Budget Aftermath: War declared on UK's high prices

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The Independent Online
A CRACKDOWN on high street prices was launched by the Government yesterday amid mounting concern that British consumers are paying far too much for a range of goods and services.

The move came as the Department of Trade and Industry published a "name and shame" list showing wide discrepancies in electricity standing charges in different areas of the country.

The Office of Fair Trading (OFT) is already investigating the price of supermarket goods, cars and private health care and has referred the cost of over-the-counter medicines to the Restrictive Practices Court.

Stephen Byers, Secretary of State for Trade and Industry, told the Commons he had now ordered a further study of prices to see how much UK shoppers were being charged compared with consumers in other countries.

If the study throws up unacceptably high variations, he will use his powers to instruct the OFT to carry out investigations.

The OFT is expected to publish its report into supermarket prices at the end of this month and is also close to finishing the investigation into new car prices.

The crackdown was foreshadowed by Gordon Brown in his Budget speech on Tuesday when he said: "It is wholly unacceptable that consumer goods can still cost up to twice as much in Britain as in America."

Mr Byers said there was "widespread concern" about the comparative price of goods in the UK which indicated that the economy was not sufficiently competitive. The Commons Heritage Committee last year criticised the price of CDs, pointing out that customers in Britain pay the same in pounds as customers in the United States pay in dollars.

The move was welcomed by the Confederation of British Industry.

Its deputy director-general, Peter Agar, who will sit on a new advisory group chaired by the Consumer Affairs minister, Kim Howells, said: "It seems to us a sensible approach. Let's first get the evidence and then see, if there is a problem, what the explanation is."

If the root cause of the problem is lack of competition, then the OFT can take action to break up cartels and anti-competitive agreements using its new powers under the Competition Act.

Mr Byers also laid out the Government's new consumer strategy, pledging better information on rights, more effective enforcement of existing law and better assurance of redress.

Publishing the list of regional electricity charges, Mr Byers said there were "huge variations" and said he had asked the energy regulator, Callum McCarthy, to carry out an inquiry to ensure that pensioners and the less well-off were not being disadvantaged.

Standing charges can account for up to 20 per cent of electricity bills in poorer households. The list shows that charges can vary from a pounds 2 rebate for customers of Seeboard who pay by direct debit to pounds 18.40 a quarter for customers of South Wales Electricity (Swalec) who use a pre- payment meter.

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