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Price Commission Bill

Volume 385: debated on Monday 11 July 1977

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House again in Committee.

Debate on Amendment No. 1 resumed.

3.49 p.m.

If we may return to the Price Commission Bill and, more especially, to Amendment No. 1, must say that I have been disappointed, if not surprised, by the attitude of the Government as portrayed by the noble Lord, Lord Oram. Throughout the passage of the Bill in the other House, the Government have proved to be obdurate. There has been very little inclination to compromise, and on this occasion the noble Lord gives us no hope that the Government would consider any Amendment at all on this subject. He says—perfectly rightly—that the last Conservative Government set up a form of permanent Price Commission. That was at a time when I think both the noble Lord and I were considerably further away from our Front Benches than we now are. But the fact of the matter is that that was a different body, with different aims, and its powers were subject to annual review in precisely the same way as we are proposing in the Amendment. So, it is not exactly helpful to trot out these ancient saws time after time.

The noble Baroness, Lady Seear, accuses me of not recognising an investigatory power when I see one, but I say to her, with respect, that that is not the point. The point is whether the body which is to exercise these powers should itself be the focus of attention on an annual basis. I believe that all of us in this Chamber see the need to exercise some kind of check on behalf of the consumer if at times, for one reason or another, it becomes apparent that an undertaking is abusing its position. But what we here say is that it is undesirable that this particular creature of Government, this new, permanent Price Commission, should sail on regardless, year after year, when, as the noble Baroness herself has said, and even the Government admit, this is not the best way to go about setting up such investigations. It is a sad day when the Liberals trot out this type of support on behalf of the Government.

In one sentence, the noble Baroness said that this kind of power—I am now going back to the wage claim aspect of the matter—will encourage moderation in wage claims, to use her own phrase. How on earth can this kind of investigation play any part in wage claims which, from the end of Stage 2, are likely to explode? Of course it can in certain circumstances, if there is a carefully phased agreement between the Government and some body, or bodies, of citizens. But when there is going to be a wages free-for-all, for which a number of very large unions have recently voted, how on earth can it play any part in moderation of those claims? It cannot.

I said on Second Reading, and I say again, that I wish that the Government had shown some sensitivity to the great anxiety of industry over this matter, and I wish that the noble Lord had had a few words of comfort, which have been conspicuously absent on almost every occasion that a Government view has been put forward. We believe that the Amendment is both moderate and sensible. The noble Lord himself claims that it is not wrecking, nor will it in any way make the Government position more difficult. In the circumstances, I should like to test the feelings of the Committee on the matter.

CONTENTS

Adeane, L.Exeter, M.Mowbray and Stourton, L.
Alexander of Tunis, E.Fairfax of Cameron, L.Munster, E.
Ampthill, L.Ferrers, E.Newall, L.
Arran, E.Geoffrey-Lloyd, L.Norfolk, D.
Ashbourne, L.Granville of Eye, L.Northchurch, B.
Atholl, D.Greenway, L.Redmayne, L.
Auckland, L.Gridley, L.Reigate, L.
Caccia, L.Grimston of Westbury, L.Robbins, L.
Carr of Hadley, L.Halsbury, E.Rochdale, V.
Carrington, L.Hawke, L.Romney, E.
Cathcart, E.Hylton-Foster, B.St. Aldwyn, E. [Teller.]
Clancarty, E.Ilchester, E.Sandys, L.
Clitheroe, L.Inchyra, L.Selkirk, E.
Cole, L.Jellicoe, E.Sharples, B.
Craigavon, V.Jessel, L.Skelmersdale, L.
Cullen of Ashbourne, L.Killearn, L.Sligo, M.
de Clifford, L.Kinnaird, L.Strathcarron, L.
De Freyne, L.Long, V.Strathclyde, L.
Denham, L. [Teller.]Loudoun, C.Strathcona and Mount Royal, L.
Drumalbyn, L.Lucas of Chilworth, L.Trefgarne, L.
Ebbisham, L.Macleod of Borve, B.Vickers, B.
Effingham, E.Mansfield, E.Vivian, L.
Elliot of Harwood, B.Marley, L.Ward of North Tyneside, B.
Emmet of Amberley, B.Monck, V.Wolverton, L.
Evans of Hungershall, L.Mottistone, L.Young, B.

NOT-CONTENTS

Airedale, L.Energlyn, L.Oram, L.
Amherst, E.Foot, L.Paget of Northampton, L.
Amulree, L.Gaitskell, B.Pargiter, L.
Ardwick, L.Gordon-Walker, L.Peart, L. (L. Privy Seal.)
Aylestone, L,Grey, E.Platt, L.
Banks, L.Hale, L.Ponsonby of Shulbrede, L.
Beaumont of Whitley, L.Henderson, L.Popplewell, L.
Birk, B.Hirshfield, L.Sainsbury, L.
Boston of Faversham, L.Houghton of Sowerby, L.Seear, B.
Brimelow, L.Jacobson, L.Shepherd, L.
Brockway, L.Jacques, L.Shinwell, L.
Brown, L.Janner, L.Simon, V.
Buckinghamshire, E.Kirkhill, L.Snow, L.
Byers, L.Leatherland, L.Southwark, Bp.
Caradon, L.Listowel, E.Stamp, L.
Champion, L.Llewelyn-Davies of Hastoe, B.Stewart of Alvechurch, B.
Collison, L.Lloyd of Hampstead, L.Stone, L.
Cooper of Stockton Heath, L.Lloyd of Kilgerran, L.Strabolgi, L. [Teller]
Crook, L.Lovell-Davis, L.Swaythling, L.
Davies of Penrhys, L.McCarthy, L.Taylor of Mansfield, L.
Douglas of Barloch, L.McCluskey, L.Wallace of Coslany, L.
Douglass of Cleveland, L.Maybray-King, L.Wigoder, L.
Elwyn-Jones, L. (L. Chancellor.)Ogmore, L.Winterbottom, L. [Teller.]

Resolved in the affirmative, and Amendment agreed to accordingly.

4.2 p.m.

Page 1, line 12, leave out subsection (2).

3.56 p.m.

On Question, whether the said Amendment (No.1) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 69.

The noble Lord said: I appreciate that this Amendment was considered in another place, and I admit from the start that it is a probing Amendment. However, I think it is very important to have an understanding with the Government that they appreciate the particular importance to the food industry of price control. With that in mind, it is suggested that to retain the connection of the Ministry of Agriculture, Fisheries and Food would be a very wise move, and the reason for it is a rather special one. The whole business of agriculture, with its control, both in this country and in the European Community, coupled with the very detailed effect of price movements on a highly sensitive commodity (I hope the Government are listening to me; the noble Lord, Lord Wallace of Coslany, has obviously taken over the batting for this one) which is vulnerable to the manoeuvring of prices on what one might call the criteria of price control, upon which, naturally, the Department of Price and Consumer Protection are the experts, together with the bearing that this has on the general picture of the food market and the bearing that there is on it of the cost of raw materials (on which the Ministry of Agriculture, Fisheries and Food is particularly expert) in a field where very special expertise is necessary because of historical reasons, because of the Community and because, indeed, of the whole history of careful control of agricultural materials of all sorts, makes it a very special case.

For example, if one were talking of some other type of commodity which was perhaps looked after mainly by the Department of Industry, one might find that the almost esoteric calculations which enter into its activities are nothing like as great as they are in the case of agricultural products. In my daily doings I am absolutely appalled at the extraordinary complexity which has evolved, not only in this country where this administration operates, not only in the European Community, but also in the area of the United Nations and in the area of GATT. The net result is that it is my humble opinion that there is an expertise in the Ministry of Agriculture, Fisheries and Food which it would be most unwise to ignore when coming to some sort of decision when the Department of Prices and Consumer Protection advises the Minister on what reaction to make to some recommendation from the Price Commission under the terms of the Bill. So the real point of this Amendment is to preserve what went on in the past, admittedly under a Government structure different from that which obtains today, so as to make quite certain that there is no break in this link of consultation as between Government Departments.

I am sure that the noble Lords opposite will say that it is quite wrong to suppose that Government Departments do not communicate the one with the other, and that of course there is machinery for that. But, as I am equally sure noble Lords opposite will be aware, government in this country is now so vast that it is almost impossible for humans to ensure the right sort of level of communication. If there was less administrative detail entered into by Government, as there was, say, 50 years ago, then it would be quite reasonable to suppose that there would be an easy flow of information as between Departments of State. But I would suggest there is all sorts of evidence that, try as they may—and this is no criticism of the Civil Service—the Departments of State find it extremely difficult to ensure the right measure of communication between each other, just because they are so vast and have such a wide area to cover. When you couple with that the extreme complexity in relation to food which I mentioned and the extreme importance of food in this area of price control (notwithstanding the fact that on Second Reading I endeavoured to show that price control is not necessary for food; but that is another matter), there is something to be said for having within an Act of Parliament an obligatory situation for ensuring communication between Departments of State. I beg to move.

I fully appreciate the point made by the noble Lord, Lord Mottistone, particularly regarding the complexity of problems affecting the agricultural industry, involved as it is now with the Common Market and many other problems, of which we are all fully aware. I do not think the noble Lord need be unduly worried. As he said, his Amendment is a probing Amendment. Under the new system which will be set up if this Bill passes, the Secretary of State alone will perform functions and exercise powers in relation to the Commission, subject to the normal non-statutory consultations between Departments and the doctrine of collective Cabinet responsibility. The Minister is well aware of the special needs of the food industry and the importance of food prices. There is no need for direct involvement of the Minister of Agriculture. The Minister was named in the 1973 Act because there was no Secretary of State for Prices and Consumer Protection. At that time he shared responsibility with the Secretary of State for Trade and Industry, who had responsibility for most sectors of industry but not for the food industry. The arrangement is overtaken by the creation of the Department of Prices and Consumer Protection.

The Commission will have complete freedom to select investigations, subject only to the Secretary of State's own veto, which we naturally would expect would be used only rarely. Under the 1973 Act the Secretary of State, the Minister of Agriculture or the Treasury can refer general questions to the Commission for examination, and there have been joint references from the Secretary of State and the Minister of Agriculture. Only the Secretary of State will have the power under the Bill—Clause 10. However, we would expect him to consult his colleagues about a general reference just as much as he does at present.

Excluding the Minister of Agriculture does not mean that the interests of the Ministry's clients will cease to have any representation on the Commission. The Secretary of State has already said that the new Commission should be fully representative, and there will be at least one new member with experience of the retail trade. By that statement I would assume that, rightly, the food industry would have its representative. This is the important point: the composition of the Commission. I sincerely believe that the noble Lord's point will be met.

Having just gone into the Lobby in support of the Amendment to Clause 1, I should not be suspected of being wildly enthusiastic regarding the prospective success of the entire proposal; but I wonder a little what has induced the noble Lord, Lord Mottistone, to put forward this Amendment. I agree that a vast amount of expertise is found not only in our Ministry of Food and Agriculture but widely diffused throughout the Common Market. Having watched these things at very close quarters during part of my career, I suspect that that degree of expertise here and in the Common Market is decidedly biased in favour of the producer rather than the consumer. I should think, therefore, that it was not entirely out of the question that if the control of prices, be it good or be it bad, were to repose in the hands of some body more detached from food and agriculture, there might be at least a fraction of a chance that the interests of the consumers would receive a more sober consideration.

I do not think that the Government are being entirely fair to my noble friend. The interests of consumers surely can be sometimes affected by the interests of the producers as well. Some of your Lordships will know that the pigmeat industry, for example, has recently been in some difficulty and, as the Minister of Agriculture will be aware, the price that pigmeat was fetching on the market was dropping significantly. If that were the only aspect of the problem the consumer would, no doubt, say, "Three cheers!" But, of course, as the price drops so sharply the return provided to the producers becomes inadequate and the supply of pigmeat (if action had not been taken) would eventually have dried up. So I think that the Amendment proposed by my noble friend has more merit than the noble Lord opposite allowed. I hope, therefore, that the Government will consider it a little more carefully than they appear to have done so far.

There is very little else to say on this matter except to reply to the remark of the noble Lord, Lord Trefgarne, that the interests of the consumer often conflict with that of the producer. That is roughly what he said. But the set-up of food production is infinitely different from that. The producer is often affected by the action of the wholesalers and the marketing system; then we have the retailer and then, eventually, in the last link of the chain, the consumer. There is a lot to be investigated, I would suggest from my previous experience of the wholesale meat trade, in the question of distribution, which might affect the interests of the producer in an adverse or beneficial way. Some systems of distribution are very suspect in price restricting and, in fact, price maintenance can be done by storage and bulk purchase on the part of the wholesaler which affects the poor producer who does not get a fair crack of the whip. This argument basically is about the membership of the Commission. The Government are aware of the fact that there should be a broad representation of viewpoints on the Commission.

I am grateful to the noble Lord, Lord Wallace, for his statement that the Government are conscious of the need for somebody who is associated with the food industry to be on the Commission. That is the practical point of this Amendment. I should have liked to see in the Bill greater contact with MAFF in the operating sense. I appreciate that you cannot duplicate the Secretary of State throughout the Bill; and this is an area where it might be possible to retain a contact. As to the point as to whether the Ministry can be considered to act against the interests of the consumer, would not be sure that that is so within this country. I think that there is a definite sign that, within the European Commission, the Director-General concerned has not got a great deal of interest in consumers. What our Ministry does have is a responsibility for food as well as agriculture. This carries on from the War, when there was a separate Ministry of Food. This has had a definitely biasing effect, in my experience, which is wholly healthy in this respect. However, as I said, this was only a probing Amendment. I am grateful to the Government for having put the point that efforts will be made to have a member of the Commission who is rightly based, and I beg to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.19 p.m.

The noble Lord said: On behalf of my noble friends Lord Mansfield and Lord Mottistone, I beg to move Amendment No. 3. The first Schedule to the Counter Inflation Act 1973 provided at paragraph 10:

"The Agency … may, after such consultation and with the consent of the said Minister, appoint such other officers and servants as they think fit.

Under this Bill, which amends some of the provisions of the 1973 Act (including that one), the Commission is required to secure the consent of the Secretary of State which, clearly, may be withheld. The purpose of this Amendment is to remove from the Secretary of State the power to veto appointments to the Commission.

Why should we seek to do that? We believe that it is desirable that the Commission should be a body independent of the Government and that, as a consequence, the appointment of officials and staff should be in the hands of the Commission and should not need the consent of the Secretary of State. It need hardly be said that the creation of this Commission on a permanent basis and with such wide powers has caused my noble friends and myself much concern. We think it right that we should remove from the Secretary of State the power to interfere—and that is really the only word that I can use—in the appointment not only of members of the board of the Commission but also of the official and the junior staff.

We cannot understand how it is that the Government have sought to take these powers if they are not proposing to use them. They were obliged to amend the 1973 Act so that under this Bill they would be able to appoint people of their choice into the various positions which the Commission will have to fill. One does not want to make personal references, but already some of the appointments to the Commission have been announced, and it need not be said that some of the appointments will have to be proved before they will necessarily be universally accepted. The principal objection from our side to the new powers which the Secretary of State is seeking to take is that this further extends the power of Government patronage to the posts to be made available in the new Commission. It is for that purpose that we move this Amendment. I beg to move.

The main purpose of the Opposition Amendment goes back to the Act of 1973. There is nothing sinister about what is proposed in the Bill. The provision set out in Clause 1(3)(b) is not intended to hamper the Commission in any way in the appointment of their staff. It is meant to give the Secretary of State a rather greater role than before in these appointments. There is nothing sinister in his having a greater part to play. It is quite normal for the Secretary of State to give his consent to staff appointments made by other, similar public bodies: for example, the Monopolies and Mergers Commission. The Price Commission do not in any case have complete freedom over appointments. They are already required to have the consent of the Minister for the Civil Service before making staff appointments. The Amendment cannot be accepted because it will prevent the manner of appointment of Price Commission staff being brought into line with that customary for similar bodies. In point of fact, the Secretary of State ought to have greater control over staff appointments than at present, because even at the present Vote the cost to the Department of Prices and Consumer Protection is about £5 million per annum. Therefore we cannot accept the Amendment.

Having had the great privilege of serving as the Director of the Distributive Industry Training Board until nationalisation of the Board in 1975, I have practical experience of outside bodies with a semi-official status being controlled too closely from the centre. I cannot emphasise too strongly that the independence not only of the staff but, more important, of the Commission— and in this case it is important that they should be as independent as possible in order to demonstrate their integrity to the world—is indefinably hampered and harmed by too close a control from the centre. This is not a Party matter, because this has been happening with different Parties in power. I am certain that the Civil Service in this country do not understand what harm they do to these outside bodies in seeking to preserve too much control.

In earlier Bills at the end of last year I sought to insert Amendments in order to make the point that bodies which are independent will function properly only if they are as independent as they reasonably can be. Of course the Secretary of State must have a measure of control over the Commission in a variety of ways. That is built in, and some may say it is built in rather too fiercely for the rest of the Bill. Earlier, the noble Lord was saying that the Government had the greatest possible faith in the Commission, and the noble Lord, Lord Oram, said that it would be harmful if we passed the first Amendment because they would feel that their future was uncertain. It was all part of a theme that the Government have great confidence in them and want to give them security, but I say that the Government have too much control over the Commission. That is a separate argument.

What is important—I cannot say it too firmly because it is an important total issue and not just to do with this Bill—is that, when the Government set up independent bodies which they want to act responsibly and want people to work in who will take responsibility instead of "yes" men, it must give them the maximum freedom of action. To hire their own servants is a perfectly straightforward and reasonable task to leave to this body. Though I grumble that the training boards have been nationalised, at least they have been allowed to appoint their own staff totally independently. This poor Commission will not be able to do so. What I am saying now might go into the depths and the labyrinths of the Civil Service Department. There is a need for them to change their attitudes to make sure that these independent bodies take the proper responsibility which Ministers expect them to take.

I follow clearly what the noble Lords. Lord Trefgarne and Lord Mottistone, have said. Perhaps the noble Lord could explain who pays for the staff of this Commission. So far as I can see, they have no source of income, so I take it that the staff will be seconded Civil Servants. Otherwise, how are the Commission to pay for the staff? If they are being paid through the Government, it is arguable that the Secretary of State should have this reserve power to disapprove of an appointment—a reserve power which I imagine he will seldom use.

The money will be found by the Department of Prices and Consumer Protection beyond their Vote. That is the short answer.

Will there be seconded Civil Servants on a temporary basis or will staff be permanently hired from outside?

I cannot, on the spur of the moment, give an adequate answer. But, in my view, some will be seconded for obvious reasons to provide the basic staff. Recruitment in the future need not necessarily be on the basis of secondment.

Will the noble Lord agree that in work of this kind there is a considerable advantage in having a sizeable fraction of the staff not seconded from the Civil Service but to have people familiar with commercial workings?

One can visualise the recruitment of experienced people from the industries involved in the Price Commission's work. Practical experience of the food industry, as mentioned by the noble Lord, Lord Mottistone, is an important point. He and I have certain experiences in these matters, and I agree that recruitment would be very beneficial from those industries, if of course the employers do not pay them more to keep them!

The noble Lord said that there was nothing sinister in the provision of the Bill. Of course I accept that absolutely, and I am sure that the concurrence by the Secretary of State to any appointment, he would hope, would be without any delay or difficulty. But, like my noble friend Lord Mottistone while my experience has not been entirely parallel, I have had experience very close to this where appointments to an organisation had to be approved by a Department.

The delay and frustration have really taken up an enormous amount of time which would have been much better spent working on the organisation itself. It is not that the names the organisation put up for the Department proved to be the wrong ones, or that they wanted somebody else, because very often approval was given to the names which had been put forward; but it may be months before approval is given. After all, the whole point of appointing people, at whatever level, is to get those whom one knows will work together as a team and will work efficiently and quickly. The aim is not merely to see that they come in due course after the immediate need is past. So I very much support my noble friend on this Amendment, because it raises an issue which goes far further than this Bill alone.

Is not this a simple example of the issue of centralisation versus decentralisation? As I understand it, the Amendment suggests that ultimately the consent of the Secretary of State must be obtained. The Secretary of State, therefore, is in a position to veto any proposals which he thinks inappropriate; but there is all the difference in the world between possessing the power of veto and having, as is implied by the proposed words of the eventual Act—

"participation in consultation at an early stage".
I simply cannot believe that any large industrial company would propose that appointments at all levels should take place in consultation with the managing director of the organisation.

The trouble is that that is just what the Bill does propose: that appointments at all levels, from the chairman down to the most humble tea-lady, should be approved by the Secretary of State, no less. He should have the virtual power to withhold approval over the appointment of the tea-lady. There are two aspects to this. The first is that the Secretary of State may not approve the appointment of some very desirable addition to the Commission's staff but, equally, he might do nothing. He might fail either to approve or not to approve, and then keep both the people concerned and the Commission in a state of suspense and uncertainty. We believe that proposal is undesirable and likely to militate against the efficient operation of the Commission.

Before I decide what we should do with this Amendment, T must try to extract from the noble Lord, Lord Wallace, clarification on two points. The first refers to the concern expressed by the noble Lord, Lord Robbins, which I share. It is a question of the level at which the Secretary of State will seek to impose a veto or seek to insist that appointments are made with his approval. Secondly, there is the more general point of what defects have been shown to be in the arrangements provided for in the first Schedule to the 1973 Act, which this paragraph amends. If the noble Lord can give me some assistance and clarification on those points, I can then consider what to do with this Amendment.

In answer to the noble Lord, Lord Trefgarne, referring to the level at which the Secretary of State would impose his veto, I think that the noble Lord is making very heavy weather of the whole matter. One cannot visualise the Secretary of State sitting in his room, having lists of appointments from top to bottom put before him, and saying, "I won't have him; I won't have her", and so on. That is absolute nonsense.

I have now been handed a further note and I think I should remind your Lordships that in practice such powers are always operated sensibly and there is no noticeable delay. That is so. Obviously with a major appointment, involving naturally a very high salary, in the national interest the Secretary of State must have some interest in that appointment. It is also very obvious that at a lower level of Commission staff, the consent of the Minister would probably be extremely formal even if in fact it was sought. Bearing in mind that even under the 1973 Act the Minister had some say and the Minister for the Civil Service definitely had a say—there is no argument about that—with all due respect to the noble Lord and the Opposition Amendment, I would say that they are making extremely heavy weather over it. They are seeing dangers that do not exist: in fact they are frightening themselves to death with their own Amendment.

If the Minister for the Civil Service had powers under the 1973 Act, as he undoubtedly did, to consider and approve appointments to the old bodies, why change that in this Bill? Those powers, so far as I know, were working perfectly well. Can the noble Lord point to any case where the powers were used wrongly? Why do the Government seek to vary those powers in this Bill?

For the very simple reason that the Department of Prices and Consumer Protection has to bear the major proportion of the Vote here. Therefore, on financial considerations alone, the Secretary of State must have some overall say in the appointment of people in the higher echelons.

I cannot pretend that I am convinced or persuaded by what the noble Lord has said. I still do not understand why the powers contained in the 1973 Act were not sufficient. However, I am not going to pursue the matter now. My noble friends and I will consider this point again and, if necessary, return to it at a later stage in the Bill. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 1, as amended, agreed to.

Clause 2 [ Commission's duty to have regard to specified matters]:

4.39 p.m.

Page 3, line 19, leave out paragraph ( a) and insert—

("(a) to have regard to the extent to which competition between suppliers restrains the price of goods and charges for services;
(aa) in the event only that competition fails to restrain such prices and charges, to have regard to all other matters which appear to the Commission in the particular circumstances to be relevant with a view to securing that prices of goods and charges of services are reasonable while enabling the making of adequate profits by efficient suppliers of goods and services; and")

The noble Lord said: We now move to Clause 2, which might be thought of as the heart of the Bill. In subsections (1) and (2) it sets out the criteria which are to guide the investigations and which are to be a source of guidance for the Commission. At this point we are dealing with the first subsection, which is the introductory one and sets out, if you like, the base from which the more detailed criteria of the second subsection stem.

I would hope that, as well as being in many respects the most important clause in the Bill, it might be an area in which the Government would see their way to accommodating us. As I mentioned on 30th June on Second Reading, in another place the Minister of State laid great emphasis on the importance of competition. I would refer your Lordships to column 1261 of the Official Report, where that reference was made. So it might be reasonable to say that the Government agree with us that competition is probably a controlling factor in fixing the price level. I should like to think that noble Lords on the Liberal Benches will, perhaps, also agree. Certainly, it appeared from what the noble Baroness, Lady Seear, said at column 1255 of the Official Report that the Liberals, too, had the same view as we have—that is, that competition is all-important. From what was said on Amendment No. 1 to this Bill, quite apart from what was said on Second Reading, we see the main function of price control as applying to monopolies or near-monopolies, rather than to companies and sectors of industry in which competition is extremely rigorous.

I endeavoured to show to your Lordships at Second Reading that competition in the food industry, in particular, is all-pervasive, and that, indeed, there is every reason to suppose that it has done the price controlling over the last five years, without any help from the Price Commission. That does not mean to say that the Price Commission are not necessary in other areas. But the food industry represents quite a large section of industry and, I think your Lordships will agree, a very important one in what one might call public morale terms. It is also one over which, if they thought it could do any good, people would look to Government to exercise control. So it seems reasonable to suggest to the Government that the over-riding factor which governs these criteria from the beginning should be whether there is effective competition in the activity or sector of industry concerned and, if there is, to say, "In that case, we will not bother to conduct an investigation into that. We will move on to something else."

It was said by the Secretary of State in answer to questions in another place that it was felt that the Commission

would have the resources to make only about 40 investigations a year, so there is reason to suppose that they will have to be selective in the areas which they cover, in order not to waste their resources. Therefore, I suggest to the Government that this introductory paragraph, which is only a kind of holding item for consideration before moving on to the present subsection (2)( a), is a wise one for practical reasons, as well as for the resources of the Price Commission and the companies that are to be investigated.

Something that worries us greatly is the enormous amount of resources that have to be used by companies which are being investigated. People—and sometimes very highly paid people—have to spend hours and days preparing evidence for any of these inquiries. I personally was involved in a company which was investigated by the Monopolies Commission, and we had to hire a very highly paid young man specially for the task, which is something that we in Parliament, and Government generally, do not always take into account. We have learned to put into Bills how much they will cost the Government—and when I entered the House only 10 years ago we were not even doing that—but I do not think we have learned to say how much they will cost industry.

The cost to the industry concerned is quite an important hidden factor, because, as I am sure noble Lords are aware, price increases come about because of a multiplicity of extra charges, such as raw material costs from abroad, wage increases and equal opportunities for women, which mean that the latter get more money. It does not matter what it is; all these items, coming together, create the conditions in which companies must raise their prices or go out of business. So one needs to think very carefully about any unnecessary expense.

That comes back to my Amendment. The Amendment seeks to provide extra guidance to the Commission to make sure that they do not start an investigation, or recommend to the Secretary of State that they should start an investigation, until they have at least cleared the question of competition out of the way. I am sure that there will be cases where they are not sure that there is perfect competition—I do not wish to get into the area of the economist, by using that term—or good competition, but I have tried to phrase the Amendment in such terms that it is flexible. They will then put that investigation on one side and move on to another one, which is more meaningful in terms of finding out whether, because of a semi or real monopoly situation, a company is charging more than it ought to do.

That is the basis of this Amendment and I hope that, because of the attitudes which have been disclosed by the Government, and by those on the Liberal Benches—it is a little difficult talking crosswise about them, and they ought to be on the same side of the House; it would be easier to talk to them if they were—they might feel that this is one Amendment which would appeal to them as being in accordance with their view; not hampering the purpose of the Bill, but strengthening it and giving better guidance to the Commission than would be the case without it. I beg to move.

4.47 p.m.

The noble Lord, Lord Mottistone, recalled that during Second Reading he put a great deal of emphasis on points similar to those which he has just been making about the importance of competition. I, too, recall that I agreed with him. In particular, we agreed in relation to food prices that it is competition in that area which has the effect of keeping prices down. So we start on a basis of some agreement. Indeed, I would agree that the extent of competition will be an extremely important factor in determining whether a firm or a sector is investigated and is subject to restrictions under the new powers.

The noble Lord said that there would have to be selection, because of the resources being limited to dealing with about 40 cases a year. It is true that there will have to be selection, and the degree of competition will clearly be one of the most important considerations that is borne in mind. But I suggest that his point is already adequately met in subsection (2)(f). He may not think that that wording entirely covers the purpose of his Amendment, but I suggest that, to a very large extent, it takes account of the points he was making. I also suggest that it is met within subsection (1) itself, because, if competition were already adequate to restrain prices, the objective of restraining prices would be met and no investigation or restriction would arise from the criteria in this clause. So I really feel that, to a large extent, the drafting of those various subsections of Clause 2 to which I have referred meets the point made by the noble Lord.

If the noble Lord will forgive me, can he indicate what he means when he refers to Clause 1? I see what he means by Clause 2(2)(f), but he mentioned also, I think, Clause 1. I am wondering whether he meant subsection (1) of Clause 2.

I apologise. I meant to refer to subsection (1) of Clause 2. It is there that the noble Lord will find the references that I made and which to a large extent meet his point. Moreover, it is undesirable to introduce new words into subsection (1) which would largely duplicate the wording in subsection (2), because subsection (1) is intended as a brief statement of the overall objective of the policy. That objective is rightly stated to be price restraint consistent with the earning of adequate profits by efficient firms. Competition is simply one factor—I agree it is a most important factor—which bears on the basic judgment as to whether prices require restraint.

Even if competition is adequate, however, it should not be assumed that it can be the over-riding factor in determining whether price restriction is justified. It is a good thing but not always perfect. In some cases, competition can be wasteful and inefficient and can lead to unnecessarily high prices because the fragmentation of the trade prevents economies of scale. On the other hand, prices and profits are not invariably excessive in conditions of limited competition. So it is not, as the noble Lord would seek to imply, just a case of black and white, that all competition is good and all absence of competition is bad. However, apart from that economic analysis I think, on the actual drafting of the clause as it is at present, if the noble Lord will examine what I have said more closely, he will find that the central purpose of his Amendment is already met within the Bill itself.

I understand the point of what the noble Lord has said but, of course, I would not have put forward the Amendment had I felt that it was satisfactory to have subsection (2)(f) as the place for dealing with competition. It seemed to me that it needed a rather greater emphasis within the Bill. If one looks at all the debates in both places one will find this subject recurring time and again. I suggest to the noble Lord, Lord Oram, that it rates rather higher than some of the other ones among which it is buried in subsection (2), and, indeed, it comes fairly far down the list. I am sure the list is not meant to be in order of preference, but nevertheless the people who wrote it in the first place probably instinctively put it in the order of their preference. We would seek to have it considered more highly by the Price Commission when they get to work.

The noble Lord, Lord Oram, said that the wording was not perfect. That, of course, is the penalty of being a Back-Bencher in an Opposition. One's wording is always open to improvement and I do not know whether, from that, the noble Lord, Lord Oram, meant that the Government might take over my Amendment and improve on it, or whether they want to leave things exactly as they are. Would the noble Lord be prepared to take it over?

No, I was not implying that. Indeed, when I used the word "perfect", as I recall I was not referring to drafting at all; I was referring to some part of the argument but I now forget what it was.

I do not know whether the noble Lord, Lord Oram, would bear with me if we had paragraph (f) higher up in the batting order?

No, I am afraid not. This is a legal document and, indeed, the noble Lord himself recognised that there is no preference in order and no greater strength is implied in subsection (2)(a) than in subsection 2(f). The latter will be just as legally binding as the former, so there is nothing in the batting order that matters.

Indeed, this is a legal document. All Bills which pass through your Lordships' House are legal documents, and I am sorry that because of that, in the noble Lord's view, we are not allowed to put in what may be regarded as instructions or encouragement to the Price Commission to do their duty in the way that we think best. I do not think the suggestion that this is a legal document is in any way sufficient to prevent my noble friend from moving, or indeed pressing, an Amendment such as this. What he does with the Amendment is a matter for him and he will tell us that in due course.

But I wonder whether the noble Lord, Lord Oram, is really sufficiently forth-coming in this matter. After all, just lately we have seen examples where competition has really "done the trick" remarkably well. Only last week one of the major petrol companies announced that they were reducing their price by, I think, 3p per gallon, and, lo and behold! the next day all the others, not to be outdone, reduced their price by the same amount. Had they not done so they would have lost sales on a large scale and found themselves suffering accordingly. I am told that the price of coffee on the wholesale market has come down lately because people are not buying coffee at the high prices that are being asked in the shops—and is there any wonder at that! Therefore, why does the noble Lord approach this Amendment with so much diffidence?

There is one other aspect which perhaps I might put to the noble Lord, which arises, indirectly perhaps, from this Amendment. In the case of large companies, whose prices are very likely subject to pre-notification and eventual approval by the Commission, where their prices are restrained for those reasons, then the prices of the producers of similar goods operating in the same market are equally restrained because of the competitive element. Therefore I think the noble Lord underestimates the effect of competition upon prices generally. As I have said, what my noble friend is going to do with his Amendment is a matter for him, but I believe that the noble Lord, Lord Oram, has been a little less than forthcoming and a little less encouraging than perhaps he might have been.

I think the noble Lords, Lord Trefgarne and Lord Mottistone, are making rather heavy weather of this Amendment. There are some more substantial Amendments which we shall need to take into account. The noble Lord, Lord Trefgarne, provoked me when he spoke about competition and the question of coffee. He knows the full reason why coffee has reached a very high price: it is because the climatic conditions, particularly in South America, have created a shortage and also, of course, there is a good deal of speculation. The noble Lord also knows that the price has come down recently, largely because the United States of America have suddenly realised that on occasions tea is as good as coffee and there is a marked resistance to paying the price of coffee in the United States. But competition can go two ways: it can reduce the price, as in the case of the food chain stores—I was reading an article this morning about Tesco—where there is marked competition and the price is brought down; but when there is a shortage, such as with coffee, the price goes up.

I have some experience about competition, and I should like to mention one particular field where I know that companies agree as to who should take the turn to go to the Price Commission for a rise in a particular commodity. But that was not the competition that the noble Lord, Lord Mottistone, was propounding; nor was it, I think, in the mind of the noble Lord, Lord Trefgarne. Competition goes both ways; it is not something you can say is a solution to all the problems. Competition depends entirely upon the way in which those who are controlling the commodity or the manufacture decide to use it.

I looked at subsection (1)(a) of Clause 2, where the Commission are "to have regard to all matters". If that was deleted as a consequence of the Amendment by the noble Lord, Lord Mottistone, then the Commission would only need to have regard to the question of competition and then go on to other matters. I would have thought it far better in terms of drafting that the Commission, which is an experienced body, should be required to look into "all matters which appear to the Commission" relevant; and clearly the question of competition will be a factor. This will vary according to which industry is involved.

In regard to the suggestion of the noble Lord, Lord Mottistone, that if paragraph (f) was brought forward in subsection (2) it would have a greater status, than paragraph (a), I would say to the noble Lord, as an industrialist, that I hope that it would not, because paragraph (a) says:
"… the need to recover costs incurred in efficiently supplying goods and services and in maintaining the value of the relevant businesses".
The noble Lord, Lord Mottistone, is an industrialist. I would have thought he regarded that as one of the major factors for the Commission to consider when considering whether a price increase was justified. I do not believe there is any point in juggling these paragraphs around on the basis that because one comes before the other it is more important. It is far better to leave it as it is and leave it for the Commission, who are an experienced body, to make a judgment. May I say, as one who not so long ago had to go the Price Commission, that I did not entirely agree with their decision, but I could not disagree with the way in which they entered and considered the application that was made.

Before the noble Lord, Lord Mottistone, replies, I wonder whether I might take up a couple of points the noble Lord, Lord Trefgarne, made. He accused me of being less than sufficiently forthcoming. I thought that in my opening sentences in reply to Lord Mottistone I had very strongly emphasised my belief in the value of competition. I fully accept the examples the noble Lord, Lord Trefgarne, made as being valuable examples of it. Certainly I was—to use his word—forthcoming in that respect. The argument between us was whether or not the Amendment was necessary in order to give emphasis to it, and I pointed to the existing drafting as being more than adequate to cover the point the noble Lord, Lord Mottistone, has in mind.

We have had a good bat at competition. I do not think it will go away and lie down. I still think it is a most important matter, though I would entirely agree with the noble Lord, Lord Shepherd, that recovery of costs is more important. When I said higher up the batting order, I did not say opening bat. Sometimes No. 3, is a good place to be. However, let us not get too wrapped up in the test match.

I see the points the noble Lord has made. I am grateful to other noble Lords for their contributions. I am not entirely happy about this situation, because I should like to see this whole clause somehow give a greater emphasis to competition, which I believe, notwithstanding what some noble Lords have said, to be a crucial factor. The one point which the noble Lord, Lord Oram, did not really reply to, though he did mention it, was the need to make sure that the Commission expends its resources very carefully indeed and does not get guided into areas where it might be investigating something which is not as important as some other matter, because it can only do 40 investigations a year. That part of it makes me want to come back to something like that. Perhaps I might reserve judgment and see whether we can find some better wording which might fall more gently on the ears of the Government at Report stage. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.7 p.m.

moved Amendment No. 5:

Page 3, line 27, leave out from ("as") to ("relevant") in line 28.

The noble Lord said: This Amendment was considered in another place, and it is by way of being a probing Amendment at this stage. Naturally, there were many Amendments in another place, but I considered this one to be of particular importance and worthy of special consideration by your Lordships. The point of it is to introduce what one might describe as a matter of fact rather than opinion. As I said earlier in introducing the last Amendment, subsection (1) of Clause 2 is dealing with the pattern of how the Commission will deal with their criteria. Therefore, it is more important than the criteria themselves. It seems to me that what has been said in another place is of very great importance and worthy of your Lordships taking it as a special case and having another look at it, or inviting another place to have yet another look.

As it is worded, subsection (1)( b) leaves it entirely up to the Commission to decide whether the matters are relevant. If my Amendment is adopted, it will be whether they are relevant as a fact. The Government will see from other Amendments later on that we seek in many ways and in many respects to involve the companies that are under threat of investigation or are being investigated or have been investigated, and give them an opportunity to have their say. We believe that the Bill as it is written is too one-sided. It gives the Secretary of State quite fantastic powers. It gives the Commission very good powers. They are powers which are autocratic in nature, and the companies that are to be subjected to these investigations will not be in a position to question the facts.

As the Bill is written, "the Commission consider them relevant", they can say, yes, they do; that is easy. But if you omit the words, "the Commission consider them", then it is a matter of fact and it is open to argument. If the Commission are wrong, then, hopefully, the investigate—do not forget we are in the world of participatory democracy these days—will have the opportunity to say, "Commission, you are wrong; that factor you have taken into account is not relevant".

On the other hand, to adopt the Amendment will not destroy the Commission's case; it will not undermine the whole position. It will not render the Secretary of State powerless to use the Bill as he thinks fit. So to that extent it is not a very big Amendment. We have been debating this for some time, and perhaps I could suggest to the Government that this is the right moment to be concessionary. I beg to move.

Before the noble Lord the Minister replies, it would help the Committee if the noble Lord, Lord Mottistone, would tell us how the subsection will read if his Amendment is adopted, because it does not seem to me to make any sense.

Leaving out Clause 2(1)(a), Clause 2(1)(b) will read:

"to have regard in particular to the matters mentioned in the following subsection so far as relevant".

I am glad that the noble Viscount, Lord Simon, is obliged by that explanation, because, as I shall point out in a moment, I think that he is on to a sound point and that the Amendment would be defective in leaving a rather meaningless or inadequate phrase in the Bill. However, the Amendment removes the Commission's discretion to judge which of the criteria set out in Clause 2(2) are relevant for the purposes of exercising their functions under the Act. It is probably intended—and I think that this was implied in the speech of the noble Lord, Lord Mottistone—to stop the Commission ignoring criteria which firms may consider relevant to the justification of a price increase, a price or a margin. If so, I suggest that the Amendment is defective because, as amended, the provision would require the Commission to have regard to the criteria set out in Clause 2(2) "so far as relevant"—the words which the noble Lord, Lord Mottistone read out—without specifying who is to judge the relevance of the criteria. It leaves the matter in the air. In the absence of any direction, the Commission would still be free to look only at those criteria they considered relevant.

I do not want to rest my case merely on a technicality nor, I am sure, does the noble Viscount Lord Simon, but it is worth pointing it out. Although the criteria in Clause 2(2) have primacy, the Commission are required under Clause 2(1) to have regard to all matters which seem to them relevant. Their overriding aim is stated in Clause 2(1) to be to restrain prices and charges, but only in so far as that is consistent with the making of adequate profits by efficient firms. This stops the Commission ignoring, as the Amendment suggests they might, such factors as criterion (c) concerning profitability, in an attempt to restrain prices unduly. Moreoever, there is nothing to stop firms saying which criteria seem relevant to them. Indeed, under the new system the Commission are likely to invite them to do just that. Furthermore, when making representations to the Secretary of State, following a report, firms will be able to point to criteria which they believe the Commission should have taken into account and did not.

Under Clause 20 the Secretary of State himself is required to take all relevant matters into account when considering what action to take following a Commission report. Therefore, I suggest to the noble Lord, Lord Mottistone, that for those reasons his Amendment is unnecessary, quite apart from the technicality in which it is defective to which we have pointed. For both reasons, I hope that the noble Lord will see fit to withdraw his Amendment.

The first point, which the noble Lord, Lord Oram, called a technicality is, in a sense, the most important. As regards his second point, I agree that there is a great deal of provision in the Bill for the types of protection that we are seeking, and we hope to improve it still further during the course of discussions in your Lordships' House. However, it is precisely because we want to leave the relevancy in the air so that it can be challenged that the Amendment has been tabled. Under the present wording of the Bill, the question of whether the Commission think the criteria relevant or not is entirely at their discretion. It is not open to the "relevant person"—that is the new okay phrase for the Bill—to challenge the decision of the Commission. Therefore, although it appears to be a technicality, it is fundamental to the process of trying to open matters up to give the relevant person a greater chance to speak up on his own behalf. I suspect that the noble Lord, Lord Oram, has been guided to think of this as a mere technicality and to consider the other points as being more important. If he would undertake to look at the matter in the light of the need for the relevant person to have a fair opportunity to defend himself—and that is what one is really seeking in so many of these Amendments—I should be most grateful.

I should not in any way wish to mislead the noble Lord, Lord Mottistone. It is true that I put some emphasis on what I called the technicality simply because the noble Viscount, Lord Simon, introduced that subject and I started off on that basis. However, my main objection to the noble Lord's Amendment is that it is not necessary and that the relevant person has adequate safeguards in any case. Therefore, it is not a question of me saying that I rather like the Amendment but that it is technically inaccurate and therefore I shall look at it again. We are not in that situation. We are in a situation where I believe that I could not accept the Amendment even if it were drafted to take account of that point.

I do not think that it is worth pursuing this particular Amendment to another stage or to take up your Lordships' time on it. Therefore, as gracefully as possible, I beg leave to withdraw the Amendment.

On Question, Amendment, by leave, withdrawn.

moved Amendment No. 6:

Page 4, line 30, leave out from ("section 4(4)") to ("and") in line 34.

The noble Lord said: I beg leave to introduce Amendment No. 6 on behalf of my noble friends Lord Mansfield, Lord Trefgarne and myself. Amendment No. 6 is a paving Amendment to Amendment No. 9 which, in its turn, has many consequential Amendments. With the leave of the Committee, I should like to suggest that we consider all the Amendments concerned together. I shall read them out fairly slowly to ensure that the Government and, indeed, my noble friends agree that I have listed all the relevant Amendments that go with Amendment No. 9, which is the substantive Amendment. The relevant Amendments are, Nos. 6, 8, 9, 10, 11, 15, 16, 24, 25, 26, 28, 29, 31 and 34.

I interrupt my noble friend because I believe that Amendment No. 18 is also consequential upon Amendment No. 9.

Yes, I entirely agree with my noble friend. I do not seem to have written it down although I have starred it. Do the Government agree with those numbers?

I should like to clear this point before we get on to the substance of the matter. I am most obliged to the noble Lord, Lord Trefgarne, for having given me a list of the Amendments which he considers to be relevant to this issue. I checked them against a list which my advisers had prepared for me. With the addition of Amendment No. 18 and the exception of Amendment No. 31, I would agree. Amendment No. 31 is not, in my judgment, consequential, as are the other Amendments, although I can readily see from its wording why noble Lords opposite thought that it was consequential. Perhaps we may proceed on the basis of the long list and when we come separately to Amendment No. 31, I shall, at that point, explain its purpose and why, in my view, it is not consequential.

Perhaps the noble Lord, Lord Oram, would agree that an Amendment of some sort in Clause 7(8) will be required—even if it is not Amendment No. 31—if Amendment No. 9, which is in my name, is agreed?

Dealing with the Amendments including No. 18 and omitting No. 31, with your Lordships' permission I should like to talk to Amendment No. 9 which omits the whole of subsection 4(2)(b). That subsection has the effect of imposing a freeze on a company during the process of investigation. I am fully confident that on the whole the very excellent criteria in Clause 2 will make good guidance for the Commission, and hopefully the Government will not interfere too much and spoil it all.

With that background I think that this is a very reasonable state of affairs. But it has the most desperate potential effect on any company which is under the investigatory process. In effect, it means that the company has been found guilty before it has been tried. That is surely contrary to the basic principles of justice in this country. It means that in the event of the Price Commission's finding that there is no reason to restrain the price or to allow the company's application through—or, alternatively, do not push it back if it is one of those that do not have to pre-notify—the Price Commission will presumably say, "Sorry. We did not mean to trouble you; we have taken up a great deal of your time and spent a great deal of your money because your executives have produced extra paper for us. In the event, we do not want to do anything about it". Of course, they may not say, "Sorry"; officials sometimes do not; but they should.

During the course of that four months will have elapsed. The raw materials from which the company's product are made can have doubled in price—they have been known to go even higher; during that time any margin that the company may have sought to achieve with a price increase will have been taken over and all their profit for the past year can be swept away. That can be shown mathematically but I shall not bore your Lordships with it at this stage.

I believe it was indicated by the Secretary of State in another place that the Commission will tend to go only for the market leaders. It was implied that they should be able to look after themselves. That is all very well, but not all market leaders can look after themselves when they are potentially subjected to such a long period in which raw material prices may increase and in which prices cannot be altered. However, because they are the market leaders they will effectively hold down the prices of other companies. Noble Lords know that I am particularly concerned with the food industry because I happen to know more about it. In that area in particular, competition is not merely between different manufacturers or purveyors of one product; it is between all products, as I endeavoured to show on Second Reading.

Whereas the market leader, with his greater resources, may be able to sell off a factory in Japan or India—where only the Indians will go out of work—smaller companies cannot do so. The smaller firms are centred in this country. The sort of purposes for which this whole process is designed, which is ultimately to ensure the well-being of people in this country, will automatically be undermined. That will be the potential effect of this long period.

In tackling this Amendment we played with the idea of whether we could reduce the period of four months to, say, one month which might have been better because then the prices of raw materials could not increase too much. However, we realised that if we did that there would not be time for the Commission to carry out a proper investigation. Therefore, we are rather stuck with the four month period. We now find ourselves saying, "What happens? What is the disadvantage to the price control system of this Amendment? Why should we not have this?". I appreciate that the Secretary of State is emphatic that we should keep it, but he has never really said why. It is a sort of act of faith. If only the noble Lord, Lord Oram, can tell us why it is so important to have it, we shall learn a great deal more than Members of another place ever learned and it will be a great help.

Noble Lords may remember that the earlier Amendments in another place related to what people call "roll-back". At the end of the period of investigation, if the relevant person is found guilty he would be made to roll his prices back to their original level. We agree with the Government that that is not really practicable for most commodities, except perhaps those controlled by a monopoly, such as a nationalised industry, as I think we are about to experience in some areas. However, that would not be possible for most commodities.

The fact that a freeze has not been imposed at the beginning of the period means two things. This is normally triggered off, in particular for the larger companies, by an application on their part for a price increase. We say that they should have their price increase, applying whatever criteria are normally applied for such increases—I am forgetting for the moment the investigation side of the process. That will safeguard them. They are much more knowledgeable as to how the market affects them; they will not want to increase their prices unless they absolutely must; they know about the raw material situation and will guard against it; they will increase their prices to £x. To turn to the four months period of investigation, it may transpire that they are not as efficient as they thought they were, and that can be proved to them. They can, as it were, be found guilty under the Bill. You would then say, "What do we do now? How can we reach the position we would have been in had we had the freeze?" The answer is that you do not really need to because, as the costs have increased, the company would in any event have had to be allowed some increase. All that has to be done now is to make sure that in the future, after the investigation has taken place, their price increases are so adjusted as to take care of the fact that they were not as efficient (or whatever the cause may be) as they should have been when the investigation was carried out. Therefore, restraint can be applied and in many commodities which are bought on a repeating basis this will indirectly give back to consumers what they would have had if a freeze had been imposed, but it is just delayed longer.

All this argument would not apply if we did not live in a world where we are so uncertain about the prices of raw materials. That can happen for all sorts of reasons, and we need not go delving deeply into it. It would seem to me that from the Government's point of view there is nothing to be lost. If the Secretary of State is saying, "I have the power to price freeze" only in order to impress his Left Wing, then that is rather a specious reason. If there is a rather more solid reason we should love to hear it; but, try as I can, I cannot think why it should be so.

5.30 p.m.

I shall try to give the noble Lord, Lord Mottistone, the reason why we regard this method of approaching the matter as important and indeed essential. May I begin as he began, when he said that he thought that the method suggested in the Bill is contrary to normal concepts of justice—I think meaning that it is wrong to punish a man, or a firm in this case, before he is found guilty. That sounds very nice, but I suggest that things are not quite so simple in this particular case, because the point is that someone else is going to be punished before the firm is found guilty. That someone else is the consumer. The noble Lord makes an expression, as much as to say that that does not matter; but the consumer will be paying an unjustified price if we accept the Amendment that the noble Lord has moved.

Would the noble Lord allow me? I apologise for interrupting just as he is starting his speech, but I really cannot bear his suggestion. The consumer is not a person. The consumer is a myth; a thing that has been created by imagination. If the noble Lord had said "the consumers" I might have gone along a little more with it; but it is most dangerous to talk about "the consumer", as though the consumer was a sort of mythical creature, like the standard British working man. They do not exist as such.

Let me assure the noble Lord that my wife is a consumer, and she is not a figment of the imagination. We regard the freeze power which Amendment No. 9 proposes to remove as essential to the credibility of our policy with the consumer (or the consumers, if the noble Lord prefers) and the wage earner, and that is not to be identified with what he loosely called the Left Wing. We have a concern for both categories of people, the consumers and the wage earners, and it is necessary to approach this problem in the way that we do in order that we can be seen to be acting in the interests of the consumers and the wage earners.

They are entitled to expect that where there are major doubts about the justification for a price increase they should not, if this can be avoided, have to pay that increase unless and until the Price Commission recommend that it conforms with the criteria. I readily agree that this is a fundamental difference of principle between ourselves on this side and noble Lords opposite. This was a matter which, as is well known, was debated very fully in another place. As the noble Lord, Lord Mottistone, pointed out, in those previous debates the matters which he has raised about the freeze were taken in association with Amendments there which sought to put the roll-back system into the Bill. I am glad to see that noble Lords have not brought that into our debates, because I think that there has now been reached on all sides agreement that, however desirable that might be in theory, in practice it cannot be made to work.

On the other hand, without that kind of provision, we are in the situation now in relation to the Amendments which the noble Lords are moving that we would, if we were to accept them, have no freeze and no power afterwards to roll-back the increased price. So the essential thing that we are now being asked to centre upon is the abolition of the freeze power. May I proceed a little on the roll-back point, because it is of importance although, as I said, I am glad that the noble Lord, Lord Mottistone, recognises that it cannot he implemented. The suggestion is unsatisfactory both to consumers and to firms, because the same consumer who has paid an unjustified price increase would not necessarily benefit from a subsequent price reduction, especially if the goods concerned were not bought at frequent intervals. If one consumer bought a refrigerator, for example, at an unjustified price he would be unlikely to get the benefit of a roll-back procedure until he bought another refrigerator many years hence. That is an extreme example, but that sort of difficulty applies through-out with the roll-back suggestion.

We believe that the Bill makes perfectly adequate provision for the many cases in which a freeze during an investigation would be inappropriate. It is not going to be an automatic and unrelieved freeze. There are a number of alleviations of that procedure. For example, the Price Commission may well decide against investigating such cases in the first place, and during investigations they may be required to allow interim increases where profits are below the safeguard levels—those which are to be provided under Clause 9.

The Commission are also free to award interim increases in other circumstances having regard to the criteria in Clause 2. Firms, and indeed their competitors, will be able to make representations to the Commission if initially the price under investigation is frozen. The Secretary of State will have power to veto an investigation at any stage—for example, if he considers that any investigation would be excessively damaging to a firm or to the relevant industry. I suggest that that is an impressive list of ways in which the problem to which the noble Lord turns our minds will be met, by one or other or many of the provisions that I have listed. Therefore, although I recognise the importance that is attached to these matters by noble Lords opposite and by their colleagues in another place, I cannot see that we on this side can begin to accept their point of view on this matter.

Just before my noble friend winds up on this Amendment, I should like to say one or two things. I am not entirely sure that the noble Lord, Lord Oram, is living in the real world. He talks of the real and proper need, which we recognise, to protect the consumers from unnecessary and unreasonable price increases. Nobody argues with that. But the consumers become consumers by working in industry or in commerce. If you put such shackles upon industry and commerce that they really cease to be able to trade profitably, then the interests of the consumers are most certainly not best served.

If a price is frozen, say, for a period of four months, as can be provided for under this Bill, if the application for the increase which was frozen was justified—and almost all applications to the Price Commission hitherto have been shown to be justified—then the innocent party (that is to say, the justified applicant) has, for a period of four months, been prevented from recovering his proper costs, and is therefore making lower profits, or perhaps making losses. Indeed, if raw materials, which form so vital a part of our food manufacture, increase by such leaps and bounds as they have of late, losses, not profits, will be the order of the day. What is it that consumers can look forward to? Instead of the penny or two on a packet of biscuits from which they have been protected, they can look forward to the sack and no job at all. If that is what the noble Lord is hoping to achieve by resisting this Amendment, the people will judge him for it.

Unhappily, I suppose the Government's reaction to this Amendment is natural in view of what has happened elsewhere; it is terribly difficult to get under their armour. Charming though the noble Lord, Lord Oram, may be when replying to Amendments, I must make a couple of points, one of which was eloquently made by my noble friend Lord Trefgarne.

Lord Oram divided his remarks into two main areas. One dealt with the fact that, in his view, the Bill was designed to protect the consumer. I do not agree with the use of the phrase "the consumer", though I might have understood him had he referred to "a consumer". The same applies to "the wage earner"; he might perhaps talk about "a wage earner". Those people are essentially on one side of the picture. Admittedly, consumers in general will for four months get their biscuits slightly cheaper than would otherwise have been the case, or they may be able to buy a fridge somewhat more cheaply. However, though a fridge is a large object and the amount one can save on it must be thought of in terms of the large overall expenditure involved, I shall not pursue that point.

The people who will suffer are the employees of firms in both retailing and manufacturing that go into liquidation. As noble Lords know—because the figures have been well publicised in relation to this Bill—there has, in the last three or four years, been a marked increase in the number of firms going into liquidation and in the number of people becoming unemployed. We must, therefore, seek a balance.

The noble Lord spoke of the safeguards, as he called them, in the Bill, but when we come to discuss Clause 9 it will become clear that those safeguards, as drafted, are most inadequate; they are really not safeguards at all for some people. If the safeguards were more adequate—exchanges

CONTENTS

Alexander of Tunis, E.Elliot of Harwood, B.Mowbray and Stourton, L. [Teller.]
Alport, L.Emmet of Amberley, B.
Amory, V.Exeter, M.Newall, L.
Atholl, D.Fraser of Kilmorack, L.Northchurch, B.
Balerno, L.Gainford, L.Orr-Ewing, L.
Barnby, L.Greenway, L.Rankeillour, L.
Berkeley, B.Hailsham of Saint Marylebone, L.Reigate, L.
Broadbridge, L.Hatherton, L.Robbins, L.
Carrington, L.Hawke, L.Rochdale, V.
Cathcart, E.Hornsby-Smith, BRomney, E.
Clifford of Chudleigh, L.Killearn, L.St. Aldwyn, E.
Clitheroe, L.Lauderdale, E.Sandys, L.
Colville of Culross, V.Long, V.Simon of Glaisdale, L.
Craigavon, V.Lucas of Chilworth, L.Skelmersdale, L.
Cullen of Ashbourne, L.Lyell, L.Strathcarron, L.
Daventry, V.Macleod of Borve, B.Strathclyde, L.
de Clifford, L.Macpherson of Drumochter, L.Strathcona and Mount Royal, L.
De Freyne, L.Mancroft, L.Thorneycroft, L.
De La Warr, E.Mansfield, E.Trefgarne, L.
Denham, L. [Teller.]Marley, L.Vickers, B.
Derwent, L.Merrivale, L.Vivian, L.
Drumalbyn, L.Monck, V.Ward of North Tyneside, B.
Effingham, E.Mottistone, L.Wolverton, L.
Young, B.

through correspondence have indicated that, in this context, the Secretary of State is not prepared to budge on certain key aspects on which I shall elaborate when we discuss later Amendments—perhaps we should not be so keen about this Amendment.

We are then told about the variation that can be made. That may possibly be reasonable, but it takes time to complete such a process, yet raw material costs go up dramatically quickly. As for the Secretary of State's veto, if that could be depended upon, the Minister would have spoken in different terms in another place and would probably have accepted an Amendment similar to this. It is because, sadly, we do not have much faith in the Secretary of State as defender of the interests of industry that we find ourselves having to press the Amendment.

5.44 p.m.

On Question, Whether the said Amendment (No. 6) shall be agreed to?

Their Lordships divided: Contents, 69; Not-Contents, 71.

NOT-CONTENTS

Airedale, L.Foot, L.Peart, L. (L. Privy Seal)
Amherst, E.Gordon-Walker, L.Peddie, L.
Annan, L.Hale, L.Phillips, B.
Ardwick, L.Hanworth, V.Pitt of Hampstead, L.
Aylestone, L.Henderson, L.Platt, L.
Banks, L.Houghton of Sowerby, L.Ponsonby of Shulbrede, L.
Barrington, V.Hylton-Foster, B.Popplewell, L.
Blyton, L.Jacobson, L.Seear, B.
Boston of Faversham, L.Jacques, L.Shepherd, L.
Brimelow, L.Janner, L.Shinwell, L.
Brockway, L.Kennet, L.Simon, V.
Brown, L.Kirkhill, L.Spens, L.
Bruce of Donington, L.Leatherland, L.Stewart of Alvechurch, B.
Byers, L.Llewelyn-Davies of Hastoe, B.Stone, L.
Castle, L.Longford, E.Strabolgi, L. [Teller.]
Champion, L.Loudoun, C.Swathling, L.
Collison, L.Lovell-Davis, L.Taylor of Mansfield, L.
Cooper of Stockton Heath, L.McCluskey, L.Vaizey, L.
Crook, L.MacLeod of Fuinary, L.Wallace of Coslany, L.
Davies of Penrhys, L.Maelor, L.Wigg, L.
Donaldson of Kingsbridge, L.Meston, L.Wigoder, L.
Douglas of Barloch, L.Northfield, L.Winterbottom, L. [Teller.]
Douglass of Cleveland, L.Ogmore, L.Wynne-Jones, L.
Elwyn-Jones, L. (L. Chancellor.)Oram, L.

Resolved in the negative, and Amendment disagreed to accordingly.

5.52 p.m.

On Question, Whether Clause 2 shall stand part of the Bill?

Before Clause 2 is agreed to, I should like to register strong disagreement with an Amendment which crept into the Bill in another place in the middle of the night. I refer to Clause 2(2)(c)(ii), on page 4 of the Bill, which refers to providing money for, and encouraging promotion of various matters relating to the enterprises in the United Kingdom; in other words, limiting the investment to the United Kingdom. This is an extraordinary isolationist and protectionist approach and, if I had not been told that, in fact, it is virtually unenforceable, then pact or no pact, I would have moved an Amendment to take this provision out.

Clause 2 agreed to.

Clause 3 [ Annual report]:

On Question, Whether Clause 3 shall stand part of the Bill?

I should like to raise a question regarding Clause 3, subsection (1) of which lays an obligation on the Commission to submit a report within two months, in effect, from the end of the three months period, and to do that covering each period of three months. In subsection (2) a duty is laid on the Secretary of State:

"to lay before each House of Parliament a copy of each report …".
We are not very accustomed in Parliament to three-monthly reports. What we are quite accustomed to is quite a considerable delay between the period when a report, say from a nationalised industry covering its year's working, is submitted to the Secretary of State and the date of publication. Nothing is said about the date on which a copy of the report is to be laid before Parliament, let alone published. I wonder whether the noble Lord can say something about the question of publication of three-monthly reports in this way. Obviously it is very important, not only for Parliament but for the whole of industry, to be kept up to date and to know how the Commission are carrying out their functions in relation to the Bill when it becomes an Act.

I must apologise to the noble Lord for having missed his opening sentence or two and, therefore, I may get this matter slightly wrong. But I should like to make the point that as the Bill was originally drafted it was our intention that reports should be annual, but in another place arguments were advanced for continuing the present practice of quarterly reports. The Government agreed with those arguments, and the Bill was accordingly amended. But I understand that the noble Lord is wondering about more precise timing and more precise provision for these reports to come before Parliament. I should like to look into this question, and if any point of substance is involved then we can bear in mind that we have the report stage in a week's time. But I rather hope and expect that a letter from me to the noble Lord may give him satisfaction.

I wonder whether the noble Lord needs to go as far as that, because subsection (2) says:

"It shall be the duty of the Secretary of State—
(a) to lay before each House of Parliament a copy of each report made to him in pursuance of the preceding subsection …";
that is, the one relating to quarterly reports. I should have thought that what is now required of the Secretary of State is that the quarterly reports required by subsection (1) shall be published to Parliament.

I quite agree, but what I am saying is that, as a Back Bencher, I have always regarded with considerable disfavour the length of time before an annual report appears before Parliament—before it is published. If there are to be quarterly reports, will there be the same time lag between the submission of the report to the Minister and the date of its publication to Parliament? I doubt whether the Secretary of State will lay a copy of each report as soon as he gets it; that is not what is said. As this is rather a new procedure, I want to know what is likely to be the time lag here. It would be very difficult to put down an Amendment on this matter because I would not wish to tie down the Minister to a particular period, but I should like to know what the period is expected to be.

With a quarterly report it may be a quarter of the length of delay about which the noble Lord is complaining.

The Price Commission have been issuing reports quarterly, so it should be fairly easy to find out what delay there is, and that I will do.

Clause 3 agreed to.

Clause 4 [ Proposals to investigate price increases]:

5.59 p.m.

moved Amendment No. 7:

Page 5, line 20, at end insert ("and any such notification shall state the reasons justifying that opinion.")

The noble Earl said: It may be convenient to the Committee if we also consider Amendment No. 14, which is similar to, and which goes with, Amendment No. 7. We turn now to the functions, or the operation, of the Price Commission, rather than the principles by which they will operate. I suppose that triggering off an investigation by the Price Commission will come about in one of a number of ways: first, if a company which is under a duty to notify an increase gives that notification; or, secondly, if an increase is made by a company which is under no such duty, and the Price Commission then make up their mind that they should now make an investigation, which they will do under the criteria laid down in Clause 2.

At that stage, of course, firms which are to he investigated will not know which of the criteria in Clause 2 apply to them—and noble Lords will have remarked when they first read them how very wide they are. These Amendments, which are very simple—and I do not need to speak at any length to them—have one ambition, and that is, in effect, that the Commission should inform the Secretary of State in writing why they propose to make an investigation into price increases triggered off along the lines I have suggested. Of course, they can also inform the Secretary of State in writing if they propose to investigate, not only a price increase but a price (and I am coming to Amendment No. 14 now) or indeed a margin under the temporary legislation.

The purpose of these Amendments is really to require notification to the Secretary of State of the reasons why the investigation is being mounted, so that the companies concerned know what are the reasons for the concern of the Commission. If I may use a colloquialism, if a company or companies have sinned they should know or should be told in what area or direction they have sinned. It is a simple matter. It is not something which is of the greatest importance, but it goes to a number of Amendments which we on these Benches will be moving concerning the fairness of these new laws. In those circumstances, I beg to move.

I should like to support this Amendment because, having listened to the long debate which took place on the previous Amendment, it seems to me that a tremendous lot of this Bill is going to be put into effect in a dictatorial manner. The last Amendment with which we dealt means that people are going to have their businesses held up without knowing whether or not the answer will be that they had done something wrong; and, therefore, their business is going to be hampered, closed down or whatever it is—in fact, judged before the trial has taken place. This has been agreed to by your Lordships' Committee. This Amendment simply says that, if somebody is served with a notice saying that something he has done is not justifiable or is not right, he shall have some idea of what he is being had up for. It seems to me a very simple matter. I cannot imagine anybody, in ordinary course of life, who is had up by the police not wanting to know why it is. The Price Commission are going to have the authority to "have up" businesses which have done wrong, or supposedly done wrong. Surely the most elementary thing is for it to say why. I entirely support the inclusion of this phrase in the Bill.

I hope very much that this Amendment will be passed. I confess that I was unable to follow the noble Earl, Lord Mansfield, when he said that it was a comparatively trivial matter. To me, it is not a trivial matter at all. I wonder whether your Lordships appreciate the amount of time which is spent by men of affairs deciding whether to make an application for a price increase or, if their applications are queried, deciding how they should put their case. I assure your Lordships that this is not negligible; it involves quite an appreciable proportion of the time of a great many businessmen.

I quite agree that this does not call for a long debate. On the other hand, I would accept that it is not an unimportant matter and I hope that, in the few words I shall say, I shall be able to reassure noble Lords and the noble Baroness who have expressed some concern. First of all, the Price Commission are only forming a prima facie view about the justification for a price increase at the time when they decide to investigate. Their considered conclusions will appear in a published report. Subject to the possible use of the Secretary of State's veto, the time for arguing about the justification for a price increase is during an investigation and after the Commission has reported, not before the investigation has started.

This is the point I should like to stress. If the reason for the Amendment is that the firm should know what will be under particular scrutiny during an investigation—and that is the main point made by the noble Earl and others—the Price Commission will of course tell the firm in any case at the start of an investigation in order to enable the relevant information to he provided. It would have to, and I think that meets the concern that is being expressed by some noble Lords and the noble Baroness. The provision for interim price increases during an investigation should be adequate to safeguard the interests of the firms concerned, and if the Price Commission selected a price increase for investigation on a totally unreasonable basis its action would be open to challenge in the courts. But the Bill intends that the basic decision as to whether a price increase should be investigated should rest with the Commission, and the Amendment would tend to undermine the Commission's discretion. But the main point is that a firm would be told in advance before the investigation started. That is the main point of criticism, I believe, which has come from noble Lords, apart from the noble Earl of the Opposition Front Bench.

May I ask the noble Lord where, in the Bill, it says that this is going to happen?

I cannot for the moment pinpoint it. I must apologise for this. My copy is missing for a second, but perhaps the noble Earl would like to come back on that point.

I am going to come back now. These are two small Amendments with one short point, and the noble Lord says, in effect, that noble Lords on this side of the Committee do not need to worry because it is all there; there is a discretion, and of course firms will be informed so that they know, in effect, the allegations which are made against them. May I say in passing to the noble Lord, Lord Robbins, that what I said was that this Amendment is not as important as some others. I never said it was trivial, and I do not regard it as being so. I am sure that the noble Lord, Lord Wallace, would invite me to withdraw my Amendment, but what I asked him was this. Accepting his argument, if I do, where does it say in the Statute-to-be, the Bill as it is now, that firms are going to enjoy this protection of which he has spoken? Is he not able to satisfy me?

I will try to satisfy the noble Earl. It is a question of practicality and common sense. The Commission would tell the firm as such. It is obvious. If the Commission is investigating anything, it will have to get evidence from the firm before an investigation can start. The firm must know, and the firm must reply. Surely it is common sense. It is not in the Bill itself—of course it is not—but, as I said, it is practical common sense, and that is the main part of it.

Apart from practical common sense, what I do not think the noble Lord said was why he did not like the Amendment—except for a vague and very small reference suggesting that it might undermine the authority of the Commission. He said it was unnecessary, but that is a different matter. He did not really say why he disliked it. I can see his point about the practicality, but so often in the case of Acts of Parliament we get extra little clauses put in, not only by the Opposition. In fact there is much in the Bill at the moment to underpin it in certain areas, to guide people like the Price Commission in a particular direction. I do not see that it in any way undermines the authority of the Commission.

I do not know what my noble friends think, but I am not convinced that there is any disadvantage in doing this. Apart from making it easier for the process to take place because they will know in which area the information is going to be required, the advantage may be that one of the important things about investigation (and I shall come back to this) is that it makes clear to the company concerned the sort of things that the Commission do not like. Then the company takes good care to put them right. There is no point in an investigation if something does not get put right. These extra bits which the Commission might otherwise omit or not give as full attention to as they should, can only be helpful to the Commission, to the Government, in the purpose of their Bill. I cannot see why it is not good enough. Why is it not something that can be readily accepted?

I think we are making slightly heavy weather of this. I do not say that in any disparaging sense to noble Lords opposite. It seems to me that subsection (1) is, in some respects, a control upon the Commission. In other words, the Commission would not enter into an investigation without prior notification to the Secretary of State. Subsection (1) therefore says that the Secretary of State shall be notified when the Commission are going to enter into an investigation. Then we come to subsection (2) which says:

"Where the Commission give a notification to the Secretary of State in pursuance of the preceding subsection in respect of an increase, then … it shall be the duty of the Commission to give a copy of the notification immediately to the person who gave the notice of the increase to the Commission (hereafter in this Act referred to … as 'the relevant person') …".
I should have thought that subsection (2) makes it quite clear that the person who has applied for a price increase would receive a notification that an investigation was in hand.

I can see what noble Lords have in mind, but I should have thought that the position of the applicant (if that is the right word for the person who is seeking an increase) is covered. Whatever one may think of the Price Commission—and they have been in existence for a good number of years—I am not aware of any criticism of their acting in a dictatorial or "riding roughshod" manner. There may be criticism of their judgments; but it seems to me inconceivable that an investigation could be entered into by the Commission without a notification, particularly as the notification is required by subsection (2).

The trouble with the Government answers to all our Amendments—and this has been quoted by the noble Lord, Lord Shepherd, whose interventions we have come to regard with considerable respect—is that they keep saying that this or that is perfectly obvious and that it stands to reason that this or that course of action will occur; but it does not say so in the Bill. On an earlier Amendment we were asked to agree that the Secretary of State should have very wide powers to choose who should serve on the Commission, from senior members down to the bottom. When we remonstrated on this, we were told that the Secretary of State would not bother himself with the junior day-to-day appointments but would be concerned only with the senior staff.

When we come to argue this Amendment we are told that it is obvious that the Commission will advance their reasons when they notify the Secretary of State. But when we look at the Bill we find there is no compulsion on them to do so. Why should we, the people, the public at large and, above all, the producers who are primarily concerned with the effect of this provision, be required to assume that the goodwill implied in the Government answers will continue for ever and ever while the Commission go about their business? I believe that my noble friend Lord Mansfield has a very powerful point on this Amendment. I am very much disposed to support him. I greatly hope that the noble Lord can really be more forthcoming on how the Commission are going to meet the objections we have raised.

It was said during the course of the discussion on both sides that this could be challenged in the courts. If it can be challenged in the courts, what does the word "justifying" mean? And when can it be challenged in the courts? In a matter of this kind, it is obvious that any challenge in the courts on a minor matter can be a financial advantage to the firm concerned if it postponed an adverse decision against the firm on the question of prices. I have always had great sympathy with any attempt in Statutes to give to the person whose action is being challenged as much information as possible. I should have thought the word "justifying" does provide a word which imports something; and a challenge in the courts about whether or not an increase is justifiable might be used in a dilatory way. Frankly, in these days of legal complexities, I have no idea at what stage you can challenge; but do I observe with increasing concern in diligently reading the Law Reports from time to time and trying to understand them, how many appeals there are in matters of this kind and how long litigation can he prolonged on the meaning of words.

May I ask the noble Earl of what assistance he really thinks this Amendment would be to anybody if it were carried? Would not the practical result be that the Commission would simply devise a formula which would satisfy the terms of the Amendment and be of no assistance whatever to the producer? Would it not be a formula of the nature that the Commission consider that the proposed increase is not justified by any information they have at the moment as to any increases in costs, or something of a general nature in general terms which would make nobody any the wiser?

I was wondering when the Liberal Party would come in on this. The noble Lord makes my point. Either the Price Commission are going to act in good faith if this were written into the Bill and will use their best endeavours to give the information required, as the noble Lord, Lord Shepherd, has said; or, as some noble Lords unfortunately feel in their bones, the Price Commission will not act in good faith, in which case they will probably act as the noble Lord suggested and will try to get round it. To me, at any rate, there are desirable and strong compelling reasons why the Price Commission should, so far as is possible, be nailed down by Statute. This has been an interesting debate in a way. The noble Lord says we are making heavy weather of it. But when it comes to a matter of fairness the person who thinks things are unfair is always accused of making heavy weather of it by the person who thinks that everything in the garden is lovely.

The noble Earl has the privilege of being a lawyer and I am not. Could he explain to me what subsection (2)(a) requires? Is this not the notification which the noble Earl is requiring?

I do not normally give legal opinions unless I am paid for them—without the salary of a Lord in Waiting, either. It is a bit much! All that it says, as I understand subsection (2)(a), is that it is the duty of the Commission to give a copy of the notification immediately to the person who gave notice of the increase. It says nothing there about the reasons. It is a copy of the notification. What I am asking for, in effect, is that the reason should be given which naturally would be in the notification and therefore promulgated to the firm or person who gave it.

Coming back to my point, this debate is a symptom, as have been others in the past, that whereas during the life of the Government which ended in early 1974 nothing they did would convince certain noble Lords with trade union sympathies who are now sitting on the Government Benches that anything which the Conservative Government did was in good faith or inspired by worthy, let alone honest, motives, equally, we have now reached the position, in this year of grace 1977, where nothing that this Government do or their spokesmen say is greeted by certain noble Lords on these Benches with other than cries of derision. It is an unfortunate commentary upon our political system and the way in which we run our affairs in this country. I am not satisfied by the answers of the noble Lord, Lord Wallace of Coslany. I will consider the matter and, perhaps, come back at the next stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [ Proposals to investigate prices or margins]:

6.22 p.m.

moved Amendment No. 12:

Page 7, line 8, leave out ("May") and insert ("July").

The noble Lord said: On behalf of my noble friends Lord Mansfield and Lord Mottistone, I beg to move Amendment No. 12. Clause 5 permits an investigation of a price or a margin by the Commission, irrespective of whether that price or margin has increased since the new powers came into operation. Until a price increase has been made under the currency of these new controls, it is unreasonable to expect that prices should be the subject of a Commission investigation. We suggest, therefore, that only if a price increase has been made after 31st July this year should there be a prospect of an investigation. Distributors, unlike manufacturers, have no triggering point for investigation and they should be in a position to know, like manufacturers, when they are at risk of being investigated. We believe, therefore, that the increase in the margin for distributors should be that mechanism.

This matter was debated at considerable length in the other place. In the Committee stage there, there was an equality of votes. The matter was decided upon the chairman's casting vote. It cannot be said that the Commons came to a clear view on the matter. On Report in the Commons the present position was introduced by the Government, and I agree it is an improvement on what was originally in the Bill; but it still is unsatisfactory, and I hope, therefore, that your Lordships will agree that we should bring the date forward from May, as is presently provided, to July. I beg to move.

I hope that the Government will resist this Amendment on grounds of equity. I hope that the noble Lord will join with me in that spirit. I suspect that the date, 31st May, is the most appropriate date closest to the introduction of the Bill, the first notification of what the Government have in mind. This is not the first occasion when legislation has been introduced in which there is an earlier date than that on which the Bill becomes art Act, in order that there should be a fairly standard date under which the provisions should be implemented.

If the Government were to accept the recommendations of the noble Lord, there will be many companies, if not the vast majority, who will have fulfilled their obligations as required under the Bill in anticipation of the Bill becoming an Act. The noble Lord is saying that there are some companies who say: "The Bill might not become an Act; we will go ahead and put our prices up even though it may not be warranted within the terms". In that case, if the noble Lord's Amendment is agreed to, the vast majority of companies—and I repeat "the vast majority"—would have stood by the provisions here. What the noble Lord would permit is for the small number of companies, which would have operated differently from the vast majority of the companies, to be able to get away with it. I cannot believe that that is what the noble Lord has in mind. If my interpretation is correct, I hope that the Government will not accept this Amendment.

I should like to support my noble friend on the Amendment. I speak with some experience of the garment trade. Many contracts are being concluded during July for autumn and winter clothing. Prices have been decided and there may even have been applications under the old régime. I am thinking in particular of the large chain stores, where the toughest horse-trading goes on to get the finest and closest competitive prices. If, once the contracts—which may run into many thousands of dozen—are concluded, somebody wants to refer a particular range of garments of a company to the Commission, they will have to wait for months while the Price Commission decide whether or not the increase is correct, and the demand under the contract might be to supply a great chain in thousands of dozens. It is grossly unfair to give this backdating of time when, if we are going to continue trading and maintain as much as we can of the textile trade, everybody should be at risk for contracts they are now concluding before this Bill becomes law.

I thought that an operative date could not be put into a Bill until the Bill has passed through Parliament. The date of 31st May has passed; we are now into July. Surely is is not customary to pass legislation which enables people to backdate something when it is not yet law. That seems a peculiar way of legislating.

It is not unknown for that to happen; a similar situation has applied to the nationalised industries, for instance. There is a great deal of confusion about this issue. As the noble Lord, Lord Trefgarne, agreed, the Government undertook in Committee in another place to look into the whole matter of whether a cut-off point should be introduced for Commission investigations into prices which are not required to be pre-notified. They agreed there should be some parallel between the position of non-pre-notifiers and pre-notifiers, whose price increases can only be investigated where the increases are made after 31st July 1977. There cannot be a complete parallel between the cut-off dates for the two kinds of enterprise. A later date than the 31st May 1977 would mean that the non-pre-notifiers, knowing the Government's intention could mount a pre-emptive price increase before the Bill becomes operative and so escape the possibility of an investigation for some time. Regulations under Clause 5(6)(c) will lay down what constitutes a price increase for the purposes of this provision. For example, an increase due solely to a rise in VAT rates will not count as a price increase for the purpose of Clause 5(1)(a). The Government have introduced into the Bill the earlier date of 31st May in order to avoid pre-emptive price increases.

Regulations will lay down that certain types of increase after the cut-off date will not count as a price increase for the purposes of this provision; for example, increases arising from higher excise duties, customs duties, car tax or VAT. In addition, where a firm announce a higher price before 31st May 1977 and it is their intention to do business at that price within 28 days of the announcement, the higher price will count as the 31st May 1977 base price and not as an increase. The regulations defining a price increase will be subject to Negative Resolution procedure. The Government do not accept the Amendment. They have gone some way to meeting the points made by the Opposition in another place. We feel we have gone a reasonable distance and that to go further would cause some degree of unfairness.

The Government's argument seems to rest on the assumption that there are lurking in the realms of commerce and trade some mavericks who are going to take advantage of the situation to jack up their prices. I do not deny that there may be such people, but we are now just a fortnight off the date which we suggest in our Amendment. Can the noble Lord tell us whether in fact there are price increases on any scale which have come into effect since the date which is written into the Bill and which it will be the Commission's intention to investigate as soon as the Bill passes into law? If there are none (which I suspect to be the case) then I do not think that the Government's arguments really carry a great deal of weight.

Again, in the past investigations by the Commission have usually shown that the applications for price increases which were being considered were justified in any event. The time has now come when the Bill, if all goes well, will receive the Royal Assent before the end of this Session. That cannot be more than two or three weeks away and I do not think that the Government can argue that there are great shoals of increases which would have taken place, or which indeed will take place, in the time remaining before the Bill becomes law.

There is one other point which was raised by my noble friend Lady Elliot: the question of retrospective legislation. The Government's position in another place seems to be weaker even than it is here, judging by the last Division, and it is surely reasonable for any producer to consider the future of this Bill, and of all Government legislation, to be somewhat dubious, particularly at the time when this Bill was going through its Committee stage in another place before the creation of the alliance with the Liberal Party, which, some may say, has kept the Government in office since then.

I do not think the Government's arguments are at all convincing on this matter. By the time we reach the next stage of this Bill, we shall be another week or so nearer to the time when the Bill will pass into law, and I think the Government's arguments at that time will be even weaker because more time will have passed. I think, therefore, that we had better take this Amendment away and consider the matter, perhaps returning to it at another stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.36 p.m.

moved Amendment No. 13:

Page 7, line 9, after ("the") insert ("gross percentage").

The noble Lord said: This is a nice, simple Amendment which probably stands a good chance of being classed as one of those which are helpful to the Government. Clause 5(1)( b) refers to:

"the margin of a distributor of goods".

In the General Regulations and in the new Consultative Document Cmnd. 6861, as well as in the present regulations, there are two sorts of margins to which distributors are subject. They are the gross percentage margin, which is the subject of my Amendment, and the net profit margin. It is significant that Clause 5(6)( b) refers to "margins" in the plural, so we assume that where it talks about "margin" in the singular in Clause 5(1)( b) it means one or other of the two margins that I mentioned. It would seem to us in this context that it is the gross percentage margin that is being referred to rather than the net profit margin. I beg to move this Amendment.

It is quite a simple Amendment, but unfortunately it does not define "gross percentage margin". The Government intend to provide that investigations should relate to gross percentage margins by suitably defining "distributors' margins" under the regulations provided for in Clause 5(6). I would agree with the noble Lord that investigations should relate to distributors' gross percentage margins; that is why we have provided in Clause 5(6) for the making of regulations which, inter alia, will provide for definitions of what is meant by "a distributor" and by "the margins and prices of distributors". We shall achieve our purpose by the regulations. Unfortunately, the Amendment does not achieve its aim because it fails to define "gross percentage margin".

Yes; but would the noble Lord not agree that there is uncertainty as the matter stands at the moment? If the provision referred to "margins" in the plural, as it does in Clause 5(6), perhaps we might go with that. "Gross percentage margin" is going to be defined; it will not be in the safeguards but it will be defined in the new price code. I should have thought there was room for clarification here, to show to which margin the Government wishes to direct the retailer or distributor. If it is a problem of definition, surely a definition could be put into Clause 22. As it stands at the moment there are these two margins, and in this particular subsection it is not at all clear which is which. It is to facilitate understanding of what the Bill states, and J should have thought it not in the Government's best interests to let through a Bill which is not as clear as possible. So I wonder whether the Government would look at this again, and see whether they themselves can put down an Amendment to get over my point.

Yes, most certainly. I think that that would be the best course to adopt. I do not think that there is much division of opinion here. It is just a question of looking at it again, and I will certainly give an undertaking that that will be done.

Amendment, by leave, withdrawn.

6.41 p.m.

moved Amendment No. 17:

Page 8, line 16, after ("considers") insert ("after considering representations made to him within 14 days by the relevant person").

The noble Lord said: We now come back again to reassurances or, more correctly, one should say that we are giving the opportunity to the relevant person—I hate to say "the accused"—to get his oar in at the pre-investigation stage. This is just in case there is anything about the situation which the relevant person may have to communicate, having received his notification, before things get going. It seems to us that this is reasonable and, it allows consultation.

I know that noble Lords opposite have never responded when I have talked about the climate of participation, but I do not do so lightly. It is a very real thing in this country today, and I welcome it. It is a fact of life that, on all sides, people are asking, even demanding, to be consulted and we have had many debates in this House around that point. I suggest that it does no harm to the status of the Commission, to the position of the Secretary of State or to the principle underlying the Bill to allow this concession to people who, whether one likes it or not, consider themselves in a threatened position when they are being investigated. After all, as we have endeavoured to show from these Benches, people do not put up prices unless they have to, because it is not in their interests from a trading point of view.

I know that there are exceptions and that there are rogues, but, on the whole, we do not legislate for the lunatic fringe. We legislate for sensible people doing sensible things, and most of the people investigated will be big companies which fall into the category of sensible people anyhow. So it is not as though they were companies which were not trying to keep down their prices in their own best interests. Also, it is not as if they were not companies with the resources to be able to advise the Secretary of State about their own figures just as well as—or, dare I mention it, rather better than—an independent body like the Price Commission. At least, most of them know what goes on in their own companies. So it seems to me that this is one of those Amendments which it would be a little cussed of the Government to refuse to accept. I beg to move.

should like to support this Amendment very strongly. It is another attempt to give the people with whom we are concerned—the manufacturers and others who are to be investigated by the Price Commission—a chance to state their case and give information which may be of value to the Price Commission. One of the disadvantages of this Bill is that it is extremely dictatorial. It insists "I am right", even before anyone has been brought before the Commission, the judges, or whatever one likes to call the persons concerned, to state his case.

This is something which I always believed was anathema to all the English legal profession, which always maintains that people must have an opportunity to state their case unfettered and that matters are sub judice until they are judged. Those may be the wrong phrases to use in this case, because we are talking about cases which will come before the Price Commission, rather than before the courts. On the other hand, the principle is the same and anything which makes matters easier, simpler and more helpful to both sides is surely something which could well go into this Bill and improve it, without making it any less effective.

The noble Lord, Lord Mottistone, puts over his case in such a charming fashion that he tempts me to melt. But, unfortunately, T cannot melt to the extent of giving in completely on this Amendment. The noble Baroness, Lady Elliot, was certainly right to state that people have a right to put their case, and I hope that in what I am going to say I shall prove that they have that right. The Amendment fails to specify the point from which the 14-day period should run although, presumably, it is from the date of notification of the investigation to the Secretary of State. But I will leave that point for the moment, for the noble Lord to reply to if he wishes.

It will be open to firms to make representations at any time during an investigation that the Secretary of State should use his veto power. There is, therefore, no need to provide a statutory right to make representations, nor to confine it to a 14-day period. The Amendment obliges the Secretary of State only to consider representations, which he would do in any case under the Bill as drafted. It does not oblige him to act upon them. The Amendment does not provide for a similar statutory right in the case of investigations into price increases under Clause 4. There is no provision for the point from which the 14-day period is to run, although it is presumably, as I said, from the date of notification of the investigation to the Secretary of State.

As regards the veto power, we would expect that to be used only in exceptional circumstances; otherwise, it would under mine the Commission's position. In any case, in exercising the veto, the Secretary of State must himself have regard under Clause 20 to the criteria in Clause 2. So the case is really met. People have the right of appeal, and there is an opportunity for them to exercise it. I do not see the point of the Amendment.

The noble Lord did not mention where in the Bill it states that people have the right of appeal at any stage during an investigation. It would be helpful to know where that is, because I cannot find it.

I shall look into it and give the noble Lord an answer in a few minutes.

We had better keep the debate going while that is done, because it is a crucial point. Everybody surely appreciates that it is a matter of great importance, and, if it is true that it is open to firms to appeal to the Secretary of State at any time during an investigation, that is a crucial part of the Bill. If it is just that no Minister can escape people appealing to him, that is one thing; but if it is part of the Bill, that is quite another. So it would be helpful to know whether there is anything in the Bill to substantiate that point.

Not directly in the Bill; but in any case people can make representations to the Secretary of State even for a period longer than fourteen days, so there is no need to restrict it to 14 days and there is no need to put it in the Bill.

Does the noble Lord mean an appeal to the Secretary of State's better nature or an appeal which might have some legal grounds?

An appeal on the basis that any British subject has to a Minister of the Crown.

I am sorry, but this really is not good enough. Acts of Parliament specify circumstances under which people can appeal in relation to particular facts which are introduced in the Bill, on particular occasions and particular points. That is part of the structure of many Bills with which I have been associated as they pass through this House, and they carefully specify when and to whom one can appeal. As my noble friend Lord Mansfield would probably say when it gets to that stage it underpins the legality of the appeal tremendously. Of course Ministers can be appealed to. People are writing to Ministers, Members of Parliament—even to us—almost daily, but that does not have a legal backing, and I suspect that in this Bill we need something that has a legal backing. If it is in the terms mentioned by the noble Lord, Lord Wallace of Coslany, that an appeal can be made at any time without specifying a time limit, that is splendid. But where is it in the Bill?

Are we not in danger of being unintentionally led astray by the noble Lord, Lord Mottistone? His Amendment does not refer to an appeal; it refers to "considering representations". Representations can be made at any time to the Minister but they do not constitute a legal appeal.

That is really the main point. References to "appeal" give a legal angle to the matter. The point is that representations to the Secretary of State can be made. When one speaks about "an appeal" one gets confused and thinks about courts of law.

I beg your Lordships' pardon for using the wrong phrase—that is the trouble with not being a lawyer! Even so, I could repeat all I have said before with the word "representations" written into my phrases. It seems to me that there are places where representations are made part of an Act of Parliament in order to facilitate a backing to these representations in the appropriate place for the appropriate purpose. What we are doing is saying that anybody can make representations at any time, so there is no point in putting it into the Bill. There is not time to look up all the cases where representations are written into the Bill, but on the basis of the argument of noble Lords opposite it has been a waste of time putting it into the other Bills. I should like to press noble Lords opposite to put something in the Bill which would cover my point.

If it is true that representations can be made at any time, and it is not quite clear in the Bill, would it not be possible to insert something which emphasises this? There is a great deal of anxiety, some of it doubtless quite unjustified, about the inquisitorial powers of the Commission, and anything that would reassure people would be a great advantage. Could not the Minister look at this again?

Clause 6(4) reads:

"The Commission shall, if so required by a notice given as mentioned in the preceding subsection, give to the relevant person or to a person appointed by him an opportunity of making representations in person to a member of the Commission about the increase, price or margin in question before the investigation is completed".
So representation does come into it.

But this is representations to the Commission; I am speaking about representations to the Secretary of State, which is rather different. I wonder whether noble Lords opposite would like to take on board the general feel of what we have been trying to say. I do not want to press them on a matter of detail of 14 days or anything like that. However particularly in view of the fact that the noble Baroness, Lady Seear, obviously agrees with me that it might be reasonable for them to see whether they could include within the Bill at some place something to make it clear that representations to the Secretary of State can be made at any time during the total process, it would be extremely helpful if that could be done before the Report stage.

Before the noble Lord, Lord Mottistone, withdraws his Amendment, as I have no doubt he will, I should like to make one short point. If this Amendment or something like it is written into the Bill, it will open the way, if to nothing else, to Questions in Parliament. If the Bill requires the Secretary of State, for example, to consider representations of a certain character made within a certain period, it is surely open to Members of the other place, or indeed to Members of your Lordships' House, to ask the Government what has been the effect of certain representations made to the Minister. For that reason alone, if for no other, I suggest it is highly desirable that an Amendment such as this should be included in the Bill.

In view of the discussion we have had I think there is a point here. I think I should give an undertaking to look into this matter, and to see what can be done before the next stage of the Bill.

I am extremely grateful to the Government for that undertaking, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Page 8, line 35, at end insert—

("(7) No investigation of a gross percentage margin of a distributor of goods may be carried out by the Commission under this section, except in cases where the margin in question exceeds the relevant margin reference level or levels of the distributor of goods as determined under the provisions of a code which either is in operation at the time of the investigation and has been prepared under the provisions of section 2 of the Counter-Inflation Act 1973, or if no code is in operation at the time of the investigation the last code that was issued under the provisions of section 2 of the same Act.")

The noble Lord said: On behalf of my noble friend Lord Mansfield, I beg to move Amendment No. 19. Clause 5 of this Bill empowers the Commission to initiate investigations into certain price rises which do not have to be pre-notified to the Commission. Under subsection (6) regulations can be made defining a distributor and a margin, and it is believed that it is the intention of the Government that only gross margins should be investigated under this clause. This matter was discussed earlier. It is the position of distributors that we seek to investigate at this point.

I am informed that distributors in general are concerned that their sector will bear the brunt of the Government's new policy on price control, and that the powers which the Government are seeking in this Bill will inevitably be used against them for reasons which they find less than satisfactory. Unlike manufacturers, where it is intended that an allowable cost rule should be abolished, it is proposed that distributors should be subject not only to all the controls under the present code, both gross and net margin controls, but also the new investigation and examination procedures. Distributors feel, on the grounds of equity, that if they too are to continue to be subject to the present controls they should be exempt from investigation when they are operating within their gross and net margin reference levels. Distribution is a highly competitive industry, in the United Kingdom at least, and it is well known that our distributors here are at least as efficient as their counterparts in Europe, if not more so. As a result of any investigation initiated under this clause a distributor could have his margin reduced even though it has not increased, whereas the worst the manufacturer can suffer is to have a price increase prevented. Equally, a distributor, unlike a manufacturer, does not know when he is at risk from investigation. On that basis, I beg to move.

Once again, I am sorry that I cannot accept this Amendment, which is nothing unusual, I suppose. The Amendment itself is defective, because there is no such thing as a gross margin reference level under the code referred to. The base period gross margin is simply called the gross margin. Where reference levels are exceeded, there is no need for investigation because the code provides that the margin should automatically be reduced. Investigations are not intended to duplicate the task of the code but to cover circumstances where the code may be ineffective; for example, because a firm enjoyed a very high margin at the base period and can, therefore, continue very profitably within its reference level. The Amendment is inappropriate because it refers to the margin in question exceeding a reference level. Our intention is to provide that investigation should relate to gross percentage margins. The Amendment is nonsense, as I said, because there is no mention of gross margin reference levels in the code. The new policy is intended to be permanent; the code is not. It is not appropriate, once the code ends, to tie investigation to permitted gross margin ceilings which must become increasingly irrelevant as time passes. For those reasons I am very sorry we cannot accept the Amendment.

Surprise, surprise, The kernel of the point that I sought to make is the apparent inequity of treatment of distributors as distinct from manufacturers. They take the view that two separate controls are being placed upon them which do not apply to the manufacturing sector of industry. It is for that reason that I invited the Government to recognise this point, and to ease the control on distributors, at least in one area. I said in my opening remarks that the distribution industry in this country is highly competitive, and I know and believe that to be so. It does seem somewhat unfair that the distributors should be controlled by what are in effect both the old and the new arrangements.

This is a highly technical area, I must confess, and it will certainly bear some closer investigation, as will, in particular, the remarks of the noble Lord, Lord Wallace. I shall take away what he said and look at it, and consider the position for the next stage of the Bill. Having said that, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 [ Investigations]:

7.3 p.m.

moved Amendment No. 20:

Page 9, line 1, after ("and") insert ("after giving a copy of a statement of the findings of fact as described in subsection (5)(a) of this section, to be contained in their proposed report to the relevant person and modifying such statements as requested by the relevant person or including in their report by way of appropriate footnotes the contents of any such request not giving rise to such a modification and not earlier than ten days after giving such a copy to the relevant person,").

The noble Earl said: I beg to move Amendment No. 20 standing in my name and the names of my noble friends Lord Trefgarne and Lord Mottistone. It may be convenient, marginally convenient, to discuss Amendments Nos. 21 and 22 with this Amendment. I see the noble Lord, Lord Oram, nodding. I was not convinced myself until I looked at the clock, but I think I am now.

We come here to Clause 6 and really a discussion of facts, if I may so put it, which may occur in a draft report prepared by the Commission. Under Clause 6 noble Lords will see that where the Commission has given a notification to the Secretary of State, it then is under a duty to carry out an investigation and to complete the investigation and make a report to the Secretary of State. Then in subsections (3) and (4) there are certain safeguards which we on these Benches do not think go far enough to protect the hapless company which may find itself the subject of an investigation.

Putting it more specifically, we think it is desirable that statements of fact contained in the draft report should be open to correction by the company investigated. Of course, in order to make such corrections, it is necessary for the company to know what is in the report at a stage when it can still correct the matter. If I may precede any remarks by the noble Lord, Lord Oram, although it is possible to demand a public inquiry under subsection (3) of this clause, I am not talking about the conditions or circumstances in which any company would probably think that such a demand or notice would be preferable. Amendment No. 20 makes it incumbent upon the Commission to correct statements of fact in a draft report if the company being investigated makes such a demand, and obviously, of course, if it is true that there are mistakes and they are open to correction. I do not think I need say anything more about it than that.

Amendment No. 21 in effect makes it incumbent on the Commission to show the company under investigation a copy of the report in draft form so that the company is then in a position to correct errors of fact and comment on the recommendations, which may provide an opportunity to warn the Commission that it may in fact be about to make some form of error. In other words, by reason of having made an error of fact the Commission may be about to make what I might call a nonsense of its judgment, but at that stage the company can come along and see the draft report and say, "This is what is wrong with it. We suggest you do this, that or the other", and the mistake can be rectified before it is made.

One of the difficulties about this legislation is that the Commission are required under the Bill to act as what I might call prosecutor—or procurator would perhaps be a better word—and indeed judge, in their own cause. What worries noble Lords on these Benches I think—it certainly worries me—is that there seems to be so little room for manoeuvre on the part of the company being investigated to make its case heard at a time when such representations would have any effect either on the Commission or eventually on the Minister. Bearing in mind the very real economic problems which may be caused for a company—I say "economic problems"; in fact if a price increase is totally unjustifiably withheld or frozen it may mean economic ruin for a company—noble Lords on these Benches have been exercising their minds to try (shall I say?) to provide means of correcting an injustice before it takes place.

Amendment No. 22 is really the same thing said in a different way. The Commission, of course, can be guided or can pay heed to information—or evidence, I suppose I should call it—which is submitted by third parties. Those third parties may be totally unknown to the company being investigated, and it may as things stand have no opportunity of knowing what is said about it, possibly by a commercial rival, nor can it judge the truth of any such assertions. So Amendment No. 22 in effect requires that such evidence should be made available to the company so that it has an opportunity to comment to the Commission on such evidence given by third parties at a time when, hopefully, such comments will have some effect. I beg to move.

I am glad that the noble Earl, Lord Mansfield, suggested that we might discuss Amendments Nos. 20, 21 and 22 together. They are not exactly alternative drafts, but they are all directed towards the same end and therefore I think that it is useful to deal with them together. The comments that I wish to make are almost identical as regards Amendments Nos. 20 and 21, with some rather different considerations as regards Amendment No. 22.

The Bill already provides safeguards to protect firms from damage that might otherwise arise from a report. Clause 6(8) requires the Commission to exclude from reports, so far as practicable, matters which could seriously and prejudicially affect the interests of a person or a firm, and the Commission may include such matters only if they are necessary for the purposes of the report. There is a further safeguard against the effects of errors of fact in reports which lead the Commission to erroneous recommendations. The firms concerned will be able to make representations to the Secretary of State before he takes any action, and they can thus draw his attention to the errors.

As regards Amendment No. 20, we do not agree that firms should have a statutory right to be given a statement of the finding of facts. As regards Amendment No. 21, it is being suggested that firms should be shown draft reports. We do not agree that they should have a statutory right in that respect. In the time available to carry out an investigation and make a report such requirements would be a serious burden on the Commission. However, in practice we should expect the Commission to check matters of fact with the firms concerned as they go along and that is, in fact, how it would work. Moreover, both Amendments Nos. 20 and 21 seem to us to go too far. They would give firms the right to ask for modification to facts in a report on any grounds whatsoever. If, for example, Amendment No. 20 were carried, firms could seek to emasculate Commission reports by asking for the deletion or modification of facts, without which the recommendations would not stand up.

Amendment No. 22 would require the Commission, once they had completed an investigation and before a report is made to the Secretary of State, to give the firm concerned comments, evidence or information which had been given to the Commission and taken into account by them during the investigation. I suggest that the Commission really cannot be required to hand over to firms information which they have received during an investigation. Some of it will be commercially confidential, perhaps from rival companies whose disclosures could seriously damage the interests of other firms. It is true that the Amendment refers to making available information "in an appropriate form" and no doubt that was an attempt to preserve confidentiality. However, I suggest that it is insufficient for this purpose. The knowledge that information or evidence given to the Commission during an investigation would be passed straight over to a rival firm would surely be sufficient to deter many companies from giving such help to the Commission. Firms affected by investigations will be able to see from the reports the facts and reasons which have led the Commission to reach particular conclusions and recommendations, and then they will be able to make representations to the Secretary of State accordingly.

The Commission can be expected to put relevant points to the firms for comment during investigations, whenever practicable, before they complete their report. For those reasons I suggest that as regards all three Amendments the practice will be sufficient to meet the wishes of the noble Earl, Lord Mansfield, but that there are dangers in writing into the Bill the type of wording that he has suggested.

Is the noble Lord, Lord Oram, really suggesting that the Commission are incapable of making an error regarding facts? I am sure that he would not wish to suggest that. However, if he admits that the Commission may make an error, surely it is desirable that that error should be corrected at the earliest possible opportunity both for the reputation of the Commission and for the convenience of the firm?

If I noted what he said correctly, I think that the noble Lord, Lord Oram, said that he would expect the Commission to check matters of fact as they go along with the firms. I am sure that this would be right. However, I think that we, on this side at any rate, would like to be sure that the Commission would, in fact, check matters of fact as they go along. That is the point which we have in mind. If we were satisfied in all cases that that would be done before the report was made to the Secretary of State, I should imagine that my noble friends would be much happier.

I suppose that there is some parallel with the Monopolies Commission, although I recognise that the Monopolies Commission has a much greater time-scale in which to work. However, am I not right in thinking that it is under an obligation to pass the factual part of its report for checking to the body into which it is inquiring—not the recommendations based upon those facts, but the facts themselves? I should have thought that this ought to be done within the time-scale. Obviously the difficulty is that, if the Commission are recommending that the price increase should not be made, and if after the time they submit their report the facts are challenged by the person whose increase is being inquired into, it will limit the time-scale considerably so far as he is concerned. It may be extremely serious for him in terms of his solvency, and so on. As I understand it, there is no limit after that as to the time within which the matter must be settled. This is something that needs to be carefully considered. I should think that we could put up with—it seems an awful long time—four months for holding a price increase, but it is extremely serious. More than a quarter's profits may go absolutely away in this period. It may be that the company will go into the red. However, to contemplate it being held back for a further period when it ought not to be held back, and when it is proved to the Secretary of State that it ought not to be held back, is even more serious. We must put some term to this.

Is it not possible for the Minister to look at the matter again and to give some reasurance that the facts will, in fact, be checked by the firms? I know that the Minister said that in practice the Commission would do A, B and C, but it is never satisfactory to rely upon what it is assumed will happen in practice. There is always the lurking feeling that, although good practice may obtain nine times out of 10, on the tenth occasion something rather serious may go wrong. That surely is a ground for asking that more safeguards should be put into the Bill.

Despite all the work that has been done by noble Lords opposite in order to table these three Amendments, just imagine what would happen if all three were accepted; we should have one of the most muddled clauses that it is possible to have. A succinct reading of Clause 6 distinctly shows that the power to hold a public inquiry exists. Far from the Commission—as the noble Lord, Lord Robbins, seemed to think—having the power of the Almighty and a dictator there exists the power to hold a public inquiry by means of which, if necessary, all these things can be exposed. As it exists, the clause is neat and controls a commission that becomes dictatorial and acts out of order in relation to Parliamentary procedure. Consequently, and with all due respect, I believe that as it stands the Bill looks after those whom noble Lords opposite wish to protect better than it would if these three muddled Amendments were included.

I was just waiting to hear what the noble Lord, Lord Oram, had to say. I should like to intervene later.

Very well. I think that I can respond to the suggestion of the noble Baroness, Lady Seear—namely, that between now and the Report stage I should look at the possibility of giving an assurance on the practice. However, I should not like to hold out any hope about a statutory requirement for facts to be corrected in the way that two of the three Amendments provide.

The noble Lord, Lord Drumalbyn, accurately quoted the practice of the Monopolies Commission. They show the people under investigation the factual part of their report. However, they are not statutorally required to do so. Therefore, I should like to look at this problem in those terms. As I say, for the reasons that I stated earlier, I do not think that I can hold out any hope of suggesting or accepting a particular Amendment to the Bill. However, I shall do what I can to make a statement about the practice in relation to the Monopolies Commission and the probable practice in relation to the operation of the Price Commission.

I certainly agree with the noble Lord, Lord Robbins, that, like all human institutions, the Price Commission can make errors, but I indicated in my opening remarks the safeguards that the relevant body has in respect of those errors and how it is protected against them—one has other opportunities to make representations.

But does that meet the point made by the noble Lord, Lord Drumalbyn, that if these opportunities arise only after the report has been presented, it may mean severe business losses which otherwise could have been corrected by the firm being investigated?

I believe that this point would be met in practice by what I said about the Commission checking facts as they go along. In reality, that is an adequate safeguard for that matter. We must bear in mind, particularly in making a valid comparison with the Monopolies Commission, that the time-scale is different. Investigations by the Price Commission are a more rapid process than those by the Monopolies Commission. That, too, is an important factor to bear in mind when considering this matter.

Which is merciful?— the Monopolies Commission procedure is more merciful. I do not think that the noble Lord would suggest that we can enable the same time-scale to apply to Price Commission investigations.

I think it would be merciful if the price increases could be disallowed for the period that the Monopolies Commission sometimes take over their inquiries.

It is nice to hear the noble Lord, Lord Oram, say that he will look at this matter to see whether this can possibly be modified. At the same time will he look in particular at Amendment No. 22? I agree that its wording is not ideal. We had some difficulty in selecting these Amendments in order to get this particular point across. May I suggest that he needs to think about two matters which we are trying to cover in these Amendments. One is the malicious information point which, in a highly competitive market, cannot be discounted. People are genuinely fearful that someone—it might be an overseas competitor; it does not have to be someone in this country—could make information available to the Commission which could be misconstrued, or construed in such a way as to operate against the company, which will be put into a very sharp position during this terrible period of freeze. That must be watched.

Secondly, in my recent experience it is sometimes very difficult to obtain information from even the most respectable sources—such as, the Inland Revenue and the Customs—which means the same thing to both parties. Recently we have been involved in a study with NEDO, in one of these Working Groups, and I suppose it has taken us two months to reach an agreed basis for the facts relating to the sector of industry with which I deal, simply because the Customs have certain figures and we have others, and reconciling them has proved to be extremely difficult. That sort of thing can be clarified only by the firm.

If something like these Amendments is not in the Bill, there is a great danger that in trying to rush the job—which they will have to do—the Price Commission will find that they are not doing enough consulting in order to be sure that they meet their four-month deadline, and then may unwittingly base a recommendation to the Secretary of State on what is actually not relevant to the company in precisely the way that the Commission think it is. So it is important that there should be something in this general area to strengthen what is contained in the Bill at present. I hope that when the noble Lord looks at this he will bear in mind the factors that I have just mentioned.

My undertaking covered Amendment No. 22 as well. I shall look at what the noble Lord, Lord Mottistone, has said. However, I chose my words carefully. I was responding to the suggestion by the noble Baroness, Lady Seear, and I quite carefully said that I expected to give an explanation of the probable practice. In his last intervention the noble Lord, Lord Mottistone, referred to the need to have something like this in the Bill. I am not giving any undertaking that anything like this will be included. I am merely saying that I am certainly prepared in the intervening period to look at this whole question to see whether I can be helpful by way of explanation. But I fear that it will only be me making much the same speech as I have made, in possibly more elegant language, after I have been more closely advised.

I am simply offering the Government some clothes of respectability with which to cover their nakedness.

Although obviously the noble Lord, Lord Oram, cannot give any undertaking—in fact he thinks it is unlikely that he can put anything into the Bill—I hope that he is not absolutely slamming the door. I have the feeling that when he looks at this he will find that unless something is put in, particularly in relation to Amendment No. 22, we shall have a situation where representations made by third parties confidentially are then taken as the basis for a decision or recommendation by the Price Commission without the relevant party being aware of them. I should have thought that that was absolutely against the principles of natural justice.

No, I did not slam any door, but I indicated that it might still be kept closed.

The longer this debate has gone on the more unsatisfactory the nature of this part of the Bill becomes. The noble Lord, Lord Davies of Leek, is having a swift look at the clause. If he had gone back he would have seen under Clause 5 that, if somebody falls foul of this Bill and finds himself in the dock on indictment, he can be subjected to an unlimited fine. Therefore, we are not talking merely about administrative matters which, by a process of conciliation and arbitration, can be smoothed over. At the end of the day, there are for individuals and their firms' real prospects of criminal proceedings, so this is extremely important.

It may be that it was disastrous having a lawyer in charge of a trade Bill for the Opposition because we tend to see things in terms of right and wrong. The Bill is to me unsatisfactory at present in two areas: first, the Commission, performing their statutory role, have to make value judgments on matters of fact which are later reported to the Secretary of State; secondly, the Secretary of State then acts on them in the way that he thinks best. It seems to me that if the Commission are going to act on facts which are unknown to what I might call the defending company, and the latter has no reason to know what the facts are, still less any opportunity of challenging those facts, one is bound, sooner or later, to get some form of miscarriage of justice. I do not see how one can avoid that fate. What we are seeking to do is to provide a mechanism by which a company which is the subject of an investigation can, first, find out what the facts are which are to be laid at its door, and secondly, make representations if it feels that the latter are incorrect or unfair.

I take the point of the noble Lord, Lord Davies, about Clause 6(3). There are two answers to that. First, the public inquiry comes at the wrong time for the purposes we are talking about and, secondly, it is using a steamroller to crack a cobnut. It would in most cases be a totally inappropriate way of proceeding.

May I interrupt the noble Earl? I am not trying to be obstreperous, but the report is given to the relevant person. The noble Earl said a minute or two ago that this was serious because criminal proceedings might come along. Then he said that a public inquiry would be using a steamroller to crack a nut. I do not think that if a criminal case can be brought against somebody, asking for a public inquiry is using a steamroller to crack a nut. Will the noble Earl, through his trained legal mind, clarify my mind?

The noble Lord is never obstreperous, only stimulating, but he is stimulating me so much that I do not know where to begin. Possibly I should go back to Clause 1 and go right through the Bill.

What we are discussing are the investigations which a Commission will carry out pursuing its statutory duty, and the means by which it will come to certain conclusions which it will then report to the Secretary of State. I have said that it is important that it should make the right decisions and act in a judicial way in so far as a body like this can because the consequences, both economic and criminal, could be very serious, for a company or an individual. That is all I said.

An inquiry under subsection (3) is not really the right way of going about telling the Commission that a matter of fact which they are minded to accept is in fact mistaken. I do not suppose that the noble Lord, Lord Oram, or anybody else would dissent from that contention of mine. There are occasions when a public inquiry would be called for, and they are written into the Bill, but I would not think that what we are talking about is one of them. So I come back: I think that there are two areas of interest here. First of all, a company must be given the opportunity of knowing the case against it, and, secondly, it ought to be given the opportunity of doing something about it.

We have had quite a long debate on this matter. The noble Lord kindly says that he will look at the matter again, but, bearing in mind that the Report stage is next Monday and that Hansard will only come out tomorrow and Wednesday, the opportunities for doing anything meaningful before Report stage will be minimal. Therefore, it may well be that we shall see some of the same old Amendments down on Report. Hopefully, the noble Lord will be able either to reassure us or even to provide an Amendment of his own which will correct the position. Pointing out the difficulties under which we labour at this end of the Session, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

7.36 p.m.

moved Amendment No. 23:

Page 10, line 10, at end insert ("including an indication as to which of the matters listed in section 2(2) of this Act they have in particular had regard in making the recommendations").

The noble Lord said: We now move to a little later in the process where the Commission are making their recommendations. The recommendation will be crucial to the company which is being investigated. In many respects, it will say what should be done but, above everything, it will say either that there is no problem or, if there is, that there are certain things that the company should have done in a different way. It seems to us that this would be a suitable moment to go back to first principles so far as the Bill is concerned and ensure that reference is made to Clause 2, which sets out the original criteria under which the Commission have to operate, because it is only if the company knows where it has offended in that sort of detail that it will be able to make sure that that does not happen again.

If a company has applied for a price increase which has led the Commission to recommend that the company should be investigated, which it will do under the heading of Clause 2, there must be something wrong. It may be that there is nothing wrong, but that does not matter and, if there is something wrong, then it is important that the company should be given all the facts related to the headings under which the investigation was carried out.

As always when putting down an Amendment, particularly when the noble Lord, Lord Oram, is sitting on the Front Bench opposite, I have looked carefully to see whether there is anything in the Amendment which I think might offend him. It seems to me that this is again one of those Amendments which really cannot possibly offend him because it can be treated just as a clarifying Amendment to make it simpler for everybody and produce a better answer for the Government, the Price Commission and the investigatee.

As usual, there are blandishments at the end of a speech by the noble Lord, Lord Mottistone, which help our proceedings even if they do not lead to the acceptance of his Amendments. In relation to this Amendment, I would point out that, in carrying out and preparing their reports, the Commission are required to have regard to the matters referred to in Clause 2. The noble Lord asked us to go back not exactly to square one but to Clause 2. It is unnecessary to impose a further requirement on the Commission to specify which of the criteria has influenced their conclusions, although this will normally emerge from all the Commission's reports because they have to give reasons for their recommendations. I suggest that, in the normal course of drafting recommendations, the criteria to which the Commission have had reference will emerge to anyone who reads the recommendations intelligently.

Under Clause 2(1) the Commission, while being required to have particular regard to the criteria, are also required to have regard to all matters which appear to them to be relevant with a view to restraining the prices of goods and charges for services, so far as that appears to them to be consistent with the making of adequate profits by efficient suppliers of goods and services. I suggest that it would detract from the generality of this provision if the Commission were required to specify which criteria had influenced their conclusions. In other words, first I think that what the noble Lord is seeking to achieve would emerge in any case from their reports and, secondly, I think it would detract from the general value of those reports if they had to do what the noble Lord would specifically require them to do.

Is he aware that my Amendment relates to Clause 2(2)? I took it for granted that Clause 2(1)(a) underpinned the Commission's reports, but if the noble Lord will look at subsection (2) he will find a series of eight criteria and he may appreciate that all we are seeking to do is to make sure we know which of those divergent criteria in particular will apply. The noble Lord again says that the Commission are bound to do this or that; he made the same claim when replying to an earlier Amendment. The particular criterion could be subsection (1)(a) in relation to costs or one of the other criteria mentioned in that provision. I got the feeling that the noble Lord was under the impression that I was referring to Clause 2(1)(a) rather Clause 2(2). Perhaps his advisers have not advised him as well as they might and, as a result, maybe we should refer to this matter at a later stage of the Bill.

I do not think I was under any misapprehension about the intention of the Amendment. I knew it referred to Clause 2(2) and the criteria under that provision, but I was referring to Clause 2(1) to show the requirement on the Commission to take into account the criteria in subsection (2), and the noble Lord will see that Clause 2 says that the Commission shall—

"…have regard in particular to the matters mentioned in the following subsection"—
and that is subsection (2). Thus, the two subsections are linked to the provision to which his Amendment relates.

I find that reply nothing like as substantial as the reply I normally get from the noble Lord. I will consider the matter and perhaps return to it at a later stage. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 6 [ Investigations]:

7.46 p.m.

Page 11, line 45, at end insert—

("(10) The Commission shall not disclose in any manner except to the Secretary of State and the relevant person that any investigation under section 4 or 5 of this Act has been commenced until a report made in pursuance of subsection (1) of this section has been given to the Secretary of State and a copy of it has been given to the relevant person unless the Commission receive a notice from the relevant person under subsection (3) of this section.")

The noble Lord said: This is a simple and straightforward Amendment, the point of which was raised in another place; I hope the Government have had time to reconsider the matter and can now give us a more sympathetic response than my honourable friends received in Committee in another place. The Amendment is designed to provide that the knowledge that an investigation is proceeding will be confined to the person or company being investigated, to the Commission and to the Secretary of State. The reason for this confidentiality will be self-evident.

It is not difficult to imagine how customers—or, as we are wont to refer to them in these proceedings, the consumers—are likely to react to the knowledge that an investigation is under way. They will assume, rightly or wrongly—in my view, probably wrongly because most of the investigations tend to show that price rises are justified—that there is something wrong with the price of the commodity or item and will ract either simply by not buying it, despite the fact that the price is frozen, in the mistaken assumption perhaps that the price will drop when the investigation is completed, or on the assumption that there is some misdemeanour afoot and therefore they should tread warily. Consumers are not all as sophisticated as Members of this House and cannot easily be dissuaded from one or other of the views I have suggested when an investigation is known to be under way.

I am informed that the retail trade, of which the noble Lord, Lord Oram, was once such a famous pillar, is firmly of the opinion that confidentiality is highly desirable. We feel that any statement from either the Commission or the Secretary of State to the effect that there is no need to assume that anything is amiss simply because an investigation is under way is not likely to convey any confidence to consumers, and I trust that the Amendment will appeal to Lord Oram, if not to other Members of the Government. I beg to move.

I should like very strongly to support this Amendment. I think it is most important that any investigation of this kind should be highly confidential. Let us face the fact that movement in prices is the hottest news which one can get on the wireless, or television, or in a newspaper. Consider the reaction when it is reported in a newspaper that a price is to go up, or is to come down. A person reading that is either furious because the price is going up, or is glad because it is going down, but a neutral view cannot be taken in such matters. If there is to be an inquiry into a matter which is sub judice, and it is not known whether the inquiry will absolve the company concerned, or will accuse it of doing something wrong, then it is most important that the inquiry should remain entirely secret until a decision has been taken, which can then be made public. I think that this is most important, and I hope that the Government will agree to put the proposal into the Bill.

7.51 p.m.

If there were only two parties involved in an investigation there might be something in the arguments to which we have just listened; but it is much broader than that. I believe that the Price Commission could not conduct their investigations properly if they had to be kept secret. For example, the Commission have to consider the interests of users, consumers, and customers in these matters. They have to consider the extent of competition. How can they consider those matters without, in the first instance, obtaining information from the users and, in the second instance, obtaining information from competitors? In other words, it would be impossible for them to carry out their investigation unless they were able to make that kind of inquiry.

If we look at broadly comparable bodies, some of which have already been mentioned in our debates on earlier Amendments, we see that there are no precedents for secrecy in cases of similar investigations. Take, for example, the investigations made by the Monopolies Commission, or the investigations that were carried out by the Prices and Incomes Board. Another example would be an organisation which was much quoted in the debates in another place: the Australian Prices Justification Tribunal. In all those cases the fact of the investigation or inquiry was well known from roughly the date of commencement, and necessarily so. The very nature of the inquiry requires that it should be known.

The noble Lord who moved the Amendment explained the fears of distributors and others about the stigma that might become attached to them if it were known that their affairs were being investigated. I believe that these fears are exaggerated, and that the Commission will have the ability and common sense to make a proper evaluation of evidence from third parties, and will not simply swallow irresponsible allegations without checking the facts. The Amendment does not ensure that an investigation will be kept secret, because it does not prevent either the Secretary of State, if he had his reasons, or the firm, from disclosing its existence. So, partly for the practical reason of the operation of the Commission in actually carrying out the inquiry, and partly for the practical reason that secrecy, if that is what is aimed at, could not, in my judgment, be achieved—even though, in my view, it is not desirable or necessary to achieve it—I believe that the Amendment should not be acceptable to the Committee.

The noble Lord, Lord Oram, has just made a statement which certainly confuses me. He said—and I understand this—that in carrying out their investigation the Commission would have to consider the interests of consumers. I think that that is what he said. I thought that the object of the examinations was to find out whether price increases were justified. Would it be right to assume, from what the noble Lord has said, that if the price rises were found to be justified, but the interests of the consumers did not fit in with that, the prices might not be allowed to be put into force? If that is the case, it puts the manufacturers in a very serious position.

The interest of the users is one of the criteria established under Clause 2. It would, indeed, be necessary for the Commission to take the interests of users into account; that would be one of the many factors involved. That is why I used it as an illustration of their need to make inquiries among users in the carrying out of their investigation.

That implies that the interests of the consumers might, in certain circumstances, override the justification for an increase.

The various criteria are, in some acses, in harmony one with another while, in some cases, perhaps they are in conflict. It is for the Commission to decide the various weights to be given to the various criteria. I am not saying that they are all in line, and that they all point in the same direction. That is why we need a body of responsible people capable of making this quasi-judicial investigation.

When he was replying, the noble Lord, Lord Oram, mentioned the Australian arrangements. I am surprised that he did that, because most of the arguments that have been advanced in favour of the Bill collapse if we admire the Australian system, as we on this side do. Of course, the big difference is that the Australian system is not compulsory. Unlike this Commission, the Australian Prices Justification Board has no powers to freeze prices; at least, that is what I understand to be the arrangement.

But I think that the noble Lord has underestimated the unfortunate effect of publicity upon producers affected by these provisions. They suffer two-fold. First, while the investigation is in progress, they are denied the rise—perhaps the justified rise—for which they applied; and, secondly (and, I believe, equally important) they suffer from adverse publicity and the loss in sales which results from that. So they suffer from two problems. It may be that the long-term battle against inflation is best served by restricting the rise applied for, but surely we have no right to expose them also to the opprobrium (if that is the right word) of public knowledge of an investigaton which will certainly further reduce their sales and their income.

I agree that there are some difficulties, but I believe that the disadvantages of publicising an investigation are much greater than the few other difficulties that exist. The noble Lord mentioned revelation by the Secretary of State as a reason for not imposing an oath of silence on the Commission; but one cannot think that it would be proper for the Secretary of State to reveal the existence of an investigation when the Commission are precluded from doing so under the terms of the Bill. In any event, if that is the only shortcoming of the Amendment, we could certainly put that right at a later stage by imposing a similar requirement for confidentiality upon the Secretary of State.

As for the objection that the producer or the applicant might himself disclose the existence of an investigation, I should say that surely that is a matter for him. The principal disadvantages of disclosure fall upon the applicant, and if he himself chooses to reveal the existence of the investigation, surely that is his affair. I am convinced that this is an important and relevant Amendment, and I shall certainly want to return to the matter again at another stage. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

This may be a convenient moment to halt the Committee, and I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.