BISCUITS (CHARGES) (Hansard, 24 October 1950)

§ The Parliamentary Secretary to the Ministry of Food (Mr. Frederick Willey)
I beg to move, That the Biscuits (Charges) (Amendment) Order, 1950 (S.I., 1950, No. 1437), dated 25th August, 1950, a copy of which was laid before this House on 28th August, be approved. The House will be familiar with the principal Order, the purpose of which was to withdraw the subsidy on flour when it is used for the manufacture of biscuits. This present amending Order is to increase the charge to 56s. 4d. a sack of flour—that is, increase the charge by 23s. 4d. a sack to serve this purpose. When the price of flour was increased by 12s. a sack on 25th September of last year, it placed my Department in this dilemma. The price of biscuits cannot conveniently be increased by any sum less than a penny a pound. If the price had been increased by a penny a pound, it would have been necessary to have increased the charge by a greater sum than was necessary to account for the increased cost of the price of flour.
In the circumstances then obtaining, we thought the better course was to reduce the charge by 12s. a sack, and so avoid any price increase. Now we feel that in the circumstances at present existing it is better, indeed it is unavoidable, to allow a price increase of one penny a pound on biscuits, and as a consequence of that price increase we must make a corresponding 2729 increase of that charge of 23s. 4d. Of this 23s. 4d., 12s. will be to offset the price increase I have mentioned, and the balance to recover the fortuitous subsidy which biscuits have carried since October of last year.

§ Mr. Turton (Thirsk and Malton)
I have listened with great care to what the Parliamentary Secretary has said, but I did not understand that today the circumstances are such that it is a good thing to put up the price of biscuits. Quite clearly the Parliamentary Secretary was reasoning that this charge should be put up because devaluation had put up the price of flour. This is a result of devaluation. We were told at the time by the then Chancellor of the Exchequer that devaluation would not put up the price of anything but bread. However, in addition it has put up the price of biscuits.
A year ago the House decided that there should be that 12s. subsidy in order to help the people who depended on a certain amount of biscuits at a small price. I cannot see why today, when other prices are going up, we should put the price of biscuits up by this very large Charges Order. Never before has a Charges Order imposed a rise of such an amount as 56s. Hon. Members will see in the Order that this charge started with something like 20s., and has slowly been increased since that time. What will be the effect of this Order on the total subsidy? I should have thought that the amount of subsidy at present involved in 20s. a sack on flour used for biscuits is such that it would not very much alter the £410 million position. Again, I ask the Government why advance the cost of living by this Order?
Only early this morning we were discussing the putting up of the price of bacon, and we were told that that was the effect of the Government's policy in putting up freight charges and also, oddly enough, of the war in Korea. I expected the Parliamentary Secretary, when he was explaining the circumstances which now made it necessary to put up the price of biscuits, to say that they included the war in Korea. I was surprised that he did not follow the line of the party broadcast made last Saturday by the Lord President of the Council. It is wrong, when the cost of living is rising, for Parliament to add to the burdens of the people.
2730 Turning to the effect of the Order, I think I have a stronger case. The Parliamentary Secretary told us why it was necessary to put up the price of biscuits by 1d. per lb. Although we are debating this Order today, it was actually introduced and came into operation a month and a half ago. The price of the cheap biscuits which are used in offices and, certainly in my constituency, by the old people and the children, has gone up by considerably more than 1d. per lb. Let me just give two examples of the cheap type of biscuits.
I remember the Osborne biscuit. I expect that many hon. Members are aware that the price has gone up from 1s. 1½d. per lb. to 1s. 4d. per lb. The Order has therefore caused a rise in the cost of that particular biscuit, which is a cheap biscuit, of 2½d. per lb. I agree that other biscuits have not gone up by that amount. The Thin Arrowroot has gone up from 1s. 1¾d. to 1s. 3¼d. May I remark, in passing, that the Parliamentary Secretary said it was necessary to get the rises by a full 1d., but in this case the customer gets a rise of more than the full penny, usually by fractions of a penny. That seems a very unsatisfactory position, considering that the people who buy these biscuits are not getting increases in wages. Many of them are old, dependent on the old age pension, and others are black-coated workers in offices. I ask the Government to reconsider the whole matter, in view of their recent policy of putting up the prices of bacon and butter, and to stop putting up the price of biscuits.

§ Lieut.-Colonel Lipton (Brixton)
No one likes to see increases in the price of anything. It is therefore right that any proposed increase should be looked at for a moment or two at least before the House agrees to it. I should have liked the Parliamentary Secretary to give us a little more information than he did in fact give us. I should like to know what addition would have had to be made to the food subsidies had this Order not been put into operation. The effect of the Order is to increase the price of biscuits by 1d. per lb. I wonder whether my hon. Friend the Parliamentary Secretary will be able to inform the House how much it would have cost in 2731 food subsidies to allow the price of biscuits to remain as it is.
What steps are taken by the Ministry of Food to ensure that when, by reason of an Order of this kind, the price goes up, say, by 1d. a 1b., the charge to the consumer from the biscuit manufacturer is not greater than 1d. a 1b.? It seems to me that it is in the highest degree undesirable that an increase agreed to by this House should, when put into actual effect outside, result in a greater increase to the consumer. I should also like information whether this increase applies to all kinds of biscuits, sweet and dry. That point is not very clear on the face of the Order. I know very little about the manufacture of biscuits, and it may well be that different qualities of flour are needed for sweet and dry biscuits respectively. It may therefore be that in respect of one or other category of biscuit the increase of 1d. a lb. is unjustified. I hope that the Parliamentary Secretary will find it possible to give information on the points to which I have referred.

§ Mr. Godfrey Nicholson (Farnham)
There is a little more mystery about this Order than has been explained by the Parliamentary Secretary. As I see it, the purpose of the charge is no longer to provide that the subsidy on flour does not apply to biscuits, because when the price of flour went up a year ago, owing to devaluation, that policy was abandoned. At that time it was deemed inexpedient to raise the price of biscuits, so the price of flour was reduced by 12s. That policy has now been put into reverse. Not only is the relaxation of this time last year been caught up, but an additional charge is being made.
I cannot believe that this is a decision of the Ministry of Food. It seems to have been dictated by the Treasury. If it has, this House is entitled to know what reversal or change in Government policy this represents. Is it a deliberate attempt to cease pegging the cost of living index and to secure economy at the cost of the food of the people? I am not saying that that is good or bad. Is this an isolated step in 2732 this direction? What instructions have the Treasury given to the Ministry of Food in regard to the cost of living, as exemplified by this Biscuits Order? I should like the Parliamentary Secretary to tell us whether further steps will be taken in the same direction. I hope that the hon. Gentleman has grasped my point and sees that I attach importance to the particular Order, which may be a step in a new direction in a very important branch of Government policy.

§ Mr. F. Willey
I should like to reply to three of the points that have been made. In regard to the last speech, let me say that there is no mystery about this Order. We were in the dilemma of either having a fortuitous subsidy on biscuits or getting more than was accounted for by the increase in the price of flour.

§ Mr. Nicholson
Has not the Ministry been in that dilemma for the past year? Why has one of the horns of the dilemma caught the hon. Gentleman now?

§ Mr. Willey
Because we have to endeavour to keep below the subsidy ceiling of £410 million.
The second point is the amount that we will obtain by this increase. The increase in the rate of the levy will produce approximately £2 million a year. I ought also to reply to the point made by my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton). It is wrong to suppose that manufacturers or distributors automatically gain from any such adjustment, but in fact in this case the distributors gain because they have a percentage margin. On prices being increased, the distributors gain in the total amount which they obtain. We have thoroughly examined the matter. We have gone into their trading position and feel it quite proper that the distributors should have the benefit of this increase.