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£ Sterling

Volume 13: debated on Thursday 19 November 1981

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asked the Chancellor of the Exchequer what is his Department's estimate of the fall in the real value of the £ sterling since May 1979.

According to the general index of retail prices, the purchasing power of the £ sterling is now 71 per cent. of its May 1979 value.

After that remarkable admission of the effects of the Government's policies over the past two and a half years, will the Minister tell us his estimate of the present rate of inflation? By how much does he expect it to increase during the next few months?

The hon. and learned Gentleman will have listened to the immediately preceding questions, when my colleagues were urged to increase the rate of inflation by Labour Members. Such a policy would bring about a record similar to that of the Labour Government. Is the hon. and learned Gentleman aware that in the first 29 months of the Labour Government, the pound that they inherited became worth only 54p? By the end of the Labour Government's period of office its value had fallen to 47p——

The reply to the hon. and learned Gentleman's detailed question is that the current rate of inflation, year on year, is 11·7 per cent.

Having asked the Chancellor of the Exchequer recently what the beneficial effect on the retail price index would be if he were to reduce VAT to 12·5 per cent., may I now be told whether there is any foundation for the rumour that the Government are considering an increase in VAT and that that pressure comes, not least, from our European partners, who think that our rate is far too low?

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's reply, I give notice that I shall seek to raise this matter on the Adjournment.