Inflation (Hansard, 4 March 1993)

§ 7. Mr. Raymond S. Robertson
To ask the Chancellor of the Exchequyer if he will make a statement on the effects of his policy on the rate of inflation.

§ The Chancellor of the Exchequer (Mr. Norman Lamont)
Our policies have brought the rate of inflation down to its lowest level for 25 years. Keeping underlying inflation inside the range of 1 to 4 per cent. over the remainder of this Parliament will represent a decisive breakthrough to permanently lower inflation.

§ Mr. Robertson
Does my right hon. Friend agree that the lowest inflation rate for a quarter of a century is the best possible news for the future of the British economy? Will he give the House an assurance that the Government will take no risks with the future of inflation, and that they will do all they can to ensure that it stays low and stable and in its target range?

§ Mr. Lamont
I can give my hon. Friend that assurance. We fought a long battle to get inflation down, criticised all the time by the Labour party. We believe unambiguously that low inflation is very important for our trade, for manufacturing and for confidence for businesses. The fact that we have a level of inflation below the average of the European Community augurs extremely well for this country.

Mr. Robert Hughes
Now that the Chancellor appears to be accepting some credit for the present inflation rate, will he accept responsibility for the years of high inflation, low growth and mass unemployment, and apologise to the British people for those policies?

§ Mr. Lamont
If the hon. Gentleman is referring to the 1980s, he must at least be aware that we reduced inflation decisively during the 1980s. Bringing it down created jobs 443 and employment. Low inflation has been one of the Government's major achievements and we intend to stick with our policy of keeping it down.

§ Mr. Rowe
My right hon. Friend will be aware that a number of us receive many letters from old-age pensioners and others on fixed incomes who are anxious about low interest rates. Will he bear it in mind that it is easy to explain to them that low inflation is their friend, provided that the costs of utilities such as railways and water do not rise well beyond the rate of inflation? Will he continue to bear down on those organisations to ensure that they keep their prices under control?

§ Mr. Lamont
As my hon. Friend knows, prices in individual utilities are matters for the regulator, but I agree that low inflation matters more to pensioners, savers and people on fixed incomes than to any other section of the community. We intend to honour our promises and pledges to them, and to keep inflation down. My hon. Friend made an interesting point about the level of interest rates and I note carefully what he said. Even in the Treasury our postbag on interest rates, which is always large, is now split at least 50:50 in terms of higher rather than lower interest rates.

§ Mr. Gordon Brown
Does not every expert forecast say that during the year, despite everything that the Chancellor says, inflation and unemployment will rise? Given that the right hon. Gentleman promised that he would not devalue, and then did, promised that he would balance the budget, and then did not, and promised a recovery that has never arrived, has not his only consistent policy on inflation been his view that unemployment is a "price well worth paying"? Will he tell us whether he believes that unemployment will rise during the coming year—yes or no?

§ Mr. Lamont
I am extremely interested to hear that at long last the hon. Gentleman has mentioned the word "inflation". He has made speech after speech, but has never before mentioned that word. That is not surprising, because none of his policies has ever shown the slightest appreciation of the problem of inflation, and the hon. Gentleman has never shown the slightest interest in bringing inflation down. He refers—[HON. MEMBERS: "Answer the question."] If the Opposition would stop shouting me down, I would answer the hon. Gentleman's question. He referred to the depreciation of sterling and the effect that that would have on the underlying rate of inflation. He will know that the depreciation has not led to an increase in inflation. We believe that the outlook in that respect is better than many commentators have said. The hon. Gentleman also referred to unemployment. I shall make it crystal clear to him that I want to see unemployment reduced—of course I do—but that I totally despise his attitude when he comes to the House with no recognition of the fact that unemployment on the continent of Europe, in the European Community, is forecast to rise beyond 11 per cent. Can the hon. Gentleman name one major country in which unemployment has not increased during the past year? There is not one.