I thank my right hon. Friend for that answer and congratulate him on his appointment to the Cabinet, but will he say why, having given that figure which is still 13·8 over 12 months, the Government are proceeding with the abolition of food subsidies when their retention was a main plank in the election manifesto on which we came to power?
An essential element in the programme for economic recovery is, and must be, a reduction in some element of public expenditure, and the announcement that my right hon. Friend the Chancellor of the Exchequer made in July about food subsidies is part of that. I am sure that the people whom my hon. Friend and I represent have much to gain from the progress of economic recovery, and this is all part of the plan for bringing that about.
It is impossible, and were it possible it would be reckless, to make estimates which would be guesses about future movements, particularly if they were as specific as that. Perhaps our overwhelming obligation is to stabilise the relationship between the pound and the dollar. That is as important to people who buy their shopping and purchase goods and groceries every week as it is to every other section of the community, because it reflects in the RPI. I promise that later this afternoon my hon. Friend will hear a robust account of how we are carrying out policies that will defend the rate.
The first thing to say about the figures I have given and pay policy is that the spectacular improvement in our inflationary situation—the reduction in the rate by 50 per cent. in a year—is almost entirely attributable to the sacrifices made by the trade union movement in signing the social contract. I believe that the trade union movement is wise enough to realise that, as long as the Government go on doing what they can to limit inflation, it has a duty to itself, its members and the nation to go on co-operating with the Government. I am sure that it is wise enough and public-spirited enough to go on doing that.
Will the right hon. Gentleman give my hon. Friend the Member for Reading, North (Mr. Durant) a rather more specific answer? Is it not a fact that the Wholesale Price Index is beginning to rise again very rapidly with a recent increase to an annual rate of 17 per cent. and that this is reflecting the fall in sterling? Will he give us some guidance? For example, if the rate of exchange is one dollar to the pound by the end of the year, what will be the effect on the RPI?
I shall not hypothesise about a proposition as wildly improbable as that, but I am prepared to agree with the hon. Gentleman on the obvious point he has made already. The depreciation of sterling clearly affects the prices of imported raw materials and, therefore, has an adverse effect on the cost of living index. It is one of the reasons why we are doing all we can to stabilise it.
Does my right hon. Friend agree that it is not good enough for the Labour Government to expect trade unionists to make all the sacrifices to defeat rising prices? Is it not about time we imposed stricter price controls on big business, especially in view of what we have learnt recently about the sharks in television rental businesses making excessive profits from working people and their families?
My hon. Friend the Under-Secretary is talking to the television rental companies this week, and I hope to make an announcement towards the end of this week or at the beginning of next week. I agree about how cooperative the trade unions are in responding to what we think to be the needs of the nation.
My hon. Friend made a wider point about the extent to which prices policy should cut into this matter. The present policy is only at its beginning. This evening I shall commend to the House the new Price Code, which has hardly begun. What follows is determined by a number of factors, including the progress of the economy and the response of private companies when it is put to them that they need to make a voluntary gesture in limiting their own profits and meeting the needs of the consumer.
First, on a purely personal basis, may I congratulate the new Secretary of State on his appointment and, still on a purely personal basis, wish him well.
Having said that, may I ask the right hon. Gentleman whether he was aware last week, when he was indulging in soggy euphemisms about being on course but the journey taking a little longer, that nobody believes anything that this Government say about inflation or anything else any more, and that for the Government journey's end is just around the corner?
I am personally very grateful for the hon. Lady's personal congratulations. I hope she will take it from me that if the occasion arises when she asks me questions with any content I shall do my best to answer them.