HL Deb 27 July 1977 vol 386 cc1031-48

5.38 p.m.

Lord WALLACE of COSLANY rose to move, That the draft Price Investigation and Examination (Exceptions) Order 1977, laid before the House on 22nd July, be approved. The noble Lord said: My Lords, although it is not my intention to move the three orders en bloc, for the convenience of the House and particularly the Opposition I propose to make one speech outlining the principles and purpose of each order in the sequence in which they are printed on the Order Paper. Eventually, of course, the Questions will have to be put to the House separately for each order.

First dealing with the draft exclusion orders, Section 22(2) of the Price Commission Act 1977 provides that the Secretary of State may, by order, make such exclusions from the provisions of the Act as he specified. We have before us the draft order giving effect to those exclusions. Parts I, II and III of the draft specify prices and charges which are to be exempt from investigations by the Price Commission into price levels under Section 5(1)(b) of the Price Commission Act.

We propose to make these exemptions for a number of reasons. First, because there are prices and charges which are either the subject of some international obligation on the part of the United Kingdom (for example, coal and steel by virtue of our membership of the European Coal and Steel Community); or are simply outside the United Kingdom's effective control (for example, import prices). Secondly, there are areas where prices and charges are determined in such a way that they do not lend themselves to price control. For example, we do not seek to control prices determined on a commodity market or at auction. Thirdly, there are areas where prices are under the supervision of a body other than the Price Commission. There are a number of prices and charges which fall into this category—for example, the price of ethical medicines where control is exercised by the Department of Health and Social Security.

In these three general areas, exemption from investigation is achieved by Article 2(1) of the draft order. This Article excludes from investigation into price levels under Section 5 of the Act those prices and charges in Parts I, II and III. These same prices and charges are also to be excluded from undertakings which a firm may give following investigations. They are also automatically excluded from investigations into prices increases under Section 4 of the Act because none of them are to be subject to the requirement to notify the Commission in advance of a proposed price increase. The effect of the draft order is therefore to take all the specified prices and charges completely outside the scope of investigations. Although these prices and charges are not to be individually investigated, it does not necessarily follow that they should also not be examined on a sectoral basis under Section 10 of the Act. We believe that there are some sectors which—although exempt from investigations—should be liable to examinations and to potential action under Section 10. These are set out in Part III of the Schedule.

There are also some sectors which, for a number of reasons, merit complete exclusion from examination. These are dealt with in Article 2(2) and covered in Part I of the Schedule. In addition, there is a third category set out in Part II of the Schedule. This is an area which it is perhaps a little more difficult to understand at first sight. It is a category which is neither outside the system of examinations, nor fully within it. Instead, Article 2(3) of the draft order proposes a category which will be liable to examination under Section 10, but exempt from any action in consequence of such an examination. This will be achieved by excluding the prices and charges in question from those provisions of Section 11 of the Act which provide for the Commission to give advice in reports on examinations and to indicate matters which they think should be remedied. Prices and charges in Part II of the Schedule are also to be excluded from undertakings given to the Secretary of State under Section 12 in consequence of an examination.

The effect of Article 2(3) is to make specified prices and charges subject only to fact-finding examinations and to ensure that no action whatsoever can result from an examination. The reason for proposing what may seem to be a rather strange half-way house is two-fold. There will be times when there is a real need for a fact-finding examination, but for nothing more than that. This is the sort of examination which the Commission have already carried out from time to time under the powers contained in the Counter-Inflation Act 1973. To exclude completely the prices and charges in Part II of the Schedule from examinations would deny the Secretary of State the power in those cases to direct the Commission to carry out a fact-finding examination. We believe it right to preserve the ability to have this sort of examination.

The second reason for wanting to keep certain prices and charges within the scope of examinations concerns the nature of the examinations which the Commission will be asked to undertake. Many examinations are likely to be wide-ranging and could therefore suffer from over-restrictive terms of reference. If we exclude too many areas from examination, we run the risk of inadvertently prejudicing a Commission examination into a non-excluded price where they need also to look at other prices and charges which are excluded from examination but have a bearing on their examination into the related price or charge.

In drawing up the list of exceptions proposed in the draft order, the Government have tried to steer a middle course. On the one hand, there is clearly a danger that too many exclusions will detract from the effectiveness of the new system of investigations and examinations. Ultimately, this would detract also from the credibility of the new system. But there is also a danger in claiming to control prices and charges which, for one reason or another, cannot or should not fall within the remit of the Price Commission. That too could only undermine credibility.

We believe that the draft order steers the right course. It excludes only those prices and charges which should be excluded, in whole or in part, from investigation and examination. I have explained to the House why this should be so. But I also believe that, measured against the scale of industry and commerce in this country, the proposed exclusions represent only a fraction of the prices and charges which the consumer is called upon to pay. The draft order will not therefore detract in any way from the effectiveness of the new policy when it comes into operation in August. I therefore commend the draft order to the House.

I now come to the limits on Remuneration Order.

In the White Paper The Attack on Inflation After 31st July 1977 (Cmnd 6882), the Government outlined the further measures which are proposed in the fight against inflation and unemployment. As the White Paper explained, these measures have been drawn up in the light of discussions with representatives of the TUC and of the revised prospects for the economy. In the past two years, the nation has derived immense advantages from the guidelines on pay which the TUC has formulated in agreement with the Government. The Government and the TUC have recognised that the period after 31st July must bring an orderly return to free collective bargaining. The keystone for bringing about such a return is the TUC's guidance on the strict maintenance of settlements made under the current policy. The guidance, which is set out in the While Paper, will go far to prevent a wage explosion from developing after July 1977. It will mean that the Phase 2 policy will continue to affect the level of the nation's earnings until the last settlement made under it expires at the end of July 1978.

The Government have therefore proposed in the White Paper to continue the provisions in relation to employers in the Remuneration, Charges and Grants Act 1975 to the extent needed to support and enforce the TUC guidance on the 12-months' rule. The limits on Remuneration Order enables that objective to be achieved. The procedure under the new order will be exactly the same as in the last two years. If the Secretary of State, certifies that the pay limit has been breached then the pay sanction will be applied. As my noble friend Lord Oram made clear in the debate on the report stage of the Price Commission Bill (Official Report, 18/7/77, col. 16), the sanction will be the disallowance of the full cost of the relevant settlement in calculations made of profit margin controls under the Price Code. The further order needed to achieve the continuance of margin control for a further year will be laid later this week. The order also gives employers protection, similar to that in the last two years, in situations where they can keep within the pay limit only by breaching contractual obligations.

I should conclude by explaining the legal basis for this order. The original pay limits for the purposes of Section 1 of the Remuneration, Charges and Grants Act 1975 were set out in the White Paper referred to in subsection (1) of that section, namely The Attack on Inflation (Cmnd. 6151). This provided the limits generally known as the £6 policy. Under the powers in Section 1(2) of the Act, the Limits on Remuneration Order 1976 added to those limits a reference to the limits set out in the White Paper The Attack on Inflation: The Second Year (Cmnd. 6507). This order adds a reference to the limits set out in the new White Paper. It is specifically stated in Annex A of the White Paper that the TUC Statement of 22nd June alone constituted the pay limits in that White Paper.

I come to the third order, which affects dividends. The main purpose of the draft order is to prolong powers to control dividends under Section 10 of the Counter-Inflation Act 1973. It arises out of the Government's White Paper The Attack On Inflation After 31st July 1977 approved by the other place in the "confidence" debate last week. The reference to dividends is in paragraph 15. The draft order prolongs the controls until 31st July 1978, after which all legislative authority ceases. There are no changes in the form of the controls as compared with Phase II. The statutory limit remains at 10 per cent., within a range of provisions, for dividend increases above the limit in certain circumstances, notably the raising of new capital for investment.

Besides Section 10, the order also prolongs Section 8. This gives power to the Government to modify Statutes relating to prices. It was used to ensure that the price control could override any previous Statutory provision relating to prices, but has not been needed for some years and it is unlikely to be needed in the forthcoming year. The provision however is necessary to maintain the validity of the orders made under it. I hope I have not detained the House for too long and complicated the situation by running three speeches into one, but I thought it would be for the convenience of the House to speak to the three orders together. I beg to move the first Motion.

Moved, That the draft Price Investigation and Examination (Exceptions) Order 1977, laid before the House on 22nd July, be approved.—(Lord Wallace of Coslany.)

5.53 p.m.


My Lords, the House will be grateful to the noble Lord, Lord Wallace of Coslany, for moving the Motion and for telescoping his three speeches into one, no doubt thereby detaining your Lordships for a shorter period. To deal first with the first order, as the noble Lord explained this provides for a series of exceptions, either in whole or in part, to the provisions of the Price Commission Act which passed through this House the week before last.

Throughout the passage of that measure we on this side were concerned to ensure that firms were adequately protected against cost rises beyond their control, and we were therefore anxious to see that the exclusions were sufficient to achieve that purpose. That indeed was one of the planks of the Government's argument; that we should wait for this order to see how generous and fair they would be. The order is in fact largely as expected. There are some areas which are of some puzzlement, but as I understand that some of my noble friends will ask the noble Lord some questions, I will not detain the House with any specific questions. Whether the list is in fact sufficiently comprehensive only time will tell.

With regard to the second order, the limits on remunerations, of course we regret that in the light of the draconian price control powers which are contained in the new Act, the Government have not been able to produce a more effective wage control policy. I do not want to be drawn into the argument whether I am for or against a wage control policy at this juncture, but I would say that we certainly need a wage control policy where there is strong and powerful control of prices, because it is necessary and indeed only just that firms should not be subjected to over-stringent price control when there are great areas of costs which are beyond their control and which are not adequately covered by the code or by exceptions granted to the general rules. The Chancellor's plea that a figure of 10 per cent. should be the norm is of course welcomed so far as it goes. What a pity it is that that figure, or something like it, could not have been written into this order along with the 12 months' rule; it seems that only the 12 months' rule was acceptable to the TUC.

The third order, as Lord Wallace explained, refers to dividends. I think we labour under a delusion if we imagine that the consumers whom we seek to protect by controlling prices are equally protected by the control of dividends. Consumers are very often shareholders in a small way, through unit trusts or pension funds, in companies and, in that capacity, they suffer when dividends are unreasonably or unnecessarily controlled. Furthermore, when companies are not able to distribute their profits or, worse still, are not able to make them in the first place because of the control on their prices, the growth of those companies must inevitably suffer, and when growth suffers employment suffers.

The Government have just announced the latest unemployment figures and they are an all-time record, anyway since the war—1.6 million no less are now unemployed. I wonder whether these new provisions will do anything for those unfortunate people. We reluctantly agree that these orders should pass and we shall listen with interest to the specific points which my noble friends will raise.

5.58 p.m.

Baroness SEEAR

My Lords, we accept these three orders arising in connection with price regulation and the incomes policy, or the absence of it in the formal sense that we have been accustomed to in the last two years. Of course, in a perfect world these are not regulations which we would wish to see, but this is very far from being a perfect world and, in our view, there is one issue of overriding importance to which all lesser issues at this stage have to be sacrificed.

However, before developing that point I wish to take up two points made by the noble Lord, Lord Trefgarne, when he said that there were draconian powers being used against employers under the new Price Commission Act. There are strong powers implicit in the Act, but there is no reason to suppose that they will be used in a draconian or unreasonable way. I would draw attention to Section 2 of that Act, which lays down very clear, though general, guidance as to the way in which investigations will be carried out and the grounds of investigation, and I submit that that section gives reasonable safeguards to people who have no wish or intention of abusing their position as manufacturers.

I also disagree with the noble Lord, Lord Trefgarne, when he regrets that there is no specific norm—of a kind to which we have become accustomed over the past two years—written into the policy. A norm has always become a minimum, and to write it in at present is to invite inflationary increases. The idea of an overall earnings figure, as distinct from a norm, has the advantage that it is not a minimum in this sense, and it has the other very great advantage that it gives an opportunity for flexibility. I am sure that noble Lords on the Conservative Benches will agree that industry is extremely anxious to have flexibility, and that a rigid norm would deprive it of that flexibility.

For my part, I am also glad that we do not now have the Government coming with a cut and dried plan that has been fixed with the TUC outside both Houses of Parliament, which Parliament then has to accept. Surely it is better that after consultation with the TUC and with the CBI, the Government should make up their mind, and have discussions in both Houses of Parliament, rather than come here and say, "This is what has been decided. This is what has to be done."

Reverting to the overriding argument, although there is much about these matters which ideally we would not like to see, nothing is more important than to restrain inflationary wage increases. If these are the terms that are required to restrain inflationary wage increases, then the price is cheap. Of course it all depends on whether the Government, having said what their policy is, intend to stick by it. That is what matters. That is what matters to my Party, and it is upon that matter that the support of my Party for the Government's policy depends.

6.2 p.m.


My Lords, I hope that the noble Baroness, Lady Seear, will forgive me if I do not follow her line of thought, which seemed to relate more to the Act than to the orders. In rising to endorse the remarks of my noble friend Lord Trefgarne, I want to ask the Government some specific questions about two of the orders, and I shall take them in the same sequence as they appear on the Order Paper. I wish to refer, first, to the exceptions order, and in particular to paragraph 13, which appears on page 4, and which is in Part H of the Schedule. On first reading this I saw, under the exclusion list, a reference to the sale of manufactured goods … which have not been substantially changed after completion of their manufacture". That is splendid—practically all manufactured goods are not changed after completion.

There are some exceptions which I could mention, but generally speaking there are no changes after completion. But on reading that part of the order more closely, I see that the part which starts with the words, "which have not been substantially …" perhaps relates, or is intended to relate, to the prices for the sale of manufactured goods, and I should have thought that in terms of the English language that was not quite good enough, and that paragraph 13(b) could well be taken to relate to manufactured goods. This is a matter in which the Government may like to help themselves by improving the position. As I understand it, we are not in a position to amend orders, and I suppose that they can only be withdrawn and reissued. If the Government feel reasonably strongly about this, they had better get on with it. But if I have a point here, it would seem that it could be pleaded that all, or very nearly all, manufactured goods escape under the terms of the paragraph to which I have referred.

In passing I should like to mention that I believe that the Government have done themselves no good over the speed with which they have tried to force the Bill and the subsequent orders through our House. On the one hand, there is the question of the wording to which I have referred which, with a little more time, may have been considered more closely, so that the possible error which I have mentioned would not have arisen, and on the other hand, a point arises relating to the heading under Part HI of the Schedule, which states: Exceptions from sections 5(1)(a), 7(5)(b) of …". Upon looking at the headings under Parts I and II of the Schedule, one sees that in each case the word "and" is included before the last reference in those headings. Therefore the word "and" ought to be included in the heading under Part III. Perhaps this can be treated merely as a printing error, and the order need not be reissued for that reason. But, again, if further action is needed, then the Government ought to get on with it, because there is not much time for them if these orders are to become effective from after 31st July.

With regard to the texts, one has not had time to study them. I fully accept what the noble Lord, Lord Wallace of Coslany, said about the criteria under which they were drawn up, but I think it would be fairer on all concerned had it been possible to have had more time here. I am pleading for more time. We should have been discussing these orders on or about 30th June, so as to have had a month before they were due to come into effect. That would have given us an opportunity to consider whether, under the terms of the criteria mentioned by the noble Lord, Lord Wallace, various products could reasonably have been included in any of the Parts of the Schedule. Not only have the Government done themselves no good by rushing this matter, but, potentially, the time factor could be seen to be unfair.

Your Lordships may ask, "What is unfairness?" I make this point because, as the noble Baroness, Lady Seear, said, hopefully the new Price Commission will be absolutely "spiffing" and will do everything in the right kind of way, and we need not worry at all. But nagging me in the back of my mind—and I cannot omit this—is this beastly business of the price freeze which, it strikes me, is quite irrelevant to the main purposes of the Act. I do not intend to make a great song and dance about the price freeze now, but it is because it is there, and because it can be so damaging to people, that it is unfair not to give them a chance to see whether these Schedules are fairly comprehensive.

I am sure that the Government do their best, but that does not mean that they have all the knowledge and expertise of people who are out at the sharp end, in the field. I am concerned about the punitive aspects of the Act; and I should say in passing that, although I believe it is now an Act, I could not obtain a copy, because Acts are not printed for a fortnight or so. Here is another example of the consequences of this matter being rushed through. It is an Act in name, but not in fact, so far as I am concerned. I should very much like answers to my questions on paragraph 13(b) and on the heading to Part III of the Schedule, and I should also like to know what the Government propose to do if my fears and suppositions are right.

I now turn to the Limits on Remuneration Order. I find it extraordinarily difficult to regard this as being legal. I know that the noble Lord, Lord Wallace mentioned specifically what rendered the order legal, and I regarded it as significant that he did so. The parent Act of 1975 reads in section 1(1) …necessary to keep the remuneration within the limits imposed by the policy set out in the document laid before Parliament … in … 1975 (Cmnd. 6151)…". Everybody knows that that set out specific limits, and last year, again, the 1976 document set out specific limits. This order gives the impression that Cmnd. 6882 sets out limits on remuneration. On looking at pages 1, 2, 3, and 4 of Cmnd. 6882 I find no remuneration limits. There is a rather hazy time limit, but there is not a remuneration limit— not anywhere. The noble Baroness, Lady Seear, may have had a jolly good point in saying that it is a good thing not to have a remuneration limit—I was rather taken with her argument—but the fact of the matter is that we are discussing an order which specifically says thare are limits.

When the noble Lord, Lord Wallace, was talking to us, he said that the limits were in Annex A on the back page, which is all that the TUC found themselves able to contribute to this general subject this year. But there is there only a back reference to last year's limits, which so far as it goes, if the timing of your negotiations is well on into the 1977–78 period, I suppose could be said to suffice. My own timing is the 1st June, so I am going to be limited by the 1976 rules. But that is not what this says. This talks about the 1977 rules, and Cmnd. 6882. In the trade union contribution, again, the only limits that could be called limits, though they are not so described in the text—nor, incidentally, are they earlier in the document—are time limits.

I would think that if someone found themselves in difficulty under this order which we are discussing he would stand a jolly good chance of being able to get a court of law to say that this is not a legal document. It is referring to something which does not exist. It is referring to limits on remuneration in Cmnd. 6882, and there are not any. So I would suggest to the noble Lord, Lord Wallace, that the Government had better get weaving. They have either got to withdraw this order because it has no validity or they have got to get somebody to give it some pay limits which it can refer to, and turn it into a legal document.


My Lords, I have a question of which I have given the noble Lord private notice, and it is this. Referring to the Price Investigation and Examination (Exceptions) Order, could the Minister say why, in paragraph 11(b) of Part II, charges for the provision of landing and related facilities for aircraft should be included? I should like to know for two reasons. First, it is not part of any international agreement; and, secondly, from the purely practical point of view, landing fees for small aircraft are often quite out of proportion to the facilities provided.

6.13 p.m.


My Lords, I sympathise very much with the perplexity of my noble friend Lord Mottistone about the order dealing with limits on remuneration. As I see it—and I hope the noble Lord will confirm this—what the Government are trying to do is to hold the 12 months' rule, and at the same time, as they say in paragraph 10 of the Command Paper The Attack on Inflation, urge that the general level of pay settlements should be moderate enough to secure that the national earnings increase is no more than 10 per cent.". This obviously means that they recognise that in some individual cases an increase of more than 10 per cent. might be justified; but, equally, if you intend to hold the national average at 10 per cent. then there must be some increases which will be less than 10 per cent. Indeed, there may well be firms which could not afford to pay an increase of as much as 10 per cent., and there may be cases in particular industries or in a particular firm where an increase of as much as 10 per cent. would not be justified. It is only in this way that the national average of 10 per cent. would work. If anything else was intended, the Government would do doubt have insisted on a flat 10 per cent. increase, but this is not what is done.

In the earlier debate we had, the noble Lord, Lord Robbins, whom I am glad to see here today, if I understood him correctly pointed to the real danger here; that is, that in the months immediately after this order comes into effect, from the 1st August onwards, there will be settlements well over the average of 10 per cent. If you are to get an average increase of 10 per cent. for the year, you will thereafter have to have increases of very much less than 10 per cent., but in actual fact, of course, exactly the opposite will happen. Here is my noble friend Lord Mottistone who has to wait till next June for his increase. Is it to be supposed that, if there are increases of well over 10 per cent. in the early part of the year—that is, in August, September and October—others will wait the whole 12 months' period before they get a comparable increase? This is the great difficulty that we are in over this order, and indeed over the policy as a whole.

I do not say for an instant that the Government are wrong in trying to achieve this, but I think we must reckon that the chances of their achieving a good result from their policy do not appear to be favourable at the moment. All I can do is to wish them the greatest of luck with their efforts to urge the unions in the early stage—in August, September and October in particular—to be extremely moderate in their increases, and to hold fast to the policy (the guidelines, as the Government say) that increases should not average more than 10 per cent. a year. I do not think there is anything more we can say about this order, except that we understand what the Government are going to do. We are going to have a terrible job to achieve it, and it all depends on their success in urging those unions whose wage settlements come up for review in the next three months to accept the guidance that the Government have given.

6.17 p.m.


My Lords, I certainly have a large number of questions to reply to, but I shall not be too long in answering because your Lordships have other business to do. At the same time, I shall endeavour to give what answers I possibly can. The noble Lord, Lord Trefgarne, and others asked, "Why control dividends at this stage?" The simple answer is that successive Governments have taken the view that, where there are constraints on pay bargaining, incomes from dividends should also be limited. That is the simple basis. We shall have to see how things go. May I say generally on the question of pay that I entirely agree that there is a teriffic responsibility on employers and trade unions in this field of pay bargaining, as to whether they keep to the TUC recommendation. The TUC have given their support, and it is now up to the workers and the employers to face up to the situation in the national interest—because that is what these orders are about. They are in the national interest, and not in anybody's personal interest or in the interest of any section of the community.

The noble Lord, Lord Mottistone, made a number of inquiries. The first one was on paragraph 13(b), which deals with second-hand goods. It is cumulative, so the reference to prices for the sale of manufactured goods applies to both (a) and (b). This is achieved by the word "and" at the end of paragraph 13(a). This word "and" is very important, apparently, because, on the noble Lord's second point, we agree that the word "and" is missing from the heading of Part III of the Schedule to which he referred. We accept that point. This will be corrected when the order is reprinted for publication. It is merely a printing omission. The noble Lord asked when the print-out will be available. It should be available at the end of this week. That is the latest information.

Generally, on the question of exceptions, it is a question of timing in getting the orders out. The Department and those responsible for the job of sorting it all out have put in great efforts and tribute should be paid to those anonymous people for having done the best that they can. They think that they have achieved the ideal balance. But nobody is 100 per cent. perfect and it is possible that there may be occasion for reasonable suggestions to be made for other exceptions. That can be done. The only problem is that it takes time for these suggestions to be fully considered. Nevertheless, it does not mean that because this has been published, it is the end of it. Any reasonable suggestion will be fully considered. We hope that there will not be too many of them; but, of course, they could arise.

I will come back to the points raised by the noble Lord, Lord Mottistone, later. The noble Earl, Lord Alexander of Tunis, asked an interesting question. On the face of it, his case is reasonable, but, on the other hand, when we go into it in detail regarding the landing fees for aircraft and so on, the charges for landing and related facilities for aircraft on international journeys have been outside the control under the code for some time. This is because such charges are akin to being export prices. Experience has shown that airports could not extricate the costs of services for domestic travel from international travel. It is difficult to sort it out. It makes it difficult, if not impossible, to control domestic charges in any satisfactory way. In August of last year we therefore made all landing charges free of control under the code. We are now proposing to extend this exemption to investigations under the Price Commission Act and to action in consequence of examinations, but they will be liable still to fact-finding examinations.


My Lords, I am a little unhappy about something the noble Lord said about it having something to do with export prices. If he is saying that export prices are not controlled, that we accept. But aircraft landing fees levied by United Kingdom airports are surely not part of export prices.


I shall repeat what I have said. I said that charges for landing and related facilities for aircraft on international journeys have been outside the control of the code for some time. This is because such charges are akin to being export prices.


My Lords, if the House will allow me, I must come back to this point. Landing fees for aircraft, so far as the major airports are concerned, are set by the British Airports Authority, as the noble Lord will know. Most other airports followed the lead given by the BAA in deciding what charges to set; but by no means all of the smaller airports are controlled by the BAA. I wonder whether the noble Lord or the Government are right in excluding those charges from the effect of this order. The answer that the noble Lord has given is puzzling and confusing. Perhaps he will be able to look at the matter again and write to my noble friend.


My Lords, I am grateful for that suggestion. It is a very complicated matter and I shall certainly see what I can do to get a clearer explanation for the noble Lord and his noble friend and others who are interested.


My Lords, might I point out, although it is not my job to do so, that when the noble Lord talks of exports to a certain extent he is right, in that foreign aircraft landing on British airfields pay their landing fees and those fees can be treated as invisible exports. I think that the noble Lord was about 50 per cent. right.


My Lords, I am grateful for that intrusion into the debate. Whether the noble Lord, Lord Trefgarne, is grateful we shall sort out later. The noble Lord, Lord Mottistone, raised the question of limits of pay. It is absolutely correct that the pay limits referred to in the limits on the Remuneration Order are those which are set out in Annexe A relating to the timing of increases in remuneration after the Phase 2 settlements. We should not underestimate the value of the strict maintenance of settlements made under the current policy. In both of the last two years, the 12 months' rule has been one of the pay limits. That is the pay limit existing now.


My Lords, if the noble Lord will allow me to intervene, he is now talking about a pay limit while the text is talking about a remuneration limit. However you try to grapple with the English language, you cannot turn a time limit into a remuneration limit. One is one and the other is the other.


My Lords, I may be a little innocent in these matters but I should have thought that remuneration and pay go together; that, colloquially, "remuneration" was a posh way of saying "pay". One talks of salaries and wages.


My Lords, my argument is not of equating remuneration with pay but of equating remuneration with time. The document talks about a time limit. That is the only limit. There is mention of remuneration or of pay but not in a limiting sense. The order talks about remuneration limits and the document referred to does not do so at all.


My Lords, the limit is entirely based on Phase 2 and the 12 months' rule. That is the basis of the whole thing. We hope that this will work and that it will be accepted, for it is a vital fact that must be observed by the British people. I can say no more than that. It is quite simple really, although it is terribly hard to put into effect.

On Question, Motion agreed to.