HC Deb 12 December 1974 vol 883 cc739-42
1. Mr. Norman Lamont

asked the Chancellor of the Exchequer whether he is satisfied with the progress of his counter-inflation policies.

4. Mr. Rost

asked the Chancellor of the Exchequer whether he proposes any further measures in order to achieve his target of an inflation rate of 10 per cent. by the end of 1975.

6. Mr. Skinner

asked the Chancellor of the Exchequer whether he is satisfied with the progress of his policies for the control of inflation; and if he will make a statement.

The Paymaster-General (Mr. Edmund Dell)

My right hon. Friend will take whatever steps he considers necessary, but it is imperative that the terms of the social contract on pay be adhered to.

Mr. Lamont

Is the Paymaster-General aware that many people who are deeply anxious about inflation find it very difficult to believe that the Government are taking the question seriously? Does the Paymaster-General agree with the forecast of the National Institute that inflation will be 25 per cent. next year? If he does not agree with that forecast, will he say—as this is a matter on which there ought to be the maximum open public discussion—precisly why he does not agree?

Mr. Dell

I am aware that many people in the country are deeply anxious about the problem, and the Government certainly take the problem seriously. No Government have made forecasts of the rate of inflation. Therefore, I shall not comment on the National Institute forecast, except to say that there are many forecasts, which cover a range, and that so far most of the people in respect of whom settlements have been made have benefited from settlements within the social contract. But, of course, there are very important further settlements yet to be made.

Mr. Skinner

Does my right hon. Friend accept that it is not just a question of wages alone, if at all? There is the very important consideration of a £2,000 million trading deficit with our Common Market partners—so-called. Is not that the problem that is creating the hemming-in and is preventing our doing the things which we really want to do? Is it not imperative that we concern ourselves with introducing severe import controls? If our Common Market partners do not like it should we not tell them to lump it?

Mr. Dell

Unfortunately, our trading deficit has increased not merely with the EEC but with other parts of western Europe. The main danger in respect of inflation in this country at present— although, of course, there are other factors—lies in wage settlements. My hon. Friend should not ignore that.

Sir John Hall

Does not the Paymaster-General agree that the movement of world prices and the general trend of likely industrial and economic activity in 1975 give considerable support to the estimate that inflation will rise at a rate of 25 per cent. or even more next year? Does he not agree that this would be an intolerable development? Does he not further agree that, so far, the Chancellor has done nothing which is likely to change that situation in 1975? Cannot the Chancellor be prevailed upon to do something much more effective than what has been done so far?

Mr. Dell

My right hon. Friend cannot, unfortunately, affect the level of commodity prices next year—that is one important factor in the situation—but I emphasise that as things are now the most important factor is the level of wage settlements. That is why I emphasise the importance of adherence to the social contract.

11. Mr. Stanley

asked the Chancellor of the Exchequer what has been the rate of inflation over the last three months expressed on an annual basis.

10. Mr. Pardoe

asked the Chancellor of the Exchequer what has been the increase in retail prices over the last three months for which figures are available expressed at an annual rate.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

The increase in the rate of inflation over the three months to October expressed at an annual rate is 13.4 per cent.

Mr. Stanley

Does the Minister not agree that when the Chancellor of the Exchequer made his prediction on 24th September that inflation next year would be down almost to 10 per cent. he was basing it on the successful working of the social contract? Will the Minister now acknowledge, after nearly nine months' working of the social contract that it has conspicuously failed to bring down inflation to an aceptable rate, there and that if it continues at its present rate will be mounting unemployment, a flight from sterling and a decline in real living standards next year?

Mr. Bamett

I do not agree with the hon. Gentleman's gloomy prognostications. The majority of settlements in the past nine months have been inside the social contract.

Mr. William Hamilton

Will my hon. Friend keep on repeating that if we do not get on top of inflation there must be substantially increased unemployment? As we are committed to maintaining at all costs an acceptable rate of employment, will my hon. Friend keep on explaining the problem to those who do not seem to understand it?

Mr. Barnett

I agree with my hon. Friend. The Government are well aware of the problem. We are seeking to get on top of it and to ensure that there is not unemployment at the levels that some hon. Members seem to relish.

Mr. Robert Carr

Will the Minister explain why the rate of inflation has risen from the 8.4 per cent. of which the Chancellor boasted in the election to the current 13.4 per cent., and say whether the Government do or do not maintain the Chancellor's public forecasts that it will be down to 10 per cent. by the end of next year? If not, why not? Does the hon. Gentleman realise that if the Government would do as his hon. Friend the Member for Fife, Central (Mr. Hamilton) has just asked, and treat the matter more seriously, putting their weight behind the social contract, all of us in the House would give the Government their support?

Mr. Barnett

I find that hard to take from the right hon. Gentleman, who has not exactly been behind the social contract. He has done nothing but denigrate it from the beginning. The 8.4 per cent. has never been denied. The Price Commission gave figures that were very similar.