§ 6.15 p.m.
§ Mr. MaclennanI beg to move Amendment No. 2, in page 3, line 33, leave out 'food of any description' and insert:
'such subsidised food or fresh food as may be'.
§ Mr. SpeakerIt will be convenient to discuss at the same time Government Amendments Nos. 3 and 4.
§ Mr. MaclennanThese amendments will limit the powers to regulate food prices, at stages before the retail stage, to subsidised and fresh foods. It was common ground in Committee that powers were needed to regulate the price of subsidised foods at all stages of distribution to ensure that the subsidy worked through to the consumer. The price code does not cover first-hand prices of fresh food, although distributors' margins are subject to control in the usual way. We therefore think that this 1674 power is essential to plug that gap in price control.
Apart from their use in respect of subsidised foods, which we see as necessary, these powers will be essentially residual. The Government hope and expect to rely on the operation of the voluntary agreement with the trade to keep down the prices of key items. My right hon. Friend said in Committee that if an effective voluntary agreement could be achieved and maintained the Government would not need to use the enabling powers in Clause 2 save with regard to subsidies and by agreement with the trade.
The food trade, through its representatives, the CBI and the Food and Drink Industries Council, made representations to my right hon. Friend against being singled out for price control at stages before the retail stage and expressed serious doubts about the possibility of a voluntary agreement being reached if they were to be so dealt with. My right hon. Friend expressed her willingness to consider an amendment of this nature if a suitable voluntary arrangement could be reached. Such an arrangement has been reached. These amendments are in fulfillment of that pledge, fairly and squarely meeting the trade's point.
§ Mr. Paul Channon (Southern, West)I do not want to debate the voluntary agreement because the House has spent some time on it. We are grateful for these amendments, which go some way to meet the points we made in Committee, and I advise my hon. Friends to accept them.
§ Amendment agreed to.
§ Amendments made: No. 3, in page 3, line 35, after 'retail', insert 'of such other food or'.
§ No. 4, in page 3, line 40, at end insert:
§
'(2) In subsection (1) above—
subsidised food" means food specified in or under subsection (2) of section 1 above, including bread and, if an order under paragraph (b) of that subsection describes the food to which it applies by reference to its use for the manufacture of any product, that product;
fresh food" means food produced in the course of agriculture, horticulture or fishing which has not been incorporated in any processed product and to which no process has been applied except—
§ Mr. ChannonI beg to move Amendment No. 6, in page 4, line 14, at end insert:
'(d) an order under paragraph (a) of that subsection shall have regard to the principles enunciated in any code for the time being contained in an order under section 2 of the Counter-Inflation Act 1973, to the extent that they enable persons to avoid selling at a loss or at a low margin of profit'.
§ Mr. SpeakerIt will be convenient to discuss at the same time Government Amendment No. 24.
§ Mr. ChannonWe had a debate on a similar point in Committee, when the Under-Secretary of State for Employment said that further study would be given before Report to our point that it was monstrous that, under Clause 2, orders could be made which would actually compel people to sell at a loss or at a low margin of profit, below the rate that the Price Code would permit and below what the Government believed to be a reasonable margin. That still strikes me as being extremely unreasonable if the Government persist in it.
I am therefore grateful to see Amendment No. 24, tabled recently, which I hope will go some way to meeting our points. I think it will be for the convenience of the House, before deciding whether to accept my amendment, to hear from the Government what would be the effect of Amendment No. 24.
§ Mr. John Fraser rose—
§ Mr. SpeakerThe hon. Gentleman may speak to Amendment No. 24, but, of course, he will have formally to move it later on.
§ Mr. FraserThank you, Mr. Speaker.
I gave an assurance in Committee that I would consider this point. I will not go into the technical deficiency in the Opposition amendment, but perhaps I may reiterate that there are a number of protections available, even if the Bill were not further amended.
The first protection is that the code protections against low profit or running into a loss-making situation still apply to individual enterprises. Although an 1676 enterprise might be restricted in the prices of certain goods, the general protection against low profits and against making a loss and which existed in the Price Code still obtains.
Secondly, the range of goods which is likely to be dealt with under Clause 2 would be very much less than all the goods sold by an enterprise, which would, again, have the advantage of the code.
The third protection, an additional protection arising out of my right hon. Friend's statement earlier today, is that I have informed the retail trade that so long as the agreement works satisfactorily it will not be my intention to operate the powers under Clause 2 except with regard to foodstuffs. There is a further assurance that there will be a restricted range of price regulation orders.
There was the defect that the orders would be very difficult to draft if they had had to have regard to the Price Code. What we are proposing in Amendment No. 24 is that in determining whether and in what manner the powers are exercised by the Secretary of State she shall have regard to the circumstances of the food trade and the trade in other goods to which the clause applies and to the effect of the exercise of these powers on the profitability of those trades.
I gave an assurance in Committee that it is not the intention of the Government to drive firms into loss-making situations. That amendment recognises that the Government accept the principle that their powers must be exercised with discretion and must avoid an unjustifiable impact on profits. The amendment will ensure that, in making orders under the clause, the Secretary of State will consider whether the making of a price regulation will give rise to loss making or to unacceptably low profits. As I say, it is not the intention of the Government to drive firms into loss-making situations, to create bankruptcy or to erode profits unduly. I hope that the duty on the Secretary of State, in making an order, to have regard to profitability will be an acceptable compromise.
§ Mr. BiffenMy hon. Friend the Member for Southern, West (Mr. Channon) is to be congratulated on having moved the amendment. I have no doubt that if this and other pressures had not been 1677 exercised on the Government it would have been unlikely that we would have seen Amendment No. 24 on the Paper.
So far as it goes, I welcome that amendment, but the whole speech of the Under-Secretary of State for Employment, it seems to me, reveals an almost culpable degree of innocence about the operation of the Price Commission. One only has to look at the experience of companies engaged in bread manufacture to realise that they have been obliged to carry the very unremunerative aspects of their business of bread manufacture in their other trading activities. One can do no better than turn to the latest published accounts of Spillers and the statement by the chairman, Mr. Vernon. My hon. Friend the Member for Devon, West (Mr. Mills) has a very direct and practical working experience of these matters, and I would welcome at a later stage his brief endorsement of my words.
These matters are not academic. First, bread is included as one of the subsidised items under Clause 1; and secondly, bread is a commodity which has been subject to political control ever since the establishment of the National Board for Prices and Incomes. There have been more reports from that board on bread than on any other single commodity. It is the fear of the business community, and a fear which is not born out of nightmare hallucinations but out of actual working experience, that where one gets a politicisation—to use an ugly word—of business activities one gets into enforced cross-subsidisation.
It was a fair point by the Secretary of State for Industry that the steel industry had been obliged to operate in a non-economic fashion to the benefit, to some extent, of steel users. I think that anyone looking at that situation would agree that it was a valid comment to make on the way in which the steel industry has been subject to political pressures in recent years. I should like to think that the Secretary of State for Industry will draw the right conclusions from that situation, which is that one wants rather less political interference than more in business activities.
Certainly my right hon. and hon. Friends are right to be apprehensive about the extent to which the Government, either by legislation or, even more 1678 disgracefully, by the kind of pressures that are exercised, so-called "voluntarily"—I put that word in inverted commas—with a statutory background, require certain activities to be carried on either at a very low rate of return or at an actual loss. There is already too much on the record of this kind of thing happening for us to be other than very apprehensive about how this policy will be put into effect.
§ Mr. SainsburyI should declare an interest in the subject under discussion. I hope that, my having declared it now, it may stay declared and not need repeating if I should be fortunate enough to catch your eye, Mr. Speaker, on another occasion during the debate.
Having heard the Under-Secretary speak I am sure that anybody in the trade would be very reassured. However, what remains worrying to me is that I understand that he is not really supporting my hon. Friend's Amendment No. 6. Admittedly his words would seem to lead one to believe that he would find it easy to support. He referred to the code protections still applying. That is just what the amendment proposes. He referred to the range of goods covered as not being a very extensive range, but surely he is aware that for many shops the range of goods would be their entire range, and that, therefore, it would not be possible to cross-subsidise into other commodities if they were not there to be sold. I refer in particular to the specialist fresh food shops.
The hon. Gentleman said that assurances had been given that if the voluntary agreement were working satisfactorily it would not be the intention of the Secretary of State to exercise her powers under the clause. I do not know who judges whether the voluntary agreement is working satisfactorily. I do not believe that this is subject to adjudication by some independent tribunal. It seems to be possible, following upon what my hon. Friend the Member for Oswestry (Mr. Biffen) referred to as the politicisation of these matters, that the voluntary agreement might be held not to be working satisfactorily, for purely political reasons. In that case, as the clause stands, certain traders might find it impossible to trade other than at a loss. In those circumstances, I am surprised that the Under-Secretary is not 1679 able to recommend his colleagues to support the amendment.
§ 6.30 p.m.
§ Mr. Peter Mills (Devon, West)I wish to support what my hon. Friend the Member for Oswestry (Mr. Biffen) has said. I believe, particularly in the case of the bread industry, in which I have some interest, that firms are being put in a quite intolerable position. I do not see why any company should go on subsidising the consumer. It is not in the long-term interests of the consumer that bread should continue to be produced at a loss. In the present economic climate it is incredible that Governments should expect the industry to subsidise bread manufacture. Costs are rising at an alarming rate and I know of no bread-making company which is making money out of that activity.
The same thing applies not only to bread. In agriculture beef is being produced at a loss, but why should it be? The extraordinary thing is that companies over which the Government have no such control, or upon which the Government cannot exercise such pressure, can virtually automatically put up their prices. They have to go through a procedure, but they get their increase just the same. Companies like Spillers and others are in an intolerable position, and I believe that we should support the amendment.
§ Mr. ChannonDoes the Under-Secretary propose to reply to some of the points raised by my hon. Friends before I ask leave to withdraw the amendment?
§ Mr. John FraserI was not intending to say very much more. I do not know whether the hon. Member for Hove (Mr. Sainsbury) realised that I was offering the Government's amendment as an alternative to the Opposition's amendment. I have sought to give an assurance that under our amendment my right hon. Friend the Secretary of State will need to have regard to profitability. I was explaining in my previous intervention that a number of other protections are available. If the hon. Member for Hove was suggesting incorporating the code protections in the order, I must explain that the purpose of the price regulation orders, which will be extremely limited 1680 in number, if indeed there are any, will be set out as clearly, concisely and simply as possible.
If, under the terms of the Opposition's amendment, it was necessary for the order to have regard to the protective provisions of the Price Code, the order would have to be an extraordinarily detailed document which would have very little meaning either to the trader or to the consumer. It would, for instance, have to repeat the somewhat lengthy provisions of the code which are difficult to understand at first reading. Indeed, someone first observed that it was called a code because it had to be deciphered. That is the objection to the Opposition's amendment, and I hope that in putting forward an alternative to it which will require the Secretary of State to have regard to profitability we have met the Opposition's point. I gave no undertaking in Committee that we would move an amendment on Report to deal with this matter, but we have given it serious consideration and that is the reason for our alternative proposal.
§ Mr. ChannonOne of our difficulties is that the Government's amendment is a starred amendment and we have had no time to consider it. I hope, however, that my hon. Friends will agree that the Under-Secretary has gone some way to meet the points we raised in Committee. I am sure that our noble Friends in another place will want to look at the new provisions more carefully than we have been able to do, and unless my hon. Friends feel strongly on the issue I should like to withdraw my amendment and accept the Government amendment No. 24 when we come to it. Accordingly, I beg to ask leave to withdraw the amendment.
§ Amendment by leave, withdrawn.
§ Mrs. Sally OppenheimI beg to move Amendment No. 7, in page 4, line 16, leave out '31st March 1975' and insert '7th November 1974'.
The amendment has a simple purpose and is extremely modest in its objectives. Indeed, Mr. Speaker, I am beginning to wonder whether I am starting to specialist in modest amendments. The point of the amendment is to limit the application of any orders under Clause 2 to November 1974 instead of the proposed date in the Bill of March 1975. The Price Code is due to be fundamentally redrafted 1681 this autumn and we therefore risk running into the situation in which Clause 2 will be applied to a completely redrafted Price Code. Application would then possibly be particularly difficult and anomalous. In that application of a different code, the whole meaning of Clause 2 might be changed. If a sale were to be made after November this year in relation to an entirely different code, which might involve unduly harsh conditions when combined with the requirements of Clause 2, that would amount to a sort of retrospective legislation that none of us would welcome.
I consider this to be a reasonable point. Perhaps 7th November is not the precise date for the redrafting of the Price Code. If it is not, perhaps the Minister can indicate what the correct date is. It would be possible to table an amendment in another place to take account of the different date.
§ Mr. Bruce-GardyneI hope we shall have some elucidation about the timing of the next stage of the monkey business which is described as the revised code. We have been told that the Minister and her hon. Friends are hard at work on it and that we shall see the results in the autumn. I agree with my hon. Friend the Member for Gloucester (Mrs. Oppenheim) that it would be absurd that we should perpetuate Clause 2 for the application of the existing code if that code is to be superseded in the autumn.
I cannot forbear recalling that if an amendment to the original legislation, which was supported by hon. Members on both sides of the House, had been accepted, the counter-inflation legislation would be coming to an end in the autumn in any case. The Minister will recall that the amendment was to limit the life of the legislation to one year instead of three, and I suspect that he even voted for it. It will be interesting to see how he justifies maintaining the operation of Clause 2 into 1975 when he, I suspect, and certainly the vast majority of his hon. Friends, voted for an amendment which would have brought the substantive legislation to an end in the course of this year. That is, to say the least, an anomalous position to adopt.
My hon. Friend the Member for Gloucester fairly described her amend- 1682 ment as modest. I should have preferred an amendment which deleted the power which the Secretary of State is taking to sustain her powers under Clause 2 until 31st March 1976 by order. It seem incredible that we should be asked to give the Government authority to maintain those powers in relation to the existing code when we are told that we shall have a different code by the autumn—or is it that all the talk about having a new code in the autumn is pure window-dressing and the Government expect to soldier on with the present ramshackle affair into 1975 and even 1976? These are matters about which we need elucidation.
§ Mr. CormackI hope that the elucidation for which my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has asked will be forthcoming. There is an overriding reason why the amendment should be accepted, though I should like the date to be 1st July rather than 7th November. We are in a pre-election situation. Therefore, it seems sensible to terminate the pernicious powers in question in November so that immediately after the October election the new Government, who will obviously be of a much more sensible persuasion, will have the decks cleared and will not have to bother with repealing these silly provisions. They are purely and simply window-dressing, an attempt to win the votes of the electorate, and 7th November should give time enough for that purpose. Therefore, let us terminate the provisions as soon as possible thereafter.
§ Mr. Giles ShawI first declare my interest in food manufacturing, in that I am involved with a company in the industry. The Government have laid great stress on the voluntary co-operation of the retail and manufacturing food trades. It seems to me pernicious that those trades run the risk of accepting under this clause the imposition of a Price Code which is in the process of being altered and which may be greatly changed. I am sure that if they were asked to co-operate voluntarily in such circumstances they would withdraw that co-operation. It is essential that we bring the dates and times into line so that the food manufacturing industry knows where it is.
§ Mr. John Fraser1 do not believe that there is a close relationship between the Price Code and the clause. We have already made it clear that one of the main purposes of the clause is to have the power to regulate the price of those goods which will be subsidised. It would be irresponsible for a Government to introduce food subsidies and then not take power to ensure that the benefit of those subsidies was passed on to the general public. I do not think that there is any dispute between the two sides of the House that that power should exist.
It would be ludicrous to introduce a measure which is likely to become law this month and then find that the powers of regulation which flow from subsidising certain foods expire on 7th November this year. That would be treating Parliament somewhat farcically. I do not want to be disrespectful, but it would be nonsensical to approve these powers now and have them lapse on 7th November.
6.45 p.m.
There is little relationship between the two matters. I understand the point that from time to time there may be a relationship between the price regulation and the code—for example, if the protections in the code against a loss-making situation were not as good or as bad as they are now.
Conservative Members have asked for reassurance. The first thing I can to say to reassure them is that every order made under the clause is subject to debate in the House. Secondly, any new code presented to the House is subject to affirmative resolution. There is, first, the opportunity to debate the exercise of the regulation-making power under the clause, and secondly there is the opportunity to debate the code. Therefore, Parliament has adequate protection. To say that the power should be given but that it should expire on 7th November would be an unreasonable curtailment of the powers we seek in the Bill.
§ Mr. Bruce-GardyneThe Minister says that the orders under the clause are subject to the affirmative resolution procedure. My understanding of the clause is that only an order to extend the duration of the clause is subject to the affirmative resolution procedure and that an order under its provisions is subject to the 1684 negative resolution procedure. That makes a substantial difference. Although the hon. Gentleman has been referring to the need for control over subsidised foods, which is one of the deleterious consequences of the attempt to subsidise food, the clause goes much wider and relates to articles
which appear to the Secretary of State to be necessities normally the subject of recurrent expenditure".
§ Mr. John FraserI hope that I did not mislead the House. I think I made it clear which order required affirmative resolution and which required negative resolution. The point I am making is that I think there is adequate parliamentary control of the two processes. That must be a matter of judgment for the House.
I should have thought that the Opposition would not want in a parliamentary or any other way to celebrate the anniversary of stage 3. That is something they might better forget, having regard to some of the problems we face as a result of it.
I hope that the House will regard it as unreasonable to limit to November this power of a Bill which will become law in June or early July, when there are other opportunities to discuss matters which cause concern to the hon. Lady the Member for Gloucester (Mrs. Oppenheim).
§ Mrs. Sally OppenheimI thank the hon. Gentleman for the way in which he has dealt with the amendment. He showed that he understood its fundamental purpose, but he is not right in saying that the clause does not relate to the Price Code. If the Secretary of State's voluntary shopping basket were made statutory, it would be a means of focusing the cuts in gross profit margins under the amendment to the Price Code and certain items under the clause. Therefore, there is a relationship, and orders made under the clause in conjunction with an entirely new price code could be very different from those we have envisaged in our discussions of the clause so far. It is true that if we imposed the limitation of 7th November the order could be renewed by a further order, if Parliament wished.
Perhaps the Minister can give an assurance that if, as we expect, there is a fundamental renegotiation of the price 1685 code, the House will be given an opportunity to debate it in the context of the clause, if necessary, and act accordingly.
§ Mr. John FraserI recognise the relationship in the hon. Lady's mind between price regulation powers and the Price Code. But I hope that the House will find satisfactory the assurance I have given that Parliament will have to debate any new code, and that the matter can be left there.
§ Amendment negative.
§ The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams)I beg to move Amendment No. 8, in page 4, line 19, at end insert:
'(4A) Before making an order under subsection (1)(a) above the Secretary of State shall consult, in such manner as appears to him to be appropriate having regard to the subject-matter and urgency of the order, with such organisations representative of interests substantially affected by the order as appear to him, having regard to those matters, to be appropriate'.
§ Mr. SpeakerWith this amendment it will be convenient to take Government Amendments Nos. 13, 15, 17 and 20.
§ Mrs. WilliamsThis group of amendments satisfies the undertaking which was given in Committee, and which was repeated by me in the debate on the clause, regarding statutory consultation. Hon. Members who served on the Committee will recall that one of the difficulties about introducing this matter in the early stages of the Bill's passage through the House was that there was no agreement about what would constitute satisfactory bodies with which to consult.
Prior to the introduction of the Bill my Department and the Minister of Agriculture, Fisheries and Food were engaged in discussion and consultation with literally dozens of organisations. It was made clear to the Committee—and it is fair to say that the Committee understood the difficulty—that we would have to get agreement with the trade on what it regarded as suitable bodies with which to consult. We have now received broad agreement within the trade that on general matters concerning both price orders and display-of-price orders it would be appropriate for the Government to consult the CBI and the Food and Drink Industries Council on manufacturing matters and the Retail Consortium and the CBI on 1686 retailing matters. We agreed to put forward an amendment to indicate that we regarded ourselves as bound to consult statutorily with those bodies that the trade considered to be representative.
In addition, we shall consult any trade organisation that is specifically affected by an order as we made clear in Committee. We have done so, for example, on food subsidies. Further, it is our intention to write to all organisations representing interests that are affected by an order to enable them to ask for representation by delegation in addition to the bodies which we are statutorily committed to consult. That will enable such organisations to take steps to be included. We intend to give publicity to orders so as to enable non-affiliated bodies to keep in touch with developments and to express their views in written form.
Amendment No. 13 basically takes a parallel power regarding the making of price marking orders. It covers unit pricing orders and other matters that are dealt with in Clause 4. We would feel ourselves bound to consult statutorily the bodies I have described, but if an order particularly affected an individual trade we would be willing to consult that body and to publicise the fact that we would do so.
§ Mr. Michael LathamThe right hon. Lady said at the beginning of her remarks that she had consulted the trade and that it had been agreed that certain bodies should be treated as representative for the purposes of discussion. Will she tell the House whom she consulted in getting that agreement? Did her consultations go wider than the people who were delegated as representatives?
§ Mrs. WilliamsWe have consulted widely and we understand that a number of the bodies which previously wished to talk to us separately—I hope that the hon. Gentleman will not ask me to give him a list out of my head—are now prepared to be brought within the umbrella of other organisations. For example the Retail Food Confederation, while asking to be considered separately for certain purposes, regards itself as covered by the Retail Consortium for other purposes including general consultation. We have gone beyond talking to the bodies that are the beneficiaries of the amendment.
1687 I hope that Amendment No. 15 will be accepted. It substitutes for a reference to the Secretary of State a reference to the Department of Commerce. As the House will recognise, the Department of Commerce will have the same consultations in Northern Ireland with appropriate bodies as we shall have with appropriate bodies in this country. The House will know that for some matters industry in Northern Ireland is represented by different organisations from those that are representative in the rest of Great Britain.
Amendment No. 17 makes it clear that a price range, as distinct from a method of displaying a range, would be a matter of consultation. That is one of those tongue-twisters that I had better take two sentences to explain. A price range is merely a matter of reporting facts. For example, the Price Commission's price ranges and the CBI's price ranges are statements of fact. However, it is right and proper that when a price range is proposed it should be subject to consultation. I hope the House will accept that this is an extension of our obligation to consult on any orders that involve price ranges although not on the facts encountered within the order.
The purpose of Amendment No. 20 is to ensure that we do not have to repeat consultations that have already taken place. That is fundamental because the consultations that have already taken place are now bound up in the Bill—for example, the consultations that took place on subsidised goods. It would be a somewhat demeaning to go back and recommence such consultations because we now have a statutory requirement to consult bodies that have already been consulted exhaustively.
This is a substantial group of amendments and I think it is fair to say that they meet the wishes of both sides of the House regarding statutory consultation. I hope that hon. Members will not feel it necessary to debate these amendments at great length as I believe that they meet the requirements of the House and of the Committee.
§ Mr. ChannonThe House will be grateful to the right hon. Lady for tabling these amendments. We tabled some amendments in Committee concerning consultation and we received certain assur- 1688 ances. We are grateful to the right hon. Lady for what she has said, and the amendments strike me as being extremely satisfactory. I advise my hon. Friends to accept them with alacrity and pleasure.
§ Mr. Michael LathamBefore we accept the amendment, I wish to raise one or two short matters. I did not have the privilege of serving on the Standing Committee although I have endeavoured to read the Committee's proceedings. The orders which the right hon. Lady has power to make under Clause 2(1)(a) are very wide in extent. Are they to be made over a whole range of goods, and is it possible to make them in respect of one shop at one particular time? Can the right hon. Lady serve a notice on an individual shop? If so, in what circumstances would she envisage consultation taking place even with the expression:
having regard to the subject matter and urgency of the orderin Amendment No. 8? I am genuinely seeking the right hon. Lady's guidance.
§ Mrs. WilliamsIt is not our intention to apply any order to one individual shop. It might be the case that we shall want to apply an order to a foodstuff—for example, a subsidised commodity. Such an order would apply to all shops which sold that foodstuff. I am happy to give the hon. Gentleman the assurance he seeks.
§ Amendment agreed to.
§
Amendment made: No. 24, in page 4, line 19, at end insert—
'(4B) In determining whether and in what matter to exercise the powers conferred by subsection (1)(a) above the Secretary of State shall have regard to the circumstances of the food trade and the trade in other goods to which this section applies and to the effect of the exercise of those powers on the profitability of those trades'.—[Mr. John Fraser.]