The controls on income and expenditure have been introduced after talks between the government, the Trades Unions Council and the Confederation of British Industry failed to produce an anti-inflationary deal.

In a statement to the House of Commons, Prime Minister Edward Heath told MPs the government had decided to bring in laws enforcing price and pay controls.

In the period before legislation was passed there would be a freeze, effective immediately, on prices, wages, dividends and rents, Mr Heath said.

The freeze applies to prices and charges for goods and services provided by both the private and public sector.

The moratorium on pay rises will not apply to increases for extra output so should not affect piece workers.

It will also not prevent wage increases as a result of promotion.

Detractors

Critics of the government plan say it will fail to have the desired effect.

Labour MP Eric Heffer accused the government of rushing through an important law "without proper parliamentary debate and scrutiny".

The prime minister also has detractors within his own party.

After his statement Mr Heath was asked by one of his own MPs, Enoch Powell, whether he had taken leave of his senses.

The income and expenditure controls are part of a two-stage plan to tackle rampaging inflation which has been a problem all over Europe.

But Mr Heath told MPs he hoped a satisfactory voluntary agreement could be reached before the second stage is implemented.

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