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Green Pound

Volume 940: debated on Thursday 1 December 1977

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asked the Minister of Agriculture, Fisheries and Food what are the latest figures available for the percentage effect on the overall price of food and the retail price index of adjusting the value of the green pound to bring it into line with the price of the £ sterling; what steps he is taking to protect the consumer against this sort of movement; and if he will make a statement.

It would require a devaluation of about 23 per cent. to bring the green pound fully into line with the current market rate used for calculating MCAs. The exact effect of a change of this order cannot be predicted but I estimate that it might eventually raise retail food prices by between 5 per cent. and 6½ per cent. on average and the retail price index by between 1¼ per cent. and 1½ per cent. I have made it clear that the timing and extent of any change must be judged against the national interest as a whole including the impact on the cost of living.

I omitted to tell the House that fewer and shorter supplementary questions and briefer ministerial replies—I am not referring to the one that we have just heard—help us to reach more Questions.

Will my right hon. Friend take the opportunity of pointing out to the housewives of Britain that they will have to face price increases at the beginning of the year anyway because of the transitional arrangements with the EEC? Will he make it clear to our partners in Europe and to the farming interests in this country that under no circumstances will he consider any devaluation of the green pound?

I made the position clear to the housewives on 17th February, in answers to questions from my hon. Friend the Member for Newham, South (Mr. Spearing) and the hon. Member for Banbury (Mr. Marten), and on various tedious occasions afterwards. Of course the transitional steps will mean a gradual increase in prices, not necessarily on 1st January. Thanks to the butter subsidy, which the Opposition chided me for achieving, increases will be spread over a longer period.

Is the right hon. Gentleman aware that the disparity between the green pound and the real rate is one of the greatest single factors promoting the export of cattle from this country for slaughter abroad? Does he not agree that the many people who condemn the export of cattle should welcome a readjustment in the green pound?

The connection between those two points is rather remote. I suspect that those who object to the export of live animals do so for compassionate reasons. If one were to devalue the green pound it would assist certain elements in agriculture, but I have to achieve a balance in the national interest.

Does the right hon. Gentleman agree that the time has come to devalue the green pound by 10 per cent. if confidence is to be restored in the beef and pig sector of the agriculture industry?

If I did agree with the hon. Member, I certainly would not say so at this time. I cannot imagine anything that would have a greater effect on speculation. I am willing to listen to hon. Members' advice. I get a great deal of advice. The right hon. Member for Yeovil (Mr. Peyton) suggests that I devalue by 7½ per cent., the hon. Member for Cardigan (Mr. Howells) says 10 per cent. and my hon. Friend the Member for Cannock (Mr. Roberts) says zero.

When my right hon. Friend goes to Europe for discussions will he say why the green pound and the pigmeat MCAs are different? When will the Commission come forward with proposals on the pigmeat MCAs?

Yes, because the question of pigmeat MCAs concerns not so much the value of the green pound—or the green franc or the green lire, because they are involved in this as well—but on the method used to calculate the MCAs. We have been pressing the Commission on this for some months now. I am glad to say that at the last council we were supported by the French and Italians, and I hope that between the three of us we can move the Commission more speedily.

May I say how glad I am that the Minister is on his way to recovery, though I doubt whether this is the right place in which to complete recovery? I hope that he will, however.

Will he confirm that according to his own calculations devaluation of the green pound by 7½per cent. would result in an increase in the cost of living index of about a half per cent? In assessing the national interest will he give proper place to the fate of the livestock producer whose interests ultimately will have a sharp impact upon the consumer, which is the group that the Minister affects to look after?

I thank the right hon. Member for Yeovil (Mr. Peyton) for his kind remarks. I feel a lot better as I see these old familiar faces all around me.

As for the substantive part of the question, I have said that this is a question of balance between the interest of the consumer and the interest of the producer. That is the difficulty. I have tried to do a quick mental calculation, and I do not think that I am wrong to within half a per cent., that on food prices it is a figure of about 2½ per cent. Of course the effect on the RPI can be calculated by multiplying that by roughly a quarter.


asked the Minister of Agriculture, Fisheries and Food if he will make a statement about the value of the green pound.

The difference between the representative rate for sterling and the market rate used for the purpose of calulating monetary compensatory amounts is now £1=1·30696 units of account, giving an applied MCA percentage of 28·9. I continue to keep the rate for the green pound under review.

Is the Minister aware that the reply will be received with great disappointment by the pig and beef sectors, and will he tell the House what he is going to do to help the livestock producers over the next three months?

I was trying to answer the question as factually as I could. A number of factors are moving somewhat in the livestock producer's favour. There has been, as there always is at this time of year, an increase in the home market for beef. It happens that at this time there is an increase in exports of Irish beef to this country—an increase which the Irish themselves did not believe would happen. Their calculations were for a drop in production, not an increase, let alone an increase in exports. The fact is that food costs will probably drop a little further, and the target price during the winter will increase.

Is it not true that the grain crop in this country in the current year has increased to 17 million tons for the first time—an all-time record? Against this background, is it not nonsense for Conservative Members continually to claim that the farming community is hard pressed?

Certain parts of the farming industry are in difficulties, and it is no use denying it. Other parts are doing very well. I have to tread very carefully on the question of a record harvest. I was chided by Sir Henry Plumb and by various members of the Conservative Front Bench for daring to say that there might be one.

Does the Minister recognise that while he maintains this very large differential, distortions are being set up in the market which will not be in the interests of the housewife in the long run?

That is one of the factors that have to be watched. I have always said that we have to keep an absolute balance on the matter of the green pound. It is no good taking a specific sector while, at the same time, ignoring the fact that many of the imports that the housewife needs come in a good deal cheaper than they would otherwise. If I am to be both Minister of Agriculture and Minister of Food, as I must be, I must keep the balance.

Has my right hon. Friend considered publishing a table containing the possible price variations and inflation variations associated with our revaluing the green pound, so that, for example, 1 per cent. upwards would mean so much on inflation, so much on consumer prices, so much on wage demands, and so much unemployment? It would clear our minds if we could have that information.

If my hon. Friend would care to table a Question, I shall see what I can do.

Will the right hon. Gentleman identify the large sections of the livestock industry which he thinks are doing particularly well at the moment? My hon. Friend the Member for Louth (Mr. Brotherton) mentioned beef and bacon, but he did not mention milk or dairy products. Will the right hon. Gentleman take the opportunity to say what will happen to dairy products after the end of the year?

I could, but I will not, because I am not yet in a position to do so. As the right hon. Gentleman must be aware—none more so—this has been an extremely good year for milk yield, and it was that which I had particularly in mind when I tried to isolate those parts of the livestock industry which I thought were doing not so well. As to pigs, there is difficulty with processing, but for the pig producer the position is undoubtedly improving.