Examination of Witnesses (Questions 40
- 45)
WEDNESDAY 4 JULY 2007
Ms Sonia Phippard, Mr Andrew Lawrence and Mr Simon
Harding
Q40 Lord Moynihan:
I listened with great interest to your assertion that food prices
should not be as cheap as possible but should be affordable, and
you cited the example of environmental costs as a reasonable upward
distortion on prices. Can you help the Committee by defining "affordability"
in greater detail?
Ms Phippard: I think what I was suggesting there
was, as we have discussed, that the price of food relative to
income in Europe has fallen steadily over time. Affordability
is an extremely difficult issue in terms of people's choices and
so on, and the Government has been very clear that actually enabling
people to make informed choices is the most important thing. I
think I would define affordability in this context as ensuring
that the population, whether here or elsewhere in Europe, has
access to safe, healthy food in a way which they can purchase
it without having to take decisions which critically affect the
rest of their lives. That is not an economist's definition. Simon
may be able to provide something much neater and more technical
than that, but it seems to me that that it is in that territory
of making sure that people are not financially so constrained
that, in making sensible decisions about how to deploy their income,
they are under-provided with food.
Q41 Lord Palmer:
The interesting thing is that, if one goes back 40 years, 40%
of the total income for every family in the UK was in fact spent
on food, and today, to answer Lord Moynihan's question, that figure
has actually dropped to single figures. It is a very big difference
over 40 years.
Ms Phippard: But it is still up to about 30%
in one or two of the new Member States. I think that was the point
I was making. It does vary hugely. Affordability does not actually
seem to me to be a very live issue for the vast bulk of the UK
population. Nevertheless, it does vary a bit depending on family
circumstances. There are people in the UK for whom it is an issue.
Q42 Lord Moynihan:
Perhaps your colleague can give us the economist's definition.
Mr Harding: Economists do not use the concept
of affordability at all. But, since you have given me the opportunity
and clearly have a thirst to know about it, the Government defines
poverty as, I think, 60% of the median household income. If we
look at people who have 60% of the median household income and
see how much of that they need to spend on food, that might give
you an assessment of affordability. But, as Sonia says, if food
only accounts for 8% of the average household bill, that is not
very much, and we must remember that 93% of that 8% is actually
value added after the farm gate, so it is all the packaging, transport,
retailing, etc.
Q43 Lord Moynihan:
If that is your motive, you would want it as cheap as possible?
Mr Harding: If you are interested in poverty,
then you will certainly want food not be an issue for the householder
defined as being in poverty. But, of course, the whole social
security system is engineered in a way that enables social security
payments to reflect the cost of food and other essential items
anyhow, so hopefully this is not an issue in that sense.
Q44 Baroness Miller of Chilthorne Domer:
Does the assessment, then, of the family tax credit level actually
take into account the price of food?
Mr Harding: I believe it would,
yes. I am not from that Department, but I believe it does. Viscount
Brookeborough: Food has to be affordable for the lowest income
group that does not get other grants such as tax credits and then
the tax credits must make up for it.
Chairman: I think we are on a wild goose chase!
Q45 Baroness Miller of Chilthorne Domer:
Just on that one, I would be grateful if you would confirm that
in writing because I understood it did not.
Mr Harding: I will check it out for you.
Chairman: We thank Lord Moynihan for that helpful
question. We particularly thank all of you. Thank you very much
indeed for a very good session.
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