HC Deb 05 July 1956 vol 555 cc1537-40
56. Mr. Grimond

asked the Chancellor of the Exchequer the policy of Her Majesty's Government for minimising losses incurred by the nationalised industries in holding down prices at the request of Her Majesty's Government.

Sir E. Boyle

So far as the fuel and power group of nationalised industries is concerned, my right hon. Friend has no reason to believe that their decision about prices will result in their making revenue deficits. As regards electricity in particular, this was explained by my right hon. Friend the Prime Minister in a reply of 26th June. The hon. Member has a separate question down about the British Transport Commission which is being answered by my right hon. Friend the Minister of Transport.

Mr. Grimond

Is it not clear that many of these industries already have a deficit which they are carrying forward? If the Government now intend to force them to run up a further deficit, how do they propose to deal with the ultimate result? Is not this policy, even if it is effective at all, inflationary and does it not in the long run merely put off the evil day and make the situation worse?

Sir E. Boyle

The hon. Member is misinformed about the facts. The National Coal Board's announcement about price stabilisation came after an increase in price as from 1st June, and the Coal Board said that in the absence of unforeseen developments this price increase would not merely prevent any growth in the Board's deficit but would reduce it. Dealing with the electricity industry, in a written reply to the hon. Member for Nottingham, North (Mr. J. Harrison) on 26th June the Prime Minister explained that While some of the area boards may be in deficit on the area's operations as a result, the electricity industry as a whole is expected to make a small surplus."—[OFFICIAL REPORT, 26th June, 1956; Vol. 555, c. 25.]

Mr. G. R. Strauss

What is the Government's policy towards the transport industry, which is covered by this Question? Do not the Government appreciate that if by their action they force a substantial loss on those nationalised industries, they have some obligation to deal with it in some way or another? Will he tell us what the policy is?

Sir E. Boyle

There is another Question on the Order Paper about the British Transport Commission to which my right hon. Friend the Minister for Transport is to reply.

Mr. Hamilton

Since the National Coal Board and the other nationalised industries are acting on the assumption that there will be no wage demands, and since further wage demands are inevitable as a result of increases in rent and the removal of the bread and other food subsidies, what will happen subsequently?

Sir E. Boyle

I cannot add to what I have said, but I do not accept the hon. Member's defeatist view about the future of wages.

Mr. Gaitskell

Are we to understand from the Minister's reply and his refusal to answer the question of my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) on transport that the Government have one policy for the British Transport Commission and a totally different policy for the National Coal Board? If it is the same general financial policy, why will not the Minister answer the question about transport?

Sir E. Boyle

Because there is a separate Question down about transport which the Minister of Transport is to answer.

57. Mr. Grimond

asked the Chancellor of the Exchequer, in view of Her Majesty's Government's request to the nationalised industries to hold back price increases, what proposals he has to limit demand for the products of these industries.

Sir E. Boyle

Our financial and economic policies are designed to deal with excess demand in the economy as a whole. We will continue to take any measures necessary for that purpose.

Mr. Grimond

Is the Economic Secretary now telling us that in point of fact these appeals were quite unnecessary because none of the Boards intended to increase its prices anyway? If that is so, why has private industry made this approach to the Government that the Boards should not increase their prices? Are we to take it that these appeals were quite unnecessary and have had no economic effect because the prices would not have been raised, so there will be no excess demand?

Sir E. Boyle

If the hon. Member reads the speech of my right hon. Friend the Chancellor of the Exchequer in Tuesday's debate he will find a precise answer. There is room for appeals and restraint and it is also essential to back my right hon. Friend's attempt to remove the excess pressure of demand.

Mr. Jay

Can the Economic Secretary explain what the Prime Minister could not explain last week—why it helps the national economy and the nationalised industries to keep down coal and rail charges, for instance, but the Government still push up the prices of bread and milk and rents?

Sir E. Boyle

I think the Prime Minister gave a very full answer to that question last week.