HC Deb 15 November 1976 vol 919 cc908-10
6. Mr. Adley

asked the Secretary of State for Prices and Consumer Protection what is the relationship between devaluation of the £ sterling and the increase in the cost of imported foodstuffs.

27. Mr. Newton

asked the Secretary of State for Prices and Consumer Protection what is his estimate of the increase in retail food prices since the end of February 1974 which is attributable to the decline in the external value of the £ sterling.

Mr. Hattersley

A fall in the value of sterling of 10 per cent. is estimated to cause an increase in the Retail Price Index of very roughly 2½ per cent. in the following year. The effect on food prices alone is complicated by the green currency arrangements, which help to shield the United Kingdom consumer from the full effects for many major foodstuffs. Assuming that the value of the green pound is not changed, the effect on food prices is less than on prices in general. It is not possible to distinguish the effects of the decline in the exchange rate from the numerous other interacting factors over a period stretching as far back as February 1974.

Mr. Adley

As from the date they came to office, the Government have achieved an effective devaluation of our currency of well over 30 per cent.—in excess of the figure even of Sir Stafford Cripps and his successor as Labour Chancellor of the Exchequer—does the Secretary of State suggest that this is the fault of the British people for never learning from their mistakes about Socialist Governments or the fault of the rest of the world for having so little confidence in Her Majesty's Government?

Mr. Hattersley

The fall that has occurred over the last two and a half years does not, in fact, beat the record of Sir Stafford Cripps. It just beats the record of Lord Barber—[Interruption.]—and it is deeply related to the other inheritances, as the hon. Gentleman chooses to particularise, that we acquired from Lord Barber and the Conservative Government of which he was Chancellor of the Exchequer.

If the hon. Gentleman is seriously asking for the causes of our economic difficulties, I believe that they are twofold. One is deep-seated—the failure of British industry sufficiently to capitalise itself over the last 30 years. The other is more recent. It is the way in which the Conservative Government, which the hon. Gentleman supported, either inside or outside this House, between 1970 and 1974, chose electoral advantage rather than the real invigoration of the economy.

Mr. Heffer

Does my right hon. Friend agree that the Opposition have remarkably short memories and that the fall of the pound began once it was floated, under the previous Conservative Government? Is not one of the most serious and basic reasons the fact that since we have been in the Common Market, every year we have been faced with an increase of prices due to the tariff problem? Is it not clear that that also should be laid at the feet of the Opposition?

Mr. Hattersley

As my hon. Friend knows, we disagree over his second point, but on the first point I think there can be no disagreement. I remember very well the debate in this House when my right hon. Friend the Member for Birmingham, Stechford (Mr. Jenkins) referred to the creeping devaluation that happened during the previous Administration. He said that the fact that Lord Barber had been—I think I quote him exactly—a dainty devaluer did not mean that he had not been a devaluer; it had happened continually.

Mrs. Sally Oppenheim

As he has made a misleading statement, will the Secretary of State now tell the House what was the depreciation in the external purchasing power of the pound under the last Conservative Government, and what it has been under this Government?

Mr. Hattersley

I have not made a misleading statement. Very much of the previous Government's policy was devoted to this end, which is why one of the hon. Lady's colleagues on the Front Bench was crying that we welcome what had happened. She seemed to be disagreeing that it happened, and her colleague is crying that we welcome it.

Mr. Adley

On a point of order, Mr. Speaker. I realise that you can hardly be held responsible for the content of ministerial replies, but the Minister has grossly misrepresented—

Mr. Speaker

Order. It would not be the first time, if it were true.