HC Deb 13 May 1970 vol 801 cc1245-8

The following Question stood upon the Order Paper:

31. Mr. STAINTON

To ask the Minister of Agriculture, Fisheries and Food as from what date the system of voluntary notification of proposed price increases by food and allied manufacturers, with a 28 days' scrutiny period, ceases; and whether he will make a statement on the new arrangements.

The Minister of Agriculture, Fisheries and Food (Mr. Cledwyn Hughes)

With permission, I will now answer Question No. 31.

I have discussed the voluntary notification of future price increases with the Food Manufacturers' Federation. It has undertaken to advise its members to continue to observe the principles of the prices policy, limiting increases to cases where unavoidable cost increases cannot be offset, or where necessary to provide capital for investment. It will advise its members to notify intended price increases, together with the justification for them, in time for me to be adequately informed before changes are announced.

I have made it clear that I shall have to decide, in the light of the information and opportunities for discussion available, whether, in any case, intended increases are consistent with the principles of the prices policy, or whether reference to the National Board for Prices and Incomes is necessary.

Mr. Stainton

There is something more fundamental in my Question than what the Minister has touched on. However these prices rises have come about, the rate of return on capital in food manufacturing has been seriously declining, and is now between 11 and 12 per cent., whereas the 10 top food chains, the supermarkets, last year showed a return on capital of 25 per cent.

This disparity, and the concentration of buying power in food distribution, is very serious. Will the Minister please direct his attention to this and the relative position of the manufacturer?

Mr. Hughes

This matter was discussed when I met the Food Manufacturers' Federation, and the point was put strongly to me. In spite of that, the federation has accepted that certain costs can be absorbed, and has undertaken to adhere to this new arrangement which, although more flexible than the last, nevertheless retains the principles of the prices policy.

Mr. Arthur Lewis

Will my right hon. Friend bear in mind that many food manufacturers claim that one reason why they will have to put up prices is the increase in the price of tin and tinplate, yet the Metal Box Company has stated that there is no need for prices to go up by as much as the manufacturers threaten. Will the Minister look at this matter and ensure that the increase in the price of tin and tinplate is not used as an excuse?

Mr. Hughes

Certainly. This was one of the factors discussed during the last 10 days with the Food Manufacturers' Federation.

Mr. Godber

Will not the Minister face up to the real problem, that he and his Government have brought about conditions in which costs have risen enormously in the food industry, that these costs have to be passed on, and that the housewife is suffering the most savage increase in prices since 1951?

Mr. Hughes

The right hon. Gentleman, unfortunately, is exaggerating, and this does not help. I recognise that increased costs which cannot be absorbed, including increased wages, may have to be passed on in the form of higher prices. It is important that this should be acknowledged by all concerned. The right hon. Gentleman's agricultural policy would further substantially increase food prices.

Mr. Wellbeloved

Does not the fact that some large retail distributors in the food trade are making 25 per cent. dividend declarations indicate that there is considerable room for drastic price cuts at the retail point of sale of large retail distributors?

Mr. Hughes

I am obliged to my hon. Friend. I recognise that the size of retail price margins is an important factor, and I am giving very careful attention to it.

Mr. Maudling

To enable him to give his Answer the Minister must have made an estimate of the rate at which costs are rising in the food industry. Will he share that estimate with the House?

Mr. Hughes

The right hon. Gentleman will know that in 1969 expenditure on food went up by 5.5 per cent., but earnings went up substantially more. The present position is that food costs are increasing, but earnings are increasing at a more rapid rate, and that is fundamental.

Mr. Maudling

The Minister has not answered my question. I did not ask about 1969. He must have an estimate to enable him to give the Answer he has given about what is happening now. If he has an estimate of the way food production and sales costs are going up, will not he give it to the House?

Mr. Hughes

There are several factors here—

Hon. Members

Answer!

Mr. Hughes

—as the right hon. Gentleman must know. The question of retail price margins has just been mentioned by my hon. Friend. There has been an increase in the cost of food, but I cannot give a more precise and up-to-date figure at present.

Mr. Brooks

Does not my right hon. Friend agree that, if there is an obvious and overwhelming case for an increase, this can be demonstrated during the scrutiny period? The inference, therefore, is that if manufacturers are not prepared to submit to this, they have something to hide. Will my hon. Friend give the House an assurance that if the manufacturers are determined to hide things he will automatically refer such matters to the N.B.P.I.?

Mr. Hughes

This is precisely what the Food Manufacturers' Federation has now undertaken to advise its members to do, namely, to give me reasonable notice of any price increase. This will enable the Ministry of Agriculture to scrutinise the matter very carefully and decide whether there is aprima faciecase for reference to the N.B.P.I.

Mr. Prior

If the Minister has done his sums correctly, will not he confirm that under his Government the cost of living has increased by over 5s. in the £, whereas our agricultural policy would result in an increase in the price of food of Id. in the lb.?

Mr. Hughes

I do not disagree that the cost of food has gone up. What I am saying is that earnings have gone up more, and that people are more prosperous today than when the Conservative Party was in power.