HC Deb 10 March 1981 vol 1000 c761

It is time for us to start thinking ahead to the advantages that can accompany a permanent reduction in inflation, for to live once again in a world that has banished the spectre of accelerating inflation must be our objective. We reaffirmed our commitment to that objective last year when we published the medium-term financial strategy. I am reaffirming it again today by taking the measures necessary to strengthen and carry forward that strategy.

I have no doubt that the House will expect me to spend a little time on monetary matters. As the recent report from the Treasury and Civil Service Select Committee has shown clearly, this is an absorbing area of policy.

Thanks to the tight financial conditions of the past 18 months, including the effects of the strong pound, we are well ahead in the battle against inflation. We have achieved that while reducing controls rather than by imposing them. But for a number of reasons related to the special circumstances of last year, the growth of sterling M3—the measure of money used to express the strategy—has been well outside the first year target range of 7–11 per cent. I said in November that I expected it to slow down in the new year. Recent figures, including the preliminary figures for banking February, published today, are fully consistent with that.