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Price Code

Volume 891: debated on Monday 28 April 1975

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1.

asked the Secretary of State for Prices and Consumer Protection when she next intends to review the Price Code.

I have no plans for a general review of the stage 4 Price Code. I am consulting appropriate representative organisations on the proposals announced in the Budget Statement for amendments to two paragraphs of the code.

In the light of the proposed improvements in the investment relief, and given the increase in the rate of inflation, surely this is merely running hard to stay in the same place and will make little practical difference. Given the time needed for investment decisions and given that the power of the legislation expires next spring, surely this will not influence anyone to take any new decisions about investment, although it will be of help to people who have already made those decisions. Surely the right hon. Lady must give some indication of the Government's intention next spring.

The hon. Gentleman must appreciate that it would be rather foolish for me to say a year ahead what the Government's intention can be next spring, because none of us can be sufficiently clear about the circumstances that can arise. Because investment relief is stated in percentage terms and in terms of categories, it is true that inflation is not affected, and this will bring fresh relief of the kind we want to those who are genuinely engaging in investment, growth and jobs.

Would not the right hon. Lady agree that the Chancellor's measures added 2.75 per cent. to the price index and that as the CBI estimates that the total removal of price restraints under the code would add another 1 to½per cent. it will not be worth while?

I am not at all sure that I accept the CBI's estimate. It should be pointed out that the CBI's estimate of the effect if the Price Code restraints were removed would apply to the prices of all sorts of goods, essential and less essential, whereas the Chancellor's measures applied above all to the less essential goods.

14.

asked the Secretary of State for Prices and Consumer Protection what recent consultations she has had with the food industry with regard to the operation of the Price Code.

15.

asked the Secretary of State for Prices and Consumer Protection what progress has been made in the consultations between the Department and the food industry with regard to amendment of the Price Code.

Following the statement on the Budget made by my right hon. Friend the Chancellor of the Exchequer on 16th April, I have circulated to interested parties a consultative document, which is available in the Vote Office, setting out the changes I propose to make to the Price Code. Among other changes, I propose to extend investment relief to commercial vehicles. This measure will, I believe, be of particular benefit to the food manufacturers as well as to distributors. My proposals take account of recent discussions between my Department and representatives of the food manufacturing industry.

Is the right hon. Lady aware that the Budget did nothing of any significance or relevance and that this absurd bureaucracy is strangling the profitability of the industry? Why not take some direct measures to ease the code in its operation? Why is the Department being so rigid over the discounts which bakers are prepared to offer to wholesalers—I put a case to the right hon. Lady recently—so that a supermarket chain can reduce the price of a loaf by 2p or 3p?

The hon. Member is on very weak ground. In the first place, the Government introduced a specific tied investment relief because we were concerned about growth. If the hon. Gentleman's own administration had done this earlier, we might have had more growth this year. [Interruption.] All I can say is that the industry itself very much welcomed this, and it will not do for hon. Members opposite to fool about in a situation in which the industry itself has pressed for investment relief of this kind.

With regard to the point about the use of the Price Code and bureaucracy, in my view it would be irresponsible in a situation of rapid inflation not to recogise that sacrifices have to be made by all sections of the community, including industry.

While accepting that any relief, be it in investment on vehicles or in any other way, is acceptable in relation to the profitability of food manufacturing companies, may I ask why it is that in the last week we have seen a report from the Spillers Group indicating a loss of £7 million on the baking side of which it attributes £6 million to the restraint of the Price Code?

There is a very difficult technical position in respect of the baking industry. The hon. Gentleman at least will recognise that it would have been irresponsible of me as Secretary of State for Prices and Consumer Protection to allow the subsidy to be used to widen discounts so that there would be no effective control over public expenditure. Of course, it is the case that we have introduced controls over discounts for the purpose of protecting the taxpayer.

Will the right hon. Lady recognise that, given that the reliefs which she has given are welcome, they have only marginally affected the food industry, which still has special problems? Does she not accept that it is in the interests neither of consumers nor of the people employed in the industry for such companies to go bankrupt? With regard to the meeting she had in her Department and the information she has given that the Department would have new criteria in relation to the interpretation of those provisions of the Price Code that the food manufacturers were complaining about, her Department cannot do such a thing. Such an interpretation must be judicially recognisable. Will she issue orders?

We are very happy to discuss at any stage with the food industry any ways in which we can assist in making orders as clear as possible. I accept what the hon. Lady says. It is fair to say from the point of view of the general public that there has been a fairly dramatic fall in the margins of retail food and drink prices from 2·8 per cent. in the third quarter of 1973 to 1·9 per cent. in the third quarter of 1974. It is worth pointing out to the public that there is no profiteering in the retail margins of food at the present time.