HC Deb 14 November 1974 vol 881 cc574-6
11. Mr. Ridley

asked the Chancellor of the Exchequer what estimate he has made of the current annual rate of inflation.

12. Mr. Adley

asked the Chancellor of the Exchequer what steps he intends to take to ensure that the rate of inflation remains at 8.4 per cent.

Mr. Healey

The increase in the retail price index in the 12 months to September was 17.1 per cent. The increase over the three months to September grossed up to an annual rate was just over 8.7 per cent., 0.3 per cent. more than in the three months to August. I told the House on Tuesday what measures I propose to safeguard investment and employment and to strengthen the social contract.

Mr. Ridley

I am sure that we can all forgive the Chancellor for a little bit of statistical inexactitude in the heat of the General Election, but would he not agree that if the rate of inflation has dropped, which I think it has, during a period of ever-rising oil prices and even greater wage rises, this is due to the drastic reduction in money supply at the beginning of this year?

Mr. Healey

I am sorry that the hon. Gentleman spoiled a good point by suggesting that the figures I quoted were inexact. The figure I quoted of 8.4 per cent. in the three months up to and including August was absolutely exact and nobody has ever contested it. The Price Commission published its own index the other day, after the election, and the index, which does not cover rents, which the present Government froze, showed a rate of increase from December to February of 23 per cent., from March to May of 16 per cent. and from June to August of 9½ per cent.

I know that the hon. Gentleman would not want to suggest that these figures were inexact or that Sir Arthur Cockfield who at one time in his career was, I believe, tax adviser to the Conservative Party, was moved in publishing the figures by any particular electoral service that he thought he was rendering to the Labour Party.

Mr. Adley

No matter how much the Chancellor of the Exchequer may now regret his remarks, is he aware that if his 8.4 per cent. election prospectus had been offered by a public company his right hon. and hon. Friends, especially those below the Gangway, would have demanded that the matter be referred to the Director of Public Prosecutions? If he has not already done so, will he read Bernard Levin in The Times today?

Mr. Healey

On the first matter, I recognise that the hon. Gentleman attempted to cover his chagrin at his inability to challenge the accuracy of my statement by an extraordinary and painfully worked out joke. I am not normally prepared to reveal my reading habits, but I follow Mr. Levin's articles from time to time, and I was delighted to discover the other day that his real trouble, according to him, is that he suffers from the death watch beetle.

Mr. Skinner

What is all the fuss and bother about this 8.4 per cent. which was bandied about during the election? The only figure that I recall is the 9½ per cent. proposed by the woman in the twinset and pearls.

Mr. Healey

I also remember that, and I have no doubt that we shall be hearing more about it later and how it is reconciled with the Draconian demands from the Opposition Front Bench for cuts in public expenditure.

Mr. Carr

May I concentrate the right hon. Gentleman's mind on the second part of the supplementary question put to him by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley)? What steps is the right hon. Gentleman taking to maintain the rate of inflation at 8.4 per cent., and does he think that he will succeed?

Mr. Healey

I apologise. I did not reply to the earlier part of the supplementary question put to me by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). The hon. Gentleman asked me whether I thought that one contribution to this decline in the rate of inflation was the stricter control over the money supply operated by the present Government. I am sure that this is the case. The previous Government, of which the hon. Gentleman was at one time a member, though he rightly resigned before 1973, allowed the increase in the money supply to rise at well over twice the level of this year. This was a major reason for the inflation that the present Government inherited at the end of February of this year.

Mr. Crawford

Does the Chancellor of the Exchequer agree that part of the reason for the unacceptable rate of inflation is the unacceptable cost to all the countries of this island of London, with its centralisation, congestion and associated weighting allowances on salaries?

Mr. Healey

No, Sir.

Mr. Ridley

On a point of order, Mr. Speaker. In view of the extraordinary number of mistakes and technological inexactitudes in the right hon. Gentleman's replies, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.