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Retail Prices

Volume 972: debated on Monday 22 October 1979

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asked the Secretary of State for Trade when he expects retail prices to return to a single figure rate of inflation.


asked the Secretary of State for Trade whether he is satisfied with the present rate of increase in retail prices.

Inflation was already in double figures and rising when this Government took office. Prices had more than doubled in five years. It will take time to correct the deteriorating situation caused by many years of Socialist incompetence and mismanagement.

As the Conservatives fought the last election on the slogan that they would reduce the cost of living, is it not appalling that they should have deliberately taken actions that have led to a doubling of the rate of increase? Their actions are increasing the cost of living rather than reducing it.

We made no forecasts at all for inflation when we fought the last election. In fact, our actions were in complete contrast to those of the previous Chancellor of the Exchequer who forecast a rate of inflation of 8·4 per cent. but presided over an increase in the rate to 25 per cent.

Is it not perfectly clear that the Government's fiscal policies are pushing the inflation rate nearer to 20 per cent. so that working and retired people are paying dearly for the rich man's Budget introduced by the Chancellor?

It is perfectly clear that with the single exception of the Budget action, which was more than compensated by a reduction in income tax, virtually every price increase that has occurred since the election was already in the pipeline when the previous Government were rejected by the electorate.

Whatever policy is adopted on inflation, will my right hon. Friend undertake that in no circumstances will he revive anything like the previous Government's Price Commission which presided over the largest recorded increase in prices in living history?

As the former Secretary of State for Prices and Consumer Protection said, the Price Commission was never intended to be an agency for holding down the retail price index. I believe that the Price Commission led to enormous bureaucracy for British industry and had virtually no impact on prices. There is no question of reviving it.

Is it not the case that, after 18 months of the last Labour Government, in August 1975 the rate of inflation in this country was 29·6 per cent?

It is true to say that prices rose faster during the period of the last Labour Government than in the whole of our recorded history. The present Government hope to do rather better than that.

The right hon. Gentleman said that the then Opposition made no forecast about inflation before the last election. Is he not aware that in a Tory Party press release the plan to double the rate of VAT was described as "a Labour lie"? These sentiments were repeated in the Daily Mail. Will the right hon. Gentleman now concede that the biggest single factor in price increases has been the decision of the Government to double the rate of VAT? So much for Labour lies.

Is it not correct to say that the rate of inflation has increased by 60 per cent. over a period of four months and that this is a disconcertingly rapid growth? Perhaps the right hon. Gentleman would do better to tackle rampant inflation than what he calls the disconcertingly high growth of rampant consumerism.

May I remind the hon. Member that the former Chancellor actually said in this House that if the earnings outturn in this country was to be 15 per cent.—in fact it is 16½ per cent.—it was inevitable that price increases would be in double figures? He also said that all the gains that the previous Government had made in conquering inflation would be cancelled out as a result. Those were the statements of the hon. Member's own Government.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of those replies, I give notice that I shall seek to raise this matter on the Adjournment at the earliest possible opportunity.