§ In the forefront of the measures which we have taken during the war to remove the threat of inflation is our policy of stabilisation of prices. It has wide significance, and it involves a considerable annual charge upon the Exchequer. In my Budget speech of April, 1941, I undertook to hold the cost-of-living index number, apart from minor seasonal changes, within the range of 125 to 130 in terms of the pre-war level. That endeavour has been rewarded with a full measure of success. The cost-of-living index has been successfully stabilised. It has at no time risen higher than 30 per cent. above the pre-war level, and for most of the time it has been below that figure. So far as food is concerned, the food index last month was 20 per cent. above the level at the outbreak of war, as compared with 23 per cent. in April, 1941. It is sometimes suggested that while the items falling within the cost-of-living index have been stabilised in price, this has not prevented many other prices from soaring. The new material provided in Section C of the White Paper shows that, taking the general price level as a whole, this is not correct. Apart from price increases deliberately brought about by higher indirect taxes, the whole volume of consumption goods and services, including luxury goods and other non-necessaries, has not risen in price by more than 36 per cent. It is not undesirable that the less necessary goods should show a greater price increase than necessaries. The rise of 36 per cent. over the whole field apart from taxes is, I think, in a proper relationship to the rise of 30 per cent. or thereabouts in the cost-of-living index, on which the effect of war taxes has been slight.
§ The success of our stabilisation policy has been achieved by a firm control of prices, coupled with some application of subsidies and remission of taxation when control has been secured. It has been a 953 cardinal point of policy that subsidies and tax remission should not be granted until an effective control of prices, and in most cases also of supply, has been obtained. For example, there has been no general remission of the Purchase Tax on clothing, but utility clothing, which unlike other clothing is manufactured under the close supervision of the Board of Trade, has during the past year been made free of Purchase Tax. Subsidies, moreover, have not been directed exclusively to price stabilisation but have also included expenditure incurred primarily for nutritional reasons, like the national milk scheme and the school meals scheme. In pursuance of this policy, control has been extended step by step over the prices of food and other essential commodities, and in respect of food prices control now covers probably 90 per cent. of the average housewife's expenditure. The cost of the stabilisation policy to the Exchequer has been substantial, and it is now running at the rate of about £180,000,000 a year, but it has been of great benefit, not least to those who depend upon small fixed incomes.
§ The objects of the price and subsidy policy may be summed up as a substantial effort not only to stabilise the cost-of-living index but at the same time, in conjunction with measures of rationing and control of distribution, to secure adequate supplies of essential articles to all sections of the community. It may, I think, be fairly said that, in the result to-day, not only has the war-time distribution of the available goods and services worked fairly and with little or no likelihood of hardship, but the foundation has been laid for an improved nutritional standard for the nation as a whole, especially when account is taken of the special schemes, such as the national milk scheme and the vitamins scheme run by my right hon. Friend the Minister of Food with such success. Certainly it can be said that the whole policy has, in its achievement, marked a great improvement over the course of events during the last war, when after three and a half years of war the cost-of-living index was nearly 90 per cent. above the pre-war figure as compared with a rise of only 28 per cent. between September, 1939, and March, 1943, while for the same period in the last great war food prices rose by 108 per cent., as compared with 20 per cent. in his war.