HC Deb 29 November 1968 vol 774 cc991-1002

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

3.53 p.m.

Mr. Edward Milne (Blyth)

The advertising industry, the subject of this Adjournment debate, has been surrounded at all times by controversy, discussion and argument. Yet for an industry which bases its whole activity on public presentation, very little is known about its extent and activities, except mainly in argument itself. All of us engaged in this discussion and controversy can, I believe, be accused of looking at advertising as we wish to see it and not necessarily as it is. I shall try, as far as it is possible for any single person to do so, to avoid this approach.

But what we want to bear in mind in relation to the advertising industry and the economy is that it is the responsibility of Government, and at the moment the responsibility of the present Government, in a period of economic stringency, to do something about finding the answers to the problems created by the industry itself.

I think it true to say that there are three or four broad reasons for disquiet about the industry. First, there is concern over inflation at the present moment. And the fact that the large amounts spent by companies on advertising may be raising the cost and prices of many consumer goods.

Thirdly, the belief is also held that advertising increases business concentration and opens industry to the abuses of monopoly. This is why it might have been advisable to have had the debate on monopolies and mergers instead of the economy in advance of each other, because another criticism that arises is that advertising misinforms consumers about products. But I do not intend to deal at length with that point.

The fourth point arises from the Royal Commission on the Press in 1963. Since that period there has been an increasing, dangerous dependence by the Press on advertising. I am sure that the big boys in the Press world will be well able to look after themselves in respect of dangers of that kind. But those of us who have with sadness watched in the past eight or nine years great newspapers die—the Sunday Citizen, for instance; Labour's then only remaining voice in Fleet Street—realise the danger to freedom inherent in the likelihood of a Press monopoly and its ever-increasing dependence on advertising revenues. We say that in this field there is one assistance that the Government could give, and I hope that my hon. Friend who is to reply will give us some assurance that the Government ought to be prepared to spread their expenditure on Press advertising over a wider field and look at the question of the effect on smaller newspapers.

Prominent figures in various fields have made their comments on the industry. I think it would be valuable in this debate to mention one or two. Kenneth Galbraith, who has been both praised and attacked for his viewpoints on the industry, has clearly stated that, in his belief, advertising is used to make the individual the instrument of the economic system to some degree. Some of us would believe that it is to an increasing degree at the present moment that this is so.

A former President of the Board of Trade, my right hon. Friend the Member for Battersea, North (Mr. Jay), said, in dealing with this subject, that too little was known about the economic effects of advertising in general and its relationship to competition.

I am certain that all of us would agree that in this period of economic stringency, as I stated earlier, the Government have a responsibility. In April, 1967, the Government stated their intention to commission an independent inquiry into the economic effects of advertising, and we could certainly do with this report in a very exhaustive form now.

Lord Leverhulme, who possibly knows more about advertising than anyone else, perhaps with the exception of Thomas Lipton, once said that he knew full well that half the money spent by his company on advertising was wasteful, but that the problem that he faced was to find out which half it was. We could gain from an answer to that problem, because if half the expenditure is harmful it leaves the country in possession of a prize of about £300 million, which is half the estimated expenditure on advertising at the moment. I know that different figures are quoted but the total expenditure is in that region.

It being Four o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

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

Mr. Milne

I cannot leave the quotations about the advertising industry without going back to another of the great authorities on the subject, Samuel Johnson, who said in 1759, The trade of advertising is now so near perfection that it is not easy to propose any provement. I am sure that at least that will gain many plaudits from the people who are generally critical of our attitude to the advertising industry.

A great many people, both in the industry and outside it, have concerned themselves with the fact that the Soviet Union has been converted to an expansion in its advertising industry in recent years, and that the Chairman of the Soviet State Advertising Agency has announced proposals to spend large sums of money on advertising. A great many people who have rejected and attacked almost every Russian proposal have nevertheless dashed in to use the Soviet decision in this case an argument for the expansion of the advertising industry in this country.

Newspaper reports in recent days have hinted at the possibility of a Government tax on advertising, and I have been quoted as being in favour of a tax on advertising. I say quite frankly that I have an absolutely open mind on the matter. But it is a point which the Government should look at when they are making an overall examination of the industry. It is a source of revenue, and such a tax would be in line with the Government's present policy of reducing consumer spending. But, as I have said in relation to the general field of advertising, I do not think there is sufficient information to make any of us expect agreement on the question of an advertising tax at this early stage of the discussions. We are watching expenditure on advertising. During the post-war period we have been watching it rising at the rate of about 10 per cent. each year. The leaders of the industry and most of its advocates would agree that their claims to the uses of advertising are that it is a means and an instrument for increasing consumer spending.

I turn briefly to the question of the expenditure on advertising by the public corporations, nationalised industries and the Government. The Central Office of Information are said to spend about £3 million a year on Government advertising, and the public corporations and the nationalised industries bring that figure up to about £10 million a year. This is a fairly considerable field in which the question of economy could well be examined in detail—not only the amount which the Government are spending on advertising but the value and the return which the Government, the public corporations and the nationalised industries get for that expenditure.

In doing some research in this sphere I was rather intrigued to note an aspect of Government policy that had previously escaped me. In the Financial Times of 13th June this year we were told that about £700,000 was spent by the Army authorities on advertising for recruitment. What was more amusing than the figure was the class distinction used by the Army. For instance, the firm of S. H. Benson was used for advertising for officer recruitment, but the firm of Colman-Prentice and Varley dealt with other ranks and adult soldiers, while the account for junior soldiers was passed to the firm of Davidson, Pearce. Berry and Tuck.

Sir Gerald Nabarro (Worcestershire, South)

Very sensible.

Mr. Milne

The hon. Member for Worcestershire, South (Sir G. Nabarro) says "Very sensible". But if we are to talk about democratising the Army we had better look at the advertising sphere as well.

Sir G. Nabarro

I do not want the hon. Gentleman to misunderstand me.

Mr. Milne

This is an Adjournment debate. Time, as the hon. Gentleman knows, is extremely limited.

In dealing with public corporations and the nationalised industries, I want also to look at British Overseas Airways Corporation. I was rather disturbed, at the beginning of October, to read in The Times that a serious storm had blown up over B.O.A.C. passenger advertising and that a group of executives was pressing for the sacking of the firm handling the agency. The report said that the first request for this sacking was made in a confidential report last October to the commercial director and to the deputy chairman of B.O.A.C. This followed up a previous report in Ad Weekly which talked about rumblings in the airline advertising agencies. It talked about a firm working on a passenger travel television campaign for B.O.A.C. which is planned to appear next spring and went on to underline what The Times had already mentioned and dealt with. This, close to two months ago, has not, in my view, been fully investigated by the Board of Trade, and I ask my hon. Friend in winding up today to deal very closely with the matter.

In the Ad Weekly of 4th October we read that there is talk within B.O.A.C. about changing agencies and other matters. There is talk about the British Overseas Airways Corporation being in contact with other agencies in London to handle its passenger airline account. The report states: Among the agencies with which B.O.A.C. are said to be talking are Boase, Massimi, Pollitt. Talks are understood to have followed a letter from Ernest Marples, new chairman of B.M.P., to Sir Charles Guthrie, chairman, B.O.A.C. I understand that the right hon. Member for Wallasey (Mr. Marples) is still a Member of this House.

It is on the day-to-day running of the advertising industry and its contact with public corporations, nationalised industries and Government Departments that I now want to dwell, because it is extremely difficult for back bench Members of Parliament to extract information of this kind.

The quotations that I have given indicate that the Government must take note of what has been happening and must give us some information. This is now a matter of urgency, and it is not good enough to tell us that the report of the Edwards Committee on the future of aviation and similar reports will be dealing with the situation. The rumblings that I have mentioned earlier have gone on for some time now and I am sure that my hon. Friend will agree that it is wrong that information should come from the Press and other sources and not from the Government Department concerned.

In the Ad Weekly of 11th October we read that A number of resignations at B.O.A.C. are threatened over of a row about the moving of the £1 million passenger advertising account. That is a sufficiently large amount of money for the Government to be concerned. It is wrong that we should get information not only from home sources but from overseas sources before we get it from the Government Department.

I want to give my hon. Friend as much time to reply as possible, and I can sum up my remarks by saying that there is insufficient information about the advertising industry, its impact on the economy, and its place in that economy. The Government inquiry called for in April, 1967, is now long overdue and in view of the economic climate through which we are moving it is imperative that this report should not only be received but debated and acted upon—not only because of its possible effect upon trade and consumption at home but also because of the question of our export trade.

I do not want to dwell too long on this matter because, for some time, in the export field I have taken the view that it is not glossy brochures and prestige advertising that our exports need, but to be assisted with the question of delivery dates and after-sales service—another aspect that we need to examine.

If any unanimity can emerge from a debate on advertising it is that comprehensive statistics should be collected. In the past insufficient research has been undertaken in respect of advertising and there is little information available from independent sources. We look to the Government to give a lead in this matter.

4.14 p.m.

Mr. David Crouch (Canterbury)

I shall be very brief. I agree with the hon. Member for Blyth (Mr. Milne) that in the advertising industry we need to seek more information. I have an interest in the subject because I am a director of an advertising agency and this afternoon I want to call on my experience of industry—the international business of manufacturing and selling in Britain and abroad and the very important task of making a market which is marketing and selling a product.

Sometimes it is necessary to remember that to make a market and to sell a product one must tell the public about that product. I agree that in the advertising industry the whole task of marketing needs examination. Such an examination is being carried out by the Board of Trade at the moment, and a similar study is being made by the Advertising Association. There are two fundamental points which face a country, in the midst of an economic crisis as much as at any other time. First, a manufacturer who cannot sell his goods is wasting resources and a call for more production must entail a call for more and more efficient marketing.

It is right that advertising should be criticised, but it is part of the marketing mixture and the sales task, which is selling, marketing, advertising. They are all the techniques of a producer at the end of the production line. First, the producer must find a market, which he does by marketing. It is then necessary, as the Americans say, to "sell the product". This cannot be done in our free economic society without information arid persuasion, which means advertising.

As the hon. Member said, the Government themselves are in this business, and responsibly so, for recruiting. One of my interests is that my company advertises for recruits to the police force, and not unsuccessfully. This is most carefully watched by the Home Office and the Central Office of Information to see that such recruitment is effective and such advertising economic.

But it is important that advertising is not exempt from social control. The Parliamentary Secretary and I have debated this subject before in Committee and in the House, and she knows my views. We have just passed the Trade Descriptions Act, an additional safeguard to the consumer and the manufacturer. I welcome it and I believe that it is making a positive contribution. There is a need for more research on the economic and social effects of advertising. I welcome the present inquiry on these lines and would only ask the hon. Lady to remember that it is based on the economic reality that advertising is a part of marketing and performs an essential function in our economic process.

4.17 p.m.

The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dun-woody)

I must begin by thanking my hon. Friend the Member for Blyth (Mr. Milne) for having raised this afternoon not only an important but a fascinating subject. I appreciate his concern that, at a time when the strengthening of the economy demands restraint by consumers, they should not be tempted to over-spend, but I do not wholly accept that his fears are justified.

We should consider first the scale of advertising. When one has disregarded financial, trade, technical and classified advertising—they are hardly relevant to this discussion—the total expenditure on advertising in 1967 in all media was £340 million. This was only about 7 per cent. higher than the comparable figure for 1964, which, when one allows for higher costs, suggests that the volume of advertising was, if anything, falling slightly. Certainly it fell as a percentage of consumer expenditure over the period. In 1967 it was down to 1⅓ per cent. so, although there has been some switch between the different media, the picture is not one of advertising expenditure charging ahead by leaps and bounds, and representing an ever-larger proportion of selling costs. In fact, quite the contrary.

However, I of course join with my hon. Friend in his sadness at the loss, for various commercial reasons, of newspapers like the Sunday Citizen. It is true that the alteration in advertising finances is bound to have some effect upon this social side of the industry. I accept that he has a genuine worry, but one would need much more information about newspaper finances before one could feel that advertising costs were the overwhelming cause of the demise of newspapers. Nevertheless, I accept that there is a genuine fear. Overall, the cold, hard statistical facts show that, in relation to consumer spending, the scale of advertising has been declining rather than increasing.

I do not think that any one of us would deny the important part which advertising has to play in making the wheels of trade go round. The hon. Member for Canterbury (Mr. Crouch), who made a very responsible speech, assisted us greatly on the discussions on the Trade Descriptions Act on the subject of advertising. I am sure that he accepts that one is never worried about the responsible members of any profession. There are occasionally those who are not quite as responsible, and we have to try to protect ourselves against them. Measures such as the Trade Descriptions Act, which will be brought into force tomorrow and which contains new safeguards both for the consumer and for the public, can be only for the good. They can only assist us in protecting the consumer.

However, in our present situation it is more important than ever that the good new product or the improved product should be brought to the fore and brought into the full economic scale of production without delay. My hon. Friend quoted Johnson. I hope he will forgive me if I say, with all respect to Emerson, that it is no longer true that the man who makes a better mousetrap will find the world making a beaten path to his door —unless he lets the world know all about the better mousetrap.

This is in no way to underestimate the important points made by my hon. Friend about the need for efficiency in overseas marketing and about delivery dates and other aspects of merchandising. Nevertheless, I feel that advertising has a distinct part to play. Without advertising, the development of efficient firms would be that much slower, if, indeed, they ever got off the ground. Nor must we overlook the fact that advertising is one of the tools in the manufacturer's competitive armoury, and the mere fact that consumers need to restrain their expenditure is no reason for damping down the competition for every £1 that they do spend. They are entitled to know the different products which are available to them. It could be that this is a time to stimulate rather than to restrain competition.

I know that in some quarters there is doubt whether all advertising stimulates competition or the emergence of new products or some other benefit to the consumer, or whether its scale is never greater than is economically justifiable, and I understand the views of those hon. Members who feel that way, but there are others who take the opposite view, and with equal conviction, particularly, as they would point out, because the advertiser is backing with hard cash his judgment of the most economical way of developing business and will pay in reduced profits if he has judged wrongly.

A fact which has been brought out very well by my hon. Friend is that there is very little objective evidence on which to base a sound economic judgment whether—or in what circumstances—one side of the argument or the other is correct. That is why my right hon. Friend the Member for Battersea, North (Mr. Jay) announced last year that the Board of Trade intended to initiate independent research into the economic effects of advertising. It is not a very easy subject, and it has been necessary to spend a good deal of time and trouble working out the right lines of approach in order to ensure that what we put in hand is likely to prove practicable and useful. But in due course we hope by this means to provide with the support of research which others, such as the Advertising Association, are commissioning—the basis for a sounder understanding of the economic truths of advertising.

But unless and until we have reached a clear understanding of the way in which advertising works, I suggest that we shall have to be extremely cautious in approaching the idea that we should artificially push it either up or down, whether generally or in some particular sector. There may be instances when a detailed examination enables one to reach a fairly confident conclusion, but at present I do not think that a case has been established for any general intervention on the level of advertising. Indeed I am sure that ways of influencing the level, if we wanted to influence it, might be extremely difficult for us to devise.

My hon. Friend also raised the important subject of the whole question of advertising by the larger corporations and their relationship with hon. Members. I hope that he will not feel that I am in any way criticising him when I say that, having worked on a newspaper, it occasionally seems to me that one should not always believe everything one sees on the printed page. If my hon. Friend sometimes feels that he is able to read more in the newspapers about the running of a particular corporation than he is able to obtain by way of information from the Departments concerned—which have a sort of management relationship in Whitehall—I hope that he will feel that this might not necessarily be because the newspapers are better informed but because they are freer to print their comments from time to time.

The real relationship between the Board of Trade and B.O.A.C. is such that normal questions of the actual administration of advertising would be left entirely to the commercial judgment of the Corporation. I am convinced, however, since my hon. Friend has made such interesting comments, that the Corporation will be taking an active interest in what has been said in this debate. I assure him that my hon. Friend the Minister of State, who is responsible in the Board of Trade for the Aviation Division, has been interesting himself actively in this subject for some time; and I will certainly draw my hon. Friend's views to his attention.

It is important to realise that there are many legal restraints already in existence on either the content or some of the implications of advertising. My hon. Friend may not feel that they are sufficient inasmuch as they do not enter into the economic sphere—and this is a valid point—but we must, before making a judgment, obtain factual evidence that can be verified. Many people feel that they can make fine subjective arguments in all sorts of spheres, but few are able to produce objective facts to back their opinions.

On a personal note, I welcome television advertising because it enables me to rush into the kitchen to make a cup of coffee when the adverts are on the screen. I imagine, however, that this is not necessarily the general point of view.

I am grateful to my hon. Friend for the extremely detailed and interesting way in which he raised this subject. I certainly undertake to draw his remarks not only to the attention of my Ministry but to the attention of other Ministries which have responsibilities in the matters he mentioned. I am sure that they will read his comments in the OFFICIAL REPORT with extreme interest.

Sir G. Nabarro

As there has not been time in this debate for me to seek to catch your eye, Mr. Speaker, it might be convenient, before the Minister resumes her seat, if I put a question to her. First, however, I wish to declare my interest in the matter as the director of a group of advertising and similar companies. Is it the intention of the Board of Trade to publish the findings of its researches in concert with the findings of the researches being conducted by the Advertising Association?

Mrs. Dunwoody

This will obviously be a subject to be decided when we get the information. The hon. Gentleman will appreciate that it is the normal practice of Government Departments having instigated independent inquiries to publish the results. However, we must wait to see exactly how soon we can get the thing started before deciding what to do when it is completed.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Four o'clock.