PRESENT INCREASES

HC Deb 25 June 1971 vol 819 cc1776-92

11.15 a.m.

Mr. Robert Sheldon (Ashton-under-Lyne)

I beg to move Amendment No. 2, in page 1, line 16, leave out "18 per cent. of the rate as so increased" and insert: 14.4 per cent. of the rate as so increased further increased by five-twelfths of the increase in the average of the general index of retail prices published in each of the three months April, May and June 1971 compared with the average of the same index published in each of the three months April, May and June 1970". I am sorry to say that we still do not have a Treasury Minister here. This is a point that we raised in Committee, and, since the Bill and particularly this Amendment deals with inflation and the need to protect pensioners from the consequences of inflation, I had hoped that even though a Treasury Minister was not selected to attend the Committee, the deficiency would be corrected on Report.

Since this is the first Bill ever to come before the House which seeks to anticipate in numerical terms the levels of inflation which the Government foresee, I should have thought it essential that a Treasury Minister be brought to the House to advise the Under-Secretary of State for Employment on these matters. Of course, we have no quarrel with the hon. Gentleman himself. His ability is known to the House and his work is greatly respected. But these are matters that concern the Treasury. We are vitally concerned in trying to assess what is the level of inflation during the period from April to September.

I should like to quote what the present Financial Secretary to the Treasury said in the Standing Committee considering the Pensions (Increase) Bill in 1969. He said: … we are denied the services of a Treasury Minister on a Bill which has traditionally been handled by such a Minister …". He went on to say: This is poor treatment. We do not expect any change to be made in the Motion "— that is the Motion relating to the composition of that Committee— or in the membership of the Committee, but I hope that the Government will take note of the point for the future and feel that it would be appropriate that Bills of this importance, affecting as many people as this one does, should be accorded the proper treatment of a debate on the Floor of the House and correct representation on the Government side in Committee."—[OFFICIAL REPORT, Standing Committee F, 4th February, 1969; c. 4.] That was on a matter much less important than this. It was on a matter which did not seek to anticipate the levels of inflation. It was a Bill that did not purport to be, as this Bill purports to be, the final Bill of this kind to appear before the House, because we are changing the way in which these increases shall be made. As a result of that, this is the last Bill of this kind, although in another respect it is the first Bill of this kind. It is the first Bill that seeks not only to allay the consequences of inflation but it goes much further than that and specifies what is the Government's view of the future level of inflation.

We can see how this is calculated if we turn our attention to this Amendment—

Mr. Speaker

Would the hon. Gentleman forgive me? I had assumed that hon. Members would have read the provisional selection of Amendments. For the record I should say that, with this Amendment, I will allow a discussion on the following Amendments:

Amendment No. 4, in page 1, line 19, leave out '18 per cent. of the basic rate' and insert: '14.4 per cent. of the basic rate increased by five-twelfths of the increase in the average of the general index of retail prices published in each of the three months April, May and June 1971 compared with the average of the same index published in each of the three months April, May and June 1970'.

Amendment No. 6, in line 22, leave out '16 per cent. of the basic rate' and insert: '12.4 per cent. of the basic rate increased by five-twelfths of the increase in the average of the general index of retail prices published in each of the three months April, May and June 1971 compared with the average of the same index published in each of the three months April, May and June 1970'.

Amendment No. 8, in line 25, leave out '14 per cent. of the basic rate' and insert: '10.4 per cent. of the basic rate increased by five-twelfths of the increase in the average of the general index of retail prices published in each of the three months April, May and June 1971 compared with the average of the same index published in each of the three months April, May and June 1970'.

Amendment No. 10, in page 2, line 2, leave out '10 per cent. of the basic rate' and insert: '6.4 per cent. of the basic rate increased by five-twelfths of the increase in the average of the general index of retail prices published in each of the three months April, May and June 1971 compared with the average of the same index published in each of the three months April, May and June 1970'.

And Amendment No. 12, in line 5, leave out '6 per cent. of the basic rate' and insert: '2.4 per cent. of the basic rate increased by five-twelfths of the increase in the average of the general index of retail prices published in each of the three months April, May and June 1971 compared with the average of the same index published in each of the three months April, May and June 1970'.

Mr. Sheldon

I am grateful to you, Mr. Speaker, for pointing out that this Amendment is taken in conjunction with other Amendments which seek to change the basis of the increase of the pension in September of this year as a consequence of the level of inflation being rather higher than that which was expected by the present Government when this Bill was produced.

In paragraph 8 of the Explanatory Memorandum it is pointed out that There is thus a gap of 5 months between the latest date to which it has been possible to calculate to movement in the cost of living and the payment date. We know that the review took in the period to 31st March and that the increase is payable on 1st September. As a result, there is this gap between the Government's decision on the cost of living in the period up to 31st March, and their anticipation of inflation up to 1st September.

We see from the Explanatory Memorandum that the Government have allowed for a cost of living increase of 14.4 per cent. up to 31st March, and that they are giving an increase of 18 per cent. which is to take effect on 1st September. The difference between those two figures is 3.6 per cent. That takes into account the movement in the five-month interval, and it works out precisely at an annual rate of inflation of 8.64 per cent.

That is the Government's estimate. I do not quarrel with it. Presumably it was made some time in March of this year when the Bill was being prepared. However, paragraph 5 of the Explanatory Memorandum says: With this new Bill, Parliament is invited for the first time to abandon the concept of relief, of hardship and to accept an unqualified obligation to maintain by means of two-yearly reviews, the purchasing power of public service pensions. That is an unqualified obligation, and no doubt the whole House will readily accept the Government's sincerity in seeking to maintain the purchasing power of the pensions involved.

In March of this year, the Government decided that 8.64 per cent. was about the kind of figure which they might allow for the level of inflation in the gap between the date when the estimate had to be made and the date when the pensions came into force. That may not have been an unreasonable estimate at the time. I would have plumped for a higher one. Other hon. Members would probably have picked different figures. However, the level of inflation has been greater than the Government anticipated. Comparing the situation in April, 1971, with that in April, 1970, the cost of living index rose by about 9½ per cent., although the figure was not known by the hon. Gentleman at the time since it appeared after the Government decided that it would be 8.64 per cent. Comparing May, 1971, with May, 1970, it is even higher, at about 10 per cent. It is clear, therefore, that levels of inflation are increasing.

These matters are the responsibility of the Treasury. It is not for the hon. Gentleman to advise on levels of inflation. It is for that reason that I wanted to put a number of points to a Treasury Minister. These are not matters where decisions had to be taken in March of this year. The Bill is still before the House. It is an absurd situation to have to rely on a forecast when some of the figures are now known.

There are occasions when we have to rely on the best estimate that we can make of what is likely to happen about the cost of living increases in the future. But it is absurd to rely on an estimate when some of the figures are before us. That is what we are doing here. We are relying on an estimate produced in March when we should be using the actual figures produced in May or June. If we are to estimate the increases in inflation, why estimate them five months ahead when we can delay our estimate until three of the five months are known and the forecast of the remaining two months is much easier to make?

This Amendment seeks to do just that. It lays down a formula on retail prices which I gather is not wholly opposed by the hon. Gentleman, and how the computation may be made. It has the great merit of taking into account increases in the cost of living and inflation in three of the months before the decision is made and before the Bill becomes law. That is its great advantage. If the Amendment is accepted, the Government will work out on this formula the latest levels of inflation which they can derive from published figures produced by their own Departments.

One of the difficulties that we have had and shall have in September is that, in the past, under all Governments, pensioners have suffered from a failure to understand the levels of inflation which are yet to come. Constantly, we have under-estimated future levels of inflation, and pensioners have suffered from that under-estimation. This Government sought to put the matter right and accepted an unqualified obligation to maintain the purchasing power of those pensions. If this Amendment is accepted, the Government will be able to meet that unqualified obligation. If it is not accepted, there is no doubt that, from September of this year, they will have failed, and the level of pension which will begin to be payable will be less than should have been allowed for and less than this House should have made sure that the pensioners received.

It is not only the case that past Governments have underestimated the levels of inflation. What is now clear is the way in which this acceleration has taken place. Taking the periods between Pensions Bills, it is clear how this has happened and how it is likely to continue to happen unless other measures are taken. Between the pensions increases of 1st January, 1965, and April, 1969, the increase in the cost of living was 21 per cent. Between those of 1st April, 1969, and 1st September, 1971, the increase is likely to be 18 per cent. In other words, the cost of living rose by 21 per cent. in 4¼ years, whereas by September it will have risen by 18 per cent. in only 2½ years. This illustrates the rapid increase in levels of inflation between Pensions (Increase) Bills which has contributed to the under-payment of pensioners.

11.30 a.m.

The present Financial Secretary to the Treasury said in the Committee debate on the Pensions (Increase) Bill, 1969: Although we cannot forecast inflation it would be a bold man who said that where the Government have so signally failed in the last three years they will be signally successful in the next two or three."—[OFFICIAL REPORT, Standing Committee F, 4th February, 1969; c. 9.] We are talking now not about two or three years but about two or three months, and much greater precision should have become possible. The Government's estimates have so far erred.

I fully accept the Government's serious intention to pay the increases which I welcomed on Second Reading and which I still welcome, but which have since proved to be inadequate. The levels of increase in inflation were not then known, but they have become more generally understood.

The Amendment says that between now and the introduction of the increase the three months April, May and June of this year should be compared with the same three months of last year, that the increase in the general index of retail prices should be calculated from those simple figures, and that that rate of increase should be the increase for the five months during which the pensions will be increased.

It is a simple Amendment, administratively convenient, and simple to comprehend. Most important, it ties in completely with the unqualified obligation to maintain the purchasing power of public service pensions. The Minister should find it very easy to accept this useful Amendment, and I hope that the House will accept it.

Mr. John Guiding (Newcastle-under-Lyme)

The Bill is an updating Bill which unfortunately is out of date before it is on the Statute Book. The argument about the 1.6 per cent. is an argument not only about money but about the fulfilment of the spirit of the legislation.

My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has illustrated how the calculations are based on earlier figures which were themselves based on an optimism which characterised the Prime Minister's "at a stroke" statement. We now know that that optimism has disappeared and that the Government appreciate that they face a very difficult problem in the shape of rising prices. This was acknowledged by the Minister of Agriculture, Fisheries and Food, speaking in the Bromsgrove by-election campaign, when he forecast further rapid increases in prices. It was apparent that he had discovered what he had conveniently ignored in opposition, that increasing world prices have a significant influence on our cost of living.

Whatever the reasons, it is clear that the cost of living is increasing very rapidly, more rapidly than the Government expected when the Explanatory Memorandum was drawn up. The difference between us is 1.6 per cent. It is important for the Government to concede that figure so that the public service pensioners will feel that they have been given a square deal.

The argument that it is ridiculous to pass the Bill based on forecasts which we now know to be wrong is unanswerable. The Government should accept the principle of the Amendment and update the Bill so that the cost of living increase over the past three months is taken into account. They should tell the pensioners, "We shall restore the value of your pensions in a real sense".

There is another reason why the Government should do this. The pensioners had thought that they would receive increases in pensions from 1st April. I have argued that the increases should be back-dated to 1st April. If that cannot be done, at least on 1st September they should receive a pension which has been revalued on the real rise in the cost of living and not on a forecast which has proved to be wrong.

The Parliamentary Secretary to the Civil Service Department (Mr. David Howell)

I admire the ingenuity of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) in devising the Amendments to raise the percentage increase in pension in such a way as to pass your keen scrutiny, Mr. Speaker, which I understand is directed on these occasions towards avoiding repetitious debate. I have listened with care to what the hon. Gentleman has said today as a further elaboration of the case which he made at length in Committee. I concede the point that he and his hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) made that he has lighted upon a slightly different method of presenting that case, but what he has said confirms my initial reaction when I first read the Amendments that we are once again on the same ground.

We are also on the same ground on the hon. Gentleman's point about the involvement of the Treasury and Treasury Ministers in this matter. As I said in Committee, the hon. Gentleman, with others, played a leading part in the creation of the Fulton Report and the Fulton doctrine, which led to the separation of Departments between the Treasury and the Civil Service Department. It is only natural, therefore, that a Minister from the Civil Service Department should have full responsibility for, and be concerned with, all the details of the Bill. If there are particular points relating specifically to Treasury policy and Treasury departmental questions in the narrow sense, I undertake to convey them and their implications to my hon. Friend the Financial Secretary. But the whole point of Fulton and of setting up a Civil Service Department was to create a Department which could deal fully with these matters, and that is why I am here today.

The hon. Gentleman's even-numbered Amendments propose a formula which would substitute for the Government's 3.6 per cent. margin on account, or 3.2 per cent. compound, a larger margin based on a projection of the cost of living as measured over the most recent year for which figures are available. This would apparently allow the figure for each end of the period to be based on a three-month average, rather than on the figure for a single month.

We are not debating the hon. Gentleman's odd-numbered Amendments, the inner thinking and mathematics of which were not revealed by reading the Order Paper. I have assumed that Amendment No. 1, which raises the standard from 18 per cent. to 19.6 per cent., is also based on a projection of the cost of living, although measured in a rather different way, and instead of repeating the calculation afresh for the graded increases, he simply added the same 1.6 per cent., which was appropriate to the standard increase, to all the other 1971 increases as well. However, it is the even-numbered Amendments that we are considering.

When the Government were considering how to provide their margin on account to meet the understandable criticism that the five-month gap was not being met, they considered all sorts of various possible methods, including expert forecasts of various kinds, and a mathematical projection based on various formulae. It was the hon. Gentleman himself who said earlier that no Government would be likely to publish a forecast of the cost of living five months ahead, but there is also the more fundamental objection to that approach which lies at the root of the issue that we were debating in Committee, and to which I shall return in a moment.

There are many forms of projection. The two sets of Amendments illustrate two forms. Another form would have been to have projected the cost of living measured over the full two-year period forward to 1st September, to have multiplied 14.4 per cent., which is the cost of living rise over the 24-month review period, by 29 over 24 to have included the five extra months. The answer would have been 17.4 per cent. Or we could have looked backwards and measured the last 29 months' cost of living that was available to us in April. That would have produced 17.9 per cent., and so on.

But all those methods miss the main point, which is that we are concerned with a permanent margin on account, and not just a margin for 1971.

Mr. Sheldon

I understand the reason why one could use the other method of calculating the increase in pensions to take account of the five-month gap. The reason I selected those months is that in a period of accelerating inflation it is the latest figures that are the most suitable.

Mr. Howell

That really strengthens the emphasis that I placed on the main point, and confirms me in my view that, despite our exhaustive going over of this point in Committee, there is still a misunderstanding in the hon. Gentleman's mind about the central point, and that is confirmed even more by the fact that the hon. Gentleman has tabled Amendments to Clause 1, without any comparable Amendment to Clause 2.

Had the Government wished to proceed by a cost of living projection—and because they did not, this is obviously a hypothetical point—they would have wished to provide for fresh projections at each review so that the spurious precision in the first instance was counterbalanced in a self-adjusting way by an equally spurious precision on later occasions.

The fundamental point—and I apologise to the House if this is repeating it, but I must do so, if only for emphasis—is that this margin is not the last word on the increases that pensioners will receive in respect of the rise in the cost of living between April and September of this year. That will be taken up in the review period 1st April, 1971, to 1st April, 1973.

Second—and this is the point which worries me most about he hon. Gentleman's intervention, on the first Amendment and about the way that he has put it down—is that it has to be a margin that is reasonably appropriate for present pensioners, not merely at this review, not merely the five months 1st April, 1971, to 1st September, 1971, but at all future reviews stretching indefinitely into the future. That is the point.

11.45 a.m.

The hon. Gentleman says that if we take the last three months they will reflect the rapid rate of inflation that confronts us. No one can deny that that is the situation, but that really reinforces my point that we are providing not just for special circumstances, but for a five-month gap-closing device for years ahead. In a sense, to suggest that the percentage should be higher now, that the margin on account should be raised by mathematical projections, reinforces the point about its almost certain unsuitability for five-month periods in future review years.

May I explain this to the House once more, because I concede that it is complicated. I concede that it involves difficult and complex presentation, but it is the centre and heart of the matter.

The scheme originally outlined in my statement of 17th November held out the prospect of increases in pensions payable this September, which was the first practical moment to bring them into payment, equal to the percentage rise in the cost of living over the first review period. As it turns out, that was 14.4 per cent.

What happened was that hon. Members, pensioners' organisations, individual pensioners, and hon. Members' constituents, represented, quite fairly, that this five-month gap between the review date and the payment date would mean that pensions would be five months out of date when they came into payment. I see their point. They had their eyes particularly on this year, as the hon. Gentleman has, but the Government were the more ready to meet the point because they saw that this pointed up not only the immediate situation but what would have been, if we had not corrected it, a permanent weakness in the Bill. The margin on account is concerned with a permanent weakness in the Bill, and that is why, on reading the Amendment, it is clear that the hon. Gentleman is concerned with the immediate situation, and not with a permanent weakness and meeting a permanent situation that will arise whenever there is a review from now on into the future.

The Government added to this year's increase, to both the standard and the graded increases payable in the first review, a margin on account.

Mr. Sheldon

If the hon. Gentleman is saying that what I have suggested is not the most suitable way of dealing in the future with the five-month gap, I should like to have some discussion with him about it, but that is another matter. If he is saying that his only quarrel with the Amendment is that, while being suitable this year, it is not suitable for subsequent years, would he undertake to introduce a suitable Amendment in the other place?

Mr. Howell

I am not saying anything in line with the hon. Gentleman's second point. What I am saying is that the proposal introduced between the statement in the House and the publication of the Bill to bring in a margin on account was designed to meet a permanent weakness in the Bill, which is that the five-month gap is not provided for in pension increases. We have devised a formula that will meet it year by year by a fixed percentage. In some years it will be too low. In some years it will almost certainly be too high, and in some years it may be just about right. Over the years, therefore, it should just about even out. It may be that over the years pensioners will gain, but, on the mathematics of it, the thing is bound to even out.

As the hon. Gentleman, and others, have said, the standard increase of 18 per cent., when compared with a 14.4 per cent. rise in the cost of living over the review period, reveals that margin to be 3.6 per cent. or, if it is done by compound arithmetic, 3.2 per cent. It has also been said by the hon. Gentleman—and this is the main cause and motivation of the Amendment—that since 1st April the cost of living has risen by 2.8 per cent. equivalent—and I concede this—to a substantial proportion of the margin on account that we have allowed.

But quite apart from the fact that the 2.8 per cent. rise so far may not be anything like the whole picture—and anyway the cost of living frequently slows down in the summer months, and even declines—the Government's argument—and I repeat it—is that they never intended to forecast or project the level of the cost of living on 1st September, 1971, or to provide a margin that was precisely apt and suited to 1971, and 1971 alone.

That meets the intervention of the hon. Member. That was not our intention, therefore it is not surprsing that it does not appear in the Bill. By April, 1973, pensioners will have been exactly compensated for the rise in the cost of living. They will once again be left with this margin of 3.6 per cent. or 3.2 per cent. to take account of the five month gap between April and September in the review year. So it will be for existing pensioners with every future review. If the cost of living rises by a little more than the margin between April and September this year pensioners will have to wait two years to get this fully corrected.

Mr. Sheldon

Is the hon. Gentleman saying that the 3.6 per cent. will be the same allowance in each of the review years?

Mr. Howell

I am indeed. It must automatically be so—or 3.2 per cent. compound. Each review year there will be the 3.6 per cent. boost to carry the pensioners from April to September. This matter must be seen in its true perspective, through time. It is not only that this is a small matter when we reflect on the huge importance of the Bill, and the vast strides that it makes, but it is also small in comparison with the average total increase of 26.3 per cent. which all qualified pensioners, whose pensions began before 1st April, 1969, will receive this autumn.

The fact in the centre of this part of the Bill is that it is to the advantage of pensioners that the permanent margin on account has been calculated at a time of relatively rapid inflation. What I am saying is that, whatever the course of inflation over the past year or during the next year or two, we would all expect that in future reviews the cost of living pattern between April and September will at any rate not be so much worse than the pattern established in the post-war years. If we look at that pattern we can see that there has been an average increase over these five months, April to September, of 1.5 per cent. not 3.6 per cent. or 3.2 per cent. It means that by any standards, and certainly by the standards we are discussing here, the margin of 3.2 per cent. would be and must be more than enough.

Mr. Golding

Can the hon. Gentleman tell us what the average level of pension will be under his scheme and what it would be under our Amendments? I understand that the present average level is about £360 a year. Can he confirm that?

Mr. Howell

Without notice—without a computer in my head—I cannot give the compound figures. If we take this year alone the various Amendments, including those not being discussed would raise the pension by I think 19.6 per cent. which would give it a much more substantial margin. The Amendments that we are discussing would give it a slightly lower margin, 3.9 per cent. I think. I do not have the exact figures in front of me. The margin for this year would I am sure be higher.

Mr. Hugh Jenkins (Putney.) Those of us who have not travelled with the hon. Member in Committee sometimes have a little difficulty in following what he says is a rather complex Bill. As I understand it, what he is saying is that the 3.2 per cent. figure, which will be biennial, will compensate for an increase calculated on the basis of 1.5 per cent. per annum. If that is correct and the 3.2 per cent. will only just cover an increase which in the past has averaged 1.5 per cent. per annum, that must mean that if there is a higher rate of increase, as recent indications suggest, it will fail to cover it.

Mr. Howell

That is not quite the case. I am the first to concede the point that the hon. Member rightly makes about this being an extremely complicated Bill. Had he been with us in Committee he would have heard me say that I wanted to provide some visual aids to penetrate some of the complexities of the Bill. I must take the blame for not putting the point clearly.

It is not quite as he has described. If we look back over the years since the war we find that in the period 1st April to 1st September there has been an average increase of 1.5 per cent. We are allowing for 3.2 per cent. because the calculation has been made at a time of relatively rapid inflation. From the pensioners' viewpoint it is fortunate that the calculation is made this year and not in a year such as we naturally hope to see in future, when the rate of inflation will be much lower. To that extent the pensioner is the gainer year after year, or rather two years after two years, having a margin of 3.2 per cent. to carry him from 1st April, the end of the review period, to 1st September, the payment date when the average increase has been one of 1.5 per cent. That is why this margin, far from being niggardly, verges on the generous in that it will more than meet the reasonable expectation of inflation over those five-month periods in the years ahead.

That is why the hon. Gentleman's Amendment which produces significantly larger permanent margins by combining the 1971 idea with the permanent margin approach which is the Government's idea must end up by being excessively over-generous and that is the reason why I must—

Mr. Sheldon

Before the hon. Gentleman finishes that point, why should it be over-generous? If, despite all indications to the contrary, the Government succeed in curbing inflation, why should the comparison between any three months, when the review is considered with a previous year, offer figures higher than 3.6 per cent.?

Mr. Howell

Because the hon. Member's Amendment asks that for this year the increase should be based on a comparison between the average of the index published in each of the three months, April, May, June, as against April, May, June, 1970. That figure would be built permanently into pension arrangements and pensions machinery. If it was higher than 3.2 per cent. or 3.6 per cent., as his calculations and mine show it would be, that would mean that instead of getting a permanent boost of 3.2 per cent. in the years ahead to cover a period when, on average since the war, the average increase has been 1.5 per cent. there would be a figure of 3.9 per cent. or 4 per cent. or whatever. To meet this particular year the hon. Member's Amendment would give a boost in future years which on any reasonable expectations—and I do not share his doubts about the success of our policies for curbing inflation—would still be more than generous and still more out of line. That is why the Amendment cannot be accepted, because it would not help the Bill as the Government conceive it and it would not meet the point which the 3.6 per cent. or 3.2 per cent. margin on account is designed to meet. That is why I must ask the House to reject it.

12 noon

Mr. Sheldon

With leave, I should like to take up the crucial point about the pension increases for this year and for subsequent years. The hon. Gentleman failed to deal with the increases planned for this year. I showed that there seemed to be no reason why he should accept for this year a level of inflation worked out in March when it could be worked out in June or even July. He conceded that 2.8 per cent. of the 3.6 per cent. had already been used up by the increases in inflation which had taken place this year. As a result, he failed to answer the point about the increases to be payable at 1st September this year. Our Amendment sought to provide for increases this year.

The basis for the increases in subsequent years could be changed by an Amendment introduced in another place. If the hon. Gentleman would accept my point about the increases next year, I would undertake that this side of the House would accept an Amendment which sought to clarify the position concerning subsequent years.

Mr. David Howell

I am grateful for the hon. Gentleman's offer, but it will not surprise him when I say that I cannot be tempted by it. There is a practical obection to the Amendment. In a sense, it is aimed at one thing, the Bill and the Clause are aimed at another. The effect of the Amendment would be to freeze the margin for future reviews on the basis of the unusually high rate of inflation in recent months. One would be setting it at a level which would be over-generous in other than normal circumstances. I must maintain my view and reject the Amendment.

Amendment negatived.