§ 2.53 p.m.
§ THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)
My Lords, on behalf of my noble friend the Leader of the House, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Drumalbyn.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The EARL OF LISTOWEL in the Chair.]
§ Clause 1 agreed to.
§ Clause 2 [Prices, pay, dividends and rents]:
LORD BESWICK moved Amendment No. 1:
Page 2, line 5, at end insert—
("This subsection shall not apply to remuneration paid to any employee whose average weekly remuneration during 13 weeks before 6th November 1972 was below £20 per week.")
§ The noble Lord said: I beg to move the first Amendment which stands in my name. When the Government first made the proposal to limit wage increases to a flat rate there were many who thought they were approaching this problem fairly. There could be an argument that the figure ought to be something higher than that proposed but, at any rate, here was a genuine attempt, it seemed, to help the lower paid. It was obvious that a £2 a week increase "across the board" would help the lower paid, the £20 a week man and under, much more significantly than those earning say, £40, £50 or £100 a week. The attempt to get voluntary agreement on that package which included the flat rate limit failed, as we now know, for two main reasons: the Government were unable to accept credible controls on prices and, in particular, those prices which most affected the £20 a week and under family, and the Government would not bring into the discussions other highly relevant factors such as capital gains, rents and land speculation. So those negotiations on a voluntary policy failed.
§ We now have this compulsory freeze. Let us agree that such was the dangerous position to which Her Majesty's Government had led us that some emergency action was needed. I am disposed to accept that argument. But why should we now seek to apply compulsorily the inadequate and incomplete control of some prices—the unfair and unacceptable proposals, as the Trades Union Congress 1110 saw them—which had caused the breakdown of the talks and yet ignore altogether the problem of the lower-paid workers? The Government have admitted that they do not even seek to control food prices. They must admit, because it is inescapable, that the devalued pound must push up the cost of all imported items. They have to admit that the steady increase of food prices which arises from E.E.C. membership will be superimposed on the recent record increases; and yet, despite all those factors, the Bill makes no attempt to help those who will be the worst hit.
§ I give the Government full credit for recognising this problem in their original proposal. They will surely have to do something about it in phase 2. I cannot believe that they would come forward with any proposals in phase 2 which do not aim to help the lower-paid families; so what possible justification is there for this inaction for 90 days, plus possibly a further 60 days, plus the time between November 6 and the day that this Bill goes on to the Statute Book? What gain is there in leaving this out of the Bill? What economic gain can there be? What moral gain can there be; what social gain?
§ There can be no overriding, economic argument since an even greater commitment was originally suggested. The Government agreed in the beginning that it was possible within our economic circumstances to accept a £2 a week increase across the board. A good deal has been said about the proposed increase for agricultural workers and I understand the Government only scraped through on an Amendment in another place which would have excluded the agricultural workers. The Government's case then was that others similarly unfortunate or similarly deserving would not be dealt with fairly if an exception were made in the case of the agricultural workers. The Chancellor of the Exchequer in another place instanced the case of the ancillary staff in the National Health Service. I am disposed to accept the argument that it would have been difficult to single out by definition, by description, the agricultural workers. I accept the Government's argument that one cannot draw the limit between one category of worker and another if both are on the same 1111 income level; but this Amendment avoids that difficulty by making the income level itself the dividing line. The noble Viscount, Lord Massereene and Ferrard, had another argument on Thursday against making a special case of the agricultural workers when he pointed out that many of them get more than the national minimum. Of course we know that to be the case; but in so far as they are getting in excess of £20 a week they would not be brought in by the Amendment which I now propose.
§ I hope that the Government will accept this Amendment. It does not go beyond—indeed, it does not even go as far—what they were proposing in their original package. It meets much of the criticism and the unfairness of this Bill, and its acceptance would do something to improve the atmosphere and help towards a reasonable agreement on phase 2. In the Government's own interests; in the interests of getting an acceptable agreement when we come to the next phase, I hope that they will see whether they can accept this Amendment. I would add just one other point, which I made on Second Reading. It would seem that the timing of this Bill is such that the Government have made a decision in advance that they will not accept any Amendment, however reasonable. If they want to disprove that charge, they can do so without damaging their case if they accept this Amendment.
§ 3.1 p.m.
§ LORD DRUMALBYN
I appreciate the way in which the noble Lord, Lord Beswick, has moved the Amendment. I am glad he accepts that it is not possible, in an exercise of this kind, to pick out special categories of workers. The noble Lord also accepted that some action was necessary. What I think we have to do is to make sure that whatever we do during the progress of this Bill is fair and will not in any way prejudice the plans we are seeking to make during the period of the standstill for the next stage. I think the noble Lord, Lord Beswick, also recognised that this was a reasonable objective of policy. He has said that what is implied in this Amendment would not involve any particular unfairness and that it would achieve right away one of the objectives set out in the original policy 1112 put during the tripartite discussions. The noble Lord is right in saying that the Government, as well as the T.U.C. and the C.B.I., agreed in those tripartite talks that an improvement in the relative position of the low-paid was an important objective of economic policy. But, as I said, the present standstill is designed to allow time for the details of the second stage to be worked out; and in framing longer-term policy the Government will have in mind the objectives agreed during the tripartite talks. So it is in the interests of the lower-paid, and indeed of the whole nation, that in the meantime everyone should enjoy equality of treatment.
As I said in moving the Second Reading, all this, of course, has to be qualified at all stages by the words "so far as practicable", and this is what we are seeking to do. The tripartite talks identified the acute problem of defining low pay.
§ LORD BESWICK
May I just get clear what the noble Lord is saying? Is he saying that it is equality of treatment that requires the man earning £20 a week and under to forgo any increase in order to ensure that he is on the same level as the £50 or £100 a week man?
§ LORD DRUMALBYN
What I am saying is that when you have what is quite obviously a standstill arrangement, if you start to make particular exceptions in that arrangement from the beginning, you are immediately going to raise a great many problems of definition, of frontiers, of drawing the line and all the rest. This Amendment would lead to this sort of problem, for it would exempt from the provisions of the standstill, as I understand it, earnings averaging less than £20 a week over the 13 weeks before November 6. It would mean, as I see it, that any employer, whether acting on his own initiative or in accordance with an agreement with the representatives of his workers, could, during the standstill, raise by any amount the rates of pay for those whose earnings did not exceed £20 on average over the 13 weeks, even if the resulting earnings significantly exceed £20. while those whose average earnings had exceeded £20, by however small an amount, would be held at their present rates of pay. So a worker whose earnings averaged £19.50 might go up to £21 or £22, while a worker who averaged 1113 £20.50 would remain at that level, and might even fall below £20 if his £20.50 had included overtime. That would be an odd result and not one which I would imagine the Committee would find wholly fair. But if this particular oddity could be overcome, the purpose of the standstill is not itself, as I have said, to alter relativities between the lower-paid and the higher-paid workers. Its purpose is to allow time to work out the means of achieving the policies which the Government have announced, one of which is the improvement of the relative position of lower-paid workers.
I think it right to remind the Committee that quite a lot has been done in respect of the lower-paid workers. For example, my right honourable friend the Minister for Agriculture, Fisheries and Food quoted in another place the advances made for the agricultural worker during the period of the present Government in comparison with what was done before. The fact is that between 1963 and 1970 wages for agricultural workers rose by 6 per cent. per annum, whereas from 1970 to 1972 they rose by 11½ per cent. per annum. It is not, of course, only agricultural workers who have benefited in this way. As we are constantly reminding your Lordships, we have introduced the family income supplement; we have introduced rent rebates, which are already in operation, and we have introduced the rent allowances, which will operate from January 1 next. So it cannot in any way be said that we have been neglecting the lower-paid workers. As I said, in many ways this is bound to be a Bill that we do not like, because we do not like this kind of regulation. But if we are to have it, I think it must apply to all. Therefore I am sorry that I cannot recommend the Committee to accept the Amendment.
§ LORD BROWN
I have the greatest possibly sympathy with the noble Lord, Lord Drumalbyn. He seems to be given a range of very difficult jobs by the Government. He has a very difficult one to do in handling the Committee stage of this Bill, and as a result he is forced—I say this with respect—to indulge in a degree of circumlocution. The noble Lord pointed out the technical difficulties of the man being paid £19.50 who would get another £2 and the man who was being paid £20 and 1114 who would get nothing. With respect, difficulties of that sort are very easily overcome—"where there's a will there is a way!" One could give a proportionate rise the nearer a worker got to the £20, and so on. It is just a small arithmetical problem.
I suspect that we are again being faced with determined resolution on the part of the Government to flout the dignity of this House. We are not going to see any Amendments accepted. It takes the heart out of me to come to the House feeling that there is no hope of getting any Amendment, which we must spend time debating, accepted by the Government. We have a Whip out, and I have come here as a loyal member of my Party; but I feel that it is quite useless. I can remember sitting on the Front Bench opposite as a Minister and at one stage having to put 200 Amendments to the Companies Bill en bloc to the House before we broke up—I see the noble Lord smiling; no doubt he remembers the occasion. The House accepted the Amendments. A few minutes later the noble Lord, Lord Carrington, arrived and delivered a violent tirade about abusing the dignity of the House. It was directed at me. I remained silent. That was nothing to what is happening in Bill after Bill—well, this is the second Bill—going through this House, when, as everybody knows, however great the wisdom displayed by noble Lords in this Chamber, and whatever the cogency of the arguments, the Government are not going to yield on a single Amendment. This is real flouting of the dignity of the House.
Here is an Amendment which could temporise the draconic nature of the freeze: a freeze is always draconic. It could soften feelings and improve the future acceptability of the sort of deal that must be worked out if we are to be saved from serious inflation. The Amendment has wisdom behind it. Its acceptance would show that the Government are not completely blind to the poorer people of this country, who are suffering deprivation as a result of rises in the prices of food and of rent. Yet we have no hope. I appeal to the noble Lord, Lord Drumalbyn, to go back to those to whom he is responsible and say. "This must be taken seriously".
§ LORD POPPLEWELL
I want to express my disappointment that it would appear that the Government are going to treat this Bill in the same way as they treated a previous measure; namely, stampede it through this Chamber in some eight days and not accept any Amendments. It really destroys any usefulness of this Second Chamber. It bears out what we have said so often in the past: that with a built-in Tory majority here, whatever happens, the Bill will go through. It brings this Chamber into complete disrepute.
Having said that, I want to speak to the Amendment. The noble Lord, Lord Drumalbyn, with his charm, is a master at getting the Government out of difficulty. We do not like to attack the noble Lord too much, because of the work he has to carry out. However, he used some words that I think belie his whole nature. He said that one of the objects of the Bill was to ensure that the matter was dealt with fairly. How can the noble Lord say that? We are aware that during the freeze the chairmen of corporations will be drawing their £45,000 or £65,000 a year. Is it fair that the labourer, the man below £20 a week, should be subjected to the same freeze? This is a question of relativity. Surely, not only must we be fair but we must be seen to be fair. The man in the street with less than £20 a week requires the same food to exist upon as the man in receipt of £45,000 to £65,000 a year. When we are talking about the necessity of getting the Government out of a difficulty which they themselves have created, the use of the word "fair" takes a bit of stomaching.
Then the noble Lord used the words "equality of treatment". Where can there be equality of treatment in the two cases that I have mentioned? Where negotiations have taken place previously, based on costs at that particular time, and certain increases have been agreed upon for the lower paid people, there cannot be any question of equality of treatment when the Government refuse to implement those agreements, in view of the continuing rises in costs that are taking place. This whole freeze is a facade because, as has been stated, the actual cost of food, over which we have no control, or manufactured goods over which we have no control, in continuing to rise all the 1116 time. I am sure that most noble Lords will have been as much concerned as I was at reading in the Press and elsewhere how steep has been the increase in the cost of various commodities in the last few days, prior to the implementation of the freeze. The Government must be speaking with their tongue in their cheek when they refer to equality. It is common sense and humanity that if the actual cost of food that these people require—meat, fresh vegetables, fruit and so on—over which the Government admit they have no control, continues to rise during this temporary period, the Government should agree to increase the rates of remuneration of those people. I hope that Lord Drumalbyn's terms of reference or instructions are not so keen that he cannot yield to the common-sense arguments we are advancing.
§ 3.18 p.m.
§ LORD SHINWELL
I find it difficult to challenge the noble Lord, Lord Drumalbyn, in respect of the anomaly to which he has directed our attention. Obviously, there is bound to be an anomaly if somebody getting £19.50 is to receive a flat increase of £2 whereas somebody who receives £20 or £20.50 is to receive nothing. As I say, we cannot challenge that. But would the noble Lord agree with me that, no matter what we do about negotiating wage rates, anomalies are bound to emerge? This has always been the case. There will always be anomalies while skilled craftsmen receive a wage which puts them on a superior level to those who are labourers. If, as sometimes happens, the labourers get an increase in wages, then the skilled man wants more. The disparity always continues. These anomalies are obvious, and even if this matter is settled, either by a negotiated peace or by a statutory declaration by the Government which involves legislation, anomalies are bound to emerge because they are inescapable. I think the noble Lord, Lord Drumalbyn, must take that matter into account.
On what is, after all, the main issue, I have only this to say. My noble friend Lord Brown directed attention to the fact that when Amendments are moved from this side of the Committee they are rejected. But there is a way out. If noble Lords on the Front Bench 1117 opposite who are responsible for administration find that, for one reason or another, our Amendments are objectionable, let them suggest to us Amendments that will be acceptable to the Government so that we can move them. In this way we would declare our belief in democracy and equality in this House and uphold the dignity of this Chamber. This is the only way out. On the other hand, what do we really expect? The Government have made up their mind that the 90 days must elapse before they can proceed to negotiate either with the C.B.I. or the T.U.C. or make a declaratory statement involving legislation. But what is going to happen when the first period is over? Will the lower paid people get a £2 flat rate? Will those above the £20 level get what is negotiated? What is going to happen then? We are in a state of confusion about this matter.
It seems to me that the only way out would be to give fairly—never mind about equality, because equality in this matter is irrelevant. We shall never reach equality in matters of wage rates. I do not think that is possible. We shall not reach equality in matters of incomes; but we can help fairly and, to an extent, equitably those who are the very lowest paid. But the Government are not likely to give way because they are obsessed with the idea that we are in an inflationary situation and that any increase of any kind is bound to increase inflation. Obviously, they must stand on that principle. It would seem to me and to my noble colleagues that we must do our best to conduct ourselves with dignity in your Lordships' House and to reinforce our belief in democracy. I do not believe the Government are going to give way at all. Therefore, what should we do? Should we just go home or have debates on pornography, or take part in academic exercises? When it comes to legislation, there is no hope whatsoever for the Opposition unless the Government have made up their mind on lines similar to what is passing through the heads of my noble colleagues on the Opposition Front Bench. In the circumstances the situation is almost hopeless. What are we here for? Perhaps the noble Lord, Lord Drumalbyn, will tell me what we are here for.
§ LORD BALOGH
My Lords, I do not altogether share my noble colleague's shock, because this is exactly what we have been hearing, and it seems to me that from the point of view of the Government this is perhaps a possible tactic. But is it a very sensible tactic? I am not appealing to the magnanimity, fairness or anything else of the Government. Governments are not magnanimous or fair: they want to get through their business. But I would appeal to the common sense of the Government. It is all very well to say that this is a short-term Bill, that we must have a freeze and that a further policy will evolve. But the Government want more. They neglect the fact that it is their very attitude in this Chamber and in the other Chamber which will influence the attitudes which are necessary in order to have a second phase in any sort of peaceful way.
I have warned the Government ever since their inception that their policy is alienating a large part of the population of the country and that they will not be able to get their policies through. Their first policy—the Heath "Mark I"—was a sort of acrimonious, competitive, exacerbating obstinacy. Then we had the "Mark II", where we heard siren voices singing a sort of ditty from Gilbert and Sullivan. Now the Government are getting back again—not perhaps outside but inside the House—to the previous uncomfortable attitude. It seems to me that the Minister—and of course I cross swords with him on all sorts of occasions, oily and not oily—ought to choose his words more carefully than to say that fairness ought to be exercised and that the whole of income increases ought to be stopped. In the first place, all income increases will not be stopped. Promotions and incremental increases will not be stopped, so that, so far as the Government are concerned, the statement that all increases are being stopped is inaccurate, to say the least. As Churchill might have said (because nowadays people say this in the Lower House): "It is a pack of lies". But I do not wish to use that expression. It seems to me absolutely essential that a sense of fairness should be imparted to the less affluent part of the population, those who are mainly concerned with manual work. This is one of those gestures which would 1119 be absolutely essential. Therefore I very much support my noble friend Lord Beswick in his Amendment.
§ 3.27 p.m.
§ LORD SLATER
My Lords, I listened to my noble friend Lord Popplewell paying tributes to the noble Lord, Lord Drumalbyn, whom many of us have known for many years. He took notes of the speech delivered by the noble Lord when opposing this Amendment. I am not in the fortunate position of being able to take notes, because of a defect which at the moment I am unable to master. During the course of his speech the noble Lord, Lord Drumalbyn, used the two words "where practicable". He is an old Parliamentarian, and I began to wonder when he used that expression. We people who have come from heavy industry have long memories. We recall that we used to meet the owners, the old coal owners, and many of the Members from the opposite side of your Lordships' House, and they always insisted that "where practicable" ought to enter into an agreement that was, or should be, arrived at between them and the work-people concerned in a particular colliery. We all saw the danger of the two words "where practicable"—who was to determine where the words "where practicable" ought to operate?
Let us take another look at the agricultural worker. When his wages are fixed they are fixed at a basic national rate; but it is not the maximum rate. The landowner, the farmer himself, if he so wills, can go beyond the national figure that has been arrived at as the national basis of the worker's particular wage. Many landowners and similar people who have farmworkers in their employ—and working for them most arduously—will, because they know the efforts that a man is putting into his work, and that he is worthy of more than has been fixed as the national basic rate, raise his wage above that level. They are allowed to go beyond that. What do the Government do? They say, "We are going to have inserted a particular figure which will be the minimum and the maximum, and you cannot get away from it. This is what we believe in; this is going to our policy".
I was rather surprised when the noble Lord. Lord Drumalbyn, with all his experience, began to talk about rate 1120 rebates, rent rebates, and so on. We get absolutely fed up listening to that. Some of us remember the nurses and what really happened when they were making a wage claim application during that period of 13 years. What did the Government do at that time? Those memories and the policies that the Government are seeking to introduce on this occasion foments within those of us who come from industry feelings of injustice. The Government are seeking to impose policies upon people who are scrambling to employers for an increase in wages in order that they might be able to look after their homes and families and meet their ordinary commitments.
I support the recommendations that have been put forward by my noble friends, and I hope that this debate will not conclude without some noble Lords from the opposite side of the House getting on their feet and seeking to give support to the Government, stating why they are supporting the Government on an issue like this. It is most important, not only to one particular section of society, but to the whole of the workpeople, the ordinary man and woman engaged in the day-to-day operations in industry. Therefore I hope that we shall see someone who has the courage of his convictions rising to tell us why he is supporting the Government on the issue which is under consideration and which we seek to alter by this Amendment, so ably moved by my noble friend Lord Beswick.
§ LORD BESWICK
I was not going to bring this debate to a close—I hope we shall go on discussing this still further. But I want the noble Lord, Lord Drumalbyn, to help the Committee. He used the phrase, "must apply to all". He said that he was unable to accept this because it would deal with one category of people, and the freeze must apply to all. I ask the noble Lord—I invite the noble Lord; I challenge the noble Lord—to get up and say that he really means that.
§ LORD DRUMALBYN
It may help to shorten the proceedings if I say now that what I was talking about was rates and scales of pay. There are two things: there is the rate and scale of pay, and there is the pay made to individuals unrelated to rates and scales of pay. The latter apply to all. We shall come to increments later, the noble Lord has an 1121 Amendment down on that. I think the position is perfectly clear here.
§ LORD MILFORD
I have been a member of the Agricultural Workers' Union for 30 years. During that time we have done all we can to get rid of the tied cottage, and to get rid of the gap between the earnings of agricultural workers and the other industrial workers. The agricultural worker to-day is as much a skilled engineer as anybody, yet his wages are pounds below those of other engineers. The agricultural worker is the most loyal worker that one could find anywhere, but he is becoming bitter at the way he is being treated, especially over this last wages issue. All around him land prices are going up, to the benefit of the pockets of the landlords. The agricultural worker sees this Government as largely a Government of landlords and businessmen. He sees the cottages in the village in which he and his friends used to live now on sale for £15,000 or £20,000. They are being sold above him as weekend cottages for commuters and people like that. No wonder the agricultural worker is getting more and more bitter, and no wonder he looks upon this Government with absolute loathing! As I say, this is the Government of the landlords and big businessmen who are being so stingy to the agricultural worker.
§ BARONESS EMMET OF AMBERLEY
The noble Lord who has just spoken ought to be replied to from the point of view of the person who lives in the country and employs people on the land. It may be true that the value of the houses have gone up quite out of proportion, but so has the house occupied by the man who is working on a farm; nevertheless, the landowner, the owner of the cottage, has not increased the occupier's rent. What is more, whoever works on a farm has no distance to travel and gets many other amenities which are often overlooked. The noble Lord has given a completely distorted view of what is happening.
§ 3.35 p.m.
§ LORD LEATHERLAND
I do not want to direct the few remarks I have to make to the case of the agricultural workers in particular, but I find it rather incongruous that this Government, who have argued from time to time about the 1122 desirability of not striking but of settling wages through properly regulated machinery or arbitration, are turning down the increase for the farm workers which has been negotiated peacefully and properly through such channels. If this debate has shown anything, it has shown that if you want to keep wages down you can always find arguments for doing so. Earlier in this Government's life they thought they could do it by union bashing. They found that they could not do so; so now they are trying to do it by legislation. It has been suggested that the principle of equality is behind the Government's proposals; but is there any equality between freezing the income of somebody on £18 a week and freezing the income of somebody on £100, £200, or £300 a week? The man on £18 a week is hard put to it to make ends meet; the other person has an adequate income. He need not cut down his standard of living, and he can draw on his savings if he wants to.
For a long period of my life I dragged myself out of the category known as the lower-paid worker. I suppose that since my retirement I have gone back into that category. Be that as it may, I have many friends who are among these lower-paid people. I also have the advantage—it is a rather tiresome one—of doing the weekly shopping at home. As I walk round the supermarket I find how easy it is to turn up at the cash desk with goods which mean a bill of £5 or over for a relatively small number of articles. It is pathetic to see people—sometimes old, sometimes not so old—on small incomes who go round picking out the cheapest things they can find, the scrap bits of bacon, the scrag ends of meat. These people do not always live on ripe pheasant and old port.
In discussing their weekly income to enable them to exist, we have to bear in mind the fact that food, which is the biggest item in their household expenditure every week, is under these measures going to be virtually free from control. We know that the price of meat is going up; we know that the price of fish is going up—and good luck to the fishermen who catch the fish! But I believe there are a lot of people who take a rake-off between them and the shop counter. The price of eggs is going up; milk has gone up; bread has gone up, and there is a 1123 serious sugegstion that it will go up again. Vegetables, as we know, are a free market, and while some of them will probably come down in price some of them will probably go up. I saw in the paper the other day that £16 million is to be paid in compensation to farmers because they have not grown potatoes this year—not because they have grown potatoes, which would contribute to the diet of many of these people, but because they have abstained from growing potatoes. After they have met their food bills these people have to pay for their gas, their coal, their electricity, their National Health contributions; and very shortly they will see many of the items of their weekly expenditure inflated by value added tax. Next year they will have increased rates to pay in many cases if they are not fortunate enough to qualify for a rebate.
The Government, as one of the basic elements of their social policy, have always said that they must be selective: they must be selective in distribution of housing subsidies; they must be selective in the distribution of social welfare payments. There is much to be said in favour of that policy; there is something to be said against it. But if they want to be selective in that branch of their policy, why cannot they be selective in this branch of their policy also and make an exception of those people who are receiving under £20 a week? It is all right to say that everybody else shall have £2 or £2 plus, but let us be selective. Let us make an exception of these people who find it so difficult to make ends meet and give them something over the £2. If the Government would do that, they would gain in public esteem.
I would finally ask the Government this question. The Government have been wrong—very gravely wrong—in many of the policies they have introduced during the last two and a half years. We have had the Prime Minister standing on his head every few months. We had Mr. Davies, when he was Supremo at Trade and Industry, doing the same thing about "lame ducks" and about grants to industry. May the Government not possibly be wrong on this occasion? I feel that if they "came clean", as the saying is, and admitted that this was an unfair proposal which they 1124 are putting before the Committee, and gave some little consideration to these grossly underpaid people, they would be thought much better of in the country.
§ 3.42 p.m.
§ LORD DOUGLASS OF CLEVELAND
I do not want to dwell on the emotional side. That has been amply done by my noble colleagues on this side of the Committee. I am looking at the practical question which the noble Lord, Lord Drumalbyn, raised of the man who gets £19.50 and gets a rise and the man who gets £20.50 and does not. Having regard to the history of debates in this House on the Industrial Relations Bill, I should have thought that the Government would be looking for some measure of elasticity on the Bill now before us that would not get them into the difficulties which the Industrial Relations Bill got them into. In examining what took place at the tripartite discussions between the Government, the C.B.I. and the T.U.C., I would say that unquestionably threshold agreements were contemplated, advocated and indeed were thought practicable to take care of cost-of-living increases. They meant that, if prices went up, there would be a bench-mark which would at least take wages up to cope with the increased cost of living. I should have thought that the Government would have some regard to what they are going to do after the 90 days in this particular respect, and say, "Well, threshold agreements will have to be arrived at after this." In what measure will be a case for discussion.
To come back to the freeze itself, there is no moral justification for a freeze which keeps wages down, however high they are, and allows prices of any sort to go up. But if it must be done by force of circumstances, there surely comes a point where it is not only impracticable but completely immoral. That is the phase we are discussing here—men getting up to £20 a week. I should have thought (and this is only a thought which has come to me as I listened to the discussion, as it might have done in negotiation with employers) that we could say that, if men getting up to £20 a week are going to have to pay more for food, some consideration should be given to this. Perhaps a threshold agreement could be worked out month by month so 1125 that there would be immediate adjustment of wages, retrospective if possible, so that they will not have a lower standard of living at any time than they have now because of increases in the price of food. This is an answer to the question whether this proposition is practicable or not. It might be said, "You come up to £20 and then you make a clean jump and there are anomalies." All my experience has taught me that one can have a sliding scale over a fairly narrow period here that would take away the impracticability of making a complete jump from £20 to £20.50.
I am here asking the Government to do two things. First, I ask them not to allow to go unchallenged the charge that they are not going to agree to any Amendments, but at least to make some attempt to meet a very difficult situation. Secondly, I am asking them to have some regard to what is going to happen after the 90-day period, because they will either have to do something about this question or else extend the period. And the longer it is extended the more difficult their task will be. Cannot the noble Lord, Lord Drumalbyn, say, "We are not going to say out of hand that this Amendment will be rejected. We will have a look at it. It is possible to do something about a threshold agreement along the lines that have been suggested, which will at least give the man with £20 or under the satisfaction of knowing that for him the wage freeze is not something which is going to keep his standard of living level or indeed going to reduce it."? It is something that will obviate that difficult and indeed impossible situation and take away from the Government a great deal of antagonism that certainly exists at the present time over this Bill in regard to the Amendment moved by my noble friend Lord Beswick.
§ LORD ARCHIBALD
May I put a small point to the noble Lord, Lord Drumalbyn? He has made a comparison between the increase in wages of the agricultural worker pre-1970 and post-1970, as though the agricultural workers' wages were determined by the Government. Is it not the case that they are determined by the Agricultural Wages Board, which is not supposed to be influenced by political considerations? Furthermore, is not the noble Lord going 1126 rather below his usual high level in making a debating point on something which really has no substance at all?
§ LORD SANDYS
I should like to take issue with both the noble Lord, Lord Archibald, and the noble Lord, Lord Leatherland, to whom the House always listens with great interest on agricultural matters. I feel that we run the risk of getting the question of agricultural workers' wages out of proportion in the time-scale. It is my understanding that the 90-day freeze is due to end on February 3, and at the present moment the date at which the present agricultural workers' wage increase, now frozen, is due to take place is January 23. I make the difference between the two dates nine days. Naturally an exception is most unlikely to be made. The gap between the two dates is short. Admittedly, the hardship is severe. When the noble Lord, Lord Leatherland, used the phrase, "The Government have turned down the farm workers' increase", I felt that to some extent he had suggested that this had been rejected. It has, after all, been postponed, and for a relatively short period.
§ 3.49 p.m.
§ LORD DRUMALBYN
I am grateful to my noble friend for making that point, but I think I should perhaps make it clear to him right away that the time-scale is not quite what he thinks. The period of the standstill will remain for 90 days from the passage of the Act. It will take us rather past the date he has in mind. It will be about the end of February, I think—
§ LORD DRUMALBYN
At a minimum, as the noble Lord says. It can be extended. But the general point which the noble Lord makes is nevertheless an important one. I hope I shall not be pressed to say what the next phase is going to be. One or two noble Lords have asked what is going to happen after phase 1. This is exactly what the Government are thinking about at the present time. The Government consider it better to think first and speak afterwards, and—
§ LORD DRUMALBYN
The noble Lord, Lord Shepherd, says "two and a half years": the fact is that for many weeks we have been discussing in the tripartite talks some kind of arrangement which would be voluntarily acceptable, and because that has not been agreed we now have to impose this phase 1
The noble Lord, Lord Slater, asked who is to determine, in these circumstances, what is practicable? This is what Parliament is determining at the present time. The noble Lord also said that memories are short. But of course one has to bear in mind that it is only six years since our predecessors had to introduce a measure of this kind, and they did not think fit in those circumstances to make the kind of exception—I am not talking about any particular level of wage that would be excepted—that is now proposed in this Amendment.
May I just say to the noble Lord, Lord Popplewell, and to the noble Lord, Lord Brown, that I try to rely on argument and not anything else, and I try to put the arguments as I see them. I am sorry if he did not find my argument convincing; I certainly convinced myself.
§ LORD DRUMALBYN
May I say also to the noble Lord, Lord Popplewell, that I think your Lordships as a whole will greatly welcome the willingness of noble Lords opposite to accept that a differential should no longer in all circumstances be regarded as something that must be maintained, and to that extent at any rate one would welcome this Amendment. Of course I am not saying anything new here because the general principle of the "across the board" increase, as I understand it, was accepted in the tripartite talks. The noble Lord, Lord Popplewell, referred to agreeing increased base rates; but may I just put the point again, quite briefly, that the whole problem of this Amendment is that it does not involve the increase of a base rate. It involves the right to the possibility of increasing the pay of those particular individuals who were averaging below £20 a week over the last thirteen weeks before the standstill came into effect. I say "the standstill came into effect" because there are the two 1128 separate stages within phase 1. First, the period before the legislation is passed, during which people are not expected to put up wages or prices, and the second stage, where it is possible for the Government, if wages or prices have been put up, to make an order or to issue a notice, as the case may be, calling upon them to be reduced to what they were before November 6. Does the noble Lord wish to intervene?
§ LORD POPPLEWELL
On the question of putting up prices, if the prices were put up in the interim period I understand the noble Lord to say that it will be possible for the Government to take action. I gather that many inquiries have been submitted about increases in prices during the interim period. May I ask the noble Lord whether he is in a position to indicate when Government action will be taken against those people who have put up prices?
§ LORD DRUMALBYN
My Lords, I imagine that Government action will be taken, on the basis of information that has been supplied, as soon as possible after the Bill becomes law. While the inquiries are running at a very considerable rate just now, the complaints are running at a much lower rate.
I was glad to hear that the noble Lord, Lord Shinwell, agreed that the Amendment in itself was not acceptable, but he asked that we should consider something of the kind. The real difficulty here is that we are asking only for a relatively short standstill—90 days, with the possibility of an extension to 150 days. The sooner we get this Bill the sooner we shall be able to bring forward our proposals for what is to happen in the next phase; but if we were to prolong this matter or to make it more complicated in any way, I think that noble Lords opposite would regret it. There would be infinitely greater arguments and complaints about points of demarcation, and all the rest of it, and I really do commend to your Lordships that it is much wiser to stick to a system that is quite clearly understandable and which will not give rise to the kind of disputes arising from having a much more complicated system written into the Bill.
I think I have already answered the main point made by the noble Lord, Lord Balogh. I do not see him in his place. 1129 Of course we are here talking about increases in rates and scales of pay on the one hand and increases in the pay of individuals on the other—where they are not subject to rates and scales.
The noble Lord, Lord Leatherland, took the debate rather wider. I do not complain of that in the slightest. Nobody can deny that in many ways those who are least well paid are most affected by a standstill of this kind at a time when some prices may go up but, if I may say so, he was not right in saying that food is virtually free from control. I would direct his attention to paragraph 7 of the White Paper, which says:Where such prices rise,and this is talking about prices which are subject to fluctuations arising from external seasonal causes—enterprises handling these products without applying any manufacturing process to them will not be required to obtain specific consent for raising their prices by the same amount. Increases beyond this will be subject to the controls provided in the Bill. Where there are price reductions, enterprises will be expected to pass them on in full.So we have the two points: there are to be no increases in margins, and this will be policed. It is only where prices go up because of external factors that the wholesaler and the retailer will be able to increase their prices.
§ LORD LEATHERLAND
I am quite sure the noble Lord understands as well as I do that when a woman goes into a shop and gets hold of a tin of corned beef she does not go to the cash desk and say "What is the margin on this commodity?" She says "How much does this cost?". Will the noble Lord assure me that since November 6 there have been no increases in food prices?
§ LORD DRUMALBYN
No, my Lords, I certainly will not do that. Nor was it envisaged that there would be none. I should hope that in some cases some prices would go down, but I think the noble Lord fully understands this. I assure him that I fully understand his argument, and it is because I understand it that I want to see this Bill on the Statute Book as quickly as possible. This will enable us to reach and implement the second phase, the really operative phase, which will help the lowest paid.
May I make a final appeal to the Minister to reconsider the purpose of the Amendment, for which there is sympathy in all parts of the Committee? Will be accept the idea that if food prices go up, wages should go up automatically as well? I urge noble Lords not to make a mockery of this assembly at the instigation of the Conservatives, who have an overwhelming majority in this Committee? When noble Lords are faced with an Amendment like this, on which they feel strongly, they should not give it the Conservative rubber stamp.
§ LORD BESWICK
The noble Baroness, Lady Emmet of Amberley, said that we were being unfair in our presentation of the position of agricultural workers. In fact, agricultural workers are not mentioned in the Amendment, and they are not dealt with separately in the Amendment. I am simply saying that any wage increase agreed between an employer and employee should not be caught by these provisions if the employee is earning less than £20 a week. That is all I am saying, and for the noble Baroness to try to make out that agricultural workers are well off is irrelevant to the argument. Is she really saying that the settlement which was freely reached between the farmers and farmworkers was unreasonable?
§ BARONESS EMMET OF AMBERLEY
If the noble Lord will allow me to answer him, I can tell him that I was referring to a speech made by another noble Lord and not to the case adduced by the noble Lord, Lord Beswick.
§ LORD BESWICK
The noble Baroness was making a point and I am answering it. She made it in the general debate. She said that we had wrongly presented the case of the farm workers. There was reached by the Wages Council an agreement (it was not actually an agreement, because the farm workers thought the award was too low), or a figure, and I thought that almost everyone was of the view that that figure should be paid. All I am saying in the Amendment is that if there is an agreement between an employer and employee for a wage increase it should not be caught in this context. As for all this nonsense of the base increase and the rest of the detail with which the noble Lord, Lord Drumalbyn, tried to cloud the issue, that is completely 1131 irrelevant. Any employer takes that sort of thing into account when he negotiates with a trade union. I am talking about an agreement reached between the two sides of industry and I am suggesting that it should not be caught by this provision.
The case of the noble Lord, Lord Drumalbyn, in his first speech was that the Government could not make exceptions and that the freeze must apply to all. I see opposite me a number of noble Lords who have been summoned here by their Whips to vote for the Government; they are being invited to support the Government on the ground that the freeze must apply to all. I challenge any of them to rise and say they believe that this Bill provides for a freeze upon all equally. They cannot do that because it specifically makes exceptions. There is no question of the freeze applying to all. But even if it did, and we had a Bill which did not include Clause 3(3), and even if it said, "We are asking for equality of sacrifice" on this sort of overall basis it would, I suggest, mean an unfair sacrifice from the lower-paid worker.
I have no doubt that many of my noble friends, among them my noble friend Lord Shinwell, will remember that famous poster of Frank Horrabin at the time of the 1931 Election. We saw a ladder coming out of a pool of water. At the top of the ladder stood a very well-dressed, well-fed gentleman with a large cigar. Lower down, with his shoulders just clear of the water, was a less well-dressed gentleman with no cigar. Lower down the ladder still was what we should call, in modern jargon, a blue-collar worker, and his neck was just above the water. The fellow at the top of the ladder was saying, "Equality of sacrifice—all down one run". In this instance the Conservatives are saying that the water should be brought up equally for all by one foot—and the man on the lower rung will be submerged. This is a fact: because the water is rising; nobody believes that this Bill will stop price increases. Price levels will go on increasing, and some people will find themselves in difficulty within three months. I mention this because the noble Lord, Lord Sandys, will, I imagine, vote for this Amendment in view of the fact 1132 that his opposition is based on a wrong assumption. This is not a three months' Bill but a five months' one, at the least, plus the length of time it will take to get it on the Statute Book.
§ LORD SHINWELL
May I remind my noble friend of a most remarkable exception arising out of the Government's policy related to this freeze? Those who are subject to annual increments—civil servants, officials of local authorities and the like—will not be affected at all. They will receive their increments as arranged. That is a remarkable exception about which the noble Lord, Lord Drumalbyn, said nothing.
§ LORD BESWICK
My noble friend is absolutely right, and these are the very people who are specifically excluded by Clause 3(3). I have an Amendment, to which we shall come later, dealing with this point. This Bill does not make equal provision for all, and I am saying that even if it did it would bear unfairly on the less well-paid.
§ LORD DRUMALBYN
I intervene because I am sure the noble Lord does not want to be unfair. I have made it quite plain that we are talking about increases in scales or rates. We are not talking about increases within scales or rates, though we can discuss these in more detail when we come to the question of increments. I thought I had made the position clear.
§ LORD BESWICK
I regret that the noble Lord—I like to call him my noble friend—Lord Robbins is not in his place. If he were here I would have said that the noble Lord, Lord Drumalbyn, was in danger of getting himself tied up with words in much the same way as some economists have done. We are dealing here with the purchasing power of the housewife, and whether it comes from an increment or from some highly esoteric scale is quite irrelevant. We are concerned with the amount of money the housewife has to pay the bills of the family, and I am saying that the housewife in the lower-paid family should have special provision made for her. I am saying, moreover, that the Government have recognised this because the original package contained the flat-rate idea, the idea that a bigger proportion should go to the lower than to the higher paid. The 1133 noble Lord, Lord Drumalbyn, has absolutely no economic argument to adduce against the Amendment. The Government admitted that it was possible to put into the economy a given sum of money. I am not asking for that total sum—which was carefully calculated (some say with slight inaccuracy) by the Chancellor; but at any rate a calculation was made—to be put into the economy, but I am saying that that proportion which applies to the lower-paid workers should be put into the economy.
I hope that the noble Lord will give some undertaking that he will look at this point again on Report stage. If he is troubled only about the £19.50 man, I will produce an Amendment which will deal with that and I hope that he can give me an assurance that it will be accepted. But in the meantime let me say that I am not asking him to give any assurance
§ about phase 2. He pleaded we should not press him on that. I am not pressing him on that, but what I am saying to him, in his own interest, is that if he wants to get a workable phase 2 then he has to do a lot more to earn confidence in the Government; he has to do a lot more to get back some of the good will which could have been his but which has been dissipated by the Government's intransigence on this and similar legislation. I hope that, even now, we may have an assurance that the Government will look at this matter again on Report stage, otherwise we shall do what we can do in the Division Lobby.
§ 4.11 p.m.
§ On Question, Whether the said Amendment (No. 1) shall be agreed to?
§ Their Lordships divided: Contents, 74; Not-Contents, 112.1135
|Addison, V.||Fiske, L.||Phillips, B. [Teller.]|
|Airedale, L.||Gaitskell, B.||Popplewell, L.|
|Amherst, E.||Garnsworthy, L.||Rochester, L.Bp.|
|Amulree, L.||Geddes of Epsom, L.||Royle, L.|
|Archibald, L.||George-Brown, L.||Sainsbury, L.|
|Arwyn, L.||Gladwyn, L.||St. Davids, V.|
|Balogh, L.||Hale, L.||Seear, B.|
|Beaumont of Whitley, L.||Hall, V.||Serota, B.|
|Beswick, L.||Henderson, L.||Shackleton, L.|
|Blackett, L.||Heycock, L.||Shepherd, L.|
|Boothby, L.||Hoy, L.||Shinwell, L.|
|Brockway, L.||Hughes, L.||Slater, L.|
|Brown, L.||Jacques, L.||Stocks, B.|
|Buckinghamshire, E.||Janner, L.||Strabolgi, L. [Teller.]|
|Burntwood, L.||Kennet, L.||Summerskill, B.|
|Burton of Coventry, B.||Leatherland, L.||Taylor of Mansfield, L.|
|Carnock, L.||Llewelyn-Davies of Hastoe, B.||Watkins, L.|
|Champion, L.||Lloyd of Hampstead, L.||Wells-Pestell, L.|
|Chorley, L.||Longford, E.||White, B.|
|Davies of Leek, L.||McLeavy, L.||Williamson, L.|
|Diamond, L.||Maybray-King, L.||Wise, L.|
|Douglas of Barloch, L.||Milford, L.||Wootton of Abinger, B.|
|Douglass of Cleveland, L.||Moyle, L.||Wright of Ashton under Lyne, L.|
|Faringdon, L.||Nunburnholme, L.|
|Feversham, L.||Ogmore, L.||Wynne-Jones, L.|
|Aberdare, L.||Brooke of Cumnor, L.||Davidson, V.|
|Albemarle, E.||Camoys, L.||de Clifford, L.|
|Alport, L.||Cawley, L.||Denham, L. [Teller.]|
|Amherst of Hackney, L.||Clancarty, E.||Derwent, L.|
|Ashbourne, L.||Clwyd, L.||Drumalbyn, L.|
|Auckland, L.||Colgrain, L.||Dudley, E.|
|Balerno, L.||Colville of Culross, V.||Dundee, E.|
|Balfour of Inchrye, L.||Cottesloe, L.||Dundonald, E.|
|Barnby, L.||Courtown, E.||Ebbisham, L.|
|Belstead, L.||Craigavon, V.||Eccles, V.|
|Berkeley, B.||Crathorne, L.||Effingham, E.|
|Bessborough, E.||Cromartie, E.||Elliot of Harwood, B.|
|Bethell, L.||Cullen of Ashbourne, L.||Emmet of Amberley, B.|
|Blackford, L.||Daventry, V.||Exeter, M.|
|Falkland, V.||Kilmany, L.||Reigate, L.|
|Ferrers, E. [Teller.]||Kilmarnock, L.||Rennell, L.|
|Ferrier, L.||Kindersley, L.||Rockley, L.|
|Fortescue, E.||Kinloss, Ly.||Rothes, E.|
|Fraser of Lonsdale, L.||Latymer, L.||Ruthven of Freeland, Ly.|
|Garner, L.||Lauderdale, E.||St. Aldwyn, E.|
|Gisborough, L.||Limerick, E.||St. Helens, L.|
|Goschen, V.||Long, V.||St. Just, L.|
|Gowrie, E.||Lothian, M.||Sandford, L.|
|Greenway, L.||Loudoun, C.||Sandys, L.|
|Grenfell, L.||Lovat, L.||Selkirk, E.|
|Grimston of Westbury, L.||Macleod of Borve, B.||Sempill, Ly.|
|Hailsham of Saint Marylebone, L. (L. Chancellor)||Mancroft, L.||Stonehaven, V.|
|Massereene and Ferrard, V.||Strang, L.|
|Hamilton, D.||Merrivale, L.||Strathcarron, L.|
|Hanworth, V.||Milverton, L.||Sudeley, L.|
|Harvey of Prestbury, L.||Molson, L.||Templemore, L.|
|Hatherton, L.||Monck, V.||Teviot, L.|
|Hawke, L.||Monckton of Brenchley, V.||Thurlow, L.|
|Hood, V.||Mowbray and Stourton, L.||Vernon, L.|
|Hylton-Foster, B.||Nugent of Guildford, L.||Vivian, L.|
|Ironside, L.||Oakshott, L.||Windlesham, L.|
|Jellicoe, E. (L. Privy Seal.)||Rankeillour, L.||Young, B.|
|Killearn, L.||Redcliffe-Maud, L.|
Resolved in the negative, and Amendment disagreed to accordingly.
§ 4.20 p.m.
LORD DIAMOND moved Amendment No. 2:
Page 2, line 12, leave out ("may") and insert ("shall").
The noble Lord said: I beg to move Amendment No. 2 and I understand that it may be convenient for your Lordships to discuss the following Amendment, No. 3, at the same time. This is entirely a matter for the noble Lord, Lord Brooke of Cumnor, and if it is convenient to him it is certainly convenient to us. An understanding Government, or an understanding Parliamentary draftsman (I do not know which it is), recognising that it is more than likely that we shall not understand the Bill if we merely read it, has generously provided us with an Explanatory Memorandum which explains in simple English what it is all about. I will, if I may, read to your Lordships the first two lines:
The Bill empowers the Government to apply a standstill in prices, charges for services, pay, dividends and rents…
That is quite simple; all those are dealt with equally, pari passu, in the same way. And a little later on in the Explanatory Memorandum we are told what Clause 2 is about. It says:
Clause 2 enables the appropriate Minister by order or notice to apply the standstill to any prices for the sale of goods, charges for the performance of services, remuneration under contracts of employment, dividends de-
clared by companies incorporated in the United Kingdom and rents.
All those are dealt with equally. So much then for the Explanatory Memorandum, which indicates what the Government have in mind.
We now turn to the Bill, and I refer your Lordships to subsection (1) of Section 2 which says "Prices…shall not exceed" a certain thing; subsection (2) says "an employer shall not pay" certain remuneration; subsection (3) says "A company…shall not declare" dividends of a certain kind. That is all very straightforward and simple. The purpose of the Bill as shown in the Explanatory Memorandum is to apply the standstill to various things. The three subsections to which I have referred give effect to that; in each case they say "prices shall not", "an employer shall not", "a company shall not". All that is what one would expect. But when one then comes to the subsection to which this Amendment relates, the subsection dealing with rents, lo and behold! the Bill reads:
The appropriate Minister may by order provide for preventing increases of rent…
The "shall not" or the "shall" have disappeared. The purpose of the Bill is to provide equally for these varied categories a standstill. The wording of the Bill says specifically what a company, an employer and a seller shall or shall not do. So the first question one wants to ask is, why does not the same wording apply to rents where the same purpose is intended?
In case one has not fully understood one turns to the White Paper, and in paragraphs 22 and 23 all this is set out. It refers to rents and says:
Some of them"—
that is to say, tenants—
are due to move from control to regulation on 1st January, 1973…This date will be postponed to the end of the standstill period.
Not "may be postponed", but "will be postponed". There is nothing in the Bill to say it will be postponed. The same paragraph goes on to say:
For those private tenants whose rent is regulated"—
that is one category
and for tenants of housing associations who come within that system"—
that is another category—
any fair rent…will not take effect until the end of the standstill.
For those two categories a fair rent which represents an increase will not take effect—not "may not" take effect, but "will not" take effect. That is what the White Paper says, repeated in essence in the Explanatory Memorandum which I have read out. But where in the Bill does one find that for those two categories of tenants rent increases resulting from fair rents being registered will not take effect until the end of the standstill? Nowhere.
One carries on with paragraph 23 of the White Paper:
The rent of business premises and land—will be subject to the standstill provisions.
Not "may be" but "will be". Where in the Bill does one find that the rents of business premises will be subject to the standstill provisions? Nowhere. All the Bill says is that "the appropriate Minister may by order provide for preventing increases of rent".
§ So the matter that troubles me, naturally, is why the Government have chosen this one category, sensitive and important to a degree, to depart from their set purpose of an effective standstill, and given themselves merely discretion to do something if they think at the time they feel like doing it. I want to press the Government that they should either explain why they have chosen this extraordinary wording, or, far rather, that they should word the Bill in accordance with their White Paper and in accordance with the Explanatory Memorandum to the Bill. 1138 That is not a revolutionary request to make of a Government. They have issued a White Paper, they have published a Bill, saying what is their intention. I am inviting the Government, in the clauses of the Bill, not deliberately to depart from their White Paper and from their intentions. The word "may" is a deliberate departure. The word "shall" is consistent with the White Paper and the Explanatory Memorandum. I am asking that the Amendment, which substitutes the Government's intention for the Government's waffle in the clause itself, should be accepted.
I hope that we shall not be given the answer, "Of course you are right: we do intend to do this, but we intend to bring in an order in due course; therefore there is no need for us to say 'shall' and to guarantee, as it were, our intention in the Bill itself." I hope that is not going to be the Government's answer. Of course the Government have made it clear, for example, that they are going to bring in an order about dividends, setting out in detail the arrangements about them. That is a complicated matter, and one well understands that the Government feel it may be more convenient for all the details to be incorporated in an order rather than set out at length in the Bill. That being their intention, they have not departed from the White Paper or the Bill itself so far as dividends are concerned they are saying, "A company…shall not declare…" dividends of a certain kind. It is not:
The Minister may by order provide for companies not declaring a dividend".
They simply say:
A company…shall not declare…
So whether the matter is to be expressed later on in full detail in an order or not, there is still no reason at all why the matter should not be stated clearly, explicitly and in accordance with the Government's White Paper, in accordance with its policy, and in accordance with the Explanatory Memorandum, in the clause itself. All I am asking the Government and your Lordships to agree to is that that correction should be made.
§ 4.31 p.m.
§ LORD BROOKE OF CUMNOR
I hope that it may be acceptable to your Lordships, as I understand it is to the 1139 noble Lord, Lord Diamond, that my Amendment to subsection (4) should be discussed in a single debate together with the Amendment which has just been moved. My Amendment is certainly a probing Amendment. I take it for granted that the standstill is to apply to furnished rents as well as unfurnished rents, but so far I have failed to find any reference to this matter, and it seemed to me to be a point which your Lordships would specifically wish to inquire into. I take it for granted that that is the Government's intention, because I do not believe that without the powers given by this Bill an absolutely effective curb on increases in furnished rents could be achieved. It may be—I hope not—that the Government have in mind that the rent tribunals can look after the position so far as furnished rents are concerned, but it would seem to me a retrograde step to leave the control, the freezing of furnished rents, wholly to the rent tribunal machinery, when it could be done much more easily, convincingly, and universally by an appropriate mention in an order to be made under this clause.
My noble friend Lord Sandford will recollect that the Francis Report said, among other of its interesting findings, that 20 per cent. of tenants of furnished property in London knew nothing whatever about rent tribunals. I seem to remember that the Francis Report also said elsewhere that any reference to a rent tribunal in the majority of cases tends to worsen the personal relations between the tenant and the landlord. That is a further reason why I should like to see the freezing of furnished rents during this period done by order under this Bill rather than by relying on the general machinery.
I do not know the Government's intentions as regards machinery. I am anxious to find out—just as the noble Lord, Lord Diamond, has been anxious in his Amendment—just what is in the Government's mind. As I say, I take it for granted that furnished rents, as well as unfurnished rents, are being frozen, and I think that it would be very helpful if my noble friend Lord Sandford would at this stage give us a general picture of the Government's intention as to the freezing of rents during the currency of this legislation.
§ 4.34 p.m.
§ LORD BESWICK
I support the Amendment of the noble Lord, Lord Brooke of Cumnor. As he says, it is inconceivable that action should be taken in the case of unfurnished accommodation and not in the case of furnished accommodation. Here again we come up against a situation in which the Government, possibly unwittingly, are differentiating against those who are in the least favourable position. I wonder whether it is understood just how unfortunately placed are so many people who are compelled to live in furnished accommodation. I have some figures which indicate the magnitude of the problem. I am told that there are 760.000 furnished tenancies in the country, of which half a million are in London, and 19 per cent. of these, according to the Francis Report, are occupied by families. There are 95,000 families who live in London alone in furnished tenancies.
As I tried to indicate on an earlier Amendment, food and rent figure much more importantly in the budget of the lower-paid than they do in the budget of the higher-paid. It is therefore very important that special attention is given to this. For all families housing is one of the three most important items in the household budget, but for the low-income families, those earning under £25 a week, it is second only to the cost of food according to the 1971 Government Expenditure Survey. The figures are really rather frightening. In January, 1972, according to one census, in South Kensington 43 per cent. of those in furnished accommodation were paying more than £6 a week; by September, 1972, that percentage had gone up from 43 to 85. Eighty-five per cent. of the people in South Kensington living in furnished accommodation were paying more than £6 a week. It would therefore seem absolutely essential that something should be done for this category of people within this interim period, and I hope that the noble Lord, Lord Sandford, will be able to say that, in order to make the matter absolutely clear, he is prepared to accept the Amendment of the noble Lord, Lord Brooke of Cumnor.
THE LORD BISHOP OF ROCHESTER
In a sentence, I should like to support the noble Lord, Lord Brooke of Cumnor, in his probing Amendment, 1141 and I do so for the reason that has just been stated, that furnished tenancies are one of the most vulnerable sectors of the housing field, and also because for people in this lower income group rent is such a very big proportion of their total expenditure.
§ 4.38 p.m.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD)
I welcome both these Amendments, Nos. 2 and 3, for the opportunity they provide for me to explain how my right honourable and learned friend intends to exercise his order-making powers under Clause 2(4); why he will do some things, and why he will not do others. Since the war, every part of the whole rent sector—council rents, private sector unfurnished rents, private sector furnished rents, et cetera—has been considered more than once by both Parties, to see which parts should be restrained or curbed in one way or another. In addition, as all noble Lords know, many of them are still at this moment restrained or curbed in various ways. Those that have not been restrained, or are not restrained now, have been excepted from the various restraints and curbs that have been considered for the good reasons that were recognised by both Parties on past occasions when it has been necessary to combat inflation by measures such as those now before us. This is why—and I am sure that the noble Lord, Lord Diamond, in spite of his charming display of simulated naivete, recognises this as well as anybody else—there is less wide scope for applying a 90 day freeze in this sector than in other sectors of prices and dividends. Where rents are concerned, there has been a measure of restraint and control over large parts of the sector for many years, and a short-term freeze in this case is not appropriate over the whole sector. Those that are not curbed by these measures, are not curbed for reasons which seemed good to the Party opposite in 1966 and in 1968, and which still seem good to us when dealing with a similar problem in 1972.
Let us now look at the whole field of rents, sector by sector. First of all, as regards the public sector, my right honourable and learned friend the Secretary 1142 of State will not, in his order under Clause 2, deal with the rents of local authorities in England and Wales, because these local authorities increased their rents on either April 1 or October 1 this year, and will not be making further increases during the 90-day standstill period. Those few authorities—and there are only a few of them now—who have yet to fulfil their obligations under the Housing Finance Act will of course still be required to do so, and I am sure all noble Lords will agree that that is equitable.
As regards the private sector, the vast proportion of rents are already subject to some form of control under the Rent Act 1968. In the unfurnished private rented sector, there are 1.1 million controlled dwellings and 1.2 million regulated dwellings. Controlled dwellings are those whose rent is broadly fixed at 1957 levels. These dwellings are due to be decontrolled under Part IV of the Housing Finance Act and this decontrol programme, which is phased over three years, was to have started on January 1, 1973. The order to be made by my right honourable and learned friend, under subsection (4) of Clause 2, will provide that this decontrol programme be postponed until the end of the standstill period. This has the effect of continuing to freeze the rents of 1.1 million tenancies in the private rented sector.
The 1.2 million regulated dwellings are those covered by the Rent Act 1968, for which rent officers and, on appeal, rent assessment committees are empowered to fix fair rents. The Rent Act froze those rents in 1965 and they can generally be increased only if the landlord, the tenant, or both acting jointly, go to the rent officer and ask for a fair rent. If this fair rent is greater than the currently frozen rent, then the landlord, under the Rent Act, may increase his rent up to that fair rent level. The order will provide that during the standstill-90 days, or more if it is extended—rent increases which result from such a fair rent determination will also be frozen. This therefore has the effect of generally freezing the rent of these 1.2 million tenancies. The only exceptions to these provisions will be rent increases following from earlier improvements to the property—this is what we describe as the 12½ per 1143 cent. provision—or existing phased increases on conversion of a "good" controlled dwelling into a regulated one.
When the Party opposite were dealing with a situation similar to this, increases took place in circumstances in which the lower income groups—about whom we are rightly concerned—were not cushioned by the provision of generous comprehensive rent allowances, as they will now be under the Housing Finance Act from January 1 next year. So that here we are making an exception which they made, but the lower income groups are protected by measures which we have made available for them and which were not available in 1966 or 1968. In addition, the order will freeze the rents of unfurnished accommodation which is not protected by the Rent Acts by virtue of its high rateable value—£400 or more in London; £200 or more elsewhere. This is a sector which the previous Government did not include in the statutory freeze which they introduced in 1966 and 1968.
I come now to the Amendment of my noble friend Lord Brooke of Cumnor, which covers the application of the standstill to tenancies of furnished accommodation. The Committee will know that furnished accommodation comes within the scope of Part VI of the Rent Act 1968. That provision enables tenants of private rented accommodation to go to the rent tribunal to have a reasonable rent registered, and registration of a rent gives a tenant security for six months, though this period can be varied either way on further application to the tribunal. There are some 500,000 furnished tenancies, but only one in 50 tenants in a year makes an application to the tribunal. The vast majority of rents in this field are agreed between landlord and tenant. Particularly in certain parts of London and of the other big conurbations, there are tremendous local imbalances in the demand for, and the supply of, rented accommodation. Generally speaking, it may often be in the interests of landlords, particularly landlords of unfurnished accommodation, to sell their property rather than continue to rent it. They can get a good price for their property on the open market. In contrast to that, rental income is often low or, in the case of controlled tenancies, derisory. When 1144 the return to the landlord is so low, it becomes all the more understandable that landlords increasingly want to sell and to get out of the business altogether. This is the background against which we have to decide what to do with furnished accommodation.
Even though the Francis Committee of Inquiry into the workings of the Rent Acts, which was set up by the Party opposite when they were in power, reported that for the most part landlords were enjoying good relations with their tenants, it is always the bad landlords and not the good ones who make the news; the mud rubs off on all landlords and they have very few supporters. The result is that the private rented sector as a whole is shrinking and, certainly in the worst areas of housing stress, the demand for rented accommodation outstrips the supply by a long way. There have been, and no doubt there will be other, more appropriate occasions than this to explore these issues in greater detail; we had a debate on housing only a few weeks ago. But the importance of this situation—and these are the realities—for our present purpose is that there is a very strong demand for furnished accommodation, especially in London, and landlords are enjoying a sellers' market. Tenants are often forced to pay whatever is asked, because they know that if they refuse they risk eviction and all the problems of finding a new home, even if the rent tribunal provides some short stay. It is in this context that we have to consider whether or not it would help if these rents were frozen for the period of the standstill.
Of course the question whether to apply a prices policy to furnished rents is not new; it has arisen before. The previous Administration had to consider it in both 1966 and 1968. Having considered it, they decided to exempt furnished rents from the standstill, no doubt for the very same reasons that have led us to that conclusion. As I have just explained to your Lordships, tenants of furnished accommodation do not enjoy the full security of tenure of the protected tenant in unfurnished accommodation. This is something which the Francis Committee looked into and it concluded that this was a situation which should not be changed. The landlord may serve a notice to quit at any time 1145 and, although the rent tribunal may allow a temporary stay of execution, the tenant of a furnished dwelling knows that if he resists an increase in his rent his landlord can, if he is so minded, get him evicted in a matter of a few months. It is true that the tenant could, if he applied, get sufficient security from the rent tribunal to get him through the standstill period of 90 days which we are talking about. But I think it would be unrealistic to suppose that tenants would prefer absolute stability in their rents for this short period if the price for obtaining it were the prospect of eviction some little time later. That is how matters stand under the law, and this is the situation against which the Government have had to consider this very difficult question of the application of the standstill to rents of furnished properties. But we have decided—and the previous Administration were led to the same conclusion before us, on two separate occasions—that we cannot put the security of this whole class of tenants further at risk for the sake of some temporary insulation against a rise in rent in some cases.
The question has been asked whether, in these circumstances, the solution does not lie in giving these tenants full security of tenure. There is certainly a case to be argued here—but not, I suggest, in the context of this particular Bill. All I would do is to remind your Lordships again that the Francis Committee, set up by the previous Administration, went fully into the question of extending full security of tenure to tenants of furnished accommodation, and they came to the conclusion that to do so would, to use their own words,result in a serious reduction in the supply of furnished accommodation for letting…".And this, I should have thought, was the last moment to do anything which might bring about that result. The Committee said that it would make it much more difficult for certain classes of people who need this accommodation to get it. They had in mind, in particular, people with low incomes, unmarried mothers, the unemployed, immigrants and young married couples. As your Lordships will know, the Francis Committee concluded with a "solemn warning" against extending full security to the furnished tenant; and the Government announced their acceptance of the Committee's recommendation on this issue long before we came to this 1146 particular Bill. As I say, we shall come back to this issue. It is one we ought to debate, but not, I think, on this occasion.
It is the Government's view that the considerations advanced by the Francis Committee, that full security for furnished tenants would lead to a serious loss in the availability of rented accommodation, override the general desire for a standstill on rents. It is our view that the true interests of these tenants are better served by doing nothing to risk their eviction or to increase their already considerable difficulties in finding alternative accommodation. But the fact that this is our decision on this Bill does not mean that we are abandoning these particular classes of tenants to their fate, and that we can do nothing for them. On the contrary, I would remind your Lordships that we have decided to legislate in this field and that measures will soon be brought before your Lordships' House to extend to furnished tenants the system of rent allowances for tenants of unfurnished accommodation already introduced as a novelty in the Housing Finance Act. It is the Government's hope that local authorities will have the schemes provided for in the Housing Finance Act—rent allowances for private tenants in the unfurnished sector—in operation next year. This additional measure, which we have undertaken to bring forward in this Session, will we believe be of far more lasting and real benefit, particularly to low-income tenants of furnished dwellings than an ill-considered and hasty application of the 90-day freeze.
The noble Lord rightly drew attention to the plight of the lower-paid in an inflationary situation. I would claim that, through the measures which we are proposing to introduce to deal with tenants in the furnished sector, and through the measures which we have already introduced in the public sector, affecting tenants in the public sector and tenants in the private unfurnished sector, we are providing a series of measures—rent rebates in the public sector; rent allowances available from January 1 in the private unfurnished sector; and, in forthcoming legislation, rent allowances in the private furnished sector—for the most vulnerable tenants of all three classes which will do more to assist them than the imposition of the freeze on this 1147 very sensitive furnished sector. I trust that my noble friend will see that my right honourable and learned friend the Secretary of State has good reasons for deciding that he will not exercise his discretion in order to freeze rents in the private furnished sector. I trust, too, that noble Lords opposite will see that my right honourable and learned friend needs comprehensive powers in order to exercise his discretion selectively, in the whole field of rents, because they are controlled already in various ways; and that, for reasons which they accepted when they were in power and were dealing with this problem themselves, across-the-board freezes would be neither appropriate nor fair.
§ 4.58 p.m.
§ LORD POPPLEWELL
I find the observations of the noble Lord most unsatisfactory, to say the least. On the last Amendment we were arguing about persons who are in receipt of less than £20 a week, and we were saying that their income should be made up to enable them to meet the increased cost of living resulting from rises in the cost of prices which are not to be frozen. In his argument on this question, the noble Lord indicates that a landlord letting unfurnished premises will have the opportunity to put up the rent if he so determines, as distinct from the occupier of the premises, who, although his cost of living continues to increase, has his wages and his income frozen. There is quite a contrast between these two lines of approach, and this indicates how grossly unfair is the Government's approach on these matters. One feels that the reason why the Government reject substituting the word "shall" for "may" is because they have now deliberately put up many house rents, some to even 25 per cent. above what was being paid—some higher, some not so high. This increases the burden on the ordinary person who has to face this 25 per cent. increase in rent and yet has his wages frozen. Here is the contrast: the landlord with the unfurnished tenant can put up the rent, but the person who is subjected to the freeze cannot claim additional wages to reimburse him because of this increased expenditure.
I found it difficult to follow the noble Lord's remarks when he said, in effect, 1148 that in this way he was assisting the unemployed. I should have thought that refusing to alter the word "may" to "shall" was detrimental to the unemployed, because the noble Lord did not clearly define in what circumstances "may" would operate. My noble friend's Amendment, in asking for the insertion of the word "shall", would have given an instruction to the Government that they must take action. This is part and parcel of the ridiculous Bill that we are now considering. We are freezing the wages, the incomes, of the lower paid, while the vast majority of the commodities, food and the rest, that they require in order to exist will be increased in price. This can happen; yet the Government will not take powers to act on any gross violation that may be reported to them. They shield themselves behind the word "may". We all know what that particular "may" really means—and I would remind noble Lords of words used previously. In this case it is more difficult to understand why they should insist on this word "may". We have been told that the Bill is designed to operate for only a limited period, one of 90 days. One would have thought, if it were designed only for a period of this duration, that unarguably the Government would have equipped themselves with the necessary authority to take action where extortions were reported to them.
§ LORD SANDFORD
May I just deal with the points raised by Lord Popplewell?—because I think I did not make myself clear. If he is talking about the unfurnished private sector (and I think he is) then the fact is that here the increases in rents are subject either to control or regulation. But on top or that, my right honourable and learned friend intends to exercise his powers to make orders under the Bill to defer until after the statutory 90 days' freeze has ended even the rights that will be permitted under the changes introduced by the Housing Finance Act. There is no question of any rises in this field, with the sole exception of a small number of increases categorised under the 12½ per cent. provision; and in those cases, as in all others, rent allowances are now available as from January 1, 1973, which were not available during the 1966 and 1968 freezes.
§ 5.2 p.m.
I have listened with keen interest to the whole story in respect of furnished houses and furnished lettings. It is a story which dates back to 1915, the commencement of the Rent Acts, since when we have heard the same type of argument, year in, year out. While I agree that mistakes have been made by both Parties in not dealing with the situation before, I see no reason why, in the present difficult situation, a distinction should be made in the Bill between furnished and unfurnished lettings. The argument about competition and about people not being able to obtain accommodation and all the rest is an out-worn one. The situation with a furnished apartment is similar to that with an unfurnished apartment which is not controlled. The amount that is being charged at the present time is the amount that the person who lets the apartment has been able to obtain. Consequently, in my view, the likelihood of the tenants being adversely affected by a standstill is very remote—particularly as it appears that the Government, at long last, are going to consider the question of control in so far as lettings are concerned. I do not see how the position of a "protected" person, one who is occupying an unfurnished tenancy, will differ from that of the person occupying a furnished tenancy. That, I gather, is behind the Amendment which is being proposed.
A large number of people who can ill afford the price increases which are going on at the present time find themselves living in furnished apartments. If they are to be excluded from such protection as is being given in respect of the charging of inflationary prices, one must take into consideration the home of the individual concerned. That means a very considerable amount to him so far as his existence is concerned—and a vast number of people live in furnished apartments. For my part, I feel that if the Amendment were accepted then, if there were any attempt at abuses, the Government could, perhaps, at long last, introduce some measure which would protect the tenant of a furnished apartment.
We talk about legislation which is to come in 12 months' time—or in 9 months or 6 months. Why cannot we move quicker? What is wrong with taking the steps that we want to take and propose 1150 to take? The Government know very well that they can get through any measure they wish to introduce. If, in this short period, an obvious abuse arises, why not take immediate action and get appropriate legislation passed rapidly through both Houses? There will not be great difficulty in getting sympathy for a Bill which protects the furnished tenant. On the contrary, the country itself is anxious to give that kind of protection to people who, Heaven knows! are charged enough to-day for the accommodation they have. The Government would have no difficulty at all in taking such steps as may be necessary to overcome the difficulties that the noble Lord has put forward. I believe he is sincere in the argument he has put forward; but I can assure him that many of us who are put into daily contact with the problem, either in a practical way or in a professional way, would not agree that the attitude he adopts is a logical one. We believe, and I am sure that many Members of this House believe, that the furnished tenant is just as much entitled to protection. In the main, he is not a wealthy person; he is usually a middle-class fellow, perhaps a teacher or a clerical worker, who cannot afford any more increases in so far as food and suchlike is concerned than can his fellow-dweller in an unfurnished flat. I hope that the Government will consider the Amendment to be a reasonable one.
§ LORD BROOKE OF CUMNOR
I find it difficult to accept my noble friend's argument in respect of furnished accommodation. I must add to that that he did not carry any additional conviction with me by maintaining that the present Government were only proposing to do exactly what their predecessors had done in this field. Personally, I think that the housing policy of the former Government was in many respects ill-judged, and I see no reason whatever why the present Government should be obliged to follow the actions and decisions of their predecessors. Let us consider this in a non-Party spirit, without bringing in on the one side or the other what some previous Government did or did not do.
The point I missed in my noble friend's speech was any reference to the public reaction to what he says the Government are proposing. Of course I know that all this really comes under the orders; it is not affected by my Amendment, which 1151 is a probing Amendment to create a debate on the subject. In any case, I had intended to withdraw the Amendment because it is not necessary. What will matter to everybody will be the content of the orders which the Government propose to lay. What worries me most about the Government's attitude is that it will seem quite inexplicable to people who are affected if they are told that their wage rates are frozen and that everyone else's rent is frozen and prices are frozen, yet if they live in furnished accommodation their landlord is at liberty to put up the rent during the freeze. The people who are living in furnished accommodation are not logicians who can take nice points of argument. To them it will seem wholly wrong that the freeze should not apply to their rent; and, as has been said by noble Lords, rent usually accounts for a rather large percentage of the family income of such people.
I wonder whether my noble friend can help by explaining what will happen under the Government plan, if the rent of a furnished flat or rooms has been fixed by a rent tribunal. Presumably it will be unlawful for the landlord to put up the rent except by going back to the tribunal. What is the tribunal to do in those circumstances? It will be aware that all unfurnished rents are frozen. Is it to reach a decision on the basis that the freeze does not apply to furnished accommodation and therefore it can do whatever it thinks fit on an application by the landlord of furnished rooms? Surely the rent tribunal will need specific guidance in such a position. To my mind if the Government wish the matter to be handled in this way, there should be specific guidance to the rent tribunal that during the period of the freeze it should not authorise an increase in rents.
No doubt my noble friend will say that all these matters were thought out by the previous Government. Well, perhaps he can let us know what is the thinking. I am not concerned about what happened in 1966 or 1968; I am concerned with what happens in the next three months when a landlord of furnished premises says to himself. "Ah! Parliament has agreed that the freeze shall not apply to me; therefore I am free to go to a rent tribunal with the expectation that I shall get a rise in rent if I can justify it." There are 1152 cases—I imagine that it is now a minority of cases—where there are furnished rooms whose rent has never been fixed by a rent tribunal, presumably because the landlord and the tenant have reached agreement and it was not necessary to go to the tribunal. In those cases a landlord would be doing nothing unlawful by putting up the rent without going to a tribunal at all provided that he could get the tenant to agree. I am subject to correction, but I believe that is the case. Any wise tenant would refuse to agree to an increase in his rent proposed by the landlord, when he saw that prices and wage rates and everything else were being frozen. Nevertheless, there are some tenants who are not as well-informed about these matters as are your Lordships, and they might well be persuaded by their landlord that an increase was right.
I cannot believe that this is a good plan in either of those circumstances. Nor am I really convinced by the Government's argument that if they put a freeze on the rent of furnished accommodation it would lead straight to a rapid withdrawal of much of that accommodation from the market. I do not think that landlords would behave like that. This freeze is to go on for another 90 days, or 150 days at the most. Then, presumably, so far as landlord and tenant know, the law as it has been up till now will be reverted to. That does not seem to me a situation which will impel, induce or tempt a great many landlords to seek to get rid of their tenants as quickly as possible; they will surely take a longer view than that. I recognise that the arguments may be nicely balanced and that there is something to be said on either side. But I put it to my noble friend that the critical argument is that during a period of general freeze one cannot long defend the absence of a freeze on furnished rents. I greatly hope that in the light of this debate—I am not proposing to press my Amendment to-day—my noble friend will consult his right honourable and learned friend the Secretary of State and that he will reach a different decision before the orders are laid.
§ 5.18 p.m.
§ LORD DIAMOND
It was the noble Lord, Lord Sandford, who suggested to 1153 me that these Amendments might be discussed together and I saw the difficulties. The noble Lord is experiencing one of them now. I think, if he will forgive me, that it would be appropriate for me to say how much I enjoyed listening to the noble Lord, Lord Brooke of Cumnor, and how I share with him the view that this matter ought to be discussed within the present context, for two very good reasons. First, the noble Lord, Lord Brooke of Cumnor, and I agree about one thing completely: that the housing legislation of our respective Governments is wholly to be deprecated by each and every one of us; and that is a good start. I want to add that I am totally unimpressed by a comparison of legislation in a totally different context. In 1966 rents, houses and land were not in the same situation as they are to-day. The reasons for protection were nothing like as compelling as they are to-day, and so I think we should be far better off to deal with the matter within the present context. I could add to that, of course, because then we were not forcing people out of local authority houses on to the private market by our local authority housing policy, either in terms of selling houses or of increasing local authority rents, and so the situation was really very different.
The first point I want to make is on the question of furnished rents. I was totally unimpressed by the argument that in some way there was a subtle protection for the tenant by not freezing these rents. There is an obvious protection for the tenant by freezing the rent. Because it is frozen he does not have to pay an increased rent out of a static wage or salary, so it is obvious that there would be a protection for the tenant of furnished accommodation if his rent were frozen. The argument used by the noble Lord was, "Ah, but he might not have any accommodation to live in." I cannot see why a landlord should be supposed to act in this extraordinary way in which if all furnished rents are frozen he is going to evict his present tenant, named Smith, in order to take on a tenant, named Jones, at exactly the same rent and under the same conditions, because if the rent is frozen he cannot improve his situation; he can only change the face of .the tenant. With respect, it is nonsense for the Minister to say that the 1154 Government are in any sense protecting the tenant of furnished premises by refusing to freeze the rents.
Then, as the noble Lord, Lord Brooke, made perfectly clear, so far as these tenancies are concerned there can be agreements between landlords and tenants; and those agreements will be effective. What sort of message is going out, not only to wage-earners, but to landlords of furnished premises as a whole, if they are told that the Government have been asked time and time again to freeze furnished tenancies and they have decided as a matter of policy that they should not do so? Is not that the plainest invitation to these landlords to take the view that the Government believe that these should be excluded, that the ordinary market forces should apply and that tenants should therefore be forced into paying increased rents in one way or another? I am bound to say that I am totally unimpressed by the argument either that there is a parallel with the previous situation or that there is any protection for the tenant which the noble Lord, Lord Brooke, seeks to achieve, which I and those behind me seek to achieve, and which I thought the Government sought to achieve. I cannot therefore see that there is any argument in the proposal that these should be freed from the freeze.
If I may now turn to the argument of the noble Lord, Lord Drumalbyn, on the previous Amendment—that is, that the freeze has to be seen to be all-pervasive—that is shot to pieces by the proposal now put forward by his noble friend, that one large section of income should be freed from the freeze; namely, the income of all landlords of all furnished premises. One knows that many of those who are affected are people for whom we should be most concerned. In that connection, the noble Lord has said that it is the Government's intention to introduce shortly rent allowances for furnished accommodation on similar lines to those for unfurnished accommodation. Therefore the landlord of a furnished tenancy can expect, shortly after the end of the freeze period, presumably—anyway, within a very easily foreseeable time—to see his tenant being rent-assisted. Surely, in those circumstances, a landlord is not likely to go to extraordinary lengths to try to evict a tenant in this short period when he can see the possibility 1155 of that tenant becoming a rent-assisted tenant at a little later stage.
I think all the arguments that have been produced in all the circumstances of the case lead to an application of the freeze on the furnished accommodation as much as on anything else. It is going to be quite impossible to explain to workers generally, and particularly those who have to live in furnished accommodation, that the Government have as a matter of deliberate policy held down all wages—held down and frozen the wages of those who have by agreement an increase to start in due course—while insisting that those local authorities who have not yet raised the rents of certain of their tenants must do so, and insisting that that shall escape the freeze—but that it is right, fair, reasonable and humane that the tenants of furnished accommodation should, virtually alone, be subject to the increased imposition of additional rent. I am bound to say that I found the Government's answer totally unconvincing, and we shall want to demonstrate our view about this.
I now turn my remarks to the noble Lord, Lord Brooke, who put down an Amendment for probing purposes. Perhaps I should have been wiser, when I saw that Amendment go down—and it was the first one to be seen—to attach my name to it. I did not do so because I did not want to seek to embarrass the noble Lord or to reduce the lustre which attaches to his name on an Amendment. But I can assure the noble Lord—and I know he will accept it from me—that if he had not put down his Amendment we should have put down an Amendment in almost identical terms. Therefore I hope that the noble Lord, Lord Brooke, will not seek to withdraw his Amendment—because if he did we should find ourselves in disagreement with him, which would be a great pity on a purely technical matter. No doubt he would wish to make it clear that, while the Amendment being voted on was in his name, it had in fact been taken over by us. He would no doubt find it less embarrassing to have it that way. But I am bound to say that we shall insist on voting on this Amendment unless the Government say a good deal more than they have said so far: because the arguments produced by the noble Lord, Lord Brooke, so much 1156 outweigh those produced by the Government that we could not in any sense of fairness, or having regard to those whom we intend to look after, let this go without a Division. That is all I say on the limited aspect of the furnished rent.
I now come back to the Amendment which I moved, and moved in very narrow terms because I thought we could reach agreement on it; namely, that the word "shall" should be used where the Government intend to do something. The noble Lord says: "The Government are going to do something because I say they are." I am bound to say to the noble Lord that we have heard this many times, and Parliament has made it as clear as can be that that is not a satisfactory state of affairs. The Government are going to do a number of things. There are, broadly, four categories, and in each of the three other categories the Government are taking power to do these things, and taking it in the form of saying: we shall do so-and-so; or, somebody else shall not do so-and-so. All I am asking is that the same wording should apply here. What we want to do is to rely on an Act of Parliament, and not—I say this with the greatest possible deference—on what an individual Minister may say about it either in the other place or in this House. I do not think it is really necessary to make the point, but no senior Minister in either place has so far said that anything will be done. Certainly it is stated in the Government's White Paper that that is their view, but we must ask for a clearer indication by the Government that they really are going to do something in the field of rents, and something much more than what has so far been said.
Surely the noble Lord, who hardly replied to this point, is not going to say that he cannot use the word "shall" because he needs comprehensive powers. All I say is that if the Government want comprehensive powers, then let them draft comprehensive powers but put in the compulsion to do something. If the Government want selective powers, then let them draft selective powers, but put in the compulsion to select. Do not leave the matter completely at large as it is at the moment, with the Bill saying that the Government "may" do something. Let the Government make up their mind what they are going to do and put it into the 1157 Bill. But do not leave us at this stage with a Bill going for a freeze which is going to last, we hope, only for a short period (it is going to last for only 90 days once this Bill becomes an Act at the end of this month, or whenever it is) when one does not know what is going to happen in that short period. Therefore I am saying to the Government that I very much hone they will reconsider this. And unless they are under a compulsion to accept no Amendment whatsoever, I cannot see any reason why they should not accede at all events to a drafting Amendment which represents their own intention, the Explanatory Memorandum of the Bill and the White Paper.
§ 5.30 p.m.
§ LORD SANDFORD
I should like to deal with the points raised by my noble friend Lord Brooke and by the noble Lord, Lord Diamond. I will deal first with the points made by the noble Lord, Lord Diamond. I thought I had made it clear that in dealing with rents we are dealing with a sector in which a considerable number of the rents concerned are already effectively controlled by other legislation. Therefore if the Bill were drafted in terms that "the Secretary of State shall exercise his power to curb all rents"—just like that—it would be quite inappropriate in this case. What he needs are comprehensive and selective powers to use in the way I have indicated in detail and the White Paper has indicated in outline. The way in which the Secretary of State is going to exercise the powers lie is seeking in the Bill is made quite clear there. I have spelt out the necessity for these and the reasoning behind them, and have pointed out the particular rents to which each section will apply.
§ LORD BESWICK
Would the noble Lord allow me to intervene for one moment? He says that the object of the Amendment sought by the noble Lord, Lord Brooke, is achieved by legislation. That being the case, can the noble Lord explain why the proportion of tenants in the private sector in furnished accommodation who were paying more than £6 a week was only 43 per cent. in January but was 85 per cent. in September of this year, 1972? How does lie explain this upward movement if there is this effective control?
§ LORD SANDFORD
I was just coming on to the private sector; what I have just said referred primarily to council rents. private controlled rents for unfurnished accommodation and private regulated rents for unfurnished accommodation.
§ LORD DIAMOND
I am sorry to interrupt again, and I am most grateful for the noble Lord's courtesy in giving way, but he has put two arguments where I am advancing only one. I am talking about the undertaking by the Minister, arid the use of the words, "The appropriate Minister shall by order provide …"If he is saying that the Minister is not going to alter this, then he can say, "provide for preventing increases of certain rents"—or whatever he wants to say about them. That is no argument against the Minister's undertaking by the word "shall" to provide for something.
§ LORD SANDFORD
The noble Lord must remember that what we are dealing with here is a short temporary set of provisions to deal with the immediate problem of the next 90 days. It was indicated quite clearly when the Bill was introduced in another place that further legislation may unfortunately have to be considered when things can be discussed in much greater detail. What we are dealing with now is a short Bill which is needed urgently for a temporary and, we hope, reasonably short period. To deal effectively in this way over the field of rents requires comprehensive but selective powers for my right honourable and learned friend, and not comprehensive powers right across the board.
May I now turn to the matter of the furnished sector, which is one that causes most concern? I would, of course, entirely agree with my noble friend that the housing policies of this Government are quite different from those of the previous Government, and there is no question at all of following slavishly the policies which they worked out and which in our view were not producing either fair or desirable results. I was arguing that in a similar situation to the one we are in now, in 1966 and 1968, having to consider the freezing of rents in the private furnished sector, they concluded that the effective introduction of such a freeze would be undesirable and would do more 1159 harm than good. Since then we have had the benefit of the Francis Committee's Report—a Committee which was established by the Party opposite, but which reported to this Government—which has confirmed the conclusion of the previous Government that to deal with the furnished sector by freezing rents would do more harm than good. We have had more recent evidence which has led us in this respect to come to the same conclusion. It is not that we are pursuing the same policies as the previous Government: rather the opposite. This is not to say that we do not realise there is a very serious problem here. This sector contains some of the most disadvantaged tenants of all, and all Parties unite in wanting to protect and safeguard them.
The conclusion we have come to, faced with the necessity to do something, faced with the evidence of the Francis Committee that freezing rents is not the way to deal with the situation, is that it is no longer necessary to draw a distinction—indeed, the noble Lord, Lord Janner, said he doubted whether it was right to draw a distinction—between the furnished and unfurnished sectors. We agree, to the extent that we think that tenants in the private furnished sector should have the same benefits of rent allowances as tenants in the unfurnished private sector. It is for that reason that, instead of taking action under this Bill, which is a short temporary Bill to deal primarily with inflation, we intend to take action under different legislation—but in this Session and not twelve months hence—to give the private tenants in furnished accommodation the full benefit of rent allowances. This is another way, and we believe a better way, of dealing with a problem that is undoubtedly serious.
§ This method has the great benefit that the help comes to the lowest-paid sector in furnished accommodation. For those reasons, my right honourable and learned friend does not propose to take action to freeze rents in this sector, in the belief that we have a better weapon to hand with which to deal with the problem.
§ LORD BROOKE OF CUMNOR
I have listened to what my noble friend has said. He will, of course, recognise that the decisive point in all this comes not on this Bill but on the orders that are to follow it. Might I ask whether he would be willing to have some talk with me, and with others who feel strongly about this, between now and the laying of those orders?—because my Amendment makes no effective difference. It is a probing Amendment. My concern is that the Government should get the orders right.
§ LORD SANDFORD
Yes indeed, I can certainly give that assurance; and the debate we have just had will be of the greatest benefit both to myself and to my right honourable and learned friend. As all your Lordships will know, it is the plight of those in this sector—the furnished sector—which has been our concern all along. If we had seen ways of dealing with it there, we should have dealt with it in the Housing Finance Act. I am glad to say that, following the consultations we have had, although we missed that opportunity we now find an opportunity for legislation in this field, and we believe that it would be very beneficial, particularly for the tenants whom we are all most concerned to help.
§ 5.39 p.m.
§ On Question, Whether the said Amendment (No. 2) shall be agreed to?
§ Their Lordships divided: Contents, 58; Not-Contents, 97.1161
|Addison, V.||Davies of Leek, L.||Hughes, L.|
|Archibald, L.||Diamond, L.||Jacques, L. [Teller.]|
|Ardwick, L.||Douglas of Barloch, L.||Janner, L.|
|Arwyn, L.||Douglass of Cleveland, L.||Kennet, L.|
|Balogh, L.||Evans of Hungershall, L.||Leatherland, L.|
|Beswick, L.||Faringdon, L.||Llewelyn-Davies of Hastoe, B.|
|Blyton, L.||Gaitskell, B.||Lloyd of Hampstead, L.|
|Brockway, L.||Garnsworthy, L.||McLeavy, L.|
|Brown, L.||George-Brown, L.||Maelor, L,|
|Buckinghamshire, E.||Granville of Eye, L.||Milford, L.|
|Burntwood, L.||Hale, L.||Morris of Kenwood, L.|
|Chalfont, L.||Hall, V.||Nunburnholme, L.|
|Champion, L.||Heycock, L.||Phillips, B. [Teller.]|
|Collison, L.||Hoy, L.||Popplewell, L.|
|Raglan, L.||Shinwell, L.||White, B.|
|Royle, L.||Slater, L||Wise, L.|
|St. Davids, V.||Stocks, B.||Wootton of Abinger, B.|
|Serota, B.||Summerskill, B.||Wright of Ashton under Lyne, L.|
|Shackleton, L.||Taylor of Mansfield, L.|
|Shepherd, L.||Watkins, L.|
|Aberdare, L.||Exeter, M.||Merrivale, L.|
|Albemarle, E.||Falkland, V.||Mersey, V.|
|Ashbourne, L.||Ferrers, E.||Milverton, L.|
|Auckland, L.||Ferrier, L.||Molson, L.|
|Balerno, L.||Fortescue, E.||Monck, V.|
|Belhaven and Stenton, L.||Gainford, L.||Mowbray and Stourton, L [Teller.]|
|Belstead, L.||Gisborough, L.|
|Berkeley, B.||Glendevon, L.||Northchurch, B.|
|Bethell, L.||Goschen, V.||Nugent of Guildford, L.|
|Bourne, L.||Gowrie, E.||Orr-Ewing, L.|
|Brooke of Cumnor, L.||Greenway, L.||Rankeillour, L.|
|Brooke of Ystradfellte, B.||Grenfell, L.||Redcliffe-Maud, L.|
|Caccia, L.||Grimston of Westbury, L.||Redesdale, L.|
|Carrington, L.||Hailsham of Saint Marylebone, L. (L. Chancellor.)||Reigate, L.|
|Chesham, L.||Rockley, L.|
|Colville of Culross, V.||Hanworth, V.||Rothermere, V.|
|Conesford, L.||Hawke, L.||Ruthven of Freeland, Ly.|
|Cottesloe, L.||Hood, V.||St. Aldwyn, E.|
|Courtown, E.||Hurcomb, L.||St. Just, L.|
|Cowley, E.||Hylton-Foster, B.||Sandford, L.|
|Craigavon, V.||Jellicoe, E. (L. Privy Seal.)||Sandys, L.|
|Cranbrook, E.||Jessel, L.||Selkirk, E.|
|Cromartie, E.||Killearn, L.||Sempill, Ly.|
|Daventry, V.||Kindersley, L.||Stamp, L.|
|Davidson, V.||Latymer, L.||Stonehaven, V.|
|de Clifford, L.||Lauderdale, E.||Strang, L.|
|Denham. L. [Teller.]||Limerick, E.||Strathcarron, L.|
|Drumalbyn, L.||Lloyd, L.||Sudeley, L.|
|Dundonald, E.||Long, V.||Swansea, L.|
|Ebbisham, L.||Lothian, M.||Trefgarne, L.|
|Eccles, V.||Luke, L.||Vernon, L.|
|Elliot of Harwood, B.||Macleod of Borve, B.||Vivian, L.|
|Emmet of Amberley, B.||Massereene and Ferrard, V.||Young, B.|
Resolved in the negative, and Amendment disagreed to accordingly.
§ 5.47 p.m.
LORD BROOKE OF CUMNOR had given Notice of his intention to move Amendment No. 3:
Page 2, line 13, after first ("rent") insert (" (including rent for furnished accommodation)").
§ The noble Lord said: For the reasons I have already given, and because the carrying of my Amendment would make no effective difference to the ultimate policy, I do not propose to move it.
LORD DIAMOND moved, as a Manuscript Amendment to Clause 2:
Page 2, line 13, after first ("rent") insert (" (including rent for furnished accommodation)").
§ The noble Lord said: As the noble Lord has not moved his Amendment, I have taken the precaution of putting down a Manuscript Amendment in the names of my noble friend and myself. I should 1162 be grateful if I may be allowed to explain why I did this, because I have already explained the reason why I did not attach my name to the Amendment of the noble Lord, Lord Brooke of Cumnor, in the first place. When I reached your Lordships' House this afternoon I was asked by the noble Lord. Lord Sandford, whether I would be agreeable to these two Amendments being taken together. Not foreseeing fully the course of events, I said that if it was convenient to the Government and, particularly, to the noble Lord, Lord Brooke, it would be convenient to me. Had I not said so, the noble Lord, Lord Brooke, would have had to move his Amendment in order that the points he wanted to make could be discussed. So the noble Lord, Lord Brooke, will understand that I do not feel that, because of my desire to assist the Government, I am denied the opportunity of expressing the views of all those behind me and, I daresay, of others as well on this issue.1163
§ 5.48 p.m.
§ On Question, Whether the said Amendment (No. 3A) shall be agreed to?
§ 5.56 p.m.
§ LORD DIAMOND moved Amendment No. 4:
Page 2, line 14, at end insert—
("and for preventing increases in the price of land, including buildings, over the price payable before 6th November 1972.")
§ Their Lordships divided: Contents, 63; Not-Contents, 90.1163
|Addison, V.||Garnsworthy, L.||Ogmore, L.|
|Archibald, L.||George-Brown, L.||Phillips, B. [Teller.]|
|Ardwick, L.||Granville of Eye, L.||Popplewell, L.|
|Arwyn, L.||Hale, L.||Raglan, L.|
|Balogh, L.||Hall, V.||Rochester, Bp.|
|Beaumont of Whitley, L.||Hanworth, V.||Royle, L.|
|Beswick, L.||Henley, L.||St. Davids, V.|
|Blyton, L.||Heycock, I..||Seear, B.|
|Boothby, L.||Hoy, L.||Serota, B.|
|Brockway, L.||Hughes, L.||Shackleton, L.|
|Brown, L.||Jacques, L. [Teller.]||Shepherd, L.|
|Carnock, L.||Janner, L.||Shinwell, L.|
|Chalfont, L.||Kennet, L.||Slater, L.|
|Champion, L.||Leatherland, L.||Stocks, B.|
|Collison, L.||Llewelyn-Davies of Hastoe, B.||Summerskill, B.|
|Davies of Leek, L.||McLeavy, L.||Taylor of Mansfield, L.|
|Diamond, L.||Maelor, L.||Watkins, L.|
|Douglass of Cleveland, L.||Milford, L.||Wise, L.|
|Evans of Hungershall, L.||Morris of Kenwood, L.||Wootton of Abinger, B|
|Foot, L.||Norwich, V.||Wright of Ashton under Lyne, L.|
|Fulton, L.||Nunburnholme, L.|
|Aberdare, L.||Falkland, V.||Mersey, V.|
|Ashbourne, L.||Ferrers, E.||Milverton, L.|
|Auckland, L.||Ferrier, L.||Molson, L.|
|Balerno, L.||Fortescue, E.||Monck, V.|
|Belhaven and Stenton, L.||Gainford, L.||Mowbray and Stourton, L.|
|Belstead, L.||Gisborough, L.||Northchurch, B.|
|Berkeley, B.||Glendevon, L.||Nugent of Guildford, L.|
|Bethell, L.||Goschen, V.||Orr-Ewing, L.|
|Bourne, L.||Gowrie, E.||Rankeillour, L.|
|Brabazon of Tara, L.||Greenway, L.||Redcliffe-Maud, L.|
|Brooke of Ystradfellte, B.||Grenfell, L.||Redesdale, L.|
|Caccia, L.||Grimston of Westbury, L.||Reigate, L.|
|Carrington, L.||Hailsham of Saint Marylebone, L. (L. Chancellor.)||Rockley, L.|
|Colville of Culross, V.||Rothermere, V.|
|Conesford, L.||Hawke, L.||Ruthven of Freeland, Ly.|
|Cottesloe, L.||Hood, V.||St. Aldwyn, E. [Teller.]|
|Courtown, E.||Hylton-Foster, B.||St. Just, L.|
|Craigavon, V.||Jellicoe, E. (L. Privy Seal.)||Sandford, L.|
|Cranbrook, E.||Jessel, L.||Sandys, L.|
|Cromartie, E.||Kindersley, L.||Selkirk, E.|
|Daventry, V.||Kinloss, Ly.||Sempill, Ly.|
|Davidson, V.||Latymer, L.||Stamp, L.|
|Denham, L. [Teller.]||Lauderdale, E.||Stonehaven, V.|
|Drumalbyn, L.||Limerick, E.||Strang, L.|
|Dundee, E.||Lloyd, L.||Sudeley, L.|
|Dundonald, E.||Long, V.||Swansea, L.|
|Ebbisham, L.||Lothian, M.||Trefgarne, L.|
|Eccles, V.||Luke, L.||Vernon, L.|
|Elliot of Harwood, B.||Macleod of Borve, B.||Vivian, L.|
|Emmet of Amberley, B.||Merrivale, L.||Young, B.|
Resolved in the negative, and Amendment disagreed to accordingly.
The noble Lord said: I beg to move Amendment No. 4, and I regret that the word "the" has been omitted before the word "price" in the Amendment as it appears on the Marshalled List. We now come to this very important issue of the prices of land and buildings, and whether any attempt should be made to subject these to the standstill during the
standstill period. The Amendment is to be added to subsection (4) which provides that:
The appropriate Minister may by order provide for preventing increases of rent over rent payable before 6th November 1972.
So what the Amendment seeks to do is to add to the discretionary powers of the Minister—and as the Bill is at present drafted they are only discretionary powers; they are not compulsory powers—to include land and buildings in the orders which he may bring forward in order to prevent increases in their prices.
§ This is a matter which has engaged your Lordships' attention both during the course of the debate on the gracious Speech and during the Second Reading of this Bill. It is a matter which goes completely to the heart of the Bill. As your Lordships have been told on many occasions—and we accept this—the purpose of this Bill is to enable the agreed objectives to be achieved in phase B. One way of doing this is to hold down prices; another way is to hold down increases in incomes; and a further way is to hold down spending power arising from sales of land and buildings and to prevent the great sense of unfairness, a very obvious unfairness, which those who are subject to the freeze would feel when they saw land and buildings continuing to rise in price, resulting in enormous profits to those who are fortunate enough to be the sellers.
§ This is a problem which your Lordships know is very serious for those who are seeking to enter the market for the first time; that is to say, the newlyweds. Most of us who are fathers have some experience of this. Newly-weds in these days are totally unable to provide for themselves a home in a way in which they reasonably could have done in earlier times. The pressure that is exerted for salary increases as a result of their being compelled to enter into mortgage agreements which are really far in excess of what they can reasonably afford is one of the pressures which result from the upward spiral of prices of land and buildings, and of other things. As has been made clear on previous occasions, a property sale is not necessarily a one-time event. A new owner must cover his capital payment and must service his capital. He does this by increasing rents (I am speaking of a case where land has changed hands) and the increased 1166 rent enters into the overheads of whoever is carrying on a business or other activity in the premises, and this is reflected in increased prices. So there is a tremendously inflationary pressure. So far as a freeze is concerned, this is something which ought to be frozen and an attempt ought to be made to achieve that.
§ I do not think anybody seriously disagrees with the fact that it would be desirable to do this if methods could be devised whereby prices of buildings and land could be controlled, because the rent of land is being controlled and the rent of business premises is being controlled—I mean, being frozen—in this way. I think everybody agrees that it would be a good thing if one could only think of the method whereby this could be done. It is admittedly very difficult to achieve. I am not going to suggest there is one simple remedy. I am, however, going to suggest that there are a number of things that Government could do if they wanted to, and which this Government have so far refrained from doing. The most obvious way in which the market is going to be brought down is by the Governments reducing the money supply. I do not think we need to go over this matter again because your Lordships have been satisfied on previous occasions that the increase in money supply has been absolutely out of all consonance with the increase in production, and that it has been a major factor in enabling inflation to continue. Money supply has been increased at rates of something over 30 per cent. for a recent quarter—I repeat, over 30 per cent.—which is inevitably going to produce inflationary pressures. The Government have said that they are making some reduction. One does not expect them to reduce the money supply, so as to create hardship, overnight; but they must take steps continuously to reduce it until it gets to proportions which are manageable, and undoubtedly this would have an effect on the prices of buildings and land.
§ What the Government can do secondly is to control building society lending. At the moment this is absolutely free and as a result there are wide fluctuations which feed the increases in prices, which are continually rising; and one is speaking against a background of prices 1167 doubling and trebling in the last two years, particularly in London and the South, and sometimes in shorter periods than that. We ail have examples of this, some of us to our own cost. We all see it from time to time and, of course, every wage earner whose wages are frozen feels it. The rates of interest charged by the building societies should also be frozen. As I understand the Bill—and I am putting this as a specific question—interest Fates are not covered at all. The provision of a loan is not the carrying out of a service and therefore it is not subject to the standstill provisions as is the provision of a service; and although one speaks about "servicing a loan" it is a different concept.
§ In short, I understand that no interest rates are covered by this Bill and, therefore, an ordinary lender, no matter what the circumstances may be, provided his contract permits him to do so, can say to-morrow to his borrower, "Your interest rate has gone up by ½ per cent. or ¾ per cent.", or whatever he thinks the market will stand. There is no question of anything being done to prevent mortgage rates going up and therefore building society rates going up thus creating difficulties just as much as increased rents create difficulties. If the noble Lord, Lord Sandford, has his way rents will be, in a large measure, frozen but the quasi rent which an owner-occupier pays in the form of the interest plus capital repayment on his mortgage to a building society will not be frozen. It should be frozen, and the difficulties which might ensue so far as building society funds are concerned could be provided for without going into any more detail than that. So that is the second thing that we suggest could be done: not only reduce the money supply, but also control building society lending and freezing the interest rates of building societies.
§ Another thing which the Government could do would be to do a U-turn, which is not a new experience for them, with regard to their own tax provisions on interest on borrowing. The Government have restored tax relief on interest on borrowing, so that those who are able to take advantage of it can get that advantage, and those who are very well-to-do can get their interest reduced effectively to very small proportions indeed 1168 by getting not only income tax relief but surtax relief as well. As a result this has made it possible for very large prices to be paid for property on the basis of borrowed money which costs very little indeed because the charge is a charge against one's total net statutory income for surtax purposes. Therefore if the Government were prepared to withdraw that tax relief or to take power under the Bill to make some statement to the effect that "the Chancellor of the Exchequer may", and so on, they could do that as well at the appropriate time. There would have to be a limit to the area from which tax relief was withdrawn. I think everybody would want tax relief still to be available to a person buying his own home, provided it was his own home—one home; the home that he was living in as an owneroccupier—and provided that the price was a modest price and that the limit on the borrowing was a modest limit. This would mean that a £10,000 loan might be a reasonable figure and £30,000 would not be a reasonable figure on which to expect tax relief on the interest paid, even though one was going to be the owner-occupier of a £30,000 or £40,000 home. That is a further thing the Government could do if they wanted to help towards the end for which this Amendment is tabled.
§ Another U-turn which the Government could make is to suspend the Housing Finance Act. When that Act was under discussion the Government were warned time and time again that it would have this inflationary effect. The present Bill is entitled the Counter-Inflation (Temporary Provisions) Bill, and one knows now for a fact—and it does not depend upon an assertion from this side of the Chamber—that the last increase in the cost of living, which was the greatest for nearly two years, was over half due to the increases in rents, and that was also entirely due to the Housing Finance Act. The Government are in a little difficulty with the Housing Finance Act because it compels local authorities to put up rents. Some local authorities have put up rents and others have not. Whereas all wage earners who have not had their wage increases are caught by the provisions of the freeze, the Government are saying, "But this shall not apply to local authorities. Where a local 1169 authority has not put up its rent, it must put it up and the additional rent must be paid. The tenant shall not escape payment". In other words, where a tenant is a wage earner who has had a wage increase which has been agreed and awarded but which has not been paid, he will have to continue receiving his old lower wage; and if he is living in a council house which has not yet had its rent increase under the Housing Finance Act, the rent will have to go up and he will have to pay the increase.
§ This is the Government's sense of justice. It is, of course, totally unjust, totally unfair and represents purely the Government's obstinacy over their recent foolish measure, the Housing Finance Act. But now the Government have an opportunity to introduce consistency by suspending the Housing Finance Act so that those local authorities which have not put up their rents need not do so, while those which have put them up can suspend them and the rents returned to what they were before the Housing Finance Act was passed. That is something else the Government could do to help to stop this outrageous inflation in the price of land and buildings. Another thing they could do, but which they have so far shown no indication of doing, is to stop the profiteering that is going on in improvement grants, particularly in the Inner London area.
§ If the Government want to go the distance in this context, which is our hope, they could restore the Land Commission, which they recently destroyed; or, if they do not wish to do that or if it would unduly embarrass them to do it, they could set up a very similar body under a slightly different name to achieve the same purpose. In that way nobody's honour would be damaged. After all, the Government are doing this sort of thing in many fields. We hope they will do it in this one as well. I have instanced six or seven actions the Government could take if they really wanted to reduce this inflation and runaway in prices of land and buildings.
§ I put it to the Government that they cannot have two policies going at the same time. Hitherto they have had a free market policy going throughout on wages, prices and houses, but they have now reached the conclusion that a free market 1170 policy is no longer to be achieved. They are now following a policy of control on prices and incomes. So far as land and buildings are concerned, they still have a free market policy and they are making no attempt to curb the inflation. It is impossible for the Government to try to run these two horses in harness; they are going in different directions. I appeal to the Government to recognise that having changed their policy completely on prices and wages, it is only sensible, if they want this to prevail overall, to change their policy similarly in regard to houses, buildings and land; and the methods I have suggested would go a very long way to achieve this.
§ The familiar argument produced in reply to all this is that the Government fear the market drying up. I do not share that fear. This is the view the Government expressed, when we debated the last Amendment, in regard to furnished accommodation: that if one controlled rents, furnished accommodation would dry up. Judging from the votes in the recent Division, it would seem that a number of your Lordships are satisfied that the Government should think again on this issue. There was a majority of fewer than 30 in favour of the Government, and one knows what a powerful emotion loyalty is and how much better off one is if one has been outside the Chamber and has not been confused by the argument, rather than if one has been inside the Chamber listening to the debate. It is much easier to vote according to loyality; we have all done this on hundreds, if not on thousands of occasions. I am not reading the Lesson. I am simply saying that it is clear that a number of your Lordships were concerned and properly disturbed by the Government's argument that freezing the rents of furnished accommodation would result in that accommodation disappearing from the market. Similarly, I am suggesting that if the argument were to be put forward that freezing or doing something about the soaring prices of land and buildings would prevent land from coming on to the market, it should not find favour among your Lordships.
§ There is no reason why the Government should not make clear their ultimate views on this issue to the same extent that they have done in regard to 1171 wages. The Minister said that the Government should not be forced into disclosing what was in their mind in regard to phase B. I do not share that view. I am simply saying that the Chancellor of the Exchequer made it perfectly clear what action those negotiating wages should take in regard to phase B. I have previously quoted the words used by the right honourable gentleman in another place—I gave the text and column number from Hansard—but at present I am relying on my memory of those words. He made it perfectly clear that those who wanted to negotiate wages during the standstill period had better wait until they knew what the Government's proposals were for phase B—in other words, that those negotiations might be totally ineffective until they knew the details of phase B. That came from the mouth of the Chancellor of the Exchequer, and one could not have had anything more authoritative.
§ I do not see why the same sort of warning noises should not be given now relating to phase B by a Minister of Cabinet rank in regard to land and property prices. That would have the effect of making those who thought it proper to withdraw from the market to think again. One withdraws from the market over a 90-day standstill period only if one thinks that one will be able to come back into the market at one's own price at the end of the standstill period. But as long as one gets an adequate warning from a sufficiently authoritative Member of the Government that it will not pay off to withdraw from the market and that one might be better off in not withdrawing, that will have the effect of making people think again, and in my view those who would otherwise be bringing land onto the market would continue to do so. Thus, I cannot feel that the argument which is so often advanced, that the market would dry up, is a compelling one.
§ The standstill provides the Government with an opportunity to prepare the ground for something one hopes they would want to do. I am sure that the Government are not unaware of the general public reaction to what is happening about the prices of land, buildings and homes. I am equally sure that they will want to do something about this in phase B. They 1172 should, therefore, find this a good opportunity to pave the way for what will come next. I am suggesting that they include something within the Minister's discretionary powers, remembering that we have not altered the Bill so far. In fact, I am prepared to lay a little wager with any of your Lordships who is interested in betting that we shall not succeed in altering the Bill at all. I am prepared to give small odds on that, too. Nevertheless, we shall do our duty, if only for the purpose of showing that we take these matters seriously, even though the Government may think that democratic processes ought not to prevail and that, notwithstanding whether or not the Bill has been guillotined in another place, it should still be railroaded through your Lordships' House. I repeat that we shall still do our duty although we are not very optimistic about getting any Amendments accepted.
§ All this outburst and display of inner feeling rests on the word may". Your Lordships have thought it proper to retain the word "may", and therefore the present position is that the Minister is required only to have discretionary powers to prevent increases of rent. I am suggesting, therefore, that to those discretionary powers there should be added powers to do something. The Bill does not disclose what he shall do with regard to rents. One has no need to disclose what he shall do with regard to prices of land and buildings, but I am suggesting that the Minister should have discretionary powers to do something about this intolerable situation which is creating such an unfavourable reaction throughout the community and which will assuredly make it quite impossible to achieve the long-term purpose of this Bill, namely, to achieve tripartite talks and agreement on some kind of incomes and prices policy.
§ 6.22 p.m.
I was one who in the debate on the Address raised this particular subject, so I should like to make a few brief comments on what the noble Lord has just been talking about. Incidentally, may I ask the Deputy Leader of the House why the little red clocks are not working?
First of all, we all know that the price of land is grossly excessive and that the price of houses is also grossly excessive at 1173 the moment, but we must remember that this Amendment would not do very much about it. It seeks only to close the stable door long after the horse has bolted. The price of land and housing has really not gone up since November, 1972. In fact there tends now to be a slight damping down. I quite agree that there is too much money supply, which undoubtedly does not help matters. I believe something should be done about the tax relief position. But the chief reason why these inordinate prices have been paid is that the general public is terrified of runaway inflation arising from the very large and increasing wage settlements that have been seen over the last few years. If this Bill and the ensuing standstill period can do something to halt that, we may get some confidence back in the general public: confidence in money rather than confidence in things. That is what is at the root of the whole trouble.
In this country, we have not seen quite so much of this trouble. I have seen it in South America where nobody has any trust whatsoever in money; the result is that everybody borrows to the hilt if they can find anybody to lend them any money, and promptly puts it into tangible assets such as buildings, land, property, factories and everything else. That is the situation we were working up to in this country; people were losing faith in the value of their currency and were flying out of currency into land and other such things. This Bill is one of the measures that the Government are taking which will help to halt that pernicious trend.
Many of the more detailed suggestions made by the noble Lord, Lord Diamond, would be counter-productive. If you make building societies lend at a cheaper rate people can afford to pay more for houses and so they bid them up. That is perfectly true. The price of houses depends to a large extent on the type of mortgage that people can afford to take out. What we must not forget is the very big increase in the cost of building houses. Over the last two years that has gone up enormously, quite irrespective of the cost of the land. I forget the exact figure, but I believe that it is something of the order of 40 per cent. in two years. People have to pay those prices if they wish to buy a house. How it is possible to control the price of houses in a more detailed way, I do not know. If you put a house up 1174 to auction how are you to say who is to be the lucky purchaser if there is a price fixed? No, all those detailed provisions are absolutely unworkable. The interest, the money supply, the restoring of confidence in money and the abolition of some of the provisions of tax relief on loans is the best way to get the price of houses and land down to a more reasonable level. I should add that when considering agricultural land, which has gone up to a ridiculous price, too, the provisions of the Estate Duties Act aid and abet enormously such dealings.
§ 6.27 p.m.
§ LORD ROYLE
I wish to support the Amendment, and I am delighted to find that the noble Lord, Lord Hawke, is doing so—in spirit at all events.
May I interrupt the noble Lord to say that I said that the Amendment was quite useless because the horse had already bolted?
§ LORD ROYLE
That was what I was coming on to. The noble Lord started off by saying that he was in favour and agreed that the price of land was excessive and so on, but we are now"—said he—" closing the door after the horse has gone". Is he suggesting that we should not take steps to prevent any increases in the future, and particularly during the time when we are on a freeze of this kind? Surely if there is a time at all when we should be guaranteeing that there should be no rise in the cost of land and buildings, that time is now, while we are considering this legislation. For that reason, I fully expect that we shall see the noble Lord in our Lobby when we divide on the Amendment a little later on.
I support the Amendment because of a full realisation of what the land and buildings problem means in this day of inflation. Only a few months ago I was in the company of an auctioneer in the South-East of England who that afternoon had sold 23 acres of agricultural land for £990,000, without planning permission, but because there was a suggestion going around that it was scheduled for residential purposes. The other week in the South-East of England I came across the sale of a house which stood on three-quarters of an acre, which had been purchased four years ago for £6,500 and 1175 was being sold for £63,000 to be pulled down so that some houses could be put on the land.
The noble Lord is instancing these things and I agree. I think they are horrible. But how on earth is he going to stop the house from being sold for £63,000 except by influencing the money supply and the confidence of people in money? No controls can stop it.
§ LORD ROYLE
I am suggesting that this kind of thing can go on and become worse very quickly, and I am sure that it can. May I come to the building side rather than the land side—I will come back to land in a moment. I know a block of rented flats on the South Coast which have changed hands three times in less than twelve months by developers or property companies each making a profit, one after the other. Now, Oats which were valued at £6.000 less than two years ago are being offered for sale to the tenants at £16,000. That is the kind of thing that is going on all the time and, I suggest to your Lordships, will continue to go on. Whatever the noble Lord has said, there is no doubt about it that in the South-East of England particularly one-third of the price of any house that is being built today is represented in the price of the land. This can be proved conclusively by contrasting situations in various parts of the country. I think it is best to use illustrations out of one's experience. I know of some houses in the southern part of Scotland which are being built to-day, with three bedrooms and a garage and partial central heating, for £6,300; and the same kind of house is being sold in the South of England for £12,000, £13,000 and £14.000. And the answer is land. The cost of building is going up everywhere, but the land in that part of Scotland is so much cheaper than it is in the South of England that houses can be sold with that difference in price. This can go on if prices are not frozen under the terms of this Bill. I suggest that if there is one thing that the Government should not have missed for the purposes of this Bill it is land and buildings; I am sure that this is probably the most important factor that we should be discussing in the freezing of prices at this time.
1176 I speak as somebody associated with the building society movement. I know full well—who can doubt it—that if there were a control on the price of land building societies would be helping purchasers with perhaps at least one-third as many more houses, because the prices would be brought down accordingly. Building societies do not want to increase interest charges. They were forced to do that quite recently because of the lack of funds coming into building societies. But the fact remains that if the land was not as dear as it is then the cost of a house would be much less, and building societies could accordingly lend to more people than they are doing at the present time and thus help the younger people in our society who are needing houses. I do not want to go on. It is obvious to roe that of all the things that ought to be considered so far as a freeze is concerned, this is the one. I hope the Government will give consideration to it. As my noble friend pointed out, this is a "may", not a "shall". If we pass this Amendment now, I hope the Minister will regard it as a "shall".
I rise to support the Amendment as strongly as I possibly can, I do not think we can consider a problem of this kind without realising that it strikes at the very root of life, indeed of mere existence, for vast numbers of the population of this land. We ought to include a provision to-day which will indicate to the public at large that we realise the extent of this evil and will cope with it in a determined manner, dealing with details at a later stage and perhaps within the period in which prices are held down. I have listened, of course, to the kind of proposals that have been put forward by my noble friends. But what is there to stop the Government at this stage from taking the drastic action—it is a drastic action—of saying that "For the period in which we are placing restrictions on the other matters which are concerned within the Bill we propose to impose a similar restriction on land and buildings"? What are they afraid of?
It will shock a large number of people—of course it will—but we have come to a stage in which shock treatment is essential to deal with the terrible problem that has come upon us. How many noble Lords here, if any, are not really shocked 1177 by what has been happening, not in the last 12 or 18 months but the last nine or six months, with prices soaring out of all bounds, enormous fortunes being made from day to day by people who are speculating in land, a commodity which is essential to the life of the people as a whole? The problem needs drastic treatment, and I believe that the country as a whole would commend the Government if they said, "Here is a golden opportunity for us to declare that we will impose this restriction on prices". God knows they are high enough at the present time!—we are talking about November of this year. We should say this as a House, irrespective of Party feeling on the matter, because it affects every Party, and I am quite satisfied in my mind that there is none of your Lordships who fee! differently about the matter. We are all seeking for a remedy. All right; have a standstill. Those who are speculating in property will then realise that the Government are determined about the matter and are prepared to do something about it. In the interim period between now and the time when the standstill comes to an end opportunities will be there for such further steps to be taken as are essential to stop this pernicious growth.
I am sure some noble Lords will think I am over-simplifying the position. I have been involved for many years in dealing with people who have been buying or selling their houses. I was involved in the problem of the control of rents when others were shouting that it was not possible, that it was going to wreck everything, that there would not be houses, that there would not be places for people to live. But it came eventually, after a great deal of shouting and a tremendous amount of effort. I am convinced that we can do the same in controlling this horrible upsurge which prevents young people from having a home of their own.
My noble friend has quoted examples. Is there anyone in this assembly to-day who could not quote dozens of similar examples? Does not everybody know that a house in London which was valued at £8,000 nine months ago is to-day selling at £20,000 or £25,000? It is stark, staring madness from the point of view of organised society. I make this appeal to the Government: never mind what 1178 difficulties may be in the way, let us take this position and deal with it at the present moment when we can say to the country as a whole that we are trying to deal with the question of inflation. It is an extremely serious position. We may not be 100 per cent. right to put a brake on the prices at the present time, but at least it will be a tremendous effort to show the country that we mean business and that we propose doing something about it; and it will prevent further inflation because those who will speculate and who are speculating will know that attempts will be made to stop the speculating, whatever may be the effect. In those circumstances, I strongly support the Amendment before us.
§ 6.40 p.m.
§ LORD DAVIES OF LEEK
I rise to support my noble friends on this Amendment, and I want to look at it briefly from another angle. I do not want to quote masses of examples, because they are obvious to us all, but if any evil needed taking by the scruff of the neck it is this problem of the rising price of land. I am convinced that much of the aridity and much of the bitter materialism that has entered into our modern life is due to the struggle of trying to keep up a decent home, or trying to get a house over one's head. I gave the example the other day, when we were talking on housing, of young people who, whatever their qualifications—whether they are first-class apprentices in plumbing, or come from the university with a first-class degree—have no chance at all of getting a house or raising the deposit. I am not blaming the building societies; the basis of the evil is here in the price of land. If ever a moratorium was needed, it is a moratorium on the price of land.
Let us get rid of these pillars of clouds. All Parties have talked for years about controlling speculation in land. I was glad to hear my noble friend Lord Janner speaking about controlling houses. Some of us campaigned 30 or 40 years ago for the control of rents. We were told that it was not possible. In certain areas a moratorium, or a control on the use of land, could be worked out. If this nation wanted to show the world that it was fighting its way back to a decent system of society, instead of following that vicious philosophy of "I'm all right, 1179 Jack", this would be an indication that the British people were deciding to wipe out this evil in their midst. I know that it is rife throughout Europe and America. I know that if you want to vet into an hotel in Paris, for instance, to-night, or try to buy a house there, you have the same vicious problem. This nation could give a lead. There is not a noble Lord in this House who wants viciously or avariciously to make money cut of land speculation, but there is not the slightest doubt that—
§ LORD DAVIES OF LEEK
All right, I am assuming that I should be right to make that assumption. I cannot prove that anybody is, and therefore it is wiser to say I believe that there is not.
§ LORD DAVIES OF LEEK
We shall know when the Division Bell goes. The noble Lord has said it, not I. I should like this clause to be nut in another way. At present, it says:The appropriate Minister may by order provide for preventing increases of rent over rent payable before 6th November 1972 …And my noble friend on the Front Bench seeks to add:and for preventing increases in the price of land, including buildings, over price payable before 6th November 1972.Surely we could declare a British moratorium on the price of building land in this transition period. It would be something that would bring Britain back to its senses. I have seen almost three wars; each time appeals were made to the patriotism of the people to fight for their country, yet to-day they cannot even get enough of it to build a little house on—or, if they see something they like, the price is such that there is no hope for them. Why in the name of God cannot we turn back? There are no longer pegs of faith to hang the hat of hope on: nobody believes in anything. If we want the world to believe in Britain and our people—and I am not discussing any "ism" or "wasm "; I am discussing an honest principle—it is vital that people have decent homes.
1180 We talk about the increase in crime, about our fuel prisons, about the problem of the homeless or the child who is backward, and about those who have not an opportunity or are overcrowded. For God's sake! let us cleanse ourselves of this by declaring here and now that for at least a five-year period we will have a moratorium on the price of building land, and spike it down courageously to the price it was, for instance, last November—not even this one. This would be some indication of our belief.
I believed, with old Henry George, that we should have had a single land tax, and that everybody should pay the economic rent of land. Ruskin said, in his famour essay, "Unto This Last ", "There is no wealth but life ", and life applied to land is the beginning of everything. When we are asking these questions about why our glory has departed, why we are running around shouting, "Ichabod! Ichabod! the glory has departed ", we should recognise that it has departed because we have no honesty of purpose about the shortage of the most important material that is limited on this space ship we call the globe, the earth , that is, land. I hope that this House will take a revolutionary step to-night, and that some noble Lords on the opposite side will come into the Lobby declaring that in this House, at least, we believe that the Government should declare a moratorium on building land over the next five year period, to at least enable the under-privileged to get a house within the limits of their income.
§ 6.47 p.m.
§ LORD SANDFORD
I wonder whether we might look at the Amendment the noble Lord, Lord Diamond, has moved. He is suggesing that the Secretary of State should take powers—for preventing increases in the price of land, including buildings, over price payable before 6th November, 1972 ".Clearly his three noble friends who have spoken on this point thought that what he meant was that it would be possible directly to control the price of land, including buildings, in some statutory way similar to that being applied to the other things to which the Bill relates. They certainly developed powerful speeches on that theme. The noble Lord himself, knowing the practicalities of the 1181 situation, did not do that. He went into the ways and means in which the economy could be, in his view, better regulated; and he did not develop at all the suggestion that some statutory procedure could be introduced directly to control the price of land and buildings. It does not surprise me in the least that he did not do so, in view of the experience that he has had in office dealing with this situation on two occasions. Neither land nor houses are sold as a standard commodity like apples or socks; there is no standard price applicable to individual lots of land or houses. The price depends on a highly sensitive relationship between demand and supply, and on the particular circumstances of each particular case: size, location, condition, permitted and existing use in the case of land; size, location, and cost in the case of a house.
Would the noble Lord forgive me for just one moment? Can he tell us in what respect that differs from the control of rents, which was fought against for so many years and which ultimately was found to be practicable?
§ LORD SANDFORD
It differs because we are dealing in each sale with a particular plot of land with all those variables, and a particular house; and with the sale between a particular owner and a particular purchaser. The position is further complicated in that no clear price level will exist for many plots of land, since some plots have never been the subject of a transaction and others may have last been sold a generation or so ago. The situation is entirely different. The same is true of secondhand houses which form the bulk of housing sales. Prices of secondhand houses tend to determine price levels for new houses, and the new and secondhand housing markets are indivisible. It is not in the least surprising to me—and the noble Lord, Lord Diamond, knows this perfectly well—that no Government, including the previous Labour Administrations, have thought it practicable directly to control the price of all land and house transactions. For example, during the 1966 standstill the Labour Administration refused to control house prices, and the then Minister of Housing, Mr. Crossman, said in a speech, " It would clearly be difficult to establish 1182 a basis for the statutory control of house prices ", as indeed it is. But that is not to say—
§ LORD DIAMOND
May I interrupt, in order to save the noble Lord's time? If he is going to make most of his speech on the basis of what the Labour Government did in differing circumstances, perhaps he will complete the information and tell the Committee by what amount prices rose during the period immediately preceding that freeze.
§ LORD SANDFORD
I do not in the least deny that the rise in house and land prices is something which we all deplore and which needs to be dealt with. All I am saying is that I agree with the noble Lord that it is not practicable to introduce any statutory procedure which would directly curb the rise in house prices. That they are rising much faster now than we should wish does not alter that fact. But it will be possible for the industry to curb the rise, because the Bill provides for the control of building material costs and wage rates in the building industry. Therefore the Government welcome the initiative of the Housebuilders' Federation in urging its members to observe the spirit of the Bill by stabilising the price of new houses. We look forward to seeing full effect given to these intentions expressed by the Federation.
I entirely agree with noble Lords, such as the noble Lord, Lord Janner, and the noble Lord, Lord Davies of Leek, who have expressed a sense of scandal and outrage at the fact that enormous fortunes are being made by speculators, and who spoke of the widespread sense of unfairness and injustice at the thought of large, uncovenanted gains being secured in the course of these property transactions in a rapidly rising market. But I would ask noble Lords to bear in mind the taxation position. There is much more involved than the payment of 30 per cent. capital gains tax. The truth is that a man engaging in these transactions, far from paying only 30 per cent. capital gains tax, pays full income tax and surtax. Profits from speculative transactions of this sort are treated as income within the Income Tax Acts, and are fully taxed as such. If it is a company which is speculating, the profit is subject to corporation tax and, when distributed, to personal tax as well. The 1183 owner of a one-man property speculating company will not escape by selling his shares, because he will be caught for full income tax and surtax on his profits. Nor will be escape by setting up trusts or settlements, or by indulging in ether avoidance devices. Legislation passed by the last Government, and supported by this one, catches transactions such as that. So I think that that aspect of the matter—
§ LORD PEDDIE
Is the noble Lord suggesting that fiscal methods alone are adequate to deal with this situation?
§ LORD SANDFORD
No, of course not. What I am doing is putting into the balance against this sense of scandal and outrage the fact that speculators in this field are not, by a very long way, getting away with the whole of these enormous profits.
Returning to the question of the impact of this situation on house owners and would-be house owners, I would point out that we have discussed this subject extensively on two occasions, both on the Queen's Speech and in the special debate devoted to housing. I made the point at the beginning of the second occasion, and I make it again now, that the rapid rise in the price of land and houses, which is much too large for comfort, is not the source, as I think the noble Lord, Lord Davies of Leek, suggested, but the symptom of the evil of inflation. It can be dealt with only if and when we succeed in dealing with inflation. It is quite impossible to deal with it directly while inflation persists. It is the one escapable symptom of inflation and we have to go to the root of the matter, which is not the rise in house and land prices. But I would ask noble Loris to take account of something I said on a previous occasion, and must say again, because it helps to get this matter into perspective. While I fully accept what the noble Lord, Lord Diamond, said about the difficulty of this situation for young house purchasers, for the lower income groups and for those moving into house purchase for the first time, the fact of the matter is that between the first half of 1970 and the first half of 1972 there were 32 per cent. more mortgages issued by building societies to first-time purchasers, 30 per 1184 cent. more to borrowers under the age of 25, and 40 per cent. more to borrowers with incomes up to the earnings of average industrial manual workers. I am not saying that all of these categories have been able to do that easily and that they are not over-straining their resources, but that is the position and it is necessary to bear those facts in mind in order to keep the matter in perspective.
In answering this debate, I make the point that now, as before, we have conic to the conclusion that it is not practicable directly to control the prices of housing or of land. It is much more important to get to the root of the evil and deal with inflation itself. The remedies which we have adopted are those which I expounded at length in our previous debate. They are concerned with ensuring that there is an adequate supply of land with planning permission to meet the demand. I think I showed clearly that if the Land Commission had been in existence it would have been no answer at all to this situation. In its two-year life, the Land Commission was unable to release on to the market anything like the quantity of land which is now needed and which we are bringing forward. I went earlier into the whole question of the contribution which it is possible for the housing improvement movement to make, and the noble Lord commented on the scandal of housing improvement grants being misapplied, particularly in London. I made the point that the housing improvement grants which are going to landlords in Greater London are a tiny fraction of the grants which are being used all over the country; that we take the view that local authorities have discretion about to whom they should give grants, and if there is a problem they have powers to deal with it. We are taking the further step of requiring them to notify tenants whose landlords are applying for improvement grants of the conditions of their tenure in order to make sure that they are not evicted while the improvements are being undertaken, when they have power to remain.
In conclusion, I can only repeat what I said originally: that we are dealing here with one of the worst symptoms of inflation, which can be effectively and permanently cured only by dealing with inflation itself. In the meantime, we have to do the best we can to keep the supply 1185 of land and the supply of houses rising to meet the demand. There may well have been useful points in what the noble Lord, Lord Diamond, said about other fiscal measures and measures to do with the management of the economy which will have a useful bearing on the matter, and they will be considered; but I cannot accept the Amendment in the sense, which the noble Lord certainly did not develop, that it is possible or practicable to do anything directly to control the Flee of land or the price of houses.
§ LORD BERNSTEIN
Before the noble Lord sits down, may I ask a question? I must apologise to your Lordships for being late, but I flew in from Newcastle hoping to get here in time to listen to my noble friend Lord Diamond speak on this particular Amendment. I have heard what the noble Lord has said in reply to what I have heard since I arrived, and I should like to ask him this question. The noble Lord said that there were difficulties which he did not think could be overcome. If somebody produces a scheme to overcome those difficulties, would the Government agree to accept the proposal, if it was practical?
§ LORD SANDFORD
I am sure nobody in this Committee would expect to hear me say that I would accept a proposal that I have not seen, but of course we win accept any proposal for consideration.
§ LORD PEDDIE
I should be glad if the noble Lord would help me. I have listened to the very long reply on the part of the noble Lord opposite. Am I correct in understanding that the major objection to this Amendment is based upon the administrative difficulties of applying it? I take it that that is the argument he is advancing. But I was intrigued—and I should like some comment on this—by the noble Lord's final remarks, when he offered the suggestion that increasing the supply of land might be a better way to deal with this problem of the rising price of land. I wonder whether the noble Lord would elaborate on that matter and give some indication of what the intentions of the Government are in this particular area.
§ LORD SANDFORD
My only reason for not elaborating on it is that in our debate on housing I made a 30-minute speech, a good deal of which was dealing 1186 with the question of increasing the supply of land for house building, and I thought it would weary the Committee if I repeated it. The points I made then are exactly the same points as those I should have to make now. If the noble Lord would care to look at the speech I made on that occasion he will see the substance of anything farther I could say now; but I think it would be wearisome for me to repeat it.
§ LORD SANDFORD
To use those terms is rather to underrate the difficulties, but the burden of my first remarks was to explain that there is simply no base on which to take a view as to the increase of prices. There is no basis on which one can exercise a fair judgment as to which prices are too much and which prices are not too much.
§ 7.4 p.m.
§ LORD DIAMOND
I want to say how grateful I am to the noble Lord, at all events for the extent to which he is thinking on the same lines as the rest of your Lordships; that is to say, he used terms which are even stronger than the terms which I permitted myself. He talked about the scandal of increases in prices, and so on, and I share his views t so we are all on the common basis of being appalled at the recent increases in the prices of land and buildings. The noble Lord has said that he cannot accept my Amendment because there is nothing one can do in a statutory way. Let me explain, first of all, why the wording of the Amendment was chosen, although it must be very obvious to nearly all your Lordships. The Bill provides:The appropriate Minister may by order provide for preventing increases of rent …If, therefore, one wants to bring in houses and buildings, one uses the words which are acceptable to the Government. If the Government have in mind doing something by way of discretion with regard to rent, and they use the words " provide for preventing increases of rent ", then the sensible thing to do in an Amendment is to use the words which we have used; namely, to providefor preventing increases in the price of land …It is as simple as that. 1187 The Government go on to say:… over rent payable before. 6th November, 1972",so the obvious Amendment is to alter the wording of the Bill as little as possible in the hope that what the Government are prepared to do on one thing they will be prepared to extend to another, and therefore one uses, in the Amendment, the words:before 6th November, 1972".If the noble Lord does not like the Amendment, then of course he can indicate what other kind of Amendment he would prefer.
What the Government cannot do is, through their spokesman, to say, "The situation is scandalous, and therefore we are going to do nothing about it ". That is the position which the Government are in at the present moment. Their spokesman can use any kind of argument about the wording of the Amendment, or about the proposal which I did not develop; it does not get the Government out of this difficulty: that the position is scandalous, yet they are going to do nothing about it, and they are going to do nothing about it because the Labour Government did not do anything about it when the position was not scandalous, when the position was that prices were rising negligibly. Every one of us knows that you do not interfere with a market with economic forces unless you have to; but if you have to, you do. As my noble friend said with regard to rents, for decades one said, "You cannot interfere with rents; it is just too difficult ", and then one was forced to do so. Here, one is being forced to do so because of the vast increase, the scandalous increase, in the prices of houses and building—and the noble Lord has said nothing to indicate that they are going to stop rising.
The noble Lord said one should put the matter in context and think of the tax provisions. I am not wholly unfamiliar with the tax provisions. Whether I agree with what the noble Lord said or not does not matter. Whether I agree with him that every single person who sells a property for a large profit pays surtax, et cetera, on it is a different issue. In fact, I do not; but that does not matter. What matters is that the noble Lord says, "We have tax provisions introduced by 1188 the Labour Government which are ineffective ". That is what the noble Lord is saying, that they are totally ineffective in stopping the scandalous rise in prices. That is what the noble Lord is saying, and I agree with him: they are totally ineffective, because we see the prices rising more and more, and getting to these fantastic figures.
The noble Lord says that there is nothing that can be done in a statutory way. Indeed there is. The noble Lord hinted—and I do not tie him down to this—that it might be possible for his right honourable friend, at the appropriate time, or even earlier, to turn his mind to tax relief on borrowing. There is nothing easier than to bring in an order dealing with that tinder the powers which I hope your Lordships will add to the Bill by accepting this Amendment. That is one simple example of what could be done. Similarly, with regard to rents, the Government are taking powers to deal selectively with rents. The Bill does not say so, but the Minister has said so; and that is why they are using these words. I am suggesting that we should have identical words for property, for land and buildings, so that the Government could deal with them selectively, too.
Let me give the Government one example. Take a small housing estate which is being built. There are hundreds of such small estates all over the country; every one of your Lordships is very familiar with them. There is a plot of land, and on it is built a small estate of 100, 200 or 250 houses. Some are built before the freeze; some are built after the freeze. They involve the same contractor and the same sub-contractor, building the same type of houses. Everybody knows what the price of those houses was before the freeze. Some have been ordered; some have not yet been ordered. What is there to prevent the Government's taking power, selectively, to stop those houses from being increased in price by the kind of order which a Minister could lay before Parliament if this Amendment were accepted, but which he could not lay before Parliament if the Amendment were not accepted? The noble Lord, Lord Sandford, will correct me if I am wrong. What I am saying is that under the powers in his proposed Bill he could not stop a builder selling a 1189 type "A" house at one price before November 6 and at another in February. If he added on the Amendment that I am suggesting, he could do so. What I am saying to the Government is that this is a further example of the way in which they could, by statutory order, prevent an increase in the price of certain houses. There are a dozen or more cases that I could use as illustrations and where the matter could be dealt with selectively. This is a huge market and this sort of thing is going on the whole time.
I do not want to delay the Committee. We have had no real answer. We have had a valuable debate and I am grateful for the admission that the situation is shocking and scandalous. I am suggest
§ Resolved in the negative and Amendment disagreed to accordingly.1190
§ ing that here is an opportunity for the Government to be allowed—not to be compelled but to have a discretion—if matters get intolerably worse during the course of the next few months, to do something about it and at the same time to demonstrate to those whose wages are frozen at a very low figure—including the £18 and £19 category, because the Government did not accept our Amendment—that those who make huge profits out of land and buildings are also brought under consideration.
§ 7.12 p.m.
§ On Question, Whether the said Amendment (No. 4) shall be agreed to?
§ Their Lordships divided: Contents, 49; Not-Contents, 76.1189
|Addison, V.||Hale, L.||Popplewell, L.|
|Arran, E.||Hall, V.||Raglan, L.|
|Balogh, L.||Heycock, L.||Royle, L.|
|Bernstein, L.||Hoy, L.||St. Davids, V.|
|Beswick, L.||Hughes, L.||Serota, B.|
|Blyton, L.||Jacques, L.||Shackleton, L.|
|Brockway, L.||Janner, L.||Shepherd, L.|
|Byers, L.||Kennet, L.||Slater, L.|
|Carnock, L.||Leatherland, L.||Summerskill, B.|
|Champion, L.||Llewelyn-Davies of Hastoe, B. [Teller.]||Taylor of Mansfield, L.|
|Collison, L.||Wade, L.|
|Davies of Leek, L.||Maelor, L.||Watkins, L.|
|Diamond, L.||Milner of Leeds, L. [Teller.]||Wells-Pestell, L.|
|Evans of Hungershall, L.||Morris of Kenwood, L.||White, B.|
|Gaitskell, B.||Nunburnholme, L.||Wright of Ashton under Lyne, L.|
|Garnsworthy, L.||Peddie, L.|
|Greenwood of Rossendale, L.||Phillips, B.||Wynne-Jones, L.|
|Aberdare, L.||Ferrers, E.||Mountevans, L.|
|Amherst of Hackney, L.||Ferrier, L.||Mowbray and Stourton, L. [Teller]|
|Auckland, L.||Fortescue, E.|
|Balerno, L.||Gainford, L.||Northchurch, B.|
|Belstead, L.||Gisborough, L.||Nugent of Guildford, L.|
|Berkeley, B.||Goschen, V.||Onslow, E.|
|Brabazon of Tara, L.||Gowrie, E.||Pender, L.|
|Brooke of Cumnor, L.||Greenway, L.||Rankeillour, L.|
|Brooke of Ystradfellte, B.||Grenfell, L.||Redcliffe-Maud, L.|
|Coleraine, L.||Grimston of Westbury, L.||Redesdale, L.|
|Colville of Culross, V.||Hood, V.||Reigate, L.|
|Courtown, E.||Hylton-Foster, B.||Rockley, L.|
|Craigavon, V.||Jellicoe, E. (L. Privy Seal.)||Rothermere, V.|
|Cranbrook, E.||Jessel, L.||Ruthven of Freeland, Ly.|
|Cromartie, E.||Kindersley, L.||St. Aldwyn, E.|
|Davidson, V.||Kinloss, Ly.||St. Just, L.|
|de Clifford, L.||Kinnoull, E.||Sandford, L.|
|Denham, L. [Teller.]||Latymer, L.||Sandys, L.|
|Drumalbyn, L.||Lauderdale, E.||Sempill, Ly.|
|Dudley, E.||Limerick, E.||Strang, L.|
|Dundonald, E.||Long, V.||Sudeley, L.|
|Eccles, V.||Macleod of Borve, B.||Terrington, L.|
|Elliot of Harwood, B.||Merrivale, L.||Trefgarne, L.|
|Emmet of Amberley, B.||Mersey, V.||Young, B.|
|Exeter, M.||Milverton, L.||Zuckerman, L.|
|Falkland, V.||Monck, V.|
§ 7.20 p.m.
§ LORD BALOGH moved Amendment No. 5:
Page 2, line 14, at end insert—
("() The appropriate Minister may by order provide for an excess capital gains tax of 80 per cent. on any gain realised by an individual in excess of 4 per cent. of the purchase price or the price on 6th November 1972 whichever was too higher.")
§ The noble Lord said: In moving my Amendment I am not going to make a long speech. I shall not make either a debating speech or even a persuasive speech. All that would be completely futile and obviously, as an economist, I am not going to waste effort pushing a stone up hill. What I am going to do therefore is to give a free tutorial to Ministers on the Government Front Bench on a new field of governmental endeavour in which they have obviously shown complete lack of knowledge. I refer to the field of social consensus.
§ My Amendment is very much open to attack. It is a clumsy device; it is an arbitrary device, but it is a device which makes easier the differentiation between those who have got and those who have not got capital, and therefore it is calculated to increase the possibility of consensus. The Government do not want any consensus. They invite us to end consensus. The Amendment does not begin to achieve a real consensus or real fairness between those who have and those who have not. For that to be done we ought not merely to have an extra capital gains tax but also some means by which ploughed back profits are distributed more equally than at the moment; that is to say, we ought to have a sort of fund into which part of ploughed back profits are paid so as to enable the workers after the freeze is ended, to participate from their sacrifice in forgoing increases in wages and therefore increases in profits. But still, with all these objections against it, my scheme would during the freeze at any rate tax capital gains realised.
§ As noble Lords will see, I have carefully formulated the language so that there will be no hardship if somebody sells something which he bought some years ago and inflation has increased the value. Obviously not the whole of the capital gain would be subject to this tax, but only that part which has been made 1192 after November 6, 1972. This is a very simple and rather modest measure. But it is a measure by which we can test the good faith of the Government in their asseverations that what they want is consensus; that they want to have a fair distribution of the burdens and that they want to decrease as much as possible the difference between those who have and those who have not capital. I beg to move.
I rise to support this Amendment. I was rather intrigued by the ingenious suggestion that at some stage anything that had been obtained by way of capital gains might ultimately be distributed among those who were willing to buy land in the area in which the capital gains were made and so reduce the price paid for their property. That is something which may require deep consideration. I do not put it forward at the moment for serious consideration by the Government but it is worthwhile thinking about. On the other hand, I think everyone would agree that speculators have had a jolly good run. The noble Lord, Lord Balogh, could have asked for much more; but I think he is putting forward a reasonable and indeed a modest proposal, that anyone who from November 6 onwards speculates in property shall not have the advantages that he had before; thus in some measure at least the speculation in land will be curbed. I do not see what reply there can be to a modest request of that kind. I ask the Government to consider the fact that the noble Lord is talking about the period after November 6 of this year: and that within the period prior to November 6 such a vast amount of profit was made out of land speculation that no one could possibly expect any Government to tolerate increases at anything like the rate that has taken place within the last nine to twelve months. I cannot see any reasonable answer to a request of this nature, and I have much pleasure in supporting the Amendment.
§ 7.27 p.m.
§ LORD DRUMALBYN
May I say that I am grateful, as always, to the noble Lord, Lord Balogh, for his tutorial and for explaining what he meant by his Amendment. I am not going to take a long time in reply. We have just had a full debate on the substance of what 1193 the noble Lord is suggesting. The noble Lord, Lord Diamond, asked the Government to do something and the noble Lord, Lord Balogh, now asks us to do something specific. I think I should answer him by reference first to one thing which was said by the noble Lord, Lord Diamond. He was advocating removing the tax relief on borrowing which the Chancellor of the Exchequer restored, and he went on to say that that was something which the Government could do at the appropriate time. I understood him to mean by that (he did not say so) at the time of the Budget. But later the noble Lord I think qualified this by saying that if we took power we could introduce an order to do it.
Generally speaking, the question of capital gains tax is undoubtedly a matter for consideration in relation to the Budget. I do not want to ride off on that, or on the rather special or unusual character of the Amendment, because all suggestions put up in good faith, and especially those put up by people with the economic knowledge of the noble Lord, Lord Balogh, have to be very carefully considered. But I cannot help wondering what the noble Lord wants to achieve. He says that by this Amendment he wants to make, as it were, a contribution to consensus. But what will be the effect of his Amendment? What does he think would happen during the few months of the standstill if, during that time, land sales were to be subjected to a penal tax?
§ LORD BESWICK
I am speaking for my noble friend, but land is not mentioned in this Amendment. Any capital gains would be caught.
§ LORD DRUMALBYN
I am talking about land because this is one type of transaction on which capital gains can be collected. I am asking what would happen to land sales if they were to be subject to a penal tax during the standstill, which is only for a few months. Surely the noble Lord must agree that the natural effect would be for people to stop selling land. Is that what we want? The only people who would sell land would be those unfortunate people who for some reason or another had to sell it. Then what would happen to the price? Because the land would be in short supply the price of the land would go up. If the price of land goes up further, is that going to 1194 improve matters or even add to the consensus?
§ LORD BALOGH
If the noble Lord, quite rightly from his point of view, argues that land sales will be stopped by this tax (it is not a very penal tax actually) and almost in the same breath avers that there will be people who are buying land—we are not talking about local authorities, because they have a perfectly good way of overcoming this difficulty—then it seems to me that this is a flagrant contradiction.
§ LORD DRUMALBYN
By no means. What I said was that some people will have to sell land. No doubt there will be many people wanting to buy land, but they will not be able to do so if it is not available. That is precisely why the price will go up.
§ LORD BALOGH
The noble Lord does not seem to be able to understand that if he argues that the temporary nature of this tax postpones the sale, he also ought to argue that it postpones the purchase of land. Therefore, so far as land values are concerned this is a neutral tax.
§ LORD DRUMALBYN
I would not agree with the noble Lord. If you make a commodity short, the price is bound to go up. That is one aspect of the matter. The general reason why the noble Lord is moving his Amendment is because he thinks it would contribute to the consensus. That is not so much, I would suggest, because the price of land has gone up, but in the belief that the price of land has gone up because of speculation. My noble friend Lord Sandford dealt with this point when he was replying to the previous Amendment, but perhaps I might briefly summarise what he said—and this is something to which my noble friend Lord Gowrie referred during the recent housing debate. Under ordinary income tax principles a person who is buying and selling land and buildings will be trading and, as such, will be liable to tax on the profits at full income tax rates, which may rise to 75 per cent. That would also apply, in appropriate circumstances, to isolated transactions. Moreover, under legislation introduced by the previous Administration in 1969I have no doubt by the noble Lord, Lord Diamond, himself—where a land transaction does not amount to trading, the 1195 profit can still be taxed as income if the land was bought with the intention of selling it at a profit, and under that provision the income would be investment income and might be taxed at rates rising to 90 per cent. at the present time. The same legislation also contains provisions which can be brought into use to counter avoidance devices. Of course capital gains tax applies where land has genuinely been held as an investment. That happens already.
There remains to be dealt with the case of the unfortunate man who has to sell his land. This argument goes, of course, for anything else; it goes for stocks and shares or any other valuables which may be subject to capital gains tax if sold. If he has to sell his asset in this particular period, is it reasonable that his asset—it may be his only capital asset in the world—should be taxed at 80 per cent.?
§ LORD BALOGH
I would take exception to the whole trend of the noble Lord's arguments. After all, this is a tax which affects only the value as at about November 6, 1972, or the purchase price, whichever is the higher. The Minister's arguments are that he thinks that he thinks capital assets—not merely land—will appreciate in the same way as they have appreciated in the past. If that is so, his whole argument is, and can only be, based on his assumption that the inflation of asset prices will go on at the same rate as it has gone on. In that case, despite the crocodile tears which he is shedding for chaps who have to sell at these enormous losses—it is heartrending; I am almost as touched as I was for the oil companies when their difficulties were described by the Minister in such heartrending terms—it seems to me that that is not an answer to my Amendment.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS)
With respect to the noble Lord, Lord Balogh, I am not a protagonist in this particular argument, but my noble friend Lord Drumalbyn is making a speech. I think there could be a limit to interventions in that speech. The noble Lord, Lord Balogh, can make several subsequent speeches. But as he is making this one in the middle of my noble friend's speech—if I may speak as 1196 quite an ordinary Member of the House—it might perhaps be better if the noble Lord could conclude fairly quickly.
§ LORD DRUMALBYN
Perhaps if the noble Lord opposite gives us tutorials on some subjects, we can give him a tutorial on interventions in the middle of a speech. But I take his point on this issue. The whole basis of the noble Lord's Amendment is on the same assumption. I am dealing with his Amendment. The Amendment assumes that capital values are going to go up during this standstill, and that is what I am dealing with. I am dealing with the noble Lord's Amendment and not any assumptions of my own. I am simply saying—and this is not at all crocodile tears—that the noble Lord would be creating some extremely hard eases in this way.
I think I have dealt with the main points that the noble Lord has raised. My answer is, first, that this is not the right place to move an Amendment of this type; and secondly, that if this Amendment were carried, it would not only dry up the source of land, about which we have just been talking, but also gravely affect the working of the Stock Exchange, which is there to even out prices in accordance with supply and demand. The net effect again would be to cause people not to sell stocks and shares during this period. If the noble Lord merely wants to have some presentational device to contribute to the consensus, that is one thing; but to do it with the expense of a tax of his kind is surely unreasonable. Lastly, I think that matters of speculation are already well covered at the present time by existing legislation, and if this Amendment were to be carried it could create some hard cases.
§ 7.39 p.m.
§ LORD DIAMOND
It is for my noble friend to say what he thought of that reply, but perhaps I can say what I think of it; and that is, not very much. Before coming to that, perhaps I may answer the question put to me by the noble Lord, as to what is the appropriate time for dealing with matters which are normally dealt with at Budget time. I used that phrase because, as the noble Lord knows, there are several ways in which it is possible to anticipate Budget Resolutions. This has been done on many occasions by Conservative Chancellors. If, for 1197 example, the Government had it in mind, as I very much hope they have, to restrict in some way the present freedom to charge interest on borrowing against one's tax and surtax, and came to the conclusion that the appropriate time to introduce the legislation would be in the Finance Bill, then if the Chancellor wanted to warn all borrowers that their situation after April 6 (or it could be after November 6 of this year) would be different from what they had expected, he might think it appropriate to come to the other place and make a statement of his intentions at Budget time. This has been done—not exactly in this field, but in the field of the Budget—and the Chancellor might think it right to warn borrowers of what their position will be.
If people are borrowing for 30 years—and some loans are for that period—they are going to be interested in what the tax provisions are, not merely at the present day but at some time ahead. There is nothing to prevent a Chancellor from coming to the other place and saying what his intentions are and that they will have effect from the date of his speech—or even from November 6, as that is a relevant date in these proceedings. Therefore, I use the term "appropriate" in order to leave it to the Government, and particularly the Chancellor, to decide what they thought was the most appropriate time—it could be earlier, it could be later or it could be in anticipation. I hope that I have answered the question put to me by the noble Lord.
I now want to turn to this particular Amendment, and to support very strongly what my noble friend has said. I regret bitterly that the Government apparently have regarded it in such a lighthearted way that they did not attempt to consider its effect at all—because the Government's main answer has concerned the hardship that would be caused. My noble friend's main point is that some indication should be given of "fair shares" in the freeze. But of course he is not being half as tough on those who have purchasing power deriving from assets as the Government are being on those who have purchasing power deriving from incomes, because so far as incomes are concerned the purchasing power is to be frozen, is it not? That is what the Government are saying.
1198 Even if you have an agreed increase, that is agreed with your employer, you are not going to get the benefit from it if it does not start to be payable until after November 6. But so far as purchasing power which stems from the sale of capital assets is concerned, what my noble friend is proposing is, first, that an increase of 4 per cent. should be available to everybody. The wage-earner does not get the 4 per cent; he gets no per cent. increase allowed. Secondly, my noble friend is suggesting that over and above that 4 per cent., four-fifths shall go to the Revenue, to the community, and that one-fifth shall remain in the pocket of the man who has made the gain, the taxpayer—20 per cent. So we get 4 per cent. as the base, as the threshold, and then 20 per cent. over and above that.
As my noble friend said, this is not a penal tax. This is giving to the property-owning section of the community an advantage during the freeze period which is not shared by the non-property-owning section. In short, it is giving to the "haves" an advantage which the "have-nots" do not share. Therefore I am totally unable to understand the noble Lord's argument about the hardship that is going to be inflicted on people who may be forced to sell at a profit over and above the price at the start of the freeze and may have to contribute a large portion of that profit to the community. I do not call that hardship at all; I call it a very reasonable proposal.
It would have the effect—if the noble Lord likes, the presentational effect, which I should have thought was very relevant—of demonstrating to the wage-earners and salary-earners whose incomes have had to be frozen, and whose purchasing power is therefore going to be frozen—because they have not the capital assets to draw on, presumably—that although they are being asked to accept sacrifices, and to forgo a rise which would otherwise be paid to them by their employer (because their employer has thought they were worth the increase, having regard to the work they are doing for him, and so on), there are other sections of the community who are sharing in this kind of sacrifice, although to nothing like the same extent. I should have thought this was a very reasonable proposal to make, 1199 and I hope that my noble friend will not withdraw the Amendment.
§ LORD BALOGH
Of course, the answer which has been put forward by the Minister is founded on the wrong assumption, based on the wrong logic and shows absolutely no sort of social sensi-
§ Resolved in the negative and Amendment disagreed to accordingly.
LORD DIAMOND had given notice of his intention to move Amendment No. 6:
Page 2, line 16, after ("goods") insert ("land and dwellings").
§ The noble Lord said: Having regard to the hour I think it is more convenient that I postpone moving this Amendment until the Report stage.
§ 7.54 p.m.
§ On Question, Whether Clause 2 shall stand part of the Bill?
§ LORD DIAMOND
I shall be grateful for answers to one or two questions on this clause. First, I raised the question of interest but I do not think I received a specific reply. I should be grateful if the noble Lord would confirm that I am right in saying that interest rates are not pegged or frozen by the provisions of this clause. The second question I
§ tivity. On these three grounds, obviously, I have to condemn it and I think I must press my Amendment to a Vote.
§ 7.46 p.m.
§ On Question, Whether the said Amendment (No. 5) shall be agreed to?
§ Their Lordships divided: Contents, 27 Not-Contents, 49.1199
|Addison, V.||Hoy, L.||St. Davids, V.|
|Balogh, L.||Hughes, L.||Serota, B.|
|Bernstein, L.||Janner, L.||Shackleton, L.|
|Beswick, L.||Llewelyn-Davies of Hastoe, B.||Taylor of Mansfield, L.|
|Blyton, L.||Milner of Leeds, L. [Teller.]||Wells-Pestell, L.|
|Champion, L.||Morris of Kenwood, L.||White, B.|
|Diamond, L.||Phillips, B.||Wright of Ashton under Lyne, L.|
|Garnsworthy, L. [Teller.]||Popplewell, L.|
|Greenwood of Rossendale, L.||Raglan, L.||Wynne-Jones, L.|
|Aberdare, L.||Emmet of Amberley, B.||Macleod of Borve, B.|
|Amherst of Hackney, L.||Exeter, M.||Merrivale, L.|
|Balerno, L.||Falkland, V.||Northchurch, B.|
|Belstead, L.||Ferrier, L.||Onslow, E.|
|Berkeley, B.||Fortescue, E.||Pender, L.|
|Brabazon of Tara, L.||Gainford, L.||Rankeillour, L.|
|Coleraine, L.||Gisborough, L.||Reigate, L.|
|Colville of Culross, V.||Gowrie, E.||St. Aldwyn, E. [Teller.]|
|Courtown, E.||Greenway, L.||St. Just, L|
|Cranbrook, E.||Grenfell, L.||Sandford, L.|
|Cromartie, E.||Grimston of Westbury, L.||Sandys, L.|
|Davidson, V.||Hood, V.||Selsdon, L.|
|de Clifford, L.||Jellicoe, E. (L. Privy Seal.)||Strang, L.|
|Denham, L. [Teller.]||Lauderdale, E.||Sudeley, L.|
|Drumalbyn, L.||Limerick, E.||Terrington, L.|
|Dundonald, E.||Long, V.||Trefgarne, L.|
|Elliot of Harwood, B.|
want to ask relates to dividends. In subsection (3) we read:
A company … shall not declare an ordinary dividend which exceeds … ".
The question I am asking is: What happens about a dividend which has previously been declared and which, if it had not been declared, would be caught by the provisions, but which has not yet been paid? That is a dividend declared before, and payable during, the freeze period. Am I right in interpreting this clause as meaning that such dividend, being an increase over a previous year, is not caught by the freeze? I hope that I have made my question clear, because it is a very important issue.
§ The third question I want to ask relates to the right of a consumer who has been chanted an illegally excessive price under the Bill to sue for recovery of the excess. Where during the period of standstill a consumer has been charged a price which 1201 is shown subsequently to be excessive, it is plain justice and wisdom that he should have the right to recover the excess. I am anxious to be clear in my question, so if the noble Lord, Lord Drumalbyn, would like me to repeat it I will do so. I am concerned with a situation where during the standstill period a consumer buys an article at a price which, under the provisions of this Bill, is excessive. It becomes clear from inquiries made that it is established as an excessive price. The Bill provides certain penalties. I am saying that the most obvious justice and the most sensible course would be that the consumer should be able simply to go along and say, "I want the excess repaid." Do the provisions of this Bill, added to the rights which a consumer has at law at the moment, enable the consumer to sue the vendor for the return of the excess? I hope that I have made the question clear. It is relevant to considerations of other parts of the Bill. If the noble Lord would be kind enough to answer those questions we might then get on to the next stage.
§ LORD DRUMALBYN
The answer to the first question is that interest is not affected. The answer to the second question about dividends was given in a Treasury paper on November 7, which stated that in the light of representations from the Stock Exchange, and after consultation with them about how to define such a commitment, it was agreed to regard the formal announcement to the Stock Exchange and Press before the standstill as equivalent to a declaration before the standstill began. There were clear reasons for this, and if the noble Lord wishes I will send him a copy of the paper.
§ LORD DIAMOND
I do not think I need that. That is the answer I expected. I want to be quite clear from the Minister that this means that a dividend which has been declared before the date of the standstill, and which is for an amount in excess of what would be permitted under the standstill arrangements, may be paid notwithstanding that the date of payment is within the standstill period; whereas, for example, an agreement made before the commencement of the standstill period to increase wages will not be allowed to come into effect during the standstill period. I do not want to be 1202 unfair on the Government; I want this gross inconsistency and injustice to be demonstrated quite clearly on the basis of the Government's own statement.
§ LORD DRUMALBYN
We are, after all, dealing with an entirely different animal here. When a dividend is declared in this way it immediately has an effect on the market; it has repercussions on the market and it is a firm commitment. For that reason it was decided, after consultations, that it should be permissible for that dividend to be paid. On the third question, the answer is in paragraph 2(1) of the Schedule which allows for part of the transaction, the excess, to be recoverable. If the noble Lord will look at the Schedule he will find that that is so. It all depends of course on an order or notice being issued under the procedure in Clause 2.
§ LORD DIAMOND
I think I had better stay on my feet for a moment while consultations go on, because I am not at all clear about this. Paragraph 2(1) of the Schedule refers to validity of transactions and it says:The appropriate Minister may by order prescribe the degree to which anything made illegal … is to be invalid either at the time when section 2 of this Act is in force, or later.Am I to understand from that that if the Minister, by order, prescribes accordingly, and the excess is invalid, then the excess can be recoverable by the consumer?
§ Clause 2 agreed to.
§ Clause 3 [Existing contracts of employment: modification while section 2 is in force]:
§ 8.3 p.m.
LORD BESWICK moved Amendment No. 7:
Page 3, line 4, leave out subsection (3).
§ The noble Lord said: If this subsection is dropped from the Bill there will be some, indeed many, who will be denied increases in remuneration to which they 1203 had looked forward and to which indeed they may consider they were entitled, and part of which probably they have already committed. In this respect they will be precisely in the position of those caught in Clause 2. They will be in the position of the agricultural workers or the National Health Service workers as very deserving cases for whom, we have all agreed, something ought to have been done, but no exceptions, we are told, could be made. Indeed, when I moved an earlier Amendment the Minister said that the freeze must apply to all. But here in this subsection an exception is being made. I want to ask the noble Lord, Lord Drumalbyn, why an exception should be made in this category of cases. In the main the people covered by this subsection will be the better paid. Almost certainly they will be better paid than, say, National Health Service workers. If we really are concerned with the ordinary interpretation of fairness we should not make this distinction between those fortunate enough to have written contracts and those unfortunate enough not to have written contracts.
§ Moreover, this is a badly drafted piece of legislation. I hope we shall not have the reply that the words have been taken from an earlier Act. There were loopholes in the earlier Act and difficulties were caused. We should at least have learnt from previous experience. The advice given by the Department of Employment to employers is that this subsection will enable only civil servants and other public servants to be excluded. Is that really the avowed intention of the Bill, may I ask the noble Lord? Is that what is intended by the Bill? The advice, I repeat, given by the Government Department is that it is intended to exempt only civil servants. I cannot really conceive that the governmental machine has so contrived this Bill that only their own servants are excluded. If that is the intention, then it is surely wrong and I shall invite the Committee to say so.
§ LORD DRUMALBYN
Why does the noble Lord say that the advice given by the Government is that this is intended only to affect civil servants?
§ LORD BESWICK
I say that because employers seeking advice contacted the Department of Employment and that is 1204 what they have been told; indeed, I understand that this advice has been tendered to the C.B.I. I was going on to say that, in any case, the wording seems to be inefficiently contrived. Mr. Clive Jenkins has said that this subsection will enable him to "drive a coach and horses" through the law for the benefit of his members. We know that the gospel of brotherhood according to Mr. Clive Jenkins does not mean that he has to consider the less fortunate when he is negotiating. But is it right that his own members ought to be enabled to use this loosely-worded piece of legislation in this way? As the noble Lord will know, or I assume he will, there is genuine apprehension in industry about the anomalies which will arise if this clause is un-amended. Employees working side by side will be treated differently: one caught and the other not.
I suggest two alternative approaches. One is that there should be a complete freeze on all increases which are not the outcome of clearly changed responsibilities. The second is a relaxation of the freeze to permit any increases which are non-inflationary in their total impact. In any large organisation, on average people retire or otherwise drop out at a higher level of pay than that at which newcomers join. Some progress up through the scales which does not interfere with the scales themselves is automatically offset by this effect. Typically in a large-scale industry it has been found that merit increases or other increases dependent upon age and service within fixed pay scales can occur without any inflationary effect provided that they do not exceed about 2 per cent. of the payroll. It might be possible therefore for the Department of Employment to draft some regulation which would cover this situation. But if they cannot do so, then I believe that the freeze on incremental and merit increases, as opposed to promotional increases, should be complete. I have endeavoured to be constructive. Accepting this Amendment would enable the Government to have second and, I suggest, better thoughts, and I hope therefore that they will find it possible to accept it. I beg to move.
§ 8.9 p.m.
§ LORD DRUMALBYN
In reply to the noble Lord I think I should start from 1205 the point that in subsection (2) of Clause 3 we read:The rate at which remuneration is payable under the agreement to the employee for work for any period when section 2 of this Act is in force shall not exceed the highest rate at which remuneration was payable under the agreement to him for the same kind of work before 6th November 1972.The next subsection states:This section shall not apply to an increase in remuneration which is in respect of age, or length of service, or length of service in employment of a particular kind, or in employment in a particular grade.I think I should tell the noble Lord what are the areas that are covered by this particular subsection. The numbers involved can be divided into four categories. First, there are employees in the public sector who receive regular increments in predetermined scales. These people include nurses, teachers and the police, as well as clerical workers in the nationalised industries and local authorities. Second, there are comparable workers in the private sector where incremental scales meet the requirements of the standstill policy. Third, there are many workers, including large numbers of manual workers, who may receive long-service payments—for example, manual workers employed by local authorities and the ancillary workers in the National Health Service. Fourth, there are employees on age-related scales, including apprentice scales. I think it is fairly clear that a significant proportion of the working population is covered in one way or another by payments of the sort described. It is not limited in any way to civil servants, as the noble Lord seemed to think.
I should like now to say a word about the type, of worker covered by this sort of payment. it is often implied, quite misleadingly, that these are highly paid employees, or at any rate significantly more highly paid than average; but I think the noble Lord will appreciate from what I have said that such is not the case. Within these groups there are many white-collar workers, nurses and teachers at the start of their careers, and the lower grades of the public services who are paid below the national average and who would lose their incremental progression if this Amendment were passed. Many of these workers, if not most, are women.
In pointing this out I am not resting the case for the Government on the 1206 average earnings of those who receive increments. The Government case rests firmly on the fact that the incremental scale is the rate for the job, at certain ages and in certain circumstances; but it is relevant to observe that on the one hand noble Lords have been pleading for lower-paid workers while on the other they are now proposing an Amendment which would adversely affect considerable numbers of the lower-paid workers. This is an inconsistency that they will have to work out for themselves.
§ LORD DRUMALBYN
The noble Lord asks whether it is an inconsistency to hold up the incremental payments for a period of two, three or four months. We have to balance two things here: first, there is the conception of the wage rate, of which we have been speaking—the wage rate which is fixed by negotiation and which is renegotiated from time to time. Second, we have to take into account the fact that these wage rates will provide for certain scales to be applied, related (as the Amendment says) to,age, or length of service, or length of service in employment of a particular kind, or in employment in a particular grade".This is quite different from the conception of a negotiation taking place at a particular time, which may or may not provide for an increase midway or on a certain date in the future, because within these employments it is accepted that the whole conditions of service rest upon a scale of wages which one moves up as one progresses in age or experience or the like. That is quite different from negotiating wages, whether the increase comes into operation immediately after negotiation or whether there is also a further increase.
I think I can probably best serve your Lordships by informing you of a reply that has been given in another place to-day. It is as follows:Increments paid to individual employees related to their age or length of service are most common in white-collar employments, in both the public and private sectors—in insurance companies, banks and those industrial concerns with large office staffs, as well as civil servants, teachers and others in the public service. But there are also age and service-related payments in the manual field as well.1207The most common arrangement in the public services is to negotiate a predetermined range or scale through which the individual moves by regular and specified steps. In such cases it is the range or scale which is the rate for the job. It is the range or scale which is commonly increased, as a whole, by the normal process of collective bargaining such general increases are expressly forbidden during the standstill by paragraph 12 of the White Paper. The workers concerned will therefore have deferred until the end of the standstill any such general increase from which they might normally have expected to benefit over the period of the standstill. In the Government's view it would be unfair to penalise such workers twice by preventing the normal progression through an incremental system which is an integral part of their existing conditions of service.I would add there, as well as preventing an increase in the scales.But as was pointed out during the tripartite talks both by the C.B.I. and by the T.U.C. there is a very wide variety of practice in this matter. In particular the degree of managerial discretion on the actual amounts to be paid varies greatly. The introduction of new incremental arrangements during the standstill could constitute an increase in the rate or scales, and as such would be contrary to paragraph 12 of the White Paper. It is the Government's intention that increments should be payable during the standstill only where there were, on November 6, pre-existing contractual obligations. The exception provided for by Clause 3(3) reflects this. In accordance with this approach the Government intend that during the period of the standstill additional personal increments would be paid only if they are in accordance with a predetermined rate or level and the increments are regular and of specified amount. Payments which do not come within the above formula should not therefore be made without specific reference to the Department of Employment.I hope that that explains the matter clearly. Whether the noble Lord will accept that it is a fair solution to an obviously difficult problem I do not know. I do not think one can get away from the fact of what the White Paper of 1966 said—namely:It is not intended that the standstill should interfere with the normal arrangements for increasing pay either with age, as with apprentices or juveniles, or by means of regular increments of specified amounts within a predetermined range or scale. Such arrangements are equivalent to promotion according to age or experience. They can thus be distinguished from a commitment to increase pay for a group of employees as a whole, which is affected by the standstill.That is the case which existed in 1966, and it has been accepted this time.
§ 8.20 p.m.
§ LORD BESWICK
The noble Lord has read out a list of very worthy occupations and has appealed to the Committee not to take any action which would deprive them of a wage increase. The immediate instinct of noble Lords on this side is to accept his appeal, but I could read him another list of equally deserving people whom the Government are freezing under this Bill. That is the hard fact of the matter and the noble Lord's principal appeal when we began discussing the Bill was that the freeze must apply to all equally.
Of course all individuals with contractual arrangements are deserving. Of course we ought not to be interfering with their increments. Of course we ought not to have got into this position at all. But the Government's case is that people have to make sacrifices because we are in a difficult position, and for the noble Lord to instance cases of the low paid and say that my Amendment would hit them hard when he turned down my previous Amendment which made specific reference to the low paid tempts me almost to quote the Chancellor of the Exchequer. That right honourable gentleman has a very wide vocabulary which he applies in these cases. It ranges from "humbug" to "hypocrite." It is "humbugery" if the Government are saving that we have to act decently and reasonably towards this list of deserving occupations or low paid apprentices. Of course an exception should be made in the case of low paid apprentices, but I am assuming that if we accept this Amendment the noble Lord will be prepared to go back and accept my previous Amendment which referred to those earning less than £20 a week.
The noble Lord made a good case, but we are dealing with a very difficult situation and I can only return to the principle which he himself enunciated at the beginning—namely, that the freeze must apply to all equally. Hard as that may he, it is just as hard for the agricultural worker, the worker in the National Health Service or those lads on the shop floor who will be working side by side with others who with a contract will be in a more favourable position. I feel that it would be better if they were all treated equally—that is, if we have to 1209 treat them all—and I therefore advise my noble friends to take the matter to a Division.
§ Clause 3 agreed to.
§ 8.30 p.m.
§ Clause 4 [Power to obtain information.]:
§ On Question, Whether Clause 4 shall stand part of the Bill?
§ LORD DIAMOND
I have only one question to ask. I am glad to see both noble Lords on the Front Bench opposite because this relates to a question I asked previously about the consumer, and on which I was very glad to have that answer. The question I ask on this clause is whether, as a result of this clause, and of the powers he already has under the ordinary procedure of the courts, the consumer will have the power to get the information to enable him to sue for the refund of the excess? That is the only point I am raising.
VISCOUNT COLVILLE OF CULROSS
The underlying reason for having Clause 4 is to get information before a Minister
§ 8.24 p.m.
§ On Question, Whether the said Amendment (No. 7) shall be agreed to?
§ Their Lordships divided: Contents, 30; Not-Contents, 45.1209
|Addison, V.||Hale, L.||Serota, B.|
|Bernstein, L.||Heycock, L.||Shackleton, L.|
|Beswick, L.||Hoy, L.||Taylor of Mansfield, L.|
|Blyton, L.||Janner, L.||Wade, L.|
|Byers, L.||Llewelyn-Davies of Hastoe, B.||Watkins, L.|
|Carnock, L.||Milnor of Leeds, L. [Teller.]||Wells-Pestell, L.|
|Champion, L.||Phillips, B.||White, B.|
|Davies of Leek, L.||Popplewell, L.||Wright of Ashton under Lyne, L.|
|Diamond, L.||Raglan, L.|
|Garnsworthy, L. [Teller.]||St. Davids, V.||Wynne-Jones, L.|
|Greenwood of Rossendale, L.|
|Aberdare, L.||Drumalbyn, L.||Long, V.|
|Amherst of Hackney, L.||Dundonald, E.||Macleod of Borve, B.|
|Auckland, L.||Elliot of Harwood, B.||Northchurch, B.|
|Balerno, L.||Emmet of Amberley, B.||Onslow, E.|
|Belstead, L.||Exeter, M.||Rankeillour, L.|
|Berkeley, B.||Falkland, V.||Reigate, L.|
|Brabazon of Tara, L.||Ferrier, L.||Ruthven of Freeland, Ly.|
|Coleraine, L.||Fortescue, E.||St. Aldwyn, E. [Teller.]|
|Colville of Culross, V.||Gisborough, L.||St. Just, L|
|Courtown, E.||Gowrie, E.||Sandford, L.|
|Cranbrook, E.||Greenway, L.||Sandys, L.|
|Cromartie, E.||Grenfell, L.||Selsdon, L.|
|Davidson, V.||Grimston of Westbury, L.||Sudeley, L.|
|de Clifford, L.||Hood, V.||Terrington, L.|
|Denham, L. [Teller.]||Limerick, E.||Trefgarne, L.|
Resolved in the negative, and Amendment disagreed to accordingly.
§ makes an order or serves a notice. It would not be used after the order or notice had been made in order, for instance, to get a prosecution. Therefore, if the order or notice has not been made there will not be an illegality upon the basis of which the consumer will be able to get the illegal half back. I do not think, therefore, that the noble Lord's point is directly relevant to that matter although under the Schedule we have the remedy that has already been described after the notice or order has been made.
§ Clause 4 agreed to.
§ Clause 5 [Offences.]
§ LORD DIAMOND
Again, having regard to the clock, perhaps it would be more convenient to leave this Amendment to a later stage. I do not, therefore, propose to move it now.
§ On Question, Whether Clause 5 shall stand part of the Bill?1211
§ LORD DIAMOND
There are one or two questions I should like to ask on this clause very shortly. In Clause 5(2) the word "influence" appears. The subsection reads:If an organisation of workers … takes, or threatens to take, any action with a view to compel, induce or influence a person to contravene any of the provisions of section 2 …We have touched on this previously, but we are still very anxious about the use of the word "influence" in the present context which is very different from the context of 1966. The 1966 Bill set up the Prices and Incomes Board; it made a number of consequential provisions and dealt with awards of the Board and other awards as well. It was important, therefore, in that context that the circumstances should be such as to permit the Board to do its work. That is not happening on this occasion, but the words have been taken holus-bolus, as I can see, from the previous Act and applied in a different context. Of course you get into the most difficult circumstances if you proceed on that basis. Incidentally, the tine provided for then was very much smaller; I believe it was £100. Here we are talking about a maximum fine on summary conviction of £400. So, in a number of ways I am saying that that is not a proper precedent to use for the word "influence", and therefore I am saying to the Government that having regard to this Bill, in the current context do they need a word which is as wide (at least, I assume it is an extremely wide word) as "influence"? That is the first question.
The second question refers to subsection (7) which says:Nothing in this section shall apply to a contravention of section 2(4) …Section 2(4) deals with increases in rent. The question I am asking here is: why has rent again been excluded from the normal provisions of the Bill affecting other matters?
VISCOUNT COLVILLE OF CULROSS
I think I can give two very short answers to this. The noble Lord, Lord Diamond, is quite right about the words having been taken from the 1966 Act. I do not think that under that piece of legislation they were ever tested in criminal proceedings and therefore, whereas it may be true 1212 that the background was different, I do not think we have any guidance from the courts as to what at that stage they interpreted the word "influence" as meaning. Therefore it is at large at the moment. It is at large under this Bill, and it will be for the courts, if the wording stays as it is, to decide what the word "influence" does mean in the particular context in which it appears here. It will be a criminal context so that they will interpret narrowly as an ordinary method of construction. I do not think I can help the noble Lord further. He has not put forward any alternative suggestion.
§ LORD DIAMOND
I am sorry that I did not make it clear. We would much prefer that the word should be left out.
VISCOUNT COLVILLE OF CULROSS
If the word were left out, there would be an unacceptable gap in the activities that we want to catch and, particularly bearing in mind that this may not be the perfection of drafting since it is a temporary Bill, we think it wise to attempt to cover this in the very strong hope that it will never have to be used at all. But the noble Lord referred to the size of the fine, if the provision should come to be used. He is perfectly right as to the maxima; but they are of course maxima, and I have been too often asked questions in this House about whether the courts use maxima (and I am thinking particularly of the case of firearms and the noble Baroness, Lady Wootton of Abinger) not to know that the courts do not by any means always use maxima. Again, I think that they will be able to temper justice by whatever they thought "influence" to be and, if they found it to be "influence", by the agree to which it was used.
As for the noble Lord's second point, about why the rent provision is left out under Clause 5(7), the answer is to be found in the Schedule, because in paragraph 1(3) the orders to be made dealing with rents are also enabled by that particular paragraph to create the necessary criminal offences. It is a much more sophisticated and diverse concept than that dealt with in the rest of Clause 5, and it was thought better to set out in the orders themselves the creation of the offences so as to be more specific and to pin down more accurately the details 1213 of what we wish to have as criminal offences. There is no gap here; it is just that it will be done by order.
§ LORD POPPLEWELL
Before the Minister resumes his seat, may I say that I am very intrigued by the explanation he has given so far as the word "influence" is concerned, that this is to be decided by the courts. What court? Is it the criminal court, the Industrial Relations Court, or what court? Furthermore, who would be the informer to take the case to court—whichever court it goes to? Would it be the Minister himself? Would it be through his director, as in the Industrial Relations Act? Would it be an associate, another employee, or would it be the employer concerned? Could the Minister give us a little further information as to how the informer would carry out the duties for the matter to be brought to court?
VISCOUNT COLVILLE OF CULROSS
The situation is perfectly simple. The answer to the noble Lord's first question is that it would be the criminal courts—whether in England, Wales, Scotland or Northern Ireland—the respective criminal courts, according to the seriousness of the method of prosecution. The proceedings under this Bill in any part of the British Isles can be brought only after reference to the appropriate authority. In England and Wales, under Clause 5(9) the consent of the Attorney General is required. The same applies in Northern Ireland, under Clause 7(4); and in Scotland there is the system of the procurator-fiscal whereby the criminal proceedings are centralised anyway; we do not need a special provision. I suppose it is not inconceivable that a private individual might ask the Attorney General for consent, but I think it is unlikely; it is more probable that this will be done in the ordinary way by the prosecuting authorities. But there is this safeguard built into the Bill.
§ LORD BERNSTEIN
May I ask the noble Viscount whether he will reconsider whether this word "influence" should be removed? I realise that the Attorney General and other people will have to decide on prosecution; and they will not do it lightly, I am sure. But one prosecution might stop a great number of people commenting on a situation 1214 because of a fear of prosecution arising from the word "influence". It is a kind of censorship over your shoulder that affects a great number of people in communications. It may not become important; on the other hand it may. We have had some recent cases where the fear of contempt of court has stopped people from offering an opinion on very serious matters. It has not stopped everybody, but it has made a great number of people consider what they were going to say—perhaps that is a good thing, but it has frightened them. I think it is a dangerous thing that somebody can be prosecuted under the word "influence". The noble Viscount knows this from his experience.
VISCOUNT COLVILLE OF CULROSS
I would take the noble Lord's point if I thought that his analogy was right. I wonder if he would be so kind as to look at Clause 5(2). The influence that is being suggested here is influence to contravene the standstill provisions of Clause 1. Therefore the encouragement that would be taking place in the form of influence would be encouragement to do something which is in fact criminal. Therefore there is a considerable difference between that type of set-un and the rather broader context of influence which the noble Lord had in mind. I think what I ought to do is to say that we would not reconsider the word "influence" for this Bill because we consider it to be an important ingredient in the package. But certainly when further stages of this policy are being worked out we should like to look at it carefully. Perhaps if the noble Lord would rest for the 90 days on this drafting, which I agree is lifted from the 1966 Act, and allow us to look at this point, alone with a number of others, for the later legislation to come, this would be the most satisfactory way of dealing with the matter.
§ Clause 5 agreed to.
§ Clauses 6 to 10 agreed to.
§ Schedule [Supplementary Provisions]:
§ 8.44 p.m.
LORD BESWICK moved Amendment No. 9:
Page 7, line 4, leave out ("may be framed in any way whatsoever").
The noble Lord said: On Second Reading the noble and learned Lord who normally sits on the Woolsack said that he had been asked to speak on that occasion so that lie could answer any legal points that arose. I ventured to put two legal points to the noble and learned Lord—I am sorry he is not here, but I would say this if he were here. He said that no question had been asked other than could be answered on Committee and made no comment at all upon what I had said. The first of the two questions which I put on Second Reading referred to Schedule 1, in which it is said:
An order or notice under section 2 of this Act may be framed in any way whatsoever …
The noble Lord, Lord Drumalbyn said that we had to be flexible in this Bill, but is not this carrying flexibility a little too far—"may be framed in any way whatsoever"? It may be that it is required by some sort of legal tradition or some sort of formula. It is conceivable that I may be told that the draftsmen have again just turned up what has been put into a previous Act, or there may be some other good explanation, in which case I shall be happy to listen to what is said. But on the face of it this seems to be far too wide a form of words. I beg to move the Amendment standing in my name.
VISCOUNT COLVILLE OF CULROSS
On this occasion we certainly have not taken the words out of the 1966 Act; but the 1966 Act was fairly detailed. I was locking, for instance, at Section 26 on prices and Section 28 on remuneration, which set out what the orders could do under those particular provisions. That Act, as I understand it, was to last for a little longer than the one we have before us to-day; therefore it was no doubt correct to draft it in terms which pinned down the realm of order making with rather more precision. Even then I notice that in making distinctions the order can have reference to "any other circumstances", which is totally undefined, and there are further rather wide references even in that rather more detailed legislation. What we want to do is to be able to cover pretty well the same sort of things as were set out, for instance, in those two sections of the 1966 Act.
1216 I think I can reassure the noble Lord about the width and flexibility of this provision. Notwithstanding that these words look to the layman as if they are absolutely limitless, a lawyer would always interpret them as being confined to the context in which the power is given, which is in this case Clause 2. You could not make orders, even in the width of drafting of this provision in the Schedule, which went outside the area covered by Clause 2; you could not make orders about something totally different; it would have to be confined to the matters specifically set out in Clause 2. What we are trying to do is to pick up for this temporary Bill the sort of detail—and, after all, we may not have a great number of orders—which was spelled out in the 1966 Act. The orders will be defined most precisely and they will have to be confined to this particular area.
The danger of not putting the words in is this. It is perfectly plain, whatever may be our views about what should or should not be in the Bill, that everybody this afternoon has been expecting some urgency. We want to get this Bill into law; we want to be able if necessary to make orders so that, for instance, the consumer can get his extra money back again—the point raised by the noble Lord, Lord Diamond. If we did not have wide powers it would be possible for the orders to be challenged as being outside the power of the Minister to make them. If we did not have some fairly flexible words of this sort, people could challenge the orders, and I am afraid that in the process it might be more than 90 days before the issue was resolved. That is not the only reason. The most important reason is that we want to do the same things as were done under the previous legislation and we want to do it quickly, without having to specify everything as the 1966 Act did. I hope that this answer will satisfy the noble Lord. The wording is confined to the realm of Clause 2.
§ LORD BERNSTEIN
It may have satisfied the noble Lord who proposed the Amendment. It is the first time I am able to say in your Lordships' House that I think the original kind of constriction imposed by lawyers is worth while.
§ LORD BESWICK
I am sorry to disagree with my noble friend who so loyally supports me from the back, but there are two reasons why I am not satisfied. The noble Viscount says, as he has done on other occasions, that what is said here must be read in the context. That seems to me to be a formula which lawyers pull out on a number of occasions. They say, "Well, it does not really mean what it says; it has to be read in its context". But the context here is fairly wide. We are dealing with Clause 2, and it is in that context that the form of words has to be considered. Clause 2 deals with prices, pay, dividends and rents, and that is a fairly wide area of human activity. I should have thought that one had to be careful about the reply here.
The other reason why I must say that we ought to register our protest is that when we have criticised wording before noble Lords opposite have said, "Well, it does not matter. It has been used in
§ Schedule agreed to.
§ House resumed: Bill reported without amendment.1218
§ a previous piece of legislation". Once a form of words gets on the Statute Book it tends to become hallowed. One finds it copied or, as the noble and learned Lord who sits on the Woolsack said, "plagiarised". It is a danger, and we ought to be more careful. The noble Viscount himself said that this wording had been spelled out in detail in a previous Bill, but it was a sort of portmanteau phrase that would cover all the other contingencies that had been spelled out in the 1966 Act. I think it would be a mistake to allow this wording to be quoted on later occasions as something that the House passed through without a Division. "May be framed in any way whatsoever" is an ugly form of words and we ought not to allow it to go on to the Statute Book. I suggest that we cannot accept the explanation which the noble Viscount has offered to us.
§ 8.52 p.m.
§ On Question, Whether the said Amendment (No. 9) shall be agreed to?
§ Their Lordships divided: Contents, 28; Not-Contents, 45.1217
|Addison, V.||Hoy, L.||Serota, B.|
|Bernstein, L.||Hughes, L.||Shackleton, L.|
|Beswick, L.||Llewelyn-Davies of Hastoe, B.||Taylor of Mansfield, L.|
|Blyton, L.||Maelor, L.||Watkins, L.|
|Champion, L.||Milner of Leeds, L. [Teller.]||Wells-Pestell, L.|
|Diamond, L.||Nunburnholme, L.||White, B.|
|Garnsworthy, L. [Teller.]||Phillips, B.||Wright of Ashton under Lyne, L.|
|Greenwood of Rossendale, L.||Popplewell, L.|
|Hale, L.||Raglan, L.||Wynne-Jones, L.|
|Heycock, L.||St. Davids, V.|
|Aberdare, L.||Drumalbyn, L.||Limerick, E.|
|Amherst of Hackney, L.||Dundonald, E.||Long, V.|
|Auckland, L.||Elliot of Harwood, B.||Macleod of Borve, B.|
|Balerno, L.||Emmet of Amberley, B.||Northchurch, B.|
|Belstead, L.||Exeter, M.||Onslow, E.|
|Berkeley, B.||Falkland, V.||Rankeillour, L.|
|Brabazon of Tara, L.||Ferrier, L.||Reigate, L.|
|Carnock, L.||Fortescue, E.||Ruthven of Freeland, Ly.|
|Coleraine, L.||Gisborough, L.||St. Aldwyn, E. [Teller.]|
|Colville of Culross, V.||Gowrie, E.||St. Just, L.|
|Courtown, E.||Greenway, L.||Sandford, L.|
|Cranbrook, E.||Grenfell, L.||Sandys, L.|
|Cromartie, E.||Grimston of Westbury, L.||Sudeley, L.|
|Davidson, V.||Hood, V.||Terrington, L.|
|Denham, L. [Teller.]||Jellicoe, E. (L. Privy Seal.)||Trefgarne, L.|
Resolved in the negative, and Amendment disagreed to accordingly.