§ 5.30 p.m.
§ Lord JACQUES
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, that the House do now resolve itself into Committee.—(Lord Jacques.)
§ House in Committee accordingly.
§ [The Baroness Tweedsmuir of Belhelvie in the Chair.]
§ Clause 1 agreed to.
§ Clause 2 [Regulation of price of food etc.]:
Baroness YOUNG moved Amendment No. 1:
Page 3, line 9, after ("above") insert ("otherwise than in retail shops with a selling space of less than 250 sq. ft.").
§ The noble Baroness said: I beg to move Amendment No. 1 and speak at the same time to Amendment No. 2. Although this Amendment is one to the Prices Bill 1975, it is similar in purpose to the one moved by my noble friend Lord Elton last July to the Prices Act 1974. The principle behind the two Amendments I am moving today is, as I say, similar to that moved last year; namely, to exempt small shops from the need to display notices giving the maxi-mum retail prices for subsidised foods, and, secondly, from the need to keep records which would facilitate the enforcement of price regulation Orders. When my noble friend moved his Amendment in the summer a practical difficulty arose over the definition of a small shop, and we are grateful to the noble Lord, Lord Jacques, for the definition of a small shop he gave on July 8th; that is, a shop of 250 sq. ft. or less. It is this definition that I have used in these Amendments. It will, therefore, be appreciated that I am talking about the very small shop, indeed the typical corner shop that one still finds in some towns, and quite frequently in the country.
§ I think we are all agreed on the great value and service of the small shop. In 65 the first place, it provides a neighbourhood service, and I emphasise the term "service", because what so many people feel now is that the community in which they live is breaking up, that they have nowhere they can go to see, quite by chance, people they know, as they can either in the corner shop or in the local pub. This service of the local shop is valuable in a world in which people feel the need for personal contact and attention, and an opportunity to meet their neighbours. It is valuable in towns, where, regrettably, it is disappearing, and in the country where it is useful for the elderly, who cannot afford a car, and where there is almost no public transport at all.
§ Small shops, because they are owned and worked by their owners, are frequently open during longer hours than the larger multiples. But small shop-keepers are finding themselves faced with a great range of very real practical difficulties today. To begin with, as self-employed people they are very worried about the new cost of the National Health Insurance stamps they have to pay each week. They are having to cope for the first time with VAT, introduced on sweets, soft drinks, crisps and all those commodities, which are, of course, very much the staple products sold by corner shops. They suffer from all the commercial disadvantages of being small and having to trade on a much smaller scale than the larger multiples and super-markets in big towns. So we feel that this latest addition, the need to display notices and the need to keep records, will be adding one more burden to people who are already working very long hours and are at the same time performing a very useful service to the community. I think it would be most unfortunate if this was a straw which broke a good many camels' backs, and if, as a consequence, we saw further disappearance of these very small shops.
§ Quite apart from the general principle of the value of the small shop, I am a little sceptical of the value of these notices in shops like these. In the first place, who will read them? I do not know how many shoppers, as it is, consult notices in shops giving maximum prices. I can see the reason for putting them there, but I suspect that most shoppers are far too engrossed in what they have to get 66 and what the prices are to be looking at notices around the shop. But whether or not that is true, I think most people who shop in a corner shop will either be people going in for one item, and there-fore probably will not need to consult a notice at all, or people who are regular customers, who would not regard the shopkeeper as in any sense wishing to, as it were, "fiddle" them by charging them more than he should for a subsidised food. Even if the shopper does read it, I am not sure what it will mean to him. As I understand it, the notice can be in a form prescribed by Statute and yet the prices could be illegal if charged in that shop. Furthermore, in order to make sure that the shopper was not being "fiddled" the inspector would have to see that the prices were correct and were being enforced.
§ I quite see the reason, which I am sure the Government will give me, for the need to display notices. I imagine it is that, if there is to be a subsidy on foods, it is essential that the Government should know that the subsidy is to the shopper and is being used quite correctly, and that somebody is not making a lot of money from it along the line. I can see that this is an important principle. But what I am trying to show in the Amendments is that we have to weigh up the balance of advantage to the shopper, which may be a very real one in a big multiple in a large town, against the disadvantage to the small shopkeeper. Having to display these notices, and even more having to keep records, does mean for the small shopkeeper an extra burden on someone already working extremely long hours, and someone who, it is accepted by everyone, performs a useful service. So far as I know, there is no evidence at all of small shopkeepers "fiddling" their customers. On the contrary, there is usually a very good relationship of trust between the two. I think, therefore, it is most unlikely that customers would feel disconcerted by discovering that there was not such a form hanging on the wall of the shop. I hope for the reasons I have advanced the Government will be sym-pathetic in the case of these very small shops and the people who work in them, and that they will not have one more burden added to the many they already bear. I beg to move.67
§ 5.38 p.m.
§ Lord JACQUES
I would assume that, given food subsidies, it would be the policy of all Parties that there should be adequate safeguards to ensure that the money voted by Parliament is used for the purpose for which it was voted; and I would assume that it would be the policy of all Parties that the safeguards should apply to all sectors of the retail trade and not just to some. There is a very strong temptation to those who have to make the safeguards to use a rigid method, to simply fix prices, and that is the end of it.
We are fully aware that practically all retailers, including the small retailers, have their promotions from week to week or month to month, and that they negotiate with the manufacturer; he bears part of the cost and the retailer bears part of the cost, and they cut prices for a period. There was no reason whatever why the Government, who were providing some of the money for cutting the prices of essentials, should not have done exactly the same as the manufacturers do on other goods, and enter into consultations with the trade with a view to getting agreement on fixed prices, preparing a list of those prices and publishing them. That would have been very simple, and it would have made enforcement extremely easy. The enforcement officer would have been armed with a full list of the prices of subsidised foods, and the shopkeeper would have been able to keep a full list which he could produce on request, and display a short list of the best-selling lines. That would have been the end of the matter. The retailer would not have had to keep any records, and the enforcement officer would not have had to ask for any. He would just have had to make sure that the prices notice was displayed and that the prices charged were the same.
But we did not adopt this simple method, because we recognised that that would be unfair to the small trader. We know that the large concerns have buying power and can therefore buy more cheaply than the small trader. We also know that the larger the shop the lower are the personnel costs per unit of trade. Consequently, the small shopkeeper would again be prejudiced, because his shop was small and would have high per- 68 sonnel costs. We also know that the retail margins reflect the differences in cost. In the small shops, where the costs are relatively high, this is reflected in a higher gross margin, and in the case of the larger shops where the costs are low there is a lower gross margin. Therefore, in order to be fair to the small trader we should take into account his difficulties, and we adopted this difficult but flexible method of margin control rather than price control. We are trying to protect the small trader not just by words but by deeds. This Amendment would frustrate our endeavour to use the flexible method of margin control which allows for the higher costs of the small retailer. It would compel us to use the more rigid method of just fixing prices and making the small trader live up to those prices.
Let us look at the Amendments. The first Amendment would exclude the small shops from the keeping of records needed for the enforcement of margin control; that is, for enforcement of the flexible method which we are using. The second Amendment would prevent the regulation of margins but not the regulation of prices, so that we would be able to use our rigid method but not the more flexible method of relating the control to the margin which reflects the costs. The second Amendment says that it would not exclude small shops from the requirement to display prices, but it would make it useless in their case by preventing us from specifying as to the place and manner of display. This is the most disturbing part of the Amendment.
My mind goes back to the time when the Conservative Government introduced the Consumer Credit Bill. At that stage, they expressed the philosophy that the retail customer should be told the truth, the whole truth and nothing but the truth—a philosophy with which we agreed. When the Bill was frustrated by the Election we had no hesitation in bringing it forward and putting it into law. We understand by that philosophy that the retail customer should be told the truth, the whole truth, and nothing but the truth, and we would include the customer who goes to the small shop as well as the customer who goes to the large shop. We feel that it is essential that in the small shop as well as in 69 the large shop there should be a display of prices of those five commodities— and there are only five involved—for the convenience of the customers.
The second Amendment would do a third thing which has probably been overlooked. It would render it impossible for us to make supplementary provisions in the Orders; for example, to prohibit unreasonable charges. An example of an unreasonable charge is where two things are sold together. One is a subsidised food and it is sold as a twin with something else, and in that way the customers are overcharged. Or, in certain circumstances, a charge could include delivery costs. There is a provision in the Orders that no unreasonable charges of that kind shall be made, but since small shops would not be covered by these Orders we could not make a supplementary provision for these unreasonable charges.
We prefer to stick to our flexible method, because we think it is in the interests of the small trader, but we do not intend to desert those who have to use the small shop. As the noble Baroness said, it is often the elderly and the less mobile who use the small shops. We have no intention of deserting them in such a way as to allow the small trader, if he so wished, to absorb part of the subsidy into his profit margin, which would be possible if the Amendment were carried. Furthermore, we have no intention of allowing him to be completely free as regards price displays. It is as important that the customer should know the price in the small shop as that she should know it in the more affluent areas, where those who are mobile can go in order to buy their foods.
We intend to consult the trade as to the kind of information that should be kept for the purpose of enforcement of margin control. We hope to harness the best recording practices. Here, if I might digress for a moment, I would say that this would be as helpful to the small trader as it is to the customer herself. Small traders far too often fail because they are working in the dark. They do not know where they are going. There are simple ways by which the small trader can know where he is going, can know his position and, at the same time, can provide the information that is needed for enforcement. May I give a simple 70 example? If a small trader keeps a record of his purchases at cost prices and of his selling prices he has a wonderful means of control. It is quite clear that at the end of a week or a month he can total up the cost and the selling values of the goods that he has. Beyond that, he can calculate the return and will know his approximate rate of gross profit, but he would not know that unless he kept such a record.
Furthermore, if he simply keeps a record of the cost and the selling price of his purchases, he can calculate his stock at any time. All he has to do is first to take his stock, calculate the selling value of his purchases, deduct the sales and the balance is the stock that he has left. He can reduce that to the cost price merely by deducting the margin which he has already ascertained. So that by the simple device of recording his purchases and his sales the small retailer has a wonderful means of controlling his business and knowing exactly where he is going. We do not intend him to go as far as that in keeping records for enforcement purposes, but that is the kind of thing that we— and, I hope, the Opposition—would like the small trader to do in order that he might keep in business and know just where he is going.
In consulting the trade on the enforcement records that are necessary, we shall consult not merely the trade in general but representatives of the small shop-keepers, so that their point of view is put forward. Furthermore, in this Bill we have taken power to provide that information on prices need not be displayed but shall be available for production on demand. It is our intention that the trader shall have a full list of prices of the varieties of subsidised foods available for production on demand. We intend that the trader shall display a short list only of the best selling lines of the subsidised foods. That list can be either typescript or printed. We are therefore going as far as we can to reduce the need for display to an absolute minimum.
I hope that what I have said will convince the noble Baroness that control by way of margin rather than by way of rigid price control is in the interests of the small trader, and that display of information to the customer is just as important in the small shop as in the large. In the light of that explanation I hope that she 71 will feel able to withdraw her Amendments.
§ 5.49 p.m.
§ Viscount AMORY
I think that my noble friend has done right to raise the question of the smaller trader, because in practice administrative methods are apt to be hard on him. I listened with great interest to what the noble Lord, Lord Jacques, said. I can see the point of the margin control as being more appropriate in this case. If I felt that the understanding the noble Lord, Lord Jacques, has shown of the difficulties and the problems of the small trader will be absolutely reflected through the Administration, I should be more comforted. It is certainly comforting to realise that what is pro-posed applies only, as I understand it, to five commodities at present. But I think my noble friend has been right to raise this matter; I agree so much with what she said. The Adminstration have to be watchful that they are not asking the small people to do more than they are capable of doing. It is difficult to define the small trader. I remember being intrigued by a definition given by an Opposition Front Bench speaker a few weeks ago when he said what he was thinking about was a shop which, on opening the door, it went "ping". That was a good description. In this case, I think my noble friend means to go beyond that and is suggesting that not all the doors she is thinking about would go "ping". Personally, I am glad that my noble friend has raised this matter and made the points she has in so able a fashion.
§ Baroness YOUNG
I thank the noble Lord, Lord Jacques, for his reply and the care which he has obviously taken. I am bound to say I am disappointed with it. Of course, I accept that to base this on the gross profit margin is a better way of dealing with the question of price control than simply to have a rigid price control. I should like to emphasise a point made by my noble friend Lord Amory. I believe we are talking about two different types of shop. I entirely accept his arguments for the larger shops and the multiples, and even what we might loosely describe as the "larger small" shops. In this Amendment we are talking about very small shops. What the noble Lord is suggest- 72 ing, if I understood him, is that all these shopkeepers (and remember we are now talking probably about a man and his wife who run the business entirely between them, or perhaps just the man or his wife) shall have a notice setting out the five commodities and the variations of price control. They may be typed or printed. They must place one on the wall, keep one available for inspection by the public and must presumably keep them up to date, otherwise they will be useless. They must have the records available at any time for a customer to inspect. As he has suggested, what he has described is a very simple way of calculating their gross profit margins.
But one imagines the mythical Mr. and Mrs. Smith, who are perhaps running the corner shop, sitting down on Sunday night for hours dealing with books in order to get their calculations right. We are doing this because, as I understand it, the Government are afraid that the small shopkeeper may absorb part of the subsidy into his price and may be fiddling the customer—a suggestion of sharp practice of which, of course, we have no proof—or indeed because the trade may be, if I understood the noble Lord correctly, engaging in what are called "unreasonable charges" which might be delivery costs, although this was not explained. Some small shops do deliver groceries—a most useful function, as anyone who has had to struggle home with large amounts of shopping from supermarkets will know, and I should not think that a charge for a delivery was unreasonable. This point is not defined in the noble Lord's reply.
Again I think that this really suggests that shops could be indulging in some kind of sharp practice, of which we have no proof. Indeed, all the evidence is that the shops are widely used by just the elderly and the less mobile members of the population who have a relationship of trust between themselves and the shop-keeper. I should have thought it quite unnecessary to set up this enormous bureaucratic apparatus for these very small shops. I am disappointed with the Government's reply. However, this is not a matter that I intend to press this afternoon. I shall read what the noble Lord has said and I may well return to the matter on Report. In the meantime, I beg leave to withdraw the Amendment.
§ Baroness PHILLIPS
Before the noble Baroness withdraws, and while I am not questioning the Amendment I should like an answer from the Minister, if he can provide it, on a matter which is constantly put to me by consumers, concerning an article, particularly one in this subsidised group, which has another price put on top of the article already in the shop. Is this, or is it not, against the law?
§ Lord JACQUES
First I should like to comment on two of the points made by the noble Viscount, Lord Amory. I agree with him that great care has to be used by the Administration in attempting to supervise this matter in relation to the small shopkeeper. Provided that it is done I am sure that it will be generally agreed to be better than having the rigid method, since these variations in cost would almost certainly penalise the small trader. So far as the five commodities are concerned, here he is protected. First we have an agreement with the trade that so long as the voluntary agreement exists we would not seek to have the price regulation outside subsidised foods. But we have gone further. We were able to get a concession from the Secretary of State in 1974 concerning the Bill then before us. I gave an undertaking that we should not require the price regulations to be displayed by small traders in respect of nonsubsidised foods; that that would be provided for in any Order we made. The small trader would be completely exempt from displaying the price regulations of nonsubsidised foods. So he is protected there. We are not suggesting that a charge for delivery is an unreasonable charge. It could be reasonable or it could be unreasonable. We are not saying that to make a charge for delivery is unreasonable-that would be completely wrong. What we are saying is that if an unreasonable charge were made then it would be against the law. Obviously, if there was a charge for delivery of, say, 5p before any Orders were made, and that was increased to 50p, that would be unreasonable; or if a special charge was made where only subsidised foods were delivered, that could be unreasonable. But we are not saying that a charge for delivery is unreasonable. Delivery is not mentioned in the Orders. The supplementary provisions merely prevent any unreasonable charges.
74 I am pleased to hear that the noble Baroness is to withdraw the Amendment at this stage. After reading my remarks I hope she will not find it necessary to reinstate it at Report stage. In reply to my noble friend I would say, first, that so far as subsidised foods are concerned, whether the old or the new price is the right one depends upon the margin, because it is mostly margin control. Whether it is lawful to put one price ticket above another depends on the circumstances of the case. I am not sure of my ground here. I prefer to write to my noble friend on that point.
§ Amendment, by leave, withdrawn.
§ Clause 2 agreed to.
§ Remaining clause agreed to.
§ House resumed: Bill reported without Amendment.