§ Question again proposed, That the Bill be now read a Second time.
§ Miss Boothroyd
The point I was about to make was on costing for unit marking or, more to the point, who would be responsible for costing. It does not seem to be mentioned in the Bill. I take it that the cost will fall on the retailer. No doubt my right hon. Friend has considered this and other suggestions.
It has been suggested that the cost of unit pricing can be inflationary. The calculations by one large supermarket group, Fine Fare, show that the simplest equipment to mark goods in its stores would cost about £150,000. It also made the point that the labour content of its store operations would be increased by 16 per cent. and that this would mean a wage cost of over £2 million a year. Those are sizeable sums.
I have other figures in which the House might be interested. They come from the United States where unit pricing is not a statutory requirement, but where some marketing chains have introduced it.
Kroger, a large chain, carried out a study and reported that it cost one-tenth per cent. of gross sales. In other words, it amounts to roughly 10 per cent. of net profit. Kroger says that while that may sound steep, it is not so high as some food men had expected.
Kroger further claims, as do several other chains—I quote from "Business-week"—that 298they can absorb the added cost without passing it on to the consumer".The chairman of Safeways Stores in the United States in a publication entitled "Consumerism"—what a ghastly word!—"Exciting Trend or Exaggerated Problems", referred to costs and reported:Initially there was concern lest it prove a costly drain on profits. These fears proved groundless. In fact, we now feel that the system of unit pricing may now be making an overall contribution to profits. We also find operating efficiencies resulting from the system, such as fewer out of stocks, less labour for re-ordering, less labour for producing price tags and tagging shelves and more accurate pricing.It may be that the firms I have quoted have the assistance of computers which would indeed assist in keeping expenses to a minimum. Such assistance may not be available to industry here.
I hope that the Government have made some estimate of the expenditure involved and that we shall hear about it in Committee. I hope that we shall also hear about measures to prevent these costs being passed on to the consumer and making the legislation counter-productive to what we are attempting to achieve. In recent years, Parliament has imposed extra work on the Weights and Measures Inspectorate, and when these regulations finally emerge—this is according to Clause 6—it will be left to the inspectorate to see that the legislation is properly enforced and carried out. Without that enforcement, the legislation will have no effect whatsoever.
My right hon. Friend will be aware that there is a severe shortage of weights and measures inspectors in many parts of the country. In my constituency there are a chief inspector, a deputy and three 299 others, a total of five qualified staff—exactly the same number as there were 25 years ago. In spite of local government boundaries having been changed, recruiting has not been increased and the strength has not been added to. The number of staff is the same in ratio to population and the area covered. It would be interesting to learn whether 300 consultations have taken place to establish the capacity of the inspectorate to deal with the work load that is involved in this legislation.
My remarks have not been a criticism but have, I hope, been helpful. I hope, too, that the House will give the Bill a Second Reading and that it will have a speedy transition through Committee.
§ 10.16 p.m.
§ Mr. John E. M. Moore (Croydon, Central)
I trust that my initial remarks will illustrate that I have already acquired the first art of a parliamentarian, and that is patience. I hope that the hon. Lady the Member for West Bromwich, West (Miss Boothroyd) will not take it as an unnecessary discourtesy if I do not refer to her speech.
As is customary in the House, I should like first to mention something about my constituency. I do so with some difficulty. I have listened to or read about 81 maiden speeches, and I find that maiden speeches in this House make the British Travel Association's recommendations seem somewhat limited.
We have a rather beautiful country. Proudly representing as I do the urban constituency of Croydon, Central I am somewhat at a loss to compete with the Pentland Hills and one or two other little delicacies. However, recognising that one occasionally owes certain courtesies to the other side, I mention John Ruskin, and I trust the House will understand the pride that I have in Ruskin's recognition of the effect that Croydon had on his career.
He said in 1885 how important Croydon was in his formative years, and in talking about Croydon itself he said:Things modest, humble and pure in peace, under the low red roofs of Croydon, and by the cress set rivulets in which the sand danced and minnows darted above the springs of Wandle.I trust that those hon. Members who have been in Croydon recently find some recognition of the borough.
The incredible explosion that we have seen in Croydon, the excitement of an urban revolution, is based upon a town with more than 1,000 years of history, and to that extent, though it is called by some a mini-Manhattan, the greater humanity of it than perhaps exists in the other Manhattan might have some resemblance to its history and its historical connections.
I shall endeavour to be brief, but there are one or two points that I should men- 302 tion about Croydon and about the people there. Two points are germane to my constituency. The first is in relation to its age. Despite the right hon. Lady's statement earlier in the debate, pensioners form 17 per cent. of the national population according to the latest census statistics. In Croydon, showing the virility of our young community, they form only 13 per cent.
On housing—and I make this point to indicate clearly the recognition that I and many hon. Members on this side have of housing problems—in the nation generally 35 per cent. of the people live in council apartments or houses, whereas in the Croydon, Central constituency that I am proud to represent, the figure is 42 per cent.—in excess of the figure for owner-occupiers.
I would crave your indulgence, Mr. Speaker, to mention a point which is not strictly relevant to the debate but is vitally important to my constituency—the Channel Tunnel. Early decision-making is absolutely important, especially in relation to the awful blight which has been caused to many of my constituents.
I would pay tribue to the previous Member for my constituency, Sir Richard Thompson, who served the House well for more than 20 years, representing in essence the constituency that I now have the privilege to serve. I would comment on his generosity, his kindness, his constant civility and the tremendous help he gave not only to me but, I am sure, to his constituents throughout his years.
I should like to turn, less controversially than some other hon. Members, to the subject of the debate—food. Our national debate on this subject lacks a sense of proportion. The noted economist Paul Bareau quoted figures recently showing that our gross national expenditure last year on food was £9,000 million, while on tobacco and drink it was £6,000 million. Our national debate is pervaded by a terrible sense of immorality. We are so conscious of the proportions in relation to food, but when we discuss this sort of figure in, for example, the Budget Estimates, we find that the wealth area taxes—surtax, capital gains and death duties—account for only 3.9 per cent of 303 the Estimates for 174–75, whereas the revenue from tobacco and drink alone accounts for 10.3 per cent.
A this early juncture in my hopefully lengthy parliamentary career I should like to make a small secondary comment about food. The Chancellor of the Duchy of Lancaster and no less a figure than the Chancellor of the Exchequer have created a fallacious assumption in the minds of many hon. Members. In the discussion of parities, the supposition behind their attack on the floating pound was that it had affected our food prices very unpleasantly. This supposition was thrown out, as most such suppositions are, in very large terms. I felt it necessary to do some detailed examination, since we have all come incorrectly to accept the statement that the weighted devaluation of about 17 to 18 per cent. in sterling terms was responsible for a major increase in the price of our food.
Cereals are at the base of the food price pyramid. I analysed the importation into the United Kingdom of cereals and cereal preparations throughout 1973 and found that over 70 per cent. came from North America, from the United States and Canada. One does not have to go far into the records to check that the rate of exchange between sterling and the dollar between June 1970 and April 1974 remained completely unchanged. The Canadian dollar has been revalued by about 6 per cent. Putting all these figures together, one sees that on 70 per cent. of our imported cereals there was P devaluation effect of only 2.2 per cent.
My main criticism of the tenor of this debate here and outside is that we have adopted an extraordinarily parochial attitude, what I would call a very selfish attitude as an affluent society. We are looking at tactical means of correcting a problem which requires great strategic thought. The events of the last few years have given us the impression that food price changes as well as raw commodity price changes are a very sudden, special and unusual thing. My supposition is that this is concealing a major change, which worries me greatly, about the whole modern world. It is that we are looking at a world in which 1 billion rich give more cereals to their livestock than the other 2 billion poor eat, a world in which 304 two-thirds of the population eat one-quarter of the world's protein. We are looking at a world in which we have created enormous demand for the conversion of cereals by the affluent to meat products not for nutritional requirements but for preferences of taste.
It is thinking on these lines which is vital now, especially when we have an additional negative introduced, the negative of oil prices, which in this instance creates not only shortages but price problems for the production of nitrogen fertilisers. Whom does this hurt and where are the main problems? It is estimated by many that India this year will lose about 7 per cent. of her potential grain crop. She cannot afford that. What we are discussing tonight is short-term palliatives which in no way affect the major discussion which we should be having about where we are going down this rather dangerous road.
I suggested that my remarks would be uncontroversial. I hope that they will be taken in that spirit. I thank the House for its courtesy in allowing me to conclude them.
§ 10.26 p.m.
§ Mr. Arthur Palmer (Bristol, North-East)
It falls to my very great pleasure to congratulate the hon. Member for Croydon, Central (Mr. Moore) on his maiden speech. I do that with special interest as a former Member for a Surrey constituency—Wimbledon. The river Wandle, in which Izaak Walton fished, on its way to the Thames is no doubt a rather different river now from what it was, in appearance at any rate. That river also flowed on the borders of my last constituency but two. With those memories of my Surrey past, it gives me great pleasure to congratulate the hon. Gentleman. He referred to Ruskin, a Victorian gentleman of some literary eminence. It is true that he had a connection with Croydon. He gave his name to the headquarters of the Croydon Labour Party. I most warmly congratulate the hon. Gentleman on his sincere, interesting and informative speech. Hon. Members in all quarters of the House will look forward to his future contributions to our debates.
I intervene in the debate on behalf of the Co-operative Group of Members, which I think is, in point of numbers, the 305 major group of the minor minority groups in the House. In doing so I wish to declare my interest as a member of a co-operative society—indeed, a shareholder. The co-operative movement welcomes the Bill as a genuine and necessary attempt on the part of the Government to control inflation by the use of subsidies to keep down price increases, in key items of food principally. This is a policy to which the Labour Party was committed at the General Election and to which the Co-operative Party was equally committed. If I am a little critical of some aspects of this measure, and bearing in mind the knowledge which the co-operative movement necessarily has of these matters, I assure my right hon. and hon. Friends that this is not intended as a criticism of the principle of the Bill or its general intention. I am concerned only about its application, and perhaps the worries I have in that direction will be put right in Committee, or at least I hope so.
Some of us feel that the Bill should not be considered in isolation from the counter-inflation policy. Some of that which was good in the previous Government's policy is to be carried on, and that is not unreasonable. Some of the effects of the previous Government's actions in regard to the retail trade, particularly stages 1 and 2, are only now beginning to filter down to the lower reaches. Already it is becoming clear that there are many unfairnesses, and in that respect co-operation as a retail trade movement is particularly vulnerable.
Co-operation as a trading principle has application in many areas other than the purely conventional sphere. It can be applied to farming, fishing, housing and architecture. However, the great bulk of co-operative trading is still done in the retail trade and it has a special appeal to those on low wages and small incomes. It is for that reason that the co-operative trade is, to a far greater extent perhaps than the trade of any other section of commercialism, concentrated on food.
Here I wish to refer to a point made by the hon. Member for Southend, West (Mr. Channon), whose speech would have carried much greater conviction if his party had not been so recently in power. The country saw what happened as a result of the Conservative Government's 306 policies and judged them accordingly. He referred to the question of margins. Certain set margins are being applied from 1st April. It is intended to reduce margins in the food by 10 per cent., but trade generally can still operate at a net margin of 1½ per cent. The average cooperative with a large proportion of its trade concentrated on food will be hit very hard by that action. Co-operative societies could find themselves in many cases operating the food section of their businesses at a loss, and they do not have the chance, because of the distribution of their trade, to recoup those losses in other sections of their business. It is a little hard, therefore, for the co-operative movement to discover that the Conservative counter-inflation policy, some of it now being operated by a Labour Government, is discriminating in its effect to the disadvantage of the non-profit-making co-operative trade and to the relative advantage of private trade. Unless it is watched very carefully, that kind of policy can result in every kind of distortion, unevenness and perhaps injustice in its application.
§ Mr. Palmer
I am not all that expert in every aspect of co-operative trade, but I believe that if over any period of time the average co-operative society, and even some of the largest societies, had to operate its food trade at a loss that would have a serious effect on the general financial viability of its business.
These arguments have been put to the Department by the co-operative society business managers. I believe also that at an earlier stage there was consultation with some of my hon. Friends in this House who represent the co-operative interest. But the trouble seems to be that everybody at the Department is now in a tremendous hurry; no one has a moment to lose. I appreciate, of course, the reasons why my right hon. Friend is working in haste. As she said, inflation is world-wide. She is right, and any nation which does not act to control it within its own borders is contributing 307 to world inflation. It is no good any separate nation economy saying, as to some extent the previous Government said, "It is not our fault. It is the fault of world conditions", when, unless action is taken, it is itself adding to general world inflation.
The control of price increases is only one part of the cure of inflation. I would never say that it was the only part. The main part is to improve the efficiency of the productive process. For that reason I was glad to hear my right on. Friend's reference to the continued commitment of our party to growth. If I may be a little critical of some of our own propaganda at the last election, we have tended to lose sight of the sound arguments we put forward in 1964 about the need to increase industrial efficiency and, in turn, growth. Therefore, I was glad to hear what my right hon. Friend said. We are perhaps back on the main road once again and this Bill is part of a larger vision. We shall see.
Holding prices back by measures such as this Bill can be done successfully only on the basis of close and careful consultation with all the interests concerned. It must be done on the basis of bringing everyone in and obtaining their consent. My right hon. Friend said that consultation had taken place with the retail trade, but my information is somewhat different. I am told—and I have obtained this information from the secretary of the research department of the Co-operative Union—that the Retail Consortium Food Committee, of which the Co-operative Union is a member, arranged a meeting with officials of the Department on Tuesday, 2nd April, to discuss proposals to amend the price code. At the start of the meeting they were given a confidential paper about the Prices Bill and given five minutes to read it. The Bill was discussed along with other aspects of the counter-inflation policy. I am told that those present strongly criticised some aspects of the Bill.
The same afternoon a group of about 50 retail trade representatives met officials at the Ministry of Agriculture, Fisheries and Food but under the auspices of the Department of Prices and Consumer Protection. They, too, were given copies of the confidential paper on the Prices Bill, 308 but they believed—this is what the research department of the Co-operative Union told me in all sincerity—that the Bill had already been printed when the consultations were taking place. The Bill was given its First Reading on 3rd April. There is a strong feeling within the co-operative movement that consultation has been worse than inadequate. Everything has been done in too much of a hurry.
I wish to suggest to my right hon. and hon. Friends that more haste may in the end mean less speed. Mistakes made now will take a long time to rectify. The co-operative movement has its own special problems which deserve consideration by a Labour Government. It must be remembered also that the retail trade in the end must survive and give good service. The need to survive and to give good service will continue beyond the present emergency. I hope that my right hon. and hon. Friends have that in mind. If rough, unthought-out methods are in being when the legislation becomes fully implemented, and the result is that there are store closures and reductions in consumer service, the situation of the public at the end of the day will be worse than when the legislation was conceived.
The powers taken by my right hon. Friend in Clause 2 are wide. Powers are not only given to subsidise food, but there are powers to control the price of a wide variety of goods and services. Why has catering been left out? The House will see that catering is given an exemption. Some of us are puzzled why that should be so. There must be some reason, but it escapes me at the moment.
As a friend of liberty, I must point out that I much dislike the retrospective powers which appear to be given in Clause 3(4) of the Bill. By that provision the Secretary of State may declare that something that was legally valid at the time it was done is subsequently invalid. I think that this is going a little far. [HON. MEMBERS: "Hear, hear."] If a price increase or charge has already been implemented, does this mean that a trader has to return to the previous position? If that is the case, it is a situation that no trade unionist would tolerate for a moment: to have a wage increase clawed back. I do not see why a trader, who earns his living either 309 individually or collectively on a reasonable basis of return on capital, should be treated in this way as distinct from other citizens.
§ Mr. Dan Jones
Before my hon. Friend is too stimulated by the hallelujahs on the Conservative benches, may I ask him whether he is aware that some of these retrospective powers can, and quite properly should, catch the profiteers? [Laughter.] If Conservative Members do not know that, they do not know the first thing about the subject.
§ Mr. Palmer
I am not stimulated by Conservative cheers—indeed, quite the opposite, as my hon. Friend knows very well. I feel that these retrospective powers are a mistake. They may catch the profiteers, but at the same time they may catch a great number of honest people. That is the difficulty. Certainly the co-operative societies are among the honest people in this country and they say they dislike these retrospective powers to be taken by the Minister.
My right hon. Friend the Secretary of State for Prices and Consumer Protection, who introduced the Bill, has always been much concerned about the question of human rights. Surely one human right is that to buy and sell at a just price. Those in the co-operative movement believe that there is a moral element in the whole business of trading and selling. To trade fairly is not to be ashamed. I hope that my right hon. Friend will think again on this score.
My remarks have perhaps been a little critical in their application to the Bill's provisions but not as to the broad principles behind the legislation. I welcome the Bill in its essential purpose and I take it for granted that before any orders are made under the legislation, if consultation has not been full up until the present time with the retail trade, particularly with the co-operative movement, the consultation will be very much fuller before the orders are laid.
§ 10.49 p.m.
§ Mr. Timothy Sainsbury (Hove)
I should like to congratulate my hon. Friend the Member for Croydon, Central (Mr. Moore) on his maiden speech. He read the passage from Ruskin so eloquently that I thought for a moment that we were among the "Stones of 310 Venice" rather than the roofs of Croydon. My hon. Friend reminded us all of the needs of the other world in terms of the basic food essentials. We can usefully bear that matter in mind during this debate.
I am glad to be called to speak following the speech made by the hon. Member for Bristol, North-East (Mr. Palmer). I support, from another point of view in the retail trade, much of what he said in his well-justified criticisms of some of the Bill's contents.
I am concerned mainly with Clause 2 and 3, but first I shall say a few words about the other clauses. Clause 1 relates to subsidies. We have heard a lot about the difficulties associated with subsidies, particularly from my hon. Friend the Member for Southend, West (Mr. Channon). It is difficult to define commodities which are undoubtedly basic necessities for everyone. This difficulty has been illustrated in relation to non-foods, but it is also true regarding foods. Milk is one of the few commodities where there can be little doubt that it is a basic necessity and where it is also possible to subsidise the entire range of the commodity.
Bread must be the next most obvious commodity. But here we have already run into problems of whether it is a basic commodity or whether the sorts of bread now being subsidised are the ones which are basic for all consumers of bread, particularly some of the most needy consumers of bread. The exclusion, for instance, of diet or special breads will not please a number of elderly consumers.
There is also immediately the problem of distortion of the pattern of demand. More consumer demand is put on the subsidised element in a commodity group There is also the matter of artificially directing consumers' choice, which carries considerable risk.
The basic items are sold most widely, most effectively and most cheaply by the large stores. Small shops are put at risk by selective subsidies because they will find it difficult, perhaps impossible, to recover the reduced profit by selling other things, and there will be a tendency for the consumer to prefer the large shop for subsidised items.
311 The biggest risk of all, and one which the right hon. Lady has shown herself to be well aware of—I hope she will bear it well in mind in discussing subsidies with the trade hereafter—is the risk of subsidising demand while doing nothing to help supply.
The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams)
Will the hon. Gentleman make clear whether his party is opposed to the idea of subsidisation?
§ Mr. Sainsbury
I was not saying that. I was pointing out some of the difficulties of extending subsidies beyond the most basic commodities, such as milk. Once we go even to a commodity as simple as bread we start to run into major difficulties. The further one goes in providing subsidies the more disruption there is to the pattern of consumer demand, the more danger there is to the small shopkeeper and the more indiscriminate the subsidies become.
Clause 4 relates to price marking. It has already been recognised that this is not as plain sailing as one might expect. There are risks of unnecessarily increasing costs. However, there is one well-known chain store which has been remarkably successful and which, I can assure the right hon. Lady, sells at low prices, and as a matter of policy it does not mark prices on any of the goods on its shelves. This is a way for it to keep its costs down. This has been very successful and popular with a large number of consumers.
There is considerable risk in embarking upon compulsory price marking without careful consideration. Perhaps there could be consultation sufficiently before the event to enable the ultimate decision to be influenced.
A number of reasons have been suggested against the inclusion of Clause 5 in a Bill which is called a Prices Bill. It is offensive to the many old age pensioners in my constituency that at a time of great inflationary pressure there should be included in this Bill—designed to hold down prices—a clause the purpose of which is to abolish the Pay Board. I am sure that on reflection the right hon. Lady will wonder why it was necessary for her to be saddled with this offensive clause.
312 The right hon. Lady has spoken of her desire to obtain the co-operation of all parts of the retail trade. I welcome that. If that co-operation is to be obtained, and I hope it will be possible, there are a number of improvements which need to be made. The hon. Member for Bristol, North-East referred to the illusion of consultation with regard to this Bill. That does not instil great confidence among those in the retail trade. Clauses 2 and 3 give an extraordinary discretion to the Secretary of State. The Bill is vague as to how this discretion might be exercised. Perhaps the most offensive feature of all is that it includes sections which allow retrospective reduction of prices.
The discretionary and retrospective powers are not likely to inspire great confidence among those in the retail trade. We need far more definition of how those powers might be exercised and what is really meant before there can be any feeling that this is not merely political window-dressing. Even more serious, we have heard from the hon. Member for Bristol, North-East of the danger to the financial viability of many businesses from the cumulative effect of one thing after another. The hon. Member talked about the effect of phases 1 and 2 "dripping through". We have some more activities of the Price Commission which are doing more than drip through for the retail trade. Combined with the effects of Clauses 2 and 3, they pose a serious threat to the financial viability of large sections of the retail trade, particularly the retailers specialising in food.
All hon. Members are aware that at times of financial difficulty it is the weakest who go to the wall. Many of the small shopkeepers are necessarily among those with the most limited financial resources. I do not need to remind the right hon. Lady of the vital rôle played by the small shops, whether independent or owned by other sections of the retail trade, such as the co-operative movement, which operates quite a number of such shops.
Those small shops are of real importance to the most needy in the community. The old age pensioner, the disabled, the housewife with young children—people who cannot go very far to do their food shopping and cannot get into the city centre to shop at the large stores 313 —depend upon these small shops. If they find that these shops are no longer there because of the provisions of the Bill they will not have anything for which to thank the right hon. Lady.
I am sure that the right hon. Lady is familiar with the many difficulties associated with Clauses 2 and 3. I appreciate that if we are to have powers for fixing retail prices, necessarily we need to take powers to ensure the display in retail stores of the fixed price, so as to reassure the consumer. But there are many pit-falls associated with these activities.
An average supermarket carries 4,000 lines. Not every customer buys every line on every visit—we should be delighted if customers did—but over a month customers buy a large number of lines. I cannot imagine customers going round the store equipped with a dictionary trying to determine which of the 4,000 lines has a permitted maximum price or range of prices. There has been no reference to quality in the debate—a curious omission if we have at heart the welfare of the consumer. How do we define perishable foods, and how do we take account of the enormous variation in quality? Hon. Members who have sampled the wares of the catering facilities in the House will be aware that not all steaks taste alike even when they are cooked identically. There is great difficulty in describing the quality of perishable food.
Reference has been made to the wide difference in operating costs between various types of store. It may not be appreciated that the difference in operating costs between a fairly efficient counter-service shop and an averagely efficient large supermarket can be as much as nearly twice the total labour costs. That means a difference of perhaps 4 per cent. or 5 per cent. in operating costs, which is a much greater difference reflected through to the housewife's shopping bill than is any difference that might be achieved by the measures in the Bill.
Not only are there different types of store, but within their own organisation groups have widely differing types of store. The co-operative movement, for example, operates hypermarkets—although I am not sure that they are called by that name—and also small corner shops. Sometimes both types of store are operated by the same society. The same pattern is reflected in the private sector. 314 Not only is there a wide difference in the operating costs of various types of store, but the same group may operate various types of store. This raises considerable difficulties in relation to the measures proposed in Clauses 2 and 3.
Nearly all the customers of large stores and supermarkets are also weekly customers of small shops. They may make one or even two visits a week to a large store, and perhaps one visit a month to a hypermarket, but they also make frequent—perhaps daily—visits to small stores. I remind the right hon. Lady of the difficulties of the elderly shopper who finds it difficult to appreciate price differences even when she always goes to the same shop. Elderly shoppers do not take so easily and kindly to change as do young ones.
§ Mr. Sainsbury
Nor to price increases. Do we want to make them still more confused by finding that there is one permitted maximum price in the small shop and another permitted maximum price in the larger shop?
The right hon. Lady spoke of a range of prices. She was kind enough to suggest that I know well how easy it is to determine the appropriate bottom level. I wish that I did find it easy. I could show the right hon. Lady the difference in operating costs even between our large and our largest supermarkets. I would find it strange help to the consumer to set a range of costs and then forbid any group to sell below the lowest price set. Yet, if we are to use the actual practical range of costs, we are going to have a very wide range indeed. This will be very confusing to most shoppers, and both confusing and disturbing to the elderly.
One wonders what is the need for Clauses 2 and 3 if we have the Price Commission and its powers already in existence. Certainly, on Clause 3 this query must be raised even more strongly. Clause 3 must produce the maximum uncertainty in the retail trade, and that will be damaging to the whole trade. Most of all, I think it will be damaging in the effect it has on the small shop.
Clause 3 will affect the small shopkeeper because his prices are going to be contrasted sharply and directly with the necessarily lower prices in the larger store, and inevitably there will be a 315 further drift from the small shops to the large shops, which will affect the financial viability of more small shops. If they go out of business, that will inevitably in turn affect the consumers.
The profits of the larger groups will be continually squeezed, despite the protestations we have heard. This will damage investment. The scale of investment in the retail industry is very large. A single new supermarket can cost £500.000. The money has to be found somewhere or there will not be any more supermarkets. If hon. Members opposite, who are so loquacious, were to consult some of the housewives in their constituencies and inquire whether they like being able to shop in a supermarket they might find some answers in the affirmative.
Let us remember that the entire supermarket industry is a creation of the last 25 years—a great part of it of the last 10 years. I contend that the supermarket industry has brought lower prices, more hygienic shops and wider choice to the consumer, who has thus benefited from investment by the entire retail trade, including the co-operative movement. Of course, we are reassured when we read what the Under-Secretary of State had to say:It must be emphasised that the Government accept the important rôle played by profits and recognise clearly the connection between profits and investment."—[OFFICIAL REPORT, 20th March 1974; Vol. 870, c. 1264.]We are further reassured when we hear the right hon. Lady say that the Government accept the need for investment.
But what do we see in practice? If Clauses 2 and 3 have any meaning, they mean that the profits of the retail trade are going to be reduced below the reasonable levels which are set out under the defined criteria in the Price Code. Inevitably, if those profits suffer, investment and productivity suffer, and the cheaper prices from which in the medium and long term the housewife really wants to benefit will also suffer.
The right hon. Lady has asked for suggestions of how the Bill can be improved. I hope we shall have an opportunity to introduce into the Bill, which has an attractive title, some measure which would help. I suggest some of them now in order that the right hon. 316 Lady can consult her colleagues about them. The first is depreciation allowances for new retail stores. The second is help for the rates on commercial premises and not just for the domestic ratepayer. Thirdly, perhaps we can find a way of making it easier and quicker to get planning permission for new stores. This aspect often affects the consumer. Perhaps we could examine carefully the difficulties posed by high interest rates on the access to capital of small businesses. This is a very serious point because, inevitably, it affects the turnover in small shops, and if there are no people to take up the small shops being sold by retiring shopkeepers we shall have closures again.
Perhaps we could look again at the burden of administrative action. I remember a complaint about this a number of years ago when the Labour Party was last in power. A complaint was made to the NEDC about the number of forms which had to be filled in by the retail trade. After due deliberation, we had a form to fill in about the number of forms that we had to fill in. We have a recent illustration where the Factory Inspectorate has suddenly decided to get in on the act. Deispite the fact that shop premises are inspected and certified under the Offices, Shops and Railway Premises Act, we now find that the Factory Inspectorate, at a time when our fire brigades have more than enough on their hands, is coming back to re-inspect the very same premises and asking for fresh fire certificates for small parts of those premises. It is administrative matters of that kind which we could tackle usefully to help keep down the operating costs of the retail trade, to the benefit of the consumer.
We have a Bill with an attractive title. However, it will not help the producers of much of our food. The farmer will not thank the Government for the Bill. It will be evident to the right hon. Lady, despite her protestations, from what the hon. Member for Bristol, North-East and I have said that the retail trade is not exactly bubbling over with enthusiasm. The small shopkeeper will be even less enthusiastic.
Then we have the consumer. We all have the interests of the consumer at heart. If we did not, we should not be in business for very long. I see for the 317 consumer a temporary short-term advantage in perhaps a small reduction in the prices of some items. But at what cost? Initially, there will be confusion and direction of her choice. Not much later, there will be a very large bill for her to pick up. Inevitably, investment and the viability of the small business will be affected adversely.
What is the reason for the contents of the Bill? We have looked for help to the farmer, to the retailer and to the consumer. We cannot find it. I am guided by the words of wisdom of a very intelligent pipe smoker of considerable fame. He said:When you have eliminated the impossible, whatever remains, however improbable, must be the truth.It was, of course, Sherlock Holmes, and perhaps he provides us with the reason for these clauses. I suspect that the reason is political window-dressing.
§ 11.13 p.m.
§ Mr. Richard Wainwright (Colne Valley)
It will soon become known in the country, because we Liberals will see that it is rubbed home during the Easter Recess, that this major Bill affecting every householder has been brought in under cover of darkness. It was introduced at an absurdly late hour. As a result, some distinguished contributions that we heard earlier will not be reported in the morning papers, and the impression will be given that this has been deliberate.
One can understand the Government wishing to bring in rather furtively a Bill which obviously has not been very carefully prepared and certainly has not been through any new open process of consultation. One wonders what the front legs of the Conservative Opposition have been doing about this piece of timing. Surely they could have made representations that it was not proper that a measure of this sort conferring such wide powers on the Government and bringing in such substantial expenditure—against which the Liberal Party intends to divide the House—should be brought in at this hour. There is bound to be a feeling of conspiracy when one notices how sparse has been the attendance on the Conservative Opposition Front Bench throughout the debate. One gets the impression that there is only a very token opposition 318 by a party which must feel deeply embarrassed by virtually every clause in the Bill.
I regret that the two distinguished contributions, one from each side of the House, by the hon. Member for Bristol, North-East (Mr. Palmer), speaking as a member of the Co-operative Group, and by the hon. Member for Hove (Mr. Sainsbury), on the enlightening aspects of retailing problems today, have had to be made at such a late hour.
Having said that about those two contributions, I should like to add that, less than six weeks from an election which largely centred on prices and pay, the voice of 6 million people who voted Liberal is not heard in the House until a quarter past eleven.
§ Mr. Wainwright
Have no fear, reinforcements always arrive. I mention this to make it clear that the Liberal Party was not consulted about the timing of this Second Reading debate. That kind of thing will not, for our part, continue. We shall ensure that the country is made aware that Parliament is being treated in a contemptible way.
When the Secretary of State for Prices and Consumer Protection was appointed to her Department there was widespread sympathetic comment that the Prime Minister had cast her in a difficult, if not impossible, rôle. Fears were expressed that her distinguished political career might suffer from being put in charge of this extremely difficult Department. So it is already proving. We sympathise that she has inherited the major part of the burden of these absurd threshold agreements which were an open invitation to inflation—almost as serious an invitation to inflation as the avalanche of plastic Access cards for which so many hon. Members on this side of the House were responsible only a year or two ago.
The right hon. Lady is part of a crew who have set to sea in a sieve, and she is the first Minister called upon to get to work with the bailer. At vast public expense she is introducing a set of subsidies which will have only a minimal effect upon the cost of living. In fact, they are designed to help not people but an index.
319 Owing to the circumstances in which the debate is being held the right hon. Lady's speech consisted largely of conventional wisdom—the sort of half truths which are passed down from text book to text book and thesis to thesis. We heard nothing about the strange choice of butter as an item to be singled out for one of the three major subsidies.
When I hold my reporting meeting on the debate in my constituency the first question will be: "Why not marge?" The right hon. Lady was unable to tell us. It is an extraordinary proposition that of the three commodities chosen for this first very expensive experiment butter should be included. I hope that in the reply we shall, at least, have some comment on the alternative to butter which so many of the lower paid in the industrial areas rely upon.
We on this bench agree with the right hon. Lady's dismissal of means-tested subsidies. There we think that she is on sounder ground. But we shall feel bound to divide on the Money Resolution, because we believe that the whole scheme is fundamentally misconceived. The right hon. Lady was unable to say how she intends to make sure that the subsidy fully benefits the consumer and is not largely lost on the way by getting into other people's pockets. She said nothing about the butter and milk that will be inputs into luxury items of food. She said nothing about the milk that goes into frivolous items of expenditure. I hope that in winding up the debate the Minister will clarify how that will be taken care of.
Turning quickly to Clause 2, in view of what we have been saying for months we are glad that at last there is to be a serious regulation of margins and we are to get away from this simplistic concentration on mere percentages.
I come now to the Gilbertian part of the Bill which suddenly switches off prices and indulges in a redundant and unnecessary clause about the Pay Board. Here again, in the distressing circumstances of the debate we have had no clarification of the Government's intentions about replacing the Pay Board by some other monitoring body. Virtually all the academic experts, and some of the more practical people, too, have reached the 320 conclusion that whether there is a so-called voluntary incomes policy, or a statutory one, or a lawyers' paradise, there must be some monitoring body. I hope that in the winding-up speech we shall hear something about what the Government intend to do if and when they summon up the courage to dismiss the Pay Board. Liberals hope that whatever machinery is set up there will be vastly improved methods of consultation.
I conclude with a quotation from the present Chairman of the Pay Board, Sir Frank Figgures. When addressing the Manchester Statistical Society on 3rd April he said:there are very many who are not represented in any meaningful way by the Unions affiliated to the TUC or (on the employer's side) by the individual firms and organisations associated with the CBI…all will need to be in some way consulted.It could, in a modest way, slightly redeem this unfortunate Bill if we could be given some indication of a new machinery of a more democratic character embodying genuine consultation to monitor the particular form of incomes policy on which the Government appear to have embarked. But the Bill is simply an unhappy, although logical, sequel to the decision that the Government took immediately after regaining office to throw statutory controls to the winds and to trust to the frail craft of the alleged social compact. One is bound to hope that the miracle will come off for the sake of the country, but we on the Liberal bench want to take no part in furthering this measure.
§ 11.24 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
I never cease to wonder at the way in which hon. Members of the Liberal Party are able to attract 75 per cent. to 80 per cent. of their parliamentary supporters by the brilliance of their oratory. I wish that I had a similar attraction for members of my party.
I agree with a large part of what was said by the hon. Member for Colne Valley (Mr. Wainwright). Indeed, I agree with it all except for his words about the Pay Board, because to me the only redeeming feature of the Bill is that the Pay Board might one day disappear. However, I confess to not being too sure that that will happen, because if the Pay Board is to disappear there is no need for the clause dealing with it. The necessary 321 order could be laid under the Counter-Inflation Acts and the board could be done away with by Monday.
But that is not what the Government are doing. Those, like the hon. Member, who want to see the Pay Board retained need have no fear. Clause 5 is in the Bill simply to placate those Labour Members and members of the TUC to whom pledges have been given that the Pay Board would be abolished. This is as vital and fundamental a piece of Socialist machinery for controlling the economic indicators of the economy as one could desire to see.
I was interested in the right hon. Lady's economic introduction. She was not too sure of her ground. She protested that the Bill was designed to halt or slow down inflation, but was very fearful of giving way to have any of her points challenged from this side. The whole Bill is based on a bogus economic diagnosis. All that she is seeking to do is to tackle some of the symptoms of inflation. What the Government have done is stick a 14 per cent. inflation sticker on a 15 per cent. rate of inflation. That is exactly the thing that they are stopping in the Bill, and they are doing it here for electoral reasons.
The Bill, if anything, slightly increases the rate of inflation and reduces it not at all. The details are remarkably ill thought out, but it is not them I wish to talk about so much as its economic effects. It tends to take from savings and profit and investment and give to consumption. This indeed is the theme of the Budget and of the Government's whole economic policy.
Let us take the milk subsidy—£275 million in a full year. The strictures that I make about subsidising milk apply to past régimes as well as present—that is nothing new from me. It is of little help to pensioners or to the worst off in the land, and that sum could have done a great deal more good if it had been spent in other ways. But, apart from that, it represents more spending power for all in the population who drink milk because they will pay less for milk and, therefore, will have additional spending power in order to buy other things, thereby bidding up the price of other things and contributing to the rate of inflation.
322 The right hon. Lady reminds me of Lady Macbeth:Come to my woman's breasts,And take my milk for gall, you murdering ministers,Wherever in your sightless substances You wait on nature's mischief!That is the price we have to pay for the election pledges of the Labour Party.
Clause 2 seeks to destroy the profit margins of those who providearticles which appear to the Secretary of State to be necessities normally the subject of recurrent expenditure and significantly affecting the cost of living for persons with small incomes.The inconsistency here is that we go about trying to help these people by erecting particularly strong price controls on those who make the things that help those people. The result is that by destroying their profit margins we stop them investing for the future, thereby reducing the likelihood of their being able to cheapen the goods they produce in future and at the same time causing perhaps some of them to go out of business in the near future. thus making shortages of those very articles where we are trying to help.
When we hear that the Price Commission boasted that it had saved over £300 million from profits last year—I have heard rumours that the figure that it is now to claim that it has saved is some £700 million off prices, for the benefit of consumption—what we are saying is that we have taken out of saving for investment in the future in order to consume it at present. When we add what the Bill will do to shopkeepers and retailers, what has been done to farmers and what is not being undone for the benefit of farmers, we see that the whole of the present Government's philosophy is to make people produce or market and sell at prices which may well be uneconomic. The Government do not care because they hope to have the next election before the chickens come home to roost, before the shortages of supply appear and before the bankruptcies and the distress in the supplying side of industry take effect.
The worst part of the Bill is Clause 3, in which "exceptional circumstances" allow the Minister to reduce prices with-out so much as an explanation. Why has the right hon. Lady not put into the clause order-making powers? Whatever 323 the exceptional circumstances may be, may we not have them put before the House and debated and approved by the House? I very much hope that she will introduce at least a negative resolution procedure so that no one can be picked upon. Indeed, I have the slight feeling that the Bill contains elements of hybridity, because under Clause 3 a single firm can be victimised and can have its prices cut without any reference whatsoever to the House, and it may be bankrupted. If it turns out to be one of the firms less well favoured on the Government benches, we have no redress and nor has the firm. It can be stifled overnight by Clause 3. Let us at least have that increased parliamentary accountability which the right hon. Gentleman the Secretary of State for Employment promised when he outlined his policy on these matters on 18th March.
As I have said, the purpose of the Bill is what worries me, because as far as I can see the Bill is not to beat inflation but is to beat the retail price index, and those are very different things. Indeed, I think that the Government cannot tell the sheep from the scapegoats. This is an attack upon scapegoats. Whether they be land reclaimers, shopkeepers, farmers, grocers, producers or manufacturers, they are made out to be the causes of inflation; they are the culprits upon whom all blame is turned. Yet we all know perfectly well that it is the manufacture of money which is the cause of inflation, and not those who vicariously benefit or suffer from its results.
But, furthermore, we face a crisis in our overseas account which necessarily means that the terms of trade have turned against us to a very large degree. That means that the only way that we can accommodate that is actually to reduce our standard of living. We have either to borrow very heavily or to reduce our standard of living—or we have to suffer worse and worse inflation. But, however, the crisis is to be tackled—and it cannot mean increases for anyone—there can be no more stupid way to go about it than to start off taking from saving and giving to consumption—in other words, making some people actually better off at a time when we should be reducing our standard of living, robbing the saving 324 sector, the seed corn, in order to do so, thereby mortgaging or jeopardising the future; and doing all this at a time of rising Government expenditure which will undoubtedly increase the rate of inflation in the future.
There is no easy way. There are no gimmicks. The Bill is just one more dreary step along the road to deterioration which this Government have taken to even more eagerly than did my right hon. Friends before them. The Bill should be withdrawn, and I shall not support it at any stage.
§ 11.35 p.m.
§ Mr. Dan Jones (Burnley)
For the sake of the record, I must make one matter clear at the outset. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) accused my right hon. Friend of not giving way. He must have known—he was in the House—that that is just not true. In fact, my right hon. Friend gave way no fewer than 10 times. In fairness, I should add that the hon. Member for Southend, West (Mr. Channon), who led for the Opposition, gave way a number of times. I have rarely heard a debate in which the two Front Bench spokesmen gave way so frequently, and it is a distortion to allege anything different.
I support the Bill. I do so challengingly, and I shall give the House some cogent reasons for that support. The hon. Member for Cirencester and Tewkesbury seemed to think that my right hon. Friend could present some sort of panacea after the débâcle left by the Tory Government. He does not recognise, apparently, that it is distinctly possible that this Bill, when it becomes law—I shall do all I can to help it on its way—will produce in the country a climate far better than the climate which the Conservatives produced when they were in power. This in itself could at least lead to an elimination of the waste which we endured—not least, with the many labour upsets of that period.
Opposition Members have not mentioned that factor so far, and neither has any of my hon. Friends, for that matter, but, having been engaged in industrial affairs for many years, I know without a shadow of doubt that if one creates an atmosphere of justice—and the Bill 325 is an attempt in that direction—the response can be very gratifying. The Opposition would do well to get that into their prejudiced minds.
Nearly every Opposition speaker has asserted that the Bill has only one purpose, that purpose, apparently, being to harness political good will. Even supposing that there might be a grain of truth in that, they should be the last people on earth to talk about such purposes. Damn it all—is it not a fact that the present Leader of the Opposition gave a precise pledge in 1970 with that object in mind? Of course, he did. He won that election on the strength of it, but he lost in 1974 because he was not trusted any more.
The right hon. Gentleman made his pledge that he would reduce the rate of price rises, but the figures show that in that period food prices increased by 54½ per cent. I have no doubt about the way people are affected or about the way they are thinking. There is no hon. Member who does the sort of doorstep work that I do regularly. That is the way to get the truth, not just from the Financial Times and the rest. It would do some Conservatives the world of good if from time to time they had these experiences. They would then make more practical contributions to the debate.
The Conservatives have mentioned the difficulties for the manufacturer, the wholesaler and the retailer. They are forgetting that highly responsible businessmen are at this moment reducing prices without any question of subsidies. We do not need to have the vast economic experience that the Conservatives pretend to possess to understand why they are cutting prices. A person with simple practical knowledge and experience knows the answer. These gestures were never made during the Conservative period of Government.
For that reason I am content to believe that in the atmosphere that the Bill can produce we shall see gratifying results, and I hope that that will be so. The hon. Member for Southend, West made a series of charges against my right hon. Friend the Secretary of State based on his criticism of the efficiency of the Bill. That comes ill from a former Minister who presided over the worst housing record in our post-war history. There was a minimum amount of efficiency there.
326 The hon. Member mentioned the significance of bread. Even now, and without waiting for Government measures, master bakers are reducing the price of their bread. Are those people amazing experts or is it that they possess an element of social morality? I wonder which is the case. If they can do it there seems no reason why other businessmen, similarly disposed and trading in a similar way, should not do likewise. I defend that view point against any kind of opposition, whether it is the surreptitious opposition I face now or a genuinely constructive opposition. The grins on some of the Conservative Members' faces would lead one to suspect we were discussing the affairs of a canine society and not the serious subject of the cost of living.
The Labour Government have done remarkable things in their short period of office. We ended the miners' strike, which was deliberately provoked for political purposes. We have ended the three-day working week. We have reduced rents. We have held mortgages, and I think we shall eventually reduce them. For no fewer than 1,500,000 lower-paid workers we have reduced taxes. Before the Opposition say that we have not made serious efforts to reduce prices let them examine those measures.
There has been no mention yet of outright profiteering, There is certainly evidence of it in my constituency. I have evidence of outright profiteering, provided in unsolicited letters to me by constituents. When Conservative Members talk about the retrospective effect of certain clauses, they fail to realise that profiteers are to be found in the country, and we will not tolerate the effects of their practices upon ordinary people. I would expect Conservative and Liberal Members to agree.
I have made the matter a subject of debate in my constituency. I would much rather have debated it with the Chamber of Trade there than debate it here, because I expect its members to defend decency of trading. Otherwise, they must be open to the charge that as long as they are making big profits they do not give a damn about the people whom they are expected to serve. Conservative Members try to impress us by talking about the poor hard-done-by wholesalers and retailers. I should like them to listen 327 closely to the following paragraph of the reply from the traders to me:As traders we categorically refute the accusations of our Members of Parliament"—that is myself. [HON. MEMBERS: "Hear hear."] I do not give a damn for any Conservative Member, any more than I care for those who sent the letter. I believe in one thing—the truth as I see it—and I will express that. The letter continues:and also declare ourselves to be wholly opposed to any form of price control what-soever.[HON. MEMBERS: "Hear, hear."] Fair enough. Conservative Members are showing themselves in their true colours, saying that it does not matter a damn how profits are made, how they affect the people who are supposed to be served, and that those profits can be made without any form of control. That is what Conservative Members cried their hallelujahs about, and I shall remind them of it in the coming months.
I fully support my right hon. Friend. Apart from the Bill, her character is such that she has earned the respect of the House over many years. She has earned the right to introduce such a measure, which is a contribution by the Government to the attempt to solve a problem that has been worrying our people for far too long, one that was almost totally neglected by the Conservatives.
§ 11.50 p.m.
§ Mr. John Gorst (Hendon, North)
I feel almost breathless as I start to speak at this time of the night, and therefore I shall be as brief as possible.
I have no argument about the aim of the Bill in so far as it is determined to alleviate the hardship of inflation on particular elements in the community. With that I have no quarrel. But it is going about it in fundamentally the wrong way. A Prices Bill may well be necessary, but this Prices Bill is totally unnecessary. It seeks laudable objectives such as price stability, the reduction of the rate of inflation and protection of the hardest hit, but I find the remedy which it proposes objectionable. It makes no distinction between those who are defenceless in the face of inflation and those who are able to fend for themselves.
328 It is no defence for the right hon. Lady to say, as she said on 1st April when I asked her a Question, that, in effect, indiscriminate subsidies are perfectly all right because the previous administration subsidised milk and the nationalised industries. Once subsidies move into more essential foods and more of them, the argument must no longer be about who did what, when and why but how we shall find the money to do what is now proposed.
The scale and scope of the changes which are undoubtedly contemplated, with £700 million put aside, change the nature of the problem entirely. The right hon. Lady told me when I intervened in her speech that she was going to deal with the matter which I raised. I am sorry to say that she did not do so. I wanted to know the proportion of people at various different income levels, and particularly those that she identified. It is only when we know exactly what those levels are that we can establish the size and extent of those who have a real need for support and whether it is feasible to have indiscriminate subsidies or selective subsidies. When the right hon. Lady decided not to deal with that matter, it could only be assumed that she had not persuaded herself that the case for having selective subsidies has not been established.
I criticise the Bill because it seeks to do the right thing with the wrong methods. If I were to summarise my objections, I should say that it is indiscriminate, ungenerous, doctrinaire, hypocritical, profligate, dangerously ineffective and effectively dangerous.
§ Mr. Gwilym Roberts (Cannock)
Will the hon. Gentleman explain how a Bill of this type is indiscriminate? Surely he accepts the simple statistic of fact that 1p on the loaf is a far greater contribution to the person at the lower end of the income range than it is to a person at the top? That is what makes the Bill discriminate in favour of the lower paid in the community. It is not an indiscriminate measure.
§ Mr. Gorst
If the hon. Gentleman had waited I should have made that my next point. If we were to shower fertiliser from an aircraft here, there and everywhere to those in need and to those who are affluent, minuscule crumbs of 1p for those 329 in real need and senseless subsidies for the rich, the fertiliser would be spread so widely that it would be meaningless for those in real need.
The right hon. Lady in her Bill should have been discriminating and selective. She should not have tried to subsidise so widely commodities such as bread and milk. She should have subsidised the pockets of the people who require help and identified that need so that people would have the money with which to pay the prices, rather than seeking to drive a large number of retailers into possible extinction.
I believe that the Bill will be dangerously ineffective. We all recognise that it is very much a ploy, an item in the powder compact with which to sweeten the faces in the TUC. We all know that cosmetics, particularly face powders, have a sweet smell but not much substance. This is precisely the nature of the Bill: it is all window-dressing, as are all cosmetics, but at the end of the day whom will it benefit? I repeat that it will be dangerously ineffective because it will distort the market and will reduce the market's efficiency. Once we have dealt with the anomalies, discrepancies and inconsistencies, it could well wipe out a large number of small shopkeepers.
Unless the Secretary of State has a boundless magical command of language, I believe that the intricacies of definition will be enormous, the errors of interpretation will undoubtedly be legion, and the problems of administration will be prodigious by any standards.
I believe that the powers conferred by the Bill will lead inexorably to a drift—not to lower prices but to maximum prices, accompanied by a minimum of competition through a diminished number of retail outlets. We all know that Socialists in the House will not give a damn. They will undoubtedly applaud the dislocation of a free market and the turning of profit-making into loss-making—a compulsory lurch towards the millenium which they regard as a rational concept. Some Labour Members will undoubtedly be laughing all the way to Moscow.
§ Mr. Gorst
Clearly, the response from the Labour benches shows that there must 330 be at least some element of truth in what I am saying. Unless the Government are prepared to look much more closely at the imposition of selective subsidies wherever there is a proven need for them—or, alternatively, unless they deal with the matter on the basis of those with a real need being given more cash with which to meet rising prices, I shall not find it possible to support this type of Bill, let alone one that seeks, quite irrelevantly, to abolish the Pay Board.
§ 11.58 p.m.
§ Mr. J. Bruce-Gardyne (South Angus)
I am not sure that I would go quite so far as did my hon. Friend the Member for Hendon, North (Mr. Gorst) in expressing enthusiasm for at least the purposes behind the Bill, but as I found it difficult to find any enthusiasm for the purposes behind rather similar legislation passed by the Conservative Government, the right hon. Lady the Secretary of State for Prices and Consumer Protection will not expect me to give an overwhelming welcome to the Bill.
I, like my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), was interested in the right hon. Lady's introduction to the Bill and I beg her to go back and read what was said by her right hon. Friend the Chancellor of the Exchequer in his Budget speech. She will find that what she said and what he said about the conditions of corporate liquidity was completely inconsistent. We all realised, listening to the Chancellor of the Duchy of Lancaster on the last day of the Budget debate, that the Government were becoming scared about what they were being told about corporate liquidity, and there has been further evidence of that today from the right hon. Lady. She should not claim, because it is not true, that what she said was directly consistent with what the Chancellor of the Exchequer told us in his Budget Statement. I beg her to reexamine both propositions.
The Bill has four principal propositions, as I see it. First, there is the provision for indiscriminate subsidies on food, up to £700 million. Secondly, there is provision for price fixing on a wide range of goods, regardless of availability or cost to the suppliers of the goods. Thirdly, there is provision for a decision by the right hon. Lady, sheltering behind the extra-parliamentary posture of the Price 331 Commission and thereby greatly extending the absence of proper parliamentary control over the activities of the Price Commission, which was greatly criticised by her right hon. Friends when in opposition, as well as by some of us on these benches. Fourthly, there is the wonderful provision in Clause 5 to convince the right hon. Lady's back benches that the Government are proposing to do something which they are already totally empowered to do under existing legislation, to fulfil their election pledges about the Pay Board.
I do not think very much of the attendance of the right hon. Gentleman the Secretary of State for Employment in this debate. In days gone by he used to tell us a great deal about the vital importance of the Chamber as the centre of parliamentary activity, but he has not paid it much attention during discussion of a Bill one aspect of which lies entirely within the responsibility of his Department.
I turn to the proposals for open-ended food subsidies. I confess that if I had to choose between open-ended food subsidies and open-ended subsidies to the nationalised industries I would choose open-ended food subsidies. I do not believe that open-ended food subsidies have the appalling distortionary effect on investment decisions and allocation of resources which open-ended subsidies to nationalised industries have. Neither do I think that open-ended food subsidies have the effect on the pattern of wage negotiations within an industry affected directly by subsidisation that the subsidisation of nationalised industry prices has had.
Having said that, I believe that all the other objections about food subsidies are just as valid as the objections about subsidies for prices in nationalised industries. There is, for instance, the indiscriminate nature of the subsidy and the difficulty of climbing out of the position of subsidisation into which we dig ourselves deeper and deeper. I refer to what my right hon. Friend the Leader of the Opposition said about food subsidies a year ago at Sidcup. He was quoted as saying:The difficulty about a massive system of subsidies…is that they would be very expensive and not very effective. They are expensive because subsidies go to those who do not need them as well as to those who do.332 I can only say amen to that and hope that it remains the policy of my party whatever action my right hon. Friends or hon. Friends may adopt in the Lobby.
This is just one more example of the increasing propensity of successive Governments to seek to bribe the electorate with its own money. The hon. Member for Burnley (Mr. Dan Jones) talked about how these subsidies would be of such benefit to the poorest members of the community. We all know that the vast majority of families who will receive these subsidies will be paying for them in taxation. What we are doing is saying that we will take from people with one hand and give them back their own money with the other, but in ways which the civil servants dictate, so that we may say "It is good and proper for people to buy a large loaf. We will subsidise that. But the small loaf is improper. It may even be fancy. It could even be continental! At no price will we subsidise that. That is the sort of purchase which no respectable family in the land would make."
This attempt to shop around by the civil servants on behalf of the housewife will not bring the electoral rewards the Labour Party seems to imagine and which, perhaps. some of my hon. and right hon. Friends fear it might.
I turn to Clauses 2 and 3, where we see the remarkable extension of the authority of the Price Commission to extend the system of arbitrary price fixing and even, under Clause 3, to chuck its own rule book out of the window. Here I refer briefly to the amendment standing in the names of a large number of my hon. and right hon. Friends and myself, referring to the impact of this on corporate liquidity. A number of my hon. Friends, and the right hon. Lady, have referred to this.
The right hon. Lady referred to the representations of the CBI on this point. We have all studied these with great interest. There is no doubt that the CBI is representing a serious case. I cannot help feeling that sometimes the CBI representations might be more opportune if it were to choose a different spokesman. To get Mr. Campbell Adamson to attack propositions for fixing prices is a little like hiring Casanova to denounce adultery. Who started it? It was Mr. Campbell Adamson in July 1971 who 333 launched the whole lunatic exercise with his 5 per cent. scheme of price control. If the CBI wants to carry conviction it is about time that it got a different spokesman.
We must examine a little more closely the ingenuity of the operation of Clauses 1, 2 and 3 of the Bill. I draw the attention of hon. Members to a fascinating report in yesterday's Times about the confrontation between the bread manufacturers and the Price Commission. The report said that in its negotiations with Associated British Foods and Rank Hovis MacDougall the Price Commission was refusing:to accept officially that bread was being sub-sidised. Companies are therefore making parallel pre-notifications. One includes the easing of costs achieved by the subsidy while the other is framed as if no subsidy exists.The report goes on to describe how the Price Commission connived, and that is not too strong a word, with the right hon. Lady to cheat the bread manufacturers in such a manner that bread subsidies could be halved by deferring decisions to the last possible moment and then making a cut for which there was no evident justification.
§ Mrs. Shirley Williams
I am bound to ask the hon. Friend to give far greater evidence for that statement than he has yet presented. I profoundly resent it. There is no truth whatsoever in it.
§ Mr. Bruce-Gardyne
I have no doubt that the right hon. Lady read the report in The Times. I was about to say when she intervened that The Times concludes that the right hon. Lady "hotly denied"—and this perhaps meets the point she seeks to make—that she had put pressure on the Commission".I was about to say that I entirely accept her denials, because no pressure is needed. Sir Arthur Cockfield is her poodle, and it is a sad commentary on the career of a distinguished public servant that he should end his days in a public rôle as the plaything of a Minister who is playing politics with prices. The Price Commission is manipulated and the cost of the bread subsidy to the Treasury is blunted.
Where will the right hon. Lady turn next? What are we to read into Clause 334 2(2)? There have been various speculative comments on this, and I will hazard a few guesses. I think that she will probably exercise her powers under Clause 2(2) to control the price of mushrooms and pantie-hose. Although my hon. Friend the Member for Southend, West (Mr. Channon) said that the powers would not be used against prices which are elastic, I think that pantie-hose might yet feature in an early application of these powers. I do not think that peaches will, or prunes, and, as a bicyclist, I am sad to say that I do not think that pedal-cycle tyres will either. I make these prognostications because the first group of items appears in the retail price index and the second does not. Clause 2(2) will be used to manipulate the retail price index. That is not hard to foresee.
What will be the effect of prolonged and intensified price control? Essentially, there will be two effects, one on the availability of supplies and the other on employment in the industries affected. In the last few months we have seen how the activities of the Price Commission have driven some commodities off the counters of shops because it is no longer profitable to sell them. In the months ahead we shall see more of this. It may, indeed, be that the right hon. Lady will cause the entire retail price index to disappear, and I suppose that that will help us with the problem of the threshold increases.
The other impact that these activities will have is that goods that might be sold at home, even at a profit, will be diverted to export markets where there is no profit margin control and where exporting is at present extremely profitable. To cite one example, the export of earth-moving machinery increased in volume terms by 90 per cent. in the first 10 months of last year, while the import of earth-moving machinery increased by a similar amount. That demonstrates in classic terms how the effect of the Price Commission's activities—which the right hon. Lady wishes to extend—is to divert goods which we require for the domestic market to the export market, so that they or similar goods have to be reimported. That may be good for the empire-building activities of the Price Commission—and it is the fastest growth industry in 335 the nation today—but the effect on the balance of payments, to put it mildly, is perverse. I believe that we shall see a great deal more of that before we are through.
Then there is the effect on employment. Here, we do not need to read the crystal ball; we can read the book—once again, The Times. We are fortunate to be able to read in it the comments of a lady known to some of us and highly respected as a distinguished journalist who happens herself to be a member of the Price Commission—Miss Sheila Black. She wrote a long article in The Times in which she took as her text the closure of the Scottish Daily Express and the Glasgow Evening Citizen. She wrote:The Price Commission has come in for its share of blame for the death of newspapers. The code is hard on newspapers, it is true. But the main trouble is that newspapers started the freeze era with their advertising rates and their cover prices artificially low…Putting it briefly, a company has to suffer before it can get relief…She described how increased costs have to be claimed in arears, quoting with approval the Managing Director of the International Publishing Corporation, Mr. Roberts, who described the activities of the Price Commission in this context as a "passport to bankruptcy". Yet what does Miss Black have to say about the activities of the commission? Merely that it is "obeying the rules". This is reminiscent of Hillaire Belloc's lines about doctorsWho murmured as they took their fees, 'There is no cure for this disease'.We have to be grateful for Miss Black, who might be described as a poacher turned gamekeeper but is allowed from time to time to do some moonlighting as a poacher and give some illumination of the murkier corners of the body of which she is a distinguished member.
I would also draw attention to the way in which the right hon. Lady is extending the extra-parliamentary powers and authority of the commission. I wish she would re-read what her right hon. and hon. Friends had to say during the Committee stage of the Conservative Government's Counter-Inflation Act. The present Secretary of State for Industry said:The second issue is whether intervention is to be accountable to Parliament. I imagine that the Opposition"—336 then the Labour Party, of course—will be able to enlist the support of the Liberals and perhaps that of some hon. Members opposite who, whatever they may think about the merits of intervention, will want to see any such intervention made responsible to elected Members of Parliament.The present Financial Secretary to the Treasury said:These men and women"—members of the Price Commission, whose powers the right hon. Lady is now extending—will be making law, day after day, every day, and we shall have less control over them than we have over the bureaucrats in Brussels." -[OFFICIAL REPORT, Standing Committee H, 5th February 1973; c. 23 and 99.]That is what right hon. and hon. Members opposite said last year. This year they are mute as the right hon. Lady extends still further the authority of this extra-parliamentary body.
On Clause 5, I shed no tears about the prospect of the demise of the Pay Board. The only tears I shed are for the one vote which, regrettably, I cast for its existence in the last Parliament. Enough has been said about the complete irrelevance and bogus nature of Clause 5, which is not needed to give the Government any power they require. But I say to the right hon. Lady and the Secretary of State for Employment that if they must include Clause 5 they had better hurry up and use it.
I urge the Government not to kid themselves. Within months, if not weeks, the great and good of the Civil Service establishment, the William Armstrongs and the Frank Figgures, will have them by the short hairs, and then they will find that they are not allowed to disband the Pay Board and that, if they have done so, they will be required to resuscitate it. My advice to the Government is to use their power quickly if they intend to use it at all, and that we shall be interested to see.
Before we proceed to give a Second Reading to the Bill we must have some light shed upon the present activities of the Pay Board. The board is getting itself into a considerable pickle in a number of directions. Right hon. and hon. Members on both sides of the House may have been interested to read of its activities in the case of English China Clays, where a company with excellent 337 industrial relations appears to be poised on the brink of an industrial dispute, where management and employees are on the same side, and where the Pay Board is pushing them over the edge.
I deplore the fact that the Secretary of State for Employment is not participating in the debate, because, above all, I want to hear what the Government propose to do in what is perhaps the most difficult of all the dilemmas facing the Pay Board at present. It is the situation of firemen in Glasgow Corporation.
In December a pay award was agreed with the firemen on a national basis amounting to upwards of 19 per cent. —substantially above that which was considered excessive for the coal miners and way above anything that was paid to any other group of workers in the country. Nevertheless, in its wisdom the Pay Board decided that this was within the limits of phase 3. Perhaps it was afraid that its voluminous files in Page Street constituted a fire risk.
In the case of the Glasgow firemen an extra sweetener was added in the form of a travelling allowance. Since then, with a good deal of prompting from one or two of us, the Pay Board has been gingerly moving towards making up its mind what to do about this. At the end of February, after sitting on it like a broody hen for weeks, it announced that it was under the impression that perhaps the travelling allowance was in breach of phase 3 and that it had it in mind to issue a restricting order in the middle of March. The middle of March came and went, and there was a deafening silence from the Pay Board.
Eventually, by dint of putting a Parliamentary Question inquiring about the dilatoriness of replies to hon. Members from the Pay Board, I elicited a reply from Sir Frank Figgures this week. He told me:The Board has not yet issued a restricting order against Glasgow Corporation but it has received representations from the Corporation and the Fire Brigades Union. You will appreciate that the Board has to take a number of circumstances into account in reaching decisions about the issue of restricting orders and the possible recovery of past over-payments.Yes, indeed, and the first and foremost amongst those circumstances that it has to take into account is the sheer lunatic impracticability of attempting to block a 338 payment which a group of employees in Glasgow has already been receiving for almost four months, let alone trying to recover from them what they have already been paid.
We cannot sweep this under the carpet. We must know what the Government propose to do. We have waited too long. The only sensible solution is for the Secretary of State for Employment to exercise his powers of discretion, as he did in the case of the miners, to resolve the impossible situation into which the board has got itself.
I refer finally to what my hon. Friend the Member for Cirencester and Tewkesbury said about the consequences of this legislation. I am not certain that I entirely share his analysis, because, as I see it, the most likely consequences of this legislation are, first, to create unemployment and, secondly, to remove goods from the shops altogether. I believe that those two consequences will increasingly go together.
I think that what happened to the Scottish Daily Express this spring and to the toilet rolls last autumn are pointers to what will happen to a wide variety of goods and employment as a consequence of this legislation. If I am right, it is possible that the ultimate consequences of the Bill may indeed be to abate inflation—not in the manner that the right hon. Lady has in mind but by adding to all the factors that the Government are gathering together now to generate, perhaps in 18 months, a slump which most certainly will cure inflation.
§ 12.26 a.m.
§ Mr. John Biffen (Oswestry)
My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has made yet another moderate and sustained critical speech on the philosophy and practice of price control. I shall in due course turn to several of the points that he elaborated.
At the outset I should like to align myself wholeheartedly and without reservation alongside the hon. Member for Colne Valley (Mr. Wainwright) in deploring the arrangements that have surrounded this important debate. The Liberal Party may feel that it was dealt with somewhat scurvily over the procedural matters on the final day of the debate on the Queen's Speech. I hope 339 that it will be encouraged, from its experience on that occasion, to probe ways in which the House of Commons can repossess some better control over its affairs, particularly in circumstances where an executive no longer commands an automatically assumed majority in our debates.
I think that today's proceedings, where we have had one deplorable closure moved and where we have a debate of this significance and importance proceeding at this hour, indicate that there is scope for fairly aggressive parliamentary gamesmanship which I hope may be exercised by those, including the Liberal Party, who believe that there is an important rôle for the House of Commons to play. The rôle of Parliament in this piece of legislation, which touches intimately upon the relationships between the House and the executive and statutory bodies, such as the Pay Board and the Price Commission, is truly at stake.
I turn now to the main economic elements of the Prices Bill. For a measure which is sliding through in the dead of night it has precious few friends. My hon. Friend the Member for Hendon, North (Mr. Gorst) thinks that it is totally unnecessary. His strictures have tended to be among the more moderate of the curses that have been laid upon it.
With whatever degree of enthusiasm we address ourselves to this topic, we at least are constrained to observe the canons of realism referred to by my hon. Friend the Member for Croydon, Central (Mr. Moore) in such a striking and agreeable maiden speech, for so much of the argument and of the contentiousness of this legislation is that it is a flight from realism. It is a flight from realism when the national situation all too much demands that we should face the circumstances, disagreeable though they be, of inflation which is edging towards Latin-American rates of intensity.
First, my objection to Clause 1 is that I do not believe that subsidies fight inflation. The case was made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), but again if I may, in a most informal fashion, strike a friendly note with the hon. Member for Colne Valley, I thought that he was remarkably perceptive when he 340 talked about the clause being more concerned with fighting the retail price index. There is a difference between a contest over the retail price index and a contest over inflation, for one of the consequences is that we shall have debates of an almost medieval scholastic variety whilst we try to demonstrate whether subsidies on electricity have a greater or lesser impact on the retail price index than subsidies on milk.
What we know is that progressive subsidisation very often leads to a deterioration in the quality of service that makes the measurement of the retail price index itself increasingly suspect. That is something that can be tested in the experience of almost every hon. Member who has to use public transport in London. The price has remained constant, but the service has deteriorated. In saying that I cast no blame whatsoever on the employees of the public transport services in London. It is one of the consequences of the financial constraint that is placed upon public transport.
My fear is that when public expenditure is assayed at the accelerating scale that is envisaged in legislation of this kind it is all too likely to be found coincidental with the Budget deficit, and that is what we find in the circumstances of today, where the £700 million contained in Clause 1 is at the same time as a Budget deficit of £2,700 million.
The House would do well to dwell upon the wise words of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) when he was still in Government and when he spoke in January of this year in the somewhat more congenial clime of the London Hilton Hotel. He said:The Government cannot escape responsibility for commercial policy and the exchange rate which has an impact on domestic costs. Nor can the Government avoid responsibility for maintaining the right fiscal and monetary balance.The charge that will be levelled, and levelled increasingly, will be that the policies are being conducted in circumstances that deny that correct monetary and fiscal judgment.
I hope that the coterie and the cosiness that are developing are not pressaging a second gag today, because I warn the Government that there are many pertinent and extended arguments that 341 could be made on the Money Resolution. I hope that we may be pre-empted from having to resort to strategems of those kinds to show that Parliament is not yet totally dead, bound and gagged at the will of the executive.
§ Mr. Biffen
I am sure that the hon. Member for Carlisle (Mr. Lewis) is itching to make his own persuasive and long-awaited contribution. Heaven knows that the Bill has few friends. I do not wish to confine the hon. Gentleman to making interruptions from a sedentary position. I shall foreshorten my remarks so that he can give the House the full and wide-ranging contribution that I know he wishes to deliver.
If there is a second reason, particularly in the context of Clause 1, why I find this legislation unacceptable, it is that transfer payments of this variety can give effect to certain social value judgments and, therefore, can be an objective of a kind of policy that has in its connotation the social compact. Transfer payments of this kind are particularly inappropriate for trying to pursue social objectives.
If one is determined to expend sums of money of this magnitude on social objectives, it is far better to use the system of cash benefits that is available either through retirement pensions or through family allowances, along the lines that were advocated in an admirable maiden speech by my hon. Friend the Member for Eastbourne (Mr. Gow) and have been long beloved of my hon. Friend the Member for Kensington (Sir B. Rhys Williams). They are automatically subject to the one means and needs test which is widely accepted; namely, income tax itself.
My hon. Friend the Member for South Angus said that one consequence of subsidies of this character is that they have a corrosive and harmful and debilitating impact upon the industries affected. I agree that if one were making a blacklist of this kind of payment, subsidies to the nationalised industries are marginally more offensive than the food subsidies in the Bill. But he was a shade generous even on that score to the Bill.
342 One might assume that the Milk Marketing Board would welcome a milk subsidy which would increase liquid consumption, according to a parliamentary answer, by about 30 million gallons a year. But not so. The board issued a statement, following the Government's announcement, under the rubricMilk Marketing Board Reaction to New Milk Subsidy",in which it said:This makes the relationship between the retail price and the true cost of producing milk even more unreal than it is at present. With milk production in decline at present, any large increase in demand for liquid milk will only accentuate the current difficulties of the dairy manufacturing trade and endanger future supplies of butter and cheese.That immediate response shows the distortions which will result for manufacturing industry, which will be to the longterm detriment of consumers.
Clauses 2 and 3 also contain, in their own ways, provisions inimical to the good ordering of our domestic economy. The price control—either the direct ministerial control as sought in Clause 2 or the enhanced control through the Price Commission which is sought in Clause 3—are attempts to direct the money flow in the economy to the disadvantage of corporate profits. That is the only possible interpretation of the intent behind those two clauses.
There are grievous and dangerous trends in corporate profitability. I was going to quote from an editorial in the Financial Times, but under the strictures of the hon. Member for Burnley (Mr. Jones), who clearly prefers the doorstep wisdom that he acquires in his capacity as a Member of Parliament in contrast to what is to be read in the Financial Times, I will not quote that evidence. But I will quote the evidence proferred to the House by the hon. Member for Bristol North-East (Mr. Palmer), who, speaking from his experience of the Co-operative Society, knows only too well the dangers to the levels of profits in the food manufacturing and distributing industries in this legislation and the adverse impact that that can have upon investment in those industries.
Clause 3 provides for the most wide-ranging powers for the Price Commission 343 and the Secretary of State. The very phraseology is daunting:If…there are exceptional circumstances justifying intervention…the Secretary of State may direct that the powers conferred on the Commission by section 6 of that Act shall be exercisable…".The powers in Section 6 of the Act make it clear that the agency will be operating under the guidance of the code. In the operation of Clause 3 of this Bill, will these "exceptional circumstances" be subject to some broad guidance given within the code, or will they merely be something which is a hatch between the right hon. Lady and what my hon. Friend the Member for South Angus called "a poodle"?
These are matters of great significance not merely for industry. A great deal of the debate has turned upon whether or not there have been adequate consultations with the moguls who comprise trade associations up and down the country. I am very concerned about the rôle and responsibility of this House in these matters. When the right hon. Lady sought to justify the parentage of Clause 3 she referred to paragraph 6 of Schedule 2 of the Counter-Inflation Act 1973. That is precisely the paragraph used by her right hon. Friend the Secretary of State for Employment to validate the miners' pay settlement. It was done in such a way—I make no objection because it was the discipline implicit in the Act, and the right hon. Lady knows that I was no warm friend of that Act—that it meant that there was no requirement on the Government to come to the House and say "The miners' pay settlement has been concluded on these terms. We know that these are terms of major significance and that the settlement is one of major significance to the economic affairs of this country deserving of debate in the House of Commons."
What was selected—by the nature of the legislation, perhaps the only selection—was a device which meant that the House never had as of right the authority to discuss a settlement of that magnitude. From that situation I conclude that it is something which ought not to be continued or persisted with; it is something which should alert this House to the need to ensure that in any legislation which we are asked now to authorise 344 the rights and the representations of the House shall be far better protected in the future than they have been in the past.
We see all too much evidence of the prospect of yet more commercial Star Chamber justice. We are only at the beginning of hearing many complaints about the arbitrary and capricious way in which the Price Commission sets about its duties and in which the Government will be intervening in the whole affair of retail prices.
The scepticism which many of my hon. Friends who have spoken in the debate have shown is extremely well founded; but it is a scepticism which was to some extent foreseen by my right hon. and learned Friend the Member for Surrey, East when making the speech to which I have already referred. With all his authority as a senior Minister in the former Conservative Government, he saidBut price controls, by themselves, can only blot out inflation—if indeed they can—where they are accompanied by pervasive controls over production, external trade, and other cost factors. Such total control impairs economic efficiency as effectively as it destroys the other aspect of a free society. This is one of the reasons why, after our latest experience of statutory controls, I remain, today as in 1970, fully aware of their limitations.The instincts and preferences of my right hon. and learned Friend are good enough for me.
§ 12.45 a.m.
§ Mr. Tom King (Bridgwater)
My hon. Friend the Member for Oswestry (Mr. Biffen) has made a powerful speech, and I shall add nothing to what he said about subsidies. I feel that that subject has been adequately covered. The Minister of State intervened earlier in the debate to ask how we on this side, who have supported some subsidies, could possibly oppose the measures now proposed. I am sure that all hon. Member recognise the risks in subsidies and the distortions which occur. What concerns us is that the greater the extent of the subsidies, the greated the distortions which follow. That is the troubling aspect of the present situation.
At this stage—especially at this time of night—what is needed is a constructive approach to the provisions of the Bill which give rise to real concern. First, I 345 take what the Secretary of State said to the effect that she will certainly take cognisance of industry's needs, and industry knows this. I wish that I could find a single person in industry who would agree with that statement.
The answer has already come from the Minister's own back benches. The cooperative movement is complaining about the way in which it is presented with documents, is given five minutes to read them, and is then expected to comment on them. The hon. Member for Bristol, North-East (Mr. Palmer) has told us of the views of the co-operative movement on the sort of courtesy and consultation which it received over this measure.
I find that reaction reflected widely in industry. Although I recognise the force of what my hon. Friend the Member for Oswestry said about the need for Parliament to exercise its responsibilities, I believe that one of Parliament's responsibilities is to see that those affected in industry have a chance to have their views represented. It is essential that we do that in this case. One of the main concerns about the whole Bill, however, is that industry simply does not know what is involved and does not feel that it has been properly consulted.
I am interested to see the hon. Member for Liverpool, Walton (Mr. Heller) on the Front Bench. I am amazed that he shows his face here on a Bill of this kind when he and his right hon. Friend the Secretary of State for Employment had so much to say in the last Parliament about extra-parliamentary controls. This is a Bill for which he, as a member of the Government, must share responsibility. If he has time to read it, it will give him the shock of his life to find that it extends yet further the scope of extra-parliamentary control.
The Minister of State, Department of Industry (Mr. Eric S. Heller)
Perhaps the hon. Gentleman will explain the line of argument which he was developing on those occasions. He was then defending his Government hook, line and sinker on the whole question of a statutory policy on prices and incomes, on controls and on the Counter-Inflation Bill. I do not remember that he agreed with his hon. Friend the Member for Oswestry (Mr. Biffen), who argued quite the contrary. The hon. Gentleman has double standards.
§ Mr. King
That is quite untrue. If the hon. Gentleman reads what I said at the beginning of my speech, he will see that I supported what my hon. Friend the Member for Oswestry had said on the subject of subsidies, and I said that I would add nothing to what he said on that point. The hon. Gentleman has only just come in. The debate has lasted for some time, and several of these matters have already been covered.
I have supported the need for price controls. The hon. Gentleman had been totally opposed to the development of extra-parliamentary agencies, and for him to intervene now on a Bill which yet further extends the rôle of extra-parliamentary agencies, against which he fought so bitterly in the last Parliament, shows that it is he who has double standards. I am surprised that the Secretary of State for Employment should associate himself with this Bill, after being one of the loudest critics of extra-parliamentary control.
Industry is concerned to know just how the powers in Clause 2(1) and Clause 3 will be used. There is no advice on that. I assume that maximum prices will certainly apply to subsidised foods, a point dealt with by the Secretary of State. She also said something to the effect that they would apply in cases where a voluntary agreement had been reached on margins. Will the Minister amplify what was meant by that when he replies? Will he clarify what goods are envisaged under "other goods", and may we have an assurance that no company will have prices fixed below the terms set out in the loss and low profit conditions in the Price Code.
The difference between these proposals and the proposals of the last Government is that the Conservative measures were accompanied by a code with guidelines so that industry at least knew the yardsticks that would be applied. I do not share the total objection to price control expressed by my hon. Friend the Member for Oswestry. I regard it as a second best and I would prefer a voluntary policy. That position has frequently been stated by my right hon. Friends in Government. But I recognise, as did the Secretary of State, that there is an acute problem throughout the world and it needs exceptional measures to deal with 347 it. The Conservatives, however, brought in measures with a book of reference so that industry knew where it stood. These proposals are blanket proposals with no code or guidance, with total power vested in the Secretary of Slate to take action and with no clear guidance to industry on what path will be followed.
I trust that any measures that are introduced under Clauses 2 and 3 will be the subject of the affirmative resolution procedure to ensure proper parliamentary control. I am not surprised that Labour Members, as much as my hon. Friends, take gross exception to Clause 3(4), which is the most blatant piece of retrospective government I have seen in any Bill.
The Secretary of State referred to possible amendments to the Price Code. I have had strongest representations about the 10 per cent. cut in profit margins. It seems harmless enough in the case of a firm which is making a 20 per cent. gross margin. A 10 per cent. cut brings it down to 18 per cent. But if that firm earns only a 2, 3 or 4 per cent. net margin this could cut its earnings in half, and this could well apply in the case of a small shopkeeper. If the shopkeeper's gross margin is to be cut in that way at the same time as rates are increased—in my constituency by as much as 80 per cent. —only one course will be left open to him, to close down, and this is the position for many people who keep the corner shops. It may be the only shop within the reach of old-age pensioners and handicapped persons, or of the young mother with children who does not have the opportunity to go to the big supermarket. Many rural parts of my constituency have not supermarkets. The increase in rates and a Government-imposed cut in margins coming at the same time could have the direst consequences, and a measure which was conceived to try to halt price rises or to reduce prices might have the opposite effect of raising the cost of living for many people.
§ 12.55 a.m.
§ Mrs. Sally Oppenheim (Gloucester)
We have had an interesting and closely argued debate. The number of hon. Members who have been in the Chamber throughout the debate, even at this late hour, have borne witness to that.
A number of valid and valuable points have been raised by my hon. Friends, 348 and some interesting points have been raised by Labour Members. Some highly original points were raised by the hon. Member for Burnley (Mr. Jones), while the hon. Member for Colne Valley (Mr. Wainwright) was a veritable Pied Piper for his own parliamentary party. But I am sure that many hon. Members enjoyed his contribution.
However, I should like to pay a special tribute to my hon. Friend the Member for Croydon, Central (Mr. Moore) for his charming and thoughtful maiden speech. His quotations from Ruskin were beautifully delivered, and both his manner of delivery and the content of his speech commanded the attentive admiration of the whole House. We look forward to his future contributions. I am sure that my hon. Friend will be a most valuable Member.
It was clearly expressed throughout the debate that most hon. Members on both sides of the House support the fundamental objectives of the Bill. The need to provide special help for certain consumers at a time of exceptional inflation is undisputed, but the means of providing it has been disputed most eloquently by some of my hon. Friends. Equally, there is a need to ensure that any measures introduced as a result of the powers given in this enabling legislation are administratively fair, practical, likely to be fully effective in pursuing the interests of consumers, and not detrimental to those interests, either directly or indirectly. I hope that those objectives commend themselves also to both sides of the House.
We have already questioned the wisdom and the effectiveness of the allocation of resources by those indiscriminate subsidies which have already been given. If I may bring my own simile to the debate, the giving of indiscriminate subsidies is rather like taking a machine gun to shoot a rabbit. Most of the shot goes very wide of the target. In any case, those subsidies that have already been given have already been more than offset for the average family by the deliberate price increases introduced by the Government. What the right hon. Lady has given with one hand her right hon. Friends have taken away with the other.
Over and over again the right hon. Lady has spoken of the value of her subsidies to pensioners and poorer families 349 in particular. The Bill refers to necessities affecting the cost of living of people with small incomes. We all accept, and always have done, that there are compelling social priorities. But I question whether expensive indiscriminate subsidies are the best way of meeting these priorities. Like my hon. Friend, I ask whether a form of family allowance increase would not have been more effective.
Be that as it may, during the General Election campaign the average housewife was clearly given to understand by the Labour Party that she would be the focal point of any attack on prices. Nobody questions the need to help poorer families, but it is now clearly established that the average housewife has been misled and let down by the Government. She is not better off but worse off, and is likely to be even worse off as time goes on. [Interruption.] An hon. Member asks from a sedentary position what my Government did. I have here a reply to a Question from the Financial Secretary to the Treasury. It tells the House exactly what the previous Government did. We raised real personal disposable income by 14¾ per cent. when we were in office. I shall be surprised if the present Government, if they are in office long enough, are able to raise the standard of living to the extent that we did and at the rate that we did.
§ The Minister of State for Agriculture, Fisheries and Food (Mr. Norman Buchan)
Does the hon. Lady agree that during the last few months of the previous Government disposable income dropped and that we inherited a downward trend?
§ Mrs. Oppenheim
I accept that there was a narrowing in the difference between average earnings and the cost of living. I accept that because that narrowing has taken place the Government are under some compulsion to consider what kind of measures they can introduce to try to halt the slide or to widen the gap. However, the present Government will not achieve a rise in the standard of living as fast as we did.
The counter-inflation legislation that we introduced approached the problem of regulating price increases by giving the Price Commission the power to ask in the case of an application for a price increase "Is it fair?". 'This legislation 350 goes a good deal further and allows the Price Commission and the Secretary of State to ask not only whether it is fair but whether an increase is acceptable in exceptional circumstances. If the answer is that it is not fair, for a variety of reasons that may have nothing to do with the business concerned, the commodity will be subject either to subsidy or to regulation. Clause 2 allows for no consultation and it takes no account of any argument as to fairness. It turns the Secretary of State into a kind of prices commissar.
Theoretically some businesses could be driven to the wall or to a point where the proprietors of smaller shops or businesses, would remove the goods from the shelves and not offer them for sale. In the case of other businesses, the shelves would be not restocked. Across the board there would be a reduction in choice for the consumer. That would clearly not be in the consumers' interest.
It is clear that the right hon. Lady intends to use her powers in Clause 2 in respect of fresh food. If she intends to do that by regulating meat prices, before long she will have to find a great deal more money to find subsidies to help families meet the expense of much more expensive imported meat because British producers will stop production. In the end it will be a case not of having to find more money to provide greater subsidies but of rationing, unless the right hon. Lady's right hon. Friends can find some way of helping producers more effectively than at present.
I should like to know whether any of the subsidy money which the right hon. Lady has left in her purse is likely to go to producers. I fully sympathise with many of the Bill's objectives. Where the question of acceptability is in the context of an emergency situation relating to inflation, that might be an overriding consideration. However, we shall want a great deal of convincing that there is no danger that the end result of allowing regulations to be imposed that take no account of possible counter-productive results would be detrimental to the interests of consumers in a number of ways.
We are faced with a piece of enabling legislation that gives wide and sweeping powers to the Price Commission and to the Secretary of State to make regulations 351 without giving anything but the merest hint what the form and content of those regulations is likely to be. I suspect that the right hon. Lady and her Department have not got very much idea either. We shall require a great deal more detailed information about their intentions in Committee. At present we are being asked to legislate blindfolded. Even now we are entitled to ask how practical and how effective this measure is likely to be. Similar measures have been introduced in Italy without very much effect, because the rate of inflation in Italy has been slightly higher than it has been in this country. For example, will the effects of increased costs or regulated prices mean that price increases will have to be imposed or passed on to consumers on other items which would otherwise have been subject to reductions? Will the average family have to pay for these measures which are aimed at helping the poorer families, although we accept the need to help poorer families?
Does the flexibility given in Clauses 2 and 4 mean that smaller traders are to be exempted? We have not yet had an assurance on that aspect of the matter. If so, will they, even then, be able to survive at a time of reduced liquidity, or will they suffer considerably as a result of an artificial intensification of competition, imposed by stringent price regulations in the larger shops and supermarkets, from which they are freed but against which they have to compete. Is this in the interests of the consumer?
In the election campaign many Labour politicians talked about the bulk purchasing of food and long-term fixed-price contracts and of how they would solve the problem of food prices. Indeed, the hon. Member for West Bromwich, West (Miss Boothroyd) argued this point on television with me. Yet I see no provision on this point in the Bill. Perhaps the hon. Gentleman in his reply will say whether members of the Labour Party have changed their minds. I see in the Bill no provision for long-term contracts or bulk purchasing of food, nor any possibility of it while the right hon. Gentleman the Prime Minister spoke at length about the display of lists giving maximum fair prices. So far as I can see—I may be wrong, and no doubt the hon. Gentleman 352 will tell us in his reply—the requirement to display lists is confined only to prices regulated under Clause 2, although they will be variable and on a multi-tier structure. In many cases will this not inevitably mean that prices will be levelled up to the maximum price lists?
The main labelling and marking requirements are in Clause 4. Clause 4(2)(b) is a seemingly puny version of our much more detailed legislation. It gives the Secretary of State wide enough powers to implement the objectives of our Bill—indeed the Bill gives her wide enough powers to do almost anything—but it gives little detail about intention.
Despite the vagueness of Clause 4(2)(b), the House will warmly welcome the fourth resurrection of this measure. Although a succession of obstacles hindered the measure in the past, it is clear that one cannot keep a good measure down, and I congratulate the right hon. Lady on reintroducing it. I am sure that in this respect the House will wish to be associated with a tribute to my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), who in the Conservative Government was the Minister for Trade and Consumer Affairs, and also to my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), who between them contrived, with remarkable tenacity and initiative, to introduce the measure to this House no fewer than three times.
Although this Bill is a comparatively modest measure, it is welcome and will provide a useful signpost for consumers to help them find their way through the High Street jungle. I must add that it is a jungle that has been considerably pruned by the record number of significant measures on consumer protection introduced by the last Conservative Government. [An HON. MEMBER: "That is why you lost the election."] Some of the measures introduced by the Conservative Government are still working their way through to the consumer. The consumer have yet to feel the benefit of them. I am sure the right hon. Lady will be only too pleased to avail herself of the facility of the Fair Trading Act.
§ Mrs. Gwyneth Dunwoody (Crewe)
Will the hon. Lady accept that the previous Labour Government were exceedingly active in promoting consumer 353 protection measures? It is unfortunate that she seeks to make small party points out of such matters, because Labour promoted much more legislation on consumer affairs than did the Conservatives. We understand the problems of ordinary families whereas, I am sorry to say, the hon. Lady and her Friends do not understand them.
§ Mrs. Oppenheim
I understand that the hon. Lady has only recently returned to the House. Had she been in the House during the last Parliament she would have known that the previous Conservative Government introduced a record number of consumer measures, with the support of both sides of the House.
§ Mrs. Oppenheim
We set in its place a far more comprehensive structure in the form of the Fair Trading Act. If hon. Members care to look at the record they will see that we undoubtedly introduced more consumer measures in one Session of Parliament than did any other Government.
It it important to stress that the value of unit pricing is that it is complementary to prescribed quantities and that it will provide an alternative where the application of prescribed quantities is not practicable.
I agree with views previously expressed that wherever possible standard prescribed quantities are a better measure of protection for consumers, particularly in the case of fresh foodstuffs, toiletries, and many other household products. However, there is an urgent need to supplement this with informative labelling where it is not practicable to package in prescribed quantities.
Many fresh foods are already commonly bought unit priced, but in today's prepacked supermarket world fashions in merchandising have made it necessary to provide consumers, in the absence of standard prescribed packaging, with information not just as to the weight and price of the goods offered but as to a price comparison with a familiar standard unit of weight or measurement, to make prices more easily comparable without recourse to mental arithmetic for which the hon. Lady the Member for 354 West Bromwich, West and I share a dislike. This is never easy for many of us at the best of times, and is practically impossible with three talkative children in tow, a heavy shopping basket, or not much time, or a combination of all three factors, as is often the case.
I was careful to say that unit pricing will enable quicker and easier price comparisons, because it will not always provide value comparisons where the quality may differ in instances of the same product, but in the case of goods with which consumers are familiar or where the quality is common or is immediately obvious. Both price and value comparison can be made much more easily with the aid of unit pricing.
This is urgently necessary at a time of high inflation. Dare I say in the presence of the right hon. Lady that it will especially assiist those consumers who shop around? Perhaps I can disarm her dislike of this advice to consumers if I say that I entirely accept the point she has frequently made, that many consumers—particularly working wives—are far too busy to go from shop to shop, and that many elderly people are physically incapable of doing so. But I can assure her that for most consumers the process of shopping around is an initial one and that, having found a shop which consistently gives the best value and service, they tend to go to that shop on a permanent basis.
Together with prescribed quantities, unit pricing will help shoppers to make this choice more quickly and easily than they could otherwise do. They should not be misled into thinking that the final answer is in unit pricing and prescribed quantities. In the case of some products weight is not a true measure of value—for example, a smaller quantity of one detergent is stronger than a large quantity of another.
An extremely important rôle for unit pricing will be during the transition period to metrication. I am not sure whether the Bill provides, as our Bill did, that items can be marked in relation to unit in imperial or metric, or both. This is an important point, which I hope will be answered in the concluding speech.
Whether we move gradually to metrication or more rapidly—as most consumer bodies would like—I believe that 355 the transition period will be difficult for consumers and it will be helpful if they can compare during that period with units of weight with which they are familiar.
There is no specification in the Bill that unit pricing can apply to goods whether prepacked or otherwise. I hope that the hon. Gentleman will make the Government's intention clear, because we do not want to do anything to encourage extra packing which is costly and an environmental hazard.
I see no objection to the continued sale of fresh meat and vegetables, cheese and other basic foods in a loose form if they are clearly marked at a price per pound and if they are weighed in front of the consumer, with the unit price on the scale. When I am shopping I do not hesitate to ask for the goods to be returned to the scale if I think that they have been whisked off a little too quickly. I am not at all embarrassed about it, wherever I am shopping. I can understand that some consumers, particularly elderly people, may be diffident about doing so. This is why they have to be protected.
Clause 4(2)(b) gives no indication of the intentions of the Government about where the unit price is to be displayed. I hope that the Minister can tell us. In an earlier debate my right hon. and learned Friend the Member for Surrey, East mentioned three possibilities—labelling of the goods, labelling of the shelves or a list of prices adjacent to the shelves or at the entrance to the shop. I do not favour the latter. I do not think it would be very effective. A housewife who is busy shopping and who has to refer to a list on the wall to find a price will not do so.
There is another choice which would be far more acceptable—the splendid British-made computerised scale which shows not only the price and the weight but, in large neon letters, the unit price comparison. If the right hon. Lady has not seen this scale I hope that she will take the opportunity to look at it because it would provide an ideal solution.
We do not know whether the flexibility written into the clause will extend to exempting smaller traders. We shall want to know what the intention is. It 356 is important not to place a heavy cost burden on the small trader. This has been the subject of some controversy in previous discussions on our Bill.
Such people as the elderly, who cannot travel far, and the young wife with children, who cannot afford the bus fares into town, know perfectly well that there is one important safeguard provided for them in the corner shop. It is one which ensures good value and good service, which are what we associate with such shops. It is that such shops are dependent on local good will for their trading. It is the same now as it was in our grandmothers' time. They do not have the anonymity or the transient custom of the supermarket. If Mr. Jones at the corner shop says that the cheese is fresh and good value it had better be or he is out of business. Most of his clients live nearby, so there is no question of short-weighting them. He would soon be caught out.
Although no indications have been given by the right hon. Lady, it would be appropriate and welcome if the unit pricing regulations were to coincide with a number of additional regulations which are much needed in this area of prescribed quantities. We would like to know how soon after Royal Assent the unit pricing regulation will be introduced. What will be the period allowed for consultations? I understand that so far no consultation has taken place between the right hon. Lady's Department and those concerned. I accept the need for consultation, but I hope that the Government will produce draft recommendations as soon as possible to reduce the unavoidable interval between Royal Assent and the introduction of the regulations. There is no need to delay the regulations which could be amended later because of the need for harmonisation with any EEC prescribed quantities. This is a measure that will greatly benefit the consumers, all the more so when it is widely understood and used.
I welcome the provisions of Clause 4(2)(c) dealing with the need to give clear information to consumers on what element in the price is represented by VAT. I hope that the Bill will proceed swiftly to the statute book so that consumers can see for themselves just how much this Government have raised prices, not only 357 of petrol, confectionery and ice-cream, which is a nourishing family food. [Interruption.] We are not suggesting that ice-cream should be subsidised. We are saying that the price of ice-cream should not have been increased by the imposition of VAT, which is quite a different argument.
§ Mrs. Oppenheim
We did not levy it on ice-cream or on petrol, both of which form part of family expenditure. We view with concern Clause 4(2)(a) and should like more information on it. We should like to know whether prices are to be marked by the manufacturer or the trader, and whether this might lead to a new outbreak of double pricing or appear to be a return to resale price maintenance.
I accept that consumers have a right to know what the price is before they remove the goods from the shelf. Here I take issue with the expertise of my hog. Friend the Member for Hove (Mr. Sainsbury). Some consumers—especially the elderly—are caused embarrassment and distress when they learn at the counter that the price is more than they expected to pay or more than they can afford. Most large stores and supermarkets already mark everything clearly.
The right hon. Lady mentioned her dislike of little sticky labels, but labels which carry the name of the shop facilitate the return or exchange of goods and are often useful in administration. In some cases the best method would be to stamp on the package both the name of the shop and the price, but this would not be practicable for unit pricing. and writing by hand would be expensive in staff time. I realise that there is no easy answer, but I expect that the right hon. Lady has given the matter a good deal of thought, and we should welcome an indication of her intentions.
I am greatly concerned that the unit pricing provisions in Clause 4 are an integral part of what are presumably intended to be temporary, emergency measures. Is the unit pricing clause, then, intended to survive on its own? Surely, it would have been more expedient to do what we intended to do—amend the Weights and Measures Act 1963 and make it a more permanent part of our legislation. Or are we to conclude that the pressure of costs in 358 industry, and world prices, will increase the cost of subsidies to such an extent that once having embarked on this course the right hon. Lady will have to keep on paying and renewing the powers in other parts of the Bill?
We shall also want to know how the provisions in Clauses 2 and 4 are to be enforced—indeed, how the whole Bill is to be enforced—in view of the shortage of weights and measures staff in some areas which was referred to by the hon. Member for West Bromwich, West. The Bill is not encouraging. It mentions small increases in staff in particular weights and measures authorities. Are these increases to be in professional staff or in assistant staff?
Some of us recall the views expressed by the Minister of State before they were tempered by the responsibility of office. The hon. Gentleman waxed eloquent on this point in our debates in Committee and in the House on our Unit Pricing Bill—so eloquent that I must resort to quotations to do him justice. He said that my right hon. and learned Friend, who was then Minister for Trade and Consumer Affairs:confessed that he knew that South Wales had a severe shortage—that is, before the Consumer Credit Bill is implemented and before the Unit Pricing Bill is on the Statute Book.He was referring to the shortage of weights and measures inspectors.So there is a severe shortfall in relation to the duties that already exist. Yet we are imposing extra duties on the weights and measures inspectorate, and the Ministry responsible for consumer protection is unable to tell whether or not…it has adequate inspectorate to implement any regulations which it may put into effect."—[OFFICIAL REPORT, Standing Committee A, 16th January 1974; c. 16.]On Second Reading of the Unit Pricing Bill on 12th December, he said:Parliament … is imposing extra workloads on the weights and measures inspectorate. It did so under Fair Trading…I find it incredible to have the admission today that the Department is imposing all this extra workload, does not have this information on the capacity of the weights and measures inspectorate …".I find it incredible that on that occasion the hon. Gentleman was talking about one subsection of one clause of their Bill. He was not even referring to the additional work load imposed by the vastly more sweeping measures of Clauses 2 and 359 4 of this Bill which provides that there may be possible increases of some staff in some areas.
But even more incredible was the hon. Gentleman's reply to my Written Question yesterday, when I asked him how many staff were employed in weights and measures departments throughout the country. He said:This is a matter for local weights and measures authorities, but I am asking for the information to be held centrally in my Department."— [OFFICIAL REPORT, 8th April 1974; Vol. 872, c. 14]
Mr. Alan Williams
The hon. Lady will bear in mind that consistently I made the point to the right hon. and learned Member for Surrey, East (Sir G. Howe) that he was unaware of the number of inspectors throughout the country. She will also bear in mind that we have just had a change round in local government and, therefore, we have had to get new information—information which the Department did not have before—on the complements of staff throughout the country, and the deficiencies. We are now getting information which the last Government never had.
§ Mrs. Oppenheim
I appreciate that point, but the end of my quotation from what the hon. Gentleman said on 12th December is:The reorganisation of the local authorities will make no difference to their ability to recruit weights and measures staff because in many of the large authorities there are already serious shortages."—[OFFICIAL REPORT, 12th December 1974; Vol. 865, c. 611]
Mr. Alan Williams
The hon. Lady must bear in mind that it makes no difference in their ability to recruit. It does mean that in the first couple of weeks of establishment of the new authorities it is difficult to get precise information. I am sure that even she will understand that simple point.
§ Mrs. Oppenheim
The hon. Gentleman made the point that it would make no difference because there was already a shortage. In most cases there has not been a reduction in the number of weights and measures inspectors employed. In most cases they have been absorbed into the county departments. In places where there are changes they have perhaps transferred from one authority to another. I am not blaming the hon. Gentleman. 360 He has not been in office long enough to secure the information. I am glad that it is to be collected centrally.
§ Mr. Deputy Speaker (Mr. George Thomas)
Order. The hon. Gentleman knows that if the hon. Lady does not give way he must resume his seat.
§ Mrs. Oppenheim
I shall be delighted to give way to the hon. Gentleman on other occasions but the hour is late and I hope I shall be forgiven if I do not give way again now.
The question of practicality is very important. Having listened to lectures from the right hon. Lady on silly advice to consumers, I think the silliest advice I have heard for a long time, which was not worthy of her, was her advice on television last Wednesday. She said that pensioners who did not want to buy a 14 oz loaf should ask the shopkeeper to chop it in half. Has the right hon. Lady any idea of the practicalities involved?
First, supermarkets sell mostly wrapped sliced bread and pensioners do shop in supermarkets. Can the House imagine the spectacle of an elderly pensioner with a queue building up behind her producing a loaf and asking the girl at the till to produce a carving knife and cut it in half? Very small shops will do it for very special customers and for very few people. But in the supermarket the girl would have to count the slices so that she would know that she was giving half. If the pensioner was in a small shop and asked the girl to chop a crusty loaf in half, the girl would have to have the judgment of Solomon because if she were only a few grammes out she would be contravening the Weights and Measures Act. The whole idea, however well meant, is not practical and is not worthy of the right hon. Lady. It is done in a very small percentage of cases only. I think that she should withdraw the advice.
We have cause to wonder what kind of practicalities will be behind the regulations proposed under the Bill. There are many aspects of the Bill which we view with concern, not least those which 361 will affect future expansion in the food industry and in food production. As the hon. Member for Colne Valley said, the Bill appears to have been thrown together in great haste and with very little thought as to the wider implications of how it is to be implemented. However, we do not propose to oppose its Second Reading.
Some hon. Members may be forgiven for thinking that Clause 5 is totally extraneous to the Bill, and many people will feel that it is detrimental to the interests of the consumer. It may be felt that it has been included with the express wish of provoking a Division. However, because the Bill has some potential for providing for some of the interests of consumers on a temporary basis in exceptional circumstances, and because of some of the welcome measures in Clause 4(2)(b), the Opposition do not wish to hinder it at this stage.
We shall want to look at it very closely in Committee. We shall attempt to amend it and, in the light of further information, we shall want to see how fair, practical and effective it is likely to be. Eventually, it will be judged on those three criteria.
§ 1.31 a.m.
§ The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)
This has been a long and wide-ranging debate, and I begin by welcoming the hon. Member for Gloucester (Mrs. Sally Oppenheim) to the Opposition Front Bench. Her speech provided a refreshing change of direction from the way that the debate had proceeded earlier.
At one stage I had the impression that we were listening to a private battle over the mantle of Enoch which was being fought between the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), the hon. Member for South Angus (Mr. Bruce-Gardyne), the hon. Member for Oswestry (Mr. Biffen), and even the hon. Member for Bridgwater (Mr. King)—
§ Mr. Maclennan
The hon. Gentleman seems willing to continue the debate even now. In a sense, we felt privileged to overhear the hon. Gentleman's discussion.
362 I do not want to protract the debate unduly, in view of the lateness of the hour, by dealing in detail with the many important matters raised by the hon. Member for Gloucester, most of which can be discussed fully in Committee. I thought on a number of occasions that she tried to have the argument both ways. She asked probingly about the impact of subsidies. She said that we all wanted to help the poor, but she wondered whether the Bill would result in the average family having to pay for it.
I turn to felicitate the hon. Member for Croydon, Central (Mr. Moore) on a maiden speech which earned the admiration of the House. He spoke eloquently of his constituency, where I am glad to say there is shortly to be opened a new consumer centre in a new shopping precinct which I hope to have the opportunity of visiting before too long. The hon. Gentleman spoke feelingly, and he awakened a response in this House to the need for the rich consumer countries to pay more attention to the needs of the poorer countries. He had the whole House with him.
One matter has recurred throughout the debate, and I feel that I should mention it straight away. It is the extent to which the proposals contained in the Bill have been the subject of consultation. My right hon. Friend has been Secretary of State now for five weeks. During that time she has had extensive consultations with a number of interests both about the proposed amendments and the operation of the Price Code and about the provisions of the Bill. She has met the CBI twice and the TUC. She has met the Retail Consortium, the Food and Drink Industries Association, a delegation from the co-operative movement, food manufacturers, and three separate consumer associations, as well as the bakers on three different occasions. It cannot fairly be said that my right hon. Friend has acted without consulting those interests most intimately concerned with the provisions of the Bill. But, lest there be any doubt, I can offer the assurance that it is her full intention that in bringing forward orders under this legislation the interests most directly affected will be consulted as frequently and in such depth as is necessary.
The hon. Member for Southend, West (Mr. Channon), who opened the debate 363 for the Opposition, again raised the question which had been canvassed at Question Time last week about the division of departmental responsibility for prices. Although I thought this matter had been clarified, the hon. Gentleman's speech seemed to suggest that he was not entirely clear about the position. I should remind him that on 4th April my right hon. Friend said:While I have a general responsibility for consumer protection, and the measures I have proposed will help all consumers, there are for nationalised industries established, and in most cases statutory, arrangements for taking account of consumers' interests: the principal ministerial responsibility for these arrangements, as for nationalised industry prices, lies with my right hon. Friends the Secretaries of State for Environment, Energy, Industry, Scotland and Trade."—[OFFICIAL REPORT, 4th April 1974; Vol. 871, c. 414.]On 5th April my right hon. Friend said:The existence of my Department involves no change in the responsibilities of my right hon. Friends the Secretaries of State for Energy, Environment, Industry, Scotland and Trade in relation to the nationalised industries or their prices."—[OFFICIAL REPORT. 5th April 1974; Vol. 871, c. 4811]I hope that that will clear up any remaining doubt about where the responsibilities within the Government lie.
The hon. Gentleman, in comparing the record of the previous Government in protecting the less-well-off members of the community with that of the present Government, also spoke of the increases in pensions in which he was proud to have had some part. He must accept that the increases in pensions which have been announced, and which we hope to receive power to implement tomorrow, will be the largest ever within the National Insurance scheme both in money and in real terms.
A large part of the hon. Gentleman's speech, as of the speeches made by a number of other hon. Members, related to the way that the money was to be raised to pay for the subsidies proposed in the Bill and, indeed, by implication, criticised some of the other measures which have proved necessary. In particular, he spoke of the burden of value added tax.
Hon. Members opposite have asserted that my right hon. Friend the Chancellor of the Exchequer, by his indirect tax 364 changes announced in the Budget, has undermined the purposes of the Bill. Even in terms of the impact of the indirect tax changes upon the retail price index, that charge, in my judgment, cannot be made out.
We calculate that our programme of food subsidies will keep down the retail price index by 1.5 per cent. The rent freeze will contribute a further 0.7 per cent., giving a total reduction of 2.2 per cent. The tax changes announced will raise the retail price index by 1.75 per cent., thus leaving a net gain of nearly 0.5 per cent.
Nationalised industry price increases that have been permitted will add 2 per cent. to the retail price index by the end of the year but, as the House knows, and as the right hon. Members for Leeds, North-East (Sir K. Joseph) and Altrincham and Sale (Mr. Barber) has admitted, these changes were made necessary by the accumulated cost increases incurred in the lifetime of the previous Government.
Lest there be any short memories, let me remind the House of what the former Chancellor of the Exchequer said:At a time of the most acute energy shortage and in our present financial difficulties, it is anomalous—to say the least—that we are subsidising coal and electricity prices at a mounting rate. Unless action is taken on coal prices, the financial support required for coal, which exceeds £150 million this financial year, could easily be doubled next year. The subsidy for electricity is running at about £75 million a year, but that does not take account of the present emergency. Consultations with the industries on the price of coal and electricity will, therefore, be carried out as a matter of urgency."—[OFFICIAL REPORT, 17th December 1973; Vol. 866, c. 962.]Can anyone who heard those words doubt that if the Conservative Party had been the Government today it would have been forced to take action on the prices of nationalised industries?
§ Mr. Maclennan
No, the hour is late.
I must remind hon. Members who have spoken of the offsetting impact of the announced increases in the prices of the nationalised industries of the dilemma that the Government faced following the election when they discovered that these industries were facing large deficits—far larger than we were led to believe when 365 we came to office—generally as a result of their peculiar form of price restraint.
The Government had to judge the amount of subsidy that they could afford to pay to these industries and to which products and services the subsidies could best be directed to hold down household costs. The House will recollect that we are still expecting to support the prices of nationalised industries to the tune of £500 million in 1974–75, but we reached the conclusion that, in view of the greater importance of food in family expenditure and the experience of rapid food price increases over the last year, the first priority was to get a programme of food subsidies into operation, and we have not completely withdrawn subsidies to the electricity industry.
§ Mr. Silvester
I am sorry to interrupt the hon. Gentleman, but he is making the point that the Government are seeking to provide subsidies on goods which pensioners buy instead of on goods which they do not buy. The figures given today by the Secretary of State for Employment show that the average weekly spending of pensioners on electricity, coal, sweets and cigarettes accounts for 11.9 per cent. of expenditure, while expenditure on bread, milk and butter accounts for 6.5 per cent. Similar considerations apply to households with incomes of less than £20 a week.
§ Mr. Maclennan
I hope that the hon. Member for Bridgwater is not suggesting that we ought to subsidise tobacco and beer.
The hon. Lady spoke of the impact of VAT on petrol. It has been suggested that the extension of the standard rate of VAT to petrol will put up distributors' transport costs, but that is not so. All registered traders recover from the Exchequer the VAT they pay on their inputs, and this will apply fully to VAT on petrol. One reason why the Chancellor applied the increase by way of VAT rather than revenue duty was precisely to ensure that it would not increase traders' transport costs. The increase 366 will fall only on the domestic consumer, the private motorist.
The hon. Lady and, in an excellent speech, my hon. Friend the Member for West Bromwich, West (Miss Boothroyd) spoke about price marking. Clause 4 enables the Secretary of State to require the proper price marking of goods for sale. The trend in retailing to self-service stores makes price marking a virtual necessity for the shopper. But the use of this power will partly depend on the selection of products for subsidies and the regulation of prices and margins. The price marking powers will, however, extend beyond the goods likely to be covered by subsidies or price regulation, although naturally such goods will be early candidates for marking orders.
There has been considerable discussion inside and outside Parliament about the commodities to which unit pricing requirements might most usefully apply. Particularly strong candidates, I believe, are fresh meat, fish, fruit and vegetables and perhaps cheese. We are prepared to consider any further suggestions carefully. We shall discuss the use of these powers with the trades concerned and with consumer representatives. We certainly hope to frame the requirements so as to minimise increases in costs for retailers, and we will take into account particular trades or classes of retailer where such requirements might cause special difficulty, and order-making powers in the Bill give us the flexibility we need to do this. But I fully accept my hon. Friend's point that we cannot give a promise of a blanket exemption for small retailers. Unit pricing may be just as useful for customers in small shops as for those in large supermarkets.
The hon. Member for Southend, West showed some uncertainty about milk subsidies. It would be helpful if I reiterated our estimate of the cost of the subsidies already announced for milk, butter and bread for 1974–75. On milk, the existing subsidy introduced by the last Government is equivalent to about 1¼ per pint and will cost £148 million. The further reduction of 1p per pint from 21st April will cost £127 million, making a total of £275 million. The previous administration applied a subsidy of 2p per pound on butter. Half is financed from EEC funds, and the United Kingdom share this year will be 367 about £10 million. To this must be added £33 million for the new subsidy of 3½ per pound, giving a total cost of £43 million for butter.
The estimated cost of the new bread subsidy, which is equivalent to ½p on the price of large and small loaves, is £17 million. The total commitment for 1974–75 is thus £335 million. The provision in the Budget for subsidy is £550 million, so we still have about £215 million in hand.
§ Mr. Maclennan
The hon. Gentleman has had an opportunity earlier to develop his points. I will only give the undertaking that the sum will be limited to £700 million and that we shall not seek to extend the sum without parliamentary approval.
I must refer to the somewhat surprising remarks of the hon. Member for Colne Valley (Mr. Wainwright), as I understand that the Liberal Party proposes to dissent from the majority minority party. It is curious that Liberal hon. Members have taken such a critical attitude to the Bill tonight because in their party manifesto at the last General Election the Liberals called for price controls to be strengthened. In the Bill we have done just that. They referred to price control by absolute rather than percentage margins. Clause 2 gives us the power to do just that. I believe that the Leader of the Liberal Party—[HON. MEMBERS: "Where is he? "1—recently spoke of a laxity in Clause 3. We have already proposed a number of urgent amendments to the Price Code to strengthen its rules. Clause 3 will give additional power for us to intervene when the rules throw up anomalous results.
In the light of those facts it is hard to understand why the Liberal Party finds it necessary to disapprove of the principle of the Bill.
§ Mr. Richard Wainwright
The hon. Gentleman was present in the Chamber when I went out of my way to commend Clause 2 and gave the very reasons that 368 he has just quoted. I also went to some trouble to point out that we on the Liberal bench intended to divide the House on the Money Resolution because that is germane to the subsidies, which is the part of the Bill to which we object.
§ Mr. Maclennan
In that case, we look forward to Liberal Party support on the principle of the Bill. I hope that we need not be too long delayed in dealing with the detail.
The Bill contains proposals which complement the Government's other initiatives to strengthen the effectiveness of the Price Commisssion its supervision of the Price Code which have already been announced. In the period prior to the election, the Conservative Party gave no undertaking that it would so seek to strengthen the machinery of price control. Some of the things which have been said tonight suggest that it would even have reneged on the extent of price control that we had. The Government have already published proposals in a consultative document for more urgent amendments of the Price Code. Urgent consultations have been taking place on these proposals. A more fundamental review of the Price Code will follow. Some necessary changes will flow from the activation of Clause 5, when the Price and Pay Code will become simply a Price Code.
The Bill should also be looked at in the wider context of the Government's action to tackle at once the social injustices in our society which uncontrolled inflation exacerbates. In moving rapidly —there have been complaints that we have moved rapidly—to protect the most vulnerable people in our society from the impoverishment and suffering which such inflation causes, we are acknowledging, both as a social necessity and as a political imperative, the priority of this task of Government. Although we are not deaf to the complaints of those who resent a policy of price restraint, we are asking the House for the powers contained in the Bill. That is why we have brought the Bill to the House so quickly. That is why the Government have already taken action to stop rent increases until the end of the year. That is why the Government have already proposed substantial increases in social security benefits, giving priority to the chronic sick, to widows and to pensioners. 369 Those measures can be seen together as part of a coherent strategy to enable the people of this country to unite to beat the inflationary forces which strike at not only the standard of living but even the coherence of society.
The proposals contained in the Bill will be recognised as both just and necessary. I therefore commend them to the House.
§ The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)
rose in his place and claimed to move, That the Question be now put.
§ Question, That the Question be now put, put and agreed to.
§ Question, That the Bill be now read a Second time, put accordingly and agreed to.