HC Deb 17 May 1979 vol 967 cc381-4
Mr. John Fraser

(by private notice) asked the Secretary of State for Trade if he will make a statement about his decision to veto the restrictions imposed by the Price Commission on the price of bread resulting in the rise in price announced yesterday.

The Minister for Consumer Affairs (Mrs. Sally Oppenheim)

Following my right hon. Friend's announcement on 15 May, the Price Commission's investigations into Ranks Hovis McDougall and Allied Bakeries have been terminated. In exercising his discretion under the Price Commission Act 1977 my right hon. Friend bore in mind the fact that both companies are unprofitable, both have closed bakeries, and jobs have been lost; and the bread industry generally has been subject to detailed Government scrutiny in recent years, including a Monopolies and Mergers Commission inquiry in 1974–77. He took into account the need to protect the viability of the two companies and to preserve jobs. The effect of his decision was to allow the two companies to implement the balance of their proposed price increases, over half of which had already been allowed by the Price Commission.

Mr. Fraser

I wish first to congratulate the right hon. Lady on her appointment. However, within one week of that appointment she has become, instead of a spokesman for consumers, a spokesman for big business. What she would have said a fortnight ago is that there were too many price increases. What she says now is that there are too many investigations into monopolies by the Price Commission.

Is not the truth of the matter that by this decision the Government have unnecessarily increased the price of bread and have put aside the possibility of an investigation? If the right hon. Lady follows this precedent, she is giving to every monopoly the green light to a price increase spree in respect of every product concentrated in the hands of a few firms. I name organisations such as the oil companies, the brewers and the banks. Is not the truth of the matter that the right hon. Lady will live to regret a petulant, hasty and unwise decision?

Mrs. Oppenheim

The present Governernment are concerned both about prices and about jobs. Prices under the Labour Government more than doubled, and unemployment also doubled. The House and the country will have noted that the Labour Party have rushed to table a private notice question about an increase in the price of bread of 1p, which in any case would have occurred later. However, during the five years in which the Labour Government were in power, when bread rose not by 1p but by 16p, the country will note that not one private notice question was tabled to the then Government.

Mr. Adley

Does my right hon. Friend agree that it was most predictable that the Opposition lost no time whatever in ignoring the havoc which they wrought on the British economy, and that they have come to the House at the first opportunity to try to make political capital out of problems which they themselves have created? Will my right hon. Friend give the House an assurance that she will do her best to ensure that the people understand that the Price Commission has been the prime cause of the destruction of jobs and that one of her first tasks is to recreate the employment that has been destroyed by the Labour Party?

Mrs. Oppenheim

I give my hon. Friend that assurance. No doubt he and the House will remember that if the baking company that closed at about this time last year, with the loss of nearly 8,000 jobs, had been allowed to make adequate profits those jobs would not have been lost. If that is what the Labour Party wants to happen, perhaps it would make it clear in the case of the companies which were under investigation.

Mr. Wellbeloved

Is the right hon. Lady aware that this is the greatest scandal in the first few days of her Government? Does she not think it disgraceful that the British housewife is being called upon to make the first pay-off to the backers of the Tory Party? Does she agree that this must be the best and quickest return on capital investment that any financial backer of the Tory Party has yet received?

Mrs. Oppenheim

I deplore the fact that the British housewife had to suffer an increase in food prices of nearly 120 per cent. under the last Government. The Price Commission has already given an interim price increase of 1p on bread. Price controls cannot prevent any further increases; they can only delay them. At the same time, they threaten the viability of the companies concerned and the jobs within those companies. That is a prime example of the futility of the operation of the Price Commission.

Mr. Peter Bottomley

Will my right hon. Friend remind the House about the reduction in the number of companies involved in bread manufacture during the term of office of the previous Government? Will she also tell the House to what extent the operation of the Price Commission during that time helped to produce profitable companies which continue to provide employment and produce bread?

Mrs. Oppenheim

There is no incidence of the Price Commission helping profitable companies to protect jobs. My hon. Friend is right about the reduction in the number of companies supplying bread, and that resulted in a reduction of choice to consumers. A situation has arisen which restricts competition to some extent, and we intend to act upon that. My hon. Friend will agree that competition in the supply of bread has intensified and has already taken away some of the market share of the two major companies which were to be investigated. No doubt, that will be an important factor in determining the future price of bread. The Government will preserve, uphold and make more vigorous competition in the supply of bread. We believe that prices are best contained by increasing competition and not by diminishing it by driving companies out of the market.

Mr. William Hamilton

Will the right hon. Lady tell us what were the losses of Ranks Hovis McDougall last year? How many jobs would be lost if this price increase were not allowed? What was the contribution of the firms to Tory Party election funds?

Mrs. Oppenheim

The companies concerned are making profit on some items and not on others. The viability of the continued production of the items which are being investigated depends on whether the company can make a profit. Nobody can make a company continue to produce goods on which it makes no profit. The number of jobs which would be lost if the viability of the companies were threatened is many thousands.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call another hon. Member for a supplementary question, but I remind hon. Members that this is a private notice question and not a statement.

Mr. Maclennan

Will the right hon. Lady confirm the indication that it is the consumer who will have to foot the Bill for the inefficiencies of private enterprise without check or interference from this Government? Does the right hon. Lady take the view that companies such as the two which she is allowing to make their first increases should be permitted to operate—as they have wished to do in the past—minimum price agreements against the interest of the consumer?

Mrs. Oppenheim

In a truly competitive situation, no inefficient company can continue to operate and stay in the market. That is why we intend to see that competition is more vigorous than in the past. We know that it will be competition rather than price controls, which have singularly failed under the last Government, that will help the housewife and keep the rate of inflation lower than it would otherwise have been.