HC Deb 15 November 1976 vol 919 cc901-2
1. Mr. Dodsworth

asked the Secretary of State for Prices and Consumer Protection what estimates he has made of the cost of the additional subsidies required to maintain the Retail Price Index at its present level in the event of the devaluation of the green pound to the level of the £ sterling.

The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley)

Depending on a number of complex factors, the green pound arrangements might represent a saving of as much as £1½ billion on retail prices, equivalent to about 10 per cent. on the retail food index. The Government have made it clear that there is no immediate prospect of a devaluation of the green pound.

Mr. Dodsworth

Is the right hon. Gentleman aware that the best contribution that he and his Department can make in terms of the retail price index is to restore confidence in the £ sterling and to make it clear that there will be a reduction in public spending by reducing the amount of money spent on food subsidies rather than by receiving over £1½ million a day through monetary compensatory payments?

Mr. Hattersley

I have no doubt that the main obligation that have to consumers is to build an economy that is sufficiently stable and healthy to enable prices to be stabilised, and the £ sterling is part of the process. However, the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) oversimplifies the problems involved. I do not think that the major problem we shall face in the next six months or year involves the question of the extent of food subsidies.

Mr. Powell

Is the right hon. Gentleman aware that the greatest contribution the Government could make to real food prices being as low as possible would be to regain for this country the right to purchase food in world markets?

Mr. Hattersley

No, I think the right hon. Gentleman is wrong. Within the figure that I quoted are almost £500 million worth of subsidies from the EEC. The green pound arrangement as it now is means that the EEC is subsidising the British consumer to a great extent. Were we to abandon that arrangement, the British consumer would suffer rather than benefit.