Inflation (Hansard, 8 October 1990)

§ The Minister of State, Department of Trade and Industry (Lord Hesketh)
My Lords, my right honourable friend the Chancellor of the Exchequer will publish a new forecast with his Autumn Statement.

§ Lord Donoughue
My Lords, I thank the Minister. We welcome him to the latest of his ministerial responsibilities. I am sure that it will be as satisfying and testing as previously. Does he agree that, with inflation now higher than it was when the Government came into office, there are two alternatives which face them: either to reduce inflation through deflating the economy with a high exchange rate and higher unemployment or to live with high inflation and face the embarrassments of devaluations in the fixed exchange mechanism in the future? Will he guide us on which of those courses the Government propose to follow?

§ Lord Hesketh
My Lords, I am surprised that the noble Lord should even consider that this 4 Government would pursue the course of inflation. They are determined to reduce and stamp out inflation. It may disappoint the noble Lord that we shall pursue a certain course which is not necessarily either of the two that he describes.

§ Lord Stoddart of Swindon
My Lords, can we have the assurance that the Government will not renege on their undertaking that all benefits, including child benefit, will be re-rated in accordance with the September inflation figures?

§ Lord Hesketh
My Lords, that question goes rather wide of the Question on the Order Paper. I should be more than happy to answer the question if the noble Lord will table it.

Lord Bruce of Donington
My Lords, to deal with the Question on the Order Paper, is the Minister aware that in the documents accompanying the Budget Statement the rate of inflation at the end of the year is estimated to be some 7.5 per cent? That figure was reiterated by one of his noble friends on the Front Bench only three months ago. Is he further aware that in the latest report from the House of Commons Public Accounts Committee considerable doubt is cast upon the whole method of preparing the cost of living index statistics, which in the forecast provide for an increase in food prices of between 5 per cent. and 6 per cent. only? Anybody who has done any shopping over the past few months knows that that is quite ridiculous. The rise in food prices has been anything between 10 per cent. and 12 per cent. In those circumstances can the Minister give an assurance on a realistic basis that the figure at the end of the year will even be below the current figure of 10.6 per cent?

§ Lord Hesketh
My Lords, the noble Lord is being slightly selective. The rate of inflation in the tender order prices at the moment is sub-zero per cent. With regard to house prices I do not see great rises there. I am well aware of the Public Accounts Committee's report. I am also aware that the Treasury will be responding with a minute, which I believe it would be improper for me to anticipate.

§ Lord Boyd-Carpenter
My Lords, in view of the Labour Party's record on inflation when in government, is it not reassuring to find the noble Lord, Lord Bruce, now appearing to be against it?

§ Lord Hesketh
My Lords, it is always a great joy to see a conversion on the road to Damascus.

§ Lord Williams of Elvel
My Lords, in the forthcoming Statement that the Minister said the Chancellor would make, will the Chancellor forecast the core rate of inflation as well as the headline rate?

§ Lord Hesketh
My Lords, I was referring to the forthcoming minute, which I believe it would be improper for me to anticipate.

§ Lord Annan
My Lords, does the Minister agree that inflation often seems to be built into our way of life? Is he aware that in Germany there is no tax relief on mortgages and that at the end of a month to six weeks every credit card has to be paid up to the full amount? Can we not learn something from our friends in Europe?

§ Lord Hesketh
My Lords, I shall certainly draw the noble Lord's remarks to the attention of my right honourable friend.