HC Deb 11 November 1974 vol 881 cc20-2
22. Mr. Giles Shaw

asked the Secretary of State for Prices and Consumer Protection why relief from provisions of the Price Code has been given to sugar refiners under Statutory Instrument No. 1793, but no relief has been given to food manufacturers using sugar.

Mr. Maclennan

There were two main reasons for the decision to shorten the 28 days' notification period for the sugar refiners. First, the increased price for sugar supplied under the Commonwealth Sugar Agreement dated back to 1st September and made it necessary for the refiners to recover excess costs on earlier shipments as well as the higher costs for current supplies. Secondly, a price equalisation scheme had to be introduced quickly to avoid distortion of competition in the food industry and inequity between different groups of consumers. I consider that these circumstances are unique.

Mr. Shaw

While thanking the hon. Gentleman for his comments, may I ask him three questions? First, in the name of equalisation, the principle which was involved, would it not be fair that those who use sugar in the production of food should be entitled to the same benefit as the refiners vis-à-vis the Price Code? Second, in the name of equalisation and in so far as there are problems of maintaining profitability and cash within the food industry, is the Minister aware that some £20 million has been added to the costs of the food industry by this measure alone? Thirdly, again in the name of equalisation, there are some 9,000 jobs at stake in sugar refining. There are 250,000 jobs in those parts of the food industry which are dependent upon sugar. Should they not have equal protection too?

Mr. Maclennan

The hon. Gentleman's comparison between the position of the sugar refiners and that of manufacturers using sugar is not entirely apt, for the reasons I have given. The liquidity problems of the sugar manufacturers are real but not special. The hon. Gentleman may be interested to await the outcome of the Price Code review, which will be announced tomorrow, before further considering the matter. I think that may cover his two latter points.

Mr. Tom King

In looking at a review of the Price Code, is the Minister aware of the particular problem of whether sugar is defined as a raw material? This matter was raised once before, and it was agreed that sugar was a raw material and, therefore, food manufacturers were entitled to relief under the Price Code. I understand, however, that the Price Commission has now changed its view again. Will the hon. Gentleman look at the matter?

Mr. Maclennan

That point has been made to us in the course of consultations on the review of the code, and I ask the hon. Member to await the announcement tomorrow.

Mr. Michael Morris

Is it not a fact that the Government have left negotia tions on cane sugar so late that there are no supplies available? Is it not also a fact that the negotiations on Australian sugar dillied and dallied so long that those supplies are not available? That being the case, we have the situation that food manufacturers, having relied on Government assurances, are now having to go into the open market and pay a huge sum per ton of sugar. In those circumstances, is it not just that they should be viewed with understanding by Her Majesty's Government?

Mr. Maclennan

The hon. Gentleman ought to be aware that it was his Government which left the whole position wide open. The present Government are engaged this week in discussions under Protocol 22, and we hope to have something more categorical to ensure the access of 1.4 million tons of cane sugar to the market than his right hon. Friend left us with.

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