HC Deb 30 January 1978 vol 943 cc8-11
6. Mr. Mike Thomas

asked the Secretary of State for Prices and Consumer Protection what was the annual rate of increase in the retail price index at the latest available date.

23. Mr. Gwilym Roberts

asked the Secretary of State for Prices and Consumer Protection what are the latest figures available for changes in the retail price index.

27. Mrs. Bain

asked the Secretary of State for Prices and Consumer Protection what is the latest increase in the retail price index.

35. Mr. Wakeham

asked the Secretary of State for Prices and Consumer Protection what is the increase in the retail price index since February 1974.

Mr. Hattersley

The retail price index rose by 0.5 per cent. in December 1977. This brings the annual rate of increase down to 12.1 per cent. The increase since February 1974 is 85.3 per cent.

Mr. Thomas

Is my right hon. Friend aware that his answer is, if anything, an improvement on the forecasts that he has made since he took office and that this is welcome? Does he agree that statements by the hon. Member for Gloucester (Mrs. Oppenheim) that Government forecasts in these matters are always wrong are not only inaccurate but mischievous and that she has joined her Front Bench colleagues in seeking to promote among working people the desire to break the Government's pay policy? Is not that her real motive rather than the search for truth?

Mr. Hattersley

Most people understand how price increases have moderated. The monthly index of prices, which shows that in the last six months the increase has never been more than ½p in the pound, is real evidence of what is happening. If there has been an inaccuracy in my predictions, I apologise, but it is that I have been over-pessimistic about the date on which single figure inflation would be reached. It may be earlier than I had anticipated.

Mr. Roberts

Is my right hon. Friend aware that most people are very appreciative of the enormous fall in the rate of inflation which has been achieved jointly by the trade union movement and the Government? Does he agree that, in view of some of the statements from the Opposition Front Bench, there may be a case not only for a Tory Party index showing the effect of its policies on prices but for a special Gloucester index to show how high the hon. Member for Gloucester (Mrs. Oppenheim) would wish prices to be?

Mr. Hattersley

The difficulty about a Gloucester index is that it would be published only in the Daily Telegraph. However, my hon. Friend makes a serious and important point. The achievements of the last two years, which we sometimes talk about loosely as our achievements—as though they were the Government's—are a result of the activities of the trade union leadership and the sacrifices of the British people. As the year wears on and real standards of living improve because inflation is under control, that achievement and the material benefits which it will bring will be clear and perhaps even the Opposition will acknowledge the debt owed to the trade union movement for two years of wage restraint.

Mrs. Bain

I hesitate to interrupt the mutual admiration society on the Government Benches, but can the right hon. Gentlement tell us when he intends to take action to ensure that food price increases are at least reflected evenly throughout the country? Is he aware of the remarks of the chairwoman of the Scottish Consumers Council who said that because there is a higher proportion of people in Scotland dependent on local facilities for their food purchases they are suffering more than anyone else?

Mr. Hattersley

In some areas—and this applies not just to Scotland, but to the South-West and parts of Wales—there are problems that result from the high cost of transport and the low turnover of supplies. I told the hon. Lady in the Standing Committee that considered the Price Commission Bill that this is a matter that we do not take frivolously or lightly. There is economic difficulty in smoothing these things out, and perhaps the Price Commission could look at this matter in one of its sectoral inquiries.

Mr. Wakeham

Is the right hon. Gentleman aware that we will accept our responsibility for the price rises of one-sixth of 1 per cent. as a result of the increased devaluation of the green pound if he will accept the Government's responsibility for the 85.3 per cent. increase in prices since they came to office?

Mr. Hattersley

The hon. Gentleman is a month late. It was last month's campaign to pretend that inflation began with the election of this Government in 1974. I have given the House figures that prove conclusively that the great increase in inflation started in the last six months of the Administration of the right hon. Member for Sidcup (Mr. Heath) with a 5 per cent. increase in prices then compared with 3.6 per cent. increase in the last six months of 1977. That Administration's printing of money, deficit financing and indexing were all calculated to get inflation going.

Dr. McDonald

What contribution has the Price Commission made to the reduction in the rate of inflation? Of the 664 price increases notified between 1st August and 31st October 1977, only 50 were withdrawn or modified. Does that not show that the Commission is hardly the monster that the hon. Member for Gloucester (Mrs. Oppenheim) believes it to be?

Mr. Hattersley

I have never promised the House a monster. I have always promised the House that the Price Commission would have a significant effect on some specific prices and would have a generally favourable effect on prices as a whole. Its existence deters many companies from applying for price increases which they would certainly make if it did not exist. If the speech that the hon. Member for Gloucester (Mrs. Oppenheim) made 15 days ago has any substance, the point that she was struggling to make was that the Price Commission was deterring people from applying for price increases.

Mrs. Sally Oppenheim

Is the Secretary of State aware that the Gloucester price index shows the highest rise in prices under the present Government that has ever taken place in this country? Is he further aware that the consumers are not so worried about the devaluation of the green pound as they are about the devaluation of the red pound, which is now worth only 54p compared to when the Government came into power? Will he explain to the House why Labour Members are so indignant about an increase of one-sixth of 1 per cent. in the retail price index produced by the devaluation of the green pound when they acquiesced without any protest to an increase of double that amount by this Government when they put a tax on food prices?

Mr. Hattersley

Our indignation about what happened last Monday night stems from a simple cause. Nobody has suggested, least of all myself, that the green pound should remain at its old level for ever. It was important that farmers, and certainly some groups of farmers, should receive adequate reward. What happened last Monday night was that a gratuitous and unnecessary addition was made to that increase. The hon. Lady voted for it, no doubt because her Gloucester constituency contains many farmers.