Price Stabilisation (Wages).

Oral Answers to Questions — National Finance. – in the House of Commons on 2nd July 1942.

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Photo of Hon. John Stourton Hon. John Stourton , Salford South

asked the Chancellor of the Exchequer whether he is aware of the persistent demands for wage increases in war industries, although the cost of living has not risen during the past six months; that such demands once conceded would imperil the national war effort, produce uncontrolled inflation entailing hardship in general, and, in particular, to old age and widow pensioners or those deriving fixed moneys from invested funds; and, as such demands are contrary to the Government's policy of price stabilisation, will he institute a policy of controlled wages on comparable lines with the existing limitation of profits from industrial enterprise, thus stabilising prices on a permanent basis?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

The Government are fully alive to the possible dangers resulting from any departure from the policy stated in the White Paper of July, 1941, on price stabilisation and industrial policy. That policy remains unchanged.

Photo of Hon. John Stourton Hon. John Stourton , Salford South

Is my right hon. Friend aware that a declared wages policy by the Government is long overdue, and that, if wages continue to rise, the policy of price stabilisation will have to be abandoned with disastrous consequences?

Photo of Major Abraham Lyons Major Abraham Lyons , Leicester East

Does the Chancellor seriously suggest that he has stabilisation to-day rather than inflation?

Photo of Sir Henry Studholme Sir Henry Studholme , Tavistock

As prices and profits are controlled, is there any reason why wages should not also be controlled?

Photo of Sir Patrick Hannon Sir Patrick Hannon , Birmingham Moseley

asked the Chancellor of the Exchequer whether the recent increase in wages to the coalminers and the decision to pass on the increase to the consumer affects the Government's stabilisation policy; what will be the increase in the price of coal; and what steps the Government propose to take on this account in relation to the industrial and domestic users?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

It is part of the Government's policy to rely for the settlement of wages on the machinery of industry for collective negotiation and arbitration. The White Paper issued last year contemplated that there might be sectional increases of wages in circumstances such as the Board of Investigation have found to exist in the coal-mining industry. The increase in wages costs will require an average increase of 2s. 6d. per ton in the price of coal. Certain other previous increases in costs which have to be covered will bring the total increase up to 3s. There will be an increase in the cost of manufacture of gas and electricity and in so far as an increase in these prices may be needed, the cost of living will be slightly affected. The combined effect of these factors on the cost of living index number is estimated at about one point.

As regards industrial coal, the Government will be prepared to discuss with industries which are large users of coal, the effect of this increase in relation to their other costs and the prices of their commodities or services, with a view to taking the measures necessary to deal with it. The Government is now by far the largest consumer, and it is not anticipated that the indirect effect on the cost of living of any increases in price that may be called for will be substantial. The Government will continue their policy of controlling the cost of living as stated in my recent Budget Speech, and in particular will effect such reductions in the retail price of other commodities which enter into that cost as may be necessary to compensate for the increase in domestic coal prices.

Photo of Sir Patrick Hannon Sir Patrick Hannon , Birmingham Moseley

Will my right hon. Friend answer the last part of the Question, as to what steps the Government propose to take in relation to industrial and domestic users?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

Industries which consider that an increase in the price of their products is required will, no doubt, approach the Department with whom they customarily deal; and, as I said in my answer, the Government will continue the policy of controlling the cost of living.

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Seaham

Is this increase in the price of coal likely to lead to an increase in electricity and gas charges, and will the Government consider subsidising to some extent, on the existing subsidy basis for other commodities, some part of the extra cost involved? Will he take care to make it clear that, if there is an increase in the price of coal and a subsequent increase in the cost of electricity and gas, the miners will not be held to blame?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

I will not answer the latter part of the question. As far as the first part of the question is concerned, I have already stated in my reply that it does not appear that the addition will be a substantial one, and that the Government are prepared to discuss with industries what will be the effect, and see how best to deal with it.

Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Seaham

Does my right hon. Friend appreciate, when he talked of an increase in the cost of living index figure of one point, that that is an average increase, and that some persons in the country, such as Service men's dependants, old age pensioners and the like, will be more seriously affected?