§ Sausages (standard lines).
§ Cooking oil, cooking fat and lard.
§ Margarine.
§ Tea (cheaper lines).
§ Breakfast cereals (standard lines).
§ Fish fingers.
§ Frozen vegetables.
§ Instant coffee.
§ Baby infant foods (packets, tins and jars).
§ Baked beans.
§ Soups (canned).
§ LORD ABERDAREMy Lords, we are very grateful to the noble Lord for having repeated that long and complicated Statement. It is one which is not very easy to digest at short notice, and as we are in the middle of a very important and interesting debate I shall be very short in the comments I make upon it. May I say, first, that the Statement began by banging the old drum of food subsidies of which, as the noble Lord knows, we on this side of the House take a critical view, because such large sums of money are spent so widely and so indiscriminately, and so much of that money goes to those who are not really in need. When the financial situation is so acutely difficult as it is, it seems to us a wasteful way of using scarce resources. But this is a matter which we can discuss when we deal with the Prices Bill very soon.
Certainly, we welcome the voluntary agreement. It must be right, and we are delighted to know that it is a voluntary agreement. I am sure that in a field where there are so many different retailers and producers, especially in the retail field, varying from large multiple general stores down to the village shop, it is much more preferable to have a voluntary agreement than a statutory one. I hope that the Government will continue to make use of voluntary agreements, rather than resort to the statutory powers which they will be attempting to take in the Bill.
However, I should like to ask the noble Lord one major question, which seems to me the major point about this Statement. What effect will this voluntary agreement have on the retail price index? Certainly, retailers may well co-operate in this exercise, but will they not have to raise margins on other products if they are to reduce their margins on specific 506 items of food? And will this new agreement really change the normal activities of the food manufacturers and retailers? I can see only one scale of judgment which we can really take on this Statement, and that is the question of the retail price index. Am I right in thinking that this agreement will have no effect on the retail price index?
§ LORD WADEMy Lords, I should like to join in thanking the noble Lord, Lord Jacques, for repeating this Statement, and I am aware of his knowledge of this subject of the retail trade. On the subsidising of foodstuffs, I can say only that in my view such subsidising may conceal inflation from some people, but it does not cure it. I would certainly agree that it is better to achieve the objectives referred to in this Statement by voluntary means, rather than by statutory powers. I note that there is to be concentration on a reduction of a list of basic items that has been agreed, and I am glad to see the co-operation of the retail trade in this regard. I wonder whether the Government are sufficiently aware of the difficulties of the small shopkeepers, because overheads are going up and nearly all the expenses of the small retailers are going up. Matters are extremely difficult, even though a distinction is made in this Statement between those with a larger turnover and those with a smaller one.
There is one other small point. I should like to know exactly what "concentrating on promotional cuts" means. Is that a fancy name for temporary loss-leaders? I presume not, but if it is I would say that temporary loss-leaders do not really help in the long run either the smaller shopkeeper or the general shopping public. I would certainly agree with the tribute which has been paid to the retail trade for their co-operation. The main point is that it would seem—and I would ask the Government whether they agree—that these proposals, however worthy, will not remove the causes of inflation. The causes go deeper than this, and these proposals will not provide a cure for inflation.
§ LORD JACQUESMy Lords, may first thank both noble Lords for welcoming the voluntary agreement. That, of course, is the whole basis of the Statement—that there has been a voluntary agreement. Regarding the effect upon the index, the sum total of the efforts made 507 by the Secretary of State, including the subsidies, upon the price index is to reduce it by 1 per cent. to 2 per cent., and to reduce the food index by between 4 per cent. and 8 per cent. I must say that that includes the subsidies. The expenditure by consumers on the foods which are the subject of this agreement is somewhere between £400 million and £800 million per year, so it covers a substantial list of foods in terms of expenditure.
We must bear in mind that the Price Commission some time ago ordered a reduction of 10 per cent in gross margins. The effect of this agreement is to concentrate the reductions on an agreed list of basic foods, and this will therefore give greater assistance to the people with lower incomes. But attached to the Statement is a second list which includes some of the items on the first list, which covers promotional items: that is to say, as one noble Lord put it, the special lines which in practice arc largely cut by the manufacturer. Thus we have agreement first by the retailers to the prices of a certain list of goods, and in addition we have a further list which includes some of the items in the first list where the manufacturers will use their promotional endeavours to cut that list, so we have a double effect upon the prices.
The small trader is only marginally affected. If his turnover is less than a quarter of a million pounds per annum he is not affected by the order of the Price Commission to reduce his gross margins; but those who represent the small traders have said that in so far as they make reductions they will concentrate on this list. Although they will not be able to do as much as the bigger retailers in this respect. we have their full co-operation. I think I have covered the main questions which have been put to me.
§ LORD WADEMy Lords, with regard to "loss leaders", prices are reduced temporarily simply to attract customers, and later the prices are put up again.
§ LORD JACQUESThose, my Lords, are the promotional goods. The second list is what the noble Lord referred to as "loss leaders".
§ LORD LEATHERLANDMy Lords, is my noble friend aware that his right 508 honourable friend deserves to be warmly congratulated on adopting the scheme that I put forward in my speech on prices during the debate on the Queen's Speech? I am a modest person and I will not press that. Let us assume there are ten items, bread, butter, bacon, et cetera, on the list. Will each tradesman be required to cut or stabilise the price of each one of those ten items, or will he, for example, be allowed to cut the price of bread but not butter, while a competitor down the street does exactly the reverse? If tradesmen were granted that flexibility it would enable competition to take place between various shops and supermarkets- in the high street.
§ LORD JACQUESMy Lords, I can answer simply by saying that there is exactly that flexibility.