Can my right hon. Friend tell the House the last time on which the rate of growth exceeded the rate of inflation, as it did in the third quarter of last year? Can he also confirm that low prices are good for competition, jobs and the economy?
My hon. Friend is absolutely correct in pointing to the central importance of keeping inflation low for the strength of the economy. The very good performance of the British economy in all aspects over the past few years has been achieved because we have put inflation at the forefront of our policies. As for the comparison that my hon. Friend made between the rate of inflation and the rate of growth, it is more valuable to look at the figures for a whole year than for a quarter. We have not had the final figures for 1987 yet, and will not have them for a little while, but it may well be that 1987 will prove to have been the first year for a generation in which the rate of growth has exceeded the rate of inflation.
In view of the optimistic remarks of the Economic Secretary that good times are just around the corner, will the Chancellor confirm that Treasury forecasts show that next year there will be a higher rate of inflation, a lower rate of growth and a worse payments crisis than last year? What does he think Noel Coward would have said about that?
I will not answer the last part of the question, because to sing it would be out of order. Certainly the forecast is for a slightly higher rate of inflation in the fourth quarter—not for the whole year, because we do not make that forecast—of 1988 than there was in the fourth quarter of 1987. Nevertheless, that rate of inflation forecast for the fourth quarter of 1988 is not merely one quarter of the average rate of inflation when the Labour Government were in office, but is only about one half of the lowest figure that they achieved in any month during the whole of their period in office. As for the forecast rate of non-oil growth, it may be lower than last year, but it is higher than the Labour Government ever achieved in any year of their term of office.
Is my right hon. Friend aware that most thinking people are well aware that one of this country's main achievements under his guidance has been the low rate of inflation?
Does my right hon. Friend further agree that the one thing any Government can do to help people on fixed incomes—pensioners and the like—is to keep the rate of inflation down so that the value of their money does not deteriorate, as it did in the 1970s?
My hon. Friend is absolutely right. During his very thoughtful and accurate question I heard a sedentary interjection from one of the junior Opposition spokesmen that there is mass unemployment. I should have thought on this day, when we have the figures showing that there has been a fall in unemployment over the past year of over 500,000, the highest ever fall in unemployment, that at least would have been welcomed by the Opposition.
If the Chancellor places such importance on the rate of inflation—as he clearly does, because he said yesterday to the NEDC that avoidance of inflation was at the "very heart" of Government economic policy—why have he and his Government taken a series of decisions in the past three months deliberately to fuel inflation by pushing up electricity prices, rents in the private and public sectors, water rates and nationalised industry prices? Is he proud of that?
I afraid that the hon. Member does not have the first idea of what causes inflation or what the rate of inflation is. The rate of inflation now is far lower than anything achieved by the Labour Government during their period in office. Not only does it compare very well with our past, but our relative inflation performance compared with other major countries has improved substantially.