asked the Minister for Industry and Commerce if, in view of the decision to abolish the National Prices Commission the plans the Government have to protect consumers against excessive price increases; the measures which the Government intend to take to ensure that reductions in the cost of imported goods, arising from currency fluctuations, are passed on to the consumer; and if he will make a statement on the matter.
Ceisteanna — Questions. Oral Answers. - Price Increases Protection.
4.
As indicated in the statement issued on the 17 January 1986 measures to protect consumers against excessive price increases are to be integrated within the new measures announced to promote competition in the economy. Previous detailed arrangements involving prior notification and approval of price increases have lapsed but the basic powers in relation to price control in the Prices Acts are being retained. These include powers to impose price controls where restrictive practices result in excessive prices and the new Fair Trade Commission will advise, as appropriate, in relation to prices.
The degree to which consumer prices can speedily reflect the impact of more favourable currency movements on import costs varies with the established purchasing arrangements of importers. Some importers may be committed to purchasing arrangements involving forward purchases of currency and this may delay the more favourable impact on prices in some cases. Price reductions in line with currency movements have been effected in a number of product areas, particularly petroleum. Any case where the benefits of currency gains are not adequately reflected in consumer prices will be suitably dealt with under the various powers available to my Department.
Have the Fair Trade Commission been established yet, and if not, when will they be established? Also, what agencies exist for the purpose of the surveillance of prices, particularly price changes arising from fluctuations in the value of the £? Can the Minister say, too, what powers exist to investigate price structures and also to whom should consumers direct their complaints if they consider they have been charged excessive prices?
The general thrust of Government policy represents a movement away from price control. Because of a substantially reduced rate of inflation we are relying on competition rather than on the National Prices Commission who in a low inflation period might be the cause of prices being maintained at excessively high levels instead of allowing them to decrease. The two new bodies responsible for complaints will be the Fair Trade Commission and the Office of the Director of Consumer Affairs and Fair Trading. These bodies will be available to ensure that no monopoly prevails and that consumers will be assured that their complaints in this area will be dealt with. In my original reply I said that arrangements for prior notification and approval of price increases have lapsed but this area can be taken on board again by a new order if necessary though that is not the intention. The intention is to allow competition to reflect itself properly in the economy but the Fair Trade Commission and the Director of Consumer Affairs and Fair Trade will ensure that the consumer is protected.
Was the abolition of the National Prices Commission due to a desire on the part of the Government to save money or was it for some other reason and would the Minister agree that, irrespective of whether inflation is high or low, there is always competition, theoretically at least, but that some kind of price control is necessary, whether the competition be real or imagined? If traders are to be freed of any kind of control they will seek to obtain the maximum prices.
The first reason for the abolition of price control is the greater emphasis being placed by the Government on competition within the economy and it was considered this was the best way of ensuring that the consumer is served best in the market place and also that fair prices are obtained. Secondly, in the past year there has been a substantial fall in the rate of inflation and the indications are that the figure will fall below the current level of 5 per cent. That would be of substantial benefit.
Will there be adequate measures to ensure compliance with what is intended?
There are mechanisms for that as I have outlined. In addition, there was considerable cost to business in respect of applications for price increases. The aim, too, is to remove State interference in the market place which was considered to encourage as a side effect non-competitive practices. The only price control exercised by my Department now is in relation to the retail price of milk in respect of which the maximum prices order is maintained, and in relation to insurance, household and motor insurance particularly. There remains a notification procedure in relation to liability insurance. Otherwise, we are relying on competition in the market place. I consider the Government decision to have been proper. It has been reflected in the market place.
How much are the Government saving by the abolition of the National Prices Commission?
The saving in terms of staff costs is £300,000.
We were told on 11 February that there would be a saving and we learn now that the extent of that saving is £300,000. This is the effect of closing the seven price line offices and presumably thereby making redundant the 27 staff members concerned. Eleven of those staff were involved in the control of the bread subsidy. Is there any means available to the Minister to monitor the administration of the bread subsidies and will he confirm that consumers now will have no means available to complain about increased prices or prices out of line?
The Deputy may take it that a director of consumer affairs and fair trade will have an interest in the area of bread subsidies and of course will be the agent through which people can complain about prices.
That has been said about 12 times.
I am only replying to questions.
What agency will police the price Acts and the consumer information Acts?
Question No. 5.