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Prices

Volume 933: debated on Monday 20 June 1977

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16.

asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the retail price index since February 1974.

18.

asked the Secretary of State for Prices and Consumer Protection what is the latest annual increase in the retail price index.

As my right hon. Friend has informed the House, the latest increase in the retail price index is 17·1 per cent. The index has increased by 78·7 per cent. since February 1974.

Is the hon. Gentleman proud, satisfied, disturbed or merely complacent about that reply?

The Government have made plain the priority they attach to reducing the rate of inflation and have given a firm indication of how that end will be achieved. It is not sensible to be complacent or as extreme as some Opposition Members are about the prospects. If the Government persist in their relationship with the trade unions, whose restraint on wage policy has contributed substantially to the improvement in the situation, we shall succeed in conquering the difficulties that we have been faced with as a result of trends many of which are beyond the Government's control.

Can the hon. Gentleman say how many of our competitors in OECD countries have rates of inflation exceeding or anywhere approaching the annual figure that he has announced? To what does he attribute the consistent disparity between their levels of inflation and ours? In view of that disparity, does he think that the Government's target is really adequate?

Part of the difference can be attributed to policies pursued by the previous Government including, for example, subsidising and forcing into deficit the nationalised industries, the results of which are still with us, though I am glad to say that the current trend of nationalised industry price increases is substantially reduced.

Is my hon. Friend aware that many people inside and outside the House believe that there have been dramatic increases in prices which have hit the housewife hard and do not contribute to the possibility of a third phase of the pay policy? Is he aware that, when the Secretary of State says that he does not believe that the Common Market and the common agricultural policy have had an effect on price increases, this may be the reason why many people believe that his Department is not doing a good job? Will he, therefore, take on board the possibility that the CAP and other activities of the Common Market have contributed to increased prices and also work to make his Department more efficient?

The prime responsibility for negotiation of the CAP lies with the Ministry of Agriculture, which has been extremely effective in reducing the rate of price increases proposed by the Community to one-quarter of what was originally intended. That is a substantial achievement.

The Price Commission Bill, which has its Report stage in the House tomorrow, will enable us to freeze prices selectively for up to 12 months and will be a substantial contribution to reassuring the housewives with whom my hon. Friend is so rightly concerned, as are we all.

As the internal purchasing power of the pound has fallen to 55p since the Government came to power, would the hon. Gentleman care to predict how long it will be before it falls to 50p? Does he agree that that would be a highly appropriate date for the Government to go to the country for the "fair test" that the Prime Minister has been talking about?

I see that the hon. Lady also reads the Daily Express. She will have seen that paper's predictions. I propose not to comment on them but to treat them with the seriousness they deserve.