Cost of Living

Part of Orders of the Day — Civil Estimates, 1964–65 – in the House of Commons at 12:00 am on 20 July 1964.

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Photo of Mr James Prior Mr James Prior , Lowestoft 12:00, 20 July 1964

I could quote figures to the hon. Gentleman, if he wants them, to show that in the last 12 years average earnings have risen by 98 per cent. at a time when the cost of living has risen by 48½ per cent., which plainly shows that the average man is 33 per cent. better off in his earnings now than he was in 1951. But that is not the real argument before us today.

If we accept that Germany has had the best record of any country in the last few years, we must look at Germany and see what we can learn from her in order to improve our own position. There are two fundamental factors. The first is that the Germans have recognised the dangers of inflation to a greater extent than we have. Secondly, they have shown a much greater desire to get the work done and to produce goods than we have. It may be that Germany felt the impact of losing the war more than we felt the impact of winning it, but the fact is that in the last ten years Germany has produced a record to which we cannot possibly fail to pay some attention. If, in the next few years, we are to keep our cost of living stable and also enjoy higher production, we must be prepared to show a greater sense of urgency in the way we conduct our affairs than we appear to be showing at the moment.

I was glad that my right hon. Friend paid tribute to our food industries and the way in which we have managed our agricultural support system in the last few years. The contribution to stability of prices made by British agriculture is too easily forgotten. In the last year, however, we have seen a sudden change in the pattern of world agricultural production. Within the last five months beef supplies from abroad have fallen by about 40,000 tons. Yet, despite that fall, we have paid a little more than we paid last year, when the total imports included the 40,000 tons. If our imports had not fallen by 40,000 tons this year, we would have paid about £10 million extra.

Beef prices have risen very substantially against us this year. We have paid £82 million more for food imports since January than we did last year. At the same time, however, our subsidy for beef is 2s. 9d. a cwt. compared with 2s. 6d. a cwt. last year. My hon. Friend the Financial Secretary should be able to save a good deal again on agricultural subsidies.

The tendency for world prices of food to increase is a sound and good thing both for this country and the world in general. Over the last few years, we have not been paying the primary producers anything like enough. As a result, food production has not increased at the rate we want to see, particularly in this country, and we have been living off the backs of the agricultural producers of the world. Thus, the rise in food prices is a good thing for us all.

The policy of the free market, which the Government have adopted, must be the right policy. The Leader of the Opposition said a few weeks ago, when the beef crisis was at its height, that he wanted a return to long-term agreements with the Commonwealth and other arrangements with foreign countries. If we had such agreements with the Commonwealth, the chances are that we should have to pay a pretty high price for them because no Commonwealth country would agree to send its food at anything other than a good price. Similarly, if we had had a long-term agreement with the Argentine, we could not in any case have avoided the problems of the drought.

Last time we had these long-term agreements and commodity agreements was between 1948 and 1952, when food prices rose more sharply than at any other period since the war—about 10 per cent. per annum. I am not in favour of a return to long-term agreements. If our importers had thought that such agreements were in their interest, they would have taken them out before now. There is nothing to stop them doing so.