Corporate Profit and Inflation

Andrew Griffith Excerpts

Tuesday 16th May 2023 Westminster Hall

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a great pleasure to see you again in the Chair, Sir Mark. I congratulate the hon. Member for Leeds East (Richard Burgon) on securing this well-attended debate, and for his valiant attempt to leave his mark on the lexicon on this topic. I thank all Members for their contributions. Clearly, the issue of high prices and inflation is affecting everybody across the country—all our constituents, who send us here—and I welcome the opportunity to respond on the Government’s behalf.

The reality is that costs in the UK have primarily risen because of Putin’s illegal invasion of Ukraine and global supply pressures post covid. The right hon. Member for Hayes and Harlington (John McDonnell) was the only one of the eight contributors we heard from, including both Front-Bench spokesmen, to even go so far as to mention those two unprecedented facts.

[Richard Burgon]

That is not true.

[Zarah Sultana]

I mentioned that.

[Andrew Griffith]

I stand corrected. I was being diligent and attentive, but I was clearly so taken by the force of the arguments made by the hon. Members that I missed that.

[John McDonnell]

Will the Minister explain the role that Putin played in ensuring that Tesco, Sainsbury’s and Asda increased their prices to such an extent that they have increased their profits by 97%?

[Andrew Griffith]

If the right hon. Member lets me make some progress, I will address precisely his point. Domestic inflation pressures have risen. The UK labour market has remained very tight, reflecting a real cost headwind to employers. There have been real challenges, as we saw in the labour figures today, in getting people off welfare and into work. That has pushed up the cost to firms, including Tesco and others, of producing goods, which has resulted in inflation. The UK is not alone, and I hope Members will reflect on and understand that. We are seeing high inflation in all major global economies. Food inflation in Germany is above 20%.

[Margaret Greenwood]

Will the Minister come back to the question from my right hon. Friend for Hayes and Harlington? Why have profits increased so much?

[Andrew Griffith]

With respect, I have not heard an awful lot of analysis in the debate. I have heard many mentions of Unite the union, and I am familiar with its work, but I did not hear any analysis from Members. Let us talk about food prices for just a moment.

[Richard Burgon]

Will the Minister give way?

[Andrew Griffith]

I will give way because it is the hon. Member’s debate, but I will talk about food prices, if that is what I am being asked to do.

[Richard Burgon]

The Minister said he heard very little analysis from Opposition Members other than reference to research by Unite the union. Does he accept, however, that as well as Unite the union, officials at UBS, Goldman Sachs, the European Central Bank and the US Economic Policy Institute all suggest that more than half of the current price mark-up is to do with profiteering? If so, what are his Government going to do about it?

[Andrew Griffith]

I listened to the citations and I will go away and inform myself about them, but one can find a million citations in support of any argument, however spurious.

Let us get to the heart of food inflation. After reading the report from Unite the union earlier today, I went and did some research. I am keen to understand the level of alleged profiteering that we see, so I looked into costs at the Co-op, a mutual organisation that I believe supports many Opposition Members. I compared the alleged profiteering by our major supermarkets with what is happening in an organisation that I hope we can all agree—and join hands across the House—is not indulging in profiteering. The cost of four pints of milk at the Co-op is 20p more expensive than at Tesco. I have a wonderful chain of Co-operatives in my constituency and it serves our rural community magnificently, so I pay great tribute to the Co-op, but six eggs in the Co-op cost 35p more than at Tesco. The Co-op was retailing the same loaf of white bread for 56p more, and chicken breasts for £1.70 more, than Tesco. The Co-op is retailing butter, tea and Heinz baked beans for 40p more than Tesco—I would be very happy to give Hansard the details of this. I will stop at the emotive category of baby milk: an 800g pack of Cow & Gate baby powder retails for £10.50 at Tesco, but the same product retails for £11.50 at the Co-op.

I put it to you, Sir Mark, that we are seeing either a vibrant and competitive market in food retail—which includes the Co-operative mutual organisation, although its prices seem a little higher—or a level of anti-competitive practices. But if it is the latter—right hon. and hon. Members should be enormously careful about this—those anti-competitive practices and that profiteering extend to no less an organisation than the Co-operative mutual society, which supports Opposition Members. If any of them want to intervene on me, I would be very interested to hear their view of the Co-operative’s business practices.

[John McDonnell]

Let me explain this to the Minister. There is such a thing as the Co-op party, of which some people on this side of the House will be members, and there is such a thing as the Co-op store. The Co-op store is not related to the Labour party; it is a completely separate commercial entity. The Co-op party is separate completely, so there is no relationship between the Members here and the Co-op store, although some of them might shop at it.

[Sir Mark Hendrick (in the Chair)]

Order. John McDonnell has made a good point, but for clarification, as a Labour/Co-op MP—

[Andrew Griffith]

Declare your interest!

[Sir Mark Hendrick (in the Chair)]

I do declare an interest. What you call “profits” for the Co-op actually get reinvested in it; they are not given out to shareholders in dividends. That is the difference.

[Andrew Griffith]

As I said, the Co-operative, as a food retailer, is a marvellous organisation. My point is that we should be very cautious about simply making the assumption that an increase in the prices that consumers are paying, which is spread across very different parts of the producer sector, automatically leads to the sorts of outcomes that we heard from Opposition Members.

We have strayed quite a long way away from the topic of debate. I would dearly love to be a fly on the wall, or a passenger on the train as it returns to both Leeds East and Leeds West, because there is some dissonance in my mind about the position of the Opposition today. We have had a very refreshing debate that has been honest and open in its candour. We have heard about the need for the minimum wage to increase to £15 an hour, the need to scrap all anti-trade union laws and to give an above-inflation pay rise to workers, the need for an excess profits tax and for wealth taxes, the need for private rent controls, the need to impose price controls on food staples—there is lots of nodding, so please intervene on me—and the need to return to public ownership every water, rail and energy company. These points were all raised in the debate—

[Sir Mark Hendrick (in the Chair)]

Order. Because of the Divisions, we have run short of time.