Food Subsidies (Hansard, 20 May 1974)

§ 1. Mr. Aitken
asked the Secretary of State for Prices and Consumer Protection how much public money has been expended since 5th March, to the nearest convenient date, on food subsidies.

§ The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams)
In the period up to 15th May expenditure on food subsidies amounted to £42½ million.

§ Mr. Aitken
Will the right hon. Lady tell the House how much of that sum has been spent in subsidising the food of the 8 million or so annual visitors and 2 overseas tourists to Britain? Secondly, approximately how much of that sum has been spent in subsidising the food of those who are affluent enough to patronise hotels and restaurants? Is the right hon. Lady satisfied that this system, which subsidises those who are affluent enough to patronise restaurants, is compatible with the social compact?

§ Mrs. Williams
On the first part of the question, I could not reply in detail without having further notice. I should think that the proportion would be very small indeed. On the second part of the question, the hon. Gentleman is simply wrong. The benefit of subsidies to lower-income families—those with an income below £20 a week—including pensioners, is two and a half times as great as it is to families with incomes of over £60 a week. It is 2½ per cent. of incomes as compared with less than 1 per cent.

§ Mr. Ridsdale
What consultations is the right hon. Lady having with the Minister of Agriculture? There is serious fear among farmers that we shall have a shortage not only of beef but also of pig-meat and that this will result in additions to prices. Would it not be better if a proportion of these subsidies went to producers as well as to consumers?

§ Mrs. Williams
The hon. Gentleman will find that this matter arises on a later Question, when I should prefer to answer it.

§ Mr. Graham
Will my right hon. Friend accept that the policy of subsidising food is warmly welcomed and appreciated by my constituents in Edmonton? May I ask her not to be inhibited by attacks on the subsidisation of food for the consumer, bearing in mind that in four years the previous Government subsidised industry by more than £3,000 million?

§ Mrs. Williams
I thank my hon. Friend. I should like to point out that subsidies to private industry alone amounted to about £2 million a day and were very much less cost-effective than subsidies on food.

§ Mr. Channon
Will the right hon. Lady recognise that the food subsidies which are being provided in this indiscriminate way are all being paid for out of indirect taxation which is hitting the pockets of those who are getting the food subsidies? In fact, as the Government have admitted to the House, the total effect of all their actions is to increase the retail price index rather than reduce it.

§ Mrs. Williams
The hon. Gentleman relies rather a lot on remarks instead of figures. I have given him the figures, which indicate the extent to which lower-income families benefit from subsidies as compared with higher-income families. In addition, the changes in direct taxation in the Budget brings in £440 million from those with an income of over £60 a week while those with incomes of below £20 a week save £18 million. That is all part of the Government's belief in equalising incomes.

§ 4. Mr. Silvester
asked the Secretary of State for Prices and Consumer Protection what proportion of the total expenditure so far committed to food subsidies will be received by households with incomes over £30 per week; and what proportion will be received by households with incomes under £30 per week.

§ Mrs. Shirley Williams
It is estimated that 76 per cent. of the expenditure will be received by households with incomes above £30 per week and 24 per cent. by households with incomes below £30 per week. Thirty pounds per week is of course a very low figure for the purposes of comparisons of this kind. In 1972 average household income was £42.85 and at the present time is clearly even higher. 4 Low-income families spend on average one-third of their money on food and will therefore receive proportionally more benefit from the subsidies.

§ Mr. Silvester
Will not the right hon. Lady begin to recognise that by juggling the figures in this way she is fraudulently hiding the fact that the vast bulk of the money voted by Parliament for food subsidies is going to people whose incomes she is not seeking to help, namely, the better off, while a very small proportion is going to the poor?

§ Mrs. Williams
I should have attributed rather more intelligence to the hon. Gentleman than that supplementary question suggests. He must be well aware that subsidies are financed by taxation. Therefore, if one increases taxation on the rich, and if the benefit of subsidies goes more greatly to the poor than to the rich, there is a consequent redistribution of income, which is part of the Government's policy.

§ Mr. Marks
Is not the point of subsidies that the rich subsidise the less well off, and is not this the reason why Opposition Members do not like them?

§ Mr. Channon
On the right hon. Lady's own figures, is it not a fact that of the £700 million which she is advocating for additional subsidies £500 million will be going to people with more than £30 a week and only £200 million to those below that figure? Is not this a total condemnation of her whole ludicrous policy?

§ Mrs. Williams
It is nothing of the sort. The hon. Gentleman must be aware that average wages today are well above £30 a week. The Question has been deliberately framed in order to elicite a most misleading answer. [HON. MEMBERS: "Oh."] Yes, indeed. If only Opposition Members will stop shouting and start listening, I shall add, as I have said on many occasions, that the benefit to pensioners is proportionately much greater than to any other group in the community.

30. Mr. loan Evans
asked the Secretary of State for Prices and Consumer Protection how much Her Majesty's Government have allocated to keep prices down by means of food subsidies; which food products have had their prices 5 reduced as a result; and how this has affected the average family.

§ The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)
The Government have allocated £380 million for food subsidies in the current financial year. The savings at the retail level as a result of the schemes already introduced are about 2p per pint on milk, 5½p per lb. on butter, 2p on large loaves of bread, lp on small loaves and 7p per lb. on eligible varieties of cheese. The total saving for a typical family of two adults and two children is estimated at about 60p per week.

Mr. Evans
I thank my hon. Friend for that reply. Does he recall that before the 1970 General Election the Leader of the Opposition said that the Conservatives would reduce prices at a stroke? Does he realise that in their first three months of office the present Government have done more than their predecessors did in more than three years? Will the Government carry on with this good work, which is deeply appreciated by the housewives?

§ Mr. Maclennan
The House and the country will have noticed the fractious and divided Opposition on this issue and will recall the total inaction of the Conservative Government in reducing prices directly or even in moderating, as we are seeking to do, the increase in prices.

§ Mr. Nicholas Edwards
Has the hon. Gentleman received my representations pointing out that in many rural areas milk distributors have taken the opportunity of the introduction of the milk subsidy to apply a delivery charge of a halfpenny for a pint for milk?

§ Mr. William Hamilton
That is private enterprise.

§ Mr. Edwards
Is that what was intended? If not, what does the hon. Gentleman intend to do?

§ Mr. Maclennan
I have received those representations from the hon. Gentleman. There has been a similar problem in my constituency. However, such increases have to be justified and we are investigating the position.