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Tea Prices

Volume 933: debated on Monday 20 June 1977

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26.

asked the Secretary of State for Prices and Consumer Protection if he will refer to the Price Commission the increase in the price of tea.

6.

asked the Secretary of State for Prices and Consumer Protection if he will refer the price of tea for investigation by the Price Commission.

My right hon. Friend announced on 30th March 1977 that he had asked the Price Commission to examine and report on prices, costs and margins in the importation, blending, packaging and distribution of tea, including the causes and effects of movements in world prices of tea. The Price Commission has not yet completed its report.

Does my hon. Friend accept that many people, especially the retired, are angry at the way that tea prices have increased? Does he appreciate that they understand that increases in the pay of tea workers in no way account for the increases which have taken place and that their confusion is heightened when the May indices show that the food index increased primarily because of the increased cost of tea, whereas the index for materials purchased, including tea, shows that those prices went down? People believe that there is speculation and that middlemen are having a field day. What will my hon. Friend and his Department do to speed up the inquiry and tackle the problem?

We are anxious that the inquiry should be completed not only as soon but as authoritatively and thoroughly as possible. It takes time for forward prices to feed through into retail costs. That explains the discrepancy between the figures to which my hon. Friend drew attention and in particular the decline in the London tea auction prices from a peak in March of 270p per kilogram to 180p per kilogram. That latter figure is still more than twice what the figure was in December 1975. These are complex matters. I believe that in such instances it is right to have a thorough report from the Price Commission.

Is the Minister aware that, despite his statement, there is still a widely held misconception that there is some connection between the Common Market and increases in the prices of tea and coffee? Will he dispel that misconception? Will he also explain why the so-called world price of sugar is at present extremely low whereas, because of commodity agreements, the price that we pay remains static and is slightly rising?

No one in my hearing today has asserted that the increased price of tea had anything to do with the European Economic Community. Indeed, my hon. Friend the Member for Aberdeen, North (Mr. Hughes) specifically denied that, and he is entirely right.

Does my hon. Friend appreciate that it is entirely right for a Government who are supposed to be dedicated to the idea of planning and intervention, on occasions of astronomical price increases, for whatever reasons—whether commodity speculation or poor harvests overseas—to intervene and to do something to protect consumers, especially the low paid and those in the pension category? If they could do that for bread to a limited extent, why have they not done it for tea and coffee?

My hon. Friend has precisely enunciated my philosophy. [Interruption.] It is because the Government accept the force of his view that there should be the power of selective intervention to deal with unacceptable price increases that they have brought forward the Price Commission Bill, which will give that power, but it will do so on the basis of the evidence of lack of justification for a price increase. We are seeking that evidence in referring matters, such as the tea price increase, to the Commission. The new Bill will give us far greater power to act than we possess at present. We are seeking in that way to strengthen our price control policy to protect the less-well-off members of our society.