Electrical Goods (Hansard, 21 January 1977)

§ Mr. Hattersley

Yes. I do so by calling on the manufacturers and importers of small electrical goods to abandon this practice, and by advising the public not to allow themselves to be misled by it.

The Report found that in the case of these particular goods the prices recommended by the manufacturers allowed for profit margins greatly in excess of those required by most retailers and that hardly anyone sold at these prices. Prices are on average 20 per cent. below the recommended prices, and in some cases as much as 30 per cent.

I endorse the Price Commission's conclusion that in these circumstances the practice of recommending retail prices is more likely to mislead than to help the consumer. This is not to say that the system of recommended prices as employed in other sectors necessarily works against the public interest. As the House knows, on receiving its report on small electrical goods, I asked the Price Commission to carry out a wider fact-finding study of manufacturers' recommended prices to supplement the report by the Monopolies Commission in 1969 and to provide an up-to-date basis for the Government's consideration of the public interest. I have no wish to prejudge the outcome.

However, so far as small electrical goods are concerned, I am satisfied that the present system should be discontinued. The consultations which my Department has held with representatives of manufacturers' and retail interests has revealed a good deal of support for this view, particularly from some of the retail interests. Some retailers and some manufacturers, on the other hand, appear anxious to retain the system. To them I 326W say that in the face of the clear evidence that the retail prices recommended for small electrical goods are not a measure of value, they are rendering a disservice to their customers by continuing to support the system and will lose all credibility.

In the meantime, I have three pieces of advice for consumers, and I am giving them the widest possible publicity, through consumer bodies such as Consumer Advice Centres and Citizens Advice Bureaux and Local Authorities Consumer Affairs Departments. First—when buying small electrical household appliances, they should take no notice of the manufacturers' recommended retail price—it does not represent a fair price or a measure of value for money. Second—they should ignore all claims about reductions from manufacturers' recommended prices—they do not imply that the goods are a bargain at the so-called lower price. Third—they should decide what to buy and where on the basis of the actual price asked and the service offered. On the wider issue of the practice of recommending prices, the former Director General of Fair Trading raised a number of problems connected with recommended retail prices in his consultative document on Bargain Offer Claims and invited views. I have no doubt that the present Director General will consider what action is desirable when the Price Commission's wider factual study is available later in the year.