HC Deb 30 April 1973 vol 855 cc795-803
Mr. Benn

(by Private Notice) asked the Secretary of State for Trade and Industry if he will make a statement on the increases in the price of petrôleum products announced on Saturday.

The Secretary of State for Trade and Industry (Mr. Peter Walker)

This is a matter for the Price Commission which has the duty of implementing the provisions of the price and pay code policy so far as prices and charges are concerned. The Price Commission announced on 28th April that it had approved, subject to certain reductions, applications for price increases for petroleum products submitted by six companies and that these increases reflected the higher costs of crude oil and freight charges.

The circumstances of the companies, including their current pricing policies, vary, but the weighted average of the price increases approved amounts to a shade over ½p per gallon across the whole range of petrôleum products.

Mr. Benn

Is the right hon. Gentleman aware that a price increase that affects everybody in this country, raising the price of top grade petrol to 8s. a gallon and going right through industrial, distribution and export costs, was sufficiently important for the Minister himself to make a statement in the House and not shield behind the Price Commission whose Chairman, Sir Artheur Cockfield is not answerable to Parliament?

May I ask these questions? First, was he himself consulted by the Price Commission? Did he approve the increases, and does he accept any responsibility for them? Secondly, did the oil companies, in accordance with the provisions of the Counter-Inflation Act, submit full details of their price structure, including their transfer pricing, the past, present and forecast profit margins, in order to allow a proper assessment to be made of the request for increased prices?

Were consumers' organisations consulted either by the Price Commission or by the Cabinet Minister who sits in the right hon. Gentleman's own Department? What estimate of the effect have the Government made of these announced increases on industrial costs and on the cost of living over a full year?

Finally, is not the right hon. Gentleman aware that the recent increases in steel and food prices and now petrôleum prices, where there are further forecast increases in every case to come, while wages are tightly controlled, have exposed the Government's counter-inflation policy to be little less than a fraud?

Mr. Walker

These increases were submitted to the Price Commission under the conditions created by legislation passed by this House. The full information was provided, and the Price Commission came to its decision. Under the legislation passed by this House, unless I wish to allow bigger increases than that which has been allowed, I am not in a position to intervene.

As to the effects of this increase on the cost of living, to get it in proportion, which obviously the right hon. Gentleman's question is endeavouring not to do, if all the oil companies—not just six of them—increased the price of their petrol products by ½p per gallon it would have an effect on the retail price index of one-twentieth of 1 per cent., and, if the right hon. Gentleman wants to get it into full perspective, as a result of this increase in the price of petrol for motoring, where the biggest increase has taken place, taking price and taxation increases since this Government came to power, and including this latest increase, there will be an increase of 3½p, whereas on tax increases alone under the last Government it amounted to 9p.

Mr. Edward Taylor

Would my right hon. Friend agree that, as this is the first major price rise, the issue at stake is far more important than ½p a gallon of petrol and is a question of constraints and control of prices? Could the Minister say whether he has had confirmed reports that some garages and companies raised their petrol prices immediately and some by more than ½p per gallon, and could he also say whether he is satisfied with the arrangements for policing these increases? Does he agree that if some garages have jumped the gun and others have raised their prices by more than ½p per gallon, the Price Commission, in consultation with the Minister for Trade and Consumer Affairs, should be seen to take immediate action under the Act?

Mr. Walker

Any increases greater than that permitted or put into effect before approval was given should be reported to the Price Commission, which is making arrangements to see that the addresses of the regional offices of the Price Commission are fully advertised in the appropriate newspapers and other media.

Mr. David Steel

Will the right hon. Gentleman look at the machinery for announcing price increases from the Price Commission in view of the chaotic events of this weekend? Is he aware that different price increases have been charged, some instantaneously and some delayed, and that this is unsatisfactory?

Will the right hon. Gentleman clarify what he said a moment ago? Is he saying that any garage which has increased the price by lp a gallon has acted illegally?

Mr. Walker

I will examine any complaints which are received as to the manner in which it was done this weekend, and if there is anything to be learned I will bring it to the attention of the Price Commission. There are some small oil companies which do not have to apply for an increase but they have to comply with the code itself. It will be seen whether these have complied with the code when their quarterly reports have been examined.

Mr. Bruce-Gardyne

Could we get this clear? Has my right hon. Friend's attention been drawn to the statement purporting to have come from the Price Commission yesterday that those pumps which have put up the price of petrol yesterday have acted illegally? Am I right in thinking that the Price Commission has no statutory authority whatsoever to declare any price increase illegal off its own bat? If so, would my right hon. Friend draw that matter urgently to the attention of the Price Commission so that it does not make statements of this kind again?

Mr. Walker

I do not know of the statement to which my hon. Friend refers. [Interruption] If I may say so, the right hon. Member for Huyton (Mr. Harold Wilson), when he was Prime Minister, set up the IRC which made all sorts of statements which were not made by Ministers. In this particular case Parliament set up the Price Commission to do this job.

Mr. Harold Wilson

Is the right hon. Gentleman aware that when we set up the Prices and Incomes Board all matters of law were dealt with by this House and not by the Board? Its reports were purely for information and were brought to the House by means of a Government order for approval by the House. Will the right hon. Gentleman, not only in the light of the single day's shambles, reconsider and recommend to the Prime Minister, who is not here, that there should now be a change in the legislation to make the Price Commission responsible and accountable to this House in its activities?

Mr. Walker

The Price Commission will be making quarterly reports to this House—[HON. MEMBERS: "Oh."] The first report will follow two months of activity. The actions of the Price Commission were perfectly legal, in the framework of the legislation passed by this House.

Mr. Biffen

Is my right hon. Friend aware that most hon. Members will echo the comments of my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) in saying that, as this is the first instance of the use by the Price Commission of its powers, the House will be naturally jealous to see how they are exercised? Since we are all conscious of our responsibilities as law-makers may I ask him to confirm that unless and until an order is laid, or a notice is served on it, any garage that has been charging the full lp or a ½p is perfectly entitled so to do?

Mr. Walker

This is an application by six specific petrol companies to increase their prices. Their figures were examined. [HON. MEMBERS: "Answer the question."] The legal sanction is on the six companies which submitted their application to increase prices.

Mr. Eadie

Is the right hon. Gentleman aware that he is giving us a foretaste of what is to come in the way that he is answering this Question? Are the Government to shelter behind the Price Commission whenever price increases are introduced so that Parliament and the people will have no say? Is he aware that people are beginning to wonder where this will end? We have had the petrol price increase and insurance premium increases are in prospect. Can he give some assurance to the House that the peoples' representatives will at least be consulted?

Mr. Walker

Except for one period of statutory freeze, under the last Labour Government prices could be increased at any time without Parliament having any interest at all.

Mr. Kinsey

Is my right hon. Friend aware that, while he is arguing about what is right in legislation, the people are worried about prices? While it is inescapable that many world prices have increased, as is the case with petrôleum, does my right hon. Friend agree that the Government have control over taxation? Will they do something to ease motor and petrol taxation?

Mr. Walker

Unlike the previous Government, this Government have not increased petrol tax at all. One control over prices open to the Government is through taxation. When the Labour Party had that control it increased taxation. Petrol taxation is a matter for my right hon. Friend the Chancellor.

Mr. Concannon

Is the right hon. Gentleman aware that when I challenged a garage proprietor this morning about the price increase he said that ½p was for what we had read in the papers and the other ½p was what he was being charged extra for delivery by the oil companies? Will he look into this?

Mr. Walker

The six oil companies concerned have published schedules of their increases. On some of those schedules there is no published increase for domestic fuel oil and other grades of oil. Most have concentrated the increase upon petrol and raised their total overall ½p in that way.

Dr. David Owen

Is the right hon. Gentleman aware that the country will find it impossible to understand that the Secretary of State for Trade and Industry, responsible for a prices and incomes policy, can come to the House and tell us that he has no powers to intervene in such a crucial element affecting prices?

Mr. Walker

It was this Government that brought in legislation—[HON. MEMBERS: "Answer."]—to say that no price increase could take place unless it was the result of certain listed costs and had no effect in increasing the profits beyond a figure exceeding the average level of the best two of the last five years. This control is far more real than anything done by the previous Government.

Mr. Robert C. Brown

Is the right hon. Gentleman aware that the people of this country would be appalled if they could see the frivolous manner in which he has handled this subject? Will he not concede that as the Secretary of State allegedly responsible for the prices and incomes policy he has exposed himself as being about as productive as a neutered tom-cat? Does he not feel honour bound to resign? Before he does so, will he answer the question about whether the 1p a gallon increase is legal or illegal?

Mr. Walker

The increase announced by the six companies is certainly legal. The hon. Member was a transport Minister in the Labour Government yet raised no objections to numerous increases in the price of petrol. He remained in office.

Mr. Leslie Huckfield

What does the Secretary of State intend to do about all those profiteering garages which yesterday were charging the 1p a gallon increase upon old stocks? If the Price Commission cannot deal with a price increase like this what chance does it stand in the rest of phase 2, let alone phase 3?

Mr. Walker

Any complaints about the operation of price increases can be referred to the Price Commission.

Mr. Ronald Bell

Is it not the case that garages, generally speaking, because of their small turnover, are not subject to price control at all?

Mr. Walker

That is so—[Interruption.] It was the position during the whole six years of Labour Government.

Mr. Benn

Is it not a fact, as Sir Arthur Cockfield said this morning, that there is no price control at the pumps and that garages can charge what they like? Can he explain why his Department— because not even the establishment of a Price Commission affects his responsibility for administering this policy—gave no guidance by way of Press statement over the weekend and why the right hon. Gentleman tries to abdicate his responsibility to Parliament?

Mr. Walker

I have not abdicated my responsibility. I wish to see that legislation enacted by this House is carried out properly by the statutory authority. The number of activities that the right hon. Gentleman in particular carried out without coming to Parliament makes him the last person to make such comments. Unlike the previous Government, this Government have brought about a situation when prices increases cannot take place to increase profit margins.

Mr. Harold Wilson

Will the right hon. Gentleman create a precedent by answering a question? If he did not hear the statement by the Price Commission on the radio yesterday, I did. Now he tells us that these garages are not subject to price control. If that is so, what is to stop them putting another 10p on their own profits? Yesterday the Price Commission said that this was "illegal". Will he now tell us whether any garage which put up the price of petrol by 1p a gallon on old stock, for which a price increase had not been approved, was acting legally or illegally.

Mr. Walker

The position as far as—

Hon. Members: Answer the question.

Mr. Mason

"Yes" or "No"?

Mr. Walker

As far as those companies that have a turnover—

Mr. William Hamilton


Mr. Walker

Those companies having a turnover of less than £50 million a year do not have to obtain approval for these increases. They can make increases providing the increases do not increase their profit margins over the specified amount.

Mr. Ewing

May I ask the Minister to show some conversion to objectivity? As the Secretary of State for Social Services has been sitting with a benign smile on his face throughout these exchanges, will the right hon. Gentleman have a word with his right hon. Friend and point out the very serious effect that the measures announced over the weekend will have on disabled drivers who have to use their cars to get around and whose allowance paid by the Department of Health and Social Security will be devalued by what has happened?

Mr. Walker

They will be faced with nothing like the increase of 9p imposed under the Labour Government.