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Food Subsidies

Volume 933: debated on Monday 20 June 1977

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21.

asked the Secretary of State for Prices and Consumer Protection what assessment his Department has made of the contribution of subsidies towards the stabilisation of prices to the domestic consumer.

Over the last three years the effect of food subsidies on the cost of living has varied. At their peak early in 1975 food subsidies were estimated to be saving 1·6 points on the retail price index.

Does my hon. Friend agree that the maintenance and even the extension of food subsidies would have a useful stabilising effect on the cost of living and would improve the chances of getting a reasonable incomes policy in the third stage?

Food subsidies are being maintained, although at a lower level than they were earlier. I have already drawn attention to the particular importance of the butter subsidy.

Does the hon. Gentleman agree that stabilisation of consumer prices will be effected by the success of the incomer policy? Having made an assessment on the basis of the Question, will he spell out what level of pay increases generally is consistent with a retail price index increase over the next year of 10 per cent., 5 per cent., or 17 per cent.?

Not without notice. That does not relate directly to the contribution of food subsidies towards stabilising the cost of living.

Will my hon. Friend indicate what level of subsidy would have been required of the Government had they tried to protect consumers against increases in food prices since the sterling crisis of last autumn?

It would have required a level of subsidy quite inconsistent with maintaining confidence in the £ sterling.

How much will food subsidies introduced by the Government have cost in total by the time they have been phased out, and what proportion of the total food subsidy has gone to poorer families?

As no decision has been taken finally to phase out food subsidies, that answer cannot be given. I can tell the hon. Lady that food subsidies are less regressive than the subsidies that her party when in power gave to the railways.