Below is the text of the speech made by Shirley Williams, the then Secretary of State for Prices and Consumer Protection, in the House of Commons on 20 March 1974.
I have discussed with representatives of the bakers the situation arising from their proposals to make increases in bread prices on 25th March following their notifications to the Price Commission.
As the House is aware, it is the Government’s intention to introduce food subsidies for certain basic foodstuffs as soon as possible and, against that background, I explained to the bakers that it was my wish to avoid any price increases occurring on the major types of bread. After consultation with my right hon. Friend the Chancellor of the Exchequer, I have now agreed with the bakers on arrangements under which there will be no increase on 25th March in the price of almost all loaves weighing 14 ounces or more, which account for nearly 94 per cent. of bread consumption.
I am grateful for the co-operation of the bakers in enabling these arrangements to be made so quickly. Loaves of less than 14 ounces—which comprise smaller speciality loaves such as French bread, bread rolls and most types of starch-reduced bread—are not subject to these arrangements. Therefore, there may be some prices increases for these speciality breads.
The proposals which I am making will involve paying a subsidy, subject to the approval by the House of the powers I shall be seeking in the proposed legislation on prices and subsidies. Estimates will be laid before the House in due course. The estimated cost of avoiding this round of increases in bread prices is of the order of £21 million per annum. My right hon. Friend will be taking this cost into account in formulating his Budget.
Mr. Peter Walker
May I ask the right hon. Lady whether it is her intention, by means of subsidy, to hold the price of bread at its present level irrespective of further rises in cost? Secondly, may I ask her whether she is satisfied that spending £21 million on an indiscriminate subsidy of this type is the best way to spend such a sum to help those most in need? Finally, is it her intention to make further statements on subsidies for milk, cheese, butter, margarine, cooking fats, eggs, bacon, ham, poultry and flour, which the present Leader of the House said are items which could be subsidised by a Labour Government?
In reply to the right hon. Gentleman’s first question, I can only say that he will have to wait and see, because neither he nor I can say what will be the movement of wheat prices in the next few months. Further price increases will be subject to notification to the Price Commission, and it will be open to us to engage in further discussions with the industry.
As for the suggestion that the subsidy is indiscriminate, I must say that so-called discriminating subsidies constantly fail on the grounds of take-up. Therefore, we feel that bread, being an essential in the diet particularly of lower-paid workers and pensioners, is very well worth subsidising.
On the question of further subsidies, my right hon. Friend said that these were articles that could be subsidised; it is important to distinguish between “could” and “would”. I will make further announcements to the House about any other individual commodities which we intend to subsidise.
Mr. Cledwyn Hughes
Is my right hon. Friend aware that her statement will be warmly welcomed as an important counter-inflationary measure and as an immediate fulfilment of our election pledge? Is she also aware that in certain rural areas, including my own constituency of Anglesey, an extra 1p is added to the cost of the loaf? Will she investigate this as a matter of urgency?
I thank my right hon. Friend the Member for Anglesey (Mr. Hughes). In reply to his point about the rural areas where transport costs lead to higher prices, we are at present only holding existing prices, but this is necessarily the sort of matter that we shall have in mind in our longer-term consideration.
While congratulating the right hon. Lady on having emerged from these negotiations and having learned that cheque book government is a good deal more difficult than she thought, may I ask the right hon. Lady to confirm that to have pegged the price of bread in 1970 would by now be costing the British taxpayer £200 million? Does she not think that the £500 million that she has available would be better spent not on indiscriminate or discriminate subsidies but on family allowances? Will she confirm that, having failed to subsidise French bread, George Thomson was right when he said that the French are now subsidising British bread?
In reply to the hon. Gentleman’s first point, only the hon. Gentleman and the Liberal Party suppose that any kind of government is easy. Some of us know better than that.
The cost of family allowances is a separate matter which we shall be looking at as a Government. We were the last Government to increase family allowances. We believe that family allowances should have been increased in the long period since they were last increased. However, that is not a matter with which I am immediately concerned because bread is important in the diet of pensioners as well as of families.
In reply to the third point, we are allowing the price of the French loaf—a loaf which may be enjoyed by those who receive the salaries of Members of Parliament—to find its own market level. It is no policy of the present Government to subsidise luxury foodstuffs.
Mr. Mark Hughes
Will my right hon. Friend say what will be the effect of this announcement on household flour, and whether there will be any consequential changes on milling tails for animal feeding stuffs?
In reply to the first part of the question, no general price increase has been notified for flour. Were such a price increase to come, we would consider it sympathetically.
In reply to my hon. Friend’s question about feeding stuffs, the subsidy relates only to bread flour used for the commercial production of bread. This by itself will not affect feeding stuff prices.
Will the right hon. Lady confirm that the subsidy of £21 million covers only the historic costs of the bakers and does not include the current world price of wheat, and that a further claim by the bakers is likely to be made to the Price Commission in the next six weeks? An estimate of that cost is around £70 million. Will the right hon. Lady allow the subsidy to cover that figure in due course?
The hon. Gentleman will appreciate that the figure which I announced will not cover any further increase apart from the one which we have under consideration. The figure which I am giving deals with the increase at present in the pipeline. Any further increase will have to be notified to the Price Commission and considered by the Commission, as was the case under the previous administration. What will happen in connection with the Government’s policy in respect of any further increases is a matter which I am sure the hon. Gentleman will not expect me to anticipate.
While warmly welcoming the announcement which my right hon. Friend has made, may I ask her to say whether the Government will also stop the denaturing of good milling wheat by the Intervention Board which is designed to keep prices up and cannot rationally be combined with a policy of subsidies?
I understand that this matter is to be looked at by my right hon. Friend the Minister of Agriculture and Fisheries in the discussions which he will be having shortly with the EEC. I take my right hon. Friend’s point.
Sir D. Walker-Smith
Will the right hon. Lady clarify the position, in the context of what she calls speciality bread —such as wholemeal bread, starch-reduced bread and other dietetically beneficent bread, if these were excluded from subsidy—from the point of view of the health of the nation?
I share the right hon. and learned Gentleman’s affection for these beneficent breads. Any loaf which weighs either 14 ounces or 28 ounces will be covered by the subsidy, which is necessarily rough and ready mechanism because it has been organised in a short time. What happens in the longer term is another matter, and we shall hold dis- cussions with the bakers concerning the many varieties of bread which exist.
Mr. Arthur Davidson
May I ask my right hon. Friend a simple question? Does this mean that bread prices will not go up in any shop? Secondly, will she keep an eye on an important fact—namely, ensuring that the English loaf is not suddenly transformed overnight into a speciality French loaf for the worst possible reasons?
I am glad my hon. Friend asked that question because it is important to make the position clear. The subsidy does not cover breads which are 10 ounces and below—such products as bread rolls, French baguets and so forth. It does not cover speciality breads of any kind. Those bakers who do not apply for the subsidy will not be covered by it. I trust that there will be few such, but there may be some.
The simple answer, therefore, to my hon. Friend’s question is that the housewife will find that the price of the ordinary 14-ounce and 28-ounce loaves should not be increased. If she finds that it has been increased in one shop, I ask her to—[HON. MEMBERS: “Shop around?”]—walk down the road to the next shop. But we are talking about 94 per cent. of all loaves produced, so I am sure the housewife will not be obliged to shop around.
I welcome the right hon. Lady’s apparent conversion to shopping around. Does she consider bread to be one of those items which bear most heavily on the family budget? What is the cash benefit per week likely to be to the average family on average bread consumption? How is this likely to be offset by other increases in prices, such as for electricity?
I am not converted to shopping around, which I thought was one of the sillier pieces of advice given by the last Government, since so many will not be obliged to shop around, because 94 per cent. of the loaves will be cause 94 per cent. of the loaves will be covered. Bread is one of the larger items in the retail food price index. I should have thought that the hon. Lady would know that. She will not expect me to anticipate statements, not only of my Department but of other Departments, about prices in the nationalised industries.
I welcome what my right hon. Friend said, but is she aware that the latest published returns of the big flour millers reveal that Rank Hovis McDougall’s showed a profits rise of 17·3 per cent., Spillers-French of 17·3 per cent. and Associated British Foods of 27·3 per cent? In the circumstances, should we be subsidising such companies? Should we not be asking them to reduce their subsidies to the Conservative Party?
It would be useful if they did so. My hon. Friend is putting a fair point but he is looking at profits which do not wholly relate to bread, and we are not at present subsidising flour or any other ingredients which go into products other than bread. The question of profits is a matter which will be considered by the Price Commission, but it will also be studied by the Government. It would not be appropriate for me to go into the matter today.
Sir H. Nicholls
Can the right hon. Lady estimate how much time has been bought by this £21 million? Roughly, when does she expect the price of bread to go up or down as a consequence of the price of the ingredients?
I cannot possibly say when the next increase might be due. We are living through an historic period during which wheat prices have risen very fast. [HON. MEMBERS: “Oh.”] We have said it over and over again. I really do wish sometimes that the Conservative Party would not cheer when we repeat what we said over and over again during the election—that world food prices have risen but that they are by no means the only factor in prices.
Mr. Peter Mills
In the interest of keeping the loaf fairly steady in price, will the right hon. Lady consider the encouragement of the use of more soft wheat in the mixture and get in touch with the Minister of Agriculture to see whether more hard wheat could not be grown in this country? Both these things would help keep the price of the loaf steady.
As the hon. Gentleman will appreciate, there has already been some shift towards soft wheat in the average grind, by millers over the past year, and we welcome that because it has managed to shave the price increase to some extent. I will take the hon. Gentleman’s suggestion about hard wheat further, but he also knows that in the use of soft wheat there is a limit on the staying quality of the loaf. But I will pass his suggestion to my right hon. Friend the Minister of Agriculture.
What will be the saving to the average family as a result of the subsidy, which I welcome? Can the right hon. Lady ensure that, because of freight charges, the price of bread in Northern Ireland will not be any different from the price in England?
The immediate effect will be to avoid an increase in the food price index of 0·25 per cent. I cannot possibly answer the hon. Gentleman’s point about the saving to the average family because this involves each person’s individual food budget. But I have given the best indications I can.
The hon. Gentleman asked me about the price in Northern Ireland. The subsidy is intended not to meet the additional cost of transport to any part of the United Kingdom but to meet the additional cost of the flour for bread production.