HC Deb 05 July 1973 vol 859 cc711-3
14. Mr. Knox

asked the Chancellor of the Exchequer what is his most recent estimate of the rate of growth.

Mr. Barber

I believe that the economy is continuing to grow in line with the Budget forecast, which was for an annual rate of 5 per cent. over the 18 months to the first half of 1974. The latest provisional national accounts show that this is, broadly, the rate that we have been achieving since the second half of 1971.

Mr. Knox

Is my right hon. Friend aware that industry, discounting some jeremiahs in the City, consider it important that the economy should continue to grow at a fast rate? Will he assure the House that if there is any sign of our rate of growth slackening off he will take the necessary measures to ensure that the rate continues at 5 per cent.?

Mr. Barber

I have no intention of anticipating any action either way at any time. We discussed this matter at yesterday's meeting of the National Economic Development Council. I can assure my hon. Friend that the council took the view—that is, both sides of industry—that it was desirable that we should continue with the growth rate that we are now achieving.

Mr. Healey

Does the right hon. Gentleman accept the estimate given by the NEDO study group, which was published in this morning's papers—namely, that it will not be possible to maintain a growth rate of even 3½ per cent. to 4 per cent. in the longer run unless action is taken quickly to remove certain bottlenecks?

Mr. Barber

At yesterday's discussion with the NEDC it was the unanimous view of both sides—that is, the trade union movement as well as employers' organisations—that although some constraints and bottlenecks are now appearing in a number of industries in some regions, they are not widespread.

Mr. Ridley

Does my right hon. Friend agree that if it were decided to introduce food subsidies it would be necessary to increase taxation to pay for them? Further, does he accept that that might well have an inhibiting effect on the future rate of growth?

Mr. Barber

We have never been doctrinaire about food subsidies or family allowances, which have recently been referred to in the Press. We have not hesitated to take direct action to keep down the prices of particular foodstuffs when that has been necessary. I refer to milk, potatoes, sugar and butter. I agree with my hon. Friend that the argument against massive, across-the-board food subsidies is overwhelming.

The cost would be enormous and the well-to-do would benefit as much as the less well-off. All would benefit alike. Such subsidies would have to be paid for by an increase in general taxation. Of that there can be no doubt

Another matter that has appeared in the Press recently which we have considered on a number of occasions, is the question of the level of family allowances. The Government's conclusion is that the family income supplement is a better means of helping those in need. That remains the Government's view.

Mr. Skinner

If food subsidies will look after the well-to-do, and if they will create extra demand, why is it that three months ago the right hon. Gentleman did exactly the same thing for the building societies?

Mr. Barber

That was a bridging operation, which was explained at the time. I believe that it had the general support of millions of people who are trying to buy their own homes. I am sad to note that the hon. Gentleman was not in favour of giving help over that particularly difficult time.