HC Deb 12 November 1974 vol 881 c268

I turn now to the public sector of industry. In my first Budget speech I referred to price increases by the nationalised industries which were expected to cut back to a more acceptable level the massive bill for Government subsidies which we inherited. In the event, our expectations have been only partly fulfilled: revenue support for the nationalised industries as a whole is now running at over £1,000 million a year, as I said just now.

These subsidies are of two sorts. First, there is help for continuing expenditure which is necessary for primarily social reasons—mainly, but not exclusively, in support of the railways. The remainder is compensation for price restraint. It is the escalation in this latter type of subsidy which we set out to reverse and, since our initial attempt has not fully achieved its purpose, we must continue a sustained assault on the problem until it has finally disappeared. In particular, as my predecessor fully recognised, to provide large subsidies for the prices of energy runs completely counter to our national objectives on energy conservation and energy policy generally.

On the other hand, experience shows that, after these prices have been held far below their true cost for a period of several years, it is impossible to achieve a realistic level all at once. But I have set it as my objective to phase out these subsidies completely as fast as possible. I cannot now anticipate specific measures which will be needed. These will depend on future movements of labour and material costs and be in large part for the industries themselves, subject of course to the jurisdiction of the Price Commission and the Ministers concerned. It will be painful and disagreeable to carry this policy through, even step by step, but I believe that the future health and efficiency of the public sector depends on our success.