Price Check Scheme (Hansard, 8 March 1976)

§ 2. Mr. Rathbone
asked the Secretary of State for Prices and Consumer Protection whether she will publish a list showing which of the items in the Price Check Scheme are of special importance in family expenditure.

§ The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)
The list of items included in the scheme, covering roughly 15 per cent. to 20 per cent. of consumers' expenditure, was placed in the Library on 11th February. The total list is important for family expenditure, although some items are more important than others. My right hon. Friend's object has been to get agreement on the inclusion of such items where, at this stage in the fight against inflation, it is possible for the manufacturer and the retailer to give an undertaking that the price in the shops will not increase by more than 5 per cent. in the next six months.

§ Mr. Rathbone
In the light of last weekend's events, is the Minister aware of an old French proverb, which goes "Is it not known in history that the mousetrap pursues the mouse?" Is the Price Check Scheme an effective mousetrap, and what is the mouse?

§ Mr. Maclennan
If the Government are setting any mousetraps, I have no doubt that the hon. Gentleman will blunder into them.

§ Mr. Mike Thomas
May we return to the realm of reality and precision? Can my hon. Friend give the House some idea of whether the scheme is succeeding? Has it been extended in any way and can he give us some positive comments?

§ Mr. Maclennan
The scheme is broadly succeeding. An increasingly large number of retailers are not only fully cooperating with the undertaking given by the Retail Consortium but are bringing in new items day by day on which they are prepared to give guarantees on price restraint.

§ Mr. Rost
What is the scheme costing the taxpayer?

§ Mr. Maclennan
I dealt with the cost to the taxpayer of the advertising and publicity in reply to a Question by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).

§ Mr. Norman Lamont
Is the Minister aware that there seems to be a fair amount of administrative chaos surrounding the scheme? Some people who are not in the scheme have received triangles but some who are in the scheme have not. Is he aware that many shop assistants know nothing about it and that many shops displaying signs have only a tiny proportion of their goods in the scheme? Does he agree that he could save money simply by dropping the great price restraint circus?

§ Mr. Maclennan
The hon. Gentleman is unfortunately aligning himself with the hon. Member for Gloucester (Mrs. Oppenheim) in her traditional negativism. The scheme covers about 500,000 retail outlets and, naturally, it is bound to have a number of small hiccoughs at the beginning, but it is plain that it is broadly understood. As the scheme is becoming more widely understood, inquiries from the retail trade are now declining.

§ 7. Mr. Whitehead
asked the Secretary of State for Prices and Consumer Protection if she has been asked to widen the scope of her advance warning scheme for price restraint.

§ Mr. Maclennan
The list of items within the Price Check Scheme covers roughly 15 per cent. to 20 per cent. of consumers' expenditure, and it also provides for retailers to add items to the list from their own range when they are satisfied they can keep price increases within 5 per cent. for the period of the scheme. We have been pressed from many sides to widen it, but its scope reflects the stage we have reached in the attack on inflation.

§ Mr. Whitehead
Has my hon. Friend enough information about the Price Check Scheme to consider extending it across a wider range of goods and services? By "goods" I mean, for example, the whole of the textile sector. By "services" I mean the services that will be involved in the expected price rises in public sector industries, increases which make many of our constituents feel that they may soon be paying more for rather less, as in the case of the Post Office.

§ Mr. Maclennan
I am glad to take this opportunity of drawing to my hon. Friend's attention the undertaking of the British Shoe Corporation to bring into the scheme all its goods except where marked. The coporation has made that decision since the scheme was announced. Marks and Spencer has made an offer which covers a number of lines of clothes not included in the scheme. A considerable extension of the scheme has been offered by voluntary groups in respect of their own brands. This has had the effect of widening the scheme in a large number of smaller, independent outlets. Finally, there has been the offer by the National Hardware Alliance to bring in a number of hardware items of great importance in the home.

§ Mrs. Sally Oppenheim
Before extending the scheme, will the hon. Gentleman tell the House whether his Department has received any notification of prosecution under the Trade Rescriptions Act relating to the television advertisements for the scheme? The advertisements show a balloon clearly marked as the cost of living, reducing in size. Will the hon. Gentleman confirm that the cost of living is not coming down and that, although the rate of inflation may be coming down, it has still been higher in this country over the past three months than in almost any other country? Does 6 the hon. Gentleman accept that it is a highly misleading and dishonest advertisement?

§ Mr. Maclennan
The advertisement which the hon. Lady has described as highly dishonest was agreed by the Retail Consortium and the CBI. I have no doubt that those bodies will note her words. The advertisement was approved by the IBA. I have received no notification of the sort that the hon. Lady has mentioned.
The House and possibly the country will have noticed how the hon. Lady has sought to hinder every positive proposal. It will have been noted how originally she sought to undermine the scheme by approaching individual manufacturers. It may be fairly said of the hon. Lady that her contribution to the countering of inflation has had as much relevance as a pair of tweezers to the clearing of a forest.

§ 11. Mr. Peter Morrison
asked the Secretary of State for Prices and Consumer Protection whether she has made an estimate of items which will have to go up in price by more than they would otherwise have done in order to subsidise those items not increasing by more than 5 per cent. under the Price Check Scheme.

§ The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams)
I do not expect cross-subsidisation to be very extensive on any goods. Indeed, in my consultations on the Price Check Scheme, representatives of manufacturing industry have repeatedly emphasised that they have limited scope for it, especially in present market conditions. As for goods of importance to low-income families, the trade associations have asked their members to keep to a minimum any price increases on basic household necessities which it has not been possible to include in the scheme.

§ Mr. Morrison
Does the right hon. Lady accept that there will be some cross-subsidisation? Does she agree that basically the Price Check Scheme is a cosmetic exercise which costs the taxpayer too much money and of which it would be better to dispose as soon as possible?

§ Mrs. Shirley Williams
I have accepted that there may be a limited amount of cross-subsidisation, but I mean limited. That is what the manufacturers and retailers have informed me.
I believe that the hon. Gentleman has misunderstood the whole purpose of the scheme. The CBI and the Retail Consortium felt able to commit themselves to a scheme which limited them to a 5 per cent. increase for the coming six months because they had faith that the counter-inflation policy would hold. They were able to anticipate falls in costs, falls which they now believe will grow as a result of the £6 scheme holding.

§ Mr. Mike Thomas
Why has my right hon. Friend not included in the scheme a basic allocation of electricity units and perhaps a lower grade of petrol and paraffin?

§ Mrs. Shirley Williams
My hon. Friend, who is very much concerned in this matter, will know that one of the difficulties about the inclusion of electricity units was the pass-through of raw material prices, which made it impossible for the electricity industry, unlike the gas industry, to commit itself to a 5 per cent. maximum increase up to next August.
My hon. Friend will be interested to know that paraffin and petrol are both included at wholesale level, but they do not represent any part of the 19 per cent. to 20 per cent. coverage, and we could not include them at the retail price level because of the rate of price cutting that is going on now. But there is no doubt that those purchasing petrol will get the benefit of the wholesale holding of base prices. A scheme with a lower grade was attempted previously.

§ Mr. Norman Lamont
What effect will the scheme have on the retail price index? How can the Government hope to monitor the scheme if they will not tell us what the effect will be?

§ Mrs. Shirley Williams
The hon. Gentleman simply does not understand the scheme. It was not chosen for items which appear in the retail price index. There are some items in the scheme which are not factors for the purpose of the retail price index. Where there is a range of goods—such as a range of 8 shoes, a range of clothing or a range of textiles—as distinct from the situation of the category of goods included in the retail price index, one cannot give a precise indication of the effect on the retail price index. But this matter is being monitored, because the Retail Consortium has asked its members to keep notices of what the prices were on the base date and therefore it will be open to consumers to inquire how prices have moved.

§ 16. Mr. Michael Morris
asked the Secretary of State for Prices and Consumer Protection whether she is satisfied that goods included in the Price Check Scheme represent value for money.

§ Mr. Maclennan
I am satisfied that the goods which represented good value for money before the scheme was introduced still represent good value for money. The Price Check Scheme adds the additional factor of the assurance of a measure of price stability over a six-month period.

§ Mr. Morris
Is the hon. Gentleman aware that many manufacturers held back on price increases in 1975 and have necessarily had to implement one in the early part of 1976, which means that they are precluded from the Price Check Scheme? Will he therefore confirm that neither his Department nor the Price Commission will give any impression that brands within the Price Check Scheme are necessarily better value for money than those outside it?

§ Mr. Maclennan
Nothing I have said, or the CBI and the Retail Consortium have said in launching the scheme, was designed to give that impression. The purpose of the scheme is to give reassurance to the consumer that the price of those items which are within it will not increase by more than 5 per cent. in the next six months.

§ Mr. Peter Bottomley
Will the hon. Gentleman remind us how it is possible for anyone to discover which goods covered by the scheme have gone up less than they would have done had the scheme not been in existence?

§ Mr. Maclennan
Shopkeepers taking part in the scheme were invited to keep lists of prices applying on the base date to which they could refer if asked by members of the public.

§ Mrs. Sally Oppenheim
My hon. Friend the Member for Northampton, South (Mr. Morris) and my hon. Friend the Member for Woolwich, West (Mr. Bottomley) have both raised valid points. Is the hon. Gentleman aware that my criticism of the Price Check Scheme has been reinforced by three major newspapers, which have described it as "Prices Con", "Great Prices Bamboozle", and "Whitehall Farce"? Is he further aware that several large department stores have not participated in the scheme? Is he suggesting that they are co-saboteurs of mine and, if so, can he please find some evidence of that? Can the hon. Gentleman—

§ Mr. Speaker
Order. The same discipline must apply to the Front Benches. That was three supplementary questions.

§ Mr. Maclennan
If there is any misunderstanding about the purpose and working of the Price Check Scheme, I attribute to the hon. Lady a considerable part of the blame, although I am bound to say that she has failed in that as in so many other things. It is not the case that three major retailers have withdrawn from the scheme. That is another misrepresentation which the hon. Lady has taken this opportunity to make.

§ 24. Mr. Nicholas Winterton
asked the Secretary of State for Prices and Consumer Protection whether she estimates that the Price Check Scheme will have any effect on the Index of Retail Prices; and, if so, what effect.

§ Mrs. Shirley Williams
What is slowing down the RPI is the deceleration of costs, as the pay limit continues to take effect. There can be no mistake that it is slowing down markedly: it increased by 15½ per cent. in the six months before the £6 pay limit came into effect on 1st August last year: in the most recent six months it has increased by 6½ per cent. The Price Check Scheme takes advantage of this deceleration to secure for the consumer positive assurances from the manufacturer, backed by the retail trade, that the price of the goods and services in the scheme will be held within the limit for the next six months.

§ Mr. Winterton
I thank the right hon. Lady for that very helpful and full reply. However, does she agree that her price 10 scheme is very much of a charade and that the massive increases in the prices of nationalised industries—electricity, post, and so on—will more than outweigh the small benefits which the consumers will receive from her scheme?

§ Mrs. Shirley Williams
The Opposition find themselves in their usual difficulty. One of their more distinguished Front Bench Members attempted during 1972–73 to get a selective price scheme off the ground, and he told the House in October 1973—I do not have the Hansard column number with me—that he was unable to get agreement on a sufficient basis to go ahead with such a scheme. The present scheme is also a selective price restraint scheme with the difference that it is in being. The concept is the same. I do not believe that it was cosmetic then: I know that it is not cosmetic now.

§ Mr. Skinner
What is the point of having elaborate machinery for the Price Check Scheme in order, as my right hon. Friend says, to decelerate the rate of price increases if every time that happens we have Common Market agreements which accelerate other price increases and thereby push up the retail price index?

§ Mrs. Shirley Williams
I know my hon. Friend's feelings about this matter. He will shortly have an opportunity to question my right hon. Friend who has the full details of the settlement. I do not have the full details and therefore cannot answer his question.

§ Mr. Adley
We all like and admire the Secretary of State, but does she realise that it becomes increasingly difficult to defend her in the face of suggestions from retailers in my constituency concerning her little orange triangles which would be uncomfortable and possibly dangerous?

§ Mrs. Shirley Williams
They are not actually orange—they are red—though that may be what the Opposition are trying to do to them should the scheme by any chance succeed. The latest results of the monitoring of the scheme by the Retail Consortium show that 19 of the 21 major retail chains are taking part in the scheme. Well before the scheme started, the other two announced their intention not to do so. The monitoring 11 also indicates that no one has withdrawn from the scheme, despite what the hon. Member for Gloucester (Mrs. Oppenheim) has been saying, and also that three-fifths of the co-operative units have agreed to take part in the scheme and are working it. It is the belief of the CWS that the rest are working it as well. The important vote of confidence which I want—the willingness of industry to carry out the scheme and those engaged in it to extend it steadily—has been given and runs contrary to the hon. Gentleman's experience which, no doubt, comes from talking to a handful of friends in his constituency.