§ Mr. Palmerasked the Secretary of State for Prices and Consumer Protection if she will make a statement about the cost of the food subsidies programme.
§ Mrs. Shirley WilliamsAs the House knows, the White Paper on Public Expenditure (Cmnd. 5879) foreshadowed expenditure on food subsidies in the current financial year at £550 million and progressive reductions thereafter. Our latest estimates indicate that, at present rates of subsidy, expenditure is likely to exceed the £550 million provided for the current year.
It will, therefore, be necessary to make an early reduction in the level of expenditure, and I have decided to cut the bread subsidy from £5.16 per sack of flour to £4.06 per sack of flour with effect from 30th November. The reduction is equivalent to about ½ on both large and small loaves and is estimated to save some £5½ million in the current financial year.
Following notifications to the Price Commission, the major baking companies are also proposing to make price increases of ½p with effect from 1st December mainly to cover wage settlements.
Taken together, these changes would mean that the price of the large loaf would in general be ½p higher than it was before the price was reduced by ½p on 20th October. I warned at the time that this reduction could only last for a very short period.