HC Deb 13 March 1986 vol 93 cc1071-2
8. Andrew MacKay

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

Mr. Lawson

Over the 12 months to January 1986, the RPI rose by 5½ per cent.

Mr. MacKay

How massively would inflation rise if the Labour party were given the opportunity to go on its £24 billion expenditure spree?

Mr. Lawson

It is difficult to make an exact estimate, but we all remember what happened when the Labour party was last in office—the rate of inflation rose to nearly 30 per cent.

Mr. Norman Atkinson

Will the Chancellor say which section of the Treasury established the figure of £24 billion, and whether that is wholly the work of the Treasury? Secondly, will he answer the question on the Order Paper and give details of the assessments that have already been provided to him by Treasury officials?

Mr. Lawson

I shall readily explain to the hon. Gentleman as briefly as I can that Treasury Ministers collected a list of various published pledges to which the Labour party is committed and then asked Treasury officials to give an objective costing of these proposals. They did that, and the figure that was arrived at was £24 billion.

Sir Peter Emery

Does my right hon. Friend agree that, for the first time since 1979, this year British exports have increased as a percentage of world trade? Does this not reflect by his ability to take care of the problems of inflation?

Mr. Lawson

My hon. Friend is right, and it is a remarkable fact that in recent years British manufacturing industry and British industry generally have been more successful in holding their share of world trade than they have been for a long time.

Mr. Penhaligon

Will the Chancellor also confirm the more remarkable fact that the only roughly equivalent industrial nation that has a higher level of inflation than us is Italy? Was that the Chancellor's aim two years ago when he took office?

Mr. Lawson

I notice that the official spokesman for the alliance, the hon. Member for Stockton, South (Mr. Wrigglesworth) said that the party's programme would produce inflation of 7½ per cent. I shall be dealing with the prospects for inflation in my Budget statement, but I do not regard the present level of inflation as satisfactory, even though it is far lower than that achieved by the Labour party when in government.

Mr. Stokes

Is not the conquest of inflation and the return to honest money the foundation of the Government's economic policy and the essential prerequisite for industrial, and consequently commercial, success?

Mr. Lawson

It is indeed the foundation of the Government's economic policy, and I assure my hon. Friend, who has been one of the Government's most stalwart supporters through their seven years of office, that it will remain the foundation of our economic policy.

Mr. Hattersley

Why is it that our inflation rate is now running faster and higher than the inflation rate in the countries of our major OECD competitors?

Mr. Lawson

The plain fact is that I do not regard the present rate of inflation as satisfactory, even though it is far lower than was ever achieved during the period of that Government of which he was a Minister, but I am confident that it will come down.