Price Commission Bill (Hansard, 2 May 1977)

§ 3. Mr. Hal Miller
asked the Secretary of State for Prices and Consumer Protection what representations have been made to him about the Price Commission Bill since it was published.

§ The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser)
The Bill received its Second Reading on 27th April. Discussions are continuing with interested parties on the detailed operation of the proposed new powers.

§ Mr. Miller
Will the Minister explain, however, what is to happen to a firm that 2 is just starting up which has a low reference margin of profit? How is it to increase its profitability? In that connection, will he accept that the proposals do nothing towards the Government's aims of restoring profitability to industry and keeping down prices?

§ Mr. Fraser
The objectives of the Bill are directed both at investment and at keeping prices down. The question of a new firm would be a subject for discussion on the new Price Code, on which discussions will start taking place quite shortly.

§ Mr. Anthony Grant
What representations has the hon. Gentleman received from small firms which have been much oppressed by the outrageous bureaucratic burden placed upon them by the Price Commission? Is he aware that one firm of which I know received a 29-page questionnaire? Will he take notice of these complaints?

§ Mr. Fraser
Small firms have no monopoly of complaint about the information which they have to give to the Price Commission. We appreciate that difficulties exist. These are under consideration.

§ Mr. Freud
By what criteria were firms selected for investigation, and what plans does the Minister have to modify the arbitrariness of selection in the Bill? Secondly, what safeguards will the Secretary of State introduce in the Bill to 3 protect the position of firms during the period of the freeze?

§ Mr. Fraser
In respect of the hon. Member's first supplementary question, the criteria contained in the Bill were selected with a view to both certainty and a certain degree of flexibility. On the question of safeguards, one of the clauses in the Bill obliges my right hon. Friend to publish information on safeguards. Clearly, those must be the subject of consultation first, but my right hon. Friend will make an announcement on the matter as soon as consultations are completed.

§ 14. Mr. Sainsbury
asked the Secretary of State for Prices and Consumer Protection what effects he expects the Price Commission Bill to have on the retail price index in the 12 months from its enactment.

§ The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley)
I would refer the hon. Member to the speech I made on Second Reading of the Price Commission Bill on 27th April.

§ Mr. Sainsbury
The Secretary of State's expectations of dramatic reductions do not seem very high. Is he satisfied that the whole exercise is worth while, bearing in mind the enormous administrative difficulties and costs imposed on industry in dealing with even routine inquiries, let alone the new investigatory type of inquiries? Is he satisfied that it is possible to obtain the quality of staff that will be required for the Price Commission to carry out investigations of that sort, which are based on totally unquantified criteria and which call for a totally different set of qualifications from those possessed by the present Price Commission staff?

§ Mr. Hattersley
I have no doubt that we shall be able to obtain both the quality of staff and the quality of Commission membership to carry out the policy in a sensible and positive fashion. On the subject of the administrative burden placed on industry, perhaps we have not made sufficient of the point that we propose to ask industry to supply less information. In the crude form, that means filling in fewer forms and providing fewer statistics than was the case 4 under the old 1973 Act—an Act which, I think, the hon. Gentleman supported but an Act which certainly imposed far too much of a bureaucratic burden on industry. That bureaucratic burden will be lifted after 1st August.

§ Mr. Christopher Price
In his efforts to keep down the index of retail prices, is my right hon. Friend aware that he needs far more help in trying to find out the real profits of some of the companies involved? Is he aware that Brooke Bond Oxo has increased the price of tea in many of the supermarkets in my constituency by up to 300 per cent. in the past six months? When is the Price Commission's report on tea and coffee to come out?

§ Mr. Hattersley
When the Price Commission has completed it. It would be wrong of me to require it to do a half-rate or shoddy job because politics required a quick report which was less than conclusive. I said that I understood the strong feelings of many consumers about the increased prices of these basic commodities. But it would be dishonest of me to pretend that there was very much that the Government could do about increased prices as these commodities enter the ports. If the Price Commission reveals that some companies have been exploiting that situation, given the powers we shall take action, but until then it would be wrong to pretend that any other course was open to us.

§ Mr. Dykes
Is there any truth in the peculiar rumour that the recent cement price increase application was turned down by the Price Commission because of the pending Price Commission Bill? If not, will the Secretary of State say why the Price Commission turned down the application from the cement industry for what looked to be a reasonable price increase?

§ Mr. Hattersley
The answer to the direct question is essentially one for the Price Commission, and the hon. Gentleman should refer it to that Commission. But it seems to me inconceivable that it should have done that in anticipation of a new Bill. That is really something of a question mark against the integrity of 5 the Commission. I do not believe that the Price Commission behaves in that way.

§ Mr. Stan Crowther
Does my right hon. Friend agree that a significant factor is sheer profiteering on the part of retailers—certain retailers, not all of them—including some large companies which are paid to increase their prices week by week, and sometimes day by day, quite irrespective of the original commodity price? Does my right hon. Friend think that the measure now proposed will put an end to that kind of abuse?

§ Mr. Hattersley
I think it is easy for consumers to note increases in individual prices and not relate them to the overall profitability of the companies from which those commodities are purchased. The margin control which was introduced in 1973 and which, if the Bill is passed, will be continued in the new Price Commission Bill ought to prevent—and, I believe, in general does prevent—unreasonable profits being made across the entire enterprise by individual retailers. If, however, there are cases where this happens, the new powers will enable us to take more specific action against them, and I shall not hesitate to do that.

§ Mrs. Sally Oppenheim
As the latest Price Commission report reveals that there has been an unusually high level of price notifications, and that there is now serious doubt about whether price increases on the six-monthly level are likely either to stabilise or to fall, can the Secretary of State comment on the validity of the Prime Minister's statement at the weekend that the Government are winning the battle against inflation, particularly as the Price Commission's commodity index is rising by over 49 per cent. on an annual basis?

§ Mr. Hattersley
I have already done so, but I shall gladly repeat it for the hon. Lady. There is no question at all but that the index of retail prices will remain at or about its present level for the next three or four months. It will then begin to reduce from autumn onwards, and that will continue through the winter and into 1978. That is what I have been saying for the past six months. That is what the hon. Lady has been denying for the past six months, and during that time I have been proved right month by month by month.