HC Deb 08 December 1988 vol 143 cc428-9
10. Ms. Mowlam

To ask the Chancellor of the Exchequer what information he has as to the current inflation rates of the member states of the Group of Seven leading industrialised countries.

Mr. Norman Lamont

With permission, Mr. Speaker, I shall publish a table in the Official Report.

Ms. Mowlam

In view of the Minister's response, will he tell the House when he expects Britain's inflation rates to fall into line with those of our competitors—this year, next year, or after the Chancellor leaves his job?

Mr. Lamont

When my right hon. Friend the Chancellor made a speech during the debate on the Loyal Address, he told the House when he expected the rate of inflation to peak and when he expected it to come down.

Ms. Mowlam

When?

Mr. Lamont

The hon. Lady knows that I would never make such a precise prediction. The inflation differential between this country and the G7 countries to which the hon. Lady referred in her question has been narrowing since the Government took office. Between 1974 and 1979, when the Labour Government were in office, the gap was 6½ points on average. Under the Conservative Government, it has been a mere 1.7 points. We intend to narrow the gap even further.

Mr. Budgen

Does my right hon. Friend agree that the history of those countries, especially Germany, shows that any relatively open economy can adjust to high and rising rates of inflation? Does he further agree that while Governments are pouring excess demand into the economy there will always be those who are unwise enough to applaud that because they personally enjoy its benefits? Does he also agree that the case against inflation is not economic, but social, because of the corrosive effect that it creates for all those who lose by inflation—whether council tenants, pensioners or savers?

Mr. Lamont

My hon. Friend is absolutely right. Those who suffer most from inflation are those on fixed incomes, savers and the elderly. A major part of our recent inflation has been caused by our very fast rate of growth. Despite the advantages of that rate of growth, we must do justice to those who are disadvantaged by inflation. That is why we have acted promptly and are determined to bring down inflation. That is why we have a Budget surplus, which is the best possible background for bringing that about.

Mr. Gordon Brown

Is the Minister aware that the Chancellor told both the House and the Treasury Select Committee last week that inflation would rise to 5.5 per cent. in 1989 if mortgage costs were excluded? Will he confirm that with mortgage costs included—a real burden that millions face—the new Treasury forecast is that inflation will rise towards 7 per cent. during 1989? Does he now forecast inflation rising above 7 per cent.? Will he say yes or no?

Mr. Lamont

The hon. Gentleman makes his calculations, but my right hon. Friend the Chancellor has published the figures both with and without mortgage costs being included. We are determined to bring down inflation and we have taken firm action to achieve that. The results of that policy will show fairly soon.

Following is the information:

Percentage increase in consumer prices over 12 months to October 1988
Per cent
United States 4.2
Japan 1.1
Germany 1.3
France 3.0
United Kingdom 6.4 1(5.1)
Italy 4.7
Canada 4.21(4.2)
1 Bracketed figure excludes mortgage interest payments.
Source: OECD, Department of Employment.