HC Deb 16 December 1974 vol 883 cc1092-6
3. Mr. William Hamilton

asked the Secretary of State for Prices and Consumer Protection what plans she has for the further subsidisation of bread and other basic foods.

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)

We are aware that, following the recent wage increases, plant bakers have recently submitted notifications of price increases to the Price Commission. We shall consider the need for changes in the existing subsidies when the Price Commission has completed its examination of these and any other notifications.

Mr. Hamilton

Will my hon. Friend bear in mind that the subsidy, particularly of bread and certain other basic foods, is widely welcomed by the lower income groups? Will he also bear in mind that the recent, fully justified wage increases in the baking industry mean that if the bread subsidy is not increased its price will rise? Will he give an assurance that the price of bread will be stabilised by further subsidy if necessary?

Mr. Maclennan

I am grateful to my hon. Friend for recognising the value of the bread subsidy. The Government will have to decide whether to adjust the subsidy, and to what level, when the Price Commission has considered the relevant price notification.

Mr. Jim Spicer

Will the hon. Gentleman think for a moment about the problem of subsidies as they continue to grow, and will he think in partcular about milk? Will he accept that, if we go on creating a gap between the real price of milk and its subsidised price, we shall soon arrive at the point when people will say, as they are already saying, that milk is the cheapest form of dog and cat food available.

Mr. Maclennan

The hon. Gentleman will recognise that his own party when in government subsidised milk to the tune of £100 million per annum

13. Mr. Stanley

asked the Secretary of State for Prices and Consumer Protection whether she is satisfied that the expenditure on food subsidies is going to those in need of subsidisation.

The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams)

As I made clear to the hon. Member in a reply on 11th November, I am satisfied that as a result of changes in direct taxation the net benefit of the Government's expenditure on food subsidies goes to the lower income groups.—

Mr. Stanley

Will the Secretary of State consider again the implications of her reply to me on 11th November in which she said that no less than 67 per cent. of the total expenditure on food subsidies went to those earning more than £2,000 a year? Will she acknowledge that the higher rates of direct taxation announced by the Chancellor of the Exchequer are no justification for the huge subsidisation of the better off by her Department?

Mrs. Williams

The hon. Gentleman has got the figures wrong. Fifty-two per cent. of the expenditure goes to those earning over £50 a week. The hon. Gentleman has entirely failed to take account of what I said in my reply with regard to the net benefit of subsidy. It will not do for the Opposition so consistently to present themselves as being unable to understand the concept of net benefit. The net benefit is overwhelmingly to lower income groups who do not pay additional tax.

Mr. Mike Thomas

What success is my right hon. Friend having in persuading her colleagues the Chancellor of the Exchequer and the Secretary of State for Energy that the same argument might be applied to the price structure in the nationalised industries, particularly electricity and gas?

Mrs. Williams

My hon. Friend will be aware that the Government have had to deal with the effect of huge and indiscriminate subsidies paid to the nationalised industries which made no distinction between the income groups concerned in paying those prices. The Government are endeavouring to see what they can do in this respect also.

Mr. Raison

Will the Secretary of State accept that in the present economic condition of the country we are in no position to go on increasing food subsidies indefinitely? Will she further accept that it is wrong to increase subsidies on commodities like bread to pay high rates of wage inflation?

Mrs. Williams

The hon. Gentleman and his colleagues must accept that there is a deep ambiguity in their position. Every month they complain about the rate of inflation, and every month they complain about the actions which the Government take to try to reduce it.

Mr. Raison

Will the Secretary of State now answer my question?

Mrs. Williams

I consider that I have answered it.

22. Mr. Gow

asked the Secretary of State for Prices and Consumer Protection if she will take steps designed to ensure that less than 52 per cent. of the estimated cost of food subsidies in the current financial year will be received by households with an income above £50 per week.

Mrs. Shirley Williams

The changes in direct taxation introduced by the present Government are ensuring that the cost of the food subsidies programme is borne by households with incomes of over £50 per week. It is not part of our policy to require people to undergo a means test before receiving the benefit of food subsidies.

Mr. Gow

Bearing in mind the words of her right hon. Friend the Prime Minister when he said that we were facing the gravest crisis since the war, does the right hon. Lady think it right in present economic circumstances that more than £250 million a year should go in subsidies to families with incomes of more than £50 a week?

Mrs. Williams

It is very difficult to get this point over to the Opposition, but I shall try again. The additional taxation on those earning more than £60 a week is greater than the benefit from subsidy. Therefore, it does not matter that they receive the subsidy, because they more than pay for it.

Mr. Michael Stewart

Does my right hon. Friend recollect that in the last Parliament there were several occasions when the Opposition could have voted against the food subsidies but that they could never quite bring themselves to do it?

Mrs. Williams

My right hon. Friend will recollect that in their manifesto the Opposition could not quite find it in themselves to announce that they would end food subsidies.

Mr. MacGregor

Does the right hon. Lady accept that the tax argument which she keeps using would apply only if the Government had made it clear that the increase in the higher tax rates was specifically to provide the food subsi- dies? As that is not so, there are much better ways of applying that higher tax revenue—either by payment direct and in tola to the groups in need or perhaps to reduce the Government's borrowing requirement.

Mrs. Williams

My right hon. Friend the Chancellor of the Exchequer made clear in his March Budget for what purposes taxation was being raised, and food subsidies were among them. I repeat that the Opposition do not seem to grasp the point that in substantial part any means-tested benefit is not taken up by those whom it is intended to reach.