HC Deb 29 November 1966 vol 737 cc194-5
17. Mrs. Renée Short

asked the Chancellor of the Exchequer what assessment he has made of the rise in the cost of living which would follow Great Britain's entry into the Common Market.

Mr. Callaghan

Apart from the effect of higher food prices, which would increase the cost of living, I do not find it possible at this stage to make a meaningful forecast of the effect on the Retail Price Index.

Mrs. Short

Is my right hon. Friend aware that even the conservative estimate of the rise in the cost of food, which is not the only effect of Britain going into the Common Market, will have a very serious effect on the standards of living of all the lower-paid people in this country, not least the 15 per cent. who are below the poverty line? Does my right hon. Friend intend to see that all wages and salaries are raised to keep pace with the rise in the cost of living?

Mr. Callaghan

The effect on food prices is quite clear. Spread over a period, it will be equivalent to 2½ per cent. to 3½ per cent. My hon. Friend asked what would be the effect on the index. This will be affected under entry by the removal of duties on a wide range of non-agricultural goods. Over any transitional period, increased duties on these items for which the E.E.C. common external tariff is higher than that of the United Kingdom will relieve the Exchequer of the major part of the burden of supporting agriculture. I do not think that it is possible to give a reasonable forecast where we will end up at the end of the day in terms of an increase.

Sir H. Harrison

Is the right hon. Gentleman aware that his colleague the Minister of Agriculture is making many speeches, reported in the Press, about the great increase in the cost of food? It might, therefore, be reassuring if he could get out a statement if there was a decrease in other articles.

Mr. Callaghan

I hope that my answer will show that there are minuses as well as pluses in this forecast. My right hon. Friend the Minister of Agriculture is making a great many speeches to the satisfaction of his audiences, and especially the farming community.