Inflation

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 27th June 1991.

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Photo of Mr Matthew Carrington Mr Matthew Carrington , Fulham 12:00 am, 27th June 1991

To ask the Chancellor of the Exchequer what are the latest estimates for the rate of inflation in the first quarter of 1992.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

No forecast has been published for the first quarter of 1992; the Budget forecast was for RPI inflation to fall to 4 per cent. in the fourth quarter of 1991 and to 3¾ per cent. in the second quarter of 1992.

Photo of Mr Matthew Carrington Mr Matthew Carrington , Fulham

I am grateful to my right hon. Friend for that answer. Are not those low inflation figures a great tribute to and justification for my right hon. Friend's low inflation policy? Will my right hon. Friend confirm that it is his intention and that of the Government to continue that policy to make Britain a low-inflation country? Will he comment also on the effect on inflation of an increase in public expenditure of £35 billion a year?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

It is absolutely clear that, whatever measure one looks at, inflation is reducing. The headline rate is now down 5 per cent. from the peak, the headline rate minus mortgage interest payments is now 2·9 per cent. down from its peak, and producer prices have also declined by 1 per cent. in the past four months. Encouragingly, too, the rate of increase in earnings in manufacturing industry has fallen by 1 per cent. in the past four months. That is very good news for British industry and very good news for the economy. My hon. Friend is absolutely right. Opposition Members are not remotely interested in the fight against inflation.

Photo of David Winnick David Winnick , Walsall North

As the Chancellor is concerned about earnings and so on, does not he have some responsibility to restrain the exorbitant increases that have been given to people who were on very high incomes in the first place? Is not it absolutely sickening and hypocritical that the very people who are receiving such exorbitant increases—66 per cent. and even more in some instances—are preaching to their work forces about moderating wage claims? Is not it time that we ended such hypocrisy?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

My right hon. Friend the Prime Minister has made his views absolutely clear. Although Conservative Members have frequently argued that there is an international market for management, we take the view that some of the recent increases in industry are excessive and are unjustified. I do not believe that it is the purpose or function of government to interfere by rule of law in those matters.

Photo of Mr Bowen Wells Mr Bowen Wells , Hertford and Stortford

Does my right hon. Friend agree that those who price themselves out of the market, whether they be the chairman of a company or the lowest-paid employee, will lose their jobs?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

My hon. Friend is absolutely right. That is why I referred to the decline in the rate of increase in manufacturing earnings, which is good news for jobs and for output.