HC Deb 26 January 1978 vol 942 cc1577-80
6. Mr. Knox

asked the Chancellor of the Exchequer what has been the average monthly rate of inflation since March 1974; and how this figure compares with the average monthly rate of inflation between July 1970 and February 1974.

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

The average monthly rate of inflation between March 1974 and December 1977 was 1.36 per cent. This stands in a better relation to the performance of the previous Administration than theirs did to their predecessors.

Mr. Knox

Will the right hon. Gentleman answer both parts of my Question, or is he too ashamed to do so?

Mr. Barnett

I thought that the answer was a good one, rather better than the Question.

Mr. Ioan Evans

Are my right hon. Friend and his colleagues proud of the fact that the situation has so improved compared with the statement by the Governor of the Bank of England in evidence to a Select Committee of the House in 1973 that we were on the edge of a financal abyss? Now that there has been a tremendous improvement in our financial affairs under the Labour Government, will they put their minds to economic matters and give high priority to unemployment? Will they bear this matter particularly in mind when considering the Budget proposals?

Mr. Barnett

I assure my hon. Friend that we have these things in mind, and we hope to be able to do something about the situation in the Budget.

Mr. Tapsell

Is it not a fact that in the past 45 months of Labour misrule prices have increased by 83 per cent. and the pound which the Labour Government inherited from their Conservative predecessors is now worth only 55p? Is this why the Chancellor of the Exchequer is about to reduce the size of the pound note to the former size of the old ten-shilling note?

Mr. Barnett

The answer to that supplementary question should probably be something on the lines of "Ugh!", though I do not know how that will appear in Hansard. The hon. Gentleman will be aware that the reasons for the growth in inflation in the last four years, certainly in respect of the early period, was due almost entirely to the policies pursued by the Conservative Government. I am sure the hon. Gentleman is pleased that the rate of inflation is now coming down, although he has noted that, because of the policies that were pursued by his right hon. and hon. Friends, food prices will not be coming down as fast as hoped.

11. Mr. Skinner

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

Mr. Joel Barnett

I shall not be satisfied until we get inflation down to the level of our international competitors and keep it there.

Mr. Skinner

In the course of the past two or three years, have not the Treasury and the Government generally been attempting to control inflation by restricting wages and at the same time turning a blind eye to the menace of the dole queue which has been ever-growing on our doorstep? Is it not now time, in what is supposed to be electoral year—perhaps come one—to start feeding the economy and let the trade union leaders do the job they were supposed to do, which is to fight for better wages and conditions and increase consumer purchasing power? If we do that, there is just a chance that my right hon. Friend the Chief Secretary will get back on to the Treasury Bench.

Mr. Barnett

I very much appreciate my hon. Friend's kindly consideration of my position in the House. If we advocated the kind of policies he suggests, it would be utterly disastrous for my chances of remaining here, and perhaps even of his remaining where he is.

Mr. Budgen

Would not the Chief Secretary agree that a formal wages policy imposed upon the private sector is either statutory or is unlawful, arbitrary and despotic?

Mr. Barnett

The strict answer to that question is "No, Sir". I know the hon. Gentleman's views—I am not so sure about the views of the Opposition Front Bench—about incomes policy. I have said recently that any Government will be concerned with incomes in the foreseeable future. This Government are concerned with levels of income. I hope that the Opposition are, but that is a little unclear.

Mr. Loyden

What does my right hon. Friend think will be the effect on inflation of the decision on the green pound and its implementation? How can he possibly think in terms of continuing the pay policy against the background of rising prices for the working people?

Mr. Barnett

Let us be clear. The responsibility for the 7½ per cent. devaluation of the green pound rests with the Opposition. On the subject of pay, I must tell my hon. Friend that it is an utter illusion to imagine that we could reduce either the level of inflation or the level of unemployment whilst allowing pay to rise to the level that some of my hon. Friends have in mind.

Mr. Tapsell

Since the Government have accepted the relationship between excessive public expenditure and the rate of inflation, may I ask whether their projection of a 2.2 per cent. increase in public expenditure every year until the early 1980s is dependent on the achievement of their optimistic forecast of a 3.5 per cent. annual increase in GDP?

Mr. Barnett

I assume that the hon. Gentleman has read the White Paper. We did not make a forecast of a 3.5 per cent. growth over the years until the 1980s. We said that those figures in the later years were very provisional and that we would be reviewing them in 1978 and in the many years that lie ahead for Labour Governments.