HC Deb 18 December 1975 vol 902 cc1637-9
14. Mr. Walter Johnson

asked the Chancellor of the Exchequer if he will now slow down the phasing out of subsidies to the nationalised industries.

Mr. Dell

No, Sir. I still intend to phase out price restraint subsidies by the end of this financial year.

Mr. Johnson

Is not my right hon. Friend aware that the phasing out of subsidies to the nationalised industries, coupled with inflation, has forced up coal prices and gas and electricity charges so much that many of the lower-paid cannot afford to pay their bills? Is he aware that, as a result of increased transport charges and Post Office charges, there is now massive customer resistance in those areas? I ask my right hon. Friend to reconsider the matter.

Mr. Dell

I recognise that this is a difficult problem. It is a priority, especially in respect of the energy industries, to cease the subsidies. It is particularly wrong that we should be subsidising them now. The proper way to deal with this difficult problem is through the social security system. I draw my hon. Friend's attention to the recent improvements in retirement benefits, supplementary benefit rates and the discretionary extra heating allowance.

Mr. Hurd

Does the right hon. Gentleman agree that one of the difficulties the Government face is that on the whole employers in the nationalised industries and throughout the public sector have disregarded the Government's advice and treated the £6 as the minimum as well as the maximum? Will he confirm the figures that were given yesterday by my right hon. Friend the Member for Worcester (Mr. Walker), which suggested that these increases, as a result of a disregard of Government policy, have amounted to £2.1 billion this year?

Mr. Dell

I did not hear the right hon. Member for Worcester (Mr. Walker) give those figures. It is true that the £6 has been used as the increase almost entirely throughout both the public sector and the private sector, with a few exceptions in the private sector. That in no way detracts from the essential point that we need to phase out subsidies to the energy industries.

Mr. Wrigglesworth

Does my right hon. Friend agree that to continue these subsidies would be a regressive policy as it would subsidise the wealthier users of nationalised industry services? Does he also agree that to keep these subsidies going would compound losses in the nationalised industries by encouraging customers to use subsidised services, leading to greater and greater losses as the years go by?

Mr. Dell

There is a great deal in what my hon. Friend says. We have considered how far the problem may be resolved by reforms of tariff structures. There is no practical way of dealing with this problem except through the social security system.

Mr. Giles Shaw

Does the right hon. Gentleman agree that one of the problems consistently pointed out in the Price Commission's report has been the increase in costs within the nationalised industries, quite apart from pricing and subsidy policies? What will the Government do to ensure that costs within the nationalised industries are brought under stricter control?

Mr. Dell

That is part of the objective of the counter-inflation policy. We expect that the increase in nationalised industry prices next year will be substantially lower than the increase this year.

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