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European Community

Volume 891: debated on Monday 28 April 1975

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3.

asked the Secretary of State for Prices and Consumer Protection if she will list the ways in which British consumers will continue to be protected from price rises whilst the United Kingdom remains a member of the European Community.

The Under-Secretary of State for Prices and Consumer Protection
(Mr. Robert Maclennan)

As members of the European Economic Community we are free to act on prices as we think best and my right hon. Friend will continue to implement the Counter-Inflation and Prices Acts in the interests of the British consumer.

While I thank the Minister for that statement, I wonder whether he can give the House an idea of what little effect our membership of the European Community has had directly on prices generally in this country.

It is true that at present the effect is broadly neutral. It should be emphasised that British consumers are major beneficiaries of the tariff cuts which have already been made between the United Kingdom and our Community partners in respect of nonfood items—for example clothing, on which tariffs have come down from 20 per cent. to 8 per cent.; furniture, from 10 per cent. to 4 per cent.; carpets, from 25 per cent. to 10 per cent., and radios, from 15 per cent. to 6 per cent. Taking food and other goods together, broadly the effect of our membership of the Community on the level of prices has been to restrain it. The effect has not been very great, but every help in dealing with inflation is good to have.

I think my hon. Friend will accept that I doubt almost all he has just said. Would he not agree that far from our having power to deal with our own prices, especially of food, we are compelled to put an import levy on them if they fall below Common Market prices? Therefore, we are on a compulsory ladder in which every rung is pushing up our prices whether we wish them to go up or not.

I hope that my hon. Friend is not doubting the accuracy of the tariff cuts to which I have referred. As a former Agriculture Minister he will know that we had levies and import quotas under our agricultural system even before entry into the Community and that the Community export levies have positively held down the price of cereals during the past year and have enabled us to keep the price of bread lower than it might otherwise have been.

Is not the whole system based upon keeping prices of food up in the Common Market? Would it not be more sensible if the money that we have to pay to the Community for keeping prices up could be spent on keeping food prices down in this country?

No, the hon. Gentleman is quite wrong. The objective is to keep prices stable.

The hon. Gentleman will know, for example, that by a direct Community subsidy worth £40 million in recent months we have been able to keep down the price of sugar to the British consumer.

4.

asked the Secretary of State for Prices and Consumer Protection what she estimates will be the effect on the average family's weekly food bill of Great Britain leaving the EEC.

6.

asked the Secretary of State for Prices and Consumer Protection what effect she estimates withdrawal from the EEC would have on the housewife's weekly budget.

Membership of the Community is at present having no significant effect on food prices overall.

Does the right hon. Lady share my concern that the price of food as measured by The Guardian shopping basket went up by 5 per cent. in March alone? Bearing in mind that the official Labour Party propaganda machine will be using that fact, what opportunities will she have in the coming weeks to point out that only a small part of that rise was due to our membership of the EEC?

One of the main effects on the increase in the food index arose from the decision taken in our own Annual Farm Price Review with respect to the price to be paid to dairy farmers in the light of their soaring costs. One must therefore make clear the reasons for this increase in the index, which had virtually nothing to do with the EEC, although I must repeat that there was some effect on butter and cheese prices in consequence of the April transitional step.

Is it not the case that the EEC has decided to apply value added tax to food prices next year? In view of the policy of harmonising these taxes as a result of our membership, will that not also mean that VAT will be applied to food prices in the United Kingdom?

No, there is no question of this country having to accept VAT on food or on children's clothing unless we decided as a national Government to do so.

Would the right hon. Lady agree that the ultimate harmonisation of food prices within the EEC could mean ultimately that food costs could take as much as one-half or two-thirds of the average weekly family income in the United Kingdom?

If so, it would be different from the experience of all other countries in the Common Market, some of which have been members for almost 16 years and in none of which is anything like that proportion of income spent on food. Such a situation would require a number of circumstances which seem to me to be extremely improbable.

Would the right hon. Lady be concerned about the future supplies of food if we were to withdraw from the EEC?

None of us, whatever our views on the EEC, can make any final statement about supplies outside the Community. What we can say is that the degree of self-sufficiency in temperate products in the Community offers some stability which we cannot be equally sure would be paralleled in the outside world. The recent experience over sugar and even more the experience of New Zealand, which was unable to meet its own quotas of butter and cheese permitted in 1974, suggest that there is some uncertainty about supplies in the world outside.

My right hon. Friend said that the present net effect of our membership of the EEC on food prices was zero. Can she say how much the net effect has varied since we became a member?

First, I should not like my hon. Friend to assume that the effect has been zero. I cannot say that it has been. I can say that there is no significant effect, the problem being quite simply that no one can precisely ascribe the sugar subsidy, amounting to over £40 million, to any particular person's purchases of sugar. If people buy EEC or world sugar, that sugar is subsidised to the extent of 20p on a 2-lb. bag. If they buy Caribbean sugar under the CSA, it is not subsidised to the same extent. I hope the House appreciates that we are trying to give the clearest picture we can and that there is some difficulty about presenting precise figures. Broadly speaking, there is no significant effect; if we include sugar, there is a mildly favourable effect; if we exclude it, there is a mildly unfavourable effect.

Secondly, in 1974 as a year there is no doubt that there was a favourable net effect in terms of food prices. My hon. Friend will appreciate that we are having to give from week to week the most up-to-date figure we can.