HC Deb 24 May 1973 vol 857 cc647-9
10. 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.

Mr. Higgins

Taking the interal purchasing power of the £ sterling as 100p in June 1970, its value in April 1973 is estimated to be 79p.

Mr. Kaufman

Is the hon. Gentleman aware that that scandalous admission that the Tory pound is now worth only 15s. 10d., in old money, will come as a bombshell to millions of families frantically struggling to make ends meet, and that the only thing that will boom for them is their cost of living?

Mr. Higgins

For families trying to make ends meet, surely, the relevant factor is what is happening to the real standard of living. Under the present Government that has been rising very rapidly, even after allowing for the increase in prices. It is my right hon. Friend's belief that we must continue on a rapid rate of economic growth, in marked contrast to the hon. Gentleman's party, which did nothing but stultify growth. What is essential is to take an overall view, and on that basis the Government's record is good.

Mr. Grylls

Taking that reply into account, will my hon. Friend tell us the extra purchasing power in the retirement pension over the same period, since 1970?

Mr. Higgins

We have made a number of increases in the retirement pension and have now undertaken to make annual reviews. By October pensions will be 55 per cent. higher than when we came to power. After allowing for price increases, that will still give a bigger increase in living standards than that of the population as a whole. That shows the priority we give to improving the standard of living of pensioners.

Mr. Healey

But does not the Minister accept that the appalling figures he has just announced represent a total failure by the Government to carry out a responsibility that the Chancellor personally accepted not so long ago to contain the rise in prices? Do not the figures that the hon. Gentleman has just quoted, following the figures he gave last month and the month before, show that in fact the cost of living has been increasing faster under what he humorously calls the prices standstill than before the standstill was introduced? As we are now in phase 2, and are liable to see big increases in the price of manufactured goods following the increase in food and house prices that we saw in phase 1, what sort of phase 3 do the Government now propose to introduce?

Mr. Higgins

As to the overall position I believe that it is true to say that the determination to beat inflation that the Government have shown in the standstill, and are showing in phase 2, has been reflected by the public at large. Much of the increase in the all-items index in April was due to sharp and unavoidable increases in the price of seasonal food, particularly tomatoes and vegetables. We have always made it clear during the standstill period that some items will go up in price, particularly imports. They are increases which the country as a whole cannot avoid paying. Apart from that, I believe that it is true to say that the policy has been successful. We are determined to make it succeed, but we must combine it with a faster rate of economic growth and higher real incomes. I think that that is the right approach.