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Food Subsidies

Volume 886: debated on Monday 10 February 1975

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23.

asked the Secretary of State for Prices and Consumer Protection whether she intends to increase expenditure on food subsidies.

As I told the House on 30th January, the Government intend to continue the food subsidies programme during the coming year at broadly its present level.

Does the Secretary of State draw any conclusion from an answer given to me last Thursday by the Minister of State, Department of Health and Social Security that even on the most favourable assumption to the Government it would be cheaper to increase pensions, supplementary benefits, family income supplement and family allowances by the exact financial weekly benefit of the food subsidy than to continue with this wasteful subsidy?

I wish that the hon. Gentleman had paid us the courtesy of being present for the Second Reading of the Prices Bill, when this matter was discussed at great length.

If so, he will know that one of the points made was that while the Government have introduced food subsidies they have also increased pensions and supplementary benefits and intend to increase family allowances to boot. In other words, we are doing both these things.

Is the right hon. Lady aware that one of my constituents is very fond of cats, orders 14 pints of milk a week to feed them and is unwillingly being heavily subsidised by the taxpayer? Does not this show how ludicrous the food subsidy is?

Perhaps the hon. Gentleman should also tell his constituent that the Conservative Government introduced the subsidy on milk and, therefore, helped her cats long ago.

Is the right hon. Lady happy that the Government have abandoned the family endowment programme? Does she not agree that it would have been better to accept the proposal for family allowances for the first child?

The hon. Gentleman will be aware that I made clear during the Second Reading of the new Prices Bill that the Government intend to extend family allowances to the first child but that this is a matter which requires a good deal of fresh administration. We see the subsidy programme as being linked to the phasing-in of this new benefit.

Does my right hon. Friend agree that the Conservatives are displaying a magnificent example of their unawareness of the circumstances of life since they do not realise that it is only by subsidising the staple foods that one helps the families who could be categorised as poor?

My hon. Friend will be aware that the take-up of means-tested benefits has not been anything like the entitlement of those whom it is intended to benefit.

Will the right hon. Lady make a start in reducing food subsidies by doing away with the interim bread subsidy which was brought in to pay for a wage settlement?

The hon. Gentleman knows that we are awaiting from the Price Commission a full report on various applications made to it, including that based on recent increases in the price of world wheat.

How much of the extra costs of the food subsidy will be printed by the Government, and how much will come out of Government taxation?

I hope that we can rely on the hon. Gentleman's support in taking it out of taxation.

Although most Members on the Labour benches readily support the fact that Conservative Members are now calling for allowances for the first child, does not this show that a system of food subsidies is an essential part of the redistributive process in the foreseeable future?

My hon. Friend will also recall that over a long period of time the Conservative Government did nothing to increase family allowances and nothing to extend them to the first child.

Does the right hon. Lady recall that when the Home Secretary recently made a statement about the increase in television licence fees there was a strong request from the Labour benches that old-age pensioners should be subsidised the full amount of that increase? Does she remember that her right hon. Friend made it clear that in the Government's view it was wrong to subsidise people in that blanket fashion and that he proposed that it should be done by increasing old-age pensions and not by acting indirectly? Does not this contradict the argument which is always being advanced about food subsidies?

There seems to be some dispute about whether my right hon. Friend the Home Secretary has been directly and correctly reported, but I must point out that the increase in the black-and-white television licence fee is far less than that in the colour television licence fee because most low-income families have access to black-and-white television and not to colour television.

Is my right hon. Friend aware of the high indirect subsidies paid on expensive foodstuffs to business men who live on expense accounts?

My hon. Friend has raised a very fair point, and I hope that very shortly my right hon. Friend will stop up this food loophole, too.

In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

27.

asked the Secretary of State for Prices and Consumer Protection whether she intends to subsidise any further foodstuffs.

I have no plans at present for introducing new subsidy schemes.

Does the right hon. Lady have any programme for reducing the amount of subsidies in view of the burden on the public purse?

It has been indicated that under the present subsidy arrangements there will be a slight diminution in the level of subsidies in 1975–76.

Will my right hon. Friend accept with what deep sorrow I heard what she has just said? Does she realise that many of us feel that it is time to consider the extension of subsidies not only to essential foodstuffs but to other essential consumer goods?

I have some sympathy with my hon. Friend's remarks, but I can assure him that the diminution will be small.

Will the right hon. Lady go a little further? I appreciate that in the Prices Bill there is a limit on the amount of money she is seeking, but does she agree that as there has been a reduction in the subsidy element in nationalised industries' prices there should be a comparable reduction in the subsidy element in food prices?

It might be argued that the opposite is the case. However, the crucial point about nationalised industries' subsidies is to try to protect the less well off, and that it what the Government are trying to do.

Following the supplementary question asked by the hon. Member for Cannock (Mr. Roberts) about increase ing the indiscriminate use of subsidies, may I inform the right hon. Lady that in Lymington there is a tremendous shortage of wide-necked bottles of Heinz tomato ketchup? When will she start to subsidise them?

I shall leave it to the Conservative Party, when it comes to office, to do that in the indiscriminate way in which it subsidised all nationalised industry prices.

The right hon. Lady has said that food subsidies will be met by increases in taxation. Since it is clear that there will be a deficit on the Government's borrowing requirement, how is it that only her subsidies are met by taxation and the increased expenditure of all other Departments is met by the printing of money?

The hon. Gentleman would lead me down a long path if I were to pursue that matter too far. However, the nationalised industries' subsidy level, as the Government have made clear, is subject to gradual narrowing as we begin to bring prices up to commercial viability. Secondly, the great bulk of the food subsidy expenditure has been met—not "will be", but "has been"—by the additional income taxation and value added taxation raised in the April 1974 Budget.

If there is a diminution in the amount of food subsidies in 1975–76, why is the Secretary of State asking for a sum of money which will enable her to increase them?

The hon. Gentleman will be aware, as he was told during the Second Reading of the Prices Bill, that there will be a slight decline in our proposed expenditure in 1975–76.

31.

asked the Secretary of State for Prices and Consumer Protection what is the latest estimate of the cost of food subsidies during the current financial year; and what is the estimated cost for the financial year ending 5th April 1976.

The estimated cost in the current financial year is about £510 million. The cost in 1975–76 is expected to be of the order of £550 million—that is in real terms, of course —and detailed Estimates will be presented to the House in due course.

Will the right hon. Lady tell the House how she reconciles her previous statement that she hopes to phase out food subsidies with her statement today that she proposes to increase them during the forthcoming financial year?

The hon. Gentleman has got it very badly wrong. He should remember that a number of schemes for subsidies were introduced late in the financial year 1974–75. Therefore, we are not talking about a full year when I give him the estimated cost of £510 million. For example, tea was brought in very late in the financial year. The cost of the subsidies in a full year is estimated at £550 million. That does not allow for what changes may be made in the year. Therefore, the hon. Gentleman has based the wrong conclusion on the wrong premises.

Will my right hon. Friend continue to subsidise the staple foods to ensure that the benefit goes to people on low incomes? However, will she bear in mind that the large companies—wholesalers and some retailers—should not be allowed to take advantage of subsidies to the extent that some of them do?

It is my intention to do what my hon. Friend suggests in the first part of his supplementary question until there is full compensation through social benefit. I have said that to the House before. Secondly, we have no evidence that any subsidy is going to the benefit of manufacturers or retailers. However, if my hon. Friend has any evidence to the contrary I shall be grateful if he will let us have it and we will then pursue the matter with the utmost determination.