Utility Goods (Price Reduction)

– in the House of Commons at 12:00 am on 28th July 1949.

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Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk 12:00 am, 28th July 1949

My right hon. and learned Friend, the Chancellor of the Exchequer, recently stressed in the House the crucial importance, in the present situation, of pursuing vigorously the Government's policy on Personal Incomes, Costs and Prices. One of the factors operating against stabilisation of personal incomes, and certainly a matter giving rise to great anxiety in the mind of the general public, is the continued high level of prices of essential consumer goods, including articles in the utility schemes. The Government believe that there is room for a reduction in costs, particularly in the distributive trades, which will lead to a reduction in prices.

We have, therefore, decided that immediate action should be taken which would have the effect of reducing by, on the average, about 5 per cent.—that is, a shilling in the pound—the statutory maximum prices in the shops of utility clothing, utility footwear and utility household textiles. I shall endeavour, so far as possible, to spread the reduction between retailers, wholesalers and manufacturers; but in order that consumers may obtain the full benefit of lower prices as soon as possible, the brunt of the reduction will, at the outset, fall on the retailers' gross margins.

The changes will mean lower gross margins for these utility goods than have hitherto been allowed, and will probably necessitate a reduction in costs which may take the form of smaller staffs and a curtailment of services to the public.

The Orders giving effect to these changes will be made and published as soon as possible and will come into force early in September. I regret that, in the circumstances, I have been unable to consult the trade associations concerned as has been usual before substantial changes were made in controlled prices.

I know that these changes will involve a good deal of additional work for the traders affected by them. But the general burden which compliance with the price control regulations involves, will be lightened by the removal in the near future of price control from certain items of non-utility clothing and a wide range of other goods outside the utility field. I am satisfied that control can be removed from these goods with very little risk of increase in price; indeed, in many of these cases prices are already falling.

Photo of Mr Oliver Lyttelton Mr Oliver Lyttelton , Aldershot

Might I ask two questions? First, can the right hon. Gentleman say why it has been impossible to consult the trade associations? Secondly, that being so, will he give the House an assurance that opportunities will be given for representations by the trade on particular instances? If I understood his statement, a curtailment of services to the public is clearly contemplated and it is very desirable that there should be no curtailment unless the results are really worth while.

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I think the House would agree when a decision is taken of a kind like this, covering a general source of supply, that to consult all the very large number of trade associations concerned would be literally impossible. I have no doubt that representations will be made immediately following my statement. Of course, if they are so made, I myself, or other representatives of my Department, will be glad to consider them. I am sure that the House will agree that we must aim at the average reduction of 1s. in the £ on clothing prices as an essential contribution to dealing with present economic difficulties. If there are special hardships involved in one or two cases, that will mean that probably something more will have to be done on others.

Photo of Hon. Oliver Stanley Hon. Oliver Stanley , Bristol West

Am I right in assuming that all the classes covered by this new decision are exempt from Purchase Tax and, therefore, there will be no question of distributors having to bear losses in regard to Purchase Tax?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

Yes, Sir. I think that the right hon. Gentleman can assume that, because I have referred to the whole of the utility grades which, with one exception, I think are free from Purchase Tax. I should like to look into the special point about the one exception, namely, furs.

Photo of Sir Austen Albu Sir Austen Albu , Edmonton

Will my right hon. Friend assure the House that there will be no reduction in the volume of utility goods coming on the market?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

The proportion of utility goods is at present increasing, and I have every reason to suppose that it will continue to increase.

Photo of Mr Roland Jennings Mr Roland Jennings , Sheffield, Hallam

Might I ask the President of the Board of Trade whether, after taking that step, he will take a further step and reduce the burden of Government expenditure on industry generally?

Photo of Mr Louis Tolley Mr Louis Tolley , Kidderminster

Might I ask my right hon. Friend when he assumes that it will be possible for him to consult the trade? It appears to me that his statement saying that he intends for the time being to place the full burden upon the retail trade, is rather hard. Is it not fair to suggest that the retailer, the wholesaler and the manufacturer should be brought into line and that each should share the burden?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I made it plain that all will participate in this benefit—[An HON. MEMBER: "Benefit?"]—which we have decided to introduce, and as quickly as possible it will be applied to manufacturers and retailers. I do not think that there will be an interval of more than a few weeks at the most between the introduction to retailers and the introduction to manufacturers.

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

Will the right hon. Gentleman say how he proposes to prevent increased inflationary pressure as a result of the increased purchasing power which will be generated by these reductions?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I should have thought that the hon. Gentleman would have agreed that this was one of the best disinflationary steps that could be taken at present.

Photo of Mr Cecil Poole Mr Cecil Poole , Lichfield

Will my right hon. Friend either tell the House now, or make available in the OFFICIAL REPORT, the wholesale and retail gross margins on the various goods that he has mentioned, so that we may be able to assess correctly whether five per cent. is the utmost cut that may be made in those margins, especially in relation to utility clothing? Secondly, might I ask a question which has already been hinted at? Will he keep very careful watch to see that there is not now a disappearance of utility goods from the shops, as has so often happened in the past?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I think that we have dealt with the second question. In reply to the first, I will certainly consider making the information available as quickly as possible, but I certainly could not give an assurance that that information will be circulated in the OFFICIAL REPORT before the House adjourns.

Photo of Mr Colin Thornton-Kemsley Mr Colin Thornton-Kemsley , Kincardine and Western

Will the Minister realise that when he makes a serious announcement of this kind without previous consultation with the trade he is making it more difficult for friendly relations to be maintained between the trade and the Board of Trade; and will he give an assurance that it is not his desire or that of his Department to depart from the practice which has hitherto been observed of consultation with the trade whenever possible?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

Yes, Sir. I am very alive to that point, but the hon. Gentleman will realise that there is another section of the community involved—the consumers—and it has not been possible to have full consultation with them either.

Photo of Mr Victor Collins Mr Victor Collins , Taunton

Has my right hon. Friend anything in mind at all other than the possible curtailment and reduction of staffs?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I think it is generally agreed by the House that the staffs in the distributing trades have grown rather more than the nation can afford in the last year or two. If the effect of this Measure is some slight reduction of staff in distribution, I think it will be useful.

Photo of Mr William Shepherd Mr William Shepherd , Bucklow

While admitting that consultations with all the trade associations affected was impossible, may I ask the right hon. Gentleman why he did not consult the Association of British Chambers of Commerce, who would have assisted him in this matter?

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I have no doubt that they could have assisted, but it would be equally possible to make out a case for at least a dozen other organisations which might have been consulted, the more so as I have said that this will apply not only to retailers, but to wholesalers and manufacturers.