§ Mrs. Colquhounasked the Secretary of State for Prices and Consumer Protection why she decided to regulate the discounts allowed on wholesale supplies of bread.
§ Mrs. Shirley WilliamsIt was necessary to regulate discounts on bread in order to safeguard expenditure of public money under the bread subsidy scheme. During the latter part of 1974 competition among plant bakers for a greater share of the relatively static bread market led to a sharp increase in the general level of discounts given to the larger wholesalers and retailers. To the extent that the higher discounts were not financed out of productivity savings, the bakers were entitled under the provisions of the Price Code to look for recoupment by way of increased prices. Under the Government's policy this would have entailed a higher rate of subsidy. Since there was evidence that the increased discounts were not in all cases being passed on at the380W retail level, subsidy money would, in effect, have contributed to an enlargement of retailers' margins instead of benefiting the consumer, as intended by Parliament.
The Government welcome the efforts of bakers to increase the efficiency of their operations and are not seeking to eliminate competition. However, they could not overlook the public expenditure implications of the sharp rise in discounts. In formulating the discount controls, care was taken to set the maximum rate at a level which would not preclude price cutting. The action taken has reduced some of the more excessive discounts that were being given, but competition remains effective and most retailers are continuing to sell bread at keenly competitive prices.