Prices

HC Deb 18 October 1973 vol 861 cc384-92

1. Mr. Edward Taylor

asked the Minister of Agriculture, Fisheries and Food if he will make a further statement on food prices.

The Minister of Agriculture, Fisheries and Food (Mr. Joseph Godber)

As a result of seasonal and other factors, food prices have been relatively stable during the summer months. Between 22nd May and 21st August, the latest date for which information is available, the food index rose by only 0.6 per cent.

The sharp rise in world cereal prices in the last three months however, has not yet been fully reflected in the index, but it is bound to cause further significant rises in the coming months.

Mr. Taylor

In view of the widespread anxiety in this country and other countries about the trends of food prices, can my right hon. Friend give any indication of hopeful signs that prices may stabilise or come down in the future?

Mr. Godber

If it had not been for the sudden burst in cereal prices, I might have been able to do so. That is the really difficult factor which has emerged in the past three months, and until it has worked its way through it is difficult to see anything particularly hopeful. But forward buying prices for wheat in particular appear to be levelling off, and beef prices are more steady. The price of some protein foods, particularly soya beans, has fallen sharply, and that will help to some degree. But the other factors have to work through the economy, and it would be misleading to say that we shall not have further rises.

Mr. Cledwyn Hughes

What calculation has the Minister made of the effect of the high cost of feeding stuffs on retail prices to the housewife in the shops?

Mr. Godber

The right hon. Gentleman will realise that that is a very difficult estimate to make. I could not put a figure on it, but it is right to give the broad indication that there will be a substantial further rise. I have never tried to hide that.

Mr. Charles Morrison

Does my right hon. Friend still agree that one of the best ways of maintaining stability in food prices is the expansion of British agriculture? He will be aware of the fears being expressed about the possible adverse effect of increased feed prices on that expansion. What action does he hope to be able to take in that respect?

Mr. Godber

There is a Question for my right hon. Friend the Prime Minister on that matter later this afternoon. However, British agriculture has significantly increased production over the whole range during the past year, and we should pay public tribute to both farmers and farm workers for what they have done. Milk producers will have a critical situation over the coming six months, because of the high feed costs. However, the cost of other commodities will be recouped from the market, although pig producers have been having a somewhat difficult time recently.

Mr. Strang

Does the right hon. Gentleman's reply to the original Question mean that the Government are reconciled to a sharp increase in the price of bread, biscuits and other bakery products, or are the Government still prepared to consider subsidising such products, which many people believe would be feasible and justifiable?

Mr. Godber

The Government have given serious consideration to all aspects of subsidies, but we have explained many times the problems that arise with general subsidies. We have a degree of subsidisation for milk and butter. We are perfectly willing to consider these matters from time to time, but against the background of the expected rises we have introduced the threshold arrangements in phase 3.

Mr. David Clark

Does the Minister realise that his answer will be regarded as disappointing by almost everyone in the country, following yesterday's answer by the Parliamentary Secretary which showed that those two countries that did not enter the EEC with us suffered a price increase for food of between only a half and a third of ours? Can he explain why we have had the terrific increase of nearly 40 per cent. in the cost of food since the General Election?

Mr. Godber

I have explained many times the reasons for the rises. There are other Questions on the Order Paper later on which I hope to deal with these matters. The other countries have their own characteristics, which I am sure can be easily explained. But I imagine that they will be affected equally with us by the enormous increase in cereal prices; every country in the world is being affected by that at present.

8. Mr. Thomas Cox

asked the Minister of Agriculture, Fisheries and Food what has been the percentage increase in food prices since June 1970.

13. Mr. Carter

asked the Minister of Agriculture, Fisheries and Food by what percentage the cost of food has increased since 18th June 1970.

35. Mr. William Price

asked the Minister of Agriculture, Fisheries and Food by what percentage food prices have risen since June 1970.

Mr. Godber

I would refer the hon. Members to the reply given yesterday to the hon. Member for Bolsover (Mr. Skinner).

Mr. Cox

Is the Minister aware that the figure he is ashamed to repeat in this House, namely the 37 per cent. increase in food prices, is a scandalous indictment of the Government? Is he further aware that that 37 per cent. increase plus the fall in the value of the pound by about 25p means that food bills for the average family in Britain have gone up by £4.50 since the Government came to power? When will the Government stop making excuses and start to admit their incompetence and get rid of inflation?

Mr. Godber

I am not aware of any of the suppositions put forward by the hon. Member—

Mr. Cox

Are they not true?

Mr. Godber

I would remind him that the position is—[Interruption.] The figure is 37.3 per cent.—[Interruption.] The hon. Member must realise that it is the practice of this House when an answer has been given only the previous day not to repeat the answer. That is perfectly normal. But taking the figure of 37.3 per cent. as the increase in food prices since June 1970, the comparable figures are an increase in earnings for that period of 44.8 per cent. and an increase in pensions of 55 per cent. Therefore, earners and pensioners alike have a substantially higher purchasing power for food than when we came into office.

Mr. Carter

In view of the spiralling costs of food, does the Minister not accept that there is an urgent need for an immediate investigation into the affairs of the commodity markets in London as they concern food? Between June 1970 and June 1973 the commodity index for food rose from 132 to 250, and much of this was due to speculation of a most squalid and corrupt kind.

Mr. Godber

If the hon. Member has evidence to support that statement I should be glad to have it. The Government certainly have no desire to hide any question of anyone speculating in that way.

However, without evidence it is impossible for the Government to act. The significant thing is that if commodities have risen as fast as that over the period mentioned it shows how effective the Government's anti-inflation policy has been because the price of food to the consumer has not risen nearly so much.

Mr. Farr

Will my right hon. Friend indicate, for instance, by what percentage the consumption of certain basic foods has increased over a similar period? Will he indicate how the consumption of meat has gone up in Britain?

Mr. Godber

The consumption of meat over that period has gone up considerably. With regard to the figures given of the food moving into consumption, there were claims made in the Press a week or two ago about meat consumption being down compared with the position which was reached at the end of rationing. I must report that carcase meat consumption is 9 per cent. higher and that total meat consumption is now 36 per cent. higher.

Mr. William Price

Why does not the right hon. Gentleman pack his bags?

Mr. Godber

I shall be happy to pack them and to go and search for food. Unlike some hon. Members, I was doing so during the recess.

Mr. Brocklebank-Fowler

In view of the figures which my right hon. Friend has just given to the House, will he confirm that a smaller proportion of the family budget is now spent on foodstuffs than for a long time?

Mr. Godber

That is most certainly true, and it is borne out by the official statistics. That is not surprising when we consider comparisons with the figures which I gave. In fact, I did not give the most telling comparison of all—namely, the all-items price index. Food represents about one quarter of that index. While earnings have risen by 44.8 per cent. and pensions by 55 per cent., the all-items index has risen by only 28.8 per cent.

Mr. Cledwyn Hughes

Is the right hon. Gentleman aware that his continuing complacency in this vital matter is frightening? How does he reconcile the Government's claim that competitive forces will bring down food prices with the increases and the enormous profit recently announced by supermarket chains? Will he refer the matter to the Price Commission?

Mr. Godber

I really must repudiate the right hon. Gentleman's accusation of complacency. My first answer this afternoon was clear enough evidence of the concern which I have about the rising level of prices. If hon. Members seek to distort the position, it is my duty to give the correct figures to the House. That is what I must do. The Government are willing to consider any evidence of malpractice, but we must have evidence on which to act.

9. Mr. Hardy

asked the Minister of Agriculture, Fisheries and Food how the increase in the price of food during the previous 12 months compares with the highest previous rise for a similar period since his records were begun.

23. Mr. Raphael Tuck

asked the Minister of Agriculture, Fisheries and Food what has been the percentage increase in the price of food for the 12 months to the latest convenient date.

Mr. Godber

Between 22nd August 1972 and 21st August 1973, the latest date for which information is available, the food index rose by 12.8 per cent. The largest increase for a similar period since the Second World War was 15.6 per cent. in the year ending August 1951.

Mr. Hardy

Will the right hon. Gentleman confirm that food prices, which have been supervised by this administration since the election, have been worse than at any time in living memory or recorded history? If he disagrees with that, will he say when, over the appropriate period, they were worse? Further, will he confirm that the Prime Minister fought the previous General Election on a platform of reducing food prices at a stroke?

Mr. Godber

The hon. Gentleman could not have heard what I said. I shall repeat it. I dealt precisely with the point that the hon. Gentleman made. During the last 12 months there was an increase of 12.8 per cent. During the period ending August 1951—a similar period—it was 15.6 per cent., which was substantially higher. Opposition Members have always said that the Korean War caused that increase. In fact, it was because of world conditions. The present situation has also arisen because of world conditions.

Mr. Tuck

What is the use of all the Government's faces—I mean "phases"; a Freudian slip—when prices are soaring? It is all very well to blame world prices, but why do not the Government do something to alleviate the situation—for example, by giving deficiency payments—instead of exacerbating the situation by raising import levies? Is it because President Pompidou will not let the Government take such action?

Mr. Godber

That is not why the Government do not take such action. The price of certain foods—for example, milk—has keen kept steady for the last two years. The position is that we have considered all aspects. If we were to seek to insulate the consumer against the effect of world prices, we should have had to impose an increase of approximately £1,400 million to correct the position over the last 12 months. In phase 3 we have provided a threshold arrangement which, after the RPI has risen above 7 per cent., will take effect as required to safeguard earners' wages.

Sir Harmar Nicholls

When Opposition Members try to excuse the great increases in 1951 because of the Korean War, are not they admitting that world forces were bigger than they could handle? Why do they deny the same position today? Are they not putting forward just a narrow, silly party point?

Mr. Godber

That is the point which I was seeking to make. It is interesting that the Opposition apply an entirely different criterion to rises under this Government than to rises under their Government. They should be honest and admit that world conditions are the cause.

Mr. David Clark

Will the right hon. Gentleman explain, if the increase of 12.8 per cent. in food prices up to August is due entirely to world conditions, why the increase in Switzerland was only 4.9 per cent. and in Sweden 5.8 per cent.? Are those countries not affected by world conditions?

Mr. Godber

I have no information about the countries which the hon. Gentleman mentioned. I suggest that the hon. Gentleman might consider what has happened in the United States, where the rise in food prices has been steeper than in Britain in recent months.

12. Mr. R. C. Mitchell

asked the Minister of Agriculture, Fisheries and Food what has been the percentage increase in food prices since 6th November 1972.

33. Mr. Fortescue

asked the Minister of Agriculture, Fisheries and Food what percentage increase has occurred since November 1972 in the cost of materials used by the food manufacturing industry; and by what percentage during the same period retail prices of manufactured foods have risen.

Mr. Godber

Between November 1972 and, August 1973, the raw materials packaging and fuel costs of food manufacturers rose by 28 per cent. Over the same period, the retail prices of food items mainly manufactured in the United Kingdom rose by 3.5 per cent. while the food index as a whole rose by 11.5 per cent.

Mr. Mitchell

Is not that figure of 11.5 per cent. disgraceful at a time when the Government are supposed to be operating a counter-inflation policy? In view of the right hon. Gentleman's answer to Question No. 8, will he tell us the rise in national average earnings over the same period?

Mr. Godber

The rise in earnings over the same period was 11.8 per cent., so there is very little difference between the rise in food prices and the rise in average earnings. The relative position has remained fairly stable. But what the hon. Gentleman has not noted is that raw material and packaging costs have risen by 28 per cent., while the rise in manufactured goods has been extremely small. This shows how effective the Government's action has been.

Mr. Fortescue

Is not the figure of 3½ per cent. rise in retail prices eloquent testimony to the excellent part which the food manufacturers are playing in fighting inflation? Should not these firms be given every incentive to increase their investment in processing machinery in order to continue their efforts in this direction?

Mr. Godber

I agree with both aspects. It is important that these industries should be given every encouragement, because they are doing an extremely good job under very difficult conditions, which, whatever the Opposition say, are dominated by enormous rises in imported food costs.

Mr. Gwynoro Jones

What did the present Leader of the House mean when he said, three years ago, that the nation and the housewives had been mollycoddled for long enough by a cheap food policy?

Mr. Godber

I cannot recall the precise quotation.

Mr. Jones

He said it.

Mr. Godber

I am not saying that he did not say it, but I cannot recall it. I cannot recall every statement made by every Member of this House. I am not disputing that my right hon. Friend may have said it, but the conditions which have developed since could not have been known by him then, or by the Opposition.

Miss Quennell

Does not my right hon. Friend think it a little odd that when beef prices rise to the farmer we have an inquiry, that when feed prices rise to the farmer we do nothing about it, and that when beef prices fall to the farmer the housewife enjoys no benefit?

Mr. Godber

I note the point, but in fairness I should point out that the Government do seek to do something about it with the farmers at the Annual Price Review, which is the normal time. But I note also the attitude of the Opposition. It is not for me to comment on that, but the Government seek to encourage production here because it is a basic fact that the more food this country can produce the better for the housewife.

Mr. James Lamond

If the right hon. Gentleman believes that everything is going so well, that the people are eating more meat although they are spending a smaller proportion of their wages on food, and that the pensioners are better off than ever before, does he expect these happy electors to flock in large numbers to support Conservative candidates at the coming by-elections?

Mr. Godber

Yes, certainly—as much as they are likely to support the Opposition. But it is necessary for me to reiterate these facts because of the distortions made again and again by the Opposition. It is undeniable that people have a higher purchasing power for food than they did during the whole six years of Labour Government.