HC Deb 26 April 1967 vol 745 cc1610-4
The President of the Board of Trade (Mr. Douglas Jay)

With permission, Mr. Speaker, I shall now answer Questions Nos. 17, 49, 74 and 78.

I am now able to inform the House of the outcome of my discussions with Unilever and Proctor & Gamble about the Report of the Monopolies Commission on the Supply of Household Detergents.

The companies have undertaken to make fully available an alternative range of top-quality soap powders and synthetic detergent powders at a price 20 per cent. below the prices of existing products in these categories. The consumer will thus be able to choose freely between these cheaper products, the prices of which will reflect less expenditure on advertising and promotion, and the higher priced and more intensively advertised products.

The companies have also undertaken not to raise the prices of any of the detergents covered by the Commission's Report for a further two years.

My examination of this problem has led me to conclude that we know too little about the economic effects of advertising in general and its relationship to competition. Accordingly, I have decided to institute some independent research into this subject, and will be consulting industry about its scope. This research will be general and not confined to detergents.

To help the consumer, I also propose to start immediate consultations with a view to the institution under the Weights and Measures Act of standardised packaging for a range of detergent products.

I believe that these measures will materially benefit consumers. I shall, however, keep the position under regular scrutiny and shall formally review it at the end of two years.

Mr. Ridley

Is the President of the Board of Trade aware that there is nothing in the Monopolies and Mergers Act which gives him power to carry out these negotiations, and that he has acted with grave constitutional impropriety? Will he now say whether he intends to continue his policy of government by Ministerial decree, or will pass laws to justify what he has been trying to do?

Mr. Jay

I am not sure what charge the hon. Gentleman is bringing against me, but it did not sound at all convincing to me. I have not introduced any decree or order, or anything else. I am glad that we have secured great benefit to the consumer and have reached agreement with the firms concerned.

Mr. Winnick

May I congratulate my right hon. Friend on his excellent measures and recommendations? Is he aware that the feeling seems to exist that Unilever wanted to be above the law in this matter, and also that the Monopolies Commission recommended that there was an excellent case for a 40 per cent. reduction in price of many of these soap products?

Mr. Jay

The agreement which we have reached is reasonable. Nobody—neither these firms nor anyone else—is above the law.

Sir J. Eden

When the right hon. Gentleman says that he does not know anything about the economic effects of advertising in general, does not he agree that the best people to judge when advertising expenditure has become excessive are the people who pay for it?

Mr. Jay

I did not say that we knew nothing about it; I said that I thought that we knew too little. There has been surprisingly little systematic inquiry into the economics of this matter, and I think that it is worth doing. It will help the consumer and the producer, as well as others.

Mr. Dickens

Is my right hon. Friend aware that his radical statement this afternoon of follow-up action on the Monopolies Commission Report will be warmly welcomed on this side of the House and throughout the country? Is he further aware that it will provide further evidence of the fact that the Government intend rigorously to follow through these reports as they become available.

Mr. Jay

I think that I can wholly agree with that.

Mr. Peyton

Is the President of the Board of Trade aware that the admission which he has just charmingly made that the Government know too little about this subject has not prevented them from intervening in this field in the past? Can he give the House an assurance that the investigation that he is now undertaking will be genuinely independent, and will be carried out by people without prejudice?

Mr. Jay

We have acted cautiously in the past. This investigation may enable us in the future to intervene more boldly, but entirely without prejudice.

Mr. Milne

Is my right hon. Friend aware that this latest excursion into the field of consumer protection will give tremendous satisfaction on both sides of the counter and to everybody throughout the country? Will he undertake, as speedily as possible, to have an inquiry into advertising, which, as he has already said, is long overdue?

Mr. Jay

Yes. It is clear from the interventions of the hon. Member for Worcestershire, South (Sir G. Nabarro) and other hon. Members opposite that the consumer is not among the friends of those who sit on the other side of the House.

Mr. Hirst

The right hon. Gentleman has referred to researches on advertising, and help to consumers and advertisers. Are we to understand that he has in mind not a Departmental Committee, to which evidence is called for or given, but a thoroughly representative type of investigation by people concerned in all these fields?

Mr. Jay

We have not decided on the final form, but we propose to consult representative industrial organisations about it.

Sir K. Joseph

The right hon. Gentleman has made a most important statement, and I want to ask him four questions.

First, would he tell us whether there is any difference between the standard products which he says these two companies will put on the market and the equivalent products which they are at present selling? Will he accept that hon. Members on this side of the House will he very interested to see how the public divides its favours between these two differently priced products?

Secondly, will he tell us whether he and the Government accept that good marketing is vital to cheap and good quality service to the consumer?

Thirdly, will he confirm—I hope that he is making a note of my questions—that his Department has sponsored the visit of a number of businessmen to go on a marketing course at Harvard University? How do the Government think that the Prime Minister's boast that we can beat hell out of the Americans can be made to come true if we send businessmen to America on courses and then tie their hands on their return?

Finally, will the right hon. Gentleman accept that the market is working, as is shown by the fact that several new detergents have been put on the market —or at least have been planned—by Tesco, Sainsbury, Jays and Aspro-Nicholas since the Monopolies Commission Report?

Mr. Jay

I think that the right hon. Gentleman failed to take a note of my statement. Of course we believe in good marketing. That is why we have supported these courses at Harvard, but good marketing is not necessarily the same as expensive marketing. The new products to be made available at these lower prices will include some existing and some new products. A wide range will be available to the consumer.

Mr. Peter M. Jackson

Will this independent investigation into advertising cover a whole range of products, or merely be confined to soap?

Mr. Jay

I have already said that it will not be confined to detergents.

Mr. Lubbock

Is the right hon. Gentleman aware that while any measures which will reduce the cost of these products to the consumer are welcome, it is already possible to buy in bulk products such as Hederol and Lissapol, which are the equivalent of those sold under proprietary names at far higher prices? Will he draw the attention of the investigation particularly to the revolting and emetic television advertisement for a substance called "Fairy Liquid", which employs small children, contrary to the spirit of the Government's own legislation?

Mr. Jay

I do not think that that would be outside the terms of reference, but I do not want to start advertising individual products here today.

Mr. Kitson

On a point of order. Is it not a great discourtesy to the House that the statement which has just been made by the President of the Board of Trade should have been published in full in the Evening Standard two hours ago?

Mr. Speaker

It may be a point of argument between the two sides of the House, but it is not a matter for Mr. Speaker.

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