£ Sterling

HC Deb 28 March 1972 vol 834 cc211-3

7. Mr. William Price

asked the Chancellor of the Exchequer by what percentage the value of the £ sterling has fallen since June, 1970.

10. 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.

15. Mr. Skinner

asked the Chancellor of the Exchequer what is the current value of the £sterling compared with June, 1970.

Mr. Higgins

Taking the internal purchasing power of the £ sterling as l00p in mid-June, 1970, its value in mid-February, 1972, the latest date for which information is available, is estimated, on the basis of movements in the General Index of Retail Prices, to be 87½p. This is a fall of 12½ per cent.

Mr. Price

Is that not a shocking and miserable answer, especially for the poor, about whom we have heard so much in the past week? At the present rate of progress how long will it take for last week's alleged pound in the pocket to disappear down the drain altogether?

Mr. Higgins

I believe my right hon. Friend dealt with that point in his speech last night. As was pointed out in an earlier answer, we have achieved considerable success in curtailing the rate of inflation. We are determined to continue that process.

Mr. Kaufman

Is the hon. Gentleman aware that the latest official figures show that inflation is again accelerating, that food prices are rising at a rate of 9½ per cent. a year, and that the Chancellor's purchase tax concession in the Budget last week will be wiped out in 25 days? What specific plans have the Government to stem the rise in the cost of living?

Mr. Higgins

I do not accept the point made in the first part of the hon. Gentleman's question. This matter was clearly dealt with by my right hon. Friend in answer to an earlier question a few minutes ago. In view of the hon. Gentleman's long-standing interest in this subject, I would point out that I replied in answer to a previous question on the basis of the retail prices index in order to be consistent with a reply that I gave to a previous question. However, the latest consumer price index for 1971, which provides a better indication of changes in purchasing power, is available, and on that basis the adjustment in the retail price index shows a figure of 89p and a fall of 11 per cent. [An Hon. Member: "A fiddle."] It was not a fiddle. I thought it right to point out that I was giving an answer on a consistent basis in line with an earlier answer. As I have said, the latest figures throw up a figure of 89p and a fall of 11 per cent.

Mr. Skinner

Is the hon. Gentleman aware that for the low income earner who in June, 1970, was on £20 a week, this will represent a drop in real purchasing power of £2.50. So much for the pound in the pocket! When one bears in mind that millions of council tenants will also be subjected to an increase of a further pound this year and to successive increases, will the Minister be prepared to say that the present Government will give a guarantee that when eventually they go to the country the pound will not fall below 75p as compared with its value in June, 1970?

Mr. Higgins

The hon. Gentleman will be aware that more help will be given to the lowest-paid in terms of rents. This is a very important consideration and will assist people at the bottom end of the scale.

Mr. John Hall

Does my hon. Friend not agree that the rise in real wages has been greater than the fall in the value of the pound? Secondly, if one takes the situation since capital gains tax was first introduced by the previous Administration, there has been a fall in the value of the pound by about 30 per cent.? Does it not mean that capital gains tax is a capital tax?

Mr. Higgins

If I may answer the main point, it is not the case that the change in the value of money has led to a fall in real earnings. The latest national income estimates show that since we took office real personal disposable income has risen at an annual rate or about 3 per cent. compared with a rate of under 2 per cent. during the whole six years of the previous Administration's period in office.