§ 21. Captain Pilkington
asked the Chancellor of the Exchequer whether he will give comparative figures showing the difference in the fall in the purchasing power of the £ sterling from 1946 to 1951 and from 1951 to 1958, respectively.
§ Mr. Erroll
Taking the internal purchasing power of the £ as 20s. in 1946, it had fallen to 15s. 2d. in 1951. Taking it as 20s. in 1951, it had fallen to 15s 10d. in October, 1958. These estimates are based on the Consumer Price Index, adjusted for October, 1958, by the Index of Retail Prices.
§ Captain Pilkington
Can my hon. Friend say why the second period was as good as it has been in view of the fact that during that time there was no comparable American loan and there was on the other hand, the burden of rearmament and renewed competition from Germany and Japan and other similar nations?
§ Mr. Erroll
In addition to the good reasons advanced by my hon. and gallant Friend, I should like to point out that during this year there has been a greater measure of stability.
Mr. H. Wilson
Will the Economic Secretary point out to his hon. and gallant Friend that the earlier period was a little closer to a war than the later period and coincided with a period of great world scarcity? Will he also give to his hon. and gallant Friend the figures of world prices and import prices in the two periods separately?
§ 23. Mr. Sparks
asked the Chancellor of the Exchequer details of the basis upon which he calculates the internal purchasing value and the internal purchasing power of the £ sterling, respectively.
§ Mr. Erroll
There are four indices concerned and I will, with permission, circulate full details in the OFFICIAL REPORT.
§ Mr. Sparks
Is the hon. Gentleman aware that on 3rd November, in reply to a Question, he said that the internal purchasing value of the £ as at September this year was 15s. 6d. and that in reply to a similar Question on 13th November, he said that the internal purchasing power of the £ as at September was 16s. 7d., a difference of 1s. 1d.? Now, he has mentioned another figure of 15s. 10d. for October. What is the significance of all these variations?
§ Mr. Erroll
The answer is that time marches on. My Answer today to my hon. and gallant Friend the Member for Poole (Captain Pilkington) was specially corrected to take into account the change in the index that was announced this morning. As regards the other points raised by the hon. Member, the Answers usually indicate whether the figures are based on the Consumer Price Index or on the Index of Retail Prices. They are two different indices and the results are, therefore, slightly different.
§ Mr. J. Griffiths
Will the hon. Gentleman reproduce these figures in HANSARD accompanied by a copy of the Tory manifesto at the time of the General Election containing the Conservative Party's promise to mend the hole in people's pockets?
§ Following are the details:
§ The terms "internal purchasing value" and "internal purchasing power" are used synonymously.
§ There are four official indices available. These are:
- (a) The Cost of Living Index, compiled monthly from July, 1914, to June, 1947, by the Minister of Labour, and then discontinued. This index was designed to measure the average changes in the cost of maintaining the standard of living prevalent in working-class households in 1914.
- (b) The Interim Index of Retail Prices, compiled monthly from June, 1947, to January, 1956, by the Ministry of Labour. This index covered a wide range of goods and services bought by households of wage earners and others with relatively small incomes.
- (c) The Index of Retail Prices, compiled monthly since January, 1956, by the Ministry of Labour. This index was constructed from material provided by the 1953–54
1310 household expenditure inquiry and covered expenditure by all households except those whose head received more than £20 a week and those whose income was derived mainly from National Insurance retirement or similar pensions and National Assistance.
- (d) The Price Index of all Consumer Goods and Services, compiled for 1938 and each calendar year since 1946 by the Central Statistical Office. This index covers the whole range of goods and services purchased by consumers.
§ It has been the practice to answer Questions relating to the internal purchasing power of the £ sterling by reference to the Consumer Price Index, wherever possible. But since this index is compiled only for complete calendar years, the Index of Retail Prices is used to bring the calculation up to date from the last complete calendar year for which figures are available. When reference is made to years before 1938, the Cost of Living Index is used. Questions which relate to changes in the cost of living are answered by reference to the Interim Index of Retail Prices or the Index of Retail Prices for periods after June, 1947, or, for earlier dates, by reference to the Cost of Living Index.
§ It is also the practice for Answers to Questions relating to the internal purchasing power of the £ sterling or the cost of living to state specifically the indices on which the calculations are based.