WILSON TACKLES U.K. £ CRISIS

Press, Volume CVI, Issue 31118, 22 July 1966, Page 11

WILSON TACKLES U.K. £ CRISIS

(N.Z.P.A. Reuter —Copyright)

LONDON, July 21.

Mr Wilson today watched for signs of foreign confidence in his bid to end Britain’s financial crisis by tough austerity cuts that provoked the nearresignation of his deputy, Mr George Brown.

The 51-year-old economic affairs Minister disclosed in a midnight statement that Mr Wilson persuaded him to withdraw his resignation for the sake of party unity and in the nation’s best interests.

Mr Brown, chief architect of the plans for economic expansion now jeopardised by the Prime Minister’s crash

programme, said: “I want to make Britain strong in every respect, to a point where we can resume our growth and expansion successfully.”

Mr Brown’s decision means he has agreed to support Mr Wilson’s economy cuts, which are aimed at strengthening the £ and increasing British exports.

The new austerity moves; include a six-month voluntary freeze on wages, prices, and dividends, new duties | and taxes on a wide range of goods and a £lOO million reduction in the Government’s overseas military and civil spending. In spite of his deputy’s change of heart, Mr Wilson still faces tough opposition to his credit squeeze from the trade union leader Mr Frank Cousins, who resigned as technology Minister only 18 days ago. Mr Cousins, flatly opposed to any form of wage and prices freeze, told reporters ■that his 1,500,000-strong ! Transport and General I Workers’ Union would not ! co-operate over a halt on rises because the Gov[ernment had failed to take i steps to increase productivity.

i The Prime Minister has

hinted that he will toughen wage restraint legislation now on its way through Parliament if the voluntary freeze does not work.

The Left-winger, Mr Michael Foot has already given the Government a blunt warning that he and his 40 or so supporters are dissatisfied with the relatively low level of overseas defence cuts, particularly East of Suez. He also made plain that Left-wing critics would not accept increased unemployment, which the new meaisures are expected to boost to nearly half a million from ■the present figure of 250,000. | Mr Edward Heath’s Conservatives have already demanded a two-day debate on the crisis measures, and have tabled a motion strongly critical of Mr Wilson’s handling of the economic situation. MAIN MEASURES The major measures in the British Government’s new austerity programme are:— 1. A demand for a six-month wage and prices standstill, followed by a further six months of severe restrictions. Companies must hold down dividends during the 12 months. New wage demands should not be implemented during the rest of the year. Present commitments should be deferred for six months.

2. Hire-purchase regulations to be tightened for cars, furniture and domestic appliances. 3. A 10 per cent surcharge on present duties on beer, wines, spirits and petrol. 4. A basic cut in the annual holiday travel allowance to countries outside the sterling area from November 1 next.

5. A reduction in public investment by £l5O million —but this will not affect housing, schools or hospital buildings.

6. A cut of £95 million in nationalised industries’ spending during 1967-68.

7. An increase In postal charges for inland parcel rates, and for letters, cards and printed papers sent overseas.

8. Reduction of military expenditure and economic aid by £lOO million elsewhere than in West Germany.

9. The Government might have to propose very sub- . stantial cuts in British forces in West Germany. These now total about 59,000 and the foreign exchange costs of maintaining them there are running at about £9O million a year.

TREASURY ESTIMATES According to Treasury figures supplied this evening the 10 per cent surcharge will add Id to a pint of beer (2s 4d to 2s sd), 3s 6d to a bottle of whisky and 4d to a bottle of wine.

Petrol will increase by almost 4d a gallon (5s 5d to 5s 9d top grade). The United States Treasury welcomed the British Government’s measures. The Treasury said:

“The actions announced are strong and far-reaching. They go further than any measures taken over the last few years. “They strike at the core of the internal inflationary pressures in the United Kingdom and should effectively promote the objectives of sterling stability and the restoration of balance-of-payments equilibrium.” U.S. VIEW The United States has expressed an interest that Britain maintain forces abroad —in Europe and the Far East —as close as possible to their present levels. The announcement by Mr Wilson left open this question, but British officials said the actual decisions on force levels would emerge in the coming weeks.