HIS DOCUMENT I S THE PROPERTY OP H I S BRITANNIC M A J E S T Y ' S S E C R E T C P . (48) GOVERNMENT) COPY NO. 38 30th January, 1948. i CABINET . STATEMENT ON PERSONAL INCOMES. COSTS AND P R I C E S N o t e "by t h e L o r d President of the Council At t h e i r m e e t i n g on ' 2 9 t h J a n u a r y ( C M . ( 4 8 ) 8 t h C o n c l u s i o n s , M i n u t e 7 ) , t h e C a b i n e t i n v i t e d me t o e x a m i n e , i n c o n s u l t a t i o n w i t h t h e C h a n c e l l o r of t h e E x c h e q u e r and t h e M i n i s t e r of L a b o u r , t h e r e v i s e d d r a f t of t h e p r o p o s e d s t a t e m e n t on p e r s o n a l i n c o m e s , c o s t s a n d p r i c e s , copies o f w h i c h h a d "been h a n d e d t o t h e m d u r i n g t h e c o u r s e o f their discussion. We h a v e a g r e e d o n c e r t a i n m i n o r a m e n d m e n t s a n d t h e d r a f t , a s r e v i s e d , i s now c i r c u l a t e d f o r t h e a p p r o v a l of t h e C a b i n e t . H.M. Office of the Lord P r e s i d e n t 30th January, of 19U8. the Council, S.W. 1 . ANNEX DRAFT STATEMENT-ON PERSONAL INCOMES, AND P R I C E S 1. The its success necessary keep our vital the to t o buy the imports we n e e d to feed Our c o s t s of production and which and wages. going. industry These the total quantity of they in situation is different occupations. in "Statement Relations between 1914-7, w i t h Council, rise us in to of that "if 3. The the But danger the costs to the development is ever of our factor in people It is essential it it a balance of in averting therefore the a corresponding the Increase we the the duty danger. to situation. will the reduce the market. there should be personal in for need". accentuated by home of prices impossible already which that level Advisory inflationary be out January, therefore steps payments, on in imports part available increase, in the is and w i l l in affecting it it a dangerous the consequence may moke many to was p o i n t e d in on incomes incomes Joint all of salaries issued and and extent affecting and taken are relation personal for exports individual available and buy present goods least the profits, the National her of of at form prices, has volume without in production or total general of largely considerable and W o r k e r s " world to further sell production, 0 result his a between of of world as and Economic C o n s i d e r a t i o n s drive 1+. money Employers play achieve the A further Government prevent the on suffer everyone t o to in costs o u r way i n all pay endorsement relation pay We s h a l l the has relationship As r e g a r d s the to of goods. the depend turn volume moke depends ability industry 2. policy our importance affect economic upon amount the Government's COSTS the no incomes volume of production. Unless we s h a l l find ourselves owing to the rising rise prices 5* in personal incomes the amount the rate of interest purchase of the of in those danger from profits inflation The regards lower P.A.Y.E. tax this to has State the available paid to upon principal 7. sod conclusive to if incomes are be away b y increased Experience run, personal so the holders the lower by t h e of them in a amount greater checking incomes the derived of certain applied introduction indirect that of all income against the as of taxation, though continuance commodities, their to any swallowed has inflation personal evade personal long the the shareholders has been countered by cases of no b e n e f i t and influence incomes been is prices giving for profits. increase s:; a s 8. reduce formerly personal curtail issued will course taxation Similarly securities of continuously taken of to spending. respect these measures be obviously in of notably foodstuffs. But themselves task direct profits assistance earned the for high of the tendency "be r e f l e c t e d are extent in export taken by the restraining and by subsidies our also who w e r e though in scale some will industries those rents same this fulfil h a v e "been These measures 6. check market. nationalised investments, to and upon d i s t r i b u t e d undertakings, of to which home annually security. unable steps on prepared costs on t h e Already distributed we a r e incomes cannot.in are corrective influence. one increases up b y if the to rise It in rising prices or have in race between to taxation. shown that, the incomes, prices will conditions become progressively personal incomes classes.. allowed but always win in the worse particularly rising for for 9. It dangers that is and e v i l s take place 10. relationships which hove bear to historiol needs of development income must, better to income levels labour to in for the conform to must those some In regard of incomes relevance another economic have to of the the be such as to of today old it is cases still do, by urgent and with relationships survival, be of altered the Relative encourage where they determined interest. industries personal world our national conditions the very the be occupations, by these of customary but difficulties movements different longer past, the economic or in of incomes. different changed sake the present-day which must no to personal traditional relation t h e moment. present as one any c o n s i d e r a t i o n particular personal The in scale century developed between to general last necessities. this not, the the essential inflation have no n e c e s s a r y incomes our of in Over considerations and therefore t h e movement most tempt needed, it in of and a should contrary direction. 11. feel In bound following to of ( a ) circumstances take general deliberations amount the and personal It is the actions possible to incomes to according determined. nor to the directly with regulate what has a field free contract of the income by t a x a t i o n . and scale would be whose the the assess This those for Government some the source. the to out settlement desirable than Government all that into organisations. to the setting whatever Government of of a guide otherwise w o u l d mean itself as interfere individuals forced from above step contribute incomes, neither further be exceptional considerations Government of detailed To would all on i n c u r s i o n between been be personal which would hitherto go have by the regarded individuals to and as In the view of the there should be terms of it of to take regord to place interest. conditions by constitute system of to grave assumption that be the In and present individual which Unless and for any so drive can and to a up prices, and substantial of benefits, increase t h e money cost so their make it almost and there will goods inflationary of our and by b l a c k impossible in affect social to is of make more increase recipients highly principle. increase adversely soleability too increase on its and home m a r k e t , only of agreements goods cannot to the this an but for upon more Such lead and system stress to and o t h e r pressure the cannot the the salaries employers children reduce of general collective general have to rest all incomes. inevitably a n d may w e l l attach for public justification and u n t i l production related would by they available of of Government money costs available it loyally justification raise terms agreed stability of time with the the will wages and t h e conditions, are in to and whether this is salary from the and present the the importance services no the observed workers, to The v a l u e bargaining and employers, main bargaining opposed concerns, increases at will as the the o r d e r l y manner bargaining, maintenance wage that to One of bargaining, inflation. collective an danger collective unjustifiable adherence Departure private competitive serious in essential collective that individual or a of general individual authorities is agreements. ensure the it strictest a system tends movements due the collective advantages that Government effect. production, pensioners, services exports market operate the and controls of ( a ) It necessary supplies does all in as justified example v t o clear a that it only be claim of If there the 12. is incomes in one of in should be of and observed justification profits, salaries order or depart in In the from to be in avoid present other the existing must them. asked clearly it is attract that incomes must as on the between of understood remuneration do living a result as standard principles of that any rise in sources and that rises for agreed and necessity free upon in will it in itself observe directly if, increased in on i n c r e a s e before is and engaged firmly Government that, for negotiation those result which the which of for all principles The S t a t e cost above. upon which might circumstances and however, the time like methods in interest and not decent undesirable press these a above cases mentioned keep considerations, the only be any n e g o t i a t i o n s these industry incomes provide the or should to to at rent, decisions incomes national personal rise personal to for industries, a marked those "be would view, does mean, increase stabilise wages w i l l from negotiations these in be will the it the undermanned It occupations Government and wish on in of relativity contract 1Jd. essential an i n c r e a s e an point to salaries a farmer exceptional principles is or maintaining with to wages merits interference not in reconsideration. In personal T h e r e may w e l l would need or 13* today. living no the right national level scarcity would he inadequate from wages continuing became It there the its different ( e ) for of a national labour. considered basis stand particular the necessary each it increases from where man u p that they which view manpower, follow incomes cases be not and in have in them, and these concerned. decided notwithstanding in any class of employment, authority, been the future whether there can practice be charges taken action. its in 15* or no-one take can Each operator; the dislocation short, place obtain agreement by a serious and accompanied if rest the by people prolonged financial to has act low us together in our standard costs in considered upon endure of money market the either sound economic on available, accompanies are in above. individual the block to will prices, enunciated except now b e f o r e have requiring to be inevitably set-back a persistent matters have community public controlled goods b e i n g made benefit a resulting increases more under w h a t e v e r may principles which alternatives the the or settling general real of in the without any that case will to and h a r d s h i p the past, other relation industry presumption, account To sum u p , incomes In the into Government private be no in or margins merits in a inflation. general lines or reconstruction living.