HC Deb 11 October 1976 vol 917 cc10-3
11. Mr. Gwilym Roberts

asked the Secretary of State for Prices and Consumer Protection what are the latest figures available for the weekly benefits provided by food subsidies to the average family and typical pensioner; and if he will make a statement.

18. Mr. Corbett

asked the Secretary of State for Prices and Consumer Protection if he will estimate the current weekly savings in food expenditure due to food subsidies for: (a) a single retirement pensioner, (b) married retirement pensioners, (c) a married couple with two children, and (d) a married couple with four or more children.

Mr. Maclennan

The current weekly savings on food expenditure due to food subsidies are estimated to be: (a) for a single old-age pensioner, 20p; (b) for a married couple with two children, 58p; (c) for an old-age pensioner couple, 32p; (d) for a married couple with four or more children, 94p.

Mr. Roberts

Will my hon. Friend accept that some Labour Members are not all that impressed by the argument of the Secretary of State in regard to the direct relevance to economic revival of the phasing out of subsidies? Does he not agree that, in view of the important stress laid by the Government on the redistributive effect of these subsidies, the phasing-out operation will have the effect of transferring money from the pockets of the poor to the well-lined pockets of the rich?

Mr. Maclennan

The Government have always accepted, although the Opposition have not done so, that food subsidies are redistributive. Their value is about four times greater for the lowest income households than for the highest income groups. That is why they have been regarded as an important contribution to social assistance during the time when the Government have been phasing in the new social security benefits. We shall make the fourth uprating in these benefits in November. I believe that any further redistribution should be done through the tax system and through social security.

Mr. Peter Bottomley

Will the Minister say how the value of these food subsidies compares with the increase in the cost of food, especially to poor families, in the last two and a half years?

Mr. Maclennan

Not without notice.

Mr. Corbett

Will my hon. Friend accept that when the Chancellor of the Exchequer made a statement about the phasing out of the food subsidies in July the inflation rate was falling, whereas that is not now the case? Will he tell his right hon. Friend the Secretary of State for Prices and Consumer Protection that he has the responsibility to go back to the Chancellor of the Exchequer and underline the extreme importance of these food subsidies for lower income families and pensioners?

Mr. Maclennan

The mportance attached by the Government to food subsidies is mirrored by the fact that we are spending more than £400 million on them this year. The major contribution which the Chancellor of the Exchequer wishes to make in bringing down the rate of inflation, which has at present reached a plateau rather than falling, must be through stabilising our currency. It was with the objective of reducing the public sector borrowing requirement that my right hon. Friend announced measures in respect of food subsidies.

Mr. Adley

As the cost of food to the pensioner, and, indeed, to everybody else, is directly related to the depreciation of our currency, will the Minister explain why the three major post-war depreciations in our currency have come under Chancellors of the Exchequer Cripps, Callaghan and Healey? What is so special about Socialist Governments that they always destroy our currency?

Mr. Maclennan

What is so special is that they followed Conservative Governments.

12. Mr. Norman Lamont

asked the Secretary of State for Prices and Consumer Protection where he intends to make cuts in food subsidies in the year 1977–78.

Mr. Hattersley

Decisions on the rate and level of subsidies are taken from time to time in the light of current circumstances.

Mr. Lamont

In regard to the earlier reply about the average saving of 58p to a family with two children, does not the Secretary of State agree that the fall in sterling in September alone added 90p per week to the average family's household budget? Since public expenditure is such a major contributor to sterling's weakness, would it not be of much greater benefit to the average family to announce today that food subsidies were to be cut?

Mr. Hattersley

If the hon. Gentleman wants me to say again that the depreciation of sterling has an adverse effect on the Retail Price Index, I shall repeat it for the fifth time if that gives him any satisfaction. As for subsidies, or indeed the entire public expenditure issue, he must understand that the people I represent are net gainers from much of the public expenditure that takes place in our nation. The people who are in the lower 10 per cent. or 20 per cent. of the income bracket have much to gain in their own personal everyday lives from what the Government provide through public expenditure. The Government's duty is to balance expenditure levels against overall economic necessities, and that is what we are doing.

Mr. Ioan Evans

Before my right hon. Friend phases out food subsidies, will he seek to phase out the common agricultural policy of the EEC, which is effectively harmonising our prices with the high prices of food which persist on the Continent? Does he not appreciate that British housewives believe that it is crazy for the EEC to be contemplating an increase in the price of margarine in this country because of the butter surplus? When will this crazy system stop?

Mr. Hattersley

Even when I was more responsible for EEC matters than I am now, I was always prepared to say that I regarded the CAP as an unacceptable system which should and could be changed. I believe that that will increasingly be the Government's policy. I said publicly last week, and I am happy to confirm today, that the idea of a tax on margarine to compensate for the butter surplus is unacceptable to the British Government and cannot become the policy of the EEC. Furthermore, the British Government are committed to doing whatever we can to limit price increases within the EEC. I refer my hon. Friend to the stand taken by my right hon. Friend the Minister of Agriculture in Brussels last week in rightly refusing to increase the rate of the green pound. I believe that that must continue to be our position.