Sitting of 5 March 1973

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PETITION

  Bexhill Hospital
  Mr. Bryant Godman Irvine: I beg to ask leave to present a petition signed by over 11,000 of the people of Bexhill-on-Sea. The petition has been organised by Mrs. Joyce Alexander, a Member of the Excellent Order of the British Empire, a freeman of the borough and chairman of the Council of Social Services of Bexhill.
  Containing as it does the signatures of almost one-third of the population of Bexhill, the petition shows how keenly the people of Bexhill feel about this matter and how they regard their hospital as a refuge and present help in time of trouble.
  The petition ends:
  Wherefore your Petitioners pray that Parliament will take note of the widespread protest, and unanimity of feeling, throughout Bexhill against the closure of the hospital's first aid department, and that the Department of Health and Social Security be asked to reconsider the matter.
  And your Petitioners, as in duty bound, will ever pray.
  To lie upon the Table.

ORAL ANSWERS TO QUESTIONS
  TRADE AND INDUSTRY

    North Sea Oil and Gas
    Mr. Ewingasked the Secretary of State for Trade and Industry how many inquiries regarding the possible use of Government advance factories presently standing empty in Scotland have been received from firms engaged in the North Sea oil industry.
    The Minister for Industrial Development (Mr. Christopher Chataway): It is not possible to identify exactly the connection between inquirers and the North Sea industry, but two factories have been allocated to concerns known to be engaged in the industry.
    Mr. Ewing: Will the right hon. Gentleman give an assurance that every encouragement will be given by his Department to firms applying to set up in Scotland to service the North Sea oil industry, as there is growing concern that such firms are being established outside Scotland, with the result that the country is losing the benefit which the North Sea oil industry could bring?
    Mr. Chataway: Yes, Sir. The hon. Gentleman will have noted the measures announced by my right hon. Friend to encourage British industry to take the maximum advantage of the opportunities offered by the North Sea industry.
    Mr. Eadie: Is not the Minister aware that there is concern in Scotland about the industrial spin-off from North Sea oil? If he refers to an answer by his right hon. Friend to me recently, he will discover that 2,500 jobs were lost in the energy industries in Scotland in 1972. What plans does he intend to present to the House to try to deal with this problem in Scotland?
    Mr. Chataway: I am sure that the hon. Gentleman knows that a whole range of measures has been announced to encourage Scottish industry to break into the North Sea oil supplies business, and not only into the £300 million a year of business in the North Sea but into the £1,000 million a year business that there is to be in offshore development worldwide.
    Mr. Douglasasked the Secretary of State for Trade and Industry if he will make a statement on meetings between his Department and Scottish industrialists on 9th February 1973 with regard to the IMEG report.
    Mr. Chataway: As my hon. Friend the Under-Secretary of State for Trade and Industry said in reply to a Question on 13th February, he met industrialists in Scotland on 9th February to discuss ways of maximising the benefits from offshore oil and gas developments. A number of suggestions were made and consideration is being given as to how and whether these ideas should be acted upon.—[Vol. 850, c. 327–8.]
    Mr. Douglas: Is the Minister aware of the extreme disquiet in Scotland about the Government's failure to implement the major recommendation of the IMEG report, namely, the establishment of an independently-financed petroleum supply industries board? In view of the major windfalls in terms of revenue coming from the North Sea, when will the Government make up their mind to establish such a board so that Scottish industry may get the full benefits of this resource?
    Mr. Chataway: My impression is that the great majority of people recognise the force of the argument deployed in the IMEG report, namely, that in order to achieve maximum speed it was best to set up the Offshore Supplies Office within the Department. There is a wide under-
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    standing that if it is to be effective it must work closely with the other agencies of the Department.
    Mr. Benn: In view of the publication of the report of the Public Accounts Committee, can the Minister really claim that the arrangements which have been made have been to the benefit of this country? Is it not clear that the royalty payments and tax losses which have been tolerated for the past two and a half years have far more than offset any windfall that there has been?
    Mr. Chataway: This is not the occasion or the Question on which to discuss the arrangements for licences and taxation which were primarily made by the previous Administration. The Question deals with the supplying industries in Scotland and, as the right hon. Gentleman knows, we have taken a very large number of measures to ensure that Scottish industry is able to break into this field.

    Advance Factories
    Dr. Dickson Mahonasked the Secretary of State for Trade and Industry if he will agree to sanction the construction of a further advance factory in the Larkfield Industrial Estate, Greenock.
    Mr. Chataway: The existing advance factory at Greenock has recently been allocated, although certain details remain to be settled with the prospective tenant. I shall bear in mind the claims of Greenock for a replacement factory.
    Dr. Mabon: Is it not the Department's policy, as it was the policy of the previous Government, always to top up with a new advance factory when an existing advance factory has been let? That was an excellent practice in the past which proved successful and I earnestly urge the Minister to promise that he will announce the building of such a factory quite soon. After all, it takes 18 months to build.
    Mr. Chataway: I cannot go further at this stage. The hon. Gentleman will know that there is another advance factory at Greenock, although an applicant is under consideration there. As he was good enough to invite me to his constituency, perhaps we shall have an

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    opportunity to discuss the matter further then.
    Mr. Edwin Wainwrightasked the Secretary of State for Trade and Industry how many industrialists have visited the advance factory at Denaby Main, accompanied by one of his officials; and if he will now assign an individual civil servant to be responsible for the letting of this factory.
    Mr. Chataway: Three. It is not practicable to assign full responsibility for letting to a single officer. The resources of the regional office are used, and will continue to be used, for this purpose.
    Mr. Wainwright: Does the right hon. Gentleman realise that the factory at Denaby Main was completed in June and that no tenant has yet been found for it? Unemployment in the area is high and everybody is getting rather despondent. What plans have the Government to find tenants for these factories? Is the right hon. Gentleman aware that in this part of the country there are large pockets of unemployment? Why does he not consider giving the South Yorkshire coalmining area development or special development area status?
    Mr. Chataway: I understand that the hon. Gentleman and his constituents want this factory to be let as soon as possible. I can assure the hon. Gentleman that our regional officers are directing all their efforts towards that end. The substantial increase in the number of lettings and sales has been very encouraging indeed. The whole object of the advance factory programme is that there should be factories available. Therefore, there are a number that remain empty at any one point in time. I do not want that to be the case for very long in the hon. Gentleman's constituency. Development area status is another question.

    Air Services
    Mr. Spearingasked the Secretary of State for Trade and Industry if he will now take steps to estimate the proportion of future air traffic in the scheduled and charter services, respectively, and the places of domicile of United Kingdom citizens using such charter services.
    The Minister for Aerospace and Shipping (Mr. Michael Heseltine): Use of pro-
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    motional fares on scheduled services and changing concepts in charter services blur the distinction between them economically so that future air traffic is best estimated as an entity. The domicile of air travellers and whether they used a charter service were among the questions put in the Civil Aviation Authority's 1972 London area airports origin and destination survey.
    Mr. Spearing: As charter services have a much higher load factor in general than do the scheduled services, and in Vol. 8 of the Roskill proceedings it was pointed out that in order to time the need for a third London airport, if one be necessary at all, one has to project the future loadings of these types of traffic separately, how can the Minister consider the need without doing just that?
    Mr. Heseltine: As the hon. Gentleman knows, the CAA is looking at the South-East England airports and will be publishing its findings in June.
    Mr. Spearing: What about the whole of Britain?
    Mr. Heseltine: The authority has authorised me to say that, from the preliminary investigation it has made, it sees no reason to doubt the need for a third London airport by the early 1980s.
    Mr. Wilkinson: I remind my hon. Friend that his hon. Friend the Under-Secretary of State told me some months ago in the debate on the need for a national airports policy that the Government would do everything possible to stimulate the development of regional airports, presumably with a view to catering for inclusive tour and charter traffic. Will he assure me that this is still the Government's policy notwithstanding the proposed development at Maplin?
    Mr. Heseltine: The CAA is looking at the whole question of regional airports, and the matters to which my hon. Friend refers will be very much in its mind.

    Aerospace
    Mr. Tebbitasked the Secretary of State for Trade and Industry what plans he has for further discussions with European Aerospace Ministers on the future of the aerospace industries in Europe.
    Mr. Michael Heseltine: As my hon. Friend the Under-Secretary of State told my hon. Friend the Member for Bristol, North-East (Mr. Adley) on 5th February, we shall continue to take every opportunity to discuss with other European Governments the steps needed to ensure a strong European aerospace industry.—[Vol. 850, c. 24–5.]
    Mr. Tebbit: Is my hon. Friend aware that although many of us feel that a strong European industry is essential for the British industry to survive at its full strength and potential, as time goes on many more of us become worried about whether, when the European industry is formed, we in this country will still have the capacity for major design leadership?
    Mr. Heseltine: I fully understand the question put to me by my hon. Friend. Obviously that must be a preoccupation of the Government as well.
    Mr. Bishop: Is the hon. Gentleman aware that there is concern about the Government's thinking, if any, about the future of the British aerospace industry with regard to rationalisation and the numbers likely to be employed in the industry? Is it the Government's plan to review the number of companies and the number of employees? Finally, does the hon. Gentleman want a British aerospace industry at all? The view of many people is that there are no indications that way.
    Mr. Heseltine: I am sure that on reflection the hon. Gentleman will take more account of the fact that last year we achieved record exports in the British aerospace industry. It does not look like an industry which is doubting the will of the Government to keep it in existence. Of course the Government have very real concern for the British aerospace industry. The question of mergers is in the first instance a matter for the firms themselves.
    Mr. Skeet: Nevertheless, the establishment of multi-national institutions in Europe would be more valuable than the ad hoc participation that has occurred in the past.
    Mr. Heseltine: I very much take that view, but other Governments have also to be persuaded.
    Mr. Benn: A moment ago the hon. Gentleman said that it was a matter for the firms. Now he says that other Governments have to be persuaded. Will he make clear to the House and the industry whether it is his intention as the responsible Minister to push firms into international companies across frontiers? What effect would that be likely to have on employment and prospects for the British aerospace industry?
    Mr. Heseltine: I cannot give any figures of the sort that the right hon. Gentleman requests because no plans exist, so calculations could not conceivably be made. It is equally true to say that if I saw any way in which meaningful conversations with the European industry could take place that could lead to the establishment of a multi-national company in the aerospace industry in Europe, I should be happy to take part in that discussion.

    Trade Descriptions (Services)
    Mr. Sydney Chapmanasked the Secretary of State for Trade and Industry if he will seek to amend Section 14 of the Trade Descriptions Act 1968 to ensure that where goods, etc., are sold with a promise and on the basis that services will be provided in the future, it should be an offence if those services are not subsequently provided, following, the recent decision of the courts in the case of Beckett v. Ben Cohen 1972 1 WLR 159.
    The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): I appreciate my hon. Friend's concern, but I have not yet decided whether an amendment to the Trade Descriptions Act is the best way to deal with the situation.
    Mr. Chapman: I thank my right hon. and learned Friend for that reply. Does he agree that this is only one of recent court decisions which suggest that at least Sections 11, 14 and 28 of the Trade Descriptions Act 1968 should be amended if the Act is to implement what Parliament intended?
    Sir G. Howe: The effects of this particular decision should not be exaggerated. Traders of all kinds would do well to remember that false statements about any matter of existing fact will continue to give rise to criminal liability under the

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    Trade Descriptions Act. There are difficulties about attaching that kind of liability to every promise about the terms on which a future service is to be provided. This together with the other matters mentioned by my hon. Friend will be one of the kinds of problems that the Director General of Fair Trading will be able to consider as soon as the Fair Trading Bill becomes law.

    Motor Manufacturers
    Mr. Thomas Coxasked the Secretary of State for Trade and Industry when he last met representatives of the motor manufacturers association.
    The Secretary of State for Trade and Industry (Mr. Peter Walker): My right hon. Friend the Minister for Industrial Development met representatives of the Society of Motor Manufacturers and Traders on 10th October 1972, and my colleagues and I meet the industry's leaders frequently.
    Mr. Cox: I thank the right hon. Gentleman for that reply. Is he aware that many thousands of British motorists who travel to Europe, especially during the summer months, and unfortunately break down or become involved in a crash often have great difficulty in trying to obtain parts because of the lack of after-sales service by British manufacturers in Europe? Will he bring this matter to the attention of the association when he next meets it? Not only does it present a problem to the British motorist but it does nothing to enhance our reputation in Europe.
    Mr. Walker: I will discuss this matter with the motor manufacturers association.
    Mr. Body: Has my right hon. Friend yet received the opinion of members of the association about the prices and incomes policy and, in their view, the inhibiting effect that it will have upon investment and, therefore, future production?
    Mr. Walker: I do not believe that it will have an inhibiting effect on investment programmes. I think that inflation would do considerable damage to export prospects.
    Mr. Benn: Will the right hon. Gentleman confirm that the provisions of the Green Paper "The Price and Pay Code",
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    which we are debating today, dealing with transfer pricing, will permit him under the powers which he is seeking to enter into all the internal transactions of American motor car companies here so that he can be satisfied that transfer payments are not made in such a way as to evade Government policy?
    Mr. Walker: That is something that can be dealt with in the debate this afternoon.

    Cypriot Ship "Karin" (Portuguese Customs Charge)
    Mr. Donald Stewartasked the Secretary of State for Trade and Industry what action he is taking with the Portuguese authorities towards settling the matter of the fines placed on goods carried in the vessel "Karin" in Lisbon in October 1970.
    Sir G. Howe: Following our earlier representations about the imposition of this additional charge, I am now considering with my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs the terms of a further approach to the Portuguese Government in this matter.
    Mr. Stewart: I thank the right hon. and learned Gentleman for that reply. Does he accept that the Department was extremely negligent in not advising shippers of the risk of fines being imposed on this vessel on arrival in Portugal? Does he accept that the Department has been extremely dilatory in seeking a settlement? Will he press strongly for encouragement to be given to exporters and shippers who are doing their best in the export drive?
    Sir G. Howe: I appreciate the hon. Gentleman's concern about the export drive. I cannot accept that the Department has been either negligent or dilatory. It is wrong to describe the charge as a fine. It is a regular charge provided by the Portuguese customs tariff. The question is whether it is proper to apply it to the goods with which we are concerned. That is the matter about which we have been making and will continue to make representations.

    Coastal Distress Services
    Mr. Costainasked the Secretary of State for Trade and Industry when he

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    expects receiving the results of his Department's experiments at selected coastguard stations to evaluate the use of direction-finding equipment on the radio telephone distress frequency.
    Mr. Michael Heseltine: Results so far show unacceptable inaccuracies and further trials are therefore necessary. I cannot say when these will be completed.
    Mr. Costain: Does my hon. Friend agree that the recent loss of the "Gold Coin" off Hastings, which nobody could tell was in the English Channel, shows that there are serious defects in the system? Can my hon. Friend do something to get it modernised?
    Mr. Heseltine: Certainly we are anxious to make progress in this matter, although it is not certain that we would have been able to help in the "Gold Coin" case. However, we wish to make progress and that is why we are carrying out tests of which my hon. Friend is aware.
    Mr. Wilkinson: Is my right hon. Friend satisfied, following the move of Royal Air Force helicopters and the search and rescue facilities from Chivenor to Thorney Island, that the DTI in their stead will be able to make adequate search and rescue provision? May I suggest something on the lines of the American civil air patrol in this country?
    Mr. Heseltine: That is another question. I hope that my hon. Friend will be aware of the announcement that we have made about the continuing air search and rescue operations and the helicopters, which I think will be satisfactory.

    Pyramid Selling
    Mr. Raphael Tuckasked the Secretary of State for Trade and Industry what plans he has to introduce legislation to control multi-level marketing and pyramid selling.
    Sir G. Howe: I intend shortly to make public, and invite comment on, the Government's proposals for dealing with pyramid selling.
    Mr. Tuck: I am grateful for that news. I should like to ask the Minister two questions. First, when does he expect the results of his Department's investigations into pyramid selling to be published? Secondly, as he must be aware
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    that people are daily being swindled out of thousands of pounds, would he make haste to end this abominable practice either by allowing my Bill, now before the House of Commons, to proceed or by bringing in one of his own, the important thing being to stop the rot from spreading?
    Sir G. Howe: I hope that our proposals will be available shortly. I appreciate the hon. Gentleman's concern as expressed in his Bill, but it deals with only multi-level marketing and the problem can arise where there is marketing at a single level. I share his concern that pyramid selling should be regulated. Meantime, I endorse his warning that anyone considering joining a pyramid selling scheme would be well advised to think carefully and even to take professional advice before doing so.
    Mr. Rost: Will my right hon. and learned Friend seek some way in which those who have already been swindled may seek redress? It is extremely difficult for this to be done through the normal processes of the law. One of my constituents has just lost £3,000 through a pyramid selling swindle.
    Sir G. Howe: I appreciate the difficulty of making use of the existing processes of the law, and that is why we are considering changes. But it is difficult to give any kind of assurance that those who seek redress will be able to get it from companies and organisations that are no longer in business. That underlines the importance of people not being gulled into parting with large sums of money for what may be worthless rights.
    Mr. Arthur Davidson: As most of these firms also indulge in the second mortgage racket, does not the Minister have any plans for making it compulsory in all instances of the advertising of loans for the true rate of interest to be shown? May I draw his attention to an article in the Sunday Mirror in which it is said that of 66 companies advertising loans not one shows the true rate of interest on a yearly basis?
    Sir G. Howe: I share the hon. Gentleman's concern that we should have as soon as possible effective truth in lending laws. That is one of the matters now under consideration in the legislation that we have in mind following the proposals

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    of the Crowther Commission. A later Question deals specifically with second mortgages.

    Public Bodies (Appointment of Women)
    Mrs. Doris Fisherasked the Secretary of State for Trade and Industry if he will make it the policy of his administration to increase the numbers of women appointed to public boards so that greater account is taken of the consumer interest which women can represent.
    Sir G. Howe: It is the Government's general policy to appoint to public bodies those people who are best qualified and available to serve; there is no sex discrimination whatever in making such appointments. The nationalised industries have associated consumer councils to represent the consumer interest. These already contain a significant proportion of women members, but I am anxious to see that proportion increased.
    Mrs. Fisher: I thank the Minister for that reply, but I hope that he does not expect me to believe it because the figures do not support his answer. If he studies the matter carefully, he will see that there are many able women who live outside the capital. When making further appointments, will he ensure that he considers the worthwhile contributions to be made by women who live in the provinces?
    Sir G. Howe: The range of bodies in respect of which I have responsibility for making appointments is, of course, limited, but the hon. Lady will know that on several occasions in our debates on the Fair Trading Bill I have stressed my personal concern that women of all kinds and from every part of the country should be available and should be sought out to serve increasingly, particularly on consumer councils and consumer representative bodies. I am willing to consider any suggestions and applications beyond and outside the ranks of those who normally come from the nominations and consultative system. I am as anxious as is the hon. Lady to do what I can in this respect.
    Dame Irene Ward: I am grateful for the Minister's answer but it was a bit negative. Is my right hon. and learned Friend aware that I have written to the Prime Minister, giving names, and to my
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    right hon. Friend the Secretary of State, giving names, and to the Minister for Transport Industries, giving names? I am tired of waiting for a woman to be appointed to the board of British Railways. In view of what he has said, perhaps my right hon. and learned Friend will now collect all my letters from the various Ministers and Secretaries of State and go through them. I hope he will ensure that women occupy top positions, not merely serve as members of consumer councils, important though those councils are. I hope he will get on with it before I get annoyed.
    Sir G. Howe: I hasten to respond to my hon. Friend while she is in a genial rather than an annoyed mood. I shall certainly follow up her suggestions for retrieving her letters and I emphasise the extent to which I share her concern.
    Dame Irene Ward: Thank you.
    Mr. Bishop: Is the Minister aware that on the boards of public bodies there are about one and a half women for every 100 men? Although I would not quarrel with his assessment of the ability of the women of his own party, most people will consider his reply a real slur on the abilities of many women who have much to offer the country, abilities that the country needs. Will he review the situation with his colleagues to see that far more women are appointed?
    Sir G. Howe: I fail to understand the hon. Gentleman's suggestion that my reply is a real slur. I have written and spoken many times on this matter on the same lines as the hon. Gentleman. The difficulty of securing an adequate representation of women on non-consultative public boards is that it depends on the extent to which they have been able to achieve success in industrial, commercial and financial careers, which in turn depends on persuading more women to take up careers in those professions than traditionally have done so hitherto, and that entails persuading more girls leaving school to choose such careers. I am in favour of all those things.

    Second Mortgages
    Mr. Fowlerasked the Secretary of State for Trade and Industry whether he is now in a position to make a statement on his consideration of excessive interest rates on second mortgages.
    Mr. Arthur Lewisasked the Secretary of State for Trade and Industry whether he has now completed his investigation into the matter of the application of profits control to financial institutions in general and interest rates on second mortgages under the second stage of the counter-inflation programme; and whether he will make a statement.
    The Under-Secretary of State for Trade and Industry (Mr. Peter Emery): A proposed Price and Pay Code for application in the second stage of the counter-inflation programme has now been published. In addition, on 19th February I made known a proposed voluntary code of conduct for those granting second mortgages.
    Mr. Fowler: We appreciate that my hon. Friend has announced a voluntary code, but I am sure he will appreciate that the Crowther Commission says that restrictions in this respect should not be left to voluntary action. Is it not a matter of urgency that second mortgage firms should be licensed? Will my hon. Friend examine whether some form of temporary licensing may be arranged before the legislation that we are all so eagerly awaiting?
    Mr. Emery: Many people granting a second mortgage act under the Section 123 procedure. I do not accept that the temporary code is in any way in place of legislation. We have made it clear that legislation on consumer credit should be brought forward as quickly as possible. None the less, until time can be found for that, there is major benefit in having a voluntary code.
    Mr. Skinner: Can the Minister tell us why property spivs are subject only to a voluntary code, to some kind of ethical procedure, while wages are being controlled by law? Why is it, for instance, that the Leader of the Liberal Party, operating as a director of London and County Investments, can operate second mortgage schemes at 280 per cent. and get away with it, while the hospital workers can have only £1·84?
    Mr. Emery: That question has nothing to do with the problem of those who wish to ensure that only the genuine firms—
    Mr. Skinner: Genuine? That makes me laugh.
    Mr. Emery—concerned with the second mortgage business, which has provided a great deal of assistance to a number of those who want second mortgages, should have a voluntary code to ensure that people who want to borrow money from them may know that they are behaving in a proper and reasonable manner.
    Mr. Pardoe: Does the Minister recognise that the quality and function of directors should be judged by the effects that they are able to have on the policies of their companies? In this respect, bearing in mind the disgraceful remarks of the hon. Member for Bolsover (Mr. Skinner)—
    Mr. Skinner: Truthful, and that is what is hurting you.
    Mr. Pardoes:—remarks that everyone in the House would expect from the hon. Gentleman, will the Minister recognise that the rate of interest now being charged by this company as the result of the activities of my right hon. Friend is the lowest second mortgage rate in the country?
    Mr. Emery: I believe that it is true that the directors of the company mentioned took action which has corrected the situation which previously existed.

    Japan (Trade Balance)
    Mr. Croninasked the Secretary of State for Trade and Industry if he will make a statement on progress made with measures designed to bring about a closer balance in the trade between Great Britain and Japan.
    Mr. Peter Walker: Our aim is to achieve a balanced expansion of two-way trade with Japan, mainly by securing a larger share of the rapidly growing Japanese import market. The efforts of the British Overseas Trade Board and the official services to this end will be powerfully reinforced by the recently announced decisions to set up a British Export Marketing Centre in Tokyo and to appoint a senior official as Special Adviser on Exports to Japan.
    Mr. Cronin: Will the right hon. Gentleman, in consultation with his European counterparts, convey to the Japanese Government the view that it is becoming an increasingly intolerable situation that

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    they should send 15 per cent. to 20 per cent. of their exports to Europe with wholly inadequate reciprocation on their part? Will he inform them that this is poisoning economic relations between Japan and the rest of the Western world? Will he bear in mind that there is now a substantial body of responsible opinion in Japan which appreciates this problem, so that the time is now ripe to make this point?
    Mr. Walker: I very much agree with the hon. Gentleman. There is no doubt that it is very much in Japan's interest to see that there is very quickly an opportunity for British and European exporters generally to penetrate the Japanese market to a much greater extent than in the past.
    Mr. Skeet: Would my right hon. Friend agree that there is a considerable accrual to the United Kingdom on the invisible account and that if we take the ordinary account and the invisible account together they represent a substantial balance in favour of the United Kingdom?
    Mr. Walker: That is true, but there is no doubt that the Japanese market has been a very difficult one to penetrate for a number of reasons. It is vital that we have the co-operation of the Japanese Government to see that there is a sensible two-way flow of traffic.
    Mr. Benn: Following the rearrangement of parities which will make it harder for Japan to penetrate the American market, has the right hon. Gentleman made arrangements to discuss with the Japanese Government the possible impact which this might have with the switching of Japanese exports to the United Kingdom, with adverse effects on our mutual trade?
    Mr. Walker: It is vital to realise that the Japanese position is a worldwide position. It does not help worldwide trading relationships if it is simply switching resources from one major market to another. This is why it is important to see that we settle this on the basis of international negotiations that will take place later this year. In the meantime we have already made various arrangement with the Japanese, covering a number of sensitive industries.

    Canned Foods (Weight Marking)
    Mr. David Watkinsasked the Secretary of State for Trade and Industry what consultations he is having with other countries with a view to introducing legislation to make it compulsory for the drained weight of foods canned in liquid and sold in the United Kingdom to be marked on the cans.
    Sir G. Howe: This problem is being explored internationally in Codex, which comes under the Food and Agriculture Organisation and the World Health Organisation. We are also in touch with our colleagues in the Community.
    Mr. Watkins: Will the right hon. and learned Gentleman accept that overseas exporters must accept whatever standards are laid down in this country for the sale of foodstuffs and that there ought not to be any barrier to legislation being introduced on this subject? Does he not feel on reflection that it was a little absurd for the Under-Secretary to have told me as he did on 12th February that legislation or regulations might have a deleterious effect on the consumer?
    Sir G. Howe: The hon. Member must realise that this is a difficult practical problem to solve. Several countries have laws which go some way towards solving it but they all depend upon the effectiveness of the control systems that can be established. I do not think it will be possible for us to deal with this unilaterally by imposing obligations on exporters to this country. It certainly is something which I regard as having to be solved if possible but it is not as easy as the hon. Member's natural interest in the subject suggests.

    Hotels and Restaurants (Complaints)
    Mr. McCrindleasked the Secretary of State for Trade and Industry whether he will seek powers to set up an agency to which visitors to Great Britain may complain on matters of alleged malpractice by hoteliers, restaurateurs, etc.
    Mr. Chataway: No, Sir. There are existing bodies such as the British Hotels, Restaurants and Caterers Association, the British Tourist Authority and the national and regional tourist boards to which a

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    visitor can turn if he fails to get satisfaction from the management of the establishment concerned.
    Mr. McCrindle: While I recognise that the vast majority of hoteliers, taxi drivers and the like are perfectly honest, may I ask my right hon. Friend whether he would not agree that disproportionate harm is done to the tourist trade by the minority who tend to cheat? Does he not feel, if as he says there are these agencies to which an aggrieved tourist can complain, that the erection of notices to that effect at the main railway and air terminals might be of some benefit?
    Mr. Chataway: I will certainly consider my hon. Friend's suggestion.
    Sir G. de Freitas: Is it not a fact that there are very few complaints that would not be met by the registration of hotels and the publication of the cost of accommodation in those hotels?
    Mr. Chataway: Registration is a somewhat different point. I do not think that of itself it would cover what my hon. Friend has in mind. We will be reaching a decision about registration as soon as possible.
    Mr. Adley: In view of the importance of our overseas earnings from tourism, does my right hon. Friend agree that it is about time that some of the nettles of registration were grasped by the Government so as to give the tourist public, particularly tourists from overseas, the feeling that we take the industry and their interests seriously?
    Mr. Chataway: The fact that we take the industry seriously emphasises the need for thorough consultation before we embark upon a registration exercise such as is proposed.
    Mr. Milne: Is the Minister aware that he is showing too much complacency on this matter and that the country needs a much more stringent code of conduct imposed upon hotels and restaurants? Is not this the responsibility of his Department?
    Mr. Chataway: If I am provided with detailed information about any serious complaint I will certainly take it up with the relevant bodies.

    Norway
    Mr. Martenasked the Secretary of State for Trade and Industry if he will make a statement on future trading relations between the EEC and Norway.
    Sir G. Howe: Future trading relations between Norway and the EEC will depend on the terms of the free trade agreement which is at present the subject of negotiations in Brussels.
    Mr. Marten: As Norway is an old ally and partner of this country from EFTA, will my right hon. and learned Friend see to it that we press for fair treatment for Norway over its exports of fish? Will he particularly stress that we go for free trade not only in fish fillets, which is what the EEC wants, but with all fish, because that would greatly help the Norwegian coastal towns and also help to keep down the cost of living in this country?
    Sir C. Howe: I appreciate the extent of Norway's friendship with this country. It is worth remembering that the negotiations on this matter are about the rate and system of transition of trade between Norway and the Community. We expect the duty concessions on fish to be made on what is far and away the most important Norwegian fish export to us, namely frozen fish fillets.
    Mr. Douglas: Is the Minister willing to make a comment on the Norwegian attitude towards North Sea oil finds, particularly the assertion by the Norwegian Government that on the median line there is a 100 million-ton field?
    Sir G. Howe: Even if I were disposed to comment on that, it would not be a comment that could arise on this Question.

    Industry Act (Scotland)
    Mr. William Hamiltonasked the Secretary of State for Trade and Industry what has been the total value of assistance given in Scotland under the terms of the Industry Act 1972.
    Mr. Chataway: A total of £11·4 million has been paid so far.
    Mr. Hamilton: I am interested in that figure. How does the right hon. Gentleman square it with the detail he gave

    21
    during the debate on 26th February? Has another £8 million been agreed since he made the statement that £3 million-odd had already been granted? Can he say whether he is satisfied with the expedition with which these applications are processed when, out of the figure he gave of 77 applications, only 14 have been granted to date? Can he give a copper-bottomed assurance that the unemployment figure in Scotland as a result of his new policies—his somersaulting—will go down to under 100,000 this year for the first time in the last two-and-a-half years?
    Mr. Chataway: The hon. Gentleman will know that the rapidly rising trend of unemployment in Scotland which had broadly continued from 1968 until 1972 has been reversed. There have been substantial falls over the past year. The figure I gave him dealing with grants in reply to this Question is expenditure both for selective assistance and for applications under Section 7. That would account for the disparity to which the hon. Gentleman referred. I will certainly ensure that applications are dealt with as speedily as possible. I believe that that is so at the moment.
    Mr. Bruce-Gardyne: Has my right hon. Friend studied the report of the Expenditure Committee on the public expenditure White Paper showing that subsidisation under the Industry Act is likely to play a very large part in the excessive rate of growth of public expenditure in the months ahead? What will we do about that?
    Mr. Chataway: I do not accept that regional policy can be used as a counter-cyclical policy. The plain fact is that over a substantial period we have given a measure of advantage to people investing in the regions. That is the aim of our current policy. It is not our intention to diminish the scale of that incentive, which obviously is of long-term importance both to the regions and to the health of British industry.
    Mr. Eadie: Would the right hon. Gentleman care to amend his statement about Scottish unemployment figures since 1966? If he looks up the figures he will see that what he said was not true—that since 1966 the rising trend of unemployment in Scotland has been reversed. Will he apologise for giving the House wrong information?
    Mr. Chataway: The unemployment figure in Scotland rose from just under 2½ per cent. to 4·2 per cent. between 1966 and 1970—a very steady rate of increase. When right hon. and hon. Members opposite left office, as they know, they left a rapidly rising rate of unemployment as well as roaring inflation.

    Offshore Supplies Office
    Mr. Eadieasked the Secretary of State for Trade and Industry what communications he has received from the Scottish Trades Union Congress on the recent appointment of a Director of DTI Offshore Supplies Office; and what reply he has seat.
    Mr. Chataway: None Sir. But when my hon. Friend the Tinder-Secretary of State for Trade and Industry met the Scottish TUC in Scotland on 9th February it indicated that it would be sending him a memorandum on the IMEG report generally.
    Mr. Eadie: Is the right hon. Gentleman aware that he will be receiving communications from the Scottish Trades Union Congress, particularly since this matter will be debated at the congress in Aberdeen this year? The Government have not made a case for the office being sited in London. How does this policy fit in with the Government's declared intention that there shall be office dispersal from London?
    Mr. Chataway: I look forward to receiving the advice of the Scottish TUC. I was glad to understand from my hon. Friend the Under-Secretary of State for Trade and Industry that there was a substantial measure of support and understanding for the wide range of measures which we are taking to support British industry in breaking into offshore supplies.
    On the question of the location of the office, clearly one of the important determining factors was what would be the most effective point from which to deal with the oil companies which have their headquarters in London. Another was that the closest co-operation was needed with the industry divisions of my Department which deal with the supplying industries. While we are anxious to move a substantial amount of office accommodation out of London, the effectiveness

    23
    of the job which can be done for Scottish industry must be the determining factor.
    Mr. William Hamilton: In view of the devastating exposures of the scandalous inefficiences of Governments in dealing with the question of North Sea oil since 1964, will the right hon. Gentleman undertake that the Government will make an emergency statement very shortly indicating how they intend to obtain for the nation, not for the shareholders of the oil companies, the enormous benefits which North Sea oil clearly will produce in the very near future?
    Mr. Chataway: That question goes a great deal wider than the Question on the Order Paper.

    Regional Policy
    Mr. Sillarsasked the Secretary of State for Trade and Industry if he will now undertake to publish an early assessment of regional policy and its contribution to employment in Scotland and other development and special development areas.
    Mr. Peter Walker: I shall in due course be publishing a report on the discharge of my functions under the Industry Act for the financial year ending 31st March 1973.
    Mr. Sillars: That is not quite an answer to the Question. Does the right hon. Gentleman agree that any assessment of regional policy is bound to include mention of the Hunterston development? Is he aware of the grave and growing concern in Scotland that the Government will continue stalling over Hunterston and that we shall finish two years hence with a green field site which contains nothing but green field? When will the Government pull their finger out and get major development going at Hunterston?
    Mr. Walker: That is an entirely different question. On the matter of the use of the Industry Act, the Hunterston project, as with other projects, will be considered on its merits.
    Mr. Lambie: What recommendation has the right hon. Gentleman's Department made to the Secretary of State for Scotland on the planning application of the Chevron Oil Company and ORSI? Will the right hon. Gentleman confirm
    24
    that his Department will reject the biased report of the Hunterston Development Company published today?
    Mr. Walker: That is an entirely different question. If the hon. Gentleman wants an answer, perhaps he will put down a Question.
    Mr. Benn: Has the Secretary of State had any further thoughts about continuation of the regional employment premium which obviously plays a very large part in the maintenance of employment and which finds support among a large number of industrialists as well as universal acclaim among the trade unionists and others involved?
    Mr. Walker: The phasing out of the regional employment premium is a matter for my right hon. Friend the Chancellor of the Exchequer. He is considering it and will eventually make a statement.

    German Democratic Republic
    Mrs. Renée Shortasked the Secretary of State for Trade and Industry what was the level of British-GDR trade in 1970, 1971 and 1972; and what steps he is taking to improve mutual trade following on recognition of the GDR.
    Sir G. Howe: Our exports to the German Democratic Republic in 1970, 1971 and 1972 were £16·9 million, £17·3 million and £15 million respectively. The corresponding figures for imports were £16·1, £19·6 and £21·6 million. We shall continue to do everything possible to develop our trade with the GDR, especially our exports. My Department will have an official information stand at the Leipzig Spring Fair later this month.
    Mrs. Short: I thank the right hon. and learned Gentleman for that reply. However, does he not think that the figures which he has given indicate that under successive Governments this area has been grossly neglected and underestimated? Will he give an assurance that following recognition, which the whole House must welcome, he will ensure that the commercial section of our embassy in East Berlin is as high powered as he can make it?
    Sir G. Howe: The recent decline is more probably due to a shortage of hard currency as a result of two bad harvests. However, recognition and the subsequent

    25
    establishment of diplomatic relations will provide a stimulus for increased trading between the countries. A commercial diplomatic office should be established in the German Democratic Republic by the late spring. It would be a mistake, however, to look forward to an immediate, dramatic or sharp increase in such trade.

    RB211 Engine
    Mr. Whiteheadasked the Secretary of State for Trade and Industry what approaches have been made to the United States of America concerning future collaborative aerospace projects involving developments of the RB211 engine.
    Mr. Michael Heseltine: Rolls-Royce is constantly on the lookout for new applications for the RB211, and for opportunities for its further development, in America as in Europe and the rest of the world.
    Mr. Whitehead: As the most recent overtures by Rolls-Royce to the United States manufacturers have been rebuffed, is it not time that we drew the lesson that these collaborative ventures with the United States do not work because of the stranglehold of the American manufacturers? Would it not be better if a further approach were to be made at Government level through our European partners in the European Economic Community and possibly the Japanese Government?
    Mr. Heseltine: It is appropriate that the approaches should come from Rolls-Royce in the first instance, although I do not accept the hon. Gentleman's interpretation in the first part of his supplementary question.
    Mr. Wilkinson: What indications does my hon. Friend have that the RB211 could have practical commercial applications in the non-aerospace field such as the powering of merchant vessels and perhaps military vehicles?
    Mr. Heseltine: This is a matter for Rolls-Royce. Certainly no proposals have been put to me by Rolls-Royce. I will draw the company's attention to my hon. Friend's interest.
    Mr. Palmer: Can the hon. Gentleman give an assurance that, in the event of these approaches being successfully taken up, work will be guided towards Bristol?
    Mr. Heseltine: That again would be a matter for Rolls-Royce to decide.

    Public Sector Contracts
    Mr. Horamasked the Secretary of State for Trade and Industry if he will co-ordinate a programme to monitor the proportion of United Kingdom public sector contracts that go to United Kingdom companies.
    Mr. Emery: The vast majority of public sector contracts are placed with United Kingdom companies. I do not consider there is any need for a monitoring system, bearing in mind its likely cost.
    Mr. Horam: That sounds rather complacent. Is the hon. Gentleman aware that there are many businessmen who believe that we shall not do as well in the EEC because, whatever the rules may say, the State industry boards of our new partners are more ruthlessly nationalistic in allocating contracts in the public sector than we are? Is he aware—he appears not to be—of this, and what can he do about it?
    Mr. Emery: My hon. Friend the Financial Secretary, in answering a Question last month, pointed out that approximately 95 per cent. of equipment supplies purchased for the public departments came from British companies. I think it is too early at this stage to be able to judge the exact working of the regulations, but I have no doubt that the British Government will want to ensure that we have a fair and proper opportunity of being able to compete in Europe and to maintain our own markets.

    Meat Imports (Republic of Ireland)
    Mr. Pavittasked the Secretary of State for Trade and Industry what are the figures of United Kingdom imports of carcase meat from the Irish Republic for the months of July to December 1972, and January 1973.
    Sir G. Howe: Imports of meat of cattle, sheep and pigs in the period July—December 1972 amounted to some 50,000 tons valued at £22 million. In January of this year the corresponding figures were nearly 7,000 tons and £4 million respectively. Detailed monthly information is given in table III of the

    27
    monthly Overseas Trade Statistics which is available in the Library.
    Mr. Pavitt: What has been the effect on this increase of our entry into the Common Market? Has there been a change in subsidy? Is this one of the reasons why meat has almost been priced out of the housewife's cooking pot?
    Sir G. Howe: No. There has been no effect on these figures from our accession to the Community.
    Mr. Body: Would not my right hon. and learned Friend agree that this huge decrease coincides with a huge increase by the French of some 2,700 per cent. in their import of meat from Ireland?
    Sir G. Howe: The increase or diversion of our supplies from the Republic became significant before our accession, and this is a reflection of the problem of the world shortage which has increased meat prices in many countries.
    Mr. Benn: Can the Minister explain how it is that in the 17 weeks since the freeze began meat prices have risen 9·1 per cent. whereas in an exactly comparable period last year when there was no freeze they fell by 3·3 per cent.?
    Sir G. Howe: For precisely the reason I have just given and which I would have thought the right hon. Gentleman would understand: for the reason that during this period there has been a shortage of meat and an increase in the world prices for this commodity.

    Steel Industry
    Mr. Goldingasked the Secretary of State for Trade and Industry whether he is yet able to confirm that a steel producing mini-plant will be established at Shelton.
    The Minister for Industry (Mr. Tom Boardman): No, Sir.
    Mr. Golding: Will the Minister tell us whether the British Steel Corporation has yet decided positively to build a mini steel plant? Can he tell us whether GKN has yet decided whether it will go ahead with a mini-plant of its own at Cardiff? Will he tell us when a decision on this question is to be expected?
    Mr. Boardman: The British Steel Corporation has said that it will be build-
    28
    ing a mini-plant in Scotland and it has named a number of possible sites for another possible mini-plant. No decision has yet been reached by GKN with regard to whether it will be building a mini-plant. Discussions are going on urgently with regard to that. With regard to the decision on timing, that is a matter for the corporation. It is aware of the need to make a decision as soon as it is possible to do so.
    Sir R. Cary: May I ask my hon. Friend whether he is aware that Irlam is still available as a site?
    Mr. Boardman: Yes. My hon. Friend has constantly reminded me of that. We have it very much in mind, as I am sure the corporation has too.
    Mr. Ewing: Will the Minister comment on the Government's attitude to the British Steel Corporation's announcement that it is now opting out of the manufacture of underwater pipes for the oil industry not only in Scotland but throughout the world? Is he aware that this business is thought to be worth something like £75 million to the corporation?
    Mr. Boardman: The hon. Member is quite incorrect. The corporation is making very great efforts to ensure getting maximum benefits from operations in the North Sea and to ensure that all possible manufacturing resources are deployed to this end.

    Lanarkshire
    Mr. James Hamiltonasked the Secretary of State for Trade and Industry how many new jobs have been created in Lanarkshire since 18th June 1970; and how these figures compare with the number of jobs declared redundant over the same period.
    Mr. Chataway: No comparison is possible because comprehensive figures of jobs created in both the manufacturing and service sectors are not available.
    Mr. Hamilton: Is the right hon. Gentleman aware nevertheless that in June 1970 unemployment in Lanarkshire was 4·7 per cent. and that the last figures presented to us last week show that the percentage is 7·3? Is he aware of the job loss we have had in the county of Lanarkshire, a job loss which is coming also through less steel production? On

    29
    that basis is he now prepared to tell us what he is going to do for Lanarkshire before it becomes a desert in this industrial area?
    Mr. Chataway: I entirely accept what the hon. Member says about the high level of unemployment in Lanarkshire, and it is a fact that it is too high, but he will know that unemployment has dropped by some 12 per cent. in the past year. We are determined to maintain that downward trend.

    Footwear Imports
    Dr. Stuttafordasked the Secretary of State for Trade and Industry if he is satisfied that the latest available figures for the amount of footwear imported from the undeveloped countries in no way hazards the footwear industry in Norwich.
    Mr. Chataway: The trend of imports from all sources is one of a number of factors to be considered. I was glad to see the recent optimistic report by the footwear industry in Norwich on its willingness and ability to meet the challenge of overseas competition.
    Dr. Stuttaford: Would my right hon. Friend agree that it is quite a challenge when the number of shoes imported from UNCTAD countries over the last year has gone up by 100 per cent.—they have doubled in one year? Is he aware that Norwich, whether willing to meet the challenge or not, is very concerned that South American countries are exporting to us good-quality leather shoes at the same time as they have a preference from us and yet are charging us 112 per cent. more than they did a year ago for leather?
    Mr. Chataway: I am aware of the difficulties but this industry is in no doubt about the scale of opportunities that it has in Europe.
    Mr. Heffer: Is not the right hon. Gentleman aware that some companies are actually importing from underdeveloped areas parts of boots and shoes—uppers and so on—which are being made up in this country and are then sold to the consumer as if they were products made in this country, and that these facts are unknown to the people who buy them? Is it not time that marks of origin were clearly put on the boots and shoes which people buy?
    Mr. Chataway: If there is any case of fraudulent marketing I will look into the matter very carefully, but I think one should have in perspective the scale of imports from the developing countries. They went up from 14·5 million to 15·5 million in 1972 and that is against a total import figure of 62·5 million over the same period.

    Australia and New Zealand (Preference)
    Mr. Jayasked the Secretary of State for Trade and Industry on what products the preference in favour of British exports has been terminated or reduced by the Australian or New Zealand Governments since 1st January 1973.
    Mr. Peter Walker: Imports into Australia of most goods of types not produced there have since 1st February been duty-free whatever their source. Consequently there is now no preference in favour of British exports of the goods concerned. The New Zealand Government has reduced the preference on certain marine engines.
    Mr. Jay: Though I agree that it is a matter so far of loss of preference rather than actual imposition of new tariffs, may I ask how great the Secretary of State expects the loss of British exports to these markets to be?
    Mr. Walker: I hope that other activities and promotional activities which my Department will be following during the coming year will ensure that trade with Australia and New Zealand continues to expand rather than contract.

    Hotels (Registration)
    Sir G. de Freitasasked the Secretary of State for Trade and Industry whether the Government will introduce legislation to make compulsory the registration of hotels in England as recommended by the English Tourist Board.
    Mr. Chataway: I would refer the right hon. Member to the answer given to my hon. Friend the Member for Bristol, North-East (Mr. Adley) on 26th February.—[Vol. 851, c. 1055–6.]
    Sir G. de Freitas: Are we not the only country in the European Community

    31
    which has no official registration scheme? Is it not time that the Government looked at this matter seriously lest we fall behind our competitors in the tourist industry?
    Mr. Chataway: We are looking at the matter in considerable depth and carrying out wide-ranging consultations. Obviously, the introduction of a registration scheme has great implications in a major industry.
    Mr. Pavitt: Will the right hon. Gentleman at least get the large hotel chains to agree to put a notice on the inside of each bedroom door showing the amount to be charged for the room, as is done in all Continental countries?
    Mr. Chataway: I will certainly bear that in mind.
    Mr. Mason: The right hon. Gentleman certainly should, because he has in his possession a recommendation to that effect. Many months ago the English Tourist Board presented to him a report recommending the registration and classification of hotels and mentioning the notification of prices. Why are the Government vacillating? They had all their consultations with the English Tourist Board before the report was presented.
    Mr. Chataway: The proposals are not simply for England. The right hon. Gentleman may have noticed that the reaction of the Welsh Tourist Board was different from that of the English Tourist Board. It is imperative, before embarking on a major matter of this kind, that there should be thorough consultation with the industry as a whole.
    Mr. Adley: My right hon. Friend is surely aware that these consultations have been going on for three years. I recognise that many small hotel keepers might be concerned about the problem, but does my right hon. Friend agree that if he personally were to take upon himself the responsibility for explaining to small hotel keepers that they have a great deal to gain by registering and classifying, as the Welsh Tourist Board has shown to many small farmhouses in Wales, these consultations might be concluded to everyone's satisfaction?
    Mr. Chataway: I have a great deal of sympathy with what my hon. Friend says. As he knows, the proposal from the
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    English Tourist Board is for registration and not classification. That is one of the areas in which there is disagreement.

VIETNAM
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Royle): With your permission, Mr. Speaker, and that of the House, I wish to make a statement.
As hon. Members may know, I attended the International Conference on Vietnam held in Paris from 26th February to 2nd March. My right hon. Friend was present except for a period in the middle of the week when he returned to London to attend to parliamentary commitments.
This meeting also provided an opportunity to hold useful bilateral talks with other Foreign Ministers.
The main purpose of the conference was to acknowledge and support the provisions of the Paris Agreement on Vietnam of 27th January. The conference was able to agree on a document called the Act of the Conference which embodied the common measure of agreement. A copy of the Act has been placed in the Library of the House.
Besides supporting the Paris Agreement, the Act provides for the International Commission for Control and Supervision to report to the Governments taking part in the conference through the parties to the Vietnam agreement; and for the Secretary-General of the United Nations as a participant in the conference to receive these reports for his information. There is also provision for joint consultation in the event of breaches of the Agreement and if necessary for the reconvening of the conference. We attach the greatest importance to the withdrawal of foreign troops from Laos and Cambodia and an end to foreign interference. This is reflected in a separate Article which re-affirms the relevant provisions of the Paris Agreement.
As I said at the initialling ceremony on 1st March:
"No document, no words, indeed no conference, can ensure the maintenance of peace in Vietnam. This, as I have indicated, must rest with the parties concerned on the ground. If they are determined that the Agreement will work, it will. If they are not so determined, it will not."

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By signing this Act my right hon. Friend and the other Foreign Ministers gave proof of their common support of the Paris Agreement. If it is observed both in the letter and in the spirit, it will serve the cause of peace.
Mr. Benn: I thank the Under-Secretary of State for his statement. The Opposition share with him the sense of relief that this negotiation has led, first, to the cease-fire and then to the Paris Act to which he referred. I endorse what the hon. Gentleman said about the need for the withdrawal of foreign troops and his hope that the settlement will last.
I should like to ask him three questions. First, is he in a position to say more about any relief work that Her Majesty's Government might undertake to repair the appalling destruction that has taken place during the war? Secondly, when may we expect full diplomatic links with Hanoi as relations normalise? Thirdly, does the hon. Gentleman look forward to the development of a broader and more general range of economic relations that might consolidate relations and contribute to recovery?
Mr. Royle: I am grateful to the right hon. Gentleman for his remarks. Many of the participants at the conference, including ourselves, hoped to see a reference to aid in the final Act. This was not acceptable to some others. In particular, the North Vietnamese made plain their preference for bilateral discussion on this point. The Government have not yet finalised their arrangements for aid but we see benefit in providing aid on a multilateral basis. On the question of North Vietnam, the Paris Agreement signed in January has created a new situation which is now under consideration. We took the opportunity offered by the conference to approach the North Vietnamese with a view to developing contacts between our two countries.
Sir F. Bennett: During the Paris conference many disturbing reports reached the outside world about the warning by the Canadians that they might have to pull out of the supervising force. Were these reports justified and, if so, what led the Canadians to feel like this and what is being done to find a replacement?
Mr. Royle: Yes, as my hon. Friend said, there was some concern during the
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course of the talks last week about Canada's position. The Canadian commitment is to remain a member of the ICCS until the end of March, but Mr. Sharp said that Canadian participation thereafter will be reviewed in the light of developments. The Canadians were not entirely happy about the way arrangements were going in the final Act to cover the reporting basis for the ICCS to the conference.
Mr. Russell Johnston: Is the Minister able to say anything more about his hopes for the withdrawal of foreign troops from Laos and Cambodia to which he referred? What pressure are the Government bringing in that regard?
Mr. Royle: Laos and Cambodia were not represented at the conference and, therefore, the conference did not discuss the situation on the ground in detail. As I have explained, there is a provision in the Act of the Conference referring to Article 20 of the Paris Agreement of 27th January. We hope that the Khmers will come together to settle their differences by peaceful rather than military means. We also welcome the ceasefire by Laos and hope that foreign forces will be withdrawn within 60 days.
Mr. John Mendelson: The Minister will no doubt recall that about a fortnight before the opening of the Conference, my hon. Friend the Member for Wolverhampton, North-East (Mrs. Renée Short) put a question to the Prime Minister in which she drew attention to the severe plight of tens of thousands of political prisoners detained in Saigon and in the environments of Saigon. The Prime Minister replied that this was one of the problems which would occupy the conference and said that it was a serious problem. Did the conference discuss the problem and, what are the Government doing in Saigon by diplomatic means to see that the tortures of these political prisoners cease and that they are released forthwith?
Mr. Royle: I cannot accept the last remarks of the hon. Gentleman, but I am aware of the concern which is felt on this matter. Indeed. I received a delegation of Opposition Members in the Foreign Office before I went to Paris. This subject was not discussed in the conference. The parties to the Paris Agreement of 27th January decided that

35
this was a matter to be settled between the South Vietnamese parties themselves. In view of that, I am afraid that it was not possible to discuss it at the conference
Mr. Frank Allaun: Has the Minister read the first-hand and horrifying accounts in The Guardian and other newspapers of young women screaming in prison hospitals as a result of the tortures they have undergone? Is the hon. Gentleman aware of the fears that many of the 200,000 political prisoners in Thieu's gaols will be exterminated? Should not the British Government take initiative for the release of all political prisoners and for the admission of the international team to all gaols?
Mr. Royle: I think the hon. Gentleman must also accept the fact that there are prisoners held by the People's Revolutionary Government, which is the Government of the Vietcong. The present situation regarding the move towards peace in Vietnam, which all of us on both sides of the House desperately desire, is very delicate. As it is laid down in the various agreements that the parties have decided that it is for them to settle these matters between themselves, I must say that it would be inadvisable for Her Majesty's Government to intervene at this time.
Mr. Wilkinson: Could my hon. Friend say what it is in the reporting procedures vis-à-vis the supervisory forces to which the Canadian object? Surely an effective reporting mechanism will be very important if the accords are to be effectively implemented.
Mr. Royle: The Canadian Government, and Mr. Sharp who signed the agreement on their behalf, have accepted the act as signed last Friday. We would have liked the conference to institute more effective reporting arrangements, but at least the document which was agreed by all provides a reasonable link between the international community and the parties to the Paris Agreement on Vietnam.
Mr. Dalyell: Although the Minister says that fighting has stopped in Laos, is he aware that the recent Labour Party delegation found a far from satisfactory state of affairs? Do we in Britain have any obligations under the 1962 agreements? Secondly, although on the subject of Cambodia the Minister told the hon. Member for Inverness (Mr. Russell Johnston) that the Khmers must come together, does he realise that this involves talking to the Chinese because "foreign troops" would be those possibly with some relationship with China, as Prince Sihanouk is in Peking. Have we discussed this matter with the Chinese Government?
Mr. Royle: The hon. Gentleman must not put words into my month. I did not say that fighting had ceased in Laos. I said that we welcomed the ceasefire in Laos and hope that foreign forces would withdraw within 60 days. I cannot give the hon. Gentleman an assurance that fighting has stopped. In regard to fighting generally, particularly in Vietnam, the agreement is only gradually being put into effect and a total end to all acts of hostility has yet to be achieved. In regard to Cambodia, naturally we hope that the Khmers will come together to achieve a possible solution to the problem, but, as the hon. Gentleman will know, under the Paris Agreement of 27th January it was laid down that all foreign forces should withdraw from Indo China. The foreign forces in Cambodia today are North Vietnamese forces and, as far as I know, Chinese forces are not involved.
Mr. Molloy: Since the hon. Gentleman mentioned new contacts with Hanoi in the new atmosphere, will he consider the possibility of the early dispatch of a trade mission to Hanoi?
Mr. Royle: I am interested in the hon. Gentleman's suggestion. I think that it is a little early to do this yet. The possibility of talks concerning the establishment of diplomatic relationships at some time in the future was aired between our two delegations in Paris, but we have not yet reached any conclusion on discussions about a trade delegation.

PRICE AND PAY CODE
3.45 p.m.
The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): I beg to move
That this House takes note of the Consultative Document on the Price and Pay Code (Command Paper No. 5247).
Mr. Speaker: I should inform the House that I have selected the amendment in the name of the Leader of the Opposition and his right hon. Friends—to leave out from 'House' to end of the Question and to add instead thereof:
'has no confidence in the policies described in the consultative document on the Price and Pay Code (Command Paper No. 5247) and believes that the problems of inflation now require the adoption of socialist policies democratically controlled by Parliament along the lines indicated in the Joint Statement issued by the Labour Party and the Trades Union Congress on 28th February'.
Sir G. Howe: Since publication on 17th January of the Government's White Paper on the second stage of our counter-inflation policy, the House has been able to spend four days discussing the principles of that policy and the terms of the Bill and to give effect to it. During the course of Second Reading debate on 29th January I gave the House an assurance that there would be an opportunity to debate the provisions of the Price and Pay Code, provided for by Clause 2 of that Bill, before the code became operative. The intention today is to give the House an opportunity to debate the proposals for the code contained in Section 2 of the Green Paper that is now before us.
Sections 3 and 4 of that Green Paper contain, respectively, proposals for the administration of dividend control and for the notification and reporting of price and pay proposals. Those proposals will be the subject of separate orders under the Bill. The status of the code is by now well known. It is intended to serve, in accordance with Clause 2 of the Bill, as instructions to the two agencies—the Price Commission and the Pay Board—and as guidance to all those concerned in the determination of prices and pay.
It will be the task of the agencies to exercise their powers, in accordance with Clauses 6 and 7 of the Bill, so as to
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ensure that the provisions of the code are implemented. They will, of course, be required—by virtue of the Clause inserted in the Bill last week—to publish quarterly reports on their work. It is the task of Ministers to formulate and propose the code. And it is for Parliament to approve the terms of the code.
The time for that final approval by the House is not yet, because there has first to be a process of consultation with representatives of consumers, distributors, employers and employees.
That process of consultation is now in progress. I take this opportunity of emphasising that the Government are more than willing, in course of that process, to receive further representations about the form of the code from the TUC. And we are anxious, too, to take account of the views of Parliament. That is, of course, the principal purpose of today's debate. Against that background, I now commend these proposals to the House. And I do so upon the basis that they are balanced and fair—[HON. MEMBERS: "Oh."]—and likely, when taken together, to be effective for our overriding purpose, which is the restraint of inflation.
Unlike the proposals lately put forward by the Opposition, this code does, of course, contain provisions for dealing alike with pay as well as prices. As the House would expect, I intend to deal mainly with the prices section of the code—and to leave it to my right hon. Friend the Secretary of State for Employment to discuss the pay provisions in the code.
I want, however to say this about the pay section of the code. It is, in the Government's view, an essential feature of our policy against inflation. It is entirely idle to believe that the problem of rising prices will yield to a policy that does not contain clear and effective proposals for the control of incomes as well. That is why the second section of the draft code contains firm proposals to assist in the determination of pay. Such firmness is absolutely essential if we are to fulfil the first principle set out in paragraph 75 of the Green paper—to limit the rate of increase of pay in money terms to a level more in line with the growth of national output so as to reduce the rate of price inflation and improve the prospect for sustained faster growth

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in real earnings. That is the heart of the matter on the pay side. If we pay ourselves more and more in money terms, we shall end up by receiving less and less in real terms and less and less in money's worth.
That is why, on the pay side, there can be no modification of the central principles of the pay limit, as set out in paragraphs 83 to 94 of the Green Paper. That is why on the pay side there can be no exceptions, or special cases. That is why the Government attach importance to each of the provisions in subsequent passages of the pay code which deal in turn with conditions of service, apart from basic pay, with special situations, like equal pay and personal increments, and with particular methods and systems of payment.
We commend the pay provisions to the House not only because they are firm, as they must be, but also because they are fair. That is underlined by the other principles set out in paragraph 75. They are written specifically first to facilitate an improvement in the position of the low paid, and secondly to leave significant room for real negotiation on the part of those who normally decide upon the amount, form and distribution of pay increases within the limit.
I remind the House that the pay limit itself is far from ungenerous. The limit proposed of £1 plus 4 per cent. is a substantial increase by any reasonable standards—that is, 7 or 8 per cent. at average levels of earnings and more than that as a percentage increase for the low paid.
Mr. John Mendelson: The right hon. and learned Gentleman has just stressed the firmness of the pay provisions and said that they must not be altered. There must be no special cases, according to the right hon. and learned Gentleman. Does that mean that at the beginning of this week, in the light of the general industrial situation, the right hon. and learned Gentleman is saying on behalf of the Government that all normal conciliation machinery is suspended and will remain suspended and that none of the country's carefully built-up conciliation will be used in any case of industrial dispute?
Sir G. Howe: I am saying no such thing. The machinery to which the hon.
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Gentleman refers remains available for all those who are willing to take advantage of it. In response to representations to the Government by and on behalf of the TUC, the pay limit suggested for stage 2 was designed to facilitate real negotiations about the distribution of each pay award and also to facilitate negotiations which could lead to settlements that were tilted more in the direction of the lower paid than the formal £1 plus 4 per cent. provided.
Mr. Tam Dalyell: Is the right hon. and learned Gentleman aware that some Opposition Members and perhaps some of his hon. Friends spent a good deal of the weekend in our hospitals trying to do some kind of emergency mediation in an increasingly desperate situation? Is he aware, further, that those who work in hospitals point out with some justice that there is a difference between 4 per cent. of less than £20 per week and 4 per cent. on anything above average wages? In this situation, given the urgency in our hospitals especially, is the right hon. and learned Gentleman as rigid as he makes out?
Sir G. Howe: I am aware, as are the Government, of the extent to which those who are low paid always confront greater difficulties in a period of inflation. It is for that reason that this policy is of such importance to the low paid, and it is precisely for that reason that the pay limit has been tilted in favour of the lower paid. The policy is designed to assist the moderates, and I hope and believe that the moderates will rally to support the policy for that reason.
Mr. John Hall: Is not there a slight misunderstanding here? Is not it the Government's policy to allow 4 per cent. of the total award and not of individual wages, thereby enabling the low paid to get more than 4 per cent.?
Sir G. Howe: I am grateful to my hon. Friend for his intervention. I ought to have made that clear. As my hon. Friend rightly says, the size of the pay package to be negotiated on in any given bargaining process is 4 per cent. of the total pay roll for that unit. It is designed specifically to permit negotiations to lead to a result titled towards the low paid, if that is what the unions desire.

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I turn to the price provisions in the code. Beyond question they add up to a firm, stringent system of control. It is a system of control which is more rigorous than any system ever applied before. I understand why the CBI feels that a good deal is being asked of its members. The proposals reflect the Government's determination to tackle prices. But here, too, we believe that our proposals are fair and workable because they allow a proper measure of flexibility between different circumstances.
I emphasise one aspect of the way in which the price provisions are intended to operate throughout stage 2. In contrast to stage 1, they do not depend on a system requiring application to be made before any increase in prices can be made. Instead, they depend on two factors: first, on a three-tier system of prior notification, of reporting and of spot checks on the smaller enterprises; secondly, on the application by enterprises themselves of the three guiding principles set out in paragraph 7 of the Green Paper.
I draw attention to those three guiding principles because each is important. The first is to limit the extent to which prices may be increased on account of increased costs and to secure reductions as a result of reduced costs. The second is to reinforce the control of prices by limiting profit margins per unit of sales or turnover while safeguarding investment. The third is in all these respects to reinforce the effects of competition and to secure its full benefits in the general level of prices. I emphasise that each of those principles, especially the first, is intended to be applied, with the minimum of exceptions, across the board.
The exceptions are listed in paragraph 10 and are confined essentially to three: first, exports; secondly, prices paid direct to overseas suppliers for imports; thirdly, prices paid to producers within the United Kingdom of certain fresh foods. But I emphasise that the system of control is complete in relation to any product from the moment when it has arrived, through the port or the farm gate, on to the market in this country. I emphasise, too, that the opportunity of profit from increased exports is without limit.
A moment ago, I emphasised the importance in the working of stage 2 of
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the system of notification and reporting of price increases that we propose. In laying down the limits for pre-notification and reporting we have striven to strike a balance between the need to submit to careful scrutiny price increases by large firms which act as market leaders and the need to avoid imposing an intolerable administrative burden on the Price Commission and on industry.
The financial limits proposed in paragraph 140 for Category I firms required to pre-notify should bring about 150 manufacturing and service enterprises into that category. Those companies account for about 50 per cent. of home sales. In addition it is intended to include about 30 to 40 companies which fall below these financial limits but which are market leaders in sectors of industry which are of special importance to consumers. Those companies will be specified by name in the order to be made under Clause 5.
In addition to the firms required to pre-notify price increases, medium-sized firms above the limits set out in paragraph 140 will be required to submit quarterly reports on their costs, prices and profits, and smaller firms above a certain minimum size will be required to keep records in an appropriate form and may be required to justify price increases to the Commission.
Mr. John Hall: Will firms making these quarterly returns also be required quarterly to reduce prices if it appears from the returns that they are exceeding their reference figures?
Sir G. Howe: If it appears that the profit levels derived from the reference figures are likely to be exceeded, price reductions should be made corresponding to the actual or expected excess.
Mr. Anthony Wedgwood Benn: In Committee I had an exchange with the Secretary of State for Employment about the use to which this power to get information would be put. Will the right hon. and learned Gentleman confirm publicly to the House that if necessary the Government intend to use the information which they get under Clause 12 to bring criminal prosecutions against firms which are in breach of the Act?
Sir G. Howe: Breaches of the Act would arise only when and if an order

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had been made. I am not certain whether the power could be used in that context. It is a situation which is very unlikely to apply.
Mr. Joel Barnett: In the event of a company making more profit than the Government want, which may happen, if an order is made telling the company that it should not and it then continues to make excessive profits, what will happen?
Sir G. Howe: If a firm is making a profit which is not in conformity with the code and an order is made against it and it fails to comply with that order, on the face of it the firm would be in breach of the order and liable to prosecution. One thing which would be manifest would be whether the firm had complied with an order requiring it to reduce prices. Its failure to do so would expose it to prosecution.
I turn now to consider some of the more important aspects of the price control system—[Interruption.] Hon. Gentlemen opposite seem to be in some state of mystery.
Mr. David Stoddart: Will the right hon. and learned Gentleman give way?
Sir G. Howe: I will first deal with this point. If a firm is charging prices which are not in conformity with the code and the Price Commission concludes that that is so and requires the firm to reduce its prices and makes an order to that effect and the firm fails to reduce its prices, it would be in breach of the order and expose itself to prosecution. That is a clear presentation of the state of affairs.
I turn now to the price control system.
Mr. Stoddart: Will the Minister give way?
Sir G. Howe: I must get on. I begin with the fundamental concept of allowable costs set out in paragraph 17. The principle essentially is that both manufacturers and firms in service industries will be allowed to increase prices only to reflect increases in allowable costs. The profit margin limitation, described in paragraphs 38 to 41, is a back-up to the allowable costs system. In other words,
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a company may increase prices in accordance with the rules on allowable costs and there is no restriction on profits as such until these reach the reference level. From that point on the profit limitation overrides the allowable costs and the company is no longer allowed to increase prices to reflect allowable costs. Instead, it must maintain prices at the same level and, if necessary, reduce them to the extent required to keep within the profit limitation.
Mr. J. Bruce-Gardyne: Last week my hon. Friend the Chief Secretary told us that as regards the limitation of profits in application to the banks, where it was made specifically clear that there could be no restriction of interest rates in the period ahead, it might be possible for my right hon. and learned Friend to say something more about the way that the absence of restraint on interest rates and the application of restriction on profits to the banks would be reconciled when we were discussing the code. Has he anything to tell us about that?
Sir G. Howe: I was not going to deal with that situation at this stage because the matters which my hon. Friend said were then under discussion are still under discussion.
The costs which will be allowable for the calculation of a price increase have been closely defined in the consultative document. They are strictly limited to labour costs within the limit of the pay code, the costs of materials, bought-in components, fuel, rent, rates and interest. All other overhead costs are excluded, and firms will be required to absorb any increase in these. The base date for allowable costs is fixed by paragraph 18 at 1st October 1972. Increases in allowable costs which occurred before that date may not be taken into account, except where the Commission is satisfied that a firm would suffer exceptional hardship through being required to absorb such cost increases.
The CBI has pressed the Government very hard to accept an earlier date. The Government fully understand the feeling of CBI members who have absorbed significant increases over the 15 months before the price freeze began, and we are appreciative of the part which that restraint has played in slowing down the

45
rate of inflation before the standstill. But the primary consideration in the Government's mind has been to frame the proposals on prices to match the exceptional circumstances of the introduction of Stage 2. In particular, we have to take account of the reduction in the rate of pay increases compared with the period just before the standstill. After weighing these factors carefully, the Government have concluded that cost increases before 1st October last year should not be allowed unless it is clear that there has been exceptional absorption of cost increases before that date.
One aspect of the rules relating to allowable costs is that relating to the productivity offset. Paragraph 19 of the code provides that in order to ensure that the benefits of increased productivity are passed on to the consumer, not more than 50 per cent. of allowable cost increases arising from pay increases may be passed on in the form of price increases.
As the House knows, during Stage 2 the pay code will not allow the introduction of new productivity agreements. Employees will not therefore receive any share of the benefits of increases in productivity during that period. It is in those circumstances that the Government consider it essential to ensure that this part of the benefits of improved productivity should be passed on to the consumer in the form of lower prices during Stage 2.
I readily admit that the problem of finding a totally practicable and equitable method of achieving that result is not without its difficulties. In particular, if different formulae were used for different sectors with different productivity trends there would be room for a considerable amount of argument about which sector a particular enterprise should be slotted into. We have therefore come forward with the proposition, which seems entirely reasonable in principle, that firms should be required to absorb a fixed proportion of their increased labour costs during Stage 2.
The proposal is simple and can be readily applied. It may give rise to some problems in certain areas, particularly in certain labour-intensive service industries where the growth in productivity may, through no fault of the industry, be below the national average. But the Government stand firm on the principle of requir-
46
ing a substantial proportion of the benefits of increased productivity to be passed on in lower prices. We are, however, certainly willing to listen, during the period of consultation on this document, to suggestions of alternative methods of applying the productivity offset.
As I have already explained, the allowable costs system, which is the foundation of the price controls that we propose, is backed by control of net profit margins. The purpose of that limitation on net trading profits is not primarily to limit profits as such but to bring about price reductions. Total profits can increase as a result of increased sales volume, even though profit margins do not rise.
It has been argued that the profit margin limitation during Stage 2 will not be immediately effective, because the information needed to assess profitability will not be available during that time scale. As I pointed out earlier, the Price Commission will be receiving quarterly reports from firms in the first two categories and those reports will include information on profit margins. If audited financial accounts cannot be produced on a quarterly basis, management accounts will be accepted provided that these can in due course be reconciled with the audited final accounts. Where quarterly management accounts are not available, the firms concerned—these are only the large and medium-sized firms—will need to make arrangements to produce them. We shall expect enterprises to scrutinise these reports as the Price Commission will, and, where it becomes apparent that profit levels are likely to exceed the reference level, to take the action required by way of price reductions to keep within the limits.
Mr. Robert Sheldon: Is the right hon. and learned Gentleman aware that a large number of firms, not always the least efficient, do not know until the end of the year what their profit margins are? We have seen reports of a firm in difficulties during the last few weeks because at the end of its financial year, surprise, surprise, it found that it had made a big loss instead of a profit. This happens all the time. These provisions do not take account of such things.
Sir G. Howe: The hon. Gentleman need not point that out. The provision is effective, and it is designed to be effective

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so far as it can be. [Laughter.] Hon. Gentlemen may laugh, but these proposals are intended to apply to the larger firms which are subject to category 1 and category 2 reporting. They will enable those firms, perhaps more effectively than in the past, as well as the Price Commission, to monitor the way in which their profit patterns develop. It will not be able to cover every case. It will he interesting to know why hon. Gentlemen opposite should laugh at the proposition that we should endeavour to cover the matter as effectively as possible, which is what this machinery is designed to do.
Mr. John Hall: Does my right hon. and learned Friend agree that any large firm to which the provision applies which makes such a vast mistake in its profits at the end of the year deserves to be penalised?
Sir G. Howe: I take my hon. Friend's point. As I have explained—and this is what hon. Gentlemen opposite do not appear to accept or understand—the arrangements for profit control through that kind of machinery are tough. They are intended to be so, but they are not unreasonable. It is important to notice that special dispensation is made for companies in a loss-making or low-profit situation. Paragraph 37 provides that where an enterprise is making a loss it may increase prices to cover its costs to the extent necessary to break even. And companies whose net profit represents a return on capital of less than 5 per cent. will be obliged to follow the allowable cost rules but will not be bound by the profit limitation until their profit margins reach the level specified in paragraphs 46 and 47 of the document.
Mr. Stanley Orme: How will the right hon. and learned Gentleman deal with multinational companies in this regard? He knows that they have power to readjust and rejig their expenditure and their profits, and they may do it in such a way as to get round the Government's proposals.
Sir G. Howe: The primary object of the code is to regulate prices. If the transfer or adjustment which the hon. Gentleman suggests affects prices, those prices, particularly of multinationals which are likely to be subject to reporting, will be scrutinised by the Price Commission. The
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point raised by the hon. Gentleman was raised by his right hon. Friend the Member for Bristol, South-East in a question to my right hon. Friend. Paragraph 28 of the White Paper makes it plain that where transfer prices differ from what they would be if the goods or services had been transferred on an arms length basis the Price Commission can substitute modified cost increases or profit margins. That is intended to deal with that problem.
Mr. Russell Kerr: The right hon. and learned Gentleman is kidding himself.
Sir G. Howe: The hon. Gentleman interrupts to say that we are kidding ourselves. Let him accept that the proposals contained in the code and complained of by British industry are the firmest and most effective ever put forward in this country. They are not a bad joke. The question is whether they are right for this code and for stage 2. They are designed for stage 2, and no one has been able to identify points at which they fall short of what is desirable or tolerable.
Mr. David Stoddart rose—
Sir G. Howe: I cannot give way now.
Mr. Stoddart: The right hon. and learned Gentleman is discriminating in giving way.
Mr. Speaker: Order. There are many hon. Members who wish to take part in the debate.
Sir G. Howe: The House will be interested to know the arrangements proposed for the control of food prices. They, too, are as strict and as tight as they can be made. The prices of all semi-processed, processed and manufactured foodstuffs produced in the United Kingdom will be subject to the same regime of allowable cost and net profit margin limitations as the prices of all other manufactured goods. Firms will not be able to recover all their allowable costs through increased prices but will be required to absorb a proportion of increased labour costs resulting from pay increases.
Mr. Peter Shore: These are comprehensive and detailed price controls. Can the right hon. and learned

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Gentleman say, as against the known formula of wage increases during phase 2, what he expects to be the rate of price increases during the same period?
Sir G. Howe: I cannot make a forecast of that kind. The right hon. Gentleman concedes an important point by acknowledging the extent to which these are effective and comprehensive controls.
The document also makes new proposals for the Price Commission's rôle in relation to fresh foods. First, a special panel of the Price Commission will deal with food and drink prices. Secondly, on a standing reference from Ministers the Price Commission will keep the price of fresh food under continuous review. Thirdly, the Price Commission will be able, again on a reference from Ministers, to carry out special inquiries into the circumstances affecting the price of any fresh food or drink.
Perhaps I may draw to a close by inviting the House to look ahead to the objectives that we are seeking to obtain.
Mr. Stoddart rose—
Sir G. Howe: I have given way a great deal already.
The first objective is to control inflation. The social implications of this are of tremendous importance. But in another sense controlling inflation is a means to a more important end, namely, the objective of growth. The Government's objectives have remained consistent over the last two and a half years—the achievement of a sustained level of growth and higher prosperity in real terms.
To obtain these objectives we have reduced taxation by an unprecedented degree, raised the level of social benefits, allowed the pound to float, and by tax and other changes we have provided a new base for industrial and regional regeneration on an unparalleled scale. It is within that context of growth that our counter-inflation programme and the formulation of the code is set.
It is with the objective of growth in mind that the Green Paper pays particular attention to the promotion of investment. Paragraph 49 of the document allows the Price Commission to give special consideration to applications for price increases where it can be demonstrated that the limits on allowable cost increases or
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on profit margins would seriously impede investment. Where the Price Commission is satisfied that that is so it may permit some departure from the normal rules.
The Government have said repeatedly that they recognise that a higher level of investment is necessary for the health of British industry and to achieve sustained economic growth at the level that we would like to see. The effect, therefore, of the measures which the Government are taking on prices and profits has to be seen in the context of overall economic strategy. The primary consideration which determines companies' decisions to invest is the confidence which they can have in the future market for their products, and that confidence in turn depends upon the view which they can take of future movements of wage and price levels and how these will affect their competitive position. That is why it is so essential for the attack on inflation to succeed and why, I am convinced, the great majority of people want it to succeed. If we can achieve a greater measure of price stability and a lower rate of inflation we shall have laid the basis of confidence from which the level of investment can grow.
That is why I am confident that the proposals in the Green Paper will commend themselves to the House. The price proposals are designed to strengthen the working of a competitive economy, and the pay proposals are designed to commend themselves to the great moderate majority, because it is that moderate majority who have the most to gain. They have more to gain than anybody else from the success of these proposals. It is upon that basis that I commend them to the House.
4.17 p.m.
Mr. Anthony Wedgwood Berm: I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
has no confidence in the policies described in the consultative document on the Price and Pay Code (Command Paper No. 5247) and believes that the problems of inflation now require the adoption of socialist policies demo-critically controlled by Parliament along the lines indicated in the Joint Statement issued by the Labour Party and the Trades Union Congress on 28th February.
I begin by congratulating the right hon. and learned Gentleman on the good-natured and good-humoured way in

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which he presented the Green Paper. The debates on the Counter-Inflation Bill, both in the House and in Committee, were of a high order, and today's debate is a continuation of that process.
The nub of the Minister's argument, and he came to it at the end of his speech, is that the gravity of the crisis confronting the country is such that the nation as a whole should rally round the Government's policy as being the only policy capable of solving the problems. No one on this side of the House will dissent from what the right hon. and learned Gentleman said about the gravity of the crisis. The rate of inflation is very rapid indeed, even during the freeze, and certainly in respect of fresh food prices. The balance of payments position is worsening, and there is widespread industrial unrest which can no longer be dismissed as being the view of a minority of so-called militants.
There is low investment. Despite two and a half years of rule by a Government who put investment high upon their election objectives, there was a drop of 10 per cent. in real terms between 1971 and 1972. There is an international monetary crisis, about which we shall no doubt hear more when the Chancellor presents his Budget tomorrow. There is a collapse of confidence that is widespread throughout the country. We therefore do not dissent from the Minister's view that there is a serious crisis, but we do not for one moment accept that there is only one answer to it or that the Government have provided that answer.
The Opposition case in this debate can be briefly stated. It is that, less than three years after coming to power on a programme of unrestrained competition within a market economy, the Government have completely abandoned that policy, they have plumped for a managed economy on corporate lines, they have undermined first industrial and then parliamentary democratic control over major economic policies, and they have brought about a major confrontation with large sections of the community, with important implications for the future. The Opposition believe that the time has come to seek a new national partnership on the basis of Socialist policies democratically
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controlled by Parliament that meet the needs, and therefore command the support, of the nation.
Today's debate is in a sense much more important to this country's future than tomorrow's Budget speech. The reason is that the Chancellor has the power to impose his Budget unilaterally upon the nation, whereas the code which we are discussing will not work without the support of the whole nation.
This code, if it comes into effect under this legislation, will mark the end of free enterprise as we know it and will usher in an era, not of Socialism—I entirely acquit the Government of any intent in that direction—but at least of State capitalism or something like it which is totally contrary to the principles upon which they presented themselves to the electorate in 1970.
This code is, of course, only one of a number of measures that the Government have introduced in the last two-and-a-half years. The Government Front Bench are still unaware, or appear to be unaware, of the magnitude of the changes that they have carried through in the system of the economy in which they profess to believe. I want to remind the House, briefly, of the powers that this Government have taken in the last two-and-a-half years, so as to set a background against which we can debate the code.
First, in the Industrial Relations Act the Government defined for the first time a wholly new concept in law—an "unfair industrial practice". I believe that I am right in saying that such a concept was utterly foreign to our law before. If there is to be an unfair industrial practice in respect of disputes, there are many people who are arguing that there are other things which are unfair industrial practices, including, for example, asset stripping, insider dealing or land speculation, and the Government have at any rate provided a future Labour Government with a precedent for dealing with such practices under an umbrella phrase like "unfair industrial practice".
Next, the Government are seeking to take power to control a privately-owned company in the interest of its customers. Clause 20 of the Insurance Companies

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Bill, now before Parliament, gives the Secretary of State the power to give any directions he wishes to an insurance company in order to protect its policy holders. Under the same Bill, the Government have also asked Parliament to give them the power to ask any insurance company to produce the books, all the books, and people to explain them to any duly authorised officer appointed by the Secretary of State. Under Clause 2 of that Bill they have asked for the power to approve the names of directors of insurance companies and they are seeking to give the Secretary of State the power to remove directors whom he regards as unfit.
Take another case. They have also taken the power—in this case under the Housing Finance Act, but it makes no odds—to put in a commissioner if a Minister's directive is not obeyed. If one can have a housing commissioner, there is no reason why one should not have a "production commissioner" as part of the same tradition: sending in an appointed officer if a company does not obey a ministerial directive.
Under paragraph 6 of the White Paper "A Programme for Controlling Inflation", they have defined in clear language "the commanding heights of the economy" as Category 1 firms. Indeed, the Minister for Trade and Consumer Affairs gave us a definition today of how many such firms he regarded as constituting the commanding heights of the economy. I have some figures, which he broadly confirmed, to show that the top 100 firms in this country in 1950 accounted for 20 per cent. of our gross national output. In 1972, the top 100 firms controlled 50 per cent. of our output, and the forecast of the NIESR is that, in 1980, the top 100 firms will produce 66 per cent. of our national output.
The Government are seeking powers to force these companies to submit detailed reports to them before any major decision can be taken on prices, investment or anything else. Under paragraph 28 of this code, as the Minister confirmed today, they have taken the power to supervise the internal operations of multinational companies. I asked the Secretary of State for Trade and Industry about this, and the Minister later confirmed it.
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Ford, General Motors, Chrysler, IBM and the oil companies can, under this provision, be required to reveal sufficient information for the Government to judge whether or not they are engaged in arm's-length trading.
Under Clause 12 of the Counter-Inflation Bill 1973 they are taking power to require periodical returns of information. In Committee I asked the Secretary of State for Employment whether that information could be used for criminal prosecutions, and received from him a provisional reply which he later found it necessary to modify in a letter. In that letter, after reminding me of what I had said in Committee, the right hon. Gentleman wrote:
"This brings me to the point about offences. If an organisation of workers commits an offence under Clause 14(2) of the Bill the fact will normally be obvious since the offence consists in bringing pressure on an employer in the ways described in Clause 14(3). Thus, I do not think that it would normally be necessary to use the powers in Clause 12 to obtain information about such an offence, although I cannot altogether exclude the possibility. By contrast, the fact that a business enterprise which was the subject of an order or notice applying the Code was not complying with it might never become evident at all if they were not required to provide relevant information under Clause 12. It is mainly for this reason,"—
for the purpose of potential prosecution—
"incidentally, that this power needs to operate in respect of any period when Part II powers are in operation."
Formidable powers indeed, and their motive is to police Government policy.
The Government also wish to take power under paragraph 38 of the code to control profit margins and, under paragraph 49, to monitor investment plans. They want to take power to amend existing legislation or future legislation by order under Clause 8 of the Counter-Inflation Bill, following a similar provision in the Counter-Inflation (Temporary Provisions) Act, under which steel prices in this country are today held below the level required by our membership of the Common Market.
To take the House back to earlier legislation, now perhaps half-forgotten, the Government also have the power, of course, if they choose, to provide money for investment themselves without allowing prices to rise. It is quite clear that under Section 8 of the Industry

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Act 1972 the Secretary of State may, with the consent of the Treasury,
"provide financial assistance where, in his opinion—

(a) the financial assistance is likely to benefit the economy of the United Kingdom, or of any part or area of the United Kingdom, and

(b) it is in the national interest that the financial assistance should be provided on the scale, and in the form and manner, proposed, and

(c) the financial assistance cannot, or cannot appropriately, be so provided otherwise than by the Secretary of State".

Of course, the powers that the Secretary of State has are powers of acquisition of loan or share capital, acquisition of any undertaking, or any assets and so on.
Finally, under the famous Rolls-Royce (Purchase) Act, the Government have already set a precedent for a one-clause Bill to take over a firm which they believe they should take over.
I have rehearsed the achievements of two and a half years of Conservative Government, not to imply that the Government have become Socialist—for they have not—but to show that they have made a very good job of burying the capitalism to which they have hitherto been so deeply committed. Given this, given that they are now not only picking up lame ducks but, as some would say in the CBI, are going for the goose that lays the golden eggs, there is not just one option open to Parliament and the nation as to how to proceed. There are at least three options.
The first is that one could go back to the market economy and forget the enforcement of these powers. But that does not find favour with the Cabinet, which has tried it and believes that it has failed. The second is to evolve the present policy further along the road to a corporate State, managed by agencies and boards and enforced by the courts, all of them beyond the control of Parliament. But this, almost by definition, because the democratic element is abstracted, involves a decision to manage the country specifically without the consent either of industry or of organised bodies of workers. The third course open to the country is the one advocated in the amendment—that we should go on to greater public ownership and greater
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equality and democracy, with Socialist measures, since there is no longer any argument about interventionism between the two sides of the House.
If the argument is not one of interventionism versus the market economy, and if we are to have intervention anyway, let us ask the real question: in whose interest is the economy to be managed? Is it worth preserving a system which has been mummified, like Tutankhamun himself, by the Government in their major alteration to the market system, to which they were committed?
Of course, if we are to come to this question, all sorts of new areas of policy and possibilities open up. The argument about inflation and about prices and incomes is no longer a peripheral argument in our society. It is now the central question.
All previous prices and incomes policies have concentrated on the role of wages as the principal cause of inflation. But in the present prices and incomes policy it is manifestly not true that wages are the dominant cause of inflation. It is manifestly true that the Government are taking sterner measures, or so they claim, against prices than have ever been contemplated before.
All previous prices and incomes policies have commanded the support of the centre in British politics, however unpopular they may have been. The relatively few critics, from Right or Left, could safely be dismissed as militants or extremists who did not accept the policy. But that is manifestly not true now that the civil servants, the health service workers, the nurses, the TUC, the Labour Party and large sections of the Conservative Party do not accept that this is a good policy.
It could be argued that all prices and incomes policies in the past were designed in some way to leave the mixed economy to work as normally as possible. But this code is now so severe that the working of that system is itself in effect suspended, like the money markets this week until the international monetary crisis is resolved.
All previous prices and incomes policies were seen as being secondary to or supporting other policies which had already been prescribed by the Government. This time the prices and incomes

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policy is presented as central, and is seen as being central, as being an argument about the whole nature of our society—who gets what and why. The introduction of such a policy is a complete break with all past policies.
I do not mock the Conservative Party for its change of policy since 1970, although it would be easy to do so. I do not mock it because I believe that what is really important about the Government's change of policy is that the Government genuinely and sincerely believed in free enterprise in 1970 but have been reluctantly driven by experience to abandon their own policy and to introduce policies which even now in their hearts they do not like but know they cannot escape. I want to analyse this experience so that the House can understand how it came about that men who would rather not have done it were driven to the course of action which they have taken.
Mr. Tom King: The right hon. Gentleman mentioned that his comments were going to be brief. Before he begins his analysis, I think what many hon. Members would like to hear is what policies the Opposition would recommend as preferable to those of the Government, which are being put forward in the code. The right hon. Gentleman has directed a lot of hilarity and ridicule at the Government, particularly at their prices policy. The Government's policies have been described as pretty tough by the Opposition. Will the right hon. Gentleman describe at some length the Opposition's alternative?
Mr. Benn: I said at the beginning that the arguments could be briefly summarised. I am now trying to develop an argument on the lines on which we discussed these issues in the Standing Committee on the Counter-Inflation Bill. I am sure that the hon. Gentleman will acquit me of trying to make a mockery of the efforts of the Government. I am trying to assess the gravity and significance of the change of policy and to give reasons for it. I shall come to that part of the amendment which deals with the Opposition's policy.
The Government tried to use unemployment to restrain wages, and failed; they cut public expenditure, especially for regional policy, but had to restore it;
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disengagement was attempted and had to be reversed; tax cuts did not result in the expected investment; free competition did not deal with inflation; the terms of our entry into the European Economic Community have already been proved to be disadvantageous in respect of food prices, steel prices, and the snake in the tunnel that we entered and left, and the refusal, so far, to join in a collective Community float; the legislation against the trade unions is a dead letter—there has been no action by the National Industrial Relations Court since the famous episode at Pentonville last summer.
The Minister for Trade and Consumer Affairs, who played a large part in introducing statutory powers against the trade unions in the Industrial Relations Act, has two powers that he could now use. Why does he not use the ballot? He does not do so because he knows that if there were a ballot the industrial action being taken would get overwhelming support. He knows that if he used the ballot he would lose the argument that a few militants are causing the trouble. Secondly, why does not the right hon. and learned Gentleman use the cooling-off period? He does not use it because it is not possible for the Secretary of State for Employment to satisfy the NIRC that there is a hope of conciliation. There is no hope of conciliation because the Government have shut off conciliation during phase 2.
What has happened is that the argument for inequality in our society, which we have been asked to accept for many years because it was supposed to provide the fuel of profits which gave us investment, is no longer valid. That is the change which has occurred, and a more fundamental change one could hardly imagine.
I come now to the Labour Party-TUC compact. It is, of course, based on the belief that the alternative open to the Government must be based upon a desire to find an acceptable policy. It has taken a year for us to evolve the statement which we published on 28th February. It reflects the deepest needs of the people represented in their work by the trade union movement and politically by the Labour Party. It is open, of course, to the Government to study and implement the programme themselves.
What does our statement say? First, it calls for direct action on prices and

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implies control of all food prices and subsidies. I have cited in the House the fact that the rate of increase in fresh food prices since the freeze is now two and a half times as great as it was a year ago, when there was no freeze. I take comparable 17-week periods of this year and last year. The prices of all foods rose by 3·1 per cent. in that period in 1971–72 and by 7·8 per cent. in 1972–73; fresh foods fell by 2·3 per cent. in that period last year, but increased by 15·3 per cent. this year; fresh meat was down by 3·3 per cent. last year, but rose by 9·1 per cent. this year; vegetables were up 12 per cent. last year and have risen 13 per cent. this year; fish rose by 2·3 per cent. last year and 18·6 per cent. this year; fruit rose by 1·9 per cent. last year and has risen 60·6 per cent. this year—all in the period of the freeze.
If it is nothing more than lack of imagination that the Government suffer from, they should surely recognise by now that they cannot present such a policy to working-class people as fair while food prices continue to rise at the present rate.
The next point in the Labour Party-TUC statement concerns permanent price control over manufacturing and retailing. I do not mock the severity of the Government's price control in this sector—indeed, in that respect, they have gone further than has ever been done before, even during the war. But those price controls must be permanent.
There must be repeal of the Housing Finance Act, for the indignity of asking a man suffering from a statutory wage control to accept a second-stage rent increase under Government legislation is utterly unacceptable. We call in our statement for an accelerated house building programme, for an entirely new approach to transport and fares, and for a redistribution of income and wealth.
In that last connection, I draw attention to one of the most disgraceful frauds in the Government's presentation of their case. I am indebted to the research department of Ruskin College for relating the effect of the Government's tax remissions and phase 2, putting them in a single chart. I can now give the House the consequences of the Chancellor's budgetary policy as reflected in his present tax intentions for 1973.
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I take the figures of tax levels for 1971–72, when we left office, and compare them with the projected percentage tax figures for 1973–74. These are the figures for a married couple, with all earned income: at £1,500 a year, a tax cut of £72 a year; at £3,000, tax cuts of £102; at £10,000, tax cuts of £660; at £20,000, tax cuts of £2,480; and at £50,000—there are a few earning that—tax cuts of £7,400. Those figures represent a combination of the three years of tax changes carried through by the Chancellor.
Adding the projected tax changes for next year to the phase 2 increases, which the right hon. and learned Gentleman had the effrontery to describe as fair, we come across the most astonishing figures of all. These figures are the total equivalent of pre-tax pay increases, assuming that both the phase 2 formula and the Budget benefits come into effect: at £2,000 a year, it is £2·60½ a week, that is, with a little bit of phase 2 and a minor tax reduction; at £5,000 a year, including phase 2 and tax reliefs, it is £5·77 a week; at £10,000 a year, through a combination of the Chancellor and his right hon. Friend, it is an increase of £14·86 a week; at £15,000 a year—that is, the level at which the new chairman of the Pay Board will come in—there is not only his increase but £22·58 per week back from the tax remissions plus phase 2 increases; and at £30,000 a year, the increase is £43·49 per week.
That is a manifestly unfair policy, a fraud concealed from public understanding by statistical complexity alone, which, once it is revealed, will simply not be acceptable.
Mr. Peter Rees: I am sure that the right hon. Gentleman does not wish to be unfair. Does he concede that at the highest levels the rate of tax will go from 88·75 per cent. to 90 per cent., and will he concede also that, as a result of the unification of income tax and surtax, a lot of people will be paying tax a good deal earlier than they did previously?
Mr. Benn: I shall give the hon. and learned Gentleman one other figure. A married couple with £10,000 a year, all unearned income, will be receiving the equivalent of £135 a week pre-tax increase from the Budget unless there is a

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change tomorrow. That is wholly unacceptable. It is no good saying that such people will be paying a week or two earlier or that there will be some other minor change. It is wholly unacceptable, unfair and unjust, and it explains in part why this policy will not succeed.
Mr. John Hall: Would it not help to put these matters in perspective if the right hon. Gentleman mentioned the total tax to be borne by each of the individuals to whom he refers?
Mr. Benn: We are told that the Government are the friends of the lower-paid. In fact, they are the friends of the rich, and especially the richest, and what they say to the public about their concern for the lower-paid is belied by every Budget introduced by their Chancellor. That is the point. We are saying no more than that.
To take the Labour Party-TUC statement further, we are calling for a phasing out of social charges and for a basic pension of £10, with £16 for a married couple. We are calling for a commitment to growth—with important lessons for the Chancellor tomorrow—and, of course, implied opposition to the EEC collective float. We are calling for the stimulation of investment by the use of public enterprise and public supervision of the investment policy of large private corporations.
We are calling for the control of capital movements overseas, for a joint programme of regional development, for a new approach to the idea of some attempt to control our economy democratically within industry and within Parliament. We are calling for a common approach to the multi-national company. We are calling also for the repeal of the Industrial Relations Act. Finally, in putting these 14 points to the House, I must express a word of thanks to the Government, for they have provided almost all the legislative machinery which we should need to implement the joint Labour-TUC statement.
The argument put by the Government—no doubt, we shall hear it again today—is that, as we have a statutory price policy, we must have a statutory wage policy, too. This is manifest nonsense. [Interruption.] It is manifest nonsense because the Government have power to use the statutes now, by a ballot or
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through a cooling-off period, to end the present industrial unrest, but they cannot use that power. There is no mystical symmetry in the Government's approach to relations between major companies and the trade union movement.
Statutory wage control with rising prices is not acceptable and will not work. The Government themselves say that they wish to move to voluntary agreement. We believe that a voluntary agreement is not possible without strict price control and subsidies, because it would involve making the unions an agent of the Government, which they will not be and would not be, and, moreover, because the Government themselves are seeking the cooperation of the trade union movement and must, therefore, recognise that even from their point of view, whether we accept it as likely or not, it is not possible to get the co-operation of the trade union movement in statutory wage control.
Mr. Kenneth Lewis: Will not the right hon. Gentleman agree that, if the Government had not brought in wage control or were not running into a wages and pay board control system, it would have been certain that the Ford workers would have demanded the sort of increases for which they were asking, whereas, now that there is this Government control, together, of course, with opposition within the company itself, they have accepted and there has been a vote against a strike?
Mr. Benn: I do not accept that for a moment. I endorse the view expressed by Aneurin Bevan in his last speech at the Labour Party conference, that what had staggered him over the years was the modesty of the claims made by British working people against a society which treated them so unjustly. I know of no worker in industry who is demanding an increase comparable to the increase the chairman of the Pay Board will get in his first year in office through the benefit of tax changes alone.
It is not sensible, practical or right to suppose that the only way in which one can deal with these problems is by statutory control of wages.
We are, perhaps, too close to the situation to appreciate the full significance of the changes which the Government have been carrying through in their two and a

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half years of office. They are now trying to create an artificial system which is unfair and cannot work, and they are being driven progressively to dismantle, first in industrial democracy and then in parliamentary democracy, the safeguards against that occurring. It may take some time for people to realise what is happening. On the other hand, the policy which we are putting before the House today, the Labour-TUC policy, is a policy built upon confidence between the TUC and ourselves. It is a policy which offers something which the Government, with all their parliamentary majority, cannot offer to the British people; namely, an end to confrontation as a way of solving these problems.
We have no confidence in the Government or their policies, and on this part of our amendment we suspect that there are hon. Members opposite who share our view. We offer an alternative approach, all of it capable of implementation by using this Government's legislation, including a great extension of public ownership. We offer an end to confrontation and a recovery of co-operation, without which no policy and no Government can hope to succeed.
4.51 p.m.
Mr. John Hall: I confess that while listening to the speech of the right hon. Member for Bristol, South-East (Mr. Benn) I thought that I had come to the wrong debate. First, I thought that I was listening to a continuation of the debate on the Counter-Inflation (Temporary Provisions) Bill. Then I thought that we were debating Labour Party policy for the next General Election.
It was my belief that the debate was supposed to be about the consultative document—the Price and Pay Code. I thought that the purpose of the debate was to examine the code, to ask questions about some of its provisions and to make some suggestions as to how it could be improved by removing the restrictions or in some cases increasing them. Instead, we have had a general debate about the philosophies of the Conservative Party and the Labour Party.
It has been suggested that Conservative hon. Members should accept what is described as the joint statement by the Labour Party and the Trades Union Con-
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gress. It seems that that should be the other way round; it should be a joint statement issued by the Trades Union Congress and the Labour Party. There is no doubt which has the greater influence in the preparation of a statement of this kind.
It is interesting to look at the words in the amendment moved by the right hon. Member for Bristol, South-East, namely:
"…socialist policies democratically controlled by Parliament…"
My recollection of some of the legislation introduced by the last Labour Government is that when it concerned in any way the trade union movement it ceased to be democratically controlled by Parliament and became controlled by the trade unions outside Parliament.
It is not my purpose to take much time in dealing with the right hon. Gentleman's speech. However, there was a time when I thought he sounded like a Conservative spokesman speaking from the Opposition benches. I agreed with some of the things that he said about the objectives for which the Government have been striving over the last year or two. If we are to continue in the way in which we are now going we shall end up a corporate State. That is not an end which I desire. I hope that we shall find it possible to revert to what I believe to be true Conservative philosophy and not the policy which we are now following.
I supported the Counter-Inflation (Temporary Provisions) Bill in the Lobbies extremely reluctantly. I have never believed that statutory policies of that kind will work for long. I supported the Bill because I could see no alternative except to introduce a measure of this kind for a temporary period. I stress the word "temporary". No provision of this nature, however stringently worded, can work for long. The only way in which we can hope to make it work is by introducing further measures to stop up loopholes and to become more restrictive.
That is not the way in which I want to see a Conservative Government proceed. I supported the measure because I regarded it as temporary. If we are to introduce counter-inflationary measures they must be made to be effective in the short term. The code which we have before us and which we are supposed to

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be discussing is certainly very stringent in its provisions. I think that the right hon. Gentleman said that the restrictions which apply to prices are probably more rigid than those which apply to pay. I agree with that.
From my experience—and I may be wrong—I cannot think of any country which operates a closed economy and has more restrictive provisions than those which are contained in the consultative document on prices as a whole. Several European countries have exercised for a long time continuing control over prices. Even so, I cannot think of any country which goes quite as far as it is proposed that we should go in the first part of the consultative document.
I have some questions to ask about specific paragraphs. I shall use this opportunity to consult the Government about the pay code. First, I have one or two comments about the effect on the companies which tried to keep to the voluntary agreement which the CBI organised and to restrict their prices increases to 5 per cent. Those firms must be kicking themselves hard. Whatever may be the utterances of my right hon. and learned Friend the Minister for Trade and Consumer Affairs, there is no doubt that they have suffered and will suffer compared with the firms which took no notice of the voluntary agreement.
It is a mistake to penalise people who respond to a voluntary agreement. If they are penalised they will not respond the next time. That applies to industry, management or trade unions. Some credit and some advantage must be given to those who respond to a call for a voluntary price restriction.
Paragraph 19 refers to productivity deduction. It allows firms to claim as justification for a price increase only 50 per cent. of any increased labour costs. I find the bland assumption that firms can absorb a 50 per cent. increase in labour costs by increased productivity a little naïve. Many firms will find it impossible to do that. If we are to have wage increases of 8 per cent. or 8 per cent. plus for the next 12 months, 4 per cent. will have to be absorbed by increased productivity in one form or another. We can all think of companies where this will not be possible. It will mean a reduction in the general margins that that firm previously enjoyed.
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Paragraph 21(ii), referring to interest charges, says:
"they are interest charges of a kind normally charged against the profit and loss account of the enterprise concerned…"
That is an increase in interest charges which cannot be accepted. Surely they should be interest charges of a kind not normally charged against a profit and loss account.
The Secretary of State for Employment (Mr. Maurice Macmillan): It is a misprint.
Mr. Hall: That is a great relief to me. When I looked at that paragraph the first time I was very worried. I am delighted to receive that assurance from my right hon. Friend.
Paragraph 36 refers to price reductions, and says that a fall in raw material prices should be fully reflected in price reductions in general. At what stage are such price reductions expected? If there is a fall in raw material prices most of them will probably be known to the general public because raw material prices are published and become known before they can be reflected in reduced prices. In many industries it takes a long time for raw material costs to work through to the production line. I should like to know how this provision will be made to apply in practice?
When these decreases in raw material prices have worked through to the production line, the costs may have been overtaken by increases in other directions which more than offset the fall in the raw material price. How will that be taken into account when we look to a firm to reduce its prices because raw material costs have fallen?
Paragraph 40 was touched on briefly by my right hon. and learned Friend. It refers to the situation where the reference level of the profit margin has been exceeded. As I understand it, firms—certainly those in categories I and II—will be expected to make quarterly returns. If it can be seen that the profit in any quarter exceeds the firm's reference figure at that time the firm will be expected to reduce prices.
Presumably, if a firm can show that its profits tend to vary from quarter to quarter—that there may be higher production or higher turnover in one quarter and lower production and lower turnover

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in another—perhaps because trade is seasonal, the firm will be able to use that as a reason for not reducing prices at that time. In that case, there would have to be a longer period before the firm could be told to reduce its prices. What is that longer period to be? Is it sensible for these changes to be possible at periods as short as a quarter? Periods of half a year might be all right, but quarterly checks may be too difficult.
The restrictions on price increases and net profit margins are likely to have some rather interesting effects. There may be an increase in investment. If a company saw that its profit margin was likely to be higher than the average of the next two years, or whatever the formula is, it would be encouraged to borrow money to invest in plant and machinery, and more capital investment, so as to offset interest charges and increased depreciation against profits and thus bring profits down to the pre-freeze and normal net profit margin. That could be a good thing in the long-term view.
On the other hand, it could encourage a good deal of wasteful expenditure. It could encourage the kind of expenditure that we had at the time of profit limitations. It could encourage excessive expenditure on advertising which might not be particularly desirable, commercially or socially. It could encourage the loosening of control of business expenses—a feature of the time when we had excess profits taxation. It could encourage a good deal of wasteful expenditure in other respects of which hon. Members can think without too much difficulty. What sort of control are we likely to have to prevent that kind of thing?
My own philosophy is that if there is a real improvement in profits, that is, if net profit margins increase because of an increase in turnover or efficiency, or a combination of both, the increase should be split three ways—to the consumer, through a reduction of prices; to the workers, through an increase in wages; and to the shareholders, who are entitled to some share in the increased productivity of the company. That seems a sensible and logical way in which to deal with increased profits. Under this system, there would be a decrease in prices, which would benefit the consumer, which is the
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Government's intention, or the company would use the excess in other ways so as to reduce profit margins to an acceptable level.
How long will it take to deal with applications for a price increase? There are special provisions for applications from food processing firms. That is essential, because food processing firms may have to deal with changes in the prices of foodstuffs daily and if their applications are not dealt with quickly the food processing firms will find themselves in difficult circumstances.
But other concerns, too, find themselves at the mercy of prices—especially the prices of imported raw materials—and they may find themselves in difficulties unless their price increase applications are dealt with speedily. I cannot see them being dealt with speedily, because the staff to be made available to the agencies will not be large. In the first year or so—I ought not to say "In the first year or so"; I ought to say, "In the first few months", because I hope that the system will not last for a year or so—the staff will tend to be overwhelmed with applications.
The pay code rightly concentrates on the benefits for the lower-paid workers. An interjection earlier in the debate suggested that it was thought by some that lower-paid workers would be restricted to the £1 plus 4 per cent. increase, but it is nothing of the kind. The figure of 4 per cent. applies to the total pay roll and it is up to the unions responsible for negotiations to decide how much of an available increase in a firm or industry should go to the lower-paid workers and how much to the more highly paid.
After having heard so often from the Labour Party and the trade unions that lower-paid workers should be better treated and given larger increases it will be interesting to see whether trade unions are prepared to allow that in practice—whether they will be prepared to permit a greater proportion of the 4 per cent. of the total salary roll to go to the lower paid and a smaller proportion to go to the higher paid. I have a feeling that they will go on demanding a straight increase across the board, as they have tended to do throughout.
My final observation relates to dividends. No doubt partly because of my

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own stupidity, I do not fully understand paragraph 131. It would seem possible for a company to declare the same percentage dividend on its capital and yet, having taken into account the adjustment of the new form of dealing with corporation tax, to make a net payment to shareholders greater than the net payment for the previous year. I should like to know whether I am right in that assumption. If I am, I am not sure whether that is what the Government intend. To make certain that I am not misunderstood, I shall say it again. If a company pays the same percentage dividend this year, after the freeze, as it did before the freeze, because of the adjustment of the way in which corporation tax is treated, it may end up paying to shareholders a larger net dividend. I wish to know whether I am correct in that assumption.
I hope that the Government will take the opportunity to deal seriously with those questions and others, so that this becomes a discussion about the nature of the document rather than a general, wide-ranging debate about the philosophy behind it and the whole subject of a pay pause. I hope that my hon. Friend will be able to answer those and the many other questions that will be put in the course of the debate.
5.7 p.m.
Mr. John Pardoe: We are debating a long, detailed and important document. We have already been over some of the arguments in Committee and on Report. It would have been better if this consultative document—for it is no more than that—had been discussed by a Select Committee. It is certainly long enough for that, and I wish that it had had that treatment at this consultative stage. When the final proposals come before us later, it would be better to debate them as we normally discuss legislation, in Standing Committee or in Committee of the whole House.
We cannot do that because of the Government's hurry to get their legislation through. I must make it clear that the Government's hurry is of their own making. I regard the Bill and the code as panic measures, and they are panic measures because of the lack of forethought.
In opposition the Conservatives opposed a prices and incomes policy. I
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do not wish to embarrass them by quoting the Conservative manifesto; I merely ask them to read it again. Perhaps in the nature of things all parties make ludicrous promises when in opposition and back them in their election manifestos and then change them when in office. In opposition the Conservatives opposed the prices and incomes policy in principle, not because of any rational basis for such opposition but simply to defeat the Labour Government. Having opposed it in opposition and having committed themselves against it during the election, they have frittered away two and a half years of precious time trying to redeem promises that no reasonable being would ever have made.
Whatever the inadequacies of the policy and of the document—and those inadequacies are substantial, as most Conservatives appreciate in their hearts—there is no reason why anyone should vote for or against a consultative document. I regard such a vote on a consultative document as cheap gesture politics. I have no intention of doing so. I shall not vote for or against the document at this stage, and I shall recommend my hon. and right hon. Friends accordingly.
All I want to concern myself with is the question of food prices. As the Minister and all hon. Members know, the Achilles heel of any prices and incomes policy is inevitably what happens to food. The country has been faced with a desperate choice. The Government have set out their view in paragraph 12 of the Green Paper which states baldly that:
"The prices paid to United Kingdom producers or producers' organisations or to overseas suppliers for fresh foods and similar products, which are subject to fluctuations on world and United Kingdom markets because of seasonal factors or international changes in the relationship between supply and demand, are not controlled."
The right hon. Member for Bristol, South-East (Mr. Benn) has amplified the extremely interesting Labour Party-TUC document which was published last week. Paragraph 6 deals with direct statutory action on prices. If the choice for the country were between those two well might the British people despair. The Minister for Trade and Consumer Affairs said that the control on food prices in this document was "as strict and as tight as it can be made." He may be right. I do not necessarily dissent from that view.

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It may be impossible to control food prices for the reasons which he gave, which Ministers have given in the past, and which we all know. I have considered in great detail and sympathetically the proposals of the Swedish Government. Here again it is baldly stated in the decree on 21st December 1972:
"The King in Council…decided: He who voluntarily sells goods listed in the addendum to this decree must not without permission raise the price he was charging on December 21 1972 at 9 a.m.…this Decree comes into force on January 1 1973 and will be valid till the end of June 1973."
That appears to be a total freeze on prices backed by the Swedish Government. But when we get to the small print—and incidentally the document in toto is certainly as long as our Green Paper—we can see that it is not really a total freeze because the freeze is selective and exceptions are allowed.
I would not for one moment suggest that in its food pricing policies Sweden can be compared with this country. The total value of all food imports is a vastly greater proportion of our gross national product than is the case in Sweden. It would be foolish to compare them directly. In any case it is far too early to see how effective is the Swedish policy. The policy involves subsidies. The Swedish Government will get those subsidies by increasing the fuel tax.
Increased fuel taxes are themselves highly inflationary. I have no doubt that the Government have considered these points and for these and many other reasons have decided not to follow the Swedish example.
Mr. John Hall: Is it not rather a problem to introduce food subsidies into this country because of EEC restrictions?
Mr. Pardoe: It is possible to introduce food subsidies through a negative value added tax. My reading of the regulations is that that would be allowed. If zero rating is allowed it should be possible to have a minus rate.
The Government now seem, to reasonable people, to be saying that nothing can be done to control food prices. That is an impossible position from which to sell a prices and incomes policy to the country, because no such policy has any chance of success unless it takes account of food.
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It is for that reason that the Opposition have taken account of food to a considerable extent in their amendment and in their document published jointly with the TUC last week. The alternative put forward by the Opposition is for direct statutory action on food.
"Food prices must be controlled; and the next Labour Government will create the machinery to make this possible providing subsidies where necessary to curb increases in the price of food."
This could succeed, but if it is to succeed the Opposition, if they become the Government, will have to face problems just as painful as those now being faced by the Government in implementing their policy.
If a total freeze on prices is introduced, either wages would be controlled or all the companies would go broke. They simply could not afford to pay the increased wages because they would not get the additional revenue from increased prices. Theoretically, the unions would not be so stupid as to close down their places of employment. The trouble is that practical politics enter into this question. A large employer would not be allowed to go to the wall by any future Labour Government. That Government would save the firm with taxpayers' money. This is the whole fallacy of dependence on price control alone. Moreover, knowing the dependence of any future Labour Government on the unions, employees would know in advance that the Government would not allow their place of employment to close. While, theoretically, therefore, a total price freeze would freeze wages, in practice I believe that increased wages would be paid through a labour subsidy paid by the taxpayer.
I will not necessarily object to this if all of the taxes needed for the subsidy were to be paid by the rich. But no such luck. We would have to get those taxes from the very people whose higher wages we were subsidising. Subsidising food prices may sound attractive. I have been tempted to indulge in advocating it. I suggested, in answer to an intervention, the possibility of a negative VAT. But the history of food prices is not encouraging. The questions arise: where do we stop subsidising? On what products do we indulge in subsidies? How do we get rid of them when we want to?
Where do we stop?

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The TUC-Labour Party document says refers to "Providing subsidies where necessary." That begs every question in sight. If subsidies are imposed to keep prices at the level they were at at the beginning of the policy it is an open-ended commitment. As the world price of a commodity increased we would have to present a bigger and bigger bill to the taxpayer. The hon. Member for Birmingham, All Saints (Mr. Brian Walden) faced this question in Committee on the Counter-Inflation Bill. He said:
"I am suggesting that the price that is paid when it is translated to the consumer is subsidised by the Government. If it is open-ended, that is not a phrase which breaks my heart."—[OFFICIAL REPORT, Standing Committee H, 5th February 1973; c. 82.]
It might not break the hon. Member's heart but it would certainly break the heart of any future Labour Chancellor. It would also break the heart of the electorate, which would revolt against the level of taxes it was asked to pay to finance such a scheme.
So what do we do, faced with these alternatives, both of which I regard as totally unacceptable? The answer lies in insuring pay against a rise in food prices, not by means of a Government subsidy but by an automatic and regular wage increase. My proposal is that every three months the Government should announce a flat-rate cash increase on all wages. That flat rate is calculated by reference to what will compensate the average worker for the rise in the cost of food in the previous quarter.
There are various ways of calculating this. One way is to relate it to average industrial earnings, now £36 a week. In 1971 food amounted to 25·9 per cent. of average household expenditure. If we apply that—it is a fairly rough and ready calculation, the Government will no doubt be able to make a better one—to average industrial earnings we get a figure of £9 a week as expenditure on food. According to the retail price index, food prices rose by about 10·1 per cent. in 1972. If they rose in the first quarter of this policy by, say, 2½ per cent., all wages would be raised by 2½ per cent. of £9, which is the increase in the average expenditure on food, and that would be approximately 25p a week, or approximately £1 a year if the increase continues at that rate. If the increase in
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the price of food were more than 10 per cent. they would get more than £1 a year. This increase, built into the policy, could be introduced instead of the £1 of the "£1 plus 4 per cent." formula, or instead of part of the 4 per cent.
What I am asking the Government to do is not to hold up their hands and say, "We surrender; we cannot control food prices", or to accept the Opposition's policy for an open-ended subsidy, but simply to say to the people, "We will guarantee you against rising food prices". Once the Government have accepted the principle of the preservation of living standards by reference to the cost of food it will be much easier for them to gain the co-operation of the great majority of the people for their prices and incomes policy.
As one who wants a prices and incomes policy to work, and who does not believe that the Government's policy will work but who has no confidence in the policies adumbrated by the right hon. Member for Bristol, South-East on behalf of the Opposition and set out in the TUC-Labour Party document, I hope that the Government will give what I have said very careful consideration, if not for phase 2, then as an integral part of phase 3.
To confirm what I have said about voting intentions, I cannot bind my right hon. and hon. Friends, and would not dream of wishing to do so, but this is a consultative document. I see no point in striking attitudes on consultative documents. The purpose of a consultative document is to consult. This debate is about consultation. There will be consultation outside the House for some time to come. Voting is a futile gesture on this occasion, and I have no intention of taking part in it.
5.22 p.m.
Mr. A. G. F. Hall-Davis: I do not propose to take up in detail the interesting comments of the hon. Member for Cornwall, North (Mr. Pardoe) about offsetting increases in food prices. However, if we were to attempt to impose crude controls on food prices similar to the price controls outlined in the Labour Party-TUC document—and the hon. Gentleman agrees with me; I see him nodding his head in confirmation—we would in a country

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which imports a great deal of it, go short of food and the result would either be rationing or under-the-counter favouritism. There may be ways of offsetting increases in world food prices. Selective social benefits and tax allowances are one way. The way not to do it—and it would be fatal to do it in that way—is within the context of the Price and Pay Code.
The right hon. Member for Bristol, South-East (Mr. Benn) had a good deal to say on a wide front. Some of my hon. Friends were a little impatient because they felt that he addressed his remarks too widely. I do not quarrel with putting the Price and Pay Code into context. It is concerned with some fundamental questions—growth, living standards and social justice. The right hon. Gentleman made comparisons between the position of certain taxpayers in the next financial year and their position two years ago. I noticed that the comparison which he did not make was between the living standards of wage earners in the next tax year and the living standards of wage earners when his party left office.
Predictions are dangerous, but I am quite confident in my prediction that at the end of this Parliament the economic growth of this country, the living standards of wage earners and the position of pensioners and of people who have retired, will have improved relatively at a far greater rate than the miserable slow crawl achieved when the Labour Party was in office.
The test which we should apply to the Price and Pay Code is whether it is simple, fair and effective. In my view—and I make no bones about it—the degree of restriction which is being placed on the freedom of decision of individuals and organisations can be justified only if the code achieves its twin objectives of containing inflation and keeping open the way to substantial economic growth.
I believe that the code will be effective and, moreover, that only by checking inflation and keeping it in check for a period shall we be able to restore freedom of decision to those engaged in industry in settling pay and price matters. Like the majority of people I am sure that right hon. and hon. Members opposite wish to see the freedom to decide pay levels back in the hands of negotiators instead of Governments. There-
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fore, they should support and not obstruct the Government's proposals. If the Government's proposals do not work, those on the receiving end of price rises will demand more restrictions, not greater freedom for negotiators.
Therefore, no one has a greater interest in the success of the Government's policy than those, like myself, who believe that industry can settle its own conditions and prices but that it will not be in a position to do so unless we curb inflation, and unless the Government's policy succeeds.
Mr. Sheldon: Is the hon. Gentleman saying that if the Government's policy is unsuccessful it will continue and that if it is successful the Government will drop it?
Mr. Hall-Davis: I am saying that in my view the policy will be successful. If it is not, the Labour Party will not ride back to office on a programme of happy union of intention with the trade union movement. Far from that, it will find that the electorate will turn to policies of greater restriction on the settlement of wages, whoever puts them forward.
I turn to the question of fairness. I believe that the Price and Pay Code is fundamentally fair, but that there is room for worthwhile improvement in one direction. I am sorry that my right hon. and learned Friend the Minister for Trade and Consumer Affairs appeared to take an adamant view on the pay section of the code. It is a consultative document and we wish to give him the benefit of our advice and views, for what that is worth.
One of the agreed objectives of the tripartite talks last autumn was to help the lower-paid. The code seeks to do that by the kind of formula used by a number of firms in recent years, namely, a flat cash increase plus a percentage of pay rates. That certainly would give the low-paid a proportionately bigger increase, but in cash terms the gap is still widening throughout the pay range. I should have preferred a flat-rate cash addition to be given across the board under phase 2.
However, there is another method of helping the low-paid, namely, to give a minimum increase in cash terms when the formula in use would throw up a lower figure. If, in phase 2, for all people

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with rates of pay less than, say, three-quarters the national average, employers could negotiate an increase equivalent to the formula figure at this level it would stop the pay gap widening for many of the lowest-paid and would give them a proportionately bigger increase than the code proposes. I am sure that the introduction of a figure—it might well be about £2 a week—by which pay for a normal working week could be increased for an individual or group without application of the £1 plus 4 per cent. formula would have the advantage of fairness and simplicity without materially affecting the cost of living.
There is another aspect of the code which will he widely welcomed in terms of fairness. My right hon. and learned Friend might have touched on it because of its importance. I refer to the freedom of employers to introduce or improve pension schemes outside the controls of phase 2. I am certain that this will give a timely boost to the improvement of pension arrangements for industrial workers. I think we shall see a bigger advance in the provision of pensions for industrial workers in the next 12 months than we have seen in the last five years or more. It is a difficult field in which to produce practicable proposals but I think we shall see a substantial advance in the next 12 months.
I should like to put to my right hon. Friend one question about pensions. As well as the cost of improving pension arrangements for those now in active employment being allowed under paragraph 39, I would hope that payments to pension funds to improve the pensions of those in retirement will be allowed at least up to the level which the Inland Revenue allows for corporation tax in any one year.
I turn to the question whether the code is simple. Here I am much less happy. I suspect that I shall not be popular with or supported to any great extent by hon. Members on either side of the House, but we come here to state our views based on our own experience, and that is how the House of Commons functions best.
In commerce and industry, keeping guidelines and controls simple is of real merit in itself if one is not to blunt the initiative and energy of managers. Management, all the time, every day, has to review the effects of the normal forces
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of supply and demand and the availability of resources for the conduct of business. If Governments have to impose additional controls which introduce a whole new set of ground rules it is important that those controls should be simple to understand and observe if they are not to take up an undue amount of senior management's time. There is also the danger—to which my hon. Friend the Member for Wycombe (Mr. John Hall) referred, when profits are being controlled—that an excess profits tax outlook may be induced, leading to a misuse of resources.
The Green Paper's prices and profits controls have a double objective—first, to stop prices being raised above their present levels unless unavoidable cost increases justify it, and, second, where companies' net profit margins as defined in paragraph 39 are currently at the highest level of the last five years, to cut them back to the average of the best two of the last five years.
I believe that the second intention is a triumph of laudable optimism over practical realism. I ask my right hon. Friend to tell me what contribution in terms of impact on the retail prices index this insistence on a two-year average for a "net profit margin" base will make. I am sure that the Government have done their own sums—I hope they have done their own sums—and calculated the impact before launching everyone else on a sea of calculations, which firms will have to embark upon if the two-year average base is maintained.
The two year from five average will create a great deal of work for accountants and financial controllers and a great deal of uncertainty for managers. It will be particularly hard for the smaller firms to understand and operate. It will, to put it no higher—or, perhaps, some hon. Members would think I should say, to put it no lower—create a temptation to undertake additional allowable expenditure which would otherwise not take place or would not be undertaken till a later date. It will be a constant temptation to some to relax efficiency.
If my right hon. Friend can tell me that calculations have been made which indicate that, as a result of paragraph 38 with its averaging provisions, the retail prices index will be one or more points lower in a year's time than if a single year's "net profit margin" were

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taken I will concede my point and accept his policy; but, if he cannot tell me what his calculations show, and if he cannot quantify the cost of living impact and show that it will be appreciable, then on grounds of simplicity, removal of uncertainty, and the efficient use of resources it would be infinitely better under the section "Prices and Profit Margins" for firms to be free to choose a single year made up of any two consecutive six-month profit periods before either 31st March 1973 or 30th September 1972.
I believe that the Green Paper policies will be an effective cure for the degree of inflation from which we have suffered in the last four years. Unfortunately, many modern cures have harmful side effects. The suggestion I have made regarding a single year base for profits would reduce the harmful side effects on efficiency and managerial initiative. The modest relaxations I have suggested on pay would make the medicine generally more palatable. Together they would make the code fairer and simpler.
In conclusion, I emphasise the merits of simplicity as a virtue in itself when controls are imposed on industry, and, in my view, neither proposal of mine would make the code any less effective in controlling prices in practical terms.
5.36 p.m.
Mr. Eric S. Heffer: First, I want to make some brief comments on the speech of the Minister for Trade and Consumer Affairs. I thought his speech this afternoon was somewhat reminiscent of our rather tortuous debates on the Industrial Relations Bill. He has a genius for making even simple things appear exceedingly difficult. On this occasion he was easily able to make something that was very difficult appear to be very difficult indeed. By the time he sat down, I thought he had made the whole approach to this question more complicated that it was before he stood up.
The right hon. and learned Gentleman, as on many other occasions, and in many different circumstances, said that the policy of the Government is fair. The Government's policies are always fair, apparently. They are fair when they increase rents to council house tenants. There was a fair rents policy, and a "Fair
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Deal at Work" which led to the Industrial Relations Act, which was intended to work out—although it did not work out—in clobbering the trade unions and making it difficult for them to operate. It has not worked out because the Government have found it practical politics not to pursue this subject too far, especially after their experiences last year, not only with the dockers but with the railwaymen, and that famous ballot to which my right hon. Friend the Member for Bristol, South-East (Mr. Benn) referred.
My hon. Friend the Member for Penistone (Mr. John Mendelson) in an intervention in the right hon. and learned Gentleman's speech, raised a very important point when he said that on the pay side of this document there was to be no modification, and there were to be no exceptions in special cases; in other words, that we were to keep the code complete and inflexible. At the same time he said that, although the consultative machinery would remain available, it would apparently not be able to be used in any meaningful sense for consultation.
The right hon. and learned Gentleman said that the policy was all geared to winning the moderates, but he has transformed the moderates into militants. I use "militants" to mean workers who are legitimately taking industrial action. He has transformed into militants sections of workers who have never before been militants. The civil servants are now rip-roaring militants wanting to overthrow the capitalist system. That has never been the policy of Civil Service unions. I have never known civil servants to be concerned with taking industrial action, but there they were, outside No. 10, with their placards and bowler hats.
Then there are the hospital workers. If the policies of a Labour Government had led to hospitals being closed, the Press and the media would have been deeply concerned, but very little is being said about what is happening now, when the hospitals are being depleted of workers because of the Conservative Government's policy.
The speech of my right hon. Friend the Member for Bristol, South-East was one of the best speeches I have heard from the Opposition Front Bench for a considerable time. It dealt with the basic philosophy underlying the Green Paper.

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Hon. Gentlemen on the Government benches should be concerned with that philosophy. The Green Paper underlines that British private enterprise is at the cross-roads. It is in a period of deep crisis.
There are three options open to us. There is the option of old-fashioned, laissez-faire capitalism which, if totally uncontrolled, would lead to mass unemployment. The second option is the one that the Government are now steadily pursuing. I would not say, as my right hon. suggested, that it is State capitalism —there may be argument about precisely what State capitalism means—but it is certainly managed, controlled capitalism, leading last to the corporate State concept. That is where we are going. The third option is to take that concept to its logical conclusion with interventionist policies on the basis of a Socialist, planned economy and to introduce a Socialist economy.
The Conservative Party before 1970 rejected the concept of Government intervention. The Secretary of State for Employment will remember the book "The Middle Way" because his father wrote it. I read that book with great interest. The Selsdon man concept ignored "The Middle Way". Apparently at that stage Keynes had never existed for the Prime Minister. All the years of Keynesian ideas were thrown out of the window, and the Selsdon man concept—laissez-faire capitalism—was adopted.
Mr. Lewis Carter-Jones: Can my hon. Friend find any relationship at all between Keynes and the Selsdon man?
Mr. Heffer: No serious relationship at all. The Government were forced by economic and political circumstances to abandon the policy of Selsdon man. No Government in the history of the country have reversed their policies and theories so quickly as have this Government. Within two-and-a-half years they have turned their ideas totally upside down.
Mr. Hall-Davis: Does the hon. Gentleman remember during the 1966 General Election the comments that were made about there being no need for a sharp increase in taxation, and what happened three or four months after?
Mr. Heffer: I am not suggesting for one moment that previous Government have
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never changed their policies or have carried out their entire election pledges. What I said was that this Government have reversed their policies and theories more quickly than any other Government in history. Their philosophy has been totally turned on its head.
My right hon. Friend the Member for Bristol, South-East said that some people were referring to the Government's present policy as a series of Socialist proposals. That is a misreading of Socialism. It confuses bureaucratic State control with Socialist democracy. The two things are not the same. What they have in common is the concept of the corporate State.
I should like to quote the following passage from a book:
"Government of the corporate system would lay down the limits within which individuals and interests would operate. These limits are the welfare of the nation—not when all is said, a very unreasonable criterion. Within these limits, all activity is encouraged; individual enterprise and the making of profit are not only permitted but encouraged, so long as that enterprise enriches rather than damages the nation as a whole."
I will quote a further passage:
"It is the machinery of central direction which the corporate State is designed to supply … it envisages, as its name implies, a nation organised as the human body. Every part fulfils its function as a member of the whole, performing its separate task, and yet by performing it, contributes to the welfare of the whole."
The writer of those words referred to the corporate State as:
"essentially a system for the economic organisation."
Hon. Gentlemen on the Government benches will see how closely those words are allied to the concepts laid down in the Green Paper and to speeches made by hon. and right hon. Gentlemen on the Treasury Bench. I shall tell the House who wrote those words. They were written by Sir Oswald Mosley in his book "My Life" and he was quoting from his other book "The Greater Britain", written in the period he became the leader of the British Union of Fascists.
This is the type of State into which the Conservative Party is moving us stage by stage. I am not suggesting that Conservative Members have been converted to the philosophy of Sir Oswald Mosley in a Fascist sense, and I would not suggest for a moment that they want to do away with our elected Parliament.

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But they wish to create a corporate State as an economic mechanism. Parliament will still be here, but we shall not have much of a function. Indeed, we are already losing that function in terms of the European Economic Community, but in respect of these proposals we shall lose that function twice over.
British parliamentary democracy is now being further undermined because of this policy and because of the many steps which have taken place since this Government have been in office. The truth of the situation is that if we oppose the concept of the corporate State, we should take it a stage further and introduce Socialist planning with public ownership and a national investment board. This is what we are suggesting should be done in the programme which we are placing before the country.
I wish to say a few words about the "nitty-gritties" of the code. We constantly hear from the Conservative benches the cry that the code is concerned with assisting the lower-paid. My heart bleeds when I hear the Conservatives say how deeply concerned they are with helping the poor lower-paid workers—except that when those workers actually come forward to ask for an increase in pay they are told "There are no exceptions, so you will not receive any increases in pay, except within the terms of phase 2".
What is the TUC's view about the lower-paid in the economic policy document which is being discussed elsewhere? This is what the TUC says about them:
"In this context there is a need to scrutinise the Government's statement that its policy will favour lower paid workers. The fact is that the application of £1 plus 4 per cent. could mean less than £2 a week for a worker earning £20, but £5 a week for someone earning nearly £5.000 a year."
Again it is the lower-paid who are left behind.
It is all very well for the hon. Member for Wycombe (Mr. John Hall) to say that within the total context of an industry some workers can be lifted up a bit and others can come down a little. The Green Paper makes clear that it would be extremely difficult for trade union negotiators, even in the context of the Green Paper, to bring about any serious change in that direction. The
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TUC is right to point out what would happen and to show that once again the lower-paid worker will be left at the bottom of the heap and will not be assisted by this policy.
Labour Members are often accused of being tools of the trade union movement. It is said that the trade unions are the tail that wags the dog of the Labour Party. Let us get quite clear the relationship of the trade union movement to the British Labour Party. Anybody who knows the history of our movement appreciates that the trade union movement created the Labour Party. There would be no Labour Party unless the trade unions had come together with groups of Fabians and Socialists in other bodies to form the Labour Party. We are based on the trade unions but that does not make us an entirely trade union party.
When trade unions affiliate to the Labour Party, they have a right to say what they think the policy of the Labour Party should be. They pay their political levy and they have as much right as any other section of the party to determine Labour policy. Let us get that point clear. But there is something else which must be borne in mind. Because the trade unions said to the Labour Government "You are moving in a direction which is likely to split the party and you ought not to move in that direction", the party leadership finally decided to accept that argument. The Labour Party have learned the lesson of what happened to the Labour Government in terms of statutory wage control. It did not work, and we should not commit that error again.
We shall not repeat the difficulties which Labour went through on statutory wage control between 1966 and 1970—and if a party does not learn from its mistakes, it is not a serious political party. It is all very well for the Liberals to take this, that or the other view, but they will never be the Government—or at least not for a very long time, even though they may have one or two successes. Governments must learn from experience. Our experience was that such an argument did not solve the problem with which we were faced.
The programme outlined by my right hon. Friend the Member for Bristol, South-East clearly shows the way in which we shall solve this problem; namely, by

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an alternative economic programme and policy. That is where the future of our country lies. The future certainly does not lie in the provisions of the Green Paper, nor does it lie in the concept of the corporate State. If that line is pursued, there will be increasing repressive legislation and there will be more and more demands for greater and greater control of the trade unions.
I wish to conclude by pointing out that in the Soviet Union there are no free trade unions. They do not negotiate wages and conditions, but the factory unions are more concerned with welfare matters, what happens in the canteen, and whether they have one or two lavatories. In Spain, where there is a Fascist corporate State, they do not even have trade unions. This is why some people are now putting their money into Spain, because wages and conditions there are pretty low. But in this country we have a free trade union movement, and this Green Paper is a blow which is aimed at free collective bargaining. Even in a Socialist society, I believe that trade unions will need to be free and strong and will need to carry through collective bargaining even against their own State and their own Government. That is my creed and it is what I believe in, and this is 1N11) I hope that enough hon. Members will have sufficient common sense to reject this document.
6.0 p.m.
Mr. Tom King: I will not intrude upon the last part of the speech made by the hon. Member for Liverpool, Walton (Mr. Heifer), in which he defined the correct relationship between the trade union movement and the Labour Party. I formed the impression that, though he chose to address those remarks to the Conservative benches, they were meant for internal consumption.
I should like to take up one point made by the hon. Gentleman, because it was the only point on which he directed himself to the contents of the code. I share some of his misgivings about the element of £1 plus 4 per cent. There is clear evidence that it is not working out in the way that it was originally envisaged it might, as a means of helping the lower-paid. That is the only matter about which I can agree with the hon. Gentleman.
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Listening to the speeches of the right hon. Member for Bristol, South-East (Mr. Benn) and the hon. Member for Walton, I began to think that I had come to the wrong debate. From the hon. Member for Walton we had an interesting preview of the policy of the Labour Party for the next election. On the other hand the right hon. Member for Bristol, South-East failed singularly to make any constructive comment on the code, even though I intervened in the course of his speech to urge him to address himself to it. The right hon. Gentleman's only comment on price control was that it should be permanent. He made no comment on the form that the control should take and what variation it should have. He dealt with food price controls, the element of subsidy which the Labour Party would recommend and the cost that it would involve. But his sole contribution on price control was that it should be permanent.
At the end of the debate we shall be asked to vote on the Opposition's amendment dealing with price control; yet all we are told is that it should be permanent. We are offered no other information. The speech of the right hon. Member for Bristol, South-East was singularly lacking any sort of contribution of the kind that we might have expected, especially when the Leader of the Opposition constantly harangues my right hon. and hon. Friends on the need for a full debate on the code and on the need for opportunities to submit amendments to it.
Hon. Members on the Government benches recognise that there is not this opportunity. I regret it, but I appreciate the reasons why. Now that we have a debate, we are subjected to hectoring, haranguing speeches on general policy, but so far we have had no attempt to make constructive amendments to the code. We hope that the right hon. Member for East Ham, North (Mr. Prentice) will make a more constructive contribution later in the day.
Mr. Reg Prentice: The view of the Opposition is that it would have been more sensible to have debated the code in a way which allowed for amendments. As it is, in one day we have to approve or reject the code. Of course we are concentrating on general principles. and I shall do the same.
Mr. King: The right hon. Gentleman is wrong when he says that at the conclusion of this debate we shall accept or reject the code. That will be on another occasion. There is the possibility of two or three debates on the code, as my right hon. Friend the Prime Minister has made clear. At this stage we are merely taking note of the code. There is no need for a vote at the conclusion of this debate. I regret that there will not be further opportunities to discuss it in detail, perhaps in Committee. But I recognise the reason why. In the face of a shortage of time and the desire to make amendments, it is even more extraordinary that the Opposition offer no constructive criticism. I cannot comment further on that, but I hope the right hon. Member for East Ham, North will recognise the force of what I say. I hope that the remainder of the debate will invalidate it, because I for one always welcome constructive criticism, and I hope to deliver a few comments of my own.
I support one of the arguments of the hon. Member for Walton. I, too, have reservations about the use of the word "fair". It is not an absolute word. Sometimes it is pronounced as though absolute fairness had been achieved. I do not consider the policy to be fair. However, I consider that when the Government have accepted the various amendments that I am about to suggest it will be as fair as is practicable in the circumstances.
We get ouselves into some difficulty if we overstate the case of fairness. Obviously, there is a strong element of rough justice in this policy, facing the problems which exist. Our aim must be to achieve a policy which is as fair as is practicable in the circumstances. It does not help to overstress the total fairness of it because obviously that is a perfect situation which is impossible to achieve.
In the code now produced I hope that the trade unions will recognise that there is much less justification for their criticism about the lack of price control. Any trade union leader who moves in boardroom or city circles will find the opposite point of view being expressed. The right hon. Member for Stepney (Mr. Shore) has conceded already that on the prices side there are very stringent controls. Nor should we ignore the impact that they are having on the business community. A
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friend of mine who travelled up on a commuter train this morning told me that four out of six people in his carriage were reading the Green Paper. We may take that as an indication that the message is getting through. They are taking their responsibilities seriously. It is not insignificant that 12 pages of the Green Paper deal with price controls, compared with four pages dealing with wage control.
I have already covered the point on the pay side about the £1 plus 4 per cent. Once again we have slipped into the dreaded minimum situation where everyone expects £1 plus 4 per cent. I regret very much that a situation seems definitely to be emerging where this will not be used by anyone as an opportunity to help the lower-paid. This is a matter at which we must look carefully in phase 3.
We should not ignore the real benefits, even within what are considered to be strigent controls on pay, for helping the lower-paid. There is facility for reductions in hours, for example. For anyone on earnings of £20 a week for 42 hours, each hour's reduction represents another 31 per cent. on pay. If two hours come off the working week it represents another 7 per cent. People working longer than the average working week can be helped considerably.
I welcome what my right hon. and learned Friend the Minister for Trade and Consumer Affairs said about the real incentive to pensions. There are areas which union negotiators have neglected for far too long. I have been engaged in many negotiations with the unions and I have felt that they have not paid enough attention to this aspect. People are always worried about the cash effect of an offer. They never pay sufficient attention to fringe benefits. In terms of pensions, holidays and redundancies it is possible for this policy to be used in a positive way to improve the benefits of many of those engaged in industry.
On the other hand, I am not happy on the pay side that some people may be doing better than they should. I have serious reservations still about permitting all incremental payments. I find it slightly bizarre that civil servants, who benefit from them, seem to be most distressed about other aspects of the Government's policy. Because of a lack of organisation, there are many industries

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which do not enjoy this kind of facility but whose workers are every bit as much entitled to incremental payments as those who enjoy them at the moment. I have certain reservations also about the open acceptance of long-term agreements overriding national policy. The question of allowing long-standing agreements to go through automatically should be reexamined.
I hope, too, that the Government will look again at paragraphs 105 and 106. A traditional loophole in the policy concerns the mobility of employees and the number who transfer. From my own knowledge of industry it is clear to me that this has been exploited already by a large number of people. It is a major loophole, and the comments in the Green Paper are very superficial.
On prices, I welcome the encouragement to exports. Again, the policy has very positive aspects about it which can be used to great effect.
Mr. Heffer: Earlier in his remarks the hon. Gentleman referred to holidays. However, it is laid down clearly in page 17 that any holiday agreement can go up to three weeks. There can be no negotiation on any period beyond three weeks. So even on holidays the policy is strictly within limits. Anything beyond three weeks is not permissible, disregarding public holidays and so on.
Mr. King: It is three weeks plus the various public holidays plus the other days. My point is that in some industries four weeks is the practice and in others it is still only two weeks. Here is another area which will enable certain industries to come up to the level of the better industries. I appreciate that we cannot go over three weeks, but those at present on two weeks might, because of this position, get three weeks' holiday somewhat sooner.
I am concerned about the investment situation. This document is not consistent in its attitude to investment. It talks about "safeguarding investment" in paragraph 7(ii), but in other parts some very odd statements are made. For example, paragraph 37 states that where a company is making a loss it may increase its prices to cover its costs. That does not seem consistent with the policy of encouraging that company to move on to a position to invest, because some
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return over and above just covering costs will be necessary if investment is to be possible.
On productivity, the Americans were able to classify different industries and to look for different productivity returns. This 50 per cent. blanket is palpably unfair to the service industries. Against that, other industries might do better in some circumstances. If the Government impose tight controls on prices which do not allow full recovery of raw material costs, which is not being granted in certain cases, and do not allow full recovery of labour costs, some companies would see only one end to that road, and that would be an end that no one would wish to see. If that is coupled with the delay in approving price increases for unavoidable costs, the net combination of that package could be disastrous.
There must be flexibility and speed in acting on these matters. The Takeover Panel operates by telephone, and it is available for comment and advice. I hope that these bodies will be flexible and available to give quick answers. I hope that this policy will be employed in a positive and constructive way. It can be seen as a straitjacket. Obviously, it introduces a number of controls which are new to British industry. In the areas that I have mentioned there are many aspects which could have a positive and beneficial effect such as in productivity, in that that blunt instrument which I have criticised can still be an effective driving force towards productivity in promoting exports, in improving pension arrangements in companies, and in concentrating union attention on areas which in the past have not occupied as much attention as they deserve in redundancy terms and other fringe matters. These points could be of great benefit.
The policy could be used for the benefit of the lower-paid. I was in industry when the Labour Government's proposals were being implemented. I felt that they were too negative and missed the opportunity, even during the standstill, during the nil norm and the proposals that followed. That could have been a time for pushing on those people who were well behind the rest in the race. I hope that we have learned from that lesson. I hope that we will use this period to push on those who are behind. I believe that the policy can be used for the benefit of the lower-paid.

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It is tragic that so many people in that category are taking industrial action against this policy. I sincerely believe that if they destroy this policy and we go back to where we were they will be much worse off at the end. If the car workers, the power workers and the various other more powerful, better organised sections of the community roar away again, those groups who at the moment feel most upset by the policy will suffer most.
I hope that this policy will succeed. Mr. Victor Feather is reported today as saying that if a policy can be made to work it is a victory for the whole nation. I believe that it is a victory for the whole nation in which those who are at the moment behind can be helped the most. For that reason, I have advanced certain comments to my right hon. and learned Friend and I hope that the House will support the policy.
6.15 p.m.
Mr. Lewis Carter-Jones: Much emphasis has been placed on the concept of what is and what is not fair. The basic necessities of life include food, clothing and shelter. If we want a working policy we must have an element of fairness in the prices of food, clothing and accommodation.
If this document had been presented in the City it would have been fraudulent, because it is based on fraudulent premises. I will try to explain. The Government remind me of a man who, having murdered his mother and father, asks the court for mercy on the ground that he is an orphan.
The price increases about which we are talking have been caused by the Government. Food, shelter and clothing price increases have been deliberately induced by the Government. They have created the situation and now they are crying about it.
I represent a working-class constituency with a fair share of pensioners and disabled people. If my constituents were given a choice of what they would like to see done, bearing in mind the Conservative Government's "Fair Deal for Housing" and "Fair Deal at Work", they would ask the Government to control food prices.
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I am an unrepentant supporter of food subsidies. In a fair, civilised society the necessities of life should be made readily available. We should legislate for food, clothing and shelter, and always in favour of the lower-paid—the under-dog.
The Government have deliberately created an unfair situation. They are trying to produce a massive piece of machinery to control the unfair conditions that they have created. Many people say that it is a difficult and massive problem to maintain food subsidies. I suggest that that is the problem that the Government ought to tackle. They should be seeking to rule out injustices in this country.
Let us consider some simple examples. A pensioner or a housewife—not the managing director of a large company—will find that a substantial amount of his or her income is earmarked for food. The Tory philosophy about not interfering with food prices is so much hogwash. If the Government really intend to tackle the problem of inflation they should start where it hurts the lowly-paid most—in the food shops. There may be difficulties in producing effective food subsidies, but it is the job of the Government to tackle severe social problems. It is the Government's job to make sure that all the people have food all the time, and in sufficiently good quantities. In a civilised State with a highly developed sense of social conscience that is the Government's job. The trouble is that the Government do not have a social conscience.
Mr. Tom King indicated dissent.
Mr. Carter-Jones: The hon. Gentleman may disagree until he is blue in the face.
Mr. King: That may be the duty of the Government, but it is surely the duty of the Opposition, if they do not like what the Government propose, to suggest alternative ways in which the problem can be tackled. The hon. Gentleman says that he does not care how the Government provide subsidies, or what they cost. He may like to know that if the suggested subsidies had been paid since 1970 the sum involved would be £2,000 million, and that if pensions were increased immediately to the amount suggested in the Labour Party's document the total

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would be £2,000 million, making a total of £4,000 million. Perhaps the hon. Gentleman will tell the House where the money would come from.
Mr. Carter-Jones: There is no problem about this. All that the Government have to do is to make certain that the basic necessities of life are available at a reasonable price. That is what they ought to do. That is what they must do if they want to show that they mean business.
I invite the hon. Member for Bridgwater (Mr. Tom King) to come to my constituency—after which I shall go to his—and ask anyone on the street what he thinks the Government should do to help the situation. I feel sure that the answer he will get is "Tackle food prices", yet it is the Government who have allowed food prices to rip-roar forward. They have encouraged them to do so.
Mr. King rose—
Mr. Carter-Jones: I shall not give way again. I have made the point. The answer is perfectly simple. I believe in subsidising the cost of food so that it is available to the lower-paid at a reasonable price. If it costs money to do that, the Government must find the money. I can think of projects on which money could be saved. I have in mind Maplin airport—
Mr. Russell Kerr: Surtax payers.
Mr. Carter - Jones: — Concorde — [Interruption.]—and one or two other things.—[Interruption.]
Mr. Speaker: Order. The hon. Member who is in possession of the Floor is getting too much assistance with his speech.
Mr. Carter-Jones: For which I am duly grateful, Mr. Speaker.
The hon. Member for Cornwall, North (Mr. Pardoe) said that action could not be taken to deal with increases in food prices because of the rules of the EEC When we come to the other side of the coin, we are told that VAT is a flexible, just and fair tax. Perhaps I may give the House just one example of this "fair" tax.
It is probably true to say that many products have alternative uses and, there-
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fore, it is necessary to be careful when considering them in relation to purchase tax and VAT, but there is one product about which I have been campaigning in this House for months which has no alternative use. I am referring to incontinence pads for the worse-off and severely handicapped in our society. If somebody can suggest an alternative use for an incontinence pad I shall apologise and withdraw my opposition to the imposition of this tax. VAT is to be imposed on equipment made specifically for the disabled and severely handicapped, and attempts by hon. Members on both sides of the House to get the tax removed have failed because the Government are afraid of a flood-tide of applications for exemption which would include children's clothing.
If the Government wish to provide justice for all, and especially for the lower-paid, they should provide protection for the necessities of life. I urge the Government to reconsider their policy on food prices and subsidise them. If they want to impose VAT, they should exempt the necessities of life and also children's clothing. I suggest, too, that in order to provide dignified housing they should dispense with the Housing Finance Act, which is causing grave, severe and increasing hardship.
I end in the way that I began, by saying that the Government are like a man who, having murdered his mother and father, asks for leniency on the ground that he is an orphan. The Government have created this inflation. They should now be honourable and do another about turn. They should dispense with this fraudulent document and tackle the real cases of inflation at the root, at the level at which the lowly paid have to pay the most for the basic necessities of life.
6.26 p.m.
Mr. John Stokes: I hope that the han. Member for Eccles (Mr. Carter-Jones) will forgive me if I do not follow him in what he said about food subsidies, because I believe that they would, in the end, lead to rationing and further wartime controls.
I greatly enjoyed the first part of the speech of the right hon. Member for Bristol, South-East (Mr. Benn). I particularly appreciated what I thought was

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his accurate diagnosis of the present agony of the Conservative Party because of the situation in which it finds itself, and which no doubt must be partly the reason for the rather thin attendance on this side of the House, though why there should be a thin attendance on the other side I do not know.
I also, to some extent, enjoyed the remarks of the hon. Member for Liverpool, Walton (Mr. Heffer) about the corporate State, which I fear had some truth in them, but I do not believe that we can make the best use of the few hours that we have in which to debate the code by trying to make party points.
I should like, first, to try to look at the code, which, after all, is a Green Paper and is called a consultative document. As hon. Members will realise, there is much in this document which I do not like. I find the rigid and detailed controls proposed on what is a living and dynamic economy impossible to carry out except in the short term. Nevertheless, I accept the necessity for a document of this kind with these what I can only call Draconian rules as a temporary measure in the present emergency, and I hope that the Labour Party will not only justify its own alternative policy but will try to improve and amend the code.
If one looks at this document in the context of what is happening in the outside world, one finds that there are some who apparently do not believe in consultation at all but who hope by force and by injuring the nation to make the Government give way and change their policies. They seek to make the Government change their policies not as a result of this or similar debates, but as a result of naked force in other places. It will be interesting to see in tomorrow's national Press how much space is given to our debate in this Chamber compared with that given to the special meeting of the TUC.
The Opposition amendment refers to
"socialist policies democratically controlled by Parliament".
But many people will feel that the nub of the problem is: will they be so controlled? Surely there are some in the trade union movement now, and some who support these strikes, who hope that
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the trade union movement, in alliance with the Labour Party, can get its way, either with, or if necessary without, the role of Parliament. That shows how far we have travelled in our view of the rule of law since 1926.
As the present strikes and disruption continue and more and more of the nation's daily life is affected, there will be a growing demand from ordinary people not just for a strict Green Paper but for some further action by the Government. The Government must govern. If industry and services are to break down to such an extent that the life of the people is threatened, ordinary people will expect something more from the Government than a highly-detailed Green Paper.
I will not elaborate on that now, but there are clearly many actions which the Government should consider and should be prepared to take if, for instance, the gas strike, which is affecting hundreds of thousands of people in the West Midlands, should be allowed to continue. What is lacking is not the details of the Green Paper but leadership from the Government, the mobilisation of public opinion behind the Government. I do not believe that we would then see this country go down in such an absurd muddle as now we see.
There is one point of detail in the Green Paper that I should like to take up, having spent most of my life in personnel work in industry. That is paragraph 105, dealing with new recruits to existing jobs and saying that they should not be paid more than those they replace or more than the rate currently paid by that employer to someone doing the same job. If the Government believe that that paragraph can be implemented, they will believe anything. I will give them one example which came to my notice last week. A waitress on £18 a week asked for a rise. She was told that it was impossible and she resigned. Immediately, a replacement was engaged at £4·50 extra. That, I am afraid, is bound to continue to happen.
Yet the paradox is that never have people as a whole, with certain exceptions that we all know about, been as well off as they are now. Never, certainly, have the moans been so loud. At a time when living costs have risen by an average of 8 per cent., wages have risen by twice as

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much. So I hope that we shall not have too much sob stuff on that score from the Labour Party.
Everyone—this is a human failing—wants to be better off without doing any more work. The hon. Member for Eccles expects the Government to find the money to support us all. Where is that money to come from? From all of us as taxpayers. Life is not like that. The sooner the Government tell us that we all have to work, and probably work a bit harder, the better—while at the same time, of course, reducing their own expenditure.
I should like to examine the code from the point of view of a longer term than the few months for which I hope it will be in force. I do not believe that any Government in a democracy can control the whole of our economic life for more than a very short period—say three to six months. The shock of this control has to be severe but it has to be sharp. Then, I hope that freedom, competition and market forces will be allowed to come back into play.
I can imagine nothing more disastrous at the start of our Common Market membership than for us in Great Britain to put our economy into such a straitjacket and to penalise those firms and individuals who are the thrusters and the risk takers upon which the capitalist system in the end depends. The climate of State control, which in effect means control by civil servants, who for all their many and great virtues are not, and never pretend to be, businessmen, would he disastrous for a great manufacturing and trading nation. To extend the tempo and mores of the unfortunate nationalised industries to the whole of the private sector would be an act of incredible folly.
I wish that the Government and other hon. Members would stop talking about fairness. I fear that what they really mean is not fairness but equality, which is quite a different matter. Justice in life is, and unfortunately only can be, a kind of rough justice, and any attempt at equality is bound to end in a totalitarian State. We all know that controls lead to fiddles, evasions, black marketeering and spivs. We have seen all this before. I find it hard to believe, and intensely sad, that a Tory Government will give the coup de grâce to capitalism—which is what the Green Paper does.
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The question to which the Government and we their supporters should address ourselves is how soon we can tread back the road to freedom. Certainly it cannot be before we get collective bargaining right. At the moment, the scales in free collective bargaining, which I believe in, are grossly unfairly tipped on the side of the unions, for two reasons—first, because of the abuses of picketing and the picketing of suppliers and customers, and, second, because of what I can only call handouts by the State, which no other country does. It was on these two rocks, I believe, that free collective bargaining foundered. I would prefer to see the whole of the Industrial Relations Act scrapped if we could tackle now, and tackle vigorously, the abuses of picketing and the absurdities of social security benefits to strikers.
To sum up, the Price and Pay Code to me is a sort of blood-letting—necessary for a short time but fatal if the process is allowed to last too long. If it is the latter, it can result only in the death of the patient.
6.38 p.m.
Mr. Neil Kinnock: If one does not mean to pay a great deal of attention to what the previous speaker has just said, it is customary to say that one will not follow the hon. Member too much. In fact, I would find it impossible to follow the hon. Member for Oldbury and Halesowen (Mr. Stokes) because in the greater part of his speech he gave voice to theories from another world and another time than those in which I live. We are at such divergence in our beliefs about the way in which Britain is now run and about the problems of Britain that I could not possibly find anything to say about his speech.
That is, except for one thing. At the beginning of his speech, the hon. Member encouraged me by saying that he shared the fears of my right hon. Friend the Member for Bristol, South-East (Mr. Benn) about the corporate State. But he then said that the sooner the Government made us sit up and work the better. He also demanded that we should get greater controls, further action against disruption and strikes. The motto of the Italian Fascist Party was "Work, believe, obey". They were beliefs held both before and during the war in Italy and

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Germany. If the hon. Gentleman is allying himself with those of us who are striving against the corporate State, I have little comfort or strength from his alliance.
Mr. Stokes: I point out to the hon. Gentleman that I fought against the Nazi and Fascist systems in the last war and was wounded in so doing. I have no truck with the corporate State. I also point out that I represent an industrial city with a large component of working class.
Mr. Kinnock: I appreciate that. I owe my own freedom in some measure to the hon. Gentleman. My only contribution to the war effort was in giving up bananas for the first three years of my life. But the fact remains that, without trying to be Fascist, we are seeing through this procedure the development of a State that relies on bureaucratic machines and devolves responsibility to them, that exalts and lifts the idea of national interest above all other interests. These seem to me to be the elements of a State which asserts itself as a body to be considered above all individual or sectional interests. That is something I fear, and. indeed, I see the elements of it, as hon. Members on both sides do, in this code and the manner in which it has been put forward.
Since the war, Governments in the western world have grappled with the problem of trying to control inflation while maintaining the elements of democracy in their societies. Very few have had marked or measurable successes in this respect, and it has always been the widely held view that only by increasing control over economies that an eventual solution will be found to the kind of inflation we have today.
I think the Government have attempted to solve the dilemma of matching democracy with the battle against inflation simply, and possibly temporarily, though I shall point out the dangers later, by ditching democracy in pursuit of their counter-inflationary policy. We have not got a corporate State in this country with jackboots or black shirts, but we are getting one in its stockinged feet.
The Prime Minister talks about consultation and the Minister talks protectively about a balanced series of pro-
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posals in the Pay and Price Code, but their words wrap up a rigorous attempt once again to subordinate collective bargaining while providing a facade of control over the other elements in the economy. The object is to win a respite from the continual inflation so that the Government can simultaneously give the appearance of grappling seriously with all the factors which institute and encourage inflation while actually dealing, or attempting to deal, with only one sector —labour costs.
At the moment we talk a great deal about fairness—at least we on this side and the Government do. The Government have advocated the Counter-Inflation Bill on the ground of being fair. They qualify the code by talking of it as being fair. But last week I listened to hon. Members opposite on the subject. Perhaps they are more honest or more cynical than the Government. They said that it would be impossible to introduce completely fair policies, and they acknowledged that the counter-inflation policy was not fair. I see the hon. Member for Enfield, West (Mr. Parkinson) smiling as I recount his words, amongst others. But if hon. Members opposite are being honest, the Government are being dishonest by pretending that it is possible to be fair in the application of this policy. At least we can give credit to back benchers opposite for their directness, honesty and insistence that the Government should get on with the job and cease their nonsensical talk about trying to be fair to everyone when they are being partisan and sectarian in pursuit of those policies.
The principle of the code and the policy is supposed to be equality of sacrifice between the earners in society and the owners of wealth. The difference in the code is that the provisions so far as they extend to prices, fees, dividends and profits are a loosely cast, very thick-meshed net, while in so far as they extend to wages and lower salaries they are a tightly drawn and thickly-woven blanket. There is a fundamental difference between the way wage and lower salary earners and other sectors of income-getters are treated by the code.
The better favoured sectors of our labour force, known by the general title of "Executive personnel", do not do too badly out of the code. I suppose that this

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is the reward for the great efficiency and great enterprise they have shown in getting Britain into the mess it is in now. According to the code, they can be regraded for greater effort and for greater responsibility; their golden handshakes are safe; their expense accounts are safe; their incremental scales are safe; their noncontributory pension schemes are not affected. This contrasts strongly with the treatment of wage earners and lower salary earners in general.
When we get to the system for controlling prices and for controlling wages, the Government have a volunteer police force to control wages. No wonder there are about 20 fewer paragraphs covering wages than there are covering these other things, for the simple reason that an employer has an automatic alibi in turning down or suspending wage negotiations. During the prices and incomes policy of the Labour Government, a personnel manager could say, sympathetically, "I would love to be able to pay you but this damned Government will not let me." Now we go through the whole process again, and employers have a ready-made alibi in the £1 plus 4 per cent. norm.
The code is complex to the point of chaos. What is the commission to do? It has functions such as calculating, or rather insisting on, price reductions where companies have charged too much; abating allowable costs when companies charge too much; analysing unit costs for the purpose of establishing what profit a company should make; relating profits to past trading records, disallowing cost increases; and, under paragraph 35, checking on the quality of goods to see whether quality has been cut while prices have remained the same.
This would be formidable task for 54,000 civil servants each armed with a computer, a blind eye and a new pin. But the Government are talking in terms of hundreds of people at the most to operate this vastly complex system. One can only conclude that these people will be hugely overworked or that the Government do not intend this sector of the policy to work, for otherwise they would be providing a much larger manpower force to deal with it or would have simplified the provisions to make it possible for them to be adequately policed and fairly dealt with.
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So the contrast between the simplicity of the pay restrictions and the complexity of the price restrictions is the first basis for suspicion, even if we neglect to take account of the other aspects of the Government's policy which have caused such distrust and distress in our society.
Then we have this gimmick of allowable costs. I recognise that there are companies which will take the functions charged to them very seriously in calculating rises in prices by relating them to allowable costs, but then we have to take account of the costs which are to be allowed for. First, there are those arising from international agreements. That is an open sesame to prices to start with. Next, materials, components and fuel costs; in the sheer complexity of trying to operate the policy it is inevitable that frequently and in large amounts company after company, especially those in category 3 and less specially those in category 2, will be able to get away with translating costs of this kind directly into prices without there being the faintest chance of their being nipped by the Price Commission or anyone else.
Then we come to import costs. No one need abuse the special allowance made by the Price and Pay Code in this respect, but it is a fact that import costs will go up—even if the exchange rate remains more or less as it is now—by about 9 per cent. over the next 12 months. As a source of inflation, obviously this presents very considerable dangers both to the country and to the efficacy of the Government's policy even if it were to be successful in all other respects.
Investment is safeguarded—and I do not blame the Government for safeguarding it—but it is safeguarded to the point of shoring up the lamest of lame ducks. If a company makes a loss under the code it can put up its prices enough to cover that loss. If its difficult trading position can be ascribed to difficulty in attracting investment it can put up prices enough to secure investment. Those are facts, and contrast very strangely with the rights and privileges of special cases, and the allowances made in respect of people who want extra wages. In paragraph 46 there is even a minimum earnings guarantee for those companies which can calculate how much they need to charge in order to provide a 5 per cent. return on capital before they become subject to the provisions of

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the code. There is loophole after loophole, and I am drawing attention only to what I believe to be the main loopholes here. There is no fairness of treatment or fairness of opportunity here—
Mr. David Mitchell: Will the hon. Gentleman comment very briefly on the 5 per cent. pre-tax profit and, therefore, the 2½ per cent. post-tax profit, and set it against the present 12 per cent. cost of borrowing money?
Mr. Kinnock: The hon. Gentleman makes the obvious point that this is not a generous giveaway. In return, one must make the obvious point that there is this pretension to equality of treatment, but when the exception is made in this respect and built into the code there can be no pretension to equality of treatment. I repeat what I and other hon. Members have already said, that unless such a policy is observedly fair, and unless the Government have gone to considerable, almost tortuous lengths to ensure equality of treatment to all sectors involved, they prejudice their own chances of making the policy work even before they start. In answer to the qualification the hon. Gentleman places upon paragraph 46 and its effects, I suggest that there still will not be enough to satisfy people to look on the Price and Pay Code as a charter for equality of sacrifice or as a charter for equality of contribution to the national need as expressed through the Government's policy.
The dividend position is unsatisfactory. We can only take what we read here, from which it appears that companies are permitted to raise dividends to defend themselves against takeovers. One can see the logic of that, but defence against takeover bids suggests all kinds of opportunities to create a false situation in order to permit a rise in dividends. Companies can raise dividends to recover from an adverse trading position, and a new company or a company that has a pre-standstill dividend commitment can also raise dividends. Hon. Members opposite may see that as fair trading, as an obligation that must be honourably maintained or as a sensible stratagem for a company, but that is not how it will be seen by the vast majority of people who become affected by the code.
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The greatest anomaly is the division of companies into three categories. The Government spokesmen have told us repeatedly during the passage of the Counter-Inflation Bill, and today so far as they have been heard, that there will be a tight and stringent control over the really big companies—the 150 to 190 companies which will become subject by name to category I. They are the price leaders and have the most influence, but I insist that those people who are reacting to an inflationary prices situation by spending their lower wages and salaries do not care whether those prices are being charged by the big companies which are the price leaders or by the smaller companies which are the price laggers. Until we have a policy which actively scrutinises and actively discriminates against all sources of inflation as they are translated into retail and wholesale prices, we shall all be looking in vain for a useful response from the trade unions. I would certainly defend the trade union attitude in this respect.
What will be the general impression that wage earners will have? Their food prices are not controlled by this so-called Price and Pay Code. Their rents are not controlled. The house prices they have to pay will not be controlled There is no minimum earnings guarantee for them, as there is in the case of some companies. There is no security for them, as there is for executive personnel, in respect of redundancy payments and pension arrangements because they ate to be as strictly controlled as they are now. There is no provision, apart from the £1 plus 4 per cent., for additional earnings, other than overtime, but Conservative Members have said that this is a great opportunity for lower-paid workers. To save time I refer those hon. Members to an article written by Victor Keegan in The Guardian on 26th February on this very point. It spells out the unfairness of the policy to low-paid workers.
The fact is that by instituting this policy the Government are attempting to change trade union negotiators into a set of crumb shedders: "Here is the £1 plus 4 per cent.—sort it out amongst yourselves". That is not possible, because everyone's view of his own income is highly subjective. There is no good logic for trying to move small amounts of

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money between one sector of a work force and another. That is only doing the job that management should do. It is subsidising inefficient management, and permitting the Government to get away with a ridiculous trick of telling workers that they can all be better off by providing them with a £1 plus 4 per cent. pool to share between themselves. That idea will be rejected in that context, not simply because it would not in individual cases amount to a large enough wage rise, although it will be rejected on that ground as well, but because it tries to institute a procedure of conflict between groups of workers inside industry. They will not be fooled.
Nothing illustrates more clearly the organic difference between earners and owners of money, for those who rely on property and capital for income, even though they are temporarily affected, will find that the latest hoarding of their assets will just bring in high returns in future, but the earnings forgone by the wage earner is money that is gone for ever. Now we have a situation where that ultimate difference between labour and capital is exacerbated by the intervention of the State in introducing sectarian legislation which subordinates free collective bargaining, and which simultaneously sets up bureaucratic State agencies responsible to no electorate or constituency, and devolves on them authority and responsibility and, ultimately, blame that they themselves are trying to dodge by a political trick.
Nothing in the code can commend itself —and that is really saying something, because all of us equally face the difficulties of inflation. The Government come forward, allegedly seriously, with a policy which is allegedly fair, yet there are such gaping inequalities and iniquities in it, in the atmosphere of industrial unrest which we now have, that unless they can do something to satisfy the criteria of fairness which have been presented by the bodies outside, there is no chance of their policy succeeding or even surviving.
There are hon. Members opposite who quarrel with the Government's diagnosis of inflation and the cure which they are offering. There are people in marginal Conservative constituencies who are worried about the Government's policy turn round. But the major sufferers will be the working people of Britain.
7.1 p.m.
Mr. Adam Butler: The hon. Member for Bedwellty (Mr. Kinnock), did the House the courtesy of directing most of his comments to the consultative document, and I shall do the same, so that what I say will have some relevance also to what he said. In the latter part of his speech, the hon. Gentleman tried continually—it was a basic point in his argument—to belittle the effectiveness of the price control, comparing it with what he would have us believe is the minimal increase in people's earnings which will be allowed. That is a false representation of the picture.
There will be an almost guaranteed 7 per cent. or 8 per cent. increase on average earnings during the coming 12 months, and we have the most stringent price controls possible outside the fresh food sector. I put it to the hon. Gentleman that he would do the country a service if he let it be generally known that at the end of this year there will still be an increase in the living standards of the people.
I shall direct most of my observations to details of the code itself. I welcome this opportunity to put certain matters before my right hon. Friend, and I am sure that they will be noted. I give a general, if qualified welcome to the code itself, which, if it be necessary to embark on this enterprise at this time, provides both the guidance and the discipline essential to its success. I believe that the enterprise is necessary and, therefore, I recognise that both the pay code and the price code are essential.
One matter which should be of the greatest concern to hon. Members on both sides of the House is the way in which price control affects the profitability of industry. There have been several references to the requirement that half of wage increases shall not be passed on and must be recovered in productivity. This is rough justice as between manufacturing industry and service industries, and, I suspect, within manufacturing industry as a whole. In view of what has been said about that by several of my hon. Friends, I hope that it will be noted.
The Government are forcing industry to bring about a certain minimum productivity, calculated at 3 per cent. or 4 per cent.—and "forcing" is the key word, because beyond that point there is no incentive to cut costs one penny further.

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It is no good telling the CBI or other representatives of industry that they should try to achieve this in the national interest, since for 15 months they have restrained their profit margins and prices with no response from the other side of industry. One cannot blame them now if they do not go one centimetre beyond the legal requirements of the code.
The margin of profit requirement and the need to match cost cuts with price cuts will remove incentives to business efficiency, and this could be the first step towards the sort of uninspired management, or, indeed, mismanagement, which is all too frequently associated with the public sector, and which is entailed, apparently, in one part of the alternative policy put forward by the Opposition, namely, greatly to enlarge the nationalised or public sector.
There are two consolations. Phase 2 is essentially short term. In our debates we tend to forget that phase 2 comes to an end this autumn. It is essentially short term, and one can understand the Government's attempt to use certain weapons to overcome inflation—weapons which are not only anathema to the Government but are potentially destructive of the spirit, drive and incentive of the private sector.
The other possible consolation is that there is some attraction in a policy which forces companies to consider the possibility of price reduction. Inflation feeds on itself in a number of different ways, not least in the belief which it engenders that prices must go up regardless. I declare an interest here, in that I am still employed by the Courtaulds group. The Courtaulds record—one can see it in the accounts—is that prices overall in the year ending March 1971 did not go up, but £60 million worth of extra costs were absorbed. Something similar may be possible in the rest of industry.
To take a little further the thought about attitudes to price rises or reductions, I can tell the House that the principal industry in my constituency is hosiery. Prices in that industry have decreased progressively and regularly over the years, and there has undoubtedly been an attitude of mind among the salesmen involved that they must go out with yet another lower price. I use that just as an example. In business generally
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today, however, be it the motor car trade or anything else—save for a few exceptions, such as hosiery—the attitude is that prices must rise.
For the short time that it is in effect the Government's measure may help to change that attitude. Savings can be made. The sharp shock of this legislation may work, provided that we can go on with the continued curb which is provided by competition. In this connection, I welcome what is said in paragraph 7 of the code that the general principles on prices are meant to
"reinforce the effects of competition",
but I should like my right hon. Friend to amplify that statement a little because I do not find it quite as strongly emphasised in the document as I should like.
Those two consolations, however, do not outweigh the risks of stultification of business to which I have referred. Nor do they outweigh the potential restriction on investment which industry so badly needs and which has been mentioned frequently. If prices are to be curbed, and if they are lowered every time there is a cost reduction to justify it, where will the money come from for investment? Paragraph 49 spells out the Government's attitude. I should have liked to see it spelled out in slightly stronger language I should welcome an assurance from my right hon. Friend that the commission will not stand in the way of industry. Will the commission be empowered to decide what is and what is not essential investment? I hope that that power will not be added to those which it has already.
Hon. Members on both sides of the House have questioned whether companies can monitor their profits in the way that the White Paper and the consultative document envisage. Of course, efficient companies are producing monthly and quarterly accounts. These provide a good and necessary indication of the likely out-turn. However, there are real imponderables such as the effects of seasonal trading. International factors can completely upset a company's performance during the year. There is the treatment of provisions for stock and other items. Any good accountant will be able to minimise or reduce profits below their true level on a perfectly

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legitimate and fair basis, so as not to be involved in any uncommercial price changes during the period.
We should also consider the companies whose main expectations are tied up in long-term projects, where success or failure is dependent on a volume of sales which may mature in the second or third year after the project has started. It is nonsensical to suggest that a technical advance or discovery which appears to show cost savings during the first year or during the development period should be passed on immediately by a reduction in the list price. That does not make commercial sense.
I shall pick on one or two other points in the code. First, how will depreciation be treated? I see that it should be taken into account in assessing net profit margins, but it seems to be excluded as an allowable cost. To do that, if I am right in my supposition, is to deny investment and to put a premium against it.
I welcome the accent on cost or price reductions which must occur from the abolition of SET. During the last six months I have received clear evidence that retailers will avoid that obligation. I hope that it will be clearly policed, in terms of the undertakings already given. In an intervention reference was made to the return on capital of 5 per cent. My right hon. Friend suggested that it was a ludicrous figure in terms of the cost of money today. I emphasise that point myself. It is a minimal return and is not adequate for the purpose of further investment. I agree that the definition of net assets employed to exclude borrowings is the right way to treat that subject.
Within industry as a whole we must move further and faster towards profit-sharing arrangements. That is the only way in which profits will be understood by those who work in industry. It is the only way in which profits will lose their wrongly attributed bad name. I hope that my right hon. Friend will confirm that established profit-sharing agreements can continue, and will look again at paragraph 111, which, if I interpretate it correctly, says that new profit-sharing arrangements cannot be drawn up during phase 2.
I welcome the code as part of the Government's statutory policy. It is a brave attempt by the Government to
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defend the interests of the less well off. I am not immediately thinking of the £1 plus 4 per cent. If a flat cash payment is what is needed, as opposed to the compromise between cash and a percentage, why was the cash payment not accepted by the TUC in its negotiations with the Government at a rate of £2·40? That was the opportunity, and that opportunity was denied. It is not in that respect that I defend the policy in its effect on the less well off.
Mr. Kinnock: The TUC turned down the Government's offer last autumn because it was not enough and because the Government made no concession on the other major requests that the TUC made.
Mr. Butler: That will sidetrack me for a short time. Labour hon. Members have been making great play about the corporate State, about democracy and, in particular, parliamentary democracy. The Trades Union Congress, in the tripartite discussions, was trying to put pressure on the elected Government of the day and trying to alter political decisions which they had made or were reserving to themselves. That is why the Government refused to yield on the points to which the hon. Member for Bedwelty referred.
This policy will help those who have fallen behind due to the exploitation by certain groups of their special position at the economy's pressure or strangulation points. Some groups have improved their position at the expense of others through the use of power. It is no good now for those who are less well off to try to use the same tactics. They must recognise that they have fallen behind because of the use of those tactics. The Government's policy prevents those tactics being successful in future. The only way in which that can be done in the short term is through a statutory policy. However distasteful that is to Conservative hon. Members, we support it for that reason. However, we must look further ahead. Phase 3 will provide the opportunity for the Pay Board to consider the special cases. It will be successful only if it brings about some rearrangement in the pecking order of wages.
We must move on to phase 4 if we are to return to economic sanity. The hon. Member for Bedwelty derided my hon. Friend the Member for Oldbury and

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Halesowen (Mr. Stokes), but my hon. Friend spoke some good sense. He rightly said that if we are to move forward to a voluntary system, as we must, the balances within industry at the point of consultation and negotiation must be more evenly weighted than they are now. When that is so we can return to a system of free negotiation of voluntary bargaining. That is what I and all Conservative Members would like to see brought about.
7.20 p.m.
Mr. John Mackie: The hon. Member for Bosworth (Mr. Adam Butler) dealt very ably with the difficulties that companies will face with investments, depreciation, profits and so on. I hope that the Government have taken note of what he said, for, as was pinpointed in our debates on the Counter-Inflation Bill, many difficulties will face companies when they implement the policy laid down in the Bill and in the code.
Several hon. Members have used the opportunity of the debate to discuss not the code but the Counter-Inflation Bill itself. I should like to remain in order as much as possible and deal especially with paragraphs 12, 13 and 14., which exclude food prices from almost any control, with the exception of some manufactured foods.
The one control that would be welcomed not only by the poorer sections of the community, which would especially welcome it, but by every section would be the control of food prices. There is not one hon. Member whose wife has not complained as bitterly as any wife about food prices, and Members of Parliament are not hard up. Month after month the Opposition, with the support of some hon. Members opposite, have raged as the Minister of Agriculture has admitted fantastic but steady rises in food prices-25 per cent. on the last occasion, and it is almost certain to be nearer 30 per cent. the next time. I cannot understand why the Government have not taken heed of all this warning, but, in fact, what they have done is to include three paragraphs in the code to exclude food prices. Yet when the debate began the Minister said that the Government would be as strict as they could be about food prices.
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For the past two and a half years we have had nothing but derision from Ministers of Agriculture whenever the Opposition have made any suggestion about controlling food prices. They laughed at our early warning system, although, as I happen to know, it did a mighty lot to keep food prices as low as possible while we were in office. I should like to see some humility from Food Ministers now that they have to do something about food prices, and do it in such a fantastic way after they laughed at us for our efforts when we were in office.
My hon. Friend the Member for Eccles (Mr. Carter-Jones) was rightly emotional about food prices and their control. He asked why food prices could not be subsidised, and I should like to deal with that subject. Now that food prices have reached their present high level, I do not believe that they can be reduced, but they can be steadied, and some effort should be made to keep them steady.
In Committee I put the argument to the Chief Secretary. In reply he said that my arguments advocating food subsidies had been dealt with at some length by three of his hon. Friends and he would, therefore, leave the matter there. I should like to consider the arguments of those three hon. Members.
The first was the Chief Secretary's hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who said that if food prices were reduced below Common Market prices it would create a demand by other countries for our food and thus reduce our supplies. We do not export home-produced food, and in any event the hon. Member was talking about reduced food prices, whereas I was talking about keeping prices steady, and so his whole argument went by the board.
The second of the three hon. Members was the hon. Lady the Member for Melton (Miss Pike), the only lady in the Committee. Her argument was so muddled that I will not bore the House by dealing with it.
The third was the hon. Member for Chertsey (Mr. Grylls). He was misreported by the OFFICIAL REPORT. He said that each 1 per cent. subsidy on food would cost £70 million, not £7 million as the OFFICIAL REPORT stated. If we are to believe the Government—and many of

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my hon. Friends would say that we cannot believe them because they are wrong so often—on the argument of the present Minister of Agriculture that food prices should not increase by more than 2 to 2½ per cent. per year, the maximum cost of steady food prices by food subsidies would be between £140 million and £200 million. In order to make the argument, several hon. Members suggested figures of about £1,000 million, but on the Government's own reckoning the figure would be between £140 million and £200 million, and those are not impossible figures when it comes to steadying food prices.
How should it be done? The principal feature would be to concentrate on the main foods, the meats, the cereals, the milk products and probably sugar, although judging by reports in dental journals, perhaps we ought to make sugar dearer because of its effects on teeth, particularly the teeth of children.
The first thing to do would be to freeze retail prices. I see that a Member from Northern Ireland, the hon. Member for Londonderry (Mr. Chichester-Clark), is present; I would make a deal with the Irish about their cattle supplies to us. I would stop all exports of beef on the hoof or on the hook, and my deal with Ireland would be that the Irish would not take a short-term advantage of the situation and would keep their meat exports to us steady. This would be essential, but it would all be for only the short term.
Any Minister of Agriculture knows the world prices of foods, and the import price of food controls the home price. I would immediately tell importers that any price rises occurring the day after retail prices were controlled would be met by subsidies. The system could be easily checked, for there are only about a dozen firms which may be regarded as the principal importers of the main foods.
I see the hon. Member for Norfolk, South-West (Mr. Hawkins) suggesting that he disagrees. As he is a Whip, I do not know whether he will be allowed to state his views. I am not saying that such a system would be easy, and nobody suggests that it would, but it is the Government's job to find ways to do these things, and if they can be persuaded that action is necessary, and they should be persuaded from what I have said and
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from their experience of the past two and a half years, they should find ways to overcome the difficulties.
I do not wish to labour the point or to go into too many details, but the system is perfectly possible if the Government have the will. This is the one move that would make a tremendous difference to everybody, for the one price rise about which we all hear complaints in our constituencies is a rise in food prices. I am not suggesting that it can be reduced but it can he steadied. It is the one thing that would help to keep down the increasing demands for more wages. We know that there will be a lot of rough justice as a result of the Counter-Inflation Bill and that it will possibly prove difficult with some of the luxury and manufactured foods. If we take the main foods that I have mentioned this could be done.
I know that a lot of hon. Members raise the bogy of rationing and the black market. Basically there is no scarcity of food in the developed world; it is only a question of seeing that the price does not rise. There should be no question of rationing at the retail end. There may be some unfairness here and there.
I cannot be satisfied with the reply I received in Committee from the Chief Secretary, which is why I have raised this matter tonight.
7.32 p.m.
Mr. David Mitchell: Listening to the debate I began to wonder whether we are not all deceiving ourselves and trying to pretend that we can opt out when world prices rise against us. There are two things I want to deal with in the code affecting legal control over pay, prices and profits. The first thing to be said about the code is that it should be practical and should not turn large numbers of people into petty law dodgers —that is, it must work. Secondly, it must not undermine national prosperity in the longer term.
I turn now to wage control. I have two practical questions to put to the Minister. I represent the town of Basingstoke, which is an expanded town taking London overspill. It is not unique in this. About 30 towns spread around the southern half of England are doing the same thing. What happens is that a firm moves from London to an expanded town,

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bringing about half of its labour force with it and paying London rates. It then proceeds to recruit locally the balance of the labour force it needs. What will happen in future? Such a firm will poach labour from an existing employer, who will be forbidden by the code to give rises to employees to retain them. When that new firm has recruited its labour force other firms in the area will be desperately short. They will have to pay the higher rate of pay, needed to obtain new staff, only to that new staff. What happens to existing staff? I am sure that in such a situation the existing staff will simply melt away; but the employer needs to keep the organisation intact.
Secondly, there is the question of civil servants and others whose pensions are related to their last working salary. It would be iniquitous if these people could not have an assurance that the whole of their standard of living in retirement would not be depressed because of phase 2 and a temporary freeze on what would have been a natural increase in their salary. I know that all hon. Members feel strongly about this, and I believe that the House is entitled to a copper-bottomed assurance that something will be done to protect such people.
I note that phase 2 should come to an end in November. It is important to bear in mind that semi-official bodies generally work on precedents when starting on the next phase of anything. I hope they take into account comments of the House on what is built into the previous phase.
There is a central fallacy in the Government's acceptance of the idea that we can equate profit control with wage control. Profit is the spur by which employers are urged on to greater effort. The real equivalent on the wages side is not wage control but control of piecework rates. If we were to tell people on piecework that they could not earn more than so many pounds a week, when they reached that sum they would simply stop working. In effect, that is the sort of brake which the Government are putting on the employers' incentive. There is a direct correlation here, but not the one which the Government have chosen. The trouble with this Green Paper is that we are removing the motive—the power—behind the private enterprise system. The
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code says that profits must be stuck at the best two of the last five years. This assumes an ability by industry to absorb cost increases on a considerable scale.
Is the rate of profit at which industry is to be stuck sufficient? There is a real danger that we will have a cycle of depression. It is fascinating to watch this. First, there is control of prices, then inadequate profits, leading to low investment, stagnation and unemployment. Then the Government intervene with subventions—usually the wrong sort in the wrong place at the wrong time—and then we hear claims that the free enterprise system is not working. Having stoked up the pressure in the boiler the Government sit on the lid and apply a policy of price and profit control. Then we are back on the same cycle of inadequate profit leading to low investment, leading to stagnation.
We should be asking whether, in passing this code in its present form, we are not laying the foundations for an exact repetition of the conditions which we have gone through in the last three or four years.
Is the frozen profit limit sufficient? If we look at the company sector of the Blue Book of National Incomes we find that in 1955—taking net trading profits before tax and payment of interest on debentures and loans as a proportion of net capital stock at current replacement cost—the figure was 17·2 per cent. In 1960 it had fallen to 15·7 per cent. It went on slowly down. In 1965 it was 12·5 per cent. Then we had the Labour Government's introduction of price control and all that went with it. We see from there an acceleration in the fall in the level of profits. It went down rapidly from 12·5 per cent. in 1965 to 6·7 per cent. in 1970. There we are, already on my cycle of depressing—the rapid fall in the level of profitability in industry and the decline in the incentive to invest which followed from the introduction of price controls. I see a dangerous and serious prospect of the same thing happening again.
Let us consider the figures, taken apart, and not for industry as a whole, for return on capital, taking depreciation into account. When a person buys a ship or sawmill, or whatever, he has to put aside enough money over the life of that

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sawmill to buy another—at what it cost not five years before but when the existing one is worn out. Otherwise he will not have enough money to stay in business. Today's edition of the magazine Accountancy contains detailed figures dealing with the effect of discounting for inflation on replacement costs. Looked at this way we see that in the electrical industry manufacturers are making losses. The same is true in shipping. Motor profits are overstated by 71 per cent. while textile profits are overstated by 65 per cent. Profits in heavy engineering are overstated by 61 per cent. and in general engineering by 59 per cent. This code takes this present level of depressed profits and says to industry, "This is the basis on which you may not improve during the next period under phase 2". We are starting from a level so depressingly low as to have caused the lack of investment and unemployment which has bedevilled the Government since they took office. With the cost of borrowing at 12 per cent. and the average return in industry as low as it is at present, it is not surprising that the situation is depressed.
I notice from paragraph 46 of the Green Paper that if the net profit before tax has fallen below 5 per cent. one can use 5 per cent. as a base figure. But that means that the after-tax profit will be 21 per cent. It is the economics of the madhouse to suggest that industry should only be allowed to use a 22 per cent. net return on its investment as evidence of its being a special case, and that above that figure firms must lump it. It is so ludicrously low that it gives me cause to wonder what civil servant or Minister could have assumed that that was vaguely economic.
I turn to the problem of the smaller businesses, which have to obtain their working capital and investment from the after-tax profit retained in the business. They cannot go to the Stock Exchange and borrow more money. Under the new corporation tax system which was introduced in the last Budget, their tax rises to 50 per cent. Therefore, these firms need to keep every penny they can get in profit to maintain themselves in business. If the trading level of a small business remains the same, the proprietor requires more working capital, because the cost of the raw material he is handling will have increased since last year, as will the
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work in progress, the value of stock, and the amount of money which his customers owe him will also have increased. Where is this extra working capital to come from? The Government expect the economy not to stand still but to grow at 5 per cent. The proprietor of a small business must have not only sufficient working capital to cover those increased costs but 5 per cent. in addition.
Paragraph 24 of the Green Paper states that:
"Prices may not be increased in anticipation of future cost increases".
I wish to put a specific question, to which I should like an answer: what does a company which normally sells at a 20 per cent. profit do when its replacement cost is more than 20 per cent. higher? Does it buy from itself? From where does it get the money to finance the next purchase? Unless I receive an answer to that question I do not see how I can possibly support the code.
Mr. Idris Owen: My hon. Friend may be interested to know that that problem is highlighted in land acquisition. One may acquire land at a given figure—say, £10,000 an acre—but before it has been developed it may have escalated in value to £30,000 and not sufficient money is being clawed back in profit to buy the new parcel of land.
Mr. Mitchell: I am grateful to my hon. Friend.
On Sunday I took my family to a hotel which I had not visited for a number of years. There was not much choice on the menu, but I remembered it as a nice, bright, cheerful place. On Sunday the carpets were worn and the curtains were shabby. There was a shortage of staff. Prices were reasonable, but the standard was poor and unattractive. As I came away, I realised that here phase 2 had been voluntarily applied by the proprietor of the establishment for the last three years.
7.45 p.m.
Mr. Peter Trew: I listened with great interest to my hon. Friend the Member for Basingstoke (Mr. David Mitchell). I shall be echoing a great deal of what he said.
The Counter-Inflation Bill, to which we gave a Third Reading last week, provides

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the machinery for the Government's counter-inflationary policy; but it is purely machinery and it requires a policy to implement it. That policy is contained in the Price and Pay Code. It is, therefore, both right and appropriate that the House should have the opportunity to debate the code.
Although we are now debating a code, or draft code, for phase 2, I believe, like my hon. Friend the Member for Basingstoke, that because phase 2 is of short duration and will be over by the autumn much that is in the code will inevitably form the basis of the policy in phase 3. There are two concepts in the code which require a great deal more thought before they form the basis for the Government's prices and incomes policy; namely, the concepts of the treatment of productivity and the control of profits.
Paragraph 19 of the code requires that firms should absorb 50 per cent. of the allowable cost increases arising from pay increases. My right hon. and learned Friend the Minister for Trade and Consumer Affairs described that as a simple provision. I agree with him. But it is too simple by half. It is a provision which is not particularly onerous for a firm which is capital-intensive, but it could well be very onerous for a firm which is labour-intensive. It discriminates against the firm which enjoys slow growth and in favour of the firm which has a high rate of growth.
Normally any measure which favours capital investment or the employment of capital and a high rate of growth is to be welcomed, but if it is too arbitrary in its application, as I believe this measure is, the result in the short term, unless it is applied flexibly and with a certain amount of discrimination, could be bankruptcy or the precipitate laying off of labour in labour-intensive firms.
There is a great deal of merit in the American rule on productivity which establishes productivity norms for individual industries on the basis that allowable cost increases are reduced in proportion to the productivity norm for the industry and which allows the firm to plough back those profits arising from productivity in excess of the norm for the industry. In this country we do not have the necessary information on productivity
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increases for individual industries, but, as a matter of course, we collect a great deal of information about industry. The information about productivity is so basic that the Government should begin to collect it with a view to making use of it. if not in phase 2, then at some future time.
I turn to the question of the control of profits. In Committee I drew attention to the fact that, according to whether one took page 5 or page 13 of the White Paper, two interpretations of what the Government had in mind for profit control were possible. I sought to ascertain from my hon. Friend the Chief Secretary which one was right. On the one hand, it was possible to take the view that what the Government had in mind was simply a back-up power for price increases: in other words, when a firm sought to increase prices one of the yardsticks by which one would test a price increase was the effect which it had on profits. The other interpretation was that the Government intended to control profits per se without necessarily any reference to prices.
In Standing Committee my hon. Friend replied:
"The answer is that the restrictions on net trading profits are intended as a back-up to the allowable cost regime for manufacturing enterprises and for the gross percentage margin control for distributors."—[OFFICIAL REPORT, Standing Committee H, 13th February 1973: c. 601.]
That was quite clear, or so I thought, but I wonder whether my hon. Friend and I are on the same wavelength, because in paragraph 147 of the consultative document the requirements for reporting, it seems to me, favour a different interpretation. It requires companies to report their costs, prices and sales as well as profits. This implies that the Government have in mind control of profits in its own right. I hope very much that my right hon. Friend, when he winds up the debate tonight, will clarify the Government's intentions on this. Are the measures for profit control simply intended as a backup to prices control, or do the Government intend to control profits as a separate exercise in its own right?
If the latter is the case, if the Government are seeking overall control of profits. there are two questions which spring to mind. How will they oblige firms to

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reduce prices in a way which will reduce profits if they are above the prescribed limits? Where a firm is pursuing some simple manufacturing activity—say, manufacturing baked beans—and that is its sole activity, one can very easily relate the prices of the beans to the profits of the enterprise, but if a firm is carrying out diverse activities, some manufacturing and some activities in the services sector, precisely how is the Price Commission to identify which activity is contributing to which part of the profit, and what action will it require of the firm?
The other question one is bound to ask is on the effect of overall profit control on investment. My hon. Friend the Member for Basingstoke spoke eloquently about this. In paragraph 49, quite rightly, the consultative document specifies that where the Price Commission is satisfied that the profit limits would impede investment it can make an exception, but it goes on to say that an enterprise must satisfy the commission that investment will take place. The question I would put to my right hon. Friend is: what is the time scale of that requirement? Must the commission be satisfied that the investment is about to take place immediately, or will it be sufficient for the commission to be satisfied that the investment will take place within some span of years?
It is perfectly legitimate for a company to set aside profits year by year to make provision for very necessary investment in the future. Today's profits are tomorrow's capital investment, and it would be a great pity if the British people found themselves compelled by the Government, with the best intentions, to eat the seed corn. I am sure that that is not the intention, but I believe that that will be the effect unless a great deal more thought is given to the concept of how to treat these two requirements of productivity increase and profit control.
7.53 p.m.
Mr. Ted Fletcher: It is as well to establish straight away the background against which we are discussing this prices code. Today the Trades Union Congress is meeting, and, although it is too early to know the outcome of the conference, it is certain that millions of people will take a decision to oppose this policy and, perhaps, take militant action.
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In addition to that, this week 200,000 hospital workers are engaged in industrial action against the policy of the Government. We witnessed last week a day's token stoppage of almost 250,000 civil servants, the first stoppage in the history of the Civil Service in this country. A meeting is also being held today by ASLEF, the railwaymen's union, to decide whether to have another token strike by rail drivers next Thursday. Ford workers, meeting yesterday, decided to put a ban on overtime, and they may take part in militant action. Within the past few weeks London teachers have been striking, and hundreds of thousands of schoolchildren have been unable to attend school. The miners are in the queue demanding in excess of what the code is offering for wages increases.
Of course, we still have with us the gas dispute. The minimum wage for a labourer employed in the gas industry is £19·10. In a situation where many of them are living in council houses and have already had a £1 rent increase in October and possibly will have to pay another increase in April, where possibly they will have to pay VAT on children's clothing after 1st April, and where they have been faced with increases in the cost of food now running at the rate of 12 per cent. a year, they have been offered a miserable pittance of £2·40 to meet these increased charges.
This is the background to the debate we are having on the code. One of the things which have struck me is the fact that this must be one of the unhappiest periods the Government have had since they came to office, because no one on the other side has had a good word to say about this piece of legislation or this code. They are looking at it with a great deal of apprehension. Some are concerned that the Government made pledges in the past that they would not in any circumstances bring in a statutory policy on prices and incomes. Others are concerned with the interference which they think this policy will have on profits and profit margins. So naturally, they are antagonistic. Others take the view that this policy is the road to Socialism, and that, if this legislation remains on the statute book, in three years' time a determined Labour Government might use it really to control prices; they are very much afraid of that prospect.

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So for many, various reasons hon. Members opposite will not go gladly into the Lobby in support of the code. I personally opposed my own Government's prices and incomes policy, and I did it in the Lobby. I hope that some hon. Gentlemen opposite will have the courage of the Prime Minister's previous convictions and tell the Government what they are going to do about their prices and incomes policy. Through the long debates in Committee and in this Chamber I have seen no single Member on the Government side rise with enthusiasm to acclaim this policy.
Why is it that millions of people are in revolt against this policy? It is because they have not the slightest confidence that the Government intend to hold down either prices or profits. That is one reason. The second reason is that they know that this Government are responsible for inflation. This Government have deliberately set out to increase prices, and, having done that, they have arrived at a situation where they are now asking people to help curb those prices.
I quote from a speech made by the Leader of the House in 1966, before he was a Minister:
"The time has come when we should have higher prices for food and no subsidies for either the agricultural or the fishing industries. If we did that we would get competition working in both industries and the nation would get better value because the nation has been mollycoddled for too long by receiving cheap food."—[OFFICIAL REPORT, 29th July 1966; Vol. 732, c. 2127.]
That was the view in 1966 of the right hon. Gentleman who is now Leader of the House.
When the Conservative Government came to power they proceeded to translate that into policy. They decided to equate food prices in this country with food prices in Europe, so they let retailers' profits rip. They abolished the Consumer Council, they withdrew agricultural subsidies and they introduced the Housing Finance Act, which puts a tremendous imposition on millions of council house tenants. They did nothing about the rocketing prices of land and houses. They let the economy rip and, quite deliberately, set inflation in train. Having arrived at a situation in which they are getting into increasing difficulties with the balance of payments, they are ask-
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ing the nation to tighten their belts and come to their rescue to get them out of the inflationary policy which they deliberately instigated.
We must ask ourselves how effective the code will be. The trade unions have the utmost suspicion of it. They know that the profit margins will not be policed. They know that prices cannot be overlooked by 700 civil servants—at a cost of £3 million. Trade unionists are not alone in this opinion. Many financiers and industrialists believe that they will get through the net of the code. For example, the City Editor of the Daily Mail says that the Government will have to be on their toes if they are to enforce the profit margin of phase 2. He then seems to suggest that they cannot, because he goes on to say:
"As it was probably only inserted in an attempt to buy the support of the unions—an attempt which seems to have failed for the most part—I do not suppose many members of the Government will weep much if ways are found to avoid the limitations on profits."
Here is a responsible man, an adviser to City financiers, telling the City of London that there is no need to bother too much about the code because the Government will not weep any tears if there is evasion of the profit limitations. It seems to trade unionists and financiers that the code can be broken. No doubt many trade organisations and manufacturers' associations are busily getting out the duplicator and sending circulars to their members explaining how to get round the Government's incomes policy and how to evade Government intervention on profits and prices. I have no doubt that the clever accountants in the City are devising means to get behind the code. The code is not even essentially a guide to a prices and incomes policy. All it is is a wage restriction policy. It is aimed primarily at working people and in the main the lower-paid working people.
I have already instanced the position of gas workers whose minimum wage is £19·10. That can be made into a living wage only by excessive overtime. Hospital and auxiliary workers, too, are in the lower wage bracket. These lower-paid workers realise that if they are to achieve a decent standard of existence they have to fight not their employers but the Government. The Government are responsible

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for the confrontation with the trade union movement, not the employers. In the old days the employees fought the employers, but now the employees fight the Government. Industrial struggles, because of the Government's policy, are becoming political struggles.
Working people are not morons. They know that prices are bound to increase, as they have already increased since 6th November. According to the Daily Telegraph public opinion poll a few days ago, only 23 per cent. of the people interviewed thought that the prices and incomes policy would be successful. There is widespread cynicism that the Government will do nothing about controlling prices and profits.
If the Government had not adopted such an inflexible attitude, it might have been possible for some advance to be made, and for negotiations to take place in special cases, as was provided for in the Labour Government's prices and incomes policy. The Government are asking for trouble in taking this inflexible stand, and they will get trouble.
I conclude by saying, as I said about the Labour Government's prices and incomes policy, that I do not think that it can succeed. I hope that, before it is too late, the Government will reject their inflexible attitude towards trade union demands. I hope that they will be prepared to negotiate with the Trades Union Congress and make concessions by withdrawing the Housing Finance Act and making possible increases higher than the norm. If the Government will abandon their idea of confrontation and be prepared to talk realistically with the trade union movement they will find a ready response.
8.8 p.m.
Mr. Piers Dixon: Hon. Gentlemen opposite have complained that few Government back benchers are behind the code. I am certainly very much in favour of the code, and many of my colleagues take the same view. However, I recognise, as the hon. Member for Darlington (Mr. Ted Fletcher) implied, that there is one major gap in the code—the control of banking profits. There is genuine concern in the City about this matter.
On Tuesday of last week the hon. Member for Dudley (Dr. Gilbert) tabled an amendment seeking to limit the interest
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which could be charged and paid. The hon. Gentleman slightly over-egged the pudding in saying that last year the people who paid interest to the bankers had had to pay about £200 million more as the result of rising interest rates. That £200 million does not go into the banks' pockets. A large part of it returns to the public. Lenders and borrowers are the same sort of people. The people who put their money on deposit with banks and building societies are not always rich—they are probably older than the people who borrow the money, and many are middle-aged. The lenders of money are not the sinister institutions which have been described; they are often pension funds which distribute benefits to the working people.
The £100 million increase in banking profits last year mentioned by the hon. Member for Dudley does not go into the coffers of the banks, because 40 per cent. of any profits made by a bank goes back to the taxpayer. If some of the profits are paid out in dividends the taxpayer receives a further proportion. The shareholders in banks are often people who are not very well off—many are middle-aged and many are pension funds and similar institutions.
I believe that there are strong arguments at present pointing to the fact that bank margins should in some sense be controlled. On the Report stage of the Counter-Inflation Bill the hon. Member for Dudley suggested that both lending and borrowing rates could be controlled. I do not regard that as a realistic suggestion, and I was glad to vote against the hon. Gentleman's amendment on that occasion, but I believe that it should be possible to control the gap between the rate at which banks borrow money and that at which they lend it.
The gross margin between the two rates is not entirely satisfactory because it would induce banks to lend to those customers who were more economic to service. I should like to see incorporated in the code some sort of net margin restriction related to the difference between what the banks genuinely receive on money they lend, after they have paid there expenses, and the price which they have to pay for that money. This could be done merely by incorporating that feature into the code, or alternatively it could be handled outside the

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code by the Government's imposing some system of special deposits on the banks at penal rates which would have the same effect and would reduce bank profits.
There is also an argument for some sort of qualitative control. I instinctively dislike qualitative controls, but I believe that in the present financial situation some sort of qualitative control of bank lending should be enforced. Not only Labour Members have been disturbed by the excessive profits made out of property speculation and on the Stock Exchange—at least, until a few months ago. I believe that the banks should be instructed to lend to one customer as against another, or possibly that there should be some system of special deposits at penal rates related to the loans made by banks for purposes such as property speculation or share speculation.
I conclude on one sad note, in terms of the code. We all know that overtime is a fiddle. It is a way by which employers are able to pay their employees extra money in a roundabout way. It is clear that by paragraph 93 of the code that sort of situation will continue to apply. Overtime is a fiddle, and under the code it will continue to be a fiddle.
However, there are companies which have dispensed with overtime and which have agreed to pay a proper wage for a proper day's work. Many of these companies—and this includes English China Clays, in my constituency—have not paid overtime, and the unions have been moderate in this respect. As a result, the wages which have been obtained by workers in many of these industries have lagged behind not only the national average but the cost of living. I should like to see some provision within the code to give recognition to companies which do not use the overtime fiddle as a way of rewarding their employees. Special concessions should be given to those employees and employers in companies which have been restrained in the past and wish to be restrained in the future, but which find themselves caught unfairly by the provisions of the code.
8.15 p.m.
Mr. Tam Dalyell: I should like to address myself concisely and crisply to five issues which I wish to
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put to the Minister for Trade and Consumer Affairs. Has the right hon. and learned Gentleman now, a fortnight afterwards, any reflections to make on the comment the Chief Secretary to the Treasury made in Committee when he was asked about the salaries of the chairmen of the Pay Board and the Price Commission. The Chief Secretary told the Committee that we should not concern ourselves unduly with such details. Do the Government still regard this as a mere detail? Is it not a very sensitive subject, and was it not foreseeable that there would be some kind of resentment when the reward to be offered to Sir Arthur Cockfield—though I make no criticism of the gentleman personally—was splashed all over the Press?
Was it wise that the reward to the man who is seen in the public eye as having to administer the Government's policy should involve such a very high increase in terms of pounds per week? The Government should make some comment on the subject and should give this information to members of the Committee who raised the subject before the event. Therefore, this is not purely a matter of hindsight.
Secondly, I wish to ask the Minister for Trade and Consumer Affairs what serious estimate has now been made of the staff requirement of the Price Commission and the Pay Board. No doubt the right hon. and learned Gentleman will have read some of the argument which took place on the counter-inflation legislation upstairs in Committee. Some of us would like to express our complete disbelief that this kind of policy can be operated by 700 people. We heard today how they will have to deal with modified pay increases and allowable costs, and that there will be a special panel to deal with administration and dividend control, which alone is a difficult enough subject. I believe that if the job is to be done it cannot be done by 700 people.
Do we know enough details about the recruitment of people who will carry out the bulk of the work? Will the Minister, in reply, give us some kind of progress report on the sheer administration of the Price Commission and the Pay Board? Do I have the Minister's assurance that this will be done? I hope that I can have the Minister's attention. Will this be done in the concluding speech, and

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will some progress report be given to the House about recruitment of the board and the commission?
Thirdly, I should like to ask about the state of the borrowing powers as used by the Treasury. Is it a fact that if the Gas Board is now losing about £1 million a day, this is being met out of the national borrowing requirement? If it is, many hon. Members on both sides of the House will know how inflationary such a move is. But I should like the fact established. Are the present losses of the gas boards being met out of borrowing requirement and, if so, what is the nature of the Treasury authorisation?
Fourthly, other hon. Members have referred to the Civil Service. Anyone representing an area where Department of Health and Social Security officers went on strike for a day knows very well what hardship and difficulty was caused. I am glad to see that the Secretary of State for Social Services is present. I hope that he will insert into the concluding speech some kind of Government statement on their attitude to and discussions with the Civil Service on Priestley. Will assurances be given on Priestley, to alleviate the very real complaints of civil servants? Perhaps the right hon. Gentleman would care to interrupt and tell the House about the state of discussions—
The Secretary of State for Social Services (Sir Keith Joseph)indicated dissent.
Mr. Dalyell: I am sorry to see that reaction to my suggestion. It means that I must reiterate that many hon. Members have seen the difficulty and hardship caused to people, and their resentment, perhaps ill placed, against the Department's staff. It is very unsatisfactory that certain clear assurances about the future and on Priestley cannot be given. It is breaking an agreement which, admittedly, was dented by the Labour Government. But it is going much further than any previous Government have done. The Secretary of State for Social Services is normally most courteous in these matters. It is very unsatisfactory that he will not make some statement about the present state of negotiations.
Fifthly—and I am glad that the Secretary of State for Social Services is here
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—[Interruption.] I noticed that the right hon. Gentleman is leaving us. He breezes into the debate, for what purpose one does not know, and leaves us just as quickly. That is unfortunate, because I want now to refer to the hospital situation.
Over the weekend I spent a good deal of time, at the invitation of Jim Strachan and Tony Martin of the National Union of Public Employees, helping to negotiate on the situation at Bangour hospital, which is one of the largest in central Scotland. In the words of the consultant, Dr. Gunn, the situation "is now critical". Within 48 hours it may be a matter of life and death. In a general hospital the position is bad enough. Here—and it is a situation which is repeated all over the country—soiled linen is piling up in corridors and there is a very real risk of infection. In addition, an intolerable burden is being put on the nursing staff and on those members of the ancillary staff who are still at work.
One has to ask the Government what their intentions are. Are they that this crisis should be ridden out? Do they intend to keep a stiff upper lip and plough on? If that is the situation, it is a matter which, not only in my lay view but in the view of the consultant surgeons responsible for the safety of their patients, it becomes a matter of life and death. In the Scottish Press we are told there are cancer patients who have been admitted rather later than they would have been otherwise and that it is not scaremongering to suggest that the situation is creating a real health hazard.
It may be that when we come to a situation where perhaps one or two deaths result, possibly attributed to the industrial situation that has arisen, the union will get the backlash of it. I want to go on record as saying that this would be a very unfair situation. These are not militant trade unionists. They are people who have not gone on strike for half a century.
In this connection I pick up a comment made by the Minister of Trade and Consumer Affairs. In the course of his speech the right hon. and learned Gentleman said that his policy was designed to help the moderates. I put it to him that a policy of £1 plus 4 per cent. is not a policy which is designed to help the

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moderates at the lower end of the pay scale, whatever else it is. There is all the difference in the world between 4 per cent. of less than £20 and 4 per cent. of a substantially larger wage or salary packet.
I wish that the right hon. and learned Gentleman would take the opportunity to answer this one point. In reply to an intervention of mine he said—twice, as I understood it—that this was a policy tilted towards the lower-paid. I invite the right hon. and learned Gentleman to say on what basis it is seriously argued by a member of the Cabinet that this policy in the code is tilted towards the lower-paid. Is it seriously contended? Have I misquoted the right hon. and learned Gentleman—
Sir G. Howe indicated dissent.
Mr. Dalyell: I assume the right hon. and learned Gentleman's nod to mean that I noted his words accurately. He said that the policy was tilted in favour of the lower-paid. I am afraid that £1 plus 4 per cent. by no stretch of the imagination is tilted in favour of the lower-paid.
Although the Opposition might argue that our party would not have started from this position in the first place, those of us who make speeches of this kind have a certain obligation to say constructively what we would do. I speak with no authority other than that of a back-bench Member. But after a great deal of discussion, not least with some of the leaders of the National Union of Public Employees who are involved, I should have thought that it was necessary, in the next two or three days, to give some kind of sign that the Pay Board and the Government are willing to have second thoughts on this issue.
Let us be realistic. It might be very difficult to go higher than the 4 per cent. In the present situation I understand the Government's difficulty. But I should have thought that it was not necessary to be nearly as rigid on the £1 flat-rate element. Unless our hospitals are to be brought to their knees, let us say that an offer of £3·50, or £4 plus the 4 per cent., is a realistic offer to those earning less than £20 a week. This degree of flexibility might help in a situation which is rapidly becoming a crisis.
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I have been speaking in terms of the crisis in operations at our general hospitals. I wish to make special mention of the village mental hospital in Bangour. There are dozens of other mental hospitals in the country in the same situation. It is all very well to tell some patients in a general hospital that they can be looked after at home and that, although there may be great difficulties, expectant mothers might have their babies at home and not in the maternity unit. A risk may be involved, but it can be done. What cannot be done is to tell long-term mental patients, "There is no longer any possibility of caring for you." Those suffering from double incontinence, which is often the case, either will not be taken home by their relatives or, more likely, do not have relatives who even visit them, let alone take them home.
Therefore, as of tonight, there is a major urgent crisis in many of our long-stay mental hospitals. What is to be done about it? Something must be done. This situation cannot be ridden out.
There must be flexibility. I suggest that that flexibility should be exercised towards certain categories of the lowest-paid workers in our society, those who are on strike for the first time for half a century, those who do the kind of dirty jobs that most of us certainly would not like to do and perhaps few of us have experience of doing other than in the emergency of the 'flu epidemic. Let us be flexible. Let us do something quickly. I can offer at least one possible constructive suggestion which ought to be within the Government's power.
8.30 p.m.
Mr. Peter Rees: I hope that the hon. Member for West Lothian (Mr. Dalyell) will forgive me if I do not follow him in detail. He addressed a series of detailed questions to the Government which I am in no position to answer.
The hon. Gentleman ended by saying that we were in an urgent crisis. So we are. That is why I support the code, although I have certain criticisms to make of it.
The hon. Gentleman touched on the intention or, as I prefer to describe it, the objective of this legislation. The objective is to buy time, but at a certain cost. The greater the time, the greater

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the cost. The longer the code runs, the greater the interference with and even damage to the market mechanism. This is a recurring theme in our political history. It is many years since I looked at the Statute of Labourers, and I wonder if that legislation was as severe as anything we have to endure today. This is indeed the most strongly interventionist legislation we have had to endure for many years, as the right hon. Member for Bristol, South-East (Mr. Benn) observed.
It must be tested by two yardsticks. First, does it ensure the minimum of disruption? Secondly, does it ensure equality of sacrifice?
I should like to consider the two main sectors affected, business and labour, to test the code as it applies to them by those yardsticks.
Regarding business, I find the following points impractical, unrealistic and objectionable. First, it is true that a company can test its profit margin by reference to the two most favourable years in the five preceding years. However, I should point out that these five preceding years will normally include the CBI initiative, the freeze, and the long period of squeeze under the Labour Government—they can hardly be regarded as five typical years—and there has been no adjustment for the fall in the value of money.
Secondly, the time factor is unrealistic for notification of price increases. Few companies can say "Two months from now we will increase our prices". It is unrealistic to suggest that the Price Commission need not reply for 42 days. This may be all right for the Civil Service, but it will not do for business.
Next I come to the proposal that a business must absorb half the allowable costs. It is unrealistic in many cases. What if a company cannot raise fresh capital and has to rely on bank overdrafts? Bank interest is an allowable cost, but such a company can take account of only half of that interest.
The code by implication proposes a restructuring of British industry. All right, let us restructure British industry, but I do not think that this is either the right way or the right moment to do it.
It sounds fair that if costs are reduced, fortuitously or by design, prices must be reduced. But why should we make the
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assumption which the code appears to make that costs will remain at that reduced level? There are bound to be fluctuations. I suggest that this is an unrealistic and rigid approach. Again allowable costs make no provision for the depreciation of capital equipment. One of the central points of the Government's economic policy, rightly in my view, is to encourage business to re-equip. It seems to me that they are taking away with one hand what they have given with the other. Unless a company can obtain full relief for the investment that it has made, this policy must go out of the window.
I come next to the question of reporting. I heard the Minister say that this system should be self-monitoring; but that is not the whole story. Companies have to report and keep records. As a professional man, I am concerned. I notice that any firm engaged in providing professional services and having a turnover of £250,000 a year or more may have to report and will have to keep detailed records. This is likely to put a grave burden on such a firm even if it is not called upon to make any formal reports.
When I balance all those factors against the burden on labour, notwithstanding all the eloquent speeches from the other side of the House I remain unimpressed. There are no comparable burdens on organised or unorganised labour. There is no provision that they should report, and no yardsticks of comparable rigidity.
Indeed, on a minor point, I notice that a trade union official acting in the course of his authority cannot be brought to book for any infringement of a specific order made by either of the agencies, while a director or manager of a company may expose himself to a fine or imprisonment. When I compare subsections (5) and (6) of Clause 14, I find that the greater burden of the legislation falls once again upon business rather than upon labour. If the burdens are unequal, one is led to ask about the compensating factors.
I appreciate that this is only a Green Paper for discussion. But I suspect that in many cases, unless drastically amended, it will involve a mere prolongation of phase 1 for certain companies which cannot bring themselves within the rather rigid terms laid down. What is the compensating good that we hope to achieve?

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The code will be tolerable only if the objective is sound, and that leads me to consider phase 3 and the aftermath.
It will not be sufficient merely to return to a free market. Events today at the TUC extraordinary general meeting have emphasised that in the prevailing climate a voluntary agreement is moonshine, and it underlines—if it were necessary to underline it—the hypocrisy of the entente cordiale which we have been told has been negotiated between the Labour Party and the TUC.
A voluntary agreement which seeks to limit the exercise by the TUC of its present strength is unrealistic. Between organised labour and management the laws of supply and demand no longer operate. Had they been in operation there would have been a perceptible slackening of wage demands during the period when there were 1 million unemployed. The truth is that the unions are in a position to inflict unacceptable damage on employers and, indeed, on the economy as a whole.
The realisation that they, too, are members of the economy and will suffer has not sunk home, and the only answer to the Jimmy Reids of this world is the liquidation of the companies that employ them. The Government must address themselves to the problem of how to ensure that when phase 2 and phase 3 are over an employer is not from the start at a hopeless disadvantage vis-à-vis the unions, so that there is a true balance in future negotiations.
This is neither the time nor the place to investigate this crucial subject, but if a solution cannot be found, if we cannot adjust this balance, the complexities and hardships of this legislation will be unbearable. We shall find that we have purchased time to no purpose, and at an unacceptable cost.
8.39 p.m.
Mr. John Golding: The contribution of the hon. and learned Member for Dover (Mr. Peter Rees) highlights the nature of the present economic policy. In the words of the old song,
"It's the rich what gets the gravy,
It's the poor what gets the blame."
There is no doubt that the financial benefits which the Budget will offer
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tomorrow to the rich, totalling £300 million, stand in stark contrast to the treatment that the very lowly-paid get under this policy.
I have been corresponding with the Minister of State, Department of Employment, about Remploy workers. It is sad to see that merit awards to those workers have been frozen during the present freeze. The Minister cannot say clearly whether in phase 2 these awards will be paid. I should like the Minister who is to wind up the debate to tell me whether they will be paid.
Certainly, people have been frightened of inflation, but increasingly they are becoming more frightened of the wages freeze, because their cost of living is rising starkly. It is going up because of increases in rents. How the Government expect any trade union official in my constituency, where rents in the rural area are to rise savagely in April, to plead for wage restraint I do not know. Rates are going up sharply, and, most important of all, so are food prices. It is extraordinary that the unions get the blame for a situation in which almost every increase in prices has been brought about by the Government themselves.
On several occasions in the last two years I have accused the Government of undermining our arbitration procedures. They should be trying to improve arbitration and conciliation procedures rather than undermine them. What is the Government's attitude to be towards arbitration under the Green Paper? This is not made clear. Are the arbitration tribunals to act as they would have acted had there been no policy and make awards on the basis of the evidence from both parties, or are they to be bound by the Government's policy?
It would be far better were the Government to allow arbitration to continue quite freely and do their own dirty work by then stopping the arbitration awards. If it is seen in this period that the Government are interfering in arbitration, they will be further undermining a situation which has been made bad by the sacking of Scamp and of Hugh Clegg and by the non-appointment of other arbitrators in the last two years.
Some people in my constituency, members of the Transport and General Workers Union, have been badly treated.

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They work at Birchenwood Coke and By-Products Ltd. at Kidsgrove. Their situation, which has been brought to the notice of the Department, is that the union was negotiating with the management for a six-point improvement in wages and conditions. They asked for improvements to the value of £75,000, but finally settled, on 16th October last year, for an across-the-board increase of £25,000. Unfortunately, they did not get the details settled until 13th November, but they had settled on the global sum and they had agreed not to press their original claim.
When this was put to the Department in November, the union was advised that the claim was frozen. The union appealed and were again told that the claim was frozen. Moreover, both management and unions were told that not only was this claim frozen and unable to be paid until 28th February, but then the Government's norm of £1 plus 4 per cent. would be applied. It seems rough justice that an agreement already reached in October cannot be implemented.
Much could be said about the unworkability of these proposals. Suffice it to say that, even were they to be implemented, one thing is certain—that the lowest-paid and the weakest in our society will get a very raw deal under this wages policy.
8.45 p.m.
Mr. David Madel: The hon. Member for Newcastle-under-Lyme (Mr. Golding) said that this debate is another extension of the arguments we have had over the prices and incomes policy during the past 12 to 18 months. The past 10 days have seen a dramatic change in the industrial relations situation, which will make the task of the new Pay Board extremely difficult. What I have to say in mitigation is that the Pay Board will have to wait only another 24 hours, for tomorrow my right hon. Friend the Chancellor of the Exchequer will introduce a Budget which, I hope, will give continuation to our economic growth.
Under the Counter-Inflation Bill, it is provided that the Pay Board and the Price Commission can be amalgamated should it be felt necessary. I hope that this will soon happen, and I hope also that it may be possible for people to give oral as well
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as written evidence to the Pay Board. The Bill at present refers only to the question of written evidence.
The first problem in the Green Paper comes in paragraphs 83 and 84, dealing with the question of the pay limit. I think that the limit of £1 plus 4 per cent. is bound to cause difficulty in defining what groups of employees are involved. Not every factory has a single union. There may well be inter-union arguments, and people change from time to time from one union to another.
There is another problem to which we must give attention—that of the hourly-rate man and the piece-rate man. The Green Paper indicates that the piece-rate man can earn more by producing more, whereas the hourly-rate man cannot. I wonder, therefore, whether an exception could be made in the case of the hourly-rate worker—for example, whether higher overtime payments could be made for shift working at night, and extra-long shifts, for example. At the moment, these are disallowed. The question of night shifts is a special problem, and I am not sure that we should exclude those who work long shifts at night from higher overtime pay. Such a change would surely help to get rid of difficulties which arise between hourly-paid workers and pieceworkers.
Paragraph 84, dealing with pay settlements, states that settlements reached after 6th November 1972 are to last 12 months. I hope that the Government will be flexible in this case because otherwise it will not be easy for low-paid industries when pay settlements come through. The assumption is that the prices policy will be successful, and we hope that it will be. But there are prices which are beyond our control. For example, the cost of food bought overseas may well go up again, and this will make it difficult for a limit of £1 plus 4 per cent. to last for 12 months in all cases. Thus, under the present system a rise on 1st May 1973 would have to last until 1st May 1974. If commodity prices increase further, this could make the situation more difficult.
There are a couple of other alterations I would like to see made on the question of remuneration. I have already mentioned higher overtime payments which might be

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allowed for hourly-paid men, but paragraph 109 states:
"Where a change in a pension scheme has the effect of increasing the pay, net of any pension contribution, of a substantial proportion of the group of employees…"
the increase will count against the pay limit. There is an overriding need for companies to go on reviewing their pensions policy, and I cannot see that paragraph 109 will be helpful, especially since it is the Government's policy to provide better pensions, which help not only the lower-paid but the community as a whole. We could get into difficulty here, not least because it is not clear what is meant by the words
"a substantial proportion of the group"
in paragraph 109.
I would say something more about hours worked. Reduction in the working week below 40 hours has to count against the pay norm. I believe that as from 1973 demand for the 40-hour week to be reduced will increase. Forty hours is a long time to work in a week. We in this country are only just beginning to grasp the effect of length of work on employees, particularly in the assembly line jobs. We should put more emphasis on quality of output per hour; that is much more important than hours worked. I ask the Government to look at that aspect.
Paragraph 99 says that a reduction of one hour in 40 should be treated as equivalent to a 2½ per cent. increase in pay. I wonder how that percentage is arrived at. It is probably an inspired guess.
Related to hours of work is the question of extra holidays above three weeks. We in this country do rather badly on holidays vis-à-vis Europe, and it would greatly help to ameliorate the industrial climate if exceptions could be made there as well as in the working week.
Paragraph 153 refers to pre-notification of pay settlements. It requires that where pay settlements affect 500 employees or more eight weeks' notice is required before the settlement can be implemented. Eight weeks is a long time especially when one knows from the history of industrial relations in a particular industry that the pay negotiations were lengthy and hard fought. Eight weeks for the Pay Board to agree an increase could create difficulty. I
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believe that a case can be made for halving that period to four weeks.
There is not much time left for me to go into any detail on prices, but paragraph 36 says that a fall in raw material prices or other allowable costs should be fully reflected in price reductions. Here, enforcement will be the difficulty, and there may be difficulty particularly with regard to value added tax. We want the public to put pressure on the Government and manufacturers to make sure that price reductions do occur. The public normally know when prices are to go up, but it is difficult to know whether they have sufficient information to put pressure on companies and the Government to reduce prices when there is a fall in raw material prices.
A recent survey undertaken by the Work Together Campaign showed that a substantial proportion, 70 per cent., of the country feels that the present share-out of wages between all different jobs is unfair. People feel that the way wages are shared is not fair, and unless the board can in the next four or five months get across to the country that it will put these differentials right, it will be in difficulty for stage 3.
8.54 p.m.
Mr. Guy Barnett: According to paragraph 113 of the code, amongst the forms of payment that must be included within the pay limit laid down in phase 2 is the London allowance. The Minister will probably already know of the deep resentment felt on this score, particularly by teachers. In effect, this limit means that in order that the London teachers may get the kind of allowance they need to alleviate some of their cost of living problems, teachers in the provinces will have to accept a smaller increase. I believe that to be wholly unfair and wrong, because the purpose of the London allowance and of geographical allowances generally is to take account of variations in the cost of living. It is solely a cost of living allowance.
The point is well illustrated by two letters which I received from constituents this morning—one from a teacher, the other from a parent. The teacher writes:
"I have recently joined the staff of a London comprehensive school. I am impressed by the enthusiasm and idealism so apparent

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among the staff of the school, but unfortunately that idealism is undermined by material disadvantages for the teacher, especially the difficulty of finding and then affording suitable accommodation. I am therefore depressed by the prospect of my own stay in London being a short one—as it is for many of my colleagues also—due to these disadvantages which are obviously inadequately compensated for by the present London allowance."
This teacher tells me that she is planning to get married soon and that, as a result, she will be leaving London.
That is typical of hundreds of letters which hon. Members representing London constituencies have been receiving. But it is interesting to note also that representative of the feeling among parents is the following letter:
"The best teacher my younger son has had was obliged to resign from the staff of Kidbrooke Park junior school last summer because he could not come anywhere near raising or repaying a mortgage on a house anywhere in this area. He rode to and from"—
The parent goes on to describe the journey which the teacher had to make in order to get to the school and then explains that, like many others, he had to give up and move away.
By treating the London allowance as coming within the pay limit of £1 plus 4 per cent. the Government are exacerbating an already appalling crisis in the London teacher service. This is creating a great deal of depression among the teachers themselves, and alarm among the parents of children attending London schools.
Other hon. Members, on other occasions, have frequently pointed out that the London teacher service is in grave danger. Its inclusion of the London allowance in the £1 plus 4 per cent. during phase 2 will mean that the Government's policy will have an even more damaging effect on the crisis situation which the London teacher service is now reaching.
In the few minutes at my disposal I wished to emphasise that point. It has application elsewhere. I believe it to be wholly wrong to include the London allowance and other geographical allowances in paragraph 113 of the code. When they re-examine the code the Government must reconsider this question. It has been put to them repeatedly, and we have never had a satisfactory answer. It is causing grave disquiet in the teach-
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ing profession in London and elsewhere, and, as I say, it is causing growing alarm among parents. I am sure it is no accident that letters are now beginning to come from parents as they become aware of the situation which is developing in the schools which their children attend.
I hope, therefore, that the Government will so amend the code that, in its final form, it will ensure that the London allowance can be treated as a separate matter, since its only purpose is to take account of the contrast in cost of living as between those who live and work in London and those who do not. The Minister must understand that, on getting married, teachers wish to own their own homes if they can. One constituent wrote to me to say that the house in which he lives, which he bought 10 years ago, cost him £5,000 but that that same house is now worth about £20,000, right outside the means of a London teacher dependent on the Burnham scale. I urge the Government to reconsider paragraph 113.
8.59 p.m.
Mr. Reg Prentice: This is the latest in a rather strange sequence of debates. The House and Standing Committee H spent a great deal of time on the details of the Counter-Inflation Bill. Although the Standing Committee sat for just over two weeks, because of the number of occasions it sat and the hours it sat, it packed into that time the equivalent of approximately 11 weeks of a normal Committee stage. There were detailed and penetrating debates into the minutiae of the Bill which provides for machinery.
In terms of the policy which is to be operated by the machinery, the only opportunities for debate are the debate today on the consultative document and the debate that will follow on the code. In both cases no amendment is possible. We must accept or reject as one package a series of complex policies which will have the most serious effects upon the lives of millions of people. I register once more a protest at this undemocratic procedure.
Another feature of today's debate is that not one Conservative Member has expressed wholehearted support for the contents of the code. The degree of misery has varied from one hon. Member to the next, but there has been a great deal of it. The hon. Member for Wycombe

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(Mr. John Hall) told the House that he hoped that the Government would soon return to a true Conservative philosophy instead of the current policy. The hon. Member for Oldbury and Halesowen (Mr. Stokes) spoke of the agony on the Government's side of the House and hoped that there would soon be a return to competition and the forces of the free market. The hon. Member for Basingstoke (Mr. David Mitchell) described certain parts of the code as consistent with the economics of the madhouse. I shall not continue to embarrass the Government with even more quotations. There are plenty to be found if hon. Members who have not attended the debate will consult HANSARD tomorrow.
We are discussing the contrasting approach between the consultative document—the Green Paper containing the framework of the code which we shall shortly be asked to approve—and the approach of the joint statement of the Labour Party and the TUC which is mentioned in the amendment. The most enthusiastic partisan of either side should avoid claiming that either document provides a panacea. Neither answers all the questions or provides a blueprint for solving all the problems of inflation.
Inflation is an international disease affecting virtually every country in the world. No political party in the democratic world has produced a blueprint for its solution. Indeed, many countries are groping with the problems that inflation produces. The only test that I apply to the two rival approaches is to question which of them is more likely to lead towards a long-term solution of the problems with which we are grappling. I emphasise "long-term".
We are about to pass out of the freeze period into a period when more choice has to be allowed, and when there must be a greater degree of sophistication in making decisions on prices, pay or other aspects of the policy. The thesis that I want to put to the House is that the joint statement of the Labour Party and the TUC provides the framework for a beginning of a solution for these complex problems, whereas the policy outlined in the draft code will make the solution even more difficult to find.
Mr. John Hall: Can the right hon. Gentleman say whether at the meeting this afternoon the TUC accepted the joint statement?
Mr. Prentice: The joint statement was not before the meeting this afternoon. What the TUC accepted this afternoon was a statement on the economics of the situation prepared by the General Council and put before the special Congress. We are not discussing that statement now, but I warmly recommend it as desirable reading for all hon. Members opposite who would like to read a more realistic reappraisal of the problems facing the country than they are getting from the Government. The Government's policy as set out in the consultative document will make the solution more difficult, because it is essentially a divisive document and because the long-term answer to the problems of inflation can be based only on good will and consent, and on a sense in the community that we are all pulling together for mutually acceptable objectives.
I want to give the House five reasons why the policy set out in the document is likely to be divisive. In choosing these five reasons I am not talking about the prices side at all. There have been many references to prices, but I do not intend to go over that ground except to underline the point that the effects of the disillusionment and pessimism already spreading through the community, the failure of the Government to keep the cost of living steady, will undermine the policy if nothing else does. I want to concentrate on the pay side of the document and its effect on industrial relations.
First, the policy will reduce, and is intended to reduce, the share of the national product going to wages and salaries. Let the House be quite clear that that is the intention of the formula set out in the code. The arithmetic may be put like this: in a 12-months' period the formula of £1 plus 4 per cent. is likely to lead to an increase in pay, measured in money terms, and not real terms, of about 8 per cent., or just under 8 per cent.—These are the Government's own figures—while in the same period the rise in prices is unpredictable—and the Minister refused to give any estimate of what that rise would he—but on the most optimistic

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estimate, the estimate giving the Government more success than they will probably achieve, will be about 6 per cent., which is the figure quoted by many commentators.
That would mean an average rise of about 2 per cent. in real living standards for wage and salary earners during 12 months when the Government's strategy is based on a growth of the economy of 5 per cent. It is therefore intended that a smaller share of the national product should go in wages and salaries during this period than in previous periods. Bigger shares are to go to rents and profits; a smaller share is to go to wages and salaries.
Mr. Hall-Davis: Does not the right hon. Gentleman's argument presuppose that none of the benefits of the 5 per cent. increase in growth is to go to the wage packet in addition to the increase announced?
Mr. Prentice: The pay packet is to be kept within the limits of the consultative document, irrespective of the growth in the economy.
Mr. Hall-Davis: No.
Mr. Prentice: That is the policy, and we are told that there are to be no exceptions—that incomes of all kinds are to be kept within those limits.
For many workers this will mean a drop in living standards. For instance, if the gas workers were to return to work on the assumptions of phase 2, early in April they would receive their first rise for 15 months. It would be a rise of about 8 per cent. in relation to a 15-month period during which the cost of living had gone up by 10 per cent. They would then enter upon a 12-months' period in which there could be no further rise, and they would be beginning that period two points lower in living standards than they were 15 months earlier. This policy is deliberately designed to reduce the share of the national income which goes to wage earners.
My second point is that this policy will reduce the standard of living of the low-paid relative to others. We have repeatedly heard from Ministers their pretence that this policy favours the low-paid. It does nothing of the kind. Some
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hon. Members opposite have recognised that. I am sure that the hon. Member for Bridgwater (Mr. Tom King) was correct to say that a policy which lays down a maximum of £1 plus 4 per cent. will be regarded by most people as entitling them to a maximum increase of £1 plus 4 per cent.
Even if there were adequate redistribution as between higher and lower-paid workers within the negotiating group the whole concept of the group does nothing about those industries which are notoriously low-paid throughout. The industries would normally be the negotiating group.
A formula which provides for the £20-a-week man a maximum rise of £1·80 and for the £100-a-week man a maximum rise of £5 will lead to bigger differentials between the two. In a series of amendments in Committee we attempted to identify areas of low pay. We identified agricultural workers, workers covered by wages councils, and women, as affected by the Equal Pay Act 1970, and we tried to safeguard the position of those workers during phase 2. Every one of our amendments to this end was rejected by the Government majority on the Committee.
My third point about the divisive nature of this policy is that the differences in pay will in any case become exaggerated as a result of the tax reliefs due to come into force as a result of last year's Finance Act. We do not know the nature of tomorrow's Budget speech, and whether the policy of last year will be modified, but unless the Chancellor produces a formula which cancels out the enormous tax reliefs for better-off people provided for in last year's Finance Act their effect will be to create even larger material differences in society than those already mentioned.
The fourth divisive point concerns the effect on industrial relations. As we discuss this situation many groups of workers have become involved in industrial action and many more are likely to become involved in the near future. I do not want to say anything which will exacerbate this situation. I speak as someone who favours a moderate approach. Such advice as I can tender may not be of any great weight. My view on these matters is always in favour of a moderate alternative.

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I sat in the gallery during the special TUC meeting this morning and listened to discussions which proved how difficult it is for moderate counsel to prevail. The Government are giving less and less ground for the moderates to stand on. They are driving people into a posture which they would otherwise reject. I make a further appeal to the Secretary of State about two current disputes—the gas and the hospital disputes. What should have impressed everyone about the gas dispute is the workers' moderation and scrupulous regard for safety. The newspapers have talked of a gas strike but there has not been one. A minority of workers have been on strike; others have been on an overtime ban.
The tragedy is that during this period, when a number of suggestions for a compromise solution were put to the Government and when the ex-Chairman of the Gas Council wrote to The Times putting forward his suggestion, his letter being followed next day by a letter from Mr. David Basnett agreeing to a formula which would be acceptable to him, the Government slammed every door and produced a situation in which matters are almost bound to escalate, with all the consequences that we fear unless a solution can be found.
The same analysis applies to the hospital dispute. I missed the speech of my hon. Friend the Member for West Lothian (Mr. Dalyell), but I have been told what he said and I commend his advice to the Secretary of State. This is another dispute in which, from the beginning, the union has acted with every possible concern for patients and for health and safety. It cannot be held in limbo indefinitely.
The Secretary of State should insist on the Cabinet's giving him a chance to find a formula for a solution of these two situations of desperate urgency.
My fifth point about the divisive effects of the Government's policy is concerned with industrial relations in the longer term. When we consider the state of industrial relations we become too obsessed with strikes, and threats of strikes and other industrial action. What I fear much more as a result of the rigid, stiff-necked application of the policies of this code is that much constructive work by
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both sides of industry over many years will be damaged and perhaps destroyed in the coming months.
My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) raised a very important point about the status of arbitration during this period. I hope that the Secretary of State will answer it. I know what the answer is likely to be because I raised a similar point in Committee. Arbitrators will not be allowed—or will they?—I hope that I shall be contradicted—to do an objective, detached job in the period ahead. They will be expected to do the Government's dirty work for them. What effect will that have on any remaining reputation of arbitration in this country? What effect will it have in the long term on industrial relations? What will be the effect on conciliation if conciliators no longer have any scope within which to work? What will be the effect on the future of the Whitley system in the Civil Service if the present sense of injustice and frustration affecting civil servants continues during this period without the Government's making any move to go hack to the principle of the Priestley Commission and reasonable parity with outside employment?
What will be the effect on productivity bargaining if there is to be no concession to productivity agreements or situations in which there has been an increase in productivity resulting from workers' efforts? There are to be no productivity arrangements during the freeze or phase 2, or the 12 months following the end of phase 2. If that is so, is there not a risk that we shall never return to the level of productivity arrangements which we have had in recent years? Is that good or bad for inflation? Have not we all said in the past that one answer to inflation is to encourage productivity arrangements so that people may have genuine rises in their standard of living without the cost being passed on in higher prices to the consumer? This concept is being sabotaged by the Government's policy.
For these reasons, and for many others which I could give, I suggest that the implementation of the Government's policy in phase 2 will create greater divisions in our society and make it more difficult to find the long-term answers to inflation.

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The Opposition amendment refers to a socialist alternative. We use the word "socialist" deliberately and proudly. The joint statement of the Labour Party and the TUC is, I believe, a socialist statement in many respects. It is socialist in the sense that it puts forward the concept of a greater degree of Government control of the economy in the interests of all the people so that the wealth of this country is used for the good of everyone and not just for the profit of a few. It is socialist in the sense that it urges the extension of public ownership, and particularly of development land where land profiteering has been one of the most potent inflationary impulses in recent years and the Government have no shadow of policy for dealing with it. It is socialist in the sense that it demands changes in taxation policy and pensions policy which will create a more egalitarian society.
The question is asked—it has rightly been asked during this debate—what about an incomes policy? Why should there not be a place for an incomes policy in this concept? My answer is, "Yes, there should be." This country needs an incomes policy, but before talking about what kind of incomes policy it should be 1 beg the House to put this matter into perspective alongside other aspects of inflation.
The pressure of wages and salaries is only one of the inflationary pressures at work. In the composition of consumer prices in Britain in recent years wage and salary costs have amounted to about 40 per cent. of total costs. Wages and salaries are no higher in Britain today than they are in most other developed countries. They are lower than in some of them. Over the last 10 years wages and salaries have risen less quickly in Britain than in most other industrial countries, but inflation in Britain has gone ahead faster than in most other industrial countries. Therefore it is time hon. Members opposite stopped talking of wages and salaries as though they were the mainspring of our inflation. They are part of the story, but only part of the story. Their role is exaggerated because of the desperate search by the Conservative Government and the Conservative Party for a scapegoat for their own failures during recent years.
Mr. Peter Rees: Of course one understands the right hon. Gentleman's argument that wages and salaries are only one factor, but if it is possible to treat them by means of a voluntary policy, as I understand his party suggests, why is it not possible to treat other factors by means of a voluntary policy?
Mr. Prentice: The hon. and learned Member has anticipated a point I am about to make.
I want to add one other argument to those which I have just been putting to the House. Not only are wages and salaries to be regarded as simply a part of the pressure of inflation; trade union policy is also only one aspect of wages and salary policy. Less than one-half of the people at work belong to trade unions, and even of those who do belong many have their wages and salaries fixed by all sorts of processes which have nothing to do with trade union policy. Promotion, rearrangement of the work force—there are all kinds of reasons of that sort why people get increases in their wages and salaries. It is not simply a matter of trade union demands. Trade union demands are part of the picture, but only part of it.
The fact that trade union demands are part of the picture has been acknowledged by the TUC consistently in recent months. In his speech this morning Mr. Feather repeated to the TUC what he has said so many times before. He acknowledged that the TUC has a role to play in fighting inflation; trade union leaders, he said, went to one meeting after another with Ministers to try to find a way towards a joint policy, and this was frustrated by the Government and not by them. He said that they were prepared to talk again if there were a reasonable basis for success in those talks.
I am asked why policy should be voluntary and not compulsory. My answer is that past experience of statutory incomes policies in this and other countries has shown that such statutory policies do not work. Policies that work—and even these are difficult—are based on voluntary acceptance and consent. Even if the consent is obtained—even if voluntary acceptance is there—it is still terribly difficult to get an incomes policy to work. That should be frankly acknowledged on all sides.

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What one would be asking people to do is to give up part of their bargaining power, to refrain deliberately from pressing their bargaining position to a conclusion. This is extremely difficult. Nevertheless, I believe that the basic good will exists in the trade union movement to try to do this but only on the understanding that other policies are followed that make it possible.
Sir G. Howe: I follow the right hon. Gentleman's argument, but I should like him to face the historical facts. In 1948, when there was a complete statutory control of prices, was there not an agreement on a voluntary incomes policy with the then Labour Government? Was there not a similar agreement with his right hon. and noble Friend Lord George-Brown in 1965, again on a voluntary policy, for the control of wages, and was there not, finally, a solemn and binding agreement arrived at on 18th June 1969 for the voluntary control of wages? Did not each one of those policies lead either to inflation or, in 1965, to the need to introduce a statutory policy? Does not that show the fraility of the right hon. Gentleman's argument?
Mr. Prentice: I think the 1969 episode is a bit misplaced. The 1948 experience was a voluntary policy on incomes that worked very well for a time and was upset by inflationary pressures caused by external events, including massive rearmament throughout the world following the Korean war. One sees from the declaration of intent in 1964 and the events that followed it that the success was only partial. Government Ministers would have been glad to have had that degree of success instead of the colossal failure they have had in dealing with inflation in the last two-and-a-half years. If they could get back to the relatively moderate inflation of the period of Labour Government they would be glad to do so.
I acknowledge what the right hon. and learned Gentleman said. A voluntary policy has never yet been a complete success in this or any other country. That is the basis on which I started my speech. My thesis is that the policy set out in the code will make it more difficult to achieve an agreed long-term policy, whereas the policy set out in the joint statement between the TUC and the
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Labour Party begins to provide the basis for a better chance of doing so. I make no claim for it beyond that, but the people in the country who are sick and tired of the Government's economic record will look to us for this kind of lead.
In the last two-and-a-half years we have suffered the worst unemployment since the 1930s, the worst industrial relations since the General Strike period of 1926 and a far higher rate of inflation than that suffered in other countries or in Britain under previous Governments. That is a massive record of failure, and the people are entitled to a change. The joint statement of the TUC and the Labour Party points the way towards that change.
9.28 p.m.
The Secretary of State for Employment (Mr. Maurice Macmillan): The right hon. Member for East Ham, North (Mr. Prentice) started by giving some figures about the gas workers. Between October 1970 and October 1972 the increase in the average earnings of gas workers was about 26·4 per cent., and the increase in the retail price index was 17·9 per cent. I am sure that the right hon. Gentleman did not mean to mislead the House.
It is also important to recognise that the stage 2 policies do not interfere with the due date of the gas workers' agreement, so that they will get an increase from 1st January 1974, whatever happens, without prejudice to any adjustment of anomalies and comparabilities which the Government said could take place in stage 3.
This is a debate about the consultative document containing the draft code for stage 2. It was asked for by all sides of the House so that detailed points could be made and so that this House could take part in the process of consultation on the draft code. I felt that sometimes during today's debate it has been difficult to realise this. It is true that my hon. Friends have used the debate for this purpose and have made points of detail, some of which I shall try to answer. I do not think I can answer them all in the time that is available to me, but certainly the points of detail made on both sides of the House will be taken account of in this process of consultation. Whether I reply to them or not, they will be carefully considered

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by the Government because this is the whole purpose of the debate.
We had from the Labour benches a mixture of denunciation of past iniquities of the Conservative Government and a marked silence about the previous policy pursued by the Labour Government. We had what can only be described as a trailer of the Budget debate and the economic debates which are to follow it, and we have also had a few points of detail.
I turn to deal first with some of the specific points made by my hon. Friends about the draft code. First, in regard to paragraphs 36 and 40 on the question of price reductions, my hon. Friend the Member for Wycombe (Mr. John Hall) pointed out that the speed at which price reductions could be made relative to a fall in raw material costs as reflected in prices might be difficult to work out in certain circumstances. I agree that this depends on the circumstances of each particular case. If the fall in the costs involved, whether in terms of raw material prices or others, is part of a long-term trend, the indications would be that prices should be reduced at a relatively early date. If the circumstances are different, this clearly is a matter which will be open for discussion between the industry or undertaking concerned and the Price Commission.
Very much the same point was made by my hon. Friend the Member for Bosworth (Mr. Adam Butler), who pointed out that it was not necessarily correct to pass on cost savings immediately in projects requiring a long period of development and a slow build-up of sales. This is a similar problem to that which is dealt with in another paragraph of the code; namely, the question of long-term contracts, particularly in the construction industry.
The answer is that the extent to which cost savings can be passed on in cases of that sort must be something which is required to be discussed with the Price Commission by the industry or undertaking concerned, because, clearly, in such circumstances it would not be right to expect an immediate return in prices, and, equally, if the profit margin indications were that the cost increase was going to lead to a movement above the profit norm, it would be equally correct to
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assume a relatively fast decrease in the prices concerned.
My hon. Friend the Member for Bosworth also said that we were forcing, through the use of productivity offset, improvements in productivity in industry. He and other hon. Friends approved of this effect of the method of price control, but he pointed out that many industries would not be likely to do very much more because of the voluntary effort they had already made during the period of CBI voluntary price restraint and would not be encouraged to do more than they had to do. I do not altogether accept that over a relatively short period of stage 2, and it is worth making the point that we are discussing the code for stage 2.
The same point must also be borne in mind by my hon. Friend the Member for Wycombe, who suggested that the choice of a base date for those industries which co-operated in the CBI voluntary price restraint was a little unfair. My right hon. and learned Friend the Minister for Trade and Consumer Affairs referred to this matter and paid tribute to the efforts of the CBI to hold down manufacturing prices, which had a significant effect during the year of voluntary restraint. But during that year some industries showed what my right hon. Friends and I regarded as a welcome increase from very low profit margins, and the choice of a base date is the fairest which can be selected in the circumstances of the stage 2 code and the stringency which we are trying to put on price control.
I accept that the effect of a 50 per cent. productivity offset is uneven. My hon. Friend the Member for Bosworth and others pointed out that it was likely to cause difficulty between different manufacturing industries and between manufacturing industry as a whole and service industries. This is a matter on which we are now consulting those concerned. But again I remind the House that we are discussing the stage 2 code.
On the pay side there are no new productivity agreements allowed during this period of stage 2. That is for the obvious reason that productivity agreements can be used as a method of breaching a policy of this kind. This was a point repeatedly made during our talks in the summer and autumn by

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union representatives as well as by representatives of the CBI.
Much the same reason applies to the exclusion during stage 2 of depreciation when calculating allowable costs. Just as productivity agreements could be used to provide too big a loophole in the policy, the allowance of depreciation as part of the allowable costs could have the same effect. These are both matters for the Pay Board and the Price Commission in advising the Government on their future consultations with both sides of industry after consultation with, I hope, the unions as well as with representatives of management and after discussion by this House of the criteria to be set up for our stage 3 policies.
I agree with my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davies) that a flat-rate wage increase would be even better for the lower-paid than the present formula. But it is extremely difficult to apply to the rather complex pay structures of our industrial system, and it is almost impossible to apply a flat-rate increase without the agreement of the representatives of both management and the work people concerned.
We did not find such agreement in our talks with the unions and the CBI. This was partly because the trade union representatives at those talks found it difficult to agree among themselves about how a flat-rate increase could be applied equitably to the wage structures in the various industries that they represented.
Mr. Dalyell: My right hon. Friend the Member for East Ham, North (Mr. Prentice) asked about the hospital workers. Might one possible way out be to increase the flat-rate element to be offered in the near future?
Mr. Macmillan: The Pay Board will be able to take this matter into consideration in consultation with the unions and the employers concerned in preparing its advice to the Government for stage 3. I must make it clear that the Government are not prepared to do this in stage 2.
I do not altogether accept the point made by the hon. Gentleman and by my hon. Friend the Member for Bridgwater (Mr. Tom King) that paragraphs 105 and 106 need cause all that much difficulty in
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the short period of stage 2. Indeed, I do not agree with the hon. Member for Bedwellty (Mr. Kinnock), who appeared to think that incremental scales are the perquisite of the highly paid. I do not think that members of the Civil Service unions or of the Transport Salaried Staffs Association would agree with his definition. I think that even the hon. Gentleman would agree that, despite the relatively short duration of stage 2, we must allow for both promotion and regrading, as a number of the unions concerned have been quick to point out and, indeed, are negotiating about at this moment.
I should also point out to the hon. Member for Bedwellty that expense accounts are not unlimited in stage 2. Company executives are not the only employees who have, and are entitled to have, expenses reimbursed. The code is clear on that point.
My hon. Friend the Member for Basingstoke (Mr. David Mitchell)—I apologise for not being present to hear his speech—made a point on paragraph 24 of the Green Paper. I remind him that we are discussing the code for stage 2 only for both prices and pay. I remind him, too, that we are consulting those concerned. I hope that he will agree that inflation is a matter partly of expectation and that it can be fed by carrying into price increases unnecessarily high estimates of possible cost increases.
The particular point to which my hon. Friend referred is partly covered by paragraph 27, which deals with accounting methods of stock valuation. It ensures that the value of stocks must be taken into account on the ordinary accounting methods used in the past. Paragraph 24 allows a company to apply for price increases which were justified by no increases in costs. So a company can take account of the increased costs of replacing stocks. As a continuing process this seems to meet my hon. Friend's point. It is basically extremely important to provide for increases in working capital arising out of increased turnover. This is particularly important for small companies and perhaps even more important for those companies dealing in goods which have a naturally slow rate of turnover. We have discussed these points with those most affected and our discussions are continuing.

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My hon. Friend the Member for Truro (Mr. Dixon) specifically mentioned banks. We are in the process of discussing with the banks the application to them of the policy and the code. I am extremely grateful to my hon. Friend for his interesting suggestion, which we shall certainly bear in mind in our continuing discussions.
The hon. Member for Cornwall, North (Mr. Pardoe) put forward an idea which could be described as a special threshold agreement based on food prices, and suggested that it should be introduced in stage 2. This matter was discussed with the unions during the summer, and I think that we can discuss it again, since I very much hope that the unions will agree to be consulted by the Government on the stage 3 policies for both the pay and price codes, including a discussion on rectification of anomalies and relativities which the Pay Board will be examining.
I think that for the convenience of the House I should make it plain that for the third stage of their policy the Government will be revising the code, and, before laying any changes in it before Parliament, will again, as at this stage, consult those concerned on both sides of industry and commerce.
Mr. Heffer: Would the right hon. Gentleman like to explain on what occasion and what time these discussions will take place, in view of the decision taken by the TUC? Is he not on this occasion, as he was during the debates on the Industrial Relations Bill, living in a totally Walter Mitty land, the trade unions having decided what policy they are going to adopt?
Mr. Macmillan: I shall come to the point about the TUC conference, but, judging by the way in which it was conducted, it is not this side of the House that is living in Walter Mitty land.
The Government will seek the help of the Pay Board in its advisory capacity on problems of relativities and anomalies, especially those arising out of the standstill. The aim will be to find ways in which progress can be made in dealing with these problems and with other matters such as productivity and restructuring within the total amount available for pay increases in the third stage. I think that the suggestion made by the hon. Member for Cornwall, North could
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properly be discussed in this context and be examined by the Pay Board should that be deemed the right thing to do.
Mr. Benn: These are difficult arguments to follow. I wonder whether the right hon. Gentleman would give the House a better indication of when he foresees the end of phase 2 and the beginning of phase 3. Is it July, as has been hinted at in some newspapers, or is it the autumn? When is it likely to be? I ask that because it is impossible to talk about phase 3 when one has no idea of the date on which, if ever, it will come in.
Mr. Macmillan: My right hon. Friend the Prime Minister made it clear that stage 2 would last until the autumn, and autumn is likely to come at the normal time. I shall not get involved in anything more precise than that.
We have also made it quite plain that all these matters can be discussed with the Pay Board. The chairman has been chosen, I hope very soon to announce the deputy chairman to deal with future relativities, and the outside secretariat is actually working.
Our policies envisage a return to the market forces of competition, as paragraph 7 of the Green Paper makes clear. It is nonsense for right hon. and hon. Gentlemen opposite to say that we are destroying the forces of competition in favour of a Corporate State, or any other esoteric organisation. I would point out to my hon. Friend who referred to paragraph 7(iii) that we are using market forces and competition as part of our price control system. We are, as my right hon. and learned Friend made clear, taking a stricter control of the few large companies and other price leaders in industry. Whatever the hon. Member for Bedwellty says, this will lead to a general steadying of prices by the force of competition. Hon. Members on both sides know that this is true.
The hon. Member for West Lothian (Mr. Dalyell) asked about the numbers required in the agencies in this context. This is the point. It will not require a large and cumbersome bureaucracy, simply because of the intention to keep control largely through the market leaders, as my right hon. and learned Friend pointed out. The House will be able to judge by the quarterly reports

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which both agencies will have to put before the House.
Mr. Dalyell: Will this still be done by 700 people?
Mr. Macmillan: This is the present intention of the Government. If variation is required, it will be seen through the quarterly reports, and we can adjust our policies accordingly. [Laughter.] Hon. Members laugh, but they were complaining that we were not being flexible enough. When I talk about a change and adjustment in policy in phase 3, they seem to regard this as being too flexible. They should make up their minds.
I would point out to the hon. Member for Liverpool, Walton (Mr. Heifer) that there are no special cases in phase 2, but that phase 2 does not, as he implied, last for three years. He also said that there was nothing, or could he nothing, between the laissez-faire policies of the past and the extreme Socialism that he and some of his Friends would like to see. I would suggest to him and to other hon. Members who have made this point that they look at what totally unrestrained collective bargaining has done to the lower-paid industries in the past. We have had a system of unrestrained collective bargaining for some time, and the lower-paid industries have remained the lower-paid industries throughout that period. The House knows well why that is so, that it is the power of the stronger unions that has kept these others down in the rat race.
Hon. and right hon. Members opposite cannot seriously be suggesting that the stage 2 increases for the gas workers, for example, or for the National Health Service ancillaries are not larger in proportion to the stage 2 increases for any highly-paid group which has yet to negotiate than they would have been before the standstill and without stage 2.
The hon. Member for Walton gave the game away. He said that the Labour Party, because it is the creation of the trade union movement, the political wing of that movement, must always do what the unions say—
Mr. Heffer: I never said that.
Mr. Macmillan: That is what the hon. Member meant. He suggested that any offer made by the unions was an offer that
160
the Labour Party could not refuse. Certainly that has been the experience of right hon. Members opposite in Government over both industrial relations legislation and incomes policy.
Mr. Heffer: The right hon. Gentleman knows full well that I did not say that the Labour Party must do what the trade unions want. [HON. MEMBERS: "Oh."] I am amazed at all the people who were not in the Chamber at the time knowing what I said. The Secretary of State should not attribute to hon. Members things that they did not say. HANSARD tomorrow will make the position clear. I made it clear that we were formed in association with the trade union movement, but that we were not a trade union party, never have been and never would be.
Mr. Macmillan: I think that the hon. Member made the position clear earlier but I am not sure that he has not now made it more confused. At any rate, he said—and I think he will agree that I am not misquoting him—that there was no question of the tail wagging the dog. Judging by what went on today, there is not much question of the tail knowing how to wag itself. At the special trade union conference today, there was a call for a one-day political strike, and as a result of a procedural muddle there was no agreement on a decision or on how to help such a strike. There was no agreement except on not to set up an organisation for doing so but there was agreement to give help in some other way. The mover of the motion at the TUC pointed out that the strikes taking place now were against Government policy and could be construed as political strikes. Those were the truest words at that conference.
The agreement between the Labour Party and the TUC, which we are supposed to be considering as a replacement of the Government's policy, as set out in the consultative document, contains a-number of examples of where the Opposition in future, as they did in the past, will commit themselves to doing what the more militant elements in the trade union movement want them to do. They have committed themselves to repealing the Industrial Relations Act, just as they were pushed out of their own legislation in the last Parliament. They are pretending that there can be a viable policy for prices and incomes with no control of wages.

161
I remind the Opposition that prices were not rising so fast last summer, but wages were. The hon. Member for Enfield, East (Mr. Mackie) has suggested that we should have an early warning system for food prices; but such a system for monitoring prices is set out in the consultative document. It is far more effective than the Labour Party's policy. It made no attempt to control food prices. We are controlling the prices of processed, semi-processed and manufactured foods, and we are monitoring any cost increases very carefully.
The right hon. Member for Bristol, South-East (Mr. Benn) and others have suggested that there is only a very slender connection between wage increases and price increases. I remind him of the figures. In May 1969 earnings were rising at an average of 6·4 per cent. a year; by October 1970 they were going up at an average of 13·5 per cent.; in June 1970 prices were rising at 5·9 per cent. a year; by the time the results of the Labour
Government's wage explosion had worked their way through, in June 1971 prices were going up at 10·3 per cent. a year.
The right hon. Gentleman made a great point about profits. When the Labour Government took office in October 1964 the annual gross trading profits as a percentage of national income was 16·9 per cent.; by June 1970 this had gone down to 13·3 per cent. No wonder there was an inadequate rate of growth; no wonder the average rate of growth was only 2·1 per cent. If the right hon. Gentleman asks what policy is likely to succeed, I suggest that it is one based on a high rate of growth and an expanding economy and not on the principles and policies that he has put forward, which demonstratively failed in the past and would fail again in the future.
Question put That the amendment be made:—
The House divided: Ayes 260, Noes 289.

Division No. 76.]

AYES

[10.0 p.m.

Abse, Leo

Crossman, Rt. Hn. Richard

Grant, George (Morpeth)

Allaun, Frank (Salford, E.)

Cunningham, G. (Islington, S.W.)

Grant, John D. (Islington, E.)

Archer, Peter (Rowley Regis)

Cunningham, Dr. J. A. (Whitehaven)

Griffiths, Eddie (Brightside)

Armstrong, Ernest

Dalyell, Tam

Griffiths, Will (Exchange)

Ashley, Jack

Davidson, Arthur

Hamilton, James (Bothwell)

Ashton, Joe

Davies, Denzil (Llanelly)

Hamilton, William (Fife, W.)

Atkinson, Norman

Davies, G. Elfed (Rhondda, E.)

Hamling, William

Bagier, Gordon A. T.

Davies, Ifor (Gower)

Hannan, William (G'gow, Maryhill)

Barnes, Michael

Davis, Clinton (Hackney, C.)

Hardy, Peter

Barnett, Guy (Greenwich)

Davis, Terry (Bromsgrove)

Harrison, Walter (Wakefield)

Barnett, Joel (Heywood and Royton)

Deakins, Eric

Hart, Rt. Hn. Judith

Baxter, William

de Freitas, Rt. Hn. Sir Geoffrey

Hattersley, Roy

Benn, Rt. Hn. Anthony Wedgwood

Delargy, Hugh

Healey, Rt. Hn. Denis

Bennett, James (Glasgow, Bridgeton)

Dell, Rt. Hn. Edmund

Heffer, Eric S.

Bidwell, Sydney

Doig, Peter

Hilton, W. S.

Bishop, E. S.

Dormand, J. D.

Horam, John

Blenkinsop, Arthur

Douglas, Dick (Stirlingshire, E.)

Houghton, Rt. Hn. Douglas

Boardman, H. (Leigh)

Douglas-Mann, Bruce

Huckfield, Leslie

Booth, Albert

Driberg, Tom

Hughes, Rt. Hn. Cledwyn (Anglesey)

Bottomley, Rt. Hn. Arthur

Duffy, A. E. P.

Hughes, Mark (Durham)

Bradley, Tom

Dunn, James A.

Hughes, Robert (Aberdeen, N.)

Broughton, Sir Alfred

Dunnett, Jack

Hughes, Roy (Newport)

Brown, Robert C. (N'c'tle-u-Tyne, W.)

Eadie, Alex

Hunter, Adam

Brown, Hugh D. (G'gow, Provan)

Edelman, Maurice

Irvine, Rt. Hn. Sir Arthur (Edge Hill)

Brown, Ronald (Shoreditch & F'bury)

Edwards, Robert (Bilston)

Janner, Greville

Buchan, Norman

Edwards, William (Merioneth)

Jay, Rt. Hn. Douglas

Buchanan, Richard (G'gow, Sp'burn)

Ellis, Tom

Jeger, Mrs. Lena

Butler, Mrs. Joyce (Wood Green)

English, Michael

Jenkins, Hugh (Putney)

Callaghan, Rt. Hn. James

Evans, Fred

Jenkins, Rt. Hn. Roy (Stechford)

Campbell, I. (Dunbartonshire, W.)

Ewing, Harry

John, Brynmor

Cant, R. B.

Faulds, Andrew

Johnson, Carol (Lewisham, S.)

Carmichael, Neil

Fernyhough, Rt. Hn. E.

Johnson, James (K'ston-on-Hull, W.)

Carter, Ray (Birmingh'm, Northfield)

Fisher, Mrs. Dorls(B'ham,Ladywood)

Johnson, Walter (Derby, S.)

Carter-Jones, Lewis (Eccles)

Fitch, Alan (Wigan)

Jones, Barry (Flint, E.)

Castle, Rt. Hn. Barbara

Fletcher, Raymond (Ilkeston)

Jones, Dan (Burnley)

Clark, David (Colne Valley)

Fletcher, Ted (Darlington)

Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

Cocks, Michael (Bristol, S.)

Foot, Michael

Jones, Gwynoro (Carmarthen)

Cohen, Stanley

Ford, Ben

Jones, T. Alec (Rhondda, W.)

Coleman, Donald

Forrester, John

Judd, Frank

Concannon, J. D.

Fraser, John (Norwood)

Kaufman, Gerald

Corbet, Mrs. Freda

Freeson, Reginald

Kelley, Richard

Cox, Thomas (Wandsworth, C.)

Galpern, Sir Myer

Kerr, Russell

Crawshaw, Richard

Garrett, W. E.

Kinnock, Neil

Cronin, John

Ginsburg, David (Dewsbury)

Lambie, David

Crosland, Rt. Hn. Anthony

Gourlay, Harry

Lamborn, Harry

Lamond, James

Murray, Ronald King

Small, William

Latham, Arthur

Oakes, Gordon

Smith, John (Lanarkshire, N.)

Lawson, George

Ogden, Eric

Spearing, Nigel

Leadbitter, Ted

O'Halloran, Michael

Spriggs, Leslie

Lee, Rt. Hn. Frederick

O'Malley, Brian

Stallard, A. W.

Leonard, Dick

Oram, Bert

Stewart, Rt. Hn. Michael (Fulham)

Lestor, Miss Joan

Orbach, Maurice

Stoddart, David (Swindon)

Lewis, Ron (Carlisle)

Orme, Stanley

Stonehouse, Rt. Hn. John

Lipton, Marcus

Oswald, Thomas

Strang, Gavin

Loughlin, Charles

Padley, Walter

Strauss, Rt. Hn. G. R.

Lyon, Alexander W. (York)

Palmer, Arthur

Summerskill, Hn. Dr. Shirley

Lyons, Edward (Bradford, E.)

Parker, John (Dagenham)

Swain, Thomas

Mabon, Dr. J. Dickson

Parry, Robert (Liverpool, Exchange)

Thomas,Rt.Hn.George (Cardiff,W.)

McBride, Neil

Pavitt, Laurie

Thomas, Jeffrey (Abertillery)

McCartney, Hugh

Peart, Rt. Hn. Fred

Tinn, James

McElhone, Frank

Pendry, Tom

Tomney, Frank

McGuire, Michael

Perry, Ernest G.

Torney, Tom

Mackenzie, Gregor

Prentice, Rt. Hn. Reg.

Tuck, Raphael

Mackie, John

Prescott, John

Urwin, T. W.

Mackintosh, John P.

Probert, Arthur

Varley, Eric G.

Maclennan, Robert

Rankin, John

Waimwright, Edwin

McMillan, Tom (Glasgow, C.)

Reed, D. (Sedgefield)

Walden, Brian (B'm'ham, All Saints)

McNamara, J. Kevin

Rees, Merlyn (Leeds, S.)

Walker, Harold (Doncaster)

Mahon, Simon (Bootle)

Rhodes, Geoffrey

Wallace, George

Marks, Kenneth

Richard, Ivor

Watkins, David

Marsden, F.

Roberts, Albert (Normanton)

Weitzman, David

Marshall, Dr. Edmund

Roberts,Rt.Hn.Goronwy( Caernarvon)

Wellbeloved, James

Mason, Rt. Hn. Roy

Robertson, John (Paisley)

Wells, William (Walsall, N.)

Mayhew, Christopher

Roderick, Caerwyn E.(Brc'n&R'dnor)

White, James (Glasgow, Pollok)

Meacher, Michael

Rodgers, William (Stockton-on-Tees)

Whitehead, Phillip

Mellish, Rt. Hn. Robert

Roper, John

Whitlock, William

Mendelson, John

Rose, Paul B.

Willey, Rt. Hn. Frederick

Mikardo, Ian

Ross, Rt. Hn. William (Kilmarnock)

Williams, Alan (Swansea, W.)

Millan, Bruce

Rowlands, Ted

Williams, Mrs. Shirley (Hitchin)

Miller, Dr. M. S.

Sandelson, Neville

Wilson, Alexander (Hamilton)

Milne, Edward

Sheldon, Robert (Ashton-under-Lyne)

Wilson, Rt. Hn. Harold (Huyton)

Mitchell, R. C. (S'hampton, Itchen)

Shore, Rt. Hn. Peter (Stepney)

Wilson, William (Coventry, S.)

Molloy, William

Short, Mrs. Renée (W'hampton,N.E.)

Woof, Robert

Morgan, Elystan (Cardiganshire)

Silkin, Rt. Hn. John (Deptford)

Morris, Alfred (Wythenshawe)

Silkin, Hn. S. C. (Dulwich)

TELLERS FOR THE AYES:

Morris, Charles R. (Openshaw)

Sillars, James

Mr. John Golding and

Morris, Rt. Hn. John (Aberavon)

Silverman, Julius

Mr. Joseph Harper.

Moyle, Roland

Skinner, Dennis

Mulley, Rt. Hn. Frederick

NOES

Adley, Robert

Carlisle, Mark

Fletcher-Cooke, Charles

Alison, Michael (Barkston Ash)

Carr, Rt. Hn. Robert

Fookes, Miss Janet

Allason, James (Hemel Hempstead)

Cary, Sir Robert

Fortescue, Tim

Amery, Rt. Hn. Julian

Channon, Paul

Foster, Sir John

Archer, Jeffrey (Louth)

Chapman, Sydney

Fowler, Norman

Astor, John

Chataway, Rt. Hn. Christopher

Fox, Marcus

Atkins, Humphrey

Chichester-Clark, R.

Fraser,Rt.Hn.Hugh(St'fford & Stone)

Awdry, Daniel

Churchill, W. S.

Fry, Peter

Baker, Kenneth (St. Marylebone)

Clark, William (Surrey, E.)

Galbraith, Hn. T. G. D.

Baker, W. H. K. (Banff)

Clarke, Kenneth (Rushcliffe)

Gardner, Edward

Batsford, Brian

Cockeram, Eric

Gibson-Watt, David

Beamish, Col. Sir Tufton

Cooke, Robert

Gilmour, Ian (Norfolk, C.)

Bell, Ronald

Coombs, Derek

Gilmour, Sir John (Fife, E.)

Bennett, Sir Frederic (Torquay)

Cooper, A. E.

Glyn, Dr. Alan

Bennett, Dr. Reginald (Gosport)

Cormack, Patrick

Goodhart, Philip

Benyon, W.

Costain, A. P.

Goodhew, Victor

Bitten, John

Critchley, Julian

Gorst, John

Biggs-Davison, John

Crouch, David

Gower, Raymond

Blaker, Peter

Crowder, F. P.

Grant, Anthony (Harrow, C.)

Boardman, Tom (Leicester, S.W.)

d'Avigdor-Goldsmid, Sir Henry

Gray, Hamish

Body, Richard

Dean, Paul

Green, Alan

Boscawen, Hn. Robert

Deedes, Rt. Hn. W. F.

Grieve, Percy

Bossom, Sir Clive

Digby, Simon Wingfield

Griffiths, Eldon (Bury St. Edmunds)

Bowden, Andrew

Dixon, Piers

Grylls, Michael

Braine, Sir Bernard

Dodds-Parker, Sir Douglas

Gummer, J. Selwyn

Bray, Ronald

Drayson, G. B.

Gurden, Harold

Brewis, John

Dykes, Hugh

Hall, Miss Joan (Keighley)

Brinton, Sir Tatton

Eden, Rt. Hn. Sir John

Hall, John (Wycombe)

Brocklebank-Fowler, Christopher

Edwards, Nicholas (Pembroke)

Hall-Davis, A. G. F.

Brown, Sir Edward (Bath)

Elliot, Capt. Walter (Carshalton)

Hamilton, Michael (Salisbury)

Bruce-Gardyne, J.

Elliott, R. W. (N'c'tle-upon-Tyne,N.)

Hannam, John (Exeter)

Bryan, Sir Paul

Emery, Peter

Harrison, Brian (Maldon)

Buchanan-Smith, Alick (Angus,N&M)

Eyre, Reginald

Haselhurst, Alan

Buck, Antony

Farr, John

Hastings, Stephen

Bullus, Sir Eric

Fell, Anthony

Havers, Sir Michael

Burden, F. A.

Fenner, Mrs. Peggy

Hawkins, Paul

Butler, Adam (Bosworth)

Fidler, Michael

Hay, John

Campbell, Rt. Hn. G. (Moray & Nairn)

Fisher, Nigel (Surbiton)

Hayhoe, Barney

164

165

Hicks, Robert

Maxwell-Hyslop, R. J.

Shaw, Michael (Sc'b'gh & Whitby)

Higgins, Terence L.

Mills, Peter (Torrington)

Shelton, William (Clapham)

Hlley, Joseph

Miscampbell, Norman

Shersby, Michael

Hill, John E. B. (Norfolk, S.)

Mitchell,Lt.-Col.C.( Aberdeenshire,W)

Simeons, Charles

Hill, S. James A.(Southampton,Test)

Mitchell, David (Basingstoke)

Sinclair, Sir George

Holland, Philip

Moate, Roger

Skeet, T. H. H.

Holt, Miss Mary

Molyneaux, James

Smith, Dudley (W'wick & L'mington)

Hordern, Peter

Money, Ernie

Soref, Harold

Hornby, Richard

Monks, Mrs. Connie

Speed, Keith

Hornsby-Smith,Rt.Kn.Oame Patricia

Montgomery, Fergus

Spence, John

Howe, Rt. Hn. Sir Geoffrey

More, Jasper

Sproat, Iain

Howell, David (Guildford)

Morgan, Geraint (Denbigh)

Stainton, Keith

Howell, Ralph (Norfolk, N.)

Morgan-Giles, Rear-Adm.

Stanbrook, Ivor

Hunt, John

Morrison, Charles

Stewart-Smith, Geoffrey (Belper)

Iremonger, T. L.

Mudd, David

Stodart, Anthony (Edinburgh. W.)

Irvine, Bryant Godman (Rye)

Murton, Oscar

Stoddart-Scott, Col. Sir M.

James, David

Nabarro, Sir Gerald

Stokes, John

Jenkin, Patrick (Woodford)

Neave, Airey

Stuttaford, Dr. Tom

Jennings, J. C. (Burton)

Nicholls, Sir Harmar

Sutcliffe, John

Jessel, Toby

Noble, Rt. Hn. Michael

Tapsell, Peter

Johnson Smith, G. (E. Grinstead)

Nott, John

Taylor, Sir Charles (Eastbourne)

Jones, Arthur (Northants, S.)

Onslow, Cranley

Taylor,Edward M.(G'gow,Cathcart)

Jopling, Michael

Oppenheim, Mrs. Sally

Taylor, Frank (Moss Side)

Joseph, Rt. Hn. Sir Keith

Orr. Capt. L. P. S.

Taylor, Robert (Croydon, N.W.)

Kaberry, Sir Donald

Owen, Idris (Stockport, N.)

Tebbit, Norman

Kellett-Bowman, Mrs. Elaine

Page, Rt. Hn. Graham (Crosby)

Temple, John M.

Kilfedder, James

Page, John (Harrow, W.)

Thatcher, Rt. Hn. Mrs. Margaret

King, Tom (Bridgwater)

Parkinson, Cecil

Thomas, John Stradling (Monmouth)

Kinsey, J. R.

Peel, Sir John

Thomas, Rt. Hn. Peter (Hendon, S.)

Kirk, Peter

Percival, Ian

Thompson, Sir Richard (Croydon. S.)

Kitson, Timothy

Peyton, Rt. Hn. John

Trafford, Dr. Anthony

Knight, Mrs. Jill

Pink, R. Bonner

Trew, Peter

Knox, David

Pounder, Rafton

Tugendhat, Christopher

Lambton, Lord

Powell, Rt. Hn. J. Enoch

Turton, Rt. Hn. Sir Robin

Lamont, Norman

Price, David (Eastleigh)

Vaughan, Dr. Gerard

Lane, David

Prior, Rt. Hn. J. M. L.

Vickers, Dame Joan

Le Marchant, Spencer

Proudfoot, Wilfred

Waddington, David

Lewis, Kenneth (Rutland)

Pym, Rt. Hn. Francis

Walder, David (Clitheroe)

Lloyd, Rt.Hn. Geoffrey (Sut'nC'field)

Raison, Timothy

Walker, Rt. Hn. Peter (Worcester)

Lloyd, Ian (P'tsm'th, Langstone)

Ramsden, Rt. Hn. James

Walker-Smith, Rt. Hn. Sir Derek

Longden, Sir Gilbert

Rawlinson, Rt. Hn. Sir Peter

Walters, Dennis

Loveridge, John

Redmond, Robert

Ward, Dame Irene

Luce, R. N.

Reed, Laurance (Bolton, E.)

Warren, Kenneth

McAdden, Sir Stephen

Rees, Peter (Dover)

Wells, John (Maidstone)

MacArthur, Ian

Rees-Davies, W. R.

White, Roger (Gravesend)

McCrindle, R. A.

Rhys Williams, Sir Brandon

Wiggin, Jerry

McLaren, Martin

Ridley, Hn. Nicholas

Wilkinson, John

Maclean, Sir Fitzroy

Ridsdale, Julian

Winterton, Nicholas

Macmillan, Rt.Hn. Maurice (Farnham)

Rippon, Rt. Hn. Geoffrey

Wolrige-Gordon, Patrick

McNair-Wilson, Michael

Roberts, Michael (Cardiff, N.)

Wood, Rt. Hn. Richard

McNair-Wilson, Patrick (New Forest)

Roberts, Wyn (Conway)

Woodhouse, Hn. Christopher

Maddan, Martin

Rodgers, Sir John (Sevenoaks)

Woodnutt, Mark

Madel, David

Rossi, Hugh (Hornsey)

Worsley, Marcus

Maginnis, John E.

Rost, Peter

Wylie, Rt. Hn. N. R.

Marples, Rt. Hn. Ernest

Royle, Anthony

Younger, Hn. George

Marten, Neil

Russell, Sir Ronald

Mather, Carol

St. John-Stevas, Norman

Maude, Angus

Sandys, Rt. Hn. D.

TELLERS FOR THE NOES

Maudling, Rt. Hn. Reginald

Scott, Nicholas

Mr. Walter Clegg and

Mawby, Ray

Scott-Hopkins, James

Mr. Bernard Weatherill

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That this House takes note of the Consultative Document on the Price and Pay Code (Command Paper No. 5247).

COUNTER-INFLATION PROPOSALS (PAY)
10.12 p.m.
Mr. Thomas Torrey: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Counter-Inflation (Restriction on Remuneration) Order 1973 (S.I. 1973, No. 148), dated 1st February 1973, a copy of which was laid before this House on 2nd February, be annulled.
In rising to move the annulment of Statutory Instrument No. 148—
Mr. Speaker: Order. Would right hon. and hon. Members retire as quietly and as quickly as possible and stop their conversations.
Mr. Torrey: In rising to move the annulment of Statutory Instrument No. 148, I am mindful of the great honour of being given this opportunity of speaking for the first time from the Opposition Front Bench. I am conscious of the frustration of waiting on the back benches hoping to catch Mr. Speaker's eye in debates that often have more speakers than time available. I know that many of my hon. Friends wish to contribute to this debate. Therefore, I propose to be as brief as possible.
The Counter-Inflation Order withholds increases in wages for large numbers of employees in the Co-operative movement. They are mainly members of the Union of Shop, Distributive and Allied Workers. There are four agreements between that union and the employers involved in the order. Negotiations for these agreements took place in the early part of last year and culminated in May 1972. The agreements covered workers over a wide range of distribution in various occupations in shops, stores, warehouses, offices, restaurants and laundries.
I will now deal specifically and in some detail with the effects of the order upon the workers concerned. I must declare my interest inasmuch as I am sponsored to the House by the Union of Shop, Distributive and Allied Workers. The agreement referred to in the order as general distributive deals with a variety of people such as deputy managers, first assistants, specialised assistants, warehouse workers and porters. But that is not where the Government axe falls.
168
While no one can describe them as well paid or over paid, these people are nevertheless somewhat better off than the people on whom the order will fall.
This so-called counter-inflation order falls on the very lowest-paid workers covered by the agreement, the ordinary shop assistants, the packers and, strange as it may seem, the cashiers and checkout operators, who, as anyone who has been in a supermarket or large store will know, are responsible for large sums of cash but whose wages are very low.
The agreement operated in two stages. These unfortunate low-paid workers had the misfortune to have such low pay that they required so substantial an increase that, perhaps in order to persuade employers, to make it a little easier for them to pay the agreement, the wage increase concluded in May of last year was to paid in two stages, one in May and another in December. That in December of last year was for £1, and it is that that the order freezes.
A shop assistant receives the princely sum of £16·10 in the London area and £15·35 in the provinces at the age of 21. A cashier or check-out worker responsible for a lot of money and doing an important job gets little more than that, £16·65 in London and £15·90 in the provinces. Those are the kinds of rates that the Government are freezing by the order.
The clerical agreement is also frozen by the order. Additional increments going right through the age scale and agreed in May were to be paid at the end of last year. Service agreements of £1 to be paid after a worker had completed a year's or two years' service after the age of 21 are to be frozen. A highly-skilled clerk working in a Co-operative office attached to Co-operative stores and shops is still being paid less than £20 a week, and that is if the increase had been allowed to operate. A clerk aged 21 would have received the princely sum of £18 in London and £17·30 in the provinces, with a slight increase for one year's or two years' service after 21 but still below the £20 figure. This is with the increase which the Government will not allow.
The freeze has prevented the progress towards equal pay under this clerical agreement. The agreement embodied a phasing-up to achieve 100 per cent. equal

169
pay between men and women. I understand that the Minister has issued consent orders in the last day or so covering some of these agreements, which means that some workers will be allowed to receive their increase. It has to be remembered that these increases will be paid nine weeks late and that payment covering the nine weeks is lost for ever.
The important thing is that for the sales assistants and the packers, the worst hit by the freeze, no such consent order has been made. Why could not the Minister have allowed a consent order in their case? Perhaps he will tell us later. It is strange that although I tried everywhere in the House on Thursday to secure a copy of these consent orders I failed. Apparently Members of Parliament must obtain their information second-hand. Mine came from the Union of Shop, Distributive and Allied Workers. I search my mind for a reason why the Government chose to operate this sanction against shop and distributive workers.
The Minister must prove that £16·35 in the provinces and £17·10 in London—this includes the increase—is inflationary. These modest increases were agreed with the employers eight months earlier. In that period rising prices and the devalued pound have made the negotiations out of date. It is not possible to talk to a man taking home less than £15 a week in terms of inflation. How can it be said that to give him the £1 will wreck the Government's economic policy when the goods he packs and sells continue to rise in price? He has contributed nothing to the wages spiral but has suffered much in his struggle to exist and to keep a family on £15.
Further, there is little or no overtime to boost earnings in distribution and shop work. The actions of the Government in choosing the worst off in the community against whom to operate their repressive orders, their actions in confronting the unions, show a complete lack of understanding of what makes trade unions tick. The great mass of workers who joined trade unions are not challenging the Government. They are not holding the nation to ransom. I know from experience that those who join unions do so because they require fair and decent wage rates, proper fringe benefits, job security, protection against
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accidents at work and recognition of the dignity of labour. Above all, they require justice. That is why workers combine. Government policies fail to give justice. Then workers become militant. We are confronted with today's chaos because of the complete lack of ability of the Government to understand workers and their problems.
The Government stand indicted by making repressive orders condemning the worst-off in our community to remain long in their poverty. The freeze is wrong because it is unjust. It is inflexible. It fails to control the price of essential foods. It fails to listen to reason. It fails to stop speculators in land, in homes and in the Stock Exchange.
Mr. F. A. Burden: On a point of order, Mr. Deputy Speaker. I can see nothing about property speculation or the price of milk in this order.
Mr. Torney: The hon. Gentleman would not understand that the cost of things like rent must come out of the miserable wage of £15 a week which shop workers receive. That has some effect on the way in which they are able to keep their families.
We shall divide the House because, despite the events of recent days, and despite the excursions into dreamland by the mass media about the continued existence of our party, the Labour Party still represents the only effective opposition to the Government's disastrous policies. We shall divide the House because Labour still believes that succour must be given to the poorest in our land, and if this means taking from those most able to afford it to give to those most in need, it must be taken.
10.27 p.m.
Mr. Wilfred Proudfoot: I walked into the Chamber without having the slightest intention of making a speech.
I formally congratulate the hon. Member for Bradford, South (Mr. Torney) on his maiden speech from the Opposition Front Bench. I have a great advantage over him. He had prepared his speech, and it suffered from all the problems of preparing a speech. I am only disappointed that I have not a music stand to put my three notes on.
However, the hon. Gentleman identified the lowest-paid workers in the land. I

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am fed up with hearing about the agricultural workers, the miners, or about this group or that. [Interruption.] The hon. Member for Ebbw Vale (Mr. Michael Foot) should listen because he does not know who the lowest-paid workers are. They are in distribution. I am one of the employers in that business. [Hon Members: "Shame."] Shame? At least I am honest.
Mr. Torney: Then come into the Lobby with us.
Mr. Proudfoot: No. The hon. Gentleman has spent a lifetime of work in USDAW but he has just shown that he does not know the first thing about retailing. I should be delighted, as would every retailer, to give my workers higher wages. I shall tell the House why we cannot do so. We in retailing and distribution are in vigorous competition.
Mr. Torney: I spent about 15 years working behind a shop counter before I worked full-time for USDAW.
Mr. Proudfoot: I do not know offhand how long I have worked in retailing. I was in the Royal Air Force and in the political business. I was also a radio pirate.
The reality is that if, as an individual, I cut my prices to beat the competition I shall be likely to put myself out of business. Retailers and all people in distribution know about the market price. They do not have to listen to my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). They know about the market. He learned out of a textbook about it. I learned it in reality. The hon. Member for Bradford, South has not learned it in reality.
Let me put this to some of the trade unionists here who represent industrial workers. Have they ever seen the customers among the production workers on the factory floor? Can one imagine the workers at Ford having the customers amongst them on the factory floor? But this is a factor which the retailer faces every day. His customers are with him every day.
Here is an honest admission. People in retailing are some of the lowest-paid workers in this country. The hon. Member for Bradford, South was right when
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he said we recently had a wage increase. It was last week. He was right, and we are moving towards equal pay. But the hon. Member did not tell the House that the biggest increase the retail employees have ever had was last week—in cash. He forgot to say that to the House, but it is the truth. The biggest increase happened last week. It was the biggest cash increase the retail shop assistants have ever had, and it occurred last week. The hon. Member for Bradford, South, a well-known member of USDAW, will surely know. Let us have the truth. It was the biggest cash increase the retail employees of this country have ever got.
The hon. Member said something about prices. He will see from the Green Paper that the retailers and the distributors are the most harshly dealt with. I am not grumbling about that at all; but it is no good the Opposition making noises about increased prices, because the retailers always make the same margin. If hon. Members opposite bother to look at the White Papers their own Government produced and what their Prices and Incomes Board produced they will find the truth documented for them; if they bother to look it up they will find that retailers are earning the same gross percentage margin. The present Green Paper says we should even limit our cash margins. The Green Paper treats harshest this section of our community. Hon. Members are asking for increased wages for people. I do not disagree that they are speaking for the lowest-paid section of the community and asking for more wages for them, but they should ask the question: how can there be increased wages out of smaller profit margins?
At the same time, this House makes silly noises about planning permissions for supermarkets or hypermarkets or whatever silly name is used now, and there are difficulties made about car parking outside shops or larger retail stores. How can this country or any other get increased productivity in retailing in such circumstances? I ask hon. Members opposite who are members of USDAW, if they know anything about retailing, to proclaim the truth of that. It really is a technical truth about retailing.
I agree completely with the hon. Member for Bradford, South, that wages are low, and these are the lowest-paid

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people; but let us look at the whole situation. The whole thing is a price freeze. If the workers in distribution get £1 plus 4 per cent., that is bigger than the increase they got last week, and last week's was the biggest increase they have ever had. If they get £1 plus 4 per cent. before the end of stage 2, that will be the biggest increase they will ever have had in their lives. Let us get the fact of the case before making noises. Stage 3 is not far away. So I do not think that people in distribution will be that disturbed about this. The distributive workers hear more about prices and price increases than any politician in this House —and they have to carry the can for us.
Mr. Stanley Cohen: The hon. Member has said several times that the distributive workers have just received the largest increase they have ever had, but he has made no reference to their take-home pay. Perhaps he will enlighten me?
Mr. Proudfoot: I am not disagreeing with the hon. Member for Bradford, South. He is absolutely right about their take-home pay. I agree with him that they are the lowest-paid workers in the community. I am trying to demonstrate that the employers cannot increase the wages without putting themselves out of business.
Mr. John Prescott (Kingston-upon-Hull): That is because of competition.
Mr. Proudfoot: Certainly it has to do with good, old-fashioned competition.
Mr. Prescott: They suffer.
Mr. Proudfoot: The hon. Gentleman says that they suffer. He is talking about the monopoly of power of the trade unions, the monopoly power of the miners, the people who make motor cars, the gas workers. He is saying that they are trying to apply their monopoly power.
Mr. Prescott: The whole theme of the argument has been that because of competition the employers are unable to pay their workers more. How often have we heard employers say that. How relevant is it? The hon. Gentleman says that the Ford workers and miners are able to exploit a monopoly position. How can that, under the free market system, be applied to the retail trades?
Mr. Proudfoot: There is a simple answer—lower the price of motor cars. That is the plain, unvarnished truth. If the hon. Gentleman watched television last night he will have heard William Buckley, Junior, the American Right-winger say so. The National Union of Seamen has priced its employers—
Mr. Deputy Speaker (Miss Harvie Anderson): Order. I hope all hon. Members will observe the conventions of the House.
Mr. Proudfoot: Has the hon. Gentleman ever known his union to negotiate for lower charter rates? That is what the market place is about. Since the war one union has actually asked for lower wages. That was the union which represented the chaps who knitted women's stockings with seams and that was when seamless stockings came in and the men found themselves out of trade. There were two unions—
Mr. Deputy Speaker: Order. I do not think those matters appear in the order either.
Mr. Proudfoot: I beg your pardon, Mr. Deputy Speaker, but I am being provoked.
I conclude by saying that I agree completely with the hon. Member for Bradford, South that the distributive workers are underpaid, but perhaps the same applies in every country. Competitive private enterprise is doing a good job of work. Competition is more apparent in distribution than at any other stage. If somebody gets on to a good thing in a private enterprise economy he is rapidly copied by imitators. I speak as an ex-radio pirate. The Labour Government had to hurry up and legislate because pirate radio operators were becoming too numerous, being on to a good thing. Hon. Members should look at the filling stations. They will see some of them empty. This is about competition.
I return to the subject of the debate. I am convinced that competition is the great protector of the consumer, and USDAW has not got a monopoly within its own work force. Other unions are involved. The hon. Member for Bradford, South recognises that fact. He would love to increase the membership of USDAW incredibly. I do not disagree

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with him, for I think that the workers should have a voice. But the fact remains that the customers also have a voice and that members of USDAW really do meet them.
10.41 p.m.
Mr. Walter Padley: I follow the hon. Member for Brighouse and Spenborough (Mr. Proudfoot) once again. He speaks with the voice of the employers in the retail trades. We should never forget that when he rises to his feet. I declare my interest. I am associated with the Union of Shop, Distributive and Allied Workers, and was its president for 16 years.
The order does not require the broad canvas that has been painted tonight. The plain fact is that as far back as May 1971—not May 1972, for the 1972 reference merely endorsed the 1971 agreement—my people in the distributive trades, those who check customers out in the supermarkets, the women shop assistants, some male porters and others, were receiving scandalously low rates of pay. In all sections of the retail trades, USDAW conducted negotiations—with the Co-operative movement, the supermarkets and the multiple stores. There were negotiations also on the statutory minimum rates payable under the wages boards, to which the hon. Gentleman referred.
The hon. Gentleman may pay the scandalously non-union rates laid down by statute of this House against his will and against the will of the other employers, but that is not true of the Co-operative movement or of the multiple stores. So saying that we have had the largest increase ever in the last week, that the wages council's order came into effect on 26th February, has nothing to do with the case, because these other workers still lag behind the agreement USDAW made with the Co-operative movement, the supermarkets and the multiple stores.
We are dealing with a very simple issue, one which cannot be muddled up with the wage freeze or anything else. I have never come to this House before to confess agreement with the right hon. Member for Wolverhampton, South-West (Mr. Powell), but even he was right when he said that the Government were im-
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posing a wage freeze for which they had no legal power. It was not until USDAW said that it would take the employers to the ordinary courts of the land that this miserable, mean, contemptible order was produced to the House. That is a fact which cannot be denied by the garrulous employer-chatter of the hon. Member for Brighouse and Spenborough or by the smoother words we shall hear from the Government.
As long ago as May 1971 this £1 a week increase for people then on £14 or £15 a week—now £15 or £16—was agreed by the employers and the unions. Subsequently there were other increases, but, as my hon. Friend the Member for Bradford, South (Mr. Torney) pointed out, they were part of the process of moving towards equal pay. Because of that, there was provision that the increases should be staggered over two years rather than over one year.
I ask the House to recognise that this order has been brought about only because the Government have broken the law to which the right hon. Member for Wolverhampton, South-West referred. We are asked to say that the economic burdens of Britain, before the Budget tomorrow, shall be carried on the backs of men and women earning £14, £15 and £16 a week.
Government supporters can say what they like. They can indulge in as much backchat as they like. I was elected president of my union in my day and I became a Member of this House to cry out against such scandals. I do that tonight. I accuse the Government of imposing an iniquitous and scandalous wage freeze at a time when prices are rising. They are breaking faith in overturning an agreement that was reached in May 1971.
Anyone who tries to defend the Government's action, with the Law Officers of the Crown behind him, may find the ordinary courts of the country taking a different view. That certainly is the view that I shall pursue in my union, of which I am proud to be a member. I condemn this Government not only for their wage freeze but for this iniquitous action against the people from whom I come.
10.47 p.m.
Mr. F. A. Burden: I have listened with great interest to what

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has been said about the order. What is more, I listened carefully to the speech of the right hon. Member for East Ham, North (Mr. Prentice) earlier. Listening to him, it seemed to me that it was the wish of the Labour Party to give the green light to every wage increase that was demanded. At the same time, however, we have the constant demand to hold down prices. It is not for me to say that the two are inconsistent, beyond reminding the House that it was the Leader of the Opposition who, just over three years ago when he was Prime Minister, said that one man's wage increase was another man's price increase.
If the Opposition continue to talk about holding down prices, they must come out openly and say how much in excess of the 8 per cent. wage increase which is allowed under stage 2 should be permitted without increasing prices.
The hon. Member for Bradford, South (Mr. Torney) quoted the earnings of workers in the Co-operative movement. He said that it was a disgrace that they were taking home £16·35 in the provinces and £17·10 in London. I agree that those are very low wages—far too low. But I remind the Opposition that if wage increases that apparently they wish to see are brought about, there will be the most violent escalation in prices, with the result that anything those people get will still leave them in a deplorable position. I repeat that although their wages are still so low, only a week or so ago they had the biggest wage increases for a long time.
It is also stated that my hon. Friend the Member for Brighouse and Spenborough (Mr. Proudfoot) was expressing the views of the employers in the retail trades. The benches opposite contain a number of hon. Members who speak for representatives and employers in the retail trades, because they are sponsored by the Co-operatives.
Mr. Geoffrey Rhodes (Newcastle-upon-Tyne, East): I am one of those sponsored Members. The difference between myself and the hon. Member for Brighouse and Spenborough (Mr. Proud-foot) is that I represent part of a movement of 13 million working-class people who want to pay this money anyway.
Mr. Burden: This is an extraordinary attitude. This sudden zeal, this sudden demand for these tremendous wage increases—[HON. MEMBERS: "Small."] All right, small wage increases. Hon. Gentlemen opposite say that they are small wage increases, but they have represented workers in the Co-operative movement for many years. Why did they not show the same zeal for them having big or even small wage increases to bring them into line with others in the distributive trades and in industry before the present Government came to power?
Mr. Proudfoot: Perhaps it will help my hon. Friend and the House to recognise that there are three different stages. There are the independents, the Co-operatives and the multiples. At three different times of the year there are three different wage rates. This is a most extraordinary fact of life.
Mr. Deputy Speaker: Order. I hope that the House will bear in mind how many hon. Members hope to speak in this limited debate.
Mr. Burden: I recognise that, Mr. Deputy Speaker, but I must make this point. The hon. Member for Ogmore (Mr. Padley) stated that arrangements had been made way back in 1971 to increase the salaries of members of the Co-operatives. There was no wage freeze then. Why were they not implemented?
Mr. Padley: The answer is that there were increases in May 1971 and in May 1972. This further increase was part of a global policy, to which all hon. Members give lip service, of equal pay for equal work.
Mr. Burden: That makes my point and enables me to conclude my speech. It is clear that if they received increases in both 1971 and 1972, the Co-operative workers are much better off under a Conservative than under a Labour Government and it explains why sponsored Members of the Co-operative movement are not raising a murmur against the Government which imposed this low standard of living upon them.
10.54 p.m.
Mr. Charles Loughlin: The hon. Member for Gillingham (Mr. Burden) has an infinite capacity for talking about matters of which he knows

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nothing, and consequently I do not propose to refer to anything that he said.
The hon. Member for Brighouse and Spenborough (Mr. Proudfoot) knows something about distribution, but I wish that tonight he had prepared his speech. The hon. Gentleman began by saying that it was unprepared, but he did not need to tell us that. The longer it went on, the more obvious it became that he had not even thought about his speech, and he was not even thinking about it when he was making it.
The hon. Gentleman said that because profit margins were low employers in the distribution trades would be only too willing to pay increases in wages. I very much doubt that. If, however, that is so, if the hon. Gentleman subscribes to that idea and if one section of distribution is prepared to pay irrespective of the low profit margins, the hon. Gentleman can demonstrate it by coming into the Division Lobby with us tonight, because the Co-operatives want to pay it. The Co-operative Union, which is the employers' association, is prepared to pay these increases, provided that the Government do not refuse to allow that to be done.
The hon. Gentleman referred to the massive wage increase being paid this week for the people in distribution. It is true that there are three sectors of distribution—the Co-operatives, the multiple trade and the private trade. The people covered by the wages council for the food sector are, by and large, employed in private distribution, not in the multiples or Co-operatives, where there are private agreements. The hon. Gentleman may be within the sector that we call the private trade, because he is not a multiple or an area multiple.
The so-called massive increase that came into effect on 26th February this year produces wages rates in the London area of £15·90 a week for shop assistants, stockmen and van salesmen aged 21 and over. That is the massive increase about which the hon. Gentleman is talking, but it does not apply to Co-operative workers or to the multiple trade. We are dealing with an order relating to the Co-operative movement.
I understand that during the last few days two eminent gentlemen have been appointed to look at the problems of
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wages and prices. I understand, too, that they will oversee and either agree or disagree with wage increases for people who are earning £15·90. As soon as they assume office—
Mr. Burden rose—
Mr. Loughlin: If the hon. Gentleman knew anything about the subject I should willingly give way to him. As soon as these gentlemen assume office they will automatically receive increases, one of £5 a week and the other of £150 a week. This is what life is about. The Government are tonight holding back an increase of £1 on the miserable rates to which my hon. Friend the Member for Bradford, South (Mr. Torney) referred, and were it not for the lack of time I should refer, to many more instances. The Government are holding back the payment of £1 which was negotiated way back in May 1971. It is not as though this was negotiated after the Government's policy was introduced. When it is paid, the gross pay—not the take-home pay—of a shop assistant in one of the larger provincial towns will be £16·35 at 21 and £17·10 in London.
I know that this measure is not about land speculators or house prices, but we should try to get into context the problems of people on a gross wage of this kind who then face deductions and even, in the case of single people or widows and widowers, have to pay income tax. They then have to pay rent or mortgage repayments, if they have been able to get a mortgage.
I can understand hon. Members on the Government side wanting to support their Government's policies. When I was on the other side of the House I supported the Government in a similar policy. But I see no reason why they should be so enthusiastic to deny increases to people who are in some cases living on take-home pay which is lower than the supplementary benefit for which they would qualify—
Mr. Burden: What did the Labour Government do about that?
Mr. Loughlin: I am talking to hon. Members other than the hon. Member for Gillingham, who mutters so much. I am asking how they can get so enthusiastic—[Interruption.] The hon. Member was not in the House when his two hon. Friends spoke.
Mr. Proudfoot: What the hon. Member is saying is interesting. But the incredible thing is that to my knowledge the people to whom he is referring are supporters of the Government's attempt to stop inflation. It is the low-paid and the people on fixed incomes who are getting hurt by inflation. They have the sense to be on the side of the Government.
Mr. Loughlin: I wish that the hon. Gentleman would go into shops other than his own. His own employees may tell him that. I go into shops and meet shop workers, and I know how they view the Government's policy. We all want to defeat inflation. It is psychologically easy to defeat inflation if one refuses to give shop workers El a week while one gives f150 a week to the guy who is to supervise their increases in future.
In the circumstances of people on these wage rates, who, although they work all week, take home less than they could get on supplementary benefit, I cannot understand how the Government, bad though they are, can introduce an order of this kind. I hope that the House will vote unanimously against it.
11.5 p.m.
Mr. J. R. Kinsey: It is true that the shop workers are poorly paid, but it should be pointed out that wages vary between the multiple Co-operatives and the small shop keepers. Indeed, they vary from trade to trade and from area to area, and in some areas they even vary according to turnover. It is a peculiarly difficult trade to understand. Regrettably, the shop workers have always been among the lower paid, but they have always been loyal workers who have given their all to the owners of the shops and to the spirit of competition that prevails in the industry.
It must be pointed out that shop workers were particularly low paid when the Labour Government were in office. The Opposition tonight are crying crocodile tears over a system which was in operation during their time in government.
Mr. Loughlin: Is the hon. Gentleman aware that under a Labour Government not a single increase for shop workers was stopped?
Mr. Kinsey: It might be true to say that not one was stopped, but in those days those workers did not have a chance to get very many increases. Therefore, the Opposition have nothing to brag about in terms of what they did for the shop workers. In fact, it is true to say that the shop workers distrust them.
Mr. Proudfoot: My hon. Friend may recall that when the right hon. Member for Blackburn (Mrs. Castle) was the Minister responsible for these matters, she sat on one of these wage increases for over nine months before she signed it.
Mr. Kinsey: That is an interesting fact of which, I must confess, I was not aware, but the House will be interested to hear that from my hon. Friend.
The shop workers are to some degree the victims of their own knowledge of the competitive system. They wholeheartedly support the competitive system. People who have knowledge of the industry know that when those workers see a lower-priced article in the shop across the road, they are the first to tell their employers to do something about the situation because they want to see the people coming into their shop. That is why they co-operate and want to attract the housewife by selling at the lowest possible price. They want to co-operate to keep the price ticket low. They are loyal to the boss and they support the Government wholeheartedly in beating inflation.
The shop workers will co-operate with the Government, far more than the TUC has tried to do today. Those shop workers are the last point of contact between the line of production and the customer. They are the ones who have to meet the customer's wrath when he or she comes into the shop. They suffer from inflation and they want to see it beaten. They know the dangers of inflation and they know that workers cannot strike their way out of an inflationary situation. They can only work their way out of it. And this is what they will be prepared to do.
11.9 p.m.
Mr. Laurie Pavitt: The hon. Member for Birmingham, Perry Barr (Mr. Kinsey) spoke eloquently as though he had some strange vision of

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what he thought people should be thinking on the shop floor in terms of retail distribution. I assure him that he is miles away from any accurate vision of the present situation.
Of course the whole country wants to stop inflation, but the reason why my name is among those supporting the Prayer tonight, and the reason why I hope we shall have a good vote in the Division, is that I feel that this kind of Government action is grossly unjust and unfair in the attempt to stop inflation.
This is not the first time that we in this country have faced this kind of problem, but it seems to be part of the pattern that the people who take the brunt are always the lowest paid. I recall the time in 1961 when there was a freeze. It was the hospital workers who suffered. It was the nurses who were caught first. On this occasion, it is again the hospital ancillary workers—the ones who are striking this week—and the lowest-paid workers in retail distribution who are caught.
I declare my interest here. I am one of 1,200,000 members of the London Co-operative Society, and I am a Cooperative-sponsored Member of Parliament. I am not an USDAW man. I am a Co-op man, trying to represent the consumer.
The Government took illegal action, and by the order they are making it legal. Apart from the injustice to workers in retail distribution, what they have done cuts across something which I should have expected all hon. Members to wish to see prevail, namely, a system for securing agreement by rational and logical means between employer and employee.
The House knows that the order is directed against the Co-operative movement, which for almost the whole of this century has had a wages board system for negotiation—the Government have always said that that is what they want—whereby people get round the table to sort out the agreement that can be reached. As my hon. Friend the hon. Member for Ogmore (Mr. Padley) said, it is done in a rational way over a period of time. From 1971 onwards an agreement has been come to and, being gentlemen, the people concerned wanted to keep that agreement. The employers—in the Co-operative movement, that means the
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ordinary members; anyone with a £ I share owns an interest in it—wanted to keep the agreement. We wanted to keep our agreement. Yet the order cuts right across the normal negotiating procedure and all the understandings which have been reached and maintained over the past half-century. By what they have done, the Government have prevented both sides from settling their disputes amicably.
I congratulate my hon. Friend the Member for Bradford, South (Mr. Torney) on his full coverage of the matter from the Front Bench tonight. He reminded the House of the other question which applies here: what will wages buy? One does not have wages just for the heck of it; one has wages to keep one's wife and family. In my area the London Co-operative Society has a large milk depot. What will the basic wage of £17·10 buy? What about rent? We have some three-bedroom flats available, but they cost £16,000 to buy. What sort of mortgage is available to a man on £17·10? We recently completed a nice redevelopment scheme of council flats, and the economic rent there is £13·50 a week. How many retail distribution workers on £17·10 basic pay will be able to afford that?
My hon. Friend pointed to the differential between the large conurbations and the rural areas. What professional man would accept the London weighting as satisfactory? Hon. Members on the Government side who criticise our case think only of office workers and professional workers in jobs which offer increments without the need to ask for them. They are not bargained for. Annual increments and fringe benefits come along, according to the job. In the trade union movement, on the other hand, and in retail distribution every penny of increase has to be fought for and negotiated.
For the past 50 or 60 years a system has been developed and organised so that, instead of there being industrial disputes, agreements are reached in a logical way. But now the Government have stepped in with their order. The London society wanted to pay the increase to which it had agreed, and it was this commitment which led to the introduction of the order.
I hope that there is a sense of social justice in the House tonight. We have

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had a lot of nonsense from the hon. Member for Brighouse and Spenborough (Mr. Proudfoot). I remember him talking similar stuff when he represented Cleveland. We had much the same sort of performance from the hon. Member for Gillingham (Mr. Burden), who paints a broad canvas and tries to make a lot out of very little. If there is a sense of justice, there will be a lot of hon. Members to support us in the Lobby. It is not just a matter of getting justice for workers in the retail distributive trades; it is a matter of trying to make some sense out of the Government's economic policy which, by its inflexibility, is making nonsense out of what even they want.
11.15 p.m.
The Minister of State, Department of Employment (Mr. R. Chichester-Clark): I congratulate the hon. Member for Bradford, South (Mr. Torney) upon his first appearance at the Opposition Dispatch Box. I hope he will often find himself there. I am sure he will, since he rose much less nervously than I do whenever I rise to speak from the Dispatch Box for the Government.
When, last November, the Government faced the need to impose a standstill, they decided to rely on co-operation backed by enabling powers to enforce compliance to be used only when necessary. As the House will recognise, that was how it was operated. The majority of people have complied voluntarily and in only a handful of cases has it been necessary to use the powers of enforcement provided by the Counter-Inflation (Temporary Provisions) Act. The order which we are debating is one of the very few which have had to be made by my right hon. Friend the Secretary of State.
At the beginning of the standstill the Government issued a White Paper setting out the requirements of the standstill. One requirement was that increases due during the standstill under pre-standstill settlements should be deferred until the end of the standstill but could then be implemented. The order was made because at a relatively late stage the Cooperative Employers' Association said that it could no longer comply voluntarily. My right hon. Friend with great regret found it necessary to use his power.
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The hon. Member for Bradford, South mentioned the effect of the Equal Pay Act 1970. I think that most hon. Members recognise, as far as equal pay is concerned, that it was necessary to stand everybody still, but during stage 2 there is special provision outside the pay limit to enable the differential between men's and women's rates to be reduced by up to one-third. That will still enable the target, to which the Government are committed, of full equality and equal pay to be reached by 1975.
Perhaps I might look at events, some of which have been rehearsed, since the imposition of the standstill. In the middle of January the Government published a second White Paper announcing that despite the extension of the standstill by up to a further 60 days all agreements reached before it and due to come into effect during the standstill could be allowed to take effect after 90 days' delay or at the end of the original unextended standstill—that is, on 28th February—whichever was the later.
I shall remind the House of the increases which have been stopped by the order against which the Opposition have elected to pray, some of which have been mentioned and on one of which the hon. Member for Bradford, South dwelt. The equal pay provisions which were agreed in January 1972 for clerical staff involve some 10,000 workers, giving between 2½ per cent. and 7½ per cent. of the male rate, to reach 92½ per cent. on 3rd December. That was, as the hon. Gentleman said, delayed for 90 days and was allowable with effect from 3rd March 1973, which was last Saturday. My right hon. Friend gave his written consent to that last week.
There was a similar increase for some 3,000 café and restaurant workers, which was also due on 3rd December. That has similarly been allowed and authorised by my right hon. Friend to be implemented with effect from 3rd March.
Then there was an increase of 12 per cent. in the rates for some 4,000 radio and television servicing engineers due on 4th December. This completed its 90-day standstill yesterday and my right hon. Friend has given his consent to its being paid with effect from 4th March. That leaves only three more increases held by the order.

187
One increase, for £1, was originally due on 31st December for 50,000 to 60,000 workers in retail distribution. This was the third and final stage of an agreement made as long ago as April 1971, as we were eloquently reminded by the hon. Member for Ogmore (Mr. Padley). This agreement consisted largely of steps towards equal pay and therefore affects mainly women.
There was a similar increase for café and restaurant workers, some 3,000 of them, also due on 31st December, and an equal pay step for laundry workers due to be implemented on 1st January 1973. These last three increases will have been held up for 90 days by 31st of this month in the first two instances and on 1st April in the third. They will be paid at the end of the standstill, if that comes before 31st March. If, therefore, the Counter-Inflation Bill receives the Royal Assent before the end of this month, the three categories of those affected by the order will have undergone a shorter delay than the rest.
Mr. Torney: Would not the Minister agree that the increases that so far have been given consent orders are for the worst-off people? I am not suggesting that consent orders should not have been made for the others, who are obviously not well off, but the people who are still waiting and still suffering are deplorably paid and they urgently need money. For them there is no question of overtime or anything like it to help them, as there is in factories. Could not a consent order be made for them too?
Mr. Chichester-Clark: I am certainly not suggesting that these are well-paid people; far from it. As the hon. Member knows, I have considerable sympathy for them.
As I have listed the increases delayed by the standstill and legally enforced by the order, it would not be a bad thing if I mentioned one more that arises out of the same series of agreements affecting workers in the retail Co-operative societies. This was equally affected by the standstill but, oddly enough, no specific mention of it has been made tonight. This is the agreement concerning about 10,000 bakery workers whose agreement was made originally on 4th December and payable from yesterday.
188
Some of my hon. Friends and perhaps some hon. Members opposite may well wonder why this has not been mentioned. The reason why it is not included in the order is that both employers and representatives of the bakery workers showed themselves to be highly responsible. They are not highly-paid people, but they agreed to observe the standstill voluntarily. Many employers and employees throughout industry have recognised that the counter-inflationary measures, unpalatable as they must be, are a lesser evil than continued inflation. It is only an infinitely small minority that refuses to accept that sort of reasoning.
I pay tribute to all those far-sighted enough to put the good of the community before their own immediate needs, and in this connection deliberately mention particularly the bakers' union and the Co-operative bakery employers who held to this view when, as we have seen, those immediately around them expressed themselves unable to exercise the same sort of restraint. The Prayer seeks to support those who felt themselves unable to exercise this restraint.
Whatever sympathy one may feel, and there is sympathy for the lowly-paid in all parts of the House, let there be no doubt that in this context it is misguided to some extent, because in some instances, as I have shown, deferment is ended and the money may be paid, while in others the remaining period of deferment is now short. It is misguided because it is the people in these categories who are likely to benefit by the Government's stage 2 proposals. It was the preparation for these proposals which made the standstill unavoidable. As the hon. Member for Bradford, South said, these are some of the lowest paid people in the country. This was recognised by my hon. Friend the Member for Brighouse and Spenborough (Mr. Proudfoot) and the hon. Member for Ogmore.
These people did not suddenly become low-paid workers last November, last December or even in January. They have unfortunately been in that situation for some long time. It is perhaps a criticism of us all, Members of Parliament, trade unionists and the public, at large, that this has been so for so long. Not

189
least it is a criticism of those who represent such people in Parliament, and, as we know, there are a number of those here tonight. Even if their case has been taken up somewhat late in the day, these people are genuinely low-paid. The proposals of the Government are specifically designed to help them and I believe that they will do so.
Even if I have riled one or two hon. Gentlemen opposite I hope I have shown that there is real sympathy for these people, a real desire to heip them and a real belief that the Government's proposals in stage 2 will help them. The case made by the Opposition tonight would have been a lot more convincing if we had not heard them making cases for virtually every wage claim put forward since 1970. The Opposition would be doing a great service if they compiled an index —and they are always talking about indices—of wage claims which have been put forward and are being put forward which they do not support. I wish that they would send us a list of those categories whom they do not automatically
classify as special cases. I submit that there is no case for annulling this order and I urge my right hon. and hon. Friends to reject the motion.
11.29 p.m.
Mr. Leslie Spriggs (St. Helens): I have just heard one of the most complacent speeches to which I have ever had to listen during the last 14 or 15 years. If anyone believes that there is a case for withholding fair wages for distributive workers, mainly shop workers, it is nothing short of a national scandal. I was asked recently by a mother in my area what the wages of her daughters, who are shop assistants, ought to be. When she told me how much her daughters were taking home, it seemed to be one of the worst possible injustices. I appeal to my right hon. and hon. Friends to go into the Lobby in support of the motion. I ask hon. Members on the Government side to do the same if they are genuinely on the side of justice.
Question put:—
The House divided: Ayes 251, Noes 271.

Division No. 77.]

AYES

[11.30 p.m.

Abse, Leo

Cronin, John

Freeson, Reginald

Allaun, Frank (Salford, E.)

Crosland, Rt. Hn. Anthony

Galpern, Sir Myer

Archer, Peter (Rowley Regis)

Crossman, Rt. Hn. Richard

Garrett, W. E.

Ashley, Jack

Cunningham, G. (Islington, S.W.)

Ginsburg, David (Dewsbury)

Ashton, Joe

Cunningham, Dr. J. A. (Whitehaven)

Golding, John

Atkinson, Norman

Dalyell, Tam

Gourlay, Harry

Bagier, Gordon A. T.

Davidson, Arthur

Grant, George (Morpeth)

Barnes, Michael

Davies, Denzil (Llanelly)

Grant, John D. (Islington, E.)

Barnett, Guy (Greenwich)

Davies, G. Elfed (Rhondda, E.)

Griffiths, Eddie (Brightside)

Barnett, Joel (Heywood and Royton)

Davies, Ifor (Gower)

Griffiths, Will (Exchange)

Baxter, William

Davis, Clinton (Hackney, C.)

Hamilton, James (Bothwell)

Benn, Rt. Hn. Anthony Wedgwood

Davis, Terry (Bromsgrove)

Hamilton, William (Fife, W.)

Bennett, James(Glasgow, Bridgeton)

Deakins, Erie

Hamling, William

Bidwell, Sydney

de Freitas, Rt. Hn. Sir Geoffrey

Hannan, William (G'gow, Maryhill)

Bishop, E. S.

Delargy, Hugh

Hardy, Peter

Blenkinsop, Arthur

Dell, Rt. Hn. Edmund

Harper, Joseph

Boardman, H. (Leigh)

Doig, Peter

Harrison, Walter (Wakefield)

Booth, Albert

Dormand, J. D.

Hart, Rt. Hn. Judith

Bottomley, Rt. Hn. Arthur

Douglas, Dick (Stirlingshire, E.)

Hattersley, Roy

Healey, Rt. Hn. Denis

Bradley, Tom

Douglas-Mann, Bruce

Heffer, Eric S.

Broughton, Sir Alfred

Duffy, A. E. P.

Horam, John

Brown, Robert C. (N'c'tle-u-Tyne,W.)

Dunn, James A.

Houghton, Rt. Hn. Douglas

Brown, Hugh D. (G'gow, provan)

Dunnett, Jack

Huckfield, Leslie

Brown, Ronald(Shoreditch & F'bury)

Eadie, Alex

Hughes, Rt. Hn. Cledwyn (Anglesey)

Buchan, Norman

Edelman, Maurice

Hughes, Mark (Durham)

Buchanan, Richard (G'gow, Sp'burn)

Edwards, Robert (Bilston)

Hughes, Robert (Aberdeen, N.)

Butler, Mrs. Joyce (Wood Green)

Edwards, William (Merioneth)

Hughes, Roy (Newport)

Callaghan, Rt. Hn. James

Ellis, Tom

Hunter, Adam

Campbell, I. (Dunbartonshire, W.)

English, Michael

Irvine, Rt. Hn. Sir Arthur (Edge Hill)

Cant, R. B.

Evans, Fred

Janner, Greville

Carmichael, Neil

Ewing, Harry

Jay, Rt. Hn. Douglas

Carter, Ray (Birmingh'm, Northfield)

Faulds, Andrew

Jenkins, Hugh (Putney)

Carter-Jones, Lewis (Eccles)

Fernyhough, Rt. Hn. E.

Jenkins, Rt. Hn. Roy (Stechford)

Castle, Rt. Hn. Barbara

Fisher, Mrs.Doris (B'ham,Ladywood)

John, Brynmor

Clark, David (Colne Valley)

Fitch, Alan (Wigan)

Johnson, Carol (Lewisham, S.)

Cocks, Michael (Bristol, s.)

Fletcher, Raymond (Ilkeston)

Johnson, James (K'ston-on-Hull, W.)

Cohen, Stanley

Fletcher, Ted (Darlington)

Johnson, Walter (Derby, S.)

Concannon, J. D.

Foot, Michael

Jones, Barry (Flint, E.)

Corbet, Mrs. Freda

Ford, Ben

Jones, Dan (Burnley)

Cox, Thomas (Wandsworth, C.)

Forrester, John

Jones,Rt.Hn.Sir Elwyn (W.Ham,S.)

Crawshaw, Richard

Fraser, John (Norwood)

Jones, Gwynoro (Carmarthen)

Jones, T. Alec (Rhondda, W.)

Morris, Alfred (Wythenshawe)

Silverman, Julius

Judd, Frank

Morris, Charles R. (Openshaw)

Skinner, Dennis

Kaufman, Gerald

Morris, Rt. Hn. John (Aberavon)

Small, William

Kelley, Richard

Moyle, Roland

Smith, John (Lanarkshire, N.)

Kinnock, Neil

Mulley, Rt. Hn Frederick

Spearing, Nigel

Lambie, David

Murray, Ronald King

Spriggs, Leslie

Lamborn, Harry

Oakes, Gordon

Stallard, A. W.

Lamond, James

Ogden, Eric

Stewart, Rt. Hn. Michael (Fulham)

Latham, Arthur

O'Halloran, Michael

Stoddart, David (Swindon)

Lawson, George

O'Malley, Brian

Stonehouse, Rt. Hn. John

Leadbitter, Ted

Oram, Bert

Strang, Gavin

Leonard, Dick

Orbach, Maurice

Strauss, Rt. Hn. G. R.

Lestor, Miss Joan

Orme, Stanley

Summerskill, Hn. Dr. Shirley

Lewis, Ron (Carlisle)

Oswald, Thomas

Swain, Thomas

Lipton, Marcus

Padley, Walter

Thomas,Rt.Hn.George (Cardiff,W.)

Loughlin, Charles

Palmer, Arthur

Thomas, Jeffrey (Abertillery)

Lyon, Alexander W. (York)

Parker, John (Dagenham)

Tinn, James

Lyons, Edward (Bradford, E.)

Parry, Robert (Liverpool, Exchange)

Torney, Tom

Mabon, Dr. J. Dickson

Pavitt, Laurie

Tuck, Raphael

McBride, Neil

Peart, Rt. Hn. Fred

Urwin, T. W.

McCartney, Hugh

Pendry, Tom

Varley, Eric G.

McElhone, Frank

Perry, Ernest G.

Wainwright, Edwin

McGuire, Michael

Prentice, Rt. Hn. Reg.

Walden, Brian (B'm'ham, All Saints)

Mackenzie, Gregor

Prescott, John

Walker, Harold (Doncaster)

Mackie, John

Probert, Arthur

Wallace, George

Mackintosh, John P.

Reed, D. (Sedgefield)

Watkins, David

Maclennan, Robert

Rees, Merlyn (Leeds, S.)

Weitzman, David

McMillan, Tom (Glasgow, C.)

Rhodes, Geoffrey

Wellbeloved, James

McNamara, J. Kevin

Richard, Ivor

Wells, William (Walsall, N.)

Mahon, Simon (Bootle)

Roberts, Albert (Normanton)

White, James (Glasgow, Pollok)

Marks, Kenneth

Roberts, Rt.Hn.Goronwy (Caernarvon)

Whitehead, Phillip

Marsden, F.

Robertson, John (Paisley)

Whitlock, William

Marshall, Dr. Edmund

Roderick, Caerwyn E.(Brc'n&R'dnor)

Willey, Rt. Hn. Frederick

Mason, Rt. Hn. Roy

Rodgers, William (Stockton-on-Tees)

Williams, Alan (Swansea, W.)

Meacher, Michael

Roper, John

Williams, Mrs. Shirley (Hitchin)

Mellish, Rt. Hn. Robert

Rose, Paul B.

Wilson, Alexander (Hamilton)

Mendelson, John

Ross, Rt. Hn. William (Kilmarnock)

Wilson, Rt. Hn. Harold (Huyton)

Mikardo, Ian

Rowlands, Ted

Wilson, William (Coventry, S.)

Millan, Bruce

Sandelson, Neville

Woof, Robert

Miller, Dr. M. S.

Sheldon, Robert (Ashton-under-Lyne)

Milne, Edward

Shore, Rt. Hn. Peter (Stepney)

TELLERS FOR THE AYES

Mitchell, R. C. (S'hampton, Itchen)

Silkin, Rt. Hn. John (Deptford)

Mr. Ernest Armstrong and

Molloy, William

Silkin, Hn. S. C. (Dulwich)

Mr. Donald Coleman.

Morgan, Elystan (Cardiganshire)

Sillars, James

NOES

Adley, Robert

Carlisle, Mark

Foster, Sir John

Alison, Michael (Barkston Ash)

Carr, Rt. Hn. Robert

Fowler, Norman

Allason, James (Hemel Hempstead)

Channon, Paul

Fox, Marcus

Amery, Rt. Hn. Julian

Chataway, Rt. Hn. Christopher

Fraser,Rt.Hn.Hugh (St'fford & Stone)

Archer, Jeffrey (Louth)

Chichester-Clark, R.

Fry, Peter

Astor, John

Churchill, W. S.

Galbraith, Hn. T. G. D.

Atkins, Humphrey

Clark, William (Surrey, E.)

Gardner, Edward

Awdry, Daniel

Clarke, Kenneth (Rushcliffe)

Gibson-Watt, David

Baker, Kenneth (St. Marylebone)

Clegg, Walter

Gilmour, Ian (Norfolk, C.)

Baker, W. H. K. (Banff)

Cockeram, Eric

Gilmour, Sir John (Fife, E.)

Batsford, Brian

Cooke, Robert

Glyn, Dr. Alan

Bell, Ronald

Coombs, Derek

Goodhart, Philip

Bennett, Sir Frederic (Torquay)

Cooper, A. E.

Goodhew, Victor

Bennett, Dr. Reginald (Gosport)

Cormack, Patrick

Gorst, John

Benyon, W.

Costain, A. P.

Gower, Raymond

Biffen, John

Critchley, Julian

Grant, Anthony (Harrow, C.)

Biggs-Davison, John

Crouch, David

Gray, Hamish

Blaker, Peter

Crowder, F. P.

Green, Alan

Boardman, Tom (Leicester, S.W.)

Deedes, Rt. Hn. W. F.

Grieve, Percy

Body, Richard

Digby, Simon Wingfield

Griffiths, Eldon (Bury St. Edmunds)

Boscawen, Hn. Robert

Dixon, Piers

Grylls, Michael

Bossom, Sir Clive

Dodds-Parker, Sir Douglas

Gummer, J. Selwyn

Bowden, Andrew

Drayson, G. B.

Gurden, Harold

Braine, Sir Bernard

Dykes, Hugh

Hall, Miss Joan (Keighley)

Bray, Ronald

Eden, Rt. Hn. Sir John

Hall, John (Wycombe)

Brewis, John

Edwards, Nicholas (Pembroke)

Hall-Davis, A. G. F.

Brinton, Sir Tatton

Elliot, Capt. Walter (Carshalton)

Hamilton, Michael (Salisbury)

Brocklebank-Fowler, Christopher

Elliott, R. W. (N'c'tle-upon-Tyne,N.)

Hannam, John (Exeter)

Brown, Sir Edward (Bath)

Emery, Peter

Harrison, Brian (Maldon)

Bruce-Gardyne, J.

Eyre, Reginald

Haselhurst, Alan

Bryan, Sir Paul

Farr, John

Havers, Sir Michael

Buchanan-Smith, Alick(Angus,N&M)

Fenner, Mrs. Peggy

Hawkins, Paul

Buck, Antony

Fidler, Michael

Hayhoe, Barney

Bullus, Sir Eric

Fisher, Nigel (Surbiton)

Hicks, Robert

Burden, F. A.

Fletcher-Cooke, Charles

Higgins, Terence L.

Butler, Adam (Bosworth)

Fookes, Miss Janet

Hiley, Joseph

Campbell, Rt. Hn. G. (Moray & Nairn)

Fortescue, Tim

Hill, John E. B. (Norfolk, S.)

192

193

Hill, S. James A.(Southampton, Test)

Mitchell, Lt.-Col. C (Aberdeenshire,W)

Skeet, T. H. H.

Holland, Philip

Mitchell, David (Basingstoke)

Smith, Cyril (Rochdale)

Holt, Miss Mary

Moate, Roger

Smith, Dudley (W'wick & L'mington)

Hordern, Peter

Molyneaux, James

Soref, Harold

Hornby, Richard

Money, Ernie

Speed, Keith

Hornsby-Smith,Rt.Hn.Dame Patricia

Monks, Mrs. Connie

Spence, John

Howe, Rt. Hn. Sir Geoffrey

Montgomery, Fergus

Sproat, Iain

Howell, David (Guildford)

More, Jasper

Stainton, Keith

Howell, Ralph (Norfolk, N.)

Morgan, Geraint (Denbigh)

Stanbrook, Ivor

Hunt, John

Morgan-Giles, Rear-Adm.

Steel, David

Iremonger, T. L.

Morrison, Charles

Stewart-Smith, Geoffrey (Belper)

Irvine, Bryant Godman (Rye)

Mudd, David

Stodart, Anthony (Edinburgh, W.)

James, David

Murton, Oscar

Stoddart-Scott, Col. Sir M.

Jenkin, Patrick (Woodford)

Nabarro, Sir Gerald

Stokes, John

Jennings, J. C. (Burton)

Neave, Airey

Stuttaford, Dr. Tom

Jessel, Toby

Nicholls, Sir Harmar

Sutcliffe, John

Johnson Smith, G. (E. Grinstead)

Noble, Rt. Hn. Michael

Tapsell, Peter

Jones, Arthur (Northants, S.)

Nott, John

Taylor, Sir Charles (Eastbourne)

Joseph, Rt. Hn. Sir Keith

Onslow, Cranley

Taylor,Edward M.(G'gow,Cathcart)

Kaberry, Sir Donald

Oppenheim, Mrs. Sally

Taylor, Frank (Moss Side)

Kellett-Bowman, Mrs. Elaine

Owen, Idris (Stockport, N.)

Taylor, Robert (Croydon, N.W.)

Kilfedder, James

Page, Rt. Hn. Graham (Crosby)

Tebbit, Norman

King, Tom (Bridgwater)

Parkinson, Cecil

Temple, John M.

Kinsey, J. R.

Peel, Sir John

Thatcher, Rt. Hn. Mrs. Margaret

Kirk, Peter

Percival, Ian

Thomas, Rt. Hn. Peter (Hendon, S.)

Kitson, Timothy

Pink, R. Bonner

Thompson, Sir Richard (Croydon, S.)

Knight, Mrs. Jill

Pounder, Rafton

Trafford, Dr. Anthony

Knox, David

Price, David (Eastleigh)

Trew, Peter

Lambton, Lord

Prior, Rt. Hn. J. M. L.

Tugendhat, Christopher

Lamont, Norman

Proudfoot, Wilfred

Turton, Rt. Hn. Sir Robin

Lane, David

Pym, Rt. Hn. Francis

Vaughan, Dr. Gerard

Le Marchant, Spencer

Raison, Timothy

Vickers, Dame Joan

Lloyd, Ian (P'tsm'th, Langstone)

Ramsden, Rt. Hn. James

Waddington, David

Longden, Sir Gilbert

Rawlinson, Rt. Hn. Sir Peter

Walder, David (Clitheroe)

Loveridge, John

Redmond, Robert

Walters, Dennis

Luce, R. N.

Reed, Laurance (Bolton, E.)

Ward, Dame Irene

MacArthur, Ian

Rees, Peter (Dover)

Warren, Kenneth

McCrindle, R. A.

Rees-Davies, W. R.

Weatherill, Bernard

McLaren, Martin

Rhys Williams, Sir Brandon

Wells, John (Maidstone)

Maclean, Sir Fitzroy

Ridley, Hn. Nicholas

White, Roger (Gravesend)

Macmillan,Rt.Hn.Maurice (Farnham)

Ridsdale, Julian

Wiggin, Jerry

McNair-Wilson, Michael

Roberts, Michael (Cardiff, N.)

Wilkinson, John

McNair-Wilson, Patrick (New Forest)

Roberts, Wyn (Conway)

Winterton, Nicholas

Maddan, Martin

Rodgers, Sir John (Sevenoaks)

Wolrige-Gordon, Patrick

Madel, David

Rossi, Hugh (Hornsey)

Wood, Rt. Hn. Richard

Maginnis, John E.

Rost, Peter

Woodhouse, Hn. Christopher

Marples, Rt. Hn. Ernest

Royle, Anthony

Woodnutt, Mark

Marten, Nell

Russell, Sir Ronald

Worsley, Marcus

Mather, Carol

Scott, Nicholas

Wylie, Rt. Hn. N. R.

Maude, Angus

Scott-Hopkins. James

Younger, Hn. George

Maudling, Rt. Hn. Reginald

Shaw, Michael (Sc'b'gh & Whitby)

TELLERS FOR THE NOES:

Mawby, Ray

Shelton, William (Clapham)

Mr. Michael Jopling and

Maxwell-Hyslop, R. J.

Shersby, Michael

Mr. John Stradling Thomas.

Mills, Peter (Torrington)

Simeons, Charles

Miscampbell, Norman

Sinclair, Sir George

Question accordingly negatived.

COUNTER-INFLATION PROPOSALS (PAY)
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Weatherill.]

ROAD SAFETY OFFICER (DARWEN)
11.40 p.m.
Mrs. Barbara Castle: This evening the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) and I find ourselves in unaccustomed partnership, because the case of Mr. Tom Wood which I am raising involves my constituents but also involves the hon. and learned Gentleman's local authority. It not only concerns the well-being of a
194
particular individual. Both of us are concerned because, in our view, it also raises an important matter of principle: the question whether a Minister should use permissive powers given him by legislation in a way to ensure that natural justice is done.
Very briefly the story, which is a complicated one, is this. Mr. Tom Wood is the road safety officer for Blackburn. In 1968, so excellent was his reputation in his work that the adjoining borough of Darwen asked if he would become its road safety officer too. Darwen was at that time one of the non-county boroughs which, under the Road Traffic Act 1960, was empowered by the then Minister of Transport, now the Secretary of State for

195
the Environment, to make its own road safety arrangements and, therefore, to be granted what is called rate exemption—that is, exemption from the county council precept for road safety work. This is important to the argument which the hon. and learned Gentleman and I are advancing tonight.
Note, however, that the Act also empowers the Minister to withdraw rate exemption when he "ceases to be satisfied", which is the phrase used, with the road safety arrangements which have been made by the exempted authority. So there is a stigma attached to the local authority and to the road safety officer involved when the Minister decides to withdraw a rate exemption which is currently being enjoyed.
As the House will be aware, I was myself Minister of Transport and, as such, I introduced a road safety White Paper in 1967 designed to enlarge, stimulate and develop road safety activities for the whole country. Following that White Paper the Ministry of Transport, quite rightly, started to stir up local authorities to road safety work, and no one welcomed that fact more than Mr. Tom Wood, the road safety officer of my constituents. He heartily endorsed the principles of the White Paper. He studied its proposals conscientiously and worked extremely hard to apply them in his own area.
The Department at that time or shortly afterwards also started reviewing the work of the 400 exempted authorities, non-county boroughs and urban district councils, which had been given permission to run their own road safety activities and, as a result of that review, in March 1971 the Department decided that the road safety arrangements of 119 of those exempted authorities were sufficiently satisfactory to warrant continuation of rate exemption. The road safety situation in the areas of the remaining authorities was considered to be so unsatisfactory that responsibility for it had to be transferred to the county council as a matter of urgency, and it had to be transferred, let it be noted, in April 1972, a few months before the reorganisation of local government which would have led to some regrouping in any event.
One of the authorities so branded as a result of the Ministry's review was
196
Darwen and, because Darwen was branded, it followed that Mr. Tom Wood, the road safety officer, was branded too. In November 1971 Darwen local authority was informed of the Secretary of State's intentions and invited to send comments about the proposal that it should lose its rate exemption. The local authority did so in no uncertain terms. The members unanimously protested against the proposal and asked for details of how its road safety service would be improved under the county council—details which, incidentally, it never received. The local authority also sent to the Department a considerable amount of information about its road safety activities, and on 22nd November offered to supply further information if required. The Department never responded to that offer.
The House will imagine the surprise of the Darwen authority when the next it heard of the matter was in a letter from the Department which reached the town clerk on the very eve of the Christmas holiday when everybody was dispersed. The letter was as follows:
"The Secretary of State is no longer satisfied with the arrangements made by your Council for road safety."
The first that Mr. Tom Wood heard of all this was when the Department of the Environment issued a Press statement on 29th December and he read the headlines in the local newspaper:
"Road safety arrangements in Darwen and Clitheroe are unsatisfactory. This was said today in a statement issued on behalf of the Department of the Environment."
There was widespread comment in our two constituencies about this slur on Mr. Tom Wood and on the Darwen authority. I know that the Minister for Transport Industries has expressed regret at the inept way in which the notification was handled, and so he should, but the issue which I am raising tonight goes much deeper than that.
Although the hon. and learned Member for Darwen and I immediately made urgent representations, it was not until 3rd February that the Minister was able to arrange to see us, and it was then too late. By 31st January the decision to remove Darwen's rate exemption and transfer its road safety functions to the county council had become operative. Every argument that the Department has

197
since used about this matter has been an ex post facto justification of a decision that is now irreversible.
One might ask: if it is irreversible, why are we raising it? I repeat that I am raising it because it is a matter of principle, and I am sure that the hon. and learned Gentleman agrees with me. We want the Minister to admit, even at this late hour, that natural justice has not been done, because that is the only way by which we can improve the administration in the future.
Why has natural justice not been done? First, at no time before the Department reached this decision was Mr. Tom Wood or the Darwen local authority informed of the specific respects in which the Department considered that its road safety arrangements were unsatisfactory. Therefore, they were given no chance to improve these arrangements if the Department thought that improvements were necessary.
The Parliamentary Commissioner, to whom we referred the case, has described this fact as "unfortunate". Does the Under-Secretary of State agree that it was unfortunate? Does he agree that it is entirely wrong that Mr. Wood and the Darwen authority should not at any time have been informed of the respects in which their arrangements were unsatisfactory?
Secondly, the Minister has admitted that the decision the Department reached was partly based on reports received from the Royal Society for the Prevention of Accidents. What this other information was based on, we have not been told and we are not allowed to know. But we are allowed to know that RoSPA regionally was investigating on the Department's behalf and sending in reports. In one respect at least, however, Mr. Wood has successfully established that the information of RoSPA was inaccurate. It was inaccurate, for example, on the number of tufty clubs which he had established in Darwen and Blackburn. I have not time to go into detail about them, hut the tufty clubs are an aspect of road safety work to which the Department says it attaches great importance.
Mr. Wood was able to establish last year that at least part of RoSPA's information was wrong, yet when the Town Clerk of Darwen wrote to the Department
198
in August asking for RoSPA's advice about his authority's actions to be made available to the council so that it could check still further upon its validity, the information was refused. For a man or a local authority to be damned on the basis of evidence they are not allowed to see appears to me to be intolerable.
Thirdly, to add further insult, three neighbouring boroughs, Haslingden, Bacup and Rawtenstall, which have never had a full-time road safety officer and whose safety record is far worse, have had their exemption continued simply on their promise that they would improve in future and discuss certain of the Department's suggestions—a promise Darwen would have been glad to make if it had been given the chance.
I know that the Minister stands on the constitutional position that in criticising Darwen he was not criticising Mr. Wood. But that really is a piece of bureacratic pedantry that deceives no one. The fact is that an unwarranted slur has been cast on one of the best road safety officers in the country, and certainly one of the most devoted. I resent it on the part of my constituents and for the sake of good administration because it is indeed a poor reward to a dedicated public servant, such as Mr. Wood has been. I know that this slur has hurt him very much.
The hon. and learned Gentleman and I referred the case to the Parliamentary Commissioner. Having read his report, Darwen Council passed a resolution asking for the matter to be pursued:
"with the utmost vigour."
It added:
"that the Department of the Environment be asked for their views on the Parliamentary Commissioner's report, with which the council are amazed and extremely disappointed."
I say this in conclusion. The Parliamentary Commissioner in his report concluded that
"officials of the Department took a genuinely different view from that taken by Mr. Wood about the adequacy of the road safety services run by Mr. Wood in Darwen."
Therefore the Parliamentary Commissioner does not find maladministration, though he points out more than once that
"At no time were Darwen or Mr. Wood given specific details of the inadequacies as viewed by the Department."
All I can say is that if such a breach of natural justice is not maladministration in

199
the Parliamentary Commissioner's interpretation of his duties, the only hope of securing fairer administration lies through Parliament.
That is the reason why the hon. and learned Member for Darwen and I are raising this matter tonight.
11.55 p.m.
Mr. Charles Fletcher-Cooke: I am grateful to the right hon. Member for Blackburn (Mrs. Castle) not only for giving me a few minutes of her time, but also for putting the case on behalf of Tom Wood and the Darwen borough council so well and so forcibly.
It is a denial of natural justice. As the Town Clerk of Darwen writes in a letter to me, so simply but so effectively:
"It would have been much better if the Minister had told us where we were falling down so that we could have put matters right."
To be condemned without being told that is abysmal. It is a denial of the first principle of natural justice that no man, organisation or body of people are condemned without first hearing them in their defence. The first that they knew was in the correspondence to which the right hon. Lady has referred in which their exemption privilege was removed.
What makes them so bitter is that neighbouring authorities which had done nothing like as well as either Darwen or Blackburn—nothing at all in many respects—had their exemptions continued because they were quick enough to make promises, whereas Darwen would have been perfectly willing to give the undertakings and would have been in a much better position to do so because it had already gone such a long way along the road safety line.
It is extraordinary that the Department of the Environment should have been in such a hurry to prevent Darwen's voice being raised and in such a hurry to prevent the voices of the right hon. Member for Blackburn and myself being raised. The timetable was very tight. Why there was this hurry no one has ever explained. Reorganisation of all the local authorities in the neighbourhood was due to take place in a few months anyhow. Therefore there was no need for this slur, because the whole matter would have been in the melting pot, as it is now.
200
The Department still has a lot of explaining to do. It has not explained it to the Parliamentary Commissioner. It has had this constitutional difficulty in the case of the borough council of Darwen, because the Parliamentary Commissioner has no locus standi since a local authority is not allowed to be an aggrieved person. But that does not prevent my hon. Friend the Under-Secretary tonight making a full and frank disclosure, and it seems to me that he ought to do something more by way of an apology than merely repeating the very mild word "unfortunate". It is not unfortunate. It is scandalous.
11.58 p.m.
The Under-Secretary of State for the Environment (Mr. Keith Speed): The right hon. Member for Blackburn (Mrs. Castle) and my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) have raised important matters for them locally, for their constituents and for Mr. Wood. I hope in the course of my remarks to answer some of their points and explain the Department's position, especially the position as we see it of Mr. Wood.
First, however, we ought to get matters in perspective. The right hon. Lady drew an accurate background to the situation. Non-county boroughs like Darwen and urban districts can have exemption from county road safety rate if the Secretary of State is satisfied with their arrangements. More than 450 authorities have been granted exemption over the years. But their arrangements have not always kept pace with the developing needs of road safety in modern traffic.
Circular No. 14/69 set out the road safety task and said that in reviewing exemptions the Minister would apply much stricter standards and have in mind the wider concept of road safety outlined in the White Paper "Road Safety—A Fresh Approach" published in 1967. This point was also made by Ministers at the RoSPA Road Safety Congresses in both 1970 and 1971. It is fair to state that local authorities had plenty of warning of the need for improvement and the broad basis on which they would be judged.
The Department reviewed exemptions in 1971 and 1972. The review was based on what local authorities had told the Department of their activities in response

201
to a circular in 1970 and other inquiries on the assessment of RoSPA's regional organisation, which is the Department's agent in the field with close knowledge of local road safety activities, and on the Department's own knowledge and experience.
Nearly 350 authorities were judged to have an unsatisfactory performance, so their counties were invited to offer better arrangements. Seventeen counties did so in 1971–72 and 135 exemptions were withdrawn. Another six counties did so in 1972–73 and 34 exemptions have been withdrawn.
I must tell the right hon. Lady that there is no question of stigma. I hope we can get away from that sort of emotional term. It was a matter of judgment whether authorities' activities were up to the high standards which she started with the 1967 White Paper. I do not wish to use the term "stigma".
This review was planned for some years and was necessary to improve as early as possible the standards of local road safety activity. It was independent of local government reorganisation but is consistent with what happens on reorganisation since, as has been pointed out by my hon. and learned Friend, the Local Government Act 1972 reserves road safety powers to counties and London borough authorities from 1st April 1974.
Darwen, with a population of 30,000, shared a road safety officer, Mr. Wood, and a part-time assistant with the county borough of Blackburn, with a population of 100,000. Only Darwen was subject to the review. The Lancashire County Council's proposed reorganisation offered a full-time road safety officer for Darwen as part of a wider area of 90,000 population, plus backing by a county headquarters staff and resources and a greater rate expenditure per head.
The Department felt that the county proposals promised an improved road safety effort, told Darwen this and invited it to comment. Darwen did not offer any improvements.
The Department has been criticised for not giving Darwen and other authorities a more precise indication of their shortcomings. This has been mentioned by my
202
hon. and learned Friend and by the right hon. Lady.
At that time it was a conscious decision not to enter into detailed discussion with authorities. Certainly authorities knew from the road safety circular 14/69 and from contacts with the Department and RoSPA. They also know that the key to better performance was more resources in terms of both staff and money. Some authorities offered a better performance backed by more resources in both 1971 and 1972 and they were allowed to keep exemption.
My hon. and learned Friend mentioned Bacup, Haslingden and Rawtenstall, places adjoining Darwen, which are cases in point. They had a poor record but they promised to appoint a full-time road safety officer. Having done so, they have kept exemption. This improved on the county proposals in that they have one road safety officer for 50,000 population.
Whatever the justification at the time, we now accept the criticism, supported by the Parliamentary Commissioner, that authorities should have been given a more specific indication of their shortcomings. This was done in the 1972 review.
The Parliamentary Commissioner also criticised the Department for allowing the decision to reach the Press before Darwen had time to tell Mr. Wood, the road safety officer. This point has also been acted on in the 1972 review. Decisions have been notified well in advance of any Press release.
Mr. Tom Wood felt that the Department's decision about Darwen cast a slur on his character. The right hon. Lady said that he was branded. He felt that it gave rise to unjustifiable doubts about his ability and might prejudice his career.
Mr. Wood's position is no different in principle from that of those employed by other authorities which lost exemption. I have already explained that this is a considerable number. But our concern has always been with the attitude of authorities, the resources employed and the range of functions covered, not with individuals.
My right hon. Friend the Minister for Transport Industries wrote to the right hon. Lady on 26th January 1972, saying:
"I am sorry that you or anyone else should think that a slur has been cast on the reputation of Mr. Wood, the Blackburn road safety

203
officer. He has, I know, done excellent work; and I must emphasise that the changes I am making are purely organisational in character and have nothing to do with the work of individual RSOs. My sole intention is to ensure that the right machinery exists at local authority level to give a fresh impetus to road safety work throughout the country."
My right hon. Friend underlined the point when he saw the right hon. Lady and my hon. and learned Friend and subsequently he saw Mr. Wood to tell him personally, and Mr. Wood was also seen by a senior official of my Department.
The Parliamentary Commissioner made a report on Mr. Wood's complaint. He concluded that the Department's consideration of Darwen as part of the review was careful and unprejudiced, was not affected by inaccurate information and took account of Darwen's views.
The right hon. Lady mentioned tufty clubs. I do not want to take up a lot of time on this but in paragraph 24 of his report the Parliamentary Commissioner dealt with them. He stressed that he found that the Department took into account correct information about the number of tufty clubs in Darwen.
I am also pleased to note that the Parliamentary Commissioner said that he
"cannot think that his"—
that is Mr. Wood's—
"reputation and standing has suffered"
and that in his view there was
"no reason why Mr. Wood's future career should have been affected".
I do not believe that the word "branded" is appropriate in this case.
Mrs. Castle: This is not an official secret. If the Parliamentary Commissioner had access to the information, why could we not have access to what RoSPA said so that we could check whether it was correct?
Mr. Speed: It was not a question of what RoSPA said. What the Parliamentary Commissioner took into account was the information upon which the Department had acted, and his statement in paragraph 24 was that we had had the correct information about the number of tufty clubs in Darwen.
Mrs. Castle: How did he know?
Mr. Speed: That is what he said in his report.
I have already accepted the Parliamentary Commissioner's criticism that the Department's decision should not have reached the Press before it reached Mr. Wood. This was extremely discourteous. It was an accident due to Christmas postal pressure. I accept what my hon. and learned Friend said, that this was unforgivable, and I hope that it will never happen again to any individual. I can imagine, particularly at that time of year, the grave effect that it must have had upon Mr. Wood on first reading an announcement of that sort in his local paper. I concede that absolutely and I apologise again on behalf of the Department. We have taken steps to ensure that this sort of situation does not occur again to any individual, so far as it is within our power, but we are, after all, human and we all make mistakes.
One ought to recall the purpose of the review of exemptions. It is to improve local road safety effort by getting more resources devoted to it, whether by exempt authorities or the counties. There is still need for greater effort. From 1st April next year road safety powers will be reserved to the counties and they will have to provide the resources. I take the opportunity of this debate, which is about an individual, to urge those counties which have not yet done so to set up a road safety organisation and all counties to tackle the problems vigorously on the lines laid down by the Department.
This affair has caused considerable distress to the right hon. Lady's constituent, but there is perhaps a silver lining since as a result of this affair we have improved our procedures. We have taken steps to ensure that the authorities to which this is applied in the 1972–73 period are not treated in the same way as Darwen. We have taken steps to ensure that anyone put in this position is treated courteously and properly, and I am sure that that is what the House wishes.
I stress again everything that my hon. and learned Friend said about Mr. Wood. I hope that having had this matter properly raised in Parliament, having seen my right hon. Friend, having had letters

205
from him and, indeed, having read the Parliamentary Commissioner's report, Mr. Wood will feel able, even though the matter may still rankle with him, to continue the good work that he has done for Blackburn and may be doing for Lanca-
206
shire. I hope that he will not have this sort of trouble or anything like it again in the future. I again apologise to him.
Question put and agreed to.
Adjourned accordingly at nine minutes past Twelve o'clock.

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Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Gloucester.

DOCK WORKERS' SEVERANCE SCHEME
LORD MOLSON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many dockers took advantage of the Aldington-Jones voluntary retirement proposals in each week while they were operative; what was the total cost; how many of those who retired have found other work; whether insurance benefit is payable in full to those who have not and whether the retirement payment is taken into account if supplementary payments are claimed.
THE EARL OF GOWRIE: My Lords, with permission, I will circulate in the OFFICIAL REPORT weekly totals of registered dockers leaving under the special severance scheme. The final total is 8,398 men at a provisional cost of £30½ million. I have no information as to the number who have found other work. Insurance benefit is payable in full, subject to the individual's contributions position. The severance payment is taken into account if supplementary benefit is claimed.
The following is the information referred to:

REGISTERED DOCK WORKERS' SPECIAL SEVERANCE SCHEME

Period Ended

Nos. Leaving

11.9.72

…

…

…

…

17

18.9.72

…

…

…

…

402

25.9.72

…

…

…

…

283

2.10.72

…

…

…

…

355

9.10.72

…

…

…

…

232

16.10.72

…

…

…

…

242

23.10.72

…

…

…

…

233

30.10.72

…

…

…

…

279

6.11.72

…

…

…

…

443

13.11.72

…

…

…

…

265

20.11.72

…

…

…

…

342

Period Ended

Nos. Leaving

27.11.72

…

…

…

…

259

4.12.72

…

…

…

…

468

11.12.72

…

…

…

…

278

18.12.72

…

…

…

…

310

27.12.72

…

…

…

…

101

1.1.73

…

…

…

…

296

8.1.73

…

…

…

…

220

15.1.73

…

…

…

…

323

22.1.73

…

…

…

…

375

29.1.73

…

…

…

…

558

5.2.73

…

…

…

…

903

12.2.73

…

…

…

…

547

19.2.73

…

…

…

…

432

23.2.73

…

…

…

…

235

Total

8,398

LORD MOLSON: My Lords, can my noble friend say from what fund this very large sum of money was derived and paid?
THE EARL OF GOWRIE: My Lords, I regret that I cannot give my noble friend that answer without notice, but I shall write to him.

NORTHERN IRELAND: CONTACTS WITH IRISH T.U.C.
2.37 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what consultations they have had with the Northern Ireland Committee of the Irish Trade Union Congress regarding their programme for economic expansion.
THE MINISTER OF STATE FOR NORTHERN IRELAND (LORD WINDLESHAM): My Lords, Ministers maintain close touch with the Northern Ireland Committee of the Irish Congress of Trade Unions, both directly and through the Committee's participation in the Northern Ireland Economic Council and similar bodies. The Government are therefore well aware of the unions' programme for economic expansion and welcome the attention focused on key social and economic issues.
LORD BROCKWAY: My Lords, I welcome the attendance of the Minister, because only yesterday he was in Northern Ireland. May I ask him this supplementary: Did he not see the trade union leaders in Northern Ireland this

861
week-end on the bus issue, and did he then take the opportunity to discuss with them the progress about working conditions, employment, housing and, particularly, the economic aid for the deprived areas which the Northern Ireland Committee of the Trade Union Congress has put forward?
LORD WINDLESHAM: My Lords, I had the opportunity to meet the Northern Ireland officers of the Irish Congress of Trade Unions not once but twice over the weekend. Yesterday's meeting was to discuss the stoppage of buses in Belfast and certain other parts of the Province, and was concerned specifically with that issue. But I also met representatives of the unions, the Churches and community organisations on Saturday to discuss with them the formation of a new committee, Citizens United for Reconciliation and Equality (CURE) which is concerned with most of the underlying matters to which the noble Lord has referred.
LORD BROCKWAY: My Lords, while tremendously welcoming what the Minister has said, may I ask whether there is not now a new possibility of working-class unity of Catholics and Protestants in Northern Ireland? Even when they disagree profoundly on the issue of the Union, should not that possibility be encouraged as a method of bridging the great gap between the Catholic and Protestant working-class communities?
LORD WINDLESHAM: My Lords, I would agree that any coming together of groups who traditionally may have regarded themselves as separated by different ideals of one kind or another, is to be welcomed in the present situation.

LIBYA: NATIONALISATION OF BRITISH ASSETS
LORD JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many British subjects have been dispossessed of their property and assets by the Libyan Government and what steps they have taken or will take to obtain adequate compensation.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, we know of eight British subjects whose property has been expropriated by the Libyan Government since the 1969 revolution. We have made frequent representations to the Libyan authorities in support of their claim for compensation and will continue to do so.
LORD JANNER: My Lords, will the noble Baroness consider joining with other Governments whose nations have been treated in a similar way with a view to taking concerted action with respect to this atrocious taking-over of the possessions of quite innocent people, people who have no opportunity of getting their property restored to them other than through action by their own Governments? May I further ask whether, while doing that, she will investigate the question of what racial and religious considerations have been used in respect of this particular imposition on innocent people?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, so far as working together with other Governments is concerned, the Libyan Government have nationalised all foreign (including British) interests in banking, insurance and petroleum distribution. We have made repeated representations, and we understand that one firm has received compensation and that in another instance the company have submitted their case to arbitration. Therefore, we think it better to make either these individual representations or for a case to be pursued under the law.
LORD HARVEY OF PRESTBURY: My Lords, is it a fact that any British subject wanting to go to Libya to deal with this matter must possess a passport written in Arabic as well as in English? If so, what progress has been made in sorting out this difficulty?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we and other Governments have made it clear that the requirement that there should be passports written both in Arabic and in English is contrary to international passport practice. As a result of those representations, the Libyans have made exemptions which cover all foreign residents

863
in Libya, their dependants and most visiting businessmen; but the difficulty still applies to tourists and visiting officials.
LORD JANNER: My Lords, would the noble Baroness consider making representations to the Commission on Human Rights in respect of individuals whose properties have been taken? One appreciates that there are companies involved, but in the main there are something like 700 persons who have been dispossessed of their property. Is there not a question of human rights in respect of that aspect of the situation?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, as I understand it, and in answer to the supplementary question from the noble Lord, Lord Janner, we know not of 700 but of eight British subjects whose property has been expropriated by the Libyan Government. The Commission on Human Rights deals with cases involving peoples, not necessarily with individuals.
LORD JANNER: My Lords, I hope the noble Baroness will forgive me, but I was referring to people, and not to 700 cases involving British subjects. I was referring to the fact that the Commission should be respected, and that we should join with other nations in presenting a case to the Commission.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I said previously that, as I understand it, the Commission will deal not with individual cases, as suggested by the noble Lord, Lord Janner, but only with cases where there is a flagrant abuse of human rights.
LORD SLATER: My Lords, can the noble Baroness say whether the International Court has any jurisdiction over such matters as have been raised by my noble friend Lord Janner? Could they be submitted to the International Court?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the Question refers in particular to British subjects, of which I said there were eight. We are making representations on those cases, and we think that this is the best way to deal with the matter. There is recourse to the courts of law, not to the International Court.

VIETNAM: INTERNATIONAL CON- FERENCE ON PARIS AGREEMENT
LORD DENHAM: My Lords, my honourable friend the Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs is making a Statement in another place to-day on the International Conference on Vietnam. It has been agreed through the usual channels that this Statement need not be repeated here, but, with the leave of the House, I will arrange for it to be circulated in the OFFICIAL REPORT.
Following is the Statement referred to:
"With your permission, Mr. Speaker, and that of the House, I wish to make a statement.
"As honourable Members will know, I attended the International Conference on Vietnam held in Paris from February 26 to March 2. My right honourable friend was present except for a period in the middle of the week when he returned to London to attend to Parliamentary commitments.
"This meeting also provided an opportunity for my right honourable friend and myself to hold useful bilateral talks.
"The main purpose of the Conference was to acknowledge and support the provisions of the Paris Agreement on Vietnam of January 27. The Conference was able to agree on a document called the Act of the Conference which embodied the common measure of agreement. A copy of the Act has been placed in the Library a the House.
"Besides supporting the Paris Agreement the Act provides for the International Commission for Control and Supervision to report to the Governments taking part in the Conference through the parties to the Vietnam agreement: and for the Secretary General of the United Nations as a participant in the Conference to receive these reports for his information. There is also provision for joint consultation in the event of breaches of the Agreement and if necessary for the reconvening of the Conference. We attach the greatest importance to the withdrawal of foreign troops from Laos and Cambodia and for an end to foreign interference. This is reflected in a separate Article which reaffirms the relevant provisions of the Paris Agreement.
"As I said at the initialling ceremony on March 1, 'No document, no words, indeed no conference, can ensure the maintenance of peace in Vietnam. This, as I have indicated, must rest with the parties concerned on the ground. If they are determined that the Agreement will work, it will. If they are not so determined, it will not '.
"By signing this Act my right honourable friend and the other Foreign Ministers gave proof of their common support of the Paris Agreement. If it is observed both in the letter and in the spirit, it will serve the cause of peace."

COUNTER-INFLATION BILL
2.47 p.m.
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, your Lordships will recall that a month ago this House debated, and in substance approved, the White Paper setting out the general policy which the Government proposed to pursue, and the new legislative framework needed to give effect to it. To-day I am asking your Lordships to give a Second Reading to the Bill embodying this framework. What we are seeking to achieve in our policy, as the Title of the Bill indicates, is to tackle inflation on a comprehensive, effective and equitable basis. I think that we all know that for a whole host of reasons, economic, political, and not least social, we have somehow as a nation to deal with this curse. Our differences, and some of them I suspect are more synthetic than substantial, are more over method than principle. In any event, in carrying forward these policies we seek, and we are confident that we have found, methods which are straightforward and which allow flexibility of operation to meet differing circumstances.
My Lords, in opening this debate I am only too conscious of the handicaps under which I am labouring. In the first place, the Bill and the Code are in a sense umbilically linked. We now have a Consultative Document before Parliament, but to do justice to it and to the Bill I should have to speak at an inordinate length. I do not propose to speak at an inordinate length and therefore I may do less than justice both to the Consultative Document, being debated in another place today, and perhaps also to the Bill. More important, my Lords, I am speaking on the eve of the Chancellor's Budget which must inevitably hear on the policies we shall be discussing this afternoon. Finally, I am speaking under the shadow of a serious, and as yet unresolved, international monetary crisis. Again the form its resolution takes is bound to have its impact on the success of our counter-inflationary policies.
I think your Lordships know that the Government, and I personally, have come reluctantly to the statutory path. I much prefer the voluntary approach. But I am equally clear that we now need to
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walk the statutory path, albeit for as short a time as possible, if we are to tame this inflationary animal which is threatening not only our economy but much else besides. To succeed, our policies must be fair and be seen to be fair, and I believe that they are. There may be disputes about this. To succeed, they must also give proof of success. Despite all the difficulties with which we are faced on the prices front—and I do not for one second under-estimate them —I believe that the first fruits of success are beginning to show. Since the standstill, the average monthly increase of 0.5 per cent. in the all-items index has been substantially less than for the previous six months when there was an average of 0·7 per cent., or in the last six months of the last Government when the figure was again 0·7 per cent. I do not claim for one second that 0·5 per cent. is not far too high—of course it is. Thus, and in particular, the standstill has been very successful in controlling nonfood prices which have increased by only 0·2 per cent. per month in the past three months, compared with more than three times the rate in the previous six months.
I acknowledge, of course, that there has been a significant rise in food prices, which, as noble Lords know, has been almost entirely due to higher fresh food prices: and this rise in turn reflects the world beef shortage, the rise in grain prices due to factors quite outside our control, and the seasonal increases in the prices of fresh fruit and vegetables. We have never claimed that fresh food prices could be controlled, just as the last Government never pretended during the 1966 standstill that they could be controlled. But despite this rise in fresh food prices, the overall level of retail prices has been rising a good deal more slowly in the past three months than it was previously. There is no doubt that but for the standstill there would have been a reverse process appearing; namely, an acceleration. Nevertheless, my Lords, all experience, both here and abroad, shows that the transition from a standstill (which is a relatively easy policy to set out and to monitor) to a more flexible policy is a difficult one. May I use a homely motoring analogy? It is rather like engaging gear and easing one's foot off the brake without either

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letting the car jump away or letting it stall. It is for this reason that the legislation, taken together with the Consultative Document, makes very careful provision to ensure that the changeover is such as to allow a real opportunity for genuine increases in pay—after all, 7 to 8 per cent. is not to be sniffed at—some real flexibility in the way these increases are determined (a point the critics seem to lose sight of) and some real opportunity for steering these increases towards the lower paid, while devising price control measures that are wide ranging and rigorous, but nevertheless provide for recognition of the differing circumstances of individual firms, the reinforcement of competition, and for adequate margin for investment.
Although your Lordships will not wish me to weary you or myself by a clause by clause examination of the Bill, I shall in a moment touch on some of the more significant provisions. Meanwhile, I feel it may make for the convenience of the House if I take up the story from our last debate and try to relate the Bill now before us, on the one hand, to the developments which have occurred since it was first introduced in another place and, on the other hand, to the proposals for price and pay control set out in the Consultative Document, and which are later to be embodied in the Price and Pay Code.
The Opposition have often sought to caricature this Government as doctrinaire, inflexible and confrontation-loving. This Bill and the Chequers discussions which preceded it give the lie to this charge. Moreover, we have been the reverse of inflexible or doctrinaire in working out the details of the legislation. We have made a number of amendments to the Bill in another place to take account of criticisms. And while I think we are all agreed that we should deal with the Bill now before us expeditiously, we shall not be doing so cursorily; we shall be offering certain Amendments at Committee, and we shall be willing to consider on their merits other Amendments that may be raised. But on the heart of the policy, the vital need to secure a reduction in the rate of price rises, mounting an attack on both fronts, on manufacturers and retailers' prices and on pay, we are determined to stand firm. Fairness obviously
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demands that the policy should bear equally on prices and on pay. While therefore we are flexible on method and on techniques, we are utterly determined to defend the citadel of this policy.
Some of our critics have taken the line that there should be a rigid control of prices, but no statutory intervention on wages, and have suggested that our policy is basically a statutory wage control masquerading as prices and incomes policy. Others seem to fear that price control may prove only too effective, and that profit margins may be eroded to a point where the level of new investment—on which we depend utterly to maintain our economic growth—may be seriously endangered. I have noted that the Financial Times has argued that the C.B.I. have more to complain about than the T.U.C. while at the other end of the spectrum the Morning Star has claimed that the Code curbs pay and is easy on prices. It is perhaps conceivable that we have struck about the right balance.
I agree that the Code is tough on prices—probably tougher and more comprehensive than any Government measure since the war. But the Consultative Document specifically provides for the Price Commission to take into account the investment cost of enterprises when administering the controls. It is our hope to raise the share of our gross national product going to investment—and we attach great store to this—in order to sustain the improved rate of economic growth which we are now achieving. I would concede that if firms reach their profit margin ceiling, their immediate financial incentive to reduce costs may be impaired. But I also believe that most firms, the wiser ones, will take the longer view, and will not relax their efforts to control costs.
Again, my Lords, we have been taken to task on the ground that by setting up these Agencies we are effectively withdrawing a vital area of our economic affairs from the control of Parliament, and either advancing along the "corporate State" road, or, some have claimed, creating monstrous unregulated new bodies that will act like Courts of Star Chamber. I would remind those who have voiced these criticisms of some significant concessions made in another place during the passage of the Bill.

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First, my right honourable friend the Secretary of State for Employment has given an undertaking that the Government will ensure that any new Code or any substantial addition or alteration to the Code should be debated in draft. The Agencies can only exercise the powers conferred on them for the purpose of ensuring that the provisions of the Code are implemented. So we are not proposing to give the Agencies by any means an uncircumscribed power.
I should like to remind your Lordships that the Bill provides that if the Minister is satisfied that there are exceptional circumstances which justify intervention by him in any case where the Agency have imposed a restriction, he may override their decision. In the exercise of this power—or indeed in his decision not to exercise the power—the Minister would be accountable to Parliament. We have also taken steps (this was during the passage of the Bill in another place) to ensure that adequate publicity is given to the publication of notices or consents issued either by an Agency or by a Minister. In sum, I claim with confidence that the Bill—certainly the Bill in its amended form as it has come to this House—ensures that there is an adequate Parliamentary presence, and that the policy itself and its mode of execution are both exposed to adequate Parliamentary scrutiny and discussion.
My Lords, so much for the Parliamentary supervision. What about the difficulties to which I referred previously of changing on the pay side from a standstill to Stage 2 and then onwards? Over the weekend my eye lit upon the report in the Observer of an interesting discussion between three distinguished professionals in this field—Professor Hugh Clegg, Mr. Harold Lever and Professor Andrew Shonfield—none of whom, I think, would claim to be of my political persuasion. I was very struck by a remark made by Hugh Clegg in this discussion, and I quote:
"It is a well known problem with incomes policies that if you cut off at a certain point and say that henceforward a policy is going to run, some people are caught."
This is precisely what happened in the standstill, and it makes the change of gear from the standstill to Stage 2 difficult and, it would also seem, a rather noisy one. We do not deny that there
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are hard cases. In our debate a month ago, I dealt with one of the hard cases and one with which I am particularly concerned; namely, those civil servants involved in the pay research cycle this year. But many of us are aware what a major breach of Stage 2 would lead to. It would mean a return to all those practices with which we have grown all too familiar during these past years: a perpetual process of leap-frogging, endless jostling in the pay queue; a return to the all-too-familiar vicious circle, a vicious circle which hits hardest those who are on fixed incomes or those without brute bargaining power.
The Government in any event—and this was made very clear in paragraph 33 of the White Paper—are acutely aware not only that the imposition of the standstill has itself caused some anomalies and highlighted some important categories of employees who, not without justice, feel that they have been hardly done by, but also that the normal process of pay determination will inevitably create further problems of relativities, both within and between different groups of workers. We recognise, as the Prime Minister has more than once spelt out, that the resolution of these problems must have a major place in a policy designed to deal with inflation in the longer term. At the same time, we must be clear that the singling out of cases for special treatment can create a fatal weakness in a policy designed effectively to control inflation. Without being partisan, I can say that most observers agree this happened with the previous Administration's policy. It is therefore essential that cases should not be considered in isolation but that the problems should be considered as a whole, and that progress towards their resolution in Stage 3 should be made within the total sum of money available to finance pay increases during that stage.
It is therefore our intention to ask the Pay Board, as a matter of very high priority, to consider the scale of the problem and to suggest the principles and priorities for making progress in resolving particular classes of anomaly during Stage 3 within the total amount available for pay increases during that stage. The Pay Board report would provide a basis for consultation with both sides of industry—and I stress "both sides"—with a view to the consequent amendment of the Price and Pay Code,

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subject to Parliamentary approval. In view of the volume of work involved and the importance for early advice, we propose to ask the Pay Board to begin by concentrating on the anomalies resulting from the imposition of the standstill and subsequently to give advice on problems of wider relativity.
My Lords, I thought it right to talk at some little length on the background to this Bill, and now very cursorily I should like to highlight some of its main clauses. First, there are the provisions which enable the two agencies, the Price Commission and the Pay Board, to be established and to operate, and the 'Treasury to draw up the Price and Pay Code to guide them. These are dealt with in Clauses 1 and 2 and in Schedule 1. Thus Clause 1 establishes the two new agencies—the Price Commission and the Pay Board. Your Lordships will have noticed that the chairmen of these two agencies, Sir Arthur Cockfield and Sir Frank Figgures, have recently been designated, and I am sure that there will be no dissent from the proposition they are both extraordinarily well equipped to discharge the very great responsibilities that will fall upon them.
The other clause in Part I—Clause 2—is one of the key clauses in the Bill. It provides the mechanism to the setting out of the statement of policies—the Code—which the Government expect those concerned with pay and prices to observe. It is therefore somewhat similar in purpose to Schedule 2 of the 1966 Act. It also provides for consultation by the Treasury for those who will be most affected by the Code and its operation. As I have already said, intensive consultation has taken place in the preparation of the Consultative Document which is now before Parliament. I will only express the hope that during the crucial period—and it will be only a comparatively short one—between now and when the Code becomes operative we shall have the benefit of consultation not only with the employing side of industry but also with the trade unions. The Consultative Document indeed draws on many of the points made by the trade unions during the tripartite discussions, and I, for one, deplore the fact that such consultation was ruled out (and ruled out by the trade unions themselves) when preparing the Industrial Relations Act. Such consul
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tation then would have been for the benefit of all. Likewise further consultation now with the trade unions would be for the benefit of all.
The second main element in the Bill, my Lords, concerns the main control powers. These are contained in Part II; that is in Clauses 3 to 11 inclusive, and in Schedule 2. This Part of the Bill will come into force with the making of the first Order embodying the Code under the Act. Subsection (1) of Clause 3 contains these "switch-on" powers. This subsection formed part of the draft Bill as published in the White Paper. Perhaps, therefore, I should draw your Lordships' particular attention to the remaining provisions of the clause, because they have been incorporated in the Bill after the White Paper stage when it came before Parliament in another place. These are designed to secure as smooth a transition as possible from the standstill to Stage 2. It is our intention to bring the standstill on pay to an end on March 31, but in order to enable prices to be effectively monitored in the month of V.A.T.—when V.A.T. comes into effect in April—to retain the prices standstill until the end of that month.
For its part, Clause 4 of the Bill provides that Part II of the Act, which contains the compulsory provisions, can last for only three years. I should like to make two points in this connection. In the first place, in proposing a three-year period of operation for the regulatory powers in the Bill the Government are in no wise retreating from their belief that the voluntary approach is preferable to the statutory path. It is not our intention to maintain these controls a moment longer than necessary, and there is clear provision in the clause to revoke them at any time. If we can get rid of them before the three-year period is over, so much the
better. But while they are necessary—and they are clearly necessary at the present time—it is really vital to provide a stable and solid framework within which the Government's policies, both to cool inflation and sustain growth, can operate effectively.
The second point which I wish to make is that Clause 2 provides effectively for Parliamentary control over Part II of the Bill—the statutory part. Fresh legislation would be needed after the

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three-year period for the continuance of any statutory policy. Moreover, within the three-year period while the statutory powers can be "switched off" by an Order in Council, they require a draft Order, with the Affirmative Resolution procedure, in order to be re-activated.
Clause 5 provides for the notification of price and pay increases. Three tiers for notification of both price and pay increases are provided for, and each case in those categories is somewhat different. There are the larger companies, where prior notification is required; there are the middle-sized companies, which will be required to notify regularly but retrospectively and there are smaller companies which will be required to keep and have the information available if that is required.
The final Part of the Bill—namely, Part 4, Clauses 13 to 21 and Schedules 3 and 4—is supplementary to the other provisions. And in this Part of the Bill I would only wish to draw your Lordships' attention to Clause 15— a clause which deals with offences. I do so because there is an inaccuracy—a not unimportant inaccuracy—in the January White Paper. In paragraph 42, the last paragraph of that White Paper, it was stated that offences under the Bill include, and here I quote from the words of the White Paper:
"striking or threatening to do so to force an employer to contravene a Notice or Order".
I wish to make it clear that subsections (2) and (3) of Clause 15 only—and I emphasise the word "only"—make liable the leaders of industrial action who exercise pressure on employers to contravene Sections 5 or 7 of the Act. This differs from Section 5(2) of the Temporary Provisions Act which also made liable the participants in a strike contravening the provisions of the Act. I emphasise this because I feel it is important and because of the unwitting inaccuracy in the White Paper. I should also wish to emphasise that the clause has been deliberately framed to reduce the risk of imprisonment to the very minimum.
We are faced, my Lords, with a major and pressing problem in tackling inflation: a problem not unique to our own country, one which we share in a greater or lesser degree with most other industrial countries. May I again express my conviction that if we fail to tackle it this
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time, we shall not only allow our economy to be crippled, but our democracy to be eroded. It is no secret that the policy which we decided to adopt was not our first choice. However, given the failure to reach effective voluntary agreement, despite sincere, sustained and strenuous efforts, we felt and we feel that there was no option but to submit these proposals to the test of Parliament.
I should like to ask your Lordships: What real alternative is there? The Labour Party and the T.U.C. seem to suggest that we can leave collective bargaining unrestrained while bearing down heavily on prices. Such a policy failed during the period of the C.B.I.'s voluntary restraint. This restraint was extremely effective so far as prices were concerned. I can only state my view—sincerely held—that the attack on inflation must be right across the board. We must deal with both ends of the equation —with both prices and wages. The policy now enunciated by the Labour Party, as I understand it, whatever its political appeal may be, simply fails to take account of the stark reality that the accelerating inflation which we decided we had to throttle in the autumn owed far more to persistent high wage increases in the preceding year than it did to price increases which mainly—although I would say not entirely—followed those wage increases.
The policy enunciated in the White Paper, embodied in this Bill and incorporated in the Green Paper, is one which we have chosen, despite evident ideological reservations, because we have become convinced in practice that there is no credible alternative policy open either to the Government or to the nation. We are convinced that any Government in this country worthy of the name would feel bound to tackle this problem head on. I do not think that there is any great dissent from that view in your Lordships' House. We are equally convinced that we need to sustain that attack, and again I do not believe that many in your Lordships' House would disagree. It is also our belief that the methods which we have chosen, after deep consideration and preparation and after a great deal of consultation, arc both flexible and fair.
May I emphasise one point in conclusion? The last thing that we are seeking

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is any confrontation with the trade union movement as a whole, or with individual trade unions. Indeed it is our belief that many of those trade unionists who are most concerned about Stage 2 are those who will lose most if our policies fail. We have shown that we are willing to be flexible; we shall continue to be so. But—and these are my final words—we have no intention of retreating one inch from the defence which we believe to be in the national interest of any of the essential bastions of our policies to contain, and then to conquer, this evident evil of inflation. My Lords, I beg to move. Moved, That the Bill be now read 2ª.—(Earl Jellicoe.)
3.16 p.m.
LORD BESWICK: My Lords, the noble Earl opened with a formidable list of difficulties under which he said he was labouring in moving the Second Reading of this Bill, and I am happy to think that he surmounted them all. We appreciate the fact that he thought it advisable, in moving this Second Reading, to adopt what I suppose in current jargon would be called a "low profile". I am sorry that the noble Earl has apparently so much trouble in changing gear in his car. Some one should tell him that there is such a thing as an automatic gearbox. Equipment can be quite useful in these modern days: equipment not only of a technical kind, but also to facilitate social change. One of the criticisms that we make of this Government is that immediately they came to office they threw aside all the equipment which we left: the Prices and Incomes Board, the Consumer Council, and the rest of it. The Government would have found their task very much easier if they had sought to build instead of destroy when they first took office.
I shall not advise my noble friends vote against this Bill, nor shall we seek to impede its passage to the Statute Book. We shall offer what we consider to be constructive Amendments at the appropriate stage, but we recognise and accept the fact that the sooner this Bill becomes law the sooner will our country move from the absolute freeze which has been imposed upon some incomes. Rigidity is an unpleasant posture and absolute rigidity is incompatible with life itself, let alone growth. But to say we shall
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not impede this Bill does not mean that we believe it can solve our problems. This Bill does not go near the heart of our problems; indeed, it does not go towards the heart of our present basic problem.
I confess readily that had this measure been brought forward two years ago I would have supported it without serious qualifications. I should have considered that the Government were building upon, improving, the prices and incomes structure which we erected. If my noble friend Lord Peddie had been given these powers when Chairman of the Prices and Incomes Board I can well see that we could have been using this for constructive purposes. I cannot give that unqualified support now for reasons which I shall try to explain. The first reason is that within the time that they took office Her Majesty's Government have soured the political and social atmosphere in which the provisions of the Bill will have to work. Not only have the Government worsened the economic state of the country, but they have intensified the worst social strains. The doctrine of Selsdon Park glorified the idea that every man has the right to grab as much as he can and the influence of that doctrine to-day is only too plain to see.
If it was possible to change human motivations by Act of Parliament, and if we wanted to remedy the damage which this Government have done, we should not now be considering a Counter-Inflation Bill but a Counter-Selfishness Bill. All the clever talk about cost-push or demand-pull inflation, all the efforts to monitor price tags or fix wage rates, is so much spitting in the wind unless we can reverse the present trend of our society and improve the spirit with which one class and section views another.
I have noted a tendency of late, within the higher reaches of my own Party, to say that what is needed is the right of individual choice, or, as the more trendy would put it, the right "to do one's own thing". It is, I believe, basically the insistence on "doing one's own thing"—in the streets, on the stage as well as on the shop floor, in the trade union committee and in company board-rooms—that is the cause of the malaise from which the Western World is now suffering. It is quite contrary to the Socialism with which I was brought up and the idea of

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"Each for all and all for each" which was the slogan of the Co-operative movement in which I was reared. It is this doctrine of imposing one's own will, irrespective of the consequences upon others, which results in children being on the streets instead of at school, in men and women being unable to get to work for lack of transport, and unable to work, if they do get there, for lack of heat. But, I insist, it is this Government who have encouraged this selfishness and given a lead to this doctrine of imposing one's will irrespective of the consequences.
As the noble Earl himself has said, the present Government, or their Prime Minister, are not incapable of altering course or changing their mind, but the frightening and self-defeating factor is that they assert the superiority of their current course with the same sublime arrogance and intolerance with which they sailed in exactly the opposite direction. It is no good the noble Earl's saying that they have been ready to talk, if before they agreed to talk they laid down ground rules which are quite incompatible with proper discussion. My Lords, I do not exaggerate in this matter. One can give innumerable examples, but in relation to this Bill listen to these words:
"The powers which the Government have taken to…impose an arbitrary control over wages and prices are unprecedented and inexcusable…".
That was the present Prime Minister talking of the policy of the previous Government. But we have reached this present dangerous point, and we are all citizens of the same country. What can be done? I repeat again that first we must try to improve the social climate. If there is confrontation—and there is, despite all the denials or attempts to wipe it away made by the noble Earl at the Dispatch Box this afternoon—if there is this escalating intolerance, someone must take a first step away from entrenched positions. It is not unreasonable to expect the Government to take that first step.
In a letter to The Times last week a much respected, independently-minded, highly experienced former Parliamentarian appealed to the Government to repeal the Industrial Relations Act. It may seem a lot to ask. But is it? Does the Act work? If the Government think it works, would the noble Earl like to rise now and tell me why are not the
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ASLEF men and the gas men brought before the courts? Why has that not been done if we have this piece of impeccable legislation? Would the noble Earl like to tell me why this action has not been taken? He will not get up because he knows full well that it would be quite impossible to attempt to make that Act apply to these men. But if it will not work—and all the evidence is that it will not work—are we not then getting the worst of both worlds or all possible worlds? I know there is much in the Industrial Relations Act which all Parties will support, but cannot we now in the light of experience wipe it out and start again, start afresh?
Then there is this Phase 2. I ask the noble Lord who is to reply: cannot a definite term be put to its provisions? They cannot work fairly. One union is already harnessing the horses to drive a coach through the loophole of the merit pay clause, and it will be the better-paid who will get through that loophole, not people such as the National Health Service workers. The Health Service workers, the London teachers, and certain others who had a two-part wage agreement and who found the freeze upon them before the second instalment was implemented—they do have a special case. The Government are ill-advised to have got themselves into a position in which those special cases cannot be considered. It would have been better from many points of view if the plan had been to move from Phase 1 directly to Phase 3, or whatever it is that the Government have in mind for Phase 3, for the longer the pattern of Phase 2 is imposed, the more rooted will be the habits of non-co-operation and the more will the special unfairnesses fester. So I ask whether the Government can give more specifically a time factor so far as the operation of Phase 2 is concerned.
May I say one thing more about incomes control? I have myself long argued the need for an incomes policy, and if I now express doubts it is not, I would say to the noble Viscount, Lord Amory, because I take orders from unions or anyone else. But I do try to learn from experience, and experience seems to show that the attempt to impose wage rates from Whitehall for all of Britain's industry is almost bound to break down. The matter is so immensely complicated and

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the opportunities for evasion, especially among the least deserving, are so widespread that the sheer practicability must be suspect. It really is necessary for all of us, wage-earners and wage-payers alike, to look at the other man's proposals with a greater readiness than the noble Earl showed when he was moving the Second Reading this afternoon.
This idea that prices should be statutorily controlled and wages voluntarily vetted is not so absurd as some would make out. Many of the over-generous wage agreements struck in recent years were possible only because the employer knew he could take it out of the customer. Most of us could think of examples where an employer has got out of line of a national agreement, not because that employer was particularly generous but because he knew that he could more than recoup himself by a price increase. With the discipline of effective price control such settlements would be impossible. I have memories, which cause me exquisite pain even now, of experience in Government when a particular Minister would argue for a wage increase over the agreed norm on the basis of a so-called productivity agreement. I never really knew the meaning of the word "phoney" until I listened to that talk of productivity agreements. Always they led eventually to applications to put up prices. The best test of a productivity agreement is effective price control; and if some services cannot be priced by market forces, then I hope the new Price Commission will take social need into consideration.
So we should not rule out a solution which tackles wages through prices. At the same time, in my view it is unrealistic to ignore the possibility, in the future as in the past, of one section of the community, more tightly organised or more strategically placed, using their strength to do better than their fellows. A completely voluntary system will not restrain them and it is idle to suggest otherwise. Some reserve sanctions are essential. But—and this is where the Government go wrong—such sanctions have to be agreed; they cannot be imposed. And agreement cannot be reached unless it is sought as part of a fair deal all round, and that is what is lacking. One element in any fair deal must be some further action to stop food prices rising. It is farcical to speak of price
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control if fresh food is exempt. I heard one housewife say last week that it was frightening to shop these days and another —and not the wife of a low-paid worker, either—said it was "horrible" to go into the grocers. Since the so-called freeze the official figures show an increase of 7·3 per cent. on food prices, and fresh food has risen by l4·7 per cent. This at
a time when we have had a freeze on prices. The budget of a working-class household will provide 25 per cent. for food; in a typical old age pensioner's budget it is 33⅓ per cent. Meat, fish, eggs, fruit and vegetables will all still be outside control. It is humbug to say that we cannot check these increases, or at least try to check them, by control and/or subsidy. We did subsidise prices, until we capitulated to the lunacy of the Common Market agricultural policy. Effective food price control, or at least an honest attempt at it, is one essential for the fair play concept.
Another essential is an end to land speculation. Really deep hatred of what is happening in the land and property market is not confined to one political Party. I shall not quote examples again —we all know them. The only difference between us has been that the Government say that all that can be done is to release more land for the speculators. The real solution here is public ownership of land, but to-morrow the Chancellor of the Exchequer could strike a significant blow for the British people by announcing a 90 per cent. capital gains tax on land sales. To-morrow, too, we shall learn the rate at which some essential clothing, which has never before been taxed, will bear V.A.T.
LORD DAVIES OF LEEK: Hear, hear! He will have to take it off.
LORD BESWICK: My Lords, clothing and food, absolutely essential, put up in price, not because of wage increases but because of deliberate Government policy. The Government should be prepared to adjust, if not reverse, their policy on food and clothing; they have done something about shelter, and they must tackle the land scandal. They could repeal the Industrial Relations Act without sacrificing anything but pride. With that kind of approach they would be entitled to expect restraint on wages. Public opinion would he behind them, and public

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opinion can be very potent. After all, the wage earner is part of the public—as the striking power-worker found when the breakfast-deprived bus conductor made him walk some year or so ago.
In a modern, integrated industrial economy we each depend upon the other, and some can take advantage of the rest. What we are now finding is that the continuous working of this modern highly integrated, immensely powerful, industrial economy is just incompatible with self-centred, selfish, self-seeking behaviour. We need to-day nothing less than a new social ethos if we are going to make our economy work. I cannot see, so far, that the political context in which this Bill is brought forward promises that progressive change. I hope that I am proven wrong, for the history of our people gives me cause to believe that our problems can be solved.
3.35 p.m.
LORD BYERS: My Lords, in following the noble Lord, Lord Beswick, I should like to say that there is much in both the previous speeches which I am able to agree with and to commend, but may I just pick on one particular point? I believe the suggestion that there should be a 90 per cent. capital gains tax on land sales is unlikely to bring more land on to the market. I would commend the Liberal policy of site value rating, which in other parts of the world has had just the effect which the noble Lord, Lord Beswick, and I should like to see, namely, more land available for housing and less speculation.
I think it is important to recognise that this Bill is not really a statutory prices and incomes policy. What we are being asked to support is an emergency expedient which has arisen from a number of causes, not least of which has been the failure of the policies of previous Governments to make a sensible, voluntary system work. I do not say this in a critical way, because I think it is very difficult indeed to get a voluntary system to work, but we should recognise that that is why we are at this impasse to-day. All we are now doing is to establish a breathing space and, if possible, a firm base from which to develop a fair industrial system in which reasonable growth is possible, and if I have any criticism to make of the last two speeches it is that in my view
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there was not the right emphasis on the need for growth in our economy at the present time. I have no doubt that a Bill of this sort is essential as a holding measure, and we shall support its Second Reading.
I cannot really understand the attitude of those trade unionists who are using industrial action to inconvenience, and indeed to jeopardise, the livelihood and health of their fellow citizens at the present time, and I ask myself, why should the country suddenly be subjected to this wave of bloody-mindedness? It cannot help anyone. It must surely be clear that if inflation is to be brought under control, then price and wage increases must stop somewhere before we start the necessary re-adjustments in Phase 3. It must surely be clear to the gas workers, the hospital workers, the civil servants and ASLEF, not to mention the teachers, that if their industrial action succeeds in weakening the determination of the Government, that action will be followed by further strikes by miners, busmen, dockers, postmen, Vauxhall workers, and so on. As was recently pointed out in the Economist:
"Except in jobs which need a lot of new recruits because of sudden changes in technology or demand, there can only be one national result of a wage increase well above the rate of rise in national productivity."
It can only put up prices, and, as the noble Earl the Leader of the House said, it will rob the defenceless sections of the community who live on fixed incomes (largely old people), the poorly paid and the unemployed. Even so, the proposed restriction on wage increases of about 8 per cent. is about twice any national increase in productivity which is likely to be achieved. Refusal to accept this wage restriction must surely lead to uncontrolled inflation, and I cannot see why this is not clear to the leaders of the unions who are at the moment undertaking industrial action. The refusal to accept the scrutiny by a pay board of the relative merits of pay claims makes one a little suspicious.
Indeed, a common feature of these industrial acts has been the special pleading on radio and television by what I can only call well trained actors arguing often from suspect premises. Much of their argument, when stripped of its camouflage, is not about low wages but about wages which they regard as low in relation to other workers. All this can be

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dealt with if Phase 2 guidelines are accepted and proper readjustments are permitted, as they must be, in Phase 3. We need this breathing space and we cannot afford to make any exceptions at all if we are to get things right in Phase 3.
I believe one of the reasons for needing objective scrutiny of pay claims by the Board is because so many of the arguments are designed to mislead. For instance, to say that a skilled gas worker gets only £23 basic pay is, as The Economist demonstrated, quite misleading, because hardly any gas worker I understand gets only basic pay, and if the gas workers accepted the present offer they would be some way above the average of industrial wages. In the same way, many of us saw on television a London teacher saying that both he and his wife were teachers in London but that they could not afford London accommodation. I am told that the combined household income of such a childless couple would probably be somewhere above £3,000 a year.
SEVERAL NOBLE LORDS: No!
LORD BYERS: The two of them, childless, in London and both teaching, I am told that that is about right. That puts them in the top 10 per cent. I am not saying that £3,000 is an adequate figure: far from it. But I am saying that there is a lot of special pleading going on at the present time and the sooner we get someone to undertake an impartial examination of these claims and the relativities, the better for all concerned. I have not seen much evidence so far of a willingness on the part of the higher-paid workers to give up much in favour of the lower-paid workers in the group to which they belong.
Now I should like to deal with the Bill itself. I wonder whether the Government are wise to separate the functions of the Price Commission and the Pay Board. That is a point which the noble Lord, Lord Peddie, made in a speech not long ago and 1 found it a forceful one. I see that they have taken powers to amalgamate these Agencies and I should have thought that one body was probably preferable at the outset if only to ensure that the trends in the fields of both pay
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and prices were constantly monitored and co-ordinated. Secondly, I put forward once again the need to have the public or national interest (represented on these boards. I should like to see people on them who are not directly associated with employers or workers, people such as we have had on arbitration boards in the past, who can really look, particularly in Phase 3, at suggestions such as that made by the noble Earl, Lord Jellicoe, for finding out what the country can afford in wage increases and in settling anomalies. That is an excellent idea on the part of the Government. But, it has to be something which has the stamp of impartiality somewhere on it, because it is very easy to agree that we can afford far more than in fact we are going to be able to afford. I believe that Phase 2 is really the policing of the freeze. Phase 3 will be the adjustments which are necessary. I commend the Government for deciding to get on with finding out what we really can afford to pay as increases in our national payroll.
I do not want to deal in detail with the Green Paper, but there are one or two things which must be said at an early stage, particularly since the Bill places the responsibility on the Price Commission, and indeed on the Pay Board also, to exercise their powers to ensure that the provisions of the Code are implemented. I cannot see any reference to profits in the Bill, but there are many references to them in the Code, and the noble Earl the Leader of the House touched on this in his speech. I believe that the references in the Code are very worrying indeed because they show a fundamental misunderstanding of the role of profits in the economy. I do not think that one can push aside what the Financial Times said. Whoever drafted paragraphs 19 and 36 of the Code accepted the old Left Wing shibboleth that "profits" is a dirty word and that it is associated with the employer's side of the business; therefore it must be controlled or limited if justice is to be done.
That is a fundamental misunderstanding. It has nothing to do with the employers' or the workers' side. I believe that no intelligent member of the Labour Party honestly believes that about profits. When it appears in a Conservative Government paper, it does a grave disservice to the attempts of those of us

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who are trying to get a better public awareness of how the economy works and what we have to do to increase economic growth. It is not, as the noble Earl, Lord Jellicoe, said, trying to strike a balance between what one might call the employing side and the employee side; it is much more than that. I have taken up this theme on numerous occasions inside this House and outside, and I have always said that we have to recognise that unless British industry is profitable it will not remain in business; not for anybody, be they worker, shareholder or anybody else. If industry makes losses then it cannot afford to pay the higher wages. If industry does not make profits through its efficiency and productivity there is no scope for reducing or containing prices. Profits are the lifeblood of the private enterprise system. Business must make profits, and I believe that what matters is that, wherever possible, they should be made in genuine conditions of competition. But what really matters is how they are used and it is vital, to my mind, that we should not allow them to become part of this phoney class struggle. They are absolutely vital to private enterprise.
I should like to see a very great extension of profit sharing and employee shareholding. Profit sharing is forbidden by the Code as I read it. I have no objection to dividend limitation or to price control in the present circumstances if it will help towards countering inflation, but attempts to reduce profits fairly made will dry up the funds for investment and reduce severely the achievement of economic growth upon which our future and future wages depend. I believe that the thinking behind paragraph 19 of the Green Paper is very dangerous indeed, and I hope that we shall have an opportunity of getting it changed. What it says is that:
"In order to ensure that the benefits of increased productivity are passed on to the consumer not more than 50 per cent. of allowable cost increases arising from pay increases may be passed on as price increases."
I believe that to be stupid and unfair. It is very unfair to the service industries. It is very unfair to the labour intensive ones. It is unfair to the public to allow the capital intensive industries to pass on 50 per cent. when the labour costs in a capital intensive industry may be only 15 per cent. or 20 per cent. That
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is an absolutely wrong attitude to take in a Paper of this sort.
Paragraph 36 has the same idea. It says:
"In addition prices should be reduced where other factors (such as an increase in the volume of sales since the last price increase) lead to a significant fall in allowable costs per unit."
Surely that is just what we want. We want to get a fall in costs. We want to encourage growth, and limitations on profit in this way remove all incentives to increased productivity. The same analogy to efficiency, productivity and profit occurs elsewhere in the Code. I should like to make sure that we make it a rule that nothing in the Bill or Code must be allowed to reduce efficiency or productivity if we are to get growth.
The same idea occurs in paragraph 120 which says that:
"…increases in pay under productivity or restructuring schemes introduced after 6 November 1972 count against the pay limit."
In other words, there is no incentive to productivity. There is a slight exception in paragraph 121. But what responsible industrialist will contemplate new investment if he cannot buy productivity? I know there have been phoney productivity agreements; we have all seen them. But we must get the emphasis on being able to get productivity agreed and to be able to buy restructuring schemes if investment is to help economic growth. Finally, I wish to refer to the period for which the Act is to run and where the Government had some local difficulty.
EARL JELLICOE: My Lords, I have listened very carefully to what the noble Lord, Lord Byers, has been saying, and I do not want to go over that ground now; we shall have a chance in Committee. But I should like to draw the attention of the House, through the noble Lord, to paragraph 49 of the Consultative Document where specific exception is made concerning investment. The noble Lord, Lord Byers, said (perhaps quite rightly) that I had not laid sufficient emphasis in my opening remarks upon growth, and I should like to make clear that this Government are committed to growth and therefore to investment for backing growth. That is specifically covered in paragraph 49.
LORD BYERS: Yes, my Lords, it is specifically covered in paragraph 49, but that allows for using profits. My point is that we must not do anything which prevents the profits being made. There are numerous other examples which we can take in Committee stage, concerning tremendous encouragement, so far as I can see, to the inefficient industries, the ones that cannot make 5 per cent. on their capital. These are the ones that are going to be allowed to increase their prices. But the chap who is really efficient, who has got a first-class operation going, when he gets over the 5 per cent. has got to do something to reduce profits. This is the wrong thinking. I hope that on Committee we may go into this matter, because we are in the consultative stage, and if we get this wrong we shall, in my view, have the wrong basis for trying to get growth. It is not just a question of pay and incomes, but of the growth we want to get in the economy.
May I refer again to the period during which the Act is to run. This is one of the problems the Government ran into in another place. I am not one who wants in any way to weaken this important holding operation, but I must say quite clearly that I do not see us being able, for anything like three years, to run our incomes and prices policy on the detailed interventionist and bureaucratic lines envisaged in this Bill and the Green Paper. I cannot see it working. If the freeze goes on for too long, we shall have lost the whole basis of the operation. I think the American experience bears that out. I believe we must enact this measure subject to renewal every twelve months. I give two reasons: first, because I believe that we cannot live under freeze and siege conditions for more than a few months without undermining the holding operation; secondly, a programme such as that outlined in the Green Paper and the Bill is so important to every individual in this country that it demands full Parliamentary discussion and approval at intervals of no less than a year. I hope when we come to Committee we shall be able to find some compromise on this question. I should hate to feel that this matter was with us without proper debate and discussion for three years.
EARL JELLICOE: My Lords, I am sorry to keep interrupting the noble Lord. I do it for the sake of clarification, to make it quite clear to your Lordships that the consultative document, the Green Paper, only runs for Stage 2; that is until the autumn. It will then be replaced by a further Code, which of course will be debated in Parliament.
LORD BYERS: My Lords, I think that is a very good thing; but the Bill has made provision for the organisation to go on unchallenged for three years. I believe Parliamentary challenge in these circumstances is very important indeed.
My Lords, we shall support this Bill. We want people to be richer, not poorer. We implore that we should not try to rush things too fast We should not agree to gross wage and pay demands at the time. We cannot afford to pay ourselves more than we are earning. But with this firm base, I believe that it is possible that we shall at last get a grip on the situation even if we do not completely solve the problem.
3.54 p.m.
LORD ROBBINS: My Lords, in rising to follow the extraordinarily cogent and stimulating speech of the noble Lord, Lord Byers, I must first tender a tentative apology to the House: if by any chance I am not in my place when the noble Lord, Lord Drumalbyn, replies, it will be merely because I have been summoned for a semi-official discussion of war and post-war history, which has taken months to arrange and which it would be very difficult for me to back out of at the short notice we have had of the appearance of this Bill in your Lordships' House.
The noble Lord, Lord Beswick, has announced that he will not ask his Party to divide against this Second Reading. If his decision had been otherwise, I confess that I should have gone into the Government Lobby. I should have gone into the Government Lobby, however, in a somewhat Lao-tszeian frame of mind. I should go in not because I think in principle and in the long run statutory control of incomes is the best way of managing that sort of thing. On the contrary, I still hold the view that if aggregate national spending is held more or less commensurate with the increase in the value of

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the product then freely negotiated contracts are better. Secondly, I should vote for the Government not because I am in favour of control of all prices. I am certainly in favour of control in the long period of some prices, prices which are, either necessarily or by way of conspiracy, monopolistically determined.
But in general, trying to keep things in proper perspective, I am opposed to direct interference with the result of market forces. This is not because I think that the direct result of market forces is always a good thing, but because I think that if it is not a good thing it is far better to tackle the fundamental influences behind demand and supply, to tackle them by way of taxes or subsidies or even by physical controls, than to monkey about with prices, which, after all, are a result of these fundamental forces. I do not believe, therefore, that price control is a good thing in itself. I do believe that all historical experience since the time of Diocletian shows how likely it is to be ineffective and how likely it is to run into grave trouble.
The reason I support this Bill is otherwise. I support it because I believe it is the only hope of stopping the fundamental conditions of inflation without bringing about a major depression. And by "a major depression" I do not mean the degree of depression that we have had lately, which has not been very much above the average which William Beveridge thought was the utmost achievable in his famous book on Full Employment in a Free Society. I mean rather old style, catastrophic unemployment, perhaps six, seven or even more per cent. I do not think we can get out of the truly terrible pickle in which we have got ourselves without such a disaster unless we are prepared to swallow a dose of the very disagreeable medicine which the Government at the moment are administering to us.
May I explain this attitude a little further. Inflation since the war is explained in many ways. It is sometimes explained in terms of demand, excessive spending on the part of someone or other; sometimes in terms of cost-push, successful monopolositic pressure for increased pay out of any relation to increased production. These explanations are very difficult to separate out. I have
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no doubt at all that in recent years there has been a considerable element of cost-push. I defy anyone to contend successfully that increases in earnings of 15 to 20 per cent. bear any relation whatever to the movements of the gross national product in recent years. But at the same time I would point out that with a public spending deficit of the order of magnitude which threatens to emerge, cost-push is not the only influence. It is not the main influence, for instance, on the level of land prices, to which allusion has been made already.
Be this all as it may, it seems to me that the fundamental point to bear in mind is that these things, cost-push, or excess governmental spending, would not be likely to happen if the rate of increase in the credit base were no greater than the rate of increase in the value of production at constant prices. Of course it is possible to conceive that, for a time, this condition might be offset by some increase in the rate at which money is used—namely, by the creation of credit outside the main organised credit system or, as happens in times of severe crisis, by a rush to turn money into goods at any price. It seems to me that in the main the proposition is incontestable that if the rate of increase of spending power is not greater than the rate of increase of production, attempts to borrow in excess of the disposition to save will prove nugatory and attempts to push up incomes will simply leave more persons without work.
But what has actually happened? Since the end of June, 1970, when the present Government came into office, M3—the most commonly accepted measure of the credit base—had increased to last September by something of the order of magnitude of 40 per cent. In the same period G.N.P. increased by—what shall we say?—5 per cent. I hope that noble Lords will notice that I am speaking in a loose way. I do not attach too much importance to precise figures here; I have handled too many of them myself. All sorts of things can go wrong in the best estimates; all kinds of incidental movements can be explained away by transitory circumstances; but surely the comparative orders of magnitude that I have cited are unmistakable. With that sort of disparity between the increase in the money stock and the increase of the

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national product, I would say that inflation of the kind that we have become accustomed to is inevitable.
It may be that some noble Lords on my left would regard it as unfair to take my figures from June, 1970. Much the same sort of rate of increase in the money stock began in the last few months of the former Chancellor of the Exchequer, Mr. Roy Jenkins. Having regard to the way in which his balance-of-payments troubles disappeared almost overnight when he had screwed himself up to reduce the rate of increase of aggregate spending, the change of policy has always been something quite astonishing to me. But June, 1970, is a long time ago. The present Government have been in office more than two years, and one of their chief promises at the Election was to arrest the rise of prices. Until recently, at any rate, with all respect, the rise of prices has not been arrested. I am a very great admirer of the present Chancellor of the Exchequer; I am a very great admirer of some of the financial reforms which he has instituted or, to take the case of negative income tax, which he has been the first Chancellor to contemplate; but I must say, in all humility, that looseness of his control of this very fundamental magnitude must be, in my opinion, a permanent blot on the record, and one for which the nation has had to pay very clearly. Look at what has happened to the balance of payments in recent months.
There are those who think that, given this sort of diagnosis, it follows that the problems could be solved quite simply by arresting the rate of increase of money supply until it had a more normal relationship to the increase of production. I wish that I could share that view, but I do not. Once inflation on the scale we have recently experienced is in full tide, a sudden check of the order of magnitude which would be necessary in increase of money stock
would be likely to bring about a grave crisis. Once inflation is proceeding at that rate, all experience shows that business expectations and trade union expectations are keyed up to further increase. Wage claims are in the pipeline which take account of expectations of that sort. If the finance is not available and there occurs a sudden retardation of the rate of increase, then dismissals and bankruptcies are probable. Only if there
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is some artificial check on the increase of claims can we hope that production will continue at the present level, or perhaps even grow.
It is for this reason that I think that the general principle of that upper limit on pay increases for the time being is worth supporting. Not that I think that it will not involve injustices; most obviously it will. Not that I think that there will not be a good deal of evasion and that eventually it will crumble; I think that that will happen. But I think that it affords a breathing space, the only breathing space that I can conceive; a pause in which we can regain control of the increase of money stock without causing an industrial crisis, and an opportunity for the public to realise what many of them have long forgotten (as the noble Lord, Lord Byers, so vividly pointed out), that claims on G.N.P. which exceed its rate of increase by very much, such as those that we have recently witnessed, can only result in either inflation or unemployment.
As regards details, surely those are better discussed at the Committee stage. I have comparatively little to say about the pay provisions. I think that the attempt to bias negotiations in favour of the lower paid, put forward with the most excellent motives, may well prove self-defeating in that it will provide an obvious incentive to substitute skilled for unskilled labour. But the idea of a general upper limit beyond which increases are not an allowable cost—I am quoting from the explicit words of the White Paper rather than the Bill—seems to me to be sound. I confess to many more hesitations about price control. Here I find myself in considerable agreement with what was said by the noble Lord, Lord Byers. I think that we ought not to forget that where there is not strong monopolistic power, prices are results and not causes. As I said once before in your Lordships' House, the rise in the value of my poor little dwelling in Hampstead Garden Suburb from about £3,000 to about £40,000 is a result, not a cause, of inflation. I am not a cause of inflation.
I would urge that the adaptability of market prices to the underlying conditions of demand and supply is a valuable feature of any system, whether privately of publicly run. I think all experience shows that if prices are held at levels

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much below that which would clear the market, there tend to develop shortages, and distributions according to the time that people can afford to wait in queues rather than accordingly to what they are prepared to pay. I must say that I think one can tremendously underestimate—I felt that the noble Earl, with whose general intentions I feel such tremendous sympathy, himself underestimated—the administrative difficulties which seem to me to leap to the eye from the most casual perusal of the Green Paper. No doubt in Committee we shall have more opportunity of alluding to these difficulties, but my imagination boggles when I think of the difficulties which will emerge in the definition of, for instance, what seems to be the simple concept of allowable cost. As I read the Bill and the Code, I must confess that I think there is real danger of upsetting the relative incentive to produce the things most in demand, and to contract those for which demand is less urgent.
As for the idea of controlling prices, including import prices, and leaving incomes to be determined in a free-for-all, hazy atmosphere of good will, I hope it is not necessary to point out that this is the road to further crisis, both national and private. The Government and nationalised industry would be committed to rising deficits and the private sector would be doomed to bankruptcy, unless indeed the influence of credit creation were to continue, and that could go on for only a limited time before a final crash. I say, in all earnestness, that those who suggest that the control of imported food prices is easy, should consider again the lessons of war experience. During the war, we succeeded in doing it by monkeying about with the index numbers and by putting all imports under State control, which I doubt whether many Members of your Lordships' House wish to do as a transitional measure. In fact, in point of pure logic—and I am not adhering to pure logic; I say that lest noble Lords on the Opposition side rise and charge me with being a cold-blooded economist, guided only by the geometry of his craft—if you are to have one kind of control rather than the other, it would be better to have pay control and let prices look after themselves.
LORD BESWICK: My Lords, is the noble Lord aware that we would never accuse him of pure logic, if he is arguing against control of imported food prices, when in fact, a short time ago, he was arguing in favour of the intervention price set out in the Common Agricultural Policy.
LORD ROBBINS: My Lords, I shall not go into that, although I cannot help suggesting that it is a little wide of the mark. But I am arguing from what I still believe to be the pure logic of the situation. I agree that Government is the art of the possible, and since, I am sorry to say, at least 80 per cent. of the population of this country, regardless of Party, probably think that the levels of prices are determined not as they in fact are, in the main, by impersonal forces, but by the manipulations of profiteers and monopolists, I suppose we must stomach a certain amount of unnecessary price control to make the prevention of inflationary pay claims at all palatable. I would only predict that the price we pay for this palatability in its present form—I am not arguing that it is incapable of improvement—may be quite considerable. I am quite sure that if we succeed in getting the volume of aggregate demand into a more reasonable relation with aggregate production, it will be quite unnecessary to have control of prices over all that part of the field where any sort of competition prevails.
In all this, we must try to keep a sense of perspective. In a former debate, I remember that the noble Lord, Lord Platt, said that he wondered—I hope I did not mistake him—whether this is not a crisis of capitalism. I would rather say that it is a crisis of finance. It is not the existence of private enterprise which has got us into this muddle; on the contrary, the crisis, I am sorry to say, is most acute in nationalised industries, where the delusion prevails that the public purse is a sort of widow's cruise, and where, because of the pivotal nature of nationalised industries, most harm can be done to society when attempts are made to stop the process of excessive claims. But I do not want to end on a note of controversy. Rather I should hope that we would all agree that the essence of the trouble is an excess of aggregate demand over supply at stable prices, and that unless that excess is

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directly curbed no amount of restraint on pay and prices will prevent further trouble.
4.18 p.m.
LORD PEDDIE: My Lords, in the debate this afternoon we are concerned with the basic principles and objectives of the Counter-Inflation Bill. I have no intention of engaging in any dissertation on the anatomy of inflation, or indeed of wasting any of my time replying to some of the points made by the noble Lord, Lord Robbins. All we can do at this stage of the proceedings is to recognise the existence of serious economic circumstances which necessitate drastic remedies. I believe that subsequent stages of this Bill will indicate ways in which it can be improved, but I welcome the sight of the Government jettisoning old concepts, although I recognise that their courage might be born out of desperation and recognition of a worsening inflationary situation.
I have no intention of repeating the points made when I spoke in the debate a month ago, except that I must once again emphasise that to-day we are in a situation which justifies—indeed, demands—positive action.
This Bill may or may not be all that we want, but the objectives must be achieved; otherwise, the effects on all sections of the community will be shattering. At the same time, although I do not seek to inject too much political flavour into my speech, I share the view expressed by the noble Lord, Lord Beswick, in pointing out that the Government themselves have a high measure of responsibility for the present situation. There was a free-for-all following the first flush of electoral success, and that, without any question of doubt, encouraged inflation—and it is all too well known that inflationary forces are self-generating. People were indeed encouraged to believe that rising prices and inflation were part of the normal economic scene. There was the belief that inflation, and ever-increasing inflation, would be a permanent feature. It is obvious, my Lords, that our entry into the Common Market and the need for economic and monetary harmonisation have presented Britain with almost appalling problems, and if inflation is not tackled the immediate impact will at least be that membership benefits will be
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seriously delayed. I often wonder—and I speak as an ardent supporter of the Common Market—how far our recent entry into the Common Market has sharpened the Government's perception, and the need to jettison their old ideas. I believe that the experiences of past weeks have done much to emphasise in the minds of the Government the need for much more positive action than they were prepared to take some two years ago.
Now I recognise that the Bill, and indeed the Code, my Lords, cannot in themselves provide the complete solution to this problem of inflation, any more than a compass can guarantee arrival at a distant port. The Bill, like the compass, can be something of a help; and indeed it would be a miracle if it was possible to have a successful voyage without the aid of a compass. A prices and incomes policy, no matter in what form it may be expressed, can only be part of an overall plan. It is no substitute for fiscal or monetary action. It is certainly no substitute for far more dynamic action in improving the efficiency of industry as a whole. Certainly it is no substitute at all for improving, as I just stated, industrial efficiency and better deployment of manpower. In the old P.I.B. days we had quite a number of critics and supporters. They often tended to polarise into extremes. There were some who believed that a strict policy and a tough Board could alone create the environment conducive to substantial economic growth. There were others—and they still exist—who believed that the free play of economic forces alone could provide the answer. Both points of view were, and are, devastatingly wrong. The truth is that we have to look upon this new-found policy, and the activities of the newly-created Board and Commission, when they are created, merely as an additional but indeed powerful tool in checking inflation.
It needs, in addition, a concerted effort, as indeed the noble Lord, Lord Byers, indicated, to increase overall productivity; and I would emphasise that, in the presentation and operation of this policy and the activities of the Board and Commission first of all the direction must be seen to be constructive, and not restrictive. Secondly, it must be based upon a public recognition of need. Without those two

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conditions, the policy will fail: there is no doubt at all about that. I believe that at the present point of time there is a recognition on the part of the overwhelming majority of people in this country that the Government should take some positive action. In that regard, the Government are fortified, and they have a measure of voluntary acceptance for the authority that is implied in the operation of the Bill.
But my main criticism of the Bill and the Code is that they tend to emphasise the negative or restrictive activity rather than the constructive. It is very significant, my Lords, that in only one case—that is, in paragraph 75 of the Code—is there a fleeting reference to the purpose of increasing real earnings. If you are presenting this policy to the worker, obviously what he seeks to achieve is a better standard of life. That is what so many have told him an incomes policy can achieve; but nowhere do the Government appear to have sufficient confidence in the policy achieving that end that they make express reference to it—neither in the Bill nor in the Code. I would strongly urge that that be underlined, because the primary objective—and I am sure it is on the part of noble Lords opposite—is to increase real earnings. Indeed, there is hardly a mention in the Bill of that particular aspect.
The Bill provides for a Pay Board and a Price Commission, apparently because it is thought that pay and prices should have separate treatment. As I have said on a previous occasion—and it has been confirmed by the noble Lord, Lord Byers —prices and pay are inextricably interwoven, so why keep them apart? It would seem that the Government themselves recognise the possibility of merging them in the future, when in paragraph 3 they make reference to that fact. Another interesting point is that in paragraph 138 it is proposed that there should be a special panel for the construction industry, including members of both the Pay Board and the Price Commission. To whom will they be responsible, and whose staff will they use? It is provided in Part 3 of Schedule 1 that any person can be a part-time member of both agencies.
My Lords, I think there is a need for a clearer indication, particularly in the Code, as to closer co-ordination of the staff, but nowhere is this mentioned. I
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recognise, of course, that there is a certain psychological value in having a separate Price Commission to indicate to trade unions and workers that special attention is being devoted to it. I recognise that; but I believe there must be some co-ordination between the operation of those two bodies, otherwise it will make for conflicting decisions and it will make for waste. But the real success of the Pay Board or the Price Commission will depend on how they operate. If there is a rigid, inflexible approach, with strict adherence to regulations, the value of the Commission or Board will be restricted. As noble Lords know, the P.I.B. discarded the convention of judicial hearings and claimed the valuable freedom of informal contact and discussion, and I can assure noble Lords that a great deal of value flowed from that method of operation.
In my opinion, my Lords, the control of prices is vital. Without it, I really do not see how it is possible to effect a reasonable or rational measure of control of pay. Furthermore, unless workers see and believe that effective steps are being taken to control prices, they will not accept pay restrictions. Noble Lords on both sides of the House recognise that there must be a degree of voluntary acceptance. Otherwise it could not be done. Paragraph 12 of the Code, dealing with prices, indicates that the prices of fresh foods will not be controlled. I recognise the enormous difficulties of obtaining successful control over the prices of these types of food. But the recognition of the difficulties, in itself, does not justify taking no action at all. If essential food is excluded from the obvious supervision, I think that there will be trouble. I could suggest some action. The seasonable movements of foodstuffs, of fresh fruits, for example, and of all kinds of food are known. They have been and can be charted; and any variation from the average can be noted and investigated. Therefore it lies within the realms of possibility that the Prices Commission engage upon activities which would indicate that they are at least making an effort to control the prices of those products.
The trouble with the Government is this. They recognise those difficulties but are afraid to express in clear, positive terms the methods by which those diffi-

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culties can be dealt with. Why do I say that?—because in paragraph 137 it is stated that a sub-committee of the Price Commission, "will…be able to carry out" special inquiries into any food prices. It does not say "must", but "will be able". There will be no difficulty at all in placing that responsibility on the shoulders of that prices subcommittee who engage in these inqiries. I know the difficulties, but here we are dealing with a psychological situation. We are dealing with a situation in which the Government have to demonstrate to the world that they are serious about it, that they really mean what they say and intend to curtail and restrain inflation—to restrain inflation and at the same time to raise real pay. That is the intention. At least, make it a little more explicit in the documents.
Pay is a factor; the pressure of pay demands has carried the major blame for generating inflation. There is no doubt that it has been a contributing factor. With that I would agree. But it is not all the story. Rising steam can blow off a kettle lid; but what built up the steam? For a long time we have had rising prices with little or no control and many employers, as some noble Lords have stated, have pursued a policy of built-in recognition of continuing inflation; and it goes on even now. You can see advertisements constantly hammering home into the minds of the general public the inevitability of rapid inflation. I repeat what I have said: the situation is self generating.
I believe that there are very few of us here on either side of the House, myself included, who really have a clear idea of what rising prices really mean to people on low pay. To the majority of us it is an academic discussion. It is so to me, to be perfectly honest and, I believe, to the majority of the House. Therefore of the terms that we hear when some people talk about low pay and the difficulties of increasing it, all I would say is this: that the solution of this problem of low pay will not be found in these two documents. It needs something more decisive; it needs serious tackling of the basic problem of real pay. It is often found in factories and it is often found in industry that you need means whereby you increase
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the efficiency and overall productivity of the people engaged in those industries.
Some control is essential. I recognise frankly that free negotiation of wages will do little to improve the general standard of those in receipt of low pay. Some of my friends on this side of the House may not like that; but it is the truth. One often finds that the processes of industrial negotiation (usually backed by industrial strength) are concerned more with the maintenance of relativities than with improving the standards of the low paid.
Therefore I hope that, stemming out of all these activities, we shall have probably for the first time, some really serious consideration of what low pay is all about and that we shall try to seek ways and means whereby this problem can be tackled. Some form of intervention is essential; free bargaining is not sufficient to ensure equity in wage determination and at the same time to restrain inflation. I think the paradox is that controls of the kind suggested must rest upon voluntary acceptance. It will need an effective assurance that the powers given under the Act will be used effectively; and that I think is absolutely necessary. Above all, the work of the Board and the Commission must be seen to be constructive and dynamic and not merely restrictive. I make no apology for repeating that point, for it is so important. The basic purpose of this activity, the basic purpose of the activities of the Prices and Incomes Board, of which I was a member, was really to create an environment which would permit a faster economic growth and higher real wages. Those objectives in my opinion should be made much clearer than they are in the various documents that have been produced by the Government.
I come to my last point. I know that many, particularly of my own political persuasion, have in recent months and probably in recent years (and I heard it when I was at the P.I.B.) have said that we should not desperately pursue a faster economic growth which might be gained at the expense of the quality of life. Why not, they say, have a more leisurely economic progress and concentradte on equitable distribution of wealth? I recognise that the more equitable distribution of wealth is a very laudable

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objective. But the mere fact of having a more equitable distribution of wealth would not, unfortunately, end our problems. It is not a question of whether we can stand still and get whatever are the spoils that there are to share but of the circumstances which are such that the economy can move either forward or backward. Our relative position over the past years in comparison with the development of many other industrial countries, has not been of a character that can ensure a rising standard of living for the great mass of the people and at the same time ensure the social developments that so many of us—at least, on this side of the House, I am sure, on the other side, too—have close to our hearts.
Therefore, even though there may be some points that I do not agree with in the Bill and there may be certain aspects worthy of amendment, the objective is right and I give support to those activities because I recognise that the situation as it is to-day is such that if this country is going to progress in the manner we all desire we must take positive action and that, I hope, will justify in the long run co-operation from all sides of industry.
4.40 p.m.
LORD O'NEILL OF THE MAINE: My Lords, it is with some diffidence that I follow in the footsteps of the speakers to whom we have listened this afternoon. None was more impressive than the noble Lord, Lord Peddie, who has such intimate knowledge of the problems which we are considering. The only reason I wanted to make a few disjointed remarks was to assure the Government that one who has criticised them for the last two years for the policies they have pursued is to-day—in company with every other speaker who has taken part in the debate—going to support them, as I think I definitely must and should, with great pleasure.
I think that many working people in this country imagine that the policies which the Government have pursued have been completely supported by the business community. That, my Lords, is not the case, and I should like to report the most recent discussion I had with a man in the Midlands who has built up a successful engineering business from
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nothing. I said to him—this was four weeks ago, when the situation was very much better than it is to-day—" If you were a Member of the Government what would you do in order to make the people of this country realise that you understood their problems?" The reply of this successful Midlands businessman was, "I would introduce food subsidies at once, and I would control speculation in property and land."
LORD WIGG: Hear, hear!
LORD O'NEILL OF THE MAINE: My Lords, it may not be possible to carry these things out in a sweeping measure, but it was very interesting for me to hear a successful business man give that as his view. Some of you, I am sure, enjoy, as I do, listening to Alistair Cooke every week-end from America. This week-end he was even more worth while listening to. The price of beef is rocketing in America to-day and the President advised everybody to eat fish. Your Lordships can imagine what Alistair Cooke did with that. One had the sort of evocations of Marie Antoinette saying, "Let them eat cake, if there is no bread." He went on to say that it was unfortunate that people in public office tended to lose touch with the people they were governing as they rushed from function to function and from official meal to official meal—and I speak as someone who has done that.
In my criticisms of the Government which I adopted for the first two years they were in Office I wrote, I am ashamed to say, many letters to The Times newspaper. In one of them I ended with the phrase that what we wanted was "Toryism with a human face". I said that because, while I can fully appreciate leading Members of the Conservative Party criticising a former Labour Government, what I object to is their criticism of the thirteen years of Tory rule. I think that we shall have to leave it to the historians to decide whether inflation is worse to-day because the policies of confrontation failed, or whether the rate of inflation would have been much less if policies of concensus as followed by Macmillan and Butler had been followed. To-day, the future lies between the Government and certain militants in the trade unions. Can the Government drop their first and former image of confrontation?

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Can the unions step back from the brink? If not, my Lords, we are heading for disaster; and in this respect it would appear from what I have seen in the Press and on the tape that Mr. Feather has become a little more militant to-day than he was yesterday. I am not suggesting for a moment that this applies to all trade unionists. Many that I know have told me that they feel that in the desperate position in which we find ourselves we must all remember that we are citizens of this country. As a secretary of a trade union said to me the other day, "This is my country, too". I think that there is this strong feeling, perhaps not among all members of trade unions, but among some.
LORD WIGG: My Lords, as an admirer of the noble Lord, may I say that surely when he reads the words he has just used he will regret them. I am sure he will agree, on reflection, that there can be no more patriotic section of the community than the trade unions. We never even started to fight the war until 1940, when a Labour Government put Mr. Churchill into power, backed by the whole might of the trade union movement.
LORD O'NEILL OF THE MAINE: My Lords, coming from a former Parliament, I make the same mistakes as the noble Lord, Lord Wigg. But I hope that he will not think that I am making any criticism of trade unions. What I was saying, and I think I can support it by statements that have been made, was that there are some members of the trade union movement who are very militant and there are others who are not, and I was drawing a comparison.
LORD WIGG: My Lords, I am sure that the noble Lord, Lord O'Neill of the Maine, does not mean to infer that because a man is militant he is not patriotic. I am militant, but I am just as patriotic as the noble Loyd—at least, I hope that I am.
LORD O'NEILL OF THE MAINE: My Lords, I think that we had better let the matter rest there; I still stick to my personal opinion. I was delighted to see that the first letter in The Times to-day is signed by the noble Lord, Lord Roberthall, who will be taking part in this debate. I was absolutely delighted to see
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that in the final paragraph of his letter he expressed the hope that the regional employment premium would be allowed to continue. As someone who comes from a region, I think I am right in saying that the termination of R.E.P. was
foreshadowed by the Labour Government. That may be so, but to-day it is still in existence; and I hope that the Government will give consideration to this matter because you need the support of the regions if you are going to carry through your policies.
I do not want to detain your Lordships. In my view the situation is extremely serious. In my view we should—as we have all publicly stated that we would—support the Government at this time in this measure. But may I once again express to the Government that a policy of consensus is necessary if they are to succeed in the policies to which they have set their hands.
4.49 p.m.
LORD RHODES: My Lords, may I ask the indulgence of the noble Lord, Lord Drumalbyn, in that because of an engagement, I may not be able to be present when the noble Lord winds up the debate. I know how one feels when someone on the Opposition Benches says that, and as the final speaker one has a good speech to make in reply to the debate. But I hope that the noble Lord will accept my apology.
My Lords, the train on which I came down to London to-day had an unscheduled stop in the Midlands and was running about 35 minutes late. When we got to Euston I went to the engine driver's cab and I said to him, "You enjoyed catching up to get to Euston on time, did you not?" He said, "Yes, it was thrilling. It is surprising what ground you can make up if you try." I thought that quite an optimistic note on which to come here to-day—you can catch up on the ground lost if only you try.
I was a little dispirited by the analogy given by the noble Earl the Leader of the House of his motor car, although I accept the desirability of the automatic gear which was so wittily advanced by the noble Lord, Lord Beswick. I did not interpret the point quite like that. My interpretation was that of a real old Tory trick of having one foot on the brake

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and the other foot on the accelerator at one and the same time, and when the foot was taken off the brake the car surged forward. Well, it might. Anybody can put forward their own interpretation. Perhaps the noble Lord, Lord Robbins, would put an interpretation on it as meaning the money that we were printing last year so that the British public could buy stuff—not ours, of course, but Japanese, because we cannot afford to buy our own.
When we have heard the noble Lord, Lord Robbins, and other exponents of economics in the past we have listened to them with great respect—I know I have. I have not been envious, because I am not in that league. I know my limitations: and to-day I am afraid that I recognise some of Lord Robbins's limitations, too. It seemed to me that what he was saying was such a long way from the shop floor.
My Lords, is it not time that political Parties got big enough to admit when they have been wrong. I remember February, 1972, when the noble Lord, Lord Beswick, got up at the Despatch Box and almost the first thing he did was to admit what the Labour Government had done wrong prior to the General Election of June. 1970. But when Parties hold strongly to beliefs in which they have been born and bred, which have been successful over the years in advancing the wellbeing of people, it is hard to give them up. It is interesting to note (I will not dwell too long on it) that the conditions under which the present Government came into office were very similar to the conditions appertaining in America when President Nixon assumed office in 1968, in that there existed a highly-charged economy. He put into operation the known remedies of monetary and fiscal policies. But for the first time in economic history in a modern industrial State, although unemployment in the old days was a discipline on people so that they would not ask for more money, in 1968-69 that policy failed miserably in the United States of America, in that it made no difference to the demands of the American workers and rabid inflation resulted: so much so that in August, 1971, they brought out their first control. It is interesting to note that the present Government in
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this country did not learn anything from the American experience, and imitated it almost to the letter.
It seems to me that political Parties on both sides of the House—not so much on this side as on the other—have misread the signs of the times. The industrial nations of the world are in a ferment. This stems from disappointment and disillusionment with this material age, which is being recognised for what it is. Everything is being called into question. It is not just a matter of wages. You mention something and it will be called into question, whether it is education, drugs among children or the system of Government. Wherever one goes throughout the industrialised nations of the world it is there. Your Lordships may not think so, but it is in Japan, too.
I recently made a journey to Japan with the idea of getting some information about Japan's attitude to world opinion on their own growth rate. They will have their anxieties, too, and before very long. The problem is not just confined to us. All the world has to find a solution to the question of (shall I say?) differential pay and growth. We have heard exponents of growth saying how invaluable it is, and how impossible it is to do without it. But, my word! there are some strong lobbies appearing in the world to say that we can do without growth. The noble Lord, Lord Peddie, has just raised this in his speech. Just think that last October the Lloyds Bank Review had the leading article on The Myth of Growth. This would have been inconceivable two years ago. I believe that we cannot get this country where we want it to be without growth. We must have it, despite the critics of what we have done with it when we have converted it into profits.
My Lords, I have been moved to speak in this debate by some experiences that I had when I was in Japan and the Far East. When I came back to this country my heart was in my boots, because I had heard so much about our inability to take advantage of opportunities in the Far East. Let me give your Lordships one example. A £15 million contract was saved for this country by an Anglophile who stuck his toes in and refused to budge, despite the fact that the Japanese competition was so severe that their price was a third down on ours and the delivery

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time was halved. I could give you instances of this as long as my arm.
How are we to get this over to the people on the shop floor? In view of the seriousness of the position now, is it not about time that we should manage to agree upon certain things between both sides of the House and say quite definitely to the country and to the workers on the shop floor: "These are the principles we believe in and these are the courses that we need to set things right"? We shall need a massive education programme on this matter. May I ask the Minister at this juncture, just to save time, whether it is possible to amend this Code during the Committee stage?
LORD DAVIES OF LEEK: Yes, my Lords.
LORD RHODES: Is it, my Lords? Have you read the debates in the Commons? I should like the Minister's answer to this question. May I ask the noble Lord whether it is possible to amend this document during the Committee stage?
LORD DRUMALBYN: My Lords, this is a Consultative Document, and consultation upon it is going on inside and outside the House. It is not yet in final form. It will be put into final form in a White Paper and then introduced in an Order embodying the Code. May I also just add this: I was asked whether it would be possible to amend the Code at the Committee stage. If the noble Lord means: will it be possible to take into account suggestions that are made about the Code, the answer of course is, Yes. What I am trying to say is that this is not presented in a form for amendment in the strict sense.
LORD RHODES: My Lords, that really is unsatisfactory, because there are so many principles laid down in this Code. According to the Minister, they are all subject to negotiation—
LORD DRUMALBYN: My Lords, consultation.
LORD RHODES: I presume that even after the Committee stage it will be possible to get the Price Commission or the Incomes Board to alter what is in the Code?
LORD DRUMALBYN: My Lords, if I may intervene again, may I say that the Code is a matter for the Treasury. It is the Treasury which has to make the Code, subject to the will of Parliament. There will eventually be a debate on the White Paper and then subsequently the Order has in the end to be approved by Parliament within three days.
LORD WIGG: My Lords, surely the Minister will agree that the question put to him is governed by Clause 2. It will then be the subject of a Statutory Instrument, which will not be capable of being amended in either House.
LORD DRUMALBYN: My Lords, that is, indeed, the position.
LORD RHODES: My Lords, I accept that. I will try to be as brief as possible, because I appreciate the time factor: hut, you see, this document is really a political sop. This is nothing else but putting industry in a straitjacket. It has not been thought through. There are any number of glaring instances in this Price and Pay Code that cannot be defended in debate or in principle.
LORD WIGG: My Lords, I should like to help my noble friend, if I may. When the Committee stage is reached, the noble Lord will be able to move Amendments to Clause 2(4) and this will enable the kind of things he has in mind to be debated by the House.
LORD RHODES: My Lords, I am much obliged to my noble friend. I hope that applies to later items, too. But I must point out that while the Government have been astute disciples of American methods, if they had studied what has been happening in America they would have noticed that the question of the offset for productivity was changed from the original inception over there, because once the incentive was removed —or, let us say, the benefit had to be disgorged—the idea failed and was withdrawn. We in this country have adopted a different method and we have gone to the length of cutting the permissible wage increases in half and requiring the other half to be absorbed. That is in paragraph 19.
The noble Lord, Lord Byers, was absolutely correct when he drew attention to the fact that labour-intensive industries

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are going to be in a very serious pickle; and apparently we have it in our power, if we will, to do something about this. In a publication of 1971 statistics (No. 1081) the figures of gross national product of industries appear in a "league table". I should like to draw the Minister's attention to this table and ask whether this can be used to ameliorate the hard lines of the labour-intensive industries, such as the wool trade. I will leave that idea with him and hope that at a later stage something may be done about it.
My Lords, what about the industries which are cyclical? Everybody knows that the textile industry works in a three and a half years' cycle, or something like it—or at least it has done so during my own lifetime. The result has been that profits have declined in bad times and one has had to look forward to the good years when there would be a swing upwards, so as to be able to recoup. If you are going to carry out to the letter what is in this Code, what will happen to the synthetic fibres industry? It has had a terrible time during these last two or three years. Last year, after Nixon's 10 per cent. cut, it plummeted to the bottom. We knew there would be an upswing during 1973. May I ask what you are going to do about that one? Are you going to leave them in a cleft stick and at a disadvantage with their competitors abroad because we cannot afford to invest? Are you going to cause them to export their goods and then import foreign products at a much dearer price?—because in that case, you will be doing more than killing two birds with one stone. Consider the wool industry. It knows that it has wage increases coming up. It has to bear in mind price rises and has to average with the price of existing wool contracts. Quotations are made six months in advance at fixed prices. I know that a paragraph mentions fixed price contracts. But as I understand the situation, they can be severely penalised if the present intention in the Code is maintained.
Why is there no control on imports? The only discipline you have on imports is by margins of existing profit. This is not an adequate discipline. I should like to know what would happen in the case of an importer of cloth or garments who, realising that the only control was on profit margins, decided to give up buying
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from British firms and to import the goods from abroad. Surely under the present code he would be able to start from scratch with a higher margin.
I do not think the prices and incomes policy will work for the reason advanced by my noble friend Lord Beswick. My experience, after two years of hard slogging on prices in the Board of Trade, working day and night on it in 1950–51, leads me to believe that it cannot succeed. On its present basis we cannot get it over to ordinary people unless we hold the rise in prices of food and clothing. Some twelve months ago I appealed to the Government to consider taking half a dozen items out of the cost of living index and holding them, giving a sense of stability to the country that we could hold something. But, as my noble friend Lord Beswick pointed out, we had to scrap all those ideas because of the effort we made to get into the Common Market. My Lords, in conclusion, may I say that at first I was a Socialist by necessity; secondly, I was a Socialist by conviction, but I hope to God that I am never a Socialist by decree! But at the rate we are going, I do not think that that is going to be too long delayed.
5.15 p.m.
LORD ROBERTHALL: My Lords, I, too, must begin with an apology to your Lordships, especially to the noble Lord, Lord Drumalbyn. I have a long-standing engagement which I have to keep, and I hope that this debate will finish in time for me to hear the last speeches, although I doubt very much whether it will do so.
I rise mainly to say that this Bill has my wholehearted support. The Bill as a Bill, has the support of almost the whole of this House. My only regret is that the conversion of the Government to the policy embodied in the Bill was so long delayed. There may be more joy in Heaven about the late repentance of the sinner, but I am absolutely sure that we should not be in such a bad economic position as we are in today if the conversion had come rather earlier. I hope that the Labour Party will remember this, and that they will be converted in good time from the latest change in their policy, which The Times described as an "S turn". Looking back on the past, I have always felt that if the conversion to

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devaluation had come rather earlier, the Government might not have changed when they did, and might not have had to give up their own attachment to some form of statutory policy. Historically, the trend of events makes it absolutely clear that we need some form of statutory policy and that we ought to envisage keeping it on the Statute book until we get a big change in our present conditions.
Historically, I do not think it is altogether fair to accuse the Labour Party of an "S turn". It was Mr. Attlee's Government in 1948 which first called attention to the problem of rising costs in a full employment economy. I have the best of reasons for knowing that when Mr. Gaitskell was Chancellor of the Exchequer he took this problem very seriously indeed. In those days we all thought it could be done by a voluntary policy if the Government had been prepared to give a strong lead to the country. That was the way that we were moving: first, to point out that you needed a policy; then to suggest that there must be some strong lead from the Government. When Labour returned in 1964, it was part of the statement of intent that there should be a much more gradual upward movement of costs, and from then until 1969 we went through a period with constant realisation that some strong lead, and probably some compulsory policy, had to be adopted. The only change has been the recent one—the agreement with the trade unions that statutory control of wages shall not again be a part of this policy. That is something that I hope will be changed in good time.
Looking at the Conservatives—naturally a much less interventionist Party—when they were elected in 1951 they were against controls of any kind. But the logic of events began to catch up with them. In 1956 they issued a White Paper spelling out in rather more detail Mr. Attlee's White Paper. Then Mr. Thornevcroft, as he then was, as Chancellor of the Exchequer, was a man who. on the whole, believed in free market forces. He set up the Council on Productivity, Prices and Incomes. It did not do very much, but it was the forerunner of our later policies. Finally we had Mr. Selwyn Lloyd who came out with a fullblooded freeze policy. Unfortunately, he
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took on the nurses to start with. He became very unpopular and his policy was dropped when he was dropped.
Then we had the present Government who came in firmly against any sort of control but have been forced to move, through attempts at voluntary control, to some form of statutory powers, at least in reserve. As the noble Earl the Leader of the House reminded us, nearly all other countries have had exactly the same experience, which is a consequence of the humane and desirable policies of full employment, which we have all pursued in varying degrees since the end of the war. I remember well in the 'fifties and early' sixties when these matters were discussed among Governments, finance Ministers and central bankers broadly speaking took the view that the way to control inflation was by more discipline, stricter financial policies and more control over money. But they seemed to me to overlook completely the fundamental difficulty we are in now, which is that unemployment cannot be used as a weapon. Thank goodness we cannot use it!—but we now have to have something to take its place. Practically all those people who in those days were saying, "No, we don't want control; tighten up the money supply, tighten up the Budget, and it will look after itself," have been forced to come round. The most striking example of all has been the United States of America, a country wedded to the free market and to not having controls, and yet a Republican Administration introduced the whole apparatus, even though the United States had a better experience in inflation than many other countries. Hence, it seems to me that something like this measure is inevitable, and I support it.
I agree with the noble Lord, Lord Beswick, when he says that we must not think that this is going to be the end of the matter, or that it goes to the heart of the matter, and that what we need in this country is something much more fundamental—which he called "the new spirit". I wish he could have elaborated on that and told us how he could get it. I do not think that just repealing the Industrial Relations Act (I know he proposed that only as a start) would do it. A great problem we are facing now is the problem of discontent with our

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system. It seems to me that the community neither wants capitalism nor wants Socialism—we have had several Labour Governments but we have not made much progress. It is a real difficulty and none of us knows the answer, yet we can admit that there is an underlying feeling of discontent which is leading to all these troubles. Inflation is a very bad thing, bust it would be an illusion to suppose either that this Bill will work easily or, if it succeeds in getting inflation under control, that we will not still have troubles.
I want to make just a few further short comments—not on the Bill itself, which seems to be more an enabling Bill giving powers than one which spells out in detail how they are going to be operated. I agree with the noble Lords, Lord Byers and Lord Robbins, that, if you can control costs and eliminate the monopoly element price control is not the important thing. It is cost control that is needed. But I agree with a number of other speakers who have pointed out that the problem of making this policy stick is a political public relations policy and it would not have had any hope of success without some form of price control. We all have to face the fact that there is going to be rather rough justice in the early period and that people have to put up with a certain amount of hardship. We must hope that this period will be used to consider a number of modifications, which I am sure will have to be made, in Phase 3.
The last time I spoke to your Lordships on this subject I said I thought there were three fundamental conditions required for a successful policy: that the Government should state a norm; that there should he some mechanism for adjustment, and that there should in the end be some form of sanctions. Looking to Phase 3, my own feeling is that the norm implicit in the present Bill is a rather high one. I admit that if we can make a success of it we shall be much better off than we have been in the last two or three years, but we shall be far from controlling inflation. On the questions of machinery, there is not doubt that one needs an adjustment mechanism. Indeed, the present industrial difficulties we are suffering from is a clear illustration of that. There is no doubt that
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people who feel themselves caught at the time when the freeze comes on have a real sense of injustice. I was glad that the noble Earl, Lord Jellicoe, said that the machinery is going to get to work very soon; and when it does get to work, if it is admitted that something must be done for those who missed out on the last round and therefore started off at a real disadvantage, I think the same could be said for profits.
Finally, there is the problem of sanctions, which is of course the most serious problem. No sanctions will work unless we can get public opinion with us. At the same time, I am sure there must be some because, it does not matter how much co-operation there is, somebody is sure to break through; and if somebody "gets away with it" that upsets everybody else. So in the end there must be some mechanism of sanctions. The particular provision in the Bill that wages cannot be passed on beyond the norm in the form of prices might be a sanction, as I believe Lord Beswick was claiming it would be. But it must be remembered that if this happens and there is a long strike, the firm concerned is going to be bankrupted and then there are going to be employment pressures. If this proposal is adopted, I do not know whether there will be provision for some compensation for a firm which is compelled, because of Government policy, to closed down altogether. This is something we need to think about a great deal. However, this Second Reading debate is a debate on the general principle of the Bill, and I wish the Government well on it. I am delighted that it seems that the atmosphere of the House implies that the Government will have an easy passage on it, and I hope so.
5.28 p.m.
BARONESS BURTON OF COVENTRY: My Lords, I want to take a line which is rather different from that taken by previous speakers in this debate. First, I would say how glad I was that the noble Lord, Lord Roberthall, took up the point which had been made by my noble friend, Lord Beswick, to the effect that we should require a new spirit in this country if we were to make real progress on the social problems now facing us. It has seemed to me over the past few weeks that the position in Britain has become

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so crucial that anyone who feels strongly should stand up and be counted. I feel strongly, and have done so for some time. There must be millions like myself who wonder when some sort of sanity will return to our industrial scene. We see Government and unions moving inexorably towards a confrontation which both say they do not want and which both are bringing to an inevitable conclusion.
As one who is no economist, I should like to make my small contribution to this debate on counter-inflation, and I am sure I speak for millions of people in the country who, like myself, are non-economists. I want to look at the background of this Bill. I believe that the background is even more important than the Bill itself, because it is only by bringing home to everyone in this country what the background really illustrates that the Bill itself will succeed.
First, the gasmen. We know that this is a moderate union with a splendid record. A union led by moderate men; a union which feels it has no alternative but to strike. Why? What has been gained by such action? If I may take the second point first, what has been gained by anyone? Industry has been impeded or closed down; workers have been laid off; £15 million profit earned by the nationalised gas industry has been wiped out; old people who need warmth more than anything have been deprived of this necessity. One does not need to be an economist to see that the first three factors I have mentioned lead to, first, higher charges for gas when services are resumed and, second, claims for higher wages to meet the resultant increase in the cost of living. One does not have to be an economist either to see that this is economic madness.
A week ago—last Monday, to be exact—a senior union official said—and I quote:
"We have been concentrating on industrial and commercial supplies, but this is now likely to spread to domestic users. It appears that only in this way will the effect of the dispute begin to bite.'
Let us take the position of the West Midlands on Saturday. The Gas Board ordered 50,000 customers to stop using gas from yesterday. In this area nearly 2,000 industrial, commercial and public facilities, including 525 schools, are cut
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off. Throughout the country about 4 million homes are affected by 9,700 men on strike and 27,000 others undertaking industrial action. More than 100,000 children continued to miss school as 1,150 schools were closed and 3,500 homes were without gas because of delays in repairs. Supplies to 2,700 industrial users were cut off.
Why have the gasmen done this? May I suggest that it is not only, and probably not mainly, because of what they were offered but because it is not as much as the electricity workers will get, because they beat the freeze. Everyone, in Parliament and outside, knows that when any dateline is drawn anywhere and on anything there must be hard cases, whether it is the number of stamps necessary for a pension, for example. If you are on the wrong side of the line, you just are, and the noble Earl the Lord Privy Seal told me that I was in good company (which I did not know) in saying this with regard to what Professor Clegg had said in the Observer on Sunday. But it cannot mean that everyone on the wrong side of the line can be transferred, or you will have no line. There cannot be anyone who does not realise that once any group gets special treatment, however well deserved that special treatment may be, there will be a rush of all the other groups who consider that they, too, represent a special case.
Taking the hard cases, I imagine everyone will agree that there are a great many workers who are grossly underpaid. We can all make our own list. The unions speak strongly about low-paid workers and pensioners. They are in a position to do something about the former. What have they done? What have the higher paid unions offered to their lower paid brothers? As I understand the position, the strikes, the industrial action and the protests are against the level of the freeze for all; not because the maximum increase is too little for the lower paid. I should like to be told that I am wrong, and I say that very sincerely, but I have not heard any higher-paid unions say that they will accept less so that the underpaid may have a better deal and a better share of the cake.
As for the pensioners, all that the unions have done for the pensioners is to make life for them more difficult. However justified industrial action may have

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seemed to those taking it at the time, so far as the old people are concerned, the miners' strike deprived them of light in their homes; the gas men's strike is depriving them of warmth and cooking facilities and the continual industrial action is pushing up prices. I do not think the pensioners have any cause to be grateful. And, as I am speaking frankly, neither do I think that the general public has any cause to be grateful. I often wonder: do the unions think they are justified in taking it out on the public in the way they do, however strongly they may feel about their own claims? The public have claims too, and I think it is time somebody said this. I wonder, and I wonder often, if union spokesmen have any idea of the public reaction when they appear on television and say how sorry they are for any inconvenience caused. This is not a plea to the unions; it is a protest from all those without industrial power who have not the strength to fight back.
What about the railway commuters who have paid money for their season tickets? I wonder, have the unions ever added up the total? Strikes at airports so that people's holidays are ruined; strikes on the railways so that they travel to work in misery or they do not get there at all; strikes by miners so that they sit in darkness at home; strikes by gas workers so that they cannot cook or keep warm. I think it is time we cried "Halt". When a moderate union like the gas workers feels it is essential to inflict hardship on non-offending domestic users to gain redress, then it is certainly time to call "Halt".
I believe the situation is so serious that Parliament itself, with one voice, should support this Bill and condemn any further industrial action. However strongly we may feel about the Government's blunders and past policy which made this Bill necessary, I believe that the present counter-inflation programme must be supported. To me it is not only the reputation of the Government and of the Tory Party that is at stake but the reputation of Parliament itself, and I think the Oppposition should say so. As I see it, the alternative is anarchy. It is the use of industrial power to deprive innocent people; it is the continued erosion of what money each of us may have. The little becomes less. It is not good
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enough. Deep down in their heart of hearts I cannot believe that the unions think it is good enough either. Certainly they could not say that it is fair.
In conclusion, there are four points I should like to make. First, in all these battles and in all this talk about hardship and prices nobody mentions those living on small, fixed incomes. We have had a couple of small mentions to-day. But is this a section of the community which should be shunned? We hear talk of how this particular wage increase cannot possibly match the rise in the cost of living. What about those who have no wage increase at all? I am not speaking of the relatively few, rich elderly people but I am speaking about the great many people who have worked hard all their lives and who have retired on their savings. Why should they he ostracised? They are a great deal worse off than some members of even low-paid unions. Why should they not be considered? We must all know many who have a great struggle to manage at all. I certainly do. And I hope that something will be done for them, with the support of all political parties.
My second concluding point is addressed to the Government. Their great lack, and the country's loss, is of someone who can talk to the unions. "Talk" is not exactly the right word, but all Members of Parliament know what I mean. Apart from this lack, though, I wish the Government would try to understand that some gesture is needed. I wish that they could realise that there are certain things which offend people—of all Parties and of none. I think that many trade unionists grudgingly believe that something must now be done. I am sure the general public does, and here I am returning to the point where I started—to the background of all this. We shall always have arguments about what is fair. But what the country as a whole knows is not fair are the rent increases, the transport fares increases, the profits on Centre Point, and the food prices. If only the Government would make a big gesture on these things. If only they could understand what this would mean. My Lords, it would encourage the moderate radical opinion in the unions to be heard—and make no mistake, it requires a great deal of courage to stand up at a union meeting and oppose the militants—it would make

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people think that perhaps the Government were not so out of touch after all. It would add a little warmth, which is what people feel is so lacking in the Government to-day.
My third concluding point is the unions. My Lords, I support the unions. Perhaps after to-day they will tell me what I can do with that support, but friends and supporters are not worth much if they are afraid to speak up. I am now saying in public what a great many people are saying in private. And I would rather the unions were not spoken of in those terms. I sat for a trade union city as a Member of Parliament for 10 years—one of the Divisions of the City of Coventry. When I went there Mr. Jack Jones was the organiser of the Transport and General Workers Union and Mr. Harry Urwin was his deputy. They taught me a lot. I had a great respect for them personally and for their ability. I think they felt, too, that I was able to make a contribution as a Member of Parliament. I am saying that because I want to see the vast amount of ability and compassion in the trade unions used for everyone in the country. I just do not believe that the trade union movement in its heart of hearts believes that physical hardship should be inflicted on people unable to fight back. I do not believe that the trade union movement is selfish. I hope that to-day's special Congress will decide that industrial power carries responsibility, whatever provocation may be offered. I hope it will decide that physical hardship and a deterioration in hospital services are not the right weapons—and I repeat, whatever may be deemed the provocation.
My Lords, I want to get rid of this Government every bit as much as my trade union friends, but I think that it should be done by the ballot box and not by industrial action. I want to see trade union representatives sitting on the various boards, tribunals and committees that are being set up. There is no one to take their place. I want to see their industrial experience and knowledge used in this sphere to amend faulty codes; to seek to change what they believe to be wrong; and, above all, to use their influence to rectify the position of the lower paid. I have always hoped that one day the T.U.C. would wish, and would be given the power by the unions
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and the authority, to play a major part in deciding the fairest way to apportion industry's share of the cake. It is only for the unions to decide which workers should receive most. Only they can decide the priorities in bringing up the grossly low paid to a fairer share of all workers.
And finally, my fourth concluding point. We cannot go on like this. The country has suffered; industry has suffered; people have been thrown off work; hospitals have been hit and the sick have had their problems made worse; the consumer population has been bullied; and the old have been deprived. The cost of living must rise because of all this industrial action. To repeat only a few figures known to us all: £15 million profit lost by the Gas Board; £1 million lost in one day by British Rail; and £56 million lost by British Leyland. We must be mad! Surely everyone must realise that if we continue to throw away money at this rate there will be nothing left to pay anybody anything, much less the 8 per cent. now available to all. My Lords, let industry, both sides of it, cooperate to get us out of this terrible situation. The stakes are much greater than any political Party. I believe that we are playing with the authority of Parliament and with the future of our country. Let us be done with it. Let us leave politics for the General Election.
5.47 p.m.
THE EARL OF DUDLEY: My Lords, I do not think that any of us on these Benches could have failed but to be greatly moved by the courageous and pertinent words of the noble Baroness. And for reasons which I shall explain later, I am profoundly grateful that I am following the noble Baroness and did not precede her.
Having missed the debate on the White Paper, I should like to preface my remarks by making a contribution to the "Diamond Book of Records"—even though the noble Lord is not here. Since the Session began five months ago, Parliament has received from the Government two White Papers, two Bills, and a Green Paper on inflation; an average of one major publication in the same policy area per month. I do not know whether that is a record, but while I should congratulate Ministers on their application,

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it is beginning to be a fine point whether it takes more Government paper to cause inflation or to cure it. All that means is that there has been a great deal written and spoken about inflation and counter-inflation, including the historic speech made by the noble Lord, Lord Robbins, last summer which he followed with a further authoritative speech to-day. I I am not sure that the noble Lord's speech last summer was not the point at which inflation became official—established, as it were. Since then, through many vicissitudes, we have arrived at the Green Paper about which enough has already been said to-day to make it another rapidly depreciating "greenback". I confess that when it comes to voicing my thoughts on that Paper I shall be a devaluer rather than a revaluer.
Noble Lords had a fairly good innings on the White Paper last month. I could not be here, but I read Hansard. I had hoped that in the second innings Government and Opposition might have thought that honour was satisfied, the pitch well worn and declare to-day after one or two wickets. However, since the decision is to play it out, before I bowl against the Green Paper I should like to bat for the Bill. I do not welcome it but I support it, believing it to be inevitable, if Government and unions are unable to agree on voluntary pay restraint even when threatened by uncontrollable inflation. I accept that they have been engaged in a struggle for power for nearly three years and that in those circumstances voluntary agreement was probably impossible to secure and almost certainly impossible to retain, to operate. I stand with the Government in that struggle, not because I am a Tory nor because I am an employer or a capitalist, but primarily because I believe that British people will be happier in a free, democratic society than under Communism, which I must tell the noble Lord. Lord Roberthall (although he is not here), I see as the only viable alternative. Because I do not want our Western democracy and free society to collapse, I stand shoulder to shoulder with those whom I judge most effective in its defence at any given time.
I had at this point one or two comments to make about the dilemma posed by trade union policy, but I am greatly
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relieved that the noble Baroness, Lady Burton, has said it for me and far more effectively than I could have done. I do not think that any of us on this side really feels happy moralising about or criticising trade union matters and policies, but we do it from time to time with the greatest reluctance and distaste, because we feel it necessary and we feel that certain things have to be said. But, despite the burden which the noble Baroness has taken off my shoulders, I should like to make one quotation in reply to the opening remarks of the noble Lord, Lord Beswick. The quotation is this:
"The revolution of rising expectations is a grim reality in Britain, even more so than in the rest of Western Europe. The willingness of organised groups of workers to hold the community to ransom is one of the manifestations of this revolution. The Labour Government failed to persuade the country, and especially the trade union leaders, of the overwhelming need for a prices and incomes policy, and, even more important, failed to persuade all workers that rising standards of living are not the result of fighting but of producing goods and services."
That is not a quotation from a speech by the Prime Minister, nor is it from a Conservative pamphlet. It is an excerpt from an essay published a year ago by the Fabian Society entitled Labour and Inequality. The intelligentsia of the Left recognise as clearly as my noble friend the need for a prices and incomes policy in the absence of voluntary restraint.
I think the Government are entitled to protect society, even if further legislation has to be introduced in the interests of society. We have lived much of our lives with inflation and with diminishing confidence in money. National economies and the international monetary system are under increasing strain. Some economists believe that monetary pressures and economic disequilibrium are so critical as to require statutory prices and incomes policies as permanent features of every national or multinational economy. I believe that to be an unrealistic view. Statutory pay and price controls are a straitjacket which the British people will only wear in an emergency and for a limited period. The impact of Phase I upon pay and prices has been quick and effective. The effects should be sustained if substantially alleviated in Phase 2.
Of course there is militant opposition to the whole statutory policy; as the noble Lord, Lord Thorneycroft, expressed it so

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forcefully in the debate on the White Paper:
"There are a few wage claims by a few powerful unions out of all proportion to what can be afforded at the present time, and the Government have to hold those at whatever cost.—[OFFICIAL REPORT, 5/2/73, col. 878.]
I am sure he received warm support from these Benches. I would add to the noble Lord's remarks by saying: beyond that do not seek confrontation, and, above all, do not seek it for electoral purposes.
I think the British expect the Government to secure peace with honour with the unions. They look beyond the emergency legislation to the time when the Government's expectations in Europe begin to be fulfilled, when the benefits in Europe, in the form of faster growth and higher real wages, begin to flow. Before then, and by then, the Government must secure voluntary agreement within which the Agencies can continue to operate in an advisory capacity, and at best with reserve powers only. The unions must know that they are fighting a losing battle. The British people will not in the long run accept to be governed other than by Parliament, nor will they accept a peace such as noble Lords opposite proffer, which would contribute nothing to either effective Government or strong economy. Unless the peace is with honour and to enhance our democracy, better St. Helena!
May I say a few words about the Government's latest weapon in the counter-inflationary struggle, the Code for which we have received the blueprint or Green Paper. Whenever I consult my lawyer or tax accountant after a new Budget and ask him to explain certain things to me, invariably the reply is, "I do not understand it either; wait till the Finance Bill". I find myself in a similar predicament over the Green Paper. I do not understand it, and I am puzzled and concerned that this should be so. I am prepared to concede defeat over tax; I am one of many who do not want to go too deeply into such a distasteful subject, and I seek professional advice. But on commercial and industrial matters I really do enjoy juggling with figures, and however I juggle with the figures in the Green Paper they refuse to submit to any form of calculation known to me, from simple arithmetic to calculus.
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From this experience I make my first point, which is that if the Government's Code is to carry conviction with the great body of professional and expert opinion that will be brought to bear upon it, much more detailed explanation must be provided than its present authors have found time to do in between preparing to-morrow's Budget. I seriously warn noble Lords that as it stands it just will not do. First, for instance, if industry and commerce are even to consider the reference level of net margin as unrealistically low as 1 per cent. of turnover, or of net profit of 5 per cent. return on capital employed, the reason why these figures have been adopted by the Treasury must be spelled out, or they will be justified in doubting the Government's intentions in paragraph 49 about attracting investment.
Secondly, it is well known that increased productivity is mainly attributable to added investment. Yet the effect of paragraph 19 could be that in a number of labour-intensive industries the benefits of increased productivity would not be sufficient to outweigh the rigour of 50 per cent. absorption of allowable costs required by the Code. This could apply particularly to the service industries. Where this was so, if labour costs, for instance, were 70 per cent. of turnover and the increase in productivity only 2½ per cent.—half the Government's expectation—the investment would no longer be attracted and productivity would suffer.
Thirdly, I have serious reservations as to whether the Government are right to bear upon gross profit margins in the way that they propose to do. Is it a valid assumption that all sectors of manufacturing industry can be expected to find two favourable years out of the last five years as a reference level? What about the effect of the formula on an automated high output industry? Surely the effect of the price reduction could be to increase the break-even point of the undertaking to a level from which it would be hard to retreat if business fell away. Nothing is more difficult than to increase prices in a time of recession.
Finally, I think it fair comment that Ministers are in danger of pursuing interventionist policies with a noninterventionist mentality. They are willing to lay down guidelines, set up

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Agencies, draft Codes and impose penalties, but draw back from participating in any way in the application of their policies. I hope that the remarks of the noble Earl, Lord Jellicoe, indicate that the Government are sensitive to this issue, but I must underline that the fourth principle relating to pay in the Green Paper in paragraph 75(4) spells out:
"to leave to those who normally determine pay decisions on the amount, form and distribution of increases within the limit."
Surely it would be nugatory if the Pay Board were to operate only in a negative sense. The Board should not merely police pay settlements but also participate in the application of the Goverment's pay policy by giving positive advice to industry as to how the group schemes might be operated to the maximum benefit and best advantage. As well as being helpful, this would generate the atmosphere of goodwill in which the Board could function most effectively.
The noble Earl, Lord Jellicoe, suggested in his opening remarks that the Government might form judgments as to how much the limits will inhibit normal pay negotiations. If I am right in thinking that this is what he meant, then may I recommend that the Government take Parliament and the people fully into their confidence on these issues. Tell the country your findings and where the trouble spots are likely to be. We are all in this together: the Government and Opposition, employers and employed, patrials and immigrants, housewives and dependants. The Party that my noble friends and their colleagues in another place represent was elected to govern the people. I say that the Government in this emergency should both lead and confide in us.
6.3 p.m.
LORD WIGG: My Lords, I regard myself as privileged to follow the noble Earl who has just spoken. I pay him a compliment by saying that I find myself in almost complete agreement with him, and where I disagree with him I prefer to engage in controversy with him rather than with the noble Baroness, Lady Burton, because I accept his sincerity whereas I do not accept hers. I have been fighting the Dudley family all my life. I was elected seven times for Dudley, and from my first election I was fighting the noble Earl's father, and yet
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we became friends. The reason I fought him—and I say this to the noble Baroness—is for a very simple reason, and although she sat in the House of Commons for ten years my reason has never entered her head: at the present time, in the second half of the twentieth century, after fighting two wars in which all classes of the community made equal sacrifices (let me put it no higher than that) one-tenth of British adults own between them three-quarters of the nation's private wealth, while only 1 per cent. of the adults own about half of all the ordinary share capital. From the time that I was a little boy I have listened to the kind of speech made by the noble Baroness. In my earlier days I heard it at Tory meetings with the Union Jack on the speaker's table. I have heard variations on the same theme from that time down to the noble Baroness to-day.
Let me tell the House a story that was told to me by the noble Earl's father, which illustrates what is possible between men who fundamentally disagree and yet live within a widely ranging social scale. His father was Regional Commissioner. He was loved by some, but he was hated by many. So far as I was concerned I came to like him, to respect him, yet I did my best to pull him off his perch, and I partially succeeded. My story is this: a complaint came to him as Regional Commissioner that coal production at Lord Dudley's Baggeridge Colliery, which he owned before it was nationalised, was unsatisfactory and it was suggested that he should go down to the pit and take with him the Minister of Fuel and Power, the late Major Gwilym Lloyd George. They went to the pit and got there just before the back shift were coming up. On the board in the canteen was written, "A cup of tea 1d., scones 1½d., sausages 3d." The Earl of Dudley went to the board and rubbed it clean, and on it he wrote, "Back Lady Dudley's horse at Ascot on Saturday". Down the pit he went and away, and he forgot all about the visit and his advice until he got to the saddling enclosure at Ascot, when the trainer said to him, "I am very sorry, my Lord, but her ladyship's horse has not been going too well. It is drawn on the outside. My advice is not to back it." Lord Dudley took the advice and the filly drawn on the outside had a

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clear run and won at 100 to 8. Lord Dudley had a qualm because he had not backed it but worse was to follow for on the Monday morning his manager rang up and said, "My Lord, do you know what you have done? There is nobody on the shift at all. They all backed your horse, and they won't come back again until their winnings are dissipated!" So he rang up Gwilym Lloyd George and said, "I am sorry, Gwilym; I went down with the best intentions in the world. I told the men to back the horse, it won at 100 to 8, and nobody has turned up, and production has 'gone for a Burton'". So Gwilym said, "Cheer up, I had fifty quid each way on it".
It is possible for extremes to talk together, and it is also possible to have memories of a Worcestershire Prime Minister. If I had to have a sticker to stick on the back of my car—I have never had one yet—what I would put on it is, Stanley come back. All is forgiven." Despite the fundamental differences that existed on economic policy in the 'thirties, when there were three million unemployed —and I well remember when my pay was cut from 9s. a day as a sergeant to 8s. 3d. there were statements by the then Professor Robbins saying how essential it was that we should make that sort of sacrifice—Stanley Baldwin had the sense of consensus that has existed in the Tory Party right down to the present Administration.
Since June, 1970, the present Prime Minister has divided Britain as it has not been divided for hundreds of years. I say to the noble Baroness, Lady Burton, that the reason why the trade unionists are "bloody-minded" is because they do not believe that lot. It is all very well for the noble Lord, Lord Roberthall, to say, The Kingdom of Heaven is open to those who repent". Yes, if they have repented; but have they? Is it a case of:
"The devil was sick, the devil a monk he would be"?
If I were Mr. Heath, one of the appointments I would have made would be to have Mr. Aubrey Jones as chairman of one of the Agencies, but of course his hatred of Mr. Aubrey Jones is such that he could never appoint him. His likes and dislikes are so fundamental that the interests of the country take second place.
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Another thing that he might have done is, instead of having the noble Lord who is going to reply to-night—and who, after his defence of our oil policies, one would have thought would have resigned over the weekend—to have had the noble Lord, Lord Butler of Saffron Walden, a master of the art of the possible, speaking from the Government Front Bench. He is a man who understands that in British politics it is pragmatism, it is consensus, that counts.
It is perfectly true that if we go on fighting each other nobody is going to win at the end of the day. It is quite useless to spend one's time, even from the safety of the Labour Benches here, using a stick on trade unionists. The question to ask is: "Why do they strike"? Here, again, I reflect upon the intelligence of the noble Baroness, Lady Burton of Coventry, because she has said what moderate men the gasworkers are. Yes, they are, and they have not struck for years. Why should such moderate men behave in such an immoderate way? Why should they inflict upon the community, of which they are a part, the blows which they undoubtedly are inflicting? The reason is that they have not been given a fair deal. If you do not treat the British people in a way that they think is fair—never mind what somebody else, even the noble Baroness, Lady Burton, says—they will react, and that is exactly what has happened. In some way or other, we must find our way back on to an even keel, if it is only in the terms of what the noble Lord, Lord George-Brown, got in 1964—a letter of intent. I would not ask the Government to swallow their pride and take the Industrial Relations Act off the Statute Book, because, as the noble Lord, Lord Beswick, said, they are not using it anyway. But what they must do is to subsidise the cost of food on at least some of the major items, particularly the items which, by Government action—and I have in mind sugar—have had their prices forced up, and will continue to be forced up, because circumstances which are far beyond the Government's control have been set in motion.
I want to deal with sugar in some detail, but before doing so may I say to the noble Earl, Lord Jellicoe, that I get a queasy feeling in my tummy when I hear him blaming on to world prices

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the cost of food and the like. The noble Lord, Lord George-Brown, was in the other place with me in 1948, when Stafford Cripps took the first freeze through the House of Commons, and he will recall that it looked at one stage as if, with the help of the trade unions, price stabilisation would be pulled off, but then came the Korean War and prices moved against us. I fought the 1950 Election and I fought the Earl of Dudley's money. What were all the placards in Dudley carrying?—a big picture of a stocking with a hole in it. When I tried to explain the impact of the Korean war, was I listened to?—not on your Nellie! The Tory Party discover world prices only when it suits them. Our fellow countrymen—never mind this House—are not bloody fools. They see what is happening and the result is that the Government's policies are not accepted. The Government create by their actions the conditions in which rejection is firmer and harder.
Let me now turn to sugar. There was a sugar agreement concluded by a Labour Government, under which we paid the primary producers£64 a ton. One of the effects of that price and of the coming of the Common Market is that the primary producers are cutting back production. So that in Jamaica —where I have been recently, although not on holiday—which lived by the production of sugar, one of the astonishing facts is that refined sugar vanished. You could not buy a pound of white sugar. They were even 31,000 tons short of their quota to the United States, and the spot price in December had risen to £107 a ton. Then that cunning French peasant,
M. Pompidou, hit on a bright idea. He has got this lot weighed up, so what he did (realising that for the support of his policies it is essential to have a rising production of beet, for which he wants a guaranteed price of £90 a ton) was to raise the issue of refining costs, and he tried to insist—he did not get away with it on this occasion—that the refining costs should be at the lowest level. As the refining costs for cane are much higher than for beet, the effect would have been to put the cane sugar producers right out of action.
Whether or not the Government know it, sugar is a cost element in almost every manufactured food and drink in
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this country. Therefore, if the price of sugar is to rise as a result of the policies of this Government, plus the fact of the secondary causes which have been brought into effect, how, in the name of fairness, can the Government go to a trade unionist and ask him to accept a burden which they have imposed upon his shoulders? Here let me say that I agree with the noble Baroness, Lady Burton, about action which inflicts loads upon the community. But I think one has a right to go to the gasworkers and say, "Look, you, like other workers in essential industries which are used by the public at large, must accept a cooling-off period. In return for the coolingoff period we are going to make you an exception. We shall treat you as an exception in return for which you give the community at large something." I think that a cooling-off period applied to the engine driver, applied to the gas worker and applied to the hospital worker is a sensible policy, provided that you give them something in exchange.
Let me tell your Lordships of a little experience that I have had in talking to an engine driver—a man for whom I have great respect—who has done his best to bring up his girl properly and to give her a better chance in life than he had. At the time of the previous strike he was taking home £22 a week, often for driving a very fast train on long runs. He told me how fed up he was, how he wanted to get out, and of the difficulties his pay had caused for the family. A row had arisen about the girl. She wanted to stay out late at night and he said, "You will be in at 10 o'clock". It was the type of argument that most of us have had—and I have three daughters. But she said, "I will not be in at 10 o'clock. When you earn as much as I do, you can talk like that". Those are the kind of forces which are let loose in our society, particularly in the case of secretaries and the like. Nothing is done to circumscribe the efforts of these agencies all over the country, which are deliberately creating conditions which are forcing up rates of pay to absolutely phenomenal heights. If there were a completely new approach, the Government might hope to get the trade unions talking. But they will not get them talking merely by fixing a date, drawing a line and saying that those who happen to be on the wrong side of the line

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must consider themselves caught, and must make the best of it.
I shall not keep the House for more than another two or three minutes, but I want to say how much I agreed with the noble Earl, Lord Dudley, in his—if I may use the word—attack upon the Government's policy in relation to profits and the way they are handling industry. I think that, great as the complaints of unions, such as the gasworkers and others who have been caught by the Government's policy, are, the employers, the owning parts of society, have an even greater complaint, because not only do these boys not understand how our society works as a whole, due to the fact that they are so remote from it; it is equally obvious that they do not understand how industry works; and unless profits can be created from which investment—and investment in the very short run—can be made, then the outlook of our society as a whole is very dismal indeed. I am a socialist by intellectual conviction, like my noble friend Lord Rhodes. The place in society into which I was born determined my political outlook, and my experience through life has only confirmed me in that view. But, like my noble friend, I want democratic Socialism. I do not want Socialism by decree. I do not want our society to have to go through all the trials and tribulations which have affected other communities, merely because this lot cannot run their own system of society—and I do not believe they can. One of the difficulties for the Labour Government was that they were confronted with the breakdown in our economy in 1964. Because what is the difference to-day from the situation which we inherited in 1964? Mr. Maudling had tried to do what Mr. Barber is doing. He was worshipping at the god of growth. Growth was to save everything. There was a massive deficit in the balance of payments. In two years this Government have managed to worship the same god and to create another major deficit. Is it absolutely certain that growth will deliver the goods? Lord Rhodes was talking about his experiences in Japan. I would commend his words to noble Lords and to the Government. In Japan they have enormous growth, but they have fantastically large inflation.
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I believe that inflation is, as it were, something which is with us; a permanent part of our capitalistic society. I believe that inflation is an essential part of a capitalist society because capitalism works only on the basis of anticipated profits, and unless those profits are going to rise then the entrepreneur will not take risks. The question is, not whether or not there is going to be inflation, but at what level that inflation is going to run and whether in fact it can be controlled—and it can be controlled only by good will between all sections of the community.
Here, I am going to close on the words I used after winning seven elections. After every Election I won I said the same thing: "We have had a hard tight; there has been a horseshoe in both my gloves; I have hit, kicked, bit and spat at anyone who got in my way. But now that it is over, let us remember something. Our society works on only one condition, and that is that the things on which we agree are infinitely greater than the things on which we disagree." That was the situation up to June, 1970. That has been thrown away, and it is for that reason that I will vote against this Bill to-night.
THE EARL OF DUDLEY: My Lords, before the noble Lord sits down, and while I appreciate the remarks he made about me, may I ask him whether he does not think that the word "attack" is rather a strong one to use about the few reasoned criticisms that I made of the Government's Green Paper? Secondly, may I remind him that I think my father had very little connection with Dudley politics. He was President of the Stour-bridge Conservative Association, but he was not on the best of terms with Dudley Borough Council and I think he had little, if anything, to do with politics in Dudley in his lifetime.
LORD WIGG: My Lords, I will put the noble Earl right on only one point. From what members of the Conservative Party told me, they never did anything, including the selection of a candidate, without the permission of Lord Dudley.
6.23 p.m.
LORD ALPORT: My Lords, the noble Lord, Lord Wigg, and I share two things. One is a great admiration and affection for the British Army, and the other is

933
admiration for the memory of the contribution which the first Earl Baldwin made to the pacification of industrial relations in those years after 1926. I am afraid I cannot follow the noble Lord or my noble friend in any intimate knowledge of Dudley. The only thing I know about it is that it has a "smashing" zoo, but I am afraid that other intricacies or intimacies of its connection are beyond me. However, I am glad to follow the noble Lord because in some ways, as on previous occasions, some of the thoughts and sentiments which he has expressed have fallen very close to the views that I have tried to express.
I have studied the Bill before your Lordships' House, as well as the Consultative Document, but I wish to address my remarks to what I would feel are wider issues which seem to me to form the backcloth to this piece of revolutionary legislation. My Lords, I do not think that in connection with this particular Bill terms like "revolutionary" are out of place. Quite apart from the fact that it is contrary to everything that the present Government proclaimed before and after the last Election, it is more far-reaching than anything in this field attempted by a Labour or any other Government in peace time. It abolishes at a stroke the criteria and processes by which, normally, decisions are reached with regard to the current value of goods and labour.
It enables the Government to take powers which Parliament would be justified in surrendering to them only at a time of national crisis. Such powers can, in
practice, be exercised effectively by a Government only because either they have the overwhelming support of the public or because they have the power and the resources to impose the disciplines of an authoritarian State on the public. If we rule out, as far as the present Government are concerned, any wish to impose their policies forcibly upon a recalcitrant nation, it follows that the Prime Minister and his Ministers must be able to rely on the public as a whole to back them up in what they are doing, and to back them willingly and wholeheartedly. This, of course, depends on some of the intangibles of politics, but in particular upon the respect for and confidence in what is nowadays called the style of Government
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and the personalities of those who exercise power, felt by a vast majority of the nation.
What I am really trying to say, my Lords, is this. In any country which hopes to operate a Parliamentary democracy you must get your politics right before you can get your economics right. Or, to put it another way, it does not matter how ingenious or prudent policies such as those embodied in this Bill may appear to be, they are useless if there is not a sufficient volume of public opinion to support them and to coerce dissident minorities into toeing the line. Of course, my Lords, as the Polls show, in theory everyone is against inflation, and by that they frankly mean, for the vast majority, that they are against rising prices. In practice—and I am treading now on the theory or perhaps the practice of economics; I have the noble Lord, Lord Robbins, here, who will no doubt correct me if I am wrong, although I shall not accept his correction with any ease—probably more than half the nation is better off as a result of the long inflation since 1939 than it would otherwise have been. The Government, in particular, are a lot better off.
One of the few things I remember from my university days is being told by my then tutor, Sir Kenneth Pickthorn, apropos the second half of the 16th century, that the Government of a country has a vested interest in the existence of an inflationary situation. Since it is always in the interests of debtors to repay their debts in depreciated currency, and because the Government at any time are the biggest debtor of all, they have a greater interest than anyone else in keeping inflation going. I thought that might stimulate the noble Lord.
LORD ROBBINS: My Lords, I only wish, on invitation, to say to the noble Lord that the gold and silver inflation of the 16th and 17th centuries was, roughly speaking, at a rate of less than 2 per cent. per annum, which contrasts, I think, very sharply with the rate of inflation since the last war.
LORD ALPORT: My Lords, we do things in a bigger style these days, but that does not take away from the principle that I learned so many years ago; and, frankly, most people in this country at the present time, or at any rate a great

935
many, rely to some extent upon credit to maintain or advance their standards of living. It is only when inflation gets out of hand that urgent action to control it seems necessary. But the processes of controlling it hit as many people as they benefit. It is perfectly true that the people who gain from controlling inflation are the poorer, the older and the weaker sections of the community, but unless the Government can appeal successfully to the consciences of those who benefit from inflation the latter have an easy get-out by pretending that the poor, the old and the weak can be compensated by increased pensions, social benefits and other forms of welfare help.
It is of course, true, as we all recognise in this House and in the country at large, that galloping inflation such as Europe saw after 1918, particularly in a community with a highly-vulnerable, export-based economy like ours, can, if uncontrolled, and will if uncontrolled, bring social revolution and economic collapse. Therefore it is right that the Government should seek to limit price rises and wage increases and the progressive depreciation of the value of money; but to do so successfully—and since any action they take will involve some degree of unfairness and many anomalies—the Government must ensure that the political climate in which their proposals are launched is such that it will muster the support among people, many of whom do not see, anyhow in the short term, that inflation is the direct threat to their standards and who see very quickly that the Government's proposals hit them a bit harder than the man next door or the man in the next factory.
Short of a situation in which inflation produces economic collapse and widespread suffering, which is, as I have said, a revolutionary situation, the enactment of legislation of the sort represented by this Bill can be successful only if the nation can be persuaded that we are facing a major national crisis—and such a crisis, whether in peace or war, has always produced in the past a political situation in which Party Government has been superseded by a national Government. If a Party Government, as opposed to a national or coalition Government, are to surmount a crisis without recourse to some form of coalition, they can do so
936
only if they can show themselves representative of the nation as a whole.
My Lords, I come now to the kernel of my argument. This Government have not succeeded (and some people will say have not really tried) to create a political climate in which alone their incomes policy can be successful. The Conservative Party has, or had, the chance (which is not available to the Labour Party for historic reasons) of reaching an understanding with the trade union movement without succumbing to the domination of organised labour's militant Left Wing. The helplessness of the Labour Party in relation to the trade union movement was amply shown at the time of the In Place of Strife episode, and it was shown as recently as last week when Mr. Wilson had his social and industrial policy for the next Election dictated to him by the T.U.C.
As I have said, the Conservative Party ought to have made it its first objective to reach an understanding with the trade union movement right at the beginning of this Parliament and to have paid a price which a powerful movement can exact from any Government. After all, in the history of our Party there are good precedents for this. It was as long ago as 1874 when the alliance between the Conservative Party and the trade union movement which gave rise to the Conservative Working Class Association all over Lancashire and the North was first started. If it could have happened then, a sympathetic, understanding and far-seeing, Administration could have done it even in the difficult days of the present time. But what has happened is that the attitude and policies which the Government have adopted have alienated moderate trade union opinion and have made the position of its tradititonal leadership almost impossible. It is no good talking about getting voluntary agreement. Two sides are necessary for that; and the two sides that will reach a voluntary agreement must have confidence, understanding and sympathy for each other.
My Lords, I would say this frankly and designedly at this present moment: a great deal of the responsibility for this situation belongs to the attitude and character of the Prime Minister. In a speech last week to, of all bodies, the

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Institute of Public Relations, he said of ASLEF, of the gas workers, of the hospital auxiliaries, of the civil servants and of the teachers that their strike is pointless and their actions are irrelevant to the real issues facing the nation. The distinguished political correspondent recording these remarks went on to comment thus:
"He held out an olive branch to the trade unions even if at times he appeared to use it to heat them over the head."
I find it beyond comprehension that anyone seeking to mobilise support for policies which may be inevitable but which will be, and are, widely unpopular and for which he depends to a large extent upon the support of the trade union movement, should be so insensitive to the basic principles of how to handle ordinary folk in a mature, industrialised democratic country such as ours.
The civil servants and the workers in a great nationalised public service such as the gas industry, the skilled craft union of ASLEF, the hospital workers in close contact with the sick, do not support strike action for irrelevant reasons. They do not face a programme of causing suffering and inconvenience because they
are being led by the nose by a bunch of irresponsible militants. I know, and we all know in this House, that there are political parasites and jackals of Communism and anarchism prowling around any industrial situation; but the present strikes are not their handiwork. The action of ASLEF is not irrelevant. It may be ill-judged and it is certainly damaging; but it is symptomatic of the basic problems of the nation to-day. Let us make no mistake about this: behind it is the consciousness of the realities of the power which organised labour can wield in a highly-developed industrialised society and a widespread feeling that any group has the right to prevent its standards of living from falling below what it regards as its legitimate expectations by taking action when such need arises. In human terms this attitude is understandable and inevitable—and we are dealing with human beings. To expect them to refrain from using the power in their hands to achieve ends which seem to them to be perfectly justified is to ask too much of human nature, unless you can do so in a climate of opinion which persuades them to accept sacrifices and restraint—and this can only be created by the existence of a national emergency
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or as a result of the most sympathetic and sensitive political leadership.
The Government seem to believe that all power lies in the hands of the Executive, exploiting sometimes in a rather cavalier fashion the legislative capacities of Parliament. I have been astonished at how many times your Lordships have been required of recent months to process legislation on matters which concern the intimate problems of ordinary people and which seem to disregard human considerations and local sentiment in the interests of administrative convenience or what is called cost-effectiveness or financial prudence.
It is perhaps always a mistake to try to seek historic parallels. But I have had an uneasy feeling for some time past that just as the heroic age of the Tudors was followed by the wars and disintegration of the reign of James I, so the heroic age of Churchill was followed by the reign of another Scottish intellectual and cynic, Mr. Macmillan, and that we are now watching events and forces being dissolved in the crucible of history to produce another confrontation between the embattled sections of our nation.
If there is anything in my view, I would advise my right honourable friend the Prime Minister to study the character and career of Thomas Wentworth, Earl of Strafford. Of this remarkable man Miss Wedgwood says in her distinguished biography:
"Administrative and financial efficiency are not in themselves passports to favour in England…his tragedy, which was also the tragedy of the King's Government, was not confined to the last months of his life. His inordinate ambition and self-confidence as well as his ability, fitted him for the highest place in the State, at which through long years of frustration he always aimed. But he lacked an essential quality of statesmanship; his judgment of human relationships was always poor and he had neither the good nor the bad qualities necessary to manipulate his fellow men or even to make and keep friends in the society and age in which he lived. Had he brought to the human side of politics the skill that he brought to administration and finance, the outcome of his rule might have been very different".
Unless the Prime Minister and the Government can bring that essential quality of statesmanship to their handling of the present situation in this country it will not be the action of strikers but the legislation of this Parliament which will be seen to be irrelevant, as were the acts of the Long Parliament three centuries ago. And if I

939
am to continue my historic parallel I should perhaps remind the leaders of the great trade unions that their lineal predecessors in the exercise of extra Parliamentary powers, Cromwell's commissioners and major-generals, in some cases followed Strafford to the scaffold and created a popular prejudice against them that has lasted from that day to this.
All this, my Lords, is not quite so fanciful as it may sound. No doubt it is our duty to put this piece of legislation on to the Statute Book in the best shape possible, but what is important is that the Government should now try to create the political climate which alone can make it effective. Let them accept that the Industrial Relations Act should be amended. In return, let them reach a sense of understanding with the Trades Union Congress as to the implementation of their prices and incomes policy. Let them accept the realities of power in the hands of the trade union leaders. Let them begin the process whereby trade unionists are brought into participation in the responsibility of industrial management at board room level rather than shop floor level. Let them who brought so many reforms, the present Government, seek to reform industrial relations by a processs of conciliation instead of confrontation. Then perhaps this Bill, when it passes into law, may have some relevance to the problems of our country.
6.42 p.m.
LORD DAVIES OF LEEK: My Lords, if I may say so without its sounding wrong, I would describe the speech to which I have just listened as one of the finest I have been privileged to hear in the period of two years that I have been in your Lordships' House, and I am grateful. I may not agree with all of it, but it was shot through with so much wisdom and understanding. I know how difficult it is to follow a speech of such philosophical content which was not full of carping criticism. I know that the noble Lord, Lord Alport, whose sincerity I would never doubt, may not agree with my approach to the problems, but I am sure that for noble Lords on both sides of the House it has been a pleasure to listen to that speech.
My Lords, so much has been said that I will try, if I can sufficiently discipline
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myself, not to speak for too long. I was grateful for the fact that the attitude of the Prime Minister has been pointed out because unfortunately—I do not doubt the Prime Minister's sincerity—on November 6 he changed his attitude completely. As Mr. Andrew Roth said in his Westminster Confidential:
"The Prime Minister is worried that not enough trade union leaders realise that he changed all the rules on November 6, when 'Phase One' of the freeze' came into effect. He feels, like some particularly bossy headmaster, that once he changes the rules everyone must kowtow to the Prime Minister of the majority party in the House of Commons.… The Prime Minister was clearly misled by the initial public opinion poll, which registered three-quarters of those polled as favouring his 'Phase Two' effort as worthy of support. But the Gallup Poll in the Daily Telegraph of 15 February demonstrated that there has been a dramatic change in public opinion. It showed"—
and this indicates the relevance of Lord Alport's observation about whatever Party is in power must get the public with it—
"that 57 per cent. of those polled thought that Mr. Heath's prices policy was not fair and only 29 per cent. thought it fair. Fully 55 per cent. thought the incomes policy unfair and only 29 per cent. thought it fair. And 47 per cent. thought the prices and incomes policy would not succeed.…"
It is often forgotten, in this "U-turn" that the Prime Minister made, that during the Election forum over the radio and television in June, 1970, when we were fighting each other on a purely political platform, the right honourable Edward Heath then said:
"We opposed the compulsory wage freeze all the way through and we have been proved right. We said that it would make industrial relations with the unions much worse. It has."
The Daily Mirror followed that up and said in November 1972:
"In fact, ultimately it was the Government who could not deliver the goods, not the T.U.C. It was the Government who could not deliver a political deal which might have made some modest inroads into the position of wealth and privilege in Britain. They could not deliver it because in the end the Tories are understandably sustained by wealth and privilege."
The noble Lord, Lord Alport, said that the Labour Party was born out of the loins of the trade union movement. If one looks at the massive millions poured into the coffers of the Tory Party, one might say that just as the Labour Movement can be accused of having been nurtured and supported by the trade

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union movement so the brewers and other big industrial tycoons have poured millions into the Conservative Party. Let us accept that as being the traditional position and there is no need to quarrel about it; there is no need to try to make cheap political capital out of it. Something is happening in the world due to—the phrase was originally Eisenhower's—this revolution of awakening expectation that is taking place throughout one end of the world to another. With the vast improvement in the mass means of communication, people are struggling for a higher standard of life; and the merchants of desire, the advertising merchants, who create desire beyond the cost of living so that things become necessities, like a television set or a telephone, have added to the personal desires of the ordinary person.
The great difference between that and the struggle that we had after the war, when we in the Labour Party came to power—I had the privilege of being in the other place for over 25 years—was that we had built-in "social shock absorbers" in the form of subsidies on food, and subsidies to create employment. Having built in those social shock absorbers we were able to keep down the cost of living for the benefit of the underpaid and the less privileged people. Now all the brakes have been taken off. It is an old story about "lame ducks" and I do not want to repeat it now because it is so stale. Suddenly all that was built up by some of the best Conservative and Liberal leaders and others by common agreement was taken away. To take away these shock absorbers—like family allowances and grants to enable more people than ever to get technical and university education—in that rigid righteousness when the Conservatives won the 1970 General Election was a huge mistake.
To be fair to the Government, inflation is not just their problem. Someone quoted Alistair Cooke. I have listened to him talking about inflation in the United States. So we accept it as axiomatic that throughout the world this inflation takes place. I agree with the noble Lord, Lord Alport, that part of the price of civilisation is inflation, but it should be controlled inflation. When I was a child one penny bought a tin of Cherry Blossom boot polish. I do not
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smoke now, but then I could buy five Woodbines for one penny. In West Wales we used to have our boots and shoes made to measure and they cost the vast sum of five shillings or up to ten shillings. To have your boots made to measure was the thing to do in a country district so that good leather boots would last. Think of that, compared with the £10 that you pay for good leather shoes to-day. There is therefore in all civilised societies an amount of inflation that I think is necessary. I wish the speech made by the noble Lord had been made by the noble Baroness, Lady Burton of Coventry.
I will not bore the House, because most of your Lordships are so well informed, but I have taken the trouble, before shouting about it, to read the T.U.C. Economic Policy and Collective Bargaining. Contrary to saying that they do not think about the lower paid workers (let us take it for granted to save the time of the House), on page 43 the General Council are particularly concerned with the low paid workers, and they believe that the £20 minimum is absolutely necessary for the low paid workers. Then it goes on with constructive alternatives on how to meet the pay of the low paid workers. That is enough to quote in a well-informed House like this to contradict the idea that inside the trade union movement they are concerned only about the privileged and people who have technical training, and are not interested in the lower paid workers.
The noble Lord, Lord Byers, was talking about teachers earning £2,500 a year and not wanting to be in London, but wanting to move out. I do not want to name anybody, but I happen to know a couple of graduates who obtained their Ph.D. at Cambridge last year and who have come here to do medical work; but, despite the fact that they are both working, they cannot afford to raise a deposit on a house. They are seeking somewhere to live until they can save some money to buy a house, for which they will have to pay an extortionate price. So it is no good chiding these teachers who want somewhere to live.
LORD WIGG: My Lords, the example given by the noble Lord, Lord Byers, was a quotation from something he saw on television. The young man who was

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interviewed said that he and his wife were university undergraduates and their joint income was £3,000 a year. He then said: "We want to start a family, but if we start a family our income will be £3,000 a year. How can we do it? "But then, that is the Liberal way.
LORD DAVIES OF LEEK: My Lords, as usual, the noble Lord has picked up my speech and he with his horse is three gates ahead of me. That is what I was going to add. I do not know whether he will be attacking me next, but that does not worry me. Another opportunity will occur to discuss the Budget.
Let me make two other points. We are no longer masters in our own house on this issue. The mammoth dollars in their billions which are moving around Europe at present are part of the price that the world is paying for an uncontrolled system of acquisitiveness—or the acquisitive society. I have said this before and it may sound old-fashioned, but I think it is true. The capitalist system in society has made a great present to mankind: it has shown how to produce. But now, with the revolution of a wave of expectation, it has not solved the problem of how to distribute. It distributes only on the basis that you have the money to buy; it does not distribute on the basis of need. It is no good scoffing at the old-fashioned Christian, or the Marxist or others. That problem is one to which some day, between us, we shall have to find an answer.
I hope that something will be done by the Government to establish this selectivity in lending. If a person is borrowing money at a fantastic rate of interest, there is a difference between borrowing it to start up a skating rink or to start up a little factory for woodworkers where in a rural district it will employ three men. There should be some check on money that is passed out to people. The Amendments on this Bill in the other place, one of which was for some control of lending, failed. One was for the control of insurance premiums. This certainly could come in in respect of the motor car. So far as insurance overseas or export guarantees are concerned insurance would be difficult to control, but certainly in the field of the motor car the ordinary man needs protection, and we should have a State system of insurance
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if only to insure cars. I am quite sure that this would be an anti-inflationary policy worth while in this country.
So, my Lords, I hope that when we reach the Committee stage of this Bill we shall have the opportunity of discussing some constructive Amendments; and I hope that this time the Executive will not roll the Bill through without taking notice of what is being said. Warnings have come from both sides of the House over the last year or two that we in Parliament are losing our grip; we are losing the power that should exist in the two Houses, and giving too much to Governments, of whatever colour. This is a sad thing for the British democratic way of life. Something is causing the bloody-mindedness and the cause should be analysed without denigrating some of the finest people of this country. At times when we need them to defend the country, to cut coal or to work themselves almost to the bone to produce, we praise them; but at moments like this the underpaid have to bear the greatest slurs imaginable from people who do not know what work really is.
6.58 p.m.
LORD HANKEY: My Lords, I must start by apologising for the fact that for a long time past I have had a diplomatic engagement. I could not foresee that this debate would come up to-day, and I cannot cut the engagement without causing offence. I shall have to leave before the winding-up speech, and I am very sorry for that. I entirely approve this programme for Phase 2. It is of course a great interference in people's lives, but I personally cannot see any alternative. The Labour Party and the TUC have produced a plan which leaves out any control of wages. I cannot see that that makes any sense in present conditions. The plan must cover wages and costs, prices, dividends and other items at least as much as the present plan does.
The noble Lord, Lord Alport, has just left the Chamber, but I must say that I was sorry about his attack on the Prime Minister and on this legislation. I think he had the problem somewhat out of perspective. As I see it, what we are all suffering from is the fact that the trade unions have succeeded in making a Labour Prime Minister stand on his head

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twice: first, over industrial relations, which it was quite apparent had to be amended; and secondly, over the vital question of Europe. I do not think the country liked that manoeuvre. The result is that we have a Prime Minister who is undoubtedly a great leader of men. Anybody who can convince the Board of Trade that we ought to go into Europe must be a great leader of men. That is what he is, and I believe that is what the country needs.
It is all very well, my Lords, to say that we must have a consensus, but we have tried everything. We have had declarations of intent; we have had agreements and exchanges of letters, and they have never led to anything. The trade unions apparently cannot agree, much as one would like them to—I do not blame them for it—on any forward-looking policies. They are able to agree to chuck out of the T.U.C. the seamen and various other unions who found it in their interests to register. I think that is a deplorable process. It is diminishing the influence of the moderate elements in the T.U.C., which is more 10 be deplored than anything.
This Bill is, in my opinion, a commendable and careful bit of work, as is the Code in the Green Paper. I congratulate the Government on it. I feel sure that the work benefited from the endeavours of the Prices and Incomes Board, about which the noble Lord, Lord Peddie, made such an interesting speech on February 5. It is a pity the Government ever abolished the Prices and Incomes Board, but now we are clearly going to set up something very much better. We must press these consultations to a conclusion and make sure that the Commission and the Board are made to work effectively. Obviously, in some form or other, they are going to be permanent features of modern Britain and I personally do not see how we can do without something of the sort in Phase 3 and thereafter.
My next point is this. I believe that the system of control, as it is before us in this Bill, is in itself incomplete. The fact is that money supply and monetary policy must play their parts, and so must budgetary policy. I would support what the noble Lord, Lord Robbins, said in this connection. If M3 increases at the same rate as in 1972—and I think I am
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right in saying that it was between 20 per cent. and 30 per cent. per annum—I think there is no hope at all of price or wage controls working. I believe that the Government and the Bank of England must cease absolutely to regard this problem with the benign indifference which seems to have been their attitude during the last year—especially, may I say, as our economic and industrial activity has now resumed progress. Obviously the Government cannot correct the ship's course all at once without causing serious accidents, but if they do not correct it during this year, then as sure as I stand here, my Lords, they will wreck their anti-inflation policy as set out in this Bill. I believe much the same observation applies to the Government's budgetary deficit. I hardly imagine that the Bank of England could restore dynamic stability —and I should like to emphasise that—to the M3 if the Government continue to run a deficit of something between £3,000 million and £4,000 million a year. I apologise for bringing up these issues on the very eve of the Budget, but they are extremely germane to what we are discussing.
Returning now to the Price Commission and the Pay Board and to the way in which they will use the powers we are about to give them, I believe that in the long run it will be very controversial that the Government—and I emphasise the Government—should say what increases are to be paid, as set out in paragraph 83 of the Code. I should like to take up a point made by the noble Lord, Lord Douglass of Cleveland, in what I thought was a most fascinating and constructive speech on February 5. Surely it would be most desirable that the Government should, at any rate in Phase 3, give a joint body like N.E.D.C. the fixing of a national norm on which the Pay Board would then operate. N.E.D.C. combines, I would recall to your Lordships, the Government, the C.B.I. and the T.U.C.; and if at all possible I believe that the norm ought to be agreed in some such way.
I would go along most warmly with the noble Lord, Lord Alport, in expressing the earnest desire that, in the great crisis we are now facing, we can nevertheless achieve some consensus for the future. Prices are very important when we fix wages; but I think we must avoid the

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situation from which we have suffered, in which the monopoly or near-monopoly power of some unions, leapfrogging over each other, forces up costs, which are then passed on to the consumer at home and abroad in the form of higher prices. I am not just blaming the unions: the C.B.I. have gone along with this, because on the whole it is less bother than to fight. Of course one can meet the export problem by periodical currency devaluations, which at least restores one's competitiveness in foreign markets; but in the end these lead to national ruin, as the French and Belgian experience between the wars has clearly shown. I think that there is no alternative to keeping our economic house in far better order than we have in the past. This is certainly the explicit object of this Bill and Code. Therefore I would urge that while some regard should be paid to prices, and especially food prices, when the norm for wage increases is settled, much more regard should be paid to increases in productivity both nationally and in each industry. I want to urge that the increase of productivity over the year before should be instrumental in fixing the rate of increase of wages and pay in the year ahead. This idea only represents a small development of paragraph 75 of the Code. When the trade unions discover that they themselves suffer from the colossal damage done by the loss of 20 million working days (as happened last year) and by the ruthless action of gas men, electricity men, train drivers and lorry drivers in maiming other industries and depriving their workmates of work, warmth, light and comfort, they may be less anxious to let the extremists do the pacemaking, and be more willing to co-operate in finding a less idiotic, less selfish and less egotistical way of fixing wages, especially as everyone's pay will be affected, and be known and seen to be affected.
I believe there is a great deal to be said for the right to strike in emergency, but I also believe it is time that we began to talk as well about the right to work. So I should like the Government to set about commissioning precise productivity studies immediately, so that authoritative material is available for N.E.D.C. before Phase 3 starts. Otherwise, if the Government continue to set the norm, I foresee that they will be carrying a very unpopular measure
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of responsibility all alone, and I believe that will end in political repercussions.
To sum up, my Lords, I fully approve of this Bill, so far as it goes, and I shall certainly vote for it. But in my opinion it will not be effective unless suitable action is taken to control the increase of the money supply, which almost certainly cannot be done so long as we run a budgetary deficit on anything like the present scale. Let us bring productivity in under N.E.D.C., marrying the progress in productivity of the year before to the increase in wages of the year to follow. Inflation, on the scale we are now suffering, is like a dangerous beast coming after us out of the river. A friend of mine once asked a Panamanian businessman what was the difference between an alligator and a crocodile—there are many of those creatures in Panama—and the man said, "Ma'am, there is all the difference in the wide world. An alligator, you tie a string around its neck and you take it out to tea with your lady friend on a Sunday afternoon. But a croc.—he is after you all the time! My Lords, I do not think the Chancellor can expect to be very popular if he has to take our "croc." over to Brussels with him, and I urgently hope that this Bill, the Code and other monetary measures will enable us to scotch the creature, or at least to keep it in a safe pen.
7.8 p.m.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, when one speaks at the end of debates, which is my usual position, one becomes increasingly discouraged. But I have one point to make this evening out of several I had prepared. Of course, this debate has been about economics, and there have been some remarkable economic speeches. I am not competent to criticise them. All I can say is that the economists do not agree—which is no surprise to anybody. However, there have been some "horse sense" speeches. My noble friend Lord Beswick opened in a way which I found admirable, because his approach was so co-operative and constructive. The noble Lord, Lord Byers, made a number of very useful suggestions to us, which we must consider.
My noble friend Lady Burton made what I think was one of the most forthright speeches I have ever heard from these Benches; and I understand what

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the penultimate speaker meant when he said that he thought the noble Baroness might well have changed places with the noble Lord, Lord Alport, which would have left the House more consistent. I want to suport my noble friend and her general comments and approach. I have something to fill in at the end of what she said. Before doing so, I must look at one or two other speakers. In particular I was fascinated by the speech of the noble Lord, Lord Alport. I must confess that the prospect of the Prime Minister's head on Tower Hill is not in its way unattractive. I wish my noble friend Lord Wigg had taken the horseshoe out of his glove before he attacked my noble friend Lady Burton. I was sorry to hear him say that he did not believe in her sincerity, though I do not believe that he meant it in that way. My noble friend Lord Wigg is somebody who believes in fighting hard and is a hardline Party politician. The whole point of my remarks to-night is that I am suspicious of the whole breed.
I wonder whether Party politics in our contemporary form is really serving the nation as effectively as Party politicians think it is. Certainly there is a good deal of evidence from recent by-elections and newspaper articles to suggest that it is not. The two or two and a half Party system which we have is not something one can afford to scrap because it provides stable Government. But I wonder whether Party managers might not do well to ease off a bit at the edges? The Counter-Inflation Bill seems to me to be an occasion for this; it is trying to do something which we all believe to be right. We in the Labour Party have criticised violently the unfairness with which this is being done, and it is perfectly clear that we would do it rather differently. The fact remains that we believe that without some such measure the country will be in a serious position, and I wonder whether we could not have been rather more gracious about it.
So long as the Government were doing the exact opposite of what we thought right, which they did for at least a year, there can be no question that we were right to attack them root and branch. But when they made their celebrated volte-face, was not that the moment for us to heap a few coals of fire and say, "Now at last you are doing the right
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thing, in however ham-fisted a way, we will help you"? Above all, the Government need help with the trade unions whom they have gratuitously goaded into a truculent hostility, and without whose good will no solution is possible. I believe, as my noble friend Lady Burton said, that there are many trade unionists and many Labour voters who would have liked to see the Opposition trying to help in this crisis, which is a national one, one which was exacerbated by the first year of Tory Government but is certainly not a Tory creation. Not all the workers want to be led by those people whom my noble friend Lord Douglass of Cleveland, in a brilliant and moving speech in our last debate—characteristically not reported by The Times—described as a sabotaging movement determined to destroy the system. These are the Communists under the bed. But we know that there are people who are not anxious for quick solutions of our problems, and this is one of the problems which will always affect the trade unions and their organisations.
I believe that many workers—and by "workers" I mean white-collar as well as blue-collar—would be happy to work hard for a good wage and enjoy the fruits of a prosperous nation; and I believe many of them think that this could be achieved by more co-operation and less "bloody-mindedness". Meanwhile, the wretched public, rich and poor, old and young, pregnant or paralysed, get it in the neck either way. Old women of 80 have to lie flat on the floor twice a day in order to see whether the gas pilot is still alight in their gas heaters brilliantly designed by marvellous English manufacturers. Then there are the transport problems, causing young girls to stand in the rain because the drivers are not driving the tube trains. The discomfort, irritation and misery caused to the entirely innocent public by sectional demands is leading, in my opinion, to a dangerous dislike and distrust of the trade union movement. This is dangerous because in the end one can govern only by consent.
Modern life is complicated, and its comfort and success depends on every man doing his job consistently and well. Any single group can upset the entire complex, though some much more easily than others. So the whole complicated

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machine can be maintained only by consent. This has been the theme of nearly every speech that we have heard to-day. It is absolutely true; it cannot be too often repeated. The unions have to be persuaded to co-operate. They will not, they say, co-operate with this Government; but they would, they say, with a Labour Government on terms recently announced. That is all right with me, but I am afraid that the public may be so bitter against being sacrificed, first to one sectional interest and then to another, that they would refuse to vote into power any Party which accepts this position. So it may go on and on, non-co-operation, misery for the public, hard-headed Government refusing to give way, trade unions unable to give way because of their rank and file—a position of almost total disaster.
As I see it, the measures in this Bill, or something like them, would have had to be taken by our own Party had we been in power. I am certain that we would have paid a good deal more attention to fairness than the Tories have: to rents, to food costs, taxation of the rich, and so on; but I doubt very much whether that would have saved us from a single instance of the industrial action now threatening the country. If it is necessary to stop inflation, which all sensible people believe is necessary, it is necessary to be fair about it. The least fair way of all is to let those workers whose work is essential to modern life under modern conditions for the day-to-day running of the country—gas, electricity, water, and many others—use the public's extraordinary vulnerability to their particular deprivations as a means of getting wage increases above those available for people like probation officers, shop workers, and others. This is the great unfairness.
We must welcome the return of a prices and incomes policy in its new dual form and of that much respected figure, Sir Frank Figgures, at the helm. There is no other way of achieving fairness. I know that my friends will tell me that I am politically naïve. Politics is about power and power comes from strength, not compromise. Imagine what my noble friend Lord Wigg would think of what I have to say; it is not the line he takes at all. I am saying: please look
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at this proposition again. I do not believe that Parties win power by following the procedures which both Parties are now following, particularly—as Mr. David Wood pointed out in The Times to-day—in Opposition. What the public do not like is the Opposition changing its mind, whether it is Tory or Labour. They accept it from Governments with a laugh, but they do not like the Opposition changing its mind. In my opinion, both Parties are playing their cards wrong; both Parties would do a good deal better, when in Opposition, to oppose the Government except when they are right. Most people on this side of the House believe that this Bill, with the many imperfections, is right and that we should support it. Convention is that we do not divide on Second Reading, which allows me to take a contrary rather than a contradictory line to my own Party's view and abstain, which I shall do.
7.19 p.m.
LORD MILVERTON: My Lords, the hour is late and my own intention is to be very brief. I have no desire or capacity to wander in the dizzy heights which have been reached by most of the speakers this evening. May I say at once that I support the present Bill, though it has some faults which doubtless can be dealt with later on. I want to emphasise —and that is all I wish to do—the vital need for all sections of our nation to work together on a basis of that willing partnership without which we cannot hope for ultimate success in a solution of the problems with which this Bill deals.
To turn now to the Bill before us, I want to give an illustration from the Bill itself of the faulty handling of joint effort. There are parts of this Bill which raise issues of fundamental importance for, or require particular action from, local authorities. I want to mention two such matters. The first concerns Clause 14, under which the Secretary of State is empowered to require rating authorities (and other authorities) to give him information about rates, including information about levels of proposed rates and the estimates and other assumptions on which those proposals are based, for the years 1973–74 and 1974–75.
Very naturally, the Association of Municipal Corporations objected, and continues to object, to local authorities being directed to provide information in

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this manner. Local authorities have adopted a thoroughly co-operative approach to the present extraordinary problems facing this country. Surely, central and local government must work in partnership in the provision of public services. Local authorities are responsible bodies answerable to the ratepayers, and the power to direct them to answer to the Government on a matter which is the concern of the ratepayers is neither appropriate as between one responsible body and another, nor is it calculated to secure the spirit of co-operation necessary to overcome current difficulties. In any case, if the Government require that local government rate-making powers should be supervised in this manner, then this Bill is not the appropriate vehicle. It is more a matter to be proposed in. and debated on, the forthcoming Bill on local government finance. So I suggest that this power of direction is a bad precedent and should not be enacted.
The other matter which I wish just to mention arises over the power the Minister is taking under Schedule 4, paragraph 2, to the Bill, to designate any inspectors or chief inspectors of weights and measures employed by local authorities as persons to enforce both the transitional arrangements of price changes following the introduction of value added tax and the abolition of purchase tax and selective employment tax, and if need be the longer-term price control provisions of the Bill. Again, the Association of Municipal Corporations (which is the leading body, as we know) is concerned that central Government should take over the officers of local authorities for central Government purposes by force majeure in this way.
Apart from the general principle that local authorities should not have their officers "requisitioned" by another authority in this way, considerable constitutional problems will arise, since the authorities' inspectors when designated will act as the Minister's officers, though still employed by the local authority, and further will be expected to use non-designated inspectors to help them who will be acting as officers of the local authority. One feels that this arrangement is most unsatisfactory and confusing. Inspectors will be unclear over their relationship to their local authority, their town clerks or other chief officers. In
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fact, paragraphs 1 and 3 of Schedule 4 appear to do all the Government want without this objectionable paragraph 2 at all. Under paragraph 1(4), the Minister is taking power to require the local authority to act, and in effect to use all its resources to act to enforce the Government's legislation. Paragraph 2 is in any event defective because it does not appear to cover the use of the authority's offices, telephones, equipment, stationery, transport, et cetera. The situation can lead to undesirable conflicts of loyalties. All these troubles would be avoided if Schedule 4 had been framed so that the Minister would look to local authorities, rather than direct to their officers.
I do not believe that Parliament can happily establish a precedent for Governments to take over local authority staff in this way, cutting out the local authority from its right to give orders and to organise and direct the staff it pays for. I hope that when the Committee stage comes it may be possible to deal with these matters, but I thought that as we are dealing with the Bill it would be right to mention them now. Perhaps I may be allowed to conclude by saying that I have been informed that the County Councils Association and the Urban District Councils Association share the concern which is felt by the other local authorities.
7.27 p.m.
Loan CHAMPION: My Lords, this has indeed been a worthwhile debate: a debate on a vital topic, a debate in which I have listened to every speech except those of my noble friend Lord Davies of Leek and of the noble Lord, Lord Alport. The latter was described to me as a sensational speech, one in which I gather he suggested that perhaps the circumstances were such as to justify a National Government. I must say that I feel that National Governments have always been a ghastly failure in peace time. I believe that they are right in war time and that the country will accept them then, but I doubt very much whether we have reached a position in relation to inflation that would justify the formation of a National Government. However, this of course is a matter of opinion, and this is the opinion which I strongly hold.
The debate has shown that the Second Reading of this Counter-Inflation Bill can be subjected to varying treatments: what

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is in the Bill; what has been left out; what is the philosophy and outlook of the Party whose Government put the Bill forward. And, as such, it contains all the elements necessary for a good old Party bash: a reminder of the faults of Government; a reminder, too, of the faults of past Governments; a reminder of the faults of political Parties, trade unions and the rest. In some circumstances I am all in favour of the Party bash. I firmly believe, however, that this is not the time for bitter controversy, but rather for a consideration of what is best for the nation as a whole. Here I agree with my noble friend Lord Donaldson of Kingsbridge. In this connection we have to remember that the nation includes the trade unionist equally with the employer and all the others who go to make up our society. I would remind my noble friend Lady Burton of Coventry that when we are speaking about the general public we cannot exclude the millions of trade unionists and their families; they go to make up nearly half of this nation. But that does not mean to say that I did not recognise, and indeed applaud to some extent, the noble Baroness's courage in putting forward the point of view which she expressed here to-day—not an easy thing to do from this side of the House, but that is one thing that I like about this House: we are not completely tied to Party points of view. Occasionally Members on both sides say things which are not wholly in accord with Party outlook and Party philosophy.
When I speak about the national wellbeing I mean that throughout the whole of the stages through which this Bill will pass we must take the national wellbeing as the starting point of our consideration. That does not mean, of course, that we shall not expose the failures of this Government which have led to this Bill, including the failure to secure T.U.C. co-operation, a point which was so well put forward by my noble friend Lord Beswick. The national wellbeing, so far as my thinking goes, means the preservation of our Parliamentary democracy, because I honestly believe that that is the best form so far devised for the government by human beings of other human beings; and although I believe our system enables us to be free, and truculently free,
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we must not allow the militants of either the trade unions or of the Right or the Left of any political Party to so exacerbate our existing difficulties as to endanger our system of democracy. It has been said, and I agree with this completely: we want neither fascism nor communism. Neither of these things would be accept able to me and I would fight against them. Our system of democracy was too hard won for us lightly to lose it.
I am firmly of the opinion that the duly elected Government of the day must govern, and also that that Government has a clear duty to ensure that their actions are not only fair but are also patently seen to be fair. In present circumstances, a head-on clash between organised labour as a whole and the Government would be a national catastrophe and would certainly jeopardise democracy as we understand it. That might seem to be putting the argument too high, but I believe that Keynes was not mistaken when he said
"Lenin was right when he said 'there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency',"
and I would think that Lenin knew what he was talking about. He certainly had viewed society, seen what happened, and this was his considered opinion.
What is the present position? The Government seek to halt the course of inflation and have introduced unpopular measures to that end—I hasten to add, unpopular only for those trade unionists whose wages are immediately held down as a result of that action, but not, I find, so unpopular with those not immedately affected and who are fervently hoping to see prices steadied. Unpopular, perhaps, with those whose profit margins tended to escalate with every price increase, but not when they see the price they have to pay for other people's goods not being held in check. But most certainly not unpopular with those of us who are pensioners or on fixed incomes from savings scraped together to provide for old age and who have for so long seen their value decline with every passing day. Here I agree very much with a passage in the speech made by my noble friend Lady Burton, because it comes home to me as one who has tried to save just sufficient to be able to get by with the small pension that I have, but I

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see every day the value of my little bit of savings declining as a result of inflation; so I am directly affected.
So one could go on, singling out those who profit immediately from inflation but suffer from it in other ways, as all do certainly in the long run. The Labour Party is of the view that the Government have an over-riding duty to introduce measures to deal with inflation and the rising cost of living. The T.U.C. says in its recently published document, the one they were discussing to-day Economic Policy and Collective Bargaining in 1973—
"Throughout the past three years, the General Council have drawn attention to the economic and social consequences of the rapid increase in the cost of living; at the same time they have acknowledged that the trade union movement should have a part to play in an agreed policy designed to reduce inflationary pressures."
I know of no dissent from these points of view by the C.B.I., which certainly took an important step when they got agreement to impose a price standstill the other day. Clearly there is agreement about the desired end; the disagreement lies in the means to that end. How do we secure such an agreement? What do we do in order to ensure that we do in fact control inflation? I find the analysis of inflation by the T.U.C., as a matter of the use of resources, convincing when they say
"an advanced industrialised economy is faced with conflicts between providing ever-increasing investment in advanced technology and infrastructure, greater demands for consumption from an increasingly educated work force, increased social spending, and, in the case of the United Kingdom, an increasing need to cover the costs of imports by expanding the export sector. In a slow growing economy, the strain of meeting these conflicting objectives creates severe inflationary pressure, even when resources are not fully utilised."
All of those complex interlocking factors in a society such as ours enter into the causes of inflation.
If I ever held it, I have long since discarded the notion that the militancy of the trade unions is the primary cause of inflation. Certainly there are growing doubts in many minds about the hypothesis that inflation is primarily due to trade union militancy. David Laidler, writing in the National Westminster Bank Review in November last on the current inflation, rejected the premise that union
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aggressiveness is the root cause of the problem. Timothy Congdon in the February issue of the same review called attention to the weakness of the Labour militancy hypothesis when discussing why inflation has accelerated.
On the other hand, it would be naive to suggest that wage and salary increases do not enter very substantially into the cause of rising prices. Sixty years ago last month I joined the old Taff Vale Railway Company, and at the end of the week I was made a trade unionist and I have been one ever since. In those days the trade unions—labour—were disciplined largely by unemployment. The fear of unemployment was a disciplining factor, and a very potent one. That stick of unemployment is no longer there. It has no disciplining effect at all because, as the T.U.C. put it in the part that I quoted, there is to-day an "educated work force", which means that we can get round the disciplining which certainly affected us in all our thinking in the days that I am talking about.
I assert that high wage demands are an effect as well as a cause of inflation. I do not believe that one can separate effect and cause. It is one of the factors, an extremely important one, and as such I believe that it must be subject to a measure of control. But to subject oneself to a self-denying measure of control is asking a lot of bodies whose very existence depends on their ability to deliver the goods in the form of higher wages and better conditions. I know something of the pressures that build up behind executive committees, general secretaries, and so on, and I know how difficult it is to deny those pressures and to avoid them. The other side of the picture—and this has been mentioned to-day—is that employers who find little or no difficulty about passing on increased labour costs by increasing prices, understandably tend to buy peace in their industrial relations at a cost to the public at large. That too has been going on for some time; it has been glaringly obvious to very many of us.
The question we must ask is, "Where do we go from here?" The trade unions deny seeking a confrontation; the Government deny seeking a confrontation; and I am positive that the majority of the people want to see industrial peace

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restored as soon as it is humanly possible to get that industrial peace restored. If there is such a wide measure of agreement, what now divides us all? Surely it must be that at the very centre of the division between us is the question of the fairness of the Government's policy for solving the problem. The strength of the argument against the Government from the trade union angle seems to me to lie mainly in three factors: food prices—perhaps the most sensitive area of all; the unfairness of Stage 2 on wages; and the apparent fairness of dividend restraint—but a disturbing recollection of past dividend restraints which resulted in undistributed profits being added to the capital value of the undertaking or used for later dividend distribution while wages not gained, even for increased production, were lost for ever to the workers concerned.
I recognise the dilemma posed by the profit-making restrictions mentioned by the noble Lord, Lord Byers, by the noble Lord, Lord Wigg, and by my noble friend Lord Rhodes. But surely it is a nonsense to suggest that profits can be free and wages restricted. It just is not "on". It certainly would not be accepted by the trade unions if you were to say, "Profits must be free, because if there are no profits we cannot do all the things that we want to do to improve our technology and all the rest". In this there must be a balance, and a balance means that there must be an element of dividend restriction in this connection.
LORD BYERS: My Lords, may I interrupt the noble Lord? The difference between profits and dividends is very great indeed. Will the noble Lord say how an unprofitable business is going to pay a better wage?
LORD CHAMPION: My Lords, that is a question which I regard as an important one. An unprofitable business cannot pay a good wage. Indeed, it ought to go out of business and probably would. That is the effect of the capitalist system which the noble Lord, Lord Byers, supports. That would be the effect of a nonprofit-making business. But that is only part of the story. I do not agree that we must have the sort of profits that have been made in the past. In this connection of profits and dividend restraint it is very
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disquieting to me to read that the banks seem to have escaped the most stringent controls. The interest rates have become an inflationary element in their own right and the Midland Bank, not out of line with the others, had pre-tax profits last year of 37 per cent. above the previous year. Nobody is going to tell me that that sort of level of profit is good for this economy of ours. Of course it is not good. I have not looked up the other banks but in the case of the Midland, the Treasury consented to an increased dividend distribution of some 16 per cent. That is a far cry from the 5 per cent. limitation in the Green Paper to govern dividend distribution.
Another factor is land prices. Unlike the noble Lord, Lord Robbins, who sees land prices and land speculation as an effect of inflation, I assert that it is both an effect and a cause in the same way that wages are. Land prices affect rent, and rent cannot be divorced from prices. Indeed, rent runs up through the whole of it. I prefer the example given by the noble Lord, Lord O'Neill of the Maine, who said that a businessman said to him, "I would control food prices and stop speculation in land." When trade unionists see what is happening in this field, how can we expect them to sit back and take everything that is suggested and said about them as to the restraints that they ought to impose on themselves? It is a nonsense.
Then there is the glaring injustice to groups of workers such as the gas workers and the civil servants who were on the point of catching up on long-established wage relationships when the door was slammed in their faces. I know all about the difficulty when you fix a date for this sort of thing. Some will have just squeezed through the door and some will be locked out. But that does not lessen the difficulty nor increase the possibility of acceptance of the position if all you have to say is, "You were very unlucky, chaps!".
Of the factors I have mentioned, I have dubbed the glaring injustice to the gas workers and others as the greatest obstacles to the acceptance of Stage 2 of the counter-inflation policy. I would put food prices and the gas workers' and civil servants' position very high. I believe that a move on those two stumbling blocks would go a long way towards securing the conditions necessary for the

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acceptance of the Government's policy. Perhaps I ought to make it clear that I am not speaking for the T.U.C. or anyone else, but rather as an old trade unionist who has had a little experience of disputes. There is a moment in every industrial dispute when a move by one side becomes acceptable to the other. If the move is made too soon the parties are not yet ready; if it is made too late, the positions taken up have hardened too much. I rather think that a move made now on food prices and on the gas and Civil Service workers' disputes might have the effect of leading to a wider acceptance of Stage 2 and a preparation for Stage 3.
On food prices, I welcome the Code's arrangement for setting up a special panel to deal with the prices of food and drink. That is certainly a field in which special inquiries are long overdue, if we are to judge by the Monopolies Commission's Report on Kelloggs, a firm which for a long time past has been fleecing the public. What the public would like to know is how many more are at the same rapacious game. There ought to be, too, in my opinion, an examination of retail price margins, which I suspect have increased not for any other reason than that prices have gone up in such a startling fashion. I think that, in addition to the Code's special arrangement on food prices, the Government ought to find a way to divert £200 million or £300 million to subsidise food in an endeavour to protect the public against world price movements. I certainly should not favour an open-ended subsidy, but the sort of figure I have mentioned, directed towards stabilising the basic foods of milk, bread, sugar, meat and potatoes, would go far to removing the complaint that wages are fixed but prices are not. That might seem to be expensive but certainly cheaper for the nation than the present loss of industrial production.
Perhaps as a footnote to that I might add that it may well be that food prices will not continue to escalate at anything like the recent rate, especially if the declared policy of Mr. Nixon of ceasing to pay United States farmers for not producing is implemented and as a result more cereals find their way on to the market from the United States of America. I think it is an undoubted fact that the Russian grain crop failure has caused to some extent the rise in food prices. My
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noble friend, Lord Peddic, was surely right to stress this aspect of the matter. He has an experience born of his period on the Prices and Incomes Board, and we ought to take very much notice of what he said in this connection.
As to the gas workers and others similarly placed, surely the Pay Board could be asked to look at their position and make recommendations outside the limits imposed by Stage 2, and if that is not deemed acceptable by the Government could we not have a clear declaration that Stage 3 will not debar the Pay Board from making a suitable recommendation in their cases in readiness for Stage 3? I had written that before I heard the speech of the noble Earl, Lord Jellicoe, and I was delighted to hear him say that he and the Government were thinking on these very lines. Stage 3, of course, will be the critical and the most difficult stage. To decide to change differentials within a single industry is an almost impossible task; to decide on that between industry and industry is almost a hopeless task, but it must be tackled if we are to have a purposeful, worth-while Stage 3 in this whole policy.
I am not unaware of the difficulties of the Government's acceptance of these proposals, but it would seem to me to be wise for the Government to take the further steps that I am here proposing in the hope of getting back to talks with the Trades Union Congress on possible modifications of their policy, and in securing co-operation to rid the country, which is now bedevilled by inflation, of strikes and other industrial action. I am sure the country is earnestly praying for this. If the Government make such moves, it would seem to me that the Trades Union Congress, while adhering to its stand that the programme for dealing with inflation must be equitable, ought to be prepared to make the necessary compromise to get the nation on to a course advantageous to our future, a future which at the moment looks pretty bleak, pretty well as bleak as anything I can remember for a long time, but not bleak enough yet for the National Government proposed by the noble Lord, Lord Alport. If we can do something of this sort, it could then lead on to co-operation about State 3 and after, the stage which is to some extent the dangerous one, because, as we experienced it in the Labour Government,

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you go on very well for a time, but once the gates are opened the flood pours through. That is something which I hope the Government, and everybody working with the Government, including, as I hope, the trade unions, will somehow avoid.
7.55 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I think the Government have some reason to feel reassured by the debate to-day. In some ways it has been a surprising debate. We have had some very striking and cogent speeches from both sides of the House, and one cannot fail in this connection to mention the speech of the noble Baroness, Lady Burton, and the speech of my noble friend Lord Alport, with which I am bound to say I did not find myself in very much agreement. But it was none the less a striking speech. In the debate there have been expressions of the exasperation that we all feel, and of the general feeling of the need for a consensus. If I were to sum up what has been said in the debate to-day about this Bill, I would comment that the presentation to the country as a whole has been criticised as being defective; that it has been said that the atmosphere for its introduction is unfavourable, but that nevertheless the House as a whole is generally agreed upon the policy.
It would be very hard for the House not to agree at least on the objectives, which were described when we had the previous debate on the White Paper, The Programme for Controlling Inflation: The Second Stage (Cmnd. 5205) which began by saying:
"In the tripartite discussions last year the Government, the T.U.C. and the C.B.I. agreed on three objectives: to maintain a high rate of growth and to improve real incomes; to improve the position of the low paid and pensioners; and to moderate the rate of cost and price inflation."
These remain the consensus of the objectives. Inevitably, there are differences of emphasis and disagreements about the methods to achieve those objectives. But I must say to the noble Lord, Lord Peddie (were he here), that at any rate in the very first three lines of that White Paper reference was made to the need to improve real incomes, and that this
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remains the background to the whole of the policy.
LORD BESWICK: My Lords, may I ask the noble Lord this question? Although there was a reference to this matter in the White Paper, can the noble Lord tell us whether anything in the Bill or the Code points to the need to improve real incomes?
LORD DRUMALBYN: My Lords, one does not necessarily set out objectives in a Bill or even in a Code. The White Paper set out the objectives and the Government have made known what those objectives are. It is much more important that the country as a whole should thus know what the objectives are than that they should be incorporated in a Bill, or for that matter in a Code.
The Government have not only to do what is necessary but they have to persuade Parliament at least, and the people if possible, that it is necessary. Where a degree of surrender of freedom of action is involved, this is not always very easy to achieve. We have been chided during the course of this debate for the fact that we did not introduce this policy earlier. But again the noble Lord, Lord Champion, knows, if I may say so, with his mature wisdom, after 60 years of trade union membership which we all very much respect, that the timing of these things is very important.
We tried to get voluntary agreement, but the reluctance of the Trades Union Congress to accept pay control made that difficult. The noble Lord, Lord Robbins, to-day expressed the view that pay control was better than price control, while the noble Lord, Lord Rhodes, thought that in saying that the noble Lord, Lord Robbins, was a long way from the shop floor. The noble Lord, Lord Peddie, said that a consensus was required, and this was something that was supported by my noble friend Lord O'Neill of the Maine, as well as by the noble Lord, Lord Beswick, who, if I may say so, was on the top of his form this afternoon and made a notable speech, as did the noble Baroness, Lady Burton, who stressed that what was needed was a new spirit. The noble Lord, Lord Roberthall, said that although the norm was rather a high one—I shall come back to that shortly—the fact is

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that people are becoming accustomed to an even higher level of wage increases.
It is reasonable that a man on the shop floor should have some assurance that prices will not shoot up far beyond the permitted increase in pay; but is it so reasonable to say that there should be no fluctuations at all in prices? After all, the background to this situation is that last autumn the country was gravely ill; it was suffering from the malady of acute inflation, a malady which, when it gets to the acute stage, has to be treated immediately and systematically if it is not to become rapidly worse and worse. Last November hourly wages were 16½per cent. higher than they were a year before; production was running at about 7 per cent. more than a year previously, and retail prices were about 7¾ per cent. higher than they had been hitherto. It is when the rate of inflation in one country becomes very much higher than the current rate in other comparable countries that there is a real danger of its getting out of control.
In the treatment of complex diseases it is not unknown for there to be disagreement among consultants as to the critical factors and the steps to be taken to deal with them. In this case some thought then, and apparently still think, that it would suffice to act on prices. If those could be held, the argument ran, it would not be necessary for Parliament to impose any control on wages. The noble Lords, Lord Beswiek and Lord Champion, made reference to this factor.
The Government have taken action, for example, on sugar and milk, where machinery already exists. The price of sugar was held down by about 1p on a 2 1b. packet from March to July 1972, and 1½p per 2 1b. since then, while milk was reduced by a ½p per pint between April and July 1972. But food subsidies could not provide an effective and lasting solution to the problem of high prices for scarce commodities. Let us take beef as an example. If there could be devised a subsidy which would hold the retail price, for example, at the level of early 1972, the first effect would be to stimulate demand to the point where supply was inadequate to meet it. In particular, housewives who are now buying other meats
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would switch back to beef; and since beef supplies are inadequate all over the world at present, the inevitable result would either be unfairness between customers or, more probably, some informal rationing by the trade. The cost would escalate rapidly. It is a difficult matter to start a rationing policy, but it is a much more difficult matter to get rid of it once you have started; and the same goes for subsidies.
LORD BESWICK: My Lords, some of us are trying to understand what the noble Lord said about sugar. Do I gather that what the noble Lord said was that sugar was subsidised up to the time when the freeze came into operation? Is he taking that as proof that the Government have done something, because they took off the subsidies when the freeze started?
LORD DRUMALBYN: My Lords, I was illustrating what the Government can do where they can do it. The noble Lord knows as well as I do that under the E.E.C. agreements the sugar subsidy is due to come off altogether by July.
LORD BESWICK: My Lords, I am asking why it cannot be kept on? If it has been done, and is administratively possible, why is it not maintained in the present situation?
LORD DRUMALBYN: My Lords, we have already agreed that it should go. This would have to be renegotiated, if indeed it is renegotiable. There is another point that I should make here; that is, that in the United Kingdom wages and salaries, as a share of national income, are significantly greater than in any other European Economic Community country, and vastly greater than in Japan. That means that we cannot afford to experiment in trying to control wages by price control. A similar experiment was tried in Canada and proved unsuccessful, and all experience suggests that it would not be successful now. For example, the control of public sector prices in the last two years has not led to an equivalent containment in the public sector wages.
The £1 plus 4 per cent. limit is not out of line with the average increase in earnings since June, 1970. From June, 1970, to November, 1972, average earnings rose at an annual rate of 10·6 per cent. The Phase 2 limit of between 7 and 8 per

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cent. is therefore not as draconian as some opponents make out. To reject the limit and to take industrial action for more is, I am afraid, only to stoke up the fires of inflation.
THE EARL OF DUDLEY: My Lords, may I ask a question in connection with the level of wages in this country as opposed to other European countries? Could this not be a reflection of the low level of investment in this country over the past few years?
LORD DRUMALBYN: My Lords, I am sure that that is a factor. For the moment, the disease has to be treated. First, we needed a breathing space to enable the doctors to decide what the treatment should be, while in the meantime ensuring that the patient would get no worse. So we had a standstill during which there were no increases in pay and only such increases in prices as were necessary to ensure that trade could continue. The administration of the prices standstill has been tougher than in 1966, and many enterprises have absorbed a significant proportion of the unavoidable increases in costs. In fact, the standstill is being remarkable successful in keeping down prices, and I think that it is necessary to get this into perspective. We tend to look at the topmost increases in prices and point to them as if they were typical of the whole. Since the start of the standstill, prices have been rising at the rate of 0·6 per cent. a month, despite the increases in world commodity prices and the floating of the pound. Within this figure, prices of food, which accounts for about a quarter of consumer expenditure, have been rising by nearly 2 per cent. a month, and thereby giving cause for special concern. That sort of thing is apt to happen following bad harvests and crop failures, or other disturbances in various parts of the world. This has nothing to do with our entering the E.E.C. What we have to fear is not so much periodical rises in food prices as the possibility of not being able to afford to pay for them. Given the expense of our dependence on overseas supplies and world markets, that is precisely why it is so important to get a grip on inflation.
In the past two and a half years food prices have risen proportionately by rather more than the retail price index
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for all items of expenditure, but earnings have risen by more than prices, and pensions by markedly more. The aims of the Government are not only to contain inflation but to do so while at the same time stimulating growth. The standstill period was only a breathing space—an interlude for working out the necessary plans for the next phase, and for Parliament to consider them. The Bill we have been debating to-day provides the legal framework for the counter-inflation programme and the methods by which the aim is to be pursued, and we shall be examining these in detail when we come to the Committee stage.
I was asked by the noble Lord, Lord Rhodes, about amendment of the Code. It is important to recognise that the Green Paper is a Consultative Document and, naturally, in formulating proposals for the later draft Code, the Government will take into account comments in the House as well as by interested parties outside. The White Paper setting out the draft Code will itself be debated, and even when the final version is incorporated in the Statutory Instrument any further significant changes will themselves be debated in draft by Parliament. As my noble friend suggested, throughout the proceedings on this Bill it will be possible to consider its provisions side by side with what is set out in the Green Paper. The noble Lord, Lord Byers, and my noble friend Lord Digby referred to the effect of the policy on investment and profits—
LORD CHAMPION: Who is Lord Digby?
LORD DRUMALBYN: I am sorry, my Lords, I meant my noble friend Lord Dudley. I should have remembered, because he spoke immediately before the late right honourable Member for Dudley. My mnemonics failed me. So far as profits are concerned, in a market in which turnover is increasing and in which there is a state of growth, it is possible for most companies to achieve greater sales. Thus so far as profit control is concerned, the comparison will be between the profit margin being made as a proportion of the larger turnover that may be expected, and that in the best two of the last five years. So I do not think the situation is as bad as the noble Lord thinks, and I hope he will reflect upon that. But most

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certainly we shall be very glad to discuss with him any suggestions as to how the formula could be improved in this regard. We certainly expect—and this is most important—that money should be available out of profits to maintain and even increase the rate of investment. Because dividends will be restricted to some extent, it is likely that there will be at least as much—indeed, more in most cases—for investment. So the general picture is that the Government are determined that there shall be no restriction in the investment field and, as has already been said, if it appears that a company's investment programme is being impaired by the operation of the controls, use can be made of paragraph 49 in the Green Paper in order to give some relief with a view to maintaining the rate of investment. Criticism has followed three main lines. First—
LORD BESWICK: My Lords, as the noble Lord has apparently finished answering some questions, may I remind him of the two questions to which I have not yet had an answer? I asked about the time factor. What is the projected date for the beginning of Phase 3? I think this is important, and if the noble Lord can be specific we shall appreciate it. The second question which I put and which I ask again is: do the Government really think that the Industrial Relations Act is working? If they think it is, why are they not applying it in the present circumstances? If they cannot apply it, can they not repeal it?
LORD DRUMALBYN: My Lords, the first question I can answer quite simply, by saying that it has been stated that Phase 2 will run until the autumn. It is not possible to be more specific than that at the present time. In answer to the second question, the fact is that the Industrial Relations Act has hardly been given a chance to run yet. We should like it to be given a full chance to run, and until it has been it seems premature to talk about repealing it and taking it off the Statute Book altogether.
The three main lines of criticism have been that the proposals in the Bill are unfair in restricting pay increases; secondly, that they do not do enough for the low paid; and, thirdly, that they will restrict growth and investment. It has
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been said by many speakers that a balance has had to be struck. If restrictions need to be imposed on prices and profits, then it is surely not unfair to impose them also on wages. I find it difficult to understand the logic of the Party opposite, which seems set on establishing an all-pervasive control over the production, land and capital sectors of the economy, but which apparently believes in unfettered freedom in all circumstances for the wage and salary sector, except when they themselves are in Government. The Party opposite and the T.U.C. seem to have reached agreement on a system under which the strong and the weak are equally free to get what they can. Is this likely to work out fairly?
LORD BESWICK: My Lords, will the noble Lord be good enough to say who said that during to-day's debate? Who said anything remotely like that?
LORD DRUMALBYN: My Lords, it has most certainly been referred to. I am pointing out the significance of what has been said.
LORD GARNSWORTHY: My Lords, can the noble Lord indicate where any wage award resembles the fantastic increase in land and property prices?
LORD DRUMALBYN: My Lords, that is not the point here. Inflation is undoubtedly being fermented by excessive wage increases, though not by them alone. I have already made that point. Until they can be brought into line, I do not see how we shall be able to get out of our present troubles. Under the proposals in the Green Paper, a considerable degree of freedom of negotiation is restored, subject to an upper limit for each group. The parties are free to arrange that a larger share of the money available to each group shall go to the lower paid. The relationship between the groups is of course of immense importance. It is during the course of the coming phase that we are very much hoping a system can be worked out for looking at the claims of different groups, so as to "even out anomalies". The only practical way of de-escalating the present inflationary wage demands is to apply the same rule to each of them.

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The price controls set out in the Green Paper are the most comprehensive controls ever introduced in peace time. The Price Commission will have to monitor the movement of all prices relevant to its functions under Clause 6, including import prices, simply because the goods concerned come under their purview as soon as they are sold in the course of business within the United Kingdom. The prices of imported raw materials and capital goods sold by distributors will fall under the same percentage margin control as domestic products. But there is no way in which we can unilaterally reduce world prices. To offset higher import prices by subsidy would entail higher taxation, and would thereby be likely to reduce real earnings as well as to cut across our policies for overall growth.
LORD PEDDIE: My Lords, I noted that the noble Lord said, with truth, that one cannot reduce world prices. But just prior to that statement the noble Lord said that the Government would monitor such changes in prices. I wonder whether the noble Lord would point out in the Bill or in the Consultative Document the way in which that is going to be done.
LORD DRUMALBYN: My Lords, I have made it clear that it will be necessary to monitor these changes in connection with the fixing of margins on the goods as soon as they come into home trade. It will be necessary to monitor them; otherwise, it will not be possible to know that the margins are being adhered to.
My Lords, I would conclude by saying only this. Our objectives as a Government have remained consistent over the last two and a half years. They are the achievement of a sustained level of growth and higher prosperity in real terms. To attain these objectives, we have reduced taxation by an unprecedented degree, raised the level of social benefits, floated the pound and, in the Industry Act, provided a new base for industrial and regional regeneration on an unparalleled scale. It is within this context of growth policies that the Bill and the Consultative Document on prices and pay are set. They provide the community at large with a realistic opportunity to break out of the vicious
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inflationary spiral that has been eroding the quality of life, as well as damaging our economic prospects, over the last few years. I have said before that the aims are common; they are shared on all sides of the House. We shall be looking at the detail of the methods of achieving those aims in Committee, and it is with these common aims in mind that I commend the Bill to the House.
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, the Question is, That the Bill be now read a second time? As many as are of that opinion will say, "Content"; to the contrary, "Not-Content". I think the Contents have it. Clear the Bar.
My Lords, I understand that Tellers for the Not-Contents have not been appointed pursuant to Standing Order No. 51. It thereupon becomes my duty to inform the House that a Division cannot take place. I declare that the Contents have it.
Bill read 2ª, and committed to a Committee of the Whole House.

FIRE PRECAUTIONS (LOANS) BILL
8.25 p.m.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, this is a slightly different subject, and I apologise in advance for the fact that my voice is going to last for a short time only. Perhaps the noble Lord, Lord Jacques, and others who may care to listen, will forgive me.
I suspect that the House may remember the Fire Precautions Act 1971, which was piloted through this House by my noble friend Lord Windlesham—largely, if I remember rightly, on Friday afternoons. It is now being applied, and its first application has been to hotels and boarding-houses under the Orders made in February, 1972. Probably the House will agree that this was right, because there had been some bad fires in certain hotels, and I think that, with the advice of the fire experts in this country, we were correct to attack this problem first. The Orders had the result that hotels and boarding-houses with sleeping accom-

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modation for six people or more—that is, staff plus guests—must have a fire certificate. The method followed is that the proprietor applies; the fire authority inspects; and, if anything needs doing, a notice is served on the proprietor setting out what, in the terms of the 1971 Act, are the steps which have to be taken and the date by which the work has to be done. I do not think there is any reason to suppose that the fire authorities are being unreasonable. They have a duty under the Act to be reasonable, anyway; and there is a good deal of room for negotiation on exactly what has to be done and the date for doing it. In the last resort, there is a right of appeal to the courts, which can consider matters like cost in terms of looking at what is reasonable.
But, of course, where work has to be done money must be found to pay for it, and some of the hoteliers and keepers of boarding-houses who ran the rather smaller premises foresaw trouble in raising the money to do this. They had not, perhaps, expected that the Act was going to apply to them, or at any rate quite so soon; and they thought that they might well not be able to borrow the money from the normal commercial sources. So, last July, the Government promised to legislate on this subject and to provide for local authority loans in certain cases; and that is the reason for this Bill. At the present moment it is intended to be applied by an Order under Clause 1(1)(a) only to small boarding-houses and hotels. There is power under this clause to extend, as the 1971 Act itself extends, to other premises, and we may come on in due course to certain small charitable organisations, perhaps, which are doing useful social work and which put people up in the process. If one wished to go further than that, extensions of these powers would need consideration if and when the question arose.
People under this Bill can apply to the local authority for a loan if they are required to carry out structural or other alterations under a notice from the fire authority, or if, under Section 12 of the 1971 Act, there is any further tightening up of the fire precautions necessary made by order under that particular section. People under this Bill can apply before they start work or, by an Amendment made in another place, even if they have
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already started before the Bill gets on the Statute Book. If they have not finally paid the bill, they can still apply for a loan under the provision of this Bill.
The local authority has a wide discretion on the amount of the loan, the security they require for it and the length of the term of repayment; and they have more discretion as we have drafted it than in the case of rather similar loan schemes under Section 36 of the 1971 Act for housing. I think this will ease matters (and it was intended to do so) for the sort of case where a hotel keeper has a short lease. He will be able to reach an agreement with the local authority, with his landlord and with anyone else who may be relevant to the scene, to provide the necessary security for the loan and to do anything the local authority require in order that they should advance the money. The local authorities' association
have supported this provision. The actual terms of the loan are dealt with in Clause 1(3) by referring to the matters set out there and a technical matter in Clause 1(4), which is really the rate of interest concerned.
We then come to Clause 1(5) where there are powers to describe the type of building by order for which loans can be made available. It allows the physical description of the building to be done by order, but it will have to be supplemented by guidance to local authorities on what is the other half of this matter, the personal circumstances, to see that we are dealing with the people of a smaller degree of wealth and resources. It is impossible to put this point into the Statute itself and it will therefore be clone by way of administrative guidance.
The idea is to give support to the smaller hoteliers and boarding-house keepers. It is no novelty to have administrative guidance on this matter; because when the 1971 Act was applied to hotels there was produced the red book that I have here, which is a book of guidance about the effect of the Act as applied to hotels. Because there has been a certain amount of misunderstanding about this book I would point out that it was issued in order to try to get a degree of uniformity throughout the country on the standards to be applied, but not in order to lay down a rigid code of regulations. It was simply to set out some guiding

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principles. I hope that those who have read it will agree that it does this. We shall be taking that sort of line under this Bill by adding further advice for the local authorities as to the sort of clientele that they should accept under the loan scheme.
There is a slightly obscure provision in Clause 1(7), but it is not really difficult. It would enable a charity, if brought in under this Bill, to mortgage its property for a loan without getting the express consent in each case of the Charity Commissioners. The Charity Commissioners have asked that they should not have to be involved in every individual case. So we have exempted that particular provision in general law.
If noble Lords want to ask me questions about this Bill I shall be happy to try to answer them, but I think that the loan scheme set out under the Bill supplements the 1971 Act, that it is simple and flexible and that it will allow the local authorities to act as a lender in the last resort, to people in a small way of business, or small charitable organisations who are doing useful social work and who unexpectedly find themselves in difficulties over the cost of very necessary fire precautions under the 1971 Act. Therefore, although it is a small measure, I think it contributes to the safety of all who use these buildings and of those who run them. I commend it to the House and I hope that it will be welcomed this evening. I beg to move.
Moved, That the Bill be now read 2ª.—(Viscount Colville of Culross.)
8.35 p.m.
LORD HAWKE: My Lords, I am glad to see this Bill. Fire damage goes up and up and expenditure on fire precautions is extremely necessary. I am not quite sure, from the general tenor of the noble Viscount's speech, whether the Bill is intended to apply only to hotels and boarding-houses, whether the Government are going to specify powers for that type of use or whether, in fact, small offices, and so on, are likely to be able to participate. My doubt is strengthened by the fact that they have brought in this clause about charities. That provision, I know from personal experience, could be very useful; because charities are apt to live in rather old and cheap buildings which have not been specially built as
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offices and in which the fire arrangements often leave much to be desired. Moreover, they have often very little cash to put into the necessary alterations prescribed by the local fire office. I can assure your Lordships that these can be extremely expensive, as I know when we had to spend a lot of money on the Chichester Diocesan Office at Hove. I think that the insurance companies will support anything that helps people to put in the necessary alterations and arrangements that the fire brigades can suggest. Therefore this Bill is regarded as a helpful one.
8.37 p.m.
LORD JACQUES: My Lords, may I first thank the noble Viscount for his usual clear explanation of the Bill. The 1971 Fire Precautions Act made it necessary to have fire certificates for two main classes of building: buildings in which people assemble for entertainment, education training and the like; and, secondly, buildings in which sleeping accommodation is provided, such as hotels, nursing homes and the like. In order to get fire certificates the occupiers, in most cases, have to do a certain amount of work, and the Bill which is before the House is to enable local authorities to make loans to the people who have to carry out the work.
The Bill is an enabling Bill. First, it enables the Secretary of State to make an order specifying the buildings in respect of which local authorities may make loans. The buildings must be those which are subject to the 1971 Act, but Clause 1(5) gives the Secretary of State wide powers in determining which buildings shall be the subject of loans. As I understand it, the Act so far applies only to hotels and boarding houses and the Minister intends, in the order which is made, to provide that the smaller of the hotels and boarding houses should be able in the last resort to get loans from the local authority. The Bill goes much further than that, and the 1971 Act went much further than the extent to which it has been applied at present. Ultimately, it will be applied to ail the kinds of buildings that I have mentioned. Is it the intention of the Secretary of State at a later stage to extend the powers of local authorities to make loans applying to a wider range of buildings than he has in

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mind at present? Ultimately, places of entertainment will be required to bring their buildings up to a standard necessary to get a fire certificate, and they may require loans. How far is it intended to use those powers?
My Lords, my second point is that the Bill enables local authorities, if they think fit, to make a loan for the purpose of carrying out the work required to get a tire certificate. The 1971 Act affects some towns more than others, and particularly seaside resorts where there are a number of hotels, boarding houses and places of entertainment. In the local authority areas where the principal occupation is catering for tourists, those employed in that industry are usually well represented on the local authority. There can be no doubt that in the seaside resorts the local authorities will use the powers given to them under this Bill to make loans. But what about other areas where people who may need loans are not so well represented on the local authority? We must bear in mind that the 1971 Act will not apply only to hotels and boarding houses. In places other than seaside resorts there will be fire hazards just as great, although perhaps not so numerous, as those in seaside resorts.
Loans will be granted only if the local authority is prepared to take advantage of the powers given by this Bill. In due course, therefore, we shall have a patchwork effect. In some areas local authorities will have taken advantage of the provisions in the Bill and will be prepared as a last resort to make loans available to enable people to bring their premises up to the required standard. In other areas the local authorities will not have taken advantage of these provisions. Has not the time arrived when we should have uniformity in this matter? Our country is relatively small, and modern communications have made it smaller. Have we not reached a point when citizens who have the same problem and can offer the same security should have the same facilities, and not be dependent on the awareness of the local authority?
The Bill gives wide powers to the local authority. It can determine the amount of a loan and the guarantees and security required. It can determine the right of repayment. The Act itself indicates the
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rate of interest. So a local authority has virtually all the say. In those circumstances, would it not be wise to make the application of the provisions in the Bill uniform over the whole country so that citizens who have the same problems would get the same treatment? Would it not be wise to ensure that the public in all parts of the country get the same measure of security against fire which the 1971 Act gives, and which this Bill facilitates by loans permitted for the purpose of carrying out work under the 1971 Act? I would say that there is a strong case for facilities for loans to be applied on a universal basis. People who need loans will be influential in some parts of the country but not so influential elsewhere. The Minister will appreciate that I am dealing not with boarding houses alone but with all the buildings dealt with under the 1971 Act. Ultimately, they will be subject to the provisions of this Bill. Looking ahead, I suggest that the facilities for loans should be made general throughout the country and should not be confined to those local authorities who care to exercise the powers. Finally, I notice that the provisions of the Bill do not apply in Northern Ireland where I should have thought they were needed more than anywhere else, having regard to the present position.
8.48 p.m.
VISCOUNT COLVILLE OF CULROSS: My Lords, my noble friend Lord Hawke asked whether the Bill would apply only to hotels and hoarding houses. I think he was answered by the noble Lord, Lord Jacques. Potentially, it would be able to be applied to all the premises set out in Section 1(2) of the 1971 Act. At present we are applying the Act to hotels and boarding houses. It is a painstaking, careful and important job. We want to get the skilled staff engaged in the inspection and the provision of advice and issuing of notices to concentrate their minds on this problem. When they have completed the hotel and boarding house scene, I see no reason why they should not turn their attention to other things covered by the 1971 Act. I do not think that will include offices, because these are dealt with under the Offices, Shops and Railway Premises Act and not the 1951 Act. If my noble friend Lord Hawke has problems about offices it will not be to this legislation that we shall be looking.

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The noble Lord, Lord Jacques, asked whether we intended to extend the scope of the Bill. The case was made for the Bill on the basis of what the hoteliers and boarding-house keepers said when they discovered how the Act was likely to apply to them. I have indicated that some charitable or similar organisations who provide sleeping accommodation—I have very much in mind hostels and accommodation of that sort, which is so valuable—may he brought into this in due course. Whether we go further and to what extent I would rather leave at this stage until we see how the fire authorities and their officers get on, and what sort of case can be made for making a further Order to extend the powers under the Bill. In the matter of places of entertainment, we shall have to see whether the people concerned cannot raise the money in the commercial market and have to go in the last resort to the local authority. That was the case made by the hoteliers and which we have accepted. I hope the noble Lord will allow us to take a pragmatic approach to this, deal with the types of premises bit by bit as they arise, and 'see what specific problems there are at the time when we take on the new ground in this campaign.
The noble Lord said that the public ought to have the same security throughout the country. I wholly agree with him. I think they will, because although at the moment the fire authorities are not applying the guidance pamphlet rigidly, it will be applied so that minimum standards are maintained across the whole country. Taking into account at the same time that the hotelier who receives a notice that something needs to be done to his hotel and does not do it is committing a criminal offence if he takes people in, I think we shall get minimum standards.
The noble Lord was suggesting that we are not sure where the money is coming from, and whether it is going to come differently from authorities in different places. This must he accepted as a risk. But if we look at the provision on housing, which I suspect is considered by this House to be equally important, in Section 36(2) of the 1971 Act we see again that local authorities, if they think fit, have this discretionary power. I have no doubt that there will be areas which are particularly dependent upon the
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holidaymaking trade or tourist trade and which, as the noble Lord said, will be anxious and willing to extend the loan facilities to people who are otherwise hard put to it in time to meet the requirements of the fire authorities.
As we move into the area of larger authorities responsible for a bigger area and interest we shall get fewer discrepancies of this sort. We shall have an area which consists solely of a seaside town, but it will take in the hinterland as well, and there will be less idiosyncrasy of this sort in the type of local authority concerned. It is perfectly true of the loans or grants available for house improvements that there is a patchwork, but I think the pressure is in the end brought upon those who may be rather reluctant, and with the enlargement of the local authority areas, I think it is probably right to assimilate this process for premises covered by this Bill to the process which Parliament has already passed in relation to housing in Section 36 of the Act.
I am not sure what else one can do. We have already told the local authorities that money they lend under this Bill will come from the key sector, and will not decrease the amount of money available to them from the central Exchequer for other purposes. So they have a guarantee that if they choose to use these powers it will not impinge upon other desirable developments which they wish to do. If you do not let the local authorities do it, but take away the discretion in this case, I am not sure what other machinery could be put in its place. If the noble Lord wishes to discuss this at a later stage of the Bill and put forward something else, of course I shall be prepared to consider it; but I cannot think at the moment of what else you do in order to ensure uniformity.
The noble Lord's last point was on Northern Ireland. At the moment we are not applying legislation to Northern Ireland in quite the same way. There are powers under which this kind of Bill could be made to cover Northern Ireland by Order in Council. I suspect that the noble Lord is right when he says that we need it; but whether under this Bill you will get structural alterations which will withstand the force of a bomb, I am not certain. I will draw the Northern Irish aspect to the attention of my noble friend Lord Windlesham and see whether he is

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attracted by it. We have powers to do it if we want to. My Lords, I thank the House for the welcome given to the Bill, and I hope that it will proceed swiftly so that people can begin to get their loans under it.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.

REPRESENTATION OF THE PEOPLE REGULATIONS 1973
8.55 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS rose to move, That the Representation of the People Regulations 1973, be approved. The noble Viscount said: My Lords, these Regulations are fairly limited in the change that they make to the Regulations of 1969, and indeed, before April 1 of next year the whole of the 1969 Regulations will need to be replaced by revised provisions taking account of the new arrangements for registration under the Local Government Act of last year. So the amending Regulations now before the House are designed only to meet the immediate needs in relation to the county and district elections this year, and to canvass the preparation of the electors' list which will take place next autumn. They apply only to England and Wales. Scotland has its own separate legislation with which these Regulations do not interfere.
There are three matters in the Regulations. The first is in Regulation 3, which provides for right honourable and honourable Members of another place to be given as of right a free copy of the register for their constituency. It was welcomed by them. I gather that in some cases the copy which might in the normal course of events come their way appeared to have got into other hands, and they were glad to find that they were going to get one under these provisions as of right. The second matter is in Regulations 5 and 7, which make technical amendments necessary to allow the existing arrangements for postal voting to apply for elections for the new counties and districts under the 1972 Local Government Act. We shall need those for the elections fairly soon. The third, and possibly the most important,
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matter is in Regulations 4 and 6, and indeed this is affected by the Schedule, too, because they deal with a different matter and will enable the new basis of jury service to come into operation when the next electoral register is published—the one compiled in October. They follow directly from that part of the Criminal Justice Act which we inserted in this House, the effect of which is, apart from certain specific exceptions, that all electors will be qualified to serve on a jury if they are between the ages of 18 and 65. These people will be liable to receive a jury summons, and the Crown Court will have to he satisfied that the person is otherwise qualified for jury service.
Under the 1972 Criminal Justice Act the registration officer will have to supply the Crown Court with copies of the register showing the people who are between these two ages. People under 18 are already shown on the published register, but in the case of people over 65 new arrangements are necessary, and the Act enables the registration officer to get information for this purpose. I think we discussed this in the House at the time. This is achieved by Regulation 4 and the new Form A prescribed in Regulation 6 and appearing in the Schedule to the Order. This form has a new column relating to jury service, and a tick is to be put in it if the elector is over 65. The registration officer then informs the Crown Court, by marking the copy of the register which he sends them, that all the electors who have been ticked are over 65. But those markings will appear only on the copies of the register sent to the Crown Court, and not on those on display for people to look at in the Post Office, or wherever they may be. Indeed, those latter registers will no longer contain the "J" sign—the jury marking at the moment—or any indication as to whether somebody is qualified for jury service.
We were—and I think this was widely understood at the time we were dealing with the Criminal Justice Act—anxious to spare people from 65 onwards from the worry that a jury summons might in some cases cause them, or indeed from the necessity to complete some questionaire and having to say whether they were over the age for jury service. But at the same time, in order to ensure that there was

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not wide knowledge of who in the community was elderly and perhaps not so able to defend themselves, and on the general grounds of privacy, we did not think it right to publish such things in the register. I can well appreciate that even under those arrangements there may be occasional difficulties when householders have to complete the jury service column and they may have to trespass slightly on the privacy of people in their household when putting down their age. But I should have thought this would cause less difficulty than the other problems. A householder will be able to use his discretion and he will know that anybody whose name is not ticked in the last column will be liable for jury service and will have to explain their way out of it. Of course, it is an offence to give false information in completing Form A, so I
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do not think that anybody is likely to put a tick falsely in the final column in order to try to relieve somebody of jury service.
That, then, is the scale of the Regulations. A copy of the register is available for each Member of another place; there is provision for postal voting at the new local elections, and a new Form A for completion of the electoral register to bring jury service within the provisions of the Criminal Justice Act of last year. My Lords, I beg to move.
Moved, That the Representation of the People Regulations 1973, be approved.—(Viscount Colville of Culross.)
On Question, Motion agreed to.
House adjourned at one minute past nine o'clock.