HC Deb 17 January 1974 vol 867 cc889-93
1. Mr. Thomas Cox

asked the Chancellor of the Exchequer what is the present value of the £ sterling compared with its value in June 1970.

2. Mr. Greville Janner

asked the Chancellor of the Exchequer by how much the buying power of the £ sterling has diminished in the last 12 months for which records are available.

3. Mr. Skinner

asked the Chancellor of the Exchequer what has been the fall in the real value of the £ sterling since June 1970.

11. Mr. Carter

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

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

Taking the internal purchasing power of the £ sterling as 100p in June 1970, its value in November 1972 was 82½p and in November 1973, the latest date available, it was 75p.

Mr. Cox

Is the Minister aware that he should hold his head in shame for that reply, because it will show the electors the total bankruptcy of the Chancellor's economic policies, which only a few weeks ago were supposed to be the foundation for booming Britain? Is he further aware that the reason why workers have to take industrial action to safeguard their interests is the 45 per cent. increase in food prices, plus the 25p loss in the value of the £ since June 1970 when the Tories came to power and not the scare-mongering rumours that the Government are now making about trade unionists?

Mr. Nott

The hon. Gentleman has listed a whole host of inaccurate charges against the Government. If the Labour Party's policies of penal taxation, massive additional public expenditure and widespread nationalisation were to be implemented, I think everybody would agree that this combination of policies would be unrealistic and incredible.

Mr. Janner

Certainly it is accurate, is it not, that there has been a drop of 25 per cent. in the buying value of the £ over this period? Is the Minister aware of the grave concern that this causes to ordinary people who cannot be expected to hold their wages down when prices are going up in this way?

Mr. Nott

During the past year, as every hon. Member knowns, inflation has been due predominantly to external factors. Domestically-generated inflation seems to have been less in the United Kingdom than in many other industrialised countries. I remind the hon. and learned Gentleman that nearly 4 million workers have now settled under stage 3, and it cannot be denied that, although prices have risen far too fast, pensions have increased by 55 per cent. and average earnings by 48 per cent. over the past three years.

Sir Gilbert Longden

Do not the hon. Gentlemen who ask these questions appreciate that it is precisely because of this constant depreciation of our currency that the Government have been forced to seek to prevent incomes from outstripping productivity, which is one of the two domestic causes of inflation? Should they not therefore welcome and support the Government's policy?

Mr. Nott

I entirely agree with my hon. Friend. Concerning inflation, I think the whole country would benefit from more support by Labour Members for the realistic and sensible policies that the Government are trying to follow.

Mr. Skinner

Is the Minister aware that in view of the 20 per cent. devaluation of the £ on the foreign exchange markets yesterday, the possible £2,500 million deficit on our balance of payments and successive Governors of the Bank of England contradicting themselves and Ministers and the Prime Minister on successive days, it is high time that that crowd on the benches opposite got out and let Labour clean up the mess again?

Mr. Nott

First, I am confident that if the Labour Party would assist the country by encouraging a settlement of the miners' dispute, for instance, sterling would respond quite dramatically. Secondly, on the balance of payments, my right hon. Friend will be answering a Question on that matter later.

If, as I have said, the policies advocated in the Labour Party's recent so-called manifesto were ever to be implemented, they would mean total disaster for this country, and the country knows it.

Mr. David Mitchell

Will my hon. Friend give an indication of the effect on living standards of the movement in the value of the £, to which he has referred, in the light of the movement of wages and pensions over the same period?

Mr. Nott

With respect to my hon. Friend, I do not think it is helpful or, for that matter, very meaningful to compare a fall in the value of sterling, which is essentially an external matter although it has internal effects upon the cost of living, with the rise in wages and pensions. I have already given the figures. Average earnings have risen by 48 per cent. over the past three years.

Mr. Carter

Do not the figures indicate the pathetic incompetence of the Government's economic policy and at the same time fully justify the comments of the Governor of the Bank of England that as a result of those policies the country will have to endure austerity until 1984? As the Conservatives when in opposition always supported the views of the Governor of the Bank of England, can we take it that they support him now?

Mr. Nott

In his statement on 17th December, my right hon Friend the Chancellor of the Exchequer, referring to the energy crisis——

Mr. Carter

Answer the question.

Mr. Nott

I am just about to answer it. My right hon. Friend made it absolutely clear that for the next year or so people in Britain faced a severe test, and that over that period we should not achieve the rise in living standards that we might otherwise have expected. However, the setback represented by the rise in energy prices—in oil prices—throughout the world will affect this country rather less than most of our industrial competitors, and in the medium term when we get North Sea oil the prospects for this country can be very bright.

Mr. Bruce-Gardyne

Does my hon. Friend agree that the expression of confidence from the hon. Member for Bolsover (Mr. Skinner) in the abilities of the Opposition Front Bench can only confirm the opinion of the rest of the House about the total inadequacy of anything that could come from that quarter? With reference to the external value of the £, my right hon. Friend the Chancellor has frequently said that we would return to a fixed parity when the moment was opportune. Would it be too much to hope that the moment might be opportune fairly soon?

Mr. Nott

If there were to be an announcement on the value of the £, it would not come from the Minister of State, Treasury.

Mr. Kaufman

Is not the hon. Gentleman bitterly ashamed that in the past three and a half years the £ has been devalued abroad by more than 20 per cent. and at home by 25 per cent.? How dare this devalued Government go to the country on that record?

Mr. Nott

As my right hon. Friend the Prime Minister said yesterday, we have a very strong competitive position and, if only we can rid ourselves of our self-inflicted wounds and the problems which arise from our industrial relations, the opportunities for our exports and higher production are undoubtedly enormous.

Mr. Cormack

Can my hon. Friend tell us what would be the cost of the programme of the Labour Party?

Mr. Nott

I do not know whether there is a sufficiently large computer to contain the amount of information which is embodied in the Labour Party manifesto and whether it could produce a sufficiently high figure. The cost of the Labour Party's proposals—its nationalisation proposals and public expenditure proposals—could clearly never be offset by the massive taxation which would be necessary under its programme. The figures are huge, and the country realises that perfectly well.

Mr. Healey

In the light of what the hon. Gentleman has just told us, no one will be surprised if the Government decide to run for cover. As they betrayed their promises at the last election in a more flagrant and extreme manner than any Govern12/22/2005ment in recorded history, however, can the hon. Gentleman assure the House that he will fight the next election on the slogan "Another three years of the Tory Government and the £ will be worth only 50p"?

Mr. Nott

I am sure that if the Labour Party were ever to fight an election on the basis of the right hon. Gentleman's taxation policies it could never win one again. If the Labour Party were to take away every penny earned by everyone earning more than £5,000 a year, that amount would be enough to provide one extra packet of cigarettes for each worker. The idea that the Labour Party could finance its programme without massive additional taxation from the ordinary people is absolutely absurd.