§ Mr. George Rodgersasked the Secretary of State for Prices and Consumer Protection if he will make a statement on the outcome of his discussions with the TV specialist rental firms on the Price Commission's Report on TV Rental Charges.
§ Mr. HattersleyThe Price Commission's Report on the TV rental business suggests that charges could be lower, even if this had to be at the expense of profit margins.
In the light of the Price Commission's report, we have already taken steps to ensure that investment relief under the Price Code should not be available in respect of expenditure by the rental firms on TV receivers.
The report was discussed with the six largest specialist firms which together account for about 90 per cent. of the specialist rental market. We put it to the firms that, in the light of the Price Commission's report, the public would look for a special effort to absorb costs and maintain price stability. In response Granada TV Rental Ltd., Rediffusion Ltd., Thorn Television Rentals Ltd., and Visionhire Ltd. have given me an undertaking that there will be no increase in existing rental charges in the present phase of price control—that is, to the end of July 1977. This means that during that period, subject to unforeseen circumstances, they will absorb already known cost increases, including the recently announced higher interest charges, the significant costs involved in the new VAT definition which operates from November 1976 and the 2 per cent. surcharge on the employers' national insurance contribution which operates from April 1977. If there are cost increases beyond those enumerated which cannot be absorbed, the companies will review the position with the Department.
228WIt is clear that average profit figures in the Price Commission's report cover a wide range of circumstances. Some rental operations are profitable by the general standards of British industry, others less so. British Relay TV Ltd. and Telefusion Ltd. had not increased prices for some time and had proposals for increases already in preparation when the report was received. These will take effect, and the new level of charges will be subject to the undertaking above.
In giving this undertaking of price stability the firms have made it clear to my Department that they do not accept that the Price Commission's comments on their profits are justified. They have also drawn attention to the relatively small number of complaints which arise in an industry which serves millions of subscribers and to the fact that charges have been frequently affected by matters outside the industry's control such as the various changes in VAT and hiring controls.
I have told the firms that I welcome their undertaking to restrain prices.