From Financial Times 23/8/66.
'The part of the economic squeeze which looks like giving the government its earliest.trouble is the supposed freeze on prices. The impression has been allowed to grow that 2 prices freeze has been introduced 2s a quid pro quo of thewage freeze. But in fact there is no price freeze (Sic!). The section on prices in the July White Paper does not amount to anything approaching a universal standstill on prices; and unless the present misunderstandings are corrected the whole policy may run onto the rockse
It is quite true that the White Paper speaks of ‘a seneral standstill on prices and charges until the end of 1966'. But the qualifications -quite rishtly introduced- are so many, that most businessmen will be able to find a good reason for putting up their charges. The biggest gateway is the reference to Government action ‘such as increased taxation.! On the very day of the squeeze announcenent, indirect taxes, except on tobacco, were put up by 10% by the use of the Registor. The impact of the Selective E mployment Tax is still to be felt. This will be very pervasive and will give many retailers an excuse for putting up their prices. The machinery of the ‘early warning! applies primarily to manufacturers. No effective vetting 4 is possible for price changes in hundreds of thousands of shops in all parts of the country. ‘Government action' moreover has not been confined to taxes. Higher interest rates will provide a potent excuse in many casese There are other gateways too; ‘market increases’ in imported material prices, seasonal changes in supply, and increased costs of components which cannot be absorbede Many food items are excluded, although they will be kept under ‘constant watch' by the Ministry of Agriculture. There is, moreover, still confusion about the exact procedure for notifying Government departments of proposed price increases. For the time being, the CBI have agreed that manufacturers should seek ‘written confirmation! of price increases only up to the end of August. After that it hopes to revert to the early warning system on the basis of a wider list of articles still to be devised. The one thing that is certain is that many prices are now going up and the man in the street is beginning to think that a bargain is being cishonoured. The Governnent has itself to blame for a large part of the nisunderstanding for with so many exceptions and qualifications it was a mistake ever to have used the expression 'prices standstill’.