GOVERNOR OF THE BANK OF ENGLAND
Q2. Mr. Watkinson
asked the Prime Minister when he proposes next to meet the Governor of the Bank of England.
The Prime Minister
I have no fixed date in mind for such a meeting.
Mr. Watkinson
When my right hon. Friend next meets the Governor of the Bank of England, will he discuss the instability in international money markets? Does he agree that there is a need to control funds of speculative, footloose money which flow through the exchanges and cause problems for the balance of payments, money supply targets and imports and exports? Is it right that Governments should be held to ransom by speculators?
The Prime Minister
The large volume of international footloose funds does cause problems and creates instability in the markets. There is no doubt about that. However, it is much easier to analyse than to control. But the fact that we cannot control it does not mean that we should not indicate that it causes instability and is a cause of altering economic [column 1311]policies domestically. The best way forward, although a difficult path to pursue, is to try to get agreement on domestic economic policies which are internationally compatible. That, in present circumstances, means that the countries with the stronger economies should expand as far and as fast as they can.
Mrs. Thatcher
As the policies pursued by the Bank of England are Government and Treasury economic policies, will James Callaghanthe right hon. Gentleman say whether, apart from productivity deals, 10 per cent. is a maximum figure for all wage increases in the public sector?
The Prime Minister
I was not proposing to discuss this with the Governor of the Bank of England, but, if the right hon. Lady wants an answer to her question, I point out that it has been answered on many occasions. My right hon. Friend the Chancellor of the Exchequer has made clear that 10 per cent. is the increase in national earnings that would lead to our being able to sustain inflation within single figures during the greater part of 1978. There has been a great improvement in the retail price index and the rate of inflation, which means that inflation has been increasing at only 3.4 per cent. in this last six months. I am not extrapolating that figure because, to some extent, the future rate will depend on the level of wage settlements. But I point out to the right hon. Lady that we are able to foresee that we shall reach single figures for inflation during the next year. The Government's aim is to sustain that improvement as being the most solid foundation for economic progress.
Mrs. Thatcher
I think that the Prime Minister has given the answer—that 10 per cent. is not a maximum figure and, therefore, the firemen would be free to negotiate in the national joint council within the cash limits.
The Prime Minister
No, Sir. The right hon. Lady is not correct. The Government have been pressed time and again, both by hon. Members opposite and by industry, to hold increases in the public sector within the 10 per cent. limit, and that is what we are doing.
Mrs. Thatcher
The Prime Minister has given two different replies. First he said that it was not a maximum, then he said [column 1312]that it was a maximum in the public sector. Which does he mean?
The Prime Minister
I think that the right hon. Lady is capable of reconciling the two statements. They are reconcilable, National earnings must be held within the 10 per cent. limit. In the public sector, where there is very little wage drift, the Government, in order to give an example to all those in the private sector who are calling upon us not to give way—some of them, I regret to say, are giving way themselves—are adhering to their own policy by not giving way.
Mr. Wrigglesworth
Does not my right hon. Friend agree that one of the difficulties in getting disputes resolved is the comparisons being made often between net and gross pay? Will he try to put a figure on the benefits which have accrued to workers as a result of the tax cuts made by the Government in recent months?
The Prime Minister
Yes, Sir. Such a figure can be put on. I have been preparing it for a speech that I hope to make tomorrow to a trade union conference. For the man on average earnings with two children, the improvement resulting from the tax cuts this year is equivalent to 6½ per cent. of his gross pay. That will be in addition to anything else that is negotiated.
MOZAMBIQUE
Q3. Mr. Brotherton
asked the Prime Minister if he has any plans to visit Mozambique.
The Prime Minister
I have at present no plans to do so.
Mr. Brotherton
How much longer do the Government intend to subsidise terrorism and murder in Rhodesia through their aid programme to the Marxist Government of Mozambique, who harbour and shelter the murderers who make raids into Rhodesia?
The Prime Minister
Like the rest of his party, the hon. Gentleman is totally isolated from opinion in this matter, including opinion in the United States, in the Commonwealth and in many United Nations countries. The basis on which aid is given was spelt out by me in an answer to the right hon. Member for Knutsford (Mr. Davies) in the early [column 1313]months of this year. It is clearly set out in Hansard. The Opposition would be far better employed in going to see the poverty which exists in some of these areas than in giving encouragement and aid to the régime in Rhodesia.
Mr. Whitehead
Does not my right hon. Friend agree that economic aid for the infrastructure of Mozambique is a guarantee of making less likely rather than more likely its dependence on the Soviet bloc, of which Opposition Members are constantly trying to remind us?
The Prime Minister
Yes, Sir. There is no doubt of that. I would add that President Machel is being of great assistance to this country in relation to events in Rhodesia and is helping, with the other front-line Presidents, to get a settlement. That is unlike the attitude of hon. Members opposite who, in their visits to Rhodesia in the course of the summer, seem to have done nothing but discourage Mr. Smith from coming to any settlement.
Mr. Biggs-Davison
As one who has seen poverty and terrorism in Mozambique, may I ask the Prime Minister whether he has no compunction about the double standards of subsidising and seeking help to secure majority rule in Rhodesia from a régime in Mozambique for which there has been no vote whatever?
The Prime Minister
The fact that there has been no vote in Mozambique should not detract from the hon. Gentleman's support for both Front Benches in this House, who have declared that there should be elections in Rhodesia before independence comes.
NATIONAL ECONOMIC DEVELOPMENT COUNCIL
Q4. Mr. Tim Renton
asked the Prime Minister when he will next take the chair at a meeting of the National Economic Development Council.
The Prime Minister
I hope to take the chair from time to time, but I have no specific date in mind at present.
Mr. Renton
When the Prime Minister next takes the chair, will he give an assurance to the NEDC that the national [column 1314]revenue from North Sea oil will not be squandered in a further programme of Labour Government extravaganza? Will he also commit himself to seeing that this money, which belongs to us all, is not lost in madcap schemes of the Secretary of State for Industry and the Secretary of State for Energy but goes largely towards increasing personal incentives to work?
The Prime Minister
We have already begun discussions on these matters, and in due course we will publish a paper which will, I hope, carry the debate even further. I do not need to give any such assurance as the hon. Gentleman asks about my meeting with the NEDC, because its members would not dream of asking me such a stupid question.
Mr. Roy Hughes
Does not my right hon. Friend agree that there is need, when he next meets the NEDC, to impress on that body that the British Steel Corporation should sustain its investment programme? Does he not also agree that the Conservative Party seems intent on making Britain into a vast tourist centre while neglecting our manufacturing industry?
The Prime Minister
This is an important matter, although I am not aware that I shall be discussing it with the NEDC. We should not allow what is a very deep world recession in steel, which is leading to losses in steel-making industries throughout the world, including the United States and West Germany, to deter us from long-term investment to ensure that we have a viable industry in this country.
Mr. Pardoe
Will the Prime Minister take a last-minute personal interest in the appointment of the Director of NEDC? Some of us would consider that the appointment of a senior civil servant to this post without any experience of industry—[Interruption.]—coming on top of the appointment of a senior civil servant to head the Central Policy Review Staff—[Interruption.]—is not a happy omen, and that these bodies ought to be in the hands of people with direct experience of industry.
The Prime Minister
The hon. Gentleman, no doubt having heard the shouts, may feel that this is the first encomium that he has had from the Conservative [column 1315]Benches for a long time, in that they want to appoint him to this very important position. [An Hon. Member: “Good God!” ] The hon. Member who interrupts, not for the first time, is perhaps not wholly in accord with the rest of his party. But it is important to get the agreement of both sides of industry—namely, the Confederation of British Industry and the Trades Union Congress—on this appointment. The salary that is being offered is really not as luxurious as we might expect and, therefore, there may be some difficulty, but I am sure that we shall find a very appropriate person.
Mr. Buchan
If my right hon. Friend will not be discussing oil revenues with the NEDC, will he go a little further and not discuss this subject with the Treasury either? Above all, will he reject any ideas that the oil revenues should be used in relation to exchange control and overseas investment? Will he settle firmly on the point that any such revenues should be used for the regeneration of those areas in the United Kingdom which did well by Britain in the first Industrial Revolution and should now be brought into the twentieth century by proper industrial investment in them?
The Prime Minister
I find the Treasury a very great repository of knowledge and information, and I treat its advice with due deference on all occasions. On this particular matter, however, I do not think that we should assume that there is any desire on the part of Her Majesty's Treasury to attempt to do other than find the right solution for these problems. There really are occasions when it is not a bad idea to repay a little debt. But that should not detract from the general point my hon. Friend is making, and which I have made on several occasions from this Dispatch Box, namely, that these revenues should be used for a long overdue regeneration of British industry, that being the basic task to which we must address ourselves while these revenues are coming into the country.
Mr. McCrindle
In view of the Government's recently discovered interest in small businesses, will the Prime Minister confirm that he feels that he receives the reaction of small businesses and knows what they are really thinking, if and when he takes the chair of the NEDC?
[column 1316]The Prime Minister
I am not sure that, I do. I find that there is more value in getting to know what small business, are saying by visiting them. I visited the last Friday and had very interesting discussions with them. They are feeling extremely encouraged by the measure that the Government are now taking, with the tax provisions which are being made and with the advantages which are being received. I am sorry if this is robbing the Opposition of a group of people whom they thought they had in their pockets. But I think it is important that we should encourage small businesses, and have thought so for some time, because they employ about 22 per cent. of the total labour force in this country.
Several Hon. Members
rose——
Mr. Speaker
I allowed “injury time” because we were late in starting Prime Minister's Questions.