§ 38. Sir C. Osborne
asked the Chancellor of the Exchequer if he is aware that the recent increases in price of bread, beer and tobacco are evidence of growing inflationary pressures, and may themselves encourage further wage demands and thus endanger the stability of sterling; what new steps he is taking to prevent further increases in Government expenditure and to eliminate inflation; and if he will make a statement.
§ Mr. Selwyn Lloyd
Recent events, including those to which my hon. Friend has referred, have borne out the anxiety expressed in my Budget speech about the rising pressure on costs and prices. My Budget proposals as a whole were designed to restrain this pressure and the new powers in the Finance Bill if granted will enable me to go further if the need arises. The level of Government expenditure has been a matter of continuing concern to me and the long-term review of which I spoke in my Budget speech is now well advanced. In the shorter term I shall make the maximum administrative economies possible. As regards 1170 incomes and prices, responsibility does not rest exclusively with the Government but is shared by bath sides of industry. In general I propose to proceed on the lines laid down in my Budget speech.
§ Sir C. Osborne
In view of the obvious strain on sterling which will come this autumn and the cross-pressure from further increases in wages and salaries, would my right hon. and learned Friend not try to get both sides of industry to made an appeal for restraint? [Laughter.] Sir Stafford Cripps would not have laughed at a question like that. In order to reinforce the pressure that I am sure he would like to bring on employers and the unions, would my right hon. and learned Friend start on Government expenditure and set a good example?
§ Mr. Lloyd
There are a number of points raised in my hon. Friend's speech. As for the comparison with Sir Stafford Cripps, there is one precedent which I am certain we shall not follow. As to the business of increasing pressures on sterling, it is not the immediate situation which is causing anxiety but the long-term trends, and it is the long-term trends that we have to get right. I have dealt with the point on Government expenditure in a previous Answer. As for a conference with both sides of industry, my hon. Friend has put forward that suggestion before, but I am perfectly certain that both sides are aware of the considerations put forward and that it is vital if we are to get the long-term trends right that we keep our costs on a competitive basis.
§ Mr. Lloyd
The right hon. Gentleman is quite wrong in suggesting that there have been cuts in Surtax. There has been no cut whatever. Nothing will have any consequence in that field until January, 1963. That is the time, and the right hon. Gentleman knows quite well that the reason for those cuts was to stop a disincentive to the effort and initiative which I believe are necessary to get us out of our present situation.