Food Subsidies

HC Deb 11 November 1974 vol 881 cc6-12

4. Mr. Gwilym Roberts

asked the Secretary of State for Prices and Consumer Protection what plans she has for extending the range and increasing the magnitude of food subsidies; and if she will make a statement.

Mrs. Shirley Williams

My hon. Friend will be aware that new subsidies on tea and flour were introduced in the parliamentary recess. I have no immediate plans for extending the food subsidies programme at present.

Mr. Roberts

Does my right hon. Friend accept that many hon. Members on this side of the House feel that additional subsidies have a useful distributive effect, so long as the money is found from taxing the wealthier sections of the community? In the circumstances which we face at present, would my right hon. Friend consider using her powers under the Prices Act 1974 to fix the price of sugar, even if it involves a subsidy in that direction?

Mrs. Williams

First, I should like to congratulate my hon. Friend the Member for Cannock (Mr. Roberts) on recognising the basic truth that those in high income groups pay by taxation for food subsidies and those in low income groups get the full benefit. I only wish that the other side of the House appreciated that as well.

With regard to what my hon. Friend has said about sugar, I am sure he will understand that discussions are now taking place on the question of future supplies, and any decision about a subsidy will have to await information on the supply position in greater detail.

Sir John Hall

Is the Minister aware that consumption of several of the subsidised foodstuffs is increasing very rapidly indeed? Can she afford this open-ended subsidy regardless of consumption? Will she not, therefore, have to introduce some form of restriction on the amount of any particular subsidised foodstuff available to the public?

Mrs. Williams

I think the hon. Gentleman will have seen the same study that I have seen—the Ministry of Agriculture's survey reported in today's Daily Telegraph. If so, he will recognise that the increases in quantity are relatively small. One reason for the small increase in quantity is given by the national household survey which says that there has been a substantial switch to subsidised foods on the part of families with four or more children. That is something I welcome, because it has offset what would otherwise be a decline in their diet.

Mr. Kenneth Lewis

Can the right hon. Lady say what sense there is in increasing food subsidies—or even in having them at all—in so far as they have no effect on the lower paid who then have to pay increased rates because the right hon. Lady's Government will not give the increased subsidies to the councils to allow them to reduce their rates?

Mrs. Williams

I am surprised at the hon. Gentleman. I know that he does not always support party policy, but it was stated in the manifesto of his own party in the last election that it would continue food subsidies because of their effect on prices. That argument is good enough for me. I believe that it is a strong reason for trying to protect the least-well-off against the effects of inflation.

9. Mr. Stanley

asked the Secretary of State for Prices and Consumer Protection what is her latest estimate of the percentage of expenditure on food subsidies in the current financial year that will go to households whose income is less than £40 per week.

Mrs. Shirley Williams

On the basis of patterns of consumption recorded in the latest family expenditure survey, it is estimated that 33 per cent. of the benefit will be received by households with incomes below £40 per week. In general, as a result of changes in taxation, the net benefit of the Government's expenditure on subsidies goes to the lower income groups.

Mr. Stanley

As the Secretary of State's answer indicated that approximately two-thirds of the expenditure on food subsidies goes to those who do not require help, how will she in future use the considerable sums of taxpayers' money at the disposal of her Department less wastefully than is the case now?

Mrs. Williams

The present benefit of food subsidies to an average family is 85p a week. To a pensioner couple it is 45p a week. In the case of families in the highest income groups, the whole effect is completely offset by increases in income tax. That is what we on this side of the House mean by redistributing income and wealth.

Mrs. Gwilym Roberts

Does my right hon. Friend agree that the way that the hon. Member for Tonbridge and Mailing (Mr. Stanley) has used the statistics is completely meaningless? The relevant question is not what percentage of the money goes to this type of household but what percentage of households are in this category. We come back to the statistic, which shows how ridiculous the question is.

Mrs. Williams

In welcoming my hon. Friend's comment, I would point out that £40 per week is not the average wage. It is considerably below that.

Mr. Alison

Having regard to the balance of benefit that the right hon. Lady has just described, may I ask whether she thinks or does not think that this justifies the phasing-out of subsidies over a period?

Mrs. Williams

I have always made clear that in the long run our hope is that we might be able to phase out subsidies in the interests of other kinds of social expenditure. It is also clear, however, that that is impossible in a situation in which inflationary pressures are so great.

10. Mr. Hal Miller

asked the Secretary of State for Prices and Consumer Protection what is the weekly saving to each family afforded by current food subsidies.

Mr. Maclennan

On the basis of the national food survey results for the second quarter of 1974, the estimated saving for a typical family of two adults and two children is about 85p per week.

Mr. Miller

Does the hon. Gentleman accept that these subsidies represent a diversion of expenditure from investment towards consumption and that the proper way to assist those who need assistance is by allowances specifically tailored to their needs? Will he press for an early end to these practices, which distort the whole pattern of supply and price?

Mr. Maclennan

I think that there is little evidence that such distortion occurs. I would simply remind the hon. Member of the statement in his party's election manifesto that With the urgent need to stabilise prices we accept that it will be necessary to retain these subsidies for the time being. Perhaps his quarrel is with his own Front Bench.

Mr. Tomlinson

Does not my hon. Friend agree that the implication of the observations of the hon. Member for Bromsgrove and Redditch (Mr. Miller) is directly to attack the living standards of working families to the extent of 85p per week?

Mr. Maclennan

I agree with my hon. Friend.

Mr. Hordern

If two-thirds of the subsidy goes to those families who do not require it, and if that amount is raised by taxation, surely it is much more sensible that either companies or individuals should be allowed to choose how they spend their money than that they should receive food subsidies that they do not require?

Mr. Maclennan

The House will be edified by the debate going on within the Conservative Party on this as on other matters. But the subsidy savings are of great benefit to large families in the lower income groups, who have to spend a large part of their money on the necessities of life. The higher income groups are paying for the subsidies through their taxes, and the food subsidies are, in fact, redistributing income in favour of those who are less well off.

Mr. Arthur Latham

Would my hon. Friend accept that lower-income families in my constituency welcome food subsidies and prefer them to be on the basis of what the Opposition describe as "indiscriminate" rather than have to face the alternatives of going without or being subjected to yet another humiliating means test?

Mr. Maclennan

The attractiveness of that point has not escaped the Government.

12. Mr. Adley

asked the Secretary of State for Prices and Consumer Protection whether she intends to set any upper limit to the increase in food subsidies.

Mrs. Shirley Williams

Under Section 1 of the Prices Act 1974, the total expenditure on food subsidies may not exceed £700 million. If further funds are required, parliamentary approval will be sought in the usual way.

Mr. Adley

The right hon. Lady, however much she tries to duck it and however much her hon. Friends may not like it, has just informed the House that 67 per cent. of food subsidies goes to families who cannot be described as being in need, and her hon. Friend the Member for Derby, North (Mr. Whitehead)—

Mr. Speaker

Order. Is this a question?

Mr. Adley

Does the right hon. Lady agree with her hon. Friend the Member for Derby, North that sugar is now available only to people who are able to afford paying for it off grocery bills? When will she wake up to the fact that many people are again realising that under a Labour Government the rich get richer and the poor get poorer?

Mrs. Williams

And when will the hon. Member for Christchurch and Lymington (Mr. Adley) read the last Budget, the reports of the Price Commission, and the reports on the Prices Bill? If he read any of those things, he would know perfectly well that it is totally untrue to suggest that the higher income groups who get subsidies—because we are determined that people shall not be means-tested—pay more than once over for them.

Mr. Arthur Lewis

Will my right hon. Friend explain why it is that since the last election the Conservatives have been clamouring night and day to get financial help, subsidies, and money on any excuse for the farmers but that when it comes to the ordinary consumer they are against subsidies of any sort? Why is it that it is always the farmers and the industrialists who must be helped?

Mrs. Williams

My hon. Friend will be aware that the previous Conservative administration heavily subsidised industry, nationalised industry and farming. For some reason best known to themselves, the one thing they objected to subsidising was food.

Mr. Richard Wainwright

If it is the Secretary of State's intention to use to the full the £700 million for subsidies to which she referred, how does she reconcile the artificial cheapening of food to those who do not need it with our international obligations to the millions who are starving?

Mrs. Williams

I think the hon. Gentleman will find that there is no necessary conflict between believing that there should be a policy of reasonable justice towards the lower income groups in one's own community and believing that there should be a similar policy in relation to the lower income groups in the rest of the world.

Mr. Skinner

Does my right hon. Friend agree that it appears from supplementary questions by hon. Members during the past few minutes that half the Tory spokesmen want to stop socio-economic groups 4 and 5 not only from breeding but from eating as well, and that the remainder of the spokesmen want all of the £700 million to be put on blue Stilton cheese?

13. Mr. Tim Renton

asked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the total estimated cost of food subsidies in 1974 and what proportion of these subsidies will go to families earning less than the average national wage.

The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams)

The estimated expenditure on food subsidies in the calendar year 1974 is £340 million, of which about one-half is expected to go to families whose income is below the national average.

Mr. Renton

Does not the Minister agree that Britain's economic and financial resources are very strained at the moment and that the answer he has given, like that of the Secretary of State, emphasises that there are far more efficient ways of redistributing income than by the Government's commitment from the bottomless pit of subsidies—for example, by index-linking all social security benefits?

Mr. Williams

In that case the hon. Gentleman must explain why he fought the last election in support of retaining our subsidies. He must decide whether, having deserted their Leader, the Opposition are now going to desert their policies.

Mr. Emery

Does the hon. Gentleman' realise that continuing subsidies for short periods specifically to aid those who are worst off, which is what we fought the election on, would mean, according to the figures given by his right hon. Friend the Secretary of State, that two-thirds of the £700 million is not going to those in greatest need? Will he do something to ensure that that money goes to those who really need it?

Mr. Williams

Half goes to those with below the average income and the rest is recouped in taxation from the higher income groups. The alternative would be an arbitrary system in which there was a very low take-up based on a means test. Hon. Gentlemen should know from their own experience that that does not work fairly.