§ 5.28 p.m.
§ Order of the Day for the Second Reading read.
§ THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL)
My Lords, in asking for a Second Reading for this Bill, we are passing from what might be regarded as pure politics to trade. That is quite a change. There is, I think, general agreement with the principles of the Bill, and I feel sure that your Lordships will agree that its introduction is overdue. The purpose of the Bill, in brief, is to enable the Government to have inquiries made into restrictive practices and monopolies in particular trades or industries and to provide for appropriate measures to be taken after investigation. Many highly industrialised countries have discovered that private enterprise does not necessarily mean free competition, and they have taken steps to give to their central Governments some power in relation to this matter. North America, in particular, has taken the matter seriously for some time, and Europe is now following suit. In 1890, the United States passed the Sherman Act which declares illegal any combinations operating in inter-State trade which seek to restrain or monopolise trade. In 1923, Canada passed a Combines Investigation Act under which a Commission has power to investigate restrictive practices, and on the basis of their report the Minister of Justice may take action in the courts. In 1946, Sweden introduced a law setting up a monopoly tribunal with compulsory powers of inquiry. More recently Belgium has introduced a Bill and Norway already has such legislation.
In this country, serious consideration of the problem of restrictive practices first engaged the Government's attention in recent times when under the Profiteering Act of 1919 a Standing Committee on Trusts was set up to obtain information regarding the nature, extent and development of trusts. There were no sanctions. 340 The Committee produced some twenty-five Reports, but it came to an end in 1921 when the Profiteering Act lapsed. Subsequently, a Committee on Industry and Trade reported in 1929 that there was no urgent case for legislation for restraining abuses arising from combinations, and from then until 1944 nothing was done. In 1944, much thought was given by the Coalition Government to inquiring into the desirability of legislation in regard to restrictive practices; and the White Paper on Employment Policy, which they issued in 1944, had this to say on restrictive business practices. Here I quote:Employers, too, must seek in larger output rather than higher prices the reward of enterprise and good management. There has in recent years been a growing tendency towards combines and towards agreements, both national and international, by which manufacturers have sought to control prices and output, to divide markets and to fix conditions of sale. Such agreements or combines do not necessarily operate against the public interest; but the power to do so is there. The Government will therefore seek power to inform themselves of the extent and effect of restrictive agreements, and of the activities of combines; and to take appropriate action to check practices which may bring advantages to sectional producing interests but work to the detriment of the country as a whole.The present Government has continued the consideration of this problem and in the Economic Survey issued in February of last year it asserted that there was no place for industrial arrangements which restrict production, prices or employment. Later in 1947, the Industrial Charter of the Conservative Party contained this paragraph:The first necessity, we believe, is to bring the facts out into the light. We accordingly propose that if, in the opinion of the President of the Board of Trade, there is a prima facie case for investigation into allegations of monopolies or restrictive practices, he should refer them to a statutory commission for inquiry. The definition of restrictive practices would include oral as well as written arrangements but would exclude wages and conditions of work. The Commission would have the right to report whether the allegations were true and whether the practice was against the public interest.Thus since 1944 it is seen that there has been the clear intention of all Parties to introduce legislation to deal with this question. For various reasons legislation has been delayed, but certain inquiries have been set on foot in the meantime. These inquiries have covered the field of radio valves, cotton textile machinery, 341 cement costs and building materials. They have strongly reinforced the case for a permanent investigating body, and the introduction of the present Bill has naturally followed.
The Bill is in a form which I am sure your Lordships will agree is well suited to our national outlook. It does not set about its business by condemning any general restrictive practices out of hand, but it provides for the appointment of a permanent Commission to investigate particular cases. The Board of Trade will not refer to it some general restrictive practice like retail price maintenance, or the prohibition of new entrants, or loyalty rebates, but will refer to it the case of a particular class of goods where it is thought that a restrictive practice is in operation. The constitution of the Commission and the choice of its members are obviously matters of first-rate importance. The success of an investigating body of this kind must depend on the type and quality of its membership and staff. Clause I proposes that the constitution of the Commission shall be not less than four and not more than ten members. This number was agreed on discussion in another place, and my right honourable friend then said that, in view of the load which the Commission will probably have to carry in its early stages, he proposes to appoint six members to the Commission, including the Chairman. The actual composition of the Commission has yet to be settled, but clearly professional men with an objective outlook on these questions are best qualified for membership.
Reference to the Commission will be made only by the Board of Trade. In this way, the Commission will not be overloaded by miscellaneous grievances and His Majesty's Government will be responsible for the order in which matters are referred to them. Normally the Commission will operate on formal references referred to them for investigation, but it is also specifically provided by subsection (2) of Clause 2 that the Commission shall have the duty of advising on matters referred to them informally. Clauses 3 to 5 settle the type of case which can be referred to the Commission. They deal with the supply of goods, processing of goods and their export. Briefly, the position is that, if a dominant firm or groups of firms covering more than one-third of any industry or trade are restricting 342 competition, they are liable to be the subject of reference to the Commission for investigation and report. In the case of exports, reference will be conditional upon those concerned controlling one-third of the country's production of the goods in question.
Reference to the Commission may be of two kinds. The Commission may be asked to report facts; that is, they will be asked to say whether one-third of the trade or industry is in the hands of those concerned and whether in fact they are restricting competition. In this case the Commission will be required to give details in their report of the way in which the restraint is exercised. Any report under this heading may be published. The other case is where the Commission are asked not only to find the facts, but also to report whether or not what is happening is against the public interest. In this sort of case the report of the Commission will always be published. Where the Commission find that the conditions reported upon operate against the public interest, they may recommend what action should be taken to remedy or prevent the resultant mischief. In this case the component authority, that is the Government Department concerned, may by order prevent the making or carrying out of the offending arrangements or require them to be determined. It will also give power to deal with boycotts. His Majesty's Government hope, however, that publication of a report and voluntary arrangements with those concerned will normally dispose of the problems raised and that these sanctions will not need to be frequently used.
The Bill does not attempt to give a precise definition of the expression "public interest," but there was a feeling in another place that some guidance should be given on what was meant by this term. Clause 14 was accepted as meeting this point. It sets out the aims which must be kept in view by those who run monopolies or restrictive arrangements if they are to operate in the public interest. It provides guidance for the Commission, and also for Parliament, who will be receiving reports of the Commission, in accordance with the provisions of Clause 9 of the Bill. Parliament will, in fact, have an opportunity of overriding the findings of the Commission about the effect of any particular practices on the public interest.
343 I do not think there is any need for me to refer at this stage to any of the more detailed provisions of the Bill, though I might mention that in addition to Clause 14, which was added during the discussions in another place, Clause 16 was similarly added. It provides for an annual report to be made by the Board of Trade to be laid before both Houses of Parliament. Clause 15 was added in the same way, and provides for the Commission to report at the request of the Board of Trade on the general effect on the public interest of practices of a specified class. It will be of considerable importance when the Commission are able, in due course, to draw conclusions from the separate inquiries made into particular industries which may have raised the same type of restrictive practices.
Finally, I might mention the position of this Bill in relation to the conclusions of the Havana Conference of the International Trade Organization. Your Lordships are aware that signatories to the International Trade Organisation Charter, which has not yet come into force, undertake certain obligations in connection with cartels and monopolies which have a substantial effect on international trade. These obligations are set out in Chapter V of the Havana Charter. The present Bill was drafted at the same time as the Charter was being given its final shape at Havana. The two documents are entirely consistent; the procedure of the International Trade Organisation will, like our own, be one of investigation into particular restrictive arrangements to try to establish what effects they have on international trade, If at a later date His Majesty's Government ratify the Charter, and are called upon to take any action under Chapter V, this Bill will provide us with adequate power to carry out our international obligations. The normal method of dealing with this type of case will, in fact, be through the machinery provided by the Bill. The Bill is in line with developments in other countries with similar economies. It has the support of all Parties in its general purpose. It is a measure which I commend to the sympathetic consideration of your Lordships' House. I beg to move.
§ Moved, That the Bill be now read 2a.—(Viscount Hall.)344
§ VISCOUNT SWINTON
My Lords, the Bill which the First Lord of the Admiralty has so clearly and agreeably presented to us is, I think, rather like the curate's egg. I agree with the noble Lord that there is general agreement that there should be an egg, but it would be desirable, if possible (I recognise the limitations of this Government under pressure), that it should be a wholly good egg. I am only sorry, approving, as I do, of so much in the Bill, that it is not wholly good. If it is not indelicate to mention it, I would venture to suggest that the title is not very happily chosen, though that is not the greatest objection, to the Bill. It is a Bill which, as your Lordships will see, is headed "Monopoly (Inquiry and Control)." As the Bill excludes from its purview every kind of Government nationalised monopoly, that does not seem to me to be a very happy title. It would be more correct to call it a Restrictive Practices Bill. I believe the President of the Board of Trade invited competition from anybody who could suggest a better title, but in another place nobody said: "Pay that man ten shillings." I do not know whether the competition is still open here, but I feel sure, if it was, that the noble Lords, Lord Lucas and Lord Balfour, would come out on top, with the noble Lord who leads the Liberal Party a good runner-up.
Superficially, there might be the comment that if you are dealing with restrictive practices you ought to deal with restrictive practices in labour, as well as in trade. But I am quite sure that the introduction of a Bill of this kind is not the way to do that. As the First Lord said in his speech, quoting from the White Paper which we all produced together, there is no room to-day for any restrictive practices, whether of trade or labour, in the production of goods we need. I think in both there has been an excuse, and, indeed, reason, for such practices in the past, in times of great trade depression. But that is not now the risk. The risk to-day, I think we should all agree, is not that there is likely to be an excess of production, but that unless we all work a great deal harder there will not be enough production of the things that we most need. Nor, indeed, are all agreements in trade bad, any more than all trade union practices are bad. There may be agreements of a restrictive character, or, let me say, 345 of a regulative character, which often serve a very useful purpose. Where those practices are good, I am sure those engaged in them have nothing to lose by publicity, because it is the publicity about sound trade practices which show that they are right.
I was very glad that the First Lord said that the reason for having the Bill is, not that every practice is a bad practice, but in order to see whether there was a prima facie case that a practice is bad, and, if so, to investigate it. I entirely agree that it is right that the Board of Trade should have the duty of sifting any complaints and deciding which of them ought to go to the tribunal. It would be quite impossible to set up a tribunal of this kind and then invite everybody to inundate them with complaints. What would happen would be that either ignorant or sometimes malicious persons—possibly competitors—would flood the tribunal with complaints which they ought not to be troubled to hear. It is quite right that the Board of Trade should have the primary duty of sifting those complaints, and sending them on only if there is a prima facie case. The test, of course, is really the efficiency of the industry—home and export—and the interests of the consumer. I am glad that "public interest" is being defined, and I am bound to say that I think the definition in Clause 14 is about as good a definition as could be given, and it is one which I certainly could not better. I am not going to attempt to better it and, therefore, I am perfectly prepared to endorse it.
Of course it is anti-social by restrictive practices, whether of capital or labour, to restrict the production of goods which are needed; but it is not pro-social to produce what nobody wants. All production has an element of restriction in it, because nobody would dream of making large quantities of goods which in no circumstances could he sell. The Government, by one means or another, have been trying to direct labour and production activities of all kinds into the most important channels. Indeed, I have often heard the advocates of nationalisation defend nationalisation on the ground that it is a good way of avoiding wasteful competition. But I would say that, broad and large, what is wanted to-day is not less competition but more competition. I am sure that the proper way to deal with trade 346 union practices, where they are restrictive, is not in a Bill like this, but in negotiation in industry, with the common object in view of getting the best under the best conditions. The proper way to deal with restrictive trade agreements is by an impartial, expert, judicial inquiry such as would be established by the Commission under this Bill. Therefore, I wholly support the establishment of a Commission with power to investigate and report. I think also that there must be power to take action on the report.
I agree with the noble Viscount—and I am glad that he said it—that there are many cases where the practices have nothing against them and, indeed, are beneficial; but it would be all the better that they should come to light. Where a practice is not good and the fact is brought to light, I think it will be quite sufficient to give it publicity, because I believe public opinion is a much greater force than some of my friends on the opposite side are prepared to admit. I think that action taken because of public opinion, and because there is a genuine consensus of opinion that a thing is right or wrong, is a great deal better than action taken or not taken because people are compelled to do either this or that. But there should certainly be the power to enforce a finding.
There is a clause to which the First Lord referred and which has been imported into the Bill—Clause 15—about which I am much more doubtful. That is the clause which says broadly that the Board of Trade may ask the Commission to make general reports—not to report about a particular practice, but really to write economic essays. I am very doubtful about the wisdom of that provision. I think the Commission will have quite enough do investigating concrete cases, and I am sure they will be well qualified to do that if the right people are appointed. Do you really want these essays written? I should have thought that there were quite enough of them. We get them from the Government every few weeks. White Papers come like "leaves in Vallombrosa." The economic and uneconomic papers follow each other in rapid succession. What do you really want out of this Bill and out of this Commission? Do you want a judicial inquiry, or do you want a brains trust to write essays? I am quite sure you want the judicial inquiry, and I am pretty 347 certain that you do not want an essay-writing brains trust. I think there are about enough of them as it is.
I come to the next thing which the First Lord slid over most skilfully (I must not mix my metaphors: I should have said "he sailed round with most skilful seamanship") which was the complete omission from the Bill and from all investigations, of the Government nationalised industries, Government-owned and Government-sponsored corporations. That seems to me to be very odd. Here are these monopolies, embracing not only the whole of one industry but the whole of many. We shall be dealing with the gas industry again this week, and we are seeing in the case of fuel that not only is coal nationalised, not only is electricity nationalised, not only is gas to be nationalised, but the whole are to be co-ordinated—blessed word!—under the Ministry of Fuel and Power. I am not going to anticipate our debates on the Gas Bill as to the importance of the consumer having his free choice; but when you take the whole of the fuel and power industries and make them into one co-ordinated monopoly under the same control—after all, as we are always being told, it is the control which counts; and it is the Minister who controls this combine—it does seem to me most extraordinary that this Monopoly Commission is to be forbidden to consider the effect upon the public of the practices of these Government monopolies.
The President of the Board of Trade gave the reason for this. He did not say that the Government monopolies might not be very damaging to the public, but he said they should not be subject to the Bill because they will be subject—I have his exact words—"to searching and detailed examination by the High Court of Parliament" That is exactly what they are not. After the great difficulties which are encountered in another place in finding out anything about them, I am glad to say that rather more information is given here. Every day when Members in another place try to put questions about these monopolies—try to conduct "the searching and detailed examination by the High Court of Parliament"—they are told by Ministers: "But you cannot ask in the High Court of Parliament about these matters. These are matters not for 348 the Minister, not for Parliament, but for the Board, because they are matters of business management"
The last matter to which I want to refer concerns the extraordinary provisions of Clause 10 (1) (e) (ii). That clause gives the House of Commons the power to declare that the findings of the Commission are wrong, and the Minister may then make an order, not through the process of an Act of Parliament, where a Bill has to be introduced and passed through all its stages and be considered in Committee in both Houses, but a summary order under this Bill, contrary to the findings and the recommendations of the Commission. What can be the justification for that? If Parliament is to be the judge, why set up a Commission? The House of Commons will not have heard the case. Why should the Government propose action where the Commission do not recommend it, and in fact very likely recommend exactly the opposite? It is really no good the Government saying that this will be seldom done. I do not know. We have an example of it to-day. We had an example in the Criminal Justice Bill, where we saw the Government accept or propose what they did not believe in, under pressure from their extremists. The purpose of this Bill is that judgment shall be given by an impartial judicial Commission who have heard and weighed the whole of the evidence.
How can it be right that when the Commission have heard the whole of the evidence and made recommendations, it should rest with the House of Commons to throw it all over by a Resolution saying: "We do not mind what the Commission have said; we do not like this," and then deal with it under summary procedure? If the Government want to legislate on Party lines, the proper way to do so is to bring in a Bill and pass that Bill in the ordinary way. This is really an abuse of the process under the Bill. What will be the position of this judicial Commission on a subsequent inquiry if the House of Commons have decided against them? What are they to do when they get their next case? Are they to give what they believe to be the right finding on the facts of the case, or are they to follow what they think would be the view of the House of Commons? I think this is a very serious blot on a Bill 349 which in many ways is admirable. I wonder why the Government must turn a good Bill into a bad Bill and turn what could easily be an agreed industrial reform into a bone of contention.
§ 6.3 p.m.
§ VISCOUNT SAMUEL
My Lords, it is clear that this Bill receives support from all quarters of the House—and nowhere more cordially than from the Liberal Benches. The Liberal Party do not claim to be the only begetters of this Bill, but we do claim to be the first begetters of it, for it is now twenty years since there was published, in 1928, the Liberal book called Britain's Industrial Future, otherwise known as "The Liberal Yellow Book;" which comprised our proposals at that time for industrial reform. In that book there was a section dealing with monopolies and restrictive practices, and a series of recommendations which, we are happy to see, are almost precisely reproduced in the terms of this Bill. So we undoubtedly welcome it with much cordiality.
At that time, we held the view that we in this country ought not to follow the example of the United States of America and pass legislation like the Sherman laws there, the object of which was to prevent the formation of large combinations. We stated in that 'Report that in this country we should try to find room in our industrial system for large-scale semi-monopolistic private concerns, but we held that they ought to be subject to very complete investigation and to a large measure of control. Measures which attempt to break up or prevent the formation of combinations lend themselves, as we have seen in America, to constant evasion. Francis Bacon, in one of his books, quoted a Greek philosopher as having said:Laws were tike cobwebs, where the small flies were caught and the great brake throughSo it has been in measures which seek to prevent the formation of these great industrial or commercial combinations.
This matter was discussed at some length in your Lordships' House in March, 1945, on a Motion brought forward by the noble Lord, Lord Nathan, who was not then a member of the Government. On that occasion, I drew your Lordships' attention to some facts which had been 350 recently published in a paper by the then Statistician to the Board of Trade, Mr. Leak, and read as an address to the Royal Statistical Society. In the course of that paper it was shown that fewer than 1,000 firms—938 to be accurate—produced 49 per cent. of the whole output of British industry and employed 45 per cent. of the working people. In other words, roughly 1,000 firms produced half of the British industrial output, and employed close upon half of the working-class population. Eighteen gigantic concerns produced close on 10 per cent.—actually 9.7 per cent.—of the whole of the industrial output of the nation, and employed 8.5 per cent. of the working classes. It will be seen from those very striking figures—which are not usually realised by the public in general—how easy it is to create these huge modern combinations, when the industry is already so greatly concentrated in a few hands. Furthermore, there are the trade associations, devoted—as we know—largely to price fixing; and other combinations and cartels of different kinds.
All these are facilitated—and I hope the noble Viscount who has just spoken will forgive my referring to the matter—by the existence of protective tariffs. They are encouraged by protectionist laws which, because these combinations are no longer kept in check, as they used to be, by the fear of foreign competition——
§ VISCOUNT SWINTON
And by Liberal laissez-faire. Liberal laissez-faire never interfered with anything.
§ VISCOUNT SAMUEL
I really do not follow the noble Viscount's argument. Under laissez-faire—which I do not defend to the extent to which it has been carried—the ports were open; and if any industry banded itself together and artificially raised prices above what was legitimate to cover the cost of production, the goods would come in from other countries and the efforts of the industry to band together would be defeated. Under a restrictive tariff, if it is sufficiently restrictive, this becomes impossible. Indeed, in the United States of America there has long been a common saying: "The tariff is the mother of trusts" The more tariffs you have, the easier it is to form these restrictive combinations.
351 The consequence has been the continuous rise in prices which we have seen in this country, and in many other countries, in recent years, and which is now becoming excessive. As the pressure continues, countries have higher and higher wages, and higher and higher profits, whereas there is very little pressure on the other side—from the standpoint of the consumer—to preserve him from the effects of the continual rise in the cost of living due to the increase in prices. At the present time, we see on all sides excessive dividends being declared by great numbers of companies; and in spite of taxation, immense private fortunes are rapidly being built up. Under the present conditions the consumer, who is also the taxpayer, is the shorn lamb of the modern world. And this Bill, at all events, is something, if only a very modest answer to its diffident bleat.
With regard to the Title of the Bill, to which the noble Viscount, Lord Swinton, has referred, I agree that it is certainly not a very happy one. It might well be altered. The President of the Board of Trade in another place, towards the end of the discussions upon this Bill, suggested that it might be amended to read: "Monopolies and Restrictive Practices Bill" I cannot think of a better Title than that. The noble Viscount suggests that we should enter into a competition to try to suggest a suitable Title. "Monopoly (Inquiry and Control) Bill" does not mean very much, and it does not seem to cover what can hardly be called monopolies at all—namely, such restrictive practices as those of certain classes of trade associations and cartels. I should like to ask the noble Viscount in charge of the Bill whether the Government intend to pursue the suggestion tentatively thrown out by the President of the Board of Trade in another place—that perhaps, at a later stage, an alternative Title might be suggested for the Bill.
With regard to the non-inclusion in the Bill of nationalised industries, I do not concur with the view which has just been expressed by the noble Viscount, Lord Swinton. But that is not because I think that State industries by their very nature are free from the evils that attach to other monopolies. I do not think so at all. They are just as liable as other very large-scale industries to the vices of lethargy and bureaucracy resulting in that costli- 352 ness of production which occurs in the case of private enterprises when they get developed beyond a certain scale. Indeed, they are even more liable, since, while private enterprises may become bureaucratic, public enterprises are born bureaucratic. It needs a constant effort to rescue them from those innate diseases. But the reason I do not concur with the noble Viscount is that I do not think this Bill is a suitable occasion for dealing with such industries as coal mining, railways and the other vast industries that have now been nationalised. The Commission will have enough to do to deal with the private enterprises which are of a monopolistic character and the widespread practices that exist through industry. I do not think that it would be very sound constitutional practice to set a Commission, appointed and directed by the President of the Board of Trade, to inquire into the coal mines, which are under the superintendence and direction of the Minister of Fuel, or the railways, which are under the Minister of Transport, or, one might add, the Post Office, which is under the Postmaster-General. These industries are already under State control and investigation, and if there is any idea in the public mind that they are guilty of various monopolistic abuses then they ought to be investigated by a Select Committee of another place, by a Joint Select Committee, or by a departmental or other Committee appointed ad hoc, and not by some Standing Commission which forms part of the organisation of another Government Department.
There is another point that might have been raised in the discussions on this Bill—namely, how far trade union restrictions can be dealt with under its provisions. There again, no controversy has arisen over facts which are not specifically referred to, because I think it is generally agreed that such matters as trade union restrictions must be dealt with in connection with trade union matters generally, rather than as part of an investigation into monopolies and similar practices. In practice it may be found convenient to investigate certain trade union practices, and there is a clause in the Bill which provides that the trade union laws, barring certain actions at law where trade unions are concerned, shall not apply under this Act. Perhaps the noble Viscount in charge of the Bill can tell us for what reason that 353 clause has been put in. It is Clause 11, subsection (4). In general, I presume that it is not intended to arrange a roving survey throughout the field of trade union activities. I agree with what was said on behalf of the Opposition in another place, that this is not the right vehicle for dealing with restrictions of that character. I think that it is to the credit of the Government that, in spite of a very crowded legislative programme, they have not sought to find any excuses for not proceeding with this measure, but have pressed it on speedily. The principles of it are agreed. The details of it are a matter for later stages. I have no doubt that your Lordships will make no ado about speedily giving a Second Reading to the Bill.
§ 6.19 p.m.
§ LORD LUCAS OF CHILWORTH
My Lords, I view the legislation proposed in this Bill as being amongst the most important and far-reaching that has been presented to Parliament by His Majesty's Government. If its provisions and proposals are implemented and carried to their logical conclusion, it will affect the whole basis of British industry and trade, and perhaps the economy upon which that industry and trade have been built. Therefore, in giving a very warm welcome to, this Bill, I am fully seized of the huge nature of the task which confronts this Commission. In the observations which I shall venture to address to your Lordships' House, I do not intend to deal so much with the thorough-going combine and cartel which has been so well covered by the noble Viscount, Lord Samuel, as with those quasi-monopolistic organisations and restrictive practices which have spread themselves with an ever-growing degree of speed over a large section of British industry and trade and which have resulted in the public being denied the efficiency of production and distribution. These practices have encouraged inefficiency to a most marked extent. Today, we are a high-cost producing nation, we are a high-cost selling nation, and one of the contributory factors is these restrictive practices to which I have referred. It is when we turn to ordinary consumer goods, purchased by the ordinary person of this country, that we see that these practices are so marked.
I expect many of your Lordships have read with interest the Report of the Committee presided over by my noble friend 354 Lord Simon of Wythenshawe, which was charged with the task of inquiring into the cost of distributing building materials. The words "building materials" in the Report could be erased, and the name of dozens of the products of other industries inserted, and the context of the Report need hardly be altered. I ought perhaps to disclose to your Lordships' House what might be a special interest in this subject, as I have spent a large proportion of my industrial life in an industry which, on the one hand, has been the victim of monopolistic arrangements, and which, on the other, has built up restrictive policies practically unparalleled in British industry and trade. Before the war, nearly 70 per cent. of the cost of production of a British motor vehicle was made up of raw and semi-fabricated materials and over two-thirds of that proportion was controlled by rings and combines. The British motor vehicle producer had to pay anything from 30 to 100 per cent. more for his fabricated assemblies than his American competitor. Therefore, is it to be wondered at that, in competition in world markets, the British motor car cost 15d. per lb. to manufacture against the American motor vehicle at approximately 8d. or 9d. per lb.? I cite that only as an example, and it was true of nearly every industry. Even to-day, the British motor vehicle manufacturer has only one supplier for all his electrical equipment. That is a ring which, unfortunately for myself, or unfortunately for them, happens to bear my name—and I would make it clear that I no connect on with them. But with quite a lot of other fabricated materials there are only one or two suppliers. One of the root causes of all this is the introduction of the branded article and, with the introduction of the branded article, the disappearance of that perfect competition so beloved by the classical economists of the Eighteenth Century. The branded article has grown enormously. It has achieved huge customer and consumer acceptance because of the guarantee of quality which it carries. But the price-fixing arrangements which have followed the introduction of the branded article present a further and still larger problem to this country which will grow as the branded article expands (and it will expand), as being the cause of more inefficiency in distribution than anything 355 else. It has had some very cruel consequences for purchasers. Competition in prices has practically ceased over a wide range of articles in commerce. Competition in margins has taken its place. Suppliers have sought to impose conditions upon the resale of their articles which has ruled out competition; they have brought the retailer and the wholesaler under the absolute domination of the producer, and in consequence the British people have had to pay higher prices for those articles. I will quote two examples. It matters not whether you purchase a motor car or a tube of branded tooth paste. You pay exactly the same price, whether you buy it from the largest and most efficient store in the heart of the West End of London or whether you buy it from the meanest shop in the meanest street in any out-of-the-way town in any part of the country. The British public are denied the benefits of efficient distribution, and those who wish to pass on those benefits have to live their entire commercial lives under the threat of a boycott by these suppliers.
Such have been the evils of price fixing. I am quite prepared to admit that in certain circumstances there is a case for price fixing; but there is no case whatsoever for the manner and the method by which commodity prices are built up before they are fixed. The classic argument always used in support of price fixing in the between the war years was, of course, that unless you had price fixing the ultimate effect of price competition rested upon the shoulders of the industrial worker—sweated wages—with the result that the employers did not mind what wages they paid or what conditions of employment they imposed so long as they could bring the price of their goods below that of their competitor. There was some truth in that, but that all disappeared two or three years ago with the advent of the Wages Councils Act and there are to-day 15,000,000 workers under industrial and basic wage agreements.
I know that the facts which I have tried to put before your Lordships raise fundamental issues, and that is why I opened my remarks by saying that this Bill strikes at the very economy upon which British industry and trade has been built. Has the producer of any article in commerce the right to put his name to 356 that article; the right to fix the price under which it shall not be sold; to control the channels of sale, as to who shall or shall not sell that article, and the conditions under which he shall sell it? Has the producer of an article the right to enter into an agreement with his fellow producers and to boycott and drive out of business anyone who will not subscribe to those conditions? Those are some of the fundamental issues which this Bill raises. Is it right that the producer should have under his domination the economic livelihood and existence of everybody in industry and commerce who is selling these articles? Those are fundamental issues, and they must not be shirked. Is it in the national interest that such economic power should be vested in producers? It never stops at one producer; there is always evolved a combination of producers. Or are there (to quote the Preamble to this Bill) mischiefs? I agree with the wise words uttered by the noble Viscount, Lord Swinton—namely, let the public know these things. If there is nothing to hide in these practices then there is no hurt done by bringing them to light, and subjecting them to the focus of public opinion. But if there is anything evil—and I am persuaded that there is—then the sooner they are brought before the bar of public opinion the better.
§ 6.30 p.m.
§ LORD BALFOUR OF INCHRYE
My Lords, I shall not detain your Lordships for more than two or three minutes, because everything that has been said has commanded a general measure of agreement so far as the principles of the Bill are concerned. But there is one particular matter which raises a question of fundamental principle—namely, the fair administration of the Bill—and I venture to raise it on Second Reading although no doubt it will come forward again in Committee. The point I am making relates to Clause 15, which deals with reports by the Board of Trade. As I understand it, the Board of Trade will be the instrument which refers matters for investigation to the Commission. The Board of Trade is, as it were, the only channel by which the Commission will receive directions to make investigations. There are provisions for the Board of Trade to report, quite rightly, on general questions, as set out in Clause 15, but the 357 Bill seems to provide that there should be, so to speak, a queue of applicants who are under request to the Board of Trade for investigation, and that queue of applicants must be listed. As I read this clause, any number of persons substantiating a claim to represent a particular interest can make a request to the Board of Trade, and that request must be cited in the Board of Trade's report, even though the Commission have not started any investigation at all. That seems to me to be, however unintentional, an unfair pillorying of particular interests.
Let us suppose that the tobacco workers of the United Kingdom wished to claim that there was a monopoly in the tobacco trade working against public interest, and that meanwhile the Commission were fully occupied with other matters. The Board of Trade would have to cite such an application in its report, and, if the trade was an export one, I can conceive that great harm might be done to our exports by the casting of some kind of stigma, some suggestion that the trade in question was under suspicion and was about to be investigated. I cannot see the justification for setting out in the annual report of the Board of Trade the names of a waiting queue of industries which are to be investigated. Let the report contain a full list of investigations which have taken place, and full information as to who instructed the investigation, but let it not go beyond the actual work of the Commission and deal with their prospective work, because that would not be in the interests of those engaged in the trade concerned. That is a general point to which we shall return, but it is only right to bring it forward on Second Reading.
§ 6.34 p.m.
§ VISCOUNT HALL
My Lords, I can but express the gratitude of my colleague the President of the Board of Trade and of the Government for the friendly reception which this Bill has received at your Lordships' hands. Indeed, there appears to be unanimity amongst those who have spoken that the Bill is not like the curate's egg, good in parts, but that in its main parts it is very good, and it is receiving the support of your Lordships from whatever Party point of view you speak. Concerning the question of the Title of the Bill, I admit that it is certainly not a happy Title, as the noble Viscount, Lord Swinton, has pointed out. The President of 358 the Board of Trade will consider again the matter of the Title in the light of the debate which has taken place to-day. I will certainly represent to him most strongly the views which have been submitted by the noble Viscount, Lord Swinton, and also by the noble Viscount, Lord Samuel, in relation to this matter.
There is general agreement that this Bill is not suitable for dealing with trade unions. I entirely support that view. I am not suggesting that sometimes there are not restrictive practices which are carried on among the trade unions. I could give many instances in my own experience in relation to the coal industry, particularly in South Wales, where we have had certain difficulties in regard to this matter, but they were effectively dealt with by the trade union concerned. Therefore no point need be made as to why the trade unions ought not to be included in this Bill. The other matter which was raised by the noble Viscount, Lord Swinton, was ably replied to by the noble Viscount, Lord Samuel—namely, the question why nationalised industries are not included in the Bill. This subject took up a long time when the Bill was in another place, both in the House itself and in committee, Strong reasons were given by the Lord President of the Council, though they may not be acceptable to the noble Viscount opposite. In some cases it was suggested that, to deal effectively with some of the practices which this Bill proposes to prevent, certain industries should be nationalised, so that they could be controlled by the public. A full inquiry could be conducted into any restrictive practices or indeed into anything that would interfere with production.
The noble Viscount, Lord Swinton, asked about Clause 15 and laid stress upon the point that the Commission, when conducting an inquiry, ought not to do so for the purpose of writing economic essays. I entirely agree, and it is intended that Cause 15 shall be made much clearer by an Amendment which the Government will move on Committee stage. I shall be quite prepared to consult the noble Viscount in relation to that matter. The noble Viscount, Lord Samuel, rightly said that the Liberal Party had much to do with the preparation of this Bill. I well remember the Yellow Book of the Liberal Party which devoted a considerable space to this 359 particular question and gave a great deal of useful information. Indeed, I fought an election on the Yellow Book; but I am afraid that, in view of industrial conditions in the area in question, whilst the Yellow Book did play a part in the election, it did not win it for the Liberal Party. But that does not for a moment detract from the many excellent parts of that book. I think it is the feeling among Liberals that this Bill does not go quite far enough.
A question was asked concerning Clause 11 (4). That subsection is in the Bill for the purpose of dealing with Section 4 of the Trade Disputes Act, 1906, so that it shall not apply to any civil proceedings in respect of a contravention or apprehended contravention of any part of any order under Clause 10 of the present Bill. I am afraid that I cannot make this matter very clear to the noble Viscount. But there is this legal point with which I think it deals.
§ VISCOUNT HALL
Section 4 of the Trade Disputes Act states that:An action against a trade union whether of workmen or masters, or against any members or officials thereof on behalf of themselves and all other members of the trade union in respect of any tortious act alleged to have been committed by or on behalf of the trade union shall not be entertained by any courtThis subsection is for the purpose, I understand, of dealing with cases of that kind. I have not come prepared to answer the question in detail to-day, but I will look into it and deal with it fully at a later stage.
§ VISCOUNT SWINTON
The Taff Vale judgment said that a trade union could be sued in tort. Before that judgment was given everyone thought that it could not. The term, "a trade union or combine" includes employers' combines as well as trade unions. I gather that what the Government wish to do by this clause is to say that notwithstanding this section in the Trade Disputes Act, an aggrieved person shall be able to sue an employers' combine in tort if the tortious act was a breach of an order made by Parliament under this Act.
§ VISCOUNT HALL
The matter has been well put by the noble Viscount. Subsection (4) is intended to cover that point. I am grateful to the noble Lord, Lord Lucas, for his speech in which he gave many strong reasons for this Bill. He dealt particularly with the question of price fixing, which, I feel sure, will be brought to the notice of the Commission. Lord Balfour of Inchrye referred especially to the question of the fair administration of this Bill. In the course of my speech I pointed out how important it was to ensure getting the best kind of Commission by having the right type of persons sitting on it—persons who will see that the administration and all matters referred to them are dealt with in a thoroughly efficient way. The matters of detail to which the noble Lord referred and to which, I understand, he has given notice that he will return during the Committee stage, will receive thorough consideration in the meantime, and we shall then be able to deal with them fully. There is nothing more for me to say except to thank your Lordships warmly for the friendly reception which you have given to this Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.