Inflation moves posing a puzzle

Quite who the Government hoped to keep happy with its inflation control proposals is a puzzle. The introduction of the artificial device of price controls to limit price rises in a restricted trade such as the sale of alcoholic drinks rather than the opening of the sector to genuine competition flies in the face of economic sense.

All right, so the Government has given a sop to those backing competition by having a commission on licence liberalisation report in three months rather than two years, but it cannot argue that it needed time to address the issue. It has already had plenty of time to digest a Competition Authority recommendation to take just the action it is now long-fingering.

The truth seems to be more that it is unwilling to face the political battle with the drinks trade which the introduction of genuine competition would involve. Price controls may make good headlines but the pub trade knows full well that, in the real world, they will be practically unenforceable, despite plans to beef up the office of the Director of Consumer Affairs. That is why there has been so little adverse response from the trade to the measure.

Plans to increase funding for child care development may please the unions in the context of partnership but are likely to do precious little to tackle inflation. And if the Government and its advisers are not au fait with the role of indirect taxation in curbing inflation this far into their term, it is time to call it quits.

Freezing public bodies' charges is all very well but it is also an artificial and temporary measure designed more to manipulate the consumer price index rather than address the structure of public service expenditure.