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Tax And Price Index

Volume 983: debated on Thursday 24 April 1980

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asked the Chancellor of the Exchequer what is the latest published increase in the tax and price index.

The tax and price index rose by 176 per cent. in the 12 months up to March 1980.

Will the Minister tell the House whether he agrees with the comment by his Department, in a press release dated 18 April 1980 concerning the tax and price index, that it is accurate only once a year, namely, from Budget to Budget? If that is so, how can it possibly be used by either employers or trade unions in collective bargaining arrangements that take place throughout the pay round, which lasts from November to July? In those circumstances, is it surprising that no one makes use of this so-called tax and price index?

I do not have before me the document to which the hon. Gentleman refers, and I hope he will excuse me from giving a specific answer on that point. With regard to his more general point on the tax and price index, I believe that this index is valuable alongside the retail price index, just as it has been valuable to have data published by the Institute of Fiscal Studies, all of which are designed to try to provide some clearer public education in the movement of prices.

On the 1 o'clock ITV news programme, Mr. Sidney Weighell said that his members were expecting to get a 20 per cent. pay increase because they want to keep their standard of living at the same level as a year ago, and that the retail price index had gone up by 20 per cent. Will my right hon. Friend send a telegram to Mr. Weighell and all the other people on his executive to tell them that if they need to keep their standard of living at the same level as last year they require only 17ยท6 per cent.?

Perhaps a few remarks from this Bench will obviate the public expenditure necessity of sending a telegram. I think that negotiations between Mr. Weighell and British Rail are best left to the appropriate people, namely, the management of British Rail, but it is undoubtedly true that productivity must be a major factor in whatever wage settlements are concluded.

Is it not clear from what has been said today that the tax and price index has lacked credibility from the word " go "? It would have been better if the Government had concentrated on the retail price index, to which wage bargainers in industry pay attention and which would have some effect on inflation if it were kept down.

That is a somewhat narrow reaction. The major embarrassment of the tax and price index is that it was an innovation, and because it was an innovation it was deeply repugnant to many on the Labour Benches. It is true that the retail price index, by virtue of its long existence, is much greater in the whole nature of public debate on these matters than any other index.