Price Commission (Hansard, 7 February 1977)

§ 2. Mr. Ridley
asked the Secretary of State for Prices and Consumer Protection if he will now abolish the Price Commission.

§ Mr. Hattersley
No, Sir.

§ Mr. Ridley
Can the right hon. Gentleman explain how it is that in the four years that the Price Commission has been in existence inflation due to increasing prices, has, on average, been running at a rate about five times higher than in the 1,500 years since the Romans occupied this country? Surely it would be better to go back to the old system.

§ Mr. Hattersley
When the then Prime Minister, whom the hon. Gentleman supported from time to time, created the Price Commission I do not believe that he promised that it would hold down the rate of inflation. The right hon. Gentleman promised that the Commission would do a number of worthwhile jobs—something I assume in which the hon. Gentleman believes, since on 15th November he urged me to make an additional reference to the Price Commission.

§ Mr. Gwilym Roberts
Rather than abolish the Price Commission, will my right hon. Friend refer to it the increase in beer prices? Is he aware that my constituents cannot understand that beer prices should be rising while the breweries' profits, over comparative half years, are in many cases as much as 40 per cent. up? Will my right hon. Friend give this matter urgent consideration?

§ Mr. Hattersley
I am conscious of the great and widespread public concern about beer prices and profits. My colleagues and I are considering this matter and I hope that we shall be able to give good news to the House in the not-too-distant future.

§ 3. Mr. Neubert
asked the Secretary of State for Prices and Consumer Protection when he expects the next report of the Price Commission to be published.

§ Mr. Hattersley
In approximately three months' time.

§ Mr. Neubert
Did the right hon. Gentleman notice the remark of the Chairman of the Price Commission in introducing the Commission's last report, when he forecast that inflation would rise to 19 per cent. in the spring? Does he agree that that figure compares adversely with that of 15 per cent, which is the only figure that he and the Chancellor have mentioned in connection with 1977? Why are the Government being so evasive about price rises immediately before us?

§ Mr. Hattersley
There is some dispute over what the Chairman of the Price Commission said. If he did mention a 19 per cent. increase he reached that figure as a result of extrapolating the six months to the end of November and the six months following that. That is a wholly unreasonable statistical exercise to enter into, and therefore invalidates the 19 per cent. figure.

§ Mr. Clemitson
Does my right hon. Friend agree that a number of companies use the Price Code as an excuse to push up their prosperity as far as permissible within the code and then hide behind decisions that the Price Commission makes subsequently? Reverting to an earlier question, will he take it from me, that a number of the brewing companies —Whitbread's, for example, which made a £26 million profit in the last half year—play this game all the time?

§ Mr. Hattersley
I do not want to make specific comments on specific companies—

§ Mr. Gwilym Roberts
Why not?

§ Mr. Hattersley
—because if we referred specific companies to the Price Commission we would be doing so to obtain information. We should not make a judgment about them before obtaining the information. I agree that there are many shortcomings in the Price Code, particularly now that it has been running for four or five years and has long-distant historical base rates. I hope that in the summer we shall be able to improve it in a number of ways.

§ Mr. Giles Shaw
Will the right hon. Gentleman confirm that on the whole, the pattern of prices reflects costs? Dealing with costs, will he take note that according to an answer published by the right hon. Gentleman's Department the Commission is estimated to cost public funds £6.6 million in the current financial year? Does he agree that one has to add to that figure the cost of administration within industry, which is considerable? Does the right hon. Gentleman think that the consumer and the taxpayer deserve some reduction in these costs?

§ Mr. Hattersley
I am sure that all of these things were taken into account by the Conservative Government when they 1031 set up the Price Code. I agree that it is, at least theoretically, possible to have a more effective price control system which costs rather less bureaucratically. A number of us are trying to discover ways in which that can be achieved.