Shirley Williams – 1974 Interview on Rising Prices

Part of the interview broadcast on Good Afternoon on Thames TV on 9 August 1974 with Shirley Williams, the then Secretary of State for Prices and Consumer Protection.

INTERVIEWER

Shirley Williams, can you tell me what effective steps you’ve taken to control rising prices?

SHIRLEY WILLIAMS

Yes, indeed and I think I have to say that I’ve always said there are some things you can do and some things you can’t do. And I’ll now list the things that I’ve tried to do.

We first of all, declare a cut across the board in the retail margins of profit by 10%. We extended it not just to fresh food, but all the way across including all the non food items as well. We then declared a three months gap between price increases except to the few very rare cases. We ended the business of increasing prices of goods bought at the same price for stock goods on display, the so called sticky label racket.

The next group of things we did was to bring in a Prices Bill which is now law, which enabled us to subsidise foods and under it we’ve subsidised bread, milk, butter, flour, and cheese. And that’s not the end of it, there’ll be others. We took powers to require the display of maximum prices for these subsidised foods and the orders on that are going out at the present time. We took powers to introduce unit pricing of particularly fresh foods, especially fruit and vegetables, meat and fish. And the first orders on that tool will be going out in the next few weeks.

We entered on a voluntary agreement with the retail trade covering essential foodstuffs which weren’t subsidised, in an attempt to try to keep the margins down as low as possible on that, and finally, we’ve taken steps with the local authorities to greatly extend consumer advice centres and we hope that in a short space of time, these will also engage in price monitoring. That’s just on the prices side. I will leave out the consumer protection side where we’ve tried to do some things also. Net effect you want to ask, between four and five points on the food index, up to now with a bit more to come.

INTERVIEWER

Well, there’s lots and lots of points to take up there. And perhaps we could start with subsidies? Now the classic argument is you must know only too well against food subsidies is that we all get them, regardless of whether we need them or not. And to back this up yourself, you said recently in the House that only a quarter of the people who benefit from subsidies earn less than 30 pounds a week, actually 24%, are they then the best way of helping people who need help?

SHIRLEY WILLIAMS

Oh, Tony, you’ve got yourself stuck into a statistical difficulty that all the House of Commons got itself stuck in, so I can’t blame you. No, it’s 24% of households. But you see, most pensioners are households of one or two people. So that that many households represents far more people than the household figure gives you. Now we know three things about this. The first says that pensioners benefit most, they actually benefit in absolute terms most, that’s to say they make more out of subsidies per head than anybody else in the population. Reason for this quite simply is they buy more staple foods and they spend more of their budget on food. They don’t spend the same amount on cars and holidays and entertainment that no doubt you and I do. So they benefit the most, absolutely. They also benefit the most proportionately, and so do the poor families.

The other part of the argument, I’ll be as quick about this as I can, of course it’s true that the average benefit of 60 pence a week goes to everybody. But the great difference is that anybody who earns over 60 pounds a week is paying an extra tax much more than he’s getting in subsidy. And anybody earning under 20 pounds a week is paying nothing extra in tax at all. So the whole of the subsidy benefits him and it’s what we call a give and take scheme, quite simply.

INTERVIEWER

But isn’t it true that the point of subsidies is completely lost if the good effect they have on lowering the cost of living is completely eroded by the government’s decision to put extra charges on the services of nationalised industries, things like electricity and gas, which pensioners need just as much as everybody else? I mean, isn’t that whole effect completely eroded away, and therefore we’re back to square one?

SHIRLEY WILLIAMS

As I began this programme by saying, there has been a definite impact on the food index and a definite impact on the pensioner index. The reason for this is that, although I agree with you nationalised industry prices do affect the pensioner, the pensioner does spend more of his income on food and rent. The two crucial things that had been directly affected in one case by subsidy and the other by freeze, then does anybody else in the population except the very poor large family.

Now coming to nationalise industries prices. I mean, obviously, as the Prices Minister, I hate to see nationalise industries prices go up. But I think it’s fair to say that the scale of the subsidy was running at about 1,400 million pounds at the end of February, that the only way to sustain this would have been a massive further increase in income tax and other taxes including VAT. Therefore the feeling was in the government, and indeed in the Conservative government before it, that we could had to set a ceiling to these nationalised industry subsidies. And the only other point I would make is this. We have tried to protect the less well off, for example, rail fares to commuters have gone up substantially less than rail fares for people travelling InterCity because our studies have shown us that commuters include far more lower paid people.

INTERVIEWER

But you mentioned the word income then. Isn’t it really better to give people the money in some form or another, like increase pensions or family allowances or even less tax ,or some sort of tax credit then they can decide what they themselves would like to spend the money on?

SHIRLEY WILLIAMS

It’s no good giving people pensions on the one hand, and then see the whole lot eroded by increases in prices on the other. But the other point I want to make is this, because I think you have got a serious point about family allowances. Subsidies affected the cost of living immediately. It takes perhaps four weeks, six weeks to bring in a subsidy scheme, at least in areas where you can properly inspect it. There are some things like meat, but I’ve always admitted it’s very difficult to do.

You can’t bring in a new family allowance system in anything like that time. You’ve got to print the books, you’ve got to set up the staff and so on. So can I just say this too quickly? The services have never been intended to be permanent, they’re intended to take the top off inflation. There is nothing in subsidies to preclude the government moving on to family allowances, moving on to higher pensions, but it can’t be done as quickly. It even took pensions up to July to be done although Mrs. Castle worked overtime and so did her staff and that was the shortest possible time.