Retail Price Index

HC Deb 20 December 1976 vol 923 cc12-5

11. Mr. Peter Bottomley

asked the Secretary of State for Prices and Consumer Protection how much the retail price index has risen since February 1974.

13. Mr. Forman

asked the Secretary of State for Prices and Consumer Protection what is the latest year-on-year figure for the percentage increase in the retail price index.

Mr. Hattersley

The retail price index rose by 63 per cent. Between February 1974 and November 1976 and the year-on-year increase recorded in the November index is 15 per cent.

Mr. Bottomley

Will the right hon. Gentleman tell the House whether that answer is more unpatriotic than the Chancellor's claim in October 1974? Will he tell the House when the country can expect the Government to accept that their policies from February and October 1974 have failed? Will they take the credit for admitting that as a Christmas present to the nation?

Mr. Hattersley

I do not think that facts are unpatriotic. My answer was devoted to facts. It is a certain attitude that is unpatriotic, and a good example was the attitude adopted by the Opposition last Wednesday.

Mr. Heffer

Is my right hon. Friend aware that his answer is extremely depressing? Is he also aware that many of us believe that the situation might have been different if we were not in the Common Market, since food prices on a world scale have fallen and we are paying artificially high prices for food in the Common Market? Is it not time that we did something about renegotiating the common agricultural policy?

Mr. Hattersley

There are essentially three elements in my hon. Friend's question. I agree that the figures I have given are depressing. They are as depressing to me as they are to him. I talked a moment ago about blame and responsibility. I hope that I implied by those remarks that I understand very well that we have an obligation to get the economy into such shape that such figures do not continue into next year and the year after. My hon. Friend and I have no disagreement about the depressing nature of the figures I have given.

As for the Common Market, certainly there are things that are wrong with the CAP that are not details but fundamental shortcomings. I hope that in the next year or two years the Government will be able to make some fundamental changes in the CAP. It will not be easy, but clearly the CAP has to meet the needs of consumers more nearly and not concentrate on the needs of producers, many of whom are inefficient.

The price of goods in and out of the Common Market varies from time to time and from year to year. Sometimes we benefit and sometimes we lose. What is very clear is that had we had the difficulties we have faced over the past year, and had they only been solved by measures that improved international confidence, the prospects of achieving that confidence outside the Common Market would have been substantially worse than they have been inside it.

Mr. Sainsbury

Will the right hon. Gentleman tell us what assessment his Department has made of the extent to which the present excessively high interest rates are contributing towards inflation? Will he tell the consumer what he is having to pay as a consequence of the need to finance the Government's excessive borrowing requirement?

Mr. Hattersley

It is impossible to make that sort of statistical assessment. We do not know for how long the high interest rates will continue. I am sure that the hon. Gentleman, like me, welcomed the sign of their reduction last week, but, putting statistics aside, he and I are agreed that the industrial as well as the consumer interests of Britain need lower basic interest rates. The Chancellor made this point explicitly last Wednesday. He made it clear that one of the purposes of his measures was to avoid having so high a minimum rate. I hope that it can be reduced in the not-too-distant future.

Mr. Lipton

How much weight is given to petrol prices in the retail price index in view of the fact that the Department is still collecting reports on petrol prices throughout the country? How can the Department arrive at an accurate figure for the effect of petrol prices on the retail price index?

Mr. Hattersley

My hon. Friend has asked a complicated statistical question and I hope that he will accept a rather crude statistical answer. My right hon. Friend the Secretary of State for Employment has statisticians within his Department who are considering a number of typical shopping baskets which, despite the mixed metaphor, contain petrol. From those shopping baskets he is able to conclude what changes have taken place in the retail price index.

Mrs. Sally Oppenheim

May I put a simple statistical question to the right hon. Gentleman to make him even more depressed? Will he confirm that in only one month out of 33, despite the boasts of himself and the Chancellor, have the Government managed to halve the rate of inflation, and that in only one month out of 33 have they managed to bring down the rate of inflation to the rate that was inherited from the previous Conservative Government? Will he confirm that inflation has risen in each of the past four months and that it is not on a plateau, as he and the Chancellor have claimed, but is rising again sharply and disastrously?

Mr. Hattersley

The hon. Lady depresses me, but not for quite the reasons she imagines. She is right that the reduction in the inflation rate is not what we would hope. I do not balk at that fact, but it is substantially lower than it was last year. When my right hon. Friend the Chancellor of the Exchequer and I talked about a plateau, we were careful to say that the figure would hover around 15 per cent. That seems to be right. We are hovering at that figure, and I believe that we shall begin to see a reduction some time next year.