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Retail Prices

Volume 958: debated on Monday 20 November 1978

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asked the Secretary of State for Prices and Consumer Protection what is his current forecast of the date on which the 12-month rate of increase in retail prices will rise above 10 per cent.

There is no reason why the 12-month rate of increase in retail prices should return to double figures if pay settlements are consistent with the policy outlined in the White Paper "Winning the Battle Against Inflation".

If things should start to go wrong this winter—and there are fair signs that they might—may we assume that the Secretary of State will advise the Prime Minister to delay the General Election still further and, if so, will he be offering advice on which parliamentary groups to buy off this time and how?

I am prepared to treat that supplementary question as if it were sensible and tell the hon. Gentleman that I do not believe that the forebodings implicit in it—forebodings for us, hopes for the hon. Gentleman—will come about. I believe that we shall have a sensible pay round and that the inflation rate will continue at or about the present level, give or take a percentage, for some months ahead. I say that without any doubt because of my belief in the common sense and public spiritedness of our trade unions.

In my right hon. Friend's attempt to contain the increase in retail prices, will his Department have another look at recent changes in petrol prices? Is it not a nonsense that a motorist buying 10 gallons of petrol can get up to £1 difference in his change at various pumps? As we are supposed to have some influence with British Petroleum, can we not have a BP pool at a low price?

I do not believe that petrol prices would be best held down by such a centralised scheme. The reason why petrol prices did not go up six months ago when it was feared that they would, on the last occasion that it was threatened that discounts would be removed, was that the companies continued to compete against each other. I want to see a continuation of that competition and Conservative Members who regard that as a major revelation have either not read my Green Paper on competition or were not here when I referred to it four Questions ago.

How much more will prices go up because of the Government's failure to reach agreement with the TUC? If the answer is that they will not go up at all, why did the Government try to reach an agreement in the first place?

I made a long speech on this subject on Saturday evening and I propose to punish the hon. Gentleman by sending him a copy. The short answer to his question is that I do not believe that there will be a significant difference in the level of wage settlements or in their effect on the RPI as a result of the TUC's eventual inability to subscribe to that document, but I believe that for the economic success of this country there needs to be a close working partnership between the TUC and the Government. The reason why I wanted that document to be endorsed by both parties was to give that close working relationship more form and detailed application.

I trust that my right hon. Friend will not send his speech to me as a punishment, because I have a feeling that I have read it before. Perhaps he would like to say a few words about the chairman of the TUC, who has argued that we ought to keep to the 5 per cent., whereas his union on the same day put in a claim for 25 per cent. Would that be a rapacious claim or a moderate claim? Is it not clear to my right hon. Friend, and to all his hon. Friends on the Front Bench that the 5 per cent. limit has now been broken and that we ought to get back to a sensible position of free collective bargaining, and at the same time—this I do accept—a recognition that the claims ought to be kept within reasonable bounds?

That question is clearly not for me, but I would say one thing about it. The point that my hon. Friend makes demonstrates the consistency of the attitude of the Post Office workers union. The point that has been made throughout is that, while many trade unions may want to initiate pay increases consistent with our inflation target, once one trade union begins to break the line it becomes almost impossible for others not to do the same. I think that the point that was made upstairs at a lunch last week is wholly consistent with all that that gentleman has said in the past.