HC Deb 16 November 1956 vol 560 cc1305-48

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Oakshott.]

12.50 p.m.

Mr. J. A. Sparks (Acton)

I am very glad to have this opportunity of raising the question of the rising cost of living. I do not propose to engage in an academic discussion of the problem but to relate it, as nearly as I can, to the ordinary every day effects it may have and is having on the ordinary people. The problem is, in the main, connected with the food supplies of the country, the provision of shelter for our people and the effect upon the pensioners.

I am pleased to be able to give the Economic Secretary to the Treasury the advantage of what, I think, will be his baptism of fire in his new office. I only regret that the benches are not more filled to witness the occasion.

I want, first, to draw the attention to a Question which my hon. Friend the Member for Erith and Crayford (Mr. Dodds) put to the Chancellor of the Exchequer on 30th January, 1956. He asked the Chancellor to say to what extent consumers' expenditure had increased over the year 1951, and how much of that increase was attributable to increased consumption and how much to the rise in prices. The Chancellor replied as follows: Because of seasonal variations in consumers' expenditure of food, comparisons can properly be made only for comparable periods. Estimates are not yet available of consumers' expenditure on food in the fourth quarter of 1955, but between the first nine months of 1951 and the first nine months of 1955, expenditure is estimated to have risen from £2,190 million to £3,058 million or by 40 per cent. The increase in the volume of consumption was rather more than 7 per cent. while prices rose about 30 per cent."—[OFFICIAL REPORT, 30th January, 1956; Vol. 548, c. 83.] I thought that those were very formidable figures and were, in fact, an admission by the Chancellor of the very steep rise in prices in the comparable periods of 1951 to 1955. I have been able to get the up-to-date figures with which to compare the full year of 1951 with 1955. The result is that consumers' expenditure upon food—and at this moment I am concerned with food—in 1951 was £2,987 million. But in 1955 that expenditure had risen by £1,149 million to a total of £4,136 million.

What proportion of this increase can be attributed to increased consumption and what proportion of it attributed to increased prices? If we take the Chancellor's figures, namely, that 7 per cent. may be attributable to increased consumption and 30 per cent. to increased food prices, we have the result that of the increased expenditure on food in 1955 compared with 1951, £209 million may be attributed to increased consumption. The remarkable fact to which I wish to draw the attention of the House is that the rise in food prices accounted for £896 million of consumers' expenditure.

We can summarise the extent of this inflation in food prices by the following figures. In 1953, increased prices accounted for £525 million of consumers' expenditure, in 1954 for £720 million and in 1955 for £896 million. The figures for 1956 are not yet available, but I should be very surprised if they did not reveal the fact that nearly £1,000 million of consumers' expenditure in 1956 may be directly attributable to the increases in prices as compared with the year 1951.

Let us look at consumers' expenditure on all items of goods and services, including food and other items which consumers wish to purchase. In 1955, consumers' expenditure on all items of goods and services was £12,783 million, this figure being based on the market prices of that year. If we revalue that expenditure at 1951 prices, we find that the value of those purchases in 1951 would have been £11,257 million; in other words, that the volume of inflation due to increased prices in 1955 accounted for £1,500 million of consumers' expenditure, or roughly 14 per cent. The 1956 figure when available will be very much greater than that, but we will leave it at the 1955 figure.

I have here a very interesting document. It has blue covers and the hon. and learned Gentleman will readily recognise it because on the front page there is a picture of a lion and the words: Britain Strong and Free. A Statement of Conservative and Unionist Policy. There is an introduction by the right hon. Member for Woodford (Sir W. Churchill), then Prime Minister. I have been reading this document, which was published for the General Election in October, 1951. On page 13 of the document a very important statement is made about the consequences of inflation. I have not time to read the whole of the paragraph headed "Strength through Enterprise"—it would take far too long—but may I read the following: Inflation also involves the unobserved removal by the Government of an important part of the wealth of all its citizens. This is the worst expedient yet. Many will recall the misery caused in the past by inflation in other countries. Only the profiteers and the speculators flourish. The pensioners, the disabled and the sick, and all those living on their savings or small incomes suffer most. Inflation is a weapon of Communism. Lenin himself once said that the best way to procure a revolution is to debauch a nation's currency. That very accurately reflects the trend of Government policy since 1951; they have been engaged in debauching the currency and their policies have stimulated inflation. Now on the Conservative benches we find the new Communists and the ardent disciples of Lenin. I think the pamphlet underlines the mistakes of the Government's policy which I have endeavoured to show.

I have been talking, in the main, about global figures and I want to come to earth somewhat and relate the effects of inflation and rising prices to some of the ordinary every-day things of life which all people, of whatever class or politics, must have in order to live. This gives in a very individual way some idea of the extent of the increase in the cost of living.

Let us compare the figures for October, 1951, with those for October, 1956, to show the remarkable rise in prices. There are four main cuts of bacon. In October, 1951, back bacon was 3s. 1d. a lb, and in October, 1956, it had risen to 4s. 10d. a lb. Gammon bacon was then 3s. 1d. and now varies from 4s. 10d. to 5s. 2d. a lb. Collar bacon was then 2s. 4d. a lb. and is now 3s. 8d. a lb. Streaky bacon was then 1s. 8d. to 2s. 1d. a lb. and now varies from 2s. 6d. to 3s. 6d. a lb. Milk was then 11d. a quart and is now 1s. 3d. a quart. Butter was then 2s. 6d. a lb. and is now from 3s. to 4s. 2d. a lb. Margarine was then 1s. 2d. a lb. and is now from 1s. 4d. to 2s. 3d. a lb. Cooking fats were then 1s. 4d. a lb. and are now from 1s. 6d. to 2s. 5d. a lb. Flour was then 4d. a lb. and is now from 7d. to 7½d. a lb. Cheese was then 1s. 2d. a lb. and is now 3s. 4d. to 3s. 10d. a lb. Granulated sugar was then 6d. a lb. and is now from 8½d to 9d. a lb.

Turning to carcase meat, topside boneless English meat was then 2s. 6d. a lb. and is now 4s. 4d. a lb. Imported frozen topside boneless meat was then 2s. 2d. a lb. and is now 3s. 4d. a lb. Rump steak—the good old English rump steak—which was then 3s. a lb. has risen to 6s. 8d. a lb. Imported frozen rump steak, then 2s. 8d., is now 6s. a lb. Coffee was then 4s. 10d. a lb. and is now 6s. 2d. a lb. A representative grade of tea was then 3s. 8d. a lb. and is now 6s. 4d. a lb.

I do not apologise for giving those individual items in detail, showing how much prices have risen since October, 1951, because these are the ordinary day-to-day commodities which people must buy in order to live. No one can do without them.

We might, next, attempt to measure the rise in the cost of living by the information given in the Interim Index of Retail Prices. In the October issue of the Digest of Statistics, Table 154, we find some very significant comparisons which give an indication of the rise in the cost of living in a somewhat different way from that which I have already given. I will take January, 1952, as equalling 100. Let us have a look at what the Interim Index of Retail Prices gives for retail prices on 17th January, 1956. I use those figures because later figures are not available.

In the food group, bread, flour, biscuits and cakes stood in the Index of Retail Prices at 121 compared with 100 in January, 1952. For meat, bacon, ham and fish the index figure had risen to 130; for milk, cheese and eggs to 111; for butter, margarine and cooking fats to 143; for vegetables and fruit to 132; for tea and sugar to 158: and for miscellaneous manufactured foods to 111. In each category in the food group which I have given the index figure has risen substantially since January, 1952.

The figure for rent and rates has risen to 117.9. I must be fair about this; I found one item in the Interim Index of Retail Prices for which prices had actually fallen a little. The index figure shows 98.7 for clothing against 100 in January, 1952. But for fuel and light the figure has risen to 127.6 and for general services to 119.1. Included in general services is the cost of travel; travel, by bus, by train or by any other method has risen to 127.

I have been trying to bring these figures for the cost-of-living index as up to date as possible. I now find that the latest figures which are available for September, 1956, show that the cost-of-living index figure has risen from 100 in January, 1952, to 1182 for all items in the index, an increase of 18.2 per cent., and that for food the index figure has risen to 126.4, or an increase of 26.4 per cent. over January, 1952. The interesting point is that import prices have been falling. They fell by 10 per cent. during this period. Therefore, it is very hard to see how the Government can justify these rising costs of living.

During the period of office of the Labour Government, from 1945 to 1951, when we had to struggle to regain our export trade, prices of imports rose by 120 per cent. The succeeding Government were very fortunate in reaping the advantage and benefit of the Labour Government's policy. Import prices began to fall. They have been falling steadily since, although the latest figure shows that there is a tendency for them to rise again somewhat. However, during this period of comparison import prices were down and the cost-of-living figure was well up, which shows the failure of the Government's economic policy to hold down the cost of living and rising prices.

What effect has the rising cost of living had upon the internal purchasing power of the £? On 23rd October, 1956, the Economic Secretary to the Treasury was asked by how much the internal purchasing power of the £ had fallen, taking October, 1951, as equal to 20s. He gave these remarkable figures of the fall. In September, 1952, the £ fell to 18s. 10d., in September, 1953, to 18s. 5d., in September, 1954, to 18s., in September, 1955, to 17s. 2d. and in September, 1956, to 16s. 5d. I wonder what that figure will be in 1957. If that downward trend continues, it will not be very long before the internal purchasing power of the £ will be one-half of what it was in October, 1951. These figures indicate that today 24s. 5d. is required to buy goods which were worth 20s. in October, 1951. This is the unobserved removal by the Government of an important part of the wealth of their citizens.

I want to make another quotation from the famous Conservative blue book, which has something to say upon this very point. On page 18 under the heading, "Financial Policy, Confidence in the £", it states: With the £ buying less and less each week the housewife finds the domestic budget can-not be balanced … Not only does the increased cost of living become intolerable, but thrift is discouraged and penalised. I would emphasise that thrift is discouraged and penalised, because it is a remarkable thing that at present—and most shop assistants will confirm it—people have got it into their heads that it is no use saving because the value of savings are constantly falling. Therefore, more and more people are spending their money as they get it.

Despite all the restrictions on hire purchase, there has not been much effect upon the amount of money that is being spent. In all parts of the country one hears people saying, "What is the use of saving when the value of our money is declining and shrinking? We may as well spend it now and get the advantage of it." That is a tragic thing, because we all know the dangers of inflation and, if we can, want to avoid the consequences. We can do that only by pursuing the right policy.

How does the rise in the cost of living affect the housing of our people? Most people want to buy a house of their own. If in 1951 a person borrowed £2,000 on a 20 years' mortgage he would have paid to the building society a rate of interest of 4 per cent. If he wanted to borrow the same sum today, the rate of interest is 6 per cent. The increase in the rate of interest charged by building societies has the effect of adding £530 to the cost of the house, on the basis of borrowing £2,000 over a period of 20 years. That is a very formidable sum to have added to the burden which a person must carry when he borrows money to buy a home, and in many cases the building societies are reducing advances on purchases to as low as 80 per cent. I am also told that some building societies will not advance money on loan except on new dwellings.

The young people of today, therefore, are facing growing problems, in the main arising from the reduction in the purchasing power of the £ and the general rise in the cost of living. It is becoming far more difficult today than it was at any time, at least since 1945, for young people to be able to have their own home and bring up their families in them.

What is the effect of the rise in the cost of living upon old-age pensioners and those who are living on small fixed incomes? In December, 1954, the Minister of Pensions and National Insurance introduced the then National Insurance Bill which was designed to increase the whole range of insurance benefits. In introducing that Measure the Minister said: … the Bill restores the value of insurance and industrial injuries benefits and pensions to the level that we all intended they should command when we settled what they should be in the two great Acts of 1946."—[OFFICIAL REPORT, 8th December, 1954; Vol. 535, c. 979.] The retirement pension was brought up to 40s. for the standard rate and 65s. a week for the married rate. The Minister claimed at that time that retirement pensions were brought up to the value that they were intended to have under the two Acts in 1946.

My complaint is that they did not remain very long at that value but immediately began to deteriorate. What has happened to the value of those pensions? We can measure that only by comparing the cost-of-living figures. When the Bill was introduced in December, 1954, the Cost Of Living All-Items Index stood at 107.7. That figure is based upon January, 1952, equalling 100, because the index system was revised in that year and a new basis was adopted. The year 1952 became the basic year, representing 100.

What was it, at the nearest convenient date? In September, 1956, the index figure had risen to 118.2, a rise of 10.5 per cent. in the cost-of-living index of all items. What was it on food, which is the most important expenditure for pensioners? At the time of the passing of the Bill, the food index stood at 110.2. In September, 1956, it had gone up to 126.4, a rise of 16.2 per cent. in the cost of food.

What effect have those rises had upon the purchasing power of the retirement pensions and what are the pensions worth today? The 40s. standard retirement pension is now worth only 36s. 10d. The worth of the married-rate retirement pension, 65s. a week, is only 59s. 3d. Retirement pensioners have therefore lost 3s. 2d. a week in purchasing power on the standard pension and 5s. 9d. per week on the married pension as a result of the decline in the purchasing power of the £ and the rise in the cost of living.

To restore these retirement pensions to the value intended in the 1946 Acts—if the Government are anxious so to do—they should be increased immediately by 3s. 6d. per week for the standard pension and 7s. 6d. per week for the married pension. There is a very considerable case to make out for urging the Government to bring in a new Bill as soon as possible to raise not only retirement pensions but other pensions and—

The Economic Secretary to the Treasury (Mr. Derek Walker-Smith)

On a point of order, Mr. Deputy-Speaker. I do not want to take any technical point, but may I ask if I would be in order in addressing myself to a matter of legislation?

Mr. Deputy-Speaker (Sir Charles MacAndrew)

The changes proposed by the hon. Member would require legislation. We cannot discuss legislation on the Motion for the Adjournment.

Mr. Sparks

I realise that, Sir, and what I said was intended to be only incidental to my main remarks. I think I clearly indicated that the value of the pensions is substantially reduced and that there is a case for increasing them.

The Government have abandoned nearly all the measures which existed when they came to office to protect the consumers against this process of the devaluation of the £ in terms of purchasing power. Price control has almost gone, food subsidies have almost gone, bulk purchase has gone and rent control is going. The Government seem to be leading the country back to the economics of the jungle, and it rapidly is becoming a case of "every man for himself and the devil take the hindmost." This has been a period of constant and continuous rise in prices, wages, salaries and profits.

I daresay that the Economic Secretary to the Treasury will tell us how wages and salaries have risen to meet the rising cost of living, but that is not the answer to the problem. It indicates the complete failure of the Government's policy. Surely if we are to develop our export trade it is not good that wages salaries prices and profits should go up year after year. The extent to which wages and salaries have had to go up to keep pace with the rising cost of living is the extent of the failure of the Government's economic policy. It indicates that their policy has failed to stabilise the cost of living and that the whole thing has got out of hand. These factors combine to raise export prices and to precipitate inflation. We all know the danger of the ever-growing spiral of inflation, and its consequences.

I will conclude my remarks by another quotation from the famous document which I have already mentioned, "Britain Strong and Free." It sums up in clearer language than I can command the condemnation of the Government's policy on stabilising prices and the cost of living. It says, on page 14: The cost of living. Whatever the national importance of other issues it is no exaggeration to say that the rising cost of living is the main day-to-day worry of ordinary men and women. A Government will be judged according to the effect of its programme upon rising costs and prices. I reiterate that, that a Government will be judged according to the effect of its programme on rising costs and prices. If Her Majesty's present Government are judged on that basis they stand completely condemned. Their policies have failed to halt the inflationary spiral that has been gathering momentum with ever-rapid revolution since the Government have been in power.

Where is this going to be halted? I hope the Economic Secretary to the Treasury will be able to tell us today how he is going to prevent this rapid fall in the internal purchasing power of the £. How is he to prevent a further surge forward of prices? How does he hope to retain for pensioners and others on fixed incomes the value of their pensions? How is it going to be done? Those are questions to which the country wants answers. They are questions that the people want to know something about. I trust that the Economic Secretary will be able to give some indication that the Government are now ready to pursue a policy which will bring this trend to a halt and stabilise the cost of living in the general interest of the country and the people.

1.30 p.m.

Mr. Robert Edwards (Bilston)

We have all had a very hectic few weeks and no one wants to prolong Parliamentary time unnecessarily. Nevertheless, this afternoon we are discussing an issue of vital importance to the poorer section of the community. Therefore, I make no apology for making a modest contribution to the debate so ably initiated by my hon. Friend the Member for Acton (Mr. Sparks).

My hon. Friend rightly stated that two General Elections have been fought on the problem of the rising cost of living, and the inflationary spiral. It is historically true that hon. Members opposite obtained hundreds of thousands of votes at those two Elections on the pledge that they would bring down the cost of living and halt the inflationary spiral. The noble Lord who once led their party organisation in the country stated in a broadcast that the high cost of living was the high cost of Socialism. After all the opportunities that the Government have had to deal with this problem it is now clear that the high cost of living today is due entirely to the economics of anarchy that have been applied by the Government.

This question was dealt with very effectively at the last Trades Union Congress, to whose deliberations I, as general secretary of my union, made a very modest contribution. I do not believe that I exaggerated when I likened the present position of the country to a broken-down railway train. The train has three coaches, first-class, second-class and third-class. In the first-class compartments are the big business men, the monopolists, the share-pushers, and those who live on large capital investment; in the second-class compartments are to be found the small businessmen, shopkeepers, and professional people; in the third-class compartments are to be found small shopkeepers, industrial workers, those who live on fixed incomes, and old-age pensioners.

That train has broken down and the order has gone round, "First-class passengers retain your seats; second-class passengers get out and walk; third-class passengers get out and push." That is what is happening today. Our trading system has broken down because there is no planning, there are no physical controls, there is no attempt in this free-for-all to exert any Governmental influence on prices.

Those in the third-class compartments, industrial workers, who, by their brains and industrial intelligence, make the greatest contribution to the production of wealth, old-age pensioners and people on fixed incomes, are being expected by the Government to shoulder the whole burden and responsibility of the failure of the Government to deal with the problems of our time.

I have no doubt that the Economic Secretary will give us a lot of figures and facts to prove that there has been very little movement in the Index of Retail Prices. He will give us a lot of figures to prove that it is stable, and, therefore, there is no basis in the arguments we apply in this House, in the trade union movement and in the country generally. We live in a paradox in which we produce more wealth—everybody is better off—until our wives start shopping. Then we realise what a paradox it is, a paradox which hits everybody.

Trade unionists have never been satisfied with the Index of Retail Prices, nor can they be satisfied, because it is based on averages. We cannot deal with the complex problem of consumption and human problems of maintaining a physical hold on life by relating that to averages. If five men were in a boat on the Thames outside Parliament, and the boat capsized, two who were strong swimmers might swim to the bank and be saved, two hang on to the upturned boat and keep their heads above water, and one be drowned. It would be said that on an average, all of them had been saved, but that would be no consolation to the relatives of the one who was drowned.

That is how averages work out. It is no consolation to lowly paid industrial workers earning less than £8 a week unless they work overtime and enjoy piecework rates, no consolation to old-age pensioners, the purchasing power of whose pensions has been reduced by 3s. in the last three years, no consolation to persons on fixed incomes, to know that the Index of Retail Prices has been stabilised. People who spend the highest percentage of income on food have had their living standards shattered. If we look down the income scale, we find that a family living on £10 a week spends, on the average, more than 50 per cent. of that income on food. When food prices are increasing, those people become the victims of the policy of the Government.

For these reasons, the trade unions, although they realise the necessity for holding the inflationary spiral, and although they know that every price increase automatically undermines real wages, are compelled by the Government's failure, constantly to make new wage demands, for that is the only way they can maintain the real wages of their members.

The Chancellor of the Exchequer recently stated that this country was the second wealthiest nation, after the United States, in the world. It is sad but symbolical that we find the following situation in the second wealthiest nation in the world after the believers in free enterprise and a free-for-all have been in control for five years.

We find that 70 per cent. of the families with three or more children pay no Income Tax because their incomes are so low. Eighty-five per cent. of the large families cannot be helped by any reduction in Income Tax; they can only be helped to maintain a decent hold on life by a reduction in the cost of living or by an increase in the value of family allowances.

In the second wealthiest country in the world we find that 2 million people are supported by the National Assistance Board. These people are the victims of the Government's failure to bring down or stabilise prices. We find that 1,600,000 people have to receive some payment from the Board to supplement their wages. One million old-age pensioners, who burnt out their lives building up the industry of the second wealthiest country in the world, have to be assisted each week by the Assistance Board.

Through no fault of their own, 200,000 hard-working people suffering from industrial accidents or sickness are compelled to live on the miserable allowances provided under our National Health Scheme. Also, 20,000 people are compelled to live on low unemployment payments the purchasing power of which has been undermined by the Government's failure to reduce the cost of living. Besides that, 350,000 of our children are maintained by the Assistance Board. This is a disgrace to our civilisation. We ought all to be thoroughly ashamed of our failure to help such important sections of our community who have contributed so greatly to building up our production and wealth.

It is clear from the very detailed and convincing speech by my hon. Friend that the Government have completely failed to fulfil their Election promises. The hundreds of thousands of new votes which they won upon the basis of their promise will turn against them at the next General Election. The Government's Charter-breaking military aggressions abroad during the last few weeks, which have resulted in the blocking of the Suez Canal, stopping our petrol supplies, and forcing our shipping to travel round the Cape, will greatly add to the cost of living, sending up prices all round. The price of food, transport, clothing, newspapers and the building of houses will all increase because of the Government's failure at home and stupidity abroad.

Mr. A. E. Hunter (Feltham) rose

Mr. Deputy-Speaker (Sir Charles MacAndrew)

Mr. Walker-Smith.

1.45 p.m.

The Economic Secretary to the Treasury (Mr. Derek Walker-Smith) rose

Mr. Hunter

On a point of order, Mr. Deputy-Speaker. Might I draw your attention to the fact that I had risen?

Mr. Deputy-Speaker

The practice of the House is that when a Member of the Front Bench on either side of the House rises, he is called.

Mr. Walker-Smith

The hon. Member for Acton (Mr. Sparks) has brought forward a very wide subject-matter for what we customarily, but not always literally, call a short Adjournment debate. He has dealt with this very extensive matter with all the comprehensiveness and amplitude for which he is distinguished in the House. Indeed, had it been only the customary half-hour Adjournment debate I do not think that I should have been in a position to make any reply at all.

The subject of the cost of living, with which he and the hon. Member for Bilston (Mr. R. Edwards) have been dealing, is very important from the human point of view of the living conditions of our people, and also because of the impact which it has on the general economy of the nation and upon our prospects in the future. It is, of course, bound up with the problem of inflation, and it has a very great significance on the maintenance of our position as a competitive nation in world export markets.

The hon. Member for Bilston indulged in some rather forceful observations about the general range of Government action and policy in the course of his concluding remarks, and the hon. Member for Acton, though he was commendably statistical and objective in part of his speech, also, from time to time, became a little more partisan in his approach.

Mr. Sparks

Is the hon. and learned Gentleman taking objection to the fact that I quoted from "Britain Strong and Free"?

Mr. Walker-Smith

No, Sir. I thought that, from the point of view at any rate of literary presentation and vividness of style, that was not the least good part of the hon. Gentleman's speech. The non-partisan part of his speech consisted of the statistics drawn from the Digest of Statistics. Where he closely adhered to those, he was unexceptionable in his presentation, although I would not wholly endorse some of his inferences.

There are really two methods of approach to any discussion on the cost of living. We can either seek to assess current trends in the light of the 1956 position, or we can make broad comparisons over the post-war era. I rather prefer the first of those approaches, because I think that it is the more constructive approach, being concerned, as it is, with the present and the future; but I do not at all shrink—and I hasten to say so because I see that the hon. Gentleman smiles—from the second approach of making comparisons.

All I say to the hon. Members for Acton and Bilston is that, if we make those comparisons, we must make them broadly and comprehensively, not partially and selectively. If we make forward comparisons from October, 1951, as both hon. Members have done, we must also complete the pattern and make comparisons back from 1951, when the party opposite was in office.

Mr. A. G. Bottomley (Rochester and Chatham)

Perhaps the hon. and learned Gentleman would remember that the Government of which he is a member were elected in 1951 to reduce the cost of living. That is the charge.

Mr. Walker-Smith

This Government were elected in 1951 for a variety of reasons. They were elected because the country had confidence that they would make a much better Government than that which preceded them and of which the right hon. Gentleman was a Member. That that confidence was well-founded was shown by the fact that, when the chance came, the verdict was repeated in 1955—and according to what I read of the Gallup polls, the position must be even stronger today. We shall be welcoming, in a day or two, the new hon. Member for Chester—a very significant result.

The right hon. Gentleman, however, must not try to distract attention from the subject matter of the discussion. Nor must he try to prevent me from completing the comparison which hon. Members have been good enough to make to the House, because I observed—and hon. Members must have observed—that in the course of Monday night's debate on economic conditions, right hon. and hon. Members opposite were very forward with comparisons from October, 1951, to the present time, but were singularly, though not unnaturally, coy of entering upon any comparisons with that former period.

Before trying to fill in that gap, perhaps I may be allowed to say something of a non-controversial nature, and it is this. Discussions of this sort are not made any easier by the rather mixed idiom in which we speak when dealing with these figures because, as the House is aware, there are, or have been, three indices of retail prices in the post-war period. There was the first Interim index of Retail Prices, which took June, 1947, as the base of 100; there was the revised Interim Index of Retail Prices—to which the hon. Gentleman mainly referred—which took January, 1952, as the base of 100; and there is, of course, the new and current Index of Retail Prices, with a revised weighting and so on, taking January of this year as the base of 100.

Of course, in making comparisons, we cannot, in any event, usefully go back further than June, 1947. This may, perhaps, be a matter of some gratification to hon. Members opposite, because the index in force before that was based on 1914, and was out of date in many respects. We can, however, compare 1947 onwards on the basis of the 1947 interim Index, and, of course, the 1956 trend, which is the current assessment to which I have referred can also be measured within this new and up-to-date operative index.

First of all, then, to complete the comparison on this Dart of the exercise—June, 1947, to October, 1951. The all-items index shows an increase of 29 per cent., which represents an annual rate of increase of 6½ per cent., but the annual rate of increase in the price of food, of which the hon. Gentleman made so much, was 10 per cent. in those years; that is to say, higher than the average for the total of all items.

Here I might just remind the House of the percentage increases in that time. They are: food—42.8; rent and rates—4.2; clothing-45.1; fuel and light—29.8; household durables—36.5; miscellaneous goods—34.8; services—21.6. Then we come to a very considerable drop: alcoholic drink, and tobacco—8 per cent. Those were the nature of the rises which were going on in that period, with which hon. Gentlemen today, and right hon. and hon. Gentlemen on Monday, did not see fit to acquaint the House.

Mr. Sparks

I am sure that the Economic Secretary wishes to be fair in his figures. Is it not correct that import prices during that period rose by 120 per cent., which accounts for and is reflected in those figures which he has just now given?

Mr. Walker-Smith

I know that right hon. and hon. Gentlemen opposite always seek to relate the movement of internal prices to the movement of external or import prices. As the hon. Gentleman knows, I always seek to be fair in this House, and I would not say that the level of import or external prices does not affect the level of internal prices. Of course it does. Nevertheless, it is right that we should get this in its proper context, because so far, and I say this with respect, right hon. and hon. Members opposite have not altogether succeeded in doing so.

There was an illustration of this in the speech made by the right hon. Gentleman the Member for Belper (Mr. G. Brown) on Monday night. He then said: The right hon. Gentleman"— that is, my right hon. Friend the Chancellor— claims that there has been a rise of only 2 per cent. this year, but that has to be measured against a fell of 2 per cent. in our external prices level. Therefore, there has been a rise of 4 per cent. internally—because the one rise has to be added to the other."—[OFFICIAL REPORT, 12th November, 1956; Vol. 560, c. 680.] That is a singular fallacy—perhaps not singular, but it is, at any rate, a fallacy—to come from the Front Bench opposite, because, of course, the imports of goods and services amount only to about one-sixth of the total final output in this country. That being so, it is obviously quite wrong to do as the right hon. Gentleman suggested—to weight the internal price level in an even ratio to the overseas level. If his point had substance at all, it could not have substance more than dividing the figure by six and then adding it to that. That is the perspective of these things, and it really would be wrong—if the hon. Member for Sunderland, North (Mr. Willey) is about to intervene on this he can save himself the trouble—to succumb to the temptation of trying to use these import prices as an alibi in respect of internal price levels.

Mr. Frederick Willey (Sunderland, North)

That was not the point on which I intended to intervene. What I was going to ask the hon. and learned Gentleman to do was this, and I intervene now only to save intervention later on. I gather that the hon. and learned Gentleman accepts the figures given by my right hon. Friend the Member for Belper (Mr. G. Brown). Will he give the import figures when he deals with the other figures which he is going to give later on in the course of his reply? In other words, will he acquaint us with the whole position and not try to isolate the present position? I gather that he accepts the figure given by my hon. Friend the Member for Acton (Mr. Sparks) with regard to the increase in imports as well as the figures given in Monday's debate. When he gives the figures for the domestic price increases, will he give us the figures for the external position also?

Mr. Walker-Smith

I do not know that in the course of this debate I could give those figures in detail. The hon. Gentleman's figure refers to this past period, and I think that probably the sets of figures given are right, but I do not want to be taken as underwriting them from this Box without an opportunity to check them. So far as the generality of the argument goes, I think we have now made our respective positions clear.

Mr. Stephen Swingler (Newcastle-under-Lyme)

May I ask a question? I think the hon. and learned Gentleman said that import prices affected only one-sixth of the total volume of goods and services in this country. Does he assert that import prices affect only one-sixth of those commodities taken into account in the cost-of-living index? If the hon. and learned Gentleman is going to measure these things accurately, what is the extent of the influence of import prices on the commodities that are measured and weighted in their measurement in the cost-of-living index?

Mr. Walker-Smith

For that one would have to have a closer analysis of the gross national output figures for the country. The generality of the matter on which my proportion is based is that in 1955 the imports of goods and services amounted to about £4,100 million and the total final output to about £23,000 million. It is, no doubt, quite true, as the hon. Gentleman suggests, that if one wanted to arrive at a final arithmetical proportion one would have to try to analyse the components within each of these figures and take further fractions, but I think the hon. Gentleman will also be fair-minded enough to agree that whatever analyses and further calculations we make, nothing can ever make correct the observation made so forcefully by the right hon. Member for Belper on Monday evening.

Perhaps I may now pass to the period on which hon. Members opposite have dwelt—October, 1951, to the present time. In that period there has been a rise in the all-items index of 22 per cent.—that is to say, less than the rise in the previous period—and the annual rate of rise has been 4½ per cent. as against 6½ per cent. in the previous period. The figures for food up to January, 1956, were given by the hon. Member for Acton from Table 154 which gives the January, 1956 figure at 125.4, that being on the middle index, the 1952 revised interim index. The food figures are brought up to date—I shall have a further comment to make on these in a moment—in Table 153 dealing with 1956.

As the hon. Gentleman, who has obviously made so close and informed a study of these statistical matters, will appreciate, we cannot follow through detailed commodity figures since the institution of the new index, though one can on the basis of the 1947 index follow through the all-item index over the whole period. But if the hon. Gentleman will look at Table 153, column 2, of the October Digest he will see that after certain movements, on which I will comment in a moment, the food figure is not widely different now from what it was at that time. In other words, his pessimistic calculation about the 1956 figures continuing the 1955 rise on the food front has happily not been carried out.

Mr. Sparks

If the hon. and learned Gentleman will give the House the details of the index figure on the new basis for each period mentioned in that table, he will find that at one point that figure was, I believe, about 102. The figure of 14th September which he has given us of about 100.8 is the lowest figure quoted in that table. Perhaps he will give us the highest one.

Mr. Walker-Smith

It is a very gratifying circumstance, is it not, that the contemporary figure is the lowest figure? The hon. Gentleman does not want the index to go up, does he?

Mr. Sparks


Mr. Walker-Smith

No, he wants it to go down. Though it might help his argument if it went up, conscientiously he is glad, I am sure, that it is in fact going down.

I am coming back to the 1956 position. I merely want to say that in referring to these movements of prices during these periods we have to have regard to the movement of wages at the same time. As the House has been aware, there has been a very marked increase in wages between October, 1951, and the present time—not only, as one might suppose, in manufacturing industries and the like, but over the whole general front of the wage-earning population. The overall rates of wages have shown an increase in this period of 35 per cent.—that is rates; but again, as the House is aware, the average earnings due to overtime and so on show a greater increase over that period.

That means that the purchasing value of wages has been maintained because the rise in wages has at least kept pace with the rise in prices. I say that because it disposes of the argument, so far as the wage earner is concerned, that he has in his individual existence suffered by this. I am not saying that the economy does not suffer, but I am coming to that in a moment.

I appreciate that we have then got to consider the position of the pensioners and fixed income folk. I do not want to take the House through what has been done under the present Government in respect of pensions increases and so on, but I would say—and I think hon. Members in all quarters of the House will be at one in this—that if we do have an upward movement of prices, the people who are likely to suffer are pensioners and fixed income folk. That is why nobody would wish to accept an inflationary situation in this country, even apart from the economic impact which it has on our competitive position in markets overseas. For social reasons, in other words, as well as economic reasons, it is necessary to arrest and counter inflation.

Of course, what has happened as a result of this double movement of wages and prices during the post-war period as a whole is a fall in the purchasing value of the £. What that really means is that we have not, over these post-war years, fully solved the problem of preserving price stability under a system of full employment. It is one of the big economic, political and social problems of our time, as hon. Gentlemen are aware.

Mr. Sparks

Would the hon. and learned Gentleman not agree that that was not said in the Election manifesto of his party in 1951? It said the exact opposite. The Tories were going to reduce the cost of living and prevent this inflationary spiral. Why have they not done so? Why have they not made good their promises to the electors?

Mr. Walker-Smith

I am just coming to deal with what we are doing in 1956, because I want to resist the temptation to carry out a grand inquest of the past. As the hon. Member for Acton will appreciate from what I have said earlier, if it comes to criticism of past actions, he is not to appear only in the rôle of prosecutor, but he must take his turn in the dock. I want to resist those temptations and come to the actual position in 1956, which, as I ventured to suggest earlier, was the more constructive of the two possible approaches to this question.

It is true that there has been a rise, referring now to the new index of 1956, of 2 points up to September, that is to say since the initiation of the index in the early part of the year. Nevertheless, the September figure is lower than the May figure by nearly half a point, 04 of a point. That fall is mainly due to the fall in food prices which has, happily, occurred over that period. There has been a fall here of 5 per cent. from April, when it stood at 106, to September when it stood at 1008.

Mr. Sparks

If the hon. and learned Gentleman would give us the average over that period, we should get a much clearer picture.

Mr. Willey

May I intrude at this point? I was about to make an important note, and then the hon. and learned Gentleman went astray. Would he give us the figure for the increase in food prices from October, 1951, to the present day?

Mr. Walker-Smith

As I have said, I do not think one can follow through into 1956 individual comparisons on individual components, because of the different structure of the present index. What I suggested in answer to the hon. Member for Acton was that if one took the published Digest figures and looked at the figure which he quoted, namely 125.4, for 17th January, 1956, on Table 154, and if one then looked at the new index for food, that is to say 100 at the same date, one would see that, after this rise and fall to which I have referred, it stands at 100.8 at the present time.

Mr. Sparks

I am sorry to keep on interrupting, but I should like to have this clear. The figure I gave was based on the January, 1952, basis, at 100, as compared with September, 1956, taking into consideration the changed basis in the present year; and food stood at 1264. That figure has been got out for me by a statistician who, I think, is able to work out the September, 1956, figure on the basis of the January, 1952, index. I believe the hon. and learned Gentleman the Economic Secretary could get the same thing; it is possible to convert the index in terms of the previous index.

Mr. Walker-Smith

I am not a statistician, and, as the hon. Member knows, through no fault of his—I do not suggest that—we did in fact have very short notice that he was going to raise this interesting fact today. My understanding is that one cannot convert the figures to the new 1956 basis, but I will certainly have another look at that. At any rate, there is not much between us on the end result of this matter.

That is the position as regards food, which at any rate shows a very satisfactory movement during the later part of 1956, albeit there was that earlier rise. The item for fuel and light, which again rose sharply in 1955, has remained relatively stable during 1956. Tobacco, for reasons which the House will know, shows an increase which has added 04 of a point, two-fifths of a point in other words, to the all-items index.

There is an item to which I ought to refer finally, because it illustrates again the point I was making about wages. The figure for services, which item was referred to by the hon. Member for Acton, has shown an increase of 5½ per cent. from January to September of this year, which has the result of adding 0.3 of a point to the all-items index. Of course, the item of services is the one which reflects most clearly changes in wages, and it does illustrate the truth that the main cause of rising prices has been that wages have tended to rise more quickly than productivity.

The hon. Member for Acton referred to the effect of interest rates on housing. This may be a matter of controversy between the two sides of the House, but the reasons why it has been necessary to raise interest rates, are, of course, well known, and hon. Members will not expect me to go over all that ground again. In our view, it has been a necessary operation in order to restrain the spending of money on less essentials and thereby prevent the diversion of resources from the exporting industries and capital investment which we require. Within that context, it is, of course, our view that it would not be right or appropriate to give preferential rates for borrowing to certain categories of borrowers, though I quite follow and appreciate the importance of the house ownership aspect to which the hon. Member for Acton referred.

In conclusion, I will say a word or two about the current position in the light of these 1956 figures. In the coming months, as the House, and the hon. Member for Acton in particular, will know, there will be seasonal rises in the prices of fruit, vegetables and fuel, rises which are normally annually reflected in the index at this time. In addition to that, there will be the residual effect of certain Government measures which have been taken which will probably add something in the region of four-fifths of a point to the all-items index. The assessment of future trends is made particularly difficult, of course, by the fact that it is not as yet possible to make any precise estimate of the possible impact of events in the Middle East.

May I just say on the generality of the matter that the Government are, of course, fully seized of the importance of arresting any fall in the purchasing value of money, and the greatest element in any continued fall would be an increase in personal incomes unrelated to productivity. Our economy in this country very much depends on having enough exports in a competitive world to pay for our necessary imports and show a surplus in our balance of payments, and also to have enough reserves to put into the necessary capital investment to keep our manufacturing and other industries fully competitive in a keenly competitive world. Inflation and over-consumption tend to prevent those things and, by doing so, to strike away the props of our economy. The Government will continue on the imperative task of countering inflation and keeping the economy in balance as an indispensable condition of the forward movement in the well-being and prosperity of all sections of our people.

2.22 p.m.

Mr. A. E. Hunter (Feltham)

I will not detain the House very long. I believe that this is the Economic Secretary's first speech since he has been promoted and I should like to congratulate him on his promotion. He has always treated us with the greatest courtesy and I think that the best wish which I can express is that he will display the same ability and the same courage as his predecessor.

I want to draw attention this afternoon to people on fixed incomes who are affected by the increase in the cost of living. The Economic Secretary mentioned several times the 1951 Election, and so did my hon. Friend the Member for Acton (Mr. Sparks). I remember very clearly the 1951 Election, and some of my hon. Friends on this side of the House will also remember the big Conservative posters, "Mend the hole in the purse"; "Stop that pipe leaking". I imagine that the bottom has fallen out of the purse and that the pipe is now a gulley, especially for those on fixed incomes.

Since 1951, the cost of every item of food has gone up steadily—meat, fruit, butter, margarine, tea, coffee, sugar, bacon, eggs and lard. Everything that the housewife uses, everything that is needed as a basic food, has gone up steadily in price. When we come to heating, the same applies to coal, electricity and gas. The Economic Secretary mentioned that to some extent the wage-earner had been safeguarded by wage increases, given as the result of the great strength of his trade union. So far as the old-age pensioners, the sick, and those on small fixed incomes are concerned, if we compare their increases with the cost of living we find that today they are considerably below the standard of 1951.

The old-age pensioner's last increase was 18 months ago. Since then I believe that the value of his pension has dropped by 3s. a week. He is faced this winter with even greater increases in the cost of living. He is faced with increased prices for bread, milk, coal and heating and is now in a far worse position than he was in 1951.

We have to remember that there are millions of old-age pensioners in this country today. They form a large part of the community. Looking back on their history, one finds that they never earned big wages. We know that in the 'twenties and 'thirties wages were low and that there was mass unemployment. The old-age pensioner who is now about 70 or 80 has had no opportunity of putting money by for his old age. Therefore, old-age pensioners are very much affected by the cost of living.

It is all very well for the Government to say how much it will cost to increase old-age pensions. Old-age pensioners in my constituency say, "You say, Mr. Hunter, that the Government say that they cannot afford it, yet in the Suez crisis they could afford £50 million for military expenditure." The old-age pensioners remember this. The Government always say that we cannot afford it, yet when military expenditure is necessary the money can always be found. I hope, therefore, that the Government will make a determined attempt to hold the cost of living so that the standard of living of old-age pensioners, the sick, and those on fixed incomes does not go lower still.

Then there is the question of rent. The Government are now bringing in a Bill to increase rents. That will affect old-age pensioners. I know that the National Assistance Board pays the rents of some old-age pensioners, but that does not apply to all old-age pensioners; so, in addition to the increase in the cost of living—food, heat, light and gas—the old-age pensioners are now to be faced with increased rent.

My hon. Friend the Member for Acton, who makes the closest study of all these problems, has done a great service not only to the wage-earners but to the old-age pensioners and the rest of the community in bringing forward this subject for debate today.

2.28 p.m.

Mr. Frederick Willey (Sunderland, North)

I should like to add my voice to the congratulations given to my hon. Friend the Member for Acton (Mr. Sparks) for promoting this debate this afternoon.

I should also like to take this occasion, on, I am sure, behalf of the whole House, of congratulating the Economic Secretary to the Treasury on his promotion to a very difficult post. We appreciate that the hon. and learned Gentleman is a good lawyer, but this afternoon he has spoken with the utmost obscurity. We know that a good lawyer speaks obscurely only when he has a very bad case, and that that is why we have had these very obscure references to facts and figures this afternoon.

One point which emerged very clearly was that the Economic Secretary takes the same view as his right hon. Friend the Member for Woodford (Sir W. Churchill) about Election manifestos.

The electorate have considered these manifestos as being relevant to the conduct of the Government which have been elected following any General Election; but, as we remember during one of our debates on steel, the right hon. Gentleman shocked us by saying quite frankly that he disregarded such manifestos and it is clear that the Economic Secretary takes the same view. He never attempted to answer the charges made of deceiving the electorate.

The Economic Secretary also failed to understand what is our major complaint. Our major complaint against the Government is that they have unfairly redistributed income. They have sought by fiscal means to make things worse for people badly off and better for people better off. That was the whole purpose of the Government in scrapping their Election undertakings and setting out quite deliberately to redistribute income.

Among their proper purposes trade unions have not only to see that wages are improved, but also deliberately to see that their members have a fair share of our national wealth. When the Government act in this way it is not only unfair, but provocative, and the unions must legitimately seek all ways and means of redressing the wrong which is done to them as a whole. That is the distressing factor about our economic affairs during the past few years under a Tory Government. We have had this constant taking away of food subsidies and the legitimate endeavour of trade unions to set matters right by increasing wages and at the end of it all we have had the economic position of the country prejudiced in world markets. We are now living in the years in which we shall reap the benefits of that very unwise and very unfair Government policy.

I will deal with another issue to show just how unfair the Government are being in present circumstances. We have had political arguments about subsidies and food subsidies, but I have always understood that it was a matter of all-party agreement that in war subsidies were justified to hold the cost of living. We are now living in precisely those circumstances. I do not want to debate whether armed conflict and its consequences is different from war and its consequences, but the situations are comparable and the economy is suffering stresses and strains because of external circumstances brought upon us by the Government.

What are the Government doing at this time? They have just taken away the remaining subsidy on bread, and in January they are removing the milk subsidy. What can be more grossly unfair? I am not seeking to argue the merits of our present difficulties, but we must recognise these difficulties and recognise that their character is the same as those which we faced in the war when we had all-party agreement.

The second disturbing factor, then, is that not only have the Government sought to obtain a redistribution of income which we regard as unfair but, at the same time, in circumstances where we formerly had all-party agreement, to take steps to hold the cost of living the Government are endeavouring, through fiscal action, to increase the cost of living. It is not surprising, therefore, that we are faced with very grave difficulties at home and, as the Economic Secretary said rather plaintively, faced with a worsening position in world markets.

These are matters which we have discussed before and I can only hope that the hon. and learned Member will have some impact on his Department. He has shown a ready desire to master figures, and I hope that he will read what I have said and realise that this is really a moral issue and not a matter of facts and figures. By and large, the workers believe that they have been unfairly treated and they have every reason for believing that. This was a deliberate action of the Government and the only resort which working people have to redress their position is through industrial pressure in the trade unions.

I conclude by saying—this is something that we have often argued—that in this as in other matters what is distressing is that the Government have displayed themselves incapable of realising the true issues, incompetent in carrying out any proper policy—in this case economic policy—and, above all, deliberately unjust. Those three factors go to the heart of the country's position today. The best service the Government could do would be to do something which is all-party and non-controversial, to say that the action which they took in breach of their Election promises about subsidies has proved unfair and that in the national difficulties imposed upon us as a result of the recent armed conflict they will revert to the all-party approach which we took during the war, reverse then-policy, and deliberately, by fiscal means and Government intervention, try to hold the cost of living and then reduce it.

2.35 p.m.

Mr. Leslie Hale (Oldham, West)

I do not propose to join in the chorus of congratulations to the new Economic Secretary, not because I do not have for him a personal regard, but because I much prefer to join in the congratulations to his predecessor upon the courage of his resignation. His predecessor did something for political morality and for the integrity of our national life. More and more we see able Ministers coming here to put on what is purely a variety turn. They put up an intellectual performance which is devoid of integrity. They build fictitious castles on the narrowest bases of fact. They are content to put forward arguments which they know are invalid and many of which they know to be untrue.

The Economic Secretary was deploring the fact that on the whole in costs of production the percentage for wages had tended to rise while the percentage of production itself was going down. However, he knows that that is a deliberate result of Government policy. He knows that time after time the Chancellor has said that he is trying to limit investment. If one limits investment in productive industry, one of course reduces production, or stops it increasing at its normal rate of increase.

The real fact of the matter and the real gravamen of our complaints are that while the Labour Government were in office we saw a Government struggling against world rising prices, endeavouring by subsidies, endeavouring by using the whole national machine, to prevent the impact of world rising prices from falling upon the poorer section of the population. Here we have seen a Government in a world where prices are falling deliberately passing on the burden to the poorer section of the population, quite deliberately, quite ruthlessly, quite cynically.

Having attracted their votes by a rather sordid and blatant parade of promises, they have quite cynically betrayed them and hoped by tendentious eloquence to prevent all of the facts becoming known. Not a single item mentioned by my hon. Friend the Member for Acton (Mr. Sparks) in his very able speech, which covered most of the ground I had intended to cover and which has therefore limited the distance which I intended to pursue, has not been deliberately increased by Government action. As my hon. Friend said, the Government have now deliberately increased the price of bread. The Government, who come here every day and pray to the Lord to deliver us our daily bread, are virtually taxing it, because the removal of the subsidy operates almost precisely as a tax.

They have deliberately increased the price of milk, having previously savagely increased the price of minor luxury items, such as bacon and things of that sort. I want to say quite sincerely that those of us who go to our constituencies and spend some hours interviewing constituents found in 1951, 1952 and 1953 that, with the exception of the special factor of the cotton industry, on the whole there were fewer problems. On the whole it was much more rare for someone to come and say that he could not manage to live. It was much more rare for them to come with an acute personal problem. In these last few weeks I have had more than I have had in years.

Last Sunday, in my comparative prosperity and with my excessive habits of spending, I was interviewing a woman who is trying to live on two guineas a week. Her total income is £2 17s. She has been to the National Assistance Board; she has made application for all the pension to which she is entitled; she is very far from well; she is nearly a hospital case; she lives alone; she has £2 17s. a week, and every Monday she pays 15s. in rent.

Two guineas a week! That is 6s. a day. What is there left after we take away the cost of bread and milk, which the Government have just put up in price? What is there left for her? What can she buy? If she spends every single penny on food she can barely live. And out of that two guineas she has to pay a wretchedly high bill for fuel and light. Sick women have to grope their way to bed; in the winter, sick women need some form of heat, however small. Sick women alone need all these things, and all these things have been taxed by the Government.

What is so amazing to me—and I propose to speak my mind in this House and say what I think about these matters—is that some Departments of State can make any demand. There has never been any limit to the amount that we can spend on guns; never any limit on the amount we can spend on military aeroplanes or hydrogen bombs; indeed, it has been shown over the last five years that we have been spending more money on those things than the nation can produce. We have forced up the cost of arms because we have agreed to spend more money on them than the productive capacity of the armaments industry can cope with.

In the meantime, the people of Oldham are trying to feed themselves on two guineas a week. The Economic Secretary said that he was not a statistician. Whether or not this is any recommendation for the office of Economic Secretary is open to argument. On the whole, I am not in favour of statisticians, but I have not been very greatly impressed by the Economic Secretaries, until the last one. The present Economic Secretary attempted to imply, by saying that he was not a statistician, that perhaps he had not even a knowledge of ordinary arithmetic, because this is purely an arithmetical problem. I suggest that he should try to solve it.

Time after time I have asked him to let us have a quite simple test of this matter, which will also be a test of the respective honesty of our approaches to this matter. He has the whole resources of his Department behind him; he has his whole previous experience at the Board of Trade behind him, and there is the Minister of Agriculture, Fisheries and Food who can come to his assistance. Let him work out what an old-age pensioner has to buy today. If he cannot do it with all the resources which he has available, the old-age pensioners' association will do that part for him.

That association has budgets which have been supplied by its members, and which have been carefully collected, computed and checked, and they show just what is the cost of living. The Minister and his Department can work out just what the increase has been in the cost of living for an old-age pensioner in the last few years, and what the increase in pension has been. What is so vital, and what we have urged time after time since the problem became acute, is that the cost-of-living index has no relation whatever to people living in poverty. It is a wholly fallacious and fictitious figure in relation to those people.

Let us consider the things which it includes. The right hon. Gentleman said, in his forecast of the future, that there had been a rise in the cost of tobacco which would have to be taken into account. He was rather more coy about the rise in rents. That is another deliberate proposal of this wretched Government. But how much tobacco, or how many cigarettes, do poor women smoke, living on two guineas a week? How much fish do they consume? How much fruit do they ever have? They may have an apple from a neighbour's garden, but anyone who goes into these matters knows that it is utterly impossible to consider buying fruit today if one is living on the risible income of an old-age pensioner.

Two guineas a week? I do not think that it has been possible, this year, to buy cucumbers at less than 1s. 6d. at their most plentiful, and up to 4s. and 5s. in times of scarcity. Salads have been at a prohibitive price, as has been almost every form of fruit, and tinned stuff is quite impossible for the old-age pensioner.

I tried to find out what it was that they buy in order to maintain their subsistence. There is no question about it; when they have bought bread and a little essential milk, a packet of tea, and a few pounds of potatoes, about the only hope left to them is a little sugar, perhaps some alternative form of hot drink and, it may be—with the utmost care—a little of that scrag end of meat which we have found by experiment works out rather more dearly than the best cut. It has so much fat; so much gristle; so much bone and so much that is inedible that buying it for a few pence a pound means buying the dearest.

That is the problem. What are the Government doing? My hon. Friend the Member for Leek (Mr. Harold Davies), with his graphic gift of expression, would say that they are hanging on the cliff-side by their teeth. It is an approximation. We have had a test of public opinion in the last 24 hours—a peculiarly fair test, because the by-election was fought with the utmost efforts of all the parties concerned. We find that a majority of 11,000 has been cut to one of 6,000. We find a 5 per cent. swing in the vote. Anyone knows that a 5 per cent. swing puts the Tories right out—where they ought to be put.

Everyone knows that this Government have ceased to have the confidence of the people. Everyone knows that the Government are hanging on, devoid of support and devoid of confidence—endeavouring, by making speeches which have little relation to the facts and contain the minimum possible integrity, to put over a screen of deceit to deceive the public.

Mr. Walker-Smith

If the hon. Member is applying these eloquent strictures to the speech which I have made today. I am sure he will bear in mind the fact that he heard only about one-third of it.

Mr. Hale

That is true. Of course, it is one of the difficulties about an Adjournment debate that it is impossible for the industrious Member to be informed in advance when it will take place, or upon what subject it will take place. It is almost impossible to know at what time it will commence. Therefore, I do not admit any dereliction of duty. I claim credit for the fact that. having no special interest in the normal business of the day, I made a special journey across London to hear the Economic Secretary's maiden speech in his new Department. I listened to it with that homage which we always pay to the orator, but with that scepticism which we always have to pay to Tory Ministers. That was the only reaction I got from the last few minutes of his speech.

I suggest that he might apply his mind to this question, and he ought to do so quickly, because I am sure that many of my hon. Friends intend to see that this issue is not allowed to go to sleep again, and intend to see that the Government are subjected to constant pressure for adopting a policy which is deliberately increasing prices when world prices have been going down constantly. That is the measure of the charge.

If he wishes to win the confidence of the House, I beg him, as one of his first acts, to get out figures relating to old-age pensioners and find out what they eat. Let him work out the special increase in costs, and let him remember that it is no use talking about other things. Old-age pensioners do not have any services; they do not have holidays; they do not have entertainments, and, in point of fact, they do not buy any clothes. That is one of the things we found out. They go on wearing the same clothes year after year because they cannot afford any more.

What the old-age pensioner spends his meagre income upon is fuel and light, which have gone up enormously, which are a terrible burden, but which he cannot avoid buying. There is no way out of it. In a constituency like Oldham, there is certainly no way of avoiding the use of fuel and light. There is hardly any way of cutting it out without creating a state of misery and physical suffering which one hardly wants to dwell upon. These people spend their money on fuel and light and on food—as I have said, on bread, milk, tea, potatoes and perhaps on a bit of shin beef or neck of mutton. That is their diet.

If the Economic Secretary will work it out, using his own arithmetic if he likes, his own limited statistical attainments, he will still be able to come to the undoubted conclusion that these people are bearing a burden which they should not be called upon to bear, and are facing a future almost devoid of comfort or of hope.

2.51 p.m.

Mr. J. A. Leavey (Heywood and Royton)

I was interested in much of what the hon. Member for Acton (Mr. Sparks) had to say in his speech, and, indeed, in what was said by the hon. Member for Bilston (Mr. R. Edwards). In those speeches, as in the speech of my hon. and learned Friend, some emphasis was placed upon the statistical significance of the subject, and some time has been spent this afternoon in arguing the value of these figures. The hon. Member for Oldham, West (Mr. Hale"—and I am with him in this—did not rely so extensively upon the statistical evidence.

I propose for a moment to avoid reliance on statistics and to look at a rather different aspect of the problem, because I believe that hon. Members on both sides of the House seek the same ultimate result. Clearly, the cost of living is a matter of concern to everyone, although, looking round the Chamber this afternoon, there is not much evidence of that. It is a matter that has always been a political and a party issue. Neither the very rich nor the very poor are without some concern as to what they have to pay day by day for the goods and services which are produced.

It ought to be recognised—it probably is widely recognised—that we cannot divide ourselves into producers and consumers, because, in fact, we are all both producers and consumers. When we speak of the needs of the consumer, it is unrealistic to try to segregate the community into two groups and to suggest that one group is producing to great advantage and the other is consuming for the exclusive benefit of the producers.

I wish for a moment to consider, not so much the effect of the inflationary position which has been a malaise of this country since the war, but its causes. Presumably, the whole community is anxious to get at the cause of the dwindling value; of money, the cause of the poverty which undoubtedly exists. I have the honour to represent an adjacent constituency to that of the hon. Member for Oldham, West, and I am sure that the hon. Gentleman will accept the fact that I, too, know of many cases such as he mentioned.

However, I do not believe that we shall ever achieve a level where the able-bodied, the young, the middle-aged, or however we like to term ourselves, can pass over to the older groups a sufficiently high proportion of our earnings to enable them to enjoy that standard of life which we should like them to enjoy. The time when that stage will be reached is beyond the comprehension of many of us, because I do not believe that the national wealth will ever be satisfactorily divided up.

Mr. Hale

I know that the hon. Gentleman has different views from mine, but he must not misrepresent the situation. We have only to make a cut of £5 million to £6 million a year in armaments to do all this. It is a question of whether one prefers guns or butter. There may be an argument in favour of guns, but it is no use saying that there is not enough butter.

Mr. Leavey

To pose this dilemma as a matter of guns or butter is wholly unrealistic. No one spends money on guns without having as the objective the possibility of enjoying butter or margarine. If the hon. Gentleman believes that by spending nothing on guns we should have ample butter then he is deluding himself, as, indeed, are a number of other hon. Members. In the last resort, no one wants to spend money on guns if it is not necessary. It is a matter of judgment whether too much or too little is spent on armaments. My own view is that we could do with a little less spent on defence, because defence is a destructive aim. But it is also a preserving aim, because we believe that without armaments and without the means to defend ourselves we shall forfeit the prospect of any butter.

However, I do not wish to be diverted on to the subject of the special application of the national resources. What I was aiming to say to the hon. Gentleman was that with the various demands on the results of creative efforts—and they are wide and varied—there will never be completely satisfactory distribution.

Mr. Harold Wilson (Huyton)

If the hon. Gentleman rejects the suggestion of my hon. Friend in connection with defence expenditure—and I am sorry that he does reject it—would he, since he is talking about the total volume of resources rather than their division, bear in mind the figures which we gave in the House on Monday, showing that the Government's credit squeeze has lost the country £500 million of resources? That figure was not controverted by the Economic Secretary, who replied to the debate. Even if we accept the defence expenditure, does not the hon. Gentleman agree that what he and all of us have in mind and want to achieve could be achieved if the Government were not deliberately obstructing production?

Mr. Leavey

I am obliged to the right hon. Gentleman. He perhaps realises more clearly than anyone else present that in tackling the problem of inflation, a problem which he knew well and which has afflicted those who have succeeded him in the distinguished office which he held, the ultimate aim is to reduce by one means or another the overall demand for the goods and services which are available in this country. I think that that is generally accepted. The means of doing it are a matter of dispute between us, but if we fail to reduce the overall demand we shall continue in this condition of inflation which has brought such dissatisfaction about prices.

Mr. Barnett Janner (Leicester, North-West)

Would the hon. Gentleman deal with the question of the overall demand for houses while he is dealing with this matter? Is he saying that the Government could do nothing to prevent an increase in the cost of living and that they are right to increase it by means of a Bill which is to be discussed shortly?

Mr. Speaker

To deal with that would be to anticipate the discussion on the Rent Bill.

Mr. Leavey

I am in some dilemma, Mr. Speaker, in not knowing whether I may attempt to answer that question or not. If it is out of order, I will not do so, but I hope to indicate my views discursively to the hon. Gentleman, because I was trying to arrive at the point where we might discuss the multiple causes of the cost of any of the goods and services which we all enjoy. These are the causes which are the root of the problem which we face.

I do not wish to detain the House, for we have had a prolonged debate, but I should like to say these few words: it seems to me that if we apply restrictions to prices we shall not necessarily have any effect upon these basic costs. It does not reduce the cost of producing something merely to limit its price. It seems to me that somehow and by some means, from every hour of work, from every acre of land, from every ton of coal, from every bale of cotton and from every billet of steel we must derive more real wealth. Paying ourselves more for producing the same quantity of wealth will not solve our problem.

I would prefer it if we did not rely too much on the statistical arguments—the arguments by which I seek to defend the Government's action and the application of statistics by which right hon. and hon. Gentlemen opposite seek to defend their action. To do this does not trace the problem to its roots. I believe it is generally accepted that until we face up to the realities and recognise that we must induce or persuade or encourage the whole nation to face the matter realistically, we shall continue to have these endless arguments and this endless struggle which brings very little satisfaction to the majority of those whom we seek to represent.

It is easy to say that one section of the community exploits its position to the disadvantage of another section. It is easy for us to take sides, representing one section or the other. But it gets us no nearer to solving the problem which, unitedly, we want to solve. It is generally recognised—and my right hon. Friend the Chancellor of the Exchequer has said this on several occasions—that to pay ourselves more for producing the same quantity of goods or for rendering the same volume of services does not solve the problem.

I hope that from this afternoon's discussions there will be a greater focus on that aspect of the problem. I mean no disrespect to the House, but I feel that to pass statistics to and fro, to argue that the index figure is unrealistic as applied to older people or those on the lowest income level and to argue what happened in 1951 against what happened earlier or subsequently may be satisfactory if one feels that one is winning the argument but it does not contribute very much to solving the problem which I presume it is the purpose of every hon. Member to try to solve. If we may have succeeded in giving a moment's more thought to that aspect of the problem, I hope I need make no apology for detaining the House at this hour on a Friday afternoon.

3.4 p.m.

Mr. Francis Noel-Baker (Swindon)

I propose to detain the House for only a few moments, and I should like to start by apologising to the Economic Secretary for not having been here to hear his speech. I was in the same difficulty as my hon. Friend the Member for Oldham, West (Mr. Hale). May I say that personally I am glad to see the Economic Secretary in his present office. I do not think any of my hon. Friends will resent my saying that we prefer to see him in his place than a number of his hon. Friends of whom we could think. At all events, personally we wish him well.

The hon. Member for Heywood and Royton (Mr. Leavey) referred in passing to armaments. I do not want to follow him in that, except to say that many of us are wondering, at a time when we are facing such very grave difficulties, what the cost of the bill for the Suez adventure will be and whether people inside and outside the House of Commons have sufficiently realised the calamitous economic difficulties with which we shall be faced very soon.

The hon. Member spoke about the use of statistics. I felt very strongly with him. One of our complaints on this side of the House is indeed about the inhuman way in which very many right hon. Gentlemen opposite use statistics when they are dealing with grave human problems. We would very much prefer that they should leave the statistics for a while and have a look at some of the victims of their present policies.

I have been engaged for months in a correspondence, Which I regret to say is becoming increasingly squalid, with the Minister of Pensions and National Insurance arising out of representations made to me by the committee in my constituency which is looking after the welfare of old people. Although it is perfectly true that the answers of the Minister of Pensions, in terms of statistics and cost-of-living indices and things of that kind, make a perfectly good legalistic and logical case, if we look at them in terms of human misery they make complete nonsense. One wishes that one could take the Minister to see the conditions in which the old people of Swindon are really living.

I do not intend to make a political speech, but one wonders more and more whether the Minister of Pensions and his officials, and the Economic Secretary's officials, really understand the problems they are talking about, particularly when they are discussing the difficulties of old people. The hon. Member for Heywood and Royton said that the community was divided into producers and consumers and that most of us were both at the same time to varying degrees. The difficulty about old-age pensioners is that they are not both. They are only consumers, through no fault of their own. They have ended the days when they could contribute to the prosperity of the country and we have to carry them on our backs. I do not think that anybody resents that.

The other difficulty, as my hon. Friend the Member for Oldham, West said, is that the cost-of-living index and other statistics used by the Treasury and the Ministry of Pensions do not really fit the case of old-age pensioners, because they are living on such a low standard that the factors that go to making up the index do not apply to them at all.

Therefore, the answers that one receives from the Treasury Bench as to what cannot be done for these people do not add up. I would beg the Economic Secretary, who has come to his job with a fresh and a very acute mind, to take the opportunity of looking from the Treasury point of view into the sufferings of the aged, a very deserving section of the community, and to use all the influence he can to persuade his right hon. Friends, and the Minister of Pensions in particular, to be more human in their attitude towards the problems of old people.

3.9 p.m.

Lieut.-Colonel Marcus Lipton (Brixton)

I want to reinforce the plea made by my hon. Friends that the Government should make a very special inquiry into the plight of old-age pensioners. Unlike my hon. Friend the Member for Swindon (Mr. F. Noel-Baker), I had the good fortune to hear the Economic Secretary's speech. It was, of course, up to his usual standard, but I am sure that the hon. and learned Gentleman will forgive me if I say that if I were to send a copy of that speech to the old-age pensioners in my constituency it just would not mean a thing.

The explanation, of course, is that the cost-of-living index is not really applicable at all to old-age pensioners for reasons which have been fully ventilated by preceding speakers in this debate. The various cost-of-living indices have been based on a pattern of expenditure and consumption and of relative proportions which does not apply to old-age pensioners.

In those circumstances, it is useless to generalise in the way that Government spokesmen tend to do. There is an old story about a meat pie that was alleged to be 50 per cent. chicken. When the manufacturer of the meat pie was asked to verify that, he said, "Well, I put in one chicken and one horse. I mix them up, and the result goes into the pie." That is the kind of arithmetic which is contained in the cost-of-living index and the kind of justification which is given for the present old-age pensions.

My hon. Friend the Member for Oldham, West (Mr. Hale) very rightly stressed the difficulty that people have of meeting their fuel and light bills. I would like the Economic Secretary to come down to the municipal library opposite the town hall in Brixton this afternoon. In the reading room he would see a lot of old people who go there to keep warm. They cannot afford to stay at home because they have not sufficient money to keep a fire going all day. Upstairs in that library is a reference room, and we have had to exclude these people from using it by making it quite clear, with the aid of large notices, that the reference library is intended for purposes of study only. When old people go into the reading room on the ground floor, ostensibly to read newspapers and magazines but really to keep warm, it is very difficult to endeavour to keep them out.

What happens in Brixton library in the winter months happens in reading rooms all over the country. I would ask the Economic Secretary to put this to the test. On any cold day let him make a tour of some of the reading rooms in the metropolitan area. I am not asking him to go too far afield, but to spend an hour or two going around London. He will see masses of people sitting in the various rooms just because they have no other means of keeping warm.

We are considering whether we can provide a room in which old people can sit just to keep warm and have a chat with other old people so that the reading room is not used simply as a refuge for people whose private residences are too cold to sit in. This situation is bound to be aggravated during the next two or three months, for a variety of reasons into which it is not necessary to go. I ask the Economic Secretary to forget his statistics and the price index and to go round the reading rooms in the London County Council area. He will find that what has been said by many speakers in this House this afternoon is abundantly justified.

3.15 p.m.

Mr. Baraett Janner (Leicester, North-West)

I, too, wish to apologise for not having heard the hon. and learned Gentleman the Economic Secretary to the Treasury. I wish to add my congratulations to the Government on having had the good sense to select him as an advocate, for it needs a considerable amount of advocacy to help the Government in their difficulties. F doubt whether even he can do it, but, nevertheless, I think that the Government have chosen the right person for the job of making as substantial a case as possible.

I would not have risen had I not heard my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) speaking about the difficulties of older people in the Metropolitan area. I should like to extend the invitation he made to the hon. and learned Gentleman to go a little beyond that area—to come to Leicester, for example, to see how old-age pensioners are suffering there. There, as elsewhere, they have formed committees to discuss their difficulties and to consider how they can get some help to relieve their anxious and difficult position. I wonder whether the hon. and learned Gentleman, with his freshness of mind in approaching this subject, could meet his fellow Ministers to see what can be done about a considerable number of anomalies so that the administration might be exercised in an easier and more humane way.

To give an example, in my constituency there is a Mr. Deasy, of Midland Cottage, Midland Street, Leicester, whose case I intended putting in a Parliamentary Question. This is an opportunity for the hon. and learned Gentleman to hear of that case before the Question appears on the Order Paper. Perhaps, in the meantime, he may be able to help. My constituent is 71 years of age, and for four and a half years after his pensionable period of employment he continued work. He expected to get the benefit of the additional retirement pension without conditions. When he retired he found himself in as bad a position as if he had not worked for those additional years. He had wanted a little extra comfort in his old age and thought that by carrying on with his work and helping the nation by keeping himself instead of having to come upon the pensions fund at the normal age he would have the benefit which was promised by the Government.

Unfortunately, the 11s. additional payment was taken into consideration as an available resource and an allowance of only 6s. 6d. was granted by the National Assistance tribunal from 1st October, 1956, to the end of November for his special needs. Leicester Infirmary had ordered him to have milk, lean meat, fish, eggs and cheese. I am sure that the hon. and learned Gentleman will agree that an additional amount of 6s. 6d. to a man who was told that he would be entitled to something for having worked the additional period is a miserable way of dealing with the case.

Mr. Speaker

I do not wish in any way to interrupt the hon. Member, but I have drawn attention to the practice of this House before. It has been deprecated by many Speakers that matters have been raised on the Adjournment of which no notice has been given to the Minister concerned. I cannot stop the hon. Member, but it is not fair to raise a matter unless it can be answered.

Mr. Walker-Smith

Perhaps I can help the hon. Member, with your acquiescence and approval, Mr. Speaker. The point on which the hon. Member is at present is not one within the purview of the Treasury, but of the Minister of Pensions and National Insurance. I will certainly draw the attention of my right hon. Friend to what the hon. Member has said, so that he can make a full review of that case.

Mr. Janner

I am very much obliged, and, of course, I appreciate the point you made, Mr. Speaker. As I think I intimated that this is a matter which would not come within the immediate province of the hon. and learned Gentleman; that is why I said that he might consult his fellow Ministers with a view to seeing how this case, and other cases, could be met. I am obliged to the hon. and learned Gentleman for having promised to pass on the information to his right hon. Friend.

My hon. Friends are right when they say that one cannot use statistics and other mathematical formulae to meet human cases, for they depend upon averages and upon many factors which do not really apply in human considerations. The right thing for the Minister to do would be to visit places and discuss the matter with those responsible for ministering the needs of people, and also to see the people themselves, in order to ascertain what can be done on the human basis.

A man does not count how much a packet of cigarettes will cost unless he is put into a position in which he absolutely cannot help himself. An odd penny here or there does not count much in a vast assessment, but it does to the man who is very poor. I hope that the Minister will realise that we are all very concerned about the problem. I am sure that he will be able to help in his new capacity if he really puts his mind to it.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes past Three o'clock.