Budget Forecast (Hansard, 26 February 1981)

§ 17. Mr. James Hamilton
asked the Chancellor of the Exchequer if he is satisfied that his Budget forecast is on target; and if he will make a statement.

§ Sir Geoffrey Howe
I refer the hon. Member to my statement of 24 November. A further assessment of the expected outturns for 1980–81 will be included in my Budget Statement.

§ Mr. Hamilton
Does the right hon. and learned Gentleman concede that consumer prices have seriously overtaken the tax deductions which he purported to make in his last Budget Statement? Does he agree that all the talk about deflation bringing jobs has proved to be wrong since nearly 2½ million people are unemployed? In his next Budget, will he consider reflating to give the people the justice to which they are entitled?

§ Sir Geoffrey Howe
The hon. Gentleman's question is directed to the accuracy of my Budget forecast. He complains about the level of consumer prices. He would do well to remember that the outturn for price inflation was 1 per cent, better than forecast in my Budget Statement.

§ Mr. Stokes
Does the fact that ICI has cut its dividend by more tha half today mean that the Budget forecast is on target or not?

§ Sir Geoffrey Howe
My hon. Friend is a robust defender of non-interventionist government. He will be the last person to expect me or any Chancellor of the Exchequer to make predictions about the outturn of particular company results. We are concerned when any company does less well than we hoped. Even in this case it is as well to remember an important factor affecting the balance of the economy—namely, that last year personal disposable income rose by 18 per cent, while the disposable income of industrial and commercial companies fell by nearly 20 per cent. Many of the difficulties faced by companies are the consequence of high pay settlements.

§ Mr. Robert Sheldon
Before the right hon. and learned Gentleman continues to congratulate himself on the reduction in inflation does he recall the Treasury estimate that showed that three to five per centage points of the fall in inflation were due to increasing the exchange rate under the present Government? Will he remember that without that the inflation rate would be much higher? Will he also remember that the price paid for the high exchange rate is the £100 million reduction in the value of ICI and many other companies as a result of his policy?

§ Sir Geoffrey Howe
Is the right hon. Gentleman suggesting that we should be encouraged to see the exchange rates falling indefinitely? He must appreciate that such a movement would itself raise the price of raw materials to companies and businesses of all kinds. There is no such thing as an evenly balanced economic benefit.