CAB129-52 — Page 106

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Printed for the Cabinet. June 1952

CONFIDENTIAL

C. (52) 188

CABINET OFFICE

RECORD COPY

10th June, 1952

CABINET

Copy No.

68

FOOD SUBSIDIES: MILK PRICES

MEMORANDUM BY THE MINISTER OF FOOD

In his Budget Speech the Chancellor of the Exchequer announced that a seasonal increase of Id. per quart in the retail price of milk would be made later in the year as one of the measures necessary to reduce the rate of the food subsidies to £250 million per annum.

2. The appropriate time to make this increase would be at the beginning of July when supply falls off markedly owing to seasonal influences, and I therefore propose to announce an increase in the price of liquid milk of 1d. a quart to operate from 1st July. The increase will probably have to continue in force for the remainder of the present financial year.

3. The increase will apply to all types of milk bought by the general public. It will make the price of raw and pasteurised ordinary milk 64d. per pint, and will increase the All Items Cost of Living Index by half a point. The prices of welfare and school milk will not be increased.

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4. I cannot say what the effect will be upon consumption, because this must depend largely upon whether consumers elect to spend a little more on milk and less on other things. The last two price increases of 1d. a quart each on 1st July, 1951, and 1st December, 1951, have had practically no effect upon total consump- tion, although it has fallen very slightly in households with several children. think, however, that this further increase might result in some reduction in total consumption. If it fell by as much as 3 per cent. the net subsidy saving resulting from my proposal would amount to £132 million. At present prices, after taking into account the increase granted to producers at the recent Farm Price Review, the milk subsidy for the current financial year, including expenditure on milk under the Welfare Schemes, is estimated at £93 million.

5. While the main purpose of the increase is to save subsidy, any fall in consumption which might result would incidentally ease the pressure upon the liquid milk supply in the autumn, when there will be a seasonal fall in the quantity available.

Ministry of Food, S.W.1,

10th June, 1952.

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THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

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