HC Deb 07 December 1954 vol 535 cc750-1
3. Mr. Dodds

asked the Chancellor of the Exchequer the purchasing value of the £ sterling at the latest convenient date compared with 20s. in October, 1951.

The Economic Secretary to the Treasury (Mr. Reginald Maudling)

The purchasing power of the £ sterling is estimated on the basis of the latest available figures to have been 18s. 8d. in October, 1954, compared with 20s. in October, 1951. This estimate is based on the price index of all consumer goods and services between 1951 and 1953. and the Interim Index of Retail Prices thereafter.

Mr. Dodds

Can the hon. Gentleman say whether he has any hope of reaching 20s. in the £ again, and, if so, will he make a prophecy of how many years it may be before that happens?

Mr. Maudling

I hesitate to make a prophecy, but I cannot help remembering that in the period of the Labour Government the £ fell from 20s. to 14s. 2d.

8. Mr. T. Reid

asked the Chancellor of the Exchequer the purchasing power in shillings of the £ sterling, assuming it to have been 20s. in 1914, in 1939, 1946 and at the end of 1954.

Mr. Maudling

Taking the internal purchasing power of the £ as 20s. in 1914, it is estimated that the corresponding figure for 1939 was 12s. 5d., for 1946 8s. 1d., and for October, 1954, 5s. 6d. This estimate is based on the cost-of-living index for the period between 1914 and 1938, the price index of all consumer goods and services for the period between 1938 and 1953, and the Interim Index of Retail Prices thereafter.

Mr. H. Hynd

Does this mean that the hole in the purse is definitely not going to be mended and that all the Government can promise is that it will not get bigger?

Mr. Maudling

So far as there is a hole in the purse, it was enormously contributed to by the Labour Party.

Mr. Peyton

Can my hon. Friend give the appropriate figure for 1951?

Mr. Maudling

Not without notice.

13. Mr. Grimond

asked the Chancellor of the Exchequer to what he attributes the decline in strength of the £ sterling.

16. Mr. Roy Jenkins

asked the Chancellor of the Exchequer whether he will make a statement about the current weakness in the exchange price of sterling.

Mr. Maudling

The external value of the £ is affected by an immense variety of factors, some of them seasonal in character. While it would be a mistake to exaggerate the size and significance of these movements, my right hon. Friend is keeping a continuous watch on this and other indicators of the strength of sterling.

Mr. Grimond

While I welcome the strength which the £ has shown in the last few days, can the Economic Secretary say whether the slight weakness was due to increasing inflation in this country?

Mr. Maudling

It is always our experience that at this time of the year the £ is under pressure by reason of heavy seasonal purchases, particularly of grain, tobacco and oil. This year the purchases may have been somewhat delayed, and, therefore, the seasonal weakness that we normally anticipate in the autumn has been rather later than we expected.

Mr. Jenkins

Does the hon. Gentleman think that the seasonal purchase of dollar commodities has been overwhelmingly the more important factor, or has there also been some movement of short-term funds away from this country?

Mr. Maudling

It is difficult to be certain in these matters, but my very strong impression, after having studied the evidence, is that there has been no capital movement at all. This is a seasonal movement. This view is supported by the considerable strength of forward sterling quotations.