HC Deb 26 March 1974 vol 871 cc297-8

As the House knows, my right hon. Friends have felt for some time that in the current situation the most immediate and effective way of helping the family budget is to hold down and even, if possible, to reduce the prices of essential foods, a field where the previous Government declined to apply controls and where prices have risen twice as fast as the cost of living as a whole. The action on which we have decided includes a selective programme of price control in conjunction with Exchequer subsidies. At present, apart from school meal charges and the EEC scheme under which butter is subsidised on a limited scale, the only such subsidy is for milk. The provision already allocated for this for 1974–75 by my predecessor was £50 million which, however, is sufficient to maintain the existing rate of subsidy for only a matter of months.

We must now extend these arrangements in the way best calculated to use the sums which can be made available. I believe that in the current year it would be right to spend about £500 million extra on food subsidies on top of the limited existing provision I have already men- tioned. My right hon. Friend the Secretary of State for Prices and Consumer Protection will therefore seek the additional powers appropriate for carrying out this selective programme. As she has already indicated, arrangements for bread are already being worked out and, of course, subsidies for butter and milk will continue to form part of the programme. In fact, a measure will be put before the House which will reduce the retail price of a pint of milk by 1p below its present level at a stroke. Further measures affecting particular food items will be decided upon within the framework of this programme as the situation requires.

The effect of this programme, including the whole of the milk subsidy, will be to reduce the rise in the retail price index this year by something like 1½ per cent. and the rise in food prices by roughly 6 per cent. In my opinion, food subsidies on this scale must be a pre-condition of any voluntary agreement on incomes. I hope that the House as a whole will agree that nothing less will suffice to give ordinary families the help they need to cope with the alarming increase in their cost of living. Together with our efforts to alter the impact of the common agricultural policy on British food prices, they represent a substantial contribution by Government policy to reducing the impact of inflation at what is perhaps its most sensitive point.

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