HC Deb 13 May 1982 vol 23 cc932-3
3. Mr. Latham

asked the Chancellor of the Exchequer whether he will make a statement on progress in reducing the rate of inflation.

The Minister of State, Treasury (Mr. Barney Hayhoe)

The rate of inflation continues to fall, and it should soon be in single figures.

Mr. Latham

Is my hon. Friend aware that that excellent news will be warmly welcomed by Conservative Members if not by the House as a whole? Will he confirm that if further progress is to be achieved substantial and careful watch must be kept on public sector and, indeed, private sector pay settlements?

Mr. Hayhoe

My hon. Friend is absolutely right. Part of this extremely welcome downward trend in price rises flows from the moderation in wage settlements in recent months.

Mr. Craigen

How can the Government justify pay increases above the rate of inflation for those already on top salaries and at the same time insist that lower-paid workers should accept rises much lower than the current rate of inflation?

Mr. Hayhoe

If the hon. Gentleman reads the whole of the Top Salaries Review Board report he will discover very cogent reasons in support of its recommendations. He will also know that the Government have not awarded the full amounts recommended but have abated them by between one-quarter and one-third.

Mr. Adley

Does my hon. Friend agree that the Government took office at a time of rising inflation and have taken steps to survive the world recession and to deal with inflation? Does he agree that both in prospects and in performance this country is now doing much better than most of our industrial competitors and that the prospects for this country are now better than they have been for many years?

Mr. Hayhoe

My hon. Friend is absolutely right. The Government inherited a repressed but rising rate of inflation. The rate of inflation is now declining and the prospects are looking good. The latest figures for the wholesale price index are at a record low—they have not been so low since March 1979—and the whole forward view is extremely good.

Mr. Robert Sheldon

The House will note the satisfaction expressed by the Minister at his success [...] reducing inflation to what it was when the [...] came to office three years ago. Does he agree [...] that the direct cost in higher unemployment and record low output has been the cause of this so-called success? Will he undertake as a first priority to return unemployment and production levels as well as inflation to what they were three years ago?

Mr. Hayhoe

The right hon. Gentleman persists in misunderstanding the realities of our circumstances. The Government inherited a rising trend of inflation. Inflation is now declining. Already the average level of inflation is lower than it was under our predecessors and all the indications are that this will be the first Government since the war to have achieved a lower rate of inflation than their predecessors. That is a very worthwhile achievement.