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Oral Answers To Questions

Volume 958: debated on Monday 20 November 1978

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Oral Answers To Questions

I remind the House once again that this is Question Time, not debating time.

Prices And Consumer Protection

Inflation

1.

asked the Secretary of State for Prices and Consumer Protection what has been the increase in the cost of living over the past 12 months as measured in the retail price index; and what estimated rate of increase over the next 12 months the Government are using for planning purposes.

8.

asked the Secretary of State for Prices and Consumer Protection what is the latest rate of inflation.

17.

asked the Secretary of State for Prices and Consumer Protection what is the latest calculated percentage rate of price inflation.

21.

asked the Secretary of State for Prices and Consumer Protection what is the year-on-year rate of inflation.

The retail price index has increased by 7·8 per cent. in the 12 months up to October; the annual rate of increase has therefore been in the range 7 to 8 per cent. for the past seven months. The Government's forecast of the rate of inflation over the coming year was published on 15th November in the Treasury's economic progress report.

I am surprised that the right hon. Gentleman does not answer my Question. Is he aware that the Treasury view was that the retail price index would rise by between 8 and 9 per cent. over the next year? If the Government are successful in keeping earnings down to 5 per cent., does the right hon. Gentleman agree with me that that will mean a reduction in the standard of living of the average British citizen in the next year? When will the Government be honest enough to admit to this in public?

The hon. Gentleman should have done me the courtesy of reading the entire survey. The survey assumes that the 5 per cent. figure, which is certainly the Government's target, will be exceeded to a small degree. Were we able to keep overall settlements to 5 per cent. there would be a further reduction in the inflation rate, and that is what the survey says.

Will my right hon. Friend bear in mind that in this House the Conservative Party strongly opposed the strengthening of the Price Commission and that action can now come only from him? Will he ensure that the Price Commission is toughened up in the foreseeable future so that we put the fourth leg on the stool and take positive action on prices? My right hon. Friend knows as well as I do that our constituents will get no change out of the Tory Party on this subject.

I have no immediate plans to change the powers or activities of the Price Commission. There a some areas in which its powers might be sharpened and made more effective. Were that to come about, it would have to happen as part of a wider initiative on wages and prices in general. At present I have no plans to change the role or powers of the commission.

What effect will the increase in mortgage interest rates have on the retail price index? Why will the Government not accept at least part of the responsibility for this occurrence, bearing in mind the size of the public sector borrowing requirement?

There is a Question on this subject later on the Order Paper. The hon. Gentleman must take responsibility for denying the right of his hon. Friend to ask it. The simple statistical answer to the hon. Gentleman's supplementary question is a figure of 0.4 per cent. over six or seven months. I do not know how the hon. Gentleman has the gall, if that is the correct parliamentary expression, to talk about the PSBR, when he compares the success of the Labour Government in holding down that requirement with the utter failure of the Conservative Government to do so.

Is my right hon. Friend aware of the astronomic price of EEC grain compared to world prices? Will he undertake to take some action with the EEC authorities to see that the British housewife is able to take advantage of the current low price of world grain, rather than allow the Euro-fanatical press to blame the low wages of British bakery workers for the high price of bread?

My hon. Friend should not think of one European price in isolation. There is no doubt that over the range of food prices the EEC's common agricultural policy is now making a small contribution to increases in prices. None of us welcomes that. There are other ways in which the EEC is helping us. These matters have to be balanced one against another.

Will the Secretary of State take account of the fact that small and medium-sized businesses—particularly the latter—are having to bear in mind in their planning much higher wage awards than 5 per cent.? Will he give some estimate of what he thinks this will do to the retail price index in due course?

We have made no secret of our belief that a series of pay increases in excess of those described in the White Paper published in July would increase the rate of inflation. Because of that conclusion we are fighting hard, as part of our overall inflation strategy, to keep planned wage increases at or about that figure. I hope that the hon. Gentleman and the companies to which he refers will, unlike the leadership of the Opposition, join in supporting the Government in that endeavour.

Price Commission

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.

National Association Of Citizens Advice Bureaux

3.

asked the Secretary of State for Prices and Consumer Protection whether he will continue to provide support to the National Association of Citizens Advice Bureaux for the next three years, and at what level.

The Minister of State, Department of Prices and Consumer Protection
(Mr. John Fraser)

My Department expects to provide over £1·l25 million in the present financial year by way of support to the National Association of Citizens Advice Bureaux. We shall maintain our support at no less than this level until March 1981. The form of our support beyond that date will be dependent upon the outcome of a review of advice services generally, which will take particular account of any relevant findings of the Royal Commissions on Legal Services in England and Wales, and in Scotland.

In view of the uncertainty and loss of morale being caused by the lack of any fixed ideas on what the subsidy will be after 1981, would it not be possible, even within the framework of this review, to give an assurance to citizens advice bureaux that their invaluable work will continue to receive help at the same real level as they are getting at present?

I think that it would be difficult to do that so far ahead. Giving an assurance for as far ahead as we have done is a departure from normal practice. I emphasise that the grant is to the National Association of Citizens Advice Bureaux, and I hope that local authorities will supplement the figure by grants at local level. I understand that the hon. Gentleman's own citizens advice bureau in Rhyl receives a grant of only £65 a year from the county council.

I recognise the excellent work done by citizens advice bureaux, but does my hon. Friend agree that they cannot adequately discharge the functions of consumer protection which were disbanded by the Tory council in the West Midlands?

I agree. That is why, at the same time as we announced this grant, we announced a grant over the same period of £3¾ million per annum for consumer advice centres.

Will the Minister explain why it has taken so long to make the announcement that he has made today? There has been a great deal of uncertainty among people in the citizens advice bureaux who, as I am sure he will recognise, do tremendously valuable work for the community.

I think the hon. Gentleman will find that the announcement of this form of expenditure has been made rather in advance of other announcements about public expenditure. I hope that he welcomes that. I agree with him wholeheartedly about support for the CAB movement. I do not think that there has been any doubt whatsoever about the degree of my support for that movement in the time that I have been a Minister.

Does my hon. Friend recognise that citizens advice bureaux appreciate the assistance which has been given by the Government? Will he resist the constant demands to cut public expenditure and accept that the public expenditure given to the citizens advice bureaux is welcomed? Will he agree that hon. Members, in dealing with constituency problems, know that many of them can be and are dealt with admirably by citizens advice bureaux?

I have often made it clear that I think that citizens advice bureaux are a best buy. We calculate that the value for money that local authorities get is about four times as much as they spend.

Food Prices

5.

asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in food prices since February 1974.

The Under-Secretary of State for Prices and Consumer Protection
(Mr. Robert Maclennan)

The food price index in mid-October had increased by 103·8 per cent. since February 1974. However, in the 12 months to October 1978 food prices rose by only 6·9 per cent. The level of the index has now remained virtually unchanged for the past five months.

Reverting to that part of the Minister's answer which was relevant to the Question on the Order Paper, may I ask whether he has read in The Guardian this morning a column entitled "Checking Labour's record"? Apparently Labour Weekly produces, with great fanfares, compliments to the Labour Party about its manifesto commitments being carried out. Will he explain —I am sure that it is a mere oversight—why little things such as jobs, the cost of living and food prices are not even mentioned by Labour Weekly? Could it be that the only carrying out to be done will be of pensioners and people living on fixed incomes, feet first, if we have much more Labour government?

I think that it was relevant to the hon. Member's Question to explain to him—and it sometimes takes time to explain these things to him—that the trend in food prices has been very encouraging in the past five months, and that indeed over a period of 12 months the increase in food prices in this country has been below that of France, the United States and Canada.

Is it not true that our present position within the EEC means that there is a fourfold engine of increase? First, we have lost control over our own price mechanism in relation to food. Secondly, there are the annual increases of the EEC. Thirdly, there is the removal of the transitional cushioning that we have had. Fourthly, there are increases in food prices in the form of taxation, which we are now paying in greater and greater quantities to finance the EEC.

My hon. Friend is right to emphasise that there are aspects of the common agricultural policy which the Government find wholly unacceptable and are seeking to renegotiate. No doubt he will take encouragement from the steps that were taken at the Bremen council in the summer, and which we hope will be followed up at the European Council in December, to give some substance to these proposals.

Advertising And Promotion Campaigns

6.

asked the Secretary of State for Prices and Consumer Protection if he will initiate a study into advertising and promotion campaigns directed at children; and if he will take steps to curb this form of advertising.

My hon. Friend will be aware that I have asked the Advertising Association to consider the social implications of advertising—including advertising directed at particularly vulnerable groups like children. In addition, the Consumers' Association is studying sales promotion techniques and practices and giving particular attention to those directed at children.

Does my right hon. Friend accept that the present pre-Christmas television advertising campaign directed at children to pressurise their parents is in every way unacceptable? Does he agree that the attitude of the Independent Broadcasting Authority, which has refused to implement the Annan committee recommendation that advertisements in areas of interest to children should be broadcast after 9 p.m., is completely irresponsible?

Advertising on television is a matter for my right hon. Friend the Home Secretary, but I strongly share my hon. Friend's views that advertising campaigns intended to encourage children to bring pressure to bear on their families, sometimes families that are not remotely near being able to afford what has been advertised, is a squalid operation. It is for that reason that I have asked the association and other interested bodies to examine the matter very carefully.

If the right hon. Gentleman is talking about squalid operations in advertising, does he think that the phrase "Back to work with Labour" used in 1974 was honest, fair, decent and true? If he were chairman of the Advertising Standards Authority, what would he say if the advertisement were referred to him?

I have inquired as to what political advertisements have been referred to the authority. The only example was that of the Conservative Party pretending that an old lady was poor and destitute when she was neither.

Ford Motor Company

7.

asked the Secretary of State for Prices and Consumer Protection if he has asked the Price Commission to investigate prices charged by the Ford Motor Company.

Under the Price Commission Act it is for the commission to determine which individual companies should be the subject of price investigations.

For once, does not the right hon. Gentleman think that it might be a good idea if the commission did investigate Ford? It might find that trying to stick to the Government's asinine policy has cost the company £400 million, which could be a justification for raising the prices of Ford motor cars.

Whether the commission investigates a price increase by Ford, were one to come along, is a matter for it, just as the rather arcane principles of economics that the hon. Gentleman holds are a matter for him.

If and when the commission looks at the Ford. Motor Company, will my right hon. Friend ask it to take into account the company's very responsible attitude in producing vehicles in this country since 1975 to run on low-lead petrol? The fact remains that the Government have not taken action to provide the low-lead petrol that Ford motor cars made in this country could use.

I know that my hon. Friend has a valuable point to make, as he and I both represent Birmingham, where the problem arises. But he knows very well, having made his point, that it is not one for me.

If the Confederation of British Industry's counter-sanctions to the Government's black list work, and Vauxhall, Chrysler and British Leyland refuse to fill the gap left by sanctions on Ford, is it the right hon. Gentleman's intention to ask Toyota and Datsun to fill the gap?

The hon. Gentleman asks me a question that includes at least three hypotheses, and on account of each I am entitled not to answer him. But I shall tell the hon. Gentleman that I do not believe that the CBI would be so irresponsible as to try to work against the Government's pay policy.

The Government's pay policy is in the interests of the economy as a whole. Despite some of the rather extreme things said at the CBI conference, if that is what it calls it, I believe that the leadership of the CBI will be a great deal more responsible than the hon. Gentleman gives it credit for.

On a point of order, Mr. Speaker. In view of the thoroughly irresponsible nature of the Secretary of State's answer, I give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

Pacemaker Machines

9.

asked the Secretary of State for Prices and Consumer Protection if he will refer the sole supplier of pacemaker machines to the National Health Service to the Monopolies and Mergers Commission, in view of the increase of cost by 100 per cent.

I understand that the only United Kingdom manufacturer of pacemaker machines ceased production about a year ago, and that the National Health Service currently obtains pacemakers from 10 suppliers, all of them foreign. I am not aware that any of these suppliers has recently introduced price increases of the order of 100 per cent. Monopoly references are a matter for the Director General of Fair Trading, who would be willing to consider any information made available to him by my hon. Friend.

I readily respond, and shall let my hon. Friend have the necessary information. Is he aware that, while the NHS is one of the largest employers of labour in the country, and therefore its wages affect the cost of living, it is one of the largest purchasers of goods, and the suppliers seem to regard the NHS as the Government and think that they can milk it dry and charge excessive prices time after time? Therefore, will my hon. Friend take as much interest in the prices charged to the taxpayer for supplies to the NHS and nationalised industries as in prices to the private consumer?

Of course, the restraint of prices is important, whoever is the consumer. I must ask my hon. Friend to give me any information that he has about price profiteering, and I shall certainly consider that evidence very seriously.

While we are on the subject of the Monopolies and Mergers Commission, may I ask my hon. Friend whether he will consider referring to that body the attempt by commercial television to exercise a three-year monopoly on football?

The hon. Gentleman should put that Question on the Order Paper. This Question is about pacemakers.

Prices

10.

asked the Secretary of State for Prices and Consumer Protection by how much retail prices have increased since February 1974.

11.

asked the Secretary of State for Prices and Consumer Protection what has been the cumulative rate of inflation since February 1974 to the latest available date in West Germany, Japan, France, the United States of America and the United Kingdom, respectively.

13.

asked the Secretary of State for Prices and Consumer Protection in which month prices will have doubled since February 1974, assuming that his forecast of 7·9 per cent. inflation at the end of the year is correct.

From February 1974 to the latest available date, price indices for West Germany, Japan, France, the United States of America and the United Kingdom have risen by 20·2 per cent., 47·3 per cent., 57·7 per cent., 40·9 per cent. and 97·7 per cent. respectively. The month to which the hon. Member for Derbyshire, South-East (Mr. Rost) refers will not, on the interpretation of the forecast which he has chosen, be reached this year.

On a point of order, Mr. Speaker. Is it possible for the Secretary of State to read out that answer more slowly so that we can take down all the figures?

In view of the figure for the United Kingdom, has the Secretary of State any special plans ready for the day when it reaches 100 per cent? Is he aware that this is the worst record of any Government since statistics were first kept? Is not this a much more valid point than the fact that he keeps trotting out, that we have had inflation of less than 10 per cent. for the past year?

When inflation was running at more than 10 per cent., the Opposition did not think that getting it down to single figures was unimportant. In those days I was told—I have all the quotations of the hon. Member for Gloucester (Mrs. Oppenheim)—that we would never do it and that if we did we would never stick to it. The figure of 7·8 per cent. has become unimportant only since this Government achieved it.

As for the overall increase in inflation, what the hon. Gentleman must bear in mind is that four and a half years ago we had in this country a condition of inflation that had been induced, and knowingly induced, by a Government who had allowed the money supply and the public sector borrowing requirement to get totally out of control. That is why this country has an inflation record different from the inflation records of our competitors.

Is it not a matter of great concern to the right hon. Gentleman that prices in Britain have gone up by four times as much as prices in West Germany and by about twice as much as prices in Japan, the United States and France since this Government came to power? As adverse external factors have affected all these countries, why has the situation been so much worse in Britain?

I explained it in answer to the previous supplementary question, but I shall gladly do it again. The simple fact is that those countries were fortunate enough not to have in 1973 and 1974 Governments who allowed the money supply and the public sector borrowing requirement to get out of control.

If I now ask the right hon. Gentleman to explain why prices have doubled under Labour, may we please be spared the usual list of miserable excuses, blaming everybody else and everything else except the real cause, which is the failure of Socialist policies?

I am astonished that the hon. Gentleman asks that question. The criticisms that I make are of the Conservative Government of 1973 and 1974. The faction of the hon. Gentleman's party that he claims to support is making exactly the same criticisms of the Conservative Government as I have made this afternoon.

Does my right hon. Friend agree that what is as important as the level of inflation in different countries at a certain point in time is the rate at which inflation is changing in those countries? Measured in those terms, Britain's present position compares favourably with that in the great bulk of Western European countries.

Our inflation rate is now appreciably lower than the overall inflation rate in countries belonging to the Organisation for Economic Co-operation and Development. The significant thing about that, to paraphrase my hon. Friend, is that the Opposition's reaction is not pleasure that the country is doing well but regret that they are doing so badly.

Is the right hon. Gentleman aware that consumers would not concur with him that this country is doing well? That is not what they find from their shopping baskets. When he trots out his moth-eaten alibis four and a half years after the Conservative Party was in power, and when he next boasts that the current rate of inflation is at or below that of our main competitors. will he bear in mind that the annual average increase in inflation under this Government is not 8 per cent. but 16 per cent.? That is the level that matters to consumers and that is the level that he must compare with other countries during this period.

The hon. Lady somewhat didactically refers to the appropriate figure for these matters. I think that her judgment on these matters will perhaps best be understood if I remind her that three months ago, when I told her that inflation would stay at or about 7·8 per cent., she described it as fraudulent, lying and a perversion of the truth. I think that puts her judgment in the proper perspective.

On a point of order, Mr. Speaker. Is it in order to ask the right hon. Gentleman to provide evidence of where I said this was a "lying" rate of inflation?

Further to that point of order, Mr. Speaker. The reference is Hansard, 12th June, column 633.

Order. I could not have been in the Chair, or I would have asked for the word to be withdrawn.

Will the Secretary of State tell us who was telling the truth in October 1974 when his predecessor the right hon. Member for Hertford and Stevenage (Mrs. Williams), in an election broadcast, expressed the view that there were no more price increases in the pipeline? Surely that suggested that no problem of inflation had been inherited from the previous Government at that time.

I do not believe that that was the suggestion. [HON. MEMBERS: "Oh."] Had it been so, it would manifestly have been wrong on the evidence. The hon. Gentleman must say—though this afternoon will probably not provide him with the opportunity—whether the fiscal conduct of the Conservative Government between 1973 and 1974 is a record of which he is proud. It is to that to which I refer, and it is to that to which I shall continue to refer.

Nationalised Industries (Consumer Protection)

12.

asked the Secretary of State for Prices and Consumer Protection when he will introduce legislation to strengthen the consumer voice in relation to nationalised industries.

I welcome my hon. Friend's answer and the commitment in the Queen's Speech. Will the strengthening of the consumer voice lead to a bringing together of the consultative committees? Does my hon. Friend agree that to have different consultative committees for the different energy industries does not meet the needs of consumers and that there could be one committee to cover the gas, electricity, coal and oil industries?

That point was considered, but, as my hon. Friend will know, the Government intend to implement the provisions of the White Paper on the nationalised industries, which was published last March. We intend to set up, on a statutory basis, the electricity consumer council. That at least will give electricity consumers a voice at national level.

Does the Minister's reply to the Question mean that whereas the general provision for consumer protection is adequate for the private sector his friends on the nationalised industries' boards are such rogues, vagabonds and con men that their customers need added individual and strengthened watchdogs.

I do not think that the Government would ever take the view that the protection afforded to consumers by private sector industries could not be improved. The protection for consumers afforded by nationalised industries is a somewhat different matter. Most of these industries are monopolistic. Therefore, they require the external scrutiny provided by these bodies.

Will the Minister strengthen the voice of the consumer in the nationalised industries in regard to independent television, because it appears that there is the danger of a monopoly in the coverage of football? Will he tell his right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell)—

Order. The hon. Gentleman is not entitled to ask Ministers to pass messages. He can ask him only about matters for which he is responsible.

Will my hon. Friend disavow the comment of my right hon. Friend the Member for Small Heath that it is acceptable that consumers should be cut down by 50 per cent. on their viewing of football?

I do not wish to go into a textual criticism of what my hon. Friend said. However, I understand that the Director General of Fair Trading is making inquiries about this reported agreement in the context of restrictive trade practices legislation.

Is the Minister aware that the Government's creature—the Price Commission—has come to the conclusion that the best way to improve prices as well as the protection of the consumer is to increase competition? What plans has he for increasing competition in the public sector of industry, because that, by far, would be the greatest help that he could ever give to consumers?

The Government's consideration of competition policy in general has been published in a Green Paper, which no doubt the hon. Gentleman has studied. on which we shall be glad to receive representations. But considerations affecting nationwide nationalised industries are somewhat different and it is appropriate to have external checks, which cannot be of the same kind as those provided by competition.

Price Commission (Cost)

14.

asked the Secretary of State for Prices and Consumer Protection what is the estimated cost of the Price Commission during the year ending 5th April 1979; and what proposals he has for reducing that cost.

The 1978–79 estimate provision is approximately £7·3 million. Expenditure on the commission is kept to the minimum compatible with the need for it to discharge its functions efficiently.

Bearing in mind that retail prices have more than doubled since this Administration came into office, is the Secretary of State satisfied that the Price Commission is worth £7·3 million a year? Is he aware that many Opposition Members believe that the public interest would best be served by the total abolition of the Price Commission?

I am perfectly well aware of that. My answer to the question is: yes, I am satisfied that it is necessary and that it is doing a good job.

Is the Secretary of State satisfied with the mechanisms for monitoring the prices of overseas manufactures which may be dumped in the United Kingdom? Is he aware of reports today that Italian-manufactured washing machines may be threatening the expansion of companies in Wales and thereby losing jobs?

In considering these matters, will the Secretary of State arrange to have published a list of those occasions on which the Tory Opposition have either opposed or failed to support any legislation to control prices?

The Conservative Opposition's record is well known. They opposed the Price Commission Bill. They have opposed every initiative that we have taken on this subject. Their entire role has been to complain on the basis of the selective use of figures. I believe that the opinion polls demonstrate that the public have rumbled them.

Is the right hon. Gentleman aware that the Price Commission's claim to have prevented about £121 million of price increases during its first year amounts to a reduction in the retail price index of about 0·1 per cent? If one deducts from that the millions of pounds that it has cost industry and the cost of the commission itself, that figure is probably 0·075 per cent. How can he claim that such a derisory figure is of any significance to consumers or that the whole paraphernalia of the Price Commission and the difficulties and uncertainties that are caused to industry warrant that kind of expenditure?

The hon. Lady has confirmed what we all suspected on the Second Reading of the Price Commission Bill—that she does not understand the purpose of the Price Commission. The commission is intended to operate on a selective basis. Its role is to prevent unnecessary price increases, not to act as an across-the-board check. It has carried out that role with great distinction. I believe that it should go on, if necessary changing its powers by making them more effective rather than reducing them.

Inflation (Price Control)

15.

asked the Secretary of State for Prices and Consumer Protection what is his estimate of the contribution of price control to the containment of inflation, as compared with that of income restraint.

26.

asked the Secretary of State for Prices and Consumer Protection what effect on the retail price index the Price Commission's interventions have had over the past year.

The main causes of the substantial improvement in the rate of inflation have been the moderate level of pay settlements and the Government's monetary and economic policies. The exercise of the Price Commission's powers results in a modification and postponement of many price rises and ensures that unjustifiable price increases are prevented.

Does my right hon. Friend agree that in a mixed economy it is difficult to operate income restraint equitably? Will he therefore ignore the blandishments of the Opposition and place greater emphasis upon price restraint? Will he advise his right hon. Friend the Prime Minister—or, if he cannot do that, advise me and I will advise him—that if his three-legged stool is not to collapse it must be propped up by a further leg of price restraint?

I understand the great attraction in calling for more price restraint, but those who ask for it rarely define the form in which it should come about. I am wholeheartedly opposed to an overall price freeze because I think that it would do a great deal of damage to industry and to employment. The most effective form of prices policy is the selective one operated by the Price Commission. With the exception of the safeguard clauses, which cause some problems, we have a good prices policy which is being operated wisely and in a determined way.

Does not the Secretary of State yet realise that the most effective control of prices lies in competition and that this affects prices more than any of the £7 million a year that the commission has been spending? As the right hon. Gentleman apparently begins to see, the actions of the Price Commission in putting up costs and putting down the profitability of private industry affect investment and, therefore, jobs. That is what results not just from a price freeze but from the actions of the Price Commission.

I do not, of course, agree with the second part of the hon. Gentleman's supplementary question and there is no evidence to support what he has said. On his first point, the hon. Gentleman may have noticed that six months ago I issued a Green Paper outlining ways in which competition in British industry could be extended and made more effective. I hope that we shall have support for that Green Paper from the Conservative Party. We have not had any support yet. All we have had is criticism, particularly from the CBI.

Does my right hon. Friend agree that the two-thirds or more of the people of this country who emphatically support the Government's counter-inflation policy believe that price restraint is easier to achieve if incomes are not dominated only by the casual brutalities of the market?

In view of the Secretary of State's earlier answer, when he attacked the previous Tory Administration, will he concede that he is now saying that the sole cause of inflation is an increase in the money supply and also concede that as a result of the 16 per cent. increase in M3 up to last April it is certain that inflation will be well into double figures by the end of next year?

The convoy cannot always travel at the speed of the slowest ship. I listed in a previous answer all the causes of inflation—not just that one—and I do not propose to list them again. I have already referred the House to the Treasury forecast for inflation next year and to the failure of amateur forecasters on the Conservative Benches. I have no reason to believe that we shall not have a successful year of counter-inflation policy in 1979.

Will my right hon. Friend consider issuing a White Paper setting out the efficacious methods that the Government could exercise to restrain prices in a free market economy, because that might go a long way towards getting acceptance of an incomes policy?

I suspect that my hon. Friend is tempted by what I regard as the chimera of an overall prices freeze, which I do not believe would be in the interests of the economy or our policy for reducing the level of unemployment. The effective way for us to control prices—if control is the right word—in the sort of economy that we manage is, first, to run the right sort of economic policies, which we have been doing, and, secondly, to have a policy of selective restraint, which is organised by the Price Commission. That is what we must continue to do.

Will the Secretary of State now answer the Question asked by my hon. Friend the Member for Cardiff, North (Mr. Grist) and tell the House clearly and with absolute candour what effect in precise numerical terms the Price Commission's interventions have had on the retail price index in the past 12 months?

It may be that the calculation of the hon. Member for Gloucester (Mrs. Oppenheim) was, for once, correct. That may be the figure. I have never made that calculaton.

Because it implies a role for the Price Commission that I have never assigned to it. The commission is not an agency for keeping the RPI down. It is an agency for preventing individual, unjustifiable price increases, and that is what it has done.

Scottish Universal Investment Trust

16.

asked the Secretary of State for Prices and Consumer Protection whether he has had communication with the Monopolies and Mergers Commission since his referral to it of the proposed takeover of Scottish Universal Investment Trust by Lonrho Limited; and if he will make a statement.

The conduct of a murder investigation—I mean a merger investigation—is a matter for the Monopolies and Mergers Commission and neither I nor my officials have had any communication with it about the substance of this investigation. I have, however, agreed to a request from the commission to extend until 11th February 1979 the time allowed for submitting its report.

Will my hon. Friend remind the Monopolies and Mergers Commission of the concern of the trade union movement in Scotland about the possibility of thousands of jobs being taken over and controlled by a huge multinational outfit such as Lonrho, headed by Tiny Rowland, a man whose sole aim is to maximise his own profits by exploiting workers—whether in Southern Africa or in Scotland?

It has long been a tradition that the Monopolies and Mergers Commission acts on an investigation pith independence and impartiality. I would be breaking that tradition if I made any reflection on the parties concerned. If parties have evidence to offer to the commission, I hope that they will do so directly. Obviously the commission will take them into account.

Is the Minister aware that his use of the word "murder" was perhaps not so odd in relation to Lonrho as it might at first have appeared, because his right hon. Friend is doing his best to outdo the Foreign Secretary, who also has his knife into this company? When will the Government stop this mean and spiteful vendetta against someone who is merely trying to run his company properly?

There is probably no depth to which the hon. Gentleman is not capable of sinking. I made a slip of the tongue. I preserve my absolute impartiality in this matter and make no reflection on the company in the context of this reference.

Retail Prices

asked the Secretary of State for Prices and Consumer Protection what is his current forecast of the date on which the 12-month rate of increase in retail prices will rise above 10 per cent.

There is no reason why the 12-month rate of increase in retail prices should return to double figures if pay settlements are consistent with the policy outlined in the White Paper "Winning the Battle Against Inflation".

If things should start to go wrong this winter—and there are fair signs that they might—may we assume that the Secretary of State will advise the Prime Minister to delay the General Election still further and, if so, will he be offering advice on which parliamentary groups to buy off this time and how?

I am prepared to treat that supplementary question as if it were sensible and tell the hon. Gentleman that I do not believe that the forebodings implicit in it—forebodings for us, hopes for the hon. Gentleman—will come about. I believe that we shall have a sensible pay round and that the inflation rate will continue at or about the present level, give or take a percentage, for some months ahead. I say that without any doubt because of my belief in the common sense and public spiritedness of our trade unions.

In my right hon. Friend's attempt to contain the increase in retail prices, will his Department have another look at recent changes in petrol prices? Is it not a nonsense that a motorist buying 10 gallons of petrol can get up to £1 difference in his change at various pumps? As we are supposed to have some influence with British Petroleum, can we not have a BP pool at a low price?

I do not believe that petrol prices would be best held down by such a centralised scheme. The reason why petrol prices did not go up six months ago when it was feared that they would, on the last occasion that it was threatened that discounts would be removed, was that the companies continued to compete against each other. I want to see a continuation of that competition and Conservative Members who regard that as a major revelation have either not read my Green Paper on competition or were not here when I referred to it four Questions ago.

How much more will prices go up because of the Government's failure to reach agreement with the TUC? If the answer is that they will not go up at all, why did the Government try to reach an agreement in the first place?

I made a long speech on this subject on Saturday evening and I propose to punish the hon. Gentleman by sending him a copy. The short answer to his question is that I do not believe that there will be a significant difference in the level of wage settlements or in their effect on the RPI as a result of the TUC's eventual inability to subscribe to that document, but I believe that for the economic success of this country there needs to be a close working partnership between the TUC and the Government. The reason why I wanted that document to be endorsed by both parties was to give that close working relationship more form and detailed application.

I trust that my right hon. Friend will not send his speech to me as a punishment, because I have a feeling that I have read it before. Perhaps he would like to say a few words about the chairman of the TUC, who has argued that we ought to keep to the 5 per cent., whereas his union on the same day put in a claim for 25 per cent. Would that be a rapacious claim or a moderate claim? Is it not clear to my right hon. Friend, and to all his hon. Friends on the Front Bench that the 5 per cent. limit has now been broken and that we ought to get back to a sensible position of free collective bargaining, and at the same time—this I do accept—a recognition that the claims ought to be kept within reasonable bounds?

That question is clearly not for me, but I would say one thing about it. The point that my hon. Friend makes demonstrates the consistency of the attitude of the Post Office workers union. The point that has been made throughout is that, while many trade unions may want to initiate pay increases consistent with our inflation target, once one trade union begins to break the line it becomes almost impossible for others not to do the same. I think that the point that was made upstairs at a lunch last week is wholly consistent with all that that gentleman has said in the past.

Small Firms (Inner City Areas)

40.

asked the Chancellor of the Duchy of Lancaster whether, in his study of the problems of small firms, he has come to any conclusions about the special problems of small firms, including producer co-operatives, which try to start up in inner city areas.

On a point of order, Mr. Speaker. Questions have been tabled to the Chancellor of the Duchy of Lancaster. May we be told why he is not here to answer them, because this situation is totally unacceptable?

Perhaps it might help the House if I mention that the Chancellor of the Duchy of Lancaster was asked at short notice to lead a delegation to a conference being held in Madrid. He is speaking on the subject of London as an international finance centre and the services which the City has to offer. He will have an exchange of views at the conference with members of the Spanish Government, among others.

I have been asked to reply to the Question.

Further to my point of order, Mr. Speaker. The Chancellor of the Duchy of Lancaster is, surely, responsible to this House, not to the Spanish Government. If he has an engagement to answer Questions in the House, should he not be here to do so? If the right hon. Gentleman were ill or indisposed, the House would be the first to forgive him. But it is surely in contempt of the traditions of this House for the right hon. Gentleman to take on another engagement when he is scheduled to answer Questions in the House.

I usually take points of order at the end of Question Time. I really have nothing to say in reply to the hon. Gentleman, because I am not responsible for Ministers.

Further to that point of order, Mr. Speaker. Is the Chancellor of the Duchy of Lancaster representing the Government at Madrid? That was not made clear.

Certainly. My right hon. Friend the Chancellor of the Duchy of Lancaster is doing what many of us consider to be a valuable task in asserting the role of our invisible exports, on which we are dependent. I should have thought that Conservative Members would be the first to realise the task which my right hon. Friend has taken upon himself, as well as his ability to undertake these tasks. Perhaps I may now reply to Question No. 40.

Order. Question Time will be ruined. However, I call the hon. Member to raise his point of order.

Surely if the Chancellor of the Duchy of Lancaster is not here Question Time is ruined. Would it not have been more tactful if he had sent the right hon. Member for Birkenhead (Mr. Dell), who appears to know a little bit more about banking? He could have represented the Government very well and the Chancellor of the Duchy of Lancaster could have remained here.

Further to that point of order, Mr. Speaker. Surely this is even more unacceptable, bearing in mind that the Chancellor of the Duchy of Lancaster has been invited to answer Questions only once this Session before Christmas—and that is today. He normally appears only every five or six weeks under the ordinary timetable, and that probably gives him only four or five occasions throughout the whole of a Parliamentary year on which to answer Questions. Surely it is totally unacceptable that he should have accepted an engagement in Spain on the one occasion when he ought to be here.

I have no doubt that the protests which have been made by hon. Members under the guise of points of order will he taken notice of.

On a point of order, Mr. Speaker. In order to help things along, may we have an assurance from the Financial Secretary to the Treasury that when the Chancellor of the Duchy of Lancaster returns to this country he will come to the House and make an apology for his behaviour?

I have been asked to reply to Question No. 40. The Government's Inner Urban Areas Act gives local authorities a range of new powers to help small and new businesses in inner city areas, and it contains specific provisions enabling local authorities to give grants and loans for the establishment of common ownership and co-operative enterprises. If my hon. Friend has any suggestions for further help in this area, my right hon. Friend the Chancellor of the Duchy of Lancaster will be happy to consider them.

I am grateful for that answer, but I am sorry that the Chancellor of the Duchy of Lancaster is concerned elsewhere with London as a centre of finance. I am concerned with London as a centre of employment. May I ask the Chancellor of the Duchy of Lancaster to press his colleagues in the Government —including the Financial Secretary to the Treasury—who share responsibility for small firms to ensure that a substantial proportion of the funds which are available for helping small firms are earmarked for workers' co-operatives, which experience has shown are particularly suited to the needs and conditions of inner city areas such as London? I hope that that message will be noted.

I have no doubt that the tasks which can be undertaken by cooperatives in this area are very considerable. As my hon. Friend will know, because he had a part to play in it, the Co-operative Development Agency Act has some part to play in this matter and is able to offer some assistance. Under the Inner Urban Areas Act, specific help for co-operatives can be made available by the district and county authorities which make use of this source of assistance.

Will the Minister convey to the Chancellor of the Duchy of Lancaster the feeling in some quarters that there is too much of a doll's house atmosphere about these proposals for the inner cities, in that the most dynamic business men are asking "What will happen when our small concerns grow big?" At the moment their big fear is that they will lose these concessions once they flourish and develop.

I am happy to learn that the hon. Gentleman considers that the actions that we have taken will lead to small firms becoming large ones. Clearly, when such firms increase in size the assistance that they require is less. Our task is to help firms to start and to grow. Thereafter, the assistance which may be available to them will be provided in conjunction with the assistance which is made to industry generally.

Will my right hon. Friend confirm that the Co-operative Development Agency has power to monitor and assist in the development of local schemes, which will help in this regard? Will he undertake to write to my hon. Friend, myself and other hon. Members who are interested to make quite clear the difference between the grant which he has mentioned and urban aid, because most of us are receiving applications under the two names?

I shall certainly write to my hon. Friend. There are these two sources of finance and assistance and I hope that use will be made of both of them.

Is the right hon. Gentleman aware that we welcome the role that producer co-operatives can have in recreating the employment base for the inner city areas? In that context, will he join me in welcoming the private initiative which has led to the creation of job ownership, with access to private bank finance? Will he accept that the episode of the Kirkby Manufacturing and Engineering Workers' Co-operative, which was inspired by the zeal of the Secretary of State for Energy when he was at the Department of Industry, is precisely the wrong way of setting about promoting industrial co-operatives and that that particular episode gives the idea a bad name?

While offering my good wishes to the hon. Gentleman on his return to the Opposition Front Bench, I must say that he is not starting off in the best possible way. The Kirkby manufacturing enterprise hardly qualifies as a small firm. If the hon. Gentleman is to deal with the problems of small firms he will have to pinpoint the particular areas of his responsibility rather more closely than that.

Chancellor Of The Duchy Of Lancaster

41.

asked the Chancellor of the Duchy of Lancaster whether, as economic adviser to the Cabinet, he intends to visit other EEC capitals in the weeks immediately ahead.

I have been asked to reply.

My right hon. Friend has no plans to do so at present, but he hopes that his colleagues will not find his advice any less acceptable on that account.

Fortified by his visit to Madrid, what advice is the Chancellor of the Duchy giving to the Government about joining the European monetary system? Does he think that it would be to Britain's benefit to join from day1 and then argue as a participant about the technical details?

The advice that my right hon. Friend is giving the Government is to the effect that as long as the European monetary system can be lasting and effective, and can promote stability and not be just a wider version of the snake, there are certain advantages. These are matters yet to be discussed, and I am sure that my right hon. Friend will play a prominent part in such discussions.

When the Chancellor of the Duchy discusses these matters, will he reflect on the fact that on the last occasion when we were invited to join a great European enterprise and failed to do so we ended up joining later and paying a much higher price? Will he recognise that as the European train leaves this particular station of monetary reform it must be wrong for the United Kingdom once again to be left behind, only to have to catch up later and pay very highly for the delay?

It is important that the European monetary system, if and when it starts, should be seen to be successful and lasting. A great deal of damage could be clone if we do not have the right conditions for entry or for starting it. Our attention must be directed towards those points.