Prices

HC Deb 21 May 1979 vol 967 cc669-72

1. Mr. Michael Latham

asked the Secretary of State for Trade whether he will make a statement on his proposals for containing price increases; and what was the underlying trend at the time of the general election.

11. Mr. Adley

asked the Secretary of State for Trade when he intends to abolish the Price Commission.

23. Mr. Heffer

asked the Secretary of State for Trade if it is his policy to abolish the Price Commission; and, if so, what measures he proposes to control prices.

The Secretary of State for Trade (Mr. John Nott)

Prices will be best contained by the operation of firm monetary and fiscal policies; and by the strengthening of competition policy. Last week, I announced the Government's proposals to strengthen competition policy and to abolish the Price Commission. A Bill will be introduced after the Whitsun Recess. In the Government's view, the Price Commission Act has destroyed jobs and investment, depressed industrial confidence and had an insignificant effect on price inflation. At the time of the general election, inflation was on a rising trend.

Mr. Latham

Is it not plain that Labour left an abysmal electoral mess on prices? How many price increases were artificially held down by the Labour Government until after the general election, and what statistical difference did the Price Commission make to the rate of inflation?

Mr. Nott

I would rather look forward to the future. We believe that the best ways of containing inflation are by strengthening competition policy and by firm monetary and fiscal policies. We shall try to do that, and I would prefer not to comment too fully on the record of the last Government.

Mr. Adley

Does my right hon. Friend think that it is a coincidence or a consequence of five years of economic failure that what we suffered in that period occurred while the power and growth of bodies such as the Price Commission increased? Will it be his consistent policy to avoid creating such bodies on the pretext of dealing with economic failure?

Mr. Rooker

Who set it up?

Mr. Nott

We shall not seek to shuffle off the responsibility of the Government on to outside bodies. We have made a start by our announcement of a new competition policy. I hope that my hon. Friend will be satisfied with its details when they are published after the recess. We have made a good start by reducing by one the number of Ministers in the joint Departments. I hope that we can continue to reduce numbers throughout the public service and in the outside bodies to which my hon. Friend referred.

Mr. Heffer

Since the Secretary of State says that he is looking to the future, will he tell us how far into it he intends to look, bearing in mind that we now have 2p on bread prices and that petrol is about to go up? Is he aware that the abolition of the Price Commission will lead to massive increases in prices, which will cause very serious problems for ordinary working people, particularly those on lower incomes?

Mr. Nott

It is difficult to say how much impact the Prime Commission had on prices. So far only one estimate has been published, and that was by the CBI. It reckoned that prices rose by 110 per cent. during the time that the Labour Government were in office, and that, had we not had the Price Commission, prices might have risen by 110.01 per cent.

Mr. Neubert

Is it not just one more illustration of the effectiveness of the Price Commission that it cannot investigate, let alone control, the costs of coal and steel, which provide a good deal of the motive behind rising prices in our industrial economy?

Mr. Nott

As part of our Bill to strengthen competition, the Price Commission will be run down and phased out. Therefore I do not think that there is much to be gained from debating what it could and could not do. I hope that we will have our new Bill by the Summer Recess, and from then on we must look to new general economic policies to deal with these problems.

Mr. Maclennan

Is the Secretary of State's unwillingness to look back due to the fact that, when the last Conservative Government left office, prices were rising at the rate of 13.2 per cent. and when the Labour Government left office they were rising at the rate of 9.8 per cent.—a very much better record of achievement? Does he realise that we will look very closely at his proposals to improve competition, and that they will be judged by their effectiveness in dealing with short-term problems such as those of the bread industry, in which it is well known that there is no effective competition between the two major companies whose price increases—

Mr. Speaker

Order. I hope that we shall begin as we intend to go on and have short questions and answers.

Mr. Nott

I did not want to look back because I wanted to be charitable. I believe in charity after a substantial victory, and that was why I thought it much better to look to the future. We have studied the two Green Papers issued by the Labour Government, and we would welcome the hon. Gentleman's advice and help in providing a strong competition policy.

The hon. Gentleman mentioned inflation figures. I recall that the previous Chancellor of the Exchequer at the time of the October 1974 election talked in terms of inflation running at 8.4 per cent. If I were to take a similar position, I could show that the inflation figure for the three months to March this year was 13.1 per cent. on an annual basis.