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Prices And Consumer Protection

Volume 893: debated on Monday 16 June 1975

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Car Parking Contracts (Exclusion Clauses)

1.

asked the Secretary of State for Prices and Consumer Protection whether she will now introduce legislation to ban exclusion clauses in contracts of car parking businesses.

The Minister of State, Department of Prices and Consumer Protection
(Mr. Alan Williams)

This is one of the problems on which the Law Commissions' recommendations are awaited. As soon as the Commissions' report is received we shall consider urgently what needs to be done.

Is my hon. Friend aware that we have been awaiting the report for several years and that the delay is quite disgraceful? Is he also aware that in the meantime motorists are paying very high rates to park their cars where they have no alternative but to leave their keys in the ignition and when an employee of the car park smashes up a car the motorist has to pay the bill because of an iniquitous exclusion clause in the contract? What is my hon. Friend proposing to do about this? Does he not agree that it is a disgrace?

I agree that it is a disgrace. I am sure that I do not need to spell out to my hon. and learned Friend that the Law Commissions are independent and not subject to the control of the Department. My hon. and learned Friend must make up his mind how much he wants to preserve the independence of the Law Commissions. He cannot have it all ways. We have made our position clear. I shall be happy to convey to the Law Commissions the point of view that my hon. and learned Friend has expressed.

At the end of the day the Law Commissions are not subject to my control or to my Department's control.

Does the Minister not agree that if the Law Commissions are not subject to the Government's control, the Government are not dependent on the Law Commissions and not obliged to wait until the Law Commissions produce their report? If they are so dilatory in producing their report, why will the Government not act independently of them?

If the hon. Gentleman had followed earlier exchanges on the subject he would realise that the question of exclusion clauses is more complex in relation to services than in relation to goods. The Law Commissions are within one or two months of completing their report. There are complications because of the legal differences in Scotland, England and Wales. This is causing some delay. However, nothing the Government could do in this sector could be as comprehensive as that which we hope to do in a relatively short while, based on the report which the Commissions have almost completed.

Inflation

2.

asked the Secretary of State for Prices and Consumer Protection by how much the retail price index has risen since 28th February 1974.

14.

asked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation based upon a grossing-up to an annual rate of the last three months' increase in the retail price index, and calculate on the same basis as the three month figure of 8·4 per cent. quoted by the Chancellor of the Exchequer as being the grossed-up annual rate of inflation for August 1974.

17.

asked the Secretary of State for Prices and Consumer Protection what is the latest rate of price inflation expressed at an annual rate.

The retail price index has risen 25 per cent. over the last 12 months to May 1975 and 32·3 per cent. since February 1974. The change over the last three months, grossed-up to an annual rate, is 53·1 per cent. but the figures are distorted by the measures which the Government have had to take for the reasons my right hon. Friend gave in his Budget Statement.

No matter how much the right hon. Lady may talk about the figures being distorted, is she not aware that the disgraceful figure she has just announced is her personal contribution to 16 wasted months of Socialism? Is she not ashamed of being a member of a Government who are bringing this country to such a state that people going abroad on package holidays now purchase their currency a week in advance to avoid the effect of inflation? As the right hon. Lady is a well-advertised moderate in the present Government, will she now begin to disown the wild Socialist policies that are bringing the country to its knees?

The hon. Gentleman will know that over the last year-and-a-bit the Government have cut retail profits by 10 per cent., have announced a three-months' gap between price rises, introduced subsidies on basic foods, introduced investment relief into the Price Code, introduced maximum prices for subsidised food, and extended unit pricing. On every one of those measures the Opposition have attacked us, opposed us or, at best, grudgingly agreed with us. When the Opposition realise that indignation is no substitute for a positive policy I shall listen to them, but not before.

I entirely accept the point which my right hon. Friend has just made, but will she also take into consideration the fact that the time has come for very drastic measures to be taken? Will she consider the whole question of introducing a price freeze on certain basic commodities? I accept that this is very difficult. Nevertheless, will she now consider the proposals by, for example, ASTMS and other organisations, to have a price freeze on basic food commodities?

I am interested in any such proposals, including those by trade union leaders. However, it must also be accepted that there must be a general restraint on incomes if a price freeze is to serve any purpose.

Does the right hon. Lady not accept that we have moved a considerable way from the Chancellor's claim of 8·4 per cent. inflation last August, doubtless based upon a formula for the full-hearted content of the British people? Does she not further agree that over half of last month's staggering price rise was due to the action which the Chancellor took and action which probably the Secretary of State for Employment failed to take in relation to the social contract? When will the Government take some action through the Department of Prices and Consumer Protection to prevent this appalling rate of inflation continuing?

I have already indicated to the hon. Gentleman—and he knows it very well—that one of the main reasons for our inflation is not that we are a high-wage country but that we are a low-productivity country. The reasons for that go far back into our recent history. What is essential is to take, over the next couple of years, the investment measures that will enable us to become a high-productivity country. For the present, we require from all sections of the community, including the Opposition, acceptance of restraint for a couple of years, which will enable this process to begin.

Is my right hon. Friend aware that the measures she has taken are welcomed as an effort to control the rising cost of living? But does she realise that many of the price regulations are not being enforced? I recognise that it is impossible to enforce them from trader to trader, but is it not possible to have random checks to ensure that they are observed?

I thank my hon. Friend for what he said. Only recently I instituted a series of special inquiries into individual prices which go beyond the general control of the Price Code. The first reports from those special inquiries are expected very shortly.

is the right hon. Lady aware that she recently attracted widespread public support for her announcement in the referendum campaign that she would rather resign from public life than remain committed to an administration pursuing policies in which she did not believe? Will she apply the same high standards and resign from public life if her colleagues in the Cabinet do not introduce measures at once to bring down the disastrous rate of inflation?

Like so many of his colleagues, the hon. Gentleman always talks in general terms and never in specific ones. The whole difficulty about the Opposition's approach is that they try to replace policy with expressions of indignation and never face up to the problems of making a voluntary incomes policy work.

To take a specific example, has my right hon. Friend had any information from the suppliers of petrol that they will now be able to reduce their prices because of the reopening of the Suez Canal, the closing of which caused them to increase prices some years ago?

We shall certainly be closely watching the effects on oil prices of the reopening of the Suez Canal. I also assure my hon. Friend that the Price Commission, with our encouragement, is chasing up all falls in raw material prices to make sure that they are carried through in the final prices.

As the right hon. Lady has presided over the fastest rise in prices this century—rises which were largely avoidable and which will bring serious economic and social consequences in their wake—does she agree that in the circumstances it would be honourable to resign? Instead of giving lectures and quoting statistics, will she turn her attention to the consequences, in human terms, of the devastating rate of inflation—for which her Government are responsible—on the people who have not gained the spoils of the big battalions to protect them against the effects of inflation—people who will suffer a sharp cut in living standards, whose jobs are in danger—[HON. MEMBERS: "Speech."] I can understand that Labour Members do not want to hear this. Does not the right hon. Lady agree that her Government have created the most unfair society in this country since the war?

That was, perhaps, a speech rather than a supplementary question. I do not think that calling for resignations across the Floor of the House is a substitute for thinking about ways to solve the nation's problems. The hon. Lady knows perfectly well that her Government's efforts to deal with inflation led straight to the three-day working week. We are trying to find a better answer, based on a voluntary policy. The Opposition would do better to support us and the social contract rather than perpetually undermine it.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Secretary of State's answer, and to give her an opportunity for her to hear our proposals, I wish to give notice that I shall seek to raise the matter on the Adjournment.

13.

asked the Secretary of State for Prices and Consumer Protection what is the latest annual rate of inflation according to the Price Commission index.

In the 12 months to February 1975 the Price Commission's index rose by 19·6 per cent. This index was published in the most recent quarterly report.

As the rate of inflation has more than doubled in the last three months, and as the Price Commission stated that any increases in prices have been due almost exclusively to increases in wages, is it not clear that a policy that seeks the control of prices, except the most important price—the price of labour—may well be in the interests of the British Labour Party but not in the interests of the British people as a whole, and must be a highly damaging sham?

The hon. Gentleman owes it to the country not to make remarks that are quite as wild as that. It is not the case that the rate of inflation has doubled in the last three months. The figure that I gave was 19·6 per cent. on a 12-monthly basis; the figure today is 25 per cent. That is not a doubling by any mathematics. I have made it clear on many occasions, as have my colleagues in the Government, that we are concerned about the level of labour costs. Incidentally, they are not just wage costs, for labour costs generally go far beyond that. The hon. Member simply cannot wave aside the problems of establishing either a voluntary or a statutory incomes policy. We have had long experience of the latter.

Does my right hon. Friend not agree that it is somewhat over-simplistic to argue that there should be a total freeze on prices at the same time as it is argued that there should be greater investment in industry? Do not many people find motivation for investment in a mixed economy in the profitability on their return? While profits need to be controlled, to argue that there should be no return on investment is likely to have major implications in terms of jobs.

My hon. Friend is leaping to exactly the opposite conclusion to that to which the Opposition leapt. We have neither said nor denied that there would be a price freeze; we have simply said that all options have to be open at present. It would be as mistaken for my hon. Friend to leap to one conclusion as it is for the hon. Member for Oswestry (Mr. Biffen) to leap to the opposite conclusion. The straight truth of the matter is that these issues are under discussion at present, as the House well knows. The investment relief was introduced by the Government, for the first time, specifically because we recognised the importance of there being the highest possible level of investment in the public and private sectors.

In view of the Chancellor's stated intention to halve the rate of inflation over the next 12 months, will the right hon. Lady say what base figure the Chancellor is using?

I would like the hon. Gentleman to ask my right hon. Friend that question because I am not quite sure of the exact phrase to which the hon. Gentleman is referring.

Is it not absolutely wrong to suggest that the basic cause of inflation is wage increases? While wage increases undoubtedly have a marginal effect on inflation, is it not the case that there are other factors of much greater importance? Is it not clear that in Chile, where a totally free enterprise system has been introduced, inflation has increased by 150 per cent.? Does my right hon. Friend not agree that it is not true to suggest that by lifting all price restrictions inflation is automatically held back? On the contrary, is not private enterprise the biggest ingredient in the creation of inflation?

My hon. Friend must accept, as I must, that in recent months labour costs have been the main force behind inflation.

I repeat that these are labour costs including the costs of the professions and the self-employed. It does not mean costs which fall only to trade unions. My hon. Friend and I would agree that we live in a relatively low-wage economy and that it is understandable that people try to force up their wages in this situation. The centre of our problems lies in the fact that we have to increase productivity to the extent that we can pay decent wages. These are not problems created over the last year-and-a-bit by the Government.

21.

asked the Secretary of State for Prices and Consumer Protection what plans she has to mitigate the effects of inflation on food prices for those on below average incomes.

The food subsidy programme, together with the operation of the Price Code and other counter-inflation measures, will continue to provide substantial benefit to those on below-average incomes.

Is the hon. Gentleman aware that, due to the failure of his Government to take action sooner, we now have the same inflation rate as Brazil, and that for it to be cured everyone in this country will have to take a cut in their standard of living. During this process, what new measures has the hon. Gentleman in mind to protect the old and the weak, who will necessarily be most at risk?

As the hon. Gentleman will appreciate, the Chancellor of the Exchequer is undertaking consultations with both sides of industry on the future programme. In the meantime, the protection which we give to the lower income groups remains.

In view of the scaling down of food subsidies, will my hon. Friend resist the introduction of VAT on food as practised in the Common Market?

I have no knowledge of any such intention, but my hon. Friend will fully appreciate that that is a question for the Chancellor of the Exchequer, and that it would be utterly wrong for me to try to answer it.

Household Articles

3.

asked the Secretary of State for Prices and Consumer Protection if she will make a statement about the results of her voluntary agreement with retailers and manufacturers to restrain the prices of certain essential household items.

The voluntary agreement covers two lists of goods: one of items which retailers keep on continuous offer, and the other of items on which manufacturers concentrate their promotional price-cuts. The combined price of the retailers' items increased by 19·6 per cent. between May 1974 and April 1975, and that of the manufacturers' items by 22·4 per cent.; together they rose by 20·1 per cent. In the same period the retail food index rose by 25·1 per cent., and the index for manufactured foods by 34·6 per cent.

I am glad to hear of that progress, but does my hon. Friend agree that this is an area of price restraint in which the housewife does not understand the system, and that on occasion it can be counter-productive, because she soon forgets the cut in prices at the beginning of the special offer period but remembers the often steep rise in prices at the end? Therefore, could any indication be given of total savings to the consumer as a result of the agreement? In any renegotiation of the agreement, will my hon. Friend try to improve the public's understanding of the system?

The saving is between 5p and 6p in the pound. I fully appreciate the point that my hon. Friend makes. It is difficult for consumers to appreciate that they are continually receiving this marginal benefit from the existence of the voluntary agreement. We are discussing what price control, and so on, is to follow at the end of the voluntary agreement, or whether the voluntary agreement is to continue.

Will the Minister give an assurance that in his efforts to continue voluntary agreements with retailers he will explore all possible means of ensuring that small self-employed shopkeepers are fully represented in the negotiations?

We shall do what we can to ensure that that is done. We fully appreciate the importance of the small shopkeeper, particularly to those confined to shopping in a limited locality, such as the elderly.

When the Department has this relative success with private industry, why is it so clearly unable to have any success with the publicly-owned industries, particularly electricity and gas, in keeping down the cost of their products to small consumers—for example, the cost of consuming electricity through a prepayment meter and the cost of consuming small amounts of electricity and gas? When the Department is having this success with the private sector, why cannot it achieve the same success with the industries owned by us and controlled by my right hon. Friends and the House?

I congratulate my hon. Friend in getting his speech in early. There is a subsequent Question on this subject on the Order Paper.

Reverting to the question asked earlier by the hon. Member for Liverpool, Walton (Mr. Heffer), does the Minister agree that even if the voluntary agreement is not renewed there is no point in using Section 2 of the Prices Act for a total freeze? To do that when underlying costs are rising would simply be further to lower investment and increase unemployment. Will the hon. Gentleman give an assurance that the Government will not impose a total freeze?

The Opposition call on us to take action to curb prices and then spell out their opposition to every option. We are willing to consider all options constructively.

Price Code

4.

asked the Secretary of State for Prices and Consumer Protection what assessment she has made of the impact of the Price Code on the level of the retail price index in the light of the recent trends in raw material and other costs.

The Price Code continues to exert a useful influence on the RPI. Precise quantification is not possible.

Even so, is there not now ample evidence to the Price Commission and the right hon. Lady's Department to suggest that margins in both industry and commerce are narrow and competitive? In those circumstances, does she not agree that to call for a freeze on prices, or, for that matter, on wages, is misconceived and nonsensical?

There has been a substantial fall in profit margins in the past 12 months, and profits are not now contributing to the rise in prices, but I do not think that the abolition of the Price Code, which the present Government inherited from their predecessors, would be a very helpful prelude to a major national attack on inflation.

In view of the British Steel Corporation's reduction in the price of certain steels, how soon can my right hon. Friend give an estimate of the effect that that will have on the price of refrigerators and other household items?

I would need a little time to consider that question from my right hon. Friend because it takes about four to five months for the prices of raw materials and of processing materials to work their way through to the retail level. As I have said, the Price Commission is already under instructions to follow through all falls in raw material and industrial material prices to the point of the retail trade.

12.

asked the Secretary of State for Prices and Consumer Protection whether she will review the Price Code in the light of the latest CBI industrial trends survey.

I have just amended the code to help exporting firms and reinforce the investment relief. I have no plans for further changes at present.

Does the right hon. Lady accept that the recent survey showing a reduction of investment intentions highlights the fact that investment relief, as it is called, is a restriction, and that 45 per cent. of investment is supported by retained profits and that for income tax purposes 100 per cent. is written off? Surely investment relief should not be substantially increased if it is an impediment rather than an assistance to investment.

If it is an impediment, it is surprising that industry welcomed its introduction and also pressed for its increase from 17½ per cent. to 20 per cent. It is a basic part of the Government's philosophy that where policies can be undertaken to increase investment which itself will create new jobs, it is very much in the national interest for that to be done. It is still a surprise to me that the previous administration had no investment relief of any kind in its price code.

Is it not a statistical fact that price increases have been at their steepest since we appointed a Secretary of State for Prices and Consumer Protection? Is it not possible that that is not wholly coincidental and that the more profit margins are restricted the more capital investment is restricted, and the more capital investment is restricted, the more expensive things become?

The hon. Gentleman's argument would be stronger if he would recognise that in the last two years there have been massive increases in both oil prices and world commodity prices, which, it is generally accepted, have been the main forces behind inflation until the last few months. In the last few months, in consequence of thresholds and other claims, there has been a take-over by the cost of income from the cost of commodities. But there is no doubt that the cost of commodities was the original engine behind the rate of inflation that we now have.

In view of that answer, will my right hon. Friend guarantee that she will resist any further relaxation in the Price Code in foreseeable economic changes that may be coming in the near future?

No, I could not give that guarantee, because in certain circumstances a relaxation of the Price Code, like the recent investment relief relaxation, is directly related to the employment position. Representations have been made to me by trade unions, for instance, with a view to making such a relaxation. There must always be a balance between trying to keep prices down and keeping employment up.

Is the right hon. Lady aware that one of the most depressing and significant aspects of Question Time today has been her unwillingness to rebut suggestions that we might have a statutory prices freeze? Will she take this opportunity here and now to hold out relief and hope to the industrial and commercial community by saying that she would not countenance a prices freeze because of the bankruptcy that it would inevitably involve for British industry and commerce?

The hon. Member will appreciate that, as my hon. Friend the Minister said earlier, it is the first responsibility of the Government to leave all possibilities open in dealing with the rate of inflation.

Garages (Code Of Practice)

5.

asked the Secretary of State for Prices and Consumer Protection what report she has received from the Office of Fair Trading regarding the discussion it is having with garages on a code of practice; and what action is proposed.

The Office of Fair Trading announced on 27th May that its discussions with the motor trade had led to the adoption by the Scottish Motor Trade Association of a code of practice in respect of used cars. It is hoped the rest of the United Kingdom trade associations will follow the Scottish example.

I thank my hon. Friend for that reply. Does he not agree, however, in view of the increase in petrol and other motoring costs, that there is greater need for consumer protection for the motorist than ever before? Will he look again at the Consumer Association report, which showed that one-third of the cars leaving garages were inadequately maintained and two-thirds were dangerously inadequately maintained? Does not something need to be done, and done urgently?

Yes, Sir, but it is a matter of doing something as urgently as possible which will be effective, when dealing with a series of outlets scattered throughout the country, many of them very small. I am sure that my hon. Friend will go along with me in congratulating the Director General and the Scottish Motor Trade Association on the first breakthrough in this sector. The schedule of inspections that we have agreed to is very valuable, and no obstacle has been put in the way of progress in England and Wales; it is just that the Scots started earlier. We hope to see this extension into England and Wales, including new cars and servicing generally.

I congratulate the Scots on their forward movement, but what is my hon. Friend proposing to do to stimulate the English and Welsh into doing likewise? Can he show to the learned and independent members of the Law Commission how much progress has been made in other sectors, so that they may try to sink their international difference?

My hon. and learned Friend seems determined to return to a point that he made earlier. I would probably be rebuked by you, Mr. Speaker, if I followed his example. For England and Wales, the Director General assures me that he is not meeting any obstacle from the trade, and that the trade is co-operating fully and willingly in attempting to establish a good code of practice in England and Wales. We hope that he will reach a suitable conclusion soon. We expect that he will come to some agreement by about the turn of the year, or early next year.

Food Manufacturers' Charter

6.

asked the Secretary of State for Prices and Consumer Protection whether she will make a statement about the Government's policy towards the proposals in the food manufacturers' charter.

The trade has agreed that there should be such a charter. I am discussing this question with it at the present time.

In view of the rapidly rising costs of manufacturers, does the right hon. Lady agree that it is urgent to have a move towards a voluntary policy which will take account of all the costs with which manufacturers are faced directly as a result of the Government's voluntary wages policy?

It is the Government's policy to enter into voluntary planning agreements with industry, but the outline of the food charter is still in very general terms and we are discussing with them the details which the food manufacturers have in mind.

My right hon. Friend seems rather timorous—if I may use a Scottishism—about any attempt being made to impose a wage freeze. Will she tell us that she will not agree to the blandishments of the trade to have a free-for-all in prices, and that everything she has been doing in this respect will be kept up in the months ahead?

My hon. Friend need have no fear that I would like or want to see any kind of free-for-all in prices at present. That would be madness.

Food Subsidies

7.

asked the Secretary of State for Prices and Consumer Protection if she is satisfied with the effect of food subsidies on the cost of living.

9.

asked the Secretary of State for Prices and Consumer Protection by what percentage the payment of food subsidies has reduced the average cost of those items to which they apply.

23.

asked the Secretary of State for Prices and Consumer Protection what effect food subsidies have had on the cost of living; and if she will make a statement.

The present saving in the General Index of Retail Prices as a result of food subsidits is estimated to be 1·4 points, while the reduction in the average cost of subsidised foods is estimated to be about 20 per cent. These savings are particularly helpful to low-income families which have to spend a high proportion of their money on food and other necessities.

The right hon. Lady was asking for specific suggestions. As food subsidies are making only a marginal impact on food prices, yet adding substantially to inflationary pressures because they are increasing Government spending, would it not be more sensible to reallocate these blanket, indiscriminate and wasteful subsidies to those families and pensioners who are being hit worst by the ravages of inflation?

The hon. Gentleman must have misheard what I said in my answer. I made it clear that food subsidies are making a 20 per cent. difference to the prices of subsidised foods. In terms of benefit, they are four times as valuable to a family with an income of £20 or under per week as to a family with an income of £80 or over per week.

The Opposition are in little position to criticise when, in government, for years they pursued a policy of subsidising the nationalised industries, where the benefit was 2 to 1 in favour of the high-income groups.

As my hon. Friend's answer clearly demonstrated that, in terms of subsidies on basic foods, the less well off are receiving substantial help, will he give an undertaking, in view of the efforts which will be made to re-vamp the social contract in the weeks ahead, that subsidisation of basic foods will continue in order to assist the less well off in our community?

It is our intention that the subsidies on food shall continue. We have announced the programme for the following year. There will be no cut in them until the next financial year. There is no question of the subsidies being terminated. It is a matter of their being phased out systematically.

I accept the point that the less well off are being benefited to some extent as a result of the food subsidy policy, but will not the right hon. Gentleman take on board the reasonable point, put by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), that if the Government wish to continue to direct most help towards these people it could be more effectively and perhaps more generously done direct through the social services benefit system?

I appreciate the hon. Gentleman's attempt to be constructive. In the Chancellor of the Exchequer's announcement of public expenditure cuts, the increases that were scheduled for the social services were not in any way cut. For example, there will be a further uprating of pensions and associated benefits in November, the non-contributory invalidity scheme, and the help for the one-parent family.

If the food subsidy system is so egalitarian in its nature, why are food subsidies being phased out progressively?

It was never envisaged that food subsidies would be continued permanently. As my hon. Friend will remember, at the time when he supported the original programme in the House it was made clear that food subsidies were an interim measure. My right hon. Friend made it clear that in the long term she was envisaging more on social security benefits—for example, if a new system such as that for one-parent families could be devised—and that we would move away from food subsidies. It was always envisaged that the food subsidies would be short-term, and the Act was brought in for two years.

What effect have food subsidies on the retail price index? Would it not be better, for example, to look at the rating system, and methods of reforming it?

The amount being paid in food subsidies is £550 million, in real terms. I ask the hon. Gentleman to read my answer, in which I stated their impact on the retail price index.

If the hon. Gentleman is right—and I accept it—that the value of food subsidies to a man on £20 a week is four times that to a man in a higher income group, does this not show, in itself, that there is a great deal of waste in the system and that it distorts the value of food in relation to other commodities in our community? Would it not be much better to give the lower income groups the help they undoubtedly need much more directly?

The hon. and learned Gentleman is aware that we have looked at a whole series of alternatives. Food subsidies were introduced because they could apply immediately. In addition, experience of schemes introduced by the Opposition—I accept their motives, but their methods were wrong—such as the family income supplement, and so on, all had a low uptake and did not get to the people who most needed the help.

Does not my hon. Friend agree that subsidies on essential foods, such as milk, bread, butter and cheese, have kept food prices in this country much lower than those in neighbouring European countries? Would it not be possible at the point of sale to show the amount of the subsidy to the consumer so that she could appreciate the benefit of the Government's action in subsidies?

The difficulty about that suggestion is that in a period of high inflation various changes would make it difficult and possibly confusing to give such information. My hon. Friend should also bear in mind the risk that if too much information is given at the point of sale, at the end of the day the consumer ends up getting no information.

Does the hon. Gentleman acknowledge that as the average family has to spend over £12 a week more than it did last year, and as poorer families need £10 a week more, and as the pension for a married couple will have to go up by £5 in December to restore its purchasing power to the level of last July, in this context the 85p a week that food subsidies are saving families is insignificant and irrelevant? Could not the Government have helped people far more by restraining inflation instead of trying to conceal it?

The hon. Lady states the obvious when she says that it would be better to restrain inflation. Both parties have been trying to find effective methods of doing just that, and we have invited the co-operation of both sides of industry in achieving an agreed policy. The hon. Lady constantly repeats the record and I congratulate her on having had it played on the radio for the first time today, but no doubt the listeners will become as familiar with it as we are. So far, the Opposition have not come up with a single alternative.

16.

asked the Secretary of State for Prices and Consumer Protection if she will make a statement on the implementation of the Government's proposals to scale down food subsidies.

19.

asked the Secretary of State for Prices and Consumer Protection if she will make a further statement on her proposed phasing out of food subsidies.

We have not decided the adjustments to be made in particular subsidies in 1976–77. The position will be considered nearer the time in the light of developing economic conditions and the expected price movements for the various subsidised foods.

I accept the need, expressed on all sides of the House, to help those on low incomes, but does the hon. Gentleman not agree that confidence in the pound sterling will not return until we, as a nation, stop subsidising consumption? Will that process not be painful for all sections of the community?

I do not agree with that conclusion. It is not necessarily valid. There are far more important factors which relate to confidence. I do not think it did confidence any good to have such an irresponsible speech as that which we had from the Leader of the Opposition at the weekend.

Since it was the Government's argument in favour of food subsidies that they protected those on low incomes, is that not a reason to retain them? Will it not be much more difficult—

It is nothing to do with the Common Market. Does my hon. Friend not agree that it will be much more difficult to get an acceptable voluntary incomes policy if food subsidies are phased out, because of the consequential rise in the price index? Does my hon. Friend not agree that the trade unions will not accept that there should be an increase in food prices at a time of income restraint?

I accept the problem put by my hon. Friend. The change that has been envisaged for next year—and I stress that it is next year; there are many months before the change comes into operation—will still add only half per cent. to the cost of living at a time when the Chancellor envisages a substantial change in the rate at which the cost of living is increasing.

24.

asked the Secretary of State for Prices and Consumer Protection what has been the value of food subsidies to the average family in Great Britain for each week; and the value for each person, during the last 12 months.

The latest estimate of the value of food subsidies to a typical family of two adults and two children is about 75p per week. During the last 12 months the estimated average value per person has varied between 15p and 23p per week.

Does my right hon. Friend agree that the subsidies have been of great help to millions of people and that this help has been insufficiently appreciated in the country? Does she also agree that the absence of that help would be noticed by those to whom a half of 1 per cent. increase in the price of food is a great deal?

I thank my hon. Friend for what he said. The Conservative administration did not see fit to increase family allowances at all, but food subsidies have been of direct help to people with several children to raise.

Is it not the case that out of the total amount of subsidies for the current year, namely, £550 million, £280 million is going to families with more than £50 a week and only £270 million to families with less than £50 a week?

The hon. Gentleman is falling into the common statistical error of comparing households which are mostly one- and two-person households—that is, pensioner households—with households which are normally four- and five-person households in the upper income brackets. If he were to look at the benefit per capita, he would find, as we have said, that the proportionate benefit to low income households is between three and four times what it is to high income households.

Advertising And Packaging

8.

asked the Secretary of State for Prices and Consumer Protection what study she has made of the amount spent on advertising and packaging goods, and their respective contribution to prices; if she will take steps designed to reduce advertising and packaging expenditures; and if she will make a statement.

Estimated expenditure on media advertising was £870 million in 1973. A Government-sponsored study of the economics of advertising will be published later this year. Expenditure on packaging is estimated at £1,700 million for 1974. The Waste Management Advisory Council, set up by the Government, is studying the possibility of eliminating excess packaging.

Is my right hon. Friend aware that many of us hope that before very long the Government will introduce controls on the advertising of essential commodities? Even so, we believe that in the meantime it is essential to curb some of the obvious excesses of our society, such as unnecessary advertising and packaging. Is she aware that such a curb would be generally welcomed by the community?

I sympathise with my hon. Friend's anxiety, especially in respect of excessive packaging, for much of which there is no justification. With advertising it is very much a matter of looking at the facts in each case. Sometimes advertising has the effect of lowering costs and at other times of raising them. My hon. Friend will be aware that my Department is in close consultation with the industry about ways in which the position may be improved.

No one wishes to see excessive advertising, but will the right hon. Lady bear in mind that the survival of many newspapers, or at least their cost to the public, depends largely on the amount of advertising that they are able to carry?

Yes, that true. The real danger with advertising is that it can sometimes create a more inflationary climate than would otherwise exist. I have in mind the example of some of the advertising for financial credit schemes in 1973, at a time when the previous administration was trying to cope with a massive but out-of-hand boom.

On a point of order, Mr. Speaker. May I ask my right hon. Friend either to answer my supplementary now, or Question No. 10 now, or both at the end of Question Firm?

Diabetic Foods

11.

asked the Secretary of State for Prices and Consumer Protection if she will amend the Price Code so as to exclude the weighting of price increases in diabetic products with costs not related to their manufacture.

My right hon Friend told the House on 17th April that she had asked the Price Commission to look into the price of diabetic foods. It will be decided whether there is need for any action when we have seen the commission's report.

May I give my hon. Friend an example of the need for action? One of my constituents went to complain about an increase in the price of diabetic chocolate biscuits at Boots and was told that the reason for a massive increase was the big increase in the price of sugar.

I can understand the consumer's no doubt bemused reaction. However, it is interesting to note that although the price of sugar has risen massively, the price of sorbitol, which is a substitute, is still twice as high as that of sugar. We must wait until we have received the report and then consider what action may be taken

Central Heating

15.

asked the Secretary of State for Prices and Consumer Protection whether she will arrange for an investigation of door to door selling and financing of central heating.

The Director-General of Fair Trading is already engaged in a review of doorstep selling. The financing of central heating installations will be covered by regulations to be made under the Consumer Credit Act.

Does the hon. Gentleman not agree that the Consumer Credit Act can be brought into this? Since some of the firms involved have been named in newspaper articles, would not this be an ideal situation for the Director General of Fair Trading to invoke Section 38 of the Fair Trading Act to warn those companies and to take whatever appropriate action may be necessary in the Restrictive Practices Court?

The hon. Lady will know that we discussed this matter at considerable length in the House last week. I am sure that we all very much regret that she was not able to be with us.

It may have been an Adjournment debate, but it was an extended one. We would have welcomed the hon. Lady's point of view. Dealing with the point about the Consumer Credit Act, I can tell the hon. Lady that we shall be introducing licensing in the autumn. That will be an ideal opportunity for the Director General to impose further discipline upon those who have behaved in what I know the hon. Lady would agree can be described as a shabby way towards the consumer. I am sure that the Director General will welcome any information that the hon. Lady can give about individual firms.

Does my hon. Friend accept that there are Labour Members who would join with the hon. Lady in calling for stringent action to be taken against those free enterprise contractors who exploit the consumer when selling central heating? Is it not worth reminding the House and the country that the best people to give advice on central heating are at the electricity boards and gas boards? Further, is it not the case that such advice is free?

That is extremely sound advice. It is valuable for the House to warn the consumer as often as possible of the risks he faces in buying from some doorstep salesmen. Most of them are decent, genuine traders. It needs only a small proportion of people trading in high-cost goods like central heating to do tremendous harm to large numbers.

Price Commission

18.

asked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the latest report of the Price Commission.

The report deals with many topics, including movements in labour costs, and material costs. The report says that prices were still being affected by the increase in oil prices but once this worked its way through, rising prices would largely be due to rising labour costs.

In the light of the Price Commission report, does the right hon. Lady consider that there is any further scope for restricting price increases by limitations on wholesale or retail margins? Will she say whether her plan for continuing restraint of prices will take into account the danger of promoting unemployment through the erosion of profit margins, caused in many cases by a delay in approving price adjustments at a time of high and accelerating inflation?

As I have already said, we are trying to strike a balance between the needs of investment and the maintenance of employment, on the one side, and the need to reduce the rate of inflation, as far as possible, on the other. It is with this in mind that I have given the Price Commission additional powers to make special inquiries about individual prices while retaining a general structure of control over the profits of enterprises.

What is the Price Commission doing about the excessive cost of ice-cream, hamburgers, and so on, charged by street traders in the West End? Let us forget all these airy-fairy theories. What is it doing about that?

Since one of my hon. Friend's colleagues has asked exactly this Question, it would be unfair of me to answer it in reply to a supplementary question.

Consumer Advice Centres

20.

asked the Secretary of State for Prices and Consumer Protection if she is satisfied with the number of consumer advice centres currently available.

In June 1974 there were about 35 consumer advice centres now there are about 60, including mobile units. In addition, there are 670 citizens advice bureaux, an increase of 45, most of which now deal with consumer problems.

I would like to see this development go further when the economic situation permits. But at present the Government consider that the enforcement of consumer protection legislation, much of it new, including the Consumer Credit Act, must, within the constraints on local authorities' spending, have priority over new developments in consumer advice.

But will my right hon. Friend accept that the implementation of consumer advice centres is an important part of the social contract? Does she agree that in Labour's Programme 1973 we stressed the importance of establishing a nation-wide system of high street consumer advice and control units to which the consumer could go immediately and ask for the price control mechanism to be operated, instead of the present rather haphazard system? Will my right hon. Friend urge action to be taken on this?

I think that my hon. Friend will accept, coming as he does from one of the leading local authorities in this field, that there has been a very sharp jump forward in the last 12 months. Indeed, if I were to give him the figures from when the Government came to power in February 1974, he would see that there has been about a fivefold increase in the number of consumer advice centres as well as an increase in the number of citizens' advice bureaux. I assure him that I yield to no one in believing that these are of crucial importance, but it would be a mistake for Parliament to pass legislation and then not to finance the means of enforcing it as quickly as possible.

Is it not true that, on a cost-effective basis, citizens' advice bureaux are giving far better value for money than are consumer advice centres, particularly at a time when there is a great shortage of local authority funds?

I think that the hon. Gentleman would find it hard to sustain that argument. It depends very much on the citizens' advice bureaux at which one looks and in what area, because the citizens' advice centres are virtually all in metropolitan areas, with relatively high rent and rate costs to meet. But my strong impression from those advice centres which have been in being long enough to return effective reports is that in many cases they are more than saving their ratepayers the cost of running them. We are endeavouring to get full reports so that we can put a complete picture before the House, but as many centres have been running for only a matter of months, and in some cases weeks, the hon. Gentleman will appreciate that it will be a little time before such a report can be brought forward.

May I draw my right hon. Friend's attention to a change in practice in the consumer advice centre in my constituency, which is one of the two consumer advice centres in Scotland? Is she aware that the control of it is now in the hands of the regional authority and that, instead of the director of the consumer advice centre being able to drive a bargain with the retailer, problems now have to go through a cumbersome mechanism, with letters being written? This is disadvantageous to the customer.

I assure my hon. Friend that we have urged local authorities not that they devolve on the districts the major responsibility which was left with the county authorities under local government reorganisation but that, as far as possible, matters of consumer complaint should be dealt with locally, which gives a much more effective and helpful service.

Is the right hon. Lady aware that the high-powered and expensive expertise offered by gas and electricity consultative councils is not used a great deal by people who need the advice? Therefore, will she discuss with the gas and electricity boards the possibility of these consultative councils having officers available to help the public in consumer advice centres?

The hon. Gentleman will be aware that the question of the structure of nationalised industries' consumer councils has been sent to the National Consumer Council for review, and we hope that one of the things which will emerge from it is a simplification of the direct service to the consumer, who often finds it easier to go to one point of assistance rather than to many.

Referendum

22.

asked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the referendum result as it affects the work of her Department.

Since I took office I have made numerous representations in the consumer interest on European Community matters, notably in relation to agricultural, competition and consumer protection policy. I shall continue to pursue these questions, and I am happy to say that the Commissioner in charge of consumer affairs will be coming here to see me shortly.

May I congratulate my right hon. Friend on the part she played in the referendum campaign, and may I say how anxious a number of us on these benches are that this House and her Department play their full part in European matters now that we are in the Community to stay? Is she aware that a number of our Socialist colleagues in Europe will be almost as interested as I am to learn the answer to my earlier supplementary question? If she could give it while answering this supplementary question, I should be extremely pleased.

I am interested in all aspects of consumer affairs, and, as in Europe, I endeavoured to get the agricultural Commissioner to consider more closely the interests of consumers in drawing up agricultural policy, so domestically I am anxious to persuade the electricity and gas boards to take into account the concern of small consumers for pricing policies which are less regressive than they are at present.

Ice-Cream And Coca-Cola

25.

asked the Secretary of State for Prices and Consumer Protection if, in the interests of visitors and overseas tourists, she will refer to the Price Commission the prices being charged for ice-cream and Coca-Cola outside the Palace of Westminster.

I am concerned about the reports of excessive charges by some street traders, but a reference to the Price Commission would not be the right remedy for a problem which may well involve unlicensed trading.

Will the Minister take from me a suggestion as to the right remedy for the traders outside this temple? If they cannot observe the prices recommended by the manufacturers of these soft drinks and ice-cream, and continue to charge prices which are three times as much as they should be, thereby rooking tourists and visitors to this country, they should be chucked out. I suggest that we put up in St. Stephen's Garden and other places, notices of recommended prices, and so safeguard our tourists.

I am afraid that the hon. Gentleman is wrong if he thinks that this problem is confined to the immediate area of the Palace of Westminster. If it were, it would be easier to solve. This sort of abuse and cheating of tourists takes place on a wide scale in London, and one of the difficulties is pinning down the people concerned. As they are unlicensed, they are often difficult to trace. For this reason, I have invited the London Tourist Board to a meeting with me this week, so that we can discuss what further measures can be taken. I am sure that this and the publicity that the hon. Gentleman has now given to the matter will help tourists. I think that magistrates could also help by not imposing such derisory fines when these people are caught.