HL Deb 24 April 1975 vol 359 cc1056-63

4.14 p.m.

Report stage resumed.


My Lords, before the Statement was made I was on the point of asking the noble Lord opposite a question. I am in no way disagreeing with his statement, but would the picture not be more complete if he said that a very large number indeed of private traders—he was speaking about oneshop traders—are in wholesale groups; that those wholesale groups benefited from the discounts given by manufacturers; and further, that these group private retailers over recent difficult years have more than held their place against competition?


My Lords, with the leave of the House, since I take it that that question was intended to be delivered, as it were, before I sat down, although the "big guns" came in and flattened me, may I say that I accept the point about the retail combines. I intended to refer to that point but I omitted to do so. I think they do not amount to more than about 50 per cent. of the people we are talking about and, of course, we are concerned with the individual community which has only one shop to lose. So although it is a perfectly fair point, I do not think it weakens my argument.


My Lords, may I ask the Minister how many of these very tiny shops exist today? The number of small shops that I know do very well indeed and do not require any help. But they are becoming fewer and fewer, and they are often most desirable.

4.16 p.m.


My Lords, we do not know the number of small shops of this size, but we are of the opinion that the number is quite substantial. The noble Baroness, Lady Young, at the Committee stage of this Bill and the noble Lord, Lord Elton, at this stage, have attempted to relate these Amendments to concessions which were made when the Prices Act 1974 was before this House. This Amendment has very little relationship to those concessions. I would remind the House what the concessions were. The Secretary of State agreed to allow small traders to display separate price ranges for subsidised foods. The implication was that the price would start at a higher figure so that there would be a smaller range. Secondly, the Secretary of State agreed not to require price ranges to be displayed by small traders in respect of non-subsidised foods and those concessions will continue. The only connection that those concessions have to this Amendment is that in both cases the definition of a "small shop" is the same. Other than that there is no connection whatever.

Underlying these Amendments there are two issues. The first is: should prices of subsidised foods be regulated and, if so, how? The Government take the view that the prices of subsidised foods must be regulated to ensure that the money voted by Parliament reaches its proper target. We are not prepared to budge from that view. Until the Committee stage of this Bill, I had taken it for granted that that was the view of all Parties, but when I heard what was said I began to wonder, because it was implied that if the small trader could, and cared to, absorb some of the subsidy into his profit margin what did it matter? That is a fair interpretation of what was said at the Committee stage.

Once one agrees that some price regulation is necessary on subsidised foods, one is faced with the question of how? Broadly, there are two methods: first, you can have the easy and rigid method; or, secondly, you can have the flexible and more difficult method. The easy and rigid method is simply to fix prices for the subsidised commodities. It does not matter how you fix the prices for the purposes of this argument; they can be negotiated with the trade, they can be average prices, they can be the mean— there are any number of ways in which you can determine that you are going to fix prices for each of the varieties of subsidised commodities, and they would be exceedingly easy to enforce. All one would have to do is to issue to all traders and all enforcement officers a list of subsidised prices, and everybody would be required to sell at those prices and enforcement would be of the easiest kind. Therefore, it is very attractive.

We did not do that, because we wanted to protect the small trader, for some of the reasons which the noble Lord himself gave when he spoke on this Amendment. We appreciate that there are such things as discounts for bulk buying; that the large trader can buy on easier terms than the small trader. But I would remind the House that when the large trader buys on easy terms that is not the end of the matter. He then has the expense of distributing those goods from a central warehouse to his branches. Consequently, he is getting the goods on easier terms because he is undertaking the functions of both wholesaler and retailer, and that has to be borne in mind. That must be borne in mind. Nevertheless, it is true that the large trader can buy on better terms.

We are well aware that the large shop has lower personnel costs per unit of trade. Consequently, if we fix prices for the subsidised commodities and adopt the easy method, there will be a substantial advantage to the large trader, and a disadvantage to the small, both because of the difference in the buying terms and the difference in personnel costs. Because of that, we have taken the more difficult way of regulating prices. We know that the differences in cost between the different kinds of traders is reflected in their profit margins; that the small trader with higher costs has a higher profit margin and, conversely, that the large trader with lower costs has a lower profit margin. We have attempted to regulate profit margins rather than rigid prices, in the interests solely of the small trader. It means that he can fix prices in accordance with his margin.

This Amendment would prevent regulation of prices by way of margin. It means that we would have to adopt the method of fixed prices, or have no control at all. On that I would make two points. First, if we are faced with the possibility that we can use only the rigid method or no method at all, then we shall be obliged to use the rigid method. We are not prepared to have no control at all so far as subsidised foods are concerned. Secondly, we would not accept the present maxima as being the rigid price. The present maxima are fixed by all sorts of factors—the cost of transport, the differences in price in different regions of the country, and so on —and all these things are taken into account.

If there were to be no other control except the maximum price, then we would be obliged to review the maximum price with a view to reducing it. because it would be excessive if control were to be by that method only. We prefer the present method whereby with the small trader prices can be flexible, and he can have the same sort of profit margin as before the food was subsidised. If he had a higher profit and higher prices, he would continue to have a higher profit margin and a higher price.

The second issue raised in these Amendments is the question as to whether the prices of subsidised foods should be displayed and, if so, how. We consider it absolutely essential that when food prices are subsidised, the prices should be made known to the consumer in the shop concerned. We consider that this is necessary for all sizes of shops. We can see no case whatever for exempting the small shop from this provisions. The noble Baroness at the Committee stage, and the noble Lord at this stage, explained that the people who use the small shop are the elderly and the less mobile. These are the people who need protection and who should know what price they have to pay when they buy subsidised foods. What does the noble Lord want? Does he want protection for those who are mobile and can go to the supermarket, but no protection for those who cannot? That is what this Amendment would mean.

The Amendment goes on to prevent us from determining the place or the manner of display of prices in the case of the small shops. It will make the display of the prices completely useless if we cannot determine the places and the manner. Consequently, it will destroy completely the ability of the Government to determine that prices should be displayed in the small shop as they are in the larger shop. We have tried to do what we can to relieve the burden upon the small shopkeeper in relation to display. In this Bill, we are taking power to determine that certain prices need not be on display, but can be held by the trader to be produced on request. Our idea is that instead of the trader finding it necessary to display a whole range of the subsidised food prices, he can display only the range of the the best selling lines, a very limited range, but he should have the full range of prices available under the counter from where It could be produced on request. I suggest that that is going to considerable limits to try to reduce the burden on the small shopkeeper. Furthermore, the short list which has to be displayed by the small trader can be printed, it can be in typescript, or it can be handwritten. I ask your Lordships, how much further can we go?

Finally, I would say that I can give an undertaking that we intend to consult with the trade, in particular the small trader, in order to simplify and minimise the records needed for enforcement. That work has already been commenced, and it will be done thoroughly. Beyond that I regret I cannot go.

4.26 p.m.


My Lords, as mover of the Amendment, I am entitled to speak twice. I acknowledge the courtesy and forbearance of the noble Lord opposite in saying that he will not seek to do the same. If I may start at the end, I welcome the undertaking of the noble Lord—and I had expected no less—that the trade would be fully consulted before the machinery was put in motion. There is not a great deal else I can welcome in what was said by the noble Lord. If I may disabuse him at the outset, I notice that both last year and this year the noble Lord has implied that we some-how wish to decontrol the price of subsidised foods. That is not the intention; our quarrel is with the method and the means. He favours what I think he called the difficult and flexible method. We regard this as entirely satisfactory for organisations which already possess the personnel, the accounting equipment, the bro formae, the staff, the resources, and the time to do it as a matter of course. We do not regard it as reasonable to expect this finesse to be introduced, and forced upon those with small concerns.

I was once a small farmer, and I remember the great burden it was to comply with the very reasonable requests of the Ministry of Agriculture, in particular with respect to the June returns which have now become selective and quarterly. This is a running exercise which must be done every weekend or on early closing day. Small traders do not have many early closing days. They often work very hard at weekends. We sympathise with them, and are responding to a cry which has come from that direction. Therefore, I make no apology for the Amendment. That is almost

enough to say in passing, except that I should mention that the noble Lord assured us of the beneficence of Her Majesty's Government towards the position of the small shopkeeper, and of how the marginal system could be better operated on their behalf. Much as I applaud the intentions of the Government, I believe that it is only in bread where this system is working at present. The discount rate allowed to the multiples is 22½ per cent.—that is their margin. The discount allowed to the small shops is 12½ per cent.—that is their margin; and those margins are fixed by Statutory Instrument. What is happening is the reverse of the declared intention for the future. Perhaps it will be put right so far as bread is concerned. I do not know, but I hope so.

The noble Lord then addressed his remarks and some passion to the next Amendment. It would perhaps shorten the proceedings if we were to take the two Amendments together, and I regret that I did not move them en bloc. However, I am prepared to speak to both together, and therefore follow the noble Lord in this respect. He reserved his fire and passion for the end of his speech; that is how I detected the approach of the conclusion. He said it would be possible so to deploy regulations that they were not onerous to the small shopkeeper. He has come almost to whittling them away. He has put them on the back of an envelope tucked behind the clock on the mantelpiece, or almost, in which case I cannot see the point of having them at all. So I feel his greatest force was directed towards his weakest position. As we have now spoken on both Amendments, I presume the Rules of the House are such that we can move only one now. But I take it we are agreed that we have discussed both, and, therefore, I beg leave to move the first Amendment.

4.30 p.m.

On Question, Whether the said Amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 95; Not-Contents, 38.

Aberdare, L. Amory, V. Belstead, L.
Airedale, L. Amulree, L. Berkeley, B.
Alport, L. Balerno, L. Cairns, E.
Amherst, E. Balfour of Inchrye, L. Campbell of Croy, L.
Amherst of Hackney, L. Belhaven and Stenton, L. Carrington, L.
Cathcart, E. Grenfell, L. Rathcreedan, L.
Chesham, L. Gridley, L. Redesdale, L
Clancarty, E. Grimston of Westbury, L. Reigate, L.
Cork and Orrery, E. Hanworth, V. Ruthven of Freeland, Ly.
Cottesloe, L. Harding of Petherton, L. St. Aldwyn, E. [Teller.]
Courtown, E. Hawke, L. St. Davids, V.
Cowley, E. Henley, L. St. Helens, L.
Daventry, V. Hylton-Foster, B. St. Just, L.
de Clifford, L. Ironside, L. Sandford, L.
Denham, L. [Teller.] Kimberley, E. Sandys, L.
Derwent, L. Kinnaird, L. Stamp, L.
Drumalbyn, L. Lauderdale, E. Strathclyde, L.
Dundee, E. Lloyd of Kilgerran, L. Strathcona and Mount Royal L.
Dundonald, E. Long, V.
Ebbisham, L. Loudoun, C. Strathspey, L.
Effingham, E. Lyell, L. Sudeley, L.
Elliot of Harwood, B. Lytton, E. Suffield, L.
Elton, L. Mansfield, E. Tenby, V.
Emmet of Amberley, B. Masham of Ilton, B. Teviot, L.
Erskine of Rerrick, L. Monck, V. Vernon, L.
Ferrers, E. Mowbray and Stourton, L. Vickers, B.
Feversham, L. Netherthorpe, L. Vivian, L.
Fortescue, E. Northchurch, B. Wakefield of Kendal, L.
Fraser of Kilmorack, L. Norwich, V. Ward of North Tyneside, B.
Gainford, L. Nugent of Guildford, L. Wigoder, L.
Garner, L. O'Neill of the Maine, L. Wolverton, L.
Granville of Eye, L. Platt, L. Young, B.
Ardwick, L. Houghton of Sowerby, L. Snow, L.
Arwyn, L. Hughes, L. Stedman, B.
Aylstone, L. Jacques, L. Stewart of Alvechurch, B.
Brockway, L. Leatherland, L. Strabolgi, L.
Bruce of Donington, L. Maybray-King, L. Summerskill, B.
Burntwood, L. Melchett, L. [Teller.] Wallace of Coslany, L.
Chorley, L. Pargiter, L. Walston, L.
Davies of Leek, L. Peddie, L. Wells-Pestell, L. [Teller.]
Douglas of Barloch, L. Pitt of Hampstead, L. Willis, L.
Elwyn-Jones, L. (L. Chancellor.) Sainsbury, L. Winterbottom, L.
Gaitskell, B. Segal, L. Wootton of Abinger, B.
Gordon-Walker, L. Shepherd, L. (L. Privy Seal) Wynne-Jones, L.
Henderson, L. Shinwell, L.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

4.39 p.m.


My Lords, as I have already addressed the House on the subject, under the leadership of the noble Lord, Lord Jacques, I think it is scarcely necessary for me to say more than that I beg leave to move the second Amendment.

Amendment moved—

Page 3, line 15, at end insert— ("( ) in subsection (4) after paragraph (c) there shall be inserted the following new paragraph— (d) the provisions of this subsection shall not apply to retail shops with a selling space of less than 250 sq. ft.";".—(Lord Elton.)