HC Deb 14 December 1965 vol 722 cc1065-7
17. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer what is the estimated total cost to the Exchequer of subsidies granted or promised to nationalised industries and other statutory bodies in lieu of price or fare increases or other charges to the consumer during the current financial year; and if he will indicate individually the value of all such subsidies.

Mr. Callaghan

London Transport has been promised a subsidy of £3.85 million. In addition, relief of part of the Coal Board's debt will cost the Exchequer about £600,000 this year in loss of interest.

Mr. Bruce-Gardyne

Would the right hon. Gentleman agree that these subsidies are a way of encouraging inflation rather than discouraging it because, while they peg prices, they do not peg wages and they increase the amount of money available to purchase other goods and services?

Mr. Callaghan

Some parts of the hon. Gentleman's statement are clearly true, but in the Government's financial policy there must always be a balance between subsidy and charging people the economic price. That principle has been followed consistently by successive Governments.

Mr. William Hamilton

Can my right hon. Friend say how the subsidy to London Transport conceivably fits in with the Government's policy of regional development, particularly in reference to development in areas like Scotland?

Mr. Callaghan

That illustrates my point, because in fact, as we have heard in relation to a previous Question, there is a limit beyond which fares cannot be increased at any one time without doing more harm than good. We may, therefore, be driven from time to time to the giving of a subsidy for the very best of economic and social reasons.

Mr. Lubbock

Is the right hon. Gentleman aware that if fare increases are imposed almost as an automatic annual measure, more and more people will be driven into bringing their cars into Central London, which is contrary to Government policy?

Mr. Callaghan

That is why I have always felt—and I hope that I have the support of the hon. Gentleman—that it is far better to try to keep prices and incomes stable than to have automatic increases of both unrelated to productivity each year.