SECRETARY OF STATE FOR INDUSTRY (SPEECH)
Q1. Mr. Blaker
asked the Prime Minister if the public statement by the Secretary of State for Industry at the Union of Post Office Engineers' Conference on 19th June 1977 concerning the economy represents Government policy.
The Prime Minister (Mr. James Callaghan)
Yes.
Mr. Blaker
Is the Prime Minister aware that his right hon. Friend was reported as saying that the Labour Government do not intend to hand over to the Tories the hard-won fruits of their policy? Does the right hon. Gentleman think that one of the fruits that his right hon. Friend had in mind was the current unemployment figure of 1,450,000? In the light of recent trade union decisions, is there any prospect of avoiding an increase in that figure?
The Prime Minister
I always thought that my right hon. Friend was a man of good sense. The quotation has undoubtedly confirmed that view. As I have said on many occasions, unemployment is the one serious blot in the progress that the Government are making. In view of the fact that world trade is not increasing as fast as we had all planned and [column 1417]hoped for when we met as a group of international countries, I do not look for—[Interruption.] I shall shout a little louder. I do not look for as much support from that as I would have hoped. Therefore, it is even more imperative to overcome inflation so that we can start domestic expansion in due course.
Mr. Radice
Does my right hon. Friend agree that without the social contract we could not have got through the past two years? Does he further agree that if free collective bargaining leads to a wages explosion it will undo all the sacrifices that trade unionists have made over the past two years and abort any economic recovery?
The Prime Minister
There is no doubt that the social contract contributed a great deal to maintaining good industrial relations at a time when the British people were suffering an overall cut in their standard of life. It enabled us to preserve some social cohesion in those circumstances. I am not surprised—I do not think anybody else is—by the great tensions that have arisen as a result of the policy. What is important is that we should have moderate wage settlements during the next 12 months. I entirely agree with my hon. Friend that if there is an explosion it is clear, as I have frequently said, that a great deal of the hopes that we have for reducing inflation will be destroyed.
Mrs. Thatcher
Is James Callaghanthe Prime Minister aware that many of us think that there is rather more than one blot upon his economic record and that the fact is that the result of his whole incomes policy has now led, inevitably, we believe, to a low-output, low-wage, high-prices and high-tax economy? Does he not recognise that unless he changes that strategy this country will fall progressively further behind in its standard of living compared with those of our industrial competitors?
The Prime Minister
What I think is true, as I have spelt out to the right hon. Lady on many occasions, is that unless we have an increase in productivity, and unless both management and unions work together to achieve that, the standard of life of this country will progressively fall behind. There is no difference between us on that. What I do not understand from the right hon. Lady—I still do not understand it after having read the speech [column 1418]that she made last Monday—is what alternative policies she has for producing the magic recipe that has so far escaped the country during the past 30 years.
Mrs. Thatcher
Perhaps the Prime Minister will one day say to the people of Britain what I believe the people of Ashford and Stechford are wanting him to say, namely, that they believe that they can spend their money better than he can and that he should leave them with a bigger proportion of their own earnings in their own pockets. Is the right hon. Gentleman aware that until he has some sort of incentive policy we shall get what we have had under his prime ministership and that of Harold Wilsonhis predecessor, namely, a flat reduction with no prospects of an increase?
The Prime Minister
No, I do not interpret the attitude of the British people in that way at all. The real truth is that the British people want both lower taxes and higher services. They want both more money in their pockets and no waiting lists at the hospitals when there is an operation pending.
Mrs. Kellett-Bowman
They want an election.
The Prime Minister
The fact that people want all these things is a problem for all democratic Governments. Hence. I come back to what I have always said; we have got to get higher productivity out of manufacturing industry. That is our first requirement and our first essential. On whatever side of the House the Leader of the Opposition may sometimes find herself sitting, she will have to come back to this problem and try to solve it.
TUC
Q2. Mr. Bidwell
asked the Prime Minister when he next expects to meet the TUC.
The Prime Minister
I refer my hon. and gallant Friend to the reply which I gave to my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) on 3rd February.
Mr. Bidwell
Due to the hilarity of the House I did not quite hear what my right hon. Friend said. But in anticipation of what he might have said in reply to my Question, may I ask my right hon. Friend [column 1419]whether he agrees that the decision of my union, the Transport and General Workers' Union, yesterday puts the Labour movement in a new phase? Will my right hon. Friend, as well as the Chancellor of the Exchequer, be seeing the trade union leaders to discuss the situation? Does he agree that the trade union movement is far from being a wild, woolly or greedy movement but that it is seriously worried about the prices explosion and about the necessity of preserving its standard of living? My right hon. Friend has a lot going for him, but our movement's unity will be preserved on the basis of its Socialist understanding——
Mr. Speaker
Order. The hon. Gentleman is taking the Question Time of other hon. Members. Mr. Bidwell, to finish.
Mr. Bidwell
I would suggest to my right hon. Friend that not least of what is going for him is the incapacity of the Leader of the Opposition. I have hitherto raised a question with my right hon. Friend——
Mr. Speaker
Order. The Prime Minister.
The Prime Minister
I agree that the decisions that have been taken, which affect the future of any agreement between the trade unions and the Labour Party, mean that we are entering a new phase. The Government will assume their responsibilities in this regard, but responsibilities in co-operation with the trade union movement. We should not assume that because these decisions have been taken there is no prospect of co-operation or collaboration between us.
Next week, the Chancellor of the Exchequer will be seeing some of the members of the TUC. The Cabinet will then consider the result of those discussions and we shall come forward to the House with our proposals, endeavouring as far as we can to carry with us all those who care about overcoming inflation and about ensuring that we get a steady expansion of our economy. From our conversations with members of the TUC I believe that it is possible to do that.
Mr. David Steel
Does the Prime Minister agree with what Jack Jones said last night, namely, that the 12-month gap between pay rises under phase 2 was a [column 1420]promise made by the trade union movement to this Government? If so, does the right hon. Gentleman expect it to be kept?
The Prime Minister
Yes. The 12-month gap was one of the early parts of the negotiations that have been going on. I am certain that the TUC will want to maintain that 12-month interval if it is at all possible. [Interruption.] The TUC is the servant of its members, in the end. This only goes to show the ambivalence of the Opposition, who are never quite sure whether the trade union leaders have too much power or too little. At some time they had better make up their mind.
I am quite certain that the leaders of the TUC will endeavour to maintain this 12-month period. That would be of great help to us, because the last settlement will not be made for several months yet.
Mr. Molloy
When my right hon. Friend meets the trade union leaders will he make it clear to them how absolutely opposed the Leader of the Opposition and many of her hon. Friends are to any form of price control? Some Conservatives are advocating a massive wage explosion and encouraging the trade unions to get involved in it. If that brings about any form of danger for the progress that this country is now making, they will then blame the trade union movement for it.
The Prime Minister
I am sure that the Conservative Party would like to ride to power on the back of every dissatisfied element in the country. What I have noticed is the extraordinary and unholy alliance between the Morning Star and the right hon. Member for Leeds, North-East (Sir K. Joseph), who seems to be joining this Communist band-wagon, about which his leader complains so much.
Mr. Donald Stewart
Why should the Prime Minister assume or expect the co-operation of the trade union movement, since he is aware that when the alleged social contract was cobbled together there was an implied remark that when wages were frozen prices would also be frozen? The wages part of that was carried out, but prices were allowed to escalate.
The Prime Minister
No undertaking of that sort was ever given. What was said was that there would be selective [column 1421]control of prices and food subsidies, and that took place. But the trade union movement is anxious that there should be good sense and sobriety in this matter. I am not speaking of everyone in the trade union movement, but as a whole it is concerned about this because it is as deeply concerned as anyone about the consequences of a return to 1973–74, when there were wage claims and settlements of 30 per cent. and prices went up by about the same amount. The trade union movement can see the consequences of that as well as the next man.
PRIME MINISTER (ENGAGEMENTS)
Q3. Mr. McCrindle
asked the Prime Minister if he will list his public engagements for 7th July.
The Prime Minister
This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.
Mr. McCrindle
When reading the speeches of trade union leaders, did the Prime Minister notice the very interesting one by Mr. Joe Gormley, in which he said that if the Labour movement was ever afraid of a General Election he did not know what it was in the political business for? Is the Prime Minister afraid of a General Election now? If so, what is he in the political business for?
The Prime Minister
On the whole, I am in the political business in order to ensure that the Labour movement gets a full opportunity of carrying out its principles and its programme. It is a five-year programme, and that is what I hope to do.
Mr. Madden
Can my right hon. Friend get someone to read the speeches of the Leader of the Opposition in order to discover whether the official Opposition believe in a voluntary incomes policy, a statutory incomes policy, or no incomes policy at all?
The Prime Minister
It is the view of the right hon. Member for Leeds, North-East (Sir K. Joseph) that there should be absolutely no incomes policy, but some [column 1422]of his hon. Friends seem to hold the view that there should be a statutory policy. We do not hold either view. [interruption.] I am not discriminating. We hold neither view. The experience of the Opposition and our history since 1945 show that a statutory policy will not command consent and that it will only bring the law into disrepute. One can proceed in this country only on the basis of persuasion and acquiescence with regard to the policies that are put forward. It is a very great exercise in carrying people with us.
Mr. Tebbit
When the Prime Minister is going through his diary of engagements, will he refer back to his diary for January of this year and look again at his New Year's message to the Labour movement, in which he said that the social contract between the Government and the trade union movement was intact and sound? Is that still his view?
The Prime Minister
No, Sir. It is not. I do not think that it is intact.
Mr. Prentice
The Prime Minister has told us several times what the Cabinet rejects in terms of pay policy. Can he say whether the Cabinet this morning expressed determination to stand by its own view of the guidelines of phase 3, with or without trade union agreement? Can my right hon. Friend also say that the Government will stick to those limits rigidly in the public sector and stand by any private employer who tries to stick to the same limits in the private sector?
The Prime Minister
I do not know whether my right hon. Friend was here when the Chancellor of the Exchequer was replying to Questions.
Mr. Prentice
Yes.
The Prime Minister
My right hon. Friend dealt with these matters perfectly adequately, and there is no need for me to add to what he said—[Interruption.] However, as the Opposition obviously like to hear me repeating what has been said already, I shall repeat it. My right hon. Friend the Chancellor of the Exchequer will be meeting trade union leaders next week. In the light of that, the Cabinet will bring forward to this House a paper which will set out our views on the way in which incomes should be dealt with during the next 12 months, and I hope [column 1423]that it will be debated in the House before we rise for the Summer Recess.
Mr. Speaker
Mr. Fairbairn.
Mr. Fairbairn
rose—[interruption]——
Mr. Speaker
Order. Popularity is one thing, but whom I call is another.
Mr. Fairbairn
When the Prime Minister addressed the nation in his philosophical and avuncular way at the weekend and told us that all his policies—[Hon. Members: “Reading” ]—and told us that all his policies—[Hon. Members: “Reading” ]—would help to loosen the steel band from the chests of the British people—[Hon. Members: “Reading” ]——
Mr. Speaker
Order. Right hon. and hon. Members are only provoking the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn). Will the hon. and learned Gentleman be kind enough to come to his supplementary question?
Mr. Fairbairn
As an unprovocative person, I am obliged to you, Mr. Speaker, for your protection. The right hon. Gentleman said that his policies would help to loosen the steel band from the chests of the British people. Are we entitled to assume that that means that he intends to cut the Lib-Lab pact?
The Prime Minister
I am not at all sure that the denouement was worthy of the build-up, but I realise that the hon. and learned Gentleman was in some difficulty. If he refers to my speech, assuming that he is allowed to later, he will see that my point was that it was the fact that the balance of payments will be moving into surplus over a period, thanks largely to North Sea oil, which would loosen one of the constraints. I went on to say—and I think that this cannot be challenged—that, with that constraint loosened, which has held us back for many years, if we can get on top of some of the other serious difficulties—for example, a reasonable control of incomes rises, an expansion of the economy, prices and the rest of it—this country will have an opportunity that it has not had for 30 years. I hope that we in the Labour movement will be able to take advantage of it.