HL Deb 23 June 1975 vol 361 cc1261-3

5.42 p.m.

Lord JACQUES rose to move, That the Counter Inflation (Price Code) (Amendment) Order 1975, laid before the House on 20th May be approved. The noble Lord said: My Lords, this Order amends three paragraphs of the Price Code. In his April Budget, the Chancellor of the Exchequer increased the vehicle excise duty, and in the estimate which he made of the effect of the Budget on the retail price index he assumed that the increased vehicle excise duty in the case of commercial vehicles would in fact be passed on to the consumer. This Order amends paragraph 32 of the Price Code to allow the increased vehicle excise duty as a cost in determining the control price.

Last year, when we revised the Price Code, we put in the Code a new clause which would enable any firm to generate additional funds from the market to finance new development, and we fixed the rate at 17½ per cent.; that is to say, a firm could regard as a cost for the purpose of control prices 17½ per cent. of its proposed expenditure on new buildings and plant. It is now proposed by this Order to increase the 17½ per cent. to 20 per cent. At the present time the expenditure which is allowed is expenditure on buildings and plant. It does not include commercial vehicles. My right honourable friend is now satisfied that to include commercial vehicles would not divert vehicles from the export market. It is therefore proposed that commercial vehicles should be included for the purposes of assessing the 20 per cent. which may be claimed as a cost for the purposes of price control.

The third amendment to paragraph 79, which deals with investment, applies to export operations. At the present time in order to qualify as an expense the capital expenditure has to relate to trading operations which are within price control. It therefore excludes exports. This Order would include exports, so any expenditure which is for the purposes of operations within price control or exports can be claimed in determining the allowable price. The final amendment which is made to the Price Code is to paragraph 83. At the present time paragraph 83 is headed "Shortages ". It provides that where the Secretary of State certifies that there are, or are likely to be, serious shortages as a result of price control, the Price Commission may allow such relaxations on the control as are specified in the certificate. We are now retitling this paragraph "Special Cases".

In addition to dealing with shortages, it will also deal with cases where it is necessary to safeguard the balance of payments. In circumstances where an overseas buyer has freedom of access to our market, it is clear that a control price can limit the price that may be obtained on the export market. It follows that there may be circumstances when it is necessary to have some relaxation of price control because of the effect it is having upon the balance of payments. Such cases would be special, and it is not expected that there will be many of them. In so far as there will be such cases, they will be dealt with by new paragraph 83 of the Price Code if this Order is approved. That sums up the changes that are being proposed by the Order.

In conclusion, any Government who are exercising price control have to seek a balance between the interests of the consumer, the producer and the national interest, particularly regarding exports and investment. I commend this Order to the House on the grounds that it gives a better balance than we had before.

Moved, That the Counter Inflation (Price Code) (Amendment) Order 1975, laid before the House on 20th May, be approved.—(Lord Jacques.)

6.39 p.m.

Lord ELTON

My Lords, I am grateful to the noble Lord for that concise and clear explanation of what is, at first sight, a complicated Order which needs some unravelling. We note its principle contents: the allowance of excise duty, which is a matter of some gratification; the change in the rate from l7½ per cent. to 20 per cent., with which we do not quarrel; and we note with particular interest the powers of waiver relating to the export market. These are the powers which seem to us to bring a brief relevance of the Order to the situation in which the State as a whole finds itself, as opposed to small balances within that State.

At a time when not just this House nor the whole institution of Parliament but the entire nation are hanging upon the lips of the Government for the fateful words which will decide whether or not we are going to succumb to financial ruin, it is very difficult to muster a great deal of enthusiasm for this unprepossessing but harmless Order. The Chancellor of the Exchequer has, in economic terms, given us an expectation of life of six weeks. Such a sentence should force us wonderfully to concentrate our minds.

In agreeing to this Order, as I suggest we should, I would urge Her Majesty's Government to bring forward urgently the policies by which they propose to avert the total economic ruin of this nation. So long as these policies are not vindictive, but are workable and fair, they need fear no partisan obstruction from these Benches. It is really in order to say that, that I comment upon this Order.

On Question, Motion agreed to.