§ 4 p.m.
§ Lord SAINSBURY rose to move, That this House takes note of the Forty-ninth Report of last Session (HL 262) of the European Communities Committee on Unit Pricing and Prescribed Quantities (R/1277/77) and R/1945/76). The noble Lord said: My Lords, I have been asked by my colleagues on Sub-Committee D of your Lordships' Select Committee on the European Communities to introduce the report that is before you today. On the last occasion that I introduced one of the Sub-Committee's reports I had to apologise for the complexity of the subject matter. Today I must do so again, and I only hope that I shall not earn a reputation for being something of a "Eurobore".
§ My Lords, I think everyone agrees that being able to compare prices easily is an important element in consumer protection. This helps the shopper; it also stimulates competition and thereby efficiency. Both the Directives that this report covers aim to increase the level of consumer protection within the Community and also to facilitate trade between the Members. However, their detailed provisions are quite distinct, though—whether by accident or design—they are in fact closely linked to one another.
§ I should like to start with the Directive on prescribed quantities, which the Committee welcomes. A number of prepacked basic foods may by law be sold only in a particular range of sizes. These sizes are known as prescribed quantities. The system is simple and helpful to the consumer. If, for example, tea is always sold in certain pack sizes, the shopper can easily compare the prices of rival brands. In addition, because prescribed quantities come in mathematically simple ranges, it is easy to assess which is the cheapest size within any one brand. An 8oz. packet at 538 55p is cheaper than a 4 oz. one costing 30p. In this country ranges of prescribed quantities already exist for 36 different products, and I think it is fair to say that all concerned—consumers, retailers, manufacturers, and the Department of Prices and Consumer Protection—agree that the system is working well. This is not least because of the extensive consultations the Department holds with trade interests before establishing a new range.
§ What the Directive sets out to do is to establish standard Community ranges of prescribed quantities for a wide variety of products. Goods packaged in these sizes will have to be accepted for sale in all Member States. Because, however, this is what is known as an optional Directive, individual States may also allow other sizes under national legislation. So, once the Directive has been adopted the situation will be thus. There will be prescribed quantities for an extensive range of products which can be freely sold throughout the Community. Additional sizes will be on sale within individual Member States. Of course, the Community quantities will come to predominate, since they will give manufacturers access to a much larger market throughout the Community. The optional nature of the Directive means, however, that manufacturers of national specialities which are not exported will not have to conform to Community standards, and I think this is to be welcomed. Another welcome point is the provision that Member States must continue to allow until the end of 1984 all sizes which they accept at the date of the adoption of the Directive. This means that packers will have plenty of time to adjust to the new ranges.
§ As I have said, my Lords, the Committee welcomes this Directive and the Department of Prices and Consumer Protection's approach to it. As we heard in their evidence, they intend wherever possible to incorporate United Kingdom prescribed quantities into Community ranges. In those cases where this cannot be done, they will at least ensure that the United Kingdom range is consistent with the Community range. This will avoid extra cost and consumer confusion. There are a few technical problems, but we feel confident that these will be solved after consultations between the Department and representatives of the industry and the consumer.539
§ I am afraid that the second Directive—on unit pricing—presents far more problems and has met a far more critical reception from the Committee. Perhaps I might start by explaining exactly what unit pricing is. The principle behind it is that a consumer should know how much he is being asked to pay per unit—pound, litre or whatever—for a particular product. This will enable him to compare prices of rival products. Your Lordships will already have realised that this system protects the consumer in a very different way from prescribed quantities. In prescribed quantities, the packs are the same size or mathematically related sizes. In unit pricing, the packs need not be the same size. Instead, the price per unit of each package is shown. In this country, unit pricing is being introduced very slowly and to a restricted range of goods. The Department's main priorities have been goods sold loose—apples or herrings, to take two incompatible examples—and what are known as "catchweight" items. These are prepackaged products—cheese is one that immediately springs to mind—that by their nature are not normally made up in predetermined standard quantities.
§ The Committee was greatly struck by the unanimity of opinion about unit pricing. Consumer organisations expressed everyone's view when they said that although unit pricing is an important aid to consumer protection, it is suitable only for products to which standard quantities are inapplicable. Your Lordships will realise why I lay such great stress on this unanimity of opinion when I say that the Directive calls for unit pricing across the board. A unit price will have to be shown for every single foodstuff sold by a retailer, not just on fruit and cheese and such like items but for every single packet, can and so forth.
§ There is just one single and very significant exemption to this provision. This is goods sold in the ranges of prescribed quantities laid down by the other Directive we are discussing today. Your Lordships will now see why these two Directives are so intimately linked. As I have explained, the prescribed quantities Directive is optional. But this very optionality—which the Committee and the Department welcome and which is manifestly sensible—is made nugatory by the unit pricing 540 Directive. Although national ranges of prescribed quantities additional to the Community ranges are permitted by one Directive, the other insists that they should be unit priced. In this way, manufacturers and consumers will be forced into accepting the Community ranges of prescribed quantities, like them or not. This is our chief objection to the unit pricing Directive.
§ Those who gave evidence did, however, express many other objections. These we deal with in paragraph 23 of our report. I should like to mention some of them here, since although I believe that not all of them are well-founded, they should be made clear. Representatives of retail interests feared that shopkeepers would suffer if unit pricing is introduced. Large concerns—supermarket chains and the like—already unit price a wide range of "catchweight" items. This is mainly done automatically by machinery at only a marginal cost, but the extensions in unit pricing proposed in the Directive would go beyond the capability of machinery and involve additional labour costs for large companies as well as for small shopkeepers. Small shopkeepers, in particular, will have to unit by hand, an operation that is costly in terms of both staff and time.
§ While most of this concern is entirely justifiable, there is some danger of exaggeration. The Directive does not require each individual item to be unit priced, only that the unit price be displayed prominently. This can be done by shelf labels, notices, posters or wall charts. A second fear was that costs to the consumer would increase if across-the-board unit pricing were adopted; evidence differed as to how much costs might increase, but all agreed that they would. The Committee also heard it suggested that, were manufacturers rather than retailers to mark a unit price, this would mean the de facto reintroduction of resale price maintenance. We were relieved to hear the Department's assurance that they are absolutely opposed to unit pricing by manufacturers.
§ I fear I have spoken for too long already, but before I sit down I must emphasise once again the Committee's conclusions. The prescribed quantities Directive we welcome for its intention to increase both trade within the Community and consumer protection. On its own it is quite acceptable. What is not acceptable is 541 that retailers and consumers should be forced into accepting it by another Directive—that is, the unit pricing Directive. There is certainly a strong case for legislating for unit pricing in some sections of the food industry. There is no case for insisting that all products be subjected to unit pricing. As we state in our concluding paragraph, number 25, the Commission should either have identified those goods for which unit pricing seems most desirable or those sections of the food industry which could practicably have been asked to unit price. Let the Commission establish these priorities; and let them then state their cost-relation to consumer protection, rather than overloading manufacturers, retailers and consumers, not to mention legislators, with excessively detailed and inflexible measures. My Lords, I beg to move.
§ Moved, That this House takes note of the Forty-ninth Report of last Session (HL 262) of the European Communities Committee on Unit Pricing and Prescribed Quantities (R/1277/77 and R/1945/76).— (Lord Sainsbury.)
§ 4.18 p.m.
§ The Earl of MANSFIELD
My Lords, your Lordships will wish to thank the noble Lord, Lord Sainsbury, for the very clear way in which he introduced the report of his Sub-Committee, which deals with a matter—dare I say it?—which is somewhat complex to those who have not lived with it. Like the noble Lord, perhaps I may take the Directive on prescribed quantities first, and this is a matter on which I apprehend there will be no disagreement in this House, so I can take it very shortly.
As the report implies, the retail sale of prepackaged goods in prescribed quantities could have beneficial effects from two points of view; first, as Lord Sainsbury pointed out, such would enable the buyer or shopper to make easier comparisons when weighing up the respective prices of one packet and another or even as between one weight or one size of packet and another, as the noble Lord pointed out. Secondly, evidence was given to the Sub-Committee that such a Directive would facilitate trade within the Community by removing national barriers to the sale of prepackaged goods which do not conform to national requirements.
542 When I first read the report I wondered whether the effect of this legislation might be to hasten metrication on an otherwise unwilling British public, but having read it through I am satisfied and glad to say that the aim will be to pick prescribed quantities which will coincide with our own gradual proposed metrication; I see Lord Sainsbury nodding in assent, so I am comforted in that assertion. In any event, we shall have until the end of 1984 to phase in the new prescribed ranges.
From the report of the Sub-Committee, it seems that the Directive was agreed and welcomed by almost everybody, except those whom I might call the "canned food" lobby. Apparently they held to the view that the Directive could be a barrier to some international trade because, for instance, the Americans, who have a huge internal domestic market, would not be too keen on tooling up a new range of can sizes to conform with the new ranges. I should have thought—and I imagine that this was also the conclusion of the Sub-Committee—that if the Americans want to send their tinned pineapple, or whatever it may be, to Europe, and particularly to the United Kingdom, they have until the end of 1984 to adjust their ideas and their machinery. If, then, they do not want to conform they need not send their pineapple, and no doubt some other place in the world market will supply it. As I understand it, this proposed Directive is welcome, and it can be implemented under the Weights and Measures Acts of 1963 and 1976 without further Act of Parliament, which is also a good thing.
Turning to unit pricing, I should say that this is a matter about which everyone seems to be doubtful, and in many cases more than doubtful. The compulsory display of the selling price and the unit price on, or near, the goods in question and even—I do not think that the noble Lord, Lord Sainsbury, mentioned this—on advertisements of such goods, will place a formidable duty upon the retailer or the purveyor of such goods, and the advertiser, and he may not be equipped to discharge such a duty. But, even if he is mentally equipped, if he has not got the machinery, it will certainly add to his costs. I am not being facetious, but let us for a moment conjure up a "Giles" type of "corner shoppe" with the little old lady behind the counter. It is difficult 543 to see how she would be able to conform to such legislation. As is mentioned in paragraph 23 of the report, it would drive the old lady behind her counter into a form of resale price maintenance, because she would undoubtedly, and with some gratitude, accept whatever figures were put before her by the wholesaler.
The report goes on to detail the various objections to unit pricing. For instance, it is said that the effect would be to pressure the food industry into adopting standard ranges of size, as opposed to prescribed quantities. Whatever the effect would be, I imagine that in the end the cost would come back to the consumer, because it would not be absorbed by the industry. As the noble Lord said, the Sub-Committee attached more weight to some of the arguments than it did to others. That is not surprising; nor is it surprising that it put most weight, I understand, upon the objections of the Department of Prices and Consumer Protection. The Department was against unit pricing, certainly in the way that the draft Directive recommends or prescribes, and this, I think, is logical. I imagine that its objections will also have been communicated to the noble Lord, Lord Oram, and we await with interest what he has to say to us.
§ 4.25 p.m.
§ Baroness SEEAR
My Lords, from these Benches, I should like to contribute very briefly, support for the general idea of a standardisation in pricing. From the consumers' point of view, there is no doubt that it is at present often very difficult, in short periods of time, to make adequate comparison at all between goods offered for sale in terms of price. An advance towards standardisation cannot be other than helpful to the ordinary shopper who is involved directly in the activity of shopping. Furthermore, standardisation, in so far as it makes for extension of sales and improvement in trade, could have an ultimate effect of somewhat reducing prices, or at least slowing down price rises. So I believe that there can be no argument about the general idea here, as both noble Lords who have already spoken have said, and with this we entirely agree.
544 However, I should like to go along very strongly in supporting the Committee, in that the prescribed quantity which we have developed considerably in this country, rather than unit pricing as such, seems to be a preferable way of aiding the consumer. I have been very much convinced by the arguments put forward by the noble Lord and by the Department of Prices and Consumer Protection to the effect that unit pricing could have a disadvantageous effect not on the large concern, which can be well organised to handle this, but on the small retailer. From the point of view of ordinary consumers, especially older people who like to shop at a small local shop, surely we have already gone rather too far in concentrating retail trade in the very big units and undermining the position of the corner shop which means something, and is very important, to a considerable number of people. I think that there can be no doubt that unit pricing will make life much more difficult for those shopkeepers, many of whom must be on the verge of abandoning their shops—as many already have—and for them this could well be the last straw.
Whatever may be said about resisting resale price maintenance, surely it must mean that such people will rely upon the manufacturer to tell them what the price should be and to put the price on the goods to save them this trouble, and however we may oppose this, it is, in fact, what will happen. On these Benches we have always been extremely hostile to resale price maintenance. We were opposed to resale price maintenance long before either of the other two Parties, who have now seen the light, came round in favour of opposing resale price maintenance. It would be the greatest pity if, in small retail concerns, it were reintroduced by the back-door because they had to comply with the Directive. Surely our aim should be to see that the idea of prescribed quantities is adopted and applied far more widely, and that unit pricing is not regarded as the normal standard way of protecting the consumer, because if it is, it will almost undoubtedly have the adverse effects which have been suggested.
§ 4.28 p.m.
§ Lord RAGLAN
My Lords, I want to thank my noble friend Lord Sainsbury 545 very much for taking charge of the Sub-Committee, of which I was then chairman, and for taking on the responsibility for producing the report, which I regard as being very clear, as was my noble friend's speech. These two draft Directives which are reported upon are concerned entirely with the packaging and labelling of eatables, and it seemed appropriate that my noble friend, who is closely associated with a famous firm whose name is a by-word for purveying good food at a reasonable price, should be asked to give us the benefit of his great experience in helping the Sub-Committee to consider the effects which the draft Directives would have for producers, retailers and consumers. Perhaps it is because he knows so much about the inside of the food retailing business that my noble friend was more cautious than I would be in pressing the merits of across-the-board unit pricing. I see that there could be difficulties for small shopkeepers, although they tend to offer their goods in unit priced form. One has only to ask them; one has little opportunity to ask in a supermarket. I am not as convinced as he is on this subject; nor am I afraid of the bogey of the return of resale price maintenance.
Across-the-board unit pricing would have the effect, as we say in the report, of pushing into prescribed quantities everything which can be pushed, and as a regular shopper I would say that I would be delighted if that were to happen. At the moment, even big stores do not unit price, when they easily could do so. I am continually infuriated by the apparent conspiracy on the part of manufacturers and retailers of food to prevent my making comparisons between prices of competing products by any means other than a slide rule or a pocket calculator. Once upon a time, when most goods were on sale loose, one bought by, say, the pound or the pint, at so much per pound or so much per pint. Everybody understood it; it was all clear and above board. But supermarket shopping is now the norm, and, although this has brought very large benefits in cheaper distribution and in increased choice, it has also caused the package to assume a very important role in influencing consumer choice. As much ingenuity—I sometimes think more—goes into designing the package as into making the food inside; and there is much opportunity, if not for actual deception 546 then for not preventing confusion about quantity, or for not encouraging comparisons between unit prices of products.
Where the packaging is not necessarily so important in competing for choice—such as where the handy little cuts of cheese of various kinds are wrapped and labelled for the customer—I believe there should be a positive requirement on the shopkeeper to tell you not only the weight and the variety but the price per pound or price per kilo of your 3¾ ounces, or whatever it is that you are buying. The shopkeeper knows the price per pound—otherwise, he would be unable to price it in the first place—so why can he not inform the shopper, if he has nothing to hide? So I wish both these Directives a fair wind, and I strongly support the principle of what they are trying to do. So far as the proposals may be practical, I hope the Government will go along with them and will, indeed, pursue them.
There is one representation which was made to the Sub-Committee which I believe the Government should accept, and that is in respect of milk bottles. If the Directives go ahead without suitable derogation, then, if milk is in pints rather than in a metric measure, it will have to be unit priced. I am advised that for various reasons it is very difficult to unit price pint bottles. Since the price of milk in bottles is Government controlled and the pint bottle is an established and very familiar measure, I think there should be no need to require unit pricing here. On the other hand, when sold in any other kind of container, such as in wax cartons, which can be made to any size and which, indeed, are made to any size, and can be conveniently printed or labelled, I believe there is no case for derogation and that the milk should be unit priced. Whether by litre or by pint I do not think matters very much at the moment.
§ 4.34 p.m.
§ Lord MOTTISTONE
My Lords, I should like to add my congratulations to the noble Lord, Lord Sainsbury, for so ably taking care of this report, studying these two Directives. I should also like, if I may, as a humble member of Sub-Committee D, to express my thanks and congratulations to the noble Lord, Lord Raglan, for so ably chairing that Sub-Committee during all the time I have sat upon it. If I may say so, I think he has 547 done the House very good service in that particular role, and I am sorry he is moving on and handing on his chairmanship to another. That does not mean to say that I agree one bit with what the noble Lord, Lord Raglan, has just said, but perhaps that will become clear as I speak.
We are in a very difficult area with Directives. I find myself living with them a great deal now—and these are only two of them. Perhaps I might beg a little time of your Lordships in order to discuss Directives rather generally, and how they may perhaps be going during the next year or two—probably longer than that—as well as to encompass these two in particular. I shall, of course, concentrate on these two as my theme, but if your Lordships will allow me to expand at points I would be grateful. I feel that this is a very important point, and one which, it may be, deserves a debate in its own right; but perhaps one can think about that after this debate is over. I shall not keep your Lordships all that long.
The important point that has come out about these Directives is that we have two: the prescribed quantities Directive, which is essentially written round preventing or getting rid of barriers to trade, as it says in the opening paragraph of the report; and the unit pricing Directive, as it has come to be known, which is under a different heading and perhaps might be described as a Directive for meeting consumers' wishes, which is a slightly different solution to the problem. I do not want to spend too much time on the unit pricing Directive, partly because I entirely agree with both the Committee and those noble Lords who have said they do not think it is really a runner. I do not think it is a runner for a variety of reasons, but the main one is that I think it will be very difficult to administer. Forgetting for the moment that it might, if implemented, put a great load on retailers, whether small or big—small, a lot of work; big, a lot of money—and that, if it does not do that, it will perhaps brush up against the resale price maintenance Acts of Parliament, I think that we shall find it very difficult to identify a lot of goods, because your Lordships will observe that it is suggested that all goods ought to be unit priced if they are not in prescribed quantities.
548 In both cases the measurement on which we are concentrating is weight, and that really is relevant only to those articles of food the quality of which is best demonstrated by weight, if you come to think of it. In the report—I think it is in paragraph 22—we quote the case of a meringue as an example of a product for which unit pricing would be totally unsuited, and I think your Lordships will agree that a meringue certainly does not measure its quality by weight. There are a whole lot of other things which fall into that bracket, and there is a whole range of products which gradually work from the meringue, at one end of the scale, through the sponge cake, through the fruit cake and on to the biscuit. Perhaps at this point, my Lords, for those to whom I have not had occasion to do it, I should declare an interest as being director of the Cake and Biscuit Alliance, the trade association which looks after the cake and biscuit manufacturers.
To return to this threat, these foods move imperceptibly along the scale, beginning with those in whose case weight is a measure; for example, a biscuit, though there are, of course, some biscuits which are probably better if they are light, like a cream cracker, than if they are heavy. Therefore, to use weight as the measurement by which these products effectively are judged for their quality—because what the consumers are interested in is whether they are getting good quality for their money—means that you must be very careful about what products you can put in prescribed quantities and what products it is worth unit pricing in the long run. So I believe that, in detail, this will be a very difficult problem.
A very good example of this is the biscuit. Your Lordships will see in the list of products on page 13 for which we have prescribed quantities in this country that biscuits are included; but if you look at the prescribed quantities Directive you will find that biscuits are not included. The reason for this is that in this country we have managed to identify and define the biscuit satisfactorily to meet the desires of the customer, the consumer, and also the manufacturers; and also to be easily handleable by Government inspectors. But in Europe this is not the case. It has not yet proved possible to 549 differentiate between a biscuit and flour confectionery, which is what we call cakes. Because of this imperceptible move of one product into another which is made basically of much the same substances, it is very difficult indeed to do so, except as a general practice in an individual country, as is the case here. I shall pursue that point later.
Before doing so, it is perhaps worth mentioning that on page 13 of this report we have only 36 items listed—I think 35 of them are food items—which is not very many; and this notwithstanding efforts by Governments over the years to try to introduce prescribed quantities for all reasonable items. In the Appendix to the prescribed quantities Directive there is a roughly similar number of foodstuffs. In fact, they do not entirely overlap. In the prescribed quantities Directive there is a slightly different list from that on page 13 of the report; but broadly they are the same. About two-thirds of them are identical. This is because there is a very narrow limit within which it is practicable to identify goods which can usefully be declared under prescribed quantities.
My Lords, it is unlikely that there will be very much more; so that the almost mythical thought which comes out of some of the evidence we received—that if we have unit pricing threatened at us (which is what the noble Lord, Lord Raglan, has said) we will "get weaving" and get a lot of prescribed quantity items in national legislation and in legislation on a Community basis—is, I am afraid, not going to be practicable. Even if it were, its desirability is questionable because so many of the products that might be added to the list are not best measured in their quality by weight.
§ Lord RAGLAN
My Lords, may I come back? Surely what we are after is reducing the number of variables about which the shopper has to make a calculation in assessing the worth of an article. Take a luxury item like chocolates! We like to see chocolates sold in half pounds or pounds. That may have nothing to do with the quality of the chocolates but it has a great deal to do with the weight of the chocolates.
§ Lord MOTTISTONE
My Lords, in fact, chocolates are on both lists. It is 550 difficult to think of others. I think that perhaps what one was pursuing was the line that instead of having 36 items we might have 72 or 108; because there are many more food products than are listed in either of these documents.
My Lords, the noble Lord, Lord Raglan, puts his finger on another point; namely, that he is talking as though the prescribed quantities Directive is essentially one the primary object of which is in the interests of the consumers. That is not the case by its definition in the opening paragraph, because it comes under Article 100 of the Treaty which is "Freeing Barriers to Trade". If it is also beneficial to the consumer, well and good! But, if your Lordships will bear with me, it is the freeing of barriers to trade to which I wish to draw particular attention. Originally, we said that we are entering the Common Market. One does not hear much talk now of the Common Market. These days we talk about the Community. This is a good thing because it implies community spirit and getting together on a wider basis than merely plain marketing. But the fundamental of the Treaty of Rome is the Common Market. I believe that what we want to do is to try to aim at having a common trading system throughout this vast area to the benefit of all nine countries. That is the whole point, as I see it, of the Community.
What you get, in fact, through these processes of trying to harmonise our various regulations in the form of these Directives, is not fewer barriers to trade but more. Take the fact that biscuits cannot be defined in European terms as a separate item and therefore are not in the relevant annex of the prescribed quantities Directive. This means that when (assuming for the moment that it goes through) the prescribed quantities Directive does go through, then biscuits will not be in it. I do not think there will be much threatening by unit pricing, for other reasons. But it will mean that the barrier to trade which now exists will continue to exist; and that barrier is that we have a regulation which says that biscuits must be sold in prescribed quantities from 1st January, 1978. So everybody else who wants to sell biscuits in this country will have to do the same thing; and we will have a barrier to trade. If we could get biscuits into this Directive, we should be freeing a barrier to trade.
551 All too frequently, you find that when these Directives come along, a derogation is made—and the matter of derogation was mentioned earlier—to allow national rules to apply. It is quite a good truism that one country's derogation is a barrier to trade of another country's, or another eight countries.
My Lords, this is why I say that this is becoming a very difficult problem. Our Sub-Committee considered a year or so ago the labelling Directive. We had a debate on it nine months ago. We would welcome this in all sorts of ways; but can we get agreement on the detail? No, we cannot. It is difficult. It is partially difficult because of different national attitudes and partially difficult because of different commodities really requiring special treatment in different ways. And every time you allow a special treatment, you put in another harrier to trade. All I would say at this point—because people are working on this and seeing whether or not they can find a solution to it; and now is not the time and place to go further into it—is to urge your Lordships to bear with the thought that Directives are not the panacea that they ought to be; that they are very difficult to work out. The unit pricing Directive certainly ought not to see the light of day and the prescribed quantities Directive is marginally satisfactory, but I would not be in the least surprised if it took much longer to come into effect than was being suggested earlier in the debate. My Lords, I hope that we shall be able to return to this question of harmonisation on a wider basis at a later time.
§ 4.50 p.m.
§ Viscount TRENCHARD
My Lords, I am afraid that I added my name very late to speak in the debate and to make my contribution as the most junior Member of Sub-Committee D. Of course, I fully endorse the report and should like to add my thanks and congratulations to the noble Lord, Lord Sainsbury, on condensing a very difficult subject to a very clear exposition.
I want to emphasise a couple of points. The first is the most important: I believe, from experience of food manufacturing and retailing for some 30 years (though I 552 have no commercial interest in that sphere today), that there is a straight choice before us as a result of these two Directives, and particularly the unit pricing Directive. Do we want to continue with the illegality in theory and in practice of retail price maintenance in this country, or do we want a broad application of Continental-style—or certainly it is the style of some Continental countries—unit pricing? I think it is a straight alternative.
The reason I think that, is that my experience of Continental countries and of the task of packaging food within those countries tells me that manufacturers carry a very large part of the burden of unit pricing in those countries. The balance of the burden that is then left to retailers is a possibility. The balance of the problem that would be left to retailers in this country if the whole of the task of unit pricing were to fall on them is I believe an impossibility. I think this is a problem for large retailers as well as for small retailers and I was glad to hear the noble Lord, Lord Sainsbury, mention the fact that costs to large retailers would increase. The actual evidence given to us in the report by the retail consortium says:Unit pricing on the scale envisaged in this Directive would lead to increases in food prices as a result of the extra costs which would inevitably be incurred to implement the proposals. Apart from the fact that the proposals would be difficult to enforce and police, the application of unit pricing at retail level would impose a quite impossible burden on all retailers, especially bearing in mind the vast ranges of food now offered for sale".In the big supermarkets today we are probably dealing with over 10,000 individual items. Certainly, all grocery food shops have been dealing with thousands of items for a long time. It is a problem for all retailers, and the retail point is the only place where this can be done if resale price maintenance is not to creep back into practice again. The noble Baroness, Lady Seear, suggested that the small shopkeeper might well choose to have his prices marked. From a manufacturer's point of view, the thought of marking some items for some retailers and not for others, would be a nightmare, particularly in the sphere of perishables.
The second point—and the only other one I want to make—arises out of what my noble Chairman, Lord Raglan, said today. He suggested that it would be a 553 good thing—if it is indeed true—if manufacturers were all pushed into packing a vastly increased range in prescribed quantities. There are practical limits to this. In this country, a great many products have grown into major demand over the years which have been packed up in numbers of portions which consumer research has shown to fit the needs of households of varying numbers. If one then adds the variability of trimming and packing—whether one takes the rind off bacon, the skin and bone off fish or the bone out of chops let alone whether one goes to the extent of part-cooking, which involves shrinkage—and if the benefits of some of these things are to be offered to housewives, a wide range of sizes is bound to result. It would be totally impracticable to meet these trends of modern demand, which have been pushed quite far in this country, by simply extending the prescribed quantities throughout nearly all food.
My Lords, I end by saying that I do not think that is the way out. It means that we are left with a choice of slightly less than the perfect answer in both cases: we can either let the illegality of resale price maintenance in this country go unchecked—which I certainly join my colleagues on the Committee in hoping will not happen—or we can oppose this unit pricing Directive, which, if applied, I am quite clear would not be in the interests of consumers in this country.
§ 4.58 p.m.
My Lords, I should like to join those noble Lords who have paid tribute to my noble friend Lord Sainsbury for the way in which he took the chair of Sub-Committee D which dealt with these matters, and for the way he has introduced this somewhat intricate subject to us this afternoon. He warned us that he might be qualifying as a Eurobore—I think he used that expression. He need not have apologised in advance, because although the subject matter is—as it is so often in the case of these EEC reports—technical and complex, we took joy in the clarity with which he introduced the subject, and I am sure we all appreciate that. When he was speaking of the boring material, I was reminded that I made my maiden speech in your Lordships' House on the emotional subject of metrication orders for dried fruits 554 and edible fats. I did not feel that that was a great Parliamentary occasion. We pay genuine tribute to what my noble friend has done for us both in the past and now this afternoon.
On behalf of the Government, I welcome this report as very timely and helpful. I earnestly commend it to the House. There has been so much unanimity in the debate and, indeed, in the evidence that was submitted to the Sub-Committee, that in stating the Government's position I inevitably will reiterate some of the points made by others who have spoken. I hope to do so briefly. It was only my noble friend Lord Raglan who introduced a somewhat different note from the general tenor of the debate. He produced the argument that across-the-board unit pricing would be acceptable because it would encourage the prescribed quantities for foodstuffs.
However, I would urge him to consider that there are many food items which are not suitable for prescribed quantities and which under this Directive would need to be unit priced. It was the noble Lord, Lord Mottistone, who used the example of the meringue as one item not suitable for this kind of treatment, and I notice that in this document before me there is a long list of other items which are unsuitable for prescribed quantity treatment. I am sure it would give your Lordships indigestion to hear them even read out in juxtaposition, but I notice that bicarbonate of soda is one of them, so that may be helpful. There are such things as cake decorations, salad cream, pease pudding, baby foods, blancmange powders and many other things, which would provide difficulties if the unit price Directive were to be adopted in the way that some have advocated.
§ Lord RAGLAN
My Lords, may I ask my noble friend: why should bicarbonate of soda not be unit priced?
My Lords, I am not briefed on every particular item in this fascinating list, but I shall think about that and perhaps discuss it privately. Since I referred just now to the interesting and helpful speech of the noble Lord, Lord Mottistone, may I make just one point regarding his favourite subject of biscuits? We should indeed like biscuits to be included in the Directive if it were 555 possible, but I understand that technically it would be difficult on account of the difficulties of defining what is a biscuit. Possibly we could do that at a later date; but in the meantime it is right to control biscuits nationally, and the noble Lord, Lord Mottistone, indicated that an order will be coming into effect on 1st January next year.
If I may proceed to make a few points about the Government's position, probably I might preface them by saying that over the last decade a great deal has been said and written about the need for consumers to shop wisely and to have a proper basis for price comparison.
In this country, we have a history going back now some 50 years of an increasingly wide range of important food items being required by law to be pre-packed only in prescribed quantities. This legal insistence on standard sizes of pre-packages has proved enormously successful in enabling the shopper to compare prices both between different products and different sizes.
Your Lordships will have noted from the Committee's Report that United Kingdom interests have widely supported the Community's initiative in drawing up the draft Directive which deals with standard ranges of sizes for the free circulation of products within the Community. This draft Directive is based on optional harmonisation so it would leave Member State governments free to decide whether any additional sizes were needed for national purposes. The general effect is likely to be beneficial both to the consumers (since it would pave the way for a possible extension of prescribed quantity legislation in this country) and to manufacturers who will no longer have to bear the costs of additional production lines to serve their export markets. The Government are therefore anxious to see this proposed Directive brought to a successful conclusion and adopted as soon as possible.
The concept of unit price marking—that is, giving the price per pound or per kilogram—is one to which we have long been accustomed, although it was not until the present Government took powers in Section 4 of the Prices Act 1974 that efforts were made to secure a uniform pattern of price display throughout Great 556 Britain for important food items such as meat, fish, fruit, vegetables and cheese, whether weighed out in front of the customer or pre-packed in random quantities. The Government intend to complete their programme in these sectors as quickly as possible.
To that extent, the draft Directive on unit pricing which is essentially concerned with the display of unit prices, is in line with the present thinking of the Government but, as has been pointed out by a number of speakers, the Commission's draft takes matters one stage further. It envisages unit pricing as the mandatory basis for price comparison for all foodstuffs, not simply those weighed out or pre-packed in random sizes. The only exemption envisaged is for pre-packed foods made up in sizes drawn from a Community range or, where none at present exists, from any national range for a particular product.
My Lords, I will not disguise the fact that this approach raises implications which are of serious concern to the Government. A blanket requirement to indicate the unit price on all those fixed-weight pre-packages of foodstuffs for which no sizes are prescribed poses practical problems of worrying dimensions and, in the debate to which we have listened, a number of these difficulties have been very fully expressed.
The main problem is the continuing extra burden this would place on retailers in calculating and re-calculating unit prices for many different pre-packaged products. Some of these are not sufficiently important even to feature very high on any consumer list of priorities for standardised packaging; quite indiscriminately, however, the unit price for each one would have to be worked out and constantly checked for accuracy and to ensure that the information was properly displayed. It can be argued that this could easily be done with mechanical or electronic labelling devices, but it must increase overheads even for multiple retailers, who frequently use such devices for pricing purposes. This will almost inevitably be reflected in prices charged to consumers.
But the Government are even more concerned, as have been a number of noble Lords who have spoken, about the effect that the EEC proposals would have on the 557 smaller retailer. Where it is agreed that unit pricing is really necessary in order to enable the shopper to make proper price comparisons, then the Government believe it is right that unit prices should have to be displayed in all types of shops. The indiscriminate application of unit pricing could, however, have a very serious effect on the future existence of the small shopkeeper. This cannot, as the noble Baroness, Lady Seear, mentioned, be in the interests of consumers. I feel certain that your Lordships will echo the Government's real concern that we should not add unnecessarily to the administrative burdens of the small shopkeeper.
There is one further point of concern to the Government. Again, it is a point that has been made by one or two previous speakers, but it is worth reiterating. If retailers felt that they could not carry the burden of unit pricing for some products which were not readily amenable to standardised packaging, there is a danger that they would enlist the help of manufacturers in printing unit prices on their packs, which could lead to a form of resale price maintenance being introduced by the back door. The Government do not believe that this would be in the consumer's interest.
Those are points which I thought it worth while stating clearly as the Government's point of view, in harmony with most of the points that have been made in the report, in the evidence that the Committee received and, I was glad to hear, in the views that have been expressed this afternoon. Therefore, I once again commend this Select Committee's Report to your Lordships, and assure you that the views that have been expressed on both Directives will be of considerable help to the Government in the forthcoming discussions in Brussels on these two matters.
§ 5.11 p.m.
§ Lord SAINSBURY
My Lords, may I thank all Members of your Lordships' House who have taken part in what has been a very useful debate on this rather complex issue. May I also associate myself, though I do not always agree with him, with our former chairman of Sub-Committee D, who has rendered both the Committee and the House great service during his term of office. I shall not 558 detain your Lordships any longer as there is to be a further debate.
§ On Question, Motion agreed to.