HC Deb 06 February 1962 vol 653 cc218-20
24. Mr. Driberg

asked the Chancellor of the Exchequer if, in view of official warnings that Great Britain's entry into the Common Market would lead to increases in the cost of living, he will give an assurance that he will not seek to extend the operation of the pay pause beyond the date of such entry.

Mr. Selwyn Lloyd

In view of the decision on the future of the pay pause announced last week, I do not think that this question now arises.

Mr. Driberg

Oh, yes it does. Would the Chancellor not agree that the 2 to 2½ per cent. mentioned in the White Paper—which has already been made nonsense of by Dr. Beeching's latest offer, inadequate though that is—is just an extension of the pay pause? Is it not wage restraint to limit increases to 2 or 2½ per cent. and is this not, therefore, simply another form of the pay pause? Can the right hon. and learned Gentleman guarantee that, if and when we go into the Common Market, the cost of living will not go up by more than 2½ per cent.?

Mr. Lloyd

The hon. Member's Question related to the pay pause and I gathered that he was referring to the first phase. As to future phases, I should have thought it perfectly obvious that there must be restraint over personal incomes for a very long time.

Mr. Callaghan

Does the Chancellor not remember that in his White Paper he says that cost-of-living increases are not to be taken as a factor in the future determination of wage claims? Therefore, can he tell us, if there is a rise in food prices on going into the Common Market, whether compensation will or will not be given to wage earners for that increase?

Mr. Lloyd

I was dealing in the White Paper with 1962. What is perfectly clear is that if people pay themselves more than is being currently earned there will be inflation and a diminution of the real value of their wages.

Mr. Gresham Cooke

Will my right hon. and learned Friend agree that if and when we go into the Common Market and have to meet the full blast of competition from Germany, France and Italy, to mention only three countries, that will be just the very time to keep a restraining hand on wages and incomes?

Mr. Callaghan

Are we to take it from the way that the Chancellor has evaded the questions put to him that the standard of living of people in this country is to be worsened if there is an increase in food prices on our going into the Common Market?

Mr. Lloyd

The hon. Member has no business to draw any such deduction. What I am saying is that it is the real value of wages that matters, their purchasing power, and if increases go on at the kind of rate at which they have been going on the real value of wages diminishes.

Mr. Gaitskell

Yes, but does not the right hon. and learned Gentleman agree that the White Paper states specifically that a rise in the cost of living in future, during the so-called interim period, is not to be taken as a reason for an increase in wages? Does it not follow, therefore, that if there is a rise in the cost of living and no increase in wages, the workers concerned will suffer a reduction in their living standards? Is this what the Chancellor means?

Mr. Lloyd

I am determined, for my part, to try to break the vicious circle, because if increases in nominal wages are given on the ground of increases in the cost of living, the value of those nominal wages will decrease. We must have increases in personal incomes measuring up to increases of output in order to get stability.