HC Deb 09 May 1962 vol 659 cc421-2
14. Mrs. Castle

asked the Minister of Agriculture, Fisheries and Food if he will take power to ensure that the increase in the price of ice cream and sweets, following the Budget, is not excessive.

Mr. Soames

This is sometimes inevitable where the tax is a small fraction of a penny. But I understand some of the new prices include increases which manufacturers had in mind before the announcement of the tax.

Mrs. Castle

Is the Minister aware that, following the imposition of 15 per cent. Purchase Tax on the wholesale price of ice cream and sweets, the trade has announced increases of 20, 25 and 33 per cent., and similar figures, on the retail price of sweets? Is this not a great gap, and are not the Government going to do something to prevent the trade exploiting this situation to give another upward twist to the inflationary spiral?

Mr. Soames

No, Sir. That is not the objective. It would appear that on the basis of changes so far announced on some lines there will be no change, on others the weight will be reduced to keep the price unchanged, and on others prices will go up from 6d. to 7d. and from 1s. to 1s. 2d. In this respect I think that the hon. Lady would like to know that in the last seven years chocolate prices have gone up by less than 2 per cent., while there have been substantial increases in some of the manufacturers' costs.

Mr. Nabarro

While conceding the truth of what my right hon. Friend says, may I ask whether he would recognise that in certain instances—and it may be a minority of cases—the increases in retail prices, notably on chocolates, are now of the order of 33⅓ per cent. compared with the pre-Budget price, whereas the Chancellor's Purchase Tax is only 15 per cent. on the wholesale price, and therefore the margin of price increase is more than double the amount of the tax?

Mr. Soames

This may be so in certain instances. I have not the figures which my hon. Friend quoted, but, in general, this is a competitive industry, and it must be left to the manufacturers to be the best judges of what they should do about their prices in relation to the Purchase Tax and other costs.

Mrs. Castle

Is not the right hon. Gentleman aware that this trade has been extremely prosperous over the past years? Its present profits do not justify this entirely gratuitous increase, although the right hon. Gentleman seems to be prepared to accept it as normal, and to accept that routine increases in prices Should take place at intervals whether or not the profitability of the industry demands it. How can the Government have an incomes policy when they are so lax with their profits policy?

Mr. Soames

The hon. Lady talks about an industry, but this concerns a number of firms within an industry taking individual decisions, and there is considerable competition. If one firm steps outside and puts on unusually high prices it will soon find itself in trouble.