Price Increases

Oral Answers to Questions — Oral Answers to Questions – in the House of Commons at 12:00 am on 5th December 1977.

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Photo of Mr Fergus Montgomery Mr Fergus Montgomery , Altrincham and Sale 12:00 am, 5th December 1977

asked the Secretary of State for Prices and Consumer Protection what has been the increase in prices since February 1974.

Photo of Mr Fergus Montgomery Mr Fergus Montgomery , Altrincham and Sale

Does the right hon. Gentleman agree with the Chancellor of the Exchequer, who in October 1974 said that the rate of inflation was 8·4 per cent.? If he does, is it not a terrible indictment of this Government that prices have risen so dramatically since then?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The hon. Gentleman is in the unfortunate position of being the last in the queue to make this point today. Therefore, he must have the unenviable rôle of hearing the figures again.

Nobody is pretending that for the past five years, since the last year of the Conservative Government, we have not had a very serious inflation problem to tackle or that we have always tackled it as effectively as we might. But we now have better inflationary prospects than most of our competitors. Again, I invite the Opposition to rejoice about that rather than complain about what has happened in the past.

Photo of Mr Tom Litterick Mr Tom Litterick , Birmingham, Selly Oak

Will my right hon. Friend acknowledge that the Prime Minister is now determined that a 10 per cent. limit shall be applied to all earnings increases during the current period? Can he, therefore, give the House some assurance that he is equally determined that the 10 per cent. limit and the 12-month rule will also apply to price increases, so that justice will be seen to be done?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Not simply the Prime Minister, but the Cabinet in its entirety is anxious to preserve a 10 per cent. ceiling on earnings.

Regarding the 12-month rule, we are now examining with the Price Commission and with the nationalised industries a way in which there can be a greater gap between price increases, many of which in many industries occur far too frequently. I share my hon. Friend's view that, if we are to have a reasonable wage round, we have all the more to concentrate on moderate price increases. The two are directly related; but, of course, they are related in both directions. The way to get prices down to below 10 per cent. and keep them there is to retain the earnings ceiling that the Chancellor described.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

Is the Secretary of State aware that the fair comparison to make is between two periods of equal Government, one Conservative and one Labour? Is he also aware that the proposals now being made by the statutory body concerned with increases in pay in the hotel industry—which are likely to have severe repercussions—cannot, on ministerial authority, be reconciled with the Government's guidelines? What will the right hon. Gentleman do about that?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

As regards the comparison, the hon. Gentleman must know, and will, in his normal fair way, admit, that comparisons of two essentially arbitrary periods are intellectually indefensible. For instance, between October 1973 and January 1974 there was a 400 per cent. increase in oil prices, which had a slight effect on inflation thereafter. I think that the Opposition ought to start taking that into account.

The settlement that the hon. Gentleman described is really a matter for my right hon. Friend. I do not know the details of it, but I shall make sure that my right hon. Friend finds out.

Photo of Dennis Skinner Dennis Skinner , Bolsover

Will my right hon. Friend accept that it is difficult for a fireman or, indeed for any other worker who is involved in a dispute with the Government, to accept that it is right and proper for the Secretary of State for Prices and Consumer Protection to suggest that price increases are being examined when all he means is that those with responsibility for the matter are standing about a mile away from it, with their hands in their pockets, watching prices rise? Therefore, will he do something more than that and introduce a price freeze, as is suggested in Question No. 28?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The answer to Question No. 28, if I might anticipate it, will be "No". The message to the firemen ought to be that they, like the rest of the British population, have the strongest vested interest in keeping inflation down to manageable figures. That is basically achieved by having an earnings ceiling that does not exceed 10 per cent. We ask for that not because we think that next year ought to be a period of continuing sacrifice but because a 10 per cent. earnings ceiling is the best way to preserve standards of living in 1978, and it is our duty to go on saying so.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

Is the Secretary of State aware that, although a four, five or even six months' improvement in the rate of price increases is to be warmly welcomed, it does not make up for nearly four years of the worst inflation that we have known, since this Government came to power? As it is widely acknowledged that inflation in the second half of next year will be rising sharply again, the Secretary of State's unequivocal statement will be carefully noted. If he is not right, it will be regarded as a short-term con trick for electoral purposes.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The hon. Lady says that it is widely acknowledged that inflation will rise next year. I know from a recent visit to Cirencester that that view is widely reported in the local papers in her area as a result of speeches that she makes in Gloucester and its environs, but I do not know any authority on these matters which holds that opinion. If the hon. Lady looks at the National Institute's figures published last week, she will not find much support for her theories there, and there are many other examples.