HC Deb 06 March 1978 vol 945 cc954-6
12. Mr. William Hamilton

asked the Secretary of State for Prices and Consumer Protection what estimate has been made of the likely trends in the retail price index up to the end of 1978

25. Mr. Mike Thomas

asked the Secretary of State for Prices and Consumer Protection what are his forecasts for price increases in the coming year.

Mr. Hattersley

Provided that wage settlements continue to be made at a moderate level, I expect the rate of inflation to remain in single figures throughout the year.

Mr. Hamilton

Does my right hon. Friend agree that housewives in particular will be happy with that assessment? Does he also agree that those same housewives will note the Tory Party's support for the tea blenders and their opposition to reducing prices? When will the order be debated in the House?

Mr. Hattersley

I cannot recall a single occasion in the last 18 months when the Tory Party has not consistently voted and spoken against every attempt we have made to control prices. I am not sure when the order will be debated. I hope that the tea blenders will continue their consultations. We shall see how the proposals work out. We must have a movement of tea prices towards the level recommended by the Price Commission. There will be an order and a debate if that is not brought about in other ways.

Mr. Thomas

Is my right hon. Friend aware that the CWS is leading the way by reducing the price of tea to 22p per quarter, 5.3 pence below the average arrived at by the Price Commission? Does he accept that that meets his criterion and that the CWS should not be penalised for selling tea lower than the other blenders? Will he give credit to the CWS for starting to bring down the price?

Mr. Hattersley

For the second time today I am glad to acknowledge that movement, and I hope that the CWS will bring with it the rest of the industry. I am more interested in the overall average price of medium-quality tea. That is the figure on which the Price Commission concentrated and that is the figure on which I must take action if the blenders, retailers and the rest of the market do not produce that sort of result over the next week or two.

Mr. Baker

When the last retail price index figures came out, the Secretary of State commented on them at the headquarters of the Ilford, North Labour Party during the by-election campaign. Does the Secretary of State think that his intervention in that campaign helped his party's candidate?

Mr. Hattersley

That campaign was characterised by different issues which I do not propose to raise this afternoon.

Mr. Raphael Tuck

My right hon. Friend and the Chairman of the Price Commission are to be congratulated on what they have done about tea, but is my right hon. Friend aware that when, due to certain circumstances, the price of a commodity rises, when those circumstances end prices should come down? Is he aware that prices still remain high in such circumstances and force up the index? What does he intend to do about it?

Mr. Hattersley

That is the problem with which the Price Commission dealt. When raw material prices went up, the prices in the shops went up, but benefits are not always passed on when the price of raw materials comes down. This is an important matter with which the Price Commission attempted to deal in its report on tea.

Mr. Neubert

Is the Secretary of State aware that in a Written Answer of 27th February it was shown that a given increase in earnings is likely to result in an equal rise in prices? As earnings are generally acknowledged to be increasing by 12 per cent, to 15 per cent., is not the return to double figure inflation more a question of when rather than whether?

Mr. Hattersley

No. The position is as I have described it and as I shall continue to describe it. Inflation will remain in single figures this year and into 1979. The evidence for that is overwhelming.