Retail Prices (Hansard, 2 May 1977)

§ 4. Mr. Neubert
asked the Secretary of State for Prices and Consumer Protection what is the most recent increase over a period of six months of the retail price index of all items excluding seasonal foods.

§ Mr. Hattersley
8.9 per cent.

§ Mr. Neubert
Does the right hon. Gentleman recall that in an answer to me on 7th February he pooh-poohed the Price Commission Chairman's forecast of 19 per cent. inflation by the spring? Now that both spring and 19 per cent. inflation are with us, what answer has the right hon. Gentleman to the Price Commission Chairman's latest forecast last Thursday that prices will continue to rise well into the summer?

§ Mr. Hattersley
I hope that I did not pooh-pooh what the Chairman of the Price Commission said. What I said then, and I repeat it now, is that the idea of 19 per cent. inflation—which the following week the hon. Lady the Member for Gloucester (Mrs. Oppenheim) said would be 20 per cent.—was not only wrong but demonstrably wrong as soon as the retail price index was published. My forecast had been consistent for six months. Inflation will continue at or about the present level until the late summer, when there will be continual though gradual decline in the RPI.

§ Mr. Buchan
Is my right hon. Friend aware that many of us on the Government Benches were very pleased to read his speech over the weekend? It was perhaps a belated conversion but no less welcome for that. Does he not agree that the biggest single factor now affecting food prices in this country is our membership of the EEC, together with the common agricultural policy? Is he further aware that this is due more directly to the steps that have to be taken in relation to the CAP and indirectly to world prices as a whole?

§ Mr. Skinner
Talk!

§ Mr. Hattersley
I am grateful for my hon. Friend's support. I hope that that support will not be moderated when he discovers that one newspaper said yesterday that I began my criticism of the CAP by saying that I continued to believe 7 that Britain's future lay, and ought to lie, within the EEC. Although the CAP has been in existence a long time, I believe that it needs radical change and substantial adjustment. I hold that view strongly, and my hon. Friend will recall that my right hon. Friend the Minister of Agriculture has done his best to make marginal adjustments to the surplus policy in relation to the CAP. I hope that we can do more in the years that lie ahead.

§ Mr. Adley
I recognise that the CAP is one factor in the increase in food prices, but does not the right hon. Gentleman agree that the main reason is our appalling domestic inflation, for which the right hon. Gentleman's Government are largely responsible? Can he confirm to as many of his hon. Friends as appear to be unaware of it that items such as coffee and tea are not grown in EEC countries?

§ Mr. Hattersley
The hon. Gentleman must decide which point he wants to make. I have always said that there are three reasons for our rate of inflation. One reason was the depreciation of sterling, the second was the drought of last year, and the third was increased commodity prices. The hon. Gentleman is right to say that commodity prices, coffee and tea in particular, lie outside the control of the EEC. They are also outside the control of the British Government, and I hope that the hon. Gentleman will not blame us for them.

§ Mr. Jay
In fairness to my right hon. Friend the Secretary of State, may I ask him to accept my congratulations on having caught up with what everyone else has been saying for 10 years?

§ Mr. Skinner
That is the point—he has not.

§ Mr. Hattersley
As that is the nearest I have ever got to a compliment from my right hon. Friend, I had better accept it gladly.

§ Mr. Marten
I congratulate the Minister on part at least of his speech. Does he recall referring in that speech to a severe and fundamental change needed in the CAP? From his experience as Minister of State at the Foreign Office in charge of European affairs, does he think that there is a real chance of any fundamental 8 changes or merely of the marginal changes to which he has just referred?

§ Mr. Hattersley
I am trespassing on the ground of others, but I believe that the prospects for a fundamental change are there, because an agricultural policy which creates surpluses intentionally, and increases them when they already exist, is in the interests of none of the member States, including the agricultural States. Sooner or later, I have no doubt, the entire nine members—and, perhaps more importantly, in four or five years the 11 members—will come to realise that that is true.

§ Mr. Ward
While it is true that the prices of tea and coffee are outside my right hon. Friend's control, is it not an unfair practice for some firms in London which sell coffee to insist on selling quantities of not less than half a pound at a price of £1.19? Is that not an unfair practice which his Department ought to look into?

§ Mr. Hattersley
One of the unfortunate features of the commercial life of some parts of our country is that when commodity prices increase a minority of firms seek to take advantage of them. I emphasise "a minority". It is because of that that we have asked the Price Commission to look at the margins on both those commodities, and I hope that the Price Commission will be able to report in the not-too-distant future.

§ 5. Mr. Robert Rhodes James
asked the Secretary of State for Prices and Consumer Protection what is the most recent increase in retail prices over three months, expressed at an annual rate.

§ 6. Mr. Sims
asked the Secretary of State for Prices and Consumer Protection how much retail prices have increased over the most recent 12-month period.

§ 12. Mr. Canavan
asked the Secretary of State for Prices and Consumer Protection what is the latest rise in the retail price index.

§ Mr. Hattersley
The latest monthly rise is 1 per cent. and the latest year-on-year increase is 16.7 per cent. The latest three-monthly rise is 4.6 per cent. That could be said to produce an annualised figure of 19.9 per cent., though it would not be statistically valid as an indication 9 of the trend. [Interruption.] I really think that the hon. Member for Gloucester (Mrs. Oppenheim) is the most ill-mannered Member of the House. No doubt she will have a chance to ask a question in a moment. This brings the increase since February 1974 to 72.9 per cent.

§ Mr. Rhodes James
Is not the Secretary of State aware that these ever-increasing prices are literally becoming intolerable, particularly for the poor and the elderly, or have the Government completely lost touch with the realities of life facing these people?

§ Mr. Hattersley
Of course, we have not lost touch with that reality. What we have done is produce a policy, against which the hon. Gentleman voted last Wednesday, which, associated with our general anti-inflation strategy, will produce a fall in the RPI, to which I have already referred. What the Conservative Opposition have to decide is whether they wish to continue to draw attention to obvious facts or whether they want to advance an obvious alternative. Up to now they have failed to do the second, and they will continue to be descredited until they say something positive about prices rather than draw attention to them.

§ Mr. Sims
Is it possible that the figures that the Minister has just given us were responsible in part for the by-election result which, in the early hours of Friday morning, rendered the right hon. Gentleman untypically speechless? Can he tell us how he reconciles those figures with the claim that his Government have halved the rate of inflation?

§ Mr. Hattersley
There is no doubt that the recent by-election losses which my Government have sustained have been largely the result of price increases. No one in his right mind would choose to deny that. However, it is not our policy to make sudden panic changes in our policy to adjust to a temporary situation.

§ Mr. Skinner
Temporary!

§ Mr. Hattersley
I am equally sure that when the rate of inflation begins to improve, as it will in the autumn, we shall reap the benefit of that. Our intention is not to change policy every time there is a by-election reverse but to go on 10 doing what is right for the country and for the economy.

§ Mr. Canavan
In view of my right hon. Friend's weekend criticism of the common agricultural policy, a policy which has largely contributed to the enormous increases in the price of food, have the supporters of the Common Market at last seen the error of their ways? Will my right hon. Friend continue on this road to Damascus and back up his fine words with some action to end this dear food policy of the Common Market, which has robbed every housewife in the country?

§ Mr. Hattersley
Not only do I not see the error of my ways but I fear that I see the error of my hon. Friend's facts. The error inherent in his supplementary question is the suggestion that the common agricultural policy has played a substantial part in the inflation that we have suffered in the past three years. It has played a part, but it is not half as great a factor as are others. The Government are working on all those things and will, I believe, put them right. My criticism of the CAP was that it was economically wrong in itself, not that it played a substantial—let alone majority—part in the present rate of inflation.

§ Mr. Skinner
Does not my right hon. Friend think it is time that he stopped listening to the Tory hypocrites on the Benches opposite who are complaining about price increases whilst at the same time voting against the Price Commission Bill and becoming scared when people such as Jack Jones talk about a freeze on prices? Is he aware that if he wants to reverse results such as that at Ashfield last week, and if he wants to save the hundreds of Labour councillors who will be thrown on the scrapheap this week, it is time that he introduced a freeze on prices, because although he will then have antagonism from the Benches opposite and from the CBI we shall go on to election victory?

§ Mr. Rhodes James
On a point of order, Mr. Speaker. I object to being described as a hypocrite.

§ Mr. Speaker
Order. We all object to that, but I am able to rule when it is directed to an individual. I gather that the remark was addressed to the world at large.

§ Mr. Swain
On a point of order, Mr. Speaker. Is it not a fact that only five or six weeks ago you ruled me out of order because I wanted to raise a point of order during Question Time?

§ Mr. Speaker
The hon. Gentleman is quite right, and I ought to have asked the hon. Member for Cambridge (Mr. Rhodes James) to wait until the end of Questions. I am glad to see the hon. Member for Derbyshire, North-East (Mr. Swain) back in his place.