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Amendment Of Price Commission Act 1977

Volume 961: debated on Wednesday 31 January 1979

The text on this page has been created from Hansard archive content, it may contain typographical errors.

I beg to move amendment No. 5, in page 1, line 10, after 'examinations)', insert:

'or, in the case of companies supplying foods and essential services, in order to earn profits to maintain their supply'.

With this we may take amendment No. 6, in page 1, line 10, after 'examinations)', insert:

'or, in the case of companies affected by industrial disputes, in order to earn profits sufficient to recover costs occasioned thereby'.

5.15 p.m.

Along with amendment No. 5, we are pleased to have a debate and possible vote on amendment No. 6. I have only one comment with regard to the points of order that preceded this debate. I understand that I was not quite as quick off the mark as I should have been in trying to place these amendments on the Table. However, Mr. Murton, I take note of your ruling. Of course, we are nothing if not generous when it comes to an agreement of this kind. Therefore, we entirely understand your ruling.

It is obvious that the intention of these amendments is to amplify, if that is not too strong a word, the modest exemption that is still contained in relation to the application of section 9 of the 1977 Act. We attach importance to the two amendments because we think that there are certain circumstances when it is essential to retain some safeguard operation for the recovery of costs incurred under what might be termed exceptional circumstances. I think it is widely understood that the operation of any safeguard policy—certainly, any safeguard policy under the Price Commission and within the ambit of the Price Commission Act—must be to protect persons, be they consumers, employers, manufacturers or employees, from unexpected developments which in relation to price applications threaten their viability, well-being or even their livelihood.

This was clearly the principle which ran through section 9, and it is clear to us that it is the principle which permeated the regulations issued under section 9. In fact, I must remind the Committee that paragraph 2 of the consultative document, which set out the safeguards under section 9, states that
"The policy for which the Bill provides contains a number of provisions designed to reassure enterprises that the new powers"
—that is, the powers under the Price Commission—
"cannot be used to depress the general level of profitability or to subject individual firms to restrictions which would threaten viability."
The suggestion that firms might have their viability threatened by the operation of this Bill, or even the parent Act that it seeks to amend, was the reason why such great importance was attached to section 9 and the safeguards and regulations that were eventually issued.

The Government clearly believe that some safeguarding should remain for companies whose prices are frozen consequent upon examinations under section 13 of the Price Commission Act. These might be described as the long-term examinations or problems. It is, therefore, our belief that some provision should remain. The Government seek to remove any safeguard provision from the shorter-term problems that are encountered within the period when prices may be frozen after application for up to 28 days.

The Committee may be wondering why such a relatively short period as 28 days should be crucial to many companies and why such objection was occasioned when it was suggested that the provision should be removed. Short periods of price freezing may have a major effect upon industrial operations and profitability. In many sectors any delay in recovery of costs may be crucial and may place companies in dire straits. That is why we seek to suggest that there are certain circumstances when companies should not suffer the penalty of having no interim safeguard applying to their profits.

There are certain industrial sectors that are especially vulnerable. The food industry is in such a position. That is why it is specified in amendment No. 5. The industry is heavily dependent upon raw materials, many of them from overseas. These raw materials may be involved in serious fluctuations. The industry may be involved in great difficulties in seeking to recover its costs.

A large company in the food industry, General Foods Ltd., wrote to me as follows:
"We, like the majority of British industry, are well aware of the national need to restrain price increases whilst generating sufficient capital for the continuation and expansion of our business. In the past three years we have seen our margins decline from 2·5 per cent. in the year ending March 1976, to a negative position in the year ending March 1978. While margins have improved this year, over the last four years our return on investment has been insufficient. Over the same period, margins in the food manufacturing industry, as a whole, have remained very depressed, at around 4 per cent. Wherever possible increased costs have been absorbed by increased productivity and efficiency. Most of our raw materials, which form the bulk of our costs, are subject to the volatility of the world's commodity markets and, thus, price increases are seldom of our own making."
That sets out why food companies are notoriously vulnerable to short-term fluctuations that adversely affect their cash flow.

The other argument raised by General Foods Ltd. is equally illustrative of the problem. The company wrote:
"We feel very strongly that the safeguard clauses should remain in the Price Commission Act, 1977. Whilst we have not been the subject of a Price Commission investigation ourselves, the coffee industry was investigated dur- ing 1977 and a key finding was that net margins had declined significantly to 1·3 per cent. in 1976. You may be interested to know that a three month delay in the implementation of a 5 per cent. increase in our coffee prices would result in a £¾ million reduction in turnover and profitability, which could, of course, have a consequent effect upon investment plans."
It is that restriction that makes the food industry feel that it should have some protection from rapid and short-term cost fluctuations. We believe it right to move an amendment that makes special reference to the food industry and its problems.

It is true—no doubt this will be part of the Secretary of State's argument—that the safeguards that are removed by the Bill have been widely used by food companies. They were used during the investigation into Weetabix prices from January to April 1978. The value of the safeguard clauses was £461,000 during those four months. That sum is roughly 20 per cent. of the total profit on breakfast foods of the company concerned. The safeguard clauses were used by Cadbury Schweppes. The safeguards amounted to £100,000 a week over the four months of the investigation. The clauses have been widely used, for the good reason that the general level of profitability in that industrial sector is traditionally extremely low. Thus it is that short-term price freezes may have a material effect.

If there is to be any safeguard, special attention should be paid to the problems of companies supplying foods, which are in an especially vulnerable position. We say that that protection would play a most important role in safeguarding the general well-being of the nation.

In the supplying of essential services, a relevant example is that of Metal Box Ltd. The company supplies vital packaging materials to the food industry and many other industries. I have a letter from the company that suggests that in September 1977, when it submitted a price increase application, an investigation ensued that continued from 30 September to 30 December 1977. The application was for a price increase of 10·5 per cent. The interim price award granted under the safeguard clauses was 9·81 per cent. The cash loss incurred by the company in consequence was £450,000. That loss was incurred as a result of the difference between the interim increase and the full amount of the price application. If no increase under the interim measures had been available, which would be the position under the Bill, the company would have incurred a loss of £6·9 million during September to December 1977. That is the view of Metal Box Ltd.

One of the problems facing Metal Box Ltd. is that steel, its major raw material, is supplied by the British Steel Corporation. The Corporation is subject to a pricing policy that is not within the compass of the Price Commission. That applies also to coal and coal derivation products, which are highly important ingredients to British industry. These materials and associated products are under European control and not under the control of the Price Commission. We submit that special priority should be given to essential services where the Commission does not at present have a remit.

In amendment No. 6 we suggest that companies should have special safeguard provisions when they suffer loss as a result of industrial disputes. It would be wrong to widen the debate by introducing industrial disputes, but it is self-evident to all hon. Members that if a major stoppage or disruption takes place the cash consequences for companies involved may be extremely severe. They may be severe in their suddenness. They may be severe in their rapid build-up and cash-flow consequences. Therefore, we suggest in amendment No. 6 that special attention should be paid to losses through industrial disputes. There is a case for some extension of special safeguards to certain industries and certain vital services.

What is intended by "affected"? Does the amendment refer only to companies that are directly affected by industrial disputes—that is to say, companies in which there has been an industrial dispute—or to companies that may claim that their cash flow has been reduced because of the secondary or tertiary consequences of industrial disputes? Would such companies be able to pray in aid the effect of the amendment?

The intention is that the costs of any company affected may be legitimate to be reclaimed as an interim safeguard provision. As the right hon. Gentleman rightly reminds us, it is not the individual company that is affected by the sudden incidence of an industrial dispute.

The impression to be gained from the amendment is that companies are to be indemnified for loss of profits as a result of industrial disputes irrespective of which party is at fault in bringing about the dispute. Sometimes the fault lies entirely with the company. In that event, surely the company should not be indemnified for the loss that is sustained.

5.30 p.m.

Does the hon. Gentleman agree that there are numerous occasions when companies which have nothing to do with the individual dispute have been occasioned substantial loss through no fault of their own? If these costs have been incurred and the companies' viability and profitability threatened, this deserves special treatment in regard to interim safeguards.

That argument would be comprehensible if the amendment were drafted to cover only those cases where the company is completely innocent. This is a blanket amendment to cover all possibilities.

The amendment has been drafted widely in order to include not only companies directly involved but companies which have been affected. In so far as these amendments have been accepted, they are reasonable amendments to be debated. If the hon. Gentleman feels strongly about the matter, as he clearly does, he has his chance to speak in the debate.

In the Second Reading, the Secretary of State laid fairly great stress on the fact that a number of interim awards had been granted to certain major companies. He seemed to suggest that these were over-generous. He quoted Imperial Tobacco, Lever Brothers and Cadbury Schweppes Food. In all these cases, the Price Commission's report, consequent upon its examination of the price application, was entirely favourable to the company.

In relation to Imperial Tobacco, the Commission concluded that
"In view of the increased degree of competition in the market and the company's forecast of an increased level in capital expenditure, we do not consider ITL's profitability is more than adequate. For these reasons, we have not recommended any formal restraint. …"
The same view was taken after the Commission's examination of Lever Brothers and Cadbury Schweppes Foods. Its report on Cadbury Schweppes Foods said:
"Our general assessment is that CSF are a well run and forward looking company …"
"the increase in the price of cocoa products was unavoidable in view of the substantial increase in raw material prices."
It is not fair to suggest that the operation of interim safeguard adjustments has done anything but allow companies a margin of improvement in a period of substantial difficulty. In almost every case it has resulted in an examination that has exonerated the company and the profitability that it seeks to achieve.

The intention of these amendments is to suggest to the Committee that if there is any justice in including provision for some basic safeguards, those safeguards should be applied to certain essential industries where the consumer well-being, as well as the importance of the industries to the national economy, justifies them.

I rise early in the debate because it is important that the House should know, if not the nature of the amendments, the consequence of passing them. The same rule applies to amendments later on the Amendment Paper. They are not amendments in the sense that they make an adjustment to the Bill to which the House gave a Second Reading. They are amendments which, if passed, would totally vitiate the purpose of the Bill.

I am careful not to describe them as wrecking amendments. Were they wrecking amendments, they would not be in order. Were they not in order, they would not have been called. Either through cunning or sloppy drafting—I would be able to attribute the cause if I knew which member of the Opposition Front Bench was responsible for the wording—the result of the amendments is to reduce the amount of discretion possessed by the Price Commission. The purpose of the Bill to which the House gave a Second Reading on Monday night is to extend its discretion.

The amendment seeks to preserve the safeguards in two specified but not very carefully drafted conditions. The categories with which the amendment deals would be enabled to receive a price increase without investigation, without modification and without the Commission having any ability to influence that price increase up to the safeguard level.

Those two categories—suppliers of food and companies engaged in the supply of essential services—are so loosely described in the amendment that the Commission would find almost all the subjects into which it might inquire covered by those headings. The Commission would find itself in a dangerous condition, were it to apply its policy without the safeguards, over a very wide area.

Let me give an example. The hon. Member for Pudsey (Mr. Shaw) referred to the Imperial Tobacco company. I do not know whether he regards that as an essential service or food. Even allowing for that slight slip, I believe he will share my view that it is extremely difficult to define what is an essential service.

The Secretary of State will recognise the importance of Imperial Foods, one of the largest groups within the food manufacturing industry.

That is exactly the point that I am making. The hon. Gentleman refers to a food company. There are massive conglomerations within this country. If the amendment were carried, all sorts of products and prices and all sorts of applications would continually be subject to safeguard regulations and would be denied the Commission's discretion, which the Bill is designed to extend. If the hon. Gentleman simply wants to preserve the conditions of a company in the food industry, or in essential services, in what he and I would both regard as a reasonable way, and if a company's viability, to use his phrase, was really threatened, the House has nothing to fear, nor have the Opposition.

Section 2 of the parent Act obliges the Commission to ensure that companies "make an adequate profit". That means an adequate profit under all circumstances and an adequate profit for all companies. Section 2(2)(e) of the parent Act obliges the Commission to have regard to
"the desirability of maintaining the quality of goods and services and satisfying the demands of users of goods and services"
Again, that rule applies—

I am sure that the Secretary of State does not mean to mislead the House. Section 2 says that the Commission "shall have regard to". Surely, he is only too well aware that the courts have held on more than one occasion that it is perfectly in order for the Commission to say "Yes. We have had regard to it but we are still going to rule that we shall not allow you to make any profit at all". Nothing can be done about that in law. "Having regard to" something provides no real safeguard or protection.

The hon. Gentleman and I have disagreed about that before. We must disagree about it again. I repeat what I told the House on Monday. Were the Commission to operate in such a way—if I may use a phrase from the hon. Gentleman's opening speech—that the viability of a company was threatened, the powers and obligations imposed upon it under section 2 would mean that it was acting outside its legal duties and could be challenged in the courts. I believe that its attempts would be unsuccessful were it to hold down prices in such a way that a company was no longer viable.

The Secretary of State is repeating the point which the Under-Secretary of State made in his speech on Monday. Clause 1(b) says that the Commission shall have regard in particular to matters mentioned in subsection (2) so far as the Commission considers them relevant. It is at the total discretion of the Commission to decide how relevant are the matters set out in subsection (2). That is the point I was trying to make to his hon. Friend, which the Secretary of State still does not seem to have taken on board.

We are in danger of getting into the unhappy position, which I was attempting to avoid, of reading the entire section. I think that the hon.

Member will agree with me that in section 2(1)(a) there is an absolute obligation on the Commission, and I repeat my belief that that obligation could be tested in the courts. Were the Commission—which is the wildest possible hypothesis—to contemplate driving a company into bankruptcy, the Commission would be operating in a way which would not be lawful, and I believe that it would be challenged.

Does that mean that if a company is making a loss, under that section the Commission automatically will allow a sufficient increase to ensure that it reaches what is described as "adequate profit"?

This again is the point which I made on Monday evening. In theory at least, the Commission is entitled to use some discretion. But the discretion is not to keep the company in a loss-making position. Let me take a specific example. If the Commission was investigating a company which was running at a loss and wanting to increase a price to move back into viability, I have no doubt that it would be the Commission's duty to allow the company to do so. But it is also the Commission's right in its report on that company's behaviour to suggest other ways in which the company might achieve the same end without placing the burden on the consumer. I do not think that there is any contradiction between those two points of view.

I return to my central argument. The nature of this amendment, which is drawn so widely and which makes no attempt to define "essential services" and no attempt to define the Commission's obligations towards them or towards the food industry, can only mean that the Commission's discretion is more limited, and in my view limited at a time when, and in an area where, no limitation is necessary. No limitation is necessary because, on the established record of the Commission, where a company has needed a price increase to maintain the objective which the hon. Member for Pudsey described, with or without safeguards, safeguards have been provided.

I take an example from the food industry, about which I told the House on Monday. United Biscuits received a discretionary award from the Price Commission—a price increase—without the paraphernalia of safeguards because that company was prepared to demonstrate the need. That reasonable approach will continue to characterise the Commission's behaviour.

I want now to say a few words about the second amendment. Amendment No. 6 has the same effect but, if I may use extreme language, is even more preposterously drawn. The right hon. Member for Orkney and Shetland (Mr. Grimond) drew attention to one aspect of that drafting.

We are told that if the amendment is carried companies affected by industrial disputes will be enabled to make their automatic price increases without recourse to the Commission and that they will be able to do that and to make price increases sufficient to recover the costs incurred thereby. I take it that that means because they have been affected by the industrial dispute.

It would be an almost insuperable problem to define which companies had and which had not been affected by some industrial dispute. An equally insuperable problem would be to calculate how their profits had or had not been affected by it. These are two concepts which are not susceptible to precise definition. Since they are not susceptible to precise definition, were they carried into law they would make the behaviour of the Commission a great deal less free than it is at the moment. They would make it virtually impossible for the Commission to inquire into any company and use its power regarding any company where there had been a dispute in the vague area of that company's operations.

There has been one example where a Price Commission report coincided with an industrial dispute. I refer to the one concerned with road haulage. It was my decision that the price control should not apply to road haulage companies because they had been affected by an industrial dispute. I was criticised by every member of the Conservative Party who asked a question on the subject because I had relaxed the rules of price control since the industry had been affected by an industrial dispute. This is opportunism taken to a preposterous degree—

I was about to ask the right hon. Gentleman a very simple question. Why did it take him from October to January to come to that decision?

Because the consultative period lasts for three months. We shall make more progress on the Bill if the hon. Member for Gloucester (Mrs. Oppenheim) reads and understands it before she makes speeches or interventions.

The right hon. Gentleman said that the amendment was very widely drawn. Is it his wish to see that a company such as Ford, which stood a very expensive strike in defence of the Government's pay policy, should be able to recover the costs of that strike?

The hon. Member for Kidderminster (Mr. Bulmer) was present on Second Reading. Therefore I must repeat what I said then. The Government want a condition of that kind to be judged by the Price Commission. We want the Commission to operate under section 2 and to make its own judgment whether the Ford Motor Company needs to put up its prices. It is wrong for me even to speculate about that, because the essential feature of the Act is that the Commission takes the decisions. However, I can conceive of a situation where, despite a strike, a price increase is unnecessary. It would be absurd if Parliament approved a policy which amounted to saying "Have a strike, become involved in a dispute, and you will be free to put up your prices as much as you want."

5.45 p.m.

What also can happen is that after an industrial dispute, especially where there is high productivity, as in the case of the motor industry productivity can make an enormous spurt forward as a result of a settlement. If that company is more successful, especially in a competitive area such as the motor industry—and the Ford company is highly successful nationally and internationally—its rate of profit and productivity goes on apace in consequence of the stoppage. That is exactly what happens very often, especially in the United States.

Because of interruptions, I have spoken for rather longer than I intended. Therefore I summarise the Government's attitude to these amendments in about four sentences. The first is that the amendments are constructed intentionally in such a way as to limit the Commission's discretion when the Bill hoped for quite the opposite result. Secondly, they are cast so widely and so imprecisely that they would in effect limit the Commission's discretion more than it is limited today, without the passage of the Bill. Thirdly, some of the limitations placed on the Commission's discretion are absurd, and anyone who had a strike or who had been affected by a strike could put up prices automatically without any sort of inquiry, any sort of investigation, any sort of amendment or any sort of prevention. Fourthly, thanks to section 2 of the parent Act, those right hon. and hon. Members who simply want the assurance that companies in the food industry who are in difficulty and companies which are affected by strikes in essential services or anywhere else will not have their profits unreasonably restricted, have got that in law. It is an unnecessary amendment, and it will be pressed only by people who want to see the Price Commission and its powers destroyed.

I first declare an interest, since I have not spoken before in the course of discussion on this Bill, as a shareholder and director—formerly an executive director—of a substantial food retailer. I am also a director and shareholder of a number of other firms in printing, composition and design which I suppose could come under the baneful effects of this legislation and derive benefit from these amendments.

I deal first with the second amendment. The Secretary of State is very free in his misinterpretation of other people's motives. On this occasion, he also seems to be fairly free in his misinterpretation of the amendment. He talks as though any company affected in any way by any strike could recover any cost. That is not what the amendment says. It says that such a company may
"earn profits sufficient to recover costs occasioned thereby."
We are taking this Committee stage on the Floor of the House, which we do not do all that frequently. But if we were in Committee upstairs, it would be common practice for any Opposition to admit, as perhaps we have to on this occasion, that amendments put forward lacked the skill of the parliamentary draftsmen. What is more, on this occasion there has not been very much time to consult others in drafting amendments. But the Secretary of State should realise, if that were the problem, that his best course of action would be not to nit-pick at the wording of the amendment but generously to accept its intention and seek the advice of those who are available to assist him in coming up with a better drafted amendment.

In relation to the second amendment, there is one other thing which I find quite astonishing in what the Secretary of State said. It reveals again, I fear, a distressing ignorance of the way in which business operates and the accounting practices and methods of business, which virtually everybody on the Labour Benches seems to have. It is extremely unfortunate and disturbing to industry and commerce that the Secretary of State seems to share that ignorance.

The right hon. Gentleman talked about the costs of a strike not being susceptible to precise definition. If that were really so, I would say to him that in spite of what the Price Commission is meant to be doing with its 600 employees—many of whom are probably working for it because they cannot get a job in a company which manufactures products and provides real employment for people—it would not be capable of precisely defining anything to do with the operating costs of a company.

I accept what has been said about the difficulty of determining who is principally responsible for industrial dislocation, because very often there are at least some from every party concerned involved, not least from the Government, but if one cannot determine the cost of industrial dislocation to one's company, I do not see how one can begin costing any product. I do not know why we have a Price Commission to do that sort of thing at all. That is absolutely nonsense. Any company could produce good, hard factual evidence to cover the wording of this amendment. If the Secretary of State were to send a little message to the Box, it could be forwarded to Charles Williams—who was a banker when he was more usefully employed—and I am sure that he would be happy to reassure the right hon. Gentleman on that.

I shall address my remarks principally to the first amendment. Speaking as a former retailer and a former food retailer—the first amendment specifically refers to food—I must agree, for a change, with the right hon. Gentleman in finding the wording of that first amendment a little vague—"foods and essential services". I do not think that anyone would disagree when I say that food is an essential service. But what exactly would be an essential service, apart from food, would, I think, require a pretty lengthy schedule.

If we consider the retail sector—which is different, of course, under the operation of the Act, from manufacturing—and consider the consequences of the individual examination of a retailer, there are two examples which spring to mind—footwear and spectacles.

As is probably apparent to hon. Members, I wear spectacles and shoes. I would certainly regard shoes as essential in this weather. I also regard spectacles as essential at all times. They are an extremely essential service to me, and to be able to obtain them and have them repaired is very necessary. I see, therefore, that there are difficulties.

I am inclined to think that all retailers provide an essential service because, basically, they serve the public. If they are not serving the public, and if the public do not find the service they want, retailers rapidly go out of business.

The effects of the Bill, if it is not amended, need to be looked at rather carefully. As far as retailers are concerned, the situation is not analogous to manufacturing industry. We are not looking at a situation where a manufacturer is told that he cannot put up his price while an investigation of his product and pricing efficiency—and all the other matters which these mysterious people in the Commission are meant to be able to do—is carried out. What we are looking at are the safeguards which protect the retailer after the investigation, not during the investigation.

I shall quote briefly from a brief provided by the Retail Consortium, which I am sure the right hon. Gentleman has readily to hand. I am sure that if the consortium is wrong, the right hon. Gentleman will not hesitate to contradict me and put it right. The second paragraph says:
"The Bill removes the 'principal' safeguard which allows that when distributors are individually examined"—
that is, the examination of an individual firm in retailing, as opposed to a whole sector—
"they can maintain a profit margin of 2 per cent. of turnover or more where the stock turns over less than 10 times per year."
There is a sliding scale, but I shall not detain the House with that.

The brief goes on:
"This means that following an investigation a recommendation"—
that is, a recommendation by the Commission—
"could be made which"—
the brief does not actually say "if accepted by the Secretary of State for Prices and Consumer Protection"—
"resulted in a distributor trading not only on a low profit margin but even at a loss."
I pause there in case the Secretary of State wishes to rise to his feet and tell me that I am wrong. However, I shall go on because he does not do so, from which we can take it that what the Retail Consortium says is correct. I repeat the words from the brief, which are:
"a recommendation could be made which resulted in a distributor trading not only on a a law profit margin but even at a loss."
I think that those words should give the Committee cause to pause and consider.

I know that the Secretary of State will constantly assure us what a reasonable fellow he is.

The hon. Member for Burnley (Mr. Jones) is convinced. I must tell him that there are occasions when I find it very hard to believe.

The actions of the Secretary of State in defending these measures are consistent with the actions of the firm of the hon. Gentleman's parents, with which I deal. That firm has kept prices very reasonable in the face of heavy competition—

and the hon. Member knows that to be true. Why is it that the methods employed by the Minister are so different from the methods of the hon. Gentleman's own family?

In so far as the firm with which I am associated is efficient, it stays efficient because of competition. Nothing that the Government have done has done other than distract management from its job of keeping that firm efficient and serving the public. We could do it much better if we did not have some of our best people providing useless figures to the Price Commission. I agree that we do not have to do it now, but for years we had to do so. It took a great deal of time and cost us—and every other distributor in the country—a great deal of money.

I remind the Secretary of State that if he were to say that that was the fault of a Conservative Government, that legislation was introduced only for a short time under a Conservative Government. It is the right hon. Gentleman's Administration which has carried it on and made it worse year after year.

However, I was distracted by the kind remarks of the hon. Member for Burnley, dwelling upon the reasonableness or otherwise of the Secretary of State. There are moments when I find it a little difficult to accept the reasonableness of the Secretary of State, and I believe that I shall be supported by a large number of distributors when I say that. After all, not so long ago we were assured by the Secretary of State that if the safeguard clauses were to be removed it could be done only as part of a general review and reassessment of the Act. What did we get a short time later? The safeguard clauses were removed without any kind of reassessment. There are times when one wonders whether the Secretary of State is quite as reasonable as he is made out to be.

The Secretary of State has referred to discretion. That is the problem. There is no certainty of discretion. We cannot rely on discretion. Retailers, distributors and manufacturers are very unhappy about relying on discretion when they are considering the implications for potential investment, for the potential generation of employment and what might happen if they were interfered with without any safeguard. Retailers believe that the public are best safeguarded by competition and they, the retailers, are entitled to some safeguard against unreasonable interference.

6.0 p.m.

I draw the Secretary of State's attention to the consequences of that unreasonable interference as it affects food and essential services. What may not be so readily realised is that if a distributor of food or essential services is told, for whatever reason, that his margin has to come down to a very low level, or even to a loss, what is likely to happen is not just that he will suffer very badly but that other retailers in that industry will suffer even more, because it is likely to be the efficient retailer who has a reasonably high margin.

The hon. Member for Burnley referred to a company with which I am associated, which is trading at a margin of, let us say, 3½ per cent. If it were told "That is too much. You must reduce it to 2 per cent.", the margin of those retailers who were trading at a margin of 1½ per cent—which is something near to the average in the industry at present—would have to come down as well. They would all be trading at a loss. The obvious consequence would be that they would rapidly go out of business. The public would find that they could not get certain products at all because shops could sell them only at a price which did not provide any profit. There would be fewer outlets, and the customer would suffer.

The essential thing which the Secretary of State always seems to overlook, and which is in the very meaning of the word "safeguards", is that safeguards provide confidence in the link between investment and employment. We know, unhappily, that there are all too many Labour Members who do not believe in profits at all. Those below the Gangway, steadily drawing reinforcements from the drop-outs from the Treasury Bench, becoming ever more numerous and noisy, do not like profits of any sort. Those who have to take investment decisions certainly do not find that very reassuring.

Without safeguards, the risk that the public run is that the efficient distributors will be penalised and the less efficient distributors will, in consequence, be driven out of business altogether. Not only will the employees in the industry suffer, but the general public will suffer too.

If there is any imperfection in the drafting of these amendments, that, surely, can be put right. What we need is to be reassured that at least the spirit of them is accepted by the Government.

If these two amendments are not wrecking amendments, they are the nearest thing to wrecking amendments that I have seen in a very long time. If, as the hon. Member for Hove (Mr. Sainsbury) suggests, all the expertise on how companies are run and managed lies on the Opposition Benches, perhaps the hon. Member could tell us how the Opposition came up with two such sloppy and indecisive amendments. When they say that they know so much about the way in which firms and industries are run, and presume to know so much about the effects of industrial disputes, how did they table such amendments?

I am sure that the public are absolutely convinced that we have not had any real control over prices for probably the last decade. Some would wonder whether we have ever had any. Therefore, any measure which at least attempts to make the control over price increases a bit more restrictive—I put it no higher than that—commands my support. However, if these two amendments were accepted, there would be very few companies which could not plead in aid one or other of the amendments.

My right hon. Friend has already raised the question of how one distinguishes between an essential and a nonessential firm or industry. It has been suggested that Metal Box is an essential firm and part of an essential industry. On that reckoning, I would think that practically every firm is essential to the economy.

We are also reminded that the amendment speaks of companies supplying foods. My right hon. Friend was quite right to mention the case of Imperial Tobacco, which, to smokers, provides essential products—cigarettes, cigars and pipe tobacco—and it also supplies a whole range of foodstuffs, not forgetting its potato crisps, which are, I suppose, both food and essential to some people.

Essential services will have to include, presumbaly, electricity boards, British Railways, bus services and all the industries under public ownership and enterprise. Taking the first amendment, this would simply mean that we would have endless argument. Presumably, company lawyers would be going to court to claim that their companies were supplying food of some kind or were connected with the supplying of food, or that they were an essential service of some kind.

There have already been cases in which this safeguard has prevented the Price Commission from doing its job properly: for example, Tate and Lyle and Cadbury Schweppes. I do not know whether another example, Allied Breweries, provides food. Many of us think that beer is a food. There is the case of Imperial Tobacco and a number of other companies which may be classed as being in the food industry. A whole number of others, by any kind of consideration, would be classed as essential services.

Therefore, amendment No. 1 is either a wrecking amendment or a nonsensical amendment, as is amendment No. 2.

Would the hon. Gentleman look at this matter rather differently if the Government brought forward a schedule, as suggested by my hon. Friend the Member for Hove (Mr. Sainsbury), defining which services should be deemed essential?

No. It is not simply that the amendment is nonsensical. It is that it is in these very areas of foodstuffs and essentials we ought to have some real and positive price controls. It is in these areas that, for totally different reasons, we ought to have controls. We do not have them.

I do not know about the companies with which the hon. Member for Hove is associated. He is a director of a number of companies. Family firms have been mentioned, and all the rest. I have no idea what kind of prices the hon. Gentleman's companies charge in their retail outlets. All I can say is that the vast majority of people would insist that there have been no controls whatever over the prices of foodstuffs and that it is nonsense to talk about competition keeping down prices, because companies use a different loss-leader each day. As I said on Second Reading, they expect our wives or ourselves to go from one end of a city centre to the other to pick up a bargain here and a bargain there, which is insulting to our intelligence and certainly suggests that the time of our wives is absolutely worthless.

I insist that it is in these very areas of food and essential services that we ought to have some price controls. I do not accept that the so, called competition which it is suggested we have is sufficient to keep down prices. I believe that under decimalisation, for example, the retail outlets made a bomb. They robbed the British people. The hon. Member for Hove shakes his head, but I believe that to be so. He had better talk to the British public and hear what they think about retail outlets and the way in which they behaved over decimalisation.

I am certain that the House will oppose any attempt to keep the Price Commission in its present weakened state in response to increased prices in the food industry and essential services.

Would the hon. Gentleman care to relate his remarks about price control and the food industry to the present employment situation in the bakery industry?

The hon. Gentleman should look at the increases in prices right across the board in the food industry, very largely determined by the indefensible common agricultural policy of the Common Market. Even so, there have been no effective controls. I do not believe that the Price Commission, apart from the case of tea—and there may be a couple of other items—has had any real and effective control over food prices. The complaints that I get from housewives is that prices go up and down in different shops and that they have to go, almost in a confused state, from one shop to another. We know that shops use a particular product as a loss-leader to get people into the shop. But once they have got them in, they con them in all kinds of ways.

Clearly, the hon. Gentleman is not going to believe me, and it does not seem that he is going to believe the hon. Member for Burnley (Mr. Jones). I can quote one or two other authorities on the effectiveness of competition. For example, the Secretary of State for Prices and Consumer Protection himself said, on 6 March 1978:

"I have no doubt that active competition in the retail grocery trade will ensure that these reductions in blenders' prices will generate a lower price in the shops."—[Official Report, 6 March 1978; Vol. 945, c. 447.]
The right hon. Gentleman said only last month:
"in a highly competitive industry such as food production and retailing, any reduction in costs ought to be passed on by a reduction in prices."—[Official Report, 22 January 1979; Vol. 961, c. 66.]
The Price Commission itself has said:
"We believe that the overall level of profitability in the manufactured food industry in recent years has been low in common with the rest of industry."
It also talks, in its report on Cadbury Schweppes, about increasing competition.

I do not know whether that was an intervention or a speech. I do not accept any of the suggestions that the hon. Gentleman has quoted—I do not care where they come from. The Price Commission, for example, talks about the level of profitability in food manufacturing, but it has also referred in that context to the rest of British industry. I do not accept those figures either. It is all very well for the hon. Member for Hove to smile, but I suggest that he reads the Peachey report. There is a lovely bit at the beginning of that report, a lovely example of the watering down of the capital involved, to give an opportunity, five or six years later, of saying "Our return on this capital is only 2 or 3 per cent." or some lower figure.

There has been a considerable amount of watering down of capital in British industry, giving scrip shares, free shares and goodness knows what else, and then saying "On the capital employed we are only earning 2 or 3 per cent.". We all know the kinds of financial machination that some firms and their accountants get up to. I am only saying that housewives and the males who have to do the shopping are convinced that not enough has been done to keep down the price of foodstuffs, and are not convinced that this so-called competition which we are told exists is sufficient to keep down the price of foodstuffs.

Amendment No. 6 says:
"in the case of companies affected by industrial disputes, in order to earn profits sufficient to recover costs occasioned thereby".
My right hon. Friend is right. This is a nonsense of an amendment, because it says "affected by industrial disputes." Thousands of companies at any one time could attempt to argue that they are affected in some way by industrial disputes. Under the amendment' they would be allowed to put up their prices, presumably to earn profits sufficient to recover costs.

I dispute what our expert—who is, I suspect, the director of many more companies than he let on—said earlier, that it is quite easy for companies to assess how much they have lost in an industrial dispute. I refute that suggestion. Companies, too, will refute it. One should study the exaggerated figures that are thrown out when there is an industrial dispute and then study the balance sheets later for that year. One will soon see therein the lies that have been thrown out at the moment of this so-called great crisis, mainly created by the media, over the lorry drivers' dispute. Companies have been talking of losing millions of pounds. But, on the basis of the figures that they suggest they are losing, or have lost, they must be making massive profits, even obscene profits.

6.15 p.m.

Companies say that they have already lost this profit or that profit in a matter of two or three weeks. Extrapolate these profit figures over the whole year, and one can only suggest that they must be making massive profits. Let us wait until we see the balance sheets. If hon. Members opposite are such great experts, they should know that following an industrial dispute a good deal of the production and the orders is made up, and that at the end of the day the amount that has been lost is often very small indeed.

I do not accept, therefore, that one can put any kind of figure on the losses claimed. I certainly would not accept managements' figures about what they claim to have lost in industrial disputes, because we know what kind of picture they are trying to paint. In my judgment, the majority of industrial disputes are caused by the inefficiency of British management, whether that inefficiency is in terms of industrial and personal relations or in communication, or whatever the management jargon may be, whether it is failure to use the disputes procedures in a proper way or a failure to respond in a proper way to a pay claim.

It is interesting to note that a tribunal sitting in Bristol has just come out with an offer to the lorry drivers that the Road Haulage Association could have made before the strike began and which could have stopped the strike. The tribunal, an independent group of people, decided that the lorry drivers ought to be getting £64 a week for 40 hours. The RHA could have made that offer three or four weeks ago.

The hon. Gentleman has made the rather wild assertion that most of the troubles are due to the inadequacy or inefficiency of British management. Can he explain why that should be so? Why should British management be so inefficient in comparison with managements in Germany, Holland, Belgium, the United States and other capitalist countries? Is there any valid reason for that?

Order. I must relieve the hon. Member for Bristol, North-West (Mr. Thomas) of the difficulty of replying, or the ease of replying, whatever he feels about it, because we are getting out of order if we stray away to other countries. We must stay with the amendments.

In the main, the rigid class structure of our society produces managers who fail in their industrial and personal relations, in communication and in other aspects of management techniques, and fail through their wrong sets of values. In this acquisitive society—my right hon. Friend the Prime Minister used that term; he does not like to use the term "capitalist society", but that is what he really meant—it is employers and managements who are responsible for most of the industrial disputes in this country.

The amendment suggests that inefficiencies and inhumanities should be subsidised instead of firms being criticised and shown the errors of their ways, in the hope that those concerned will do better next time. The amendment suggests that whenever an industrial dispute is created anywhere in the country employers should be subsidised and allowed to keep the same profit levels. I hope that the Committee will not pass this amendment, which would give firms further excuses to create even more strikes so as to attract subsidies.

The two amendments are nonsense. I hope that they will be thrown out by the Committee. Even though the Price Commission does not have anything like sufficient powers to keep prices down, it should have the powers suggested in the Bill, and it should not be limited by exempting foods, essential services or other companies affected by industrial disputes. If that were allowed to happen it would completely wreck the intention of the measure.

I declared my interest on Second Reading. However, I should like to refer to the remarks of the Seecretary of State. He seems to have forgotten that the profitability of British industry is one-third of what it was 10 years ago, that we are paying ourselves twice as much for producing no more than in 1974, and that we have 1 million more people unemployed. In his rejection of these amendments he used the word "viability". He was concerned about the viability of companies. He seems to forget that companies are in business to make a profit and that profit is essential for investment and the generation of jobs. He made it clear that he was looking to the Price Commission to develop an intervention-its role which did not recognise the right of a company to pursue the legitimate profit that it should make and was concerned only whether that increase was a matter of life or death for that firm.

As I explained on Second Reading, my company suffered a reduction in its profitability for reasons that we believe lie outside the terms of the legislation. I do

In preserving margins in food, which the second amendment seeks to do, the not wish to go into that further now. time value of money is all-important. I shall give a concrete example from our own experience. One may apply for an increase only to a civil servant, who then goes to the representatives of the Commission. If they ask a supplementary question, time is wasted while the process filters back. In our case there was a question dealing with cider apple concentrate. We were asked why we could not deal in the commodity market. There is no commodity market in cider apple juice. Much time was therefore wasted. An exactly analogous situation may arise with any food commodity.

Certainly General Foods, to which my hon. Friend the Member for Pudsey (Mr. Shaw) referred, found that the variations in the price of coffee contributed millions of pounds to its costs. If it cannot recover those costs immediately, as part of an international company it will find that its profitability drops and that it will attract less investment support as against other companies in that oragnisation across the world.

I ask the Secretary of State to consider whether, at a time when we seek to attract foreign investment, it is right to deprive companes coming here of at least the minimal defence that these amendments would give us. Foreign investors look at this country and see the state of our industrial relations. They note the rate of inflation. They observe a number of aspects that are unattractive. When they find that they cannot price their products to ensure that their investment remains valid, an investment in this country looks even less attractive.

I regret that the Secretary of State has not seen fit to accept these amendments.

Most hon. Members on both sides of the Committee realise the importance of profits. There is no more effective way of measuring the efficiency of a business than by profits. All my hon. Friends agree with me. Why we should have these absurd lectures on elementary economics from the Opposition I cannot understand. This is in keeping with the debate on these amendments by the Opposition.

Members on both sides agree that there have been the most deplorable industrial disorders in the past few weeks. These have done severe damage to our economy. There is no escape from that. We all accept it. At the same time, some of the industrial stories have been justified. Many of them have been based on psychological considerations. The most important psychological consideration is prices. Almost every striker has at home a wife who grumbles about prices. It is deplorable that when the Government introduce a Bill that should have a real effect on prices and on the psychological cause of industrial unrest, we have interference from the Opposition. It is unfortunate.

Last week the Leader of the Opposition said that she would co-operate in any way with the Government to put a stop to the industrial disorders. The Government now introduce a Bill that could have an important psychological effect on all trade unionists, everywhere, yet we now witness opposition—although not very effective—that is intended to drive a coach and horses through the Bill.

Is the hon. Gentleman aware that on Monday, in the Second Reading debate, one of his hon. Friends said that the TUC would take very little notice of this Bill?

I did not hear that remark. I was not present for the whole debate. However, I cannot take responsibility for every word uttered by every one of my hon. Friends.

Amendments of an extraordinary nature have been introduced. I shall not repeat what my right hon. Friend the Secretary of State said. The effects of these amendments are preposterous. The words "essential services" could result in a schedule running to seven volumes. Amendment No. 6 contains the suggestion that companies should be able to recoup profits lost as a result of industrial disputes. This could be applied in the infinite future. In 10 years' time a company could say that it had lost sales as a result of the strike in 1979.

We should maintain the standard of our debates and ensure that the Opposition draft amendments of a more intelligent nature. The hon. Member for Hove (Mr. Sainsbury) apologised for the amendments. I hope that the hon. Member for Pudsey (Mr. Shaw) will take note. I believe, from a nod of his head, that he accepts a share of the repsonsibility for drafting the amendments. We have a responsibility to maintain the standards of debate. If we debate amendments which hon. Members on both sides agree would be totally preposterous in their effects if added to the Bill, it will considerably lower our standards. Is it possible for my right hon. Friend's Department to give assistance to the hon. Member for Gloucester (Mrs. Oppenheim) and her colleagues in drafting amendments, so that at least they make sense and are comprehensible?

The amendments are fatuous. They are incompetently drafted. They are meant to drive a coach and horses through and wreck a Bill which will have important psychological effects in putting an end to the present industrial disorders.

These are two important amendments. That is the only reason why I intervene. I did not take part in the Second Reading debate, although I read the debate in the Official Report. I take part as one who has worked with the food industry for 15 years and who believes that amendment No. 6 will have a major beneficial effect, if carried, on industry in my constituency.

I sit as an industrial Member and therefore shall comment on the second amendment. The problem faced by the Committee is the speed with which the Bill is being pushed through Parliament. Those of us who have worked on complicated Bills in this and other areas will know that there were many amendments, although not correctly drafted, which the Government, after due deliberation, accepted when they had a chance to reflect on the implications.

Here the great difficulty is that we are dealing with the value judgments of the Price Commission versus the experience of business. I know that the right hon. Gentleman has said that that is a sufficient safeguard, but he and I know that historically the rate of return on capital in the food industry is low and that there is low investment in that industry.

6.30 p.m.

We have to ask one fundamental rhetorical question. Do we or do we not want a viable and successful food manufacturing industry? If the answer is "No", let the Bill go through, and we can all forget about the food manufacturing industry. If the answer is "Yes", I urge the right hon. Gentleman to listen to the representations that he gets from the food industry from time to time and to try for once to help the industry and understand its problems.

The right hon. Gentleman knows as well as I do that commodity prices can and do rocket. He knows that they can move within a week, and move very substantially. We all remember the way in which the price of cocoa rose at one time. The same happened with coffee and other commodities. This can have a major effect on the future profitability of a company and on its cash flow.

The right hon. Gentleman knows as well as I do that the loss of production by food manufacturing industry in the last three weeks—particularly by those companies which use edible oils—has been lost for ever. It will never be made up. It is not like the capital goods sector, where there is simply a delay for a period of time. The margins that would have been earned have gone for ever, but the overheads remain. Furthermore, it seems that the right hon. Gentleman and his hon. Friends are not interested in product development and product improvement. That is not a dimension that is taken into consideration by them.

I have in my constituency the head office of Rockware Glass, a company that controls about 30 per cent. of the glass bottle market. The first effect of the present secondary picketing, which has hit the company very badly, is that bottles are now being imported. There is competition from the Continent. The prices are considerably higher than those of home-manufactured articles. They are coming into the country so that the people who use the bottles can have something to fill. There is a double effect here. It not only affects the balance of payments adversely. It also affects the profitability of the companies which are using the bottles, and it affects the housewife because the prices go up. The company is facing a major cash flow problem. The factory is stacked up to the gunnels with bottles. The product has not gone out for the last two or three weeks and the raw materials have not managed to get in.

It is the cash flow effect that is so important in relation to these industrial disputes. I do not share with Labour Members their complacency when they say that manufacturers and industrialists pretend that the figures are this, that or the other. Anyone running a business knows very quickly the effect on it of an industrial dispute. If the right hon. Gentleman does not agree with my statement, he should ask his Department to telephone the head office of Rockware Glass, in Northampton, tomorrow morning and ask the company to cost-up during the day the net effect on it of the present strike. If he does that, he will find that the company will be able to produce a fairly accurate estimate by the end of the day.

I also sit for a new town. If the right hon. Gentleman thinks that this sort of Bill helps to attract industry from all over the world to our new towns, he is very much mistaken. This sort of Bill is a major deterrent to future employment in this country. If Labour Members are at all concerned about employment, they ought to realise that industry must be reasonably profitable and earn a reasonable rate of return on its capital. It cannot do that if the Government are waiting all the time to pounce on it.

I believe that the right hon. Gentleman was right originally when he put his safeguard provisions into the Price Commission Act. Indeed, there are elements of the original Bill that many of us who work with industry understand and with which we have some sympathy. But if some of the basic safeguards are removed, it will jeopardise all the good will and all the other necessary elements. The Bill that we are now considering seeks to take away these safeguards, and the timing is very inopportune in relation to the crisis that much of industry is facing.

One is left with the conclusion that the motivation for the Bill has nothing to do with the future of industry or with benefits for the housewife. It is a rather shoddy political manoeuvre so that the Labour Party can blazen it from the electoral platforms when the general election takes place.

I shall not follow the rather exaggerated statements of the hon. Member for Northampton, South (Mr. Morris) about the effects of the Bill. I do not share his fears about the effects on industrial investment. I do not think that they will in any way be realised.

My right hon. and hon. Friends have dealt adequately with the obscure nonsense of the amendments. I accept the point, put to us by the Opposition Front Bench, that the amendments had to be drafted quickly. I am sure that the Opposition share the concern of my right hon. Friend and other Labour Members that a Bill of this sort was needed very quickly in the circumstances facing the country. In view of this, I have no complaint about the obscurity of some of the amendments.

The amendments have the specific aim of narrowing drastically the discretion of the Price Commission, whereas the whole purpose of the Bill is to widen the discretion. The unfortunate impression that we have had this evening from the Opposition is that there is no discretion whatever, and no power for any interim increase to be made. We have been given the impression that if the Bill becomes law there will be no interim increases. That is an absurd suggestion to make. In effect, the Price Commission will have far greater discretion in the interim increases which can be made.

I have been appalled at some of the wilder statements from the Opposition about investment and profitability. I accept entirely that the profitability of British industry is far from low, and I am sure that hon. Members on each side of the House would accept that. I have some knowledge of industry in general but no knowledge whatever of the food industry. I accept that in certain parts of the food industry profit margins are at present extremely low, but I do not think it can be said that the Bill is such a violent instrument that it will materially affect that position.

I have only a slight knowledge of the coffee market, but my understanding is that sometimes the fluctuation in coffee prices leads not only to low profit margins but can lead to high profit margins. Surely the whole aim of the Bill is to deal with the company which is making bumper profits and to remove any need for an interim increase.

I have a long list here of the various companies over which there was no discretion whatever under the previous Act. The remarkable thing—I do not know how my right hon. Friend would explain this—is that the same companies have been listed by the Opposition Front Bench as examples of the other side of the coin. Nevertheless, the serious point is that here we have a list of companies in relation to which the Price Commission had no option but to grant a 100 per cent. interim increase. That means, although I do not doubt the detailed investigations by the Commission, that it is difficult for the Commission to turn the clock back on an increase once it has been granted for an interim period.

There has been a tendency, in cases where the Commission eventually did not grant full increases, for a compromise to be sought. This is the danger, as I see it, in the narrow discretion currently available to the Price Commission. For that reason, we should reject these amendments. They narrow even further the discretionary powers of the Commission.

To echo the words of my hon. Friend the Member for Loughborough (Mr. Cronin), the important thing about the Bill is not that it will have enormous effects on industry but that it will not even have a measurable effect on prices. In the present industrial relations climate, the psychological effect of any measure which combats price increases in any way is extremely valuable. To be able to combat increases, the Price Commission needs the widest discretionary powers possible. For that reason, we should reject these amendments.

I find myself in exactly the same position as my hon. Friend the Member for Northampton, South (Mr. Morris). I, too, was unable to take part in the Second Reading debate, but I believe that these two amendments go to the heart of the badness of this Bill.

I have spent a lifetime in line management in British industry—not lecturing on it or commenting on it, but working in it. I can assure Labour Members that whenever a management committee or a board decides to put up prices it does so as a last resort. No company wants to put up prices. When I listened to what was said by the hon. Member for Bristol. North-West (Mr. Thomas)—who represents the views of so many Labour Members below the Gangway—I put it down, not to malevolence but to ignorance. No legislation is required, because competition keeps down prices in the private sector.

I do not wish, in the interests of time, to go into sophisticated arguments about what is the yardstick of profitability, whether it be the return on capital invested or some other yardstick. But there is one simple yardstick, and that is the percentage profit on sales. Labour Members are so often inclined to mention the profits of millions and millions of pounds made by a certain company without relating them in any way to sales. I would like to mention some of Britain's top companies—half a dozen of them in different sectors.

Labour Members think it is great to be able to point out that Unilever made £611 million, as detailed in its latest published accounts. But what was that figure as a percentage of sales? It was 7¼ per cent. That was before putting aside money for reserves, or any dividends to shareholders, and various other commitments. A profit of 7¼ per cent. on sales is not a proper return. It should be 10 per cent. as a minimum. Therefore, none of this legislation is required for companies whose published accounts show less than 10 per cent. profit on sales.

I give some more examples. P & O made 4½ per cent. profit, Marks and Spencer 5 per cent., Beecham 9 per cent., Scottish and Newcastle Breweries 9 per cent., and, as mentioned by the hon. Member for Keighley (Mr. Cryer), the company which is a great friend of the Chancellor—and I suppose I can declare an interest here—Saatchi & Saatchi 3½ per cent.

This legislation is both unnecessary and damaging. There is a far greater instrument available for bringing down prices than any Government legislation, and that is competition. If legislation is needed, it is to deal with Government monopolies. That is where competition cannot operate to bring down prices. It is with the greatest pleasure that I support the amendment so ably moved by my hon. Friend the Member for Pudsey (Mr. Shaw).

6.45 p.m.

We have heard some remarkable speeches from the Government Benches. First, we were told that these amendments would drive a coach and horses through the principle of the Bill, yet several Government spokesmen have assured us that there is no substance in the Bill. They say that it is largely psychological. The hon. Member for Loughborough (Mr. Cronin) shakes his head, but I think that two, or possibly three, speeches made during the debate referred to the overwhelming importance of the psychological element in this Bill. The hon. Member for Bristol, North-West (Mr. Thomas) said so. Those speeches implied, as did that of the hon. Member for Cannock (Mr. Roberts), that this Bill would achieve very little.

I did not say quite that. I said that the main element of the Bill was the psychological one. I accept that. But would the hon. Gentleman not accept that, with our industrial relations as tense as they are, the psychological aspect is an extremely important one?

I may accept that. But the hon. Gentleman and his colleagues say that this Bill is largely psychological and yet argue that these amendments will, in some strange way, drive a coach and horses through that psychology. I cannot follow the mixture of metaphors that has been introduced. What worries me, although not in the same way as it did my hon. Friend the Member for Kidderminster (Mr. Bulmer)—because I do not regret that the Government have not accepted these amendments in their present form—is that we have not heard a single word from the Government to the effect that they would accept the motive behind the amendments. We have had no suggestion that the Government regard these aims as desirable. All that we have heard are criticisms of the amendments on such details as bad wording or hasty drafting, or on the ground that they go too far.

We have not heard anyone say that it is desirable that companies should have enough profits to maintain their supplies. How bad it would be if companies did not have sufficient profits to maintain such supplies. The hon. Member for Bristol, North-West was extremely biased in his judgment on this matter. I hope that the country never has to rely upon that kind of judgment. It was appalling. If we have companies that do not have adequate profit margins and cannot maintain their supplies, we shall be in a desperate plight. There have been more realistic speeches. The hon. Member for Cannock said—I thank him for it—that he had found no evidence of the gross overpricing to which his hon. Friend the Member for Bristol, North-West referred. He agreed that prices, and certainly profits, were, historically, very low.

Whatever may be the deficiencies of some of our heavy manufacturing industries, there is a lot of evidence that in the food and distributive trades we are, perhaps, better off than most of our competitors in the free world. The distributive trade, in particular, is probably as good as any in Europe or beyond. We are not dealing here with one of the most defective sections of the economy. Perhaps it is one of the better parts of our economy. I would have liked to detect, especially from the Minister, some readiness to accept the principle of the amendments. I accept that there should be some classifying, some scheduling of essential services. I hope that the Government will accept the aim of the amendments.

I appreciate the problems of the Commission. Here I differ from some of my hon. Friends. Given this type of control, I accept that it is difficult, within this setting, to check all the claims that are being made. It is certainly not beyond the ingenuity of a Commission advised by contemporary accountancy to do this task. It can be done by companies with much smaller resources. I hope that the Government will say that they are prepared to accept what lies behind the amendment.

We have had a fairly full debate on this group of amendments. I regret that I seem to have provided amendments that the Secretary of State found sloppy and inadequate. Perhaps a sloppy Bill deserves sloppy amend-

Division No.57]


[6.52 p.m.

Adley, RobertBottomley, PeterClark, William (Croydon S)
Aitken, JonathanBoyson, Dr Rhodes (Brent)Clegg, Walter
Alison, MichaelBradford, Rev RobertCockcroft, John
Arnold, TomBraine, Sir BernardCooke, Robert (Bristol W)
Atkins, Rt Hon H. (Spelthorne)Brittan, LeonCope, John
Atkinson, David (B'mouth, East)Brooke, Hon PeterCormack, Patrick
Awdry, DanielBrotherton, MichaelCostain, A. P.
Baker, KennethBrown, Sir Edward (Bath)Craig, Rt Hon W. (Belfast E)
Beith, A. J.Bryan, Sir PaulCrouch, David
Bell, RonaldBuchanan-Smith, AlickCrowder, F. P.
Bendall, VivianBuck, AntonyDean, Paul (N Somerset)
Bennett, Dr Reginald (Fareham)Budgen, NickDodsworth, Geoffrey
Benyon, W.Bulmer, EsmondDouglas-Hamilton, Lord James
Berry, Hon AnthonyBurden, F. A.Drayson, Burnaby
Biffen, JohnButler, Adam (Bosworth)du Cann, Rt Hon Edward
Biggs-Davison, JohnCarlisle, MarkDurant, Tony
Blaker, PeterChalker, Mrs LyndaDykes, Hugh
Body, RichardChurchill, W. S.Eden, Rt Hon Sir John
Boscawen, Hon RobertClark, Alan (Plymouth, Sutton)Edwards, Nicholas (Pembroke)

ments. They compare favourably with the drafting of the Price Commission Act, which, in section 2, contains such garbage—talking about the duties of the commission in performing functions—as:

"to have regard to all matters which appear to the Commission in the particular circumstances to be relevant … and not to have regard to any other matters."

Two or three points of substance have emerged from the debate. The first is the major disagreement between ourselves and the Government about whether it is right to give further discretion to the Commission. This is the main reason for moving this amendment. We do not believe that the increased discretionary powers given under the Bill will be used in the somewhat sacred way in which the Secretary of State suggested the Commission has always acted. We believe that industry is substantially disheartened by the way in which the Bill has been rushed through.

The hon. Members for Cannock (Mr. Roberts) and for Loughborough (Mr. Cronin) suggested that the Bill would have important psychological overtones. If the Government's pay policy of 5 per cent. has any overtones, I suggest that this Bill contains an infinitesimal amount of overtone, which will do little to influence the industrial setting. The right thing to do is to demonstrate our dislike of this measure and our support of the amendments. I therefore ask my right hon. and hon. Friends to press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 256, Noes 270.

Elliott, Sir WilliamKing, Evelyn (South Dorset)Rees, Peter (Dover & Deal)
Emery, PeterKitson, Sir TimothyRees-Davies, W. R.
Eyre, ReginaldKnox, DavidRenton, Tim (Mid-Sussex)
Fairbairn, NicholasLamont, NormanRhodes James, R.
Fairgrieve, RussellLangford-Holt, Sir JohnRidley, Hon Nicholas
Farr, JohnLawrence, IvanRidsdale, Julian
Fell, AnthonyLawson, NigelRifkind, Malcolm
Finsberg, GeoffreyLester, Jim (Beeston)Roberts, Michael (Cardiff NW)
Fisher, Sir NigelLewis, Kenneth (Rutland)Roberts, Wyn (Conway)
Fletcher, Alex (Edinburgh N)Lloyd, IanRoss, Stephen (Isle of Wight)
Fletcher-Cooke, CharlesLoveridge, JohnRoss, William (Londonderry)
Fookes, Miss JanetLuce, RichardRossi, Hugh (Hornsey)
Forman, NigelMcAdden, Sir StephenRost, Peter (SE Derbyshire)
Fowler, Norman (Sutton C'f'd)McCrindle, RobertRoyle, Sir Anthony
Fox, MarcusMcCusker, H.Sainsbury, Tim
Fraser, Rt Hon H. (Stafford & St)Macfarlane, NeilSt. John-Stevas, Norman
Freud, clementMacGregor, JohnScott, Nicholas
Fry, PeterMacKay, Andrew (Stechford)Shaw, Giles (Pudsey)
Galbraith, Hon T. G. D.Macmillan, Rt Hon M. (Farnham)Shelton, William (Streatham)
Gardiner, George (Reigate)McNair-Wilson, M. (Newbury)Shepherd, Colin
Gardner, Edward (S Fylde)McNair-Wilson, P. (New Forest)Shersby, Michael
Gilmour, Rt Hon Sir Ian (Chesham)Madel, DavidSilvester, Fred
Gilmour, Sir John (East Fife)Marshall, Michael (Arundel)Sims, Roger
Glyn, Dr AlanMarten, NeilSinclair, Sir George
Godber, Rt Hon JosephMates, MichaelSkeet, T. H. H.
Goodhew, VictorMather, CarolSmith, Cyril (Rochdale)
Goodlad, AlastairMaude, AngusSmith, Dudley (Warwick)
Gorst, JohnMawby, RaySmith, Timothy John (Ashfield)
Gow, Ian (Eastbourne)Maxwell-Hyslop, RobinSpeed, Keith
Gower, Sir Raymond (Barry)Mayhew, PatrickSpence, John
Gray, HamishMeyer, Sir AnthonySpicer, Michael (S Worcester)
Griffiths, EldonMiller, Hal (Bromsgrove)Sproat, Iain
Grimond, Rt Hon J.Mills, PeterStainton, Keith
Grist, IanMiscampbell, NormanStanbrook, Ivor
Grylls, MichaelMitchell, David (Basingstoke)Stanley, John
Hall-Davis, A. G. F.Moate, RogerSteel, Rt Hon David
Hamilton, Archibald (Epsom & Ewell)Molyneaux, JamesSteen, Anthony (Wavertree)
Hamilton, Michael (Salisbury)Monro, HectorStewart, Ian (Hitchin)
Hampson, Dr KeithMontgomery, FergusStokes, John
Hannam, JohnMoore, John (Croydon C)Stradling Thomas, J.
Harrison, Col Sir Harwood (Eye)More, Jasper (Ludlow)Tapsell, Peter
Haselhurst, AlanMorgan, GeraintTaylor, R. (Croydon NW)
Hastings, StephenMorgan-Giles, Rear-AdmiralTaylor, Teddy (Cathcart)
Havers, Rt Hon Sir MichaelMorris, Michael (Northampton S)Tebbit, Norman
Hayhoe, BarneyMorrison, Hon Charles (Devizes)Temple-Morris, Peter
Heseltine, MichaelMorrison, Hon Peter (Chester)Thatcher, Rt Hon Margaret
Hicks, RobertMudd, DavidThomas, Rt Hon P. (Hendon S)
Hodgson, RobinNeave, AireyTownsend, Cyril D.
Holland, PhilipNelson, AnthonyVan Straubenzee, W. R.
Hooson, EmlynNeubert, MichaelVaughan, Dr Gerard
Howe, Rt Hon Sir GeoffreyNewton, TonyViggers, Peter
Howell, David (Guildford)Nott, JohnWainwright, Richard (Colne V)
Howells, Geraint (Cardigan)Oppenheim, Mrs SallyWalker, Rt Hon P. (Worcester)
Hunt, David (Wirral)Page, Rt Hon R. Graham (Crosby)Walters, Dennis
Hunt, John (Ravensbourne)Page, Richard (Workington)Weatherill, Bernard
Hurd, DouglasPardoe, JohnWells, John
Hutchison, Michael ClarkParkinson, CecilWhitelaw, Rt Hon William
Irving, Charles (Cheltenham)Pattie, GeoffreyWhitney, Raymond
James, DavidPercival, IanWiggin, Jerry
Jenkin, Rt Hon P.(Wanst'd&W'df'd)Peyton, Rt Hon JohnWigley, Dafydd
Johnson Smith, G. (E Grinstead)Pink, R. BonnerWinterton, Nicholas
Johnston, Russell (Inverness)Powell, Rt Hon J. EnochWood, Rt Hon Richard
Jones, Arthur (Daventry)Prentice, Rt Hon RegYounger, Hon George
Jopling, MichaelPrice, David (Eastleigh)
Joseph, Rt Hon Sir KeithPrior, Rt Hon JamesTELLERS FOR THE AYES:
Kaberry, Sir DonaldPym, Rt Hon FrancisMr. Spencer Le Marchant and
Kilfedder, JamesRaison, TimothySir George Young.
Kimball, MarcusRathbone, Tim


Abse, LeoBenn, Rt Hon Anthony WedgwoodBuchanan, Richard
Allaun, FrankBennett, Andrew (Stockport N)Butler, Mrs Joyce (Wood Green)
Anderson, DonaldBidwell, SydneyCallaghan, Rt Hon J.(Cardiff SE)
Archer, Rt Hon PeterBishop, Rt Hon EdwardCallaghan, Jim (Middleton & P)
Armstrong, ErnestBlenkinsop, ArthurCampbell, Ian
Ashley, JackBoardman, H.Canavan, Dennis
Ashton, JoeBooth, Rt Hon AlbertCant, R. B.
Atkins, Ronald (Preston N)Boothroyd, Miss BettyCarmichael, Neil
Atkinson, Norman (H'gey, Tott'ham)Bottomley, Rt Hon ArthurCarter, Ray
Bain, Mrs MargaretBoyden, James (Bish Auck)Carter-Jones, Lewis
Barnett, Guy (Greenwich)Bradley, TomCartwright, John
Barnett, Rt Hon Joel (Heywood)Brown, Hugh D. (Provan)Castle, Rt Hon Barbara
Bates, AlfBrown, Robert C. (Newcastle W)Clemitson, Ivor
Bean, R. E.Buchan, NormanCocks, Rt Hon Michale (Bristol S)

Cohen, StanleyJeger, Mrs LenaPrice, William (Rugby)
Coleman, DonaldJekins, Hugh (Putney)Radice, Giles
Colquhoun, Ms MaureenJohn, BrynmorRees, Rt Hon Merlyn (Leeds S)
Concannon, Rt Hon JohnJohnson, James (Hull West)Richardson, Miss Jo
Conlan, BernardJohnson, Walter (Derby S)Roberts, Albert (Normanton)
Corbett, RobinJones, Alec (Rhondda)Roberts, Gwilym (Cannock)
Cowans, HarryJones, Barry (East Flint)Robertson, George (Hamilton)
Cox, Thomas (Tooting)Jones, Dan (Burnley)Robinson, Geoffrey
Crawshaw, RichardJudd, FrankRoderick, Caerwyn
Cronin, JohnKaufman, Rt Hon GeraldRodgers, George (Chorley)
Crowther, Stan (Rotherham)Kelley, RichardRodgers, Rt Hon William (Stockton)
Cryer, BobKerr, RussellRooker, J. W.
Davidson, ArthurKilroy-Silk, RobertRoss, Rt Hon W. (Kilmarnock)
Davies, Bryan (Enfield N)Kinnock, NeilRowlands, Ted
Davies, Rt Hon DenzilLambie, DavidSandelson, Neville
Davies, Ifor (Gower)Lamborn HarrySedgemore, Brian
Davis, Clinton (Hackney C)Lamond, JamesSelby, Harry
Deakins, EricLatham, Arthur (Paddington)Sever, John
Dean, Joseph (Leeds West)Leadbitter, TedShaw, Arnold (Ilford South)
Dempsey, JamesLestor, Miss Joan (Eton & Slough)Sheldon, Rt Hon Robert
Dewar, DonaldLever, Rt Hon HaroldShore, Rt Hon Peter
Doig, PeterLewis, Ron (Carlisle)Short, Mrs Renée (Wolv NE)
Dormand, J. D.Litterick, TomSilkin, Rt Hon John (Deptford)
Douglas-Mann, BruceLofthouse, GeoffreySilkin, Rt Hon S. C. (Dulwich)
Duffy, A. E. P.Loyden, EddieSilverman, Julius
Dunn, James A.Luard, EvanSkinner, Dennis
Dunnett, JackLyon, Alexander (York)Smith, Rt Hon John (N Lanarkshire)
Eadie, AlexLyons, Edward (Bradford W)Snape, Peter
Edge, GeoffMabon, Rt Hon Dr J. DicksonSpearing, Nigel
Ellis, John (Brigg & Scun)McCartney, HughSpriggs, Leslie
English, MichaelMacCormick, IainStallard, A. W.
Ennals, Rt Hon DavidMcDonald, Dr OonaghStewart, Rt Hon Donald
Evans, Fred (Caerphilly)McElhone, FrankStewart, Rt Hon M. (Fulham)
Evans, Ioan (Aberdare)MacFarquhar, RoderickStoddart, David
Evans, John (Newton)McKay, Allen (Penistone)Stott, Roger
Ewing, Harry (Stirling)MacKenzie, Rt Hon GregorStrang, Gavin
Fernyhough, Rt Hon E.Maclennan, RobertStrauss, Rt Hon G. R.
Fitt, Gerard (Belfast W)McMillan, Tom (Glasgow C)Summerskill, Hon Dr Shirley
Flannery, MartinMadden, MaxSwain, Thomas
Fletcher, L. R (Ilkeston)Magee, BryanTaylor, Mrs Ann (Bolton W)
Fletcher, Ted (Darlington)Mallalieu, J. P. W.Thomas, Dafydd (Merioneth)
Foot, Rt Hon MichaelMarks, KennethThomas, Jeffrey (Abertillery)
Ford, BenMarshall, Jim (Leicester S)Thomas, Mike (Newcastle E)
Forrester, JohnMason, Rt Hon RoyThomas, Ron (Bristol NW)
Fraser, John (Lambeth, N'w'd)Meacher, MichaelThorne, Stan (Preston South)
Freeson, Rt Hon ReginaldMellish, Rt Hon RobertTierney, Sydney
Garrett, John (Norwich S)Mikardo, IanTilley, John
George, BruceMillan, Rt Hon BruceTomlinson, John
Gilbert, Rt Hon Dr JohnMiller, Dr M. S. (E Kilbride)Torney, Tom
Ginsburg, DavidMitchell, Austin (Grimsby)Tuck, Raphael
Golding, JohnMolloy, WilliamVarley, Rt Hon Eric G.
Gould, BryanMoonman, EricWainwright, Edwin (Dearne V)
Gourlay, HarryMorris, Alfred (Wythenshawe)Walker, Harold (Doncaster)
Grant, George (Morpeth)Morris, Rt Hon Charles R.Walker, Terry (Kingswood)
Grocott, BruceMorris, Rt Hon J. (Aberavon)Ward, Michael
Hamilton, James (Bothwell)Morton, GeorgeWatkins, David
Hamilton, W. W. (Central Fife)Moyle, Rt Hon RolandWeetch, Ken
Harrison, Rt Hon WalterMulley, Rt Hon FrederickWeitzman, David
Hattersley, Rt Hon RoyMurray, Rt Hon Ronald KingWellbeloved, James
Hayman, Mrs HeleneNewens, StanleyWelsh, Andrew
Healey, Rt Hon DenisNoble, MikeWhite, Frank R. (Bury)
Heffer, Eric S.Oakes, GordonWhitlock, William
Henderson, DouglasOgden, EricWilley, Rt Hon Frederick
Home Robertson, JohnO'Halloran, MichaelWilliams, Rt Hon Alan (Swansea W)
Hooley, FrankOrbach, MauriceWilliams, Rt Hon Shirley (Hertford)
Horam, JohnOrme, Rt Hon StanleyWilliams, Sir Thomas (Warrington)
Howell, Rt Hon Denis (B'ham, Sm H)Ovenden, JohnWilson, Gordon (Dundee E)
Hoyle, Doug (Nelson)Padley, WalterWilson, William (Coventry SE)
Huckfield, LeePalmer, ArthurWise, Mrs Audrey
Hughes, Rt Hon C. (Anglesey)Park, GeorgeWoodall, Alec
Hughes, Robert (Aberdeen N)Parker, JohnWoof, Robert
Hughes, Roy (Newport)Parry, RobertWrigglesworth, Ian
Hunter, AdamPavitt, LaurieYoung, David (Bolton E)
Irving, Rt Hon S. (Dartford)Pendry, Tom
Jackson, Colin (Brighouse)Penhaligon, DavidTELLERS FOR THE NOES:
Jackson, Miss Margaret (Lincoln)Perry, ErnestMr. James Tinn and
Janner, GrevillePrice, C. (Lewisham W)Mr. Ted Graham.
Jay, Rt Hon Douglas

Question accordingly negatived.

I beg to move amendment No. 7, in page 1, line 10, after 'examinations)', insert

'and except as regards any notification given by the Commission in pursuance of subsection (1) of section 4 of that Act in respect of any increase of which notice has been given to the Commission in pursuance of an Order under section 5 of the 1973 Act where the said notice is given more than twelve months after the previous such notice'.

With this we are to take the following amendments:

No. 9, in page 1, line 12, leave out 'Section 4(5)(b) and (ii)' and insert 'In Section 4(5)(b)'.

No. 11, in page 1, line 17, leave out 'shall cease to have effect' and insert
'there shall be added at the end of the paragraph the words "and that the notice given to the Commission which is the subject of the notification in pursuance of subsection (1) of this Section has been given more than 12 months after the previous such notice given by the relevant person".'.
No. 19, in page 1, line 18, leave out subsection (3).

No. 20, in page 2, line 7, leave out subsection (4).

No. 21, in page 2, line 15, leave out subsection (5).

No. 22, in page 2, line 22, leave out subsection (6).

I shall first sketch the background to this proposal, which I hope the Secretary of State will agree is eminently sensible and is certainly a long way from anything that he could call a wrecking amendment.

The purpose of the Price Commission Act 1977 was to enable the Commission to forbid, or in some cases to reduce, price increases where its investigations showed that they were unjustified. It was felt, however, that mere suspicion by the Commission that a price increase was unjustified was not sufficient reason to ban or reduce the increase. It was therefore accepted that any action of the Commission must depend not on its suspicions but on the outcome of its investigations. Obviously, such investigations would take place only where the Commission felt that there was a prima facie case against the proposed increase.

When the 1977 Bill was being discussed in Parliament the question arose of what should be done during the period of investigation. I accept the Government's view that there is a genuine problem here for anyone seeking to control prices. Let us imagine a company which notifies the Commission of its intention to make a price increase which the Commission feels is totally unjustified. If the Commission can do nothing about the increase until it has completed an investigation which, if it is to be sophisticated, may take quite some time, it will be shutting the stable door after the horse has bolted. Price control is ineffectual in those circumstances.

Many people argued that the best way of dealing with the problem was to allow the price increase until the Commission had completed its investigation. If the investigation showed that the increase was unjustified, it could be rolled back. That procedure would be possible with such items as telephone charges and electricity bills. The customer could be rebated or discounted on a future bill. But it is a difficult procedure to implement with general price increases. It was felt on both sides of the House, after the matter had been discussed in 1977, that the procedure was not satisfactory.

The Government were still faced with the problem of what to do during the period of investigation if they did not want the price increase to take effect without hindrance. So a satisfactory compromise was reached. A safeguard allowed companies to increase their prices immediately by the amount needed to restore their profits to a basic minimum level. The Bill seeks to remove that safeguard. My hon. Friends and I believe that the Bill is wrong, but we have already had a Second Reading debate this week.

The Bill proposes one exception to the general abolition of the safeguard. I shall not go into the details because they are set out clearly in the Bill.

My amendment proposes another exception—not extensive but, nevertheless, important and deserving. In order to understand the amendment, one has to examine the working procedures of the Price Commission over the period since the 1977 Act came into force.

Much of the Commission's best work has been done through consultation and agreement with the companies. I am sure the Secretary of State would accept that and wish that work to continue. If an atmosphere of parties glowering over the table is generated, no agreement can take place, and that is hopeless and inimical to any hope of price control.

Some companies—generally the large ones—are required by the 1977 Act to notify the Commission of their intention to raise prices, at which point discussions take place. The discussions are informal and private, which I believe to be a good thing at that stage. During these discussions the practice has been for the representatives of the Commission to ask the company to give an assurance that if the notified price increase goes ahead there will not be a further increase for at least 12 months.

The 12-month rule on prices has been largely accepted by the companies. This is an immensely important factor in stabilising not only the size but the frequency of price increases. The 12-month rule also applies to wage claims. The trade unions originally accepted the rule voluntarily. I am not sure whether it is still accepted—we shall have to wait and see. That had an effect upon wage inflation.

The 12-month rule on prices has been beneficial to the economy. It has had a stabilising effect that has been beneficial for the producer of parts who sells his products to manufacturers who then assemble them into the finished product. There has always been a problem for someone buying from a person higher up the line. If the buyer does not know that the price of the product will remain stable for the next 12 months, he has to guess the likely rise, if there is to be one, in order to publish his catalogue, including the price increases for the next 12 months. He would also wish to make quotations for the next 12 months. A builder buying building products, such as copper pipes, wants to know, when he quotes for a house which will not be built for 12 months, whether the prices will remain stable.

It would be helpful right through the economy if large major companies which supply primary products announced that their prices would not be increased over the next 12 months. Clearly, there cannot be a total guarantee, and the Price Commission has never asked for one, but there has been a mutual understanding and agreement which has worked well generally.

If the builder further down the line guesses that there will be increases over the next 12 months in, for example, the price of radiators, bricks and cement, and so on, he adds a percentage—usually 50 per cent.—to his prices to be on the safe side. However, he may be wildly inaccurate. Therefore, I believe it to be important for the Government to encourage the continuance of the 12-month rule.

The Secretary of State will remember the previous practice. In the Ford Motor Company, there was at one time a whole department whose job it was to concoct the case for a price increase every three months. On the day, almost as the clock struck, the claim was submitted, with all the documentation behind it. In that way there is an appalling escalation in price inflation. The three-month rule was a disaster, and to return to it would be disastrous.

How can companies be encouraged to practise the 12-month rule? My hon. Friends and I do not support the Bill. However, it encourages the use of the 12-month rule, and these amendments seek to maintain the basic profit safeguard for those who agree to the rule.

If the Government resist this amendment, they will pave the way for more frequent price increase notifications and more demands and requests to the Price Commission, which will become bogged down. The Government will throw away the co-operation that has been built up between the companies and the Price Commission over the last year or so.

7.15 p.m.

I hope that the Government will accept the amendment. It is a pity that there are no Scottish National Party Members present. I do not know whether they have done a deal with the Government. I should not be surprised if they had—and who am I to blame them? I hope that they will not be deterred from voting for the amendment by the bullying of the Secretary of State, who, I believe, has told them that the amendment has been concocted by the CBI. I am aware of the regional reason that the SNP has for disliking the CBI, since it seems to be funding the "No" campaign in Scotland. However, not everything said by the CBI in England is nonsense, even though that may be the case in Scotland. I received this information from a member of the CBI, though not the CBI itself.

I believe that the amendment makes good sense. It will assist the Commission in its job and prevent the frequency of price increases that would otherwise take place.

Perhaps, Sir Myer, I can explain the reason for your eye alighting upon the hon. Member for Cornwall, North (Mr. Pardoe) before it alighted upon me. Although my name and the names of my hon. Friends appear on the Amendment Paper before that of the hon. Member for Cornwall, North, your immediate predecessor in the Chair explained that this was because an error had been made in the printing and that there were witnesses to the fact that the hon. Member for Cornwall, North had submitted his amendment—which is identical to ours—first to the Public Bill Office.

I hope that my hon. Friend the Member for Pudsey (Mr. Shaw) will not take it amiss if I suggest that, he having accepted responsibility for submitting our amendment, if the Liberals now claim that this move is of their inspiration alone—and certainly if history is to turn upon the accident of who arrives first with the amendment and a great consequence flows from the speed of the race to the Public Bill Office—Opposition amendments should be entrusted to a Member with longer legs.

I turn to the amendment, which I believe to be sound good sense. The hon. Member for Cornwall, North made out the main case for it. It seems to be a case of justice for those firms which, by choice or order, have forgone a price increase for a period of 12 months. I believe that it is reasonable that such a firm should not have its price increase application frozen for a further period of three or four months while an investigation is carried out.

The Bill is intended to remove safeguards provided in the regulations under the Price Commission Act 1977. I remind the House of the Secretary of State's view on those safeguards. He said, in a press statement on 15 June 1977:
"The safeguards are not what the Price Commission or the Government will regard as reasonable profit levels. They are essentially a minimum—the legal protection of a level of profits below which no company will ever be forced to operate, even if all the other built-in safeguards are not already there."
The purpose of the Bill, by the right hon. Gentleman's definition, is to remove safeguards which are providing an essentially minimal protection to profit—the safety net below which he thought that no company could reasonably be asked to operate.

The other safeguards to which the right hon. Gentleman referred were those embodied in section 2 of the Act, to which he turns increasingly to give assurance that companies have nothing to fear in allowing greater discretion to the Price Commission. That is not my view. Therefore, the purpose of the amendment is to temper that discretion and to limit it in this small but vital way.

If companies are, for whatever reason—by obligation, choice, exercise of social responsibility, which no doubt will appeal to the Secretary of State, or for commercial or other reasons—to forgo a price increase in their product for a period of 12 months at a time of rising inflation, it is only reasonable that they should not run the risk—discretion or no discretion—of having the price of their product frozen for a further period of three to four months. That appears to be equitable, and I hope that it will be accepted by the Government.

It follows that if a company is able to absorb the pressures upon it in a period of 12 months—and pressures are posed first by inflation, currently running at 8·4 per cent. and generally acknowledged to be rising—it means that in the course of a year costs generally will be rising in that order. Costs in individual industries could be running at a much faster rate, particularly in regard to commodities affected by world prices rather than anything that happens in the internal economy.

In those circumstances it seems reasonable not to allow the Price Commission the discretion to withhold the interim safeguard which a company can look to and rely upon. We seek to give that company the continued certainty that in those circumstances it will be protected.

I wish to reinforce the case already made for not allowing the Commission further discretion. It already has wide powers of discretion under the original Act. I question the need to give the Commission greater discretion because of of its character. I question also its much-vaunted claim to independence. It has always been potentially a political instrument of government and, although it claims independence, there are several signs of its not having the independence we should like to see it have.

Many of us would support some of the functions of the Commission. However, we would like to see them vested not in that body but in a new Monopolies and Mergers Commission. We think that there are areas of imperfect competition in the British economy which deserve scrutiny and require action.

The Price Commission, under its chairman, is composed of men and women of no doubt balanced views, but it is characteristic of the Secretary of State's appointments to the Comission that, for example, the statutory housewife on that body should prove to be not just any housewife but an active member of the Eltham Labour Party. That calls into question whether the character of the Commision might influence its reports, particularly when one appreciates that these investigations can be carried out by as few as three members of the Commission. Therefore, an individual's personal attitude undoubtedly could colour the eventual report that emerges.

Will the hon. Gentleman elaborate on the membership of the Commission? He said on Second Reading that the Commission's chairman was an ex-candidate for the Labour Party. Do the Opposition feel that every quango must now be filled with those who have no allegiance to either the Conservative or the Labour Party? If that is so, the Liberals appear to have a marvellous future. The most attractive prospect opens up for us. Is that what the hon. Member is suggesting?

No. I am sorry to disappoint the hon. Gentleman in the expectation of what he will do when he retires in a few months' time. That is not my belief, nor is it the view of any reasonable person. I am suggesting that with a chairman of the Commission who is parti pris a committed Labour Party supporter, and who in a recent article claimed that he did not intend to enter into party politics in public for the time being, there is at least a suspicion—I put it no higher—that in some ways his attitude may be influenced. I suggest that his relationship with the Secretary of State will be that much closer than if the chairman were, say, the hon. Member for Cornwall, North or any other average man in the street chosen to fill that post.

Originally, the Secretary of State was to have the power himself to initiate price investigations. That was a power that he had to forgo—and rightly so. What political power that would have given him on such occasions as this, as we are approaching a general election. This is one way in which we can temper the political potentiality of the Commission. The right hon. Gentleman can initiate examinations into sectoral industries but can no longer initiate price investigations.

I should like to illustrate why I believe it is dangerous to give added discretion to the Commission. I wish to give a little evidence of what I see as a changing role of the Commission.

The mechanism is triggered in most cases by pre-notification of a price increase. That is the way in which the process begins. The Commission reacts to that price increase application and decides whether prima facie there is cause for investigation to see whether the price is justified. That is in its way a passive role. It does not at present have greater powers of discretion beyond what is put to it other than by the Minister referring sectors to it for examination.

I wish to draw attention to a new development of Government policy. The Secretary of State has drawn great strength from the criteria of section 2 as guiding the Commission. He even went so far as to say that if the Commission went outside those criteria—

Order. I am in a certain amount of difficulty. Will the hon. Member help the Chair by indicating how he is relating his remarks about investigation by members of the Commission to the amendment that is under discussion dealing with the 12 months period?

I shall be glad to do so, Sir Myer. In the amendment we ask that the discretion of the Price Commission to allow interim safeguards should not be given to it but that it should be automatic. The reason why I am arguing on those lines is that the Price Commission is taking on itself responsibilities for exercising a much wider role in the organisation of the economy than merely confining itself to price increases in isolation. The evidence lies in a written answer given to me on Monday of this week by the Under-Secretary of State for Prices and Consumer Protection. He told me:

"The function of the Price Commission is, however, to investigate prices and price increases on a selective basis in accordance with the criteria set out in section 2 of the Price Commission Act 1977, and not to seek to control the general level of inflation."—[Official Report, 29 January 1979; Vol. 961, c. 327.]
That is the view of the Minister and his Department in interpreting the Act, and I accept that view within the Act.

7.30 p.m.

The chairman of the Price Commission recently said:
"Over the next year"
—that is, 1979—
"we will be playing our role to the full in counter-inflation policy as opposed simply to competition policy."
That is a mistaken view. The Commission's role is not to make judgments on targets for inflation or levels of wage increases. The point is clearly illustrated in the Commission's latest report. It is claimed that
"All sectors of the community, Government, industry, trade unions and consumers, are on record as believing that it is imperative to keep the rate of inflation at or below its present level."
The Commission believes that it should exercise its discretion to meet that objective, taking as support
"the emphasis placed on a reduction in the rate of inflation both by the Trades Union Congress and by the Confederation of British Industry at their recent conferences, the declarations of support for that objective by spokesmen from all major political parties and the National Consumer Council".
If we allow the Commission discretion in these matters, it may seek to echo hints given by Ministers at national level about what its role should be.

The Secretary of State for Transport said, over the weekend:
"There is now a respectable case for a pay and prices freeze."
If the Commission were to accept such guidance on its role, if given that extra discretion, it might well freeze the price of a product under investigation, even though that product might have been sold at the same price for 12 months and the increasing cost pressures had been contained over that period.

In conclusion, it is not only equitable to seek implementation of this point in the Bill; the increasingly wide economic role of the Commission suggests caution by this House rather than greater freedom in conferring extra powers on it.

I do not propose to follow the hon. Member for Romford (Mr. Neubert) in any great detail. But for once I must comment on his habit, which not even all his hon. Friends will admire, of always playing the man rather than the ball in talking of the Price Commission.

He tells us cynically that the ex-managing director of a merchant bank who has become chairman, since he is also a member of the Labour Party, must be a force for the end of civilisation as we know it. He reveals that the housewife who is a member of the Commission is also a member of the Labour Party. I am delighted to discover that. But he does not tell the House that among the other sinister men and women who will be influenced by every ministerial hint is the ex-deputy chairman of Unilever, the ex-managing director of Esso, the next deputy chairman of Wimpey, a director of Beechams and a partner in Arthur Anderson, the senior industrial accountants in London. I have no idea for which party they vote or what their political philosophy is. I suspect that if any of us wanted to transform the Price Commission into a covert agency for Socialism in our time, one of those members might publicly complain.

The amendment was moved by the hon. Member for Cornwall, North (Mr. Pardoe) as if it had some meaning, as opposed to the general smears from the hon. Member for Romford. I am surprised at the arguments between the Liberal Party and the Conservative Party about the parentage of the amendment. The arguments are rather semantic as to whether it was canvassed by the CBI or a member of the CBI and therefore appeared twice in almost identical form. I shall not go into that semantic distinction. We all know that the amendment has an industrial origin, and some of us would say that it is none the worse for that.

I do not complain of the origin of the amendment or the drafting. The drafting is from the Conservatives and not the Liberal Party, and they could not even copy it correctly. But the concept of the amendment is absurd. The hon. Member for Cornwall, North made the best possible case that he could. At one stage he appeared to be arguing that by supporting the amendment we would more fiercely be holding down prices than we would be if the amendment were not carried. On examination, I do not believe that he would agree that to be the case.

The amendment says that a company which puts up its prices once every 366 days shall not be prevented from so doing by a Price Commission investigation. A company which puts up its prices every 364 days shall be investigated by the Commission. But the company in the 366-day category has advantages over its competitor or partner company simply through a 48-hour difference between their price notifications. That clearly does not make sense. Any policy that requires a company to wait for a day after the year for the price increase to be automatic and not to be questioned is absurd. It discriminates between two different companies.

Much as I wish to see price increases spread over as long a period as possible, some price increases are necessary in under a year. We heard a great deal about the food industry in the previous amendment. The Commission has a proper record of not applying rigid rules to limit a company to a year for a price increase. It has allowed more rapid increases because of the rising cost of raw materials. If the amendment were passed, companies with fast-moving imports and raw materials which quickly change in price would be at a disadvantage compared to those companies with a small import of raw materials which do not have to put up their prices more than once every 365 days.

I return not only to the discrimination of the amendment but to the absurdity that a company can, if it wants, wait for 366 days and put its price up with impunity but if it needs or wishes to do after 364 days it will be prevented in some way. It is not an example that could never arise. I shall describe by way of hypothesis how such a situation could occur. Until the Price Commission decides whether or not to investigate such increases, I am not allowed to know what companies notify price increases. But on 20 January the Morning Advertiser—which, as the House will know, is the journal of the brewing trade—said that Scottish and Newcastle Breweries was reported to be planning a 3p a pint increase. Let us assume that the Morning Advertiser discovered that two days after the company had put in its price application on 18 January.

We know that Scottish and Newcastle Breweries last made a price application on 30 January 1978. If the amendment is passed, all that the company will have to do is withdraw the price application that it made on 17, 18 or 19 January—and I am still hypothesising. Were it to leave it in, it would be subject to examination or investigation. It would have to put it in 11 days later, when it would not be subject to such investigation.

It provides another means for companies to drive a coach and horses through the provisions of the Price Commission Act, if they are fortunate enough to be able to spread their price increases over 11 or 11½ months—almost a year. That opportunity is not given to food manufacturers and other companies dependent upon raw materials; for example, companies with high copper ingredients in their metal products. They do not have the same opportunity to manipulate their price increases, and that seems to me to be absurd.

Does the Minister appreciate that when Scottish and Newcastle Breweries put in that application its management accountants were able to advise the company that at that time it was making less than 10 per cent. percentage return on sales?

The hon. Gentleman may well be right. It may well be that Scottish and Newcastle Breweries deserves a 3p increase on a pint. It may be that when the Commission examines the application it will say "Absolutely right, Scottish and Newcastle. Have 3p on a pint with our blessing".

But that is not the point that we are arguing. The point that we are arguing is twofold. It is a point in principle whether the Price Commission should be allowed to exercise its discretion and to make that judgment. We disagree about that. It is also a point of absurdity whether the Price Commission's right to do so is determined by whether Scottish and Newcastle Breweries puts in for its increase on 17 January or on 1 February. The absurdity of that seems so self-evident that I shall leave the Committee to judge the merits of the amendment.

I regret that the Secretary of State did not respond in a constructive way to the very conciliatory approach of the hon. Member for Cornwall, North (Mr. Pardoe). The hon. Gentleman suggested something that seemed eminently sensible—that companies should be allowed to trade with certainty, if they held back their prices for 12 months, against the total uncertainty of the present situation. The hon. Member for Cornwall, North rightly pointed to the necessity of the Price Commission's continuing to enjoy the good will of industry. That is not something to be taken for granted at the present time. A lot of people in industry would like to see positive action taken against what they regard as totally discriminatory action. Of course, it would be open to all companies to put in applications at the present time, to swamp the Commission and to make its work absolutely untenable. However, I believe that industry will respond responsibly, although it looks to the Minister also to behave responsibly.

I should like to dwell on two recent cases to show where the good will of industry is being put at risk. Perhaps the first case is not so serious as the second. My first example relates to Allied Breweries. The company estimates that the cost of the investigation to it was about £200,000. The whole company came to a halt. It was faced with a number of people inquiring into all aspects of its business. Most of them were accountants by training, who were quite unable to grasp many of the complexities of such a large organisation, yet under the Act they were bound to complete their investigation within three months. I believe that that was an impossible job, although the Committee should not think that I want such an investigation to take longer.

It meant that when the report had been written it contained a great deal of inaccuracy, which could sensibly have been put right by the company, but once that report had gone to the Department, without consultation, it was enshrined in stone and could not be altered. Therefore, a good deal of inaccuracy, which otherwise could have been corrected, is in the hands of the Minister.

The second case concerns Royal Doulton. There, the Commission issued a report that was unfavourable. The chairman had given an undertaking in writing that consultation would be extended before the report was published. The company received by telex the proposed press release at 11 a.m. It was a critical one. It was told that the report would be issued at 2.30 p.m., but it subsequently transpired that it had been given to the Lobby the day before. That report was critical of a number of features, and the headline gave the impression—I believe an unfair one—that the company was not as well run as those in the industry believe it is.

That report was certainly damaging to management morale. It prejudiced customers' confidence in the company, and it should be remembered that 55 per cent. of the company's output is exported. All this was based on criticisms of the level of stockholding at a time when a major reorganisation was being undertaken. One United States customer who saw a copy of the press release could not believe that a Government agency would issue a report of this sort, which could only react to the benefit of Royal Doulton's competitors in other countries.

I hope that the Secretary of State will take both these points on board and ensure that they are put right when the Commission undertakes investigations in the future.

7.45 p.m.

The hon. Member for Kidderminster (Mr. Bulmer) raised two interesting points, one of which related to inaccurate reports being produced by the Commission. I thought that the Commission consulted the firms concerned in the fullest possible way and that the firms could make representations before the reports are published. If the hon. Gentleman is aware of circumstances where that does not happen, he should report that fact to the Secretary of State with all possible speed.

The hon. Member's other point related to references in a report about a company not being well run. I know nothing about the affairs of Royal Doulton. It may well be that it is a company whose business is run impeccably. But a large proportion of companies in British industry are not well run at all. I cannot think of any other reason why we lag so severely behind our competitors such as Germany, the United States, Japan and even France. I suggest that a lot of companies are very badly run indeed.

I can suggest two quick answers. First, the hon. Gentleman should look at the rate of reward in those countries which operate free enterprise economies. Secondly, I do not think that he begins to understand the extent to which this country is losing its best managers overseas because of our tax system. If he were to ask anyone in British industry today whether they would swop the German system of industrial relations for ours, I am sure that he would get some insight into why.

In my opinion we are straying well outside the scope of the amendment. I ask hon. Members to address themselves to the amendment. There may well be difficulty with it, but I certainly will not allow a wide-ranging debate on the Price Commission.

I am forbidden to take up that point, but I should mention that I am a director of a company that does not face the problem of people going abroad. It is a very efficient company and, therefore, people stay with it.

I was worried by the speech of the hon. Member for Romford (Mr. Neubert). He talked about the chairman of the Commission being influenced by political motives. He rather implied that those motives were not necessarily in the public interest but that they helped the interests of the Labour Party in some unspecified way. That is a very improper assertion.

When we are dealing with bodies such as the Commission, the members of which do very hard work in the public interest, for negligible reward, those members ought to have our support. I was shocked to hear the hon. Gentleman say something which possibly may be repeated in the press and on radio tomorrow. Admittedly, my right hon. Friend the Secretary of State put the matter right by pointing out that most members of the Commission could not possibly be influenced by political motives. It is unfortunate that reference was made to the chairman and to another member. If there has been some occasion on which they have done something for political motives, the hon. Member for Romford ought to say what that occasion was.

I bow immediately to your ruling, Sir Myer, and will not pursue the matter any further.

On a point of order, Sir Myer. The hon. Gentleman has made personal comments about my speech. Surely it is the practice of the Committee that I should be allowed to respond to them, particularly if the hon. Gentleman allows me to intervene.

We are now dealing with Mr. Pardoe's amendment. I do not know whether the hon. Gentleman was present when the Secretary of State replied—he may have been present—but the right hon. Gentleman gave a reply that would be very useful to him. We shall be in great difficulty if hon. Members come into the debate and are not sure which amendment we are discussing. We are now discussing amendment No. 7. However, I will allow the hon. Gentleman to make one short comment before I bring to an end this aspect of the debate.

I am indebted to you, Sir Myer. The hon. Gentleman should not confuse my remarks about being influenced in the direction of Government policy with being influenced by the Labour Party. I spoke of the Government. I quoted the chairman of the Price Commission to illustrate the way in which the role of the Commission has been changing and the influence of Government policy.

I cannot pursue the matter further, Sir Myer, in deference to yourself. It seems a quibble that the hon. Gentleman should dissociate the Government from the Labour Party. I take the view that they must be one homogeneous organisation.

I know that hon. Members want to vote on the amendments as soon as possible. That wish has been conveyed to me from a proper quarter. Therefore, I shall make my comments briefly.

I am appalled at the loose drafting of the amendments. They have an effect that can be described only as preposterous. I cannot understand why the House of Commons should have its time taken up for a whole day to discuss amendments of this nature that are frivolous, badly drafted and have the intention of trying to disturb the effect of a Bill that is extremely necessary in the present unfortunate state of the country.

If my hon. Friend the Member for Cornwall, North (Mr. Pardoe) is fortunate enough to catch your eye, Sir Myer, and is able to reply to the debate when the Committee has had ample time to range over the whole subject, I know that he will explode with a loud bang. The Secretary of State had the impudence to produce an extraordinarily flimsy argument against the amendment. The right hon. Gentleman relied upon the well-known frailty of any arbitrary period. Of course 12 months is an arbitrary period. He produced absurd semantic arguments about a company secretary being lunatic enough to push his application in after 364 days instead of holding it back for 366. That is not a respectable argument. I am sure that it will go for six if and when my hon. Friend takes over the batting.

The Secretary of States does not seem to realise that out of the goodness of our hearts and the breadth of our minds we are, among other things, trying to save him and his party from almost certain disaster in one part of Britain—if not more. If he persists in refusing any safeguard to companies that take the extraordinary risk of keeping their prices stable for 12 months, it is inevitable that, sooner or later, lay-offs, if not a total cessation of business, will occur in some areas. Responsibility will rightly be laid at the door of the right hon. Gentleman and his Government.

Many businesses that operate in a competitive climate take an incredible risk when they go to the extraordinary length in the haywire situation created during recent weeks of keeping their prices stable for the eternity, in modern times, of 12 months. Overheads have a habit of growing like snowballs, and they become more and more of a burden.

In companies that are keeping their prices stable there is an atmosphere of tension and a certain amount of austerity that some members of their staffs begin to find irksome. There is a general tightening of expenses. That is a discipline that some employees cannot endure. Companies that take so many risks for 12 months are surely entitled to the modest safeguard of having a basic profit protected, especially in times when the risks of disputes and being the victims of secondary or tertiary picketing are ever present.

It is a risky period for anybody running a substantial business of the type that has to pre-notify its price increases. It is flying in the face of all business experience in such uncertain times for the Secretary of State to pretend that there is not a special virtue and a special risk in keeping prices stable for as long as 12 months. Therefore, there is a special entitlement to the protection that the amendment modestly proposes.

I thought that the Secretary of State's reply was flippant, unconvincing and unworthy of him. He normally gives serious replies.

The right hon. Gentleman left the Committee with the impression that the only factor stopping companies from increasing their prices was the Price Commission. However, over and over again he argued that it is competition that has the most effect on prices. If a company has held its prices stable for 12 months, it will not say "Three cheers. We can now push our prices straight through the roof regardless".

The Price Commission is only one of the considerations that a company has to take into account. For example, it has to consider its rivals and competition generally. The amendment is not, as the right hon. Gentleman tried to pretend, seeking to give carte blanche to companies that achieve almost the impossible and maintain their prices at the same level for 12 months. The amendment merely provides that companies that achieve that deserve special consideration. They will still have to face competition from their rivals. They will still have to charge a price that the customer is prepared to pay. That is the ultimate discipline on companies.

If the right hon. Gentleman were to consult the Commission, he would find that companies that had not increased their prices for 12 months would be regarded as being in a special category and that that achievement would probably be considered a significant fact in the Commission's taking the decision whether to initiate an investigation. I am sure that the chairman would confirm that.

We are trying to encourage companies at this difficult time to hold their prices for 12 months and to give their customers certainty. We say that if companies do that they should in turn be entitled to special consideration. It is a sensible amendment. It was extremely well moved and the Opposition will have great pleasure in supporting it regardless of who tabled it first.

The Secretary of State talked about the automatic price increase. Plainly, no price increase is automatic. I must remind the right hon. Gentleman of the exact nature of the safeguard. It means that during the period of investigation a company may not increase its prices unless its profits have fallen by 20 per cent. or more. It is not a major safeguard. It is significant. It was thought significant enough to put it into the orginal measure. Indeed, the right hon. Gentleman thought that it was significant enough to argue in favour of it when the orginal measure was passing through the House. A company may increase its prices only to bring its profits back to their level at the base date. It cannot increase its prices very much, whatever happens.

Division No.58]


[8.01 p.m.

Adley, RobertBell, RonaldBoscawen, Hon Robert
Aitken, JonathanBendall, VivianBottomley, Peter
Alison, MichaelBennett, Dr Reginald (Fareham)Bowden, A. (Brighton, Kemptown)
Arnold, TomBenyon, W.Boyson, Dr Rhodes (Brent)
Atkins, Rt Hon H.(Spelthorne)Berry, Hon AnthonyBradford, Rev Robert
Atkinson, David (B'mouth, East)Biffen, JohnBraine, Sir Bernard
Awdry, DanielBlaker, PeterBrittan, Leon
Beith, A. J.Body, RichardBrooke, Hon Peter

The hon. Member for Loughborough (Mr. Cronin) described the amendment as frivolous. The most frivolous reply that the right hon. Gentleman could have made was the arithmetical one of 366 days against 364. That is farcical. He must have thought it up to himself instead of having it written for him. We are not talking about companies that are thinking of increasing their prices on the 364th day. We are talking about companies which may be inclined to increase their prices after six months, three months or nine months.

The amendment may just tilt the balance of argument that it is worth waiting another six months and getting a full 12-month period of stability in a company's prices. A company may consider that it is worth while to hang on, knowing that there is the safeguard if it does. That is all the argument is about. The Secretary of State is throwing away the stability that the 12-month rule would give. He is undermining it and inviting companies to go for three-monthly and six-monthly increases. To throw away the stability of the 12-month rule is crazy and irresponible.

Let me put it this way. Would the Secretary of State like to throw away the 12-month rule on the wages side? He knows perfectly well that that rule provides great stability.

8.0 p.m.

What we really need is a three-year contract on wages and prices. If we can start getting rid of the whole idea of annual increases, we shall be even better off. At least, for heaven's sake let us stick to the 12-month rule. By throwing it away the Secretary of State is doing a great disservice to his own policy of price control. I hope that the Committee will pass the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 256, Noes 270.

Brotherton, MichaelHolland, PhilipPrecival, Ian
Brown, Sir Edward (Bath)Hooson, EmlynPink, R. Bonner
Bryan, Sir PaulHowe, Rt Hon Sir GeofferyPowell, Rt Hon J. Enoch
Buchanan-Smith, AlickHowell, David (Guildford)Prentice, Rt Hon Reg
Buck, AntonyHowells, Geraint (Cardigan)Price, David (Eastleigh)
Budgen, NickHunt, David (Wirral)Prior, Rt Hon James
Bulmer, EsmondHunt, John (Ravensbourne)Pym, Rt Hon Francis
Burden, F. A.Hurd, DouglasRaison, Timothy
Butler, Adam (Bosworth)Hutchison, Michael ClarkRathbone, Tim
Carlisle, MarkIrving, Charles (Cheltenham)Rees, Peter (Dover & Deal)
Chalker, Mrs LyndaJames, DavidRees-Davies, W. R.
Churchill, W. S.Jenkin, Rt Hon P. (Wanst'd&W'dt'd)Renton, Rt Hon Sir D. (Hunts)
Clark, Alan (Plymouth, Sutton)Johnson Smith, G. (E Grinstead)Renton, Tim (Mid-Sussex)
Clark, William (Croydon S)Johnston, Russell (Inverness)Rhodes James, R.
Clegg, WalterJones, Arthur (Daventry)Ridley, Hon Nicholas
Cockcroft, JohnJopling, MichaelRidsdale, Julian
Cooke, Robert (Bristol W)Joseph, Rt Hon Sir KeithRifkind, Malcolm
Cope, JohnKaberry, Sir DonaldRoberts, Michael (Cardiff NW)
Cormack, PatrickKilfedder, JamesRoberts, Wyn (Conway)
Constain, A. P.Kimball, MarcusRoss, Stephen (Isle of Wight)
Craig, Rt Hon W. (Belfast E)King, Evelyn (South Dorset)Ross, William (Londonderry)
Crouch, DavidKitson, Sir TimothyRossi, Hugh (Hornsey)
Crowder, F. P.Knox, DavidRost, Peter (SE Derbyshire)
Dean, Paul (N Somerset)Lamont, NormanRoyle, Sir Anthony
Dodsworth, GeoffreyLangford-Holt, Sir JohnSainsbury, Tim
Douglas-Hamilton, Lord JamesLatham, Michael (Melton)St. John-Stevas, Norman
Drayson, BurnabyLawrence, IvanScott, Nicholas
du Cann, Rt Hon EdwardLawson, NigelShaw, Giles (Pudsey)
Durant, TonyLe Marchant, SpencerShelton, William (Streatham)
Dykes, HughLester, Jim (Beeston)Shepherd, Colin
Eden, Rt Hon Sir JohnLewis, Kenneth (Rutland)Shersby, Michael
Edwards, Nicholas (Pembroke)Lloyd, IanSilvester, Fred
Elliott, Sir WilliamLoveridge, JohnSims, Roger
Emery, PeterLuce, RichardSinclair, Sir George
Eyre, ReginaldMcAdden, Sir StephenSkeet, T. H. H.
Fairbairn, NicholasMcCrindle, RobertSmith, Cyril (Rochdale)
Fairgrieve, RussellMcCusker, H.Smith, Dudley (Warwick)
Farr, JohnMacfarlane, NeilSmith, Timothy John (Ashfield)
Fell, AnthonyMacGregor, JohnSpeed, Keith
Finsberg, GeoffreyMacKay, Andrew (Stechford)Spence, John
Fisher, Sir NigelMacmillan, Rt Hon M. (Farnham)Spicer, Michael (S Worcester)
Fletcher, Alex (Edinburgh N)McNair-Wilson, M. (Newbury)Sproat, Iain
Fletcher-Cooke, CharlesMcNair-Wilson, P. (New Forest)Stainton, Keith
Fookes, Miss JanetMadel, DavidStanbrook, Ivor
Forman, NigelMarshall, Michael (Arundel)Stanley, John
Fowler, Norman (Sutton C'f'd)Marten, NeilSteel, Rt Hon David
Fox, MarcusMates, MichaelSteen, Anthony (Wavertree)
Fraser, Rt Hon H. (Stafford & St)Mather, CarolStewart, Ian (Hitchin)
Freud, ClementMaude, AngusStokes, John
Fry, PeterMawby, RayStradling Thomas, J.
Galbraith, Hon T. G. D.Maxwell-Hyslop, RobinTapsell, Peter
Gardiner, George (Reigate)Mayhew, PatrickTaylor, R. (Croydon NW)
Gardner, Edward (S Fylde)Meyer, Sir AnthonyTaylor, Teddy (Cathcart)
Gilmour, Rt Hon Sir Ian (Chesham)Miller, Hal (Bromsgrove)Tebbit, Norman
Gilmour, Sir John (East Fite)Mills, PeterTemple-Morris, Peter
Glyn, Dr AlanMitchell, David (Basingstoke)Thatcher, Rt Hon Margaret
Godber, Rt Hon JosephMoate, RogerThomas, Dafydd (Merioneth)
Goodhew, VictorMolyneaux, JamesThomas, Rt Hon P. (Hendon S)
Goodlad, AlastairMonro, HectorTownsend, Cyril D.
Gorst, JohnMontgomery, Fergusvan Straubenzee, W. R.
Gow, Ian (Eastbourne)Moore, John (Croydon C)Vaughan, Dr Gerard
Gower, Sir Raymond (Barry)More Jasper (Ludlow)Viggers, Peter
Gray, HamishMorgan, GeraintWalker, Rt Hon P. (Worcester)
Griffiths, EldonMorgan-Giles, Rear-AdmiralWalters, Dennis
Grimond, Rt Hon J.Morris, Michael (Northampton S)Weatherill, Bernard
Grist, IanMorrison, Hon Charles (Devizes)Wells, John
Gyrlls, MichaelMorrison, Hon Peter (Chester)Whitelaw, Rt Hon William
Hall-Davis, A. G. F.Mudd, DavidWhitney, Raymond
Hamilton, Archibald (Epsom & Ewell)Neave, AireyWiggin, Jerry
Hamilton, Michael (Salisbury)Nelson, AnthonyWigley, Dafydd
Hampson, Dr KeithNeubert, MichaelWinterton, Nicholas
Hannam, JohnNewton, TonyWood, Rt Hon Richard
Harrison, Col Sir Harwood (Eye)Nott, JohnYoung, Sir G. (Ealing, Acton)
Haselhurst, AlanOppenheim, Mrs SallyYounger, Hon George
Hastings, StephenPage, Rt Hon R. Graham (Crosby)
Havers, Rt Hon Sir MichaelPage, Richard (Workington)TELLERS FOR THE AYES:
Heseltine, MichaelParkinson, CecilMr. John Pardoe and
Hicks, RobertPattie, GeoffreyMr. Richard Wainwright.
Hodgson, RobinPenhaligon, David


Abse, LeoFord, BenMikardo, Ian
Allaun, FrankForrester, JohnMillan, Rt Hon Bruce
Anderson, DonaldFraser, John (Lambeth, N'w'd)Miller, Dr M. S. (E Kilbride)
Archer, Rt Hon PeterFreeson, Rt Hon ReginaldMitchell, Austin (Grimsby)
Armstrong, ErnestGarrett, John (Norwich S)Molloy, William
Ashley, JackGarrett, W. E. (Wallsend)Moonman, Eric
Ashton, JoeGeorge, BruceMorris, Alfred (Wythenshawe)
Atkins, Ronald (Preston N)Gilbert, Rt Hon Dr JohnMorris, Rt Hon Charles R.
Atkinson, Norman (H'gey, Tott'ham)Ginsburg, DavidMorris, Rt Hon J. (Aberavon)
Bain, Mrs MargaretGolding, JohnMorton, George
Barnett, Guy (Greenwich)Gould, BryanMoyle, Rt Hon Roland
Barnett, Rt Hon Joel (Heywood)Gourlay, HarryMulley, Rt Hon Frederick
Bates, AlfGrant, George (Morpeth)Murray, Rt Hon Ronald King
Bean, R. E.Grocott, BruceNewens, Stanley
Benn, Rt Hon Anthony WedgwoodHamilton, James (Bothwell)Noble, Mike
Bennett, Andrew (Stockport N)Hamilton, W. W. (Central Fife)Oakes, Gordon
Bidwell, SydneyHarrison, Rt Hon WalterOgden, Eric
Bishop, Rt Hon EdwardHart, Rt Hon JudithO'Halloran, Michael
Blenkinsop, ArthurHattersley, Rt Hon RoyOrbach, Maurice
Boardman, H.Hayman, Mrs HeleneOvenden, John
Booth, Rt Hon AlbertHealey, Rt Hon DenisOwen, Rt Hon Dr David
Boothroyd, Miss BettyHenderson, DouglasPadley, Walter
Bottomley, Rt Hon ArthurHome Robertson, JohnPalmer, Arthur
Boyden, James (Bish Auck)Hooley, FrankPark, George
Bradley, TomHoram, JohnParker, John
Brown, Hugh D. (Provan)Howell, Rt Hon Denis (B'ham, Sm H)Parry, Robert
Brown, Robert C (Newcastle W)Hoyle, Doug (Nelson)Pavitt, Laurie
Buchan, NormanHuckfield, LesPendry, Tom
Buchanan, RichardHughes, Rt Hon C. (Anglesey)Perry, Ernest
Butler, Mrs Joyce (Wood Green)Hughes, Robert (Aberdeen N)Price, C. (Lewisham W)
Callaghan, Rt Hon J. (Cardiff SE)Hughes, Roy (Newport)Price, William (Rugby)
Callaghan, Jim (Middleton & P)Hunter, AdamRadice, Giles
Campbell, IanIrving, Rt Hon S. (Dartford)Rees, Rt Hon Merlyn (Leeds S)
Canavan, DennisJackson, colin (Brighouse)Richardson, Miss Jo
Cant, R. B.Jackson, Miss Margaret (Lincoln)Roberts, Albert (Normanton)
Carmichael, NeilJanner, GrevilleRoberts, Gwilym (Cannock)
Carter, RayJay, Rt Hon DouglasRobertson, George (Hamilton)
Carter-Jones, LewisJeger, Mrs LenaRobinson, Geoffrey
Cartwright, JohnJenkins, Hugh (Putney)Roderick, Caerwyn
Castle, Rt Hon BarbaraJohn, BrynmorRodgers, George (Chorley)
Clemitson, IvorJohnson, James (Hull West)Rodgers, Rt Hon William (Stockton)
Cocks, Rt Hon Michael (Bristol S)Johnson, Walter (Derby S)Rooker, J. W.
Cohen, StanleyJones, Alec (Rhondda)Ross, Rt Hon W. (Kilmarnock)
Coleman, DonaldJones, Barry (East Flint)Rowlands, Ted
Colquhoun, Ms MaureenJones, Dan (Burnley)Ryman, John
Concannon, Rt Hon JohnJudd, FrankSandelson, Neville
Conlan, BernardKaufman, Rt Hon GeraldSedgemore, Brian
Corbett, RobinKelley, RichardSelby, Harry
Cowans, HarryKerr, RussellSever, John
Cox, Thomas (Tooting)Kilroy-Silk, RobertShaw, Arnold (Ilford South)
Crawshaw, RichardKinnock, NeilSheldon, Rt Hon Robert
Cronin, JohnLambie, DavidShore, Rt Hon Peter
Crowther, Stan (Rotherham)Lamborn, HarryShort, Mrs Renée (Wolv NE)
Cryer, BobLamond, JamesSilkin, Rt Hon John (Deptford)
Davidson, ArthurLatham, Arthur (Paddington)Silkin, Rt Hon S. C. (Dulwich)
Davies, Rt Hon DenzilLeadbitter, TedSilverman, Julius
Davies, Ifor (Gower)Lee, JohnSkinner, Dennis
Davis, Clinton (Hackney C)Lestor, Miss Joan (Eton & Slough)Smith, Rt Hon John (N Lanarkshire)
Deakins, EricLever, Rt Hon HaroldSnape, Peter
Dean, Joseph (Leeds West)Lewis, Ron (Carlisle)Spearing, Nigel
Dempsey, JamesLitterick, TomSpriggs, Leslie
Dewar, DonaldLofthouse, GeoffreyStallard, A. W.
Doig, PeterLoyden, EddieStewart, Rt Hon Donald
Dormand, J. D.Lyon, Alexander (York)Stewart, Rt Hon M. (Fulham)
Douglas-Mann, BruceLyons, Edward (Bradford W)Stoddart, David
Duffy, A. E. P.Mabon, Rt Hon Dr J. DicksonStott, Roger
Dunn, James A.McCartney, HughStrang, Gavin
Dunnett, JackMacCormick, IainStrauss, Rt Hon G. R.
Eadie, AlexMcDonald, Dr OonaghSummerskill, Hon Dr Shirley
Edge, GeoffMcElhone, FrankSwain, Thomas
Ellis, John (Brigg & Scun)MacFarquhar, RoderickTaylor, Mrs Ann (Bolton W)
English, MichaelMcKay, Allen (Penistone)Thomas, Jeffrey (Abertillery)
Ennals, Rt Hon DavidMacKenzie, Rt Hon GregorThomas, Milk (Newcastle E)
Evans, Fred (Caerphilly)Maclennan, RobertThomas, Ron (Bristol NW)
Evans, Ioan (Aberdare)McMillan, Tom (Glasgow C)Thorne, Stan (Preston South)
Evans, John (Newton)Madden, MaxTierney, Sydney
Ewing, Harry (Stirling)Magee, BryanTilley, John
Fernyhough, Rt Hon E.Mallalieu, J. P. W.Tinn, James
Fitt, Gerard (Belfast W)Marks, KennethTomlinson, John
Flannery, MartinMarshall, Jim (Leicester S)Torney, Tom
Fletcher, L. R. (Ilkeston)Mason, Rt Hon RoyTuck, Raphael
Fletcher, Ted (Darlington)Meacher, MichaelVarley, Rt Hon Eric G.
Foot, Rt Hon MichaelMellish, Rt Hon RobertWainwright, Edwin (Dearne V)

Walker, Harold (Doncaster)Willey, Rt Hon FrederickWoodall, Alec
Walker, Terry (Kingswood)Williams, Rt Hon Alan (Swansea W)Woof, Robert
Ward, MichaelWilliams, Rt Hon Shirley (Hertford)Wrigglesworth, Ian
Watkins, DavidWilliams Sir Thomas (Warrington)Young, David (Bolton E)
Weetch, KenWilson, Gordon (Dundee E)
Weitzman, DavidWilson, Rt Hon Sir Harold (Huyton)TELLERS FOR THE NOES:
Welsh, AndrewWilson, William (Coventry SE)Mr. Ted Graham and
White, Frank R. (Bury)Wise, Mrs AudreyMr Bryan Davies.
Whitlock, William

Question accordingly negatived.

8.15 p.m.

I beg to move amendment No. 33, in page 1, line 10, after 'examinations', insert

'and section 4(5) of that Act'.

With this we may discuss the following amendments:

No. 34, in page 1, line 12, leave out subsection (2).

No. 30, in page 2, leave out lines 8 to 10.

No. 40, in the Schedule page 3, line 5, leave out (a) the word "either";'.

No. 41, in page 3, leave out lines 6 to 8.

No. 42, in page 3, leave out lines 9 to 10.

No. 31, in page 3, leave out line 24.

I make no apology for the fact that if the Opposition succeed in carrying this amendment we shall be restoring to the Bill the possibility of interim safeguards. That is our objective because we believe that the interim safeguards are extremely important.

I remind the Committee what these interim safeguards under the present legislation amount to, because there has been a great deal of misunderstanding about it today. The impression that Government supporters often try to give is that by our opposition to various parts of the Bill we are seeking to promote a price explosion. As we know, that is nonsense. Indeed, the Secretary of State has said time and time again that the effect of the Bill on the retail price index will be minimal.

It is worth considering the safeguards that the Opposition are trying to retain. We are trying to ensure that a company that is about to be investigated retains the right to make a net profit margin of 3 per cent. on the product in question, rising to 12½ per cent. in very exceptional circumstances for very capital-intensive industries. We are trying to make sure that a company is entitled to receive 80 per cent. of the net margin on the product at the date of the last price increase before 1 June 1977. That qualifying increase would come at the end of a period of very severe price restraint and would be based on margin control. It would not be a case of the company being allowed to apply to make 80 per cent. of a net profit margin which had not been controlled. On the qualifying date the product would have been controlled very severely. The final possibility is that the 80 per cent. which I have just mentioned could become 100 per cent. if the company in question was making a very low profit.

We are seeking to retain not the right for companies to make colossal profits but the right for companies which, in order to qualify, have to be making low profits to have that low rate of profitability safeguarded.

As I said on Second Reading—it is common ground between us, based on statistics drawn from the Government's publication Trade and Industry—the level of profitability of British industry is historically extremely low. British industry is now making barely half the profits that it was making in the early 1970s and barely a third of those being made in the 1960s. We are not talking about letting profitable British industry have a bonanza. We are talking about retaining minimum safeguard for companies whose profits have been monitored carefully in very special circumstances.

The Opposition have pointed out again and again to the Secretary of State that one of our principal objections to the Bill is that so many of the powers that it gives to the Price Commission are available to it at the Commission's own discretion and on the basis of very subjective criteria.

It became crystal clear today that the Secretary of State had not read his own Price Commission Act 1977 recently. He and the Under-Secretary on Monday repeatedly quoted those matters to which the Commission was supposed to have regard. However, they forgot to mention section 2. In section 2(1)(a), it is to have regard to all matters that appear to the Commission in the circumstances to be relevant. In subsection (1)(b) it is to have regard in particular to the matters mentioned in the following subsection—again, so far as the Commission considers them relevant. It is up to the Commission to decide whether it considers relevant any of the criteria set out on those things which it should or can take into account. It is entirely at the discretion of the Commission.

We do not pretend that the Commission is concerned in the business of trying to drive companies into bankruptcy. I do not want to level any criticism of that kind at the Commission. What we say is that when the right to have safeguards was introduced into the Bill the Secretary of State admitted that industry was not happy about the new Commission, did not know who would be manning it, did not know how the criteria would be applied, and felt that it needed safeguards.

We have had the Commission for only 16 months. Industry is still not confident that it can rely on the Commission. It feels that it needs statutory safeguards and, in particular, these very important interim safeguards.

As I am sure you would confirm, Sir Myer, those who speak in the House find themselves, from time to time, reading newspapers that they do not normally read. I found myself reading Labour Weekly recently. It is not a paper to which I ever intend to subscribe, but it is one that I happen to have in my hand now. The edition that I have is for 19 January 1977, and the headline reads:
"Jim turns the screw on profits."
There is a revealing passage in an article in that newspaper, written by Mr. Harold Frayman—about whom I know nothing other than that he is rather misguided if his writing is to be believed. He says:
"Until Wednesday any reasonably profitable company could continue profitably, even though subject to a commission investigation and pressure to increase their efficiency or absorb price rises."
What I find interesting about that statement—in the light of the views expressed by Labour Members, when they are here, about profits and the importance that some of them attach to them—is that, to Labour Weekly, even a reasonably profitable company—not a company making excessive profits—which is able to continue to make profits as a result of having the right to an interim safeguard, is offensive. Even reasonable profits, according to that writer, need to be pursued.

Yet over and over again we are reminded—even by the Prime Minister—of the importance of profits, of the need for greater profits, and of the need for further investment. If one reads Labour Weekly, one sees that "Jim's" objective—whoever Jim is—is to turn the screw on profits. That is why he wants to get rid of interim safeguards. If that is the reason, I think that is the best reason of all to resist their removal. We need reasonably profitable companies to be able to continue to make reasonable profits even when something as important as the Price Commission has decided to investigate them.

I shall give another reason why I believe that we ought to retain interim safeguards. The Secretary of State denied, rather feebly, that it had ever crossed his mind that the removal of safeguards and the measures introduced by the Bill could, in any way, be used to replace pay sanctions. The chairman of the Price Commission put it slightly differently. He said "Oh, no. Prices that are jacked up because of high wage rises would not automatically be investigated." He also said that he certainly would not approve of companies that simply passed on large wage increases in price rises. He made it quite clear that a wage increase of over 5 per cent., while not automatically triggering off an investigation, would certainly be a major consideration for him.

I think that the Minister would agree that at present commodity prices are reasonably stable. If there is to be a cost push for industry, it is likely to be a wage push. The principal cause of any increases applied for by companies over the next few months will in many cases be the level of wage settlement at which they are forced to settle.

Although the Minister has gulled his hon. Friends, I believe that this measure and the removal of interim safeguards is once again a way of putting a form of pay sanction on industry. As I said on Monday evening, industry, having been forced to concede the additional wage demand by union pressure, will be penalised. The interim safeguard removal will make companies particularly vulnerable to any wage push.

I should like to refer to a document produced by Phillips and Drew about the profit safeguards. I must be truthful with the House. Phillips and Drew argue that there are grounds for tightening up the safeguard proposals, but they go on to say that it is patently absurd to propose to get rid of the safeguards. Just because in some instances they have worked unsatisfactorily, it is not right to get rid of them all. It may be better to amend them.

The hon. Member is one of the fairest Members of the House, but he is being unfair to Phillips and Drew, because in this instance they argue quite strongly that there are flaws in the safeguard procedure and that matters need to be tightened up. What they are saying is that getting rid of safeguards is quite wrong. They make a very simple point. They say:

"Given that published net profit margins in the United Kingdom are probably around 6 per cent., a 15 per cent. wage award, for example, which could not be passed on would put many companies into at best a break-even situation. This could last for four months, until the investigation was completed and could then be extended if the Price Commission report comes out against the application."
That is fair enough. If the Price Commission's report comes out against the application, it would be extended.

The point I make is that companies that are not particularly profitable at present could find themselves facing very large wage demands and could as a result find themselves in some difficulties.

The Secretary of State tried to tempt us by giving the impression that the nationalised industries were an area which he and the chairman of the Price Commission were particularly anxious to get at, because as loss-makers many of them qualified for automatic safeguard increases.

We all know of the speech that the chairman of the Price Commission made about British Rail. The Secretary of State said that the nationalised industries which are loss-making would be brought within the ambit of the Commisison and would not qualify for automatic increases. We find this a bit of a thin argument. The nation owns the nationalised industries. They are losing money. I cannot believe that the Commission will be the instrument that forces British Rail to de-man. I do not believe that that is the real reason why the Secretary of State wishes to remove safeguards.

We know that in the private sector safeguards have been justified after investigations. The increases allowed have proved to be justified after the investigations in the overwhelming majority of cases, and we think that it is pure semantics on the Secretary of State's part that he tries to tempt us by saying "The people I am really after are the loss-making nationalised industries." We believe that there is an overwhelming case for retaining interim safeguards. We believe that this very critical time, when companies are facing losses through industrial disputes—in some of which the companies concerned are not involved—is a particularly bad time to remove them. That is why we have tabled the amendment and why we will vote for it.

8.30 p.m.

The hon. Member for Hertfordshire, South (Mr. Parkinson) was candid enough to admit that this group of amendments would have a devastating effect on the Bill and are, indeed, intended to degut it. They are intended to retain the principal safeguard but to dispense with the interim safeguard provisions. They would restore the full effect of safeguards during investigation by the Price Commission. They would remove from the Bill the duty upon the Secretary of State.

In advancing his case for the restoration of interim safeguards, the hon. Gentleman deployed a number of arguments which were made at length on Second Reading. I addressed myself to most of them in replying to that debate. I specifically addressed myself to the point about the possible use of the Bill as a sanction on unacceptable pay increases.

My right hon. Friend today pointed to his action in respect of the report on road hauliers as further evidence that there was no such intention in the Government's mind. In so far as it is open to the Secretary of State to implement or not implement a recommendation of the Price Commission, he would not seek to implement a recommendation on the ground that it was a backing to pay policy. But, as I argued on Second Reading, it is not open to the Commission to operate a pay sanction in the way suggested by the hon. Gentleman, because it has a duty not to do so. It has a duty to bear in mind the criteria spelled out in the Bill, and only those criteria.

Clearly, although it is open to the Commission to consider the impact of wage costs upon a proposed price increase, along with all other costs, it has to bear in mind the general criteria spelt out in section 2(1) of the parent Act, which requires it to look at the practice of efficient suppliers of goods and services.

It is clear that my earlier words fell on deaf ears, because the argument has been produced again tonight that there is no intention of using the Bill as a pay sanction. In our view it would not be legally possible to do so. The hon. Member again canvassed the general argument that risk is involved for industry in allowing the Commission to exercise its discretion in determining whether to introduce or permit a price increase and how to react in the period of investigation.

The case for the Bill is that the Commission is better able to judge the profit needs of a company and its circumstances at any one time with the exercise of this discretion, and to act in protection of the public interest, than would be the case if hon. Members sought to apply a general rule about the level of profitability precluding an investigation or the possibility of making a recommendation to restrain prices in advance of the investigation taking place.

Does the Minister agree that in estimating the profit levels the advice to the Price Commission should include keeping a wary eye on dividends? The end product of this would be undesirable if it resulted in bankruptcies and, consequently, more unemployment.

I have no doubt that the Commission will turn its attention instantly to considering whether a case is suitable for investigation and, if it decides to investigate, to precisely the question of whether a company's profitability is such as to lead it to the view that an interim price increase should be allowed. That must inevitably be the first question to which the Commission applies its mind. It has already done so in making interim awards, notwithstanding the presence of safeguards under the parent Act, in five cases out of the total it investigated.

The Commission's readiness to make interim awards where it was not impelled to coinsider the necessary invocation of safeguards seems to me evidence, if that were needed, that it may be relied upon to attach the greatest importance to the profitability of the company and to ensuring that its investigation will not unfairly disadvantage the company. I do not think that there has been any allegation or suggestion that in considering applications for interim awards the Commission has exercised its discretion other than extremely fairly.

Would the Minister be more specific? He said that the Commission was in the best position to judge whether a certain level of profitability was appropriate to the firm in question. Under section 9 of the safeguard provisions immense care was taken to provide precise formulae, which the Secretary of State ultimately issued, as to what should constitute correct profitability in varying industries. It is the removal of this precision and the substitution for it of the discretion based upon extremely general clauses in section 2 that provides the uncertainty which industry now faces.

The hon. Gentleman is right. My right hon. Friend, in devising the safeguard regulations, tried extremely hard to come up with provisions that would be applicable broadly to the circumstances of whole sectors of industry, broadly divided between distributors and manufacturers, but the task of arriving at appropriate levels to safeguard industry in this way is an impossible one to fulfil without in some cases erring on the side of generosity. If the generosity had the effect only of taking some companies out of investigation or preventing the Commission from making recommendations during the period of investigation, that might be acceptable; the problem is that the Act provides that once that over-generosity has taken place there is no possibility of rectifying the position in the public interest.

The price level is determined by the award under the safeguard rules. The defect of making general rules, from the publc interest point of view, is that the Commission, having gone into the circumstances of the company concerned with very great care, is precluded from making the recommendation which it might think appropriate to make.

It is not open to Ministers to examine these matters, and I cannot say, therefore, whether the Commission has in a particular case felt itself precluded from making a recommendation to my right hon. Friend as to how a price might be restrained, and whether it has been prevented from doing so by safeguards. But I can point to the general statements that have been made by the Commission in its quarterly reports, particularly in April last year, in which it said this in general terms. I find that an extremely compelling argument for reviewing the underlying philosophy of safeguards. It is defeating the purpose of the Commission's function, which is to seek to restrain prices in the public interest, that it should be precluded from exercising its judgment when it is appropriate to do it.

I recognise that in this group of amendments the Opposition are proposing to permit the principal safeguard to stand. Hitherto, the principal safeguard has been uninvoked, and I think that the interim safeguards—

I think that the Minister is confusing principal and interim. We are trying to retain the interim in these amendments and not the principal. The Minister has been putting it the other way round.

I am sorry if I have confused the hon. Gentleman. He is proposing, as I understand it, to accept the provisions of the Bill in respect of the principal safeguard.

The principal safeguard has, however, proved to be of relatively minor importance and has not been invoked. That being so, I do not regard it as the most generous concession from the Opposition in the public interest.

I consider that this group of amendments is designed to degut the Bill and that as such it must be most unacceptable to me and to my hon. Friends.

Amendment No. 33, as the Under-Secretary of State rightly said, is intended to have a devastating effect on the Bill, and I am glad that he has taken the point so easily.

I should like to deal with two matters raised by the Minister. The first is whether the Price Commission has the power to refuse price increases on the ground that a wage increase is inconsistent with Government pay policy. He says that this is out of the question and that it is not possible because the Price Commission Act 1977 renders it impossible.

If we look closely at section 2 of the Price Commission Act 1977, we find that subsection (1)(b) requires the Commission to have regard to certain matters mentioned in the following subsections, inasmuch as it considers them relevant. But there is absolutely nothing whatever to stop the Commission from considering them all totally irelevant, and it can therefore fall back on section 2(1)(a), which requires the Commission
"to have regard to all matters which appear to the Commission … to be relevant with a view to restraining prices … so far as that appears to the Commission to be consistent with the making of adequate profits".
I think that the Price Commission could easily find that it was consistent with the making of adequate profits to restrain price increases, on the ground that a wage increase was inconsistent with Government pay policy. Therefore, I do not accept the Government's statement that the Commission does not have this power. I believe that a proper interpretation of section 2 of the 1977 Act suggests that it does.

8.45 p.m.

My second point deals with the Under-Secretary of State's reference to the ability, and indeed the qualifications, of the Price Commission, as opposed to the House of Commons, to determine what is an adequate profit. The significant point is that nowhere in the Act is there a definition of what is adequate profit. Who is to say what is adequate profit? Surely it is a matter of subjective judgment. Some people talk of excessive profits, but what is an excessive profit?

If a company is looking forward to heavy capital expenditure, it must have adequate cash flow and adequate profits to carry out such expenditure.

That is a significant point, both in terms of profitability and of cash flow and I shall say more about cash flow shortly. On the question of the ability, and the qualifications, of the Commission to determine these matters, I think that the same is true of the word "efficiency". That word was bandied about on Second Reading by Labour Members, but nobody defined efficiency. Nor does the Price Commission attempt to define it in any report that I have read. The word is not susceptible to definition. One again it is a matter of an entirely subjective judgment whether a company is efficient.

I make no apology for returning to two matters dealt with on Second Reading, because although I specifically asked for a response to these two points I got none whatever during the course of the reply by the Under-Secretary of State. During the course of his speech the hon. Gentleman chose to deal with various points made by his right hon. and hon. Friends about certain matters relating to the Commission but failed completely to deal with the important points made during the debate. I thought that his speech was in contempt of the House in many ways, because he ignored the debate which preceded his speech.

The two points to which I particularly wanted an answer, and which are germane to this debate, concern, first, the timing of this Bill. We have had no adequate explanation about the timing of the Bill. It was introduced in the middle of an industrial crisis—last week, when the road haulage strike was at its absolute peak.

If we look at the comments made about a recent CBI survey, we se that it says:
"The Confederation of British Industry has started an urgent review into financial problems facing companies as a result of the lorry drivers' strike as fears grow of a serious liquidity crisis.
Growing concern about a cash squeeze, and falling industrial confidence in the wake of inflationary pay settlements, and industrial unrest came through strongly in the CBI's latest industrial trends survey released yesterday.
The CBI is planning to arrange a meeting of senior finance directors to gauge the extent of the problem and the Government and the banks have been alerted."
Indeed, the Secretary of State for Industry referred on Friday to the problems that companies are facing as a result of the present industrial situation.

The report adds:
"the CBI is disturbed that the toll taken by the lorry, drivers' strike will mean many companies … will face cash problems until the summer … some export business may be lost permanently from disenchanted customers."
What a time to introduce a Bill such as this, when companies are hard hit by the industrial situation. We have had no explanation from the Government about the timing of the Bill, except that in the course of the debate on an earlier amendment it was said that its timing was to satisfy the TUC. The hon. Member for Bristol, North-West (Mr. Thomas) said on Monday that the TUC was not interested in the Bill one way or the other. That is clearly true. I do not understand the timing of the Bill. We have had no adequate explanation about it.

The second point that I raised on Second Reading related to confidence. This was bound up with the reason for the Government introducing the safeguard regulations in the first place, as the Secretary of State made clear on many occasions in 1977. The CBI has reported the effects which this and other events are having on confidence. It said:
"The rapidly rising level of pay settlements, concern about public sector pay trends, coupled with the tougher price control measures are adding to the industrial depression. The detailed survey results do not suggest a sharp fall-off in industrial activity but … confidence has dropped to below average levels and pessimism is strongest among the bigger companies."
This is the essential point about the safeguard regulations—the interim regulations in particular. They gave to industry a degree of confidence about the operation of the Price Commission Act. That is being taken away, and that is why we make no apology for tabling this amendment, even though it may have a devastating effect on the Bill.

There is a certain amount of logic in the amendment. It retains the principal safeguards but removes the interim ones. There is a distinction between these types of safeguards which I do not believe the Under-Secretary of State understood. He became confused between the two on Second Reading. There was an illogicality in the principal Act. If we accepted the principle of the Act—which I did not—the Government should have said that the Price Commission would investigate proposed price increases but that no action would be taken in respect of such increases—they would be allowed—until the investigation had been completed. It should have been stated that if, when the investigation had been completed, the increases were found to be justified they could be rolled back. That would have been a more logical way of proceeding rather than telling every company that was being investigated that its prices were to be frozen for four months—a month's notification period plus the three-month investigation period.

The principal safeguards would come into operation in those circumstances. It is the interim safeguards which are the most important. They protect companies during the investigation period. Although in 23 cases out of 30 involving companies which have been the subject of reports interim safeguard applications have been allowed, the reports show that the Price Commission would have allowed these increases subsequently. Most would have been justified on their merits.

The Government should have done one of two things. If, as the Under-Secretary of State believes, the regulations are too generous because they are arbitrary, the Government could have amended them. They have not sought to do so. Instead they have sought to do away with them altogether. Earlier the Secretary of State said, in a not very encouraging answer to me, that even when a company was making losses it might not be able to increase its prices sufficiently to eliminate the losses.

I am grateful to the hon. Member for allowing me to correct the impression which he has that I was suggesting that the safeguards are too generous. I was not suggesting anything of the kind. I was suggesting that in some cases they might be too generous and that it would be impossible for us to devise safeguards which did not act in too penal a fashion upon some while being too generous to others. That is why a discretionary system is more appropriate for the needs of industry and the public.

May I suggest an example to which an arbitrary basic safeguard could apply? I refer to loss-making companies. I cannot understand the case for saying that if a company is operating at a loss and its assets are decreasing it is not entitled to increase its prices sufficiently at least to break even. That will not be very encouraging when it comes to investment. The Government could have amended the regulations so that they were less generous. That was an option open to them which they did not take.

Another option open to the Government was to amend the Act in the way that I suggested earlier so that all companies would be entitled to make price increases in the first instance, and if a Commission report subsequently found that they were not entitled to the increase there could be some kind of roll-back provision.

The Bill is patently unfair because it will simply serve to delay price increases. Perhaps I may give an example of the company referred to by my hon. Friend the Member for Pudsey (Mr. Shaw), and that is Metal Box Ltd. It has a large factory in Sutton-in-Ashfield employing 2,000 people. Almost all the aerosol cans made in this country—they account for about 80 per cent. of the market—are made there. The company has almost a monopoly.

Quite rightly, the Price Commission chose to investigate the company. Metal Box Ltd. is the subject of regular investigations, and I believe that that is correct because of its monopoly market position. My hon. Friend explained the effects that the Bill, if enacted at the time of the investigation, would have had. It would have diminished the company's profits by nearly £7 million. The company also said in its letter:
"In the longer term, the uncertainty about pricing arrangements would have perforce curtailed our investment plans both in the United Kingdom and overseas."
The whole question of investment is another important aspect of the matter.

Let me now read from the report of the Price Commission on Metal Box Ltd. We have heard a great deal from Labour Members about efficiency. One might assume that since Metal Box Ltd. dominates the market in aerosol cans it would be inefficient because, in the absence of any real competition, it would simply set its own price. But the Price Commission said:
"On the basis of the evidence we have collected from the company, our survey of competitors and consumers, and our limited international comparison, a clear impression emerges that Metal Box is in most respects an efficient and enterprising firm, and its market position must in large measure be due to the high standards of performance it has set for the industry, and maintained over many years."
It went on to make further favourable comments about the company.

My hon. Friend made the point that Metal Box Ltd. made in its letter about its dependence on its supplier of raw material—the British Steel Corporation. BSC is not subject to price control. It is completely exempt and it can put up its price whenever it wants. Yet under the provisions Metal Box Ltd., with the interim safeguards abolished, would have to live with that price rise for four months. That will damage investment confidence in Metal Box Ltd., and it will damage the prospects for my constituents who work at the company. Therefore, I wish forcefully to support the amendment.

The Under-Secretary seemed surprised that during this debate we should have mentioned some of the matters that we spoke of on Monday. He then said that the amendment strikes at the heart of the Bill. Surely it is hardly surprising, therefore, that we should have mentioned on Monday some of the things that we are dealing with today. On Monday we discussed the principle of the Bill, and here we are discussing the heart of the matter.

The Under-Secretary, in slightly pooh-poohing my remarks about the intention of the Bill being to restore some form of pay sanction and to discipline companies that paid large wage increases, said that his right hon. Friend the Secretary of State had demonstrated that that could not possibly be true. He said that the right hon. Gentleman had personally announced that the Road Haulage Asso- ciation employers would not be investigated whatever level of pay increases they gave.

What the Secretary of State was saying, therefore, was far from admirable. It was that any group of employers that employed trade unionists who could hold the country to ransom and do tremendous damage, while threatening the Government's electoral prospects, need not worry because the Secretary of State would not take action against them.

I am not surprised, but many companies that would have to pre-notify will not be in that position. They will not be in the position by which the Secretary of State, because of political pressures upon him, will concede to the companies making an application.

9 p.m.

Many businesses in their day-to-day running need apply to increase their prices, because of wage or price increases. They cannot rely on political pressure being placed upon the Secretary of State forcing him to concede their applications.

The Under-Secretary of State argues that everybody knows that the Commission is to be trusted. I am afraid that the people in industry to whom my hon. Friends and I have spoken are not so aware. They do not believe that the activities of the Commission over the last 16 months warrant the removal of its statutory protections.

The Under-Secretary of State repeated the assertion that companies are protected by section 2 of the Act and by the courts. That is a cumbersome procedure. Over and over again it has been demonstrated that safeguards are justified and the increases that are allowed have subsequently been approved. Why should we take on trust a body that is not trusted by British industry?

My hon. Friend the Member for Kidderminster (Mr. Bulmer) gave two examples of companies becoming concerned about the activities of the Commission. I am afraid that I have to inform the Minister that the basis of trust upon which he forms all his arguments against the amendment does not exist.

In the circumstances, we have no choice but to press the amendment, and I urge my hon. Friends to vote for it.

Question put, That the amendment be made:—

Division No. 59]


[9.01 p.m.

Adley, RobertGoodlad, AlastairMoore, John (Croydon C)
Aitken, JonathanGorst, JohnMore, Jasper (Ludlow)
Alison, MichaelGow, Ian (Eastbourne)Morgan, Geraint
Arnold, TomGower, Sir Raymond (Barry)Morgan-Giles, Rear-Admiral
Atkins, Rt Hon H. (Spelthorne)Gray, HamishMorris, Michael (Northampton S)
Atkinson, David (B'mouth, East)Griffiths, EldonMorrison, Hon Charles (Devizes)
Beith, A. J.Grimond, Rt Hon J.Morrison, Hon Peter (Chester)
Bell, RonaldGrist, IanMudd, David
Bendall, VivianGrylls, MichaelNeave, Airey
Bennett, Dr Reginald (Fareham)Hall-Davis, A. G. F.Nelson, Anthony
Benyon, W.Hamilton, Archibald (Epsom & Ewell)Neubert, Michael
Berry, Hon AnthonyHamilton, Michael (Salisbury)Newton, Tony
Biffen, JohnHampson, Dr KeithNott, John
Blaker, PeterHannam, JohnOppenheim, Mrs Sally
Body, RichardHaselhurst, AlanPage, Rt Hon R. Graham (Crosby)
Boscawen, Hon RobertHastings, StephenPage, Richard (Workington)
Bottomley, PeterHavers, Rt Hon Sir MichaelPardoe, John
Bowden, A. (Brighton, Kemptown)Heath, Rt Hon EdwardParkinson, Cecil
Boyson, Dr Rhodes (Brent)Heseltine, MichaelPattie, Geoffrey
Bradford, Rev RobertHicks, RobertPenhaligon, David
Braine, Sir BernardHodgson, RobinPercival, Ian
Brittan, LeonHolland, PhilipPink, R. Bonner
Brooke, Hon PeterHooson, EmlynPowell, Rt Hon J. Enoch
Brotherton, MichaelHowe, Rt Hon Sir GeoffreyPrentice, Rt Hon Reg
Brown, Sir Edward (Bath)Howell, David (Guildford)Price, David (Eastleigh)
Bryan, Sir PaulHowell, Geraint (Cardigan)Prior, Rt Hon James
Buchanan-Smith, AlickHunt, David (Wirral)Pym, Rt Hon Francis
Buck, AntonyHunt, John (Ravensbourne)Raison, Timothy
Budgen, NickHurd, DouglasRathbone, Tim
Bulmer, EsmondHutchison, Michael ClarkRees, Peter (Dover & Deal
Burden, F. A.Irving, Charles (Cheltenham)Rees-Davies, W. R.
Butler, Adam (Bosworth)James, DavidRenton, Rt Hon Sir D.(Hunts)
Carlisie, MarkJenkin, Rt Hon P. (Wanst'd &W'df'd)Renton, Tim (Mid-Sussex)
Chalker, Mrs LyndaJohnson Smith, G. (E Grinstead)Rhodes James, R.
Churchill, W. S.Johnston, Russell (Inverness)Ridley, Hon Nicholas
Clark, Alan (Plymouth, Sutton)Jones, Arthur (Daventry)Ridsdale, Julian
Clark, William (Croydon S)Jopling, MichaleRifkind, Malcolm
Clarke, Kenneth (Rushcliffe)Joseph, Rt Hon Sir KeithRoberts, Michael (Cardiff NW)
Clegg, WalterKaberry, Sir DonaldRoberts, Wyn (Conway)
Cockcroft, JohnKilfedder, JamesRoss, Stephen (Isle of Wight)
Cooke, Robert (Bristol W)Kimball, MarcusRoss, William (Londonderry)
Cope, JohnKitson, Sir TimothyRossi, Hugh (Hornsey)
Cormack, PatrickKnox, DavidRost, Peter (SE Derbyshire)
Costain, A. P.Lamont, NormanRoyle, Sir Anthony
Craig, Rt Hon W. (Belfast E)Langford-Holt, Sir JohnSainsbury, Tim
Crouch, DavidLatham, Michael (Melton)St. John-Stevas, Norman
Crowder, F. P.Lawrence, IvanScott, Nicholas
Dean, Paul (N Somerset)Lawson, NigelShaw, Giles (Pudsey)
Dodsworth, GeoffreyLe Marchant, SpencerShelton, William (Streatham)
Drayson, BurnabyLester, Jim (Beeston)Shepherd, Colin
du Cann, Rt Hon EdwardLewis, Kenneth (Rutland)Shersby, Michael
Durant, TonyLloyd, IanSilvester, Fred
Dykes, HughLoveridge, JohnSims, Roger
Eden, Rt Hon Sir JohnLuce, RichardSinclair, Sir George
Edwards, Nicholas (Pembroke)McAdden, Sir StephenSkeet, T. H. H.
Elliott, Sir WilliamMcCrindle, RobertSmith, Cyril (Rochdale)
Emery, PeterMcCusker, H.Smith, Dudley (Warwick)
Eyre, ReginaldMacfarlane, NeilSmith, Timothy John (Ashfield)
Fairbairn, NicholasMacGregor, JohnSpeed Keith
Fairgrieve, RussellMacKay, Andrew (Stechford)Spence, John
Farr, JohnMacmillan, Rt Hon M. (Farnham)Spicer, Michael (S Worcester)
Fell, AnthonyMcNair-Wilson, M. (Newbury)Sproat, Iain
Finsberg, GeoffreyMcNair-Wilson, P. (New Forest)Stainton, Keith
Fisher, Sir NigelMadel, DavidStanbrook, Ivor
Fletcher, Alex (Edinburgh N)
Fletcher-Cooke, CharlesMarshall, Michael (Arundel)Stanley, John
Fookes, Miss JanetMarten, NeilSteen, Anthony (Wavertree)
Forman, NigelMaude, AngusStewart, Ian (Hitchin)
Fowler, Norman (Sutton C'f'd)Mawby, RayStokes, John
Fox, MarcusMaxwell-Hyslop, RobinStradling Thomas, J.
Fraser, Rt Hon H. (Stafford & St)Mayhew, PatrickTapsell, Peter
Fry, PeterMayer, Sir AnthonyTaylor, R.(Croydon NW)
Galbraith, Hon T. G. D.Miller, Hal (Bromsgrove)Taylor, Teddy (Cathcart)
Gardiner, George (Reigate)Mills, PeterTebbit, Norman
Gardner, Edward (S Fylde)Miscampbell, NormanTemple-Morris, Peter
Gilmour, Rt Hon Sir Ian (Chesham)Mitchell, David (Basingstoke)Thatcher, Rt Hon Margaret
Gilmour, Sir John (East Fife)Moate, RogerThomas, Rt Hon P. (Hendon S)
Glyn, Dr AlanMolyneaux, JamesTownsend, Cyril D.
Godber, Rt Hon JosephMonro, Hectorvan Straubenzee, W. R.
Goodhew, VictorMontgomery, FergusVaughan, Dr Gerard

Noes 271.

The Committee divided: Ayes 251,

Viggers, PeterWhitney, Raymond
Wainwright, Richard (Colne V)Wiggin, Jerry
Walters, DennisWinterton, NicholasTELLERS FOR THE AYES:
Weatherill, BernardWood, Rt Hon RichardLord James Douglas Hamilton and
Wells, JohnYoung, Sir G. (Ealing, Acton)Mr. Carol Mather.
Whitelaw, Rt Hon WilliamYounger, Hon George


Abse, LeoEwing, Harry (Stirling)MacFarquhar, Roderick
Allaun, FrankFernyhough, Rt Hon E.McKay, Allen (Penistone)
Anderson, DonaldFlannery, MartinMacKenzie, Rt Hon Gregor
Archer, Rt Hon PeterFletcher, L. R. (Ilkeston)Maclennan, Robert
Armstrong, ErnestFletcher, Ted (Darlington)McMillan, Tom (Glasgow C)
Ashley, JackFoot, Rt Hon MichaelMadden, Max
Ashton, JoeFord, BenMagee, Bryan
Atkins, Ronald (Preston N)Forrester, JohnMallalieu, J. P. W.
Atkinson, Norman (H'gey, Tott'ham)Fraser, John (Lambeth, N'w'd)Marks, Kenneth
Bain, Mrs MargaretFreeson, Rt Hon ReginaldMarshall, Jim (Leicester S)
Barnett, Guy (Greenwich)Garrett, John (Norwich S)Mason, Rt Hon Roy
Barnett, Rt Hon Joel (Heywood)Garrett, W. E. (Wallsend)Meacher, Michael
Betes, AlfGeorge, BruceMellish, Rt Hon Robert
Bean, R. E.Gilbert, Rt Hon Dr JohnMikardo, Ian
Benn, Rt Hon Anthony WedgwoodGinsburg, DavidMillan, Rt Hon Bruce
Bennett, Andrew (Stockport N)Golding, JohnMiller, Dr M. S. (E Kilbride)
Bidwell, SydneyGould, BryanMitchell, Austin (Grimsby)
Bishop, Rt Hon EdwardGourlay, HarryMolloy, William
Blenkinsop, ArthurGraham, TedMoonman, Eric
Boardman, H.Grant, George (Morpeth)Morris, Alfred (Wythenshawe)
Booth, Rt Hon AlbertGrant, John (Islington C)Morris, Rt Hon Charles R.
Boothroyd, Miss BettyGrocott, BruceMorris, Rt Hon J. (Aberavon)
Bottomley, Rt Hon ArthurHamilton, W. W. (Central Fife)Morton, George
Boyden, James (Bish Auck)Harrison, Rt Hon WalterMoyle, Rt Hon Roland
Bradley, TomHart, Rt Hon JudithMulley, Rt Hon Frederick
Brown, Hugh D. (Provan)Hattersley, Rt Hon RoyMurray, Rt Hon Ronald King
Brown, Robert, C. (Newcastle W)Hayman, Mrs HeleneNewens, Stanley
Buchan, NormanHealey, Rt Hon DenisNoble, Mike
Buchanan, RichardHenderson, DouglasOakes, Gordon
Butler, Mrs Joyce (Wood Green)Home Robertson, JohnOgden Eric
Callaghan, Rt Hon J. (Cardiff SE)Hooley, FrankO'Halloran, Michael
Callaghan, Jim (Middleton & p)Horam, JohnOrbach, Maurce
Campbell, IanHowell, Rt Hon Denis (B'ham, Sm H)Ovenden, John
Canavan, DennisHoyle, Doug (Nelson)Owen, Rt Hon Dr David
Cant, R. B.Huckfield, LesPadley, Walter
Carmichael, NeilHughes, Rt Hon C. (Anglesey)Palmer, Arthur
Carter, RayHughes, Robert (Aberdeen N)Park, George
Carter-Jones, LewisHughes, Roy (Newport)Parker, John
Cartwright, JohnHunter, AdamParry, Robert
Castle, Rt Hon BarbaraIrving, Rt Hon S. (Dartford)Pavitt, Laurie
Clemitson, IvorJackson, Colin (Brighouse)Pendry, Tom
Cocks, Rt Hon Michael (Bristol S)Jackson, Miss Margaret (Lincoln)Perry, Ernest
Cohen, StanleyJanner, GrevillePrice, C. (Lewisham W)
Coleman, DonaldJay, Rt Hon DouglasPrice, William (Rugby)
Colquhoun, Ms MaureenJeger, Mrs LenaRadice, Giles
Concannon, Rt Hon JohnJenkins, Hugh (Putney)Rees, Rt Hon Merlyn (Leeds S)
Conlan, BernardJohn, BrynmorRichardson, Miss Jo
Corbett, RobinJohnson, James (Hull West)Roberts, Albert (Normanton)
Cowans, HarryJohnson, Walter (Derby S)Roberts, Gwilym (Cannock)
Cox, Thomas (Tooting)Jones, Alec (Rhondda)Robertson, George (Hamilton)
Crawshaw, RichardJones, Barry (East Flint)Robinson, Geoffrey
Cronin, JohnJones, Dan (Burnley)Roderick, Caerwyn
Crowther, Stan (Rotherham)Judd, FrankRodgers, George (Chorley)
Cryer, BobKaufman, Rt Hon GeraldRodgers, Rt Hon William (Stockton)
Davidson, ArthurKelley, RichardRooker, J. W.
Davies, Bryan (Enfield N)Kerr, RussellRoss, Rt Hon W. (Kilmarnock)
Davies, Rt Hon DenzilKilroy-Silk, RobertRowlands, Ted
Davies, Ifor (Gower)Kinnock, NeilRyman, John
Davis, Clinton (Hackney C)Lambie, DavidSedgemore, Brian
Deakins, EricLamborn, HarrySelby, Harry
Dean, Joseph (Leeds West)Lamond, JamesSever, John
Dempsey, JamesLatham, Arthur (Paddington)Shaw, Arnold (Ilford South)
Dewar, DonaldLeadbitter, TedSheldon, Rt Hon Robert
Doig, PeterLee, JohnShore, Rt Hon Peter
Dormand, J. D.Lestor, Miss Joan (Eton & slough)Short, Mrs Renée (Wolv NE)
Douglas-Mann, BruceLever, Rt Hon HaroldSilkin, Rt Hon John (Deptford)
Duffy, AE. P.Lewis, Ron (Carlisle)Silkin, Rt Hon S. C. (Dulwich)
Dunn, James A.Litterick, TomSilverman, Julius
Dunnett, JackLofthouse, GeoffreySkinner, Dennis
Eadie, AlexLoyden, EddieSmith, Rt Hon John (N Lanarkshire)
Edge, GeoffLyon, Alexander (York)Snape, Peter
Ellis, John (Brigg & Scun)Lyons, Edward (Bradford W)Spearing, Nigel
English, MichaelMcCartney, HughSpriggs, Leslie
Ennals, Rt Hon DavidMacCormick, IainStallard, A. W.
Evans, Fred (Caerphilly)McDonald, Dr OonaghStewart, Rt Hon Donald
Evans, Ioan (Aberdare)McElhone, FrankStewart, Rt Hon M. (Fulham)

Stoddart, DavidTorney, TomWilliams, Rt Hon Alan (Swansea W)
Stott, RogerTuck, RaphaelWilliams, Rt Hon Shirley (Hertford)
Strang, GavinVarley, Rt Hon Eric G.Williams, Sir Thomas (Warrington)
Strauss, Rt Hon G. R.Wainwright, Edwin (Dearne V)Wilson, Gordon (Dundee E)
Summerskill, Hon Dr ShirleyWalker, Harold (Doncaster)Wilson, Rt Hon Sir Harold (Huyton)
Swain, ThomasWalker, Terry (Kingswood)Wilson, William (Coventry SE)
Taylor, Mrs Ann (Bolton W)Ward, MichaelWise, Mrs Audrey
Thomas, Dafydd (Merioneth)Watkins, DavidWoodall, Alec
Thomas, Jeffrey (Abertillery)Weetch, KenWoof Robert
Thomas, Mike (Newcastle E)Weitzman, DavidWrigglesworth, Ian
Thomas, Ron (Bristol NW)Welsh, AndrewYoung, David (Bolton E)
Thorne, Stan (Preston South)White, Frank R. (Bury)
Tierney, SydenyWhitlock, WilliamTELLERS FOR THE NOES:
Tilley, JohnWigley, DafyddMr. James Hamilton and
Tinn, JamesWilley, Rt Hon FredrickMr. John Evans.
Tomlinson, John

Question accordingly negatived.

9.15 p.m.

I beg to move amendment No. 23, in page 2, line 25, leave out subsection (7).

This amendment raises the general issue of retrospective legislation. It is true that the Government's intentions were publicly stated when the Bill was first published, but it cannot be sufficiently stressed that as long as this country remains a democracy a Bill does not have the force of law as soon as it is published and that it does not achieve the force of law until it has received the Royal Assent.

We know that some Labour Members have always regarded the due process of democratic procedure as a mere unnecessary obstacle on the road to the millenium. We know that over the years many members of the Labour Party have thought in terms of enabling Acts, sweeping aside parliamentary safeguards and giving Ministers huge powers to act by simple fiat. But, fortunately for all our sakes and for our democracy, all these schemes have come to nothing—yet.

But their existence in the first place re-emphasises the need for vigilance, and it must be clear to the Committee that the purpose of the amendment is to remove the retrospective elements of the Bill. I believe that we ought to act in any case where retrospection arises so that in some way we can restrain any signs of arrogance on the part of the Executive. Ministers must learn that their wishes are not automatic law and that when they act in any way to override the spirit of democratic procedure their presumption will be exposed. That is what we hope to do.

There is certainly a place, and there will always be, for retrospection I think I am right in saying that the introduction of this feature is not unprecedented, on either side of the Committee. There are also a number of hypothetical cases where, for example, retrospection comes to the aid of a Member of the House who was duly elected but who was subsequently discovered to be technically disqualified. Here again, we could rightly object to not having retrospective legislation.

But that is the use of retrospective legislation for the purposes of mercy. That is the opposite of the reason for introducing retrospection in this Bill, in what is an extraordinarily sloppily drafted subsection. I do not blame the Minister for that, I am just pointing out that that is what it is. There can be no justification for the use of retrospective legislation either to enhance the power of Ministers or to enhance the scope of the criminal law. But that is what is happening in this instance.

The result is likely to be arbitrary and oppressive. I shall take the brewers as an example, because I know that they are great favourites with Labour Members who sit below the Gangway. Why should one company—this is almost playing the Devil's advocate—be permitted an increase merely because it notified its wish to introduce a price increase before the arbitrary date, while other companies which did not notify that wish until after the arbitrary retrospective date have their prices frozen?

Some firms may have been considering ways in which they could absorb increased costs—that is one of the Secretary of State's favourite excuses for the Bill—within their existing profit margins and were perhaps doing everything possible to avoid increased prices and proposing lesser increases. They are now being penalised for their action and their concern for the consumer. If they had brought forward their notification slightly earlier instead of trying to avoid price increases, they would not have been caught by the retrospective element of the Bill.

Is it implied that the industrial crisis that we have been through and are going through has had and will have no effect on prices? The retrospective element will catch companies whose costs and profitability have been under tremendous pressure because of the industrial situation. There could not be a worse moment for retrospection to be introduced. The very companies that were trying to comply with the Government's now non-existent pay limit will be penalised by the retrospective subsection. It is grossly unjust that they should be so penalised and that the Secretary of State, knowing the date of retrospection, should have introduced it at such a time. The right hon. Gentleman's action has been positively disgraceful.

I hope the Committee will accept that the principle of retrospection is bad. I accept that retrospection is not unprecedented. However, in this instance the situation is worse because the rules are being changed in the middle of the game.

Careful judgments have to be made by companies before they decide to submit a notification. Careful judgments have to be made by them before they decide upon their capital investment programmes. These are difficult judgments for them to make in the present economic climate. There is a difficult industrial situation and a drop in liquidity. We have talked before about a drop in profitability and a lack of confidence in investment, assuming that the money and the confidence were available, but at present the money is not available, so the difficulties are compounded.

The companies that are caught will incur great expense or loss. Some of their investment decisions are of great importance and involve large capital sums. Some of them are too far advanced to retract now that they are caught by the retrospective subsection. The investment decisions will no longer be viable but the companies will be committed to them. Their decisions will have been made on the basis that the rules would not be changed. If the companies had known the nature of the retrospective provisions, obviously they would have applied before 16 January.

The situation is made far more disreputable by the fact that for months there were press rumours about whether the Bill was to be introduced, and that was denied as recently as November by the Secretary of State. That denial must have had an influence on companies which were planning their investment policy. The influence must have been adverse. When the press rumours were current—they continued for quite a long period—the right hon. Gentleman should have denied or confirmed them and not left companies in the dark about what would be an important step for them.

Looking at the items likely to be caught as a result of this retrospective subsection, we see that it is really a price-fixing exercise. They are items which are either heavily weighted in the retail price index or heavily weighted in the family shopping basket. The Government may use that as an excuse for their action. I can understand that in circumstances of rising inflation they may choose to do so, but it exposes the fact that this is a blatant exercise to manipulate the retail price index, in a run-up to a general election, involving those goods which the Government think will be sensitive, in the short term, for consumers. It contributes to the uncertainty felt by industry over the whole concept of this measure. It will add to the lack of trust already existing between industry and the Secretary of State.

We have heard of the lack of trust between industry and the Price Commission over the Commission's discretionary powers. But industry now feels that the Secretary of State has reneged on his own words, given on numerous occasions in Committee on the Price Commission Bill. He now tries to justify himself by referring back to section 2 of the Price Commission Act which provides none of the protection that he manifests to the House. This lack of trust between industry and the Secretary of State is particularly damaging in the present state of the economy.

Apart from the political consideration, we have to ask why this measure needed to have the retrospective clause. The House did not reassemble until 15 January. If the Government had a measure of such importance that it had to be rushed through the House and considered in three days and had to contain a retrospective element, why did not the House reassemble earlier so that the Bill could be considered in a proper period of time? The retrospective element need not have been activated in this way. The Bill could have received the Royal Assent two weeks earlier if the Prime Minister had not been gallivanting in Guadeloupe.

I hope the Minister will accept that the Opposition consider this a very important amendment. The principle of the amendment is important. It is also important in relation to confidence in industry and the element of trust to which I have drawn attention. I hope that the Minister will accept the amendment. If he does not, that will be typical of the Government. They think, rightly, that they can make the rules. But, at the same time, they assume that they can break the rules a short time after making them. If the Minister is not prepared to accept the amendment, I hope he will give specific and detailed reasons why he cannot do so.

It is pleasant to hear the hon. Lady speaking from the Dispatch Box. For several hours, I have heard her speaking from a sedentary position on the Opposition Front Bench. She has never made any secret of the fact that she wants to sabotage prices legislation—

The hon. Lady says "Rubbish", but she made no secret of the fact during a record sitting for this House when we considered the Report stage of the Price Commission Bill in 1977. If that was not sabotage, I do not know what is.

Conservative Members' phrases about wanting the amendments to have a "devastating" effect on the Bill show that they wish to sabotage it. That has been a consistent Opposition attitude in respect of the Government's prices policy and the Government's incomes policy. There can be no difference about that. The Opposition are a sabotage party. I must, however, point out to the hon. Lady that every sabotage party has a weak member. It often happens in Hollywood films. The girl who breaks her ankle has to be carried along by the rest. I suppose that the hon. Lady has been responsible for masterminding this amendment. I must tell her that it does not amount to sabotage in the normal sense. It amounts to a strengthening of the powers in the Bill. I shall explain why, and I shall point out to the hon. Lady that if she wants to help the Bill go through, she will vote for her own amendment.

9.30 p.m.

I have to explain the effect of subsection (7). It provides that where a notification of a price increase has been given before 17 January 1979, the investigation safeguards are preserved throughout the entire investigation. Subsection (7) has two merits. First, it has the merit of certainty after which the hon. Lady yearns. It states clearly that the investigation safeguards are preserved for notifiers before 17 January during the entire period of the investigation. Secondly, subsection (7) makes it clear that the preservation of safeguards is for the whole period of the investigation—a period of three months from the time the Commission decides to start the investigation.

I ask right hon. and hon. Members to compare that with the hon. Lady's amendment. First, the amendment removes that certainty. But the second effect is that if a firm notifies a price increase prior to 17 January but does not immediately need safeguards and then, six weeks or two months after the Commission decides to investigate, it wants to take advantage of the safeguards, it will not be able to do it if the amendment is carried. If subsection (7) is left in the Bill as it is, the firm which prenotified before 17 January will still be able to take advantage of the safeguard provisions in six, seven, eight or nine weeks' time.

Despite that, surely there is an element of retrospection in the first part of the clause which stipulates that the procedures

"shall not apply in relation to any increase."
If that is included, there will be some retrospection.

The preceding provisions are those provisions which take away the safeguards. Subsection (7) preserves those safeguards for those firms which notified before 17 January. In other words, it makes certain that there is not an element of retrospection. That is done to give certainty and fairness and to avoid retrospection for those companies.

If the hon. Member for Gloucester (Mrs. Oppenheim) wishes to continue her consistent policy of wanting to sabotage the Bill, she will vote against the amendment. If she wants to strengthen the Bill, she will vote for her amendment. It is clear that she has not understood her own amendment.

Surely the Minister is not suggesting that there is not an element of retrospection in the clause. Companies which apply after 16 January 1979 and before the passing of this measure will not have the protection which he describes.

I am coming to what the Opposition meant to do and did not do. The hon. Member for Gloucester accuses the Government of having an element of retrospection in the Bill. She repeated that assertion about 10 times. But the fact that she repeats a statement 10 times does not make it a fact. I assert that there is no element of retrospection. The law will be changed when the Bill receives the Royal Assent, and it does not have a retrospective effect.

The hon. Lady is right when she says that a firm which did not anticipate the Bill may be at a disadvantage compared with the firm which did. But that is not retrospection. I can think of a number of Finance Bills as a result of which, had people anticipated them, they would have been better off than if they had not. But that does not make a Finance Bill retrospective. It merely makes the losses or gains lie where they fall. The fact that the hon. Lady asserts that the Bill is retrospective, without giving one example, does not make it a fact. As I say, the rules will be changed on Royal Assent.

I take two examples to illustrate what I am saying. If a firm gives a notification of a price increase after 17 January but before the Bill receives the Royal Assent and the Commission decides to investigate, because the law has not been changed and is not being changed retrospectively the firm will still, under the existing law, have the advantage of the investigation safeguards. So that position is preserved. If an investigation is decided upon after the Bill receives the Royal Assent, of course the new law will take effect and the gains or losses will fall either side of that date. That is not retrospection. That is changing the law and creating a new situation after the law has been passed. Therefore I have to advise the hon. Member for Gloucester that she is under a misapprehension both as to the nature of the Bill and the nature of her own amendment.

I shall say one last thing on this matter. The investigation safeguards will be removed when the Bill becomes law, but that does not mean that a company is bereft of an opportunity of going to the Commission and asking it to exercise its powers of giving an interim price increase. That facility remains. We believe that we have had sufficient experience of the operation of the Commission—not just ourselves, but the country and industry as a whole—to be able to repose in it a trust which it has demonstrated it is capable of having.

Before the Minister concludes, will he advise the House how he foresees the anomalies being dealt with by the Commission when a sudden announcement is made by the Prime Minister on 16 January and some companies within an industry have put in a price application and others have not? Is the Minister saying that he relies on the Commission to ensure that price applications allowed under the old regime will be also allowed to new companies in the same industry which make an application after 16 January?

I am not going to substitute my judgment for that of the Commission. The Commission will have to act reasonably and in accordance with the criteria. It strikes me as being a much fairer system, and one that allows a degree of discretion, if one compares the effects of the original Counter-Inflation (Temporary Provisions) Act which the Opposition introduced.

I should like to make certain that we have understood what the Minister said. Will he please answer the question? Do the regulations as currently issued under section 9 of the Act, unamended, continue in force for those price applications that are lodged after 17 January 1979 and until the Bill becomes enacted?

They must remain in force until the Bill becomes an Act of Parliament, because there is no authority known to the law by which they could be repealed.

I rise with some hesitation, if not diffidence, because I have not had the benefit of hearing earlier debates on the Bill.

How the Under-Secretary of State can stand at that Box and claim the merit of certainty for subsection (7) is quite beyond me. My hon. Friend the Member for Gloucester (Mrs. Oppenheim) has put the case about retrospection. She has said that the clause is retrospective. There can be no doubt whatever, surely, that this subsection is retrospective for a certain period of time. It ought, therefore, to be removed from the Bill.

There is another reason why subsection (7) should be removed. I shall not use the words "sloppy drafting". which I gather were used against my hon. Friends from time to time. I think that the drafting is cunning, but it is too cunning by half. It is impossible to get through the jungle of subsection (7), although attempts have been made to signpost the way.

It says:
"as from the passing of this Act the regulations then in force under section 9 of that Act shall apply in relation to any such increase only so far as they were made in pursuance of subsection (1)(a) of the said section 9."
How can regulations be partly in force? How does one identify those parts of the regulations which were made
"in pursuance of subsection (1)(a) of the said section 9"?
The draftsman has put a signpost through this jungle and told us to look at section 9(1)(a) of the 1977 Act. We must not look beyond section 9(1)(a). That says:
"which are relevant for the purposes of paragraph (b) of section 4(5) of this Act".
So there is a further signpost through the jungle—"cut down a path through this legislation and you will find the answer".

One turns to subsection (4)—though one does not quite turn to it, because that paragraph is applied by section 5(4). All right. One turns first to section 4 and finds the appropriate subsection. That is subsection (5)(b), which says:
"that apart from this subsection the profit of the relevant person would, in consequence of the notification, be kept below the profit determined in his case in pursuance of section 9 of this Act."
But that is not all, because one then has to refer to section 5(4). I refrain from reading that, Mr. Godman Irvine. It extends over about 20 lines. What it does is textually to amend the previous section. It inserts certain words here and certain words there.

I do not think that I am exaggerating when I say that I have never seen a piece of draftsmanship in a statute which is cross-referenced as much as this, and cross-referenced with no sense in it. One cannot possibly construe what is meant, because when one returns to the beginning one has to find what regulations apply. The Under-Secretary of State said "This clause has the merit of certainty." It has no certainty about it at all. It has impossibility—the impossibility of knowing what regulations will apply during this retrospective period.

We need not quarrel about the certainty of subsection (7). Does the right hon. Gentleman agree that if one leaves out subsection (7) one creates even more uncertainty and robs firms of the ability to obtain an investigation safeguard if they need it in two or three months' time? Does he accept that that is the situation, and that subsection (7) confers not a retrospective penalty but a retrospective advantage?

I am asking the Minister to accept that this subsection is an invitation to litigation. Its uncertainty shows. It is impossible to say what is the law and what is not the law. It is trying to remove part of regulations—the Minister shakes his head. Statutory instrument No. 1282/1977, the Prices and Charges (Safeguard for Basic Profits) Regulations 1977 was made, and declared so to be made, not under section 9(1)(a) of the 1977 Act but just under section 9, so how does one pick out from these regulations those which were made in pursuance of section 9(1)(a) as applied by section 4(5), as applied by section 5(4) of the 1977 Act?

It is very easy. The regulations provide a mathematical set of rules for calculating minimum profits. They apply in three circumstances. They apply where there is a pre-notifier. Pre-notifiers are dealt with in section 4 of the 1977 Act. They apply, secondly, to the non-notifiers whose price increases are called in by the Price Commission under section 5 of the 1977 Act. They apply, thirdly, to orders made after an examination on the initiative of the Secretary of State, and these are dealt with by section 13 of the 1977 Act.

What one does is to remove the references to individual investigations, dealt with in sections 4 and 5 of the 1977 Act, but the mathematical set of rules for preserving profits still applies to the examinations which can cover a multiplicity of firms, which are sectoral examinations initiated by the Secretary of State. I hope that that explanation makes the position clear beyond any doubt.

9.45 p.m.

If the Minister intended subsection (7) to mean all that, why did he not put it in the Bill? The subsection does not apply to individuals; it applies to certain parts of regulations, and one has to identify the parts of those regulations that are still law after the Bill becomes a statute. The subsection does not apply to individuals as the Minister listed them. It might have made it clear if it had said that it applied to individuals A, B and C if they had done X, Y and Z. But it does not say that. It tries to carve some regulations in half and does not say where one draws the line.

It is impossible from the subsection to know what, after the Bill becomes law, is the law and what is not the law. I ask the Minister to reconsider it in some form. I know that this is a late stage in the Bill, but it is not too late to correct appalling draftsmanship like this.

The Minister said that the amendment, moved by my hon. Friend the Member for Gloucester (Mrs. Oppenheim), in her effort to avoid any possibility of retrospection, was sabotage of the Bill. That was an unfair and inaccurate description of the action she took. Indeed, it might be said that, under successive Governments since the war, we have become unduly complacent about retrospection. It is a most obnoxious principle, and while I agree that there are some few occasions when it might be established that it is absolutely necessary, those occasions should be minimal. Far too many Ministers have made use of this device, which is often convenient to Governments. I have an uneasy feeling that what is convenient is often bad in the broadest sense.

If my hon. Friend, in seeking to avoid any semblance or possibility of retrospection, erred in any respect, she did so in a very good cause, but, against the background of the appalling draftsmanship and the degree of cross-references to which my right hon. Friend the Member for Crosby (Mr. Page) referred, it would not be surprising if the amendment did not have expressly the effect that it is intended to have. The Government's draftsmanship is so bad that I do not think that the Minister can take much pride in picking holes in the draftsmanship of the amendment, which has been done with far less resources than those available to the Government.

I should like reassurance that there is no element of retrospection in the clause, because I am not entirely satisfied about the position, despite what the Minister said. I ask the Minister to reconsider what has been said and, if something can be done, to put beyond any iota of doubt this question of retrospection.

I give an absolute assurance that subsection (7) does not involve retrospection except in the sense of conferring a retrospective benefit, making it absolutely clear that a firm which applied for a price increase before 17 January 1979 will have the benefit of investigation safeguards even if it has to take that benefit after the Bill has become law. So it works to the advantage of companies. If we omit subsection (7), we deny that opportunity to those companies which have notified their price increases prior to 17 January.

I referred to sabotage earlier. I was referring to the fact—it is quite legitimate for them to do this—that the Opposition have tried to sabotage our prices legislation. But in this instance, whether they understand it or not, if the amendment is carried, they confer a disbenefit on the companies they are trying to protect.

The Minister has only partially clarified the situation. We moved an amendment to an imperfect, unclear subsection. That subsection does not make clear to which of the regulations in the statutory instrument it refers, and leaves an area of doubt both with or without the amendment. I remind the Minister of the words of the Prime Minister when he announced this measure. He used the word "retrospective". Speaking of the Price Commission, he said:

"In this context it will be obliged to look at all relevant costs. The Bill will also provide that firms which prenotify price increases after today—16th January—will not qualify for safeguards if the Price Commission decides to investigate those price increases."—[Official Report, 16 January 1979; Vol. 960, c. 1559.]
That is clear. That refers to retrospection in relation to the investigations. Firms will not be able to invoke the safeguards if they prenotify after 16 January.

There is also the question of the 28-day notification. We deal with that specific point in this amendment. The amendment would make notifications made up to the date of the passing of the legislation eligible for awards. It would give them the certainty that the safeguards could be invoked in the 28-day period in which the Commission was considering the application—that is, before the investigation.

It was difficult to tell whether the Minister of State referred to the investigation period—as did the Prime Minister when he referred to the retrospection—or the prenotification period of 28 days. Without the amendment, in the period of 28 days of prenotification a company would not be eligible automatically for the safeguard in that period.

As the legislation stands, advantage is not taken of the safeguards in the 28-day period of consideration. That is not even the situation now.

There could be an interim award. The price is frozen in the 28 days. The price increases cannot be obtained during the 28 days. In that period the Commission may say "We have decided that we shall investigate your firm". From that moment the price is frozen. The Minister of State may quarrel with the Prime Minister, but the Prime Minister made that point when he said that any price increase notified after 16 January would not qualify for safeguards if the Price Commission decided to investigate those price increases.

If the 28 days pass without the Commission saying anything, there will be no investigation. The safeguards must be invoked. In that period of 28 days an investigation may be started by the Price Commission. According to the Prime Minister, that would start from 16 January. In the case of a prenotification, although the safeguards would not be invoked or made ineligible until the Bill was passed, the fact that the 28-day period started from 16 January would mean that a company could be caught retrospectively—not during the period of investigation—because it did not notify before 16 January.

Ministers of State have to be very careful when they disagree with their Prime Ministers, but I have to tell the House that if that were to happen and if there were a decision to investigate the price increase before this Bill became law, all the law on investigation safeguards that existed for the benefit of the company would have to continue.

I accept that point, but if, after 16 January, the 28 days were not reached before this Bill became law, it would be at that moment—

The Minister is nodding. Then that is right. That is what the amendment seeks to do, and that is what I believe it does. If it does not, perhaps the Minister will say why.

I am still, despite my hon. Friend's lucid explanation, concerned with some of the statements that the Minister has just made. It is quite clear from everything that has been said—and not only by the Secretary of State—that 16 January is to be the watershed between the old regime and the new regime. Where else, otherwise, is there any mention in the Bill of that dividing date, except in subsection (7)? If it is not to be found in that subsection, where else is it to be found?

In view of what the Minister has said, and in view of what I have said—and I am certain that I was correct—we would be willing to withdraw the amendment, on an undertaking from the Minister of State that in another place the subsection will be appropriately redrafted to avoid the

Division No. 60]


[9.57 p.m.

Adley, RobertForman, NigelMacfarlane, Neil
Aitken, JonathanFowler, Norman (Sutton C'f'd)MacGregor, John
Alison, MichaelFox, MarcusMacKay, Andrew (Stechford)
Arnold, TomFraser, Rt Hon H. (Stafford & St)Macmillan, Rt Hon M. (Farnham)
Atkins, Rt Hon H. (Spelthorne)Freud, ClementMcNair-Wilson, M. (Newbury)
Atkinson, David (B'mouth, East)Fry, PeterMcNair-Wilson, P. (New Forest)
Baker, KennethGalbraith, Hon T. G. D.Madel, David
Beith, A. J.Gardiner, George (Reigate)Marshall, Michael (Arundel)
Bell, RonaldGardner, Edward (S Fylde)Marten, Neil
Bendell, VivianGilmour, Rt Hon Sir Ian (Chesham)Mates, Michael
Bennett, Dr Reginald (Fareham)Gilmour, Sir John (East Fife)Mather, Carol
Benyon, W.Glyn, Dr AlanMaude, Angus
Berry, Hon AnthonyGodber, Rt Hon JosephMawby, Ray
Biffen, JohnGoodhew, VictorMaxwell-Hyslop, Robin
Blaker, PeterGoodlad, AlastairMayhew, Patrick
Body, RichardGorst, JohnMeyer, Sir Anthony
Boscawen, Hon RobertGow, Ian (Eastbourne)Miller, Hal (Bromsgrove)
Bottomley, PeterGower, Sir Raymond (Barry)Mills, Peter
Bowden, A. (Brighton, Kemptown)Gray, HamishMiscampbell, Norman
Boyson, Dr Rhodes (Brent)Griffiths, EldonMitchell, David (Basingstoke)
Bradford, Rev RobertGrimond, Rt Hon J.Moate, Roger
Braine, Sir BernardGrist, IanMolyneaux, James
Brittan, LeonGrylls, MichaelMonro, Hector
Brockiebank-Fowler, C.Hall-Davis, A. G. F.Montgomery, Fergus
Brooke, Hon PeterHamilton, Archibald (Epsom & Ewell)Moore, John (Croydon C)
Brotherton, MichaelHamilton, Michael (Salisbury)More, Jasper (Ludlow)
Brown, Sir Edward (Bath)Hampson, Dr KeithMorgan, Geraint
Bryan, Sir PaulHannam, JohnMorgan-Giles, Rear-Admiral
Buchanan-Smith, AlickHarrison, Col Sir Harwood (Eye)Morris, Michael (Northampton S)
Buck, AntonyHaselhurst, AlanMorrison, Hon Charles (Devizes)
Budgen, NickHastings, StephenMorrison, Hon Peter (Chester)
Bulmer, EsmondHavers, Rt Hon Sir MichaelMudd, David
Burden, F. A.Hayhoe, BarneyNeave, Airey
Butler, Adam (Bosworth)Heath, Rt Hon EdwardNelson, Anthony
Carlisle, MarkHeseltine, MichaelNeubert, Michael
Chalker, Mrs LyndaHicks, RobertNewton, Tony
Churchill, W. S.Hodgson, RobinNott, John
Clark, Alan (Plymouth, Sutton)Holland, PhilipOppenheim, Mrs Sally
Clark, William (Croydon S)Hooson, EmlynPage, Rt Hon R. Graham (Crosby)
Clarke, Kenneth (Rushcliffe)Howe, Rt Hon Sir GeoffreyPage, Richard (Workington)
Clegg, WalterHowell, David (Guildford)Pardoe, John
Cockcroft, JohnHowells, Geraint (Cardigan)Parkinson, Cecil
Cooke, Robert (Bristol W)Hunt, David (Wirral)Pattie, Geoffrey
Cope, JohnHunt, John (Ravensbourne)Penhaligon, David
Cormack, PatrickHurd, DouglasPercival, Ian
Costain, A. P.Hutchison, Michael ClarkPink, R. Bonner
Craig, Rt Hon W. (Belfast E)Irving, Charles (Cheltenham)Powell, Rt Hon J. Enoch
Crouch, DavidJames, DavidPrentice, Rt Hon Reg
Crowder, F. P.Jenkin, Rt Hon P. (Wanst'd&W'df'd)Price, David (Eastleigh)
Dean, Paul (N Somerset)Johnson Smith, G. (E Grinstead)Prior, Rt Hon James
Dodsworth, GeoffreyJohnston, Russell (Inverness)Pym, Rt Hon Francis
Douglas-Hamilton, Lord JamesJones, Arthur (Daventry)Raison, Timothy
Drayson, BurnabyJopling, MichaelRathbone, Tim
du Cann, Rt Hon EdwardJoseph, Rt Hon Sir KeithRees, Peter (Dover & Deal)
Durant, TonyKaberry, Sir DonaldRees-Davies, W. R.
Dykes, HughKilfedder, JamesRenton, Rt Hon Sir D. (Hunts)
Eden, Rt Hon Sir JohnKimball, MarcusRenton, Tim (Mid-Sussex)
Edwards, Nicholas (Pembroke)Kitson, Sir TimothyRhodes James, R.
Elliott, Sir WilliamKnox, DavidRidley, Hon Nicholas
Emery, PeterLamont, NormanRidsdale, Julian
Eyre, ReginaldLangford-Holt, Sir JohnRifkind, Malcolm
Fairbairn, NicholasLatham, Michael (Melton)Roberts, Wyn (Conway)
Fairgrieve, RussellLawrence, IvanRoss, Stephen (Isle of Wight)
Farr, JohnLawson, NigelRoss, William (Londonderry)
Fell, AnthonyLe Merchant, SpencerRossi, Hugh (Hornsey)
Finsberg, GeoffreyLewis, Kenneth (Rutland)Rost, Peter (SE Derbyshire)
Fisher, Sir NigelLloyd, IanRoyle, Sir Anthony
Fletcher, Alex (Edinburgh N)Loveridge, JohnSainsbury, Tim
Fletcher-Cooke, CharlesLuce, RichardSt. John-Stever, Norman
Fookes, Miss JanetMcCrindle, RobertScott, Nicholas

ambiguity to which reference has been made.

Question put, That the amendment be made:—

The Committee divided: Ayes 254, Noes 273.

Shaw, Giles (Pudsey)Stanbrook, IvorViggers, Peter
Shelton, William (Streatham)Stanley, JohnWainwright, Richard (Colne V)
Shepherd, ColinSteen, Anthony (Wavertree)Walters, Dennis
Shersby, MichaelStewart, Ian (Hitchin)Weatherill, Bernard
Silvester, FredStokes, JohnWells, John
Sims, RogerStradling Thomas, J.Whitelaw, Rt Hon William
Sinclair, Sir GeorgeTapsell, PeterWhitney, Raymond
Skeet, T. H. H.Taylor, R. (Croydon NW)Wiggin, Jerry
Smith, Cyril (Rochdale)Taylor, Teddy (Cathcart)Winterton, Nicholas
Smith, Dudley (Warwick)Tebbit, NormanWood, Rt Hon Richard
Smith, Timothy John (Ashfield)Temple-Morris, PeterYoung, Sir G. (Ealing, Acton)
Speed, KeithThatcher, Rt Hon MargaretYounger, Hon George
Spence, JohnThomas, Rt Hon P. (Hendon S)
Spicer, Michael (S Worcester)Townsend, Cyril D.TELLERS FOR THE AYES:
Sproat, Iainvan Straubenzee, W. R.Mr. Michael Roberts and
Stainton, KeithVanghan, Dr GerardMr. Jim Lester.


Abse, LeoDunnett, JackKerr, Russell
Allaun, FrankEadie, AlexKilroy-Silk, Robert
Anderson, DonaldEdge, GeoffKinnock, Neil
Archer, Rt Hon PeterEllis, John (Brigg & Scun)Lambie, David
Armstrong, ErnestEnglish, MichaelLamborn, Harry
Ashley, JackEnnals, Rt Hon DavidLamond, James
Ashton, JoeEvans, Fred (Caerphilly)Latham, Arthur (Paddington)
Atkins, Ronald (Preston N)Evans, Ioan (Aberdare)Leabitter, Ted
Atkinson, Norman (H'gey, Tott'ham)Evans, John (Newton)Lee, John
Bain, Mrs MargaretEwing, Harry (Stirling)Lestor, Miss Joan (Eton & Slough)
Barnett, Guy (Greenwich)Fernyhough, Rt Hon E.Lever, Rt Hon Harold
Barnett, Rt Hon Joel (Heywood)Fitt, Gerard (Belfast W)Lewis, Ron (Carlisle)
Bean, R. E.Flannery, MartinLitterick, Tom
Benn, Rt Hon Anthony WedgwoodFletcher, L. R. (Ilkeston)Lofthouse, Geoffrey
Bennett, Andrew (Stockport N)Fletcher, Ted (Darlington)Loyden, Eddie
Bidwell, SydneyFoot, Rt Hon MichaelLyon, Alexander (York)
Bishop, Rt Hon EdwardFord, BenLyons, Edward (Bradford W)
Blenkinsop, ArthurForrester, JohnMabon, Rt Hon Dr J. Dickson
Boardman, H.Fraser, John (Lambeth, N'w'd)McCartney, Hugh
Booth, Rt Hon AlbertFreeson, Rt Hon ReginaldMacCormick, Iain
Boothroyd, Miss BettyGarrett, John (Norwich S)McDonald, Dr Oonagh
Bottomley, Rt Hon ArthurGarrett, W. E. (Wallsend)McElhone, Frank
Boyden, James (Bish Auck)George, BruceMacFarquhar, Roderick
Bradley, TomGilbert, Rt Hon Dr JohnMcKay, Allen (Penistone)
Brown, Hugh D. (Provan)Ginsburg, DavidMacKenzie, Rt Hon Gregor
Brown, Robert C. (Newcastle W)Golding, JohnMaclennan, Robert
Buchan, NormanGould, BryanMcMillan, Tom (Glasgow C)
Buchanan, RichardGourlay, HarryMadden, Max
Butler, Mrs Joyce (Wood Green)Grant, George (Morpeth)Magee, Bryan
Callaghan, Rt Hon J. (Cardiff SE)Grant, John (Islington C)Mallalieu, J. P. W.
Callaghan, Jim (Middleton & P)Grocott, BruceMarks, Kenneth
Campbell, IanHamilton, James (Bothwell)Marshall, Jim (Leicester S)
Canavan, DennisHamilton, W. W. (Central Fife)Mason, Rt Hon Roy
Cant, R. B.Harrison, Rt Hon WalterMeacher, Michael
Carmichael, NeilHart, Rt Hon JudithMellish, Rt Hon Robert
Carter, RayHattersley, Rt Hon RoyMikardo, Ian
Carter-Jones, LewisHayman, Mrs HeleneMillan, Rt Hon Bruce
Cartwright, JohnHealey, Rt Hon DenisMiller, Dr M. S (E Kilbride)
Clemitson, IvorHeffer, Eric S.Mitchell, Austin (Grimsby)
Cocks, Rt Hon Michael (Bristol S)Henderson, DouglasMolloy, William
Cohen, StanleyHome Robertson, JohnMoonman, Eric
Coleman, DonaldHooley, FrankMorris, Alfred (Wythenshawe)
Colquhoun, Ms MaureenHoram, JohnMorris, Rt Hon Charles R.
Concannon, Rt Hon JohnHowell, Rt Hon Denis (B'ham, Sm H)Morris, Rt Hon J. (Aberavon)
Conlan, BernardHoyle, Doug (Nelson)Morton, George
Corbett, RobinHuckfield, LesMoyle, Rt Hon Ronald
Cowans, HarryHughes, Rt Hon C. (Anglesey)Mulley, Rt Hon Frederick
Cox, Thomas (Tooting)Hughes, Robert (Aberdeen N)Murray, Rt Hon Ronald King
Crawshaw, RichardHughes, Roy (Newport)Newens, Stanley
Cronin, JohnHunter, AdamNoble, Mike
Crowther, Stan (Rotherham)Irving, Rt Hon S. (Dartford)Oakes, Gordon
Cryer, BobJackson, Colin (Brighouse)Ogden, Eric
Davidson, ArthurJackson, Miss Margaret (Lincoln)O'Halloran, Michael
Davies, Bryan (Enfield N)Janner, GrevilleOrbach, Maurice
Davies, Rt Hon DenzilJay, Rt Hon DouglasOvenden, John
Davies, Ifor (Gower)Jeger, Mrs LenaOwen, Rt Hon Dr David
Davis, Clinton (Hackney C)Jenkins, Hugh (Putney)Padley, Walter
Deakins, EricJohn, BrynmorPalmer, Arthur
Dean, Joseph (Leeds West)Johnson, James (Hull West)Park, George
Dempsey, JamesJohnson, Walter (Derby S)Parker, John
Dewar, DonaldJones, Alec (Rhondda)Parry, Robert
Doig, PeterJones, Barry (East Flint)Pavitt, Laurie
Dormand, J. D.Jones, Dan (Burnley)Pendry, Tom
Douglas-Mann, BruceJudd, FrankPerry, Ernest
Duffy, A. E. P.Kaufman, Rt Hon GeraldPrice, C. (Lewisham W)
Dunn, James A.Kelley, RichardPrice, William (Rugby)

Radice, GilesSpearing, NigelWalker, Terry (Kingswood)
Rees, Rt Hon Merlyn (Leeds S)Spriggs, LeslieWard, Michael
Richardson, Miss JoStallard, A. W.Watkins, David
Roberts, Albert (Normanton)Stewart, Rt Hon DonaldWeetch, Ken
Roberts, Gwilym (Cannock)Stewart, Rt Hon M. (Fulham)Weitzman, David
Robertson, George (Hamilton)Stoddart, DavidWellbeloved, James
Robinson, GeoffreyStott, RogerWelsh, Andrew
Roderick, CaerwynStrang, GavinWhite, Frank R. (Bury)
Rodgers, George (Chorley)Strauss, Rt Hon G. R.Whitlock, William
Rodgers, Rt Hon William (Stockton)Summerskill, Hon Dr ShirleyWigley, Dafydd
Rooker, J. W.Swain, ThomasWilley, Rt Hon Frederick
Ross, Rt Hon W. (Kilmarnock)Taylor, Mrs Ann (Bolton W)Williams, Rt Hon Alan (Swansea W)
Rowlands, TedThomas, Dafydd (Merioneth)Williams, Rt Hon Shirley (Hertford)
Ryman, JohnThomas, Jeffery (Abertillery)Williams, Sir Thomas (Warrington)
Sedgemore, BrianThomas, Mike (Newcastle E)Wilson, Gordon (Dundee E)
Selby, HarryThomas, Ron (Bristol NW)Wilson, Rt Hon Sir Harold (Huyton)
Sever, JohnThorne, Stan (Preston South)Wilson, William (Coventry SE)
Shaw, Arnold (Ilford South)Tierney, SydneyWise, Mrs Audrey
Sheldon, Rt Hon RobertTilley, JohnWoodall, Alec
Shore, Rt Hon PeterTinn, JamesWoof, Robert
Short, Mrs Renée (Wolv NE)Tomlinson, JohnWrigglesworth, Ian
Silkin, Rt Hon John (Deptford)Torney, TomYoung, David (Bolton E)
Silkin, Rt Hon S. C. (Dulwich)Tuck, Raphael
Silverman, JuliusVarley, Rt Hon Eric G.TELLERS FOR THE NOES
Skinner, DennisWainwright, Edwin (Dearne V)Mr. Ted Graham and
Smith, Rt Hon John (N Lanarkshire)Walker, Harold (Doncaster)Mr. Alf Bates.
Snape, Peter

Question accordingly negatived.

It being after Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.