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Nationalised Industries (Subsidies)

Volume 722: debated on Tuesday 14 December 1965

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asked the Chancellor of the Exchequer what is the estimated total cost to the Exchequer of subsidies granted or promised to nationalised industries and other statutory bodies in lieu of price or fare increases or other charges to the consumer during the current financial year; and if he will indicate individually the value of all such subsidies.

London Transport has been promised a subsidy of £3·85 million. In addition, relief of part of the Coal Board's debt will cost the Exchequer about £600,000 this year in loss of interest.

Would the right hon. Gentleman agree that these subsidies are a way of encouraging inflation rather than discouraging it because, while they peg prices, they do not peg wages and they increase the amount of money available to purchase other goods and services?

Some parts of the hon. Gentleman's statement are clearly true, but in the Government's financial policy there must always be a balance between subsidy and charging people the economic price. That principle has been followed consistently by successive Governments.

Can my right hon. Friend say how the subsidy to London Transport conceivably fits in with the Government's policy of regional development, particularly in reference to development in areas like Scotland?

That illustrates my point, because in fact, as we have heard in relation to a previous Question, there is a limit beyond which fares cannot be increased at any one time without doing more harm than good. We may, therefore, be driven from time to time to the giving of a subsidy for the very best of economic and social reasons.

Is the right hon. Gentleman aware that if fare increases are imposed almost as an automatic annual measure, more and more people will be driven into bringing their cars into Central London, which is contrary to Government policy?

That is why I have always felt—and I hope that I have the support of the hon. Gentleman—that it is far better to try to keep prices and incomes stable than to have automatic increases of both unrelated to productivity each year.