HC Deb 27 June 1972 vol 839 cc1173-5
10. Mr. Dixon

asked the Chancellor of the Exchequer what has been the increase in the standard of living on the basis of real disposable income per head since June, 1970.

Mr. Barber

Between the second quarter of 1970 and the fourth quarter of 1971—the latest available quarter—the standard of living on the basis of real personal disposable income per head rose by 4 per cent.

Mr. Dixon

Does my right hon. Friend agree that that is an annual rate of about 2.7 per cent., representing the increase in the standard of living since the last election, and that that figure invalidates the implication in the supplementary question addressed to my right hon. Friend by the right hon. Member for Leeds, East (Mr. Healey) under whose Government, on a similar basis, the standard of living was increasing at about 1.3 per cent.?

Mr. Barber

With respect, my hon. Friend is doing an injustice to the right hon. Member for Leeds, East (Mr. Healey). Between 1964 and 1970 the standard of living of the British people on the same basis rose at an annual rate not of 1.3 per cent. but of 1.5 per cent. My hon. Friend is right in saying that for the period which I quoted, the annual equivalent rate is 2.7 per cent.; in other words, that our standard of living has improved at almost twice the rate under this Government's policies of expansion and tax cuts that it did under the Labour Government's policies of restriction and tax increases.

Mr. Joel Barnett

Is it not a fact that the floating of the £ is a massive vote of no confidence both at home and abroad in what the right hon. Gentleman's inflationary policies have done? Despite all this, will the right hon. Gentleman persist in telling us that it is all a great victory? Does not he intend to change his policies in any way?

Mr. Barber

I made it quite clear in my statement about these matters on Friday that one of the principal reasons which led to the troubles a week or so ago and the action which I felt it right to take in the national interest was the fear of inflation. Certainly that is true.

Mr. Evelyn King

Amid the welter of figures which we have had today, is it not a fact that my right hon. Friend's announcement of a 4 per cent. rise in the standard of living is almost the only one worth hearing? Will my right hon. Friend publicise it as widely as possible?

Mr. Barber

The truth is that we are all—right hon. and hon. Members opposite and my right hon. and hon. Friends—in business together with the same objective of improving the standard of living of the British people. Therefore this is an extremely relevant figure.

Mr. Bob Brown

Will the right hon. Gentleman accept that whether the standard of living, on the basis of real disposable income, has increased by 2.7 per cent. or by 1.5 per cent. is completely irrelevant? What is important is the dispersal of the wealth of the nation, out of which those at the lower end of the scale have been coming badly whereas those at the top have received a tremendous increase?

Mr. Barber

If one thinks about real earnings, average earnings during the past year have increased by 5 per cent. after allowing for the increase in the cost of living. The hon. Gentleman is quite right to say that one of the problems about improving the position of the lower paid, as we have found repeatedly, is that it seems to be impossible in many cases to improve the position of the lower paid without the trade unions concerned insisting that that improvement should be reflected all the way up through the differentials. This is one of the major problems.

Mr. Healey

But if the right hon. Gentleman is concerned—I believe that he is right to be concerned—about the need to compress differentials, how on earth can he justify giving people on £20,000 a year an increase of 18 per cent.? Should not the Government start there if they want to influence the unions' attitudes on this matter?

Mr. Barber

I can assure the right hon. Gentleman that if the average level of wage claims were anywhere near the average annual rate of increase involved in those increases, we should be doing very much better.