HC Deb 14 June 1984 vol 61 cc1061-2
12. Mr. Andrew MacKay

asked the Chancellor of the Exchequer if he will make a further statement on the level of inflation.

Mr. Lawson

Over the 12 months to April 1984 the retail prices index increased by 5.2 per cent.

Mr. MacKay

In the light of that impressive figure, does my right hon. Friend perceive any reason why the electors of this country should ever again believe Labour economic spokesmen when, because of their scaremongering, they have been wide of the mark in every projection on inflation and the cost of living?

Mr. Lawson

My hon. Friend is correct. There is no reason whatever to believe the statements made by prominent figures on the Labour Front Bench, whose forecasts have regularly proved wrong, not least those of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) who, as the House has been reminded, forecast confidently that inflation would be in double figures by the end of 1983.

Mr. Haynes

When is this cocky Chancellor of the Exchequer going to tell the people of this country exactly what is going on about inflation? He attends many functions and enjoys himself at expensive dinners, but there are people in my constituency who find it hard to live. When will the Chancellor tell them what is going on about inflation? Has he seen the recent report in which inflation is forecast to go 6.6 per cent.? Incidentally, Mr. Speaker, if the Chancellor were made of chocolate, he would eat himself.

Mr. Lawson

The hon. Gentleman should not be so gloomy at the fall in inflation. We all want to see it go down much further and we are determined that it shall. I am glad to report that the rate of growth of the money supply over the past six to 12 months has been well within the target ranges. We are on track for a further reduction in inflation. So far from there being signs of any increase in inflation, the latest CBI survey shows a significant decline in the number of firms expecting to increase prices.

Sir Frederic Bennett

In an earlier reply my right hon. Friend referred to the unanimity of the economic communiqué from last week's summit meeting. Can he confirm that that unanimity included the Socialist President, who has a Socialist Prime Minister and a huge Socialist majority in the French Parliament?

Mr. Lawson

My hon. Friend is right. It is interesting to note that when President Mitterrand and the French Socialist party were campaigning for office they did so on a programme not unlike that espoused by the Labour party in Britain. However, they attempted to put it into practice, and the result was total disaster. They have now turned their policies round by 180 degrees, and they accept that the policies on which we have embarked are the only ones that can bring health and economic strength to their country.

Mr. Norman Atkinson

Will the Chancellor of the Exchequer reconsider the answer that he has just given, as it flies in the face of general economic opinion that there is no relationship at all between the money supply and the level of prices? If the right hon. Gentleman disagrees with the overwhelming majority of economic opinion, can he explain what the relationship is?

Mr. Lawson

The hon. Gentleman is mistaken about the preponderant weight of economic opinion, and that is not surprising. The economic facts are there, and if the hon. Gentleman took the trouble to look over a period of years at the rate of growth in the money supply of various countries, together with the rise in prices, he would find a very clear correlation.