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Price Commission

Volume 958: debated on Monday 20 November 1978

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2.

asked the Secretary of State for Prices and Consumer Protection when he next expects to have an official meeting with the chairman of the Price Commission.

The chairman of the Price Commission and I meet frequently. No firm date has been set for our next meeting.

When the Secretary of State next meets the chairman of the Price Commission, will he discuss with him whether it is right for the Price Commission to do a lot of rather esoteric market surveys —at the taxpayers' expense, of course—such as the recent one on Royal Doulton fine china? Is this an essential ingredient in its examination of the retail price index?

I think that the hon. Gentleman does not understand the role of the Price Commission or the Bill against which he voted so assiduously for 36 hours last year. The Price Commission's task, as I hope to reveal in a later answer, is to prevent unjustifiable price increases. That requires the Price Commission to make specific investigations. That is what it did in the case to which the hon. Gentleman refers, and that is its proper statutory role.

Will my right hon. Friend reconsider his previous answer and, when he next meets the chairman of the Price Commission, tell him that he will remove the profit safeguard clause from the Price Commission Act 1977, which enables many large companies, such as Allied Breweries, Tate and Lyle, and Lever Brothers, to obtain the whole of the price increase for which they ask? Would not this undoubtedly strengthen the hand of the chairman of the Price Commission?

I have never made any secret of my reservations about the safeguard clauses, which were inserted originally, while the Price Commission ran for its first year or so, to convince industry that neither the Act nor the commission was likely to work in a way which was to its detriment. But removing the safeguards, or changing them after a year, or one and a half years, would involve some penalties in terms of industrial confidence. I think that they could be removed or altered only as part of a wider initiative about prices and wages. It would be very difficult to alter them in isolation, undesirable though they are in many ways.

The Minister has just mentioned unjustifiable price increases. When the Government have been considering the rate support grant, what level of settlement have they calculated for the local government employees, and what effect would that have had on the rates?

A specific question about the rate support grant must be addressed to my right hon. Friend the Secretary of State for the Environment, but I have already made clear—and so have the Chancellor of the Exchequer and the Prime Minister—that our planning figure is the one published on 15th November. That is the planning figure that we use for local authorities, as for everything else.

Does my right hon. Friend accept what has been said, that if we are to have any vestige of a wage policy we must have tighter price controls? Will he discuss with his Cabinet colleagues the need for public sector price increases to be contained within the guideline increases?

I hope that my hon. Friend does not diminish—indeed, I know that he does not—the success in terms of price stability that the nationalised industries have already achieved. Most of them have managed to postpone price increases for 12 months or more, and all of them have kept their increases to the minimum. But there are two ways of looking at nationalised industry prices. One is the way followed by the previous Government, which was to subsidise prices out of taxation, with all the economic disadvantage that that caused. The other is to keep down the increase to a minimum consistent with the effective operation of the industry. We follow the second route, and I am sure that it is a proper route to follow.

Will the Secretary of State return to the original question about the Price Commission's investigation into Royal Doulton, which was raised by my hon. Friend the Member for Harrow, East (Mr. Dykes), and confirm that he does not believe that the activities of the Price Commission will seriously reduce the rate of inflation? If that is so, what is the point of the Price Commission investigating markets, such as fine china or tableware, which have little bearing on the cost of living? What, indeed, is the point of a sectoral inquiry, as recommended? What will the right hon. Gentleman do about it?

The point of inquiries of this sort is to provide an assurance to the British consumer that prices are not increasing unreasonably. There may be occasions when a price increase is unavoidable because costs go up. There are others—the Price Commission has found a good many in the last 18 months—where a price increase can be avoided, and where—[Interruption.] The hon. Member for Gloucester (Mrs. Oppenheim) is rather late in starting her interruptions this afternoon. Where the Price Commission suspects that that might be the case it is its duty to investigate. Clearly. I shall not stop it from doing so, but will encourage it to do so whenever it thinks it is necessary.