HC Deb 23 May 1972 vol 837 cc1208-11
12. Mr. Kaufman

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

14. Mr. Carter

asked the Chancellor of the Exchequer what is the value of the £ sterling now as compared to the value on 18th June, 1970.

18. Mr. Skinner

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

Mr. Nott

Taking the internal purchasing power of the £ sterling as 100p in mid-June, 1970, its value in mid-April 1972 is estimated at 87½p. This estimate is based on changes in the Consumer Price Index between 1970 and 1971 adjusted by movements in the General Index of Retail Prices for the months at the beginning and end of the period. If the estimate were based solely on movements in the General Index of Retail Prices, the corresponding figure would be86½p.

Mr. Kaufman

May I, first, thank the hon. Gentleman for being delicate enough to give the House the exact and accurate figures this time. Is he aware that his shocking announcement that the £ is worth only 86½p compared with its value when the Government came to power reflects only the first impact of the Government's high rents policy? Will he give an estimate of how high the cost of living will soar when the full force of the Housing Finance Bill is felt?

Mr. Nott

If the hon. Gentleman had asked for the figures last time on the basis of the retail price index, I would have given them to him. The latest figures confirm the improvement in price performance which has been achieved in recent months. In the nine months since last July, the retail price index has increased only 4¼ per cent. I remind the hon. Gentleman that between July, 1969 and April, 1970, under the Labour Government, prices rose in that comparable period at the much faster rate of 6¼ per cent. The effect of the Housing Finance Bill on the retail price index will not be large. Many people—and this applies to the most needy—will pay less rent, and for them the cost of living will fall. The increase in rents and rates in April was the same this year as last year.

Mr. Carter

Will the hon. Gentleman not agree that next year, when the VAT is introduced, inflation could run up to about 15 per cent. per annum, thus further eroding the value of the £? In view of this, does he not think that supervisory bodies should be established and controls introduced to protect the consumer?

Mr. Nott

I do not know how the hon. Gentleman works out his figures. Certainly, VAT will yield to the Revenue approximately the same as purchase tax and SET. I do not know where he gets his wild figure of 15 per cent. It bears no relationship to the facts.

Mr. Bruce-Gardyne

While totally disregarding the absurd comments of the architect of the phrase about the pound in our pockets, may I ask my hon. Friend whether he agrees that there have been slightly perturbing signs of a revival of an upward movement in prices recently, and, in this context, could he confirm the welcome reports in the Press on Monday that the need for more stringent monetary policies and control of public sector expenditure were on the agenda for discussion at Chequers at the weekend?

Mr. Nott

I am not sure why my hon. Friend thinks that there has been some acceleration in price rises. The April figures are not seasonally adjusted, and there is always an above-average rise in prices in April for this reason. The April increase was under 1 per cent., and that is much smaller than in April, 1970 and April, 1971. As to the question of money supply, I am sure that my hon. Friend appreciates that the Government are pursuing expansionary policies. I do not believe that any cutback in the supply of money would have any effect on inflation. It would probably just cut back on the activity rate in the economy, and that is something we do not want to happen.

Mr. Skinner

Is not the money supply situation causing trouble for the building societies and for the Government? As to these 86½p pound notes, may we assume that they are in general use? Do they apply to the railwaymen or is it that when his right hon. Friend was accusing £15-a-week railwaymen of holding the country to ransom—[HON. MEMBERS: "£15 a week? How many?"]—more than there are here—was the right hon. Gentleman under the impression that railwaymen were using something other than these 86½p pound notes?

Mr. Nott

I am sure that the hon. Gentleman is as keen as the whole House is to see an end to the rail dispute. The British Railways Board has made an offer to the unions, which is being put to the ballot, and I do not think that it will help if I comment further on that issue.

Mr. Redmond

This is a perennial Question, identically worded, from the same hon. Members. Would it not help if they had the monthly figures from my hon. Friend with a full explanation as to what is happening each month? They might then be able to understand the situation.

Mr. Nott

It might help the three hon. Gentlemen opposite who have asked Questions if I sent them a complimentary copy of a fascinating booklet called Statistical News. It would provide them with interesting bedtime reading, and they would then be able to understand how the figures were arrived at.

Mr. Healey

While the House will readily understand the Minister's reluctance to admit the Government's failure to control prices over the last two years, can he now confirm that the taxpayers referred to in Questions Nos. 4 and 9 have had the value of the tax reductions more than wiped out by the collapse in the purchasing power of the £ over the last two years? Will he answer the question instead of dodging it?

Mr. Nott

My right hon. Friend answered that Question. I am not sure how the right hon. Gentleman arrives at his figures, but my right hon. Friend has given the right answer.