HL Deb 18 July 1977 vol 386 cc33-82

4.5 p.m.

Debate on Amendment No. 1A, on Report, resumed.


My Lords, perhaps I should reply briefly to the points which have been made by the noble Lord, Lord Boyd-Carpenter, and the noble Lord, Lord Mottistone, on the Amendment which we are considering.


My Lords, may I ask the noble Lord whether he has asked for the leave of the House to make a second intervention?


My Lords, I apologise if I have omitted to do so. If I have not the leave of the House I shall gladly sit down. I take it that I have that leave and I apologise to the House for any discourtesy. I was suggesting that the two speeches about which I needed to comment were those made by the noble Lord, Lord Boyd-Carpenter, and the noble Lord, Lord Mottistone. I acknowledge that the noble Baroness, Lady Seear, my noble friend Lord Lee of Newton and my noble friend Lord Kaldor made important contributions, but it seemed that they were not directed at me in particular.

The noble Lord, Lord Boyd-Carpenter, started by offering a neat summing up of the position as he saw it: pay control goes, price control remains. If I may say so, his summing up was neat but tinged with a degree of exaggeration which often make the interventions of the noble Lord so attractive. Pay control does not go. I agree that it is very different, in view of the events of last week, but, as I indicated, there is to be an order continuing pay control, in particular the 12 month rule. Indeed, firms will be in the same general position under the new White Paper as under the existing one. The only difference is that the current White Paper goes in detail into the level of wage settlements which are permitted, whereas the new one, as I indicated several times, will provide a sanction merely against breach of the 12 month rule. So it is not true simply to say that pay control goes.


My Lords, surely what the noble Lord has said is that pay control in general in respect of the specific amount of increase permitted goes and that what remains is the 12 month rule itself—a diminishing asset.


My Lords, f did say that there are radical differences but, so far as the Amendment which we are now considering is concerned, the important feature is that the pay control which continues is sufficient to bring into effect the pay sanction that we were speaking of. Again, it is true when the noble Lord says that price control remains, but may I ask him to recognise that the kind of price control which we are bringing in through this Bill is—and in a year's time will be very much more so—a different kind of price control from that which has applied hitherto? These are important differences that I wish to comment upon regarding the noble Lord's rather over-simplified summing up of the present position.

The essential feature of price control is that the Price Commission will undertake investigations into carefully selected price increases. This is very different from the across-the-board controls through the Price Code. If the noble Lord studies Clause 2 (2) in particular, he will note that a series of criteria are there set out. These are designed exactly to take account of the different circumstances in the various kinds of firm to which he referred. The noble Lord instanced in particular a firm which is capital intensive and which might, for that reason, be all the more tempted, for the sake of a quiet life, to give way to an improper wage demand. I suggest that Clause 2 is designed very carefully and very specially to take account of the differing circumstances of different firms.

The noble Lord asked how the Government would help a firm to resist an improper wage demand, one which is out of time and in breach of the 12 month rule. If a firm properly resists such an improper demand, then it will know that no certificate will be issued by the Secretary of State for Employment. This firm will therefore not be referred for investigation to the Price Commission and its pricing policy will be unaffected. It will be for the firm to determine its pricing policy. On the other hand, the firm would know that if a competitor gave way to an improper wage demand the certificate would be issued which would cause my right honourable friend the Secretary of State for Prices and Consumer Protection to require the Price Commission to investigate under the margin controls the affairs of the firm which improperly gave way to such a wage demand. In that way I think the Government would be behind a firm such as the noble Lord has instanced.


My Lords, I am obliged to the noble Lord for giving way. Is not the sanction on the competitor who gives way that he would be less able to compete because his prices would go up? Why should he have a still further sanction imposed upon him?


My Lords, the firm would come under scrutiny and it would suffer the penalty of having its margin reduced. The improper wage increase would not be allowed to the company in the calculation of the allowable price, so it would be under a disadvantage in that respect.


My Lords, if while they are going through the procedures just outlined by the noble Lord—and we know that such procedures can be protracted—considerable losses are incurred (which was the point raised by my noble friend), can they claim any sort of compensation from any source?

4.12 p.m.


My Lords, we discussed this at Committee stage and interim price increases would be allowed even during the period of investigation—indeed more than one, if needed—so the losses would not occur. That is quite apart from the safeguards provided under Clause 9. I was about to reply to the noble Lord, Lord Mottistone—not to all his points, as he will recognise, but particularly to the point that he made, that things are different now as compared with a week ago. I entirely accept that and indeed I acknowledged it in my opening remarks. But he suggested that because they are different now we need to review the situation again. To some extent we are doing that now, but I would suggest that since I have already indicated that there will be an order needing the affirma- tion of both Houses of Parliament, and that will come within the next two weeks, that will provide the opportunity to review the situation.

Then the noble Lord disappointed me because he recalled that I had said that the White Paper and an order would be before Parliament, and he said, "If that is so, jolly good show!"; and I thought he was then going to on say, "And that obviously makes it unnecessary to rely on the TUC meeting in September". But then, disappointingly and rather tamely, at the end the noble Lord said that nevertheless he proposed to support his noble friend's Amendment.


My Lords, if the noble Lord will allow me to interrupt on that point, the fact is that a White Paper was promised for last Friday, which would have been substantive. Because that did not come forward, is it not reasonable to have doubts about the solidity and firmness and all-embracing covering of any White Paper that might come out in a fortnight's time? Therefore it is important to have coverage in the Bill to make sure that we are dealing with the situation.


No, my Lords. The point is that in order to continue the powers existing at the moment under the legislation referred to in this Bill, an order is necessary. I can only give the noble Lord my undertaking that that order is on the way, and I can only ask him to accept that such is the position. I believe he will then find his opportunity to say what he wants to say more fully.


My Lords, before the noble Lord sits down, he said quite a lot about sanctions for breaches of what he described as the "12 months' rule". Will the sanctions be brought against firms who also give wage settlements which are above the 10 per cent. maximum?


My Lords, the order to which I referred—and I made this clear in my opening remarks—will apply only to the 12 months' rule and not to other aspects of pay policy that were announced by my right honourable friend the Chancellor of the Exchequer.


My Lords, the emperor's clothes grow more diaphanous by the second. I think we have had a useful debate. Most noble Lords realise that this Amendment was tabled in the light of swiftly changing circumstances. Certainly the drafting was not meant to be taken very seriously, particularly as I drafted it myself, and therefore it was used as a peg for one or two arguments to which hopefully it was thought the Government might reply.

It seems to me that what we are left with is the Government saying, "We think that the maximum level of settlements should be no more than 10 per cent. If a trade union or any other body of workers is able to use its industrial muscle and get a far larger settlement then we, the Government, do not propose to intervene. The company which gives it will not be helped to resist such a claim, but equally it will not be penalised for having given in." I hope this is a fair way of putting the Government's argument. They say, "What we, the Government, are adamant about is our 12 months' rule. In other words, if that rule is breached then we shall use both of the arms; that is to say the arm of general Government dissatisfaction which the Chancellor mentioned in his Statement in the other place last Friday and also, as the noble Lord, Lord Oram, has said, sanctions will be imposed against the company by means of the Price Commission. That was the matter which I wanted to find out. It then becomes plain and paramount that the Price Commission is going to be used as a political arm of the Government to help impose its policy upon companies. I think that is the situation to which we now come.


My Lords, I am grateful to the noble Earl for giving way. In that respect the situation is as it has been for the last two years.


My Lords, if the noble Lord is saying that the Social Contract has really been a figment of the Government's imagination for the last two years, that is something which others have been saying all along, but I do not believe he means that.


No, my Lords, I do not. I must make this clear. As I understood it, the noble Earl was referring to the pay sanction provision and it is that which has existed these last two years in the same form as it will now exist. It has not had to be invoked, but no change is being effected by what we are now discussing.


My Lords, the fact of the matter is that there will be no moral argument. As I understand the position, there will be the invocation of powers only if the 12 months' rule is breached. I see the noble Lord is, nodding his head. One asks what protection the company is to have, in so far as protection may be needed. I cannot say I was surprised. I was a little disappointed by the attitude of the noble Baroness, Lady Seear, who said—I trust I am being fair and reasonably accurate—that that is something which companies have to work out for themselves. The managers are there to manage and they will have to get on and do their best. That is a robust point of view, but I am not sure that industry will regard it as exactly helpful.

Then the noble Lord, Lord Lee of Newton, asked, "What is policy?" in regard to incomes policy. Of course, a question like that can be mentioned in a number of different ways. It is rather like asking somebody if he believes in heaven: most of us have our ideas of heaven but they do not usually coincide with the ideas of other people. It is not an easy question to ask and it is certainly not an easy question to answer. My grandmother, aged 90 at the end of the war, who had been deaf for 36 years, said that her idea of heaven was to go to a tropical island and die of a surfeit of pineapples. Apparently that was something that was pleasurable to an old lady at the end of the war. It may be that in the economic debate on Wednesday one might come back to the noble Lord's question, but I do not think it has really got very much to do with the Amendment or the debate this afternoon.


My Lords, if the noble Earl will allow me to intervene, I was not referring to an old lady of 90. I was referring to the Leader of the Opposition.


My Lords, we are both referring to desirable existences. It is just that our ideas about them do not coincide. I think we should get on. We have had a good debate. In the circumstances, I am sure we shall all read, and our colleagues in the other place may well read with interest, what has been said on behalf of the Government this afternoon. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 5 [Proposals to investigate prices or margins]:

4.21 p.m.

Lord MOTTISTONE moved Amendment No. 1: Page 7, line 9, after ("margin") insert ("not being a net margin as provided for in regulations made under subsection (6) of this section").

The noble Lord said: My Lords, I trust that the discussion on this Amendment will be short because, as I said in Committee, the purpose behind it, which I then endeavoured to establish, is a tidying up operation. I hope it is helpful to the Government to tidy it up. It is certainly helpful to business to know where they stand. As the Government will be aware, there is more than one sort of margin which might be covered by the phrase which the Amendment seeks to correct. Taking into account what was said at Committee, and also what was in the note which the noble Lord, Lord Wallace, very kindly sent to me to clarify a point which he had made, I hope this Amendment will take care of what the Government wished to modify within my original Amendment. I beg to move.


My Lords, I gave an undertaking in Committee that we would look at the general principle of the previous Amendment and the one which we have before us today. I would say that the problem with any attempt to specify in the Bill the margin to be investigated is that, to be successful, it would require an extensive definition of "margin". Such definition would be out of place in the main legislation. That is why we have left the problem of definition to regulations which will be made under Clause 5(6).

We have, however, looked at the idea of including in the Bill a provision that will make clear that investigations are to be made into gross percentage margins, but we cannot do so without either including a somewhat lengthy definition or leaving the definitional problem to the regulations. This latter method would mean that we do not really solve the problem. I am afraid the present Amendment poses the same difficulties. We have concluded that the definition of "margin" has to be left in Clause 5(6) regulations.

However, I should like to give a very clear undertaking that investigations will relate to gross percentage margins. We will achieve this by suitably defining distributors' margins under the regulations. In this way we will meet the intention behind the Amendment. The regulations will make it immediately obvious to the distributive trade that any investigation will be into the gross and not the net margin. In the light of that undertaking I hope the noble Lord will feel able to withdraw his Amendment.


My Lords, I am slightly disappointed because I had rather hoped that the phraseology of the Amendment, to which the noble Lord's reply did not directly relate, took care of exactly what he was saying and underpinned his assurances. I entirely accept the noble Lord's assurances, and I am sure that people who are interested in this Amendment will read the Official Report and take comfort therefrom. The difficulty is that, quite apart from Governments changing—which, God help us, they may soon—Ministers change and even Ministries get swept away, while Acts of Parliament go on for ever. It is a little difficult to have a matter of importance like this left on an assurance within the record. But this is not an important enough point to take any punitive action against the Government and so, with your Lordships' permission, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 6 [Investigations]:

4.26 p.m.

Lord TREFGARNE moved Amendment No. 2:

Page 8, line 43, at end insert— ("(aa) to complete the investigation and to make available to the relevant person any evidence or information relied upon by the Commission during the investigation. Provided that the Commission shall not make available such evidence or informaton as aforesaid if the provision thereof would be prejudicial to any legitimate commercial interest.")

The noble Lord said: My Lords, on behalf of my noble friends Lord Mansfield and Lord Mottistone, I rise to move Amendment No. 2, which is an Amendment to Clause 6. My noble friend Lord Mansfield spoke at length, as indeed did the noble Lord, Lord Oram, during the Committee stage to Amendments Nos. 20, 21 and 22, which were debated together at that time. The point which we are seeking to make al this moment, and one which we regard as of particular importance, is related to the provisions in the Bill for consultation between the Corn-mission and firms whose affairs are under investigation.

My noble friend Lord Mansfield was at pains to explain to your Lordships that under the Bill as drafted it was quite open for the Commission to produce reports, and indeed for the Secretary of State to take action upon them, with the most inadequate provisions, as we thought, for consultation with firms whose affairs were being looked at, and non-existent provision indeed for any rectification of defects which may only be apparent to the firm under investigation when the report appears, or indeed in the deliberations of the Commission before the report itself finally comes before the Secretary of State. We on this side of the House find this unacceptable.

The noble Lord, Lord Oram, in replying to the points we made at Committee stage, said, first of all, that firms were entitled to make representations to the Secretary of State between the publication of the report and action by the Secretary of State. We agree that that is possible, but we think that that provision is in no way adequate to meet the problem that we see before us. The noble Lord, Lord Oram, also said that there was a problem of time; he said there would be no time, if the Commission were to produce their reports promptly, for them to consult with firms to check the accuracy of the information upon which they were relying. The noble Lord also said that some consultation would in any event take place. So I am not at all persuaded by that point, and I hope your Lordships will not attach too much importance to it.

Finally, the noble Lord, Lord Oram, said that there were considerations of commercial confidentiality. I believe that the noble Lord had a point there. Under the Amendments we proposed at Committee there may have been some difficulty about the Commission revealing information that they had received from third parties. We have accordingly adjusted our Amendment on this occasion to have regard to that point which the noble Lord made.

My Lords, the problem is that firms feel that when the Commission are reaching conclusions which may be very disadvantageous commercially to firms, they should rely upon accurate information; that the Commission should not be reaching conclusions upon information produced perhaps by aggrieved third parties and which might never come to light unless the Commission have a statutory obligation to bring this information to the attention of firms under investigation. I beg to move.


My Lords, as the noble Lord, Lord Trefgarne, has explained, during the Committee stage we discussed similar Amendments to the one that he has just moved. I acknowledge that the noble Lord, Lord Trefgarne, obviously listened to, and no doubt has studied since the Committee stage, what I said in reply to the Amendment at that time. As he has explained, the present Amendment is similar in intention to those that we discussed a week ago. He has pointed out that he has carefully taken care of a main point that I raised on that occasion about the disclosure of commercial information where disclosure could damage a third party, and I acknowledge that his Amendment seeks to take care of that matter. However, he will recall, and he has said so this afternoon, that that was not the only point that I put before your Lordships in resisting the Amendment, as I am afraid I must continue to resist it today.

I undertook to look at the matter and I have done so. However, I made it clear during the Committee stage that I did not expect to be able to come back to the House with any suggestion about how the Bill could be improved in this respect. I am afraid that that is still the position. It is not the case that I do not recognise the real fear among noble Lords opposite that the Commission might inadvertently rely upon some erroneous fact with damaging results to the firm concerned; it is simply that in practice we feel that these fears are misplaced. Perhaps I may repeat two or three of the reasons why we have reached that conclusion.

First, there are the safeguards to protect the firm. Clause 6(8) requires the Commission to exclude from reports, so far as practicable, matters which could seriously and prejudicially affect the interest of a person or a firm. The Commission are permitted to include such matters only if they are necessary for the purposes of their report. Under Clause 6(9), the Secretary of State can, before he publishes the report, exclude any finding of fact, the publication of which would be against the public interest. The Commission are required under Clause 6(1)(c) to give a copy of their report to the firm concerned as soon as they give it to the Secretary of State. Therefore, as the noble Lord, Lord Trefgarne, acknowledged, the firm will be able to make representations to the Secretary of State about any possible errors before he takes action on the basis of the report. I have quoted the noble Lord, Lord Trefgarne, and I should also acknowledge that he indicated that that does not satisfy him. It is still the same argument, but I believe that it needs to be put on record.

I should, perhaps, rest my case more on another point which I remember stressing last week. The Commission, in practice, can be expected to check matters of fact with the firm concerned as they carry out their investigation. Although it is not laid down in the Bill, I believe that that is, in practice, the real safeguard against the inclusion of errors in their report. I accept that there can be two judgments as to whether the factors that I have mentioned are sufficient. Our judgment is very distinctly that the practical outcome of the Bill will avoid any difficulties such as those to which the noble Lord, Lord Trefgarne, has pointed. I believe that the various safeguards and other provisions built into the Bill are such that certainly there is no need to introduce an Amendment of the kind proposed. Therefore, I assure the noble Lord, Lord Trefgarne, that, having given further thought to the matter since we discussed it a week ago, I have reached the same conclusion, and must ask him not to press the Amendment.


My Lords, I am most unhappy at the reply the noble Lord, Lord Oram, has given to my noble friend Lord Trefgarne. If one looks at the Official Report of the Committee stage, one sees that the noble Lord made great play of the commercial interest which we have endeavoured, as he admits, to remove. He has now produced some other points to draw to our attention, one of which is Clause 6(8) which, as I read it, refers strictly to individuals, and quite rightly so. It is most important that individuals should be protected in this way and the Government are to be commended for including Clause 6(8) in the Bill. However, that does not get around the question of the company.

The noble Lord, Lord Oram, then directed our attention to Clause 6(9), in which there is reference to the public interest. However, that is the other end of the scale. Between the individual and the public interest is the company. It is the company which is liable to be misrepresented. It seems to me that it is unreasonable to rely on either of those provisions. I suggest to the noble Lord that perhaps his argument is not as strong as he was trying to make it out to be, because he finished by saying that the third and most important matter is that, as regards the practical workings, the Commission will have to consult with the firm as the information is collected. That may well be so, but if it were satisfactory for what might be supposed to be the practical workings—I do not dissent that this might be so—then there are many other safeguards which have been built into the Bill by the Government and which, probably, would have been taken care of just as well by what would happen practically.

After all, when we pass Acts of Parliament we must always make a judgment. Indeed, it arose on my last Amendment. We must make a judgment about what might be promises from this Government or that Government, what might be practical considerations and what is required in order to safeguard not just the individual but the individual organisation like a company, trade union, or some such body of people, against the irrational action of a public body like a Commission or even a Minister. One must be sure that what is rational today will be rational in the future. Therefore, provisions must be built into the Act, indeed, any Act, to provide protections.

The fact of the matter is that in this case the noble Lord, Lord Oram, although producing many arguments as to why he thinks the Bill or the possible practice of the Commission will provide the protections which we are seeking, has not actually said what is harmful in this particular proposed Amendment, to the principles of the Bill or what is inaccurate or bad wording. He has not said anything which, to my mind, makes this Amendment not a very sensible one. The Amendment provides an extra safeguard which is very reasonable for a company to expect. I, therefore, strongly support my noble friends in this Amendment.

Viscount SIMON

My Lords, during the Committee stage of the Bill, my noble friend Lady Seear and I expressed some doubts about the Government's attitude to Amendments which were then numbered 20, 21 and 22. I am a little disappointed at the Government's reaction. There is one point on which, perhaps, the noble Lord, Lord Oram, will be able to clarify the position when he comes to wind up. He referred to the fact that a copy of the Commision's report would be made available to the "relevant party" at the same time as it was sent to the Minister. However, it is not clear to me whether the report would, in fact, contain any statement of the facts or alleged facts upon which recommendations are based.

It seems to me that the report has merely reached a recommendation. Unless the facts are disclosed, there is no opportunity for the "relevant party" to make representations to the Secretary of State before action is taken. The noble Lord repeated what he said in Committee; that the Commission can be expected to check matters of fact as they go along. That seems to be a reasonable assumption. But it seems curious that there is no provision that they must disclose to the "relevant party", not necessarily the name or the source of the information, but the fact that some information has been put before the Commission.

I wonder what noble Lords on the Benches behind the noble Lord, Lord Oram, apart from those in other quarters of the House, would say if it were proposed that any other quasi-judicial body should make recommendations for action based on facts which were not disclosed to the party concerned. It struck me at the time—and it still strikes me—that we have not provided an adequate opportunity for the party concerned to defend himself against allegations which, in certain circumstances, might even be malicious. Therefore, I hope that it is not too late—though it must be getting very late—to ask the noble Lord to have one more think about this.

4.42 p.m.


My Lords, with respect, it is really missing the point to quote Clause 6(8) and to pray that in aid as being a reason for resisting this Amendment. That is not the point of the Amendment at all. May I say that, a fortiori, subsection (9) also misses the point? The object of this Amendment is really two-fold and it has taken into account in its redrafting such objections as the noble Lord ventilated to me on the last occasion the matter was debated.

First, the Amendment provides a check so that a firm which is the subject of an investigtaion can, as it were, point out errors of fact. I know that the noble Lord, Lord Oram, says that, in the normal course of events, the Commission will check the facts as they go along, but the trouble is that, with any organisation—whether it is governmental or nongovernmental—errors creep in. Any statutory investigation, whether it is carried out by a court of law or a body such as this, should, in the normal course of events, write in what I might describe as a "safeguards" clause to prevent errors of fact and injustices, if such can be written into the Bill without obvious disadvantage.

The other matter which I suggested to the noble Lord in Committee occurs in the event of representations being made by third parties which may or may not be known to the firm or undertaking whose activities are under review. The noble Lord said that in such circumstances it might be very undesirable to let the company being investigated know too much about the reports which are being made and about their source; it might be a matter of company or commercial confidentiality. This Amendment has been redrafted with precisely that point in mind, and the discretion which is given to the Commission is really profound, if I may so describe it, because the Commission are allowed to be the judge in their own cause as to when they should withhold information under the terms of this Amendment, because they believe that to reveal it would not be in the public interest or in the interests of whoever gave the information.

I do not think that the noble Lord, Lord Oram, has put forward any convincingreason why this Amendment should be resisted. From first to last one of the unsatisfactory features of the Bill has been the lack of the Government's awareness that, unless we think about it, there will be injustices. I was very heartened by what the noble Viscount, Lord Simon, said. Unfortunately there is not time for the Government to think again. We are on the penultimate stage of the Bill, and the ultimate stage so far as Parliament is concerned, except for the consideration of Lords' Amendments, will be in an hour or two's time. It must be done now. I am not entirely sure what my noble friend Lord Trefgarne will decide to do because I have not spoken to him, but if I were him I should be strongly tempted to press the Amendment.


My Lords, perhaps I may address the House again in order to take up one or two points that have been raised. First, the noble Lord, Lord Mottistone, said that in Clause 6(8)(a) there is reference to "individual" and that later on there is reference to "the Secretary of State". He suggested that in between the individual and the Secretary of State there are some most important bodies and he instanced firms and trade unions.


My Lords, I apologise for interrupting the noble Lord, Lord Oram, but that is not so. I said that in subsection (9) there is a reference to "public interest" and that between the individual within a firm and the public interest—I did not mention the Secretary of State in this context—there is the firm whose interests as a corporate body are not looked after in the Bill as it stands.


My Lords, I apologise for having misunderstood that point. However, it makes little difference to the point I am about to make. In subsection (8)(b) there is reference to a "particular person", and "person" comprehends the kind of bodies, firms and trade unions about which the noble Lord, Lord Mottistone, was a little anxious. So I think he will find that they are covered.

The noble Viscount, Lord Simon, asked me even at this late hour to think again because of the need for the facts to be presented. There is no need for me to think again because it is already firmly included in the Bill. He will see that Clause 6(5)(a) reads that a report must include: a statement of the findings of fact made by the Commission in the course of the investigation to which the report relates". I see the noble Viscount nodding. I think that that meets the point he made.

There was one other point which I did not make in my opening remarks but which is important—in fact, I recall that I made it in Committee. The time-scale to which we hope the Price Commission will work does not afford time for too much exchange of documents, periods of correction and so on. I believe that all noble Lords are anxious that the matter should proceed as quickly as possible, and I urge that that is a practical consideration to be taken into account.


My Lords, may I take up the point about the time-scale? Surely that exercise will be a highly statistical one, with the Commission deciding between the cost of the product and the justifiable price at which it is sold. Therefore, it will involve a company in producing a vast amount of statistical evidence. Surely it would be much quicker if such a company knew the claims against it first and could come with the relevant evidence, instead of having to ask for time in order to amplify that it thought the charges are unjustified.


My Lords, I agree with the description of the noble Baroness, Lady Hornsby-Smith, about the kind of investigation that is involved here. Therefore, it is all the more important not to have a stage that will use up other time. The kind of point she had in mind will in practice be taken fully into account in the normal exchange of question and answer and consultation between the Commission and the firm whose affairs are being investigated.

I was about to make the point, in reply to the noble Earl, Lord Mansfield, that I had agreed that the Amendment sought to deal with the confidentiality point I made last week. I did not wish to rest on the question of drafting. The noble Lord, Lord Mottistone, said that I had not raised any drafting points, and I did not wish to do so, but as the point has been raised it is only right that I should point out that "legitimate commercial interest" would be too vague a phrase to insert in just that fashion and it would be necessary to have some such phrase as, "in the opinion of the Commission prejudicial to any legitimate commercial interest". As I say, I do not press my case on any drafting point and I make it only because the matter was raised. I rest my main case on the practicalities of the situation which I indicated both in. Committee and earlier when I dealt with the Amendment.


My Lords, the practicalities of the situation are that there would be an injustice if we agreed to the proposals in the Bill. I cannot believe that it would be right to agree to such proposals if we felt they would lead to in-justice.

If, in order to ensure an element at least of cough justice—and even that seems to be missing as the Bill is drafted—we must somewhat extend the time the Commission may take to produce its report, so be it. The noble Lord, Lord Oram, spoke about confidentiality, and acknowledged that the Amendment went some way towards meeting that, although he complained about the words "legitimate commercial interest", saying they were too vague. He thought we should have written in words to the effect that "in the view of the Commission" a commercial interest was violated. I do not think that would be a good idea.

If we rely on the view of the Commission as to what constitutes or does not constitute a legitimate commercial interest, we should be giving it more power than would be appropriate. I use the word "power", but perhaps that is the wrong word to use. Certainly we should be imposing a burden on the Commission in asking it to consider what was or was not a legitimate commercial interest; that should be left to the courts when and if any dispute arises. The noble Lord, Lord Oram, has not persuaded me. The emphasis of his arguments have changed on this occasion from those he advanced in Committee and I believe it would be right for me to ask your Lordships to reach a view.

4.53 p.m.

On Question, Whether the said Amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 97; Not-Contents, 108.

Alexander of Tunis, E. Cullen of Ashbourne, L. Halsbury, E.
Alport, L. Daventry, V. Hanworth, V.
Ampthill, L. Davidson, V. Harding of Petherton, L.
Auckland, L. de Clifford, L. Harmar-Nicholls, L.
Avon, E. Denham, L. [Teller] Hawke, L.
Barnby, L. Derwent, L. Home of the Hirsel, L.
Berkeley, B. Digby, L. Hornsby-Smith, B.
Blake, L. Drumalbyn, L. Hylton-Foster, B.
Boyd-Carpenter, L. Ebbisham, L. Ilchester, E.
Camoys, L. Effingham, E. Jessel, L.
Campbell of Croy, L. Ellenborough, L. Killearn, L.
Carr of Hadley, L. Elliot of Harwood, B. Kinnaird, L.
Carrington, L. Exeter, M. Kinnoull, E.
Clancarty, E. Fraser of Kilmorack, L. Long, V.
Clitheroe, L. Glasgow, E. Loudoun, C.
Clwyd, L. Glenkinglas, L. Lucas of Chilworth, L.
Cobham, V. Gridley, L. Lyell, L.
Cornwallis, L. Hailsham of Saint Marylebone, L. Macleod of Borve, B.
Mansfield, E. O'Hagan, L. Stamp, L.
Margadale, L. Onslow, E. Strathclyde, L.
Marley, L. Rankeillour, L. Strathspey, L.
Massereene and Ferrard, V. Redesdale, L. Teynham, L.
Merrivale, L. Reigate, L. Trefgarne, L.
Mersey, V. Rochdale, V. Trenchard, V.
Monck, V. Romney, E. Tweedsmuir, L.
Monk Bretton, L. Sackville, L. Vickers, B.
Montgomery of Alamein, V. St. Aldwyn, E. [Teller] Vivian, L.
Morris, L. St. Davids, V. Wakefield of Kendal, L.
Mottistone, L. Sandys, L. Ward of North Tyneside, B.
Mowbray and Stourton, L. Sharples, B. Ward of Witley, V.
Newall, L. Sligo, M. Westbury, L.
Northchurch, B. Spens, L. Young, B.
Nunburnholme, L.
Airedale, L. Gardiner, L. Pannell, L.
Allen of Fallowfield, L. Gladwyn, L. Pargiter, L.
Amherst, E. Gordon-Walker, L. Peart, L. (L. Privy Seal.)
Ardwick, L. Greene of Harrow Weald, L. Peddie, L.
Avebury, L. Greenwood of Rossendale, L. Phillips, B.
Aylestone, L. Gregson, L. Pitt of Hampstead, L.
Bacon, B. Grey, E. Platt, L.
Balogh, L. Hale, L. Robson of Kiddington, B.
Banks, L. Hamnett, L. Rochester, L.
Beaumont of Whitley, L. Hampton, L. Rusholme, L.
Beswick, L. Harris of Greenwich, L. Sainsbury, L.
Birk, B. Henderson, L. Samuel, V.
Boston of Faversham, L. Houghton of Sowerby, L. Seear, B.
Brock way, L. Hughes, L. Segal, L.
Bruce of Donington, L. Jacobson, L. Shepherd, L.
Buckinghamshire, E. Jacques, L. Shinwell, L.
Burntwood, L. Janner, L. Snow, L.
Burton of Coventry, B. Kaldor, L. Soper, L.
Byers, L. Kirkhill, L. Stedman, B.
Campbell of Eskan, L. Leatherland, L. Stewart of Alvechurch, B.
Caradon, L. Lee of Newton, L. Stone, L.
Castle, L. Listowel, E. Stow Hill, L.
Champion, L. Llewelyn-Davies, L. Strabolgi, L. [Teller]
Collison, L. Llewelyn-Davies of Hastoe, B. [Teller] Swaythling, L.
Cooper of Stockton Heath, L. Taylor of Mansfield, L.
Crook L. Lloyd of Kilgerran, L. Thomson of Monifieth, L.
Cudlipp, L. Longford, E. Wade, L.
Darling of Hillsborough, L. McCarthy, L. Wall, L.
Davies of Leek, L. McCluskey, L. Wallace of Coslany, L.
Delacourt-Smith of Alteryn, B. Mackie of Benshie, L. Wells-Pestell, L.
Diamond, L. Maybray-King, L. Wigoder, L.
Donaldson of Kingsbridge, L. Morris of Grasmere, L. Wilson of High Wray, L.
Douglass of Cleveland, L. Morris of Kenwood, L. Winterbottom, L.
Elwyn-Jones, L. (L. Chancellor.) Murray of Gravesend, L. Wise, L.
Fisher of Camden, L. Ogmore, L. Wootton of Abinger, B.
Foot, L. Oram, L. Wynne-Jones, L.
Gaitskell, B.

Resolved in the negative, and Amendment disagreed to accordingly.

[Amendment No. 3 not moved.]

5.1 p.m.

Lord MOTTISTONE moved Amendment No. 4: Page 10, line 10, at end insert ("including an indication as to which of the matters listed in section 2(2) of this Act they have in particular had regard in making the recommendations.")

The noble Lord said: My Lords, I beg to move Amendment No. 4. This is the Amendment which I moved at the Committee stage as Amendment No. 23. I thought at that time, and again when I read the official record, that the noble Lord who was replying for the Government was not taking up the terms of the Amendment as they were put, because most of the burden of his argument related to Clause 2(1), not Clause 2(2). I would agree with the noble Lord that if the Amendment had been written in terms including an indication of the matters listed in Clause 2(1), that would not have been sensible, because sub- section (1) is a general introductory subsection, whereas subsection (2) contains many serious and different aspects which need to be taken into account by the Commission when they are conducting their investigation. It would be of very great interest to any firm being investigated to know the different matters which the Commission have felt are the most important matters for the purposes of the investigation and the subsequent report, so that, as I said in Committee, the firm can know where it went wrong and how it can avoid so doing in the future. Furthermore, the firm can also protect against certain matters, if it feels so emboldened, for which there is ample provision in the Bill.

The Amendment, does nothing but strengthen the Bill, as I felt before, and I thought that noble Lords opposite, having had an opportunity to consider the matter further, might be able to address their comments to the question of the items in subsection (2) rather than subsection (1), as they did when replying to me previously.


My Lords, as the noble Lord, Lord Mottistone, indicated, this Amendment has exactly the same wording as an Amendment which he moved last week. I rather felt that he was making a little too much of my references to Clause 2(1) as against Clause 2(2), and I had hoped, even last week, that I had indicated that there is a relationship between the two. I was addressing my remarks equally to both because, as I pointed out, they are linked. I am afraid that I have reached the same conclusion about the Amendment a week later because, in carrying out and preparing their reports, the Commission are required to have regard to the matters referred to in Clause 2. It is unnecessary to impose a further requirement on the Commission to specify which of the criteria have influenced their conclusions, although—and I believe I made this point last week—they will normally emerge from the Commission's reports because they have to give reasons for their recommendations. Therefore, in giving reasons they would need to indicate the criteria to which they had had particular reference.

Under the provisions of Clause 2(1), the Commission, while being required to have particular regard to the criteria, are also required to have regard to all matters which appear to them to be relevant, with a view to restraining prices of goods and charges for services, so far as that appears to them to be consistent with the making of adequate profits by efficient suppliers of goods and services. That is a point which I recall quoting last week, and I believe it is important to quote it again. In my view, it would detract from the generality of this provision and upset the relationship between subsections (1) and (2) if the Commission were required to specify in all their reports which criteria had influenced their conclusions. I believe that the criteria would emerge from a reading of the report, as well as the reasons for the Commission's report, and therefore I see no necessity to write this into the Bill.


My Lords, this is not sufficiently important an event that I should do very much about it, but I must confess that I found that an unsatisfactory reply, and a rather sad one, evidencing a certain determination on the part of the Government not to try to help people who are being investigated. If, as the noble Lord, Lord Oram, says, in the event the report which comes out of an investigation will inevitably cover the points which I seek to have included by Statute, then jolly good show! But if that is to be the case, why could not this Amendment be included? If it is inevitable, let us help it along by having the Amendment. This situation gives one cause to think that perhaps there is a subtle reason against giving this kind of information to people. I find that hard to imagine, but one is made suspicious. I feel that it is an unsatisfactory situation; but on the other hand it is not a very important issue, and so I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 9 [Safeguard for basic profits]:

5.7 p.m.

Lord TREFGARNE moved Amendment No. 5: Page 14, line 38 after ("fit") insert ("taking into account the matters listed in section 2(2) and in particular the need to ensure that companies are not handicapped financially by increases in any costs beyond their control,").

The noble Lord said: My Lords, bloody, but unbowed, I rise to move Amendment No. 5, which is set down in the names of my noble friends Lord Mansfield and Lord Mottistone, as well as my own. On this side of the House we have been at pains to protect the legitimate interests of the producers and firms, at whose affairs the Commission may seek to look, and this Amendment is a further attempt to do just that. To us the Bill fails to provide for the cost increases which these days all too often affect companies, and for which the provisions, or the protections, of Clause 2 (2) really are inadequate. For example, firms can be affected by dramatic and almost instantaneous changes in currency values. We all know how last autumn the pound and the dollar reacted very sharply and very quickly. We know how often in the past, at least, oil prices have been raised, sometimes at very short notice, and very sharply; and we know how other commodity prices have changed very rapidly. We remember that sugar prices, for example, escalated very sharply at one stage a year or so ago. I remember there was a fairly short-lived but sharp increase in salt prices at one stage, and the rumour went about that there had been a strike in the salt mines in Siberia.

But, seriously, perhaps the most important change in costs, which may not happen overnight but which often happens at short notice, is the change in wage and salary costs. Unhappily, the Government have not included in this Bill, or indeed in any of the guidance documents which we have received so far, any statutory wage policy. While we on this side of the House have been twitted by various Members on other Benches as to whether we agree with this or that form of wage control, what we can say is that, with cost control or price control as draconian (which is the only word I can think of) as that contained in this Bill, then some form of protection against sharp changes in wage rates ought to be included in the Bill. It is for that purpose that we have tabled this Amendment, to which we invite your Lordships to agree. I beg to move.


My Lords, as the noble Lord has recalled, this is an Amendment which was dealt with at Committee stage. We dealt with it at some length, and I recall saying quite a bit about it. However, I make no apology if this afternoon, as well, my remarks are somewhat lengthy (though I hope not too lengthy) because this is an important Amendment that noble Lords have brought forward. May I say that I was a little surprised to see it set down, since it was a matter upon which your Lordships' opinion was expressed in the Division Lobbies last time. While I have been in your Lordships' House I have noticed that the Party opposite has been frequently willing to use the majority to which it is accustomed to reverse a decision of another place, but I was not aware that it was anxious to reverse decisions of your Lordships' House, which is presumably what it is proposing to try to do now.


My Lords, if the noble Lord will forgive me, this is, after all, Report stage. What is happening is that the Committee may have reached one decision; the House might reach another.


My Lords, I was not in any way suggesting that noble Lords were out of order in bringing this forward, and I am glad to welcome to the Report stage the same people who were here at Committee stage. That is the nature of proceedings in your Lordships' House. But if I may deal, as I indicated, with the rather important question of substance raised by this Amendment, it gives me an opportunity to explain, in perhaps a different way, the points with which I had hoped to convince your Lordships last week. I explained on that occasion why the Government could not accept the Amendment, and I tried to set the Government's proposals for the Clause 9 safeguard regulations in their wider context, taking account of the many other checks and balances which are established by the Bill to limit the powers of the Price Commission and of the Secretary of State, and to prevent the imposition of unreasonable restrictions on companies. I explained that we needed to see the Amendment against the background of more general safeguards.

I do not want to go over the same ground, but I should like to make three important points. The first is the relationship between the criteria in Clause 2 of the Bill and the safeguard regulations under the Bill. Noble Lords opposite have noted that the Bill does not require the Secretary of State to have regard to the Clause 2 criteria when he makes the safeguard regulations, and it is to fill this apparent gap, presumably, that they have tabled this Amendment. But these two parts of the Bill cannot be linked together in this way without changing the whole basis of the new system.

The Clause 2 criteria are a set of general principles which are meant to be applied with flexibility to individual cases according to the particular circumstances; and a study of the matters specified in Clause 2(2) shows that they can be applied to the circumstances of an individual firm or industry, but are quite inappropriate for devising across-the-board regulations applying to every sector of industry and commerce. For example—and here I quote from Clause 2(2)(a): the need to recover costs incurred in efficiently supplying goods and services …", I suggest cannot be met by a blanket definition of costs which every supplier is entitled to pass on to his customers. It is relevant to a particular inquiry into a particular firm, but not across the board.

Moreover—and, if I may, I quote from Clause 2(2)(c)—a return on capital sufficient, to defray the cost of the capital (including compensation for the risk involved in producing the profits), and … to provide money for, and to encourage the promotion of, innovations and technical improvements …", will of course depend upon the cost of the capital, the business risk and the investment needs of each firm or sector. Another important criterion is in paragraph (f), which refers to the need to safeguard consumers' interests by restricting prices or charges where competition cannot be promoted; for example, because certain suppliers control a substantial share of the relevant market. Whilst this criterion will be a helpful guide to the Price Commission in their individual investigations or examinations, I suggest it would provide no sort of basis on which to frame generally applicable regulations.

But, my Lords, even if it were possible to use the Clause 2 criteria to draw up safeguard regulations, the effect would be to negate the whole concept, which I have tried to explain several times, of a flexible system of price investigations based on judgments rather than rigid rules. The safeguard regulations, instead of providing a floor beneath the criteria which protects firms' viabilities but allows the flexible element to operate, would almost entirely replace investigations and examinations. On the one hand, they would provide an entitlement to price increases irrespective of any Price Commission scrutiny; and, on the other hand, there would be a presumption that any price increase in excess of the safeguard entitlement should automatically be cut back, since the Secretary of State would have had regard to the Clause 2 criteria in drawing up the safeguard regulations. The whole point of changing from a rigid price code to a more flexible policy is that a detailed and universally applicable set of rules and regulations should not be the major determinant of pricing decisions in future.

My second point relates to the reference in the Amendment to costs beyond companies' control. In fact, of course, it is extremely difficult to decide, even in an individual case, whether a cost is really within a company's control. Many industries would be able to argue that almost all their costs—including labour and overheads such as rent and rates—are imposed on them by external forces over which they have little or no influence. On the other hand, there are some firms where one could argue that even their raw material costs are to some extent within their control, because they could change their manufacturing processes or stocking practices so as to use their materials more efficiently. If, as I have indicated, this question is difficult enough in the individual case, how many times more difficult it would be to translate it into generally applicable regulations.

Attempts to influence the form of the Clause 9 regulations by inserting additional words and concepts into that clause are, I suggest, inappropriate for enabling legislation of this kind—and we are dealing with enabling legislation. Such attempts are no more likely to help the cause espoused by noble Lords opposite than they are to make the Secretary of State's task any easier.

My Lords, my third point follows from that, but is also linked with the concern expressed by the noble Lord, Lord Mottistone, when this Amendment was debated last week. I replied to him then, but I will, if I may, comment again on it. His argument was that industry needed figures on which to plan and the only figures to be thrown up by the new prices policy would be those in the safeguard regulations. I do not see how, on that basis, the noble Lord could defend his own Party's introduction of the Price Code some years ago. Even when the figures used in the Code had been amended to give greater satisfaction to most of industry than they did in 1973, industry could not plan for the future on the basis of those figures with absolute certainty because the Code could be changed, with very little notice, to impose however stringent a régime was desired by the Government of the day. Industry must, therefore, have looked behind the figures and relied on what it believed to be the intentions of the Government.

There is no reason why it should not do the same in the case of the safeguard regulations. The Government have made it clear that the figures in the safeguard regulations have the strictly limited purpose of acting as the floor for the new system and that they in no way represent a view of what is a reasonable profit for the average firm. The safeguard regulations will be relevant only to the small number of firms and the sectors which are investigated or examined; these firms and sectors will, in any case, have their pricing and profitability judged against the Clause 2 criteria and not against the safeguard regulations. Unlike the contents of the Price Code, the Clause 2 criteria are to be permanently enshrined in legislation. The noble Lord, Lord Mottistone, said that Acts of Parliament go on for ever. This is not literally true. I know what he meant and he will accept that these criteria will be, as I have said, permanently enshrined in legislation. They will, therefore, provide a better basis for planning ahead than any of the ad hoc expedients we have had in the field of price control over the last decade or more.

In conclusion, I should like to give three assurances. First, those companies which are worried about the prospect of large increases in costs while their prices are frozen have nothing to fear because the safeguard regulations will give them an entitlement to more than one interim price increase during an investigation if cost increases cause their profit margins to fall below safeguard level. The regulations will have a similar effect after investigations, in that price increases may be made at any time to restore profit margins to the safeguard level.

Secondly, the consultative period on the draft safeguard regulations ends today. I can undertake that all the representations made by industry and the points made in our debates on the safeguards will be taken fully into account by my right honourable friend before the regulations are made. Thirdly, the Government have always made it clear that the safeguard regulations will be subject to review in the light of experience. If experience shows that the safeguard levels can be raised without undermining the effectiveness of the general policy, this possibility will certainly be considered. I have given those three undertakings in the hope that, in addition to what I spelled out at some length last week, noble Lords, will consider that there is this distinction between the criteria, on the one hand, and the Clause 9 regulations, on the other, and that they will not feel it necessary to press this Amendment.


My Lords, the House will be obliged to the noble Lord for that very full explanation of what the Government are after in this provision. He spoke of this clause acting as a floor so far as profits were concerned. There is always the danger that what is put forward as a floor will come to be treated as a normal base. I think that this is what inspires the fear about this provision. At the same time I think that what the noble Lord has said should go some way to dispel that fear.

It all depends very much on the attitudes of the various groups of the Commission which may or may not be similar; each may take different views. I think that we should have been happier—or, at least, I should have been happier—if it had been possible to relate the floor to some more specific formula as to what would be expected from an efficient producer, which is one of the safeguards. I wonder whether that is not the reason why my noble friend Lord Mottistone has included the safeguards from Clause 2 in this Amendment.

My Lords, it seems to me that there is a great deal to be said for ensuring that the Secretary of State will have regard to the safeguards where appropriate. But this is exactly what the Commission are doing in other cases. They are not going to have regard to all the safeguards, for not all will be necessarily appropriate to any particular case. If the noble Lord will look at them again, he will see that some of them will not be appropriate in particular cases. I think that it is just as easy, and just as difficult, to apply norms or minima of this kind to one firm as it is to a whole group of firms in an industry, having particular regard to the efficiency test.

To go to the opposite extreme, it might be that a minimum profit margin as specified in these regulations would not be appropriate for a firm, which was not, in fact, efficient. On the other hand, there is the opposite danger that firms which are efficient and an industry which is efficient may be held down to an unduly low minimum. One would expect to see—and I do not know whether the noble Lord can comment on this—wide differences in the rate of minimum profit to be provided under this clause. The different circumstances are allowed for in the clause. It seems extremely difficult to envisage any way in which the Secretary of State is going to be able to fix these minima in such a way as to ensure that companies—to quote the Amendment: are not handicapped financially by increases in any costs beyond their control". This seems to be the main burden of this Amendment. It is absolutely essential to make it clear that the minima are constant minima and therefore the prices should be able to be altered in accordance. with the needs. I do not know whether this is what is intended. If the minima are to be constant, it has to be possible for the prices to move rapidly in certain cases.

The noble Lord said that even within the period of investigation it will be possible to vary the prices from time to time. It is not only the period of investigation; it is a question of which firms, or which groups of firms, are to be examined. From that point of view, the minimum profit will be very much one that will be looked to all the time. We have in our minds—I have, at any rate—that this will loom far too large in the minds of the Commission and, in the case of this particular clause, of the Secre- tary of State. The Amendment will alleviate that situation, even if it does not wholly cure it.

5.32 p.m.


My Lords, it is unfortunate that the Government do not seem to have been able to absorb that we were trying to say at Committee stage and are still firmly putting forward the concept that the criteria in Clause 2(2) are only suitable for guidance for the Commission and are not suitable for guidance to the Secretary of State and his Department in pursuing a parallel action. The various criteria in Clause 2(2) are excellent, and I have heard nobody criticise them. In another place there were various efforts to improve them, but even that was not really worth pursuing to any great extent because they are a very good, basic set of criteria for a pricing policy.

All of them are not applicable to each and every case, and I am sure that the Government are as aware of that as anybody else is, because they are a total compendium of the likely factors which need to be taken into account when producing a pricing policy. The fact that they are suitable for the Commission on which to examine a pricing policy does not mean that they are not appropriate for the Secretary of State and his Department to use as guidelines for producing the safeguards. As I said in Committee, if the safeguards were more realistic—and this comes back to the point that I was making earlier on which the noble Lord, Lord Oram, was kind enough to comment—these criteria within the safeguards seem to be aimed at the below-average efficient firm to make sure that it is not too protected. This is a rational point of view, if that is all it is.

As I endeavoured to show, these figures, which are the only figures within the Bill and its subordinate regulations, are the only ones that people have on which to plan. The noble Lord, Lord Oram, reminded me of earlier pricing policies introduced by my right honourable friends from the Party which I have the honour to try to serve, but what we are talking about now is that any threatened price control, which may be implemented by a Price Commission, or by a Secretary of State, is inhibiting to people who want to plan in the long term.

If one wants to build a new factory of any sizeable proportions, one has to start thinking about it 10 years ahead. In order to do that, one collects in all the facts from all over the world, including whether or not the business is liable to prosper in the interim. Ever since we forced ourselves into a position of having to have price control, we have introduced one method of discouraging people from planning for the future and from conducting the investment which all of us would like to do. It is therefore unreasonable to refer us back to 1973, when price regulations were beginning, saying that we should not have learned from the shortcomings of any form of regulation in the meantime. It would therefore be sensible if, in constructing their safeguard regulations, the Government were to look more widely than the present regulations indicate.

I will not spell out what is defective about the regulations because the regulations are not the subject of debate of this Amendment. In any case, the Secretary of State must be well aware of the deficiencies because many people have written to him to point them out. He has seen fit so far to ignore the most important shortcomings. As the safeguard regulations are still in draft form, and as the noble Lord, Lord Oram, tells us that today is the last day for submitting Amendments to them, perhaps we could end at this point in time with a strong plea to the Secretary of State to think much more widely than he has hitherto about what he is doing with the safeguard regulations and let him be guided by his own particular items within Clause 2(2) of this Bill when he comes to consider how he might amend his safeguard regulations. If we could be sure that that was happening there would be no need for an Amendment, but we cannot be sure because the Secretary of State has given us every indication that he is most unlikely to pay attention to the wise counsel which has been given him from outside.

The Earl of HALSBURY

My Lords, may I ask a question on this Amendment and the Bill as unamended? Will either the Minister in charge of the Bill or the sponsors of the Amendment say how it is proposed to cover the needs of a company for increased working capital in a period of rising prices to finance debtors and stocks? This is done in two ways: either out of the margin of profitability or by borrowing from the bank. At intervals, of course, what you borrow you have to repay, so you have to fund it with a rights issue in due course. Nothing is more exasperating than trying to run an industry with a Price Commissioner, or somebody like that, breathing down your neck and telling you that you have to do it one way, when your bankers are telling you that, to please them, you have to do it another. I should like to know whether this Amendment improves that state of affairs or leaves it unchanged. I do not see much reference to it in the Bill, except obliquely.

5.40 p.m.


My Lords, I am not sure that I am in a position to clarify or answer the question advanced by the noble Earl on the Cross-Benches. Speaking off the cuff, the problem to which the noble Earl referred might possibly be amenable of some solution if this Amendment is agreed to, but certainly is not if the Amendment is not carried. I might have been wiser to consider this matter and answer the noble Earl in due course, but unhappily there will be no opportunity for that because there will be no further stage of this Bill after today.

If we look at the Bill, as presently drafted in Clause 9, we find that the regulations which the Secretary of State is to make shall be made only: by reference to such matters as he thinks fit", and in this Amendment we seek quite simply to guide the mind and the hand of the Secretary of State so that some, at least, of the matters which he has to regard as "fit" are defined and laid down in the Bill. We strongly believe that firms which will be bound by the regulations, as indeed will be the Commission, ought to have some basic guidance, even if only of a somewhat general nature, as provided, for example, in Section 2(2). This is referred to in the Amendment, and the general provision that we have included aims to ensure that: companies are not handicapped financially by increases in any costs beyond their control". I listened with care to what the noble Lord, Lord Oram, had to say. There was nothing really very new from what he said at the previous stage when we considered this matter before. I really do not think I can allow this matter to be settled simply by the assurances that the noble Lord gave. He has claimed that the provisions of section 2(2) are to be enshrined, as he put it, in the Bill, and he was rather proud of that word. I would use another word. I would suggest "entombed" rather than "enshrined", but I hope the noble Lord will not take me amiss in saying that. I believe that it is essential to include this provision in the Bill because the safeguards which are provided, and on which the noble Lord invites us to rely, are really of a very general nature.

The other great point advanced by the noble Lord concerned the provision for interim price rises. As I believe my noble friend Lord Drumalbyn said, the effect of these regulations will dictate whether firms are to be subject to investigation; and, until they are declared to be so subject, the question of interim price rises does not apply. We would say that, by including this Amendment in the Bill, we should raise the threshold—if that is the right word—at which an investigation

would be initiated; and I believe that that would be highly desirable.

The noble Lord made another point relating to the position of consumers in a monopoly or near-monopoly situation. I pointed out, in relation to another Amendment at Committee Stage, that there is more than one sort of consumer. A good many consumers work in firms which will be subject to investigation and, if the rules are too rigid and the controls are too strong, those consumers will suffer—because, where profits are inadequate, employment drops or at least does not increase, and in the very worst situations a company may cease to trade and close down altogether.

For all those reasons, I believe that this Amendment should be included in the Bill and I hope that your Lordships will agree with me.

5.45 p.m.

On Question, Whether the said Amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 96; Not-Contents, 111.

Alexander of Tunis, E. Fraser of Kilmorack, L. Mottistone, L.
Alport, L. Gainford, L. Mowbray and Stourton, L.
Amory, V. Glasgow, E. Nelson of Stafford, L.
Ampthill, L. Gridley, L. Newall, L.
Auckland, L. Hailsham of Saint Marylebone, L. Northchurch, B.
Avon, E. Halsbury, E. Nunburnholme, L.
Barnby, L. Hanworth, V. O'Hagan, L.
Berkeley, B. Harmar-Nicholls, L. Onslow, E.
Birdwood, L. Hawke, L. Orr-Ewing, L.
Blake, L. Home of the Hirsel, L. Rankeillour, L.
Camoys, L. Hornsby-Smith, B. Redesdale, L.
Campbell of Croy, L. Hylton-Foster, B. Reigate, L.
Carr of Hadley, L. Ilchester, E. Rochdale, V.
Carrington, L. Killearn, L. Romney, E.
Cathcart, E. Kinnaird, L. St. Aldwyn, E. [Teller]
Clitheroe, L. Kinnoull, E. Sandford, L.
Cobham, V. Lauderdale, E. Sandys, L.
Cornwallis, L. Long, V. Sharples, B.
Cullen of Ashbourne, L. Loudoun, C. Spens, L.
Daventry, V. Lucas of Chilworth, L. Strathclyde, L.
Davidson, V. Lyell, L. Strathspey, L.
de Clifford, L. Macleod of Borve, B. Teviot, L.
De La Warr, E. Mancroft, L. Thorneycroft, L.
Denham, L. [Teller] Mansfield, E. Trefgarne, L.
Derwent, L. Margadale, L. Trenchard, V.
Digby, L. Marley, L. Tweedsmuir, L.
Drumalbyn, L. Massereene and Ferrard, V. Vickers, B.
Ebbisham, L. Merrivale, L. Vivian, L.
Effingham, E. Mersey, V. Wakefield of Kendal, L.
Ellenborough, L. Monck, V. Ward of North Tyneside, B.
Elliot of Harwood, B. Monk Bretton, L. Westbury, L.
Exeter, M. Morris, L. Young, B.
Airedale, L. Gaitskell, B. Ogmore, L.
Allen of Fallowfield, L. Gardiner, L. Oram, L.
Amherst, E. Gladwyn, L. Pannell, L.
Ardwick, L. Gordon-Walker, L. Pargiter, L.
Avebury, L. Greene of Harrow Weald, L. Parry, L.
Aylestone, L. Greenwood of Rossendale, L. Peart, L. (L. Privy Seal.)
Bacon, B. Gregson, L. Peddie, L.
Balogh, L. Grey, E. Pitt of Hampstead, L.
Banks, L. Hale, L. Platt, L.
Beaumont of Whitley, L. Hamnett, L. Rochester, L.
Beswick, L. Hampton, L. Rusholme, L.
Birk, B. Harris of Greenwich, L. Sainsbury, L.
Blyton, L. Henderson, L. Samuel, V.
Boston of Faversham, L. Houghton of Sowerby, L. Seear, B.
Brockway, L. Hughes, L. Shepherd, L.
Bruce of Donington, L. Jacobson, L. Shinwell, L.
Buckinghamshire, E. Jacques, L. Simon, V,
Burntwood, L. Janner, L. Snow, L.
Burton of Coventry, B. Kaldor, L. Stedman, B.
Byers, L. Kennet, L. Stewart of Alvechurch, B.
Campbell of Eskan, L. Kirkhill, L. Stone, L.
Caradon, L. Leatherland, L. Stow Hill, L.
Castle, L. Lee of Newton, L. Strabolgi, L.
Champion, L. Listowel, E. Swaythling, L.
Chorley, L. Llewelyn-Davies L. Taylor of Mansfield, L.
Collison, L. Llewelyn-Davies of Hastoe, B. Thomson of Monifieth, L.
Cooper of Stockton Heath, L. Lloyd of Kilgerran, L. [Teller] Wade, L.
Crook, L. Longford, E. Wall, L.
Cudlipp, L. McCarthy, L. Wallace of Coslany, L.
Davies of Leek, L. McCluskey, L. Weidenfeld, L.
Delacourt-Smith of Alteryn, B. Mackie of Benshie, L. Wells-Pestell, L.
Diamond, L. Mais, L. Wigg, L.
Donaldson of Kingsbridge, L. Maybray-King, L. Wigoder, L.
Douglass of Cleveland, L. Milner of Leeds, L. Wilson of High Wray, L.
Elwyn-Jones, L. (L. Chancellor.) Morris of Kenwood, L. Winterbottom, L. [Teller]
Fisher of Camden, L. Murray of Gravesend, L. Wootton of Abinger, B.
Foot, L. Norwich, V. Wynne-Jones, L.

On Question, Motion agreed to.

[Amendment No. 6 not moved.]

Clause 12 [Undertakings and orders in consequence of reports on examinations]:

5.53 p.m.

Lord REDESDALE moved Amendment No. 7:

Page 17, leave out lines 33 to 36 and insert— ("( ) Such provisions as are authorised by the preceding provisions of subsection (4) shall not be included in such an order—

  1. (a) in respect of goods which are exempted goods for the purpose of the Resale Prices Act 1964, and
  2. (b) in respect of retail prices which are recommended by a manufacturer or supplier, the Secretary of State shall have the power to prohibit their use only where the recommended prices cannot be verified by the consumer, are not uniformly available to retailers, are not recommended by the manufacturers or suppliers, and are not fair and reasonable in relation to known and established retail margins.")

The noble Lord said: My Lords, this Amendment was moved in a different form in the previous stage of this Bill. I am unashamedly rehearsing this Amendment again, and perhaps I may use the words of the Chancellor of the Exchequer who recently said that his fox had been shot, but its tail had been stuck on in a different part of its anatomy. What I aim to do here is to resurrect my fox and, at least, change its scent, and I hope that, on this occasion and in its new guise, it will smell slightly more sweet to the noble Lord opposite.

I shall be as brief as I can. I do not wish to weary your Lordships by going through my involvement and interest in this Bill. I should just like to remind your Lordships yet again of the consequences of removing double pricing. It has been shown by a number of pieces of research that double pricing does not confuse the consumer and, in fact, is found to be a help. Furthermore, research done by the BMRB showed, on two shopping baskets of identical items, that those which had been double priced were 3.5 per cent. cheaper than those which had a single price. There is another aspect to this. Double pricing slows down price increases. I hope the Government realise that, if double pricing is abandoned, we shall have price increases, because one will not be able to sell goods so economically. We shall all be the losers. Furthermore, there is no question of protection for consumers.

I have tried to re-run and re-jig this Amendment, and I genuinely hope that it will be more acceptable to the noble Lord. I have done this by moving it on to the next clause, and I have also provided that the Price Commission can investigate whatsoever they want. All I am aiming to do is to limit the Secretary of State's powers on this one point. I have tried very hard to produce something which is acceptable, because I feel that it is in all our interests that we should retain double pricing. My Lords, I beg to move.


My Lords, as the noble Lord, Lord Redesdale, reminded your Lordships, we dealt with this point on a similar Amendment which he moved at the Committee stage. He and I were a little at cross-purposes, in that I suggested that his Amendment then compelled us to rely purely on a voluntary agreement and I could see that that worried him. I am glad that he seems to have reflected on what I said and has recast his Amendment, moving it to Clause 12, presumably with a view to avoiding the difficulty to which I pointed. There is now a great deal of common ground between us on this problem and, at the Committee stage, the noble Lord himself recognised that there are abuses in this area which require correction. On the other hand, the Government have made it clear that no across-the-board attack will be made on recommended resale prices, and that orders will be made only in cases of abuse and where the Price Commission have so recommended. So I think that our two positions are not very far apart, but I am afraid that they are sufficiently so for me not to be able to accept the Amendment. I should perhaps explain the reasons.

The Amendment would mean that any manufacturer or retailer affected by an order could challenge the order in the courts on any one of four grounds, which are spelled out in the Amendment. For example, it would usually be possible to argue that the recommended price could be verified by the consumer if he tried hard enough, for instance, by writing to the manufacturer. It would also be an extremely difficult task to impose on the courts a duty to decide whether a recommended price was fair and reasonable in relation to known and established retail margins. This is surely a task best left to the Price Commission in their reports, on which the Secretary of State should then be free to act by order subject to the normal Paliamentary control. I suggest that that is a more appropriate procedure than having recourse to the courts.

Another defect of the noble Lord's Amendment is the inclusion of the condition, on which the order-making power is dependent, that the recommended price shall not have been recommended by the manufacturers or suppliers. This would have the effect of preventing any order from being made, unless the retailer could be shown to have invented his own recommended price. Such a practice is already an offence under the Trade Descriptions Act, and the condition therefore means that the Bill would add nothing to existing legislation on recommended resale prices.

The reason for Clause 12(4) is that the abuse of recommended resale prices does not end with fictitious recommended prices. Above all, the Amendment requires the Secretary of State to satisfy himself—and, potentially, the courts—that all four conditions are met before he can make an order. If, therefore, an abuse arises because one, two or even three of the conditions are not met, it could not be corrected. It may not have been the noble Lord's intention that it should be all four, but my understanding is that this would be the effect of the Amendment as drafted.

I should like to suggest that the Amendment illustrates the difficulty of trying to impose detailed constraints on the powers of the Secretary of State in the main legislation. The Government believe that these constraints are unnecessary. Any sectors whose recommended prices are examined by the Price Commission under the new powers will have the opportunity to make their case the Commission, to study the Commission's published report—which must include the reasons for their recommendations—and make representations about it to the Secretary of State before he makes an order. They can also press for the order to be annulled by either House of Parliament. These, I suggest, are proper and effective safeguards which I believe in practice would meet the fears which the noble Lord has in mind. I accept a good deal of his case, but I do not accept that it is necessary to have the Amendment in order to meet it.

6.2 p.m.


My Lords, may I make two observations about this matter. First, I find difficulty in understanding how recommended prices can be brought into this clause. A price is a figure at which goods are offered for sale. A recommended price is not a figure at which goods are offered for sale. Inasmuch as this paragraph states that: …f any kind are or may be for sale", it is very difficult to see what is meant by "may be". A curious use of the word "may" is to be found here. Anybody who compares his price with the price of another person is comparing it with the price at which that other person is selling; it is not the price at which he may be selling. If the word "may" is intended to mean "is permitted to be sold", that is not what a recommended price is about.

Unfortunately, I was out of the Chamber when my noble friend moved this Amendment at the Committee stage. When I read this provision I was puzzled by it. Then I noticed in the Explanatory Memorandum at a previous stage of the Bill that the phrase "recommendation of prices" was used as one of the purposes. I find considerable difficulty in understanding how this provision could be related to recommended prices. Secondly, since recommended prices are legally permitted by the Resale Prices Act, if it is intended to deal with recommended prices in this Bill surely we should ensure that they are proper recommended prices and we should not prohibit them altogether in any sphere.

I am not certain what the Government have in mind. The noble Lord said, rather darkly, that there were other abuses besides excessively high recommended prices, and I should like to know what they are. If a recommended price is too high, it means one of two things. Either it means that the manufacturer who recommends the price is allowing too high a margin on the price at which the goods would be sold on a normal mark-up basis in small shops—the result would be that there would be a very wide spread of prices where very large discounts could be obtained—or it means that the recommended price was always intended to be fictitious and bears no relation to prices. When I say "prices" I mean prices at which goods are offered for sale.

The way to deal with that matter would be to ensure that if one is to have recommended prices there should be proper indications of price. I believe that at an earlier stage my noble friend used the phrase "an anchor price". Perhaps "a bench-mark price" would be a better indication. There is no doubt that they are valuable guides even where the spread of prices is very considerable. In The Times of 9th July, I read a very interesting article which dealt with average discounts from recommended prices. They ranged very widely indeed—from 21 per cent. on carpets and 22 per cent. on consumer electronics to 1 per cent. on clothing and footwear. I wonder whether the noble Lord—certainly I shall give him permission to answer this point—could say why he thinks that it is necessary to deal with this matter only by prohibiting recommended prices either by a particular manufacturer or in certain areas—I do not know which he proposes—rather than by ensuring that any recommended price which is allowed by law is related to reality. Secondly, although it is very late in the day perhaps the noble Lord would give me an opinion, and the reason for his opinion, as to how and why this subsection deals with recommended prices, for I do not believe that it will be found to do so.

6.7 p.m.


My Lords, I am reluctant to ask for the leave of the House to answer these points, but I shall do my best. They are a little difficult to answer, Regarding the noble Lord's question about whether this power is appropriate, the answer is that if the noble Lord looks back to Clause 10, where the Secretary of State may direct the Commission to examine any question relating to prices or charges, he will find that the problem of recommended resale prices is one such area of inquiry that the Secretary of State might ask the Price Commission to examine. Indeed, the Price Commission have been examining such problems. If it is a legitimate problem for them to be asked to look at, they make recommendations, and then it is legitimate for an order to be made or an undertaking to be given. It is that which is provided for in Clause 12, and that is where the subsection appears. As I see it, it is in order to give the Secretary of State order-making powers in relation to a particular matter.

If the noble Lord reads through Clause 12(4)(b), I believe that he will find there a description of what are recommended resale prices. I see that the noble Lord does not find such a description. When I read through Clause 12 I found this to be so, and I believe he will find this to be so, too. Therefore the Amendment moved by the noble Lord, Lord Redesdale, was appropriately centred here. With regard to the other question, I am not sure that I have the answer off the cuff. Would the noble Lord mind repeating it?


My Lords, one question is whether it is actually provided for here and may I say that the words, such goods may be sold by retail at a price higher than the price at which the seller indicates he will or may sell them do not seem to be a justification because the recommended price is not a price at which goods may be sold? It is simply an indication of a price at which it would be reasonable to sell them. The other point I was asking about was the whole question of how this is dealt with—by prohibition. The noble Lord has mentioned the possible negotiation—if one may put it that way—and that may be the right answer. All I was saying was that I did not think prohibition was the right answer for something that can legitimately be done.


My Lords, I think it would depend upon the recommendation by the Price Commission after it had made the examination at the request of the Secretary of State. If it recommended that a certain practice in this field was wrong and should be prohibited, then the Secretary of State would take that recommendation into account in deciding whether to make an order.

I hope that I may have given the correct answers. If the noble Lord will look at what I have said, I shall certainly do so too and, if there is any difficulty, I am sure that we can resolve it by correspondence.


My Lords, I am grateful to my noble friend for so ably raising some points which I certainly had not got. One point which came out was that, in trying to re-jig my fox I might have overcooked it in its present amended form. Sadly, I really should have left it as it was before because I thought it was straightforward in trying to cover the three points and raise any abuses that might come up. Perhaps by trying too hard I have introduced elements which are wrong. I accept that point. However I do not accept that we have a satisfactory situation as it stands now.

I am grateful to the noble Lord for saying that we have a degree of common ground. At one point I was getting quite enthusiastic and I thought that we had even more common ground than we had, but I seemed to fall off the end of it! Sadly, it stems that the Government are not going to move on this point: I think that they are wrong and I should like to go on record as saying that they are wrong on this point and that it will increase prices. It is unfortunate. I can do no more now but beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.12 p.m.

Lord MOTTISTONE moved Amendment No. 8: After Clause 13, insert the following new clause:

Representations to the Secretary of State

. At all stages of the procedures described in sections 4, 5, 6, 10 and 11 of this Act, the relevant person may make representations to the Secretary of State regarding any matters thought by the relevant person to affect the initiation of or execution of any investigation or examination concerned.

The noble Lord said: This is a recasting of what was Amendment No. 17 at the Committee stage, when the noble Lord, Lord Wallace of Coslany, kindly said that he would look into the point and communicate with me, which he has done. Reading both his communication and the Official Report, it seemed to me that he was making two points: one was that Amendment No. 17 was on too narrow a basis and the other was that there was really no need for it because people always have a right to make representations to the Secretary of State, more or less at any time.

The problem is that within this Bill it is particularly important to draw to the attention of people who may be affected by it when it is particularly relevant for them to take advantage of their opportunity to make representations to the Secretary of State. I looked through the whole Bill and I find that in those clauses which might be said to be operative ones and which affect persons who will be involved in the various processes within the Bill—Clauses 7(3) and 12(1)—there is a specific invitation to the relevant person to make representations to the Secretary of State. In the what might be called the "executive clauses"—because the others tend to be informative rather than executive—which are the ones mentioned in my Amendment (to wit, Clauses 4, 5, 6, 10 and 11) there is no such guidance to the relevant person to take advantage of his right to make representations.

The other executive clause, if we may describe it as such because it is really more introductory of the safeguards—is Clause 9 where, in subsection (2), the Secretary of State is specifically invited to cause people to make representations to him. Therefore, it seems to me that, in this Bill where representations to the Secretary of State at certain points could be of great importance to companies, it is reasonable that they should have their arm jogged by a separate little clause in relation to those executive clauses for which this provision has not specifically been made.

I hope that this Amendment is sufficiently in accord with what the noble Lord, Lord Wallace of Coslany, was saying in Committee to be one which might commend itself to the Government so that the Government could improve their record by at last accepting an Amendment in good faith as being one which improves this Bill, in no way harms it, and is thoroughly to be desired. I beg to move.


My Lords, I should very much like to be included in the noble Lord, Lord Mottistone's book of records but unfortunately one cannot quite do that. We have looked into the whole question and my reply is fairly lengthy but there are some important points, particularly towards the end of my remarks.

The Bill has been drafted to ensure that firms have the clear right to make representations to the Secretary of State at the most crucial point in an investigation and examination—that is, after a report has been delivered to the Secretary of State and before action is taken as a result. Indeed, we have carefully drafted the Bill to ensure that the order-making power cannot be used until firms have had a chance to make representations. The order-making power cannot be used for the first 14 days following receipt of a report on an investigation. It expires after 28 days. In the case of examinations, it cannot be used for 28 days following publication of a report; and it expires after three months.

At all other stages of investigations and examinations, firms are completely free to make representations to the Secretary of State. They do not need to be given any statutory right to this effect. The only point where they need such a right is when the order making power comes into play—and that is taken care of in the Bill. Nor does the Secretary of State need to have placed upon him a statutory duty to consider representations. Any representation would almost certainly relate to the criteria. Because the Secretary of State is bound by Clause 20 to have regard to the criteria when exercising his functions under the Bill, he is also bound to pay regard to representations which relate to the criteria. He would be failing in his duty to do otherwise.

We do not believe it necessary to provide for representations in the way proposed, since the point is met in practice. Moreover, I believe that the proposed Amendment could lead to unforeseen consequences. A requirement upon the Secretary of State to consider representations would not only mean that he had to consider the most fatuous representations; it could also lead to firms attempting to disrupt the system by bombarding the Secretary of State with representations—possibly at the last minute—which he would be forced to consider before exercising a particular function under the Bill. Furthermore, I believe that a statutory right to make representations to the Secretary of State during investigations and examinations will undermine the Commission's position. There is clearly a danger that firms will come to see the Secretary of State as the focal point of the investigatory system; with the Commission reduced to nothing more than a minor appendage to which firms pay little attention. I am quite happy that there are facilities for representations and they are provided for in the Bill. I hope that the noble Lord will accept the explanation, particularly the latter part of my remarks.


My Lords, I must start by apologising to your Lordships for not having said that I was, with your Lordships' leave, including Amendments Nos. 9 and 10 in my remarks. It is clear that the noble Lord, Lord Wallace, assumed that. The noble Lord said—and I take the earlier part of his remarks as a fair statement of fact—that people could in fact make representations at any time. But then in his closing remarks he said that if we made it statutory people would be inclined to take advantage of this and make fatuous complaints, and indeed perhaps deliberately try to upset the machinery of investigation in order to foil the whole purpose of the Bill, or words to that effect. I can see the point, but it seems a little at variance with the earlier statement, because if it is said—and when we read the Official Report we shall see that it is said quite clearly—that people can make representations at any time, there is nothing to stop them from making fatuous representations whether they are statutory or otherwise. I should have thought that there was not very much substance in whether or not they were statutory, if people are free to make representations at any time except when the actual terms of the machinery do not allow it. So that does not seem to be a very strong argument against my Amendment.

On the noble Lord's last point, I fully appreciate this; it does make sense. When the Bill comes into effect the Commission will be making various communications to the relevant persons under the terms of the Bill; they have to be notified when an investigation or examination is begun. May I leave with the Government the thought that there might be a standard covering letter for this which drew the attention of firms to their statutory and other rights and encouraged them to make representations to the Commission itself, or to the Secretary of State as the case may be. If this emanated from the Commission this could surely not be undermining the Commission's position, because they would be in the driving seat and giving this advice to firms. It seems to me that would be a reasonable way of meeting my point. I would not expect the noble Lord to say here and now whether he would agree, but perhaps he might bear that in mind for guidance to the Commission when it is carrying into execution the purposes of the Bill after it becomes an Act. With that, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 9 to 11 not moved.]

Then, Standing Orders No. 43 having been suspended (pursuant to Resolution):


My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a.— (Lord Oram.)

On Question, Bill read 3a, with the Amendment.

6.24 p.m.


My Lords, I beg to move that this Bill do now pass.

Moved, That the Bill do now pass.—(Lord Oram.)


My Lords, I had hoped that the noble Lord would say a few words on Third Reading, but he has chosen not to, and I shall, therefore, say them now. I do not think there is any question of order about this; it is merely a matter of convenience. I will not state at length, or really at all, the objections of noble Lords on these Benches to this Bill. We think it is a Bill which, as it has made its passage through the two Houses, has changed considerably so far as motivation is concerned. It started off as being, I will not say a panacea for inflation, but it was going to be a great help in the Government's attempt to contain inflation. The events of this afternoon, with the first Amendment which I moved and later withdrew, make it quite plain that in fact it is going to have little or no effect on inflation at all. We are told that in effect the only matter to which the Government are going to have regard, at least so far as this Bill is concerned, is what I might describe as the 12 months' rule; in other words, if a union is fortunate enough or strong enough to secure for its member a 60 per cent. increase in wages, that is something which so far as this Bill is concerned will play no part. On the other hand, if it seeks to have two bites of the cherry within 12 months, then the unfortunate firm which bows to such pressure will find that any resulting increase in prices which it wishes to make will be the subject of some kind of unwelcome investigation from the Price Commission.

This is really not the sum total of our objections to this Bill. What I tried to say on Second Reading was that we all concede that there are times when Governments have to intervene to some degree, as may be necessary, in private enterprise, or indeed in the public sector, in the interests of the consumer. That is something which should be done, as I suggest, in special areas, very specifically named areas, which should be set out with care and certainly not in a hotchpotch bureaucratic effort such as this Bill. What I think we have feared—and nothing that has been said during the progress of the Bill's passage through your Lordships' House has allayed these fears—is that this is really a collectivist, bureaucratic and indeed snooping attempt on the part of the Government to interfere particularly with private business in this country, in a way which I, for one, think will be seen to be increasingly unjustified in the future.

We have attempted to do two things. We have attempted to improve the Bill and to make provisions for fairness where we thought the Bill was deficient. As to the first, we have only been able to ask the Government in effect to think again in one Amendment, and it perhaps is the most important Amendment of the lot. It may well be that we were fortunate to impose it on the Government. What I would say—and I am looking at the noble Baroness, Lady Seear, when I say it—is this. Throughout the passage of this Bill in your Lordships' House it is right to say that neither the Liberals nor the Government have put down one Amendment; neither the Liberals nor the Government have seriously considered, in my opinion, any Amendment which has been put down by us. Is it the Liberal position, one asks, that they thought—and, for all I know, still continue to think—that this Bill is, and was, so perfect that it needed no Amendment in this revising Chamber at all; and a fortiori are she and her colleagues so satisfied that they think this is a Bill about which, in no way, shape or form, should the Government be asked to think again? That is the situation that we have reached in this House.

Do not let it be thought that I am complaining at the decisions to which the House has come, because I certainly am not. But it is something to which we shall all have to pay regard in the future: that our role as a revising Chamber, as a Chamber where reasoned Amendments are thought out and debated, is one which perhaps is not so safe for the future as some of us may have thought. My Lords, having made those remarks, may I thank the noble Lord, Lord Oram, and the noble Lord, Lord Wallace, for their unfailing courtesy in the way they have treated us. We hope that, when it receives the Royal Assent, this Bill will not do too much damage.

6.30 p.m.

Baroness SEEAR

My Lords, I know that there is a great deal more to discuss this evening and I do not intend to be drawn by the noble Earl, Lord Mansfield, into a long discussion as to what has been our policy as regards the Bill. However, I wish to make one or two comments. Unlike the noble Earl, we do not see the Bill as primarily an anti-inflation instrument. We see it as having some contribution to make in the area of inflation for reasons which I have given repeatedly during the debates which have taken place. First of all, through the 12 months' rule, it gives some measure of control over wage increases although it is very slight. I am astonished at the line which the noble Earl, Lord Mansfield, has taken over this matter. Was it really his wish that the Bill should include draconian measures against employers who gave way to wage increases in the general area, apart from the 12 months' rule? I had not understood that the Conservative Party had what would have amounted to a statutory incomes policy, but that is what the noble Earl this afternoon seemed to be asking for.

Another way in which the Bill can help with pay policy is the degree of assurance that it may give—I do not know how great that degree will be—to the rank and file trade unionists in this country who are still being asked to exercise restraint and on whose good sense the future of inflation really depends. They can believe that because of the Bill there is still some control over prices.

I ask the noble Earl, Lord Mansfield, to ask himself whether, if it had been possible for people who are against the whole of the Government's policy as regards attempting to control inflation, to go to the country and say: "Look, you are being asked to exercise restraint over pay and the Government have torn up all vestige of control over prices", this situation would not have been exploited to the full by the enemies of this country who do not wish to see inflation controlled? Surely this must be the case. It is for that reason, in the short term, that we have wanted to see the Bill go through.

The final reason is that we believe that the Bill is a first step towards an effective competition policy which we have needed for a long time. The noble Earl will know, because I have no doubt he read the proceedings in another place, that we have been instrumental in pushing the Government in the direction of saying that it is their intention that we should not continue with a Price Commission. We are the last to want to increase bureaucracy, but the Price Commission should be combined with an improved Monopolies and Mergers Commission. In this way we shall cut down bureaucracy. Indeed, as regards bureaucracy, the Bill which does not involve a code at the end of a year, is much less bureaucratic than the Act which it replaces with all the complexities and details of a code. Therefore, we say move on as fast as possible towards incorporating the Price Commission into the Monopolies Commission so that we can have an effective competition policy of the sort that other countries, more successful than ourselves, in the Free World developed many years before we shall.


My Lords, like the noble Baroness, Lady Seear, I do not propose to be drawn unduly by the concluding remarks of the noble Earl, Lord Mansfield, although I should like to take up one point that he made. He churned to have detected a change in the motivation concerning the Bill during the course of its passage through another place and ultimately here. I do not think that he is right in that view. From the outset it was made clear that the Bill had two purposes: the short-term purpose and the long-term. As regards the Amendments with which we have been dealing in this House, it is true that emphasis has been given by myself and others to the long-term purposes. I shall not weigh up the relative merits of the short term and the long term, but the introduction by the Bill of the investigatory powers and the replacement of the old system by this new system is a most important part of the new thinking and the new policy as regards this question.

In view of that, rather than accept what the noble Earl, Lord Mansfield, has said about the one Amendment that the Opposition carried, I would say that, because of the need for establishing the long-term purposes of the Bill, the Amendment which made the powers renewable year by year was probably the least desirable of the series of undesirable Amendments that we have been considering. I am very happy that as regards at least all the others the will of your Lordships' House has prevailed in a way in which we are not very often accustomed in this place.

My Lords, having made those remarks I should generally like to reciprocate the concluding sentence of the noble Earl, Lord Mansfield, and thank him and Lord Trefgarne, and I should also like to include Lord Mottistone, for the manner in which they have approached and dealt with the Bill, if not for the matters which they introduced into our discussions.

On Question, Bill passed, and returned to the Commons.