§ 13. Dr. M. S. Millerasked the Chancellor of the Exchequer, expressed as a percentage, what is the value of £1 sterling today compared with May 1979.
§ Sir Geoffrey HoweAccording to the general index of retail prices, the value of £1 sterling in January 1983 was 66 per cent. of its value in May 1979.
§ Dr. MillerWould it not make more sense, if a devaluation of that kind is to be carried out, for it to be done as an operation for the benefit of the country, so that we are not dragged into that position, with such an injurious effect on the country?
§ Sir Geoffrey HoweThere is no benefit in a loss in the value of the pound as measured by the retail prices index. It is a measure of the rate at which inflation is taking place, and compares favourably with a much sharper fall, during the same period under the Labour Government, from 100 to 55 per cent. It is a significant step in the right direction, but inflation is still greatly to be deplored.
§ Mr. LathamCan we not be sure about one thing, which is that if there were a Labour Government there would not be a 20 per cent. fall in two years, but a 50 per cent. fall in two days?
§ Sir Geoffrey HoweI hesitate to predict, but my hon. Friend may be aiming in the right direction.
§ Mr. StrawIs not the truth of the Government's alleged success on inflation that it has been bought at the cost of an overpriced and dishonest pound, a catastrophic loss of competitiveness and 2 million people on the dole? Is the Chancellor not aware that most forecasters are now predicting that, on a continuation of present policies, inflation will go up and not down? Does the right hon. and learned Gentleman accept the analysis of the Financial Times—the Conservative party and the bankers' paper—that there is a big round of price rises on the way?
§ Sir Geoffrey HoweUnder this Government substantial headway has been made in reducing the rate of inflation, and provided that we maintain sound financial policies there are prospects of continuing to move in that direction. We have succeeded ahead of all expectations in recent months, but progress in the immediate future is likely to be slower. As to the hon. Gentleman's suggestion that an overvalued pound, as he puts it, is to be regarded as a dishonest pound, I should have thought that this was precisely the opposite of what is desirable. As for his suggestion that loss of competitiveness, as he puts it, is to be recovered by adjusting the value of the pound, that is again a misleading insight. The only worthwhile way to improve competitiveness is to improve the competitive performance, in terms of price and quality, of the output of our goods and services.