Revealed: home truths about 'rip-off Britain'

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The Independent Online
EARLY next year the Government will publish a survey of prices across Europe and the United States. Last week The Independent on Sunday did its own survey and can report, without fear of contradiction, that we really do live in "rip-off Britain".

British shoppers can expect to pay far more for many high-street goods than they would in Europe and the US - and they cannot even enjoy the consolation of trips abroad to buy cheaper products: yes, the goods are cheaper in the shops there, but, because of the cost of travel from the UK, the bargains are few.

Eurostar charges people travelling from Britain to the Continent nearly 20 per cent more than passengers making the same journeys in reverse. A return trip from Paris is pounds 14 cheaper than one starting in London.

Flying is an even worse deal. A club-class British Airways ticket to Los Angeles would cost a British passenger pounds 4,988, yet a Swiss traveller could fly to the same city via London for pounds 1,722.

If companies can get away with it they will charge high prices and, in Britain at least, there is little anyone can do about it.

Take cars, which cost much more in the UK than anywhere else in Europe. Of the 75 best-selling cars in Europe, 62 are more expensive to buy in Britain. A Honda Civic costs 80 per cent more in Britain than in Denmark. The reason? Denmark's tax on car sales are sky-high - 200 per cent - so the motor industry slashes prices there and jacks up the cost for the same model in the UK to compensate.

Even worse is the length to which manufacturers go to prevent foreign dealers selling cars to British customers for import. Phil Evans, senior

policy researcher with the Consumers' Association, says: "We're awful at languages and as soon as dealers find out you're from Britain they'll do anything to stop you buying a car."

The manufacturers, Mr Evans explains, use a bonus system to punish dealers who sell too many cars to the British. "Basically, manufacturers decide at what price they will sell to the dealer. They fix prices in every market so they can restrict competition."

Clothing is a similar story. A basic pair of Levi jeans costs pounds 21 in the States, pounds 32 in Italy, and pounds 52 in the UK. It's much the same with Gap products - far cheaper in the US than here.

British hotels are the most expensive in western Europe, with an average daily room rate of pounds 153. "There's no obvious reason for this," says Mr Evans. "Except, perhaps, for a business culture that survives on the tacit understanding that, if no one undercuts anyone else, they can all sit back and enjoy a slice of the profits."

The British Retail Consortium, the lobbying organisation for the big retailers, disagrees. It says there are other reasons for high prices, ones that are beyond manufacturers' control. David Southwell, its spokesperson, says: "The UK market is exceptionally competitive. Britain is not some treasure island that gives the golden edge to retailers."

He points to higher costs for retailers in Britain, particularly rents and wages.

Lawrence Sugarman, a retail analyst for Dresdner Kleinwort Benson, says: "Land costs are higher here but also suppliers have chosen to believe that the UK is an expensive market."

The Government has signalled its concern and hopes its international price survey will shame manufacturers into cutting prices.

The research will compare prices of about 100 products in Britain, France, Germany and the US.

Mr Evans is optimistic that the consumer will get a fairer deal. He said: "I think prices will get better. A new competition law from Europe comes into effect next March, which means companies will be fined heavily if they're caught price-fixing. Once consumers feel they can shop around to find a bargain, manufacturers will start realising that they can't get away with their old habits any longer."