HC Deb 25 October 1973 vol 861 cc1446-9
2. Mr. R. C. Mitchell

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

3. Mr. Carter

asked the Chancellor of the Exchequer what is the value of the £ sterling now compared to 18th June 1970, based on the General Index of Retail Prices.

13. Mr. Greville Janner

asked the Chancellor of the Exchequer by how much the buying power of the £ sterling has been reduced since June 1970 generally and specifically in connection with the purchase of food.

15. Mr. Kaufman

asked the Chancellor of the Exchequer, following the publication of the latest General Index of Retail Prices Statistics on 19th October, what is the purchasing power of the £ sterling now, taking it as 100p on 18th June 1970.

The Minister of State, Treasury (Mr. John Nott)

Taking the internal purchasing power of the £ sterling as 100p in June 1970, its value in September 1973 is estimated to be 77p. Movements of food prices accounted for one third of the reduction.

Mr. Mitchell

For how much longer do the Government intend to continue devaluing the pound?

Mr. Nott

The important feature, which has often been repeated to hon. Members on the Opposition side of the House, is that the standard of living has increased much faster under the present Government than it did under their predecessors, and it continues to do so.

Mr. Carter

As bad as that figure is, may I remind the Minister of the fall in the external value of the pound? Is he aware that since June 1970, against the franc the pound has fallen by 23 per cent., against the mark by 33 per cent. and against the guilder by 31 per cent.? Is that not a suicidal descent, and is it not morally bankrupt of the present Government to show so great a lack of concern about it?

Mr. Nott

As the hon. Gentleman knows, relative exchange rates are continually changing, day by day, and the present under-valuation of sterling will be made perfectly clear to hon. Members of the Opposition when I answer a later Question on the Order Paper, on the way in which inflation is moving in the countries which are our principal industrial competitors. That will show that at present sterling is under-valued. But for years and years the hon. Gentleman's Labour Government sacrificed the prosperity of the British people by treating the exchange rate as a shibboleth, and after all that they failed We shall not do that.

Sir B. Rhys Williams

Has my hon. Friend tried to calculate what would have happened to the pound had either the Labour Party or the Liberal Party been in power?

Mr. Nott

I would shudder to think about that.

Mr. Janner

Is the Minister aware that while the standard of living may have risen, as he says, for the better off in the community, it has fallen for all those who are worse off? How does he square the shocking and disgraceful figures he has given to the House with the Prime Minister's promise, made in Leicester during the election campaign, that if his party were returned to power it would hold down the cost of living and keep up the value of the pound?

Mr. Nott

The hon. and learned Gentleman is entirely wrong. The poorer sections of the community have done better than the rest of the population. The real net earnings of the family man earning half the national average wage —if everything is taken into account, including prices, rents, FIS, FAM and everything else—have increased by an annual rate of almost 4 per cent. since mid-1970, which is double the rate under the Labour Government.

Mr. Kaufman

Is the hon. Gentleman aware that with bread up 25 per cent., beef 79 per cent., eggs 99 per cent., cheese 78 per cent., rents 33 per cent., rates 40 per cent. and medicines 27 per cent., under this Government people can no longer afford to eat, to pay for a roof over their head, or to be ill? With telephone charges up 44 per cent, they cannot afford to telephone the Prime Minister to complain about it.

Mr. Nott

The hon. Gentleman always exaggerates his case to such an absurd extent that his supplementary questions are totally useless. His figures are partly wrong. I can only repeat that the real earnings of poorer people, including pensioners, have increased far faster than the cost of living.

Mr. Dixon

Does my hon. Friend agree that during the six years of Labour Government world food prices were completely on a plateau, that since the present Government have been in power there has been an astronomical rise in world food prices, and that no Government, Labour or Conservative, can credibly control international food prices?

Mr. Nott

Yes, of course I can agree with that. So does the right hon. Member for Leeds, East (Mr. Healey), who said on television the other day that the increase in food, wheat and meat prices is not primarily the responsibility of the British Government. So my hon. Friend has support from the so-called Shadow Chancellor

Mr. Healey

I am very grateful to the Minister of State. Will he also quote from my speech in which I pointed out that a 20 per cent. devaluation in itself is responsible for a 20 per cent. increase in the price of imported food and that countries like Germany, which have managed their affairs better, have not suffered an increase in their food prices, because they have managed to revalue their currency?

Does not the hon. Gentleman agree that the figure of 77p which he has announced shows that the value of the pound has fallen by nearly one quarter since his party took power and that the rate of inflation since the prices and incomes policies were introduced last November has, if anything, been slightly greater than during the previous year? As the Chancellor of the Exchequer recently accepted personal responsibility for maintaining the value of the £ sterling, will the Minister of State explain why his right hon. Friend shuffled off on to him the responsibility for giving this appalling answer rather than face the music himself?

Mr. Nott

The right hon. Gentleman is quite wrong. Retail prices have increased less than 3 per cent. since April, the last month of the standstill. This is in spite of soaring basic raw material costs, which have increased by 38 per cent. in the last year.

As far as I can understand it, the right hon. Gentleman's policy to is increase Government expenditure by £6,000 million, to nationalise to the extent of £10,000 million, completely to remove any kind of control on wages, and after that massively to increase taxes. So perhaps the right hon. Gentleman could tell us what his remedy for the present problem is.