Inflation (OECD Forecasts)

Oral Answers to Questions — Prices and Consumer Protection – in the House of Commons at 12:00 am on 17th April 1978.

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Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster 12:00 am, 17th April 1978

asked the Secretary of State for Prices and Consumer Protection if he will make a statement on the most recent inflation forecasts for the United Kingdom made by the Organisation for Economic Co-operation and Development.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

In its latest survey of the United Kingdom economy, published in March, the OECD forecasts that our inflation rate will be even lower than it had forecast previously.

Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster

The right hon. Gentleman well knows that the OECD predicts accelerating prices in the second half of the year, and that that body and the Chancellor of the Exchequer have made it plain that the whole Budget strategy, which is a high risk strategy, depends on increased industrial production. Will he acknowledge that industrial production is stagnant, that the March balance of trade figures were disastrous, and that it is politically misleading to talk about 7 per cent. inflation or single figure inflation while not giving sufficent attention to the fact that those are matters from which doubtless the Government will escape by having a General Election before the result of their mismanagement comes home to the British people?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I am sorry to spoil the hon. Gentleman's prepared supplementary, but I do not think that the evidence of the OECD survey supports what he says. The evidence of the OECD survey, particularly that part of it which is my concern, confirms the contention which has been advanced by the Government for the last 18 months, namely, that we would remain in single figure inflation throughout 1978 and that that good result would persist into 1979. Once again, I invite the Conservative Party to rejoice with me in the fact that we have made that success.

Photo of Mr William Molloy Mr William Molloy , Ealing North

Will my right hon. Friend bear in mind that quite apart from the evidence in the OECD report, the last time the Tories were in government they left us with an enormous problem which they tried to solve by printing money? It is much more important that he should take that into account and resist any measures that might come from the Government on those lines, but he should continue his present work in co-operation with the TUC in carrying out the successful fight against inflation.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I am grateful for my hon. Friend's remarks. There are two important points that flow from them. The first is the necessity, if we are to bring the inflation rate down to a lower figure than 7 per cent.—and certainly that is necessary—of the co-operation of the trade union movement in the next pay round. The second matter relates to comparative inflation rates. The Opposition have spent the last four years comparing various inflation periods. I wish that they would start comparing the last year of their Administration with the present year of ours. Such a comparison would be very illuminating.

Photo of Mr Neil Marten Mr Neil Marten , Banbury

What has been the total inflation figure since the Government came into office three-and-a-half years ago? Has it been over 50 per cent?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The figure is a good deal more than 50 per cent., and it is the subject of a later Question. Again, let me urge the hon. Gentleman to make his comparison on the basis of realistic periods, not the period of a General Election but the period when there was a 400 per cent. increase in oil prices, which occurred during his party's administration. It coincided with the beginning of a massive printing of money, and the inflation which was disastrous for this country and which is now under control began some time in the summer of 1973.

Photo of Mr Robert Mellish Mr Robert Mellish , Southwark Bermondsey

I understand that the City is concerned because it thinks that the Budget was far too generous and there has been a crisis. [HON. MEMBERS: "Hear, hear."] The Opposition say "Hear, hear" to that. Against that, the Opposition demand that the income tax cuts should have been greater. In those circumstances, the amount of give-away in the Budget would have been very much more than it was last Tuesday. Will my right hon. Friend try to elucidate the Conservatives' policy? Do they really believe that last week's Budget gave away too much?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

My right hon. Friend must not tempt me to answer questions which are more appropriate for answer by my right hon. Friend the Chancellor of the Exchequer. But he and I will take common ground in the fact that the great achievement of the last two years, including the progress that we have made on inflation, is attributable to the efforts of the British people. The British people, when they appreciate the Conservative Party's attitude, will be sorry to see that the Conservative Party is looking to failure rather than to success and not saying that at least we have got inflation under control.