HC Deb 11 November 1976 vol 919 cc633-4
1. Mr. Skinner

asked the Chancellor of the Exchequer whether he is satisfied with the current rate of inflation; and if he will make a statement.

6. Mr. David Steel

asked the Chancellor of the Exchequer if he has plans to set another target for reducing inflation.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

We have already made very good progress in reducing the rate of inflation from its 1975 peak of 26.9 per cent. It remains our objective to bring the United Kingdom inflation rate at least down to the levels of our main overseas competitors. I shall not be satisfied until we have achieved this.

Mr. Skinner

Does my right hon. Friend accept that the progress referred to has dimmed a bit recently? Does he further accept that, apart from 105 Labour Members of Parliament signing a motion for an alternative strategy, the meeting of the executive of the National Union of Mineworkers this morning presented an alternative strategy that is almost a mirror image of the one on the House of Commons Order Paper, namely, the question of price control, direction of investment, import controls, and the restoration of public expenditure cuts? Will my right hon. Friend and his colleagues now put their minds to the task of devising an alternative strategy along those lines?

Mr. Barnett

I have seen the motion signed by my hon. Friend and others of my hon. Friends, and I am pleased to note that they have reverted to a selective import control policy rather than one of general import controls. [Interruption.] My hon. Friend demurs, but I have the motion here and I have read it. It is more in line with what the Government have in mind.

I understand my hon. Friend's concern, and that of many of my hon. Friends, about public expenditure. I doubt, however, that the alternative strategy that he has in mind would do anything other than increase the rate of inflation

Mr. Adley

Is the Chief Secretary aware that it is deliberately misleading to pretend that the target that the Government are after is a reduction of the rate of inflation from the rate that they themselves created as a result of their first 18 months of government? What the nation wants to know is: when will the target figure begin to approach the supposed figure of 8.4 per cent. that the Chancellor of the Exchequer boasted about in October 1974?

Mr. Barnett

The trouble with the hon. Gentleman is that he thinks so much that he does not listen. He should at least listen to his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who has told him and the House on numerous occasions that the rate of inflation in 1974–75 was due to the excessive growth of money supply led by excessive growth of public expenditure—at that time undertaken by the right hon. and learned Gentleman and many of his right hon. Friends, including the Leader of the Opposition.

Mr. Hardy

As it is relevant, would my right hon. Friend care to inform the House what the current rate of increase is in money supply and what it was two years ago?

Mr. Barnett

I am sure that my hon. Friend is aware that we intend to ensure that the rate of increase in money supply shall be in the region of 12 per cent., whereas in the years to which he referred it was between 28 per cent. and 30 per cent.

Mr. McCrindle

Is not the disappointingly high rate of inflation due in large measure to the decreasing value of the pound abroad? Is not that, in turn, brought about by the lack of confidence of people abroad in the Government's policies? What new policies have the Government to put before the House and the country with a view to abating the rate of inflation?

Mr. Barnett

I agree that the depreciation of sterling has had some effect. Equally, if we are talking about confidence, some of the more hysterical and exaggerated comments of Opposition Members do not help.