HC Deb 11 July 1974 vol 876 cc1528-9
5. Mr. Tim Renton

asked the Chancellor of the Exchequer whether inflation in the British economy in the last three months has exceeded his expectations at the time of making his Budget Statement; and whether he plans any further steps in this connection.

Mr. Healey

I recognised in my Budget Statement that it was inevitable that the rate of increase of the retail price index would continue to be substantial for a time. But we are taking vigorous measures to keep the rate of inflation to a minimum.

Mr. Renton

In his Budget Statement the Chancellor also said that we must restore the people's confidence in money. Does he not agree that, apart from the world fall in commodity prices—for which he can hardly take credit—nothing his Government have done since Budget Day has gone any way towards achieving that honourable end? Will he confirm that when he introduces his mini-Budget later this month he will not bring in inflationary measures for electioneering purposes—measures that could have the effect of turning the present disastrous rate of inflation into maxi-inflation that will finally destroy the confidence of every saver-investor in this country?

Mr. Healey

I cannot agree with all the hon. Gentleman's remarks. Shortly after entering office we found that the rate of inflation we had inherited was 13 per cent. and that the increase in oil and commodity prices was bound to feed through for another nine months and increase that rate substantially. Therefore, we froze rents, subsidised food, tightened price control, put an effective control on the money supply, and took care not to inflate demand, as the previous Government had done, to a point beyond the capacity of our economy to meet it. If the hon. Gentleman shares the views that some of his hon. Friend expressed earlier, as he appears to do, he should applaud what we have done rather than seek to attack it.

Mr. Molloy

Does my right hon. Friend agree that my right hon. Friend the Secretary of State for Prices and Consumer Protection has had little appreciation from the Opposition? When she seeks to control prices she is condemned by them, and then they try to make capital out of rising prices.

Mr. Healey

I have no difficulty in agreeing with everything my hon. Friend says.

Mr. Higgins

Are not wage increases of 20 per cent. or more likely both to exacerbate inflation and endanger employment? Will the Chancellor say clearly whether or not they are consistent with the social compact?

Mr. Healey

The hon. Gentleman will be well aware that the major inflationary element in wage increases at present is the threshold agreements which were part of the pevious Government's policies.

Mr. Higgins

Rubbish.

Mr. Healey

That is a point which has been put to me repeatedly by the Confederation of British Industry, and if the hon. Gentleman thinks that it is rubbish he should say that to the Confederation.