§ 3.49 p.m.
§ Mr. George Wallace (Norwich, North)
I beg to move,That this House, noting the increase in prices of basic foods with the consequent hardship to families in areas of low average wages and increasing unemployment, but not classified as development areas, calls upon Her Majesty's Government to set up an organisation for consumer protection with powers to scrutinise and check prices of essential goods and services.The last time I was fortunate to move a Motion on a private Members' day was some months ago when I raised the question of overseas aid and the needs of developing countries. We had a good debate and at the end my Motion was accepted by the Government and by the House without a Division. I sincerely trust that I shall receive the same broadminded treatment today.
From the needs of the underfed millions we come back full circle to our own doorsteps and the most pressing problem of all, certainly for the wives of workers, the domestic chancellors of the exchequer—the worries and anxieties which they are facing due to rapid increase in prices, particularly of basic foods.
I have attempted to question the Minister on this point but, for a technical reason, it was not possible and so I put down an Early Day Motion and, thanks to my good fortune in the Ballot, it has now become a Motion before the House. I speak in this debate as one who has first-hand experience of family shopping every week.
§ Mr. Wallace
I know that prices are the main topic among housewives in the supermarkets and other shops. By sheer chance this morning I ran into real trouble on this issue. I went out to get a few odds and ends we had not got during the weekend shopping, and I was checking on a few prices. It so happened that I saw a couple of ladies having a heated argument. Being a polite sort of fellow—and minding my own business—I asked "What's the trouble? Prices?" Then, literally the balloon went up. I got the impression that it was supposed that the prices were all my fault. The right hon. Gentleman the 41 Member for Lowestoft (Mr. Prior) should have been with me and he would have understood exactly how housewives feel about this. The lady's complaint which was given to me arose from her friend's shopping bill, which had gone up from £5 to £7 a week, and, as she told me, "It is time we pulled something down." I rather gather she meant prices.
What is even more worrying to those of us in this House who have some practical experience of shopping and of family finances is the difficulty of elderly pensioners vainly trying to purchase an adequate diet out of inadequate incomes.
As the Minister is probably only too well aware, the local evening newspaper in my constituency—in his birthplace, if I am not mistaken—the Eastern Evening News, which covers, particularly, North Norfolk, has since January been conducting a survey of prices, mainly of basic foods, purchasing the same brand or quality of foods each month at the same supermarkets; 21 items were checked. This fair survey has revealed that prices of mainly basic foods have risen by 21½p—4s. 4d. in good old English money—since January last up to and including April, with the biggest increase in April of 11½p, after the Budget and after the announcement of the reduction in S.E.T.
The main increases were in beef, butter, bacon and potatoes. A random survey of items other than staple foods revealed the somewhat startling fact that it would appear that often shops, because of rapid price increases, posted new price labels over old. Two items pictorially displayed in this newspaper showed, when the old labels were removed a price rise for one, a curry rice preparation, of 2p; that of another preparation, of 1½p.
The Eastern Evening News survey, however, is not related to a given family budget but deals only with a series of items. My wife and I have considered this matter very carefully. She is a very experienced and very careful shopper. We have discussed it and we have discussed price rises from the family budget angle, that is, not only weekly quantities of basic foods bought at weekends, and during the week, but of all the other items in the weekly shopping list—items such as soaps, washing powder, breakfast cereals, tooth paste, etcetera. We estimate that the prices of essential foods and goods have increased by approximately 42 5s. per head since January. That means for an average family of four an increase of £1 a week.
This estimated figure does not include fuel, light, fares and similar items, all of which have increased. Anybody who lives in an outer London suburb, as I do, will know what fare increases mean. Incidentally, I noticed in the Evening Standard of 6th May that Cow & Gate infant food is to go up by more than 25 per cent. in June, and the main reason, the firm says, is the sharp increase in the price which manufacturers have to pay for liquid milk.
It must be obvious to hon. Members on both sides of the House that if this situation continues the increase of pensions—which is welcomed by both sides of the House and is to take effect next September—will be more than wiped away. Similarly, there is the question of wage-cost inflation we hear so much about particularly from the Government benches, and from all that one would think, from the speeches made and the Press articles written, that the main pressure for wage increases stems from the ambitions of trade union leadership. That is not so.
Some hon. Gentlemen present—I see at least one here—will remember the postal strike, and how 28 wives of Norwich postmen came up to this House of Commons. They had not a clue how to lobby. I instructed them. They interviewed Members on the Government side. One did not exactly want to meet them. He is present in the Chamber at the moment—the hon. Member for Yarmouth (Mr. Fell). He will recall the occasion.
§ Mr. Anthony Fell (Yarmouth)
I am grateful to the hon. Gentleman for giving way to me. It was not a question of my not wanting to meet them. It was that they did not come from my constituency, and I thought it right that they should meet those Members of Parliament from whose constituencies they came.
§ Mr. Wallace
The hon. Member rather overlooks the fact that they were postmen's wives and that it was a national postmen's strike, and that their views were views which should have been taken into account by hon. Members. However, we will forgive the hon. Gentleman and not become bad friends.
§ Mr. Wallace
O.K. In that case I apologise, if I have got it wrong, but the other ladies were very upset at the time.
The main point I want to make about it is that those ladies came to see Members of Parliament. They met lady Members, too. They met in a Committee Room. Eventually—and I give my right hon. Friend great credit for this—the Leader of the Opposition asked to see them and asked them to come to his room, and that very kind act was greatly appreciated by them. I think the House will agree, aside from party matters, that if the Leader of the Opposition can do that it is certainly a good thing to do. All these women told my right hon. Friend of their complaints about price increases, and explained that their husbands' wages were not sufficient to feed their families adequately. That is just one example.
I wonder whether right hon. and hon. Members have ever given any thought to the pressures on workers from their wives in the home. Make no mistake about it. That is where the pressure begins. A wife and mother working seven days a week with no overtime rates, worried and anxious over rising prices, struggling to give her family an adequate diet, is bound to take it out on her husband. It is obvious that pressure for wage increases stems from the housewives in the home and not from the ambitions of trade union leaders.
I have said already that I have some experience of shopping. Without wishing to cash in on the occasion, I have also experienced the struggle of trying to live on low wages, and I have known the soul destroying effect of long-term unemployment. The average housewife is also worried about the possibility of her husband losing his job.
In Norfolk, there has been a serious increase in unemployment. At the moment, more than 10,000 people are out of work. The unemployment rate is 4.4 per cent., which is higher than the national average. The peak figure in the Norwich area is 40 per cent. more than a year ago, and total unemployment 44 in the Norwich district committee area is in the region of 5,000. To do the hon. Member for Yarmouth credit, his concern about the situation is such that last week he led a deputation from his constituency to the relevant Government Department.
In the Norwich area, a determined effort of self-help is being made, and I think that the House should know about it, though it brings back memories to me of the provision of work schemes in the days of the great depression. There is a good spirit of co-operation. Norwich City Council has decided to increase capital works schemes by another £500,000, and I understand that there is £8 million worth of work in the pipeline.
On 22nd April, the Executive Committee of Norwich Trades Council presented a report to its members outlining possible lines of action to give employment to workers not only in the city but from a large surrounding area, including Yarmouth and many other constituencies in North Norfolk. From the report, I understand that there is a total of 107 acres of land now or potentially available on 13 different sites for industrial development within the city area. In addition, the Norwich Union Insurance Company is prepared to erect factories and warehouses on a pre-let basis to tenants' own requirements on a further eight acres of land.
The city council is and always will be willing to provide new houses for key workers in industries coming to the area. The City's Advisory Committee for Development of Industry, representative of employers, trade unions and the local authority, is giving urgent attention to the problem.
In passing, though one does not normally mention civil servants, I must pay tribute to the manager of the Norwich area of the Department of Employment, who is more than pulling his weight in seeking solutions to the problem. Tribute must also be paid to the work of the Church, through our bishop, who is now unfortunately leaving the diocese. We have industrial chaplains working in conjunctions with managements and trade unions and getting down to the job in no uncertain fashion. It is a situation of which we can be proud. I am sure, too, that the House will appreciate the 45 positive approach of the trade union movement in the area in this great combined effort to overcome the problem by self-help.
The Government must recognise the efforts of people who are trying to solve their own problems, and I appeal to right hon. and hon. Gentlemen opposite not to obstruct, delay or withhold consent for capital work schemes of the local authority. I ask them to give all possible help and advice to further the local authority's effort to encourage industry to move to the area.
There is one positive action that the Government can take now, and it concerns the Sizewell "B" power station. Construction should have commenced in January, 1971, but it has been postponed for 12 months. Bearing in mind that the power needs of the area are not covered adequately, a decision to proceed at once could result in the employment of workers from a large area of Norfolk and Suffolk extending from north of Norwich, down to Ipswich and possibly across to Cambridge. I appeal to the Government to give this matter their urgent attention and to show the same sense of urgency that has been shown in Norwich by the city council and many other bodies working on solving the problems through their own efforts.
East Anglia is an area of low wages. Average figures are £2 a week below the national average and £3 below the South-East area average. One way of overcoming this is by competition for labour, and that will be created by introducing new industries in to the region. In addition, some trade unions should look at their practice of establishing national minimum wage agreements regardless of region, since these perpetuate the low wage areas. In making that remark, I have the full support of the Norwich Trades Council.
The problems of a low-wage area are added to by rising prices and unemployment. In our area, the decision of the Eastern Counties Omnibus Company to cut out concessionary fares for schoolchildren has imposed further hardship, especially in the rural areas. What is more, in the first week of the imposition of the new price for schools meals, the take-up of meals in Norwich dropped by 20 per cent.
46 It is no good talking about wage inflation to people in low-wage areas. I say that to any Government spokesman who may mention wage-cost inflation. It just does not register: people have enough on their plates trying to make ends meet because of price increases.
Having operated the parish pump, I hope with some effect, I return to the national problem of the rising prices of basic foods. The new import levies on meat imposed by the Government will increase already high prices. The levies have also upset the butchers. I listened to the Minister of Agriculture speaking on the B.B.C. programme "The World This Weekend", in the early stages of which I played a tiny part, having raced to the studio at great personal inconvenience the night before. The butchers have a case. I cannot speak with experience of bulk imports of other foods, but I have some experience of the meat business.
I have nothing against the first-hand importer, who does a good job in finding supplies and bringing them to the United Kingdom for the consumer. He deserves a fair and reasonable reward for his services. But it is my experience that in periods of short supply shipments of meat often change hands several times before the ships carrying them reach the United Kingdom. Each change of hands carries a small profit margin, and the final cost is added to without any possible service in bringing the goods to the consumer. It may be good business practice, but it is not in the public interest.
Another matter which needs attention is the so-called free offer. I can give the House one example, though I did not yield to temptation. The other week, I was out doing a bit of shopping. I was looking for soap. Normally, we use a certain brand which, of course, I shall not mention by name. I noticed that one bar of soap had attached to it a beautiful hairbrush, which was a free offer. There are many such examples. These gimmicks are being introduced when housewives would much prefer a straight reduction in price. I believe, and perhaps I am a little old-fashioned, that quality and price are the best salesmen.
We are always being told to shop around. I wish to goodness that people who give that advice would try shopping 47 around themselves. Just imagine the poor housewife going around the shops with her children trying to compare prices, coming to a decision, and then dragging all the way back to the first shop she went to. It is all very well if one is physically fit—and I must say that I get so exhausted in the process of shopping that when I get home my wife says, "It is time to get yourself a drink"—but for old age pensioners and others it is sheer misery. Therefore, let us have less talk about shopping around since it is complete and absolute nonsense. If the Conservative Party wants to cash in politically on this subject, they should drop the idea of shopping around, because it is doing them enormous harm.
What needs to be done? In the days of the previous Government it was the selective employment tax that was used as an excuse for price increases. Today, the ready-made excuse is the wage-cost inflation. Some increases may be justifiable, some not, but there is no protection today for the housewife. The National Board for Prices and Incomes and the Consumer Council provided some degree of protection, but they have gone. Let us make no mistake about it, food prices will become a crucial issue as we come nearer to the possibility of joining the Common Market. The main feeling in my constituency against the Common Market is the fear of rising prices. If there is any logical case for going in, I assure the House that it will disappear if there is any possibility of price increases arising as a result.
The Minister, on the radio on Sunday, admitted that he expects many food prices to increase during the coming months. The right hon. Gentleman knows this, and it is certainly a serious problem for the low-wage earner and the old age pensioner. The right hon. Gentleman also said in his broadcast that it was not so much a question of the cost of living, but of living standards. Surely to the low-wage earning family and the old age pensioner living standards are very much affected by rising costs of essential foods. This is the main element in their outgoings and is a very significant factor. I understand that butchers are now finding a ready sale for scrag ends of mutton and lamb, particularly to old age pensioners. That takes us back to the old social patterns of the past.
48 In these circumstances I feel that the Government, in fairness to the housewife, should set up some consumer protection organisation to watch food prices, to check the validity of any increases which the Government or the public might refer to such a body, and to make recommendations to the Government or Parliament for action. I have no exact details in mind for such a body, but I feel that it should contain among its members a number of practical housewives who, let us face it, know more about shopping problems than the whole of the Government and Parliament put together. The retail and wholesale trades should be represented, as well as the Government.
It would appear that my suggestion has already caused some interest. It was reported in the Eastern Daily Press at the weekend that a village grocer in Norfolk had suggested that women's institutes throughout the country should take over the job of watching food prices and exposing any increases. The small shopkeepers also are expressing great concern. This is only natural because of the personal relationship which exists between the small shopkeeper and the customer. This situation does not exist in the large supermarkets.
There is increasing speculation about a possible return of an incomes policy either on a voluntary or imposed basis. I believe that no Government of any political complexion will ever get an incomes policy to work unless it is accompanied by a determined and positive policy to keep down the cost of basic foods and other essentials. I feel sincerely that my Motion is a step towards that end and I appeal to hon. Members in all parts of the House for their support in accepting this Motion and in seeking some tangible expression of concern by the Government.
§ 4.16 p.m.
§ Mr. Evelyn King (Dorset, South)
The House is most grateful to the hon. Member for Norwich, North (Mr. Wallace) for raising this important subject today, and also for the fact that we have present in the debate the, let us call him in this context, Minister of Food. We are also grateful to the hon. Gentleman for the moderate way in which he introduced his Motion. He spoke of a broadminded approach on this subject and I should like to support him in that sentiment.
49 All the elements of which he spoke in relation to the constituencies in Norfolk apply no less to my constituency in South Dorset. I wish in some ways that he had dwelt at greater length on the preamble to his Motion which mentions… areas with low average wages and increasing unemployment but not classified as development areas".He gave figures relating to North Norfolk, most of which would be identical for South Dorset, which has an unemployment rate of 4.4 per cent. My constituency has an average earnings rate of £24.8 as against the national average of £28.9. An interesting picture emerges if we compare both those constituency average figures with the development areas. I have never been able to understand why the constituents of either North Norfolk or South Dorset should be taxed in order to give their money to development areas, such as the Merseyside, where in fact the average wage is higher and the unemployment rate is just about the same. I hope that, in so far as he has any influence on his own party, which has done a great deal for development areas, the hon. Gentlemen will draw their attention to the fact that what one puts into development areas one inevitably takes out of other areas. In some cases this may act against them unfairly.
To turn to the matter of food, it would be rash for any hon. Member in this debate to make many party points, since whatever defects exist in the food price mechanism—and there are certainly defects—when one Government has been in office for the last 11 months and another for the last six years, it is difficult to claim that faults exist in greater measure on one side or the other.
May I try to put the matter in perspective? In England some £6,000 million is spent on food every year, which represents 21 per cent. of consumer production. The effect of increased food prices can easily be over-estimated. To put it another way, if food prices rise by 5 per cent., the effect on the cost of living is about 1 per cent. In 1970, housing costs rose by 12 points, transport costs by 11 points, service industries by 12 points, but food rose by only 9 points. If one relates the increases in one commodity to another, one will find that food increases are not as fearful as some suppose. There is an emotional memory from the 19th 50 century—Sir Robert Peel, the Corn Laws, and all the other troubles of that century—and this is a hang-over. Excluding the retirement pensioner and similar poverty groupings, the effect of food prices on the population as a whole is less than might be supposed. If one seeks to deal with retirement pensioners and so on, they are better dealt with by an addition to their salary, wage or pension than by trying to deal with food prices, the effect of which, upon 90 per cent. of the population, is quite different.
Regarding the housewife, I know that the phrase "shop around" has been much used, and I have my doubts about it. I hope that I may be forgiven for saying so, but the housewife is not awfully good at shopping around. Most supermarket owners would say that if one wants to sell an article, it has little to do with value, price or bargaining ability. One puts it at eye height on a shelf and the housewife will buy it. That is not a great tribute to the housewife. Many housewives, too, are prepared, and anxious, to pay more than they need to for convenience foods or for quality. The supreme example is potatoes. I used to grow them and I sold them at about £20 a ton. They were bought in a greengrocer's shop at about £30 or £40 a ton. If they were bought by the pound they would be at another price. If they had been put in paper bags as potato crisps, by that time they would have become £1,000 a ton. Many housewives prefer to buy them as potato crisps or wrapped in paper, cooked and ready to eat, than to buy them in another way. There are many other examples. There is a desire to buy oven-ready, ready-packed foods which are naturally and necessarily more expensive than they need to be.
I want to make some practical suggestions. May I first free from blame the persons to whom blame is sometimes attributed, but who deserve none. It is not the farmer's fault. Every statistic shows that the farming section of the community has immensely increased production a rid efficiency. No one who knows the figures would suggest that farmers' profits are in any way excessive. Between 1964 and 1970 food sales rose by £1,376 million. Farm sales rose by only £345 million. To put that in a more effective way, for every £1 spent in a shop on 51 food from a farm, the farmer received 40p, and that is a very small amount. Therefore, we exempt the farmer.
On the next stage, the shopkeeper, I can do no better than to quote Lord Peddie's report, produced last month:Nowhere in the food trade did we find more than a slight rise in gross margins. In some cases they declined." "In small shops there was a very lost level of profit." "For multiples, a low return on capital—lower than in other distributive trades.That is the report of the National Board for Prices and Incomes. We exempt the farmer and the shopkeeper.
The next stage is the food manufacturer. He, too, is hard-pressed, and the figures, which are all open to be seen, show that the return on capital of food manufacture is about 13 per cent. No one could call that excessive.
But who is to blame? This is where one comes to the third part of the Motion, in which the hon. Gentleman asks the Government to set up a committee. It is largely Governments who are to blame—all Governments. Here I am having no regard to party. It is simple to analyse where the increased food prices have come from. In almost all cases they come from Government action. A single example of the element which comes highest in food costs is transport. From 1964–69 transport costs increased by 21 per cent. Again, I quote Lord Peddie, and the Opposition will value his opinion:The increase in vehicle licence duties and fuel costs has had a serious impact on costs. A single firm is spending £300,000 a year on fuel tax.That is just one item. Then one turns to the labour force; first to wages and, second, the cost of employment. Between 1964 and 1970—I use those dates only because they happen to be the dates that I have, and not to cover the period of any particular Government—what I call the poll tax, that is, national insurance plus S.E.T., a tax imposed upon an employee, rose by 110 per cent. That is why food prices have risen. Government action has done that. It may be the action of all Governments. S.E.T. alone has directly added three quarters per cent. to the price of food.
On wages, U.S.D.A.W. has now submitted a claim for a minimum wage of 52 £20 for shop assistants. I do not regret that, I support it—as long as hon. Gentlemen opposite will carry through their logic and understand that in putting forward the claim the union, too, are doing something to raise the price of food to some extent.
What can we do to help? There are a number of Government regulations and laws which are outmoded. I spoke on this matter briefly a few months ago when I introduced a Bill designed to give shopkeepers greater liberty on the hours that their shops could open. I do not ask hon. Members to accept only my opinion, but also the opinion of the Consumers' Association and the Consumer Council. It is also the opinion of Lord Peddie that there should be greater liberties as to when shops may open. There can be no difficulty in seeing why this is so. If we look at the table in the same report, we find that only 4 per cent. of housewives shop on a Monday; 43 per cent. shop on a Friday. If we enable shops to open at such hours as the maximum amount of business is done, we shall be able so to reduce costs as to effect, to some extent at least, the charges which the shopkeeper will have to make for his goods. That is one way in which the Government can help.
§ Mr. James Wellbeloved (Erith and Crayford)
The hon. Gentleman has referred to retail trading. I am sure that he would not want the House to be misled. He is aware that every responsible retail trade organisation has declared that it is against the alteration in shop hours and against the Bill that the hon. Gentleman introduced.
§ Mr. King
I am afraid that the hon. Gentleman has misinformed himself. He would do well to read the debate in HANSARD. He would find that the reverse of what he has said is true.
I move on from the small shop to the large one, the multiple shop. For every £7 rung up on the tills of shops £1 is now spent in multiple shops or in supermarkets—at any rate, in large stores. Therefore, what the big stores do is of vast consequence.
I have no doubt that a development is soon to take place which is already common in France and in America—the out-of-town shopping precinct. Some people 53 call it the hypermarket. There are valid reasons for its development and it is tremendously germane to price levels. First, rents will be less. Second, hypermarkets will be popular with the customer because more and more customers are shopping by car. It may be argued that at present cars are owned only by a certain income group, but this is changing over the years. It is becoming impossible to take cars into town centres. Hypermarkets can be sited out in the country with doors all the way round so that cars can be brought almost to the door of the shop.
I have sympathy with housewives. Thirty-nine per cent. of housewives carry away from shops 20 lb. or more of goods. Sixteen per cent. of housewives carry away loads of more than 40 lbs. These are considerable loads for women. This is one reason why hypermarkets, where vehicles can drive to the door and where trolleys can be pushed to the vehicle, are bound to emerge.
I shall not give the source of the next figure that I shall quote, but I have gone to some trouble to ascertain it. Having consulted a number of firms, my information is that once a hypermarket is established there can be a reduction in food prices of about 3 per cent. Such a reduction is well worth having.
Adding all these things up we can get to the things which Governments can do.
§ Mr. Wallace
The hon. Gentleman keeps talking about people driving cars to these places. I have not got a car. I cannot drive. What does he suggest for people who must get on without cars?
§ Mr. King
There are other shops too. Probably the hon. Gentleman did not hear my opening statements when I talked about the plight of pensioners and the poor. I explained that I thought that such people were better dealt with by cash allowances. We must treat food prices as something which affects 90 per cent. of the population. There will be an enormous increase in the number of car owners over the next 15 years.
The development of hypermarkets is being held up by town and country planning regulations and by what I regard as rather foolish restrictions in many counties. I hope that my right hon. Friend the Minister of Agriculture, Fisheries and Food will consult my right hon. Friend the Secretary of State for the Environ- 54 ment with a view to removing these obstacles.
This is the second time in one week that I have mentioned this matter. The last time planning restrictions were held to be responsible in part for an increase in the price of minerals affecting my constituency. In this case they could be responsible for an increase in food prices or at least for preventing a decrease in food prices.
I have no doubt that there was good sense in what the hon. Member for Norwich, North said. In so far as he meant that the Government should set up a committee which might well have upon it more business men than Government employees to indicate the sensitive points—transport, tax, planning position of shops—which all added together would help to reduce the price of food, I have no doubt that he has done a valuable job in bringing this matter to public attention.
§ 4.34 p.m.
§ Mr. Gerald Kaufman (Manchester, Ardwick)
My hon. Friend the Member for Norwich, North (Mr. Wallace) and the hon. Member for Dorset, South (Mr. Evelyn King) have spoken as representatives of constituents in mainly rural areas and low-wage earners. I represent part of one of the largest cities in the country but a part of that city in which wage levels are often very low, a part of that city in which unemployment is rising fast, and a part of a city where we, in common with our neighbours in the North-West, are asking for intermediate area status. Therefore, my area, although very different from the areas represented by the two previous speakers, is very relevant to the Motion. I congratulate my hon. Friend on introducing the Motion.
In one of the main shopping streets in my constituency on Saturday morning a document was distributed to housewives whose receipt they greatly appreciated. This document was labelled, "Grocer Heath's Special Offer". Any housewife who stopped to look at the document would look at what "Grocer Heath's Special Offer" was. It was:Shopping prices up! Rents up! Rates up! Unemployment up! That is Toryism."Grocer Heath" himself—the Prime Minister—made his own special offer to the country on 16th June of last year. I will read that part of the Prime Minister's 55 special offer—his now notorious statement of 16th June—which is relevant to the Motion:That alternative is to break into the price-wage spiral by acting directly to reduce prices. This can be done by reducing those taxes which bear directly on prices and costs, such as the selective employment tax",half of which has now been taken off with no noticeable effect on pricesand by taking a firm grip on public sector prices and charges such as coal, steel, gas, electricity, transport charges and postal charges.This would, at a stroke, reduce the rise in prices, increase production and reduce unemployment.The Motion refers toprices of essential goods and services",to which the Prime Minister referred on 16th June. I shall pass over the Prime Minister's statement about the reduction of unemployment. In the Manchester travel-to-work area unemployment among males since this Government came to power has risen by 37 per cent. I will go through the list of goods and services the price of which the Prime Minister said that his Government would reduce at a stroke. I will do this one by one with two exceptions, because they are not local exceptions, and explain the way in which they have affected the Manchester area.
The two exceptions are the postal charges which, despite a wholly inadequate pay offer to the postmen, have risen once and are rising again, and steel, where there is a 7 per cent. price increase which the Prime Minister boasted about at Question Time last Thursday as apparently a price reduction. If a 7 per cent. increase is a reduction, we can now understand what they mean when they talk about limiting increases.
What about the other goods which the Prime Minister referred to in his statement? How have they affected the Manchester area? He talked about coal. The price of domestic coal per ton in the Manchester area has risen by 5 per cent. since this Government came to power. He talked about gas. The price of the average gas bill from the North Western Gas Board, which I have consulted about this, has gone up by 6 per cent. since this Government came to power. He talked about electricity. The average quarterly electricity bill in the Manchester area—I have consulted the 56 North Western Electricity Board about this—has risen by no less than 12 per cent. since this Government came to power. The average electricity bill in the Manchester area has gone up since last June from £8.70 to £9.75.
As for transport charges, Selnec, which is under Conservative control, has increased bus fares by an average of 4 per cent.
What about other charges? Let us say that one of my constituents wants to go on holiday to Blackpool—not very far, not by many standards of continental holidays now an expensive place to go to. The return fare to Blackpool has risen from £1.40 to £1.60. That is an increase of 14 per cent. If he can afford only a day trip he will find that the cost of that has risen from 70p to 80p—again an increase of 14 per cent. If, in indignation against these price increases, he wants to demonstrate outside Downing Street, in London, about the Prime Minister's broken promises, he will find that the cost of a day return ticket from Manchester to London has risen from £3.50 to £4.40—a 26 per cent. increase. In the remote eventuality of his thinking of going for more than a day he will find that the fare—again, second class—has risen from £5.80 to £7.55, which is a 30 per cent. increase.
If, in despair at these and other price increases, the worker in my constituency decides to try to forget everything by getting a drink, and chooses the most popular brew in Manchester—which, appropriately enough is called Wilson's"—he will find that the cost of a pint of mild has risen by 11 per cent., from 9p to 10p, and the cost of a pint of bitter has increased even more—by 15 per cent., from 10p to 11½p.
The most serious increase, as well as one of the highest—33⅓ per cent.—has been in the cost of school meals. In Manchester as a whole this has had a devastating effect. The Manchester City education officer has given me figures for the reduction in the number of school meals taken in Manchester. In Manchester, on a day in the spring term—before the price rose from 9p to 12p—and on a day in the present summer term, respectively, the number of children taking school meals fell from 62,174 to 57,705—a reduction of 4,469. That was 57 a far greater reduction than the estimate given to me by the education officer when I asked for one in advance.
In my constituency of Ardwick the reduction has been from 7,062 to 6,506—a reduction of 556. The percentage reduction in my constituency, which contains some of the most needy areas in the city, is higher than that for the city as a whole. The alarming thing is that whereas there has been a slight increase in the number of primary school children taking school meals there has been a devastating reduction in the number of secondary school children doing so. For the whole of the city the reduction has been nearly a quarter, but in my constituency it has been more than a quarter. The children are not getting the hot meals that they were getting before.
The question is: can the housewife compensate by feeding her children well when they are at home? The Financial Times grocery index shows that since this Government came to power the average price of groceries has risen by 10 per available, but I have consulted The Grocer—a publication that Conservative Members used to quote with great effect when they were in opposition. That publication gives some interesting examples. It shows that the price of tea has risen from 8½p to 9½p per quarter since the Government came to power. The price of margarine has risen from 11p to 13p.
Let us suppose that the mother, especially if she goes out to work—if she can get a job—is unable to concentrate on feeding her children well every day of the week, and wants to give them a good meal at the weekend. What has happened to the price of a joint, about which my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) has spoken with great effect? One of the most prominent of the many butchers in Manchester told me that since the Government came to power the price of the Sunday joint has risen by between 36 per cent. and 49 per cent. That increase has occurred since June last year. Nine months ago the average price was between 17s. and 22s., in the old coinage; it is now between 25s. and 30s.
That butchers' spokesman put the whole blame for the increase on the Gov- 58 ernment. He blamed their levy policy. The Minister of Agriculture, Fisheries and Food will not be surprised to hear that, bearing in mind that when he was at a dinner the other day he was told what the impact of this levy policy would be in the period ahead.
§ The Minister of Agriculture, Fisheries and Food (Mr. James Prior)
Will the hon. Member tell me how a levy that has not yet been introduced can possibly affect meat prices?
§ Mr. Kaufman
The Minister must ask that question of the butchers' spokesman in Manchester who gave me this information, and was more vituperative about this Government than I could ever contemplate being.
Mr. Bob Brown (Newcastle-upon-Tyne, West)
I am sure that my hon. Friend has no wish to mislead the House. He talks about "the Sunday joint". He must concede that for many families today the Sunday joint is no more than a Sunday chop.
§ Mr. Kaufman
My hon. Friend is quite right. I do not wish to mislead the House on this point, just as the Minister would not wish to mislead the House about the comments made by butchers in his presence last week, when he endured what Labour Ministers often had to endure and Tory Ministers rarely had to endure, namely, being insulted at a dinner.
I went round my constituency yesterday morning and in one large block of flats in the Longsight area I spoke to many housewives about the cost of living. Their comments about the Prime Minister, even in this permissive age, were almost unprintable. One reason is that there are many low-wage earners in the area, many of whom have children at school and who have been faced with an increase of one-third in the price of school meals. Many people cannot manage to pay this increase, as has been shown by the figures that I have given.
On Saturday night a letter appeared in the Manchester Evening News which put the matter accurately. It said:Before decimalisation there was frequently sung on the radio a song helping people to count up to in decimals. Somehow the singer did not get round to a second verse telling if a person wished to spend£1 while shopping. better take two.59 When in opposition the Prime Minister used to make a great song and dance about two things which would happen if the Labour Party remained in office—one was the disaster of the 10-shilling £ and the other the disaster of 750,000 unemployed. The Labour Government never reached his target of 750,000 unemployed when they were in power, although the Conservative Party has now effortlessly surpassed that target. The 10-shilling £ is obviously the next thing on the list.
This Government and the Prime Minister personally—because of his special offer of last June—have broken the basic promises upon which they were elected to power, and the housewives of Manchester and their husbands will neither forgive them nor forget them.
§ 4.49 p.m.
§ Dr. Tom Stuttaford (Norwich, South)
I congratulate my colleague—not my political friend—the hon. Member for Norwich, North (Mr. Wallace) for putting down this Motion and being fortunate in the Ballot. He is a constituency member par excellence. He need not apologise for talking parish pump politics. I am going to do the same. We represent different parts of the same city. The hon. Member put his case very fairly and moderately, and I agreed with what was said about his speech by my hon. Friend the Member for Dorset, South (Mr. Evelyn King) on the question of food prices.
I want to emphasise the East Anglian aspect of the matter and I hope that my right hon. Friend the Minister will refer to it in his reply. This Motion was put put down in order to bring to the attention of the country the plight of East Anglia—an area neglected not only for the last 10 months but ever since the war, by both parties. If we look at the figures of unemployment there—and they are worse than the hon. Member for Norwich, North mentioned—we find how badly they compare with the figures mentioned in the debate on the steel industry last week.
In Yarmouth now there is a male unemployment level of 9.35 per cent.—these are this morning's figures—and in Norwich the figure is 4.2 per cent. The figure for Norwich and the surrounding 60 countryside is 6.35 per cent. We have not had such figures for some 30 or 40 years. They have not been induced by the present Government during the last few months. We saw these figures coming last summer. Indeed, it is because we saw unemployment coming that we had a change of Government. If East Anglia had not changed its mind about its politics, there would not have been a change of Government at Westminster.
§ Mr. Wallace indicated dissent.
§ Dr. Stuttaford
The hon. Member for Norwich, North shakes his head, but he is now the sole survivor of the Socialist majority in that area.
§ Mr. Wallace
I am intrigued by the arguments by my constituency colleague. He did not fight the election on the Tory Party slogan of "A Better Tomorrow". He fought it on a "Better Next Week." He forgot that tomorrow never comes and that next week is only a few days away.
§ Dr. Stuttaford
That shows how in East Anglia we realised there would not be a sudden improvement. We did not expect a sudden improvement. That is why I changed my slogan to a "A Better Next Week" from "A Better Tommorow".
If we look at the unemployment figures for East Anglia and then consider the normal wage structure, we see why prices are so damaging to those low income households who cannot afford a rise in the cost of basic commodities. In East Anglia we have a wage structure which is the lowest urban wage structure in the country, and the rural wage structure is one of the lowest if not the lowest. If we add to this factor unemployment, we find that the people who are now unemployed have been able to put no money away and save. Their wages have never allowed saving. This is one of the very good reasons why they are now feeling the effect more than is any other area.
There is another reason why we in East Anglia are suffering. We have never been classified as an intermediate or development area. There can be no other large tract of countryside—far larger than South Dorset—which has these conditions. There is no chance of having intermediate area status. We have appealed time and time again, but 61 our appeal has always been rejected. This would be fair enough if the Government of the day did not discourage firms from coming to East Anglia. We all know that it is not only a question of granting I.D.C.s, but when a firm seeks advice from the Ministry, it is the nod, the wink and the nudge which determine where that firm may go. We want to see an end to the discouragement to firms moving to East Anglia, and positive encouragement, matching that of the Norwich City Council which is doing so much to attract industry there.
We must have a better infrastructure in the future. In Norfolk we have less dual carriageway than in any other county in the country. We have a road bill a quarter of that of Devon which is similar in size, in rateable value and industry. We have been a neglected area for too long. This is shown in last year's election figures. If we do not change this situation, it may be shown in the election figures five years' hence.
We must, however, look at two factors which have determined some of those conditions over the last few years. First is the regional employment premium. We had an area struggling for existence. We had a hard working, low strike force of workers. This area has had little to do with prosperity partly because of the regional employment premium. Firms in Norfolk have had to compete with firms in other parts of the country, not only with the new factories but with the existing factories.
The other factor is S.E.T. In a city like Norwich surrounded by countryside, one realises that this is a service district and a commercial district in a rural area. Here, S.E.T. bites harder than it has bitten in other places. It has certainly bitten in Norwich. A great deal of unemployment must be attributed to the Socialist policy of the regional employment premium and to S.E.T. If we take away S.E.T. and the regional employment premium, Norwich will pick up, particularly if it is given facilities to do so. If the fact that it has this labouring force which works hard and strikes extremely rarely, and has a work record second to none. It should be brought home to employers who want to move their factories, and if they are encouraged to go to East Anglia rather 62 than to other areas where they will get grants, but elsewhere, they will not get the same loyalty and hard work as they can get in East Anglia.
I hope that my right hon. Friend the Member for Lowestoft (Mr. Prior) will remember where he was born and will tell us what he intends to do for his home area.
§ 4.56 p.m.
§ Mr. James Wellbeloved (Erith and Crayford)
I want to make a brief intervention., primarily because the question of meat and meat prices has cropped up and, as the House is aware, I have a certain interest in the meat industry. I hasten to add that I have no financial interest. I happen to be the son of a retail butcher and I spent my early youth living above a butcher's shop.
I am indebted to my hon. Friend the Member for Norwich, North (Mr. Wallace) for initiating the debate. Although he dwelt considerably on the problems of development areas, particularly development areas which combine those disadvantages which he mentioned with the disadvantage of low wages, I was mindful of the fact that although I represent an area which could not qualify for development area status, I have in my area a large number of people who are on low incomes and a large number of retired pensioners who are also at an equal disadvantage with my hon. Friend's constituents because of the policies that are being pursued by this Government.
The hon. Member for Norwich, South (Dr. Stuttaford) seemed to indicate that he expected a miracle of conversion from his right hon. Friend the Minister of Agriculture, Fisheries and Food. I can tell the hon. Gentleman, before his right hon. Friend even gets to the Dispatch Box to reply to the debate, that there will be no miracle conversion on the part of the right hon. Gentleman. He is committed to a high price food policy, and nothing will change him from that path. When we come to the Division this evening, I hope the hon. Member for Norwich, South will have the courage, with other hon. Members opposite who share his views, to join my hon. Friend the Member for Norwich, North in the Division Lobby as a protest against the policy that is being pursued by the Government.
63 The hon. Member for Dorset, South (Mr. Evelyn King) mentioned convenience foods and seemed to imply that because sales of these convenience foods are increasing there was little problem facing the British housewife. I would only say that convenience foods, by and large, are not bought by retired pensioners or by the housewife shopping for a family with a relatively low or even average income. Convenience foods are the kind of commodity which are bought by a young couple who want quick and easy meals which can be prepared with ease before they go out in the evening to enjoy themselves.
§ Mr. Kaufman
My hon Friend has taken up the point made by the hon. Gentleman the Member for Dorset, South (Mr. Evelyn King) about convenience foods, and he will recall that the hon. Gentleman referred in particular to potato crisps. With the decline in the number able to afford school meals, many children are now being sent to school with potato crisps to eat for lunch instead of the good meal which they could have expected in the past.
§ Mr. Wellbeloved
My hon. Friend was quite right to deploy his argument about the effect of Tory policy on school children. It is deplorable that one of the consequences of the present Government's policies is that, instead of having wholesome and nutritious school meals, children are now—perhaps, following their natural preference—taking a few pennyworth of sweets or a packet of potato crisps.
My constituents, and, I wager, the constituents of practically all hon. Members, are interested not in convenience foods but in low-price meat—their traditional British diet of a low-price weekend joint and low-price meat, a steak, a chop, or something else, during the week. This traditional diet will be taken from them under the high meat price policy, the meat tax policy, being pursued by the right hon. Member for Lowestoft (Mr. Prior), who is now the Minister of Agriculture, Fisheries and Food.
The hon. Member for Dorset, South told us that this was not the farmers' fault. In fact, the National Farmers' Union has been the most powerful lobby 64 in this country generally, and especially in relation to Members of Parliament, for a change in our system of low-price meat imports. It has exercised an undue influence on the Government which the Government will come to regret as time goes on and the effects of the National Farmers' Union's success on meat imports becomes better known.
We were indebted to my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) for bringing into the debate the estimates published in The Grocer of food price increases since this miserable Government took office in June last year. There has been a 10 per cent. increase in food prices alone already. It is no wonder, as my hon. Friend the Member for Norwich, North said, that wage earners are putting in claims for higher wages. This is no inflationary situation created out of spite. It is a wage-inflation situation born of sheer necessity, in an effort to obtain incomes with which the ordinary working man can maintain his family.
I come now to the "Prior policy pledge" made by the right hon. Member for Lowestoft not during the election campaign but in a speech in this Chamber on 29th July, 1966. A good many people are under the impression that the Tory Party has only just became converted to a high food price policy. In fact—to be fair to him, he may not have made a great issue of it at the last election—the right hon. Gentleman made his view clear in a quiet and discreet speech in 1966:The time has come when we should have higher prices for food and no subsidies for either agriculture or the fishing industry. If we did that we should get competition working in both industries and the nation would get better value because the nation has been mollycoddled for too long by receiving cheap food.. A great case could be made out for increasing the price of food…"—[OFFICIAL REPORT, 29th July, 1966 Vol. 732, c. 2127.]The right hon. Gentleman has made out that case, and he has convinced his colleagues in the Tory Government that the time has come to impose high food prices on the British people. It is no good their praying in aid the movement towards Europe, because their policies, as set out by the right hon. Gentleman, and quite independent of whatever might be going on in the European negotiations, will impose high food prices upon the British people in any event.
§ Dr. Stuttaford
Prices were rising steeply by June. This is nothing new. There was no sudden change. The graph is fairly straight.
§ Mr. Wellbeloved
I am delighted that the hon. Gentleman has reminded us of that. It may well be so, but, despite the evidence of worldwide inflationary trends, the Prime Minister promised—as my hon. Friend the Member for Ardwick said, it was his special election offer—that he would halt the rise in food prices at a stroke. Yet we have heard this afternoon that, despite that solemn pledge, which conned many a decent housewife into neglecting her family responsibilities and led her to vote Tory, food prices have risen by 10 per cent.
§ Mr. Norman Buchan (Renfrew, West)
I wonder what the position might have been if, at the same time as giving a pledge to bring down prices at a stroke, the Prime Minister had promised to appoint as Minister of Food someone who wanted food prices to go up.
§ Mr. Wellbeloved
I shall let my hon. Friend develop that argument, if he has the good fortune to catch the eye of the Chair later. I am trying to be fair to the Minister, although he has embarked upon and committed himself to a policy of robbing the British public of their traditional low-price food. In the Borough of Bexley—I represent a constituency within the London Borough of Bexley and I am a neighbour of the Prime Minister—we are so concerned about the impact of Tory-imposed food prices and the abolition by this Government of every piece of machinery which was having an influence to stabilise food prices that we have had to set up an organisation called the Bexley Housewives' Protection League. We share the concern of so many other housewives at the terrible task which now confronts them when they go shopping in the high street.
§ Mr. Peter Mills (Torrington)
I am interested to hear about that organisation. I wonder whether I might be invited to speak to it at some time.
§ Mr. Wellbeloved
I imagine that the Bexley Housewives' Protection League would be prepared to invite the hon. Gentleman along at some time in the future, although our members would be 66 in some difficulty in knowing whether they were inviting the hon. Gentleman as the Member for Torrington or as the spokesman for the milk lobby. The hon. Gentleman can choose which capacity he prefers. In due course, when the Bexley Housewives' Protection League has dealt with the real problems which confront it and wishes to turn to a little light relief, I shall commend the hon. Gentleman's name to it.
Now, a word about meat imports. There has been a conspiracy, a conspiracy to which the Minister of Food has been party, pursued by the National Farmers' Union. It started with that great publicity campaign which surrounded us when we were trying to deal with the problems of foot-and-mouth diseases which were reviewed by the Northumberland Committee. The farmers were delighted with the opportunity quite irresponsibly to attack our traditional suppliers of low-price meat. How they relished the thought that they might be able to persuade the Government to ban imports of low-price meat. For the farmers of Britain work on a mistaken basis, believing that, if they can stop low-price meat imports, the market will stay the same, or may even enlarge, and the total market for them will increase.
§ Mr. Wellbeloved
I have an idea that the Minister of Food is about to intervene and say that it was my Government who did it. He will recall that I was just as vigorous against my right hon. Friend who was then Minister of Food for following that mistaken policy.
The right hon. Gentleman was a party to the conspiracy, and his attitude was apparent at the time. I was about to deal with the second leg of the conspiracy, for which the right hon. Gentleman is entirely responsible, namely, the conspiracy to introduce a meat tax for the first time in our history, a tax on one of the staple items of the British citizen's diet. It is a disgrace that for the first time in our history we are faced with the imposition of a tax on the traditional British food—beef, lamb and 67 all the other delicate and delicious meats that go to make up our staple diet.
The Minister made the objective of the levy quite clear to the New Zealand Minister of Overseas Trade, the right hon. J. R. Marshall, recently. The New Zealand High Commission News Bulletin wrote that the Minister made it quite clear that the British Government's objective in introducing the levy scheme wasto increase consumer prices in Britain.—that is, to increase the price of meat.
The effect of the Government's policy on meat will not be to increase the British farmers' share of an expanding market. Because of the disgraceful increase in basic meat prices, the United Kingdom's total meat consumption will decline. Many people who require low-priced meat will find that it is impossible to obtain it, because retail butchers will have no alternative but to increase prices. As my hon. Friend the Member for Ardwick mentioned, it was estimated in the confrontation between the Minister and the butchers that as a result of the levy meat prices would increase by 20 per cent. and might well go up by 30 per cent.
Because of the Government's activities, the ordinary housewife, the ordinary meat consumer, faces even greater difficulties. I hope that in replying to the debate the Minister will tell the British housewife clearly by how much he expects the price of meat per pound to increase as a result of his levy. Let the Government's estimate of meat prices be on the record now.
While he is coming clean and giving the housewives the facts, will the right hon. Gentleman also tell the House and the country by how much he expects the retail price index to decrease over the next 12 months as a result of the reduction in selective employment tax? Let us have a figure. When they were in Opposition, the Tories were always prepared to put a figure on this, that and the other in relation to the then Government's policy. Let us have a figure for the cost to the British housewife of the right hon. Gentleman's dear meat policy and for the reduction because of the reduction of S.E.T.
§ 5.13 p.m.
§ Mr. Peter Mills (Torrington)
I welcome the debate and congratulate the 68 hon. Member for Norwich, North (Mr. Wallace) on bringing its subject matter to the attention of the House. It is a long time since our last debate on food.
I also congratulate the hon. Gentleman on the fair and honest way in which he presented the facts. Regrettably, the hon. Member for Manchester, Ardwick (Mr. Kaufman) has left the Chamber, but I would say exactly the same about him if he were here. His speech was very different from that of the hon. Member for Norwich, North. His alleged facts were not right, and it was a patently dishonest speech. His attitude will not help solve the problem we face. If the hon. Gentleman wants to make an impression here and to win an argument, that is not the sort of speech to make. Even though I disagree with a number of other hon. Members present, I know that they are honest and present the facts fairly.
§ Mr. Buchan
In fairness to my hon. Friend the Member for Ardwick, may I point out that his whole speech hinged on the speech of the present Prime Minister on 16th June last year. If the hon. Gentleman is challenging the factual basis of my hon. Friend's speech, he is challenging the promises in the Prime Minister's speech.
§ Mr. Mills
I do not disagree that the hon. Member has every right to attack us and to attack my right hon. Friend the Prime Minister. But the hon. Member for Ardwick is not like the hon. Member for Renfrew, West (Mr. Buchan), who is my pair, and who usually presents the case fairly and correctly, and the hon. Member for Norwich, North, who also usually speaks in a correct, honest way.
There are very few hon. Members present, probably for the simple reason that the film "Growing Up" is to be shown in a few minutes. That may well be why the hon. Member for Ardwick has left the Chamber. One thing that is essential to growing up to good food.
§ Mr. Mills
I am coming to that. The children of our land get very good food. They are well looked after, and the protein level of their diet is high.
69 I disagree with my party and my Government on milk. The Government have made a mistake here, because it is important to give young children milk so that they grow up with all the goodness that milk provides. On the whole our children are well fed. As a nation, we are well fed with a wide variety of food, and we have a service that is probably the best in the world.
It is no use denying that food prices have gone up in recent years. They have gone up fairly rapidly recently, and they went up under the previous Administration. I shall come to some of the reasons why. But wages went up by 13 per cent. last year while the cost of living rose by 7 per cent., so most people have been covered for the increase in the cost of food and the cost of living. Those who are suffering are the pensioners and the elderly, and it is the Government's duty to watch their position very carefully. The Government have done something about the matter. But it is still those on fixed incomes who are finding it extremely difficult to cope with the increased cost of living, including the increased cost of food.
Everything else goes up without much comment, while most of us bitterly resent an increase in the price of food. We have had a cheap food policy for a very long time, and we do not like to see the price of food going up But I sometimes wonder whether we could not complain a little more bitterly about the increased cost of everything else, such as television sets, whisky and beer. We get very emotionally involved when we talk about an increase in the price of food.
§ Mr. Wallace
For the average small family with a fairly low income, food is the most vital thing; it is the housewife's main concern. That is why people concentrate on an increase in food prices more than on anything else.
§ Mr. Mills
I agree, but other things go up fairly rapidly in the household budget. All I am saying is that it seems to me that we do not like to pay a fair price for our food. But I will come back to that in a moment. Our food prices compared with those of other countries are reasonable, and that point should not be overlooked.
The first and most important reason for the increased cost of food is the in- 70 creased cost of raw materials. One sees this reflected in the world prices of cereals. Every cereal commodity has gone up—maize, hard wheat and the rest. The rise in prices last year was triggered off by the 10 per cent. reduction in the American maize crop. The price has gone up by £8 or £9 a ton—and if a Socialist Government had been in power, exactly the same thing would have happened. This rise in cost affects the rearing of every animal which uses cereals. The whole cost of production has risen dramatically. One cannot get away from that.
Butter is another good example. Its price has risen substantially for a variety of reasons. For example, there has been drought in Australia and New Zealand, whose butter production has fallen as a result. On the Continent, a number of producers have gone out of butter manufacture because of the poor prices they have been receiving for milk used in butter making. On 5th May, the Financial Times pointed out that even in the E.E.C. many people have gone out of milk production because butter prices have been so low that it was not worth their while. The result is that butter prices have been rising. We in this country, whether under a Socialist or under a Conservative Government, cannot be isolated from the effects of these world price rises of raw materials. They have had a dramatic effect upon us in the last year or so.
§ Mr. Cledwyn Hughes (Anglesey)
The hon. Gentleman is making a reasonable case. The only difference between the situation as it is today and the situation as it was when we were in office is that the hon. Gentleman made very different speeches then.
§ Mr. Mills
With great respect, I do not think that I did. Indeed, I am coming to something which backs up what I have said in years gone by.
One of the important aspects of the situation, and the reason we are in it, is that good housekeeping demands that this country should produce enough to fill its larders. No doubt the right hon. Member for Anglesey (Mr. Cledwyn Hughes) would have been doing exactly the same thing as my right hon. Friend the Minister of Agriculture had he still been in office—he would have been searching far 71 and wide to find enough butter to fill our larders. One of my criticisms of the right hon. Gentleman as Minister was that he did not foresee that this situation was coming and did not encourage British agriculture further. Had he done so, the situation would not have developed as far as it has. Butter is a typical example. Good housekeeping demanded home production high enough to cope with the situation which has arisen—drought in Australia and New Zealand and reduction in European butter production.
The right hon. Gentleman should have seen to it that home producers were encouraged to feed the nation. Good housekeeping demands that even in this country a small surplus should be provided each year to see that we meet difficulties like this. I see that the right hon. Gentleman shakes his head, but this is the same sort of speech that I made when I was in Opposition.
Is it fair to go on producing a commodity at below cost? For years, New Zealand has provided butter to this country at virtually below the cost of production. If hon. Members disagree with me, they have only to read the Financial Times of 5th May, which put the case far better than I can. It is not fair to continue this situation. If we want a good supply of butter, we must pay a fair price for it.
The second main reason for the increase in the cost of food is legislation. It is easy for this House to pass legislation and forget its effects. The effects of legislation on the cost of living can be fairly steep sometimes. The Transport Act added at least another 14 per cent. to transport costs, and this is reflected in the cost of living. Selective employment tax, the responsibility of the Labour Government, added another £85 million. I see that hon. Members opposite are still deserting the Chamber to see "Growing Up". It is obvious where they are going but will continue my speech despite that.
Fuel costs are another factor. The price of crude oil from abroad has gone up considerably. Then there are licences and the drivers' wages. Yet other factors which have led to an increased cost of food are meat inspection and meat levies. North Devon Meat, the company in which I am interested, last year paid £12,000 in meat levies and £14,000 for meat inspection. That is a heavy burden 72 for one company to bear and it has to be reflected in the cost of meat. Someone has to pay for it.
It is easy for this House to pass legislation but in the long run much of that legislation means an increase in the cost of food. My right hon. Friend should look closely at the Socialist legislation of the last six years to see where he can prune some of the costs—for example, the Transport Act, meat inspection, meat levies and so on. He should prune unnecessary provisions.
§ Mr. Mills
No, I will not give way. It is easy for hon. Members opposite to criticise us, but they have a heavy responsibility for legislation and taxation which have put up the cost of food. They cannot get out of it.
The third main reason for the increased cost of food is the development of convenience foods. I am not against them. Modern housewives naturally want to use them. One's wife says that she has not the time to prepare a lot of the food. I believe that convenience foods are here to stay. Very well, then! The housewives and the community have to pay for them. The figures are staggering. A ton of potatoes costs £23 to £24 and the cost to the housewife may be about £35 a ton in the normal way. But if that ton of potatoes is prepared as frozen chips, the cost rises to the tremendous level of over £200 a ton. If the housewife wants to buy frozen chips for the sake of convenience, that is fair enough, but it makes an increase in the cost of food. We cannot have it both ways.
The fourth reason for the increase in the cost of food is the tendency for housewives to want better cuts. Any butcher will say that one of the problems today is that housewives want chops, or parts of legs, and not the cheaper cuts of meat. Any farmer today could quickly make a fortune if he were able to produce a pig or a sheep like a centipede, for the more legs of meat a butcher has to sell, the more profit there is for both the butcher and the farmer. But the effect is that the butcher has to put up the price of other joints to cover the meat not bought by the housewife. That is an important, although not the only, factor in the reason why meat is so dear.
73 The fifth reason—and here I must declare an interest as a farmer—is the policy of giving British agriculture a fair return for its labour. This is absolutely right. It is in the interests of the consumer and the country as a whole, and it is a change from the policy of the Labour Government. If we allow British agriculture to slip back, we shall be in danger of paying considerably more for our food. With a healthy, prosperous and viable agriculture, we can produce the food the country requires. We can deal with problems of droughts all over the world and with the occasional failure of imports.
As I have said, good housekeeping should budget for a small surplus to cover problems of this sort. That means giving British farmers a fair end price. Most reasonable people would agree with that, Of course British agriculture helps the balance of payments and so on, but I am concerned about it mainly because, if British agriculture is neglected, we shall be subject to all the problems associated with importing food, and we could be held to ransom by the countries from which we import. In the interests of the consumer and the nation as a whole, it is important that we have a healthily strong British agriculture to keep our larder filled.
§ Dr. Stuttaford
Does not my hon. Friend agree that cities such as Norwich, represented partly by the hon. Member who moved the Motion, are extremely dependent on a healthy agriculture, not least as a service centre for agriculture?
§ Mr. Mills
I agree. Most towns in the counties service agriculture and are very much dependent upon a profitable agriculture. That is why I welcome the debate. Unemployment does not help British agriculture. The more unemployed there are, the fewer people who will be able to buy all the pleasant things which British agriculture produces—butter, eggs, cream and so on. Unemployment does not help British agriculture, or cities like Norwich and the towns in the South-West. There are problems in the rural areas and one of the ways in which to help is to have a profitable and viable agriculture.
I repeat, good housekeeping, with all that that means, demands that we have an agriculture which is profitable and 74 viable, I am very concerned that we should be down to two or three weeks' butter supply. That is not good housekeeping but a reflection on the right hon. Member for Anglesey, because if British agriculture had produced more during his administration, we should not now be in this position.
§ Mr. Cledwyn Hughes
The hon. Gentleman is being unfair to me and unfair to himself by producing such an appallingly bad argument. He knows that throughout my period at the Ministry of Agriculture butter stocks were at a very high level and that one of my problems was that butter stocks virtually doubled in that period. At that time, he was in opposition shouting the very opposite of what he is now saying. For a fair-minded hon. Member whom I respect, he is being grossly unfair, for it is difficult in a debate of this length to go into detail. He must do his homework before he says these things.
§ Mr. Hughes indicated dissent.
§ Mr. Hughes
I apologise for intervening again in the hon. Gentleman's speech. If he reads his right hon. Friend's Price Review White Paper, he will see that it says that production was going up in all the major sectors. If there were a decline, it was for the reasons the hon. Gentleman has given, namely, bad weather, drought and so on. He knows these things perfectly well.
§ Mr. Mills
Of course I will. What I am saying—and the right hon. Gentleman cannot dispute this—is that British agriculture lost confidence over the last two or three years. It has taken this Price Review—I do not know whether it has done the trick—to start to get that confidence again. I have constantly said, even in this debate, that good housekeeping demands that we have a small surplus and if the right hon. Gentleman's Administration had arranged that, we should not be in our present position.
§ Mr. Hughes
May I correct the hon. Gentleman? Paragraph 31 of Command 4623, Annual Review and Determination of Guarantees, introduced by his right hon. Friend, says:Between June, 1969 and June, 1970 the beef herd expanded more than in any previous year.
§ Mr. Mills
If the right hon. Gentleman is right, it seems strange that the confidence which almost completely disappeared under the last Administration should now be starting to return. I believe that we shall see production rising.
What I am saying applies as much to my right hon. Friend as to the previous Minister of Agriculture—the lesson must be learned that it is right to ensure that British agriculture flourishes enough to produce enough to cover all eventualities, including shortages of supplies from abroad.
I have spoken for a long time, but I have been provoked. I would like to see us producing good food at a fair price and I hope that in future we shall not rely upon imports to anything like 76 the degree we have done. The Opposition bear a heavy responsibility, through legislation and increased taxation imposed when they were in Government, for the rise in the cost of food. Whatever Government is in power, the world rise in the price of raw materials has had a dramatic effect on the cost of food. A Minister of Agriculture would be very wise to learn lessons from the past. It would be wise and good housekeeping to see that we have a small surplus to deal with problems. This would be of benefit to housewives and the farmer.
§ 5.42 p.m.
§ Mr. John Golding (Newcastle-under-Lyme)
In the past Parliament I made my maiden speech on the subject of low-paid areas. At that time the Local Employment Act was going through the House and hon. Members on all sides representing lower-paid areas discussed their problems. At that time we were assisted by Mr. Derek Page, who then represented King's Lynn. It seems that the problem of low pay has disappeared from King's Lynn as there is no representative from that area present today.
This is a continuing problem which is unfortunately getting worse. This is happening in two respects. It is getting worse because of the Government's wages policy. The problem with the low-wage earners is the problem of the differential between those areas of low nay and the richer industrial areas—those with economic strength who can obtain considerable wage increases. It seems to be the policy of the Government to try to hold back the public sector, the badly organised, those in traditional industries. My hon. Friends from the North Staffordshire area and myself see this problem increasing as one moves further away from the more prosperous area of the West Midlands.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) recently published an article on potters' pay showing the way in which pottery workers were now lagging behind the average of other industrial workers. Everyone knows of the plight of the mineworkers and of the problems of the agricultural workers. In North Staffordshire we have pottery workers, miners and agricultural workers as well as public service workers, and we realise that the wage freeze is hitting 77 them very hard. We feel very resentful that this problem is worsening.
In another respect the problem of the lower-paid is deteriorating. When I spoke in November, 1969, I saw as a saving grace the fact that we did not have a high level of unemployment. I was able to say, as were Members from East Anglia, that although we had the problem of low pay, industrial and agricultural inertia, at least we were not cursed with the problem of unemployment. We cannot say that now. We now have this problem added to the earlier problem of the low-paid. It worries all of us very much that we see the unemployment figures for the disabled, school-leavers, the young and the over-40s rising.
§ Dr. Stuttaford
is the hon. Gentleman aware that in Norwich anyway there was considerable unemployment under the Labour Government, particularly associated wih tthe boot and shoe industry and that parts of the North Norfolk coast had levels of around 5 per cent. to 6 per cent. a year or two ago?
§ Mr. Golding
I am cautious about speaking of the problems of East Anglia, but I do know that never have the levels been so high as they are now. While there may have been difficulties in particular industries due to transition, perhaps to the introduction of new materials or new processes, never since the beginning of the Second World War have we seen such levels of unemployment.
These two problems of unemployment and low pay have crystallised. There is the third problem of rising prices, particularly in the price of basic essentials such as food and rent. These play a large part in the budgets of the lower-paid and an increase in the price of food, rent or bus fares hits the lower paid disproportionately hard. We find that these increases are making life difficult for the lower-paid.
It is not as if in the lower-paid areas the food cost any less. In 1969 I made a comparison between prices in a supermarket in Ealing and a supermarket in Newcastle-under-Lyme, my prospective consitutency. I found that there was little difference between the cost of food in Newcastle and in London. Indeed, it was more expensive in Newcastle-under-Lyme. Later a national survey confirmed 78 my findings. Because of the distance from markets, the cost of transport and the system of distribution whereby we bring meat from Aberdeen then ship it back to Aberdeen via London, in many of the lower paid areas, the cost of food is higher than in the industrial conurbations. This is certainly true in many areas of Scotland, where the price of food is far higher than it is in the industrial cities and the South of England. We have increased costs, to some extent stabilised wages, and the threat of unemployment.
We can be critical not just because the Government have failed to control price and wages rises. It is their deliberate policy to have high council rents and high food prices. They cannot have it both ways. They cannot tell us about the advantages that they have given the farmers in terms of income or address themselves to the middle-class taxpayer in terms of tax reductions and ignore the fact that these benefits have been obtained at the expense of the housewife in the price which she has to pay for food. It is the lower-paid workers' wives who are paying the bill for the Tory concessions in taxation and the increased incomes for the farmers.
§ Mr. Peter Mills Indicated dissent.
§ Mr. Golding
The hon. Gentleman shakes his head. But he must realise that the money has to come from somewhere, and it has come from the purse of the lower-paid workers' wives.
The situation is grim. Our whole social pattern is changing. There has been reference to the dramatic increases in meat prices. I do not know whether the increase has been 24 or 30 per cent. But when we were talking about a scarcity due to the foot and mouth outbreak people put up their hands in horror because the price of beef was up to 9s. Yet today one cannot buy best beef for 10s. a lb. To echo Marie Antoinette, right hon. and hon. Members opposite would say, "Let them eat scrag end". They are disturbed that the housewife should want best quality meat, but this is what she has come to expect in the last few years.
It is wrong for the Government consciously to pursue a policy which means for most working class families that they are not able to eat meat in the week. In view of the price of lamb, pork and 79 beef this weekend, manual workers' families cannot afford to buy meat in the week.
§ Mr. Golding
I do not know what experience the hon. Gentleman has of keeping a family on a manual worker's wage. I do not know whether he goes shopping on Monday morning with money from the wage of a manual worker. The wife of a miner who works on the surface in my constituency will be lucky. to receive £15 on a Friday if her husband gives her his entire wage packet.
§ Mr. Golding
—to maintain the household and to pay for rent, clothes and holidays. I hope that someone will institute an inquiry into the hon. Gentleman's living conditions. I should be very surprised if there were any hon. Member whose family was living on £15 a week.
§ Mr. Golding
I said that if the husband handed his entire wage packet to his wife she would have only £15 out of which to pay for rent, clothe the children, feed the family, pay for school meals and perhaps to put aside something for holidays. If the family have a car—and I will not ask whether hon. Gentlemen opposite have cars—they will have to find the cost of running it.
I have referred to right hon. and hon. Members opposite saying, "Let them eat scrag end". Perhaps the Minister the right hon. Member for Lowestoft (Mr. Prior) would say, "Let them eat fish". He would at least then be doing a service to his constituents, because that is what is likely to happen in the very near future.
§ Mr. Robert Hughes (Aberdeen, North)
Does my hon. Friend agree that if the Minister were to say that it would be far more relevant than when he said, "Let them eat peaches instead of oranges"? [Interruption.]
§ Mr. Thomas Swain (Derbyshire, North-East)
On a point of order. When the Chamber is almost empty, obviously because a film is being shown elsewhere in the precincts, is it usual for an hon. Member to keep up a running commentary throughout another Member's speech.
§ The Deputy Speaker (Miss Harvie Anderson)
That might be a matter for the Chair, but not in the way that the hon. Gentleman represents it.
§ Mr. Golding
The latter-day Marie Antoinette might say, not, "Let them eat fish or peaches", but "Let them eat pigeons". This is the mentality of the Government.
The £, which was worth a £ in June, 1970, is now worth only 94p. The Government must realise that their prices policy is proving disastrous for low-wage earners. Their employment policy is producing very great problems in the areas of low-wage earners. Their wages policy is creating even greater difficulties for working class families in those areas. In speaking for North Staffordshire, I associate myself with the sentiments expressed on behalf of East Anglia.
§ 5.59 p.m.
§ Mr. J. R. Kinsey (Birmingham, Perry Barr)
In addressing the House on this most important issue I should like to take up some of the points made by the hon. Member for Manchester, Ardwick (Mr. Kaufman). I am sorry that he has left the Chamber, but I am not going to attack him; rather, I am going to thank him for making some of the points he did about the increase in prices since the present Government came to office and relating those increases to those for coal, gas, electricity, steel, and the Post Office.
Those increases were in the pipeline before the previous Government left office. Certainly the Post Office increases were. Those increases must bear heavily on the shoulders of the party opposite. This Government actually reduced to the consumer the oncost of steel and coal prices, and did so against the Opposition's 81 wishes, particularly over the steel prices. We have just reduced the prospective increase of 14 per cent, to 7 per cent., as we heard at Question Time today.
§ Mr. Alexander Wilson (Hamilton)
Is the hon. Member suggesting that the price of coal has been reduced since Tory Government came into power?
§ Mr. Kinsey
The price of a coal increase which was in the pipeline when the last Government left office. I wish the hon. Gentleman would allow me to continue my speech. I have only just started. The cost as it was in the pipeline has been reduced to the consumer and by this Government.
In steel, we have reduced the increase from 14 per cent, to 7 per cent., and yet we heard cries from the Opposition to put on the full increase of 14 per cent. These costs are basic and have consequences across the whole spectrum of the cost of living. These are what are called basic industries.
I am grateful to the hon. Member for Norwich, North (Mr. Wallace) for initiating this debate today, because the cost of living is a major problem not only to the housewives on the lower income scales but all the housewives throughout Britain, who all have to cope from day to day with what is a worrying, wearing problem. It is a terrible time they are going through, to make the housekeeping money stretch from one week's end to the next, and it is that with which the Government are concerned. The housewives do not want to hear who caused the problem. What they want to know is, who is going to cure it. It is necessary to understand the problem before we can cure it. From the benches on this side of the House we have heard today, from my hon. Friend the Member for Dorset, South (Mr. Evelyn King), my hon. Friend the Member for Torrington (Mr. Peter Mills), my hon. Friend the Member for Norwich, South (Dr. Stuttaford), constructive criticisms and ideas of how to tackle the problem and the ways in which the Government can get their shoulders to the wheel.
A reliable guide to the way the cost of living has been moving comes from a paper published by the C.S.O. on 26th 82 March, 1971, about the consumer index and the purchasing power of the £. I refer in particular to Appendix A of that publication. We can see how pre-war the cost of living went. There was practically stability after 1921; and there was an actual reduction. Older housewives who had that experience of shopping then can remember it and compare it with the problem they are having to face today.
§ Mr. Kinsey
I will not give way, for I have not much time and I have a lot to say.
Since 1945 we have seen the inflationary trend. It is a matter of history. The record is remarkable. Under the Socialist Governments, between 1945 and 1951, the increase on average per year in the cost of living index was four points. From 1951 to 1964, under a Conservative Government, the average increase was two points per year. The Socialist record, when the Socialists came back into office again, from 1964 to 1970, was an average increase in the cost of living of five points a year.
The record is more remarkable still when we consider the highest and lowest points of the increases. The two highest points of increase during the Conservative Government were in 1956 and 1962. In each year it was 3.6 points. The two lowest points of increase were in 1959 and 1960 and were 0.6 and 0.9. We go back to the Socialists again. Under the Socialists the two highest points were in 1951 when the increase was six points and in 1969 when there was a 6.4 increase in the cost of living. The lowest increase they had in any one year was in 1949, when it was 1.5.
One lesson we can learn from this is that the Conservatives are better managers than the Socialists. Another lesson we can draw is that the highest increases came from devaluation. That must never be forgotten. That is an important factor. Whatever we have gained on the economic side we have lost in the cost of living battle, and it is the housewives who are having to pay for it, as we said they would. All this reveals completely the inability of the Socialist Government of that day to 83 manage our affairs. The Socialist failure was stark and expensive.
What other factors affect the cost of living? There is consumer supply and demand, which is vital in the ever-present equation we must make in estimating the increase in the cost of living. I have every sympathy with the consumers, and we on this side of the House work for them. We do not batten down on them by supporting every demand for increases which go against them. Overhead costs have gone up—in wages, taxes, transport, and rents. If we examine these in detail we shall see some of the answers to help us solve the problem before us. As for the supply-demand position, shortages distort natural rulings.
There are related factors in nature itself, and some of them are difficult to overcome, as we have had explained to us from both sides of the House, and in the speech of the hon. Member for New-castle-under-Lyme (Mr. Golding), who referred to foot-and-mouth disease. That has contributed very much to the shortage of meat. Another factor is the drought in New Zealand. That affected milk supply; it affected butter supplies; we were having a shortage there. The supply position in meat was affected also by foot-and-mouth in the Argentine and we had shortages there. Another factor is fowl pest. The poultry farmers have provided a source of cheap meat and that has been under threat from fowl pest. Research can make a difference to all this, but research takes time.
Of course, when supplies are plentiful, that brings down costs, and we see that particularly in the supply of fresh vegetables. The cost of living index shows that vegetables became cheaper and the index lost points on that account. That helped the housewives considerably. The farmer really is the city housewives' friend, and ought to be encouraged. There was point in what my hon. Friend the Member for Torrington said.
What we want to see is where, in the system itself, we can so operate as to get the greatest results. Is it doing the job? Is it getting food to the housewife at the cheapest possible price? Any doubts that we may have had should have been dispelled by the National Board for Prices and Incomes Report on Food Distribution, Prices, Costs and Profits, which con- 84 tains a mass of detail about the price margins on which various section of the trade operate. For example, the average wholesale grocer operates on a net profit margin of between 1 and 2 per cent. In the case of retail grocers, before tax and interest, the average margin in turnover is between 2.2 per cent, and 2.5 per cent. That of wholesale greengrocers is 1.2 per cent., and lower. That of butchers in the wholesale trade is 1.3 per cent. It is almost impossible to work on lower margins than that, yet the object is to reduce margins ever further. That shows that the policy of this Government is right. The Conservatie Party trusts and has confidence in our traders and distributors. It is a policy worth supporting.
The business man is anxious to secure the lowest price for his customer. He is motivated by the desire to serve the shop customer and he offers his goods at the lowest possible prices. There cannot be much wrong with a system which keeps a constant look-out for ways in which to reduce costs and rely on efficiency to beat the competition. That is what the trader is out to do. There is no need for the Government to interfere in such a system, as the previous Government did. The Labour Government were wrong in what they tried to do. All that they did was to increase costs, as the cost of living index proves. In fact, the Socialist record in government from 1945–1951 and from 1964 to 1970 gave the economy thrombosis. The medical definition of "thrombosis" is "A collection of bloody clots interfering with the smooth flow of the stream" That is exactly what happened. The National Board for Prices and Incomes merely held up price reductions without reducing prices.
The effect of wages on prices is most important, though not so much the wages of the trade. The retail and distributive trades admit that their wages are lower than those in other trades. However, they must be taken into account, because they are considerable. In the wholesale grocery trade, they account for between half and two-thirds of the costs, as the Report of the National Board for Prices and Incomes shows. In the case of retail grocers, wages account for 43 per cent, of the costs. In the case of butchers in the retail trade, wages represent two-thirds of the costs. All the way through, wages are most important.
85 We must be mindful, too, of the pressures put on the trade by wage increases outside the trade. It took the Leader of the Opposition five years to discover the equation that wage increases are price increases. Having lost office, the right hon. Gentleman forgot it within a few months. When he was Prime Minister, he insisted on wage rises of between 2½ and 4 per cent. For the right hon. Gentleman and his supporters today, the sky is the limit. Right hon. and hon. Gentlemen opposite act as though they were the Government who never were. It would have been better if they had never been, in which event the British housewife would not have had to endure the absolute rise in the cost of living which the policies of right hon. and hon. Gentlemen opposite began, for which they set the pace, and from which we still suffer.
§ 6.15 p.m.
§ Mr. Michael Barnes (Brentford and Chiswick)
I begin by adding to the congratulations which have come from both sides of the House to my hon. Friend the Member for Norwich, North (Mr. Wallace), not only for his Motion but for the way in which he moved it and for the very close knowledge that he has revealed of the problems confronting his constituents. Increased prices of our basic foods affect not only low-income families but all sections of the community. However, my hon. Friend was right to draw our attention to the problems of low-income families, and there are many such families in that part of the country which my hon. Friend represents.
Even before the present inflationary spiral took hold, the core of our poverty problem was not so much among the unemployed as among low-income families where the breadwinners were in fulltime work. Today, many such families are faced with the threat of unemployment which, with the sharp increases in food prices which have occurred, means that very many of them are hard hit.
Another group of people to whom reference has been made is that of retired people. It is heartbreaking to hear from elderly people in one's constituency the complaint, "Cannot you people at Westminster do something about prices?" I have even heard elderly people say that they would prefer to do without the £1 increase in the old-age pension which is to 86 come if it meant that prices would remain stable. Until the increase in the pension is paid in the autumn, pensioners will be worse off than at any time since the situation which existed before the Labour Government increased the old-age pension in 1965. When the increase is paid, pensioners will be a little better off. How long they will remain better off depends on how soon the Government tackle the problem of increased prices.
We on this side of the House feel that the Minister is far too complacent about the problem. He tends to minimise the true facts of the situation. I remember how he caused quite a stir last November when he replied to a Question from one of my hon. Friends asking how much food prices had gone up since last June, and said that food prices were 1 per cent, down since June, 1970. Of course, it had been the experience of housewives throughout the country that many food prices had risen very sharply. In referring to a 1 per cent, reduction in food prices, the right hon. Gentleman was taking all foods at a time when seasonal items were showing a marked drop. But during the same period, there were sharp increases in non-seasonal, packaged, processed foods, which form the bulk of the food purchases of most families.
The other mistake that the Minister makes when he considers food prices is to take too simple a view of the problem. I think that he says that, despite the policies of the Labour Government, prices rose during the time that the Labour Party was in office. In fact, prices rose at nothing like the rate that we see today. We have had references in the debate to the fact that retail food prices are 10 per cent, up on what they were 12 months ago. The Minister, when quoting what happened to prices when the Labour Government were in power, mentions only the last two years. He mentions the increase from June, 1968, to June, 1969, and from June, 1969, to June, 1970, when the increases were 7.4 per cent, and 6.2 per cent, respectively. But he does not mention previous years, going back to June, 1965, for which the figures are 1.9 per cent., 2.9, 5.2 and 3.1 per cent.
§ Mr. Kaufman
There is further reinforcement to my hon. Friend in an 87 answer which I received from the Minister of State to the Treasury recently, which shows that between devaluation and the fall of the Labour Government the purchasing power of the pound fell by 13p, but that since that time the purchasing power of the pound has fallen by 5p—that is to say, at a considerably faster rate since this Government came into power.
§ Mr. Barnes
I am grateful to my hon. Friend for pointing that out. The Minister is saying that, because of the rises which took place when Labour were in power, although they are far smaller than the rate at which prices are increasing now, we must have no prices and incomes policy, no early warning system, and apparently we do not even need any system of consumer protection, since the Consumer Council can be abolished. The Minister argues that all that is necessary is to reduce the level of wage settlements and to have competition.
His policy was expressed in the newspaper interview referred to by my hon. Friend the Member for Norwich, North:Mr. Prior is relying on two things to break the spiral of rocketing prices: bringing down the level of wage settlements, which he described as the 'root cause'; and encouraging competition between shops, producers and manufacturers. He told me that he is confident that these policies will pay off in the long run—but the big question he left unanswered was how long we must expect that run to last before the pay-off.May we be given more information as to how long it will be before that pay-off comes? I do not believe the right hon. Gentleman can give us that information.
The right hon. Gentleman's whole philosophy on food prices is too naive to admit of a solution. I use the word "philosophy", because it is a word of which the right hon. Gentleman is fond. Of all Ministers in Government, after the Prime Minister's speech at Blackpool at the Conservative Party conference, when he launched the so-called new radical. Conservative philosophy, the right hon. Gentleman was the quickest to take his cue from that. Since then we have had many references in his speeches, answers to Questions and even in White Papers to the "Government's philosophy". It is very nice to have a philosopher farmer for a Minister of Agriculture. It is a mixture in a politician of which Plato 88 would have approved, but I doubt whether Plato would have given the right hon. Gentleman very high marks for his philosophy.
The Minister enunciated his "philosophy" in an answer to a written Question on 8th December, 1970,I am confident that where there is competition there will no unnecessary or unjustified price increases."—[OFFICIAL REPORT, 8th December, 1970; Vol. 808, c. 59.]But consumers are not interested in whether price increases are unnecessary or unjustified. Consumers are interested in whether price increases happen and how much they are. In stating that principle, the Minister is stating no more than a syllogism because, by his definition, where there is competition any increase that takes place must be necessary or justified in the perfect Tory world. I do not believe that to be a view which many people in the country would accept. It is far too simple.
Of all issues which were before the country at the last General Election, prices, and especially food prices, was the most crucial. Two days before polling day the Prime Minister made the statement in which he listed measures which would "at a stroke" reduce the rise in prices. It is a phrase which has been quoted many times since then. The phrase was put to the Minister of Agriculture on 17th November, when he reaffirmed that the Government would honour their election pledges. But what we want to know today is when and how that crucial pledge about food prices will be honoured.
The Government have now been in power for nearly a year. Retail food prices are now running at a rate 10 per cent, higher than they were this time last year. It has been clear to many of us on this side, for a long time, that this was the way that things were developing, but the Minister has tended to close his eyes to this situation and to hope that it would not happen. When questioned about the rate of price increases during the calendar year 1970, during which year food prices went up by something like 9 per cent., the answer we got was that most of the increases were during the first part of the year when Labour was in power. We are now approaching the first full year of Conservative Government and when it becomes known the 89 amount by which food prices will have gone up in the shops during that year will be in the region of 10 per cent. When the Prime Minister used the phrase "at a stroke" last June, and made the statement he did, people took it to mean that there would be direct action on prices. They did not think it was a vague reference to Tory economics generally.
§ Mr. Barnes
I was talking to a lady in my constituency—she was not a Labour voter and, indeed, I do not think she liked any politician—and she told me that the one thing she was sure about was that this Government had said that they would reduce prices and had not done so. That is the way an overwhelming number of people now look at the matter.
It is no good saying that the cut in S.E.T. makes any real contribution to reduced food prices. Ministers have been wildly optimistic about a cut in S.E.T. The Chancellor of the Exchequer in his Budget Statement said that such a cut would have a direct influence on prices. But the Financial Secretary to the Treasury, winding up at the end of the Second Reading debate on the Finance Bill on 28th April, went much farther and made some fantastic statements. He said, among other things:… food store after food store has been bringing down prices as a result of the cut in S.E.T."—[OFFICIAL REPORT, 28th April, 1971; Vol. 816, c. 558.]This is absolute nonsense, for the following reasons. Let us take as an example a multiple group with, say, 100 branches. The saving in S.E.T. to that group in a year will amount to £100,000. Let us imagine that the takings of each of the 100 branches are about £5,000 a week. This means that each branch, as a result of the cut in S.E.T., will be able to reduce prices by about £20 a week. A reduction of £20 a week on takings of £5,000 a week amounts to less than ½p in the pound. It may be that some outlets will concentrate all that £20 on making reductions on certain items. They may well do that for a limited period, but it will not go far. Indeed, taken over a period the price reduction which can be made from the cut in S.E.T. is very marginal.
§ Mr. Barnes
Does the hon. Member for Torrington (Mr. Mills) consider that a price reduction of less than ½p in the pound is significant in terms of grocery prices at present?
§ Mr. Barnes
Of course it will help the Chancellor, and indeed the taxpayer, but it will be followed by the imposition of a value added tax. I am talking about how significant are the reductions in food prices that can be made as a result of the cut and, as we have seen, they are marginal in the extreme—less than ½p in the pound.
§ Mr. Barnes
No, I am sorry, I will not give way. My time is running out. The evidence which The Grocer produced recently is that in most cases in the grocery trade a reduction in S.E.T. will be pocketed by the trade to improve its profitability.
Competition has been mentioned very much by the right hon. Gentleman, who says that where there is competition prices will then come down. As regards the grocery business, I wonder how well he understands the complexities of food marketing. Power has moved dramatically in the food marketing business to the big groups, the supermarkets with many different outlets. They are able to twist the arms of their suppliers to give them bigger and bigger discounts. That enables the multiples, the supermarkets, to cut prices to the consumer. But the trouble is that that reduction by the supermarkets is very soon offset by increases in prices which manufacturers are forced to make because of pressure from the big buying groups. This is a very complex situation. It is not enough to merely say that where there is competition, prices will come down. But the Minister has very much made that his point of view, and he pins his hopes on bringing down food prices in the future almost entirely on promoting competition. He has said that he will not intervene when he has been asked, during Question Time, to intervene in various 91 ways. He has said that he does not consider it his business to do so. He does not believe, apparently, that consumer protection, through organisations such as the Consumer Council, has anything to offer.
The Minister described my right hon. Friend's early warning system, on the 9th February, as "a public relations measure". But I doubt whether food manufacturers would have described that system, and the references that they have had to make to the Prices and Incomes Board, as a public relations measure. They were very serious measures which raised problems for food manufacturers. But they were very much in the public interest then.
Surely the lesson of the last ten months is that sooner or later, and the sooner the better, we have to turn to some sort of prices and incomes policy. I supported the prices and incomes policy brought in during the last Parliament, but it was a policy which created a lot of opposition. Some of my hon. Friends were bitterly opposed to it, and it was only partly successful.
The mistake made by the right hon. Gentleman—and it is characteristic of his approach—is that he considers, because the prices and incomes policy of the Labour Government was not entirely successful, that therefore all similar attempts of this kind are doomed. The Minister may shake his head but this is the response that we have had Question Time after Question Time—that because it did not work entirely it was no good. Perhaps he will change his mind today. If he still holds that view, he is in a minority.
The crude way in which the Government are trying to hold down wage settlements without a proper incomes policy is dividing the country and storing up a great deal of ill will. It is impossible to moderate wage demands in the private sector without parallel action on prices, especially food prices, to establish confidence that the Government are trying to follow a fair policy and not one which means that the devil takes the hindmost.
Food prices are, perhaps, the most crucial of all, especially to low-income families and retired people. That is why my right hon. Friend the Leader of the Opposition singled out certain food prices 92 among the key prices he listed in his recent speech in New York, when he spoke of a compact between the Government and various sections of the community. He emphasised there that the first condition of any compact of this kind must be parallel action on prices. There is none at present. On 16th June the Prime Minister implied that there would be. His statement cannot be read in any other way. Food prices are now up by 10 per cent, on a year ago. We want to know when and how the Government will do something about it.
§ 6.35 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. James Prior)
I congratulate the hon. Member for Norwich, North (Mr. Wallace) on his good fortune in the Ballot and on the debate that he has initiated. I will deal with many of the points he made. I am sorry that the debate has not been better attended, but I gather that there have been other activities in the House this afternoon and that this has restricted the number of hon. Members who have considered this an important subject.
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Kinsey) summed up the subject of the debate very well when he said that it is not a matter of who has caused it but who will put it right, or cure it, which counts. That should be the point to which we should address ourselves. The hon. Member for Brentford and Chiswick (Mr. Barnes) tried to do so. I will come to some of his points as we proceed.
The core of the Motion requests the Governmentto set up an organisation for consumer protection with powers to scrutinise and check prices of essential goods and services.As I see it, this is a further request for the restoration of the previous Government's prices policy, for a Prices and Incomes Board, and all the complicated paraphernalia for bureaucratic scrutiny of commercial pricing decisions. It will come as no surprise to the hon. Gentleman that I am opposed to this. My resolve is stiffened by the complete lack of any evidence that interventionist policies have been successful in the past in holding down prices.
While the hon. Gentleman was speaking of the need for a prices and incomes policy, his hon. Friend was muttering 93 that it had not made much difference to prices. Hon. Gentlemen seem to believe that they have only to set up a board or institute an inquiry and the problem will be solved, or at any rate brushed under the carpet. Boards and inquiries can sometimes deal with the effects of a policy, but they do not get to the root of the problem. That is the important thing.
In the days of the Prices and Incomes Board, business men had to give up many hours explaining their proposals to Government Departments or providing evidence to the Prices and Incomes Board. Several business men have told me that they used to spend more time consulting their competitors on how to present a case for an increase than competing with each other to keep down prices.
§ Mr. Prior
The hon. Gentleman says "nonsense" but this is what I have been told. He will see my point as I develop my speech. Judged by the criteria of price increases, the period of office of the Labour Party was disastrous. The hon. Gentleman made a good deal of the fact that I always quoted the increase in the cost of living in relation to the last year of the Labour Government and that this was not entirely fair. But it is the trend that has been established which is the important part. In June, 1965, the percentage increase over the previous June was 3.1. It then rose by 5.2, by 29, and by 1.9. But in 1969 it went up by 7.4, and in 1970 by 6.2. Those are the increases which we have had to accept in the last two years.
§ Mr. Heffer
On a point of order, Mr. Speaker. The right hon. Gentleman has made references to my behaviour as though it has been improper. I put myself in your hands, Mr. Speaker. As far as I know, I have broken absolutely no rules of the House. I asked the right hon. Gentleman to give way. I have sat here for most of the afternoon. I requested the right hon. Gentleman to give way on this point. Perhaps you, Mr. Speaker., will inform me what rules I have broken which would justify such a statement by the right hon. Gentleman.
§ Mr. Speaker
Fortunately or unfortunately, I have no control over what the right hon. Gentleman or any other hon. Gentleman may say, and it is not for me to comment on the behaviour of hon. Members. There has been no breach of order.
§ Mr. Speaker
Order. I said a moment ago that there had been no breach of order. Now the hon. Gentleman is coming near to one.
§ Mr. Prior
I will deal with the points raised by the hon. Member for Brentford and Chiswick—[Interruption.]—over that interruption. I will take an actual example of bread prices, which I think is important. In 1964 when the Labour Government came to power the price of an ordinary large loaf was 1s. l½d. By June, 1970, it had risen to Is. 9d., an increase of 55 per cent. During that period of time the baking industry had been subjected to regular surveillance and 95 to no fewer than four detailed inquiries by the National Board for Prices and Incomes—that is, four detailed inquiries in just under six years. Despite all that, there was an increase of 55 per cent, in the cost of a large loaf.
As hon. Gentlemen know, last summer it was widely predicted that the price of a large loaf would have to rise by 2d., and I confidently predict that had hon. Gentlemen opposite remained in office and continued to operate their so-called controls that the increase would have come about long since. In fact, the only increase which the very competitive position prevailing in the industry has allowed to occur is one old penny per loaf last November and that had to be rounded down to 0.8d. on decimalisation—and this at a time when cereals prices throughout the world have reached their highest level ever.
What has happened here is an excellent example of the effect of giving a free rein to competitive pressures and makes it plain that the large interests must compete with each other rather than come to the Government and ask them to fix the price for them. I do not suppose the industry would have minded continuing with the old system, which effectively guaranteed it full recoupment of its cost increases.
§ Mr. Cledwyn Hughes
The right hon. Gentleman has been very critical of the National Board for Prices and Incomes. In fairness, will he agree that in relation to some of the commodities in respect of which my right hon. Friend and I made references to the Board, the Board found that the increases being sought by the industry were not justified?
§ Mr. Prior
Certainly; the Board found from time to time that increases were not justified. I am saying that competition would have kept those increases to the very minimum. However, I should be the last person, particularly as Minister of Food, to wish to give the impression that the Government are not greatly concerned about rising prices of food and other essential goods. I recognise full well the burden that increases in the cost of living place on pensioners. The lowest-paid workers and those on small fixed incomes suffer most from them. Yet the country as a whole has not been pre- 96 pared to accept that stable prices are simply incompatible with large increases in incomes year by year which have not been earned by higher productivity. That is a statement which is taken from the 1969 White Paper published by the Labour Government. I am very surprised the hon. Member for Walton did not rise on that one.
§ Mr. Heffer
The right hon. Gentleman has just quoted from a White Paper. We have heard him explain that there has been a continual rise in the cost of living under the Labour Government. What we are interested to hear is what the Tory Government intend to do about it, because they said that they intended "at a stroke" to deal with this question. When will he tell us what the Tory Government's policy is to deal with the increase in the cost of living?
§ Mr. Prior
I am in the process of telling the hon. Gentleman exactly what we are doing. It was notable that only one hon. Member opposite, namely, the hon. Member for Brentford and Chiswick, made any mention of wage increases. It is of fundamental importance, not only that we should overcome the problem of rising prices, but that people should realise the causes of it. This is where I come to the question asked by the hon. Member for Walton. There is no doubt that the main cause is quite simply paying ourselves too much. We shall get price increases down only by reducing labour costs. This is why the Government have taken action wherever possible to bring down the overall level of wage settlements.
Mr. Bob Brown
The right hon. Gentleman says that paying ourselves too much is the trouble. He then says that we must reduce labour costs. "Paying ourselves too much" must also mean taking too much in the form of profit, but he has not yet mentioned that.
§ Mr. Prior
The hon. Gentleman must know that profits have fallen considerably in the last two or three years and that one of the problems which all industries now have to face is the lack of cash to reinvest. Failure on the part of the nation to realise the seriousness of the situation can also result only in greater hardship and higher unemployment.
97 This inflation of wage settlements has its roots in what happened in the period before the election; and we have never claimed that it could be halted overnight.
§ Mr. Prior
Unless a halt is called fairly quickly, the course of inflation could lead to disastrous consequences, not only for trade union members themselves but also for the nation as a whole. We therefore consider it imperative that all concerned with wage settlements should take full account of the national interest in the widest sense so that the general level can quickly be brought more closely into line with the growth in output.
There are encouraging signs that the upward trend in pay settlements has been checked. For example, in the last quarter of 1970 local authority manual workers received increases of about 15 per cent, to 16 per cent., whereas more recently other important manual groups in the public sector have settled for increases of about 10 per cent, or less.
In the private sector, although there have been some high settlements—in the motor industry for example—these should not be taken as indicative of the overall pattern. There are, in fact, encouraging signs of a growing recognition that the general level must come down and the Government for their part will do everything possible to encourage this. If hon. Gentlemen ask me my opinion of the motor car industry, I am prepared to give that as well. I will make it plain how much I deplore the settlements reached in the car industry. Nor should the car industry, on either side—management or unions—be under any illusion about what the rest of the country thinks of what they have done.
Hon. Gentlemen opposite seem to doubt what I say about the effectiveness of competition. I do not think that I can do better than refer them to the recent Report of the much-vaunted National Board for Prices and Incomes on food distribution. I think we all know why that inquiry was set up. It was, of course, no more than a political gimmick to try to take some of the steam out of the situation before the election last June. It was, at the same time, 98 a useful stick to try to show that the big retailers were taking advantage of their position to increase their profits at the expense of the housewife. [HON. MEMBERS: "So they were."] But it has boomeranged on them, because the objective has certainly failed. The Board's Report has shown firmly that the extremely competitive conditions existing in the retail trade are working to keep down profits and margins and encouraging improvements in efficiency.
Let me give another example of competition working. When my right hon. Friend the Chancellor announced in his Budget speech the halving of the rates of S.E.T., there was an immediate response by a number of leading multiple food chains and department stores. They all tried to steal a march on each other to get customers into their shops. This is what competition is about. They did not wait for the operative date in July, and in many cases a series of price reductions already has given a valuable lead to die trade.
§ Mr. Prior
I cannot give way. I have already given way quite enough. Time is getting very short.
I know that housewives tend to think that they are powerless to help themselves and powerless to drive a hard bargain. This is not true, and is well brought out by the way in which they regularly beat the food index. The food index is produced as part of the machinery of the General Index of Retail Prices. It measures price changes for what is effectively a fixed basket of goods—fixed in the sense that it naturally cannot allow for the housewife who goes from shop to shop to get a bargain.
The figures for household expenditure, on the other hand, reflect what householders actually spend, and this, of course, reflects the extent to which housewives take advantage of special offers and switch away from seasonally expensive items. In the last few years, about one-fifth of the increases in prices has been avoided by intelligent shopping. Put another way, one-fifth of the effects of rising prices has been beaten. [Interruption.] Hon. Members opposite should take some credit for this, because it was going on during their period of Government.
99 The Report of the National Board for Prices and Incomes bears all this out. Its survey of housewives showed that they are for the most part ready to take advantage of the scope for getting a good deal. This is well illustrated by what is happening with regard to meat. For reasons of supply, beef is now very expensive but pork is relatively cheap. Many housewives have swapped from one to the other. That is good sense. [Interruption.] That is what is happening.
I must also point out to the House the fact that the proportion of total consumer expenditure which goes on food continues to decline. We are now spending a smaller proportion of our incomes on food as our general level of prosperity increases.
Reference has been made to the nationalised industries, and I want to take this up. One of the first things that we did on coming into office was to reduce the postal charges which the previous Government, presumably, had accepted, because in any event they had allowed the stamps to be printed. Those reductions were worth £30 million over a five-year period. The second example is in steel, where we recently halved the British Steel Corporation's suggested range of price increases. This cut will have saved the food and drink manufacturing industry about £2½ million per annum in cost increases of tinplate alone.
§ Mr. Prior
The hon. Member for Norwich, North, who opened the debate, referred to the standard shopping basket which is regularly priced by the Eastern Evening News. I know that this exercise is carried out in good faith, and it will be no surprise to the hon. Gentleman that I have been following its reports carefully during the last few months. My Ministry has found that the increases recorded tend to overstate the overall rise in prices as indicated by the official food index.
§ Mr. Wallace
I have also been checking those prices and I checked a number of them this morning. They are quite accurate. It depends what quality and brand one buys.
§ Mr. Prior
The hon. Member for Erith and Crayford (Mr. Wellbeloved) said a lot about the butchers and he quoted some extremely extravagant remarks, some of which have been made recently by the butchers. All I can tell him is that there is absolutely no case for saying that the increase, in meat prices has been due to our levy policy. The levy policy does not even start until 1st July. It is absolute nonsense, therefore, to say that the levy has had anything to do with the increase in the prices of meat.
The truth is that we are in a situation in which beef is in very short supply. The amount of home-produced beef at the moment is running at only about the level of 1964 and somewhat below the level of last year. At the same time as this has happened, imports of beef have fallen sharply. The Argentine, for example, from which we used to obtain quite large supplies of beef, is now itself having to have meatless days because it cannot find enough beef to feed its own population.
When the levy policy is introduced, it will do no more at this stage than underpin prices to prevent them dropping and causing the taxpayer excessive subsidies. It is Government policy over the next three years to reduce the subsidies paid out to fanners and to see that farmers get their return from the market. I would have thought that to have a situation in which farming does not expand is certainly not in the interest of the housewife. She is having to pay inflated prices partly because of the failure over the past few years of British agriculture to produce more food.
My message to housewives and to hon. Members is that if we have a strong British agriculture, we shall have plenty of food at reasonable prices. I do not believe that in East Anglia or any other part of the country—and particularly East Anglia, where there are low-wage earners—there is any point in denying that for many years agriculture and farm workers have not had a fair chance of achieving a reasonable standard of pros- 101 perity. I believe that the present Government policy is fair to both consumers and to farmers.
§ Question put and agreed to.
That this House, noting the increase in prices of basic foods with the consequent hardship to families in areas of low average wages and increasing unemployment, but not classified as development areas, calls upon Her Majesty's Government to set up an organisation for consumer protection with powers to scrutinise and check prices of essential goods and services.