§ 2.49 p.m.
§ Lord BOYD-CARPENTERMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they have now considered the view expressed by the Price Commission in their Quarterly Report that, on the present basis, the rate of inflation will rise towards the end of the current year; whether they accept this view; and what action they propose to take.
§ Lord WINTERBOTTOMMy Lords, the view expressed by the Price Commission in their latest Quarterly Report was that:
In the short term therefore, if the official indices continue to follow the pattern of the Commission Index after a lag of a few months, we should expect the current rate of increase to be maintained at about 8 per cent. However, it may be less easy to keep it down to this level in the medium term.The Government's own view is that inflation will remain at, or about, 8 per 853 cent. in 1978, but that the level in 1979 depends on continued moderation on pay, which is why the Government announced new pay guidelines last week in the White Paper Winning the Battle against Inflation.
§ Lord BOYD-CARPENTERMy Lords, does not that guarded and carefully expressed Answer indicate that the undue optimism about the movements of the economy which the Prime Minister has recently been expressing is as unfounded as the optimism which he expressed on similar subjects when he was Chancellor of the Exchequer in 1967?
§ Lord WINTERBOTTOMMy Lords, I think the noble Lord belongs to that particular group of people who can see no good in the present situation. I should like to make a small historical point. In this matter it will be for the people of this country to choose, but the present round began when the annual rate of inflation was 17 per cent. With inflation now at 7.4 per cent. and people prospering as a result, I would hope and expect to see a much lower level of wage increases in the next round than at the present. This is a success story, and am sorry that the noble Lord cannot see it.
§ Lord BOYD-CARPENTERMy Lords, does that mean that the noble Lord disregards the considered views, not only of the Price Commission—who, after all, are in daily touch with movements of prices—but of other responsible bodies representing economic opinion, which apprehend that unless there is a very substantial alteration in present policies the curse of inflation will be returning?
§ Lord WINTERBOTTOMMy Lords, this is a most esoteric subject which needs thorough discussion with the aid of a number of professional economists—who, as we know, seldom agree. Nevertheless, the policy of this Government has been successful, and I am not going to apologise for it.
§ Lord SAINSBURYMy Lords, would my noble friend not agree that the present strength of the pound will have a very good effect on the rate of inflation next year? Further, would he not agree that certain questions coming from the other side of 854 the House are prompted by political propaganda in view of the coming General Election?
§ Lord WINTERBOTTOMWith the latter part, yes, my Lords. Nevertheless, the world confidence in the pound, which is shown by its rate of exchange, in fact strengthens the negotiating position of the British Government in this particular area, because as the pound strengthens so the cost of our raw material imports falls.
§ Lord HARMAR-NICHOLLSMy Lords, does the noble Lord not think that, when we have the present unemployment, when we have the present borrowing level and when our standing and position in the world seems to be drifting, to describe that as a success story is a misuse of the English language?
§ Lord WINTERBOTTOMMy Lords, I reckon that my use of the English language is as accurate as that of the noble Lord opposite. May I say, however, that the standing of this country seems to improve. There is no such thing as a perfect world. The noble Lord may think he is dwelling in it, but it does not exist.
§ Lord SHINWELLMy Lords, is it not obvious that if the Government's incomes policy is rejected and, as a result, we have a free-for-all, which I understand is the policy of the Party opposite, then we are bound to have higher inflation? There is no escape from it. In those circumstances, ought we not to receive the support of all those who seek to avoid inflation by their acceptance of the Government's policy?
§ Lord WINTERBOTTOMMy Lords. I am grateful once again for the wise remarks of my noble friend.
§ Baroness GAITSKELLMy Lords, is the noble Lord aware that only a few days ago the Press told us that trade unionists in this country were far better off than, or were as well off as, trade unionists on the Continent? Have the nobles Lords opposite realised that?
§ Lord WINTERBOTTOMMy Lords, that is another question, but an interesting one.
§ Lord DRUMALBYNMy Lords, is it not important for the future of this country that, irrespective of Party, the public should be made aware of what the intentions of the political Parties are in regard—
§ Lord DRUMALBYNMy Lords, I am so glad that noble Lords opposite approve of what I am saying. Should the public not be made aware of the intentions of the political Parties with regard to the rate of inflation? Would the noble Lord not agree that a 7½ per cent. rate of inflation ought not to be allowed to continue for any time at all that can be avoided—that is, that it is far too high a rate of inflation?
§ Lord WINTERBOTTOMMy Lords, the noble Lord, whose views we all respect, used the word "Parties", in the plural. This is of great importance. I agree with him that 7½ per cent. is too high. It is about the level in the OECD at the moment, but it is still too high. It is Her Majesty's Government's intention to go on trying to decrease the rate of inflation, with the enormous advantages that that will bring to the people of this country.
§ Lord LEE of NEWTONMy Lords, would my noble friend agree that, if all the political Parties agreed on the need to limit dividends, that would also assist in keeping down inflation?
§ Lord WINTERBOTTOMMy Lords, dividends are an element, but perhaps not the most important one.
§ Lord CLITHEROEMy Lords, would the noble Lord agree that the word "inflation" as it is now used means debasement of the currency, and that any debasement of the currency is wrong?
§ Lord WINTERBOTTOMMy Lords, as I said, we all deplore sin, but we tend to practise it. I think, basically, we all really rather like inflation, but we have to keep it within reasonable levels.
§ Lord HATCH of LUSBYMy Lords, would my noble friend agree that the success of the nationalised industries, as seen only this week in the case of the 856 Post Office and of the coal mining industry, is playing a great part in reducing inflation?
§ Lord WINTERBOTTOMMy Lords, that is a very weighty subject on which I really cannot comment.
§ Lord HAILSHAM of SAINT MARY-LEBONEMy Lords, while acknowledging that the noble Lord is right in saying that the world is not perfect, that this side is always moved by political motives and the other side is entirely blameless in the matter, may I ask whether we have not had enough of this?