Price Increases

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 10th May 1971.

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Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West 12:00 am, 10th May 1971

asked the Secretary of State for Trade and Industry how many requests for advice he has received from private companies who, in view of the Government's policy of controlling inflation, want to know whether they should increase their prices to the consumer because of increased operating costs; and what replies he has sent.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

There have been only a few informal requests. The firms concerned have been advised in the terms of the reply, which I gave my hon. Friend the Member for Cheltenham (Mr. Dodds-Parker) on 14th January.—[Vol. 809, c. 106.]

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

Does not this lack of requests by private firms, in co-operation with Government policy, show that they are unconcerned about controlling inflation, simply passing on price increases to the consumer without regard to the effect on the cost of living? Does it not also show that these firms are not concerned to absorb their cost increases by increased efficiency of operation?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Considering that last year the average level of wages rose by 14 per cent. while the average level of prices rose by 8 per cent., the facts speak directly contrary to the hon. Gentleman's allegation. Competition has had the effect of moderating price increases far more than they would otherwise have been.

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

Do the Government intend to do anything about prices other than leave them to competition?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

What is more, we intend to reinforce competition where it is lacking by working through the Monopolies Commission. As the hon. Gentleman knows, competition has always been the best way to control prices.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

asked the Secretary of State for Trade and Industry if, in view of increasing price rises, he will now consider fresh measures in order to reduce them; and if he will expedite their introduction.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Increasing price rises are the inevitable consequence of inflationary wage rises. It would therefore be more appropriate for the hon. Member to concentrate his energies upon ways of reducing inflationary pay settlements.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

Is the hon. Gentleman aware that it does him no credit to keep on uttering propositions which are universally known to be fallacious? The part which wage inflation plays in prices can easily be measured and it is generally known to be a minority part. Will he get down to answering the Question? Are not the Government personally, individually and totally responsible for most of the price increases?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I sometimes wonder whether the hon. Gentleman will ever learn anything. If the nation pays itself 14 per cent. more in total, does he expect that that will not go through in prices? Is he further aware that, in the first eight months of this Government, the rise in prices was the same as in the last eight months of the last Administration?

Photo of Mr Edmund Dell Mr Edmund Dell , Birkenhead

The hon. Gentleman said that he was reinforcing competition by using the Monopolies Commission. In what way? There has been only one reference of a monopoly so far in the ten months of this Government's life. What are the Government's decisions about competition policy, if they have come to any, and what specific proposals, if any, have been submitted to the C.B.I. and the T.U.C. and can be submitted to the House?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Discussions have been taking place about the reform of the Monopolies Commission. I must ask the right hon. Gentleman to wait a little longer.

Photo of Mr John Biffen Mr John Biffen , Oswestry

Is my hon. Friend aware that many people think that increases in prices and, indeed, increases in wages are the product of the rapidly inflated money supply from which this country has been suffering? Inasmuch as this has been contributed to by a substantial inflow of overseas funds, will my hon. Friend recommend to the Government that we should follow the excellent example of Germany and float the currency?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I am not responsible for the conduct of monetary policy and questions to do with parity. I would point out to my hon. Friend that within any given total of money it is perfectly possible for a redistribution of income to take place from one section of the community to another, and that is what is happening.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Is not the hon. Gentleman aware that he has absolutely no proof of his contention that the rise in unemployment is due to the increase in wage costs? Is not this the most fallacious argument? Is it not true that the hon. Gentleman and the rest of the Government have discovered one truth—that if a lie is repeated often enough, it will eventually get across to some people who will believe that lie in the same way that some people believed Nazi propaganda?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The hon. Gentleman must realise that it is perfectly possible for any firm or industry to price itself out of its market and thereby increase unemployment. Indeed, that is one of the factors now at work.