§ 27. Mr. Jayasked the Chancellor of the Exchequer to what causes he attributes the rise of 6.4 points in the cost-of living index between April, 1961, and April, 1962.
§ Mr. Selwyn Lloyd2.2 points are due to the current shortage of potatoes and other seasonal factors affecting the price of foodstuffs. 0.6 of a point is due to increases in rents and rates. The remaining increase of 3.6 points, including 1.2 points on account of indirect taxation, is essentially the consequence, direct or indirect, of personal incomes rising faster than national production.
§ Mr. JayAs the Chancellor keeps telling us that the object of his pay pause policy is to stabilise the value of 1148 money and prevent prices from rising, is it not remarkable that in the year of the pay pause we have had the fastest rise in the cost of living for many years?
§ Mr. LloydThe reason for this increase has been the prior increase of incomes at a higher rate than national production. I very much hope that later in the year we shall see the effects of the pay pause.
§ Mr. RidsdaleCan my right hon. and learned Friend say how many points have been attributable to the increase in the price of electricity and coal, the increase in the price of gas and the increase in the price of rail fares?
§ Mr. S. SilvermanWill the right hon. and learned Gentleman explain how he can possibly hope to maintain effective control over the rise in wages if he makes no attempt whatever to control the rise in prices?
§ Mr. LloydThat is one of the troubles about inflation. In order to bring it under control one has to take certain steps, as we had to do last July, which have the effect of increasing the cost of living. There are some interesting figures to be given by my hon. Friend the Finacial Secretary in answer to a later Question about the extent to which personal incomes have increased much more than the cost of living. They have also increased more than production, and that is the reason for the present position.
§ Mr. JayDid not the Chancellor admit in his first Answer that part of the rise is due to increases in indirect taxation for which he is responsible?
§ Mr. LloydI should like the right hon. Gentleman to realise that in order to stop an inflationary situation one has to take that kind of action which may involve direct or indirect taxation.
§ Mr. JayDoes not the Chancellor understand that if he had made increases in direct taxation instead he would have curtailed spending without raising prices?
§ Mr. LloydI do not think that such increases would have taken place in 1149 time. Regarding Income Tax, I had to take immediate action indirectly in order to deal with the demand at the time.