Inflation

HC Deb 27 June 1972 vol 839 cc1168-9

6. Mr. Douglas

asked the Chancellor of the Exchequer if he will make a statement on the current rate of inflation.

Mr. Barber

Yes, Sir. Over the past year the rate of increase of prices has been almost halved.

Mr. Douglas

In view of that subjective answer, does the right hon. Gentleman not agree that his objective is objectionable in that it means that for those on fixed incomes, particularly old-age pensioners, any increase in pension is overtaken by inflationary pressures in the economy? Will he make a statement saying how he intends to protect them from the hidden devaluation which is taking place at present?

Mr. Barber

The hon. Gentleman is quite right to say that it is pensioners and those on small fixed incomes who are the principal sufferers from inflation. That is why over the past year we have taken the various actions which we have taken. This has ensured in the past year that the retail price index for all items has increased by just over 6 per cent. compared with almost 10 per cent. a year ago.

Mr. Ridsdale

Is my right hon. Friend aware of the fact that what is disturbing is that 800,000 building workers have put in wage claims of 20 to 23 per cent.—[HON. MEMBERS: "Hear, hear."]—and that 2½ million engineering workers have wage claims of up to 40 per cent., and that these wage claims are causing old-age pensioners and others to suffer?

Mr. Barber

My hon. Friend is quite right, and I am sure it will be noted outside this House, if it is reported, that when my hon. Friend made his observations about those wage claims they were cheered by the Opposition.

Mr. Healey

Is the right hon. Gentleman aware that the value of average earnings has dropped by £200 since he took office under two years ago? In view of the fact that devaluation is bound to increase the cost of living, will he abandon those elements in Government policy which are calculated to increase the cost of living—namely, rents, food and the new VAT?

Mr. Barber

I can assure the right hon. Gentleman that real earnings have been going up at a considerable rate over the past year or two. I thought the right hon. Gentleman would be the first person to accept that. What is certain is that any increase in prices as a result of any change in the exchange rate will be not nearly as much as the increase in prices resulting from inflationary pay claims.