CHANCELLOR OF THE EXCHEQUER (INTERVIEW)
Q1. Mr. George Gardiner
asked the Prime Minister whether the statements by the Chancellor of the Exchequer on economic policy in his London Weekend Television interview on 4th January represent Government policy.
The Prime Minister (Mr. Harold Wilson)
Yes, Sir.
Mr. Gardiner
I ask the Prime Minister specifically whether he agrees with two statements made by the Chancellor of the Exchequer in the course of that interview. First, his right hon. Friend said that there could be no question of replacing the present £6 pay limit with another [column 240]flat rate and that there must be more flexibility so as to allow for differentials. Secondly, he said that there was a special case for giving some tax relief to middle income earners. The right hon. Gentleman confessed that he had given them quite a caning. Does the right hon. Gentleman agree with those two statements?
The Prime Minister
My right hon. Friend did not use quite the expression the hon. Gentleman has mentioned. He indicated the case for more flexibility, but this issue has not yet been decided, as my right hon. Friend made clear at the time. My right hon. Friend was speaking on behalf of Her Majesty's Government in that second statement.
Mr. Skinner
Is my right hon. Friend aware that since the Chancellor's broadcast, when he talked about giving some element of tax relief to the middle class—namely, those earning between £4,000 and £8,000 per annum—the Secretary of State for the Home Department has said—quite alarmingly, most people in the PLP would think—that when public expenditure as a proportion of national income reaches 60 per cent. and beyond, the result is that a pluralist democracy is in danger?
Taking into account the two restrictions mentioned by the Chancellor and the Home Secretary and today's ministerial replies about pensions, how are we to observe what my right hon. Friends have said and at the same time get better pensions, more hospitals and more housing? Does my right hon. Friend agree that he should get these people together?
The Prime Minister
My right hon. Friends are together. The Question on the Order Paper relates to a broadcast by my right hon. Friend the Chancellor of the Exchequer. If my hon. Friend wishes to table a Question about the speech of my right hon. Friend the Secretary of State for the Home Department, I shall be delighted to answer it.
Mr. Duffy
Is my right hon. Friend aware of the conclusion drawn in the latest report of the Price Commission—that inflation is now slowing down, but that it is still relatively too high for pressure to be significantly eased on the exchange rate and, therefore, on import costs, and that much the greater part of [column 241]the improvement is attributed to the almost universal observance of the £6 voluntary limit on pay increases?
The Prime Minister
Yes, the current report of the Price Commission is an extremely important document and marks a very important stage in the fight against inflation. I am sure that its conclusions will be as welcome to Opposition Members as it is clearly welcome to my hon. Friend and myself. He will be aware of course, that the Commission's own index and other published indices show a very significant fall in the rate of inflation.
Q3. Mr. Peter Morrison
asked the Prime Minister whether the television interview given by the Chancellor of the Exchequer on 4th January on the economy represents Government policy.
The Prime Minister
I refer the hon. Member to the reply which I gave earlier today to the hon. Member for Reigate (Mr. Gardiner).
Mr. Morrison
Will the Prime Minister give his own views about the restoration of differentials? Will he support the attempts of the Chancellor of the Exchequer to resist the pressure from his left wing to reflate the economy?
The Prime Minister
The subject of differentials and the next stage of the anti-inflation policy will have to be discussed with all concerned. At this stage it is impossible to forecast the right answer. There must be discussions. During the greater part of last summer I was badgered by the Opposition to do something, presumably statutory. We have achieved the right answer, it is working, and the hon. Gentleman should wait for the progress of further consultations.
Mr. Newens
Is it not hypocritical for Opposition Members to press for cuts in public expenditure and at the same time to press for increased expenditure on armaments in the spirit of the cold war?
The Prime Minister
The speech made last week, which has been the subject of some comment this afternoon, contained a complaint about a cut of £4.8 billion in the defence review last year. Any party that claims to want to cut Government expenditure overall must start by replacing that £4.8 billion as well as dealing [column 242]with Maplin, the Channel Tunnel and all its other commitments.
On the subject of public expenditure, I was interested to note the forthcoming and frank statement by the right hon. and learned Member for Surrey, East (Sir G. Howe), who advocated cuts in expenditure this year rather than three years ahead. He admitted that this would cause additional unemployment this year. The House should know whether the Leader of the Opposition supports that view.
PRIME MINISTER (VISITS)
Q2. Mr. Trotter
asked the Prime Minister when he next intends to visit Portsmouth.
The Prime Minister
I have at present no plans to do so, Sir.
Mr. Trotter
Is the Prime Minister aware from his visits to naval and other military bases of the ever-increasing Russian military strength? Does he realise that the Russian Socialists are realistic and appreciate not only military strength but willpower? Although they undoubtedly wish to see a Socialist Government here, they will respect Britain more if we are led by an iron lady rather than by a plasticine man.
The Prime Minister
The Soviet Union, which is composed of realists, pays less attention to the odd speech here or there than it pays to the record of Her Majestys' Government's support of NATO and our determination to maintain its strength.
Mr. Frank Allaun
Is the Prime Minister aware of the even greater military strength of the United States? Do not both great Powers possess the ability to overkill? Is there any sense in the United Kingdom's indulging further in this nonsense, because there is no defence against nuclear weapons?
The Prime Minister
Anybody in my position must be fully aware of the great contribution made by the United States, together with other European countries, to NATO. The balance of military power and of ability in nuclear matters—the balance of terror, as my hon. Friend might prefer to put it—has been significant in achieving detente between the two super blocs, and therefore between NATO and [column 243]the Warsaw Pact countries. Because of this situation, the achievements of Helsinki, which I believe to have been real, were possible, although not every Conservative Member welcomes that.
Mrs. Thatcher
In view of the hysterical outburst from Moscow and the somewhat trivial response of R. Masonthe Secretary of State for Defence to the factual and balanced speeches made by the right hon. Gentleman James Callaghanthe Foreign Secretary and myself, will Harold Wilsonthe Prime Minister speak up for the effective defence of Britain and for our way of life against those who permit freedom of neither speech nor travel and who have to build a wall to keep their people in?
The Prime Minister
I agree with the right hon. Lady about the outbursts from Moscow. I thought the best comments on the whole business came from my noble Friend the Minister of State for Foreign and Commonwealth Affairs, who told the Russians that this was a country of free speech and that anybody was free to make speeches—including my right hon. Friend the Secretary of State for Defence and those Russians who wished to enter the argument. It was quite wrong of the right hon. Lady to refer to any comparison between her speech and that made by my right hon. Friend the Foreign Secretary in relation to what was said by my right hon. Friend the Secretary of State for Defence, who spoke from real knowledge of these matters. The right hon. Lady's analysis contained a considerable number of long accepted truths which she has just discovered, but it contained nothing new. The difference between the right hon. Lady and my right hon. Friend the Secretary of State for Defence is that he has been dealing with these matters from great knowledge, whereas the right hon. Lady has suddenly began to make speeches about them.
Mrs. Thatcher
If the Prime Minister accepts the analysis and accepts that, if our defence is to be effective, it must bear some relation to the forces ranged against us, will he say “No” to further defence cuts?
The Prime Minister
We have a responsibility, as had the Conservative Government of which the right hon. Lady was a member, in making our contribution to NATO. We are making a full [column 244]contribution and NATO is extremely satisfied with our contribution. I have made clear in the House that any review of defence expenditure will not affect the effectiveness of that contribution. We have said this to our NATO allies. I am sure that the right hon. Lady will be satisfied with the figures when they are published. I agree with the right hon. Lady's comments about the Berlin wall. I recall a visit made by 40 hon. Members in a Labour Party mission to Berlin many years ago. Some of my hon. Friends who were involved in that visit are still in the House and they will remember the line taken by that mission and its leader in 1962.
BELGIAN PRIME MINISTER
Q4. Mr. Marten
asked the Prime Minister when he next proposes to meet the Belgian Prime Minister.
The Prime Minister
I have at present no plans to meet M. Tindemans before the next meeting of the European Council on 1st and 2nd April, Sir.
Mr. Marten
Has the Prime Minister read Mr. Tindemans' report and does he recall the reference to direct elections to the European Parliament? Does he agree that before detailed discussions on this subject are carried very much further the United Kingdom Parliament should be told what powers the European Parliament will have? How can we possibly judge whether it is right or wrong to have direct elections until we know precisely what the powers are? Are we not putting the cart before the horse? Therefore, may we have an assurance that Parliament will be told?
The Prime Minister
The issue of direct elections was settled by the referendum—[Hon. Members: “No” .] The referendum ratified the Treaty of Accession, with the changes that we succeeded in obtaining in our renegotiations, and the matter is included in the Treaty of Rome. My right hon. Friend the Foreign Secretary has told the House what we intend to do about direct elections. We do not intend to proceed with undue haste, but we are not dragging our feet. We feel it right first to consult the principal parliamentary parties in this [column 245]country, as well as the party organisations outside with experience of dealing with some of the technical problems. In other words, we envisage a procedure not unlike that followed in connection with other election proposals.
The idea is that we shall invite parties represented here and parties outside, through their national organisations, to give their views to the Government. We then propose to produce a discussion document in the form of a White, or Green Paper containing all the questions raised, so that all hon. Members and the public can express their views. I agree with the hon. Member for Banbury (Mr. Marten) that before any decisions are taken they should be the subject of debate by Parliament.
Mr. Rose
Does my right hon. Friend agree that accession implies that we accept the principle of direct elections based on the national method of member countries? Does he not also think it rather strange that those who criticise bureaucracy in Brussels should be against the democratic principle of direct elections? Does he not further agree that two years is quite sufficient, in view of our experience in Northern Ireland and with the referendum, to prepare a suitable method of direct elections?
The Prime Minister
My hon. Friend has raised a number of questions which go rather wider than I should wish on the implication of views expressed by hon. Members. I have already stated the position on the principle of direct elections. It is, however, extremely important that we get this matter right and I do not believe that any party, the Government, Opposition or anybody else, can claim to know all the answers. That is why we shall welcome consultation and advice, written or oral, from all parties here and from party organisations outside. We shall then prepare a document setting out the main issues that have to be settled, and I hope that it will be debated by the House.
Mr. Thorpe
Has the Prime Minister seen the reported disagreement of his right hon. Friend the Foreign Secretary with the two-tier system in Europe suggested by Mr. Tindemans? Does he believe that it would be a bad thing for the Community? Is he aware that there is no need for this system in Great Britain [column 246]if we move towards integration economically and politically, at the same pace as all our partners?
The Prime Minister
Of course I support what my right hon. Friend said about the two-tier system. This proposal, which has been aired before, is not one that the Government will support. The real answer is not, as the right hon. Member for Devon, North (Mr. Thorpe) says, to move towards greater integration. We have to catch up the backlog of past events under successive Governments—I am not making a party point—in investment and other matters to ensure that we are highly competitive. This is the task to which the counter-inflation policy, which has now been accepted by the whole country, is working.
Mr. Spearing
My right hon. Friend has said that he thinks that the issue of direct elections has been settled by the referendum. Does he not recall that the 12-page red, white and blue pamphlet put into every letter box during the referendum campaign contained no reference to what the Government are now maintaining is an obligation? As this did not appear in any of those leaflets, on what basis does my right hon. Friend make his claim?
The Prime Minister
The leaflet did not contain the whole text of the Treaty of Rome or the Treaty of Accession. It would have been a very long document if it had. My hon. Friend is being very churlish about the quality of speeches by his right hon. and hon. Friends, hon. Members opposite and himself if he suggests that this issue was never adequately raised in the campaign. It certainly was.