HC Deb 27 July 1978 vol 954 cc1778-80
6. Mr. Neubed

asked the Chancellor of the Exchequer what is the latest annual rate of inflation recorded in the United Kingdom and West Germany respectively.

Mr. Joel Barnett

In the 12 months to June, the retail prices index for the United Kingdom rose by 7.4 per cent. In the 12 months to May, the latest figure available, consumer prices rose by 2.7 per cent. in the Federal Republic of Germany. This shows that, although we have made excellent progress in the last year, we still have some way to go before we catch up some of our main international competitors.

Mr. Neubert

After four and a half years of Labour Government, what explanation does the Minister have for our rate of inflation still being three times worse than that of one of our major competitors?

Mr. Barnett

The hon. Gentleman is really quite remarkable. He overlooks the fact that when we took office inflation was running at 13.2 per cent. and rising. What is more, if we listened to his right hon. Friends we should have inflation rising again.

Mr. Fernyhough

Will my right hon. Friend bear in mind that over the past 20 years Germany's GNP has been running at double that of the United Kingdom and that over those 20 years the United Kingdom has spent roughly just as much on defence as has Germany? Is it not true that if the Germans had paid to us under the Paris agreements what it has cost the British Government to keep British troops in Europe, our position would have been very much better?

Mr. Barnett

I agree with my right hon. Friend that we pay a much higher proportion of our GNP on defence expenditure than do many countries in Europe, but it would be quite wrong to imagine that that is the sole reason for our much worse performance over a long time on the industrial front in relation to Germany.

Mr. Lawson

Is the Chief Secretary aware that over the period of this Government as a whole inflation has been twice as bad as it was under the previous Conservative Government? Is he aware also that the figure which he himself said is the most accurate guide to the current rate of inflation—namely, the annual rate over the past six months, leaving out seasonal foods—shows an increase of 9 per cent. and rising?

Mr. Barnett

I think it fair to say that what the hon. Gentleman is proving is that an incoming Labour Government invariably inherit a much worse economic situation than do an incoming Conservative Government.