HC Deb 15 May 1986 vol 97 cc845-6
11. Mr. Andrew MacKay

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

Mr. Lawson

Over the 12 months to March 1986 the retail prices index increased by 4.2 per cent. and I expect tomorrow's figure to be substantially better.

Mr. MacKay

Does my right hon. Friend agree that these exciting prospects could be put in jeopardy if employers in the private sector were to continue to concede irresponsible and inflationary wage settlements, with their consequent effect on unit labour costs, the efficiency of British industry and job prospects?

Mr. Lawson

My hon. Friend is right to talk about the dangers of excessive increases in unit labour costs. However, the consequences will be felt not so much on inflation as on employment and jobs. That is the problem at present. Another and much greater threat to inflation would be if, by any mischance, any of the Opposition parties were to gain office.

Mr. Ashton

When the Chancellor set out on his policy to reduce inflation to this level, did he know that it would create unemployment of nearly 4 million?

Mr. Lawson

It is not inflation that has created unemployment. In fact, the reverse is the case. Rising inflation is bad for jobs. The inflation record of this Government is something of which the whole nation can be proud.

Mr. Robert B. Jones

Will my right hon. Friend confirm that inflation is not a disease, the cure for which is to forget about it, but a constant pressure in the economy which requires the consistent approaches which we have had until now and which we need in the future?

Mr. Lawson

My hon. Friend is right. The achievement of the Government in getting inflation down as far as we have—it is going down still further—is something which nobody in this country should take for granted.

Mr. Winnick

Is it not interesting that despite all the boasting by the Chancellor about inflation rates, the electorate, at every opportunity since the Budget, have decisively rejected policies which they know mean continuing mass unemployment and cuts in housing, education and the Health Service? Is it not also interesting to note that not only are the public not convinced, but that Cabinet colleagues of the Chancellor are not convinced, such as the Leader of the House, who, in a television interview on Sunday, made it perfectly clear that there must be alternative policies to those pursued by the Prime Minister and the Chancellor?

Mr. Lawson

The Cabinet is united on the importance of getting inflation down, and keeping it down. There is no benefit to this country in inflation going up. Let me say, too, that low inflation is of the greatest importance to those who are seeking jobs.