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Inflation

Volume 13: debated on Thursday 19 November 1981

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11.

asked the Chancellor of the Exchequer what is the current rate of inflation.

16.

asked the Chancellor of the Exchequer what is his estimate of the level of inflation by the end of 1982.

18.

asked the Chancellor of the Exchequer what has been the rate of inflation in the most recent 12-month period for which figures are available.

The latest figures for the annual rate of increase in the retail price index are for the 12 months to October 1981, when the increase was 11·7 per cent. As regards prospects for the level of inflation in the coming year, I ask the hon. Gentleman to await publication of the Industry Act forecast.

Given that the true unemployment figure is nearly 4 million, and given the massive and savage cuts in public expenditure over the past two and a half years—which particularly affect the poorer sections of the community—will the Chief Secretary accept that the Government's monetary policies are cracking up? Will the Government change course and make a determined effort to reduce unemployment? When will the rate of inflation return to single figures?

I have already indicated when the forecast for inflation will be made. The unemployment situation is sufficiently serious for no useful purpose to be served by producing inflated and exaggerated figures at the drop of a hat. We all accept that it is serious and that the long-term solution to the problem lies in the structural change in the economy, signs of which are beginning to emerge.

Does not the right hon. and learned Gentleman yet accept that the Government have increased prices by 29 per cent. since they came into office and have done so, moreover, at the cost of intolerable and socially unacceptable high levels of unemployment that will have serious long-term consequences for the social stability and fabric of areas such as Merseyside? How much longer must my constituents suffer before this stupid and destructive policy is changed?

I do not believe that the hon. Gentleman's constituents, any more than the constituents of other hon. Members, including my own, would benefit from a reversal of policies that have led to a fall in the year-on-year rate of inflation from 21·9 per cent. to 11·7 per cent.

Although sterling M3 has been increasing faster than the rate of inflation over the last 15 months, will my right hon. and learned Friend confirm that he does not expect the rate of inflation to rise other than marginally in the foreseeable future? If that is so, how does my right hon. and learned Friend, as an advocate of monetarism, explain that?

As I have said to my hon. Friend, the Industry Act forecast will be made shortly. That will give the Government's latest view of the progress of inflation and the battle against it in the coming months.

Is not the right hon. and learned Gentleman aware that it is a measure of the wreckage of the Government's economic strategy that, of 16 interventions by Conservative Members this afternoon, only three have been remotely sympathetic to the Government's position? Does the right hon. and learned Gentleman agree that as a result of his gross underestimation of the inflation rate up to November, married pensioners have been defrauded by the Government of £1·20 from the pension that they will receive this Monday? Will he promise the House that early steps will be taken to restore the full value of all pensions and benefits under the national insurance and supplementary benefits schemes to compensate for the 11·7 per cent. rise in inflation up to November?

The word "defraud" does not come well from the lips of the hon. Gentleman. I am sure that, on reflection, he will think better of it. I am happy to confirm that the pledges that have been made and repeated by my right hon. Friends the Prime Minister, the former Secretary of State for Social Services and the present Secretary of State for Social Services, will be adhered to.

Can my right hon. and learned Friend recall any occasion since the election when the Opposition, by commending low wage settlements, have played any part at all in helping to reduce the rate of inflation?

My memory is not good enough to search out any such rare occurrence if, indeed, it happened.