FOOD PRICES

HC Deb 11 March 1968 vol 760 cc1141-52

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]

11.32 p.m.

Mr. Kenneth Lomas (Huddersfield, West)

I am most grateful for the opportunity to raise on the Adjournment the question of rising food prices. This subject has been discussed and written about many times since the Labour Government came to power, and on almost every occasion the impression has been created that the Government were more interested in keeping wages down than in keeping the cost of living under control. A tremendous amount of misleading information about prices, particularly food prices, has been published in the Press and given out on radio and television, and the time has come to state the facts: facts based on figures published in the Ministry of Labour Gazette, which are presumably acceptable to both sides of the House.

Let us first look at the general position. I will take the period the Labour Party have been in power—from October 1964 to January 1968, the latest date for which figures are available. In that time retail prices covering all items have risen from 107.9 points to 121.6 points, an increase of 12.7 per cent., or just over 2s. 6d. in the £. In the same period food prices increased from 108.0 points to 121.1 points—a 12.1 per cent. increase, or slightly less than 2s. 6d. in the £. In the same period the weekly wage rates rose from 146.2 points to 172.2 points, an increase of 17.7 per cent., or about 3s. 6d. in the £, and the hourly rate increased from 154.7 points to 189.8 points, an increase of 22.7 per cent., or around 4s. 6d. in the £. So much for the lie that the Labour Government have kept wages down while allowing prices, particularly food prices, to soar.

Let me now make known the facts as far as the first 22 months of this Parliament is concerned, including the period of standstill and severe restraint—from April 1966 to January 1968. Prices as a whole in this period increased from 116.0 points to 121.6, an increase of 4.8 per cent., or a shade under Is. in the £. The cost of food in that period went up from 115.2 points to 121.1, a 5.1 per cent increase, or a fraction over 1s. in the £. During this period wage rates increased from 157.6 points to 172.2, an increase of 9.2 per cent., or 1s. 10d. in the £, while hourly rates increased from 173.0 points to 189.8, an increase of 9.7 per cent., or Is. 11d. in the £. In other words, during this period wages increased by almost twice the amount that prices rose, including food prices.

Now consider, for comparison, the last 22 months of Conservative Administration; from January 1963 to October 1964. In that period all prices went up from 102.7 points to 107.9, a 5 per cent. increase, or Is. in the £, about the same as under the present Government. Food prices during that period rose from 103.8 points to 108.0, an increase of 4 per cent. or 10d. in the £, slightly less than under the present Government, and I give the Conservatives that point. But, if we look at wages during that period, we find that during the last 22 months of Conservative rule, wage rates went up from 136.3 points to 146.2, an increase of 7.2 per cent, or 1s. 5d. in the £, 5d. in the £ less than under Labour in this Parliament, while hourly rates under the Conservatives in that period increased from 143.4 points to 154.7, an increase of 7.9 per cent., or about 1s. 7d. in the £—or 4d. in the £ less than under Labour. No further comment is required from me. The facts speak for themselves.

In the last 13 months, January, 1967, to January, 1968, the pattern has been the same, wages rising faster than prices—certainly faster than food prices—and this at a time when the nation is being told that the Labour Government are attacking wages and doing nothing about prices. All prices from January, 1967, to January, 1968, went up by 2.6 per cent. Food prices, with which we are most concerned, went up by 3 per cent., but the weekly wage rate increased by no less than 7.3 per cent. and hourly rates by 7.6 per cent. Thus wages from January, 1967, to January, 1968, increased two-and-a-half times the amount by which prices rose. These are the facts of life, and the sooner they are understood and appreciated the better. I must say to those who still refuse to believe them, "I can only give you the facts. Only God can give you the intelligence to understand them."

The compilation of the Retail Price Index is done in a most scientific manner. Out of a total weighting of 1,000 points, food is given 350, or 35 per cent. of the total. The information on food prices is obtained by personal visits to retailers by local officers of the Ministry of Labour. In the case of non-proprietary foods, the information is obtained from each of the 200 local office areas, the prices for each article being collected from five retailers selected by the manager of the local office as being typical of those where the majority of households commonly make their purchases.

I would like here to refer to an article, published only yesterday by Professor Alan Day in the Observer. In the article he invited the Chancellor of the Exchequer to look at the Retail Price Index which, he said: …almost certainly over-estimates the price rises which really take place. I should like to ask the Minister three questions at this point. First, is it not possible to have the figures published more frequently than at present? At the moment, they are published a month or so after the checks are made. Secondly, cannot the Ministry translate the percentage figures into pounds, shillings and pence to make them more understandable to the housewife and to to the electorate? Thirdly, has some consideration been given to the compilation of these statistics based on information obtained from each region? This is obviously an important point for the people living in the regions, as there must inevitably be price fluctuations between one area and another, and a regional price index would be very valuable.

I turn now to the misleading information about food prices that is fed to the Press and, therefore, into the mind of the housewife. Here, I must make it plain that I am not attacking the Grocer—the magazine that publishes price increases. These people have a job to do for the trade and the people for whom they cater, and they do it very well, but the fact remains that the information they give is often used as political propaganda by the opponents of the Labour Government.

The grocery trade, quite rightly, lists every size of every product, together with every manufacturer who makes it. Let me take peas as an example. Canned peas are packed in two varieties—"Processed" and "Garden"—and each variety is packed in five different sizes—5 oz., A.1, 1. Tall, A.2, and A.2½. So, if the prices of peas goes up, one is immediately faced with ten increases. When one multiplies that 10 by the number of manufacturers, it is perfectly easy to see how one could read 50, 60 or 70 price increases for one single commodity—

Mr. Speaker

Order. The Minister is not responsible for the periodical called the Grocer. The hon. Member can only raise in debate something for which the Minister is responsible. The hon. Member must ask the Minister to do something.

Mr. Lomas

I am just pointing out that this is the case made on food prices, by our opponents, and I am asking the Minister to comment.

Again, what really matters is the kind of commodity the housewife buys, and the frequency with which she buys it. In the Grocer for 20th January, 216 price increases were shown. Of these, 30 were pasta products and a further 36 were toiletries and patent medicine. While this is not misleading to the trade it most certainly is to the housewife and to the electorate.

In a letter I received from the Grocer dated 22nd February, it is stated with reference to price increases: …the figure since 24th November (devaluation week) is about 2,500—this has been arrived at by counting all brands, varieties and sizes as separate items. I ask the Minister to say that these published figures should be treated with some suspicion, and that it should be recognised that the method adopted by the Ministry of Labour is far more accurate and more scientifically compiled. Let it also be remembered that during the past few months the price of meat, for example, has been affected by the foot-and-mouth epidemic, and although I do not deny that price increases have taken place, and will take place again, due to devaluation and to other factors, I think we should really put the record straight when and where we can.

A further point to bear in mind, and which I hope the Minister will note and do what he can about it, is that when announcements are made in the trade Press, such as the Grocer, of price increases and the manufacturers' recommended prices, little attention is paid to the abolition of resale price maintenance and the fact that many kinds of retail outlets establish their own prices which are often below those recommended by the manufacturer. It should be recognised and appreciated that the retail grocery trade frequently absorbs a proportion of the increase in manufacturers' costs.

In a list which the Grocer published on 10th February, 202 price increases were shown, but 92 of these related to various types of pasta foods, sanitary towels, pickles, rice, gherkins, onions and olives, dessicated coconut, spices, health food and candles, and quite recently the rise in tile price of Bronco toilet paper was reflected as 16 increases. Unintentionally or not, these price increases bandied about in the Press have created an altogether wrong impression, and it is time the truth was made known and the housewife acquainted with the fact that this Government is on her side and not against her. I know that the Government are doing all they can to stabilise prices, but perhaps the Minister can give some indication of how the early warning system is working and what steps his Department is taking to ensure that manufacturers and retailers do not attempt to take the housewife for a ride.

Much has been said of the special position of the pensioner, and though I realise and appreciate that this Government have done much to assist these people by generous increases in their pension rates and by other means, cannot consideration be given to the compilation of a special price index—food prices in particular—that would be a concern to them and a real help to the Government in determining future pension increases?

This Adjournment debate will, I think, have helped to nail a few of the lies that have been put about, and perhaps as a result the general public will appreciate that here is a Government determined to keep prices down wherever possible, a Government determined to increase the standard of living for all, and a Government that is worthy of the fullest possible support from the trade unions. It might well be argued, with some justification, that the facts I have given show that the prices and incomes policy of the Government has not been as successful as they would have hoped. This is, of course, why further necessary action is being considered now, but they do clearly show that the housewife and the nation have been "conned" by the Press, misled by T.V. and radio, and led up the garden by ill-informed politicians. I hope that this debate will help put matters right.

11.47 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)

I am glad that my hon. Friend the Member for Huddersfield, West (Mr. Lomas) initiated this debate, because the question of food prices is important for every home in the country. Naturally it attracts a lot of attention, although I regret to say there is not a single Tory or Liberal hon. Member present. I hope that the debate will have removed some misunderstanding of what has been happening to food prices. An impression is sometimes gained that they are constantly rising and right across the board. This, as my hon. Friend said, is not true. There is the natural human reaction we all have of remembering when prices rise and forgetting when they go down.

There are two forms of publicity which give rise to misunderstanding. My hon. Friend referred to the way in which information about price increases appearing in the Press can be misinterpreted. The trade Press issues guides to changes in manufacturers' recommended prices as a service to the retail grocery trade. For that reason they quote every brand, type, size, shape and flavour. Traders need to know these and it is perfectly proper for the trade organs to tell them. But it is quite misleading to present these increases as though the individual housewife had to meet them all.

For instance, one firm recently increased the price of its brand of pickles. Five flavours were involved, and seven sizes for each flavour—anything from a 6 oz. jar to a 160 oz. jar. This, therefore, counts as 35 price increases. If two other pickle firms do the same, this is recorded as yet another 100 prices up, which is totally misleading. But for the housewife who buys a jar of pickles every now and then, it is one price and one price increase only. She may not even have to pay any more at all, since competition among retail grocers is so acute that increases are not always passed on.

The Prices and Incomes Board, in its report on distributors' margins, notes that in a spot check which it did, 94 per cent. of the grocery prices checked were below the recommended prices. Moreover, the mere counting of lines can take no account of the importance of the product. For example—my right hon. Friend has called attention to this already—not long ago there appeared 118 price increases which, on examination, proved to be due to increases by two firms in a wide range of imported Continental cheeses, most of them of a somewhat limited appeal and certainly not eaten in the great majority of households. I doubt, for instance, that consumption is high of goat cheese wrapped in chestnut leaves or of classic pyramid- shaped or log-shaped cheeses—which counted as three more food prices up.

My hon. Friend gave other examples, and I could give many more, but I think that the point is accepted. I repeat that this way of recording increases is a perfectly legitimate service for the trade, but to suggest that, in the case I cited, the housewife has to pay more for 100 or 118 items in her shopping must be due either to ignorance or to a distortion of the facts.

After this debate, I do not think that anyone will be able to plead ignorance. Distortion serves no one's purpose, least of all that of the food trades, which have a fine record in holding prices over the past 18 months and deserve more credit than they get when these misleading accounts appear in the Press.

The other approach adopted to publicise food prices, that of the "shopping basket", is more validly founded in that it sets out to record actual prices paid by shoppers. These shopping baskets, however, suffer from two limitations. In the first place, because of the competition to which I have referred, prices of foodstuffs vary considerably from shop to shop. Therefore, a report based upon prices in only one or two shops can be misleading. A considerable number of shops need to be covered for a fair picture to be gained. Second, the balance between different items in the "basket" may not reflect the balance of purchases generally. Again, it is statistically quite complicated to produce a fair picture.

My hon. Friend recognised that when he referred to the Index of Retail Prices. The food component of this index is far and away the fairest "shopping basket" of all. The items in it are weighted carefully so as to be an accurate reflection of what shoppers buy. Second, the price information collected is extremely wide. Without doubt, for accurately measuring changes in the price of food, this index cannot be beaten.

However, I admit at once the weaknesses to which my hon. Friend has referred. An index number is not very meaningful to most people, and, with a delay of a month or more before the figures appear, some of their value is lost. The Government would like to overcome both these weaknesses. To translate the index into hard cash, the Ministry of Labour intends to publish each month, beginning this month, average prices and price ranges of about 80 items of food covering about two-thirds of total expenditure on food.

Unfortunately, this information cannot appear until well after the date to which it refers. This is inevitable, given the magnitude of the operation involved. We have, therefore, been considering ways and means of providing more up-to-date supplementary information. For 18 months now my Department, with the full co-operation, which I am grateful to acknowledge, of the trade associations concerned, has been supplied with information each week or fortnight of prices actually being charged in a large number of shops of all types. During and since the period of standstill, this has enabled us to keep in close touch with what is actually happening in retail food prices. I should like more public use to be made of this information.

We must be careful, of course, that any such publication does not lead to further misunderstanding. My Department is in close torch with the trade associations concerned to see what can be done. I very much hope that something can be produced which will be of general use. I hope that these developments will meet the points made by my hon. Friend about the need for prices to be quoted in terms that can be understood and for information to be made available much more quickly.

As to the question of publishing regional prices and prices particularly affecting special groups like pensioners, my right hon. Friends have asked the Cost of Living Advisory Committee to examine whether more information should he collected and published on these matters.

As my hon. Friend said, clearly and distinctly, another widely held misconception is that the Government have been much more active and successful in holding down wages than they have in holding down prices. Again, this is just not true. My hon. Friend has given the facts of the matter very clearly. It is of no help to anyone to distort the picture, and I hope that note will be taken of what he has said.

I must recognise that food prices rise. The Government have always made plain that devaluation is bound to result sooner or later in some increases in the price of many important foodstuffs. Here I should like to pay tribute to the most statesmanlike recognition by the Trade Union Congress that in the nation's difficult economic circumstances, it would be wrong for incomes to rise to compensate for these increases caused by devaluation. I hope that all sections of the community will show an equal public spirit.

Moreover, devaluation is not the only factor involved. For instance, my hon. Friend referred to the significant rise in the price of beef in recent months due to the dislocation of supplies caused by the tragic foot-and-mouth disease epidemic and the measures taken to deal with it. Indeed, this increase in meat prices and the normal seasonal increase in food prices at this time of year account for the rise in food prices in the past three months.

I must emphasise that it is not the Government's policy—in fact, it is not possible—to freeze food prices. Again, there seems to be some misunderstanding on this, and an impression that any price increase must mean a failure in the Government's policy. This is not so. The policy requires that price increases should occur only when justified by devaluation or by cost increases which cannot be absorbed.

Where the Government do come in, and come in very actively, is to ensure that all price increases of economic significance are justifiable in the terms of that policy. This is by no means easy. Nevertheless, my Department has enjoyed excellent co-operation from the food industries in operating this policy. Hon. Members will be familiar with the "early warning" arrangements under which major manufacturers give us advance notification of price increases. Their costs are rigorously examined and we accept that an increased price is necessary only when fully justified against the prices and incomes criteria.

The fact that most of the proposals are found to be consistent shows no laxity on our part but that, by and large, manufacturers are not making increases unless they are justified. Similarly, a constant watch is kept on the price of seasonal foods to ensure that unjustified price increases do not take place. There are regular discussions with the trade through a number of liaison committees which keep us fully in touch with the price situation.

Then we have a lot of information about retail prices from a wide variety of sources. It is true to say that a change cannot take place in any significant food price without our knowing about it, and if we do not know the reason for it we quickly take action.

I accept that naturally there is great general interest in and concern about food prices. I hope that I have shown that, although food prices have been much more stable than people have been led to believe, it is wrong to expect them to be frozen and that, in the immediate post-devaluation circumstances, some increases must be expected. But, at a time when we must have restraint on incomes, the public has a right to demand—and the Government have a duty to ensure—that important prices are not increased unjustifiably. We have a thorough and active machinery to ensure this.

In the past, we may not have publicised enough all that we have done and perhaps this is an area in which improvement is called for. I hope that this improvement will start as a result of the debate and I thank my hon. Friend for initiating it. He has done a good job not only for the housewife but also in enabling the Government's case to be put and in trying to get a better understanding of those who have co-operated with the Government in making this action possible.

I hope that, as a result of the debate, there will be a much clearer understanding by our people and that they will be fully confident that the Government have taken steps, which no other Government have ever taken, to keep prices down to a reasonable level in very adverse circumstances. I only wish that our predecessors had been as active in this as we have been.

The Question having been proposed after Ten o'clock on Monday evening and the Debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes past Twelve o'clock.