§ The impact that the three-day week has had on the nationalised industries means that we must take immediate action to reduce their deficits. We inherited a situation in which the estimate of revenue subsidies required by the nationalised industries in 1973–74 had risen far above the previously planned figures to a total of £800 million and, without large and early increases in their prices, this figure was bound to escalate to a much higher level 300 in 1974–75. Part of the £800 million consisted of subsidies paid to the railways and the coal industry for reasons of social and industrial policy, but a substantial further part resulted from applying to the public sector a more stringent policy of price restraint than to private industry, and the situation was made worse by the losses arising from the three-day week.
§ I cannot believe that the previous Government would not have taken action to deal with deficits on this appalling scale. Indeed, now that I have the figures, I must confess my surprise that the previous Chancellor did not take the opportunity to do so in his December measures. The subsequent two months of short-time working have produced a crisis situation.
§ When we came into office three weeks ago, we found on our desks the most urgent proposals from the nationalised industries for a round of price increases. The Ministers concerned immediately carried out appropriate consultations with the industries. We could not allow the existing state of affairs to go on. Costs had to be reflected more closely in prices. There is no other way of avoiding a heavy excess of demand for the products concerned, the uneconomic use of resources, the collapse of all financial disciplines, and an unacceptable level of support by the Government. At the same time, the situation had gone too far to be rectified completely by a single round of price increases. The balance which has been struck is therefore as follows.