HC Deb 07 February 1977 vol 925 cc1039-41
14. Mr. Silvester

asked the Secretary of State for Prices and Consumer Protection if he will make a statement on his latest plans for renegotiating the Price Code.

Mr. Hattersley

I am considering what form prices policy should take after the powers to enforce the Price Code expire on 31st July. I hope soon to be in a position to give details.

Mr. Silvester

Will the right hon. Gentleman confirm that it is not his intention, in any proposed agency that he may set up, to give wide discretionary powers that may lead to delay in manufacturing plans?

Mr. Hattersley

The hon. Gentleman must await my announcement rather than ask questions based on hypotheses like that.

Mr. Skinner

Is my right hon. Friend aware that in its latest report the Price Commission refers to the fact that it is unable to comment on the question of profit margins? Will he, in any further discussions, ensure that the Commission is able to state precisely where it stands on such matters?

Mr. Hattersley

I shall examine what my hon. Friend has said, but I find it difficult to comment now, since our price control policy is so concerned with margins that I do not understand how his supplementary question relates to the report or to what we have been doing.

Mr. Budgen

Is not the Chancellor of the Exchequer attempting to halt inflation by monetary control? If that is the Government's policy, will the Secretary of State confirm that there is no need for either wage or price control now?

Mr. Hattersley

My right hon. Friend the Chancellor of the Exchequer was explicit, when he spoke on 31st January, in saying that an element of monetary control was an essential feature in overall economic policy, but I do not think that any sensible person believes that that alone can put the economy right.

Mrs. Wise

In addition to the point made by my hon. Friend the Member for Bolsover (Mr. Skinner), is my right hon. Friend aware that the Price Commission, in its latest report, also says that the calculation of profits for price control purposes is now highly artificial and bears little resemblance to profits as calculated on accepted accounting principles? Will my right hon. Friend comment on that aspect and on what use fictitious profits are?

Mr. Hattersley

As I understand the point made by the Price Commission, it was suggesting that the Sandilands Report and what it reveals perhaps sometimes demonstrate that companies are not making as much profit as a superficial reading of their accounts would suggest. But the substance of my hon. Friend's supplementary question is in a sense right, in that one of the things wrong with the Price Code is that it attempts to create a view of profits when perhaps a different view could be of more use. Perhaps we should be more sophisticated about their level, the reasons for them, and what they are used for.

Mr. GilesShaw

Before any renegotiation of the Price Code, will the right hon. Gentleman bear in mind that in only nine cases has it been necessary for the Price Commission to act against manufacturers in support of the code and that following the voluntary principle in negotiating the next phase is the only way to proceed?

Mr. Hattersley

That point could be argued both ways. One could say that only on a few occasions did the Price Commission choose to act. One could say, alternatively, that only on a few occasions did the Price Code allow it to act. We have to strike a balance between the two concepts, so that the Price Commission, or what follows it, can act when action is necessary. I am afraid that I cannot give the criteria for that today.