Corporate Profit and Inflation

Debate between Mark Hendrick and John McDonnell

Tuesday 16th May 2023 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

I want to try to take the argument on from the discussions that have taken place so far. My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) spoke about food, which is such a basic need. If we cannot control the supply and price of food, to be frank, we lose control of our overall economy and our society itself. The food increases that my hon. Friends have spoken about relate partly to short-term issues such as the breakdown of the supply chain post covid and the Ukraine war, and partly to two seemingly more permanent issues. The first is the impact of climate change, which is undoubtedly impacting the supply of food, and the second is the almost permanent installation into our economy of profiteering. That is why the Unite report, which introduced the concept of greedflation, is so important.

My hon. Friend cited several instances of greedflation, but food is a good example. There has been a 97% increase in supermarket profits, and a 255% increase in the profits of agribusinesses themselves. Unless we can develop policies to tackle climate change, including by accommodating to it in some areas, and get greedflation under control, these rises will be a permanent factor that will undermine the quality of life of all our constituents in the long term.

This debate is not just an exposition of the problems; it has to be a way for the Government and Opposition parties to talk about solutions to address the immediate problems and look at the long term. My hon. Friend the Member for Leeds East (Richard Burgon)—I congratulate him on securing this debate—mentioned some. The first is the need for immediate action, which must mean price controls. Price controls on basic foodstuffs have been introduced in this country in the past, particularly to deal with short-term problems. I do not think that permanent price controls are effective, but on a temporary basis—12 months, for example—they can be. Other countries, including Switzerland and Hungary, are already developing price controls, and France has introduced its own mechanisms for negotiating prices down on the basis of the expectation of price levels.

My view is that price controls are needed because of the urgent situation our constituents are facing. I think the Unite report said that there has been a 57% increase in the number of households that are restricting their food intake, and in which parents are choosing not to eat so their children can. Unless we can do something urgently to assist them, we will be inflicting human suffering on our society. To be frank, my generation has not seen that before; it is almost reminiscent of the ’30s.

Secondly, let us just talk about excess profits. I want to quote a senior Conservative Minister, who introduced excessive profit taxes across the whole of the economy. He said:

“At a time like this sacrifices should be equally borne. We are not prepared to see excessive profits”.—[Official Report, 11 March 1952; Vol. 497, c. 1289.]

He introduced a new levy, which was charged on the amount by which current profits exceed standard profits. That was Rab Butler in the 1950s, who introduced a model that we could draw upon now. It would extend across the whole economy and would expose and properly tax those who are exploiting the current economic situation.

The other issue is something I have raised in previous debates. During the banking crash—some of us were here at the time—we witnessed a shift in investment from the crashing mortgage economy. The crash at one point brought our banking system to a halt, and almost did something more fundamental, in terms of destroying confidence in the financial system. Money moved out of property, where prices were crashing, and into food speculation, and we saw rapid increases in food prices. In fact, in some areas of the globe, we even saw famine as a result.

Then, on a global basis, an agreement was reached and we inserted into the regulatory regime after the banking crash certain controls on food speculation—for example, how much food wealth could be owned by a particular speculator. The Government at the moment, in their Financial Services and Markets Bill, are removing those protections. Already food speculation is taking place and causing some of the profiteering that is happening, but we are inviting even further speculation, which I think in the short and medium term will result, in the same way it did after the banking crash of 2007-08, in people going hungry and famines occurring in parts of the world.

My final point is that if the Government are not willing to act so decisively with price controls, regulation of speculation or an excess profits tax, the minimum that we should ask for is an inquiry into the anti-competitive market practices taking place in certain sectors. I would like to start with the food sector. We are seeing this demand being met in the US now; an investigation is taking place into the anti-competitive market practices that are happening. The US is at the moment looking at the fertiliser and agricultural business sector. In this country, we need an investigation into the profiteering and greedflation in particular—that is the No. 1 issue—that is taking place in the food and agricultural sector.

We cannot stand by and watch people line their pockets and corporations make excessive profits while our people, in some of our constituencies, are actually starving—they are actually going hungry. That is why, in this period, special measures are needed. They are measures that we have used in the past, that people are using in other countries and that have proved to be effective. If nothing else, if they were even temporary measures, they would alleviate the situation that our constituents face. This is a matter of urgency. That is why I keep repeating time and again, in as many debates as I possibly can, the need for action.

I will just say this to my own party: this crisis of greed inflation, combined with the climate crisis, means that when we take over and go into government next year—as soon as possible, I hope—we will have to address this issue. We will have to have the radical solutions that need to be put forward; otherwise, we will not be fulfilling our historic mission of looking after working-class people in this country.

[Sir Mark Hendrick (in the Chair)]

Now we move to the Front-Bench contributions. I call the spokesperson for the SNP.

--- Later in debate ---

[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—