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Price Commission (Powers)

Volume 961: debated on Monday 22 January 1979

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asked the Secretary of State for Prices and Consumer Protection if, in the light of the latest figures available for the rate of inflation, he will take steps to increase the price control powers of the Price Commission.

Yes, Sir. As my right hon. Friend the Prime Minister announced on 16 January, we shall shortly introduce legislation to amend the Price Commission Act 1977 by abolishing the requirement for safeguard provisions except following sectoral examinations.

Does my right hon. Friend accept that any strengthening of the Commission's powers will be welcomed by millions of consumers? Does he agree that if the Opposition vote against these proposals they will once again be emphasising their completely hypocritical attitude? They weep tears about rising inflation, but vote against every proposal designed to curb inflation.

I very much agree. The House being of the composition that it is, I think that we shall have something of a battle before we manage to pass the Bill into law, but it is a battle well worth fighting and I believe that it is one that will find support from the people of this country, who want stronger price, legislation and will support a Government who introduce it.

As this is, according to the right hon. Gentleman, a battle well worth fighting, will he say what exactly will he the effect on the overall rate of inflation of the abolition of safeguards in the case of the Price Commission?

It was the hon. Gentleman who speaks for the Liberal Party on these matters who said on television that the Price Commission would have a significant effect on the retail price index. We have never contended that that was so. What we have said is that there are a number of sectors where price increases are not justified, and that where they are not justified they should not be allowed. What has happend over the past 18 months is that the Commission has not been able to use its discretion concerning unjustifiable price increases, and we propose to restore that discretion.

In strengthening the Price Commission's powers, will my right hon. Friend take into account that the amount of inflation generated by wage claims depends entirely on how much of those wage claims is passed on to the consumer? Will he make certain that those firms that give wage increases do not pass on in prices much more than the wage increases in order to increase their profits?

Yes, indeed. The criteria that govern the Commission's behaviour impose on it the principal duty of ensuring that companies at least attempt to meet increased costs by greater efficiency rather than automatically passing them on. To often over the past two years companies have believed that the only response to an increased cost was an increased price. I hope that we can persuade them, one way and another, that greater efficiency is one of the alternatives.

May we revert to the road haulage industry? Did the right hon. Gentleman suddenly discover yesterday that he had no power to interfere in connection with the employers, or did he know it for several weeks? If he did know it several weeks ago, my hon. Friend the Member for Wellingborough (Mr. Fry) is quite right: the Secretary of State is largely responsible for the present state of affairs.

I discovered the situation that I have described during the consultative period. My last consultation with the parties took place last Tuesday. As I told the hon. Member for Welling-borough (Mr. Fry), my original intention was to do what I normally do, which is to announce my decision towards the end of the appropriate period. The appropriate period ends tomorrow, and I would have announced my decision today. But having taken the decision on Thursday I announced it earlier than I had intended in order to allow the parties to know of the situation facing the industry. I am sure that in this particular I was absolutely right to operate in the normal way. If I had treated this order differently from the way in which I have treated other orders, the hon. Gentleman and his party would have been the first to complain.