HC Deb 19 November 1974 vol 881 cc1245-73

10.10 p.m.

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

I beg to move, That the Food Subsidies (Tea) (No. 2) Order 1974 (S.I., 1974, No. 1913), a copy of which was laid before this House on 18th November, be approved. The order replaces the first order which was made shortly before the recess and came into operation on 1st September. [Interruption.]

Mr. Speaker

Order. Will hon. Members withdraw from the Chamber as quickly and quietly as they can?

Mr. Maclennan

I begin by apologising that it was not realised that the period from 22nd October until the opening of the present Parliament on 29th October counted towards the 28-day period within which time the order had to be approved by this House. The order thus lapsed on 16th November. We have, therefore, been obliged to make a No. 2 order.

A good deal of the subordinate legislation which comes before this House is long and complicated. By contrast, this order is brief and clear. The first article sets out the title and the operative date, while the second is the substantive provision. It states that Tea is hereby specified as food of a description in respect of which payments may be made under Section 1 of the Prices Act 1974. In other words, the effect of the order is to enable my right hon. Friend the Secretary of State for Prices and Consumer Protection to continue to pay a consumer subsidy on tea.

Section 1 of the Prices Act lists five foods in respect of which subsidy payments may be made, but provides for further items to be added to the list by orders subject to the affirmative resolution procedure. This is the first time we have made use of these powers. The order-making procedure was included in the Prices Act so that Parliament would have an opportunity to consider the implications of any addition to the subsidy programme. The terms and conditions of the tea subsidy payments are set out in a scheme made under Section 1(5) of the Act, and copies have been deposited in the Library for reference as necessary.

The Government decided to introduce the subsidy on tea early in September when the major tea companies would otherwise have implemented price increases following notifications to the Price Commission. Until this year tea prices had been stable for nearly four years, but largely as a result of a shortfall in the crop and increased world demand there had been a rise in the level of the London auction prices. It was accordingly decided to introduce a subsidy at a rate of 8p per lb., which offset the higher auction prices and brought down the level of prices in the shops.

The subsidy programme now covers six basic foodstuffs—liquid milk, bread, butter, cheese, household flour and tea. The inclusion of tea fitted in well with our general policy of selecting items that are important in the weekly shopping of lower income households and the elderly. Official surveys show that in 1973 average consumption per head among pensioners was about 3½ oz. of tea per week, while the figure for lower-income groups generally was about 3 oz. per week. As the national average consumption in the same period was only 2 oz. per week it seemed to the Government that tea was eminently suitable for subsidy.

I was encouraged to see from the Conservative Party's election manifesto that hon. Members opposite have had a partial conversion to food subsidies, in that they now recognise that it would not be practicable in the present economic climate to attempt to phase out the existing subsidies. I hope that they accept the need to continue the subsidy on tea which, as I have already indicated, was in operation well before the election campaign.

The estimated cost of the subsidy on tea in the current financial year is about £15 million. Continued at the present rate for a full year the cost would be about £29 million. The saving in terms of the retail prices index is about 0.1 per cent., which compares favourably with the cost-effectiveness of other food subsidies. I should perhaps add that the overall cost of the subsidy programme in the current financial year is about £500 million. It will be seen from this figure that tea is a comparatively small item in the programme.

The administrative costs of the tea scheme will not be very great as there are relatively few subsidy claimants. As with other schemes, the tea subsidy is administered on behalf of my right hon. Friend the Secretary of State for Prices and Consumer Protection by the Ministry of Agriculture, Fisheries and Food. The Ministry has arranged for the registration of packers and importers of tea, who may claim in respect of sales of tea and teabags in packets of 3 kilograms or less. Tea in larger quantities of up to 51 kilos, just over 1 cwt., is eligible for the subsidy only if it is sold for direct consumption; for example, in institutions such as hospitals. This condition is necessary in order to avoid the possibility of repackaging and double claims for subsidy.

Following the general policy of subsidising only basic foodstuffs used by the majority of households, it was decided that the more expensive varieties of tea should not be eligible for subsidy. The quantity of tea excluded from the scheme is not great but we did not feel that it would be right to use taxpayers' money to hold down the price of the more luxurious kinds of tea.

We must ensure that the expenditure on the tea subsidy gets through to consumers, and to this end the scheme contains a condition that subsidy claimants should not increase their prices without the prior approval of the Secretary of State. This supplements the existing requirement that the larger companies should pre-notify any price increases to the Price Commission.

In addition, the Government expect to lay before Parliament fairly shortly a Tea Prices Order which will specify maximum prices to be charged for the most popular brands of tea. The order will also provide for control over retailers' profit margins on a gross percentage basis, and will make provision for the display of price information in the shops. We are engaged at present in discussions with the interested organisations regarding this order.

To sum up, the Food Subsidies (Tea) (No. 2) Order 1974 is a necessary measure to enable the Government to continue to pay a subsidy on tea. The subsidy will be particularly beneficial to poorer families and the elderly, who have been most seriously affected by the sharp rise in the cost of living.

I commend the order to the House.

10.18 p.m.

Mr. Timothy Raison (Aylesbury)

The Under-Secretary was rather lucky in that his opening words were largely drowned by the hubbub of hon. Members leaving the Chamber. I was sitting fairly near and I was able to hear him apologise for the astonishing incompetence of his Department regarding the order. I should have thought that a great Department of State like his ought to have known when this Parliament came into being. We accept his excuses, but they were pretty lame.

What the Under-Secretary did not give us, unless I misheard him, was an indication of what happens regarding the missing four days. Parliament has sanctioned tea subsidies until 16th November. This order, if passed, will sanction the resumption of tea subsidies from 20th November. But what happens to the tea subsidies for the four days between those two dates?

It is one of the fundamental principles of the House of Commons that we control expenditure. The Government cannot spend money unless the House of Commons approves it. I should have thought that at the very least the Under-Secretary could tell the House how the period of four days is to be covered when there is no legislation that I can see that allows the Government to pay the subsidy in relation to that period. If the Under-Secretary does not know the answer he must send for a Law Officer and find out.

The Opposition are prepared to accept the order. We accept it for the reason that we did not oppose the introduction of tea subsidies before the General Election, and we do not, therefore, propose to vote against the order tonight. But the Government must not assume that we shall automatically support future proposals for further subsidies. The argument made over and over again that subsidies are far from the most effective way of spending such money as is available is one that gains rather than loses in strength as time goes by.

The fact is that subsidies do not help the poorest people. The Minister today gave a revealing answer to a Question on the subject. He said that the estimated cost of food subsidies in the current financial year was £500 million, and added: it is estimated that about 33 per cent. of this expenditure will be received by households with an income of less than £40 a week, which contains about 32 per cent. of the population. About 52 per cent. of the expenditure will be received by households with an income above £50 a week, containing about 52 per cent. of the population. There could hardly be a less redistributive measure than that. It once again proves the point that subsidies are not an effective way of helping the poorest people.

I accept that tea is heavily consumed by old-age pensioners, and I understand the Minister's argument there, but it seemed to me, from some rapid arithmetic, that the amount of money the average old-age pensioner spends on his tea is probably only about 2p a week—certainly a very small sum. [Interruption.] If I am wrong, the Under-Secretary can produce his figures when he replies.

It is reasonable that expensive, luxury teas should not be subsidised. But an interesting ingredient in the order is the way in which it highlights the excessive cost of teabags. I have always had a feeling that buying teabags was a waste of money, and the fact that the subsidy is applied to tea costing 75p a lb. in the form of teabags compared with 50p a pound in the ordinary form shows that one should think carefully.

Although we do not oppose the subsidy, it seems rather pointless on the face of it. Admittedly, the price of tea has risen, but it is still far from expensive. I believe that the cost of the sugar and milk that go into a cup of tea is still greater than the cost of the tea. I understand that 50 cups of tea can be made from a quarter of a pound—in other words, for about 10p. We also have figures showing that the saving for the average family of four as a result of the subsidy is only 3¾p a week.

The more we think about these matters the more we realise that the substantial sums we are spending on subsidies could be better spent in other ways, if the money is available at all. We heard from the Minister that the cost of the subsidy is about £15 million in the current year and that it will be £29 million in a full year. I do not think that hon. Members on the Opposition benches would have much difficulty in thinking up many ways in which the money could be well spent.

I ask the hon. Gentleman not only to answer my earlier question about what happens about the missing four days but to give an estimate of what he believes to be the future position over both the supply and the price of tea.

10.24 p.m.

Mr. Richard Wainwright (Colne Valley)

The Liberals intend to oppose the addition of a further food to the list of subsidies, as we have opposed all the subsidies consistently from the beginning of the legislation.

I will not weary the House by repeating the arguments of the hon. Member for Aylesbury (Mr. Raison), most of which I am happy to endorse. Relative to the retail price of tea, the subsidy is substantial, amounting to nearly 20 per cent. on the average retail price. Secondly, it is on a commodity which has little, if any, real food value. For other reasons it may be important to consumers but in terms of real food value there is virtually nothing in it. That makes it in some ways an even less satisfactory transaction than the earlier subsidies that have been pushed through the House.

It is the view of Liberals that the tea subsidy was chosen largely to provide an emotive rounding-off to the roll-call of subsidies which the Labour Party was able to put into its General Election manifesto. It was able to end its subsidy paragraph with tea. We all know that tea is an emotive word to many English people, if not to people throughout the British Isles.

As we have heard, the subsidy will cost in a full year £29 million. In the submission of Liberals, that could be very much more effectively spent on relieving specific ascertained needs. There is a further point which comes as ammunition to my argument from the Chancellor's Budget statement. When talking about the prices of products of nationalised industries he said: If we are to correct the large structural distortions which have affected our economy over recent years, with too much going into consumption and too little into investment and exports, it is inevitable that from time to time steps should be taken which will raise consumer prices. There is no escape from this ".—[OFFICIAL REPORT, 12th November 1974; Vol. 881, c. 279.] How can a resounding statement like that be squared with this squalid measure'? The situation is beyond my comprehension. At a time of a national crisis the existence of which nobody disputes, it is important that a Government should offer a consistent lead. How can the people take a lead from a Government who one day announce the importance of doing away with distorting subsidies and admit that there will have to be serious rises in consumer prices and who the following week come forward with a measure artificially to reduce the price of a commodity which has no real food value?

As we oppose this measure our only regret is that we are not supported by all the Opposition parties on an official basis. The consequence of the attitude which the Conservative Opposition have adopted ever since the Prices Bill has been an ever-growing number of subsidies. The Conservative Opposition said that they regretted the Prices Bill, that they did not believe in subsidies but that they would not oppose the Bill. Liberals could never understand that. If the Prices Bill had contained a once-and-for-all list of subsidies which would have represented the end of the matter we would not have gone along with it ourselves but there would have been logic in saying "This is a conclusive list of subsidies which for the time being we must accept, albeit with regret". That would have been understandable, but the Prices Bill gave the Government power to introduce an ever-growing number of subsidies. They have taken full advantage of that power throughout the summer and early autumn.

By failing to oppose the Second Reading of the Prices Bill and then by failing to oppose certain clauses in Committee, the Conservative Opposition encouraged the Government to make the fullest use of the subsidising powers that had been taken.

Mr. Fred Silvester (Manchester, Withington)

The hon. Gentleman says that our action would have been reasonable if there had been a list of goods to be subsidised. No doubt he will agree that a finite sum was involved. The Bill, however objectionable in other senses, has a limit.

Mr. Wainwright

Thank goodness there is an ultimate limit. I maintain that the Conservative Opposition have opened the door to the Government to use their powers to the limit. By this addition of £29 million in a full year the Government are creeping towards the expenditure of the maximum sum. I regret that they have received a measure of encouragement from Conservative hon. Members.

In the interests of a consistent lead to the country from this House, and because we believe that this is a mis-spending of taxpayers' money at a time when the lower paid and the retired in our population are desperately in need, we intend to oppose this measure.

10.31 p.m.

Miss Margaret Jackson (Lincoln)

It seems that the hon. Member for Colne Valley (Mr. Wainwright) and the hon. Member for Aylesbury (Mr. Raison) are falling into the same trap. They are condemning this measure excessively on the wrong grounds. The hon. Member for Aylesbury said that subsidies did not help the poorest. That is a rather sweeping statement. If he had said that they did not help them most effectively or were not the most cost-effective method one might have discussed that, but to say that they do not help the poorest people at all is in itself a mis-statement. The hon. Member also said that they were not redistributive.

I link those two statements because they seem to make the same basic mistake namely, that the food subsidies introduced by the Government were meant to be redistributive or were meant to give the most cost-effective help to the poorest people. It does not seem that they were ever so designed, and we have never said that that was the case. They were part of a range of measures introduced to combat inflation. The intention was that something should be done which would have an effect on the budgets of all families, because inflation hits all families. It is true that it hits the poorest most of all, and we tried to do other things which would help them.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Does not the hon. Lady agree that the necessity, claimed in this order, to print another £29 million is likely to make inflation worse not better?

Miss Jackson

I do not think that the hon. Gentleman and I are on the same point. I will return to it later if there is time.

We were seeking to combat inflation, and we saw that the way to do this was to deal with the problem of lost confidence among ordinary people. The Tory Party bore not just a heavy responsibility but the only responsibility for this lost confidence. I do not think that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) would entirely disagree with that.

We felt that the country was in a state when people were frightened by inflation—ordinary families, not just the poorest ones. Every family was feeling the effect of inflation in rent and food bills and so on. People were becoming alarmed. They were coming to believe that there was nothing that any Government could do, because the Tory Government refused to do anything. They felt that there were no measures which could be taken to combat an ever-increasing menace.

It was that loss of confidence which we sought to combat. We never suggested that food subsidies, or so many of the other measures we took, were ideal. We never suggested that they were the most cost-effective. We never suggested that they were meant to be redistributive. We saw this as a practical, political problem of a total loss of confidence among ordinary families and set about tackling it in the best way we could. Tory and Liberal Members may well disagree with us about the method of tackling the problem but to criticise it on the ground that it was not doing something it was never meant to do is irrelevant.

Mr. Raison

Surely the Minister referred to the redistributive qualities of this subsidy when he made the particular point of saying that it would help old people.

Miss Jackson

The Minister mentioned the effect that it had on the different earning categories and social security categories, but that is not the same as saying that the subsidy is meant to be redistribu- tive. I think that will be found to be the case from an examination of the record. I should be surprised if any Government spokesman has ever said that food subsidies were intended to be a method of redistribution. Tory and Liberal Members have criticised the measure for the sums involved. I agree that in some cases they are substantial, although the expenditure is not intended to be long-drawn-out. The sums are large because the Tory Government left us with enormous problems.

10.35 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The hon. Lady the Member for Lincoln (Miss Jackson) has made a most charming and disingenuous speech, and I shall refer later to some of the points she made. However, first I should like to take up the cudgels with the Under-Secretary of State, who said that this was a simple and clear order. The only point about which I want information and which the order does not mention is what the rate of subsidy per pound of tea is to be, what the annual cost will be, and how many civil servants will be involved in administering it. That is the only relevant information which should be in the order, but it is not in it. It is all about such matters as "eligible tea" and "relevant dealers" and other such jargon, whereas what we want to know is how much expenditure is involved in passing the order.

It is not necessary to subsidise tea. It is not a staple food of life or an important commodity in maintaining nutrition and health among the community. It is something which people enjoy and it is a pleasant and important beverage. But it is not essential to the family budget.

I cannot understand why the Government have renewed the order if it lapsed conveniently after the election. It is an absolute God-send to the Government if they can get out of it. The Government have had all the kudos possible out of it, having introduced it before the election. The hon. Lady the Member for Lincoln said that there was no economic point to the order, that it had no redistributive effect and no effect on the cost of living. She said, almost naively, that it was a glorious public relations exercise to win votes. It has done its work; it has won the votes. It is now out of commission. Therefore, we could have gone home at 10 o'clock and saved the country £29 million.

Mr. Ioan Evans (Aberdare)

Everyone gets the benefit of food subsidies on essential foodstuffs, but they are paid for in taxation. Therefore, the order is redistributive, and the old-age pensioner who enjoys a cup of tea welcomes it. If hon. Members opposite think that tea is not part of the old-age pensioners' diet they are living in another world. The subsidy is redistributive because the wealthy pay the taxes to pay for it and the lower income groups get the benefit of it.

Mr. Deputy Speaker (Sir Myer Galpern)

I ask hon. Members to make interventions as briefly as possible.

Mr. Ridley

If I may intervene in the hon. Gentleman's speech, I point out that I was talking about the speech of the hon. Member for Lincoln. She said that she did not think that the order was redistributive. I agree with her. She made an admirable point. She was right. The Minister said that the average consumption of tea among pensioners was 3½ounces. The subsidy is 8p per pound, which works out at 1¼ per week. Multiplied by 52, it comes to about 91p per year. If we were to put up old-age pensions by 91p a year it would have exactly the same effect. It would cost, on my rough and ready calculation, about £7 million to do so. It is surely better to spend £7 million on putting up old-age pensions than to spend £29 million on this ridiculous subsidy. That would be genuinely redistributive. If other beneficiaries were included, such as large, poor families or the disabled, it would still cost much less than £29 million.

It is to the £29 million that I want, finally, to address myself. Somebody sometime has to say this. The £29 million does not come from increased taxes, from clobbering speculators or from the rich. It does not come from all those bogymen whom the Government supporters are always seeing but who do not exist. It goes on to the borrowing requirement. It makes the borrowing requirement not £6,271 million but £6,300 million—which is what we were told last week it would be.

Where does that extra £29 million borrowing requirement come from? The Chancellor of the Duchy of Lancaster is not here. He is probably in Tehran or Abu Dhabi—I do not know where—but he has gone to borrow the money from the sheikhs. It is not coming from taxation. Redistribution just is not happening. What is happening is that the country's debts are being stacked up against pensioners and wage-earners, and they will one day have to pay it back. When we come to pay back the £29 million to the Arabs it may cost £50 million or even more. The interest will have accrued, the value of the pound will have fallen and inflation which it will cause will have made our currency worth much less.

Who will be the sufferers? The sufferers will be the old-age pensioners. Therefore, the order is directly against the interests of the poor. It is the worst thing that could be done.

Why my hon. Friend the Member for Aylesbury (Mr. Raison) is prepared to say all these things but is not prepared to take us through the Lobby against the order I do not understand. At some stage in the rake's progress which the country is embarking on it has to be pointed out that it is the addition of hundreds of small things like the 1¾ per week tea subsidy which is causing our economic decline. I very much disapprove of the order, and I hope that the Government will not proceed with such follies in the future.

10.43 p.m.

Mrs. Maureen Colquhoun (Northampton, North)

All these arguments were advanced in our debates on the Prices Bill, both on the Floor of the House and in Committee. I am amazed that Oppositon Members should pretend to misunderstand the Government's intentions.

Food subsidies were introduced to keep down prices. That was the fundamental thinking behind the Prices Act, and that was one of our election promises. No effort was made by the previous Conservative administration to deal with prices. In Committee on the Prices Bill Oppositon Members cried their crocodile tears, yet, surprisingly, did not vote against the Bill. It is extraordinary.

If I really believed that something was as wrong as the Conservatives pretended the Prices Bill was, nothing would persuade me not to vote against it. The Conservatives showed an alarming lack of courage during the passage of the Bill because, by and large and fundamentally, of political reasons. They were afraid to be seen to be voting against the British housewife. The Liberals at least have the courage of their convictions on this issue and are to be congratulated.

Tea is essential to the British nation—as essential as the air we breathe. [Interruption.] Of course it is. What would happen to anyone in an election who said he wanted to put up the price of tea? The Liberals want to clobber the tea drinkers, but what do the Tories want to do? Do they want to put up the price of tea? If that is their policy, let them say so and vote against the order. But for God's sake do not sit there—

Mr. Deputy Speaker

Order. I am very much interested in what the hon. Lady has said, but I tell the House honestly that if we could get short speeches I would repair to my own home and have a fresh cup of tea.

Mrs. Colquhoun

I ask right hon. and hon. Members opposite not to sit there and play their silly political game with the nation's tea but to declare their intentions. If they want the price of tea to go up, let them say so now.

10.48 p.m.

Mr. Giles Shaw (Pudsey)

I rise with some difficulty under the stricture of the hon. Member for Northampton, North (Mrs. Colquhoun) that we should declare our position on this subsidy. But I have to return to the point made so well by the hon. Member for Colne Valley (Mr. Wainwright)—that when it comes to subsidy there is a major and clear ambivalence in the Labour Party. We saw in the Budget Statement that subsidies are to be phased out, yet by this order food subsidies are to be extended within the £800 million for which permission was granted by the House earlier this year.

Mr. Frank Hooley (Sheffield, Heeley)

My right hon. Friend the Chancellor of the Exchequer did not say, that food subsidies were going to be phased out, and it has not been the policy of the Labour Party that they would be.

Mr. Shaw

The hon. Gentleman is right. The Chancellor did not say so, but the Secretary of State for Prices and Consumer Protection said that ultimately it was her intention to phase out food subsidies. But the Chancellor said, without peradventure, that subsidies of nationalised industry prices were to be phased out. We must therefore conclude that within the Government there is the view that subsidies for gas, electricity and coal should be withdrawn and that the pensioners, the housewives and the poorer families must pay the full prices for these products but that an entirely different principle must apply to food subsidies. That is the basis of the debate.

On the principle of subsidy, there is in the Labour Party an ambivalence between what is fair to certain categories of cost which are significant and what is fair to certain other categories of cost. The hon. Member for Northampton, North is wrong to suggest that the Conservative Party is alone in having an ambivalence in relation to food subsidies.

Turning to the Price Code, we note that the Government—and the majority of my right hon. and hon. Friends support them—are preparing to take measures which ease the code. The hon. Member for Northampton, North said that we did nothing about prices. May I remind her that we had a Price Code so severe that the present Government wish to amend it in several important respects? We must conclude, therefore, that this Government intend that prices in the shops for a wide variety of goods eventually reach their proper market level.

From the Under-Secretary came an eloquent appeal, like that of the Dutch boy of old with his finger in the wall of the dyke of inflation, for our approval of the Government's introduction of a subsidy on tea of 2p per quarter lb. The average price of tea is currently of the order of 9p per quarter, which is the equivalent of two postage stamps at the first-class rate.

The tea has been picked, blended, transported from somewhere like Sri Lanka to this country, and distributed to a whole range of shops, where it is available at prices ranging from 7½p to 12p per quarter and at an average price of 9p.

Given the prices of other commodities which the housewife has to buy, can it be suggested that a price of 9p a quarter is exceptional and deserves to be subsidised? Surely that price is incredibly low in relation to most food prices and in relation to many other prices which the housewife accepts.

We understand that the Labour Party is equally concerned to ensure that the tea producers—the under-developed world from which tea largely comes—should have an increasingly higher margin of profit on their produce. The Minister told us that the price of tea at recent auctions had moved from 45p per kilo a year ago to 66p today, and he thought that it was time for the Government to intervene in the mechanism between producer and consumer. However, I suggest that he would perform a greater service to the tea producers of Sri Lanka and elsewhere if he allowed them to take their full margin of the United Kingdom market in order to ensure that the growers obtained the fullest possible benefit. He will not do that if he introduces an artificial situation between producer and consumer.

It is calculated that a subsidy of 2p a quarter will provide a saving of £1.60 a year to the average householder. That is based on a daily consumption of four and a-half or five cups of tea. We in Britain drink greater quantities of tea in times of crisis, so I have no doubt that consumption will rise. But on present rates of consumption the subsidy will be the equivalent of 0.2p a cup. Everyone who drinks tea will be grateful for that. But, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out, the consequence of adding to the pensions or allowances of those in greatest need would be small compared with the £29 million in a full year involved in this proposed subsidy. Surely it would be better to allow those in need to spend any additional income as of right, rather than say that the Government are prepared to offer them 0.2p for each cup of tea that they elect to drink.

This is, once again, a measure which has many of the cosmetic features of a subsidy policy. It is designed, once again, to try to disguise the cracks in the principles of subsidy. It is designed, surely, to try to prevent the consumer establishing the true value of tea. If we interfere in the mechanism of what the value should be, we prevent the consumer recognising its true value and acting accordingly.

All that will be left will be for us to assuage our sorrows in a cup of coffee—without sugar, of course—with naught but the lees to brag about.

10.55 p.m.

Mr. Graham Page (Crosby)

There is a note on the Order Paper below the entry of this order which reads: The Instrument has not yet been considered by the Joint Committee on Statutory Instruments. As chairman of that Committee I should like to point out that the order was considered this afternoon and that the Committee has no point to which it wishes to draw the attention of the House. The order was considered so late because it was made and laid before the House only on Monday—yesterday. I think that the Committee has acted expeditiously in dealing with the order this afternoon.

As the Explanatory Note points out, the order is necessary because the previous order, which was made on 30th July, lapsed. The order requires the approval of the House within 28 sitting days, and that time expired on 16th November—last Saturday. Therefore, between last weekend and when the order comes into operation on 20th November there was no authority for the Government to pay any subsidies. I think that the Minister should explain what has happened during that period. Have unauthorised payments of those subsidies been made? If so, how is the matter to be put right?

If the Minister comes to the House with an indemnity Bill indemnifying those who have made unauthorised, illegal payments during that period, I am sure that the House will be generous in allowing such a measure to go through. It would not, for example, be like a Clay Cross wiping of the slate. When a mistake is made by the Government the House is usually generous in allowing it to be put right. It must be put right. The Government cannot be allowed to make unauthorised payments when the statute has deliberately provided that such an order should be approved by the House within 28 sitting days. Otherwise, the order lapses and the Government have no authority under it.

There was plenty of time for the Government to bring the first order before the House. As I said, it was made on 30th July last. The House has been sitting since we returned after the election, so there has been plenty of time.

It is unfortunate that the order should have lapsed. I am not sure how the administration will operate for these four days. If payments have been made to claimants, may I ask whether they are to be reclaimed? How will the administration of that reclamation be carried out? I think that the Minister ought to explain this matter to the House because, although it is a short period, it is a serious constitutional matter which should be put right.

10.58 p.m.

Mr. Ken Weetch (Ipswich)

I had not intended to intervene in the debate. However, I took serious objection to the remark by the hon. Member for Colne Valley (Mr. Wainwright) that this was a squalid measure. I hope that many people will have noted that remark very carefully. Whatever the merits or demerits of this proposal, there is nothing squalid about it at all. I suggest that to cast aspersions on the intention of this measure is totally out of place.

One point that took me aback was the comparison in principle between the order and attempting to remove the deficits of the nationalised industries to obtain a return to a more economic pricing policy. Trying to compare the two I thought was quite staggering. My right hon. Friend the Chancellor of the Exchequer inherited a calamitous series of deficits in the nationalised industries and that situation had to be dealt with, but to compare the two things in this debate is totally misleading.

It may be that the £29 million will cut the price of tea by only ½p per quarter, and that the decrease in the retail price index may be only one-tenth of 1 per cent., but that is not the point. In the fight against inflation certain key commodities are of crucial psychological importance. I suggest that tea is one, and we ought to recognise that fact.

It has also been called emotive, as opposed to being rational.

Mr. Ridley

Will the hon. Gentleman be more accurate and talk not about the fight against inflation but about the fight to get the retail price index down for political reasons?

Mr. Weetch

It has been called emotive, but there are times when this aspect of character has to be harnessed in the same way as anything else.

I also object to the extension of the argument against the order to the question of subsidies as a whole. It still is the case that lower income groups spend a greater proportion of their income on food than on any other item. To say that this is completely ineffective is misleading, because there are degrees of effectiveness. The most effective method is means testing, and that is a fact, because in means testing the most deprived sections of the community are never reached. Yet that is the alternative that is being offered.

What is significant in this debate is the love-hate relationship which the Conservative Opposition have with subsidies. We hear all the criticism in the world about subsidies here, but they never have the backbone to vote against them openly.

Mr. Nicholas Winterton (Macclesfield)

What rubbish.

Mr. Weetch

This order should receive the support of the House because it is practical and, however small, is of benefit—and that cannot be said for some of the arguments that we have heard from the Opposition tonight.

11.3 p.m.

Mr. David Penhaligon (Truro)

I should like to point out to Government Members that if someone boils a 3 kw kettle for seven minutes he will use about 0.3 of a unit of electricity, and at today's prices that would cost about 1.3p. Therefore, if the price of electricity is increased by 15 per cent. to remove subsidies, that is precisely the amount of money that is saved on subsidised tea.

11.4 p.m.

Mr. Maclennan

The House may agree that the Government were right to include in the Prices Act a provision enabling us to debate the addition of new commodities to those that we are already subsidising, because we have had a lively and stimulating discussion on the substance of the order and hon. Members have ranged rather widely.

A number of points have been raised, and I shall try to answer some of them quite fully.

The hon. Member for Aylesbury (Mr. Raison), whose presence on the Front Bench I welcome, quite properly raised the question of what he described as the missing four days, and the point was echoed by the right hon. Member for Crosby (Mr. Page).

I apologised at the beginning of my earlier remarks for the circumstances that had brought that about. I think the hon. Member will realise, on reflection, that it is unusual for an order to straddle two Parliaments in this way. There was some doubt whether, in law, the days when Parliament was here gathered before the Session had officially been opened by Her Majesty the Queen could be regarded as full sitting days. That is how the situation arose.

The hon. Member is right to ask what the consequences are. Certain tea subsidy payments were made yesterday before this error was discovered. I wish to tell the House how this matter can be dealt with in accordance with precedents. With the approval of the Treasury, these payments can and will be treated on an ex-gratia basis and the Appropriation Accounts for 1974–75 will be noted accordingly. The payments are clearly within the spirit and intention of Section 1 of the Prices Act, and Estimates provision has been made already, in the usual way. I have consulted my colleagues on this and there is no need to cancel the payments which were made during the unintended gap in the statutory powers.

Mr. Graham Page

This seems a terrible risk. It means that the Treasury can give away money when there is no legal authority to do so by just calling it an ex-gratia payment and including it in the accounts later. Surely this was not the intention of the Prices Act, 1974, when the hon. Member's Government put in that Act that he should have authority to pay out these subsidies only during the 28 days that the order remains in force.

Mr. Maclennan

The right hon. Gentleman is sufficiently experienced a parlia- mentarian—I am sure that he has studied these matters with great care—to know that what is happening is in no way unprecedented, and that there are good examples which may be quoted of payments of this kind being made ex gratia.

Mr. Ridley

Is the Minister aware that the Government now have to introduce a special Bill to enable them to pay out subsidies for four days retrospectively? Otherwise, the House will not pass the Supplementary Estimates which he will have to present. Governments have to live within the law more than any other group of citizens, because it is they who make it. If the Minister has admitted that he has made this mistake, he has no other course of action to take but to seek to present a Bill to put the matter right at a later stage.

Mr. Maclennan

The hon. Gentleman has already made it clear that he would have preferred the order not to be introduced at all.

Mr. Ridley

What has that to do with it?

Mr. Maclennan

I have taken seriously the point of the hon. Member for Aylesbury and I have explained how it can be dealt with in accordance with precedent. I have explained the background and circumstances which gave rise to this.

Mr. Raison

If the Minister is going to quote precedent on this, he must do so with chapter and verse. It is not good enough just to say that there are precedents. We shall certainly not accept his argument without looking at the matter more closely and carefully in future.

Mr. Maclennan

The hon. Member would be entitled and, indeed, right to do so. I regret the situation that has arisen and I hope that he will be satisfied that we shall take all appropriate steps to rectify the position.

Mr. Ridley

What steps?

Mr. Maclennan

Turning to the question of the value of the subsidy—

Mr. Ridley


Mr. Deputy Speaker (Sir Myer Galpern)

Order. The Minister is not giving way.

Mr. Ridley

Will the Minister give way?

Mr. Deputy Speaker

Order. Mr. Maclennan.

Mr. Maclennan

The hon. Member for Aylesbury questioned the value of the subsidy and suggested that the proportional benefits from the tea subsidy were not sufficient to justify the introduction of the order. He and his hon. Friends have been equivocal about this. My hon. Friend the Member for Lincoln (Miss Jackson), who made a cogent speech, and other hon. Members were right to point to the ambivalence of the Conservative Party in carping from the beginning about the introduction of food subsidies but at no point being prepared to follow the Liberal lead and vote against them. The facts are that over half of the expenditure of the tea subsidy is expected to go directly to households with incomes below £50 a week. The precise proportion is 53 per cent., which is the highest proportion for any of the subsidised foods. Comparable figures for other foods are cheese 45 per cent., butter 48 per cent., milk 48 per cent., bread 51 per cent., and household flour 52 per cent.

The hon. Member for Aylesbury also asked about the future position with regard to the supply of tea. The reports that we have received from the trade indicate that there has been a marginal increase in the supplies of tea moving into distribution since the subsidy was introduced. We think that this was probably an initial response. It is too early to forecast whether the trend will continue. However, it is probably unlikely that the subsidy itself will reverse the slow decline in tea consumption which has been apparent for some years, in spite of the relatively high price of other competing drinks.

The hon. Member for Aylesbury will have to do a little better, however, when it comes to estimating the value of the subsidy. He suggested that the average pensioner spends only 2p per week on tea. That great mistake can be attributed to his only recently coming to grips with the problems of old-age pensioners and their difficulties in meeting the costs of living out of their restricted circumstances.

According to the most recent figures that we have, the facts are that old-age pensioners spend about 7½p per week on tea. The value of the subsidy to them, therefore, is proportionately very considerable, as I have said.

The hon. Member for Colne Valley (Mr. Wainwright) basically contradicted himself when he spoke, on the one hand, of this being a heavy subsidy, and, on the other, of its being squalid because of its ineffectiveness. It seems that he has a debate within his bosom about this. He had better resolve it before he presents the case against subsidies in the future.

I accept the view of my hon. Friend the Member for Lincoln that the purpose behind the Government's introduction of subsidies, particularly on tea, was to seek to assist those less well-off members of the community on low incomes, especially pensioners, to meet the heavy impact of the rising cost of foodstuffs.

The hon. Member for Colne Valley and the hon. Member for Pudsey (Mr. Shaw) both thought that they saw some contradiction between the Governments policy on the subsidisation of the nationalised industries and our policy on food subsidies. Let me assure them that there is no contradiction, either in principle or in practice. We feel that it is right to continue food subsidies because food makes for such a substantial part of the weekly expenditure of poor families. At a time when food prices are still rising, it would impose a heavy burden on low income groups if we attempted to phase out food subsidies.

I do not know who the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) thought he would persuade by his argument. I doubt whether he will be persuading many old-age pensioners that they should listen to his arguments on the predominant consideration of the need to reduce the borrowing requirement. The tea subsidy certainly meets more immediate needs in a way that they can understand. The hon. Gentleman's whole argument was somewhat topsy-turvy and out of touch with realities. He also asked how many civil servants would be involved in the administration of this subsidy. I sought to answer that question before he put it by telling him that the administrative costs would be very small. Obviously, no precise information can be given.

Mr. Ridley

Why not?

Mr. Maclennan

Because, as the hon. Gentleman will know—

Mr. Ridley

On a point of order, Mr. Deputy Speaker. The Minister is not prepared to answer any of the questions which have been put to him. He is not equipped with the facts and figures, or with the proper remedy for the constitutional impropriety which he has admitted on behalf of the Government. May I beg to move in some way that the debate be adjourned so that we may return to this subject? Is there any way in which the House can be protected from the inefficient—

Mr. Deputy Speaker

No, there is no such motion which would be accepted by the Chair. We could probably smooth matters if we arranged for all to have a subsidised cup of tea.

Mr. Maclennan

The hon. Member for Cirencester and Tewkesbury is a former member of a Government and he knows as well as anyone—or he should—that the time of civil servants is spent on many things. The cost of working out the answer to his bogus questions would be a completely unreasonable expenditure of the public money which he is so anxious to save.

My hon. Friend the Member for Northampton, North (Mrs. Colquhoun) took the opportunity of reminding the House of the underlying purposes we had in mind in bringing forward these provisions in the Prices Act. I am grateful to my hon. Friends for contributing to this short debate and I have much pleasure in commending the order.

Several Hon. Members


Mr. Silvester

May I say, Mr. Deputy Speaker—

Mr. Deputy Speaker

Order. I have not called anyone yet. The hon. Member will wait until he is called. Mr. Stanbrook.

11.17 p.m.

Mr. Ivor Stanbrook (Orpington)

Mr. Deputy Speaker, this is not good enough. Like most Englishmen, I enjoy my cup of tea, and there is nothing I should like more than to be able to get one cheaper—[An HON. MEMBER: "Go and get one now."] We are not being treated with the proper courtesy and seriousness to which we are entitled. Two important questions have been raised as well as the general principle of whether tea should be subsidised.

The first question was: what will be done about the interim period during which there was no legal authority for subsidising tea? That is a matter of the greatest constitutional significance. Are the Government actually going to cover up that situation by paying out more money under the heading of "Gratuities"? Is that the way they will indemnify the Clay Cross people? Is that the fund from which so many things will be paid out without legal authority? It is proper for the Minister to obtain legislative authority for every payment of money that requires such authority. Any other course of action is wrong and unconstitutional.

The Minister said that there were precedents, but he has quoted none. We are entitled to know what the precedents are in matters of grave constitutional importance. If the Government get away with this once they will try to get away with it again. There will be occasions when they will have no legal authority to do things and when they will be able to quote precedents for acting unconstitutionally. It is perfectly proper to take a consitutional point at this time of night, because that is far more important than anything to do with subsidies or cups of tea. [Interruption.]

The other point which has not been covered by the Minister—[Interruption.] On a point of order, Mr. Deputy Speaker, can you do anything to stop hon. Members from making comments from a sedentary position?

Mr. Deputy Speaker

I am still trying to hear whether the hon. Member is in order. That is what I am concerned about.

Mr. Stanbrook

Perhaps Labour Members should call out more clearly, so that you can hear them, Mr. Deputy Speaker.

The second point of importance not covered adequately tonight concerns the administrative cost of running the subsidy. The Minister has said that it is very small. What does "very small" mean? What precisely is involved in the subsidy? How many civil servants will be employed working out the subsidies and applying them over the whole range of this country's consumption of tea?

These are matters of fundamental constitutional importance. We on the Opposition benches have often tried to reduce the administrative burden caused by an inflated Civil Service. The Government propose to increase the size of the Civil Service, but say that the administrative costs will be small. They do not tell us specifically by how much the Civil Service will be inflated to run this iniquitous proposition.

It is a thoroughly iniquitous proposal by the Government, for the constitutional reasons alone, and therefore I shall vote against it.

11.21 p.m.

Mr. Fred Silvester (Manchester, Withington)

I am sorry to intervene at this late stage.

I have heard many wrong arguments from the Government benches. One hon. Lady made untrue comments about what was said during the passage of the Prices Act. But let us not go through that now. The reason I rise is that the Minister has made an apology for an error by the Government and has clearly been inadequately briefed on the procedure that should be followed. However reasonable the mistake may be, it is wrong for him to come here without being accompanied by a Law Officer and without having a proper brief, and then to expect the House to accept that the payment of public funds without authority can be done simply on the nod. That is not good enough.

In regard to the points raised by my right hon. Friend the Member for Crosby (Mr. Page) and others, the Minister has added to the problem by treating the House with a degree of arrogance that is not appropriate in the circumstances.

I do not seek to prolong the debate on the tea subsidy, but I ask the Minister to devise a way whereby we may know how the money may be properly paid under parliamentary and constitutional procedures. That is a reasonable request, and I hope that it is one to which the Minister will accede immediately.

Mr. Deputy Speaker

Dr. Hampson.

An Hon. Member

The hon. Gentleman has only just come in.

11.23 p.m.

Dr. Keith Hampson (Ripon)

Some of us have other business in the House, and then come into a debate when we think that it is important. Then, after listening to some of the comments from the Government benches, we are spurred into action, particularly when we hear the rather tiresome comments that constantly flow from Labour Members about the poor and the pensioners, and how measures such as the subsidy are particularly geared for those people.

If Labour Members read their OFFICIAL REPORT they will see a reply by the Minister to my hon. Friend the Member for Eastbourne (Mr. Gow) saying that 52 per cent. of the enormous subsidy bill of £600 million goes to families earning more than £50 a week. That shows the indiscriminate nature of the policies pursued by the Government, including the order, which involves £29 million. These sums are not trivial.

Earlier today we put Questions to the Secretary of State for Education and Science on matters of great importance to many Labour Members, including the question of adult illiteracy. The programme to deal with that problem, with so much effort behind it by the Secretary of State, is a £1 million programme. We are talking about £29 million being squandered. Much of that sum will not even go to the categories that so many Labour hon. Members go on about at such length. Further, as we heard from the Chancellor, the whole range of public expenditure is under tight pressure. Local authorities will be heavily in the red next year. We have the rates burden. The authorities do not know where to turn. Everything that can be saved should be saved. My right hon. and hon. Friends are saying that of all subsidies that have been put forward the money involved in this subsidy should be saved. The money could be used for so many of the good causes in which Labour hon. Members believe.

Hon. Members


Dr. Hampson

If there is a Division I shall vote against this measure. That is why I am speaking now. Time and time again we have heard Government spokesmen proposing measures of this kind when at the same time they and their colleagues on the back benches have been arguing for more and more cash for the purposes to which I have referred and for many other good causes. For Heaven's sake let us get our priorities sorted out. Let the Government's right hand know what their left hand is doing and what it wants.

The Government have rightly said that they will wind down the subsidy scheme that my Front Bench, when in Government, pursued with the nationalised industries. It seems that we shall see true costs reflected in prices. That I support. However, it is nonsense, as the hon. Member for Colne Valley (Mr. Wainwright) said, to offset nationalised industry subsidies with this sort of nonsense, partticularly as so much of this sort of subsidy will not go to the categories about which the Minister and his hon. Friends make so much play.

I must reiterate what so many of my hon. Friends have said since my right hon. Friend the Member for Crosby (Mr. Page) spoke. It is extraordinary for a Minister to come to the House unprepared. The Minister had no brief and he could put forward no explanation in answer to my right hon. Friend. He does not know what it is possible to do. He has no precedents to which to refer. It is only courtesy to the House for him to return to his Department and to suggest that legislation be introduced to offset the mistake which he has admitted has been made.

Mr. Ridley

Does my hon. Friend recall that the Minister said that he would take steps that would be appropriate? This is the worst of all worlds. The hon. Gentleman has admitted that he is in the wrong. He has said that he will take steps in the hope that we shall all go away and forget about the matter. Will my hon. Friend press the Minister to explain the steps that he will take? Perhaps my hon. Friend will ask the Minister to be specific, and tell us what the steps will be. At the moment it seems that he is trying to get out of the matter on words.

Dr. Hampson

I have pressed the Minister and I press him again. I am staggered that I have not seen little messages of advice floating towards the Minister. Why has not somebody checked the position? Why has not the House been treated in the manner to which it is entitled? Why have we not been told how this mistake will be rectified? Where is the Secretary of State? The Secretary of State and her hon. Friends are trading on the good will of the House. This issue is no storm in a tea cup.

Mr. Kenneth Clarke (Rushcliffe)

It is a Boston Tea Party.

Dr. Hampson

It is worth recalling to Labour hon. Members that tea has once before brought down a British Government. The same might be about to happen.

11.28 p.m.

Mr. Nicholas Winterton (Macclesfield)

I hope that the House will consider me a reasonable person. I do not wish to go over the ground that has been covered by my hon. Friend the Member for Pudsey (Mr. Shaw) and other of my hon. Friends who know a considerable amount about the food trade. I hope, Mr. Deputy Speaker, that as the person who safeguards the interests of back benchers you will advise the Minister that he should answer the questions that have rightly been put to him by my right hon. and hon. Friends. Over the past quarter of an hour my colleagues have given the Minister every opportunity to obtain the information that we have tried to solicit from him. I have not seen any notes pass down from the Civil Servants' box. I hope that with the leave of the House the Minister will answer the questions which we have rightly put to him.

This is an important constitutional point. There are the four days that are not covered. I believe that the Government have a duty to answer these constitutional points before this measure is passed. If he does not give the answers which have been sought, I can tell him that there are number of us on this side who have every intention of voting against the order. I have no vested interest in tea. I do not drink it. However, I hope that the Minister will answer.

Question accordingly agreed to.

Resolved, That the Food Subsidies (Tea) (No. 2) Order 1974 (S.I., 1974, No. 1913), a copy of which was laid before this House on 18th November, be approved.

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