HC Deb 26 October 1971 vol 823 cc1455-7
12. Mr. Ashley

asked the Chancellor of the Exchequer what new steps he proposes to take to restrain price increases.

22. Mr. Douglas

asked the Chancellor of the Exchequer if he will make a statement on the effects of the Confederation of British Industry initiatives on prices on the current level of inflation.

Mr. Barber

The indications are that the measures taken in July—the taxation reductions and the C.B.I, initiative and the response of the nationalised industries—are succeeding in moderating the rise in prices.

Mr. Ashley

Has the right hon. Gentleman misunderstood the Question, which is not about the July proposals but about new proposals that he may have? Is he aware that the increase in prices is causing grave hardship to millions of people who are entitled to the strong measures which were promised by the Government 16 months ago? When shall we have these strong measures?

Mr. Barber

I appreciate the hon. Gentleman's point, but one of the principal reasons for cutting S.E.T. by half and for the very considerable cut in all the rates of purchase tax was to have a direct effect on prices. When these are coupled with the C.B.I, initiative and the response of the nationalised industries it is not surprising that, on the facts as we know them now, the effect on prices is beginning to show.

Mr. Douglas

While the right hon. Gentleman is basking in the reflected glory of the C.B.I. initiative on prices, will he concede that the C.B.I. has expressed grave concern about the regional problem of high unemployment and the fact that investment is not being stimulated, especially in the capital goods industries which are so very important to Scotland? What action does he propose to take along these lines?

Mr. Barber

I share the concern of the C.B.I, and of right hon. Members in all parts of the House about the problem that we face in the regions. As for basking in the reflected glory of the action of the C.B.I., I believe that the C.B.I. deserves great credit for its initiative, which has made a major contribution to moderating the rise in prices.

Mr. Ridsdale

Is my right hon. Friend aware that a great many people welcome the restraint on prices, especially those of the nationalised industries? Have we reached a plateau in terms of price increases? What are the latest figures? Can my right hon. Friend give any estimate of the position?

Mr. Barber

I cannot give the estimate for which my hon. Friend asks but the normal figures in the retail price index have been encouraging over each of the past two months. One cannot take a couple of months and assume that the trend will continue. Nevertheless, the figures are encouraging. I note what my hon. Friend says about the nationalised industries.

Mr. Arthur Lewis

For a long time the Government have been saying that one of the reasons for the steep rise in prices has been the high level of wage and salary increases. How does the right hon. Gentleman square that with the fact that this Government only recently have appointed a man at £13,000 a year to a part-time job while allowing him to keep 20 other directorships, when the job was formerly a full-time one? Does action of that sort help to persuade trade unionists not to ask for high wage increases? Perhaps the right hon. Gentleman will refer to yesterday's HANSARD for the details.

Mr. Barber

That is an entirely different question.

Mr. Joel Barnett

Does the right hon. Gentleman no longer believe in competition to hold prices down?

Mr. Barber

Yes, indeed I do. That is one of the reasons why, in the private sector, we did not take the kind of action which was taken by the previous Government when statutory controls were introduced. This was an initiative by industry itself, which it believed to be in its own interests.

23. Mr. John D. Grant

asked the Chancellor of the Exchequer what steps he has taken to analyse in detail the effect of the Confederation of British Industry's price restraint request.

Mr. Maurice Macmillan

The Government are expecting the results of the C.B.I. initiative to appear in the price indices in the normal way. Naturally we are keeping a careful watch on these indices.

Mr. Grant

As the Chancellor of the Exchequer has found that the C.B.I.'s Left-wing interventionist policies have proved worth while, will the hon. Gentleman go the whole hog and admit that the Government's previous view that only unfettered competition would combat price inflation effectively was totally misconceived?

Mr. Macmillan

Since I do not accept the hon. Member's premise I do not accept his conclusion. This initiative was taken by the C.B.I. because it thought that it was for its benefit and the benefit of industry, as well as for the benefit of the country. It is entirely consistent with the idea of keeping prices down through competition to which this Government still adhere.

Mr. Fell

But if my hon. Friend says that prices will be kept down through competition, can he give us an assurance that the nationalised industries will not come running to him in the near future asking for the whacking great losses which they say they will incur through keeping their prices down to 5 per cent. to be paid by the Government?

Mr. Macmillan

Where the nationalised industries have kept their prices down there may well be financial and other consequences with which the Government of the day, in their capacity as owner, will have to deal—just as shareholders and owners in private industry will have to deal with the problems created for them.