Food Subsidies

HC Deb 21 July 1975 vol 896 cc12-4

4. Mr. Gow

asked the Secretary of State for Prices and Consumer Protection what is her latest estimate of the cost of food subsidies during the current financial year; and whether she will make a statement of Government policy in regard to food subsidies, following the statement of Mr. Chancellor of the Exchequer on 1st July.

14. Mr. Tim Renton

asked the Secretary of State for Prices and Consumer Protection what are her latest proposals for the planned reduction in food subsidies.

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

The estimated cost of food subsidies during the current financial year is about £550 million. As stated in the White Paper "The Attack on Inflation", the planned run-down in the programme next year will be moderated.

Mr. Gow

Does the Minister think that the best way to help the elderly and those on low incomes is to increase food subsidies? How does he reconcile the statement of the Chancellor of the Exchequer of 15th April—when his right hon. Friend said that it was the Government's policy to contain and reduce food subsidies—with the statement that his right hon. Friend made earlier today?

Mr. Maclennan

An analysis of the income expenditure of two-person households shows that the benefit of food subsidies is proportionately nearly four times greater for those with incomes below £20 a week than for those with incomes over £80 a week. Therefore, the answer is in the affirmative. On the second part of the hon. Gentleman's question, the policy set out in the White Paper will affect pay more quickly than prices. We felt it essential to take steps to safeguard the position of poorer families. That is why the cut in the subsidy programme next year is to be smaller than that envisaged at the time of the April Budget.

Mr. Bates

Why does my hon. Friend believe that we should subsidise butter but not margarine? As we import large quantities of butter but hardly any margarine, is not this almost a direct subsidy on imports?

Mr. Maclennan

I have had discussions with the margarine industry about the effect on it of the butter subsidy. The industry recognised that the prospects are brighter than they were—[Interruption.] Conservative Members who find this such a risible situation should appreciate that the effect of competition on the margarine industry is not unimportant. They may then look at this matter from a new point of view.

Mr. Renton

Is not the real danger that on food subsidies the Government will fall into the same trap as that into which they have fallen over post office charges and gas prices? Is it not clear that the longer we continue to subsidise the harder it is to return to economic and commercial levels? Would it not be far better to scrap food subsidies now and, instead, to concentrate the help that is available on those who cannot afford to buy food?

Mr. Maclennan

It is not good enough for the Opposition to make this sort of criticism when they supported a policy not only of heavily subsidising the more regressive nationalised industries but a policy of food subsidies. It was the previous Conservative administration who introduced the butter subsidy that the Opposition are now apparently criticising.

Mr. Mike Thomas

Does my hon. Friend accept that there are many hon. Members on both sides of the House who, over the years, have made a case for negative income tax? As food subsidies and subsidies on other essential items are financed by a clawback through income tax, does my hon. Friend agree that we have here a form of negative income tax? Does my hon. Friend accept that many of my hon. Friends would like to see the Government's programme extended to other essentials and not limited to food?

Mr. Maclennan

I am aware of my hon. Friend's views on this matter. I believe that he is right in stressing the redistributive benefits of the food subsidy programme. I regret that that appreciation is not shared by Conservative Members.

Mr. Maxwell-Hyslop

Is the Secretary of State aware that the Government's policy of not covering producer costs has already predictably resulted in a chronic shortage of milk for manufacture? Is she aware that last Friday all of the employees in a milk processing factory in my constituency were told that they were losing their jobs because there was no milk for manufacture? Is she not concentrating so much on subsidies that the commodities simply will not be there, with the result that people will not benefit from subsidies on commodities which they cannot buy because they are not being produced?

Mr. Maclennan

There is a later Question tabled on this subject.