Selective Employment Tax

HC Deb 20 July 1971 vol 821 cc1240-5

5. Mr. Marks

asked the Minister of Agriculture, Fisheries and Food if he has studied the estimate of the ratio between selective employment tax and overheads of retail and wholesale food distributors made by the National Grocers' Federation, a copy of which has been sent to him ; and what percentage reduction in food prices he now anticipates from the reduction in selective employment tax.

6. Mr. John D. Grant

asked the Minister of Agriculture, Fisheries and Food what analysis he has made of the effect of the reduction in selective employment tax on retail food prices.

8. Mr. Dempsey

asked the Minister of Agriculture, Fisheries and Food to what extent the prices of basic foodstuffs have now been reduced as a result of the reduction in selective employment tax.

13. Mr. Ashley

asked the Minister of Agriculture, Fisheries and Food how many food prices have now been reduced since selective employment tax was halved ; and if he will make a statement.

20. Mr. Skinner

asked the Minister of Agriculture, Fisheries and Food to what extent the halving of the selective employment tax has now reduced food prices.

30. Mr. Cledwyn Hughes

asked the Minister of Agriculture, Fisheries and Food by how much per cent. the cut in selective employment tax has reduced food prices.

36. Mr. Barnes

asked the Minister of Agriculture, Fisheries and Food what estimate he has made of the impact of the cut in selective employment tax on retail food prices.

Mr. Prior

I have noted the comments of the National Grocers' Federation to which the hon. Gentleman drew my attention. While it is not possible to estimate precisely the effect on food prices of the reduction in selective employment tax, I have been pleased by the response of the many food traders who have made selective price reductions to pass on the savings to the customers.

Mr. Marks

Why is it that the Secretary of State for the Environment can make an estimate of between 1 per cent. and 2 per cent. for the building trade but the Minister of Agriculture cannot make any estimate for the food trade? Is he aware that the Grocers' Federation says that the cut will mean only ½ per cent. off food prices? When S.E.T. was introduced some places, including motorway cafés and restaurants, made a specific increase of 7½ per cent. Is the Minister going to do nothing about this?

Mr. Prior

As my right hon. Friend the Chancellor of the Exchequer pointed out in the House last week, Mr. Reeves Smith's various statements are by no means consistent. I do not think that further comment on them is necessary from me.

Mr. John D. Grant

Cannot the Minister stop giving these joke answers? Does not he recognise that the removal of S.E.T. to the extent that the Government have done it has had virtually no impact at all on retail food prices, and that it has been the non-event of the political year? If he wants to tackle inflation, does not he realise that he will have to get a grip on food prices? What is he going to do about it?

Mr. Prior

I shall give the hon. Member anything but a joke answer now. The halving of selective employment tax and the reductions in purchase tax, together—[HON. MEMBERS : "Ah!"]—are certainly measures which this Government have taken, whereas the previous Government did nothing but put up taxes.

Mr. Dempsey

Is the Minister aware that the old saying that what goes up must come down does not apply to food prices? Does not he realise that the reduction of S.E.T. has meant no reduction in the price of bacon, butter—indeed, the price of butter has gone up—cheese, eggs and other basic foodstuffs? Is it not time the country realised that what has happened is that the Government sprung a diabolical confidence trick on the retail housewives? Is the Minister going to do something about it?

Mr. Prior

The hon. Member's question shows his complete lack of knowledge of the subject. He would do much better to study the facts before asking such a stupid question.

Mr. Dempsey

I checked up today.

Mr. Evelyn King

Is not this a rather ill-informed and ignorant question? Is it not a fact that the Grocers' Federation has only 6,000 members, does not represent wholesale grocers, and has no access to the figures presented by wholesale grocers? The hon. Member has got the wrong federation altogether. Can the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) tell us what he means by "retail housewives'?

Mr. Prior

As my hon. Friend knows, a large number of shops have made many worth-while reductions.

Mr. Ashley

Why does not the Minister admit that most traders—particularly the large ones—were swift to impose price increases when S.E.T. was introduced but were very slow to make price reductions when S.E.T. was halved, thereby observing the injunction of the Government to stand on their own two feet? Will the Minister institute an inquiry into the relationship between prices and taxes?

Mr. Prior

No, Sir. The hon. Member is not being fair to food retailers, many of whom reduced their prices before S.E.T. was reduced.

Mr. Burden

Is it not a fact that when this tax was imposed the Labour Government's Chancellor of the Exchequer stated that there would be no increase in prices as a result, and hon. Members opposite accepted that? If that is the case and there was no increase in prices as a result of the imposition of S.E.T., how can hon. Members opposite logically expect prices to be reduced now, because the tax has been reduced?

Mr. Prior

As my hon. Friend knows, the Opposition can turn anything on its head.

Mr. Skinner

Is the Minister aware that the cut in S.E.T. has done nothing for the eight million old-age pensioners who spend more than half their total income on food? Since he is beginning to brag about purchase tax reductions, would he now accept that the pensioners will get nothing out of that either? Does he not realise that the only people who have benefited from the cut in S.E.T. are the C.B.I. and the food manufacturers, who should have been directed to put the £300 million into reducing food prices and not into their own pockets?

Mr. Prior

The hon. Member has his facts wrong about old-age pensioners. As regards food manufacturers, I understand that the Executive Committee of the Food Manufacturers Federation has this morning agreed to recommend its members to accept the C.B.I.'s undertaking. The Brewers Society has also recommended its members to do the same. This means that we can look forward next year, I hope, to a better record.

Mr. Body

May we have it firmly recorded that where world food prices have risen by 12 per cent. in the last year or two, largely through reasons of climate, they are likely next year to come down again?

Mr. Prior

I should like to think that world food prices would come down next year, but I will not speculate on that. All I know is that the increases in the prices of food at the moment are due, by between a third and a half, to increases in world prices and the rest to general inflation.

Mr. Cledwyn Hughes

Would not the Minister agree that on any objective assessment, the effect of the cut in S.E.T. on food prices has been extremely disappointing? Although there have been individual cuts, which the Minister has quoted to his advantage, broadly the reduction has not been passed on to the consumer. Would he not, therefore, call a meeting of the retail organisations to make sure that the cuts which the Government have made are passed on to the housewife?

Mr. Prior

No, I think that the cuts are being passed on to the housewife. [HON. MEMBERS : "Nonsense."] A number of leading food manufacturers and retailers have this morning announced their intention of passing on to consumers the benefits of purchase tax reductions. Indeed, some have already taken action. This is one of the best things that can happen.

Mr. Kinsey

Has my right hon. Friend had drawn to his attention the Financial Times grocery price index, which shows an unexpected fall, it says, in prices this month, in respect of dry groceries, canned food, fish meat, bacon, fruit and vegetables? Does not this reflect the cut in S.E.T.?

Mr. Prior

All these things are helping now. It ill becomes hon. Members opposite to complain, when we cut S.E.T. and purchase tax in the way that we have, that this is having no effect on prices. They know perfectly well that it will have an effect.

Mr. Barnes

Can the Minister clarify whether he really believes that the cuts are being passed on to the housewife? In that event, why cannot he give an estimate of the number of new pence in the pound for the shopping family basket as a whole by which prices have come down? Alternatively, does he agree with his hon. Friend the Member for Gilling-ham (Mr. Burden), who implied that there was not much to be had from the cuts anyway?

Mr. Burden

I said that that was what the Labour Party had said—that there had been no increase.

Mr. Prior

These cuts are being passed on. If hon. Members will take the trouble to walk down any High Street, they will find what is happening.