MEAT PRODUCTS (PRICES) (Hansard, 26 February 1973)

§ The Minister of Agriculture, Fisheries and Food (Mr. Joseph Godber)
The reasons for these increases are precisely the same as those for which the Government have been forced to allow increases in other cases, namely, the sharp rise in cost of the various forms of meat involved and the serious decline in profitability of the firms concerned. I have satisfied myself that all these firms are running at very reduced profits and in some cases at a loss. The price rises which I have agreed will require the industry to continue to absorb a significant part of their additional costs.

§ Mr. Buchan
Is the right hon. Gentleman aware that the House and, more important, the people of this country will consider that a shocking statement? Will he confirm that this is the second increase of such magnitude in the prices of these products in two months? How can the Government regard these companies as having special circumstances when the workers of this country are never regarded as having special circumstances—for example, the gas men, the railway workers, civil servants and agricultural workers on £16.50 a week? Will the right hon. Gentleman confirm that the rate of increase is now running at about four to five times that of 12 months ago? Having regard to pensioners and low-paid workers, will he now consider introducing subsidies? This has now the backing, among others, of the National Institute for Economic and Social Research, who suggest using a form of negative value added tax. Is he aware that we have pressed this upon him for some time? According to figures from The Grocer, there has been an increase of 14 per cent. in fresh food prices since the freeze. Will the right hon. Gentleman now remind the other grocer that it is time he fulfilled his at "a stroke pledge", or to get out?

§ Mr. Godber
The hon. Gentleman's facts are not correct. I will seek to correct them for him. In fact, this is not the second increase this year—

§ Mr. Buchan
Within a year.

§ Mr. Godber
In December—before Christmas—there was an increase. Thus, to say that it is within two months is quite wrong. The important point is that this rise in fresh meat prices took place well after Christmas.
This is a situation which must be considered in relation not only to the firms but to their workers. At least one distinguished hon. Member opposite has mentioned to me that the jobs of some of his constituents would be in danger if these prices were not put up. The hon. Member has to look at the matter from the viewpoint of all concerned.
Secondly, in regard to the increase in prices, the figure which the hon. Member gave is utterly wrong. The position now is as I have given it to the House already, that food prices have risen since November 1972 from 22.9 per cent. to 27.4 per 1066 cent. This is the figure to the latest known date. There is no published figure since that date. This is the figure which was published oniy the other day. It is a very much smaller figure than that given by the hon. Member.
The simple truth is that these increases have come about, as this House perfectly well knows, as a result of world shortages, and that we are unable without allocation, rationing and subsidisation to affect this position. Even taking account of this, the purchasing power of the pensioner and the earner has still gone up very much more than the cost of living and the cost of food since the last election.

§ Mr. More
In order that we may see the effect of my right hon. Friend's statement in its proper proportions would my right hon. Friend tell the House what will be the effect of these increases on general food prices?

§ Mr. Godber
The effect of the increase to which the Question refers, on the general prices index as a whole will be roughly 0.075 of 1 per cent. of the cost-of-living index. This is a very small figure. [Interruption.] These are the facts: 0.075 per cent. It is a very small figure, but I would be the last to minimise the difficulties for the housewives of these high prices. But the fact is that the purchasing power is very substantially higher than when right hon. and hon. Gentlemen opposite were in power.

§ Mr. Jay
Will EEC regulations prevent us from subsidising the retail prices of meat products?

§ Mr. Godber
Since we have not considered doing so I do not think the question arises. It would not be a practicable thing to do to control these prices without introducing allocation and rationing, which I do not believe the housewife wants.

§ Mr. Charles Morrison
While regretting that these price increases have been necessary, may I ask whether my right hon. Friend will clarify the position by confirming that he is justifying the increases on the basis that there has been a marked increase, which cannot be absorbed, in the cost of imported materials or costs arising from changes in seasonal trends in supply, or other 1067 reasons, and that these are the criteria which justified price increases by the Labour Government in their own White Paper on prices and incomes? Further, would my right hon. Friend not agree that the introduction of value added tax will have a stabilising effect on food prices?

§ Mr. Godber
Yes, certainly. On both these questions I give an absolute "Yes". Because of the abolition of purchase tax and selective employment tax there will be a net advantage to the housewife in this regard. As for the criteria, my hon. Friend is right. The previous Government would not and could not subsidise these items in these conditions.

§ Mr. Loughlin
While appreciating that there may have to be increases in these food prices to maintain the economic stability of the producers, may I ask the right hon. Gentleman whether he does not feel that it is a bit ironical that he should accept this principle and yet at the same time impose that burden upon the very people to whom the Government are denying increases—agricultural workers, shop workers, food manufacturing workers? Would it not be better, once there is this recognition, to subsidise these workpeople's pay packets? Would it not be better for the Government to recognise that they have to subsidise the wages packets of the workers?

§ Mr. Godber
No. I think the hon. Gentleman is distorting the facts. The position is as I have told the House. The purchasing power of every section of the community is substantially higher than when his Government were in office.
As for the specific categories to whom he referred, they would be entitled to receive their increases in the near future—

§ Mr. Loughlin
No.

§ Mr. Godber
Yes. They will be entitled to receive them in accordance with phase 2, and those increases will far more than cover these very minimal increases in the total cost of living index.

Mr. Edward Taylor
If there is a reduction in the price of meat over the next few months, will the Minister take steps to ensure that the prices of sausages 1068 and pies are reduced accordingly? Second, while most reasonable people would accept that, if there is a world shortage of meat, the price must go up, it is rather more difficult to explain why the price of butter should go up when there is a glut of butter.

§ Mr. Godber
The price of butter has not yet gone up. We all know that, under the arrangements for entering Europe, there will be some increase. That has never been concealed from the House or the public. But as for meat, certainly if the price of meat drops, as I hope it will during the year, we shall look closely at the profits of these firms with a view to requiring reductions as soon as they are justified.

§ Mr. Alfred Morris
Why does the Minister still try to throw dust in the eyes of hon. Members and of housewives? Does he deny that, as was first reported by Alexander Kenworthy, the distinguished agricultural correspondent of the Daily Express, the average family consumed only 11 ozs. of beef and lamb per head in the third quarter of 1972, compared with 14½ ozs. in the second quarter of 1954, when meat was still rationed? Would he now come clean with the House and confirm or deny those figures?

§ Mr. Godber
The distinguished representative of the Daily Express certainly quoted some figures. I think that they came from the National Incomes Survey—

§ Mr. Morris
From the Ministry.

§ Mr. Godber
But the figures that I gave the House when we first debated this matter showed clearly—the hon. Gentleman tried to challenge me on this—that the total consumption of these meats by the average household is substantially higher now than it was then—

§ Mr. Morris
Rubbish.

§ Mr. Godber
It is no good the hon. Member saying, "Rubbish." These are the figures of food consumed by the public as a whole. If he is saying that children should not have meat in schools or that workers should not have meat in canteens, then he is talking nonsense. But that food should be taken into account in the total consumption, in which case the figure is higher now than it was then.

§ Mr. Tom King
While nobody enjoys price increases, is it not a simple fact that, if the Minister refused to grant such increases, in the face of rising raw material costs, the manufacturers might have not alternative but to withdraw certain of these lines? Would not that be much more resented?

§ Mr. Godber
That is true. One manufacturer has already withdrawn two lines and others have protested to me and want to see me because they say that they will have to close down other lines because the increases that I have allowed, they say, will not cover their increases.

§ Mr. Hooson
In view of the continued rise in world prices of meat and of grain, upon which the price of meat is largely dependent, mainly due to the failure of harvests in the Soviet Union, can the right hon. Gentleman foresee any hope of stabilising the price in the foreseeable future without a subsidy?

§ Mr. Godber
If one could forecast the position at harvest time this year, it would be possible to forecast fairly accurately. But the world cereal price position has eased substantially over the past month. Prices have dropped to some small degree. Meat prices are just off the top and are fairly stable. There may be some improvement later this year, but I would not forecast the precise figure.

§ Mr. Buchan
But, even granted the Minister's troglodyte attitude towards subsidies, is it not in order, even within 1070 the confines of the Common Market, to introduce a negative value-added tax, as the National Institute recommends? Would he not now reply to the question of my right hon. Friend the Member for Battersea, North (Mr. Jay). Since the EEC introduced provisions for subsidised butter, before the end of last year, for certain groups, is it not the case that what is good enough for Common Market butter is also good enough for British beef? Would he also confirm, in relation to our entry into the EEC, that, apart from new methods of subsidy, he is in immediate process, from tonight, of unscrambling all the basic support systems which we have had to keep down prices in this country?

§ Mr. Godber
I am sure that the hon. Gentleman's last question is related to the bacon stabiliser, which we shall be discussing later today. I have made clear the position over that and sugar. As for VAT, the hon. Gentleman will not expect me to comment on what the Chancellor will or will not say. That is not a matter within my purview, and it would not be proper for me to comment on it. I have told the hon. Gentleman the facts on food. These increases should not be exaggerated, because the figures that I have given show what a minimal effect they have on the cost of living index as a whole.

§ Mr. Speaker
Order. We have before us two important debates initiated by the Opposition on Scottish affairs.