HC Deb 24 January 1985 vol 71 cc1117-8
5. Mr. James Hamilton

asked the Chancellor of the Exchequer what is the current real value of the pound sterling expressed as a percentage of its real value as at January 1979.

Mr. Ian Stewart

The domestic purchasing power of the pound is 58 per cent. of what it was in January 1979.

Mr. Hamilton

Is that not a disgraceful answer? Will the Minister recognise that since the Conservatives came to power in 1979 there has been a relentless reduction in the purchasing power of the pound? If he will not listen to Her Majesty's Opposition, will he pay attention to Lord Stockton, who yesterday advised the Government to depart from their monetarist policy? If they do not, then, like the Belgrano, they will be sunk.

Mr. Stewart

I am surprised that the hon. Gentleman, if he wants to comment on the purchasing power of the pound under this Government, did not choose May 1979 as the starting date for his question. Under this Government during the last five years the purchasing power of the pound has fallen by about 40 per cent. It fell by well over 50 per cent. under the Labour Government whom he supported. The last Conservative Government was the first since the 1950s to have an inflation rate lower than that of the preceding Government. This Government will achieve the same.

Mr. Higgins

As the question referred to a comparison with 1979, will my hon. Friend say to what extent the decline in the value of the pound was due to the highly inflationary wage settlements which had been agreed at that time? Does he agree that the decline in the value of the pound was, therefore, a hangover from the Labour Government?

Mr. Stewart

My right hon. Friend is absolutely right to point out that the bulk of inflation under the Conservative Government which took office in 1979 took place in the very early years when we had to clear up the mess that had been left behind by the Labour Government.

Mr. Freud

Will the Economic Secretary accept that the strength of the dollar makes it extremely attractive to American galleries and collectors to purchase British works of art? Will he consider raising the allocation of money available for acceptances in lieu of tax?

Mr. Stewart

I do not have responsibility for that, but, of course, the exchange rate between sterling and the dollar also makes it attractive for British companies to sell into the American market, and I hope that they will do so.