HC Deb 23 February 1978 vol 944 cc1687-8
12. Mr. Knox

asked the Chancellor of the Exchequer by what percentage the value of the £ sterling has fallen since March 1974.

Mr. Healey

From the average levels of March 1974 until 20th February 1978 the spot rate for sterling against the United States dollar has fallen by 16.4 per cent. and the trade-weighted effective index has declined by around 20 per cent.

Mr. Knox

Are those disgraceful figures not a terrible indictment of the Government's record over four years in power? What does the Chancellor intend to do to ensure that this is not the pattern over the next year?

Mr. Healey

The hon. Member will be as aware as I am that the reason for the decline of sterling was the fact that we ran a big balance of payments deficit in the early years of this period, almost entirely because of the increase in oil prices and the fact that our inflation rate was substantially higher than that of our competitors—again largely because of the increase in oil prices. The hon. Member will also be aware that we have now eliminated our balance of payments deficit and brought down our annual inflation rate to below the level that we inherited from the Conservative Party.

Mr. Litterick

Does the Chancellor of the Exchequer agree, however, that a high exchange value of sterling would not be an unqualified blessing to the British people?

Mr. Healey

That is a controversial issue, on which there are many views from both sides of the House. My own opinion is that the present level of sterling is, on balance, not damaging to the economy, but I accept that a substantial increase in the value of the pound, unless we can bring our rate of inflation down and reduce the level of our wage costs, would be damaging to our industrial performance.

Mrs. Kellett-Bowman

Does the Chancellor of the Exchequer accept that his reply to the Question is quite horrifying? Will he also bear in mind the answer that his hon. Friend gave to Question No. 7, about the effect of a three-year averaging of tax liability applying to other industries besides that of agriculture? Will he bear in mind that agriculture is the only industry which pays for its input in real money and gets green pounds in return, and will he act accordingly?

Mr. Healey

The hon. Lady will not expect me to agree with the first part of her question. As to the second part, which has absolutely nothing to do with the original Question that is before the House, all I can say is that the performance of British agriculture is due, as was said by the Duke of Northumberland, who chairs the National Economic Development Committee on Agriculture, largely to the fact that it has operated a planning agreement with the Government for many years.