HC Deb 22 March 1973 vol 853 cc633-6
3. 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 now, taking it as l00p on 18th June 1970.

4. 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 l00p on 18th June 1970.

5. Mr. Carter

asked the Chancellor of the Exchequer what is the value of the £1 sterling now, taking it as l00p on 18th June 1970, on the basis of the General Index of Retail Prices.

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

I have nothing to add to the reply given to the hon. Members on 22nd February.

Mr. Skinner

Since 22nd February is a long time ago, and since the purchasing power of the pound has continually floated down, has the Financial Secretary any idea at what point it will settle and when?

Mr. Higgins

The important point is the one which my hon. Friend the Minister of State made on 22nd February, which is that it is necessary to look at this situation in relation to what is happening to personal disposable income per head. If that is done, as my hon. Friend pointed out, the rise in the standard of living over the period referred to is almost double the rate in the period 1964–70, and that is something which should be generally welcomed.

Mr. Redmond

Would it not help far more if the Opposition, instead of putting this identical Question down every time Treasury Questions are first in the list, did something to help the counter-inflation policy?

Mr. Higgins

I very much agree with my hon. Friend. I do not wish to inhibit anything which Labour Members may wish to put on the Order Paper, but the counter-inflation policy which the Government are pursuing is of vital importance to every member of the community and I would therefore hope that that would be reflected in the attitude of all Members—but that is not always the case.

Mr. Kaufman

Should not the Financial Secretary add to the previous answer to which he referred the 14 per cent. increase in egg prices between last Sunday and this Monday; the 10 per cent. increase in bakery prices permitted by the Government; the Government-decreed increase in rents due next week; the massive rate increases brought about by Government policy; and the forthcoming mortgage interest rate increase, carefully postponed until the day after the county elections? In view of these blows against the standard of living of ordinary families, how can the Prime Minister have the nerve to say that prices are being stabilised?

Mr. Higgins

The answer to the hon. Member is simple—I would not wish to endorse any of the points he has made. [Interruption.] We have discussed these points on previous occasions in great detail. My point is that the picture as a whole should be considered, and on that basis, in spite of the rise in food prices the standstill has succeeded in halting the acceleration of prices evident in the months before it was announced.

Mr. Adley

Is it not clear from a walk along any High Street that the shops, supermarkets and stores are displaying notice after notice clearly indicating a reduction in prices on the introduction of VAT?

Mr. Higgins

That is a matter of common experience for those who have eyes to see. But, of course, it is important to take a balanced view, which is why the Government have published notices in the Press and will be publishing a leaflet setting out clearly the effects of VAT, so that the public will know where they stand. It is also why we have proposed powers in the counter-inflation legislation to enable us to control prices affected by the abolition of purchase tax and SET and the changeover to VAT to ensure that the price changes properly reflect the changes in tax.

Mr. Carter

Is the Minister aware that this catastrophic fall in the value of money, far from creating the one nation that the Prime Minister promised in June 1970, has created two nations—those who can keep pace with inflation and those who cannot? If this fall in the value of money is to continue at the present alarming rate, would it not be a good idea for the incomes of the unemployed, the sick and the pensioners to be pegged to a cost-of-living index authorised by the quarter and not by the year?

Mr. Higgins

That comes oddly from an hon. Member who supported a Government which changed pensions only every two years. However, I agree with him 100 per cent. that the vital need to stop inflation and control the rate of increases in prices stems from the fact that it hits the weakest members of the community hardest. That is why we are determined to succeed in our counter-inflation policy.

The total increase in pensions announced by the Government will be 55 per cent. by October—more than in the last 12 years and certainly more than twice the rate that prices have risen. It is the overall battle against inflation which is most important to the pensioners.

Mr. Healey

Will the Financial Secretary explain his unprecedented refusal to give us the figures this month, as compared with four weeks ago? Is it because there has been no further fall in the purchasing value of the pound, or is it that the fall has been so great at a time when the Government are purporting to maintain a price freeze that if that fall came to the notice of the people the whole prices and incomes policy would be blown to kingdom come?

Mr. Higgins

I deny categorically that there has been any deliberate delay by the Government in publishing the price index for February. It would normally be published tomorrow, and that is when it is due.