HC Deb 28 November 1972 vol 847 cc225-7
11. Mr. James Hamilton

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

28. Mr. Carter

asked the Chancellor of the Exchequer what is the value of the £ sterling compared with June, 1970 based on the General Index of Retail Prices.

Mr. Nott

It is 83p—which is why the Government imposed the standstill.

Mr. Hamilton

Does not the hon. Gentleman recognise, on the basis of his own figures, that during the same period the cost of living has increased by 22 per cent.? Does he deny that between now and next April the cost of food will increase by 1 per cent.? Will the Chancellor take note of the situation and admit that the freeze will apply only to wages, and that he cannot control prices and will not able to do so?

Mr. Nott

The hon. Gentleman knows very well that over the period of 18 months the Government have had great success in bringing down the rate of inflation. It is a matter for regret that the rise in retail prices in October put us back to more or less where we were when the Labour Government left office. Prices were then rising at 8 per cent. It was because of the trend towards higher prices again that the Government had to impose the standstill.

Mr. Carter

Is the Minister aware that if this Parliament runs its full course, and things continue as they have been, the 1970 £ will be worth about 75p in 1975?

Mr. Joel Barnett

Less than that.

Mr. Carter

Given this rapid and constant fall in the value of money, does not the hon. Gentleman think that there is an argument for an immediate and dramatic increase in the old-age pension, and that when it is increased it should be tied to the cost of living index?

Mr. Nott

I am not aware of any such hypothetical situation. In October pensions were 35 per cent. higher than in June, 1970 and retail prices were about 20 per cent. higher. We have introduced an annual review of pensions, and during the present Government's period of office their real value has increased at double the rate of increase that occurred when the hon. Gentleman's party was in power.

Mr. Bruce-Gardyne

Will my hon. Friend assure the House that by his initial reply to the hon. Member for Bothwell (Mr. James Hamilton) he was not seeking to imply that the freeze as such was an answer to inflation?

Mr. Nott

I am not suggesting that the freeze by itself is an answer to inflation. It must be looked at in conjunction with a whole range of fiscal monetary and economic policies.

Mr. Healey

Does the Minister recall, however, that it is only a fortnight since the Prime Minister said that the Government had a unique responsibility for controlling inflation? Does he agree that the appalling figures he has just given show that the Government have totally failed to fulfil that responsibility in the past 21½ years? In relation to the freeze, is he aware that the Economist predicts an increase in food prices over the next 12 months of 8 per cent. and that nothing in the freeze legislation will prevent this?

Mr. Nott

The Economist has had a number of observations to make on quite a number of things, including the right hon. Gentleman on occasions, but I do not think the right hon. Gentleman's predictions can possibly be borne out by the facts. I do not agree with what he said.

Mr. Kaufman

On a point of order. I beg to give notice, Mr. Speaker, that I shall raise a point of order on this Question at the end of Question Time.