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Volume 175: debated on Thursday 5 July 1990

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To ask the Chancellor of the Exchequer what is the tax and price index rate of inflation.

Is not it remarkable that no matter how the Government seek to change the method of calculation, our rate of inflation is still among the worst of all manufacturing countries? Would the Chancellor of the Exchequer like to tell us when his miracle is going to start so that our inflation will drop and our manufacturing deficit be eliminated?

Will the Minister tell us which measurement of inflation the Treasury intend to use in estimating when we enter the exchange rate mechanism? Will he guarantee to tell us that now, so that we can judge exactly when the Government are likely to meet that average rate of inflation which will bring us into the exchange rate mechanism?

What would be the effect on the underlying rate of inflation of a massive increase in public expenditure in addition to an immediate cut in interest rates, both of which are Opposition policies? How could any Government implementing such policies and committed to immediate entry to the exchange rate mechanism, however vague the conditions, hope to maintain the pound's parity within the ERM system?

That is a question for the hon. Member for Derby, South (Mrs. Beckett), the shadow Chief Secretary. If the Labour party were ever returned to office, she would be the Minister responsible for ensuring that all the gravy trains arrived on time.

The Minister told his hon. Friend the Member for Eastbourne (Mr. Gow) that the cause of inflation was excessive demand. Will he say who caused that excessive demand?

It was caused by over-confidence among consumers, especially in the wake of the Wall street crash of 1987. I notice that the Leader of the Opposition is whispering advice to his right hon. and learned Friend. Perhaps they are correcting each other. The shadow Chancellor did not advise the then Chancellor, my right hon. Friend the Member for Blaby (Mr. Lawson), to deflate after the Wall street crash of 1987.