Bread (Hansard, 17 November 1976)

§ Mr. Hattersley

The retail prices of subsidised bread are already subject to statutory control under the Bread Prices Order. It was originally intended that this control should lapse when the subsidy ended. Bread is, however, a staple food, and I have concluded that, even after the subsidy ends, maximum price control should be continued for standard bread, although not for premium varieties. I therefore propose to put the control on a longer-term basis by changing the coverage of the order. In general this will involve a simplification of the control.

At present the trade discounts which retailers can obtain from their suppliers are restricted under the bread subsidy scheme, with the purpose of ensuring that

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the course of its work on special references, on average distribution margins for selected individual goods, including the following items which form the subject of these questions:—

the benefit of subsidy reaches the consumer. I propose to end these restrictions and provide instead that the statutory maximum prices under the Bread Prices Order shall be reduced progressively when the retailer receives large trade discounts. I believe that action on these lines will give a more effective control over the price of basic bread, continue to safeguard public funds while the subsidy lasts, and reduce Government intervention in day-to-day commercial matters. At the same time it should lead to actual price reductions in some shops, which will be particularly welcome after the succession of bread price increases already this year.

I am beginning consultations on my proposals forthwith and I hope to lay an order before the House before Christmas. The major baking companies have, however, notified to the Price Commission their intention to raise their prices by a further ½p on all loaves at the end of this month. I have informed them that, irrespective of the acceptability of these notifications under the terms of the Price Code, I am not prepared to raise the present statutory maximum retail prices for standard bread until it has been possible to introduce the new system.

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In order to maintain retail prices unchanged I have decided to defer a reduction in the bread subsidy which I had planned for December, but the extra cost can be accommodated within the overall provision for food subsidies.

I should emphasise that I have not taken this action because I consider that the baking industry is making excessive profits. I am taking the steps outlined above because at the present time we need a more effective maximum price control for basic items. It is not possible to freeze prices irrespective of cost increases, and the statutory maximum prices will have to be increased from time to time. But I hope to show that the Government are actively looking for ways of restraining prices further and are prepared to intervene where this is appropriate.