£ Sterling (Value)

HC Deb 23 January 1973 vol 849 cc197-200

4. Mr. Ashton

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

5. Mr. Skinner

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

8. Sir G. Nabarro

asked the Chancellor of the Exchequer what is the value of the sterling compared with 1st July 1970.

11. 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.

The Financial Secretary to the Treasury (Mr. Terence Higgins)

Taking the internal purchasing power of the £ sterling as 100p in June 1970, its value in December 1972, the latest date available, is estimated at 82p. This estimate is based on the movement in the General Index of Retail Prices.

Mr. Ashton

Is the hon. Gentleman aware that on the last three occasions he has answered this recurring Question the value of the £ has always gone down by 1p per month? When is the freeze supposed to start working?

Mr. Higgins

I should emphasise that in the December price index period the retail price index rose by about ½ per cent. and that per cent. of that increase was due to higher food prices, partly due to seasonal factors and partly due to the world beef shortage. There was very little increase in non-food prices. It was less than one-quarter of 1 per cent.

Mr. Skinner

Can the hon. Gentleman tell the House why, in the first month after the freeze, prices were higher than in the preceding month? I am astounded that, when the Minister comes to the Box on numerous occasions to answer this Question, he trots out such phrases as "Things are looking up", "We are turning the corner" and "If we take the appropriate measures things will change." Can he give us a guarantee that as a result of phase 1, phase 2, and the prospect of phase 3 the £ will not fall another 5p under the present Administration?

Mr. Higgins

I am never astonished that the hon. Member is astounded because he has immediately asked a question which I answered a moment or two ago. He must listen to the answers which are given. I must confess that I do not recognise the remarks which he has attributed to me. The essential thing here is that the Government should introduce the proposals which we have made and which we believe will make a significant contribution—as, from the figures I have quoted, it is apparent the standstill has done.

Sir G. Nabarro

My hon. Friend has twice mentioned food prices. Has he any proposal to hold food prices in check or is the whole of the freeze exempted from food prices, and the other way round? Are food prices to be taken out of the freeze?

Mr. Higgins

My hon. Friend will appreciate that if food prices rise on a world basis we as a country have to pay more. Since he has asked a specific question about food I am sure that he and hon. Members opposite will welcome the fact that with the abolition of SET on 1st April there will be a reduction in the tax on food distribution and in other taxes which hon. Members opposite introduced. We are thus reducing the tax on food, in contrast to the previous Government's action.

Mr. Kaufman

Is the hon. Gentleman aware that in the first month of this fraudulent freeze the pay of a worker on average rates of pay was cut by 15½p a week and the pension of a married pensioner was cut by 5½p a week? Is he proud of that as an achievement? When will the Chancellor abandon his stubborn arrogance and do something about food prices?

Mr. Higgins

I do not believe that my right hon. Friend is either stubborn or arrogant. The point is that in the 12 months to December 1972 retail prices rose by 7¾ per cent. whereas average earnings increased at least twice as fast. In real terms pensions in December were 11 per cent. higher than in mid-1970 and there was also the extra £10 paid to pensioners. I believe that this answers the hon. Gentleman clearly.

Mr. Rost

If the Labour Party is really concerned about the fall in the value of the £, why has it consistently opposed a voluntary agreement on incomes in the national interest?

Mr. Higgins

I hope that hon. Members opposite will adopt a more responsible attitude towards these matters in the future than they have in the past.

Mr. Healey

Is the hon. Gentleman aware that he has just admitted that food prices went up 1½ per cent. in the first month of the freeze which means an annual rate of increase in the retail price index of 6 per cent.? How can he expect any ordinary working person to co-operate voluntarily in total control of incomes when the Government absolutely refuse to do anything about the appalling rise in food prices?

Mr. Higgins

I have already given the figures and I rest on them. I am not quite sure whether the right hon. Gentleman heard them correctly. As for the overall position I should make it clear that if world prices rise, as a nation we necessarily have to pay more. Dealing with the proposals for wages and incomes I have already given the position for the 12 months to December. Whereas retail prices rose by 7¾ per cent. average earnings rose at least twice as fast. The important thing is that we should support the measures which the Government are introducing, which will help to cure inflation, will have a significant impact and will benefit the entire country.

9. Mr. Sydney Chapman

asked the Chancellor of the Exchequer what is the purchasing power of the £ sterling, based upon the General Index of Retail Prices, assuming it to have been 100p on 6th November 1972; and what it was on 6th December 1972 and 6th January 1973.

Mr. Higgins

Taking the internal purchasing power of the £ sterling as 100p in November 1972, its value in December 1972, the latest date available, is estimated at 99½p. This estimate is based on the movement in the General Index of Retail Prices.

Mr. Chapman

I am grateful for that reply. If one makes the assumption that in the last two months there has been an effective fall in the value of the £ of probably 1 per cent., can my hon. Friend tell the House what was the effective fall in the value of the £ in the two months prior to 6th November?

Mr. Higgins

I am sorry. If my hon. Friend will table a specific Question in those terms I will give a specific answer. The precise position in answer to his question is that the value of the £ on the basis I have described is 99½p.

Mr. Brian Walden

What I am interested in, and I am sure that the whole House, especially my side, is interested in it, is an answer to a question that has puzzled me for a long time. At the last General Election the Conservative Party promised that the return of my party to power would lead to the "ten bob" £—

Mr. Speaker

Order. Is this a question?

Mr. Walden

Yes, Mr. Speaker. Has the Treasury done any calculations about when the "ten bob" £ will become a reality?

Mr. Higgins

The important point which needs to be emphasised is that we should take measures which will prevent the decline in the value of the £. We are determined to do that.