HC Deb 11 December 1956 vol 562 cc208-10
26. Mr. Lewis

asked the Chancellor of the Exchequer to what extent his Department's estimate of 1s. 5d. per gallon on the price of petrol increasing the cost of living by one-third of one point took into account the increases that will arise in distribution costs of milk, bread, coal, vegetables, and meat, the increase in the cost of bread, where this is produced by oil-fired stoves, and the increased rates of local borough councils.

27. Mr. Dodds

asked the Chancellor of the Exchequer if he will state in detail how he has arrived at his calculation that the increased cost of petrol will cause an increase of less than one-third of a point in the cost-of-living index.

Mr. Walker-Smith

On 4th December my right hon. Friend gave an estimate that the increase in the duty on petrol and similar hydrocarbon oils by 1s. 0d. a gallon would increase the cost of living by less than one-third of a point. This took into account both the items in the index into which the cost of petrol and other dutiable oils enters ascertainably, that is, private motoring and travel by bus.

It is not possible to calculate exactly what the indirect effect on the cost of living arising from increased distribution costs might be. Apart from technical difficulties of computation it would depend on the extent to which the additional costs can be absorbed without affecting retail prices. My right hon. Friend is, however, satisfied that it must be very small.

There is, I may add, no duty on fuel oil used, for example, in bakeries.

Mr. Lewis

That was with reference to the Is. tax. The Minister will agree that there has been a further increase of 5d. and that almost every week this year the Government have come forward with new increases and said, "This will mean only a small increase in the cost of living." That is what they have said, whether it has concerned rents, prescriptions or petrol. Surely the Minister can give some idea of what the position will be in the next two or three months?

Mr. Walker-Smith

The Question relates to the estimate of one-third of one point in respect of the petrol duty. That one-third of one point is the estimate in relation to the duty, and the duty only; and that is the basis on which my right hon. Friend made his estimate of one-third of one point. Taking into account the other matters, it is increased to the neighbourhood of one-half of one point, as I think the hon. Member knows.

Mr. Dodds

Is the Minister aware that I was present when the Chancellor made his amazing calculation. I regret that it was not possible for the Chancellor to see the pained expressions behind him. Nevertheless, the statement has been made. Can the Minister give an undertaking that if any firms make a "phoney" excuse of an increase in the price of petrol for raising prices substantially, the Government will take action against such unpatriotic firms?

Mr. Walker-Smith

I would say to the hon. Gentleman and to the House that the statistics show that the rise in the cost of living is very small, or relatively small, and includes both the increase in duty and the increase in the commercial price of petrol. I am sure that that is a consideration which will be borne in mind by all concerned.

Mr. Jay

Does the half of a point assume that none of the traders concerned will add more to the final price than the 1s. 5d. which is strictly justified?

Mr. Walker-Smith

It includes the 5d. increase in the commercial price for private motoring, and was based also on the hypothesis that all bus operators would raise their fares by the maximum allowed, so in that respect it is a pessimistic calculation.

Mr. Jay

But does it assume that none of the traders will add on more than the 1s. 5d. which is strictly justified?

Mr. Walker-Smith

It does not include any figure above that.

Mr. Lewis

Does it include the 8d. a ton that has gone on coal today?