are one or two points I should like to raise, even at this late hour, because I think it is important that the public should know where they are on these matters. There is the question of the Landlord and Tenant Act 1954, which relates to tenancies which have come to an end or which might come to an end. They are long-term tenancies on which there is a question of ground rent only, and not rack rent. I should like to be satisfied that the clause, as it stands, will cover the cases referred to in that Act. I believe it probably is the case, but it is important that we should have an assurance about it, because it is an important matter from the point of view of people who have long-term tenancies.

There is one other point which I should like to make—and I hope the noble Baroness will forgive me for referring to it at this stage. There is another section of tenants who have long leaseholds. For many years there was a big struggle to enable tenants who hold long leases to purchase the freeholds. The Act which provides for that again has the limit in so far as rateable values are concerned. I do not want to argue the case now, because it is late, but I think it has actually formed part of the question of inflation. Perhaps the noble Baroness would consider between now and the Report stage whether she could not also bring in a provision to enable the Leasehold Reform Act 1967 to be amended in a similar way to the Rent Acts to which she has referred. This is of importance to a large section of the community, and certainly I would advocate the bringing into the same rateable value scheme leasehold reform, so that it can have similar attention to that given to rented houses.

THE EARL OF KINNOULL

Before the noble Lord sits down, I wonder whether he can clarify to the Committee what possible effect the Leasehold Reform Act has on this Rent Act. The Leasehold Reform Act has nothing to do with the Rent Act.

LORD JANNER

Indeed, it has. With respect, a person who has a long lease and whose lease is about to terminate is placed in an extremely serious position. The whole object of the Leasehold Reform Act was to give him protection in a similar way to that granted by the Rent Acts, and, in addition, to enable him to purchase the freehold. I think that we should take this opportunity to extend the provisions of that Act. We are dealing with the question of rateable values in so far as the Rent Acts are concerned and increasing the range there, and frankly, I do not see why these tenants who have held tenancies for many years should not have the same opportunity in so far as the actual extension of rateable value is concerned.

THE EARL OF KINNOULL

Is the noble Lord saying that long-lease tenants would not be protected by the Rent Act?

LORD JANNER

There is a certain amount of protection under the Rent Acts, but the provision in so far as concerns the security of tenure for long leases has been extended to enable people to purchase their freeholds, and I see no reason why they should not purchase the freeholds if their rateable values are more.

BARONESS YOUNG

The noble Lord, Lord Janner, has made two points. The first is as to what effect this new clause will have on the Landlord and Tenant Act 1954, and whether these people will be covered by the new limits in the Rent Act. I am glad to confirm that they will, and that the Landlord and Tenant Act affects the relevant provisions of this Rent Act. The second point that he raised was with regard to the Leasehold Reform Act, and in this case the answer is No; the Government have no proposals for raising the limits except in relation to rating revaluation. Over the years a number of cases have been determined under the existing limits, and to make any change now would not be equitable. So we have no plans at the moment for altering that.

LORD JANNER

Would the noble Baroness consider it again between now and the Report stage?—because it is an important matter and affects a large number of tenants.

BARONESS YOUNG

I take the noble Lord's point that this is an important matter, but, with respect, I do not think it is strictly relevant to this new clause, and I could not give any undertaking at this stage.

LORD STRABOLGI

Perhaps before we leave this the noble Baroness could answer two questions. First of all, with regard to existing tenancies which already have protection and have rateable values under £400 in London or under £200 outside London, based on the 1965 Act: will these be affected by any revaluations which may take place on or after April 1, or will they continue to be based on the earlier date of 1965? Secondly, I wonder whether the Government have considered the question of tribunals. The noble Baroness mentioned the courts when she put forward this Amendment. There have been cases with these tribunals when there has been a dispute between a tenant and landlord; the landlord has been a rather rapacious company—the type of company alluded to by my noble friend Lord Royle and the noble Lord, Lord Bethell—and has asked more than the tenant thinks it is worth. They have not been able to come to agreement. It has then gone to the tribunal, and the tribunal has fixed the rent even higher than the most rapacious landlord wants. Yet there is no appeal. What are the Government proposing to do in a situation of that kind? Are they proposing that there should be an appeal to the courts; or are they leaving this to the decision of the tribunal?

THE EARL OF KINNOULL

Before my noble friend replies, may I point out that surely that is the appeal. The noble Lord says that there is no appeal from the tribunal. The tribunal is the appeal body.

LORD STRABOLGI

But the point I was trying to make was this—and perhaps I may give an instance which was in the newspapers. The rent was, I think, £900 a year, and the landlord wanted to increase it to £1,100, which the tenant thought was too much, although he was probably prepared to pay £1,000. They then went to the tribunal, who said: "We do not think £1,100 is enough. We think a fair rent is £1,300", which was £200 more than the landlord had thought of. Will it be possible to appeal against decisions of that kind?

BARONESS YOUNG

The noble Lord, Lord Strabolgi, has raised these two points and I should like to confirm that the new clause applies to all tenants under the present Rent Acts whose rateable value in London is £400 a year or less and outside London £200 a year or less.

On the second point, I am not a lawyer, but as I understand it, where a tenant and a landlord go to the tribunal and the tribunal determines the rent, as my noble friend Lord Kinnoull has said, this is the new rent; this is the decision taken by the tribunal on appeal. There would be no further appeal from that decision.

Clause 13 agreed to.

Clause 14 [Power to obtain information about rates from rating and other authorities]:

LORD GARNSWORTHY moved Amendment No. 30: Page 11, line 34 leave out subsections (6) and (7).

The noble Lord said: The hour is somewhat late, but the subject matter of the Amendment is important and I trust that your Lordships will bear with me while I put the case in support of it. Clause 14 gives the Secretary of State the power to require rating and other authorities to furnish information about rates for the financial years 1973–74 and 1974–75, including information about the levels of proposed rates together with the esti mates and other assumptions on which those proposals are based. The clause also enables an authority to substitute a new rate where it appears to them that a rate lower than one made for either of those financial years will prove sufficient.

One wonders why this clause was ever put in the Bill. The whole of it is offensive to local government and casts an aspersion on them that they do not deserve. Subsections (6) and (7) are largely concerned with machinery. This was stated by the Minister in the other place at col. 1607 on February 28, when he said that subsection (6) provided for reducing a rate after it had been published and subsection (7) dealt with the giving of information about that reduction. It is interesting to note what the Minister said on February 28, and I quote: I look on these subsections as machinery which I trust will never need to be used. I am quite sure that the whole arrangement of monitoring can be carried out on a voluntary basis, and that the statutory power behind it is needed only as a longstop. There is no precedent for the powers which the Government are now seeking and I certainly have no knowledge of any instance of non-co-operation by local government which would warrant the inclusion of this clause in the Bill. Perhaps I might put forward the feeling of the local authority associations in this way. It has been the practice of the associations and their members to cooperate with successive Governments in policies aimed at helping the national interest, and if some sort of monitoring system of rates is required in the present economic climate it could be achieved by an entirely voluntary approach without the necessity for the compulsory power proposed. The fact is that this is nothing more than a piece of window-dressing, and I more than doubt that anyone seriously thinks the occasion will arise when the local authorities, having made a rate for the years 1973–74 or 1974–75 will in fact make a new or a second rate on the grounds that the amount of the first rate exceeds what is required in respect of either of those two periods. Local authorities do not work in this way.

The clause gives the Secretary of State the power to monitor proposals of local authorities, but what complaint can be made of the unwillingness of local authorities to give information? What evidence is there of any such unwillingness? Do the Government not already get all the information they want without this new provision? It may be argued that the Secretary of State ought to have the power to request a reduction or a re-consideration of the rate. That is the only merit that can be advanced in favour of these subsections (6) and (7), and probably of the whole clause. Before this indignity —and it is an indignity—is perpetrated on local government, I believe that we in this Committee ought to remind ourselves of how local authorities deal with the fixing of rates. The fixing of a rate or precept represents the decision of a democratically-elected body and is the culmination of a very long process, which must be an exercise of judgment. The judgment lies in the establishment of a proper balance between the demand for services and the cost which the ratepayer can fairly be called upon to pay. The process is a long one and is carefully carried out. It is difficult to see how a short, sharp, monitoring process on one sheet of paper can interpose a better and more valid judgment. If it is only an increase in expenditure that is to be called into question then it becomes even more difficult, since reference has to be made to such things as the budget for the previous year and the base-line from which an authority is working.

The Government's approach would appear to be that they are not calling into question the judgment of the authorities but merely saying that, even if the judgment is correct, the overriding factor is the danger of inflation and that, come what may, the rate should be reduced. It is important to remember that many of the functions of local authorities are obligatory. Much of their expenditure is quite beyond their control. In any case, if control of expenditure is regarded as essential it should be undertaken in a different way, but it can best be done in full consultation with local authorities when considering the rate support grant calculations. This could be done well in advance within this framework by letting local authorities know in ample time; that is to say, prior to the preparation of their estimates.

I find it ironic that the Government should be seeking these powers at a time when they have been compelling local authorities to raise rents and when some authorities have been taken to court for refusing to act as agents in an operation that itself has helped, and will go on helping, to produce an inflationary pressure. I find it particularly ironic when I reflect on the promise of that "better to-morrow" when those meaningful words were spoken: We think it wrong that the balance between central and local government should have been distorted, and we will redress the balance and increase the independence of local authorities. Under this Government we have seen the whittling away of the power of local government. There was the Housing Finance Act; the use of Section 68 of the Education Act by the Secretary of State for Education and Science; the loss of health responsibilities and powers as a result of the reorganisation of the National Health Service; and so we judge the Government's promise by their performance.

For local authorities this clause represents another intrusion, and a very unnecessary one—an indignity they do not deserve. Mr. Graham Page, speaking again on February 28 in the other place, said, and I quote from column 1604 of the OFFICIAL REPORT: … in local government finance central Government are a partner with local government, and not merely a sleeping partner: central Government contributes 60 per cent. of the expenditure of local government.

He went on: In normal times we trust our partners, the local authorities, to spend it wisely. In times such as the present we have a duty to have a closer partnership in considering the expenditure. So this system of monitoring has been adopted. I doubt whether this clause will give the Government one iota of information they could not obtain otherwise. If a partnership is going to be meaningful it certainly needs to be based on trust, and that trust is not strengthened when one partner is reminded too forcefully that despite his responsibilities and public accountability he will do as he is told. One wonders whether this clause is designed merely to show that the Government intend to make it known that they are the masters. I do not think that local government quite deserves to be treated in this way. I beg to move.

8.22 p.m.

VISCOUNT AMORY

I go some of the way with the noble Lord, Lord Garnsworthy, though perhaps not all the way. Local authority associations, as the noble Lord said, have an honourable tradition of co-operating voluntarily with the national Government of the day in the national interest. We would have hoped that it would be thought unnecessary to make statutory provision of this sort which seems rather derogatory to the local authorities. In fact, I think the local authorities feel hurt at this treatment. When the Bill first appeared the provision was permanent. The association I am connected with disliked that very much. At the Report stage in another place the provision was limited, I think, to two years. We recognise therefore that the Government come some way to meet us; but we still dislike the principle of statutory monitoring in a case like his, and would be preferred the Government to have been content to rely on voluntary co-operation, and I am sure that that voluntary co-operation would have been given.

8.26 p.m.

LORD WIGG

I can understand the local authorities being hurt, but I do not think that they ought to be surprised. They knew just how far the independence of local authorities was impinged upon by the previous Administration. They could judge for themselves just how far it was a political gimmick for the present Administration to announce that they were going to restore independence which had never been taken away from them. I am sorry that they are hurt; I am very sorry indeed that their dignity has suffered. But that is just as far as my sympathy goes, because even in local government they are concerned, in most local government areas, with the stuff of which politics are made, and they will have been able to read the signs aright.

They know that this Bill is from beginning to end a piece of political window dressing, and that local authorities up and down the country universally —there have never been exceptions—have always co-operated manfully with central Government, irrespective of its complexion. They know that. They know also that the Government have to put the dummies in the shop window to cover their past mistakes. Therefore the Government are shaking their fists in the face of their old friends, the local authorities, in order to make others feel that this is a tough Administration. Of course it is not. The present Administration are sawdust Caesars. The more co-operative institutions have been in the past, the more likely the Government are going to treat them with indignity and be rude. When they get a little of their own medicine they do not like it; they start invoking the national interest at the top of their voices.

It is no accident that the Tory Party has always been the Party of bellicosity, the Party of patriotism. It is no accident that Dr. Johnson in his day said that patriotism is the last refuge of the scoundrel. It is the last gimmick left in the political spectrum. This clause does not mean a single thing. I would say to my noble friend Lord Garnsworthy who as a good local government man obviously feels deeply about the indignities that the Government have heaped upon local authorities up and down the country: Be of good cheer! This does not mean very much. Everyone whose opinion is worth having thinks well of the local authorities; they know very well that they have cooperated in the past; they know very well they will co-operate in the future. If the Government want any information they will have it. There may be one or two exceptions who will stray, but, by and large, the local authorities in this country will co-operate. The Government know that they will co-operate and everybody else whose opinion is worth while knows this very well.

It is no good pleading with the Front Bench opposite because they are not going to shift. How dare they move one single dummy! It would take away something from the picture that is put in the shop window. What they are doing is meant to be another indignity heaped upon the co-operative local authorities, another form of the political alibi that the Government are using in order to disguise the shift of their policies.

LORD MILVERTON

I feel in some difficulty in this matter. Following this Amendment I have an Amendment proposing the complete deletion of Clause 14. T was not going to make a speech on the subject because I have already made the speech on the Second Reading of the Bill. As there was no time for answers to be given on that occasion, I thought that replies might be given to the many criticisms, some of them coinciding with what we have heard to-night, on this occasion. That is the reason why I put down the Motion—in order to give the Government the opportunity of giving the answers to the speech I made during Second Reading.

Owing to the slowness of the mail and such things there has been some delay, but yesterday I received a private letter from my noble friend Lord Drumalbyn. The letter said that he regretted that he had not had the opportunity of a lengthy summing up on the Second Reading, but wanted to put me right over certain points of view taken by Government, and he painted the picture as he saw it. He also eliminated some of the mistaken outlook which I had had. The answer to much of the debate we have heard Ito-day is shortly, no doubt, going to be given by my noble friend Lord Drumalbyn. What he wrote to me in that letter convinced me that I had misjudged the Government's point of view, and the picture he painted made me feel that I would no longer be justified in proposing or supporting a Motion for the deletion of this clause. It would be much better for him to give the contents of that letter rather than for me to try, even if I had his permission, to repeat some of the words written in that letter by the noble Lord: because obviously what one wants are his own words in the record of Hansard, and that we can get properly only from his own lips. I shall look forward, no doubt, to hearing him repeat to this Committee much of what he wrote to me in that private letter. I shall only say that I personally propose to ask the Committee to allow me to withdraw the Motion standing in my name for the deletion of this clause, and that will mean that I shall also oppose the Amendment which is now before your Lordships.

LORD DRUMALBYN

I must say to the noble Lord, Lord Garnsworthy, that he seems to have misunderstood the situation and that we certainly cannot accept the Amendment. The clause simply gives the Secretary of State power to require certain information; it gives him no power to fix a rate or precept or to tell a local authority what rate or precept it should make. The noble Lord speaks as though there was a power to require—

LORD GARNSWORTHY

If the noble Lord will read to-morrow what I have said, he will see, I am sure, that his brief is not too well prepared.

LORD DRUMALBYN

I heard the noble Lord use the words "telling the local authorities what they should do". The fixing of rates is entirely a decision for the authority concerned and it alone is in a position to know all the local circumstances. Any Order made under the clause would be merely an Order to provide information. The power in Clause 6 is simply a power given to the local authority to reduce its rate of precept. It is a new right, not a derogation of power. Rates are, after all, an important item in household budgets and industrial and commercial costs. In the context of the far-reaching measures we are taking to counter inflation we did not think it right to leave rates entirely out- of account. The noble Lord said that we could rely for this information on the voluntary co-operation of rating authorities. We have indeed, as I acknowledge with pleasure, had for the most part excellent co-operation, and indeed the monitoring of rates for England and Wales for the coming year is already taking place on a voluntary basis. It would not have been fair to the great bulk of authorities who are co-operating in the counter-inflation policy if those who are unwilling to give information voluntarily were not required to do so as well.

I would draw the attention of the Committee to the fact that the powers extend only to the end of March, 1974, which will enable monitoring to take place again next year if it is considered desirable to repeat this year's exercise. This limitation results, as my noble friend Lord Amory has said, from Government Amendments in another place, which took account of representations which have been made to us on this point, and in particular this meets representations made by the County Councils Association. The monitoring exercise was explained to local authorities in a Circular that went out on February 2 and some 80 per cent. of the rating authorities have already replied. In the short time since the exercise began about one-fifth of these have been asked to review their expenditure and 25 have already agreed to do so, with reductions totalling about£¾ million. This is a very reasonable figure over the short period and I hope the noble Lord will agree that rate monitoring is well worth while.

I cannot accept this Amendment, which would reduce this clause to a virtual nullity, and it would be better to do as my noble friend Lord Milverton suggested, namely, to leave out the clause altogether. But I think my noble friend Lord Milverton has been satisfied on the basis of the letter that I wrote to him that there is sense in what we are doing here; that it is not a derogation of the powers of local authorities; it fully respects the independence of local authorities. All it does is to ensure that local authorities, like everybody else during this particular period that we are in, will co-operate in the fight against inflation.

LORD WIGG

If the noble Lord has written a letter to one of his noble friends which is so completely convincing, why should not the rest of us hear it? Is it some confidential document or has he used arguments to his noble friend of which he is ashamed? Why can we not have this letter read out, because I am sure that the letter must have been strong to have convinced the noble Lord, Lord Milverton. At one time he was a very powerful colonial official and I am quite sure he would not have been convinced by the arguments that have been put to us now. So this great magnum opus which the Minister has obviously taken such a long time to prepare should be read to the rest of us so that we may all know what it is.

LORD MILVERTON

May I say that the noble Lord who has just spoken should not be surprised that I do not publish private letters. It has not been my custom to do so without the permission of the writer and I do not propose to vary my custom, however it may differ from the noble Lord's. In addition may I say that the question of whether I can be convinced by the arguments which have just been repeated by the noble Lord, Lord Drumalbyn, and the fact that I was convinced by those arguments setting out the Government's point of view as being reasonable, is a matter for my judgment. The noble Lord may find it impossible to understand how I could have come to that conclusion, but it is also possible that I may be right.

LORD WIGG

On the contrary, the noble Lord's comments as regards myself border on the verge of being impertinent. I understand perfectly well that the ownership of the copyright of a letter that has been written does not rest with the noble Lord; it rests with the person who wrote it. Perhaps the noble Lord will humble himself and will take into account the fact that I was not addressing him. His opinions in this matter do not count. I was addressing my remarks to the Minister. He is answerable to the House, not Lord Milverton. Therefore if the noble Lord writes a letter to another noble Lord, which he has quoted, at least under the rules of the House of Commons you are required to lay it. That is a Parliamentary custom and perhaps the noble Lord has not been in public life long enough to understand its fundamental decencies.

LORD DRUMALBYN

The noble Lord is a very skilled Parliamentarian himself and he knows perfectly well that when a Member of Parliament raises a question during a debate and it is not answered one has the courtesy to write and deal with the point afterwards. That is what I did in that case. I would not dream of regarding anything that my noble friend has said as an impertinence. This was a perfectly ordinary procedure. I have given to the Committee the substance of what I said to my noble friend in that letter. The noble Lord may or may not find it convincing: my noble friend has said that he is convinced and I am happy with that. So I hope the noble Lord will accept that it would not be usual for me to read the letter now.

8.29 p.m.

LORD GARNSWORTHY

I am grateful to noble Lords who have taken part in this short debate. I had intended to take up the matter that the noble Lord, Lord Wigg, has just been pursuing: and indeed I will, because I will say that if the noble Lord, Lord Milverton, is satisfied by what we heard from the noble Lord, Lord Drumalbyn, then he is indeed very easily satisfied. He can read Hansard to-morrow and he had better compare it with his letter, because we heard from the noble Lord, Lord Drumalbyn, no argument that could persuade anybody who knew anything at all about the subject. The noble Lord, Lord Milverton, often speaks for at least one of the local authority associations, and part of what I have said this evening was quoted from what they themselves have said, and I did not lightly table the Amendment. I think the speech of the noble Viscount, Lord Amory, indicates that in point of fact the local authorities are not so happy as the noble Lord, Lord Drumalbyn, endeavoured to persuade the Committee.

LORD DRUMALBYN

I did not base my case on the happiness of the local authorities in this matter; I based it on the argument of the strength of the case itself.

LORD GARNSWORTHY

So far as that goes, I am making the point that although he made it clear that he did not go all the way with me, the noble Viscount, Lord Amory, made it fairly clear—and he speaks with a very close association with one of the major authorities—that they are not happy. I thought that the noble Lord, Lord Drumalbyn, tried to ride off with it much too lightly. If I may say so, I think that he stuck much too much to his brief and over-anticipated what was going to be said. He criticised the interpretation I placed on Clause 14. What I said about Clause 14 I read word for word from the Explanatory and Financial Memorandum and I was very careful to do that. I hope that the noble Lord will take a little more care in future before he suggests that I misrepresent the position when I do that. I believe that that is a very fair point for me to make. I believe that the Committee is entitled to know what the noble Lord, Lord Drumalbyn, wrote to the noble Lord, Lord Milverton. The noble Lord, Lord Milverton, asked questions in debate and there is a point at which the House perhaps will want to know detailed answers to the questions he raised. Let me put it in that way, because it will not be difficult for us to pursue it. I certainly should like to see a copy of the letter that was sent because there appear to be some very overpowering reasons if the noble Lord, Lord Milverton, is persuaded, having spoken as he, did on Second Reading.

LORD DRUMALBYN

If my noble friend agrees, I have no objection whatsoever to sending a copy to the noble Lord. The point is that my noble friend raised this matter in the debate and the noble Lord did not, otherwise I would willingly have sent him a copy.

LORD GARNSWORTHY

We frequently do not raise questions that have been asked by other people. If they have been raised in open debate, there is a point at which the Committee and the House considers it is entitled to have the answer to the question that has been raised. If the noble Lord, Lord Drumalbyn, is offering to pursue with the noble Lord, Lord Milverton, whether he will let me have a copy, then I accept his offer and I shall be interested to know what co-operation he gets from the noble Lord, Lord Milverton, because I believe that it will be 100 per cent. I should not have thought that there was any reason why the contents of the letter could not have been disclosed.

LORD DRUMALBYN

The noble Lord is making terribly heavy weather about this matter. There is no question whatever of holding this back. It was a letter from myself to the noble Lord, Lord Milverton, and what my noble friend has said is perfectly correct. I have made an offer to send the letter and I understand that my noble friend has no objection to my doing so. My noble friend agrees with me that he has no objection. I shall send the letter to the noble Lord, Lord Wigg, as well. It is completely unusual to read out a letter that has been sent to somebody else. I have never known it done, and the noble Lord should get to know more of the procedure of this House.

LORD WIGG

But it is a question of constitutional importance, and the Minister knows it perfectly well. The questions are asked in debate and once this House, or any other deliberative assembly, is used as a forum in which to ask questions, what is said is the property of all Members. The question of privilege in both Houses of Parliament is a common possession, not an individual possession. The copyright, the ownership, of that letter is vested in the Minister. If he uses a private vehicle to convey an answer to a public question, then it should be kept private and not brought out into the open, or any part of it brought out into the open. The Minister has not gone sufficiently far for one to be able to formulate a question here which would involve him in revealing the contents of the letter. I do not think that there is any secret about it, but I feel that it should be accepted, if only as a standard of courtesy, that if a debate is used to ask a question publicly then the answer should not be given privately.

LORD DRUMALBYN

We must not allow this matter to go past because it will disrupt the usual way in which we deal with our affairs in this House, and with which the noble Lord is not yet sufficiently familiar. I know that he has been a Member for a long time but he has not so far come here very often. We very often deal with matters this way by way of courtesy. We write to a noble Lord who has raised a matter in the House either because the Minister does not know the answer at the time or because he has not time to answer. This is done regularly and it is regarded as a facility and a courtesy. There is no reason at all why a letter should not be referred to. There is no Rule of the House against this whatsoever and it would certainly be a great loss to the House, I would submit to your Lordships, if we were to discontinue a procedure which works extremely well and is universally appreciated.

LORD BESWICK

I think that the noble Lord, Lord Drumalbyn, is making a mistake if he tends to underestimate the Parliamentary experience of my noble friend Lord Wigg. I suggest that it is a very weak argument on which to rest his case. Is there not a little truth on all sides here? It is perfectly correct to say that letters are sent to individuals. That is all right and in order, and nothing that my noble friend has said suggests that it should not be continued. The difficulty here arises when one noble Lord makes a reference to a letter and suggests that there is something about it which is much more convincing than we are allowed to hear in public. When that point is reached, another custom should be invoked; namely, that when a letter is sent to one individual it should also be sent to several who are interested or, indeed, published in Hansard.

LORD DRUMALBYN

The fact is that only my noble friend raised this matter in the debate and therefore it was to him that the letter was sent. I feel that we have carried this as far as we possibly can. I was trying to quieten down the noble Lord a little because he had got very excited.

LORD WIGG

May I just add one word? I want to make it absolutely clear and the noble Lord, Lord Drumalbyn, must know it, that I do not challenge the right of Ministers to write to whomsoever they like. In my time as a Minister I have written to Members of the House of Commons and of the House of Lords in the ordinary conduct of business, and that is why I reduced my point to one of courtesy. The issue is not that the noble Lord, Lord Drumalbyn, wrote to the noble Lord, Lord Milverton, but that the noble Lord, Lord Milverton, raised the issue of the contents of that letter as being something which convinced him and which, of course, would have been perfectly all right if the noble Lord, Lord Drumalbyn, had repeated it in his reply. But he clearly did not repeat it in his reply. So an argument was introduced about which we knew nothing. That is the point. I repeat that I am not challenging, never have challenged, and indeed would not challenge, because it would be ridiculous to do so.

LORD DRUMALBYN

May I add what I hope will be the last word in this matter? As so often happens, this shows what happens when one tries to save time. In the letter I slightly abbreviated what I had to say to my noble friend. That is all that happened. And now we have spent ten minutes on it.

LORD GARNSWORTHY

I was in the middle of trying to reply to the debate and I was doing it, I thought, with considerable moderation. The noble Lord, Lord Drumalbyn, said that he was trying to reduce the temperature but he should have seen himself from this side. I think that the point is fairly made and since a use was made of the letter I do not regret the approach I made to the noble Lord, Lord Drumalbyn, or what I said. But let the matter pass. I am extremely grateful to my noble friend Lord Beswick. We have had one or two quotations from Scripture while we have been considering this Bill. There was something about heaven and all the powers, or something like that, and my noble friend Lord Wigg has told me to "be of good cheer". When the noble Lord, Lord Beswick, came in I thought, "after the storm the still small voice". I think that we should leave the matter where he left it when he finished speaking. I would not want to take up the time of the Committee by taking this matter to a vote this evening. The noble Lord has made clear the Government's opposition to the Amendment and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Clause 15 [Offences]:

9.0 p.m.

THE EARL OF GOWRIE

The purpose of this Amendment is to extend the period of 14 days during which the Pay Board have to give warning notice of their intention to issue a restriction order or notice under the protection given by Clause 15 to employers against industrial pressure to contravene such an order or notice. I beg to move.

Amendment moved—

Page 13, line 6, at end insert— ("( ) Where, under subsection (4) of section 7 of this Act, the Pay Board have given notice of their intention to make or give an order or notice under that section then, for the purposes of subsection (2) above, the giving of the notice under the said subsection (4) shall he treated as if it constituted the making or giving of the order or notice to which it relates.").—(The Earl of Gowrie.)

THE EARL OF GOWRIE

This is purely a drafting Amendment. I beg to move.

Amendment moved— Page 13, line 24, leave out from ("approval") to ("this Act") in line 25 and insert ("under Schedule 2 to this Act, or for consent under any provisions of").—(The Earl of Gowrie.)

THE EARL OF GOWRIE

With the leave of the Committee, I should like to take Amendment Nos. 33 and 34 together. These are tidying up Amendments. The effect of them is to give to trade union officials acting within the scope of their authority immunity from personal liability for an offence committed by refusing or wilfully neglecting to comply with the notice given by the Minister or either Agency other than the provisions of Clause 13, that is to say, requiring the furnishing of information or the production of documents. I beg to move.

Amendment moved— Page 13, line 39, after ("(2)") insert ("or paragraph (a) of subsection (4),").—(The Earl of Gowrie.)

THE EARL OF GOWRIE

I beg to move Amendment No. 34.

Amendment moved— Page 14, line 32, leave out ("section 15(2)") and insert ("subsection (2), or paragraph (a) of subsection (4), of section 15.").—(The Earl of Gowrie.)

Clause 15, as amended, agreed to.

Clause 16 [Offences by unincorporated bodies]:

THE EARL OF GOWRIE

Amendment No. 35 is a technical Amendment designed to remove any doubt arising from the present wording of Clause 16(4)(c). I beg to move.

Amendment moved— Page 14, line 46, leave out ("payable out of") and insert ("enforceable, by way of execution, diligence or otherwise, against").(The Earl of Gowrie.)

LORD BESWICK

This may be a technical Amendment but I am not sure what language it uses. If it is English, I am afraid it is beyond my comprehension. How do you enforce something "by diligence or otherwise"?

LORD DRUMALBYN

Perhaps I could explain. "Diligence" in Scotland is the equivalent of "execution", "or otherwise" is a covering phrase.

Clause 16, as amended, agreed to.

Clauses 17 to 20 agreed to.

Clause 21 [Short title, Supplemental provisions and repeals]:

8.55 p.m.

THE EARL OF GOWRIE

In Sassenach English, this is a drafting Amendment only. I beg to move.

Amendment moved— Page 18, line 28, after ("Acts") insert ("and instruments").—(The Earl of Gowrie.)

Clause 21, as amended, agreed to.

Schedule 1 agreed to.

Schedule 2 [Approvals and consents]:

8.56 p.m.

LORD DRUMALBYN moved Amendment No. 37: Page 24, line 18, leave out sub-paragraph (2).

The noble Lord said: I beg to move Amendment No. 37. The effect of these two Amendments is to transpose subparagraph (2) with the omission of the words "at any time" and put it into a new paragraph (2) while replacing subparagraph (5) of paragraph (1) with new sub-paragraphs (2), (3) and (4) in the new paragraph (2). The reason for this is that sub-paragraph (2) as it now stands prevents the Agency, once it has given its approval, from subsequently reducing the price, charge or remuneration which it has duly approved. That is right and proper in the case of remuneration, but it goes too far in the case of prices and charges. We now think that paragraph 1 as drafted does not make this absolutely clear. The new paragraph 2 does two things: first, it permits the Agencies to frame their approval in whatever way seems to them appropriate for ensuring that the provisions of the Code are implemented, including attaching conditions to it, making all allowances for future changes of circumstances and limiting the duration of approval. Secondly, it permits the Minister to frame this order under paragraph 1 in such a way as to impose the same sort of conditions, limitations and qualifications in the case of deemed approvals as might have been imposed in the case of actual approvals: in other words, to ensure that deemed approval does not exempt the applicant from all his obligations tinder the Code in respect of the price or charge in question, should circumstances change in the future. The Amendment will not be placing an onerous burden on industry. It merely ensures that where industry is achieving better results it should share the benefits with the consumer or user. The Amendment is therefore necessary to ensure that the central objective of Phase 2, a reduction in the rate of inflation, is achieved. I commend it to your Lordships for approval.

LORD DRUMALBYN

I beg to move. Amendment moved— Page 24, line 28, leave out ("sub-paragraph (2) above") and insert ("any provision of this Schedule so specified").—(Lord Drumalbyn.)

LORD DRUMALBYN

I beg to move.

Amendment moved—

Page 24, line 42, leave out sub-paragraph (5) and insert— ("2.—(1) Where an Agency approve proposals for an increase in accordance with an order under paragraph 1 above, the Agency shall not exercise their powers under Part II of this Act so as to restrict any price or charge, or any kind of remuneration, where the price or charge or remuneration is duly authorised by the approval. (2) In exercising their powers under an order under paragraph 1 above, an Agency may frame an approval of proposals for an increase in such way as appears to them appropriate for the purpose of ensuring that the provisions of the code are implemented. (3) In acting under sub-paragraph (2) above an Agency may—

  1. (a) attach any conditions to an approval, and
  2. (b) limit or qualify an approval to allow for any change in circumstances, and
  3. (c) limit the duration of an approval.
(4) An order under paragraph I above which provides that an Agency shall be deemed to have given their approval in any circumstances may impose any such conditions, limitations or qualifications as might have been imposed by the Agency under the preceding provisions of this paragraph.").—(Lord Drumalbyn.)

Schedule 2, as amended, agreed to.

Schedule 3 [Supplemental provisions]:

LORD DRUMALBYN moved Amendment No. 39. Page 27, line 13, leave out ("or modify") and insert ("any of")

The noble Lord said: This Amendment arises out of an undertaking given in another place to reconsider the wording of sub-paragraph (2) of paragraph 2 of Schedule 3, which makes it clear that for the purposes of Clauses 5 to 7 and of orders and notices under those clauses successors in business and groups of companies can be dealt with as one person. It was represented that the wording of sub-paragraph (2) was unduly wide since it gave power to the Minister and the Agencies not only to restrict the provisions of sub-paragraph (1) but also to extend them. That was not the intention. While accepting the substance of this argument, we felt it necessary to look more closely at the wording. The Amendment we have now tabled gives effect to our undertaking, and I ask the House to accept it. I beg to move.

LORD DRUMALBYN moved Amendment No. 40:

Page 27, line 16, leave out sub-paragraphs (1) and (2) and insert— ("(1) The Minister may by order made at any time during a period when Part II of this Act is in force prescribe the degree to which anything made illegal by any order or notice made or given under Part II during that period, or anything otherwise affected by any such provision, is to be valid or invalid either during that period or later.")

The noble Lord said: This Amendment arises out of an undertaking given in another place to reconsider the wording of paragraph 3 of Schedule 3 which deals with validation orders. If an order or notice is given under either of the Agencies under Part II of the Bill, restricting a price, charge or rate of remuneration, it becomes illegal to charge a price or charge, or to pay remuneration, exceeding the restriction, and the validity of the relevant contract will be affected. Subparagraph (1) accordingly empowers the Minister to make orders to proscribe the degree of validity and invalidity in such cases. Sub-paragraph (2) makes it clear that such an order will continue to have effect after Part II has ceased to be in force. This is necessary to make the position clear as regards actions done under contracts during the time Part II was in force, but it was represented to us that the paragraph, as it stands, might empower the Minister at any time after Part II had lapsed to make an order regulating the validity or invalidity of something done when Part II was in full force and effect. That was not our intention, and the Amendment which we have now tabled puts the position beyond all doubt. I beg to move.

Schedule 3, as amended, agreed to.

Schedule 4 [Enforcement]:

9.1 p.m.

LORD MILVERTON moved Amendment No. 40A: Page 30, line 9, leave out from beginning to end of line 34.

The noble Lord said: This Amendment also springs from a speech that I made at the Second Reading of the Bill. I put it down to-day in order once more to give the Government the opportunity of saying what happened. On this occasion there was discussion with the Parliamentary Under-Secretary of State for Industry and Consumer Affairs with various local government officials. After some discussion—I was not present, and I do not know what happened or what was said—I gather that it was understood that in addition to the reply to the speech that he made, if this Amendment were put down for discussion in the House so as to give it a right of position the Government would take an opportunity of saying how far they were able to go to meet some of the wishes of local government, and to say exactly what the position was. I am not in a position to say what they are going to reply, but I have no doubt that the noble Lord will shortly enlighten the Committee. At the end of that, I would ask leave to withdraw my Amendment. I beg to move.

VISCOUNT AMORY

I am glad that my noble friend Lord Milverton has provided this opportunity so that my noble friend Lord Drumalbyn can say a word to us about this matter. At first sight, the proposal that the Government should use the weights and measures inspectors employed by local authorities for the enforcement of provisions of this Bill seems rather drastic. However, we recognise the tremendous amount of work which is going to fall on the officials of the Central Government, and they will need all the help they can find in this matter. In these circumstances, I am sure that counties will be willing to help the Government in the way proposed.

We recognise that the functions mentioned are mainly of a transitional nature, but the situation will not be without complications, because the inspectors designated will be serving two masters. In discussions that have been held with the Local Authority Associations, those representatives of the Local Authority Associations have raised various questions, such as about the recoupment of additional expenditure which will follow as a result of this work and the need for advice and instructions to the inspectors. In the discussions, I understand that the representatives of the Local Authorities Associations have in general received satisfactory replies. However, I would ask my noble friend for an assurance that the fullest prior consultation will take place with the local authorities concerned before inspectors are designated, so that this rather unusual scheme will have the chance of working satisfactorily.

9.5 p.m.

LORD DRUMALBYN

I am grateful to both my noble friends. I very much appreciate their concern in this matter. I am glad to hear from my noble friend Lord Milverton that he will not press this Amendment, and I hope he will still be of that view when I have given my explanation. Perhaps I could say to the noble Lord, Lord Garnsworthy, that this was a point, as he will see when he gets that letter, on which I was unable to give the noble Lord the information that he sought at that time. Since then, as my noble friend Lord Amory says, a deputation has seen my honourable friend Mr. Amery, and I hope that what I am now going to say will be helpful.

We regard this paragraph as an essential part of the machinery for ensuring that in the immediate future the Government can effectively supervise prices and charges during the transition to V.A.T. and, if necessary, in accordance with the provisions of the Code. My noble friend expressed the view that it would have been sufficient to frame the legislation in such a way that Ministers could look to local authorities for enforcement instead of direct to their officers, but our reason for taking powers to designate weights and measures inspectors as enforcement officers under the Bill is to maintain central control over the officers implementing it so as to ensure that enforcement action is immediate, consistent, and comprehensive in its coverage of the country as a whole. It is difficult to see how we can achieve these ends, and afford adequate protection to the consumer, unless the Minister has the power to give direct instructions as necessary.

My noble friend considers that we are creating here an undesirable precedent. I can only say to him that this paragraph does not, as he seems to fear, amount to a major change in Government policy. Clause 28 of the Fair Trading Bill, which leaves the duty of enforcement with the local authority, follows in this respect the precedent set by earlier Acts such as the Trade Descriptions Act and the Weights and Measures Act. In the present case we are dealing with an emergency situation created by the rapid growth of inflation for which immediate special measures are required. I can assure my noble friends that the points that they have made are being borne fully in mind, and I certainly take special note of what my noble friend Lord Amory has said about consultation.

VISCOUNT AMORY

If my noble friend cares to write to me a letter on that or any other subject, I shall have no objection at all to receiving it.

Amendment, by leave, withdrawn.

Schedule 4 agreed to.

BARONESS YOUNG

I beg to move Amendment No. 41.

Amendment moved— After Schedule 4 insert the following new schedule—

("SCHEDULE

RENT RESTRICTION

Special rent limit for existing tenancies brought within the Rent Act

1.—(1) This paragraph applies to a regulated tenancy—

  1. (a) which was granted before 8th March 1973, and
  2. (b) which would not have been a regulated tenancy but for the provisions of subsection
(1) of the principal section.

(2) Subject to the provisions of this Schedule, the recoverable rent for any contractual period of a tenancy to which this paragraph applies shall not exceed the limit specified in paragraph 2 below, and the amount of any excess shall, notwithstanding anything in any agreement, be irrecoverable from the tenant.

(3) Sub-paragraph (2) above shall cease to apply if the landlord and the tenant so provide by an agreement conforming with the requirements of section 43(3) of the Housing Finance Act 1972 (agreement to explain the nature of the tenant's security of tenure).

(4) Where—

  1. (a) sub-paragraph (2) above applies, and
  2. (b) a rent for the dwelling-house is registered under Part IV of the Rent Act 1968 which is less than the limit specified in paragraph 2 below.
neither section 20(2) (registered rent as limit for contractual periods) nor section 22(2) (corresponding provision for statutory periods) of that Act shall apply to a tenancy to which this paragraph applies.

(5) Where a rent is so registered which is not less than the said limit, sub-paragraph (2) above shall not apply.

(6) Section 33 of the Rent Act 1968 (enforcement provisions) shall apply as if any amount made irrecoverable by this paragraph were irrecoverable by virtue of Part III of that Act, and section 36 of that Act (adjustment for differences in lengths of rental periods) shall apply for the purposes of this paragraph.

2.—(1) Where at the date of the passing of this Act Article 10 of the Counter-Inflation (Rents) (England and Wales) Order 1972 applied to the rent under the tenancy (to which paragraph 1 applies), the said limit is the rent payable under the tenancy at that date.

(2) In any other case the said limit is the rent payable under the terms of the tenancy (to which paragraph 1 applies), as varied by any agreement made before 8th March 1973, being the rent payable at the time in question, or the rent payable at 8th March 1973, whichever is the less.

Adjustment for repairs, services or rates

3.—(1) This paragraph applies to a contractual period the rent for which is subject to paragraph 1(2) of this Schedule.

(2) In this paragraph "the previous terms" means—

  1. (a) where paragraph 2(1) applies, the terms of the tenancy referred to in the said paragraph 2(1) at the passing of this Act, and
  2. (b) where paragraph 2(2) applies, the terms referred to in the said paragraph 2(2)

(3) Where under the terms of the tenancy there is with respect to—

  1. (a) the responsibility for any repairs or
  2. (b) the provision of services by the landlord or any superior landlord, or
  3. (c) the use of furniture by the tenant,
any difference compared with the previous terms, such as to affect the amount of the rent which it is reasonable to charge the limit in paragraph 2 above shall be increased or decreased by an appropriate amount.

(4) Where for the contractual period there is a difference between the amount (if any) of the rates borne by the landlord or a superior landlord in respect of the dwelling-house and the amount (if any) so borne during the first rental period for which the previous terms were agreed, the limit in paragraph 2 above shall be increased or decreased by the difference.

(5) Where for the contractual period there is an increase in the cost of the provision of the services (if any) provided for the tenant by the landlord or a superior landlord compared with that cost at the time when the previous terms were agreed, such as to affect the amount of the rent which it is reasonable to charge, the limit in paragraph 2 above shall be increased by an appropriate amount.

(6) Where the previous terms provide for a variation of the rent in any of the circumstances mentioned in this paragraph, the limit shall not be further varied under this paragraph by reason of the same circumstances.

(7) Any question whether, or by what amount, the limit is increased or decreased by sub-paragraph (3) or sub-paragraph (5) of this paragraph shall be determined by the county court, and any such determination—

  1. (a) may be made so as to relate to past rental periods, and
  2. (b) shall have effect with respect to rental periods subsequent to the periods to which it relates until revoked or varied by a subsequent determination.

Statutory period of tenancy: no adjustment for improvements

4. Section 25 of the Rent Act 1968 (increase for improvements) shall not apply to a tenancy to which paragraph 1 of this Schedule applies.

Premiums

5.—(1) This paragraph has effect where a premium was lawfully required and paid on the grant of a tenancy to which paragraph 1 of this Schedule applies.

(2) Nothing in section 86 of the Rent Act 1968 (prohibition of premiums on assignment of protected tenancies) shall prevent any person from requiring or receiving, on an assignment of the tenancy, the fraction of the premium specified below (without prejudice, however, to his requiring or receiving a greater sum in a case where he may lawfully do so under Schedule 11 to the Rent Act 1968).

(3) If there was more than one premium, sub-paragraph (2) above applies to the last of them.

(4) The said fraction is X/Y where—

  1. (a) X is the residue of the term of the tenancy at the date of the assignment, and
  2. (b) Y is the term for which the tenancy was granted.

(5) Sub-paragraph (1) of this paragraph shall apply where a tenancy has been assigned as it applies where a tenancy has been granted, and then Y in the said fraction shall be the residue at the date of that assignment, of the term for which the tenancy was granted.

6.—(1) Where the tenancy to which paragraph 5(1) above applies was granted on the surrender of a previous tenancy, the surrender value of the previous tenancy shall be treated, for the purposes of paragraph 5 above as a premium, or as the case may be as part of the premium, paid on the said grant of the tenancy.

(2) For the purposes of sub-paragraph (1) above the surrender value of the previous tenancy shall be taken to be the amount which—

  1. (a) if the previous tenancy had been assigned instead of being surrendered, and
  2. (b) if this paragraph had applied to it,
would have been the amount which could have been required and received on the assignment in pursuance of paragraph 5 above and this paragraph.

(3) In determining for the purposes of paragraph 5 above, or of this paragraph, the amount which may be or could have been required and received on the assignment of a tenancy terminable, before the end of the term for which it was granted, by a notice to the tenant, that term shall be taken to be a term expiring at the earliest date on which such a notice, given after the date of the assignment, would have been capable of taking effect.

Tenancies ending before passing of this Act

7.—(1) This paragraph applies where the tenancy of a dwelling-house has come to an end at a time before the passing of this Act, and the tenancy would have been a regulated tenancy if the principal section had been in force at that time.

(2) No order for possession of the dwelling-house shall be made which would not be made if the principal section had been in force at the said time.

(3) Where a court has made an order for possession of the dwelling-house before the passing of this Act, but the order has not been executed, the court, if of opinion that the order would not have been made if this Act had then been in force may, on the application of the person against whom it was made, rescind or vary it in such manner as the court thinks fit for the purpose of giving effect to the principal section.

(4) If the tenant under the tenancy which has come to an end duly retains possession of the dwelling-house after the passing of this Act (without any order for possession having been made, or after the rescission of such an order) he shall be deemed to do so under a statutory tenancy arising on the termination of the tenancy which has come to an end, and, subject to sub-paragraph (5) below, the terms of that tenancy (including the rent) shall be deemed to have been the same as those of the tenancy which has come to an end.

(5) The High Court or the county court may by order vary all or any of the terms of the tenancy imposed by sub-paragraph (4) above in any way appearing to the court to be just and equitable (and whether or not in a way authorised by the provisions of sections 23 and 24 of the Rent Act 1968).

(6) If the tenant died after the tenancy came to an end, but before the passing of this Act, and at the passing of this Act the dwelling-house is occupied by a person who would, if the tenancy had been a statutory tenancy, have been the "first successor" within the meaning of paragraph 4 of Schedule 1 to the Rent Act 1968—

  1. (a) an application tinder sub-paragraph (3) above may be made by that person, and
  2. (b) sub-paragraph (4) above shall apply as it applies where the tenant retains possession.

Mortgages

8. At the end of section 93 of the Rent Act 1968 (mortgages to which Part VIII of that Act applies) there shall be inserted the following subsection— (5) If at the date of the passing of the Counter-Inflation Act 1973 land consisting of or including a dwelling-house was subject to a tenancy which becomes a regulated tenancy by virtue of section 13 of that Act, then in relation to that dwelling-house (and any land including that dwelling-house)—

  1. (a) sections 94 and 95 below shall have effect as if for the reference in subsection (1)(a) above to 8th December 1965 there were substituted a reference to the date of the passing of the said Act;
  2. (b) subsection (2)(a) of the said section 94 shall have effect as if for the reference to the appropriate day there were substituted a reference to 7th March 1973, and
  3. (c) subsection (1)(b) of the said section 95 shall not apply."

Grounds for possession of dwelling-house

9. If at the date of the passing of this Act a dwelling-house was subject to a tenancy which becomes a regulated tenancy by virtue of the principal section, then, in relation to that tenancy—

  1. (a) Case 5, paragraph (b) of Case 10, and paragraph 2(a) of Part III, of Schedule 3 to the Rent Act 1968 shall have effect as if for the references in those provisions to 8th December 1965 there were substituted references to the date of the passing of this Act,
  2. (b) Case 8 of the said Schedule 3 shall have effect as if for the reference to 23rd March 1965 there were substituted a reference to 8th March 1973, and
  3. (c) the said paragraph 2(a) of Part III of Schedule 3 shall have effect as if for 7th June 1966 there were substituted a reference to the expiration of a period of six months beginning with the passing of this Act.

Reserve and Auxiliary Forces (Protection of Civil Interests Act) 1951

10. In section 16(2)(a) of the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951 (protection of premises by extension of the Rent Acts the words "on the appropriate day" shall cease to have effect, and for the words "in subsection (1)(a) of section 1" there shall be substituted the words "in paragraphs (a), (aa) or (aaa) of subsection (1) of section 1".

Tenancies at a low rent

11.—(1) At the end of section 2(1) of the Rent Act 1968 there shall be inserted the following provisio:— Provided that paragraph (a) of this subsection shall apply in relation to a dwelling house—

  1. (i) in relation to which the appropriate day fell before the passing of the Counter-Inflation Act 1973, and
  2. (ii) which had on the said appropriate day a rateable value exceeding, if it is Greater London, £400 or, if it is elsewhere, £200.
as if for the reference in the said paragraph (a) to the appropriate day there were substituted a reference to the date of passing of the Couner-Inflation Act 1973.".

(2) In section 2(5) of the Landlord and Tenant Act 1954 (as originally enacted) for paragraphs (a) and (b) there shall be substituted

Page 32, line 18, at beginning insert—

("14 & 15 Geo. 6. c. 65. The Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951. In section 16(2)(a) the words "on the appropriate day".")

Page 32, line 25, at end insert—

("1967 c. 88. The Leasehold Reform Act 1967. Section 39(1)(b).
1968 c. 23. The Rent Act 1968. In Schedule 15, in the paragraph amending section 2 of the Landlord and Tenant Act 1954 the words (amending section 2(5)) from "and in" to the end of the paragraph.")

Page 32, line 28, at end insert—

("1972 c. 47. The Housing Finance Act 1972. In section 89, in subsection (1) the words "(6) and", in subsection (2) the words "(6) and" and "1 and", and subsection (6).

Statutory Instrument

S.I. 1972/1851. The Counter—Inflation (Rents) (England and Wales) Order 1972. In article 9(5) the words form "and this paragraph" to the end of article 9(5).
Article 10, except as respects rent for a period before the passing of this Act").

—(Baroness Young.)

Schedule 5, as amended, agreed to.

House resumed: Bill reported with Amendments.