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1972: Pay and price freeze aims to curb inflation

The Conservative Government has frozen pay and prices in an attempt to halt spiralling inflation.

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.

In Context
Wages and prices had started to spiral out of control after the collapse of agreements between the previous Labour Government and the unions.

The Conservative Government's moratorium on price and wage increases passed into law as the Counter-Inflation bill.

The bill led to large-scale industrial unrest and eventually the fall of the government.

There were a series of strikes during 1973 but it was the miners' strike which caused the most damage to Mr Heath's administration.

It led to serious power shortages and forced the imposition of a three-day working week.

Widespread dissatisfaction at the state of the economy led to the Conservative Government being voted out at the 1974 general election.


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