Retail Prices

HC Deb 20 December 1976 vol 923 cc19-21

19. Mr. Tim Renton

asked the Secretary of State for Prices and Consumer Protection what is his most recent estimate of the effect of the devaluation of sterling during 1976 on retail prices in 1976 and the first six months of 1977.

24. Mr. Adley

asked the Secretary of State for Prices and Consumer Protection by how much the devaluation of the £ sterling, since October 1974, has affected food prices.

Mr. Hattersley

Estimates of this kind are always subject to considerable uncertainty. But depreciation over the 11 months to November 1976 might be expected to have increased the retail price index by about 3 per cent. by the end of this year and by a total of about 5 per cent. by the second quarter of 1977.

As I explained on 15th November, it is not possible to distinguish the effects of sterling depreciation on food prices.

Mr. Renton

Does not the right hon. Gentleman think it tragic that the international loss of confidence in this Government has led to such a decline during 1976 in the value of sterling, which in turn has led to a further rise in the retail price index? To what extent does the right hon. Gentleman expect the trend to continue next year?

Mr. Hattersley

Of course I think that the sterling depreciation, which has had the results that the hon. Gentleman describes, is tragic. I doubt whether I would quote the same causes for that depreciation as would the hon. Gentleman. As to the future, the Chancellor of the Exchequer made clear a week ago that we believe that the measures we then took have halted the depreciation of sterling, which was one of their principal intentions. I am sure that it will succeed.

Mr. Adley

Since all three major postwar devaluations have taken place under Labour Governments, and since the Secretary of State admits that devaluation of the £ sterling increases food prices, does he not agree that the obvious and logical corollary is that Labour Governments result in higher food prices?

Mr. Hattersley

The hon. Gentleman is making a well-known philosophical error, which I would explain to him were Mr. Speaker to allow me to give longer answers.

Mr. Skinner

Does my right hon. Friend remember that during and before the referendum debate many of us on the Labour side of the House argued that prices would rise substantially if we remained in the Common Market and that the pound would suffer as a result? Does he also recall that he was one of those who went round the country, with others from the Opposition, and said on public platforms that we would benefit as a result of remaining in the Common Market? Will my right hon. Friend, as shortly as possible, apologise from the Dispatch Box?

Mr. Hattersley

I would do so, perhaps not shortly, if I thought an apology were necessary. I stick by my original contention that the economic difficulties that this country has faced since June 1974 would have been substantially greater had we been outside the Common Market.