HC Deb 27 July 1971 vol 822 cc190-1
8. Mr. Kaufman

asked the Chancellor of the Exchequer what is the purchasing power of the £ sterling now, taking it as 100p on 18th June, 1970.

Mr. Higgins

On the basis of the movement in the General Index of Retail Prices, the purchasing power of the £ fell by 9.3 per cent. between mid-June, 1970, and mid-June, 1971, the latest date for which information is available. In money terms this is equivalent to a fall from 100p to about 90½p.

Mr. Kaufman

Is the Minister aware that, with Tory inflation at its present ruinous rate, the effect of the cut in purchase tax which the Chancellor of the Exchequer announced with such a vainglorious flourish last week will be completely wiped out three weeks from now?

Mr. Higgins

I have pointed out to the hon. Gentleman on earlier occasions that the previous Administration must carry a great deal of responsibility for the situation. In regard to the reference to the cut in purchase tax, the hon. Gentleman is taking the rather narrow view of the measures we have recently announced. In addition to the cut in purchase tax, there were the cut in S.E.T., the limitation which my hon. Friend announced on nationalised industry prices and also the C.B.I. initiative, which was generally welcomed.

Sir G. Nabarro

On the matter of purchase tax, would my hon. Friend bear in mind that the reduction from 36⅔ per cent. to 30 per cent. on motor cars, coupled with the freeing of all hire-purchase restrictions, has led to an enormous demand for motor cars? As this will cause manufacturers to be able to work their plant to the extent of 100 per cent. instead of 80 per cent., will my hon. Friend appeal to manufacturers to reduce the prices of all their motor cars on the home market?

Mr. Higgins

I always listen very carefully to what my hon. Friend says——

Sir G. Nabarro

I am sure you do.

Mr. Higgins

—with regard both to purchase tax and to the car industry. I do not doubt that his views will also be noted by that industry.

Mr. Taverne

Is it not a fact that inflation at the moment under the present Government is still accelerating, that the policies which were pursued until last week have totally failed and that the heavy increase in unemployment has been produced by a policy which is now discredited and largely abandoned?

Mr. Higgins

I believe that our policies are effective and, as my right hon. Friend pointed out on Monday, we have now reached a further stage in the battle against inflation, which we are determined to win. I believe that we have the support of the country in the measures we have taken throughout.