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Commons Chamber

Volume 958: debated on Monday 20 November 1978

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House Of Commons

Monday 20th November 1978

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Oral Answers To Questions

I remind the House once again that this is Question Time, not debating time.

Prices And Consumer Protection



asked the Secretary of State for Prices and Consumer Protection what has been the increase in the cost of living over the past 12 months as measured in the retail price index; and what estimated rate of increase over the next 12 months the Government are using for planning purposes.


asked the Secretary of State for Prices and Consumer Protection what is the latest rate of inflation.


asked the Secretary of State for Prices and Consumer Protection what is the latest calculated percentage rate of price inflation.


asked the Secretary of State for Prices and Consumer Protection what is the year-on-year rate of inflation.

The retail price index has increased by 7·8 per cent. in the 12 months up to October; the annual rate of increase has therefore been in the range 7 to 8 per cent. for the past seven months. The Government's forecast of the rate of inflation over the coming year was published on 15th November in the Treasury's economic progress report.

I am surprised that the right hon. Gentleman does not answer my Question. Is he aware that the Treasury view was that the retail price index would rise by between 8 and 9 per cent. over the next year? If the Government are successful in keeping earnings down to 5 per cent., does the right hon. Gentleman agree with me that that will mean a reduction in the standard of living of the average British citizen in the next year? When will the Government be honest enough to admit to this in public?

The hon. Gentleman should have done me the courtesy of reading the entire survey. The survey assumes that the 5 per cent. figure, which is certainly the Government's target, will be exceeded to a small degree. Were we able to keep overall settlements to 5 per cent. there would be a further reduction in the inflation rate, and that is what the survey says.

Will my right hon. Friend bear in mind that in this House the Conservative Party strongly opposed the strengthening of the Price Commission and that action can now come only from him? Will he ensure that the Price Commission is toughened up in the foreseeable future so that we put the fourth leg on the stool and take positive action on prices? My right hon. Friend knows as well as I do that our constituents will get no change out of the Tory Party on this subject.

I have no immediate plans to change the powers or activities of the Price Commission. There a some areas in which its powers might be sharpened and made more effective. Were that to come about, it would have to happen as part of a wider initiative on wages and prices in general. At present I have no plans to change the role or powers of the commission.

What effect will the increase in mortgage interest rates have on the retail price index? Why will the Government not accept at least part of the responsibility for this occurrence, bearing in mind the size of the public sector borrowing requirement?

There is a Question on this subject later on the Order Paper. The hon. Gentleman must take responsibility for denying the right of his hon. Friend to ask it. The simple statistical answer to the hon. Gentleman's supplementary question is a figure of 0.4 per cent. over six or seven months. I do not know how the hon. Gentleman has the gall, if that is the correct parliamentary expression, to talk about the PSBR, when he compares the success of the Labour Government in holding down that requirement with the utter failure of the Conservative Government to do so.

Is my right hon. Friend aware of the astronomic price of EEC grain compared to world prices? Will he undertake to take some action with the EEC authorities to see that the British housewife is able to take advantage of the current low price of world grain, rather than allow the Euro-fanatical press to blame the low wages of British bakery workers for the high price of bread?

My hon. Friend should not think of one European price in isolation. There is no doubt that over the range of food prices the EEC's common agricultural policy is now making a small contribution to increases in prices. None of us welcomes that. There are other ways in which the EEC is helping us. These matters have to be balanced one against another.

Will the Secretary of State take account of the fact that small and medium-sized businesses—particularly the latter—are having to bear in mind in their planning much higher wage awards than 5 per cent.? Will he give some estimate of what he thinks this will do to the retail price index in due course?

We have made no secret of our belief that a series of pay increases in excess of those described in the White Paper published in July would increase the rate of inflation. Because of that conclusion we are fighting hard, as part of our overall inflation strategy, to keep planned wage increases at or about that figure. I hope that the hon. Gentleman and the companies to which he refers will, unlike the leadership of the Opposition, join in supporting the Government in that endeavour.

Price Commission


asked the Secretary of State for Prices and Consumer Protection when he next expects to have an official meeting with the chairman of the Price Commission.

The chairman of the Price Commission and I meet frequently. No firm date has been set for our next meeting.

When the Secretary of State next meets the chairman of the Price Commission, will he discuss with him whether it is right for the Price Commission to do a lot of rather esoteric market surveys —at the taxpayers' expense, of course—such as the recent one on Royal Doulton fine china? Is this an essential ingredient in its examination of the retail price index?

I think that the hon. Gentleman does not understand the role of the Price Commission or the Bill against which he voted so assiduously for 36 hours last year. The Price Commission's task, as I hope to reveal in a later answer, is to prevent unjustifiable price increases. That requires the Price Commission to make specific investigations. That is what it did in the case to which the hon. Gentleman refers, and that is its proper statutory role.

Will my right hon. Friend reconsider his previous answer and, when he next meets the chairman of the Price Commission, tell him that he will remove the profit safeguard clause from the Price Commission Act 1977, which enables many large companies, such as Allied Breweries, Tate and Lyle, and Lever Brothers, to obtain the whole of the price increase for which they ask? Would not this undoubtedly strengthen the hand of the chairman of the Price Commission?

I have never made any secret of my reservations about the safeguard clauses, which were inserted originally, while the Price Commission ran for its first year or so, to convince industry that neither the Act nor the commission was likely to work in a way which was to its detriment. But removing the safeguards, or changing them after a year, or one and a half years, would involve some penalties in terms of industrial confidence. I think that they could be removed or altered only as part of a wider initiative about prices and wages. It would be very difficult to alter them in isolation, undesirable though they are in many ways.

The Minister has just mentioned unjustifiable price increases. When the Government have been considering the rate support grant, what level of settlement have they calculated for the local government employees, and what effect would that have had on the rates?

A specific question about the rate support grant must be addressed to my right hon. Friend the Secretary of State for the Environment, but I have already made clear—and so have the Chancellor of the Exchequer and the Prime Minister—that our planning figure is the one published on 15th November. That is the planning figure that we use for local authorities, as for everything else.

Does my right hon. Friend accept what has been said, that if we are to have any vestige of a wage policy we must have tighter price controls? Will he discuss with his Cabinet colleagues the need for public sector price increases to be contained within the guideline increases?

I hope that my hon. Friend does not diminish—indeed, I know that he does not—the success in terms of price stability that the nationalised industries have already achieved. Most of them have managed to postpone price increases for 12 months or more, and all of them have kept their increases to the minimum. But there are two ways of looking at nationalised industry prices. One is the way followed by the previous Government, which was to subsidise prices out of taxation, with all the economic disadvantage that that caused. The other is to keep down the increase to a minimum consistent with the effective operation of the industry. We follow the second route, and I am sure that it is a proper route to follow.

Will the Secretary of State return to the original question about the Price Commission's investigation into Royal Doulton, which was raised by my hon. Friend the Member for Harrow, East (Mr. Dykes), and confirm that he does not believe that the activities of the Price Commission will seriously reduce the rate of inflation? If that is so, what is the point of the Price Commission investigating markets, such as fine china or tableware, which have little bearing on the cost of living? What, indeed, is the point of a sectoral inquiry, as recommended? What will the right hon. Gentleman do about it?

The point of inquiries of this sort is to provide an assurance to the British consumer that prices are not increasing unreasonably. There may be occasions when a price increase is unavoidable because costs go up. There are others—the Price Commission has found a good many in the last 18 months—where a price increase can be avoided, and where—[Interruption.] The hon. Member for Gloucester (Mrs. Oppenheim) is rather late in starting her interruptions this afternoon. Where the Price Commission suspects that that might be the case it is its duty to investigate. Clearly. I shall not stop it from doing so, but will encourage it to do so whenever it thinks it is necessary.

National Association Of Citizens Advice Bureaux


asked the Secretary of State for Prices and Consumer Protection whether he will continue to provide support to the National Association of Citizens Advice Bureaux for the next three years, and at what level.

The Minister of State, Department of Prices and Consumer Protection
(Mr. John Fraser)

My Department expects to provide over £1·l25 million in the present financial year by way of support to the National Association of Citizens Advice Bureaux. We shall maintain our support at no less than this level until March 1981. The form of our support beyond that date will be dependent upon the outcome of a review of advice services generally, which will take particular account of any relevant findings of the Royal Commissions on Legal Services in England and Wales, and in Scotland.

In view of the uncertainty and loss of morale being caused by the lack of any fixed ideas on what the subsidy will be after 1981, would it not be possible, even within the framework of this review, to give an assurance to citizens advice bureaux that their invaluable work will continue to receive help at the same real level as they are getting at present?

I think that it would be difficult to do that so far ahead. Giving an assurance for as far ahead as we have done is a departure from normal practice. I emphasise that the grant is to the National Association of Citizens Advice Bureaux, and I hope that local authorities will supplement the figure by grants at local level. I understand that the hon. Gentleman's own citizens advice bureau in Rhyl receives a grant of only £65 a year from the county council.

I recognise the excellent work done by citizens advice bureaux, but does my hon. Friend agree that they cannot adequately discharge the functions of consumer protection which were disbanded by the Tory council in the West Midlands?

I agree. That is why, at the same time as we announced this grant, we announced a grant over the same period of £3¾ million per annum for consumer advice centres.

Will the Minister explain why it has taken so long to make the announcement that he has made today? There has been a great deal of uncertainty among people in the citizens advice bureaux who, as I am sure he will recognise, do tremendously valuable work for the community.

I think the hon. Gentleman will find that the announcement of this form of expenditure has been made rather in advance of other announcements about public expenditure. I hope that he welcomes that. I agree with him wholeheartedly about support for the CAB movement. I do not think that there has been any doubt whatsoever about the degree of my support for that movement in the time that I have been a Minister.

Does my hon. Friend recognise that citizens advice bureaux appreciate the assistance which has been given by the Government? Will he resist the constant demands to cut public expenditure and accept that the public expenditure given to the citizens advice bureaux is welcomed? Will he agree that hon. Members, in dealing with constituency problems, know that many of them can be and are dealt with admirably by citizens advice bureaux?

I have often made it clear that I think that citizens advice bureaux are a best buy. We calculate that the value for money that local authorities get is about four times as much as they spend.

Food Prices


asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in food prices since February 1974.

The Under-Secretary of State for Prices and Consumer Protection
(Mr. Robert Maclennan)

The food price index in mid-October had increased by 103·8 per cent. since February 1974. However, in the 12 months to October 1978 food prices rose by only 6·9 per cent. The level of the index has now remained virtually unchanged for the past five months.

Reverting to that part of the Minister's answer which was relevant to the Question on the Order Paper, may I ask whether he has read in The Guardian this morning a column entitled "Checking Labour's record"? Apparently Labour Weekly produces, with great fanfares, compliments to the Labour Party about its manifesto commitments being carried out. Will he explain —I am sure that it is a mere oversight—why little things such as jobs, the cost of living and food prices are not even mentioned by Labour Weekly? Could it be that the only carrying out to be done will be of pensioners and people living on fixed incomes, feet first, if we have much more Labour government?

I think that it was relevant to the hon. Member's Question to explain to him—and it sometimes takes time to explain these things to him—that the trend in food prices has been very encouraging in the past five months, and that indeed over a period of 12 months the increase in food prices in this country has been below that of France, the United States and Canada.

Is it not true that our present position within the EEC means that there is a fourfold engine of increase? First, we have lost control over our own price mechanism in relation to food. Secondly, there are the annual increases of the EEC. Thirdly, there is the removal of the transitional cushioning that we have had. Fourthly, there are increases in food prices in the form of taxation, which we are now paying in greater and greater quantities to finance the EEC.

My hon. Friend is right to emphasise that there are aspects of the common agricultural policy which the Government find wholly unacceptable and are seeking to renegotiate. No doubt he will take encouragement from the steps that were taken at the Bremen council in the summer, and which we hope will be followed up at the European Council in December, to give some substance to these proposals.

Advertising And Promotion Campaigns


asked the Secretary of State for Prices and Consumer Protection if he will initiate a study into advertising and promotion campaigns directed at children; and if he will take steps to curb this form of advertising.

My hon. Friend will be aware that I have asked the Advertising Association to consider the social implications of advertising—including advertising directed at particularly vulnerable groups like children. In addition, the Consumers' Association is studying sales promotion techniques and practices and giving particular attention to those directed at children.

Does my right hon. Friend accept that the present pre-Christmas television advertising campaign directed at children to pressurise their parents is in every way unacceptable? Does he agree that the attitude of the Independent Broadcasting Authority, which has refused to implement the Annan committee recommendation that advertisements in areas of interest to children should be broadcast after 9 p.m., is completely irresponsible?

Advertising on television is a matter for my right hon. Friend the Home Secretary, but I strongly share my hon. Friend's views that advertising campaigns intended to encourage children to bring pressure to bear on their families, sometimes families that are not remotely near being able to afford what has been advertised, is a squalid operation. It is for that reason that I have asked the association and other interested bodies to examine the matter very carefully.

If the right hon. Gentleman is talking about squalid operations in advertising, does he think that the phrase "Back to work with Labour" used in 1974 was honest, fair, decent and true? If he were chairman of the Advertising Standards Authority, what would he say if the advertisement were referred to him?

I have inquired as to what political advertisements have been referred to the authority. The only example was that of the Conservative Party pretending that an old lady was poor and destitute when she was neither.

Ford Motor Company


asked the Secretary of State for Prices and Consumer Protection if he has asked the Price Commission to investigate prices charged by the Ford Motor Company.

Under the Price Commission Act it is for the commission to determine which individual companies should be the subject of price investigations.

For once, does not the right hon. Gentleman think that it might be a good idea if the commission did investigate Ford? It might find that trying to stick to the Government's asinine policy has cost the company £400 million, which could be a justification for raising the prices of Ford motor cars.

Whether the commission investigates a price increase by Ford, were one to come along, is a matter for it, just as the rather arcane principles of economics that the hon. Gentleman holds are a matter for him.

If and when the commission looks at the Ford. Motor Company, will my right hon. Friend ask it to take into account the company's very responsible attitude in producing vehicles in this country since 1975 to run on low-lead petrol? The fact remains that the Government have not taken action to provide the low-lead petrol that Ford motor cars made in this country could use.

I know that my hon. Friend has a valuable point to make, as he and I both represent Birmingham, where the problem arises. But he knows very well, having made his point, that it is not one for me.

If the Confederation of British Industry's counter-sanctions to the Government's black list work, and Vauxhall, Chrysler and British Leyland refuse to fill the gap left by sanctions on Ford, is it the right hon. Gentleman's intention to ask Toyota and Datsun to fill the gap?

The hon. Gentleman asks me a question that includes at least three hypotheses, and on account of each I am entitled not to answer him. But I shall tell the hon. Gentleman that I do not believe that the CBI would be so irresponsible as to try to work against the Government's pay policy.

The Government's pay policy is in the interests of the economy as a whole. Despite some of the rather extreme things said at the CBI conference, if that is what it calls it, I believe that the leadership of the CBI will be a great deal more responsible than the hon. Gentleman gives it credit for.

On a point of order, Mr. Speaker. In view of the thoroughly irresponsible nature of the Secretary of State's answer, I give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

Pacemaker Machines


asked the Secretary of State for Prices and Consumer Protection if he will refer the sole supplier of pacemaker machines to the National Health Service to the Monopolies and Mergers Commission, in view of the increase of cost by 100 per cent.

I understand that the only United Kingdom manufacturer of pacemaker machines ceased production about a year ago, and that the National Health Service currently obtains pacemakers from 10 suppliers, all of them foreign. I am not aware that any of these suppliers has recently introduced price increases of the order of 100 per cent. Monopoly references are a matter for the Director General of Fair Trading, who would be willing to consider any information made available to him by my hon. Friend.

I readily respond, and shall let my hon. Friend have the necessary information. Is he aware that, while the NHS is one of the largest employers of labour in the country, and therefore its wages affect the cost of living, it is one of the largest purchasers of goods, and the suppliers seem to regard the NHS as the Government and think that they can milk it dry and charge excessive prices time after time? Therefore, will my hon. Friend take as much interest in the prices charged to the taxpayer for supplies to the NHS and nationalised industries as in prices to the private consumer?

Of course, the restraint of prices is important, whoever is the consumer. I must ask my hon. Friend to give me any information that he has about price profiteering, and I shall certainly consider that evidence very seriously.

While we are on the subject of the Monopolies and Mergers Commission, may I ask my hon. Friend whether he will consider referring to that body the attempt by commercial television to exercise a three-year monopoly on football?

The hon. Gentleman should put that Question on the Order Paper. This Question is about pacemakers.



asked the Secretary of State for Prices and Consumer Protection by how much retail prices have increased since February 1974.


asked the Secretary of State for Prices and Consumer Protection what has been the cumulative rate of inflation since February 1974 to the latest available date in West Germany, Japan, France, the United States of America and the United Kingdom, respectively.


asked the Secretary of State for Prices and Consumer Protection in which month prices will have doubled since February 1974, assuming that his forecast of 7·9 per cent. inflation at the end of the year is correct.

From February 1974 to the latest available date, price indices for West Germany, Japan, France, the United States of America and the United Kingdom have risen by 20·2 per cent., 47·3 per cent., 57·7 per cent., 40·9 per cent. and 97·7 per cent. respectively. The month to which the hon. Member for Derbyshire, South-East (Mr. Rost) refers will not, on the interpretation of the forecast which he has chosen, be reached this year.

On a point of order, Mr. Speaker. Is it possible for the Secretary of State to read out that answer more slowly so that we can take down all the figures?

In view of the figure for the United Kingdom, has the Secretary of State any special plans ready for the day when it reaches 100 per cent? Is he aware that this is the worst record of any Government since statistics were first kept? Is not this a much more valid point than the fact that he keeps trotting out, that we have had inflation of less than 10 per cent. for the past year?

When inflation was running at more than 10 per cent., the Opposition did not think that getting it down to single figures was unimportant. In those days I was told—I have all the quotations of the hon. Member for Gloucester (Mrs. Oppenheim)—that we would never do it and that if we did we would never stick to it. The figure of 7·8 per cent. has become unimportant only since this Government achieved it.

As for the overall increase in inflation, what the hon. Gentleman must bear in mind is that four and a half years ago we had in this country a condition of inflation that had been induced, and knowingly induced, by a Government who had allowed the money supply and the public sector borrowing requirement to get totally out of control. That is why this country has an inflation record different from the inflation records of our competitors.

Is it not a matter of great concern to the right hon. Gentleman that prices in Britain have gone up by four times as much as prices in West Germany and by about twice as much as prices in Japan, the United States and France since this Government came to power? As adverse external factors have affected all these countries, why has the situation been so much worse in Britain?

I explained it in answer to the previous supplementary question, but I shall gladly do it again. The simple fact is that those countries were fortunate enough not to have in 1973 and 1974 Governments who allowed the money supply and the public sector borrowing requirement to get out of control.

If I now ask the right hon. Gentleman to explain why prices have doubled under Labour, may we please be spared the usual list of miserable excuses, blaming everybody else and everything else except the real cause, which is the failure of Socialist policies?

I am astonished that the hon. Gentleman asks that question. The criticisms that I make are of the Conservative Government of 1973 and 1974. The faction of the hon. Gentleman's party that he claims to support is making exactly the same criticisms of the Conservative Government as I have made this afternoon.

Does my right hon. Friend agree that what is as important as the level of inflation in different countries at a certain point in time is the rate at which inflation is changing in those countries? Measured in those terms, Britain's present position compares favourably with that in the great bulk of Western European countries.

Our inflation rate is now appreciably lower than the overall inflation rate in countries belonging to the Organisation for Economic Co-operation and Development. The significant thing about that, to paraphrase my hon. Friend, is that the Opposition's reaction is not pleasure that the country is doing well but regret that they are doing so badly.

Is the right hon. Gentleman aware that consumers would not concur with him that this country is doing well? That is not what they find from their shopping baskets. When he trots out his moth-eaten alibis four and a half years after the Conservative Party was in power, and when he next boasts that the current rate of inflation is at or below that of our main competitors. will he bear in mind that the annual average increase in inflation under this Government is not 8 per cent. but 16 per cent.? That is the level that matters to consumers and that is the level that he must compare with other countries during this period.

The hon. Lady somewhat didactically refers to the appropriate figure for these matters. I think that her judgment on these matters will perhaps best be understood if I remind her that three months ago, when I told her that inflation would stay at or about 7·8 per cent., she described it as fraudulent, lying and a perversion of the truth. I think that puts her judgment in the proper perspective.

On a point of order, Mr. Speaker. Is it in order to ask the right hon. Gentleman to provide evidence of where I said this was a "lying" rate of inflation?

Further to that point of order, Mr. Speaker. The reference is Hansard, 12th June, column 633.

Order. I could not have been in the Chair, or I would have asked for the word to be withdrawn.

Will the Secretary of State tell us who was telling the truth in October 1974 when his predecessor the right hon. Member for Hertford and Stevenage (Mrs. Williams), in an election broadcast, expressed the view that there were no more price increases in the pipeline? Surely that suggested that no problem of inflation had been inherited from the previous Government at that time.

I do not believe that that was the suggestion. [HON. MEMBERS: "Oh."] Had it been so, it would manifestly have been wrong on the evidence. The hon. Gentleman must say—though this afternoon will probably not provide him with the opportunity—whether the fiscal conduct of the Conservative Government between 1973 and 1974 is a record of which he is proud. It is to that to which I refer, and it is to that to which I shall continue to refer.

Nationalised Industries (Consumer Protection)


asked the Secretary of State for Prices and Consumer Protection when he will introduce legislation to strengthen the consumer voice in relation to nationalised industries.

I welcome my hon. Friend's answer and the commitment in the Queen's Speech. Will the strengthening of the consumer voice lead to a bringing together of the consultative committees? Does my hon. Friend agree that to have different consultative committees for the different energy industries does not meet the needs of consumers and that there could be one committee to cover the gas, electricity, coal and oil industries?

That point was considered, but, as my hon. Friend will know, the Government intend to implement the provisions of the White Paper on the nationalised industries, which was published last March. We intend to set up, on a statutory basis, the electricity consumer council. That at least will give electricity consumers a voice at national level.

Does the Minister's reply to the Question mean that whereas the general provision for consumer protection is adequate for the private sector his friends on the nationalised industries' boards are such rogues, vagabonds and con men that their customers need added individual and strengthened watchdogs.

I do not think that the Government would ever take the view that the protection afforded to consumers by private sector industries could not be improved. The protection for consumers afforded by nationalised industries is a somewhat different matter. Most of these industries are monopolistic. Therefore, they require the external scrutiny provided by these bodies.

Will the Minister strengthen the voice of the consumer in the nationalised industries in regard to independent television, because it appears that there is the danger of a monopoly in the coverage of football? Will he tell his right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell)—

Order. The hon. Gentleman is not entitled to ask Ministers to pass messages. He can ask him only about matters for which he is responsible.

Will my hon. Friend disavow the comment of my right hon. Friend the Member for Small Heath that it is acceptable that consumers should be cut down by 50 per cent. on their viewing of football?

I do not wish to go into a textual criticism of what my hon. Friend said. However, I understand that the Director General of Fair Trading is making inquiries about this reported agreement in the context of restrictive trade practices legislation.

Is the Minister aware that the Government's creature—the Price Commission—has come to the conclusion that the best way to improve prices as well as the protection of the consumer is to increase competition? What plans has he for increasing competition in the public sector of industry, because that, by far, would be the greatest help that he could ever give to consumers?

The Government's consideration of competition policy in general has been published in a Green Paper, which no doubt the hon. Gentleman has studied. on which we shall be glad to receive representations. But considerations affecting nationwide nationalised industries are somewhat different and it is appropriate to have external checks, which cannot be of the same kind as those provided by competition.

Price Commission (Cost)


asked the Secretary of State for Prices and Consumer Protection what is the estimated cost of the Price Commission during the year ending 5th April 1979; and what proposals he has for reducing that cost.

The 1978–79 estimate provision is approximately £7·3 million. Expenditure on the commission is kept to the minimum compatible with the need for it to discharge its functions efficiently.

Bearing in mind that retail prices have more than doubled since this Administration came into office, is the Secretary of State satisfied that the Price Commission is worth £7·3 million a year? Is he aware that many Opposition Members believe that the public interest would best be served by the total abolition of the Price Commission?

I am perfectly well aware of that. My answer to the question is: yes, I am satisfied that it is necessary and that it is doing a good job.

Is the Secretary of State satisfied with the mechanisms for monitoring the prices of overseas manufactures which may be dumped in the United Kingdom? Is he aware of reports today that Italian-manufactured washing machines may be threatening the expansion of companies in Wales and thereby losing jobs?

In considering these matters, will the Secretary of State arrange to have published a list of those occasions on which the Tory Opposition have either opposed or failed to support any legislation to control prices?

The Conservative Opposition's record is well known. They opposed the Price Commission Bill. They have opposed every initiative that we have taken on this subject. Their entire role has been to complain on the basis of the selective use of figures. I believe that the opinion polls demonstrate that the public have rumbled them.

Is the right hon. Gentleman aware that the Price Commission's claim to have prevented about £121 million of price increases during its first year amounts to a reduction in the retail price index of about 0·1 per cent? If one deducts from that the millions of pounds that it has cost industry and the cost of the commission itself, that figure is probably 0·075 per cent. How can he claim that such a derisory figure is of any significance to consumers or that the whole paraphernalia of the Price Commission and the difficulties and uncertainties that are caused to industry warrant that kind of expenditure?

The hon. Lady has confirmed what we all suspected on the Second Reading of the Price Commission Bill—that she does not understand the purpose of the Price Commission. The commission is intended to operate on a selective basis. Its role is to prevent unnecessary price increases, not to act as an across-the-board check. It has carried out that role with great distinction. I believe that it should go on, if necessary changing its powers by making them more effective rather than reducing them.

Inflation (Price Control)


asked the Secretary of State for Prices and Consumer Protection what is his estimate of the contribution of price control to the containment of inflation, as compared with that of income restraint.


asked the Secretary of State for Prices and Consumer Protection what effect on the retail price index the Price Commission's interventions have had over the past year.

The main causes of the substantial improvement in the rate of inflation have been the moderate level of pay settlements and the Government's monetary and economic policies. The exercise of the Price Commission's powers results in a modification and postponement of many price rises and ensures that unjustifiable price increases are prevented.

Does my right hon. Friend agree that in a mixed economy it is difficult to operate income restraint equitably? Will he therefore ignore the blandishments of the Opposition and place greater emphasis upon price restraint? Will he advise his right hon. Friend the Prime Minister—or, if he cannot do that, advise me and I will advise him—that if his three-legged stool is not to collapse it must be propped up by a further leg of price restraint?

I understand the great attraction in calling for more price restraint, but those who ask for it rarely define the form in which it should come about. I am wholeheartedly opposed to an overall price freeze because I think that it would do a great deal of damage to industry and to employment. The most effective form of prices policy is the selective one operated by the Price Commission. With the exception of the safeguard clauses, which cause some problems, we have a good prices policy which is being operated wisely and in a determined way.

Does not the Secretary of State yet realise that the most effective control of prices lies in competition and that this affects prices more than any of the £7 million a year that the commission has been spending? As the right hon. Gentleman apparently begins to see, the actions of the Price Commission in putting up costs and putting down the profitability of private industry affect investment and, therefore, jobs. That is what results not just from a price freeze but from the actions of the Price Commission.

I do not, of course, agree with the second part of the hon. Gentleman's supplementary question and there is no evidence to support what he has said. On his first point, the hon. Gentleman may have noticed that six months ago I issued a Green Paper outlining ways in which competition in British industry could be extended and made more effective. I hope that we shall have support for that Green Paper from the Conservative Party. We have not had any support yet. All we have had is criticism, particularly from the CBI.

Does my right hon. Friend agree that the two-thirds or more of the people of this country who emphatically support the Government's counter-inflation policy believe that price restraint is easier to achieve if incomes are not dominated only by the casual brutalities of the market?

In view of the Secretary of State's earlier answer, when he attacked the previous Tory Administration, will he concede that he is now saying that the sole cause of inflation is an increase in the money supply and also concede that as a result of the 16 per cent. increase in M3 up to last April it is certain that inflation will be well into double figures by the end of next year?

The convoy cannot always travel at the speed of the slowest ship. I listed in a previous answer all the causes of inflation—not just that one—and I do not propose to list them again. I have already referred the House to the Treasury forecast for inflation next year and to the failure of amateur forecasters on the Conservative Benches. I have no reason to believe that we shall not have a successful year of counter-inflation policy in 1979.

Will my right hon. Friend consider issuing a White Paper setting out the efficacious methods that the Government could exercise to restrain prices in a free market economy, because that might go a long way towards getting acceptance of an incomes policy?

I suspect that my hon. Friend is tempted by what I regard as the chimera of an overall prices freeze, which I do not believe would be in the interests of the economy or our policy for reducing the level of unemployment. The effective way for us to control prices—if control is the right word—in the sort of economy that we manage is, first, to run the right sort of economic policies, which we have been doing, and, secondly, to have a policy of selective restraint, which is organised by the Price Commission. That is what we must continue to do.

Will the Secretary of State now answer the Question asked by my hon. Friend the Member for Cardiff, North (Mr. Grist) and tell the House clearly and with absolute candour what effect in precise numerical terms the Price Commission's interventions have had on the retail price index in the past 12 months?

It may be that the calculation of the hon. Member for Gloucester (Mrs. Oppenheim) was, for once, correct. That may be the figure. I have never made that calculaton.

Because it implies a role for the Price Commission that I have never assigned to it. The commission is not an agency for keeping the RPI down. It is an agency for preventing individual, unjustifiable price increases, and that is what it has done.

Scottish Universal Investment Trust


asked the Secretary of State for Prices and Consumer Protection whether he has had communication with the Monopolies and Mergers Commission since his referral to it of the proposed takeover of Scottish Universal Investment Trust by Lonrho Limited; and if he will make a statement.

The conduct of a murder investigation—I mean a merger investigation—is a matter for the Monopolies and Mergers Commission and neither I nor my officials have had any communication with it about the substance of this investigation. I have, however, agreed to a request from the commission to extend until 11th February 1979 the time allowed for submitting its report.

Will my hon. Friend remind the Monopolies and Mergers Commission of the concern of the trade union movement in Scotland about the possibility of thousands of jobs being taken over and controlled by a huge multinational outfit such as Lonrho, headed by Tiny Rowland, a man whose sole aim is to maximise his own profits by exploiting workers—whether in Southern Africa or in Scotland?

It has long been a tradition that the Monopolies and Mergers Commission acts on an investigation pith independence and impartiality. I would be breaking that tradition if I made any reflection on the parties concerned. If parties have evidence to offer to the commission, I hope that they will do so directly. Obviously the commission will take them into account.

Is the Minister aware that his use of the word "murder" was perhaps not so odd in relation to Lonrho as it might at first have appeared, because his right hon. Friend is doing his best to outdo the Foreign Secretary, who also has his knife into this company? When will the Government stop this mean and spiteful vendetta against someone who is merely trying to run his company properly?

There is probably no depth to which the hon. Gentleman is not capable of sinking. I made a slip of the tongue. I preserve my absolute impartiality in this matter and make no reflection on the company in the context of this reference.

Retail Prices

asked the Secretary of State for Prices and Consumer Protection what is his current forecast of the date on which the 12-month rate of increase in retail prices will rise above 10 per cent.

There is no reason why the 12-month rate of increase in retail prices should return to double figures if pay settlements are consistent with the policy outlined in the White Paper "Winning the Battle Against Inflation".

If things should start to go wrong this winter—and there are fair signs that they might—may we assume that the Secretary of State will advise the Prime Minister to delay the General Election still further and, if so, will he be offering advice on which parliamentary groups to buy off this time and how?

I am prepared to treat that supplementary question as if it were sensible and tell the hon. Gentleman that I do not believe that the forebodings implicit in it—forebodings for us, hopes for the hon. Gentleman—will come about. I believe that we shall have a sensible pay round and that the inflation rate will continue at or about the present level, give or take a percentage, for some months ahead. I say that without any doubt because of my belief in the common sense and public spiritedness of our trade unions.

In my right hon. Friend's attempt to contain the increase in retail prices, will his Department have another look at recent changes in petrol prices? Is it not a nonsense that a motorist buying 10 gallons of petrol can get up to £1 difference in his change at various pumps? As we are supposed to have some influence with British Petroleum, can we not have a BP pool at a low price?

I do not believe that petrol prices would be best held down by such a centralised scheme. The reason why petrol prices did not go up six months ago when it was feared that they would, on the last occasion that it was threatened that discounts would be removed, was that the companies continued to compete against each other. I want to see a continuation of that competition and Conservative Members who regard that as a major revelation have either not read my Green Paper on competition or were not here when I referred to it four Questions ago.

How much more will prices go up because of the Government's failure to reach agreement with the TUC? If the answer is that they will not go up at all, why did the Government try to reach an agreement in the first place?

I made a long speech on this subject on Saturday evening and I propose to punish the hon. Gentleman by sending him a copy. The short answer to his question is that I do not believe that there will be a significant difference in the level of wage settlements or in their effect on the RPI as a result of the TUC's eventual inability to subscribe to that document, but I believe that for the economic success of this country there needs to be a close working partnership between the TUC and the Government. The reason why I wanted that document to be endorsed by both parties was to give that close working relationship more form and detailed application.

I trust that my right hon. Friend will not send his speech to me as a punishment, because I have a feeling that I have read it before. Perhaps he would like to say a few words about the chairman of the TUC, who has argued that we ought to keep to the 5 per cent., whereas his union on the same day put in a claim for 25 per cent. Would that be a rapacious claim or a moderate claim? Is it not clear to my right hon. Friend, and to all his hon. Friends on the Front Bench that the 5 per cent. limit has now been broken and that we ought to get back to a sensible position of free collective bargaining, and at the same time—this I do accept—a recognition that the claims ought to be kept within reasonable bounds?

That question is clearly not for me, but I would say one thing about it. The point that my hon. Friend makes demonstrates the consistency of the attitude of the Post Office workers union. The point that has been made throughout is that, while many trade unions may want to initiate pay increases consistent with our inflation target, once one trade union begins to break the line it becomes almost impossible for others not to do the same. I think that the point that was made upstairs at a lunch last week is wholly consistent with all that that gentleman has said in the past.

Small Firms (Inner City Areas)


asked the Chancellor of the Duchy of Lancaster whether, in his study of the problems of small firms, he has come to any conclusions about the special problems of small firms, including producer co-operatives, which try to start up in inner city areas.

On a point of order, Mr. Speaker. Questions have been tabled to the Chancellor of the Duchy of Lancaster. May we be told why he is not here to answer them, because this situation is totally unacceptable?

Perhaps it might help the House if I mention that the Chancellor of the Duchy of Lancaster was asked at short notice to lead a delegation to a conference being held in Madrid. He is speaking on the subject of London as an international finance centre and the services which the City has to offer. He will have an exchange of views at the conference with members of the Spanish Government, among others.

I have been asked to reply to the Question.

Further to my point of order, Mr. Speaker. The Chancellor of the Duchy of Lancaster is, surely, responsible to this House, not to the Spanish Government. If he has an engagement to answer Questions in the House, should he not be here to do so? If the right hon. Gentleman were ill or indisposed, the House would be the first to forgive him. But it is surely in contempt of the traditions of this House for the right hon. Gentleman to take on another engagement when he is scheduled to answer Questions in the House.

I usually take points of order at the end of Question Time. I really have nothing to say in reply to the hon. Gentleman, because I am not responsible for Ministers.

Further to that point of order, Mr. Speaker. Is the Chancellor of the Duchy of Lancaster representing the Government at Madrid? That was not made clear.

Certainly. My right hon. Friend the Chancellor of the Duchy of Lancaster is doing what many of us consider to be a valuable task in asserting the role of our invisible exports, on which we are dependent. I should have thought that Conservative Members would be the first to realise the task which my right hon. Friend has taken upon himself, as well as his ability to undertake these tasks. Perhaps I may now reply to Question No. 40.

Order. Question Time will be ruined. However, I call the hon. Member to raise his point of order.

Surely if the Chancellor of the Duchy of Lancaster is not here Question Time is ruined. Would it not have been more tactful if he had sent the right hon. Member for Birkenhead (Mr. Dell), who appears to know a little bit more about banking? He could have represented the Government very well and the Chancellor of the Duchy of Lancaster could have remained here.

Further to that point of order, Mr. Speaker. Surely this is even more unacceptable, bearing in mind that the Chancellor of the Duchy of Lancaster has been invited to answer Questions only once this Session before Christmas—and that is today. He normally appears only every five or six weeks under the ordinary timetable, and that probably gives him only four or five occasions throughout the whole of a Parliamentary year on which to answer Questions. Surely it is totally unacceptable that he should have accepted an engagement in Spain on the one occasion when he ought to be here.

I have no doubt that the protests which have been made by hon. Members under the guise of points of order will he taken notice of.

On a point of order, Mr. Speaker. In order to help things along, may we have an assurance from the Financial Secretary to the Treasury that when the Chancellor of the Duchy of Lancaster returns to this country he will come to the House and make an apology for his behaviour?

I have been asked to reply to Question No. 40. The Government's Inner Urban Areas Act gives local authorities a range of new powers to help small and new businesses in inner city areas, and it contains specific provisions enabling local authorities to give grants and loans for the establishment of common ownership and co-operative enterprises. If my hon. Friend has any suggestions for further help in this area, my right hon. Friend the Chancellor of the Duchy of Lancaster will be happy to consider them.

I am grateful for that answer, but I am sorry that the Chancellor of the Duchy of Lancaster is concerned elsewhere with London as a centre of finance. I am concerned with London as a centre of employment. May I ask the Chancellor of the Duchy of Lancaster to press his colleagues in the Government —including the Financial Secretary to the Treasury—who share responsibility for small firms to ensure that a substantial proportion of the funds which are available for helping small firms are earmarked for workers' co-operatives, which experience has shown are particularly suited to the needs and conditions of inner city areas such as London? I hope that that message will be noted.

I have no doubt that the tasks which can be undertaken by cooperatives in this area are very considerable. As my hon. Friend will know, because he had a part to play in it, the Co-operative Development Agency Act has some part to play in this matter and is able to offer some assistance. Under the Inner Urban Areas Act, specific help for co-operatives can be made available by the district and county authorities which make use of this source of assistance.

Will the Minister convey to the Chancellor of the Duchy of Lancaster the feeling in some quarters that there is too much of a doll's house atmosphere about these proposals for the inner cities, in that the most dynamic business men are asking "What will happen when our small concerns grow big?" At the moment their big fear is that they will lose these concessions once they flourish and develop.

I am happy to learn that the hon. Gentleman considers that the actions that we have taken will lead to small firms becoming large ones. Clearly, when such firms increase in size the assistance that they require is less. Our task is to help firms to start and to grow. Thereafter, the assistance which may be available to them will be provided in conjunction with the assistance which is made to industry generally.

Will my right hon. Friend confirm that the Co-operative Development Agency has power to monitor and assist in the development of local schemes, which will help in this regard? Will he undertake to write to my hon. Friend, myself and other hon. Members who are interested to make quite clear the difference between the grant which he has mentioned and urban aid, because most of us are receiving applications under the two names?

I shall certainly write to my hon. Friend. There are these two sources of finance and assistance and I hope that use will be made of both of them.

Is the right hon. Gentleman aware that we welcome the role that producer co-operatives can have in recreating the employment base for the inner city areas? In that context, will he join me in welcoming the private initiative which has led to the creation of job ownership, with access to private bank finance? Will he accept that the episode of the Kirkby Manufacturing and Engineering Workers' Co-operative, which was inspired by the zeal of the Secretary of State for Energy when he was at the Department of Industry, is precisely the wrong way of setting about promoting industrial co-operatives and that that particular episode gives the idea a bad name?

While offering my good wishes to the hon. Gentleman on his return to the Opposition Front Bench, I must say that he is not starting off in the best possible way. The Kirkby manufacturing enterprise hardly qualifies as a small firm. If the hon. Gentleman is to deal with the problems of small firms he will have to pinpoint the particular areas of his responsibility rather more closely than that.

Chancellor Of The Duchy Of Lancaster


asked the Chancellor of the Duchy of Lancaster whether, as economic adviser to the Cabinet, he intends to visit other EEC capitals in the weeks immediately ahead.

I have been asked to reply.

My right hon. Friend has no plans to do so at present, but he hopes that his colleagues will not find his advice any less acceptable on that account.

Fortified by his visit to Madrid, what advice is the Chancellor of the Duchy giving to the Government about joining the European monetary system? Does he think that it would be to Britain's benefit to join from day1 and then argue as a participant about the technical details?

The advice that my right hon. Friend is giving the Government is to the effect that as long as the European monetary system can be lasting and effective, and can promote stability and not be just a wider version of the snake, there are certain advantages. These are matters yet to be discussed, and I am sure that my right hon. Friend will play a prominent part in such discussions.

When the Chancellor of the Duchy discusses these matters, will he reflect on the fact that on the last occasion when we were invited to join a great European enterprise and failed to do so we ended up joining later and paying a much higher price? Will he recognise that as the European train leaves this particular station of monetary reform it must be wrong for the United Kingdom once again to be left behind, only to have to catch up later and pay very highly for the delay?

It is important that the European monetary system, if and when it starts, should be seen to be successful and lasting. A great deal of damage could be clone if we do not have the right conditions for entry or for starting it. Our attention must be directed towards those points.

Questions To Ministers

On a point of order, Mr. Speaker. It will be within the recollection of the House that the Secretary of State for Prices and Consumer Protection quoted to the House the Hansard record. I am raising this point of order because I believe that all Members will regard the integrity of the Hansard record as being of prime importance —as I am sure you do, too, Mr. Speaker.

The Secretary of State said that my hon. Friend the Member for Gloucester (Mrs. Oppenheim), speaking from the Front Bench, accused him of making "lying" predictions about the rate of inflation. I was very surprised that any occupant of the Chair would have allowed such a statement to be made in the House. Therefore, I obtained the relevant copy of Hansard and I found that what it said was rather different from what the Secretary of State averred.

My hon. Friend was not referring to the right hon. Gentleman or to his period in office. She said:
"Do they think that the people of this country have forgotten this Government's lies about the rate of inflation before the last election"—[Official Report, 12th June 1978; Vol. 951, c. 633.]
In short, she was referring to a period before this Government were formed and before the right hon. Gentleman occupied his present station. I do not ask him for one moment to agree with my hon. Friend —that would be too much—but I do ask him to correct the record of what he attributed to her this afternoon.

Further to that point of order, Mr. Speaker. I speak from memory but, of course, I looked up the quotation this morning. There is no doubt at all that included in the passage was a sentence which the hon. Member did not read out just now. That was the invitation from the hon. Lady to me to

"tell the truth for once."—[Official Report, 12th June, 1978; Vol. 951, c. 633.]
I do not know how that can be interpreted other than as a suggestion that on other occasions I lied.

On a point of order, Mr. Speaker. Have you received a request from the Attorney-General to give a reply to Written Question No. 246 on the Order Paper, especially in view of public interest arising from the letter of the Director of Public Prosecutions to The Times on Saturday, dealing with immunity from prosecution for witnesses where the DPP indicated that the Attorney-General had handed over some of his statutory responsibilities to him?

I have received no request from the Attorney-General to give an oral reply to that Question.

On a point of order, Mr. Speaker. I rise on the point of order which was raised earlier regarding the absence of the Chancellor of the Duchy of Lancaster. We might have understood if the Chancellor of the Duchy of Lancaster had been in a European capital today, because we are accustomed to Ministers being absent for that reason. Since he is in the capital of an applicant country, could we have a statement from the Financial Secretary to the Treasury as to the circumstances in which Ministers, particularly those who answer Questions very infrequently in the House, give priority to absences abroad? In this case, the absence with the Spanish Government has been given priority over and above the duty of the Chancellor of the Duchy of Lancaster to reply to Questions in this House.

Order. I hope that the House will not pursue this point of order. There is no valid point of order for me in it. Which Ministry answers is not my responsibility. I will not take any further points of order about the absence of the Minister today. Of course, there may be other points of order.

On a separate point of order, Mr. Speaker. Is it not a fact that in the recent courtesies of the House points of order are left until after the end of Question Time? Is that not your guidance to the House? Therefore, is it not an abuse of Back Benchers' time when time is taken from Questions by points of order which could have been taken at the end?

Order. In this case the blame is mine. I should have asked the hon. Member who first raised the point of order to wait until after Question Time. Many hon. Members feel, on the spur of the moment, that they must rise to a point of order. I should have requested them to wait. I shall do so in future.

On a point of order, Mr. Speaker. Will you give some guidance to assist us? Some of our Euro-fanatics seem to be describing countries such as Spain as "non-European".

On another aspect of that other point of order, Mr. Speaker. I do not want to strain your patience, but I came to the House specially to hear the answer to Question No. 40. It is a pleasure always to welcome the Chancellor of the Duchy of Lancaster if only for 10 minutes once or twice a year. Could we in future be advised beforehand if a Cabinet Minister has to be absent, so that we can adjust our own attendance accordingly?

Ambulance Service (West Midlands)

( by Private Notice)

asked the Secretary of State for Social Services if he will make a statement on the breakdown of ambulance services in Birmingham and the West Midlands.

I should like at the outset to allay understandable public concern by saying that, according to information we have received this morning from the West Midlands regional ambulance service, an emergency ambulance service is being maintained throughout the West Midlands area. The dispute, which affects Birmingham, Coventry, Solihull, Sandwell, Dudley, Wolverhampton and Walsall, has, however, worsened over the weekend.

Normally there are about 200 ambulances available of which between 38 and 43 are on emergency standby. I understand that there are 52 vehicles on station today and that, as I have said, this is sufficient to maintain an emergency service.

No out-patients are being conveyed by ambulance but all 999 calls are being answered, although in some circumstances patients may be asked to make their own way to hospital. I also understand that the number of 999 calls this morning was considerably lower than usual because of the help being given by the police and the commendable restraint being shown by GPs and the general public.

Officers of the regional health authority are currently discussing with their counterparts in the area health authority ways of increasing the service to provide some facilities for out-patients.

This complex dispute centres on the issue of anomalies and bonuses payable following the transfer of the service from local authorities in 1974. Since that time, ambulance men on routine calls have refused to cross local authority boundaries. In the last few weeks the West Midlands men have stepped up their action by refusing to cross boundaries even on 999 calls, by refusing to use radios when on the road and finally, last Thursday, by refusing to refuel their ambulances. Instances were reported of ambulances running out of fuel while on the road.

On Friday, the regional administrator, following consultations with the chairman of the RHA, decided that the ambulance service could not continue under such conditions and he therefore required each man to give an undertaking to work normally or be suspended. By this morning, 400 men out of a total of 650 had been suspended.

I undertand that the ambulance men who have been suspended are to hold a mass meeting today. Hon. Members may be assured that we shall keep very closely in touch with the developing situation.

I point out, without disrespect to my hon. Friend the Under-Secretary of State, that I asked this Question of my right hon. Friend the Secretary of State.

Will my hon. Friend tell us whether any consultation took place with the Department on Friday before these men were suspended? He has confirmed that discussion and consultation took place in the West Midlands. Will he confirm that normal working for these ambulance men means working as they did before April 1974, four and half years ago? Will he tell us why no action has been taken by any of the Ministers in the Department in four and a half years to get this matter solved? The answer that my hon. Friend has given today is not good enough.

I answered my hon. Friend's Question, which was about emergency services. I hope that I did my best. I must make clear to my hon. Friend and the House—and I am getting tired of having to make it clear—that I am responsible for this aspect of industrial relations in the National Health Service. If my hon. Friend feels that I am not up to the job, fair enough—he can make his own representations. As long as I am responsible, however, I shall continue to come to the Dispatch Box and answer Questions for which I have ministerial responsibility. My right hon. Friend knows the contents of the answer.

My hon. Friend asked about consultation with the Department. We were notified on Friday of the intention of the regional health authority to undertake the action that it has taken. I remind my hon. Friend and the House that arrangements for the provision of ambulance services are the responsibility of the regional health authority and not of Ministers, who are in close touch, of course, with members of that authority.

This is a complex dispute. My hon. Friend is right in saying that it has been continued since 1974. It is not a dispute that will be easily resolved. I do not wish to take up the time of the House by giving a very long supplementary answer on the ins and outs of the dispute, but I think that the point could be well met in a Written Answer for the benefit of the hon. Members concerned.

Is the hon. Gentleman aware that great credit is due to the police and the St. John Ambulance Brigade and Red Cross volunteers who are striving to deal with crisis cases? But does he realise that the dispute about pay anomalies has lasted for more than four years? It cannot be allowed to drag on, or there could be serious loss of life. Would it not help if the TUC intervened to try to bring some quicker solution to the problem?

I appreciate what the hon. Gentleman has said about the services being given by voluntary organisations. We are much indebted to them for their efforts during this difficult period. I must make clear that this is not a national dispute. There is a Whitley Council agreement on incentive schemes for ambulance men, and ambulance authorities throughout the country are trying to ensure that ambulance men who have transfer conditions from local government under the Health Service reorganisation in 1974 are transferred on to the new incentive scheme. However, the dispute is about the fact that many of the men, particularly in the West Midlands, do not want to be transferred to the new incentive scheme until the anomalies to which I have referred have been brought out. That is what the dispute is about.

Order. As far as I can see, every hon. Member who has got up, except those on the Front Benches, has a constituency interest. If the questions are brief, I hope to call them all.

My hon. Friend has drawn attention pointedly to the fact that he is responsible for industrial relations in the Department. That being the case, although this matter is one for the regional health authority, would he not agree that in exercising his responsibility, and since I raised this matter some two years ago on an individual case, he might well have taken an initiative himself before now? Will he now consider taking such an initiative?

My hon. Friend is right. This is a matter primarily for the West Midlands regional health authority and the regional ambulance service. My Department is now fully involved with discussions going on with officials of the authority, and I hope that we shall come to terms with them shortly about a means of solving this very difficult dispute.

Does the hon. Gentleman understand that his statement will not allay fears in the West Midlands? Does he further understand that in a constituency like mine the ambulance service is totally dependent now on volunteers and the police? Does he also understand that, even now, strenuous new efforts are being made to widen the dispute and that Mr. Adamson, of the National Union of Public Employees, has said this morning that the dispute is essentially about the right to take this kind of industrial action? Will the hon. Gentleman say, therefore, that it is not justifiable to take this kind of industrial action, which places at risk the lives of patients?

My right hon. Friend the Secretary of State has already, on industrial disputes, deplored the taking of action which places people's lives at risk or in peril in any way, and I have nothing to add to what he has said. I agree with the hon. Gentleman's comments about the use of voluntary services, and I hope that we shall not be relying on them for very long.

Would not my hon. Friend agree that this is virtually a re-run of the firemen's dispute, which was settled in a remarkably short time once the firemen had taken direct action? He has bravely taken responsibility for the conduct of industrial relations in the National Health Service. The fact that direct action has had to be taken after such a very long time in which this dispute has festered surely indicates very significant managerial incompetence in the conduct of industrial relations in the National Health Service.

I think the fact is that this has been an intractable problem. I must correct my hon. Friend on one thing. This is not direct action. This has been indirect action, since the men, by taking their indirect action, were still at work and getting full pay.

Is the hon. Gentleman aware that the matters about which he has been speaking have not been the only things to cause anger to ambulance men in the West Midlands over a long period? Is he aware that they are also angry at continually being treated as the poor relations of the emergency services in relation to pension rights, long-service awards and their liability to prosecution for traffic infringements? Will he also take those matters into consideration with a great deal more vigour than he has done hitherto?

I am well aware of the points that the hon. Gentleman has made, but they are not pertinent to this dispute.

My hon. Friend said in reply to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) that he did not wish to take up the time of the House by reading a long supplementary answer. Is he aware that in the opinion of many of us that was tantamount to declining to give any facts about the situation to the House of Commons? Will he accept that the action which has been taken in suspending these men simply escalates the difficulty and does nothing to secure an ambulance service for our constituents? Will he accept the responsibility of resolving this difficulty or ensuring that it is resolved?

My hon. Friend has asked for information, and she shall have it. I hope that she will pay note to what I have to say.

The transferred ambulance men—we are talking about people transferred from the local authorities to the health authorities in 1974—had certain protected rights to retain ex-local authority conditions of service. They also retained earnings from inherited working practices. This has led to different rates of pay for the same work. The ambulance men's Whitley Council agreed a national incentive scheme under which it was intended that a common level of bonus would be achieved to replace the differences in earnings. Pay policy prevented this until 1977.

Phase 3 of the Government's pay policy gave us the opportunity to make progress by implementing the Department's bonus scheme. Accordingly, we have been attempting to negotiate with the ambulance men's trade union since April 1978. The main union concerned is adamant that the buying out of anomalies must be treated as a separate issue from the bonus scheme, on which it will negotiate only after the anomalies have been removed. The management's latest offer, in October of this year, was a generous interim payment, to be absorbed by the phased introduction of the Department's bonus scheme, commencing within six months. That was rejected by the men.

After this strike is settled, may I ask the Minister to give careful consideration to the contracts of employment that are entered into with those who carry out essential services within the Health Service? Will he consider requiring all those who carry out those essential services within the Health Service to agree to a "no strike" clause being inserted in their contracts of employment?

We already have sufficient trouble in the National Health Service without going into the suggestion contained in the latter part of the hon. Gentleman's supplementary question as an attempted solution to our problem. I take note of what he said in the first part of his supplementary question. Terms and conditions of employment are obviously something about which management must always be concerned.

Does not my hon. Friend accept that, however complex the issue may be, four years-plus is too long? Would he not agree that he seems to be taking a far too complacent attitude to the situation? Is he aware that today a meeting is taking place which could result in this dispute being spread to the whole of the West Midlands regional health authority? Is he further aware that there is a possibility of nationwide support action in a matter of days?

I said that I understood there was to be a mass meeting today. I hope that the outcome of the meeting will be favourable. Even if it is not, my officials are closely in touch with the regional health authority. It is in the interests of all of us, not only hon. Members but the general public, that this dispute —it is a complex one—should be resolved as satisfactorily and as speedily as possible.

Is the Minister aware that, in spite of the intricacies of the dispute, the main responsibility of the Government and this House must be towards the patients? Is he satisfied that the ambulance services can be kept going? If they cannot be kept going, will he consider using the facilities of Her Majesty's Forces?

I do not want to say anything on that point or to answer hypothetical questions. At the moment the emergency service, which is the important service, is being kept going and steps are being taken to see whether the out-patient service, which, as the hon. Gentleman will understand, is very sketchy at the moment, can be improved.

The Minister must be aware of the appalling damage that was done recently by the strike of maintenance supervisors working in the National Health Service. Is he aware that this strike which we are now discussing has similar features? Is he further aware that undoubtedly the care of patients will suffer? Can he assure the House that there is adequate local negotiating machinery? For instance, is he aware that, as of last night, there were no arrangements for any meeting between NUPE and the regional health authority? Will he see that local negotiations are started immediately?

To answer the hon. Gentleman's latter point, the negotiations will obviously have to depend now on the outcome of the mass meeting this afternoon. Even if that proves to be unsuccessful—that is, if the men decide to convert the action into an official strike—the regional health authority will have to get together with representatives of the men—the regional officials—to resolve the dispute. There is adequate negotiating machinery on pay and conditions of service within the service. There is the Whitley Council machinery. The Whitley Council has provided for the possibility of a solution to this dispute, but so far it has not been a solution satisfactory to the men.

Official Secrets Acts

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"the use by the Attorney-General of his discretion in allowing prosecutions in cases under the Official Secrets Acts in the light of the verdicts and sentences in the case of Regina v. Berry, Campbell and Aubrey, which was settled on Friday."
I do not think that there will be any dispute that this is an extremely important matter, because it goes to the roots of press freedom and freedom of information in Britain. It arises out of a case in which three individuals, among them two journalists, have been harassed for 20 months on charges under the Official Secrets Acts which the House now knows have resulted, in the case of the two journalists, in mere conditional discharges.

This issue goes directly to ministerial responsibility, which is one of the points you have to bear in mind, Mr. Speaker, in the sense that the Attorney-General's discretion was deliberately included in the Official Secrets Acts by Parliament as a safeguard to avoid abuse of those Acts when, from time to time, they were passed by this House. It is worth remembering that the Official Secrets Act 1911, under which these charges were laid, was said at the time it was passed to be intended solely to deal with cases of espionage.

In addition, the Attorney-General has made it clear, both by his words and by his actions in the recent Gouriet case concerning the Post Office, that he considers himself answerable in his discretion in no way to the courts of justice but to this House. Those were his words. The day after the case involving Mr. Gouriet, he came to the House and made a statement about the use of his discretion in that case. Since he has not done so today, there is a strong case for the House demanding that he should. It is essential for him to explain what his policy now is in authorising prosecutions under section 1 charges—which, it is worth remembering, were dropped in this case after the judge had declared them oppressive—and section 2 charges.

Another point which you have to consider, Mr. Speaker, in deciding this issue is the opportunity which the House might have of debating the matter in future. Like the Chancellor of the Duchy of Lancaster, the Attorney-General comes to the House to answer questions for only 10 minutes every two months. He has only recently done so and, therefore, will not be due back until about Christmas time. It is essential that we have the chance to call him to account in this absolutely vital matter very quickly.

I come now to the issue of urgency, which I have to prove to secure a Standing Order No. 9 debate. At the moment, members of the public, journalists and everyone else have been relying on the statement of the Home Secretary as to the Government's policy on prosecutions under the Official Secrets Acts which was made on 22nd November 1976. Having said earlier that the Government no longer considered mere receipt of information to be an offence, the Home Secretary said:
"It was important that the statement should be made so that the Government's intentions might be taken into account."
That is the intention that receipt of information should cease to be illegal.
"Although the operation of the Act is a matter for my right hon. and learned Friend the Attorney-General, it will no doubt be open to the Attorney-General to take into account the Goverment's intention to introduce legislation on the lines I have indicated in considering whether to bring proceedings under section 2. For that reason alone, it was vital that a statement should be made."—[Official Report, 22nd November 1976; Vol. 919, c. 1882.]
Everyone in this House assumed that that meant that there would be no more prosecutions under section 2 of the Act for receiving information. In this case, after the section 1 charges were dropped, after being categorised by the judge as oppressive, the judge went on to say that the Attorney-General could start prosecutions and he could also stop prosecutions. In my submission, that was an open invitation by the judge for the Attorney-General to drop not only the section 1 charges but the section 2 charges also.

The urgency is that until the Attorney-General explains the position no one knows exactly where he stands. The Official Secrets Act is breached daily within and without the Palace of Westminster. If mere receipt of official information is once more to become a prosecuted offence, no one—not merely journalists—will know where he stands. The Attorney-General must combat the accusation that there has been oppressive discrimination in prosecuting procedures, which is so far explicable only in terms of influence over those prosecutions by those in the security service who are not answerable to the House.

You have indicated before, Mr. Speaker—for example, after the Tame-side judgment—that the aftermath of an important judgment such as the one to which l have referred is a proper occasion for a Standing Order No. 9 debate. put it strongly to you, Mr. Speaker, that there can hardly be a more important issue for the House to consider than freedom of speech. This is pre-eminently a proper issue for a Standing Order No. 9 debate.

The hon. Member for Lewisham, West (Mr. Price) gave me notice before 12 o'clock noon that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,

"the use by the Attorney-General of his discretion in allowing prosecutions in cases under the Official Secrets Acts in the light of the verdicts and sentences in the case of Regina v. Berry, Campbell and Aubrey, which was settled on Friday."
I listened carefully to what the hon. Gentleman said, and I repeat to the House once more that I do not decide whether a matter is to be discussed. My discretion is limited solely to whether the matter is of such a character that it must be discussed this night or tomorrow night.

As the House knows, under Standing Order No. 9 I am directed to take account of the several factors set out in the Order but to give no reasons for my decision. I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order, and, therefore, I cannot submit his application to the House.

Welsh Affairs


That the matter of the Welsh Economy, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. Foot.]

Orders Of The Day

Companies Bill

Order for Second Reading read.

4.4 p.m.

I beg to move, That the Bill be now read a Second time.

The Bill has two main purposes: to implement the EEC second directive on company law and to give effect to the proposals in the White Paper "The Conduct of Company Directors", Cmnd. 7073, published in November 1977. The Bill also revises the penalties and modes of trial for offences under the Companies Acts and provides new powers relating to the fees charged by the Registry of Business Names.

In introducing the Bill, I draw particular attention to the fact that there have already been wide opportunities for public examination and comment on its proposals. In addition to the White Paper to which I have referred, my Department issued a detailed consultative document on the EEC second directive in July 1977, the comments on which were of considerable assistance in the drafting of the legislation. And, of course, the Bill itself was published in draft form as a White Paper "Changes in Company Law", Cmnd. 7291, in July this year. But I am conscious that the House has not considered any of these documents and that today we are holding our first substantial debate on company law reform since the 1976–77 Session of Parliament, during which the Companies Act 1976 was passed.

Before turning to the detailed provisions of the Bill, therefore, it may be helpful if I remind the House of some of the factors which influence the development of company law and which have contributed to the proposals in the Bill.

First, there is the continuing review of company law which my Departmenet undertakes. This work is aimed at identifying important areas where the law needs to be strengthened and draws heavily on recommendations for reform from inspectors' reports into company affairs, the outcome of court cases and representations by the legal and accountancy professions among others. The proposals in the White Paper" "The Conduct of Company Directors" were the result of this continuing review, and the Green Paper" The Future of Company Reports" was another.

Secondly, there is the European company law harmonisation programme. This has a special place of its own, in article 54(3)(g) of the Treaty of Rome, which provides that, as part of the general programme of abolishing restrictions on the freedom of establishment, the legal safeguards in member States for the protection of the interests of shareholders and others concerned with companies shall be co-ordinated.

The EEC second directive has been followed by the adoption of two further directives during the past few months: the fourth directive, which deals with company accounts, and the third directive, which is concerned with mergers. There are a number of further draft company law directives in various stages of negotiation or preparation, and the cumulative impact of the EEC programme on United Kingdom company law is likely to be considerable.

The effect of these EEC directives on company law in most other member States—for example, on disclosure and auditing—is likely, however, to be considerably greater than in the United Kingdom, and the whole process is best seen as one which is gradually co-ordinating and improving the legal framework of the wider home market for United Kingdom companies, which is what the European Community provides. The United Kingdom has contributed to this developing framework and, of course, also benefits from the experiences of other member States.

The third source of influence on company law is, however, perhaps the most important. It is the impact of wider economic and social developments which affect, for example, public expectations about the extent to which companies, particularly large companies, disclose information about their activities, and the expectations of employees who wish to play a great and increasing part in the decisions which affect their working lives and the success of their company. A further example which I should mention is the questioning of the principle of self-regulation by such groups as the Stock Exchange and accountants who audit company accounts.

But such is the importance of company law, as the basic legal framework for the majority of our industrial and commercial institutions, that it is necessary to consider all these different and important pressures and proposals to ensure that balanced and sensible progress is made. This consideration is normally undertaken by my Department, assisted every 20 years or so by a specially appointed committee.

I no longer believe that an occasional inquiry is a sensible way to proceed but feel that it is necessary to have an independent and public body to advise on the development of company law. Accordingly, I am proposing to set up a standing advisory committee of company law, on which not only the professions but industry, the City and the trade unions would be represented, to undertake a continuing review of company law and to provide me with advice on both general developments and specific proposals. Although many details remain to be settled, on which I propose to hold discussions with the interested parties, I would expect that its reports and recommendations would normally be published.

As I have already mentioned, a large part of the Bill is concerned with the implementation of an EEC directive. Parts I, II and III of the Bill, together with clauses 67 to 69 and clauses 74 and 75, deal with second directive provisions.

Before discussing these provisions, I should perhaps first explain to the House why it is necessary to bring forward a substantial Bill to deal with the implementation of an EEC directive rather than use the order-making procedure provided in section 2(2) of the European Communities Act.

There are two main reasons why a Bill is necessary. First, the directive deals with public companies only and imposes important new obligations on public companies. But our Companies Acts at present define only a private company, which has to comply with the tests set out in section 28 of the Companies Act 1948, which means that public companies at present form a residual category, and many of them could not be expected to comply with the EEC directive. The Bill therefore reformulates the definition of public and private companies. This is a major change which is not suitable for subordinate legislation.

The second reason is that the directive itself contains a number of provisions which we consider are desirable on general grounds and should be applied to all companies. An example is the right of existing shareholders to have first refusal of new shares issued by their company, the so-called "pre-emption" rights dealt with in clauses 16 to 18. The second directive also requires us to lay down clear rules about the distributable profit of public companies. Legislation on the distributable profit of companies generally is overdue and we have decided to introduce appropriate provisions for private companies at the same time.

Surely a third very good reason for bringing this before the House in a Bill is that if it were done by subordinate legislation right hon. and hon. Members would not have the opportunity to amend it in any way.

I am always grateful to have even stronger arguments put forward for my propositions than I am able to adduce myself. The right hon. Gentleman is right. That is obviously the case. In any event, I do not think anyone would seriously question that such a major legislative change could be done in any other way than the way proposed by the Government. The right hon. Member for Crosby (Mr. Page) is himself a member of an advisory Committee on the procedure of the House. I say that with some experience of legislation over the past two Sessions.

As part of the process of adapting our law to comply with the second directive, we have also thought it sensible to introduce a number of useful improvements into the law at the same time, which are closely related to but not essential for implementation of the directive. This, too would not have been possible under the order-making procedure for implementing EEC directives.

I turn now to part I of the Bill, which provides for the new definitions of private and public companies, for machinery for registration and re-registration of companies and for certain transitional provisions necessary during the bringing into operation of the new classification of companies.

Clause 1 defines public and private companies. A public company will be one which has been registered or reregistered under the Bill as a public company, and private companies will be those which are not public companies. The essential features of a public company will in future be that its constitution must meet the requirements of clause 2 and schedule 1, that its name must end with the designation "public limited company", or "PLC "—"CCC" in Welsh—and that in order to register under clause 3 it must have an authorised capital of not less than the statutory minimum, which is set in clause 74 at £50,000. The current requirements that private companies must restrict the right to transfer their shares and limit the number of their members to 50, set out in section 28 of the Companies Act 1948, will be repealed. The remaining restriction in section 28—namely, that private companies may not offer their shares or debentures to the public—is regarded as essential and is being retained in a different form in clause 14 of the Bill.

The new requirements which public companies will have to fulfil in order to comply with the second directive mean that there are a number of tests which private companies will have to meet in future in order to become public companies. These tests are set out in clauses 5 and 6, while clause 8 deals with the position of existing public companies.

I said earlier that public companies at present were a residual category. There are currently about 16,000 public companies and more than 600,000 private companies. Only a minority of existing public companies offer their shares or debentures to the public. Most are public companies only because they do not meet one or other of the current tests for a private company—for example, there are many residents' associations, formed as companies, with more than 50 members, which means that they are now public companies. Perhaps up to half of our existing public companies will become private companies under the Bill, and clause 8 provides for this. Only those companies which wish to offer their shares or debentures to the public are likely to want to remain public companies, and it is estimated that the main provisions of the second directive will apply to less than 1 per cent. of all companies on the register. More than 99 per cent. will be private companies when the transitional period provided in the Bill is complete.

Before leaving part I, I should also draw the attention of the House to the provisions of clause 10, which provides safeguards for minorities where a public company decides to become a private company.

Part II of the Bill is concerned mainly with implementing the requirements of the second directive relating to the share capital of public companies. These requirements may be summarised as follows. First, the directors may not issue shares or other securities without proper authority, renewed at regular intervals, from the company in general meeting. This is provided in clause 13. Secondly, a company issuing equity shares for cash must first offer them to existing equity shareholders. This pre-emption right may be varied only with the consent of the shareholders. Clauses 16 to 18 deal with this.

Thirdly, there are strict rules on payment for shares, which may be allotted only in return for money or moneys' worth. Shares must be paid up as to at least 25 per cent. of their nominal value, together with the whole of any premium, before allotment. Non-cash consideration for shares may include goodwill and know-how, but not an undertaking to do work or perform services. As a further safeguard, where shares are issued in consideration for a non-cash asset, this must first be the subject of a report by an independent expert as to its value. Detailed provisions covering these matters are set out in clauses 19 to 30.

The basic principles behind these requirements are sound and are not fully reflected in our present law. We have therefore decided that certain of these provisions should apply to all companies, private as well as public. In particular, we believe that the provisions in clause 13 requiring consent to the issue of shares and clauses 16 to 18 giving preemption rights to existing shareholders on the issue of new shares will provide greater protection for minority shareholders in private companies against discriminatory increases in share capital, and these clauses therefore also cover private companies. The more detailed rules relating to the payment of shares are, however, required only in the context of the strict capital maintenance provisions for public companies which constitute one of the central features of the second directive and are not considered appropriate for private companies.

This capital maintenance concept also lies behind the remaining clauses, 33 to 37, of part II. Most of these apply only to public companies, but clause 34, which prohibits a company from acquiring its own shares, applies to all companies and is the statutory expression of an existing common law rule.

Part III of the Bill lays down new rules concerning the distribution of profits to the shareholders of a company. Reform of the law relating to dividend distributions is long overdue, and this part of the Bill covers private as well as public companies.

The intention in clauses 38 to 43 is to carry out an extensive reform of the law relating to distributable profits, and the provisions therefore embody not only the requirements of the second directive but also the relevant provisions of the fourth directive on company accounts. Furthermore, it is hoped that it will be unnecessary to alter the clauses when current cost accounting is adopted.

Profits which are available for distribution are first defined in clause 38 as the accumulated realised profits of a company, so far as these have not previously been utilised, less the accumulated realised losses, so far as these have not previously been written off.

The right hon. Gentleman said that amendment would not be necessary if current cost accounting were adopted. Presumably, at some stage the two systems—the present historic cost convention and current cost accounting—would overlap. Is the right hon. Gentleman convinced that there would be no need for transitory provisions to cover that?

I hesitate to say that I am convinced about it, but I am advised that the provisions as drafted take account of the change. He would be a rash man who said, even in advance of a Committee discussion of the matter, that he was convinced. That is my advice, but no doubt the matter can be traversed at a later stage.

I was referring to the definition in clause 38 of profits. No distinction is made between capital and revenue profits or losses. It should be noted that, for the purposes of this clause, unrealised profits or losses are disregarded in determining the amount available for distribution. A new rule in this clause is that unrealised profits may not be distributed. At present our law on this is confused: distribution of unrealised capital profits has been ruled by English courts to be permissible but by the more prudent Scots to be unlawful. The Jenkins committee, in its report in 1962, recommended that the law should be changed to prohibit the distribution of unrealised capital profits. This is clearly an overdue reform, which, although not directly required by the second directive, would in any case have to be introduced to comply with the provisions of the fourth directive.

Public companies will have to meet an additional test before they can pay dividends out of distributable profits as defined in clause 38. The second directive requires that a public company may not pay a dividend unless the net assets of the company after payment of the dividend are at least equal to the capital of the company plus any reserves which are not available for distribution. This is the capital maintenance concept applied to the dividends of public companies, and the rule is embodied in clause 39.

This rule is also a new one in our law, and its effect will be that public companies which have met unrealised losses will be able to pay a dividend only if they retain sufficient realised profits to cover their unrealised losses.

To summarise the main new effects of these clauses, they will, first, provide a new definition of distributable profit which excludes unrealised profits; secondly, require all companies to make good past realised losses before distributions can be made; thirdly, require public companies to maintain their capital and reserves in paying dividends, by requiring them among other things to make good any unrealised losses.

The second directive acknowledged that special rules were required for investment trust companies, whose distributions cannot be governed by the capital maintenance concept. These special rules are set out in clause 40, which also provides for a new certification procedure for such companies.

Clause 41 sets out the necessary provisions relating to the accounts of companies and the duties of auditors in connection with the new distribution rules set out in this part of the Bill. This clause has been completely revised to take account of criticism of the draft published in July.

I now turn to part IV. It deals with a number of proposals put forward in the White Paper "The Conduct of Company Directors". Clauses 44 and 45 codify the existing common law duties of directors. The first clause deals with the fiduciary duty of directors and the second with the duties of care and skill. Neither clause is intended to introduce any major change in the law.

The object of clause 44 is to express, as succinctly as possible in the statute, the rules relating to a director's fiduciary duty as they have been developed in a wide variety of court decisions over the past 100 years. A statutory statement of this kind was recommended by the Jenkins committee in 1962 and endorsed by the Bullock committee in 1977. Formulation of this clause has not been easy, and the draft published in July has been criticised on a number of counts. Clause 44 has been modified to take account of some of the criticisms, and others are still being considered. I would welcome further representations on it, and I expect that it will be closely examined in Committee.

Several times the Secretary of State has referred to the White Paper "The Conduct of Company Directors". Will he confirm that the Bill does not contain the recommendation in that White Paper that directors should be required to send copies of the annual report and accounts to all employees?

We have sought to include most of the recommendations that are in the White Paper, but that particular provision has not been included.

I was referring to the duties of directors. It is no longer acceptable that company law should require directors to act solely in the interests of shareholders. This does not reflect the reality of business operations in the twentieth century—or, indeed, the practice of responsible boards of directors. It is common ground between the two major parties at least, and perhaps others, that the law should be amended to reflect these changes. The Government's proposals were set out 12 months ago in the White Paper "The Conduct of Company Directors", in which we stated:
"The Government … believes that employees should be given legal recognition by company law. The statutory definition of the duty of directors will require directors to take into account the interests of employees as well as of shareholders".
Provision to this effect was included in the draft clauses published in July. It seems appropriate that this provision should be seen as part of the general statement of directors' duties. We have, in consequence, included the clause in the present Bill in place of deferring it for future legislation on industrial democracy.

The effect of this clause is to create a positive duty on directors: it is not merely permissive. One major consequence will be that in future directors will not be at risk, in actions brought by shareholders, simply because they have taken account of the interests of employees.

I welcome the move that the Government are making on responsibility for employees, but is the right hon. Gentleman satisfied that the wording of the Bill is sufficiently clear for the distinction to be drawn and to be operable, particularly in the courts, should the matter go that far? Is the definition in this part of the Bill consistent with the Government's thinking about further legislation on industrial democracy?

The hon. Gentleman's second point rather begs the question before we have put detailed proposals on the matter into legislative form. However, hon. Members will wish carefully to consider the wording in Committee. It is positive, but questions about what could be done in the courts would depend on the type of action raised and upon the situation in which it was raised. I am advised that there may be some difficulties over that, but this is perhaps a matter which could be given further thought in Committee.

I wish to follow up that point. Is this provision intended to give the workers a standing comparable with that of a shareholder in an action for relief of oppressed minorities? Will they have the same status vis-aá-vis directors? Will they be actionable in that way? I think that that is what the hon. Member for Caernarvon (Mr. Wigley) was seeking to deal with, and it is what concerns me.

That is a proper matter to raise, but I hesitate to give a detailed answer to my hon. Friend without knowing the type of action that will be taken. It is an important point, however, and I hope that we shall return to it in Committee. It is not easy to argue on the detail of it at this stage.

Before leaving part IV, I should also mention the important new provisions relating to loans to directors, in clauses 49 to 51 and 53 to 56. These provisions replace sections 190 and 197 of the Companies Act 1948, which have long been recognised to be inadequate. The Jenkins committee recommended a strengthening of section 190, and investigations following the recent secondary banking crisis revealed a number of cases where abuses had occurred. The inspectors in their report on the London and Counties Securities Group recommended that the "banking exemption" in section 190 should be abolished, subject perhaps to some small individual limit to avoid the need to prohibit minor loans to directors. The accountancy profession has repeatedly made strong representations to the Department on the need for tightening up on loans to directors.

The principal features of clauses 49 to 51 are that they extend their existing prohibition on loans to directors to cover, in the case of public companies, loans to a director's immediate family and to companies in which the director or his family have a substantial interest. Breach of these new provisions is to be a criminal offence where the company concerned is a public company.

These provisions are subject to certain exceptions. In particular, the present banking exemption is being retained. But the total of any loans made under this exemption to a director and those closely associated with him may not exceed £50,000 and no such loans may be on specially favourable terms, unless the loan is made under a house-purchase assistance scheme available to employees of the company.

These new restrictions are backed up by more detailed disclosure requirements, in clause 53, where loans have been made to directors, their families or associated companies.

What is proposed to be done about existing loans, should there be any, to bank directors and their families if they exceed £50,000? I believe that this point may be covered by clause 53, but I am darned if I can understand the clause.

I am sure that we do not intend to cover that. The hon. Member may be referring to clause 53(6), on which we have received some representations about whether it would have a wider effect than the clause intends. I understand that it is not intended to affect existing loans, which is generally in line with the principles of the legislation passed by this House. My recollection is that we have already received representations on the matter, but we shall look most carefully at it.

Is it still permitted for a private company to lend to its directors?

These provisions change only the law relating to public companies. The law governing private companies remains unchanged.

The provisions in clauses 57 to 63 concerned with insider dealing have probably attracted more comment than much of the rest of the Bill put together, and I therefore make no apology for dealing with them at some length.

The central proposition contained in these clauses is that insider dealing should be made a criminal offence. The Government believe that the case for such action has been clearly established, and I note that in its recent statement the Council for the Securities Industry, speaking for a wide range of financial and business interests, has firmly and clearly supported this. One can analyse the phenomenon to show that it represents a threat to public confidence in directors and others closely associated with companies, that it is unfair to other shareholders and investors and that it is frequently a breach of the person's obligations to companies. But one can put it simply: insider dealing is wrong. Within the existing framework of self-regulation in this area it is forbidden under the rules of the Stock Exchange and the City Panel on Take-overs and Mergers, but those bodies agree that more is called for and that criminal sanctions should be introduced.

One must recognise, however, that the distinction between reprehensible conduct and innocent and, indeed, useful activities is one which it is easier to recognise in practice than to embody in statutory language. I therefore wish to make plain that, while the Government are firmly committed to the introduction of criminal sanctions, they do not intend to make it impossible for legitimate or desirable activities to continue. I have in mind, for example, shareholdings by employees and directors in the companies for which they work, the more active role for institutional shareholders, the role of investment analysts and the role of financial journalists in disseminating information and evaluating companies' performance.

These proposals will, when enacted, be the first statutory steps into a complex area, and they are intended to be on the cautious side, for I do not want them to do more harm than good. I believe that as they are expressed in the Bill, they represent a fair and reasonable balance between deterring wrongdoers and not discouraging those who are doing no wrong at all, but I recognise also that comment—which, of course, the Government themselves invited—has revealed some differences of opinion about the particular drafting of some parts of the clauses. I have no doubt that these will be closely scrutinised in Committee, and the Government will listen with care to the arguments which will doubtless then be presented. I believe that in this area the publication of draft clauses in July was particularly valuable, giving as it did a much greater opportunity for interested parties to consider such points than is usually possible with the normal compressed parliamentary timetable.

The right hon. Gentleman has given way a number of times, but I hope that he can help us a little further. I believe that the whole House will welcome his assurance that there will be thorough discussion at later stages of the Bill, if it is given a Second Reading, but it would help us to know whether that is tantamount to an assurance that as much care will be exercised over any definition of the concept of "insider" as over the concept of "insider dealing" when the Bill goes through its later stages.