§ 11.6 a.m.
§ Mr. W. T. Williams (Hammersmith, South)
I beg to move,That this House welcomes the Report of the Committee on Resale Price Maintenance and the subsequent statements of the President of the Board of Trade thereon, and in order that the public may reap its benefits urges His Majesty's Government to take all action open to them to deal with the problem.When I gave notice to raise this Motion for discussion by this House I did so in the belief that it would be a matter of great public interest. I must confess, however, that I did not suspect the extent of the public interest that has been aroused. During the past few weeks 722 my correspondence has reached what one may call almost fan mail proportions, though I must confess that not all of it by any means has been as adulatory as is generally characteristic of fan correspondence.
The greater part of the propaganda that has been sent to me from various organisations makes a great point of the fact that this is not a simple issue. That is easily recognised; though it would seem, from the method of the propaganda that has been adopted, that the Lloyd Jacob Committee was a kind of ogre that had been conjured up by wicked Socialists only to annoy the hopes of those two innocent babes the Fair Prices Defence Committee and the Proprietary Articles Trade Association. However, this is not a fairy story, and, like most factual experiences, the facts covering this situation are very different from the rather mixed conglomeration of special pleading that has been advanced by the Fair Prices Defence Committee and the Proprietary Articles Trade Association.
In the first place, the Lloyd Jacob Committee is an independent Committee that has had no axe to grind, and it represents many shades of opinion within this country, political and economical. When it presented its Report, it presented an unbiased statement, the only concern of which was that there should be efficiency in meeting the needs of the consumers. In those circumstances one would have thought that the Report would have been welcomed by all sections of the community, for all sections of the community exist primarily to serve the interests of that largest section of that community, the consumers. I should have thought it would have been welcomed by all parties in this House, and I must confess to some surprise on reading the Order Paper this morning in discovering an Amendment to my Motion, in line 2, to leave out from "maintenance," to the end, and to add:as a contribution to a complex problem and at the same time, whilst believing in a broadly competitive system over the whole range of industry and commerce as the best protection of the interests both of producers and consumers, nevertheless recognises the valuable function of the mechanism of resale price maintenance, under proper safeguards, in the complicated structure of a modern economic society; it further declares its views that these problems should be handled, over the whole range of 723 industry, whether nationally or privately owned, by the machinery of the Monopolies Commission.This Amendment in itself, is a contradiction in terms; because I was always of opinion that the Tory Party and its auxiliary, the National Liberal Party, were also convinced of the Tightness and propriety of private enterprise. It is, therefore, important that, in beginning this discussion, we should recognise that the idea ought to be guarded against that many pamphlets imply a monopoly of wisdom, or that selective quotation, which is the activity of most of these pamphlets, is the way of stating or reaching truth.
§ Mr. Iain MacLeod (Enfield, West)
Will the hon. Gentleman allow me? I am sorry to interrupt, but there is a most important point here which puzzles me very much—this talking about a contradiction in terms. The Motion the hon. Gentleman is proposing invites us to do a certain thing in order that…the public may reap its benefits.Now, as a matter of English construction, the phrase "reap its benefits" refers back to "Resale Price Maintenance" and not to the Report, because one cannot gain benefits from a Report, but only from action taken under it. The words about action follow and do not precede this statement of reaping its benefits.
§ Mr. Williams rose—
§ Mr. Speaker
The hon. Gentleman is not now entitled to make a speech. The hon. Member for Hammersmith, South (Mr. W. T. Williams) now has possession of the House.
§ Mr. Williams
If the hon. Gentleman has a speech to make, I think it would be more appropriate, that he should make it in his own time and not in mine.
Stated quite simply, the intention of this Motion—and indeed of the Lloyd Jacob Committee—is to show that the practice of collective resale price maintenance has increased the cost of living 724 in this country, that it is a bad thing, and that it ought to be brought to an end. Certainly the recommendations of the Committee make some compromise; they leave the right to individual manufacturers to enter into private agreements with retailers; and yet I would suggest that the Report itself is a strong condemnation of the whole practice of resale price maintenance, and it is a matter of some surprise—
§ Mr. Manningham-Buller (Northants, South)
I am sorry to interrupt, but in view of what the hon. Gentleman has said, I would ask him to consider the wording of his own Motion, because I think he will find on reflection that as a matter of English it is wrong. In view of what he has just said, if his whole case is to be against resale price maintenance, I do ask him to consider the wording of this Motion—on which Members may be asked to vote—which as a matter of English would appear to be in favour of resale price maintenance.
§ Mr. Williams
If hon. Members opposite would permit me to make my speech in my own way, it would then become quite clear what our intention and our purpose is in this matter.
I say that the recommendations of the Lloyd Jacob Committee bears the marks of compromise. Speaking personally, I regret that compromise; I think it would have been more desirable had the Committee carried out the implications of their own recommendations on the evidence received before them. However, I recognise that half a loaf is better than no bread, and the intention of this Motion is to welcome the Report of that Committee and to urge to His Majesty's Government to implement such recommendations as are made in that Report. I therefore think that all this rather silly quibbling, intended to obscure the mainpurpose—
§ Mr. Manningham-Buller rose—725
§ Mr. Williams
I think it would be more profitable, both for this Debate and for hon. Members opposite, if they were to concern themselves with the clear intention of this Motion rather than quibbling about terms, as they are now attempting to do.
§ Mr. Boyd-Carpenter (Kingston-upon-Thames)
On a point of order. I think there is an important point of order here, because the hon. Gentleman has placed on the Order Paper a Motion which, on its clear construction, refers to the benefits of resale price maintenance. Is it therefore in order for the hon. Gentleman to make a speech arguing a wholly contrary view and to seek to support a Motion welcoming the benefits of resale price maintenance by arguments whose effect is to show that there are no such benefits?
§ Mr. Speaker
I cannot rule it out of order. The hon. Gentleman is entitled to make his speech in his own way.
§ Mr. Boyd-Carpenter
Then in the event of a Division taking place upon this Motion is the House to vote—and here I seek your guidance, Mr. Speaker—on the terms of the Motion or on the terms of the hon. Gentleman's speech?
§ Mr. Williams
As I interpret this Motion—[Laughter]. Surely it is proper for me, whose Motion it is, to offer an interpretation of it. As I interpret this Motion, it is possible for a Report to have benefits as well as for resale price maintenance to have benefits; it is possible that, if the Report be implemented, the benefits would be felt by the community. That is the intention of this Motion, and I think the intention is clear. [HON. MEMBERS: "No."]
Whilst the recommendations of the Report are perfectly clear, I think it is only fair to say that the practice of resale price maintenance may at some time have had something to commend it. Our belief is that that, if ever it was true, is no longer true; and our claim is that the only effective way by which resale price maintenance can be enforced results in practices which are unconstitutional, and which should be deplored by all the 726 people of this country who care about the right of Government and constitutional procedure.
It is certainly true that as long as the practice of resale price maintenance is continued, the sanctions that are in force as a means of ensuring price maintenance are actions which are contrary to good government. For example, the threat of stopping supplies linked with the sales contract, which is enforceable at law, are between them powerful weapons in the hands of any manufacturer to enforce his standard price. In fact, however, what happens is that manufacturers enter into trade associations which reinforce one another in order to take collective action.
In addition to this, there is a whole series of elaborate provisions which deal with various matters such as hire purchase, terms settlement discount charges services, handing in used articles in part exchange, and a host of other things, all of which set up a law within the law and compel retailers to be subjected to penalties, even to the extent of fines or the withdrawal of discount, or even the settling, as a punishment of retail terms for wholesale goods for a fixed period. Whether the stop list and all these other sanctions are imposed or whether they are merely kept in the background is quite irrelevant. The fact is that this system of price maintenance has been turned into a comprehensive system for policing entire industries.
§ Mr. Williams
The arguments that are advanced, and have been advanced in the pamphlets and literature sent to me, which I have read very carefully, as reasons for maintaining collective resale price maintenance, are three. In the first instance, they insist that the development of branded goods is a guarantee of quality, and that the only way by which branded goods may maintain quality is by this method of resale price maintenance. The second argument used is that this is the only effective way of preventing price cutting and the use of branded goods as loss-leaders. The third argument for resale price maintenance is that the standard of living of both employers and employees in the distributive trades can only be protected and safeguarded by this system.
727 For a few moments I should like to deal with those three arguments in some detail, and to ask what is, after all, the relevant question: Does resale price maintenance achieve any of these declared aims? I should like to show that it does not achieve them, and has no real relevance to any of them. It is true that branding has certain advantages, both to the consumer, to the retailer and to the manufacturer. The consumer, one assumes, is able to buy a thing without examining its quality on the ground that established proprietary articles reach the same kind of quality every time they are packed. It enables the retailer not to have to be a specialist in the thing he is selling but to accept the guarantee of the maker.
On the other hand, it is also true that branding has no necessary relation to quality whatever. [HON. MEMBERS: "Oh."] The importance and significance of branding, even for the purchaser, is more often than not, not a guarantee of quality but a guarantee of effective advertisement, and a considerable amount of the money that goes into the cost price of the article is not for the article at all but for the cost of advertising it.
§ Mr. Williams
I was coming to that In fact, the price is not so kept down The price is very often higher than it need be because of the amount of money spent in advertising. For instance, with cosmetics and toilet requisites as much as 30 per cent. of the cost price is spent in advertising.
I believe that the effective guarantee of quality can only lie in some form of Government branding. The connection of quality with branding need in no way be associated with price rings, and the argument that it is important to have resale price maintenance in order to conform to any quality is sheer nonsense. Every Government—Tory Governments as well as Labour and Liberal Governments—whenever it has set a standard of quality, has concerned itself, not with minimum prices, as do these manufacturing trade associations, but with maximum prices. For example, the whole range of utility goods has maximum and not mini- 728 mum prices set upon it, and traders are encouraged, so far from charging the maximum price, to sell, if possible, under the maximum price.
§ Mr. Williams
Many traders do so. The Co-operative movement, with which I am associated—[HON. MEMBERS: "Ah!"] It is remarkable that this should cause surprise. I say, without prejudice, that the Co-operative movement, with which I am associated, at the request of the Government cut many of its sales prices for some 12 months, and it was ultimately compelled to restore those price cuts because no other trader in those goods would do likewise. In the same way, the British Standards Institute, which is concerned exclusively with quality, is in no way concerned with price rings. It is therefore nonsense to assert, as these trade associations do, that in order to maintain quality in branded goods it is essential to have some kind of price ring.
§ Mr. Williams
No, I am afraid not. I have given way twice already. If the hon. Gentleman has any contribution to make there is no reason why he should not endeavour to catch your eye, Mr. Speaker.
This whole business of branding has been completely perverted and is no longer, or not necessarily any longer, associated with quality, but is really a demand upon the purchaser in order to pay for the advertisements, the truth of which is often measured by the most famous of them—"Beer is Best."
The second argument advanced in favour of resale price maintenance is that this is the only way by which price cutting and loss-leaders can be prevented. This is indeed a strange assertion for private enterprise. In any case, it is unreasonable to advance it as an argument when there is nothing in the Lloyd Jacob Report on Resale Price Maintenance which prevents the legal enforcement of legally entered into contracts between an individual manufacturer and those with whom he trades.
In actual fact, what resale price maintenance does in this business of price cutting—and I believe that some of my hon. Friends who follow me will elaborate this 729 point—is to subsidise inefficiency, to help towards the creation of monopolies in individual commodities, and to serve best, not the interests of the small man but of large concerns.
§ Mr. Williams
The third argument used by the supporters of resale price maintenance is that this is an effective means of maintaining the standard of living of the employer and the employee, and it is very largely this which is responsible for the fact that chambers of commerce throughout the country support this device. It is a pity that this is so, because it just is not true. The standard of living of the employee is protected adequately by other and more effective means—by legislation, by the activities of the trade unions and by joint committees. In the same way the strength of the shopkeeper lies, not in the maintenance of resale price maintenance, but in the over-all economic planning which maintains full employment in this country.
The Proprietary Articles Trade Association, which is the major force in this business, has been in existence for over 50 years, yet the bankruptcies in 1923, when the Association was in being, numbered 4,993, whereas in 1947, which is the last date for which I have figures available, they numbered 624. This, therefore, has obviously nothing to do with resale price maintenance or the activities of the Proprietary Articles Trade Association. I must confess that it amazes me that small shopkeepers should be deceived by this kind of thing. Here, indeed, is a case of people who are deceived by their own propaganda.
What are the actual results of this system of resale price maintenance? As I see it, there are four. I have already said something about inefficiency, but a great deal more can be said about that. Much more important perhaps is that it succeeds in vitiating Government wishes. Let me quote from paragraph 51 of the Report:If for example the manufacturers in a particular industry were in a ring for the purpose of raising prices, additional money made available by Government activities for the purpose of maintaining employment might simply 730 be absorbed in increased profit margins and no increase in employment would result.
§ Mr. G. B. Craddock (Spelthorne)
Is the hon. Gentleman reading from the same Report as we have? Which is the paragraph?
§ Mr. Williams
The paragraphs are actually numbered. It is on page 11.
Perhaps more important than that is that these associations of manufacturers and distributors, whose main business is to enforce prescribed retail prices, have created a law for themselves which—quoting from paragraph 147 of the Report—have turned price maintenance from a reasonable means of preventing damage to well-known high quality brands by the operations of unscrupulous shop-keepers into a comprehensive system for regulating and policing entire, industries.
§ Mr. G. B. Craddock rose—
§ Mr. Speaker
The hon. Gentleman cannot speak unless the hon. Member gives way. I think that it is paragraph 81 and not 51.
§ Mr. Thornton-Kemsley (Angus, North and Mearns)
I do not want to interrupt the hon. Member, but he has twice quoted from paragraphs in which these words do not appear. It may be we are not talking about the same report. We are looking at the Report of the Committee on Retail Price Maintenance, and the two paragraphs which the hon. Member gave do not in fact contain the words which he said they did.
§ Mr. Williams
I am sorry. I am told that the paragraph is not 51 but 81. I am so confused by all these interruptions that I cannot even read my own writing. The paragraph is 81. Mr. Speaker, I am not attempting to mislead the House. If in things of this kind my figures are wrong, they can be corrected, and that will be done. I am not quoting from things that are not in the Report, and I hope that hon. Members will accept that assurance. If I made a mistake in the number, that can easily be corrected.
§ Sir Ronald Cross (Ormskirk)
We are seeking to follow the hon. Member's observations when he quotes from the Report. It is not good enough to correct them next day in HANSARD.
§ Mr. Williams
I thought I had corrected it already. Even within the trade 731 associations that this retail price maintenance is attempting to protect, the only effective result is that it makes distribution margins rigid and unassailable and attempts to render the distribution system inelastic and impervious to change. The effect of that on industry at the present time when the danger of inelastic distribution is to distort our economy is something against which every hon. Member ought to be united in opposition.
Most important of all—and this is something surely about which all of us ought to be concerned—is that this artificiality does increase the cost of living. It is possible, because of the way in which inefficient producers and distributors are cushioned, to reduce the cost of these articles to the public, and the cooperative movement has declared its own willingness to attempt this, if this system were abolished. Undue weight has been given to the iniquitous system of price cutting in order to bolster up the inefficient. The cure is more dangerous than the disease. To protect abuses which are occasional the system of continuous retail price maintenance is adopted, and this results in an increase in the cost of living for the majority of the people of this country.
The second part of our resolution welcomes a statement made by the President of the Board of Trade upon this Report. Summarising the comments of the President of the Board of Trade, I think that it may fairly be said that he urges the trade associations to put their house in order, and secondly urges that retail price maintenance should not interfere with constitutionally accepted forms of trading. In fact we have the evidence of the President of the Board of Trade himself that after his contact with these associations he has no reason to suppose that they have any intention at any time now or in the foreseeable future of putting their house in order, although the recommendations of the Report are clear and not for the benefit of a section of the community but for the benefit of the community as a whole.
The Co-operative movement does fulfil a constitutionally acceptable place in the community. Very large sections of the proprietary trading associations and members of the Retail Price Maintenance Committee are refusing to supply co- 732 operative societies with goods because they are afraid of the legitimate and constitutionally acceptable trading pattern of the Co-operative movement. We, therefore, urge His Majesty's Government to take action in this matter. We believe that it is not right that semi-monopolies should exercise extra-legal rights of enforcement and that the consumer should be held up to ransom, as he is, by this practice, and we urge the Government to take such action as they can, and that speedily, to ensure that this inequitable system is brought to an end and made illegal in this country.
§ 11.36 a.m.
§ Mr. Daines (East Ham, North)
I beg to second the Motion.
I am going to try, if the House will listen to me, to state, or re-state, a factual case, and I shall try to give the sources of my information as I go along. I think that whatever prejudices and interests hon. Members may have, it will help if the main elements of the case are re-stated, so that the House and the country know what is the actual problem, I think that is very necessary, because on coming into the House this morning, one of the officials of the House, who really does understand his way around, said to me almost pathetically, "What do the words 'retail price maintenance' mean?" I am certain that that form of words which is an extremely awkward form of words has very little meaning for the average member of the public.
What is the size of this problem? Thirty per cent. of the domestic consumers' private expenditure is made on articles or commodities that are covered in some way or other by price-fixing organisations. That is a fact which we should clearly grasp.
§ Sir Herbert Williams (Croydon, East) rose—
§ Mr. Daines
I do not mind interruption when I have developed the argument on my own particular lines, but at the present moment I do not intend to give way. It is true that 50 years ago when some of these price-fixing or price-protection organisations grew up, there was a strong case for something to be done. I very much doubt whether, when we face the fact that today there are 2,500 trade associations with some power of enforcement, this type of organisation bears a 733 true relationship to its origin. This Debate is an opportunity for bringing the searchlight of public opinion to bear on this extremely important and little-known problem.
It is indeed a strange economic underworld. In it are the mighty barons who wield great economic power. There are strange silent figures who walk about in darkness and evade all publicity. May I say, in passing, that when we consider the vast array of paper, telegrams and letters that we now receive, it is about time that some of these organisations knew that when they flood Members of Parliament—and I am speaking for the whole of the House—with such an array of paper, the reaction of the average Member is against them rather than for them, because we strongly suspect special pleading. There is, however, a rising awareness of the problem, and I want to call the attention of the House to this very excellent pamphlet on monopoly published by the Conservative Political Centre and written by the right hon. and learned Member for West Derby (Sir David Maxwell Fyfe). It is a very good statement of the case. I do not agree with all its conclusions. The right hon. and learned Gentleman calls attention to the first type of restrictive practice with which I want to deal, and I will give a quotation to show the fairness of the right hon. and learned Gentleman in the presentation of his case. On page 12 he says:The best-known patent pool of this country is the Electrical Lamp Manufacturers' Association, which provides for an exchange of patents between members, fixes prices and seeks to induce distributors to stock only the products of its members.
§ Sir H. Williams
On a point of order, Mr. Speaker. Has not this question been under investigation for the last nine months by the Monopolies Commission and should it not be regarded as sub judice?
§ Mr. Speaker
It is not like a case in law, or a charge. The matter is before a Commission. I do not think that is sub judice.
§ Mr. Daines
If hon. and right hon. Gentlemen will curb their impatience, they will find that I do not intend to deal with the case. I was going to say that while I would call attention to this reference as an illustration of the wide range of the pamphlet, I had not the slightest 734 intention of going into any further details about the operations of the Electrical Lamp Manufacturers' Association, for the very good reason mentioned by the hon. Member for Croydon, East (Sir H. Williams). It is an illustration of one of the most important forms of restrictive practices in operation, through a central, powerful organisation by the control of patents. It is not only capable of checking all effective competition, but of charging what price it likes. I will make no other reference to it.
There is another type of monopoly which works in the field of price restriction and which is equally dangerous. Here I hope that I shall carry the whole House with me when I give the illustration that I used when we considered the Monopolies Commission Bill in Committee, and which I will now repeat. A friend of mine manufactured a substance which I will call B. I call it so for the deliberate reason that my friend is not yet clear of economic pressure, which can be extremely dangerous. B is a by-product of A, which is a substance effectively controlled by a large monopoly, and in wide use throughout the country.
My friend decided to have a go at making A. The monopoly—[Interruption.] If hon. Members do not mind I will make out my case in my own way. My friend thought that he was entitled to make A. The great and mighty firm whose name is a household word throughout the country invited him to come to their huge works. They gave him a lovely lunch—I give his own phrase—and then told him as simply and bluntly as they could that if he did not stop making the substance A, they would not only smash him in the making of A but they would smash him in the making of B as well. That surely is economic brigandage of the worst order that all of us must condemn.
§ Mr. Daines
I will now come to the individual branded article. My hon. Friend has dealt with the integral elements of the branded article. I have nothing to say against the report and recommendations of the committee about price enforcement for the single branded article, but when the claim is made, as 735 it is made in a whole variety of documents, that because an article is branded and a huge public demand is created, perhaps by advertisement costs, that article has some great, inherent quality, it is straining our credulity a bit too far. Somebody's corn pads are advertised as worth a guinea a box, and a demand is created. It would be extremely interesting if some hon. Member with an intimate knowledge of that commodity would give us its actual cost so that we could decide whether it is worth a guinea a box.
Let me give actual figures which were got out by Kaldor and Silverman, two of the ablest economists in this field. Health salts, for example, show on an average, and on the manufacturer's costs, advertising costs of 36 per cent. Tonic wine has been found to carry additional expenditure on manufacturer's costs of 40 per cent. On household cleansers there is 25 per cent. I have only picked commodities that come within price ring control.
§ Mr. Daines
Not for a moment. When I have completed this point, I will gladly give way. I shall not try for one moment to say, where a commodity, good or bad, has had a terrific expenditure put behind it and a public demand has been created, that an unscrupulous retailer should be allowed to use that branded article as a loss leader. I condemn the practice utterly, and I hope that no change will come that will make the practice possible. But to claim that an inherent quality lies in the article because a demand has been created is sheer nonsense. Behind the whole policy is the effective enforcement of a minimum price. That fact cannot be denied when we compare what has actually happened with utility brands where there has been quality enforcement and sale not above a maximum price. There we can get a fair perspective.
§ Mr. Craddock
When the hon. Member talks about a percentage of costs, what cost elements is he taking? He mentioned 36 per cent. on manufacturer's costs. Did he mean the cost of labour, materials, and overheads or just of the materials themselves? That is what I want to get at.
§ Mr. Daines
I always thought that manufacturers' costs obviously included labour, raw materials and the whole of the outlay on an effective plant.
§ Mr. Daines
If the hon. Member will see me as soon as I have finished and if he wants to speak later in the Debate, I will gladly place the whole of my files, which are quite extensive, at his disposal. I do not think he will doubt the accuracy of the figures.
I now come to the third and the most important case of collective price enforcement. The most interesting and by far the most powerful example is the Proprietary Articles Trade Association. To a great degree this affects the chemists and pharmacists of the country. I make no criticism when I say that it is very interesting to notice exactly who is in the House this morning. Fifty per cent. of the retail chemist trade is in proprietary lines. The protected list for 1947 contains no fewer than 2,000 articles. This covers 90 to 95 per cent. of nationally-owned medicines and 70 to 75 per cent. of the trade in baby foods and toilet preparations.
If any attempt is made by the chemist to sell at below the listed price, a stop list is operated. As a result of this, if he charges 6d. less for Glaxo, not only is his Glaxo stopped but all the 2,000 articles are stopped. That is what it means in practice. How far the fine system is brought into operation I do not know, but the chemist is in a position where he can be tried by the Association and have inflicted upon him a fine of £25 for the first offence or a fine of £50 for the second offence.
§ Mr. Daines
Are we really to say that the House of Commons is prepared to stand by and see an organisation which is responsible to nobody but itself exert powers which the public would surely consider should belong only to the courts of this country? I will give another interesting example in regard to the building trade which should intrigue the whole House. I do not know what is amusing the hon. and gallant Gentleman the Member for Knutsford (Lieut.-Colonel 737 Bromley-Davenport). Does he wish to say anything?
§ Mr. Daines
I am sorry: I thought that the hon. and gallant Gentleman wished to make some point. I prefer to see him laughing. It is much more attractive, I can assure him. I wish to direct the attention of the House to another very important aspect of the problem which we may not have time adequately to discuss. I commend to the House the reading of the great mass of material in the Simon Committee Report on Building Trade Prices. Price enforcement not only deals with toilet preparations, Glaxo and Beecham's Pills, but is also a very powerful and potent weapon in regard to the building trade. A substance with a list price of £500 after all trade discounts and price enforcements have been operated was analysed, and we found that its net cost, on the definition which I gave, was £289 7s. 3d. That means that the total distributive margin was £210 13s. 9d. If anybody can justify a system with this vast difference I think we are indeed living in a world of economic lunacy.
I find it extremely difficult to understand exactly what animates so many hon. Members opposite in their Amendment. I always thought that the Conservative Party, above all other parties, claimed to be the party of private enterprise and free competition. I need only refer to the recent oration of the right hon. Gentleman the Member for Woodford (Mr. Churchill). When the Opposition talk about freeing the people from controls and then put down an Amendment aimed at maintaining these controls, surely it is a contradiction not only in terms but in actual fact which rather exposes the hypocrisy of hon. Members opposite.
This great problem undoubtedly affects the cost of living of our people to a great degree, and surely we all see the need for reducing the cost of living. I would say at once that I deprecate the ganging-up of the producer, the wholesaler and the retailer, if the primary effect of the ganging-up is the exploitation of the consumer. I will even go so far as to say—laying myself open to criticism from my own people—that I have always deprecated 738 an equally dangerous form—not in size but in principle—of ganging-up by the employee with the employer in order to exploit the consumer. I believe that it is the function of Parliament so to guide and direct our economy that the concern of all shall be the needs of the consumer and the whole of our economic power shall be directed towards that end.
I do not claim that collective price maintenance has of necessity meant an increase in prices, but I do claim that it has effectively stopped the passing on to the consumer of the reductions that are possible as a result of mechanical packing, self-service, and good organisation. What we are getting with collective sales price enforcement is a back-handed type of competition where, wastefully and stupidly, the retailer competes by giving extra services, or else we get the fantastic waste in advertising. It has been found by one of the greatest national advertisers—I make no comment about the quality of the article—that one can reach a saturation point in advertising. One can keep on saying, "It is good for you, it is good for you, it is good for you," until the maximum sales point is reached; but if the advertising is dropped in a certain area, the sales begin to fall there. What happens is that after a certain point advertising not only ceases to be information but ceases to attract further sales and really becomes a drug without which industry cannot run.
I want now to deal with the argument from the labour standpoint. Many of the documents which have been sent to us put the case that if collective price resale maintenance is not enforced, it will be a blow against labour. I am a member of U.S.D.A.W., the shop assistants' union. Although I have never been a shop assistant, I was previously a member of the National Union of Distributive and Allied Workers.
§ Mr. Daines
I do not mind interruptions if they are intelligent. I want to say something at once with regard to the claim of the various price-fixing associations under the heading of trade unionism and labour. Any hon. Member on my side of the House who understands trade unionism, as we all do, and perhaps some trade unionists opposite if there are any, can make their comments at the right 739 time. In the distributive trades until 1938, outside the Co-operative movement, there was virtually no effective trade union organisation. The distributive trades have been notorious for the bad conditions of the workers. When the shopkeepers with their proprietary trade associations had a meeting, they always refused to meet us. At least it can be claimed that the Co-operative movement in this respect is ahead of the others. I reject absolutely the argument that price maintenance is essential for good wages. I have already deprecated the argument of ganging-up. That seems to be something which we cannot possibly be expected to accept.
May I say a word about the Cooperative movement? It is not unknown in this House that I am a Co-operative-Labour M.P., and I am rather proud of that fact. Time will show that the inherent philosophy on which we work in planning our economy to the needs of our people is sound, and will have to be adopted generally. One of the recommendations of the Lloyd Jacob Committee was very specific to the Cooperative movement. On 2nd June, 1949, the President of the Board of Trade used these words in this House:In these discussions, I shall make it clear that discriminatory restrictions against consumer dividend or discount systems employed by the Co-operative Societies and others must be abolished, and that the public must be allowed to reap the benefit of low-cost methods of distribution (in particular self-service shops) by way of reduced retail prices."—[OFFICIAL REPORT, 2nd June, 1949; Vol. 465, c. 2319.]In order that I can make my point quite dispassionately and without any undue heat on the other side, I am fortified in calling attention to a statement made by Lord Woolton, which I believe was sincerely made; at least, I hope it was. He said:The Conservative party proposes no hindrance or injury to the commercial operations of the Co-operative movement. The independence and survival of the commercial side of the Co-operative movement will be better assured under a Conservative administration than under a Government, whose essential policy …" etc.Whatever ejaculations have come from hon. Members opposite, who do not understand their own party line, I, for the purpose of my point, am going to accept that statement as being made in good faith.
740 I want to say quite bluntly to the President of the Board of Trade, "What about it?" I agree that be has carried out one of the requirements of the Report. He has negotiated with these people, but with what result? We get this bumper load of tendentious stuff this morning, and nothing is being done. So far from the Co-operative societies finding any easement in their position, it is no better. We have had case after case—and I hope hon. Members opposite, at least, have got a sufficient sense of commercial integrity to support me in this—where we find the whole of supplies to shops engaged in open and fair competition being stopped by some of the associations operating price resale maintenance. In the name of the Co-operative movement, I want to know what further action my right hon. Friend is going to take.
I apologise quite sincerely for taking the time that I am taking. The claim of the Amendment is that the Monopolies Commission is quite capable of handling the whole of this situation. At the present time we have six cases before the Commission and they are only partial elements of a particular industry. I do not think it is any over-statement to say that it will be two years before we get anywhere near to action, but the building trade is screaming out for action. A whole range of trades—and I think it must be apparent to the House this morning—are screaming not only for inquiry but for positive action. If we take no further action, time is bound to show that whatever good may come from the Monopolies Commission in the long run, and however much we were guided by advice from other countries where they have tried to tackle this problem, it will not meet the case today.
I am asking the President of the Board of Trade not only to think again, but to give us a very clear indication of the action that the Government are going to take. I condemn collective price maintenance, not only as inherently wrong, but as having within it elements which enable associations to commit an economic crime against the whole community. We can only effectively tackle this problem by making collective resale maintenance a crime against the people. Let them know that if they take this action they are open to proceedings in the courts, and throw the responsibility upon 741 the Attorney-General or some Law Officer of the Crown to take definite and practical action against them.
I do not believe that this Debate or subject can be hidden away in awkward reports. It is vital, not only to the economy of this country, but to the whole of our people. We have got to learn a way—and I speak, I hope, for many Members opposite as well as for my friends on this side—of framing a new code of law in the economic field. The man who tries to smash a decent trader operating in a reasonable way is just as much a criminal as the man who stops another man with a pistol. We have got to have a re-definition of crime and the law. I appeal to the Government and the President of the Board of Trade to face the facts, and give us legislation that can tackle this evil thing.
§ 12.8 p.m.
§ Mr. Linstead (Putney)
This is particularly a case in which those who start should at the very beginning of their remarks declare any interests they may have in this special matter. I do so most willingly, because I have a connection with the drug trade, and particularly because I remember that when I was first apprenticed in a chemist's shop many years ago, there were many people in business in the drug trade who remembered the bad old days of the price-cutting war. The very modest prosperity of the retail drug trade today has enabled that trade to take over the responsibility of the pharmaceutical service under the National Health scheme, and if we were to go back to a price-cutting war we should very soon find that the Minister of Health would have to increase the remuneration given for the pharmaceutical service.
I must draw attention very briefly and in no controversial spirit to the actual wording of this Motion. I hope the mover will realise that it is capable of two interpretations, and what will matter is the record in the Journals of this House. Therefore, it is impossible for many of my hon. Friends to permit their names to go to a Motion which can be interpreted as meaning that they are in favour of or that they are opposed to retail price maintenance.
§ Mr. W. T. Williams
The hon. Member has just said that the Motion is open to two interpretations. Be that as it may, 742 when I, who put down the Motion, interpret it in a certain way, it is not unreasonable to suppose that such an interpretation ought to be acceptable.
§ Mr. Linstead
The actual document that I should like the mover of the Motion to have in his mind is the Paper which will be circulated to all of us tomorrow morning or on Monday which will give the Division list on the Motion. It will have the Motion at the top and underneath it will have the names of those who vote in favour and of those who vote against; there will be nothing else on the Paper. Therefore, I advise any of my hon. Friends who think as I do, not to commit themselves to a Motion of this kind, and I very much hope, Mr. Speaker, that you will find it possible to call our Amendment, so that we shall be able to express our opinions in voting for that Amendment and it will not be necessary for us to put our names either for or against the ambiguous Motion which appears on the Order Paper.
I should like to deal briefly with one or two of the remarks of the hon. Member in moving the Motion. I am bound to say to him, quite respectfully, that they bore to me all the marks of a theorist speaking from a brief upon a subject with which he was not personally well acquainted. I do not see how anybody who is connected with industry could possibly sustain the argument that branding has no relation to quality. Surely people are not spending hundreds of thousands of pounds to establish trademarks and brands unless they are satisfied that the quality that goes with that brand will maintain the sales of the article over a large number of years.
§ Mr. Daines
Would the hon. Member still maintain that statement in view of his excellent pamphlet on patent medicines, and would he say that the branding of some of the very well-known patent medicines is a sign of their quality?
§ Mr. Linstead
Patent medicines are a very good example of a case where good quality accompanies the brand. If there are evils connected with the patent medicine trade, they are evils which are connected with the type of advertising and not, in general, with the quality of the actual goods.
While still dealing with the points which were made by the hon. Member 743 for Hammersmith, South (Mr. W. T. Williams) in moving the Motion, I really cannot understand how he can say that the expenses of advertising add to the cost of articles. It is common commercial knowledge that by large-scale advertising, large distribution is obtained and in consequence the retail price comes down. I would refer also to the curious figures of bankruptcies with which he chose to support his argument. He said that in 1933 there were 5,000 bankruptcies and that in 1947 there were only 600. How he could possibly link those figures with any price maintenance scheme which has been in operation since 1900 puzzles my comprehension. If they show anything, they show that over a period of time during which resale price maintenance was in operation, bankruptcies have become fewer.
§ Mr. Daines rose—
§ Mr. Linstead
I cannot go on giving way. I should like to refer also to two of the remarks of the hon. Member for East Ham, North (Mr. Daines) in seconding the Motion. His argument proceeded on the basis that price fixing was inherently an evil thing, and he implied that the prices fixed were always higher than they would have been otherwise. I hope that I am not doing the hon. Member an injustice.
§ Mr. Daines rose—
§ Mr. Linstead
If I may finish what I am saying, I will give way to the hon. Member later. I draw attention to the finding of the Committee on page 14 of their Report, where they say:On the whole the margins allowed on price-maintained goods appear to be lower than those taken on free-price goods.Let me quote also from paragraph 85 on the following page:We conclude, therefore, that the effects of severe price-cutting of well-known branded goods may well be harmful to the wider interests of the public.I do not think that the hon. Member will find in the Report anything to substantiate the general association which he suggested between harmful practices to the public and resale price maintenance.
§ Mr. Daines
I thought I made it quite clear in my speech that I made no condemnation of the fixed-price system with a particular branded article. What I 744 went on to contend was that the maintenance of collective price enforcement was wrong. The hon. Member will recall that when I was dealing with his own profession, I went out of my way to cite the case of a chemist who, having undercharged on one item, found that he had the whole 2,000 articles of his stock withheld from him. Let me make it quite clear that I am not condemning a fixed price on a branded article as such. What am condemning is the enforcement of collective price resale maintenance.
§ Mr. Linstead
The hon. Member for East Ham, North, is putting himself in the same awkward position as that in which the President of the Board of Trade and the Committee have found themselves. They are, on the one side, giving lip-service to resale price maintenance while, on the other side, denying the only system by which resale price maintenance can be maintained. It is not sufficient to assume that one can get away with the advantages of resale price maintenance, while at the same time denying to a trade or an industry the only means by which it can bring those advantages into being.
My last remark concerning the speech of the hon. Member for East Ham, North, is to remind him of this. He quoted a number of cases of high-priced articles which, in his opinion, were kept at that high price as the result of price maintenance schemes. I would remind him, however, that the Government have had power since 1941 under the Goods and Services (Price Control) Act to prescribe prices for any goods where they are satisfied that the commercial prices are too high. If there is any substance in the case which the hon. Member is making, then his remarks should be addressed to the Board of Trade and the President should be asked why he has not made use of the powers which he possesses to prescribe fixed prices for those articles. The answer is, I am reasonably certain, that on investigation those prices are found to be not excessive and that the President of the Board of Trade has not found it necessary to use those powers.
I regret two things about the opening of this Debate. One is that it is quite clearly shaping itself on party lines—
§ Mr. Linstead
—when really the problem is very much wider than the division between the parties in this House. Secondly, I regret that, so far, the discussion of the problem has run in such a narrow channel. What is at stake here is the whole organisation of retail and, indeed, wholesale distribution in the country. It is unfortunate that we in this House give so little time to considering the enormous problems of retail distribution—and it is a great pity that when we consider them, as we do on the chance of a Private Member's Motion on a Friday morning, we do so against such a limited background as the Report unfortunately provides for us.
The House will hardly need reminding that we are trying this morning to find some way of passing on to the consumer the benefits of economies which can be made in redistribution costs without at the same time destroying the structure which industries have slowly built up over a number of years and on which their prosperity, including the prosperity of their employees, depends.
I do hope that if the President of the Board of Trade is to speak in this Debate, he will be much more forthcoming and much more specific than he was in the remarks he made on 2nd June last year. A great industry like the distribution industry has a right to know what view the Government take of its future. I do not think it should be left in uncertainty. It ought to be told whether the Government accept the principle of fixed prices which are fair to the trader and fair to the consumer, or whether they favour the price war as a method of bringing down the cost of living. The right hon. Gentleman ought to tell us that and he ought also to say whether or not, in the Government's view, the prices which are maintained by price maintenance organisations are excessive. The House is entitled to have guidance from the Minister on that question.
So far as I could answer those two questions, I would say that resale price maintenance is entirely in step with the Government's economic theory and also that no evidence has been produced to show that trade associations have misused the sanctions which they apply. As to the Report itself, I do not know whether other hon. Members obtain from it the same impression as I obtain, but 746 I am bound to say that the conclusions and recommendations seem to me to be out of step with the facts and the evidence in so far as we were allowed—
§ Mr. Daines
This is very important. The statement just made by the hon. Member was that the conclusions were not in accordance with the evidence. Can he tell the House how he makes that assertion, seeing that the evidence is not yet published?
§ Mr. Linstead
If I had been allowed to finish my sentence—I must admit it was my own fault because I did sit down—I was going to draw attention to the fact by saying, "the evidence as far as we are able to discover it from the Report and from information that has been sent to us." I would quote, for the enlightenment of the House and of the hon. Member who interrupted, three sentences from the Report. The Committee say in paragraph 49 that consumerstold us without exception that in their view branded articles should carry a fixed retail price.They then said, in the footnote on page 14:on the whole the margins allowed on price-maintained goods appear to be lower than those on free-price goods.Finally, in paragraph 85, they say:We conclude, therefore, that the effects of severe price-cutting on well-known branded goods may well be harmful to the wider interests of the public.I say that a Report which contains those statements and then, by implication, in its findings condemns resale price maintenance as practised by trade associations, is a Report which has not married its recommendations to its evidence. I have very little doubt that the Committee were given a witch hunt and had to find the witch.
So far as I can make out from reading the Report there is only one substantial point which they are able to make in regard to the effect of retail price maintenance on the public interest. They do indicate, in most carefully concealed words, that they think the distributive trades are taking too large a proportion of the available manpower of the country. They are very careful how they say it, but they say it and the implication of the Report is that by a price war it may be possible to create unemployment in the 747 distributive trades and thereby encourage employees to move to undermanned industries.
That is the clear implication of what the Report says and it is very significant that in his remarks of a year ago the President of the Board of Trade carefully avoided that particular issue. I think today he ought to come out into the open about it and tell the House whether it is the Government's view that the distributive trades are overmanned and whether they want to adopt the method of price-cutting in order to create unemployment there and so transfer workers elsewhere. I am not saying whether it is a good or bad thing at the moment, but I am saying that the President of the Board of Trade ought to state the Government's attitude clearly today.
I wish to refer quite briefly to the Cooperative societies' position. It seems to me that the Co-operative societies are anxious to get the best of both worlds. The Committee have suggested in their Report that price maintenance is unobjectionable if carried out by individual manufacturers. The hon. Member who seconded the Motion said the same, and yet the Co-operative societies claim the right to give a dividend on price-maintained goods. [HON. MEMBERS: "Why not?"]. I will explain why not. What the Co-operative societies are asking is a system of price maintenance maintained by the manufacturers under which they alone are to be permitted to cut prices.
§ Mr. Coldrick (Bristol, North-East)
Can the hon. Member submit to the House any evidence that the Co-operative movement has objected to any private trader sharing his surplus with his customers?
§ Mr. Linstead
I am quite aware that the method of distributing dividends, whether by the Co-operative societies in a cash form, or in other forms by a corporate body giving periodical dividends, can be represented in that way, but for ordinary commercial trading purposes and to the ordinary housewife who buys from the Co-operative society, the Cooperative dividend is nothing more or less than a deferred price cut and I do not see how the Co-operative societies can logically support price maintenance with the plea that they alone are to be allowed to make a price cut.
§ Mr. Linstead
No, I have been speaking for rather a long time and I still have a few more things to say.
On the general question of price maintenance and arguments for and against it, I wish to sum up in this way. First, in favour of price maintenance, it is clear that the public prefer fixed prices for identical goods. Secondly, I think there is no evidence that maintained prices are excessive prices. The Committee report to the contrary. Thirdly, price maintenance schemes have brought stability and prosperity to industries and trades which were in a perilous condition before price maintenance was introduced. Price maintenance ensures that the public get what they ask for and the retailer does not try to substitute something else on which he gets a decent profit. Price maintenance ensures a stable home market upon which a manufacturer of branded goods can build his export market.
On the other side, we know the argument is advanced that price maintenance enables inefficient distribution units to function. It is very easy to talk about inefficient distribution units but that begs the question. Very often references to so-called inefficient retail distribution units really mean the small shopkeepers, and the question in that regard is, "Are you or are you not prepared to see the small shopkeeper continue to function as a substantial element in retail distribution?" We believe that the small shopkeeper is needed not merely as a unit in retail distribution but as an element in the life of the community, that he provides a type of outlet, a type of character, and that the community would be very much the poorer if by price war, by nationalisation of the distributive trades, and so on, that particular type of man were put out of business.
It is, of course, argued against price maintenance that the distributive trades retain workers needed in productive industry. I have dealt with that argument. Then there is the curiously complicated argument used by the President of the 749 Board of Trade that price maintenance producescontrols, whose scope, complexity and cumulative restrictive effects may surprise even those with long experience in the distributive trades."—[OFFICIAL REPORT, 2nd June, 1949; Vol. 465, c. 2319–2320.]There is nothing in the Report about that. But the comment by the President is a heartening sign that he recognises that that state of affairs goes with controls. When I read it, it sounded like a picture of the Ministry of Supply or the Ministry of Works or even the Board of Trade.
The summing up of the situation which I should like to make would be along the following lines. We are all agreed that the cost of living should be brought down by every proper and legitimate means. I think that on both sides of the House we should also agree that it is not a proper and legitimate use of power to inflict cuts and sacrifices on one section of the community merely in order to bring down prices. I am reasonably certain that the President of the Board of Trade will find among the trade associations and manufacturers and distributors a great readiness to help him in his task of bringing down retail prices, but I am sure that he will not find that co-operation if he adopts the method of attacking a system which has been built up, which has proved itself, and which has in my view survived the investigations of this Committee with scarcely any damage to its structure or its reputation.
The only section of the work of the price maintenance organisations that might possibly be open to criticism is what might be called the Star Chamber aspect of their work, the fact that they do impose their sanctions privately and within their own offices. It might be very much better if they could find the means whereby there were some type of tribunal under a chairman of undoubted reputation where these cases could be considered and the reasons and the decisions, though perhaps not the names, made public. It might be even better if it were possible for some system to be devised whereby the law courts rather than a domestic tribunal were the places where these things were decided.
But however the problem is approached, I am sure that it must be approached on the basis of some type of price maintenance structure which 750 guarantees all through an industry fair prices to every section of that industry, I believe that if the President of the Board of Trade approaches trade associations, not on the basis that he is going to break down their structure, but on the basis that he wants to be satisfied that proper prices are charged at every level, he will get co-operation. I am sure that is the way that modern Government ought to be carried on.
§ 12.35 p.m.
§ Captain Field (Paddington, North)
I am very glad indeed to follow the hon. Member for Putney (Mr. Linstead) because in the time at my disposal I wish to draw the attention of the House to one aspect of retail price maintenance, namely that connected with the marketing of proprietary medicines.
I shall seek to show that indiscriminate trading in proprietary medicines may indeed be detrimental to our national health; that there are signs that the selling of these articles will come into conflict with the National Health Service; that the manufacturers of branded articles often make greatly exaggerated claims as to their efficacy; that these goods are sold at greatly inflated prices, and that, indeed, the whole traffic in proprietary medicines is bolstered up and kept going by the present system of resale price maintenance. I shall also seek to show that in this trade, resale price maintenance keeps prices up rather than down. It should be remembered in this connection that retailers and consumers have no say whatever in the fixing of prices, which is solely in the hands of manufacturers.
My attention has been drawn to an editorial comment in the current issue of the "Pharmaceutical Journal," which is the organ of the Pharmaceutical Society of Great Britain, with which the hon. Member for Putney is, I believe, or has been connected. The suggestion is made there, second-hand it is true, that the President of the Board of Trade is personally responsible for initiating this discussion today. I cannot answer for him or for my hon. Friends on this side of the House who are taking part in the Debate, but I wish to assure the House and hon Gentlemen opposite, and the Pharmaceutical Society also, if they so desire, since I am dealing with a matter within their interest that there is not the 751 slightest truth in this suggestion so far as I am concerned.
Incidentally it seems to me that the "Pharmaceutical Journal" might well have taken this opportunity of trying to bring the profession to a realisation of their responsibilities and to curb the traffic in these proprietary medicines which has been universally condemned for many years by the British Medical Association and eminent doctors everywhere, as I shall presently show. Indeed, looking through the trade journals, I would say that the trade comments upon the Lloyd Jacob Report which we are discussing and upon the forthcoming Debate in the House, and the literature with which we have been bombarded since this Motion was put down, show a sickening self-interest. Nowhere have I detected in the trade journals or the literature put out a thought for the consumer or for the ethics of this commerce. That is very regrettable when one considers that this trade in proprietary medicines is largely conducted by an honourable profession whose individual members have a record of great skill and service to the community.
The main claims put forward by the manufacturers and vendors of these proprietary articles for their branded products as against their British Pharmacopoeia equivalents is, and I am taking these words from one of their own documents put out by one of their trade associations:that they have built up a reputation for reliability, high standard, good preparation, easy absorption or digestibility, etc.These are the claims—
§ Captain Field
Yes, thank you very much. Yet I have looked in vain through the references in the Lloyd Jacob Report to the Proprietary Articles Trade Association and elsewhere for the slightest hint that this Association controls in any way the standards of the articles manufactured by its members. Indeed, I am of opinion that as the law stands at the moment it is harder to control the pharmaceutical standards, pharmaceutical content, of branded and proprietary medicines than of their British Pharmacopoeia equivalents.
§ Mr. Linstead
May I interrupt a moment to say that the machinery is precisely the same on all these articles? The formula must appear whether they are pharmacopoeial or whether they are not, and the public authority has the duty of analysing the thing in order to find out whether or not the contents correspond to the declared formula.
§ Captain Field
I am not so certain about that, because it appears to me that if a person goes into a shop and asks, for instance, for a packet of aspirin or a packet of substance containing aspirin, he must be given that substance; but if he goes in and asks for Aspro the chemist is bound to hand him a packet of Aspro.
§ Captain Field
All right, but can anybody pretend—will the hon. Member for Putney say—that there is any difference, for example, between a packet of Apro tablets and a bottle of aspirin tablets put out by a perfectly reputable manufacturer?
§ Captain Field
I think that the House will be with me when I say that there is one very great difference, and I shall presently come to that, and that is the difference in their cost. In point of fact, the consumer is paying for the advertising and sales pressure behind the proprietary product. It is thus possible to see that the system of price maintenance enforced by powerful trade associations is essential to the marketing of these dubious remedies, and it must have an effect on the cost of living.
I have been looking through some of our national newspapers in the last few weeks, and I have extracted from them some of the advertisements for these products. The House will be able to judge for itself whether it feels that these claims which are made could possibly be made 753 in good faith. These are some of the advertisements which I have extracted:Nervous dyspepsia, A new man thanks to Maclean Brand Stomach Powder. Maclean Brand Stomach Powder quickly relieves indigestion.
§ Mr. S. Marshall
On a point of order. Is it right and proper that hon. Members of this House should be giving free advertisements in this fashion for certain commodities, because if so, I should be interested to appear and see my name on the list?
§ Captain Field
The recommendation came from the other side of the House, and not this side. The advertisement goes on:Keep a bottle always handy and take a dose whenever you are troubled by flatulence, heartburn—[HON. MEMBERS: "Hear, hear."]—nausea, stomach pains, etc.Another advertisement says:First dose relieves pain. Bisurated Magnesia contains quick acting and medically approved antacid ingredients. Nagging indigestion pains vanish immediately.This is another:Good hair for all. How to make hair grow—stop it falling out, restore natural colour.Here is another for Fynnon Salt:Thousands take Fynnon for laxative action, but for thousands more Fynnon means relief from rheumatic pains, sciatica, lumbago, neuritis, fibrositis and gout.I ought to say in passing, as has already been noted, that the value of the content of practically all—in fact all—of these effervescent salts is a fraction of the price charged. My hon. Friend the Member for East Ham, North (Mr. Daines) told the House that in this particular instance that about 30 per cent. of the cost goes in advertising. Here is another one:Throbbing nerve pains. Phensic for quick, safe relief from headaches, rheumatic pain, all nerve pains and colds and chills.
§ Captain Field
Some of these advertisements are more subtle:If you are persistently troubled with a cough, by day or night, get medical attention. But perhaps you know that your cough is 754 a greater nuisance than a danger, and all you need is something reliable to check the bronchial spasm when it occurs,It seems to me that here the implication is that if the sufferer is sensible he will by-pass his doctor and buy a bottle of this remedy.
§ Mr. R. Harris
Would not the hon. and gallant Member agree that it is a great advantage that the public should buy these branded goods, because if they do not, the doctor will prescribe medicine which will come out of the cost of the National Health Service?
§ Captain Field
I do not think I should like to comment on that. Here is another one for yeast:Don't risk a nervous breakdown—it often comes from a nervous system starved of Vitamin B. Take two tablets of Phillips Tonic Yeast with your meals, you will be amazed at the result. You will sleep better, digest your food better, tire less quickly, feel better in every way.It is to me an interesting fact that Phillips Yeast Tablets cost 1s. 3d. for 50 yet there is another brand which one can buy for 1s. 6d. for 100. One can only speculate, if the tablets are identical in their content as to why there should be the great difference in price
§ Captain Field
Now we come to Beechams Powders:for headaches, neuralgia, nerve pains, rheumatic pains, colds, chills, influenza.Perhaps the hon. Member for Putney will tell me, because I have no information, whether Beechams Powders are the same as Beechams Pills. [HON. MEMBERS: "Try them."] I would much rather leave the experiment to someone else.
§ Captain Field
I think it is worth while mentioning that as long ago as 1909 the British Medical Association published the fact that one box of these pills which was then sold at 1s. 1½d. was based on ingredients worth half a farthing. It is true that costs have risen since then, but I have no doubt the difference in price remains the same. Their claim already referred to—"worth a guinea a box"—seems to me to be on a par with statements which have been made by the party opposite.
§ Mr. Linstead
I am reluctant to interrupt the hon. and gallant Member, because what he is saying is worth a guinea a box, but what is the purpose of his argument? Is he trying to show that if these goods were not price maintained then they would no longer be in circulation?
§ Captain Field
I say that if these were no longer price maintained, they would very largely disappear.
I wish to give a last illustration of a product which has already been mentioned, namely Aspro. Here we have a formidable list of maladies which can be treated—they are very careful to avoid the word "cured." Here we have to try Aspro forinfluenza, sore throats, headaches, neuralgia, irritability, toothache, colds, lumbago, nerviness, neuritis, sciatica, gout and rheumatic pains.This is perhaps a little more significant:Alcoholic after-effects, pains peculiar to women and sleeplessness.Aspro costs 1s. 5d. for 27 tablets. One must be fair and point out that in that price is included 33⅓ per cent. Purchase Tax. But ordinary aspirin can be bought, in a perfectly good brand, for anything from 1s. per 100 upwards. When one considers that aspirin is sold in bulk at 2s. 8d. a pound and, if my calculations are correct, one pound of aspirin contains well over 1,000 five grain tablets, one can see exactly the relationship of the proprietary price to the cost of the article.
Major Hicks-Beach (Cheltenham)
Can the hon. and gallant Gentleman give the exact difference after taking Purchase Tax into account?
§ Captain Field
No, I could not, because Purchase Tax is 33⅓ per cent. on the original price. One factor is most important when considering proprietary articles. First, it is necessary for the person to read the advertisement, but once the gullible reader has read it, the manufacturers must rely upon him making his own diagnosis of his complaint. They are exploiting his ignorance of his own bodily functions and his very great desire for health.
§ Mr. G. B. Craddock
What does the hon. and gallant Gentleman suggest that the public should do in this matter?
§ Captain Field
I will come to that. These interruptions only tend to put one off one's main argument.
It is a great shame that in this traffic, manufacturers should be aided and abetted by the pharmaceutical profession, an honourable profession. At the best, the public can only consume large quanties of medicines which are probably harmless but quite inefficient, and at the worst—and one cannot tell how often this is the fact—there is in many cases a delay in seeking skilled advice which may make a difference between life and death.
I want to draw attention to the Chemists' Friend Scheme which is a restrictive and price maintaining organisation operated by the National Pharmaceutical Union. According to a statement on page 41 of the Lloyd Jacob Report it is linked with the Proprietary Articles Trade Association. In their description of the Chemists' Friend Scheme, the National Pharmaceutical Union make the claim that they have the… right to prevent unskilled persons and those who have not the requisite training from lessening the earnings of the qualified man.With that claim I have no quarrel whatever. But their statement continues:From the point of view of the public it is essential that these measures should be taken, as the individual service given by chemists is very necessary.I have already shown the House, and I hope I have convinced hon. Members, that these proprietary articles must rely to a great extent on self-diagnosis of complaints by the general public. I have already shown the conditions and the maladies, many and varied, which these preparations seek to remedy and which are stated in their advertisements, although it is true that many of these ailments are described in the vaguest terms which find no place in medical parlance.
In these circumstances, there is absolutely the minimum opportunity for chemists to exercise their professional discretion and initiative. The would-be purchaser when he comes into the shop is already conditioned by the advertising to ask for a particular proprietary article, and the chemist must sell it to him. Indeed, one of the conditions of the scheme is that the chemist is pledgedto use his utmost endeavours in every way to give these goods priority of sale over eligible non-Chemists' Friend goods.757 That is taken from one of the conditions of the scheme.
Further, they must display these goods to the maximum of their ability to the exclusion of other lines, and they may not make mixed window and counter displays of Chemists' Friend and non-Chemist Friend goods.
In all this the chemist is so tied down by restrictions and controls that he loses all his professional initiative and that professional discipline which the pharmaceutical profession properly claims for itself. It seems to me that this practice might well be brought to the attention of the Society for Freedom in Medicine which is presided over by Lord Horder who has on many occasions criticised the traffic in proprietary medicines. Indeed, he once exhorted his professional colleagues to… resist more than they often do the blandishments of the wholesale chemists, decline their dictation, and so to provide a less easy market for purely commercial enterprise.
§ Mr. S. Marshall
I would ask in what way his argument applies to the Motion on the Paper which refers to price maintenance.
§ Captain Field
I am seeking to prove that the whole system of selling proprietary medicines is bolstered up by the system of resale price maintenance. If the system were modified or taken away—and I suggest that the pharmaceutical profession ought to have set its house in order by doing this long before any sort of Government pressure was brought to bear—then these disreputable claims of these proprietary articles would long since have disappeared. I should like to remind hon. Gentlemen that a Bill was introduced into this House, I believe in 1936, the object of which was to curb advertisements issued by these people. That Bill was turned down. As the Bill was introduced on the day of the Grand National, and there was a large Conservative majority, it did not get through.
§ Mr. Linstead
The hon. and gallant Member is not very well-informed in these matters. The substantial provisions of that Bill were subsequently enacted.
§ Captain Field
it is a matter of fact. The Bill was introduced on that day and it was talked out because there was not a sufficient majority to support it.
§ Mr. Beverley Baxter (Southgate)
On a point of order. When the hon. and gallant Gentleman purports to give us the history of this House, he should at least have some idea what he is talking about. He has just made the statement that there was not a sufficient majority to carry it. I do not know what that means.
§ Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew)
That is not a point of order.
§ Captain Field
I should like to mention an occurrence reported in the current issue of the "British and Colonial Pharmacist." It is stated that at a recent meeting of the Council of the Proprietary Articles Trade Association a communication from a manufacturer was received and discussed. The communication was reported as follows:It is becoming fairly obvious that the chemist is devoting more and more time to prescriptions and less and less time to his regular counter trade. This is either because he is too busy with prescriptions or because his turnover from these has increased so much under the Health Scheme that it is attracting much of his interest. Unless something is done to combat this trend, it may ultimately be very harmful to branded preparations sold over the counter.In other words, the manufacturer of a proprietary medicine wants to alienate the chemist from his principal work, of dispensing medicines. Although the Proprietary Articles Trade Association reached no decision on this matter at the meeting described, it may well be that these trade associations will in the future submit to the domination of the manufacturers of these remedies and will try to prevent the chemist from carrying out what I hold to be his main professional role.
759 I hope I have said sufficient to demonstrate to the House that the proprietary medicine trade is bolstered up by the system of retail price maintenance in its present form, and is of dubious social value, and, in fact, increases the cost of living for such people as purchase these articles. For many years these practices have been condemned in reputable quarters, and I hope the House will take this matter into careful consideration and give the Motion the support it deserves.
§ 1.1 p.m.
§ Mr. John Rodgers (Sevenoaks)
I beg to move to leave out from "Maintenance," to the end of the Question, and to add instead thereof:as a contribution to a complex problem and at the same time, believing in a broadly competitive system over the whole range of industry and commerce as the best protection of the interests both of producers and consumers, nevertheless recognises the valuable function of the mechanism of resale price maintenance, under proper safeguards, in the complicated structure of a modern economic society; it further declares its views that these problems should be handled, over the whole range of industry, whether nationally or privately owned, by the machinery of the Monopolies Commission.I regret very much that, in discussing this subject of resale price maintenance and of distribution, hon. Members opposite have not treated it with the seriousness and in the manner it thoroughly deserves. I do not propose to follow the hon. and gallant Member for Paddington, North (Captain Field) in discussing patent medicine advertising. I wish to confine my remarks to the subject of retail price maintenance, though I would remind him that one of his right hon. Friends has discovered that "a little bit of what you fancy does you good," and that that applies to the things the hon. and gallant Gentleman was discussing too.
I think that all of us, on this side of the House, at least, are trying to achieve two objects. First, we wish to encourage production among manufacturers and distributors so that, secondly, we can supply merchandise to the British people at the cheapest possible price and of the highest possible quality. That is our entire approach in discussing this Amendment. All of us wish to see the British people able to buy their goods at the lowest possible price.
§ Mr. Coldrick
Will the hon. Gentleman give way a moment? He says that it is his intention, and that of his hon. Friends, to foster competition. Will he indicate to the House how it is possible to have unlimited competition in the sale of these things if their price has already been determined?
§ Mr. Rodgers
I am coming to that point in a moment. I am sorry I should have been interrupted on it at this stage. All of us are very worried, particularly on this side of the House, at the continually rising cost of living. Therefore, we regard this whole problem of resale price maintenance with immense seriousness, and I do regret, as I said earlier, that hon. Members opposite should have degraded this Debate into a cheap attack on patent medicine advertising.
At the outset let me say that I agree with the hon. Member for East Ham, North (Mr. Daines) in at least one remark he made, and that is that the term "resale price maintenance" is very little understood, and that, in fact, it is an unfortunate term. It does, I think, suggest unfortunately that there is some attempt by manufacturers to keep up prices. I should very much prefer to see the term "resale price standardisation" used rather than "price maintenance," because I think it is a much fairer definition of what we are trying to discuss.
I think that hon. Members on both sides of the House should realise that if there were no price standardisation or price maintenance, we should be plunged once more in this country into a system akin to that of the Eastern bazaars, where we haggled about the prices of various merchandise. That would be quite incompatible with the system of mass production as we know it today. Without some basic price standardisation, without some system of branding, and without the system of advertising, it is quite impossible for us to secure the most economic production or the most economic distribution of many commodities.
Here I should like to say that I have spent 20 years in the advertising business, I am proud to say; and I have never heard in all those 20 years such nonsense talked on the subject of advertising as I have heard today. I could give many, many instances to show that the greater the amount spent on advertising, the more 761 continuously unit costs go down; and I could prove quite conclusively, I think, to any hon. Member opposite that advertising and the branding of merchandise have conferred immense benefits upon the consuming public. If manufacturers were asked to produce a multiplicity of goods at varying standards, all the immense advantages that come to the country through mass production would be lost.
I think that in discussing this particular problem of resale price maintenance, hon. Members opposite should recognise that the whole question of distribution is brought under our review. It is perfectly obvious, I think, that immense benefits have been conferred on the public by resale price maintenance and by the availability to the public of branded merchandise. I should like to take as an example of that the Co-operative Wholesale Society stores themselves. Here we have stores which have the advantages of being both manufacturers and distributors. They produce goods of the same type as branded merchandise, often at a cheaper price. Yet it is a fact that the demand for branded, fixed-price merchandise is steadily rising, even in the Co-operative Wholesale Society stores. Not only has it been the tendency in the past, but it is going on at the moment. While on the subject of the Co-operative Wholesale Society, I would say that there is very little evidence that they have done anything to improve products or to initiate new products. All they have done is to imitate private enterprise merchandise.
I think that the public on the whole recognise the great value they get from fixed-price, branded merchandise. In fact, that point was made in the Lloyd Jacob Committee's Report, when it was said that all the women's organisations the Committee interviewed not only had no complaints but recognised that they derived great benefits from fixed-price maintenance goods. On the other hand, while it is obvious that in certain fields the general policy of price standardisation or maintenance is to the general good of the public, and has resulted in the public's getting better value for their money, if improvements can be made in the methods of distribution, or in a particular retail distribution, I think we ought to see what they are, so that the consuming public can benefit. If it could be proved, for instance, that self-service 762 stores operate more efficiently than the ordinary type of retail store, then I think the public are entitled to the benefit of that greater efficiency.
What I would urge is that both sides of the House should approach this problem not in any dogmatic party spirit at all. I do not think we ought to be bigoted or emotional about it. I do not think we ought to try to pull out a few examples of abuse and then try to condemn the general system because of those few examples.
§ Mr. Crosland (Gloucestershire, South)
Would the hon. Gentleman allow me to intervene? He made an important point just now, and I should like his answer to this. He said that if self-service stores could provide goods at lower cost to the consumers, the public should be in a position to derive the benefit of that. Would he say how that could happen if price maintenance continues?
§ Mr. Rodgers
I think we ought to recognise that this subject of retail price maintenance is an extremely difficult and important one. That is why in the last 20 years or so at least three investigations into the subject have been made. There was one in 1920, another in 1930, and the Lloyd Jacob inquiry in 1949. Because it is such a complex problem, I urge hon. Members on both sides to be as impartial as possible.
I would remind them of a remark made by the Lloyd Jacob Committee themselves, who recognised the complexities, and accepted the principle of price maintenance. They recommended that no action should be taken which would deprive individual producers of the power to prescribe and enforce resale prices for goods bearing their brands. That was recommended by the Committee. At the same time they would not allow two or more manufacturers to join together with that object.
If the Government were to accept that recommendation, they would have to ask themselves one or two practical questions. How, for instance, would they deal with the tobacco interests? They have a retail fixed price policy, and they have discovered that it is in their interests to have 763 the widest possible distribution of cigarettes, so that a person has not got to walk very far in order to get the brand that he wants at the price he knows he will have to pay for it. That is only possible, they maintain, through the policy of resale price maintenance. I do not think I need remind even hon. Gentlemen opposite of the chaos that was caused when gift schemes in connection with cigarette sales operated. That is a concomitant of any plan to cut price maintenance.
§ Mr. Rodgers
What would the Government do about the motor trade, who also have a policy of fixed prices for sales of cars, which enables distributors to sell those cars at reasonable prices, even though cars are in very great demand and are scarce today? By the resale price maintenance policy the public have been protected, and the distributors have got a square deal, too. I ask the Government, too, whether they would allow trade unionists to combine in order to keep up wages, but deny manufacturers the right to come together to ensure a policy of price maintenance so that they can be sure of their returns and be enabled to keep up the level of employment?
If price maintenance is made illegal, then I am quite certain, as my hon. Friend the Member for Putney (Mr. Linstead) said, that we should be involved in a price-cutting war to the detriment of the entire community, and not least to that of the workers themselves. The other day, in the journal of the Union of Shop, Distributive and Allied Workers, Mr. Francis Hunt, a trade unionist, said that the ending of branding and of price maintenance schemes would, from the distributive workers' standpoint, be nothing less than "utterly disastrous."
Today it is generally agreed that between 27 per cent. and 35 per cent. of retail commodities are sold at fixed resale prices. Nobody quite knows the exact figure. It is somewhere between 27 per cent. and 35 per cent. I think we should ask ourselves whether we have enough information—and I do not think we have—to make an announcement such as is contained in this Motion.
764 Why, I should like to know, do the United States have only 4 per cent. of their merchandise sold at resale maintenance prices? I do not think we know the answer. One of the things I should like to urge is that we should study the American distributive system to see whether there is anything we could learn from it. Then I think we should also look into the American system of fixed minimum prices. The Americans used to have a price spread, a maximum and minimum. Since the establishment of the Office of Price Administration, the maximum price has been abolished and the minimum price fixed. It is enforceable at law, and every State, except the State of Texas, backs this, and a manufacturer can have redress in the law courts if a retailer sells below that minimum price. It may well be, as my hon. Friend the Member for Putney has suggested, that that system is worth inquiring into, to see whether it has any application over here.
What British manufacturers are extremely concerned about is that their branded merchandise, which they have spent a great deal of money to develop, and in the wide distribution of which they have spent a great deal of money, should not be used as "loss leaders"—a system whereby retailers take in well-known products to induce customers into their shops, and then sell to the customers other manufacturers' inferior merchandise. The whole system of "loss leaders" is one to which we should pay more attention. I do not think we have studied that enough, and I do not think the Board of Trade have given nearly enough attention to the problem of distribution. I may add that I am one of those people who welcome the distribution census, for it will throw some light on these problems, just as, I think, the Lloyd Jacob Committee's Report throws a lot of light upon them.
This whole field has been given quite inadequate attention from the point of view of the interests of the consuming public. I think we must try to secure more statistics, and look into the whole problem, which includes the problem of resale price maintenance, from a nonparty standpoint, to see what is the best system on behalf of the consumers—that is, the housewives—of this country. It is in the spirit of approaching the matter 765 on those lines that I move this Amendment.
§ 1.17 p.m.
§ Mr. Deedes (Ashford)
I beg to second the Amendment.
I think we are all aware by now, if we were not before, that we are today discussing a most complex and involved subject, which I, personally, find has become even more involved as a consequance of our exertions during the last 48 hours. I think that no hon. Member on either side of the House who supports conditions in industry designed to give security and stability at all levels can afford to be too contemptuous of the system which is dealt with by this Report.
There is much ground covered in this Report which was also covered in a different sphere by the Report of the Lucas Committee on the marketing system two or three years ago. The Government discovered then that it was a profoundly difficult subject round which to frame legislation, and in the case of the Lucas Committee's proposals they chose to exercise caution. We think that they will do well to exercise that caution again in this respect. Exactly the same very difficult principle is involved in the Lloyd Jacob Report—namely, to hold a balance between a system of trading which gives reasonable security to traders at all times and a system which denies consumers the advantages of free competition.
At all times the Lloyd Jacob Report tends to make the same criticism as the Lucas Report made—that practices which were in order, say, 20 years ago, are not necessarily in order today. I am rather doubtful about that. I think that there may be just as great dangers in legislating to meet special requirements of an inflationary period as in legislating for a deflationary period, and that we should aim here at a solution which does the job in good times as well as bad. It is quite clear that that is one cause of the widespread disquiet to which hon. Gentlemen opposite have referred today among retailers over the threatened abolition of resale price maintenance. It may appear desirable in the interests of consumers now, but it might cause disaster for thousands of retailers and small shopkeepers in difficult economic circumstances, and of that they are well aware.
Rightly or wrongly, small shopkeepers view these proposals in the Report with 766 considerable alarm. Their fears may be groundless. I hope that we shall receive an assurance from the Government on that point. We shall welcome any reassurance that the commotion which this Report has created is groundless. It is worth stressing that it is the small trader who is alarmed and not the big units, the multiple stores and, of course, the Co-operative societies.
We take, as this Amendment shows, a broader view of this subject than do hon. Members opposite. The fundamental problem at stake is what practices are harmful to the public interest. That is the line taken in relation to monopolies, and it is a sound line. What can be retained without harm; what ought to go? In that respect, I am bound to say that the Report is not very helpful. It says, as has already been quoted, on page 17:We conclude, therefore, that the effects of severe price-cutting of well-known branded goods may well be harmful to the wider interests of the public.Action by individual manufacturers to stop severe price-cutting contrary to the public interest, which incidentally is not a thing which they are likely to find themselves in a position to do very effectively, is approved as being harmless. Action by manufacturers in associations, which is effective, is disapproved of as being harmful. It is hard to draw from that conclusion what action the Committee considers should be taken.
I do not blame the Committee for the inconclusive results which they have produced. As suggested earlier in the Debate, in my view they have been required to deal with the fringe of a very much bigger and, indeed, a huge, subject—no less than the whole marketing, distribution and retail organisation in this country, to which hon. Members opposite have added the question of advertising. That main problem is, I think, what the Government are suspected of having their eye on, and in respect of the small trader not a particularly friendly eye. It is that impression which is causing so much commotion of which we are all aware.
In view of some of the views recently expressed by right hon. and hon. Members opposite on the subject of the relation between consumers and retailers, it is hardly surprising that there should be considerable disquiet at the moment 767 among the retailers. I can well see that some hon. Members opposite are entering into all this in a crusading spirit, and are out to take a tremendous swish against the trade associations, alleged price rings, big traders, and so on. I advise them to be careful that they do not tilt at the wrong windmill.
Let me return to the question of public interest. A balance needs to be restored between reasonable stability and the right of the consumer to benefit from competition. I think that balance can be restored, but I think that in that respect we should get from the Government an assurance that a particular action in this particular respect is not being made an excuse for rationalisation—I think that is the right word—of the whole retail industry; the weeding out of the small and so-called inefficient and so on, a process, incidentally, which would inevitably affect many small village shops dealing with small communities, and on whose behalf there is a good case to be made. If the Government are dissatisfied with the retail trade as organised today and think that there are too many shopkeepers and that methods are wasteful, let them say so. Otherwise, let them give an assurance to the retailers that they do not propose to get at them through a peculiar brand of retail price maintenance reform.
I would like to say a word on the suggestion that the distribution costs of the country today are wasteful, unnecessary and could be removed by sound planning. I question whether in respect of coal, electricity or travelling, in which the Government have a form of retail price maintenance of their own, the consumer considers himself today all that better off.
We on this side of the House fully share the anxiety felt on the other side in respect of the increasing cost of living, but to suggest there are walloping margins in retail prices and that retail price maintenance is part of them is not fair and is misleading. It is "pie in the sky" which will not materialise. By collossal expenditure and maintaining high taxation the Government have the consumer on a very narrow margin, and now they are looking for fresh pips to squeeze. The retailer seems to be one of the pips. Let the Government first turn their attention to reducing the Purchase Tax, which, in 768 respect of certain commodities, makes the cut made by the retailer very small indeed.
Any attempt to take a balanced view will be interpreted on the other side as the defence of bad practices in big business. Speaking for myself, which one may be allowed to do on Friday, as a broad supporter of the system of competitive free enterprise, nothing infuriates me more than the small minority who indulge in practices harmful to the public interest. It makes it difficult to define what we on this side regard as legitimate interests. We do not in the least object to the retailer being exposed, as he is today, in many connections, to competition, providing that it is fair and providing that it does not deteriorate into what hon. Members on the other side like to call, in a different context sometimes, "the law of the jungle."
Where cases can be found of manufacturers acting against the public interest in respect of retail price maintenance, let them be dealt with. We have heard today of the work of the associations, but we have not had a single example of a firm being put out of business or dealt with severely by one of those associations. If there are such abuses, let them be dealt with, and the machinery already exists for doing that in relation to monopolies. I would point out that, at the moment, there being no legal redress, those concerned can hardly be blamed for taking action for themselves. There is no legal redress for those who now adopt the system of retail price maintenance.
I think it is regrettable to create an impression that the public are getting a raw deal from the traders, and, to take an expression already used on the other side, that they are being held up to ransom. Trade, particularly in this country, is built up on mutual trust and confidence, and the less politics interferes with it the better. Broadly, there exists between the public and the shopkeepers a very good relationship, which compares very favourably with the relationship between the public and the State trading organisations. The great proportion of shopkeepers are honest, hardworking and do not make a vast profit, and those who deal with small communities—and I am thinking particularly of the rural areas—are often very hard put to it to 769 make ends meet. Let credit foe given to the work which they do, and do not let a great picture be built up of a conspiracy by retailers against the public, which there appears to be some danger of doing on the recommendations of this Report. Let the retailers be treated as the agents and not the enemies of the community.
§ 1.30 p.m.
§ Mr. Tomney (Hammersmith, North)
There are numerous aspects of this problem which have not been mentioned. The ramifications of resale price maintenance go further than most members of the public realise. My hon. Friend the Member for East Ham, North (Mr. Daines) referred to the Electrical Lamp Manufacturers' Association, and Mr. Speaker ruled that it would be in Order to comment upon the matter, even if it was subject to inquiry by the Monopolies Commission.
Hon. Members have asked for examples of those ramifications. I propose to give them. Hon. Members have said that the Co-operative societies get the best of both worlds by being both producers and marketers. Any specialised industry which is marketing its product through a central selling agency, or in association with other manufacturers by collective agreements, is in a very advantageous position by being able to fix wage costs with their competitors in a way which binds the worker to a certain scale of remuneration. In fact, that is done, and in the electric lamp industry more than in any other industry in the British Isles. The industry is specialised in regard to its key personnel, and it requires, more than any other industry, the retention of that key personnel in order to be able to carry on its business.
The business is fairly new, having grown up in the last 50 years. It became highly specialised and technical, and it was essential that it should retain its technical labour. Various firms banded themselves together in association, and decided to fix prices of their commodities in the open market and to fix the prime cost of wages within the industry. Despite the wholesale retention of trade unions within this industry, we have found that the hands of the trade union officials are tied, because there is no free negotiation within the industry. The position is tied up because costs are related in such a manner that each manufacturer agrees 770 beforehand what margin shall be paid in wages. They agree that trade union rates and conditions shall be recognised but we know that the profit per article in the industry is probably larger than in any other industry because of the resale price maintenance arrangements. The industry is virtually a closed shop of manufacturers of the worst possible kind.
Requiring specialised labour, the industry has retained it on the basis of preventing men from having a free choice to seek employment with competitive firms in order to advance their own prospects and earnings. The men find that they will get substantially the same wages, within a few coppers, from one firm as from another. This is a vicious circle of price maintenance that we should not allow as legislators and as trade unionists. I ask hon. Members to consider the prospects of a man whose skill can be exercised only in this industry, which is marketing its goods under price maintenance arrangements. The man draws the trade union rate of wages, while the company is making huge profits. What share of those profits goes to the man whose skill is producing the article? Only that share which can be won by hard negotiation by trade union negotiators, and no more.
In one factory the works committee and the shop stewards' committee, by virtue of research, were able to prove to the management that the industry could easily afford to pay higher wages. The management admitted the case but said they were prevented from paying higher wages by the price-fixing arrangements with their competitors in the price ring. What a damnable thing that is, that it can be proved from the workshop level that these things can be done, and yet they are impossible under price arrangements. Hon. Friends of mine have spoken of this matter from the consumer level. We have come to the point in the marketing of products where we have to decide by legislation what is a fair price, what profits should accrue to industry from that price and what should be the reward of the workers. If we are to maintain artificially high prices by advertising and otherwise, we shall never get a real knowledge of prime costs either in industry or in retail trade.
It is time that this House took a definite lead by legislation to prevent these prac- 771 tices, which are nothing more or less than robbing the general public. They promote inefficiency in industry by keeping mediocre staffs, by overburdening the distributive side, and by preventing the rapid and ready expansion of our export trade. It is time that this House was prepared to do something about it.
§ 1.38 p.m.
§ Mr. Summers (Aylesbury)
I wish the hon. Member for Hammersmith, North (Mr. Tomney) had taken a hint from his hon. Friend who seconded the Motion, for it is very much better to leave the investigation of the trades about which he has been speaking to the Monopolies Commission.
I have seldom listened to a Debate in which there have been more contradictions. From Monday to Thursday it is customary for us to hear numerous contradictions of opinion and thought between the two sides of this House, but apparently it has remained for Friday to furnish contradictions between the intentions of the mover and the seconder of a Motion and in the wording of the Motion. The present Motion is intended to attack the practice of resale price maintenance and yet there is evidence in the Report of the Committee, which apparently is approved by the supporters of the Motion, in support of that same system which hon. Gentlemen opposite wish to abolish.
We have, as I say, had contradictions between the mover and the seconder. I am sorry the seconder is not in his place. He was at pains to condemn the effect of competition and he illustrated his case with graphic examples, yet apparently he is anxious to increase that very competition with which he found fault, by denying the protection that is provided by price maintenance. It is evident that the mover and seconder of the Motion made up their minds on this subject before ever the Report was published. I should have thought that they would have been serving the public interest much better if they had realised the complexity of the matter and not taken up a rigid point of view quite divergent from the recommendations of the Committee.
It is not surprising, with the continual rise in the cost of living, that people throughout the country and in all parties are concerned to see whether it is possible 772 in the sphere of distribution in some way to reduce the rising cost of living. We continually find increases in the cost of production, largely brought about by Government expenditure, and one is forced to the conclusion that, in directing attention to the retail distribution end, hon. Members opposite are attempting to find some way of escape from the difficulty created by the policy of their own Government in the matter of costs.
It is necessary to study the Report to see whether there is evidence of unreasonable prices being charged which affect the cost of living. In weighing up the evidence and publishing their recommendations, the Committee were obviously on the horns of a dilemma. They found very convincing evidence of support from the public on the question of branding. Whatever the mover and seconder of the Motion may say to deny the link between quality and brand, it is evident from paragraph 19 of the Report—which says:The representatives of the various women's organisations who gave evidence before us were, without exception, strongly in favour of branding.—that the spokesmen for the consumers are strongly in favour of it. We also find that the Committee are in favour of branding, for they tell us in paragraph 23We have also assumed that, although there may be incidental disadvantages or abuses, the system by which manufacturers purposely differentiate their products from those of other manufacturers and actively promote their sale by advertisement and by other means, is not, generally speaking, in conflict with the public interest.We also find in the report an expectation—and considerable evidence in support of the view—that the practice of branding will increase.
Now it appears from other parts of the Report, notably in paragraph 49, that the representatives of consumers not only welcomed branding as a practice, but, where goods were branded, strongly approved of their resale price being fixed. It says that the witnesses for the consumers:Stated strongly and unanimously that fixed retail prices afforded them certain marked advantages.One horn of the dilemma is the support for branding and the growth of the practice of fixing retail prices of such goods. This provides ample evidence in 773 support of the entire system of price maintenance in this field, but there were other considerations with which the Committee was concerned and which were apparently not on all fours with the evidence. The Committee adduced a number of theoretical arguments to suggest that there might be impediments to cheap sales by the continuance of this practice, although the Committee gave no practical evidence to show whether their theoretical ideas were borne out in practice. They were also faced with the obvious objections of the Co-operative societies. The fact that the Motion was put forward by two hon. Members representing the Co-operative societies shows clearly that the implied objections of those societies in the Report are undoubtedly the views which they hold.
Faced with this dilemma, the Committee felt obliged, in some way or other to compromise. I find the justification for the compromise entirely lacking in conviction, judged in the light of the evidence on which it is founded. The conclusion at which they arrive is paradoxical. They approve of the individual manufacturer enforcing resale price maintenance, but deny him the facilities to make that system effective. Experience has shown that, left with the law in its present state, individual manufacturers cannot in practice enforce the resale price of their products unless they are reinforced in other ways. That being so, it is not unreasonable to describe the findings of the Committee as recommending to individual manufacturers a certain course and yet denying them the means for carrying out their own recommendations.
The difficulty in which individual manufacturers are placed in maintaining the resale price of their articles without some form of reinforcement is surely the origin of the collective system of price maintenance which we find under examination in the Report. I suggest that it is also the explanation of the reluctance of the collective price maintenance authors to abandon their practice at the behest of the President of the Board of Trade. The Report as we find it, is quite unsatisfactory because even the recommendations of which we approve are denied effective application by the other recommendations.
What would it be reasonable to put in the place of these unsatisfactory recom- 774 mendations? It is obvious that it is necessary to ensure that in a time of scarcity—that is the case with many goods today—by attempting to do away with price maintenance schemes we do not lay the public open to the risk of being overcharged in competitive conditions for goods in short supply. This situation is not unique. An attempt was made to resolve it in the United States of America. There, the prejudice against any form of price maintenance has for many years been much stronger than it has been in this country, and yet, despite that prejudicial background, they have found the need to recognise by law the right of a manufacturer to maintain the price of his goods right down to the consumer level.
§ Mr. Summers
Under conditions and proper safeguards. I want the Government to consider this. If it be correct that price maintenance has many marked advantages and that it is desirable for manufacturers to evolve schemes to support their prices right down the chain of distribution, and if they are powerless without collective price maintenance to fulfil that recommendation of the Committee, surely it is the duty of the Government to discover how they can enable that part of the Report to be implemented by some other method if they do not like the collective method which is now at the disposal of manufacturers. I ask that serious consideration be given to the law such as will strengthen the hands of manufacturers and enable them to do what this Committee regards as reasonable, without the support of those practices which, in certain instances, are quite properly called in question.
Reference is made in the Amendment to the possibility of referring such matters as this to the Monopolies Commission. I think it surprising that more space and thought have not been given in this Report to the merits and practicability of referring matters of this kind to that Commission. The thing that is important, and which I hope the Government will bear in mind, is that this is not a simple matter; that any attempt to do away with such abuses as may exist are quite capable, unless treated with discrimination, of doing more harm than the good they seek to do. I therefore hope that in 775 dealing with this matter the complexity and variety of its nature will be recognised, and that it will be dealt with on a realistic ad hoc basis, doing away with such abuses as can be proved to exist, where they exist, without at the same time, by the crudeness of the methods intended to do away with those abuses, doing more damage to the public in other directions.
§ 1.52 p.m.
§ Mr. Padley (Ogmore)
I think it would be well if I began by saying that, since I am President of the Union of Shop, Distributive and Allied Workers, my view of this matter is naturally influenced by the welfare of 350,000 organised distributive workers. Since there have been references on this side of the House to modern Luddites and on the other to alleged restrictive practices by trade unions, I might say that the Cotton Working Party presided over by Sir George Schuster, himself incidentally with experience of the distributive trades, made the point that in that kind of industry where there are numerous firms, trade union organisations have often, as in the past, to take a bird's-eye view, and in that sense to face up to the real problems of the industry or trade.
In the distributive trades the workers employed have a double interest, first in the wages and conditions that they get from their employers, but second in the price they have to pay as consumers. In no other industry do the workers spend the whole of their income on their own consumer goods as is the case in this industry, and in that sense my views are influenced by my position in the Distributive Workers' Union. I would go on to say that I approach this matter from the broad basis of the public interest. Indeed, it would be true to say that the clearest voice in Britain for many years past in favour of the rationalisation—I emphasise the "r"—of the distributive trades, has, in fact, been the principal trade union catering for the distributive workers.
I listened to the mover and seconder of the Amendment, and I began to wonder why it had been tabled at all. They cooed like doves, and if the ease of hon. Members opposite was as simple as they stated in those speeches, then I cannot understand why the Amendment was 776 tabled at all, except that the Motion pays tribute to a statement of my right hon. Friend the President of the Board of Trade. The Amendment, therefore, seems to me to have no purpose other than that of a party political manoeuvre.
It seems to me that this subject can best be discussed if we break it down into four distinct parts. The first is the question of branding articles and fixing prices for those articles; the second is the enforcement of that price either by the producer or by collective action through trade associations or by some other means; the third is the problem of dividends paid by Co-operative Societies and discounts paid by some other traders; and last is the place of price maintenance as an instrument of a restrictive monopoly in the manufacturing industry as well as in the distributive trades. I propose to analyse the subject under those four heads.
So far as branding and price fixing are concerned, it is happily unnecessary for me to state at any length the case for them. There is a mass of evidence in the Lloyd-Jacob Report, and even the mover and seconder of the Motion have not suggested that there should be an end to branding and to the maintenance of prices in the case of branded goods. It is self-evident that if we are to enjoy mass manufacture, giving benefits to the consuming public, then the manufacturer must be provided with a large stable market.
§ Mr. Maudling (Barnet)
As I under stood it, the mover of this Motion said he was against all forms of price maintenance whether by individual manufacturers or collectively. I thought it was only the seconder of the Motion who was prepared to accept individual trader's prices.
§ Mr. Padley
The Motion, in fact, welcomes the Lloyd Jacob Committee Report, and I would find it rather difficult to reconcile that statement by the mover, with the Report.
§ Mr. Maudling
The mover of the Motion clearly stated that he was accepting this as half a loaf, which was better than no bread.
§ Mr. Padley
I am quite sure my hon. Friend the Member for South Hammersmith (Mr. W. T. Williams) and myself on another occasion can continue any argument which we have, and I very much regret that he is not in his place and able to speak for himself at the moment, because I know that his view is not as far removed from mine as some hon. Members opposite might have us believe.
The point I was making was that from the manufacturers' and the consumers' point of view there was a case for branding and price fixing. The women's organisations which were consulted by the Lloyd Jacob Committee were unanimous in their view. When I was interrupted I was about to say that the history of the chocolate manufacturing industry in the early 1920's is, I think, conclusive proof that an end to all price maintenance arrangements for branded goods would not be in the interests of the public.
I begin, therefore, in agreement with the Report and, therefore, with the Motion and say that the branding of articles should remain and that with it there must be some price maintenance arrangements. The interests of the public, of the workers in the distributive trades and of the manufacturers, demand that. Moreover, it is worth while remembering that if self-service is to become an important permanent feature of food distribution, there must be not only the present situation with regard to branding, but probably some development as well. Therefore, those who call for a development of self-service and in the same breath demand the suppression of branding or the complete ending of price maintenance arrangements, are really arguing for two quite incompatible propositions.
The women's organisation who were consulted also said that they were never sure whether the price charged was the right one. In my judgment, a Socialist approach to this problem requires, first, that a consumer advice centre should investigate the quality of branded goods and should publish its findings. Secondly, it seems to me that there is a case for the review of the fixed prices of branded goods by the Central Price Regulation Committee or by some other body.
We then come to the second aspect of the problem, which is the enforcement of 778 the price of the branded article. The Lloyd Jacob Report says that:We recommend that no action should be taken which would deprive an individual producer of the power to prescribe and enforce resale prices for goods bearing his brand."I am interested in the interpretations which have been given to that sentence, because it is certainly true that an individual producer cannot enforce price maintenance simply by operating an individual stop-list.
The large volume of goods which are handled by wholesalers means that in the present state of the law the individual manufacturer will be quite powerless to enforce his price if collective action is outlawed without something else being put in its place. In many ways this is the most important point in any analysis of price maintenance as such. By "as such," I mean not linking price maintenance with producers' monopoly schemes. Some element of collective action is needed to enforce minimum prices unless there is new legislation which will give the producer a remedy either through due processes of law in the courts or by some other means.
There is nothing in that sentence from the Report which I have quoted which says that in the view of the Lloyd Jacob Committee the only remedy open to the manufacturer should be an individual stop-list. Indeed, from a careful reading of that recommendation it will be noticed that it says that nothing should be done which will deprive theindividual producer of the power to prescribe and enforce resale prices.…"Some reference has been made on the other side of the House to the present state of the law in the United States of America. I agree with hon. Members opposite that some notice should be taken of the legislation dealing with price maintenance which forms part of the Anti-Trust legislation of the United States. But hon. Members opposite have not said today that side by side with the legislation which gives the individual manufacturer a legal remedy in the courts against a price-cutting retailer, there should be outlawed the kind of trade associations which have been defended with gusto by hon. Members on the other side of the House. The legislation in the United States specifically outlaws combinations 779 of manufacturers, wholesalers and retailers whose intention is to restrict production, to keep out new entrants from the trade, and to interfere with the distribution of commodities other than those of a single manufacturer and so on. To that extent, even the land of free enterprise which is so often boosted by hon. Members opposite takes a more progressive line than do some hon. Members opposite.
I would not be content, however, simply with the position of the United States. It seems to me that if the individual manufacturer is to have a remedy against the price-cutting retailer by due processes of law in the courts, then side by side with that right should go both the public investigation of the quality of the articles concerned by the consumer advice centre, and also a measure of public control over the prices of the articles thus protected.
§ Mr. Padley
Given the structure of wholesale and retail distribution in Britain, with its million shops and its multitude of middlemen, some real and some "brass-platers," it is a practical impossibility under the existing law for the manufacturer to have a legal remedy. Hon. Members opposite will find that I am quite right if they consult any of the distinguished legal gentlemen on their benches.
I pass now to the third point: the question of dividends paid by Co-operative Societies and deferred discounts payable by other traders. It seems to me that the line already taken by the Grocery Proprietary Articles Council is a quite sound one; that providing the dividend or the discount is paid on the whole of the trade which is done by the particular firm, and providing it is paid at intervals of not more than every three months and during a recognised period—14 days is quoted by 780 the grocers' trade association—dividends and deferred discounts shall not be regarded as price-cutting. In other words, one of the less dangerous trade associations has itself given some suggestive advice to my right hon. Friend the President of the Board of Trade when this matter comes to be dealt with by new legislation.
The reason why I am strongly in favour of dividends and deferred discounts is that this is the practicable method of handing on to the consuming public the benefits of more efficient methods of distribution without causing instability in the trade in the way that the use of loss leaders in the old price wars caused instability, with consequent losses not only to distributive workers and traders but also to the consuming public.
I turn to the relationship of price maintenance to the general question of monopoly in British industry. Hon. Members will have received many documents from many trade associations. They will have heard one hon. Member opposite quote from an article which appeared in "The New Dawn," the organ of the shop, distributive and allied workers. There should be no attempt to create an impression that that union, although it is concerned, on the lines I have indicated, with problems of price maintenance, is prepared to underwrite the restrictive practices and the police methods of some of the trade associations referred to in detail by the Jacob Committee Report. I say this not only because we take the public interest into account, but also because we take our own interest as distributive workers into account.
If private trade associations are to be given the right to organise rings of producers, to link the rings of producers to organisations of wholesalers and retailers and if the retail trade is to be threatened that unless it conforms to the edicts of monopolistic producers it will be put out of business, what sensible trade union with members in the distributive trades, and taking the workers' point of view, could possibly underwrite any such scheme, given the well known hostility of many sections of employers in the distributive trades to trade unions in days gone by and, to some extent, today?
Is it thought that we would for one moment place ourselves at the mercy of tightly knit trade associations and a form 781 of monopoly which I believe my hon. Friend the Member for South Gloucestershire (Mr. Crosland) would probably call "oligopoly," the most dangerous form because it extends right from the manufacturing end of the industry through the industry to wholesale and retail distribution.
§ Mr. Padley
If the hon. Member for Croydon, East (Sir H. Williams) really thinks there is a parallel between public corporations and, for example, the Electric Lamp Manufacturers' Association, I suggest he should study the evidence.
§ Mr. Padley
The hon. Member would be very hard put to it to substantiate: that statement, if he had time.
§ Sir H. Williams
No. I have no interest, in electric lamps except as a consumer, but they are one of the few commodities at present which are as cheap as, or cheaper, than in 1939, while coal is much dearer, as everyone knows.
§ Mr. Padley
I suggest that the hon. Member should do some more research on the prices of commodities about which he speaks.
In the very modest speeches of the mover and seconder of the Amendment, hon. Members opposite have in a very, tentative way said that there might be something to be said for the right of the manufacturer to enforce the minimum price. But they have omitted the other half of U.S. legislation, which would ban the restrictive trade associations. If that right of appeal to the courts is to apply to the manufacturers, not only should there be some public supervision of quality and price, but there must be public supervision and, where necessary, drastic action by the Monopolies Commission. Some of us on this side of the House are sometimes doubtful whether it is in fact possible by legislation to make private semi-monopolists fight one another by Acts of Parliament. Thus we come to a remedy which the hon. Member for Croydon, East, would certainly not appre- 782 ciate, the remedy of public ownership and some measure of democratic control over that industry.
I sum up on this note. First, that the case for branding and the case for minimum prices has been established by the Lloyd Jacob Committee Report, as well as by the experience of most hon. Members and most members of the consuming public of Britain; secondly, that some method is necessary for enforcing minimum prices. The individual producer cannot do it under the existing law of Britain because of the intervention of a multitude of wholesalers and the large number of retail shops and retail firms. It is wrong that the legitimate object of price maintenance in branded articles should be achieved by private interests through private organisations. In my view it is dangerous to the public interest.
I therefore suggest that there should be a close study of the legislation of the United States of America, that there should be new legislation which would give to the individual producer the right to enforce, by due processes of law in the courts, the minimum price, but that in return for the right to use the courts there should be public supervision of quality and price. In addition, I think legislation is necessary which will outlaw those trade associations which are engaged in linking producers' rings to systems of price maintenance in the distributive trades.
Thirdly, I think that new legislation is required which will protect the right, not only of Co-operative societies, but of all traders who are giving, or who, in the future, will give deferred discounts. I believe that is the real answer to the problem of maintaining stability in the distributive trades and at the same time passing on to the consumer the benefits of improved methods of distribution. Fourthly, in my view there is need, not only for vigorous action under the Monopolies Act, but also the need for more drastic action of a public ownership kind to break down some producers' rings which are exploiting price maintenance for their own purposes.
Finally, resale price maintenance is merely one aspect of the problems of the distributive trades at the present time. I know I reflect the view of the Distributive Workers' Union when I say that the 783 way to build an efficient system of distribution is neither to have a free-for-all scramble on the laissez faire principles propounded by Adam Smith and his friends, nor to have a system of distribution in which a large number of private firms are organised in greater or lesser degree in private tightly knit trade associations for their own purposes.
The real answer to the problem of the distributive trades is to be found in public control and in some measures of public ownership. In my judgment there must be a public investigation of the rôle of wholesalers and the middlemen in the various sectors of the distributive trades. In my judgment there must be public control to eliminate those who are not performing the true functions of wholesalers. There must be public action to prevent the gross overlapping and waste of resources which occurs at present. Secondly, there must be some form of public control over the location and number of retail shops. In my judgment, in so far as the President of the Board of Trade and his colleagues are prepared to link this attack on the bad features of price maintenance with bold and constructive plans to build a planned distributive economy in accordance with Socialist principles they will succeed in their task.
§ 2.21 p.m.
§ Mr. Thornton-Kemsley (Angus, North and Mearns)
I am glad to be able to follow for the first time in this House the hon. Member for Ogmore (Mr. Padley) because in a sense he and I are, I suppose, on different sides. I here divulge an interest in the subject under discussion from the point of view of what I suppose could be called a large-scale retail organisation. I think we would desire to congratulate U.S.D.A.W. on the return to this House at the recent election of so able a spokesman, with much of whose speech I found myself in agreement.
I am not quite so happy as are some hon. Members about the extension of the policy of price maintenance in this country. My concern is that the growth of fixing price margins by manufacturers narrows the field of competition within which merchandise can be exposed to competition's stimulating influence. I believe in competition. My support of a 784 free enterprise economy is founded upon the deep conviction that the public interest is best served by competition. Yet I see that the Lloyd Jacob Committee, in paragraph 102 of their Report, have come to the conclusion that:the cumulative effect of fixed resale prices for a wide variety of goods must be to eliminate price competition over large fields of retail trade.The same sort of thing is to be noticed in an article in the "Economist" of 11th June, 1949. I do not intend to read much of that article, but I will read just one sentence:The forces tending to make distributive margins rigid and unassailable, and tending therefore to render the distributive system inelastic and impervious to change, are growing stronger and more organised and are spreading over a widening area of trade.I do not think that is a good thing.
I agree with the hon. Member for Ogmore in what he said about branding, and that branding should stay. I agree with him that some price-fixing arrangements should be allowed. I was interested in what he said about the price-fixing arrangements. How are we to be sure that the prices fixed by manufacturers are the right prices? That is a point which, I am sure he would agree with me, is of the greatest possible importance. A manufacturer can quite easily assess his own costs of production and can add his own uplift; that is easy enough. It is not quite so easy for him to judge the cost of distribution. Yet by his action in fixing the retail price he is substituting his own estimate of the proper uplift for the judgment of the market.
To assess the normal cost of distribution over a wide range of merchandise is extraordinarily difficult. That was recognised in the Committee's Report, in which, in paragraph 57, it is stated:those of our witnesses who used the alleged uniformity of operating expenses as an argument in favour of resale price maintenance have provided us with little or no statistical evidence to justify their contention. Time after time witnesses admitted to us not only that no precise data can be produced but that no systematic collection of the requisite information had been undertaken—…On the contrary there was much evidence that distributors' costs vary from place to place in accordance with the circumstances. For example, there is the widest possible disparity between the rents which are paid under pre-war leases of shops and the economic rents of newly-built 785 premises and between the rent per square foot of trading area in the best positions in a town and in the back streets. Again, firms catering for a high-class trade may prefer the carpeted dignity of wide open spaces to the utilitarian and less luxurious use of floor space. Some firms may spend vast amounts upon advertising and others may rely entirely upon their own reputation for good value, believing that the best possible advertisment is a satisfied customer.
The Committee gave examples of this by quoting the operating expenses of one branch of one firm in 1946, which were as much as 104 per cent. above the operating expenses of another branch of the same firm. The conclusion at which they arrived in this connection is given in paragraph 69 of the Report, in which they say:for many classes of branded product no 'ordinary' or 'average' distributor exists,There is much that I wanted to say but which I am leaving unsaid because I know so many Members wish to speak. It ought not to be beyond the genius of a nation of shopkeepers to find a middle way between the conflicting requirements noted in the Lloyd Jacob Report, on the one hand the need to encourage economies in distribution and reductions in retail prices, and on the other the maintenance of the quality and the supply of branded goods.
I agree with the hon. Member for Ogmore that branded goods have come to stay. They have an important part to play in supplying the needs of the consumers in this country. And the fact that the brand, nationally advertised as it often is, and widely known, is in itself a guarantee of standardisation, and an assurance that the manufacturer at least is not ashamed of his product. But do not let us lose sight of the fact that the consumer's real safeguard against high prices is the go-ahead and enterprising firm which is not prepared to sit still, but which seeks always to improve us service to its customers and to ensure that it is never knowingly undersold by any of its genuine competitors.
§ 2.31 p.m.
§ Mr. Reader Harris (Heston and Isleworth)
I congratulate the hon. Member for Ogmore (Mr. Padley) on the speech he has made. It was refreshing to hear someone from the other side of the 786 House who has had some experience of, or at any rate knows, the industry. It is quite obvious that he spoke as he did because he knows only too well that if resale price maintenance is done away with, and a price-cutting war started, the first people to suffer would be the shop assistants. The next people to suffer would be the consumers; and the last lot of people to suffer would be the shopkeepers themselves. They would naturally be the last to suffer, because human beings have an urge towards self-preservation and to look after themselves as long as they can. But it would certainly be the workers who would suffer first.
While on this subject of the effect of price cutting on the workers, may I go back to what was mentioned by the hon. Member for Putney (Mr. Linstead)? A few days ago I received a deputation from the owners of chemists' shops. I know nothing about chemists' shops, but they told me they were terrified that if resale price maintenance were done away with they would go back to the evil days of 20 or 30 years ago, when chemists had to work 15 hours a day to earn a living, and when the assistants in chemists' shops received a wage of £20 a year and the emolument of free accommodation, which was generally nothing more than a bed under the counter. We have now a stable industry, very largely as the result of resale price maintenance. It has many flaws in it; and I would fully support everything said on both sides of the House about the need for some sort of inquiry to make absolutely certain that the existing resale price maintenance is necessary, and that the public are not being exploited.
The Report of the Resale Price Maintenance Committee has, I think, gone astray in one respect. It started off well by stating:We have restricted our inquiry in the main to 'consumer' goods—that is to say, goods bought in the ordinary retail shops of the country—and we have not considered in any detail the distribution of capital goods or engineering equipment.The pity is that when this Report comes to its recommendation clauses, it does not draw any distinction between the two lots of goods. Resale price maintenance, in my view, is seen at its best in the motor industry. I think we have to put 787 all the articles to which resale price maintenance applies into two broad categories. There is the type of goods to purchase which one goes into a shop and puts down one's money on the counter, receives the goods, consumes them and throws away the packet. It is really a small operation.
But an entirely different state of affairs arises when one buys a motor car or a radio. In that case, when the goods are purchased, instead of it being the end of everything between the purchaser and the shopkeeper, it is only the beginning of a relationship, because it is the duty of the manufacturer or the dealer to see that what the purchaser has bought remains in good condition for, at any rate, some specified length of time. If the purchaser buys a motor car, it is up to the person who sells that motor car to see that it will run for a reasonable length of time. Usually there is a guarantee for six months or a year. It is the same with a radio. If the shopkeeper sells a radio it is up to him, either because there is a guarantee or morally, to see that the instrument is in good condition more or less for the whole of its life.
Where there is anything in the nature of an aftersale service, it is absolutely essential to maintain the price of the goods sold in the first place. If we do away with resale price maintenance, shopkeepers will have to cut their profits in order to attract customers into their shops; they will not be able to give the service which the public needs and so the public will suffer. Very much the same thing applies even in a chemist's shop. It is all very well to say that these branded goods should not be sold at a fixed price, but if, in point of fact, a price war starts, even the little chemists' shops would be unable to give that service which the public is entitled to demand. They could not keep their shop clean or have a decent shop and their premises would become dilapidated. That is what happens in practice when we start doing away with definite maintenance prices.
§ Mr. Harris
The point I want to make goes back to what was said by the hon. Member for Ogmore. The resale price maintenance to the small shopkeeper is 788 what trade union agreements are to the workers.
§ Mr. Padley
Would the hon. Member allow me? At no point in my speech did I make that statement, and I do not accept it.
§ Mr. Harris
Then I hope, by the time I have finished my speech, that the hon. Member will have been converted and will accept that fact.
In the motor industry the dealers sell cars under a covenant. These covenants are a means of depriving the motor car dealers in this country of a profit they could otherwise make of £25 million a year. It is only right that the dealers should be deprived of the chance of making this terrific profit at the expense of the consumer. If there were no covenant, cars would be delivered on allocation from the manufacturers to the dealers; but the dealers would not sell them to the next customer on the list. The dealers would simply announce that there would be an auction next Tuesday, and sell them for the best price they could get—
§ Captain Field rose—
§ Mr. Harris
Not to me. Because a motor car is sold under covenant, and the member of the public buying it is prevented from taking his car round the corner a couple of hours afterwards and selling it at twice the list price, the dealers are content to sell at exactly the list price and not try to make an illegal profit. That is what resale price maintenance means in practice. It is all very well to talk a lot of airy nonsense about it, but in practice it works to the benefit of the consumer.
I take another example, and here I wish to disclose my particular interest, which is that I am secretary of one of the associations mentioned in this Report, the National Tyre Distributors' Association. What is the effect of resale price maintenance on the tyre industry. It is this; the retailer's profit margin on tyres in this country averages about 17½ per cent. In America, where there is no 789 resale price maintenance, it is 45 per cent. At the moment there is a shortage of tyres, largely because some of the nationalised industries, sensing that there would be an increase in the price of tyres through shortage, went out and bought them quickly. I do not blame them for doing that. When I inquired where they got their inside information, they told me it was from a headline in the "Daily Express." The fact is that there is a shortage of tyres at the moment and if there were no such thing as resale price maintenance and the plan under which all tyres are sold, there would be nothing to stop tyre dealers keeping tyres under the counter and getting the best price they could for them; and there again the public is being protected.
§ Mr. Harris
I can only speak for this particular industry, but the dealer has to sell at the price agreed in the tyre plan. He cannot sell above or below it. He cannot sell above or below that: it is a fixed maximum price. The trader would be in very severe trouble and would be struck off the tyre register if he tried to sell above or below the list price.
There is another respect in which retail price maintenance will assist members of the public. I refer to the Waleran Report on petrol filling stations. One of the recommendations of that Report was that petrol filling stations ought to be neatly spaced all along the roads of the country and that they ought to have all sorts of amenities with proper drive-ins and toilet facilities for the public. All those facilities can be provided only if the owner of the petrol station knows that he will get a fixed price for petrol. It would be useless if he had to reduce the price in order to attract custom. Then he could not provide the facilities I have mentioned.
Hon. Members opposite ought to remember that if they start tinkering with resale price maintenance and start a price-cutting war, the people who will benefit are the big men, the big chain stores. They will simply promote monopolies. That is what must always happen. The big firms will go to a manufacturer and, because they buy in bulk, they buy at a much cheaper price. These big men can buy 790 huge quantities of goods and keep them on one side for months, thus creating a shortage, and then they can flood the market.
The greatest protection to the consumer is that we should have a lot of small men in business—a million shopkeepers. That is the protection for the consumer. I ask hon. Members opposite not to get too deeply involved in political prejudice on this matter but to look at it from a practical point of view. Like the hon. Gentleman who seconded the Motion, I am entirely against what he called a ganging-up of manufacturers, wholesalers and retailers to exploit the public. Also, I am against the ganging-up by the trade unions and the Labour Party to exploit the public in many other ways. Ganging-up can be done by all sorts of people. I am against it in every form.
Therefore, I support any inquiries initiated by any Government to make sure that the public is not exploited in any way. After all, the consumer interest is the most important one. At the same time, it is no good trying to pretend that the shopkeepers are one lot of people and the consumers another lot of people. The shopkeepers are the public. There are a million shops in this country. One family in 16 gets its bread and butter from selling goods in small shops. We all live for each other in a civilisation such as this. Therefore, I say that the shopkeeper is as much entitled to protection as is the trade unionist.
§ 2.43 p.m.
§ The President of the Board of Trade (Mr. Harold Wilson)
The House will be grateful to my hon. Friend the Member for Hammersmith, South (Mr. W. T. Williams) for raising this question today in a way which has afforded opportunity of discussion of what is a very vital subject both for the consumer and for the trader." I have thought from one or two speeches that perhaps we have not heard quite enough about the position of the consumer. At one stage the hon. Member for Heston and Isleworth (Mr. R. Harris) said that he could only speak for the tyre industry. An hon. Member before him began by declaring his interest in large-scale retailing, though he did go on to discuss the position of the consumer in regard to retail trade.
791 I should like to refer to one important matter which has been mentioned. Suggestions have been made in certain sections of the Press that, for some strange reason which I cannot fathom, I am supposed to have taken steps leading to the initiation of this Debate. That is a most improper and completely false suggestion. The initiative came entirely from my hon. Friend the Member for Hammersmith, South. To be quite frank, I should have liked another two or three weeks in which to work on some of the suggestions and proposals put forward. I hope that the trade association papers, and others who like inventing these stories, will perhaps give a little space now to say that this was a complete invention.
I should like to carry the House back to what has happened over the past year since the publication of the Lloyd Jacob Report. The Report was published just over a year ago. I should have thought that hon. Members in all parts of the House would have wanted to pay tribute to the excellent Report published about so difficult a subject. I must confess that I was surprised when the hon. Member for Putney (Mr. Linstead), in referring to this Committee which was presided over by the gentleman who is now Mr. Justice Lloyd Jacob, went on to allege that this Committee's Report was at variance with the evidence and did not derive from the evidence, and when he said that this Committee, having been charged with a witch hunt, had to find a witch. That is a rather serious reflection on a Committee consisting of eminent persons, and I do not think it is borne out by a fair and unbiased reading of the Report.
When the Report was published, I made a statement in this House on 2nd June. 1949, foreshadowing two main lines of action. The first was to ask the…principal trade organisations involved to consider the most satisfactory means of ensuring that price maintenance by individual producers…"—not group arrangements—shall not injure the interests of the consumer.The second was to ask manufacturers and traders generally—and here I was dealing with the group collective resale price maintenance—to realise that:…their own interests, as well as those of the country, will best be served by freeing 792 distribution from the many self-imposed restrictions and controls described in the Report.I did make a third point referred to by my hon. Friend who opened the Debate dealing with the problem of supplies to Co-operative societies. I referred to the:…discriminatory restrictions against consumer dividend or discount systems employed by the Co-operative societies and others.I said that those must be abolished and that:… the public must be allowed to reap the benefit of low cost methods of distribution … by way of reduced retail prices.I am sure that that statement ought to find support in every part of the House, or at least with every one who is concerned with the legitimate interests of the consumer. I had hoped when I made that statement that it would lead to action by industry along the lines of the suggestions I made to the House at the time. I said then:I hope indeed that in the next few months we shall see industry itself taking steps to this end. I must make it clear, however, that although we have every reason to hope for the co-operation of industry in this matter, the Government are fully determined to ensure that the general public shall not suffer from the private restrictions of price competition."—(OFFICIAL REPORT. 2nd June, 1949. Vol. 465. c. 2319–20.)That was on 2nd June, 1949, and I think it is right that I should give the House a brief account of what has happened since that date.
After giving industry and trade a reasonable amount of time to consider the Lloyd Jacob Report and the statement that I had made, I had a meeting with representatives of a number of the industries concerned and with the Federation of British Industries and the National Union of Manufacturers. At that meeting it became clear that neither the Federation of British Industries nor the National Union of Manufacturers were prepared to give any general guidance on the question of resale price maintenance to their constituent bodies, on the ground, which they stated, that it took a variety of forms in different trades and they felt that this was a matter for discussion and settlement trade by trade.
Therefore, it was arranged that I should take this up with each individual trade. On 1st December I sent a letter and questionnaire to all known collective price maintenance associations asking them a 793 number of questions, including a question whether they were or were not in favour of price competition by distributors, and whether they had abandoned or modified, or intended to abandon or modify, any of their resale price maintenance practices in the light of the statement I had made in this House some six months earlier.
There were 84 collective price maintenance associations circularised, and ultimately I received replies from the great majority of them. These replies showed that out of the 84, only one association had made, or was making, any change in its collective price maintenance arrangements. I think it was clear that this particular trade was doing it independently of the Lloyd Jacob Committee Report, and that the great majority of the associations showed that they intended to continue their arrangements along the same lines as before. Although they did not all answer the question whether they were or were not in favour of price competition between distributors of branded goods, of those who did answer the question the great majority said that they were not in favour of such price competition.
§ Sir H. Williams
May I put this question? Safety razors, for example, are sold at all sorts of prices, and the presumption is the dearer they are, the better the quality. Is that not a form of price competition, even though there is price maintenance?
§ Mr. Wilson
Yes, I should think to some extent that would be price competition, but the phrase I used was price competition within branded goods, meaning within particular branded goods. The point the hon. Gentleman has in mind, I think, is as between two razor blades, one sold at 2½d. and the other at 4d.
§ Mr. Wilson
The phrase I used would cover cases where particular brands were selling at 2½d. or 4d., and the question was whether there should be price competition between distributors of the particular razor blade which was, say, only 2½d. or 4d.
As the House I think knows, 13 of the principal trade associations joined themselves together into a body calling itself the Fair Prices Defence Committee, acting under a body called the Fair Trading Congress. I should repeat that most of the 794 constituent organisations of this Fair Prices Defence Committee refused to answer our questionnaire until the Committee as a whole had had an opportunity of discussing this with me. Well, I met them on 4th April of this year, and, while it appeared that some members were not wedded to arrangements discriminating against traders giving deferred discount, such as the Cooperative societies—it was a fact that some of them were prepared to make a move in that direction—it was quite clear that the associations I met then were certainly not minded to take any action voluntarily which would weaken the main structure of their collective resale price maintenance arrangements.
Perhaps I can summarise the position just a year after the publication of the Lloyd Jacob Committee Report. It is clear that industry and trade will not voluntarily take action along the lines recommended in the Lloyd Jacob Report, or in the spirit of my statement of 2nd June of last year. So, the Government are now naturally considering what action is necessary to implement my assurance to the House in the statement I have referred to—my assurance that we were fully determined to ensure that the general public shall not suffer from private restrictions of price competition.
I want to say right away that I believe the present attitude of the trade represents a perfectly sincere attitude, and their spokesmen in the House today have been, I think, perfectly sincere about it; I think they are wrong, but I think they are sincere. If the present attitude of the trade is maintained, then I think the House will be forced to the conclusion that effective action cannot be taken without legislation.
Let me make it clear that it will not be easy to draft legislation which will ensure the best protection of the consumer. The recommendations of the Lloyd Jacob Report, for instance—which in general was critical of many price maintenance arrangements, and was most anxious than new and economical methods of distribution should be encouraged, such as the go-ahead firm to which reference has been made—drew a sharp distinction between resale price maintenance practised by individual manufacturers and resale price maintenance carried on by collective price maintenance associations.
795 I have no doubt that, in coming to this conclusion, the Lloyd Jacob Committee, as is clear from the Report, were partly affected by considerations not entirely within the field of distribution but perhaps more within the field of the principles of law about the extra-legal nature of these collective sanctions to which they refer, and also of course the necessity for maintaining freedom of contract as between an individual manufacturer and an individual trader.
There has been considerable criticism in the public Press and elsewhere of this distinction made in the Lloyd Jacob Report, and our discussions with trade and industry have brought out this point. I am bound to say that a number of the trades with whom I have discussed this problem have drawn attention to what is a rather difficult distinction to maintain, both as a matter of theory and as a matter of practice. Indeed, there has been some evidence available that some of the cases where the consumer is perhaps harmed relate to the individual withholding of supplies rather than the collective withholding of supplies. We have heard suggestions at various times that the Co-operative movement are perhaps more prejudiced by the action of individual manufacturers of certain kinds of branded goods than by collective action.
One other big difficulty in considering what steps we ought to take relates to the question of the loss-leader, which has been referred to a number of times in this Debate, and which takes up a good deal of space in the Lloyd Jacob Report. Of course, if special arrangements have to be made to deal with the practice of loss-leading and to give the manufacturer power to withhold supplies against loss-leader price cutting, that enormously complicates the arrangements that have to be proposed. The Lloyd Jacob Report in general, with the exception of the Note by Mr. Henry Smith, tends to condemn loss-leading price cutting. It pointed out the relation of protection against the loss-leader to the whole subject of branding on which, as the hon. Member for Aylesbury (Mr. Summers) pointed out, consumers' organisations and traders equally expressed themselves as being in favour.
The arguments that have been brought up in the House today about the relation 796 of branded goods to quality have to be taken very much into consideration, though I think it is fair to say that within certain fields of industry we do find branded goods which are not in any way backed up by resale price maintenance arrangements—particularly in the textile and clothing field.
As a number of my hon. Friends, particularly the hon. Member for Hammersmith, South, have suggested, certainly a good deal needs to be done, and will have to be done, to protect the consumer by means quite outside the imposition of brands by private manufacturers, and far greater use made of the British Standards Institute, and the perpetuation of that great protection to the consumer, which is a form of branding, through the maintenance of the best advantages of the utility scheme. That has been a form of branding which has not been done by the individual manufacturer but has been done as part of a general arrangement. In my view, it is possible to have the advantages of branding over a considerable field without necessarily backing it up by price maintenance, so far as minimum prices are concerned.
Of course, the Lloyd Jacob Report went on to deal with the effects of loss-leader price cutting not only on quality but also on stability of manufacture, and that is another very important point to be borne in mind. On the other hand, I think the House will see the great difficulties of drawing up proposals for dealing with resale price maintenance which would be effective, and which at the same time had to allow a let-out, or special provision for individuals or groups to withhold supplies from shopkeepers who were indulging in loss-leader price cutting. The Lloyd Jacob Report did not actually condemn loss-leader price cutting as such, but it said that the advantages to the consumer were never permanent, and it concluded that the effects may well be harmful to the wider interests of the public. That may very well be so, and I would not myself defend loss-leader action as such. Indeed, I do not think anyone has set out to defend loss-leader action.
The question which will need consideration is whether the disadvantages of loss-leading are such as to justify the very complicated system which would be necessary for any exempting action to 797 except loss-leader action from the general arrangements which will be necessary to enable the benefits of cheaper distribution to be passed on to the consumer. I recognise that this is certainly a point on which there are two views. Until today I would have been very surprised to know that there were two views on the question of whether action is or is not necessary. I should have thought that hon. Members in all parts of the House would have felt that the statement which I made in June a year ago was one which they could accept, no matter to what party they belonged.
I found within an hour or two of the Debate beginning—indeed from the sharp interruptions which my hon. Friend had to put up with when he opened the Debate—that there were sharp divisions coming up on party lines. The hon. Member for Putney (Mr. Linstead) regretted that this was becoming an issue which was being dealt with on party lines, and so do I. I hoped that action on this would have been non-controversial. [HON. MEMBERS: "No."] It became quite clear this afternoon that there was a division on party lines, and that some of my hon. Friends were taking the line of the consumer against the price fixer. [Interruption.] The hon. Gentleman who said that this is purely a Co-operative Party thing is very wide of the mark indeed.
§ Mr. Wilson
Because the mover and seconder said that they were members of the Co-operative Party, that does not mean that everyone on this side of the House who stands up for the consumer is approaching it from the Co-operative Party point of view. The hon. Member for Putney said that he was approaching it from the point of view of the drug trade, but because hon. Gentlemen supported him I am not suggesting that he is a druggist or is approaching it from that point of view.
The hon. Member for Putney, I know, spoke with great sincerity, but I must refer to one remark which he made, because I think that he would persist in dragging across the trail a certain red-herring about the position of the small shopkeeper. First, he referred to the 798 threat of nationalisation of the small shopkeeper. It has been made clear, time and time again, that this is not part of our policy. Indeed, our approach to this problem today, and the approach of my hon. Friends, has been shown to be not towards the nationalisation of the small shopkeeper, but in many cases the protection of the small shopkeeper.
§ Mr. Linstead
I think that we ought to take one step further on this matter. Surely, the right hon. Gentleman has heard the phrase—public ownership of means of distribution. Is he saying that his party have abandoned that part of their party policy?
§ Mr. Wilson
I am saying that time and again my right hon. Friends and myself have said that there is no question of there being in our policy any proposal for the nationalisation of retail trade. I made clear to the hon. Gentleman that we were more concerned with the protection of the small shopkeeper. If the small shopkeeper is so important both to the economic and social life of the country as the hon. Gentleman suggests—and I agree that he is—then why should he not be free from time to time to reduce prices to the consumer, without being faced with what the hon. Gentleman has referred to as the Star Chamber methods of some of these price-fixing associations?
I have been asked what is the view of my party. One reason why I expected to get support from the other side of the House on this was that in the publication "The Right Road for Britain" one of the many things which the Conservative Party promised to do would be, they said, to encourage competition in shops, farms and factories. It is clear from what a number of hon. Members have said today that such competition as they are going to leave in the shops would be purely the competition of quality and service and not the competition of price.
I was amazed to hear the hon. Member for Heston and Isleworth (Mr. R. Harris) trying to prove that competition in the retail trade was bound to lead to decay and to dilapidation. For the Conservative Party to come forward and suggest that as one of the results of competition, represents a revolution in their political thought. I am therefore surprised that 799 hon. Gentlemen opposite have not supported the line which was taken by my hon. Friends today. I am bound to be forced to the conclusion, particularly after reading the Amendment which some hon. Gentlemen opposite have put down, that the promises and pledges that they made in the election and their declared faith in competition and enterprise, are merely hollow and empty things.
§ Mr. Wilson
As soon as profit-making industry is affected, all that hon. Gentlemen opposite have said about protecting the consumer, their great posters about fighting the rising cost of living, as well as their great faith in competition and enterprise, go by the board.
§ 3.5 p.m.
§ Sir Peter Bennett (Birmingham, Edgbaston)
I feel that it is necessary for me to make the usual disclaimer. I expect that some of my organisations are connected with one or other of the associations which have been referred to, and so I make that statement. Incidentally, it is quite unnecessary, because we deal with the problem ourselves and have dealt with it for a long time. I hope the House will pardon me, as it has always done, if I refer to my personal experience.
I have been through all this for a great many years. Long before I was connected with my present organisation it had to fight this battle, more than 50 years ago. Today we can stand on our own legs and deal with our own problems of price maintenance. Apparently we have been commended by the Lloyd Jacob Committee as being among the manufacturers who can deal with the matter themselves and do not need any help. Nevertheless, we try to help our weaker brethren, and therefore we are members of an association.
Some of my older friends on both sides of the House may remember the day when "The King of the Road" was a well-known trade name. It was a loss leader. My predecessors had to take action. It used to be a common thing in the early days of the cycle industry, before that industry was properly organised—as some of us think it is today in spite of what has been said—for London 800 stores to come out with advertisements such as this: "As advertised, 5s. 6d Our price, 4s. 9d." Hon. Members can imagine the effect which those advertisements had. Dealers all over the country appealed to my predecessors and said that the matter must be dealt with otherwise they could not go on. Many people were sending mail orders to London to get the goods that those dealers were carrying. Dealers were therefore avoiding such things as "The King of the Road," which was demanded. They were expected to keep all the lines which were slow sellers and slow movers, while the people in London were getting all the plums.
Therefore we had to work out a scheme for protecting our retailers and for maintaining the prices. Strange as it may seem to hon. Members opposite, the consumers approved of our doing so because they liked to know that they could get the same article, with the same name and the same quality, at any shop in the country, at the same price—[Interruption.]—like, as one of my hon. Friends has just said, the "Daily Herald," the "Daily Express" or a postage stamp. Having made that preliminary statement to show that I am a prejudiced party and that I hold certain views, I hope that the President of the Board of Trade will agree, while we can differ on these matters, that we hold our different views quite sincerely.
We believe that it is for the good of the consumer that certain arrangements should persist. The right hon. Gentleman said that he had been rather struck by the fact that the consumer had not been considered quite enough. He seemed to think that it was all on the other side. I too have noted that the consumer does not seem to have been considered very much. Both of us seem to have come to the same idea that in this little dogfight between different sections of retailing, the consumer is inclined to be pushed into the background.
The President of the Board of Trade said that he had made up his mind that the public should not suffer from retail price maintenance and that he had called industry together. He said he was rather surprised at what happened. I doubt whether he was quite as pained as he made out because he has had some time in office and is not as innocent as he tried to make out. Why should he 801 expect these people to come along in a white sheet and say that they have been very bad boys and that they are now prepared to do something different? Strangely enough, they are also quite sincere and they think that what they are doing is best for the consumer and is in the national interest. Why should they say that they will give up what they have been doing because the President of the Board of Trade has a Report—which is a little indefinite and not altogether helpful—and that they will drop all their bad habits and do exactly what he wants them to do?
The President of the Board of Trade pushed on one side as if of small importance the fact that there is competition between different brands. What he wants to do is to set retailers at each others' throats. I assure him that competition between different brands is most intense. Travellers are out selling their brands and they are not the slightest bit interested to know that the retailer is maintaining the price in selling someone else's article; they are out to persuade him not to have so much of that article but to have more of their own.
How could the President of the Board of Trade expect universal consent when he made his suggestion? I do not suppose that he was half as surprised as he made out when these people maintained that the system which they have built up as the result of trial and error over all these years is not so bad after all because it is giving the public what they think they want. The President of the Board of Trade and some hon. Gentlemen opposite appear to think that the public do not really know what they want, but the public seem to be sure that they want it. The manufacturers are quite unregenerate in wanting to continue to give the public what they think the public want.
§ Mr. H. Wilson
I did not express surprise that the retail price maintenance associations did not change their ways as a result of that statement; I recorded the fact. The surprise which I expressed was later on and it was because the Opposition were taking the view that they have done this afternoon after all the statements they made before and during the General Election.
§ Sir P. Bennett
I propose to stick to the facts as I see them. Let us leave 802 the electioneering until a few months time.
The President seems to have come down on the side of the self-service people. I am not saying anything against them, for I have seen them in America and they are excellent, and I have no doubt that they will develop here. When they do the problem will be tackled. I discussed this matter with a confectioner. He said that certain variations were allowed near the factory. These arrangements are not the laws of the Medes and Persians, and if it is left to industry and the consumers they work out measures to deal with different problems. The President has come down on the side of a few self-service shops—the big stores, the chain stores and the Co-ops. against the rest. Yet he claimed to be sympathetic to the small trader. We on this side of the House are very sympathetic to the small trader. We think the big people can look after themselves, and we are not prepared to fight their battles for them. On the question of branding, the President said he liked the idea, but he was rather vague on how to separate it from this wicked practice of price maintenance, which enables the people to buy the same brand at the same price all over the country.
I listened very attentively to the speech of the hon. Member for Hammersmith, South (Mr. W. T. Williams), who moved this Motion. The point that I was going to make on that speech has been made by others—the value of the organisation to prevent people from charging exorbitant prices. One of my hon. Friends has blown the trumpet of the motor industry, so I need not do it. What would have been said today if motor cars had been like houses and sold to the highest bidder, which would be the case if it were not for the organisations? People would be striking hard bargains and something which should sell for £500 would be going for £1,500. In fact, the price would be doubled, trebled or quadrupled. Everyone knows what happens as soon as a covenant on a new car expires, and that would be happening all the time if the industry itself had not taken action.
What would hon. Members opposite have said during the cigarette shortage if a trader had said, "Oh yes, I have Players but they are 5s. today for a large packet." If the intending purchaser had 803 refused to take them at that price he would have been told, "If you do not take them somebody else will." That kind of thing would have happened but for the price control fixed by the manufacturers. [HON. MEMBERS: "But it did happen."] The point I am trying to make is that prices stayed fixed because the trade organisations had said, "You cannot cut the price, and you cannot charge more."
What does the hon. Member for Hammersmith, South, suggest? He said that these organisations had been useful some time in the past, but that the value has gone today. The Lloyd Jacob Committee seemed to be in two minds about it. They said that a manufacturer could protect his own price, but they condemned the method by which he did it. That leaves me completely staggered. If a thing is bad it is bad, and I cannot see why it should be good if it is done by a trader himself and becomes evil if it is done by an organisation or association. I have no doubt the Committee had a difficult job in getting agreement, and that is one of the penalties.
What puzzled me about the hon. Member for Hammersmith, South, was that he suggested some form of Government branding. We have been talking about freeing labour from the distributive industries. If we are going to have the system suggested by hon. Members on the other side of the House, how can labour be freed? If there is to be a super-Government organisation to brand, inspect and settle the prices of products, labour is going to be increased and not reduced. Some of us had to work with Government inspectors during two world wars, and it was hard enough. Do not make such a system a natural and permanent part of our industry.
A great attack was made on advertising, and the adoption of American methods has been suggested. People have come to me and told me to advertise more, arguing that by so doing we could sell more. It is suggested we should look at the Americans, but the Americans are not allowed to have our system. Whether they are right in having the Sherman antitrust laws I do not know, but they have got them and they have to think out ways of handling them. One of the ways is advertising to an enormous extent, which costs an enormous amount of money. 804 They have no organisation of the kind that we have here. They have other, and very expensive, methods, and I am not at all sure that I do not prefer ours.
There has been a good deal of lip-service to the consumer interest and there has been talk about freedom, but I like freedom to be left to the purchaser as well as to the trader. I think that there should be freedom for the public to buy where it wants and that there should be freedom also for the shopkeeper to sell what he wants and without any dictation. There should be no compulsion on the manufacturer. He should be free to sell if he wants to do so. I do not see why there should be a compulsion which says. "You must make these goods and sell them to somebody at such and such a price." Many manufacturers take the attitude, which may seem strange to hon. Members opposite, "Do not buy our goods unless you want them. If you want our goods we are willing to supply them to you under the conditions that you sell them on the terms that we lay down. There is no compulsion; there are plenty of other goods if you do not like this, but if you buy our goods you buy them on our conditions."
The Co-operative movement has been mentioned. There is, and through the years there always has been—my hon. Friend the Member for Putney (Mr. Linstead) dealt with this—a clash between the Co-operative movement and the rest of the trade. The Co-operatives have tried to brand their own goods and they have found that the public preferred something else. Being good traders they said, "If we cannot sell our own goods, we will sell the other goods," but when the other man came along and said, "Of course, you sell them under my conditions," they said, "Oh, no, we only sell them under our conditions." That would immediately have put everybody else up in arms. Why should one set of shopkeepers be able to quote a lower price than another?
Whether it is right or wrong to have this fixed-price arrangement I am not arguing, but if there has been agreement we must face the fact that we cannot grumble at people saying: "If you sell our goods you must not have an indirect price cut because we have promised the other man it shall not happen." That is all that has happened.
805 I hope I have said sufficient to show that we do not consider there is anything immoral in the methods which have been adopted. I do not mean to say that there have not been mistakes and that some people have not taken advantage. There are bad boys in every organisation. I do not accuse hon. Members opposite of being leaders of a bad lot because there are unofficial strikes now and again. They have their bad boys to deal with as we have ours, and we are dealing with them and we will continue to do so.
In the Amendment we make the suggestion that these matters should go before the Monopolies Commission, but somebody has said that the Commission are already overloaded. We do not suggest that this matter should stand at the bottom of the queue. The Commission exists to investigate trade practices and monopolies. If it is not big enough, there could be a special set-up; in other directions, additional judges have been appointed and so on. But there is no need to start in yet another direction now. That is why we ask for something definite, so that these things may be examined and it may be seen what is good in them, because there is a great deal of good in them. If there is anything wrong, let the errors be dealt with. We are quite willing to put everything forward and to let the Monopolies Commission deal with it. We believe that that is in the interests of the consumer as well as of the manufacturer.
§ 3.25 p.m.
§ Mr. Crosland (Gloucestershire, South)
As far as this House is concerned, I do not represent the Co-operative movement or any trade association or merchanting interest. I speak solely as a consumer, with no professional interests. For two reasons I have been rather disappointed by the Debate; first, because of the statement of my right hon. Friend the President of the Board of Trade, which I had hoped would be a great deal stronger and much more specific. I am very sorry that after six years of Labour Government we should have had so little action against restrictive practices and monopolies in the private sector and I hoped this afternoon that we would have had a very much stronger and toughter statement from my right hon. Friend.
The second reason for my disappointment is that I thought the Debate would 806 be a great deal more non-party and would cut across the Floor of the House very much more than it has done. It has been almost entirely a Debate between the two sides of the House. To a certain extent it has shown a difference of opinion on this side of the House, but I am very surprised that, with one exception, there has not been more feeling on the other side of the House against resale price maintenance because—and I do not think this is an unfair debating point—it is surprising to anyone who has listened even to recent speeches from hon. Members opposite that we should have heard hardly a word against collective maintenance of resale prices.
Only yesterday I remember the right hon. Member for Aldershot (Mr. Lyttelton) becoming extremely eloquent on the laws of supply and demand and saying it was intolerable that the Government should seek to interfere with them and that what was wanted was that the Government should allow the free play of the laws of supply and demand. Two or three weeks ago there was a very eloquent statement by the Leader of the Opposition on the need to allow the higgling of the market. Again and again we have had suggestions that we should leave things to free market forces and be against restriction, control and intervention. It was very surprising, after all those speeches from the other side of the House, that we have had possibly one—I am not quite certain of that—at the most one, speech from the other side really saying anything effective against resale price maintenance at all.
The general case for it has been sufficiently paraded this afternoon and obviously at this stage it would be very undesirable to go into the whole argument again, but I would like to insist on one or two points against it as brought out in the Lloyd Jacob Committee's Report, because they have been rather left out and forgotten in the last two or three speeches to which we have listened.
I want to stick to general points. We spent about half the morning in a discussion of the virtues of "Aspro" rather than "aspirin," but I want to confine myself to the general points. I think I have the support of the hon. Member for Angus, North (Mr. Thornton-Kemsley), in saying that even apart from the Committee set up by the Government as an 807 official body, the case against resale price maintenance also has the support of practically every independent observer who has investigated the problem over the last three or four years. [HON. MEMBERS: "No."] I should say there is great unanimity once one gets outside trade circles. [HON. MEMBERS: "Where?"] Amongst people like Levy and Hall and various people who have investigated the matter.
§ Mr. S. Marshall
Has the hon. Member any evidence to quote from outside trade circles that there is a determined resistance against resale price maintenance?
§ Mr. Crosland
What I said was that almost all the independent investigations of the problem of retail trade and making a more efficient and low-cost trade had come to the opinion that maintenance of price levels collectively was a bad thing. I instanced Levy and Hall.
I want to go over again one or two points which have not been mentioned so much today. I think everyone agrees that the whole crux of this problem of resale price maintenance is that there are single uniform prices but not single uniform costs. The hon. Member for Angus, North, gave interesting illustrations of how much the cost of distributing any goods varied between different parts of the country and different types of organisations, and other obvious considerations. The crux of the matter is that we have no uniform cost of distribution but a uniform price.
If we have uniform prices and not uniform costs, there is a tendency—and I do not think there will be disagreement from hon. Members opposite—for a price to be fixed high enough to cover the costs of the least efficient distributor. That is bound to follow from any system of having a uniform price when there is not a uniform system of distribution. I do not see how one can get away from the fact that there is a fundamental conflict of interest here between resale price maintenance, which imposes a uniform price that is paid wherever one shops, and the interests of the consumer, which must surely be that the price should vary according to how high distributive costs are. There is that fundamental disagreement between price maintenance and the public interest.
§ Mr. Colegate
To apply the hon. Member's argument to the motor car industry, does the hon. Member really think that there is a uniform price for all motor cars or that the principal motor car manufacturers base their prices on the least efficient motor car manufacturer, which is in effect what the hon. Member is saying.
§ Mr. Colegate
I only wish to clear up the point. The hon. Member will agree that he did say that the price tended to be the price which would protect the least efficient producer. [HON. MEMBERS: "Distributor."] Does the hon. Member really think that the price of motor cars is settled by the manufacturers ascertaining what it must be to enable the least efficient distributor to carry on?
§ Mr. Crosland
Certainly. We have been told again and again from the other side of the House that every manufacturer wants the maximum number of retail outlets. There is nothing surprising in that; he naturally wants his market to be as wide as possible. If that is so, he presumably wants to charge a final resale price which will cover the costs of those distributors, including even those which have the highest costs. There is nothing else that he can do. If one wants to buy an Austin 10, it costs one the same if one walks 30 miles and takes it over at the factory, or buys it in the North of Scotland. [HON. MEMBERS: "No."] To take another example, if one buys a packet of 20 Players one pays exactly the same, however much the cost of distribution may vary.
§ Mr. Maudling
How does the hon. Member reconcile his argument with the statement in the Committee's Report that:On the whole the margins allowed on price maintained goods appear to be lower than those taken on free-price goods"?
§ Mr. Crosland
Does the hon. Member mind if I finish that quotation. It goes on to say:We do not attach any great significance to the fact—which the hon. Member has mentioned—… indeed we should have been disturbed had this not been the case, for such goods do not ordinarily require inter alia the same sales effort as unbranded goods.809 If I might resume the argument where I left it when I was first interrupted, I think it is agreed by the Committee that where there is a uniform price combined with different costs of distribution, the price will normally be fixed so as to cover the costs of the highest cost distributor, and therefore there will be other distributors who will be able to make a bigger profit on the sale of that commodity. It is from this that most of the evils, as we on this side of the House think they are of resale price maintenance follow.
The crux of the whole matter and much the most important consideration is that there cannot be any price competition, because the price is maintained, but there will certainly be other forms of competition which must take a non-price form. This is inevitable. If one starts with a fair margin of profit allowed to the bulk of distributors, since the price is fixed on the basis of the highest cost distributor, one is bound to find a high degree of competition which takes some form other than price. Thus we get the familiar effect, which cannot or should not be disputed, that a highly competitive industry which cannot compete in price must compete by offering new services, new types, new qualities, etc.
If that is in dispute, I would refer hon. Members to paragraph after paragraph in the Report of the Committee which shows evidence of the effect in industry without any price competition whatsoever. I have a list of a great number of paragraphs in this Report where the effects of this are described. For example, in paragraph 95 there is a very fair statement of the effects of resale price maintenance in preventing price competition; and in paragraph 160 there is an equally clear statement of what good effect price competition may have in industry if it were to take place. I have also a list of other paragraphs if hon. Members dispute the point I have been making.
Surely there cannot be any dispute on these two propositions and in general a prima facie case can be made in favour of price competition. Certainly there is a prima facie case so far as manufactured goods are concerned. Hon. Members opposite are perfectly happy and willing, so far as I know, to resist a monopoly when it occurs in manufacture. The hon. Member for Edgbaston (Sir P. Bennett) spoke with pride of the high degree of 810 competition between the different firms in the motor industry and the hon. Member for Heston and Isleworth (Mr. R. Harris) also spoke with pride of the degree of competition that existed among manufacturers. Surely if it is a good thing that there should be competition among manufacturers, including price competition, why should the distributive trades be different from the manufacturers? What is a good thing for one is surely not a bad thing for the other.
§ Mr. Frederic Harris (Croydon, North)
Will the hon. Member tell the House whether he believes it is in the interests of the workers to sell at a cut price?
§ Mr. Crosland
I have been saying for the last five minutes that it is in the public interest as a whole—and this is the view which I take—that there should be price competition. I will come back to that point in a moment. [Laughter.] All right, if hon. Members think there is something funny about it, I will go on with it now. I hope that at some time we shall have a perfectly clear statement as to whether hon. Members opposite believe that in general there should be price competition. They say they believe in price competition in manufacture; and I repeat what I have already said: what is so different between manufacture and the distributive trades, and why is what is good for one not good for the other? We have had no answer to that.
What we have had is a great number of statements from hon. Members on the subject of loss leaders, price slashing and price cutting in a very drastic manner. It has been pointed out that the reason we have resale price maintenance is that it is a perfectly natural and inevitable action against the losses and high degree of excessive price competition we had in the inter-war period and earlier. There is an argument here, and the hon. Member for Ogmore (Mr. Padley) made the same point. But in the new circumstances of today, are we still against price competition? Is not it a fact that the drastic and excessive degree of price slashing and price competition was the result of ex tremely depressed conditions? [HON. MEMBERS: "No."] I do not think that can be disputed—
§ Mr. Crosland
I do not think that can be disputed. As conditions got worse, and trade declined and depression grew, there was a greater tendency for price competition. I do not think I am making a very radical or surprising argument here. It eventually lead to restrictions of this kind and resale price maintenance in the distributive trades, and all kinds of rings in the manufacturing industries. But supposing we do not have that background of depression and of falling markets, supposing we get full employment and a prosperous economy, are we to go on with these restrictions in quite different circumstances? Is it true that if we have free price competition, we should have all this price slashing and so on? I do not believe for a moment that is true. If we have reasonable prosperity and full employment without depression, I can see no reason for thinking that competition will invariably cause cut-throat price slashing.
§ Mr. W. Robson-Brown (Esher)
I should like to ask about this period of full employment and satisfactory economic conditions to which the hon. Gentleman has referred. I do not suggest, but I understand from him, that he advocates in effect that any workman should be allowed now to sell his labour at any price he wishes under any conditions he wishes without restraint or control.
§ Mr. Crosland
The hon. Member is understanding me to make a perfectly simple remark which in fact I couched in the form of a question to the Opposition. Do they or do they not believe in price competition now that we have a general condition in industry where price competition will not lead to cutthroat price slashing? I should like an answer to that question as well.
§ Sir P. Bennett
As soon as an article becomes known as "cut price," the rest of the retailers lose confidence in it and refuse to stock it, and the manufacturer is in a difficulty. That has happened invariably in the past. Why the hon. Gentleman should imagine that it should not happen in his new generation, I do not know.
§ Mr. Crosland
I am afraid that the hon. Gentleman has missed my point. I 812 fully agree that if an enormous amount of price slashing of the old kind took place, there certainly would be harmful results to manufacturers, for the reason he put forward. My entire argument is that in the new circumstances, where there is no background of depression, it is inconceivable that if we restored price competition it would take the same cutthroat form as before.
§ Sir P. Bennett
I was not talking about a period of depression. I was talking about conditions which appertained during the cycle boom, when everything was booming. It was then that we had to introduce price maintenance—in conditions of boom.
§ Mr. Crosland
That may be so in the case of the cycle boom. If hon. Members would read the Appendix to the Lloyd Jacob Report, which gives the circumstances in which all these collective agreements were formed, they would find that nine out of 10 were formed with a background of depression and as a reaction against the sort of price-cutting which took place in a slump. The same applies also to restrictive monopolies in manufacturing as well as in retail distribution.
It is clear that if we restore price competition in circumstances of full employment, it would not be of that drastic cut-throat kind and, on the whole, I think that it would have most beneficent results. If that is not the case, and if hon. Members think that to restore price competition in the retail trade would lead it to the disastrous events of 20 or 25 years ago, which we have heard about today, why is there this difference between the retail trade—
§ Viscount Cranborne (Bournemouth, West)
Will the hon. Gentleman give one example? We have not had one example of a concrete nature, though we have had a lot of generalisation.
§ Mr. Crosland
I do not think that the hon. Member has been present during most of my speech. The point I am now making does not allow of an individual answer, because we have not got any single example of price competition in these trades. But if competition were restored in them, we would not get cutthroat prices. The thing which I want to know is this. If we would get cutthroat competition by restoring it to the 813 retail trades now, why have we not got this sort of competition in those manufacturing industries, which even today are competitive? There does not seem to be any answer to that whatsoever.
§ Mr. Charles Orr-Ewing (Hendon, North) rose—
§ Mr. Crosland
If the hon. Gentleman promises that his interruption will be the last from his side of the House I will give way.
There were two arguments which, I think, were used from that side of the House on the subject. One was that of resale price maintenance and loss-leaders, and so on. I have dealt with that. The second one was that resale price maintenance was a protection of the consumer against high prices. The hon. Member for Edgbaston used that, and he has gone out; and the hon. Member for Heston and Isleworth used that, and he has gone. I am sorry they are not here, because it seems to me that to say that was most disingenuous—to say that the primary object of resale price maintenance was to protect the consumer against high prices. [HON. MEMBERS: "Why?"] For the reason that until 1945, in peacetime years, the resale price maintenance schemes as a whole were never needed to protect consumers against the inflation of consumer goods prices.
It is quite true, as was said, that in the last four or five years we have had price maintenance of some sort, and that but for it prices would have gone up. We have had the case quoted of motor cars. We have had the case of cigarettes quoted. But from 1920, not until 1945—I am afraid I cannot hear what the hon. Member for Oxford (Mr. Hogg) is saying.
§ Mr. Crosland
The hon. Member, if I may say so, is making a rather unfair debating point. [HON. MEMBERS: 814 "Why?"] Because he is claiming credit merely for being older than I; but I may add that the answer that I was going to make is that most of these price maintenance schemes were started only since 1920. [HON. MEMBERS: "No."]
However, the other point, as I was saying, used from the other side of the House was, that if we did not have resale price maintenance the prices of goods would soar in the shops, so that resale price maintenance really does give protection for the consumer. That was the point the hon. Member for Heston and Isleworth used. It is a nonsense point. It must be a nonsense point. The reason why we have prevented the prices of things going up in the last few years is that they have been Government price controlled. It is not because of resale price maintenance.
For an hon. Member to come along and pretend that the main reason why we have not been exploited in the shops in the last few years has been price maintenance shows a degree of naïveté or the opposite which is really fantastic—to say that because we have had resale price maintenance prices have not gone up, when, in fact, they have not gone up because of price control. Those were the two arguments which were used, for the most part, on the other side of the House. As I say, I do not want to parade the arguments on this side very much.
I should like to end by saying a word about what is the right procedure now. A number of hon. Members have referred to what the United States have done about resale price maintenance and monopoly generally. There is, I think, an important lesson to be learned from the United States. It is perfectly true, as was mentioned by one hon. Member, that resale price maintenance is legal in America. It is quite true also that although resale price maintenance is legal it is very much ignored in the United States, with the result that a far smaller proportion of consumer goods is effectively price maintained there than is so maintained in this country. That was also mentioned by an hon. Member on the other side of the House. But he drew no conclusion from it.
It seems to me inconceivable that there is no relation between this fact, that far fewer goods are price maintained in America than in this country, and the 815 fact that the Americans are far more efficient than we are in this country in their methods of retail distribution.
The particular example constantly quoted today has been that of the so-called self-service shops—what the Americans call the "super markets." In conditions of our sort, while we have price maintenance, it is not possible nor profitable for anybody to set up a new form of retail distribution. That seems to me decisive. In fact, the hon. Member for Sevenoaks (Mr. Rodgers), who moved the Amendment, said that he believed in competition, though he did not say any more about it after that; and he went on to say that resale price maintenance stood in the way of the development of new distributive techniques, such as that of the self-service shops.
I ventured to get up and say "If you believe in the development of these new self-service techniques, if you believe," as he said he did, "that the lower prices which result from them should be passed on to the consumer, how can you believe in resale price maintenance?" He said—I am not blaming him; he probably forgot—that he would deal with it later in his speech, but he unfortunately did not have time to do so. Nevertheless, I think the point wants to be repeated. If we are to develop these new methods of distribution, such as self-service shops, if these new methods do involve far lower costs, and if the lower price should be passed on to the consumer, how can it conceivably be passed on if we have resale price maintenance? This seems to me one of the crucial disputes today.
Everybody says they believe in lower distributive costs; everybody says that distributive costs have increased, are increasing, and ought to be diminished. We have here a perfectly good method of reducing distributive costs by the development of these new techniques, these new methods of distribution, and we are stopped from doing it—or we are stopped from going on with it because the lower prices could not be passed on to the consumer while we have resale price maintenance.
In other words, we are in what seems to me an absurd situation. The consumer may not want lower prices; it may be that he wants the greater service plus the higher prices that he has got today, 816 but the absurdity is that he cannot choose. We do not allow the consumer any choice between, on the one hand, shopping in, say, a self-service shop with low prices, and on the other hand going to a quite different kind of shop with cafeteria, red carpets, and everything else. He cannot choose between those two because he is not offered the opportunity of going to a low price self-service shop. The reason he is not offered that opportunity is that it does not pay anybody to set up such a shop because they cannot pass the price on to the consumer.
§ Mr. Nabarro rose—
§ Mr. Crosland
I cannot give way at this late stage. The fact that there is this development of new distributive techniques in the United States, the fact that there is this development of self-service shops and the like with lower costs which are passed on to the consumer, obviously has something to do with the fact that there is not in the United States resale price maintenance on anything like the scale that we have it in this country. As hon. Members opposite quote to us on this side, as they frequently do, the practice and theory of the United States administration, it is worth bearing in mind that the Millard-Tydings Act in America, which effectively legalised price maintenance, at any rate in inter-State commerce, was passed over a Presidential veto, and was passed against the advice of the Federal Trade Commission, and that in the last few years both the Federal Trade Commission and the temporary National Economic Committee—both public or semi-public bodies—have come out advocating that price maintenance should be illegalised.
I should like to go on to finish with the question of what we should do now. There are, so far as I can see, three possibilities for future action. The first one was suggested by the hon. Member for Edgbaston, when he in effect said "Do nothing." He said, "You have got the Monopolies Commission; you have got two or three industries now being examined by the Monopolies Commission. Don't start anything new; don't start anything radical; don't disturb things. Leave it all to the Monopolies Commission and you will probably be perfectly all right." That really is just an argument for doing nothing at all. Although one could 817 not discuss it this afternoon, I personally object very strongly to the Monopolies Commission and all its practices; because I think it does nothing effective whatever. It will obviously take so long over every report, and will cover such a tiny subsection of industry, that we shall get nowhere at all with the Monopolies Commission. It is useless, so the suggestion to pass the thing over to the Monopolies Commission is merely, in fact, a recipe for doing nothing.
The second thing we could do is to accept as they stand the conclusions of the Lloyd Jacob Report and legislate on the basis of those conclusions as they stand. Now a number of hon. Members on both sides have pointed out that there is a serious illogicality in the conclusions of the Lloyd Jacob Report, and I personally think that they are right. Although I think the Report is a great advance and very much welcome it, there is this serious illogicality in it, that they spend about 30 or 40 pages saying that resale price maintenance—[Interruption.] There is still five minutes to go, and hon. Members must contain themselves a little longer.
There is a serious illogicality in the Report of the Lloyd Jacob Committee when they spend 20 or 30 pages in saying that retail price maintenance is thoroughly bad, and, at the end, say that they do not mind about it if the individual manufacturer is allowed to enforce it; they only mind about it if the trade association is allowed to enforce it. That is rather illogical. Either price maintenance is a good thing or it is a bad thing.
It seems to me that the truth of the matter is that retail price maintenance as operated in the past is a bad thing, and if it is a bad thing, then it is bad however enforced, and it is illogical in the conclusions of the Committee that they should say that it is only bad when collectively enforced and not bad when individually enforced. If individual enforcement is going to be effected, we shall be no better off than before. Nothing will change except that we shall not have collective trade association enforcement.
The more sensible attitude to take is that price maintenance has led to bad economic results, and we should get rid of it, whether collectively or individually enforced. We should make—to use a favourite current phrase—an experiment 818 in freedom. I should have thought that we would have bad plenty of support from hon. Members opposite for that. We have a great section of British industry being restricted, governed and policed by a series of restrictive agreements of one kind and another; why not free distributive trades as an experiment?
If hon. Members opposite are right, then within six months of our attempting to restore price competition we shall have loss leaders, price-slashing and cut-throat competition, and more legislation would be needed to safeguard the distributive trades. If we have a prosperous market and full employment and not a background of depression, and the effect of that is to make price competition a healthy and not a cut-throat action, we shall find ourselves in a better position with free distributive trades than with the present system of restrictions and controls.
In conclusion may I ask hon. Members to forgive the fact that I have been able to make only a brief intervention. I have not had time to develop in detail many points which I should have liked to have developed. I end by saying that we have a completely different economic situation from the one which existed in the interwar period: first, because we have full employment—and I grant hon. Members opposite this, that we are likely to have at any rate a higher level of employment than pre-war whichever party is in power—
§ Sir H. Williams (Croydon, East) rose—
§ Mr. Daines rose in his place and claimed to move, "That the Question be now put," but Mr. SPEAKER withheld his assent and declined then to put that Question.
§ 3.59 p.m.
§ Sir H. Williams
I understand that the hon. Member for Gloucestershire, South (Mr. Crosland), who has taken 40 minutes to say nothing, in his spare time teaches economics at Oxford, and therefore I am glad to say that my son is going to read at Cambridge. In 1929, I had some responsibility in this matter, and I received a deputation from the Cooperative societies at the Board of Trade to examine this problem, and we turned it down. Six months later, a deputation was received at the Board of Trade by my Socialist successor, who also turned 819 down the Co-operative societies. The hon. Gentleman who has just been speaking is not very clear about things that happened in 1921.
§ It being Four o'Clock, Mr. SPEAKER proceeded to interrupt the Business.820
§ Mr. Daines rose in his place and claimed to move, "That the Question be now put."
§ Question put. "That the Question be now put."
§ The House divided: Ayes, 140; Noes. 126.821
|DIVISION No. 28.||AYES||[4.0 p.m.|
|Allen, A. C. (Bosworth)||Hate, J. (Rochdale)||Paton, J|
|Attlee, Rt. Hon. C. R||Hale, Leslie (Oldham, W.)||Peart, T. F.|
|Awbery, S. S.||Hall, J. (Gateshead, W.)||Popplewell, E|
|Ayles, W. H.||Hamilton, W. W.||Proctor, W T|
|Bacon, Miss A||Hannan, W||Rankin, J|
|Balfour, A.||Hargreaves, A.||Reeves, J.|
|Barnes, Rt. Hon. A. J||Hastings, Dr. Somerville||Reid, T (Swindon)|
|Bartley, P.||Hayman, F. H||Reid, W (Camlachie)|
|Bing, G. H. C.||Herbison, Miss M||Rhodes, H.|
|Blenkinsop, A.||Hewitson, Capt. M||Robens, A.|
|Blyton, W. R.||Holman, P.||Robertson, J. J. (Berwick)|
|Bottomley, A. G||Hudson, J. H. (Eallng, N.)||Robinson, Kenneth (St. Pancras, N.)|
|Bowden, H. W||Hughes, Moelwyn (Islington, N.)||Ross, William (Kilmarnock)|
|Bowles, F. G. (Nuneaton)||Hynd, H. (Accrington)||Royle, C.|
|Brockway, A. Fenner||Hynd, J. B. (Attercliffe)||Shackleton, E. A. A.|
|Broughton, Dr. A. D. D.||Irvine, A J. (Edge Hill)||Shinwell Rt. Hon. E.|
|Burke, W. A.||Irving, W. J. (Wood Green)||Silverman, J. (Erdington)|
|Castle, Mrs. B. A||Isaacs, Rt. Hon. G. A||Silverman, S. S. (Nelson)|
|Champion, A. J||Jay, D. P. T||Slater, J.|
|Clunie, J.||Jenkins, R. H.||Smith, Ellis (Stoke, S.)|
|Collindridge, F.||Johnson, James (Rugby)||Sorensen, R. W.|
|Cooper, J. (Deptford)||Jones, D. T. (Hartlepool)||Soskice, Rt. Hon. Sir. F.|
|Cove, W. G.||Jones, Jack (Rotherham)||Sparks, J. A.|
|Crosland, C. A. R.||King, H. M.||Stewart, Michael (Fulham, E.)|
|Crossman, R. H. S||Kirkwood, Rt. Hon. D.||Strauss, Rt. Hon G R (Vauxhall)|
|Dalton, Rt. Hon. H.||Lindgren, G. S.||Stross, Dr. B|
|Davies, Ernest (Enfield, E.)||Lipton, Lt.-Col. M.||Taylor, R. J. (Morpeth)|
|Deer, G.||Longden, F. (Small Heath)||Thurtle, Ernest|
|Delargy, H. J.||McAllister, G.||Tomlinson, Rt. Hon|
|Dodds, N. N.||MacColl, J. E||Tomney, F.|
|Donnelly, D.||McGhee, H. G.||Turner-Samuels, M|
|Driberg, T. E. N.||Mack, J. D.||Vernon, Maj. W F|
|Dugdale, Rt. Hon. J. (W. Bromwich)||McKay. J. (Wallsend)||Viant, S. P.|
|Ede, Rt. Hon. J. C.||McLeavy, F.||Wallace, H. W|
|Edwards, W. J. (Stepney)||Marquand, Rt. Hon. H. A||Webb, Rt. Hon M (Bradford. C.)|
|Evans, Albert (Islington, S. W.)||Messer, F.||Weitzman, D|
|Ewart, R.||Middleton, Mrs. L||Wells, P. L (Faversham)|
|Field, Capt. W. J.||Mikardo, Ian||White, Mrs. E. (E. Flint)|
|Fletcher, E. G. M. (Islington, E.)||Moeran, E. W||Willey, F. T (Sunderland)|
|Follick, M.||Morgan, Dr. H. B||Williams, D. J. (Neath)|
|Foot, M. M.||Morley, R.||Williams, Ronald (Wigan)|
|Freeman, J. (Watford)||Nally, W.||Williams, W. T. (Hammersmith, S.)|
|Ganley, Mrs. C. S.||Noel-Baker, Rt. Hon. P J||Wilson, Rt. Hon. J H. (Huyton)|
|Glanville, J. E. (Consett)||Oliver, G. H||Woods, Rev G. S|
|Greenwood, A. W. J. (Rossendale)||Orbach, M.||Wyatt. W L|
|Greenwood, Rt. Hn. Arthur (Wakefield)||Padley, W. E|
|Grenfell, D. R.||Pannell, T C.||TELLERS FOR THE AYES:|
|Griffiths, Rt. Hon. J. (Llanetly)||Pargiter, G A||Mr. Daines and Mr. Coldrick.|
|Alport, C. J. M.||Burden, Squadron-Leader F. A.||Fraser, Sir I. (Lonsdale)|
|Amery, J. (Preston, N.)||Clarke, Col. R. S. (East Grinstead)||Fyfe, Rt. Hon. Sir D. P. M.|
|Arbuthnot, John||Colegate, A.||Galbraith, Cmdr T D. (Pollok)|
|Assheton, Rt. Hon. R. (Blackburn, W)||Cooper, A. E. (Ilford, S.)||Galbraith, T. G D (Hillhead)|
|Baldock, J. M.||Cooper-Key, E. M||Gates, Maj. E. E|
|Baxter, A. B.||Craddock, G. B. (Spelthorne)||Harris, F. W. (Croydon, N.)|
|Beamish, Maj. T. V. H||Cranborne, Viscount||Harris, R. R. (Heston)|
|Bell, R. M.||Cross, Rt. Hon. Sir R.||Harvey, I. (Harrow, E.)|
|Bennett, Sir P. (Edgbaston)||Crosthwaite-Eyre, Col. O. E||Hay, John|
|Bennett, R. F. B. (Gosport)||Crouch, R. F.||Heald, L. F|
|Bishop, F. P||Crowder, F. P. (Ruislip-Northwood)||Heath, Col. E. R|
|Black, C. W||Crowder, Capt. John F. E. (Finchley)||Hicks-Beach, Maj. W. W|
|Bower, N.||Darling, Sir W. Y (Edinburgh, S.)||Hill, Mrs. E. (Wythenshawe)|
|Boyd-Carpenter, J. A.||Deedss, W. F.||Hill, Dr. C. (Luton)|
|Braine, B.||Douglas-Hamilton, Lord M||Hogg, Hon. Q.|
|Brooke, H. (Hampstead)||Drayson, G. B||Holmes, Sir J. Stanley (Harwich)|
|Browne, J. N. (Govan)||Erroll, F. J||Hornsby-Smith, Miss P.|
|Buchan-Hepburn, P. G T.||Fisher, Nigel||Howard, S. G. (Cambridgeshire)|
|Bullus, Wing-Commander E. E.||Fort, R.||Hudson, Sir Austin (Lewisham, N)|
|Hutchinson, Geoffrey (Ilford, N.)||Manningham-Buller, R. E||Russell, R. S.|
|Hylton-Foster, H. B||Marlowe, A. A. H.||Sandys, Rt. Hon. D.|
|Jeffreys, General Sir G.||Marshall, S. H (Sutton)||Smith, E. Martin (Grantham)|
|Johnson, Howard S. (Kemptown)||Maude, A. E. U. (Ealing, S.)||Smithers, Peter H. B. (Winchester)|
|Keeling, E. H.||Maudling, R.||Spans, Sir P. (Kensington. S.)|
|Kingsmill, Lt.-Col. W. H.||Medlicott, Brigadier F||Strauss, Henry (Norwich, S.)|
|Leather, E. H. C.||Mellor, Sir J.||Studholme, H. G.|
|Legge-Bourke, Maj. E. A. H.||Moore, Lt.-Col. Sir T.||Summers, G. S.|
|Lennox-Boyd, A. T.||Morrison, Rt. Hon. W. S. (Cirencester)||Sutcliffe, H.|
|Lloyd, Maj. Guy (Renfrew, E.)||Nabarro, G.||Taylor, C. S. (Eastbourne)|
|Lloyd, Selwyn (Wirral)||Nichells, H.||Thompson, K. P. (Walton)|
|Longden, G. J. M. (Herts, S. W.)||Nield, B. (Chester)||Tilnay, John|
|Lucas, P. B. (Brentford)||Oakshott, H. D||Vosper, D. F|
|Lueas-Tooth, Sir H.||Orr-Ewing, Charles Ian (Hendon, N.)||Walker-Smith, D. C.|
|McAdden, S. J.||Prescott, Stanley||Ward, Miss I. (Tynemouth)|
|McCorquodale, Rt. Hon. M. S||Price, H. A. (Lewisham, W.)||Watt, Sir G. S. Harvie|
|Macdonald, A. J. F. (Roxburgh)||Redmayne, M.||Wheatley, Major M. J. (Poole)|
|Macdonald, Sir P. (I. of Wight)||Remnant, Hon. P.||Williams, C. (Torquay)|
|Mackeson, Brig. H. R||Roberts, P. G. (Hesley)||Williams, Gerald (Tonbridge)|
|McKibbin, A.||Robinson, J. Roland (Blackpool, S.)||Williams, Sir H. G. (Croydon, E)|
|Maclay, Hon. J. S.||Robson-Brown, W. (Esher)||Young, Sir A. S. L.|
|MacLeod, Iain (Enfield, w.)||Rodgers, J. (Sevenoaks)||TELLERS FOR THE NOES:|
|Macmillan, Rt. Hon. Harold (Bromley)||Roper, Sir H.||Mr. Linstead and|
|Macpherson, N. (Dumfries)||Ross, Sir R. D. (Londonderry)||Mr. Thornton-Kemsley.|
§ Question put accordingly, "That the words proposed to be left out stand part of the Question."822
§ The House divided: Ayes, 142: Noes, 124.823
|Division No. 29.]||AYES||[4.11 p.m.|
|Allen, A. C. (Bosworth)||Griffiths, Rt. Hon. J. (Llanelly)||Paton, J|
|Attlee, Rt. Hon. C. R||Hale, J. (Rochdale)||Peart, T. F.|
|Ayles, W. H.||Hale, Leslie (Oldham, W.)||Popplewell, E.|
|Bacon, Miss A||Hall, J. (Gateshead, W.)||Proctor, W. T|
|Balfour, A.||Hamilton, W. W.||Rankin, J.|
|Barnes, Rt. Hon A J||Hannan, W||Reeves, J.|
|Bartley, P.||Hargreaves, A.||Reid, T. (Swindon)|
|Bin, G. H. C.||Hastings, Dr. Somerville||Reid, W. (Camlachie)|
|Blenkinsop, A.||Hayman, F. H.||Rhodes, H|
|Blyton, W. R.||Herbison, Miss M.||Robens, A.|
|Boardman, H.||Hewitson, Capt. M.||Robertson, J. J. (Berwick)|
|Bottomley, A. G||Holman, P.||Robinson, Kenneth (St. Pancras, N)|
|Bowden, H. W.||Hudson, J. H. (Eating, N.)||Ross, William (Kilmarnock)|
|Bowles, F. G. (Nuneaton)||Hughes, Moelwyn (Islington, N)||Royle, C.|
|Brockway, A. Fenner||Hynd, H. (Accrington)||Shackleton, E. A. A|
|Broughton, Dr. A. D. D||Hynd, J. B. (Attercliffe)||Shinwell, Rt. Hon. E.|
|Burke, W. A.||Irvine, A. J. (Edge Hill)||Silverman, J. (Erdington)|
|Castle, Mrs. B. A.||Irving, W. J. (Wood Green)||Silverman, S. S. (Nelson)|
|Champion, A. J.||Isaacs, Rt. Hon. G. A.||Slater, J.|
|Clunie, J.||Jay, D. P. T.||Smith, Ellis (Stoke, S.)|
|Collindridge, F.||Jenkins, R. H.||Sorensen, R. W.|
|Johnson, James (Rugby)||Soskice, Rt. Hon. Sir F.|
|Cooper, G. (Middlesbrough, W.)||Jones, D. T. (Hartlepool)||Sparks, J. A.|
|Cooper, J. (Deptford)||Jones, Jack (Rotherham)||Stewart, Michael (Fulham, E.)|
|Cove, W. G.||King, H. M.||Strauss, Rt. Hon. G. R. (Vauxhall)|
|Crosland, C. A. R||Kirkwood, Rt. Hon. D||Stross, Dr. B.|
|Crossman, R. H. S.||Lindgren, G. S.||Taylor, R. J. (Morpeth)|
|Dalton, Rt. Hon. H.||Lipton, Lt.-Col. M,||Thurtle, Ernest|
|Davies, Ernest (Enfield, E.)||Longden, F. (Small Heath)||Tomlinson, Rt. Hon. G|
|Deer, G.||McAllister, G.||Tomney, F.|
|Delargy, H. J.||MacColl, J. E.||Turner-Samuels, M|
|Dodds, N. N.||McGhee, H. G||Vernon, Maj. W F|
|Donnelly, D.||Mack, J. D||Viant, S. P.|
|Driberg, T. E. N||McKay, J (Wallsend)||Wallace, H. W.|
|Dugdale, Rt. Hon. J. (W Bromwich)||McLeavy, F||Webb, Rt. Hon M. (Bradford. C.)|
|Ede, Rt. Hon. J. C.||Marquand, Rt. Hon H A||Weitzman, D.|
|Edwards, W. J. (Stepney)||Messer, F||Wells, P. L. (Faversham)|
|Evans, Albert (Islington, S. W.)||Middleton, Mrs. L.||White, Mrs. E. (E. Flint)|
|Ewart, R.||Mikardo, Ian||Willey, F. T (Sunderland)|
|Field, Capt. W. J.||Moeran, E. W||Williams, D. J. (Neath)|
|Fletcher, E. G. M. (Islington, E.)||Morgan, Dr. H. B||Williams, Ronald (Wigan)|
|Follick, M.||Morley, R||Williams, W. T. (Hammersmith, S.)|
|Foot, M. M.||Nally, W.||Wilson, Rt. Hon. J. H. (Huyton)|
|Freeman, J. (Watford)||Noel-Baker, Rt. Hon. P. J||Woods, Rev G. S.|
|Ganley, Mrs. C. S.||Oliver, G. H||Wyatt, W. L.|
|Glanville, J. E. (Consett)||Orbach, M|
|Greenwood, A. W. J. (Rossendale)||Padley, W. E||TELLERS FOR THE AYES:|
|Greenwood, Rt. Hn. Arthur (Wakefield)||Pannell, T. C.||Mr. Daines and Mr. Coldrick.|
|Grenfell, D. R.||Pargiter, G. A|
|Alport, C. J. M||Harris, R R. (Heston)||Medlicott, Brigadier F.|
|Amery, J, (Preston, N)||Harvey, I. (Harrow, E.)||Mellor, Sir J.|
|Arbuthnot, John||Hay, John||Moore, Lt.-Col. Sir T.|
|Assheton, Rt. Hon. R. (Blackburn, W.)||Heald, L. F.||Morrison, Rt Hon W S (Cirencester)|
|Baldock, J. M||Heath, Col. E. R.||Nabarro, G,|
|Baxter, A. B||Hicks-Beach, Maj. W. W||Nicholls, H|
|Beamish, Maj. T. V H||Hill, Mrs. E (Wythenshawe)||Nield, B. (Chester)|
|Bell, R. M.||Hill, Dr. C. (Luton)||Oakshott, H D|
|Bennett, Sir P. (Edgbaston)||Hogg, Hon. Q.||Orr-Ewing, Charles Ian (Hendon, N.)|
|Bennett, R. F B (Gosport)||Holmes, Sir J Stanley (Harwich)||Price, H. A (Lewisham, W.)|
|Bishop, F. P||Hornsby-Smith, Miss P.||Redmayne, M.|
|Black, C. W||Howard, S. G. (Cambridgeshire)||Remnant, Hon. P.|
|Bower, N.||Hudson, Sir Austin (Lewisham, N.)||Roberts, P. G. (Heeley)|
|Boyd-Carpenter, J. A||Hutchinson, Geoffrey (Ilford, N.)||Robinson, J. Roland (Blackpool, S.)|
|Braine, B.||Hylton-Foster, H. B.||Robson-Brown, W. (Esher)|
|Brooke, H. (Hampstead)||Jeffreys, General Sir G||Roper, Sir H.|
|Browne, J. N. (Govan)||Johnson, Howard S (Kemptown)||Ross, Sir R. D (Londonderry)|
|Buchan-Hepburn, P. G. T.||Keeling, E. H.||Russell, R. S|
|Bullus, Wing-commander E. E||Kingsmill, Lt.-Col. W. H||Sandys, Rt. Hon. D|
|Burden, Squadron-Leader F. A||Leather, E. H. C.||Smith, E. Martin (Grantham)|
|Colegate, A||Legge-Bourke, Maj. E. A. H||Smithers, Peter H. B. (Winchester)|
|Cooper, A E. (Ilford, S.)||Lennox-Boyd, A. T||Spens, Sir P. (Kensington, S.)|
|Cooper-Key, E. M||Linstead, H. N.||Strauss, Henry (Norwich, S.)|
|Craddock, G. B (Spelthorne)||Lloyd, Maj. Guy (Renfrew. E.)||Studholme, H. G|
|Cranborne, Viscount||Lloyd, Selwyn (Wirral)||Summers, G. S|
|Cross, Rt Hon Sir R.||Longden, G. J. M. (Herts, S. W)||Sutcliffe, H|
|Crosthwaite-Eyre, Col O E||Lucas, P B. (Brentford)||Taylor, C. S. (Eastbourne)|
|Crouch, R. F||Lucas-Tooth, Sir H||Thompson, K. P. (Walton)|
|Crowder, F. P (Ruislip-Northwood)||McAdden, S. J||Thornton-Kemsley. C N|
|Crowder, Capt. John F. E. (Finchley)||McCorquodale, Rt. Hon. M S.||Tilney, John|
|Darling, Sir W. Y (Edinburgh. S.)||Macdonald, A. J. F. (Roxburgh)||Vesper, D F|
|Douglas-Hamilton, Lord M||Macdonald, Sir P. (I of Wight)||Walker-Smith, D. C.|
|Drayson, G. B||Mackeson, Brig. H R.||Ward, Miss I. (Tynemouth)|
|Erroll, F. J||McKibbin, A||Watt, Sir G. S. Harvie|
|Fisher, Nigel||Maclay, Hon J S.||Wheatley, Major M. J. (Poole)|
|Fort, R.||MacLeod, Iain (Enfield, W)||Williams, C. (Torquay)|
|Fraser, Sir I. (Lonsdale)||Macmillan, Rt. Hon Harold (Bromley)||Williams, Gerald (Tonbridge)|
|Fyfe, Rt. Hon. Sir D. P. M||Macpherson, N. (Dumfries)||Williams, Sir H. G. (Croydon, E)|
|Galbraith, Cmdr T. D. (Pollok)||Marlowe, A. A. H.||Young, Sir A. S. L|
|Galbraith, T. G. D (Hillhead)||Marshall, S. H. (Sutton)|
|Gates, Maj. E. E.||Maude, A. E. U (Ealing, S.)||TELLERS FOR THE NOES:|
|Harris. F W (Croydon, N.)||Maudling, R||Mr. Rodgers and Mr. Deedes.|
Question put, and agreed to.
§ Mr. Speaker
Order! I understand that the hon. Member is claiming the main Question. Perhaps I should explain to hon. Members, as this has not often happened before, that having given the Closure, that governs all the proceedings and the Closure has not to be moved again. Therefore, I am bound to put the questions, if claimed, until all the proceedings which are being discussed this afternoon are over. Therefore, I must now put the Motion to the House.
That this House welcomes the Report of the Committee on Resale Price Maintenance and the subsequent statements of the President of the Board of Trade thereon, and in order that the public may reap its benefits urges His Majesty's Government to take all action open to them to deal with the problem.