Leading Article: The British must learn to haggle and fight for a bargain

LIVING IN Britain is an expensive business. Even Volvo, that trusty old steed of the middle classes, has been exposed as rigging its prices for the UK market. The crux of the problem is that manufacturers and retailers know that they can get away with deep-lining their pockets with our precious pounds. And the Government lets them. In the United States, the Volvo price-fixers would have committed a criminal act, been liable to pay up to pounds 70m in fines, and possibly found themselves in jail. Tony Blair himself has spoken out against artificially high prices in this country, and has promised to take action. The new competition regulations, to take effect in March 2000, are a step in the right direction, but do not go far enough. The Government's White Paper on consumer affairs, due out this week, has a lot of work to do.

Britain is a sitting target for pumped-up prices. The stretch of water dividing Britain from neighbouring countries provides a neat, business- friendly barrier between retail outlets here, where high prices can be charged, and abroad, where consumers can drive across the border to go shopping. But this is just the start of it. Culturally, the British focus more on service and less on price.

What is needed is for British consumers to become more sensitive to the prices of consumer goods. And here the Government can play a role by encouraging consumer education at all ages.

Public exposure of where and how consumers can find the best prices would help. A great leap forward has been made in the past decade, as the British have learnt to complain about service that is not up to scratch. Now, they need to turn the same hard-to-please attitude on to prices. The British need to do what goes so against their grain, and haggle and fight for a good price.

But in some markets, such as those of cars and branded goods, the failure of competition is regulatory. Car manufacturers and dealers have a block exemption from competition regulations on the grounds that cars are particularly complex products with safety implications, and therefore need specialist dealers. But this exemption allows prices to be unfairly distorted - even cars manufactured here in Britain can cost less abroad - and it should be ended. Similarly, manufacturers of branded goods who charge higher prices in the EU can prevent their products being bought cheaply elsewhere and resold here at a discount. Instead of banning this "grey market", the Government should seek to encourage this arbitrage, not just for businesses but also for consumers. A first step could be to fast-track customs payments for the millions of Britons who holiday abroad, in the same way that tax- free shopping for foreigners has been made so easy here. And the Government should consider raising the duty-free limit. Another way of encouraging globally competitive pricing in Britain could be to make purchasing products from abroad on the Internet as easy and tax-free as possible.

But not everybody has a home PC and the time and knowledge to dig out the best value. Nor should they have to. The Government's consumer affairs White Paper is a chance to bring fair prices to the people. It is expected to tackle a number of important problems including rogue traders, cowboy craftsmen and unfair pricing. These are issues that affect most people living in Britain, taking pennies out of their purses every day. If Tony Blair really cares about the beleaguered British consumer, then this is a golden opportunity to do more than simply woo the voters with small talk while kowtowing to big business with inaction. A bunch of consumer- friendly principles will not be enough. In order to rid Britain of this high-price-tag burden, the Government needs to set out a clear time-table to end anti-competitive practices and encourage price-sensitive shopping.