The Chief Secretary to the Treasury (Mr. Joel Barnett)
If one wanted to sum up what has just been said by the right hon. and learned Member for Surrey, East (Sir G. Howe), basically it would be that he agrees with the Government's motion and policy of reducing inflation but does not like the way that we are doing it and is not sure—indeed, has not the faintest idea—how he would propose to reduce it.
The right hon. and learned Gentleman said that he answered my right hon. Friend the Prime Minister earlier. He said that the answer would be “a long and painful process” . That was his answer. But we know what his answer is. We have had his so-called alternative in the past. It is interesting that the right hon. and learned Gentleman did not mention it tonight. I can understand that. My hon. Friends were right to point out that the right hon. and learned Gentleman's alternative would be a recipe for mass bankruptices and a massive increase in unemployment.
I turn now to some of the right hon. and learned Gentleman's criticisms, taking some of his epithets in turn. First, we were told—in the past, not in this debate today—that our policy was tyrannical and all the rest of it. That is not in the amendment either. The right hon. and learned Gentleman told us tonight, as did many Opposition Members, that it was against the rule of law. Let us consider the various sanction policies and see whether they are against the rule of law.
First, on the question of purchasing contracts, Ford is free to sell to the Government and the Government are free to buy, subject to the right to cancel. Ford agreed to abide by the conditions in the White Paper. That is a tyrannical use of the discretion available to the Government—or so we are told by the right hon. [column 791]and learned Gentleman. The Government are exercising their proper discretion and freedom to buy, as any buyer can. Incidentally, we made it clear from 1975 onwards that we would have regard to all the factors, including the public interest. This is called “tyrannical” , but it is being done in France and now it is to be done in the United States as well.
We are also told that it is tyrannical to withhold selective grants. [Hon. Members: “That is the worst one.” ] I am interested to hear hon. Members say that. The discretionary power in relation to selective grants was given to the Government, in the infinite wisdom of the then Conservative Government, in the Industry Act 1972, by which the Secretary of State was given the power to give such grants if it was “in the national interest” . That is stated in section 8 of the Act. We are told that that is not what was intended, but the right hon. and learned Gentleman was a Minister in the Department at the time, and it is pretty slap-happy legislation if he did not intend us to use it in respect of the national interest. What did he intend us to use it for? What does he mean by “national interest” if it does not mean to try to keep down the rate of inflation?
Then we are told that it is “arbitrary” to have a proper use of the discretionary power sensibly given to Governments by a Conservative Government in this case—a Government who did not want any Government to have rigid, inflexible powers with no room for manoeuvre. Therefore, they properly and perfectly sensibly wrote into the Act the discretionary power available to the Government to use in the national interest. That is precisely what the Act said.
As the House knows very well, in many Acts that we pass the word “may” is inserted—rather than “shall” —so that the Minister will have discretion and not be inflexible and rigid in the policy. But because we are using that discretion, the Conservative Opposition now tell us we are being rigid.
Mr. Tebbit
rose——
Mr. Barnett
I intend to use my discretionary power in this instance. In this case it is a very limited power, although I hope a useful one, to keep out the hon. Gentleman.
[column 792]Several Hon. Members
rose——
Mr. Speaker
Order.
Mr. Barnett
We are told that the Conservative Opposition are desperately keen about small firms, yet we have had debates on sanctions on only two occasions—the first in relation to Sun Alliance and the second in relation to Ford. That is their concern for small firms. Those are the times when we have had sanctions debates. It shows that the Opposition's language about tyrannical and arbitrary power is nonsense. Then they turn to the question of secrecy. We are told that this is secret policy. Well, the Conservative Opposition seem to know enough about it to be able to describe it pretty graphically, although more than a little inaccurately. But where is the secrecy? We have described our powers in White Papers.
Mr. Budgen
Will the Minister give way?
Mr. Barnett
I shall not, because a few minutes of my time was taken at the discretion of the right hon. and learned Member for Surrey, East.
We have set out the powers in White Papers and have discussed them with the firms. The public and Parliament know what they are. The only secrecy is the names. The Government are perfectly willing to publish the names of firms which are subject to sanctions. Some names are published with no explicit consent from us, but, because this is a commercial matter between the Government and the firm concerned, we have said that we shall publish if the firms agree. So far, only one firm has agreed that we should publish.
Are the Conservative Opposition asking us arbitrarily, whether or not the firms agree, to publish the names of the firms? [Hon. Members: “Answer” .] Frankly, the charges which they level are ludicrous, and the only cause of this debate was Ford. We are told that we are punishing the wrong firm for a whole variety of reasons that were given by a number of hon. Gentlemen, including the right hon. and learned Member for Surrey, East.
An editorial in the London Evening News, not normally a newspaper that [column 793]supports this Government, said, on 28th November:
“It is also obvious that a lot of Ford's friends are impressed by Sir Terence Beckett 's plea of mitigation. Namely, that the 17 per cent. settlement is not damaging.”
The editorial goes on to say:
“This is a resourceful argument: it is also a specious one. For, as Sir Terence knows perfectly well, it is not what happens at Ford that matters so much as what is likely to happen elsewhere as a result of the Ford deal. Ford has set the pace.”
It goes on:
“The pace Ford has set is frankly impossible. In this sense, Sir Terence and his colleagues have trampled the national interest underfoot.”
Mr. Michael Latham
rose——
Mr. Speaker
Order. It is clear that the Minister is not giving way.
Mr. Barnett
As I was saying, Sir Terence was accused of trampling the national interest underfoot. I would not personally accuse Sir Terence of trampling the national interest underfoot, but I have no doubt whatever that the antics of the Opposition show a total disregard for the national interest. They are prepared to trample it underfoot for their own narrow party interest. Of that I have no doubt whatever.
The Conservatives are wrong anyway. It is not even in their party interest. The Opposition know, in the words of the London Evening News, that the pace Ford has set is impossible. They know it, if they want to be the least bit responsible. Indeed, Ford poses the central problem which was recognised by the right hon. Member for Chipping Barnet (Mr. Maudling). Anyone who wants to look seriously at the problem of how we deal with the central issue of winning the battle against inflation knows that the question is, if one stands by and allows one company to get 17 per cent. or more, what does one say to the others? This is the central problem that any Government face.
Mr. Crouch
rose——
Mr. Speaker
Order. The Minister is not bound to give way.
Mr. Barnett
It is well known in this House that I give way probably more than most Ministers or most hon. Members, but I will not do so now. I want [column 794]to consider, if I may, in this reasonably quiet House, the Government's incomes policy and the alternatives open to them.
The Government have stated guidelines which are by no means rigid. There is room to go beyond 5 per cent. There is more for the low paid in certain instances, and there are some special cases. There is also room for genuine self-financing productivity deals.
We are told that the Opposition do not like rigid norms. We were told on a previous occasion that the Leader of the Opposition does not like the four-letter word “norm” . She said on ITN on 10th October:
“I don't think I could tell them any specific level” ——
no figure whatever, no guidance. The right hon. Lady, speaking to the faithful at Brighton, said:
“Responsibility can't be defined by the Government setting a fixed percentage for everyone, because the circumstances are different in every concern in the country, whether nationalised or free.”
That is very interesting. What is interesting is that at Penistone in June the right hon. Lady said:
“There will be no free collective bargaining in the public sector.”
I am not sure what policy there will be. There will be no guidelines, no specific figures, no free collective bargaining. What on earth will there be? Perhaps she will tell us some time.
I will tell her. The right hon. Lady is sitting between two right hon. Members—the right hon. Member for Lowestoft (Mr. Prior) and the right hon. and learned Member for Surrey, East—who, although they do not like her to notice it too often, have told us and her, perhaps sotto voce, that they are in favour of trying to achieve a 5 per cent. outturn in pay. They have said that. In all the speeches and interviews that the right hon. Lady gives, she has never been prepared to allow a figure to be dragged out of her in any circumstances.
Mrs. Margaret Thatcher (Finchley)
Quite right.
Mr. Barnett
She says that is quite right. It is interesting that her two colleagues have had a figure dragged out of them. They recognise that the aim should be a 5 per cent. outturn. How will that be [column 795]achieved? We are told that the answer is that one explains it to people. What—without giving them a figure? What is one to explain? This is a fascinating policy.
The difference between the Opposition and us is that the Government are prepared to spell out a policy, to say that it is 5 per cent. that we want to achieve. What the Opposition want is a rigid 5 per cent. average.
Mr. Prior
Perhaps I can help the right hon. Gentleman by quoting from a letter from the Chancellor of the Exchequer to me, dated 10th August 1977. Speaking of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), he said:
“He went on to suggest that there needed to be an understanding about the total increase in pay that the economy could afford, but that it would be unthinkable to translate that into an individual flat rate figure. I share this view, as you know.”
Mr. Barnett
My right hon. Friend is absolutely right; what I want to know is which of the three Opposition Members is right.
There is a central problem facing this country. How do we deal with the problem of inflation? Pay is not the only issue, but it is the heart of the problem of how we get inflation down. The Opposition have not been prepared to face up to it. I know that the right hon. Member for Lowestoft is embarrassed because he has upset the right hon. Lady by mentioning that terrible figure of 5 per cent.
The case for the sanctions is the case for the Government to use every legal power which is available in what is agreed to be the national interest. Of course, there will be some anomalies, some differentials and some unfairness. But neither free collective bargaining nor incomes policy has over many years ever created fairness of a distribution of income.
However, without a moderate outturn now, if the Government were to abdicate their responsibilities, unfairness would be piled on unfairness, the anomalies and differentials would remain, others would be added, and on top of it all would be the ultimate unfairness of renewed inflation. [column 796]That is what would happen under the proposals of the Opposition.
How are we to avoid the upsurge in inflation and bring it down even further, which is the central problem?
“There are no quick cures or easy solutions.”
I am reading from “The Right Approach” , so I assume that it is right. But if there is no quick cure in the longer term, there will certainly—[Hon. Members: “Read on.&cqq] I intend to read on, given time. If there is no quick cure for the problems of inflation in the longer term, it will be no easier if there is an upturn in the rate of inflation. I hope that we can agree on that. We shall not solve the problems by using the extravagant language that we hear from the Opposition Front Bench.
I willingly concede that the Government are not wedded to sanctions as a permanent solution to what is an intractable problem. I welcome the renewed discussions that we shall be having with the TUC. Those discussions will be starting on Tuesday. They will not be concerned only with pay; they will cover the whole range of economic and social policy. We can expect that the TUC will put forward constructive proposals, which is a great deal more than we can expect from the Opposition.
I turn my attention to the alternatives that are available to any Government, some of which have been put forward from time to time by the Opposition. There is the alternative of a truly rigid, fullblown statutory policy. Perhaps I should apologise to the right hon. Member for Lowestoft. In the past I have had some fun at his expense, especially when dealing with statutory policies. It may surprise Opposition Back Benchers to know that the right hon. Gentleman was merely repeating Conservative Party policy when he said that he does not rule out a statutory policy. It is all in the “blue book” . “The Right Approach” makes it clear, after pointing out the difficulties, that “experience demonstrates the unwisdom of … rejecting the idea” .
The hon. Member for Oswestry (Mr. Biffen) is looking rather serious. I assume that he would have put it the other way round. The reason why certain passages appear in the little “blue book” is that the Tories know that their alternative [column 797]policies cannot succeed and that they would have to return to a statutory incomes policy.
The Opposition's alternative incomes policy is, as we have been constantly told, all set out in the “blue book” . The hon. Member for Blaby (Mr. Lawson)—I do not see him for the moment—becomes very upset when Opposition policy is questioned. When we last debated these matters in February he told the House that the Government should not continue to ask questions about Opposition policy because the answers were all set out in the little “blue book” .
The “blue book” has 71 pages and two-thirds of one page relates to incomes policy. One alternative, covering six lines, relates to the West German policy for concerted action. As that is the Opposition's policy. I assume that they know what it is. It involves a highly centralised system of meetings between Government, employers and trade unions where they agree on a consensus on what should be the appropriate level of earnings for the following year. It is to be a “consensus” ; it is not a norm. It is not that four-letter word. It is not an average but a consensus. If the Opposition are to propose concerted action of the West German style without setting out any specific figure, as the right hon. Lady tells us, how will they pursue that policy? I wish that they would tell us the alternative instead of using the sort of language that we have heard today. There is no conceivable alternative in that direction, and they know it.
Fortunately for the Opposition Front Bench, the “blue book” goes on to explain:
“It would be foolish to pretend that this can be accomplished overnight.”
They are certainly right about that. They tell us that they would use “every available means” . There would be no brandishing of norms. There would not even be brandishing of averages. Instead we should have the brandishing of monetary restraint and cash limits.
How will that system work? In the two-thirds of one page of the “blue book” we do not have that explanation, but there is another book. It is a little blue book containing 50 questions and answers. I read it and there was not one sentence that told us the answer to the problem. I looked a little further afield[column 798]—[Interruption] I am surprised that Opposition Members do not want to know the policy of their Front Bench. I am astonished. I thought that they wanted to know that policy. I think that I should tell them because they really do not know.
The policy of the Opposition in the other little blue book is “detailed explanation” . Perhaps the Leader of the Opposition will explain how she can have a detailed explanation without giving specific figures. How will the Opposition set figures for cash limits in the public sector without a guideline for pay? Are they really suggesting that they will have a cash limit on which they will make an assumption about pay and not tell anybody? Is that their policy? Is that a policy of full explanation? What will they do in the private sector? We are told that they will have free collective bargaining and a tight monetary target.
Mr. Prior
Hon. Members below the Gangway are leaving the Chamber.
Mr. Barnett
The right hon. Member for Lowestoft obviously does not want to hear what the Opposition policy is. The Opposition want free collective bargaining and a tight monetary policy. [Interruption.]
Mr. Speaker
Order. The House listened to the right hon. and learned Member for Surrey, East (Sir G. Howe) in reasonable silence. Only a few minutes are left.
Mr. Barnett
The Opposition believe in free collective bargaining with nothing to keep to the average but a tight monetary policy.
We were accused of operating an arbitrary and unjust policy. I can assure the Opposition that there would be nothing more arbitrary and unjust than a tight monetary policy and free collective bargaining which would be arbitrary on small firms in particular. There would be massive bankruptcies. [Hon. Members: “Rubbish.” ] I have had a little to do with cash limits. Cash limits are now made to appear to be a substitute for a public sector pay policy. The right hon. Member for Chipping Barnet said in February that using the public tail to wag the private dog was not a great success in the past and would not be a great success now. But that is the Opposition's policy and nothing else. [column 799]
Cash limits should reflect pay policy. They are not a substitute for pay policy. But the Opposition use cash limits as if they were a magic formula which will solve all our problems. The Opposition have exposed their inability to explain their policy. They have no answer.
Mr. Crouch
rose——
Mr. Barnett
I shall not give way.
Mr. Crouch
rose——
Mr. Speaker
Order.
Mr. Barnett
The debate has shown——
Mr. Crouch
Will the right hon. Member give way?
Mr. Barnett
No.
In today's debate we have heard much extravagant language. We have had not a single alternative. The amendment agrees that we must bring down the rate of inflation. [Hon. Members: “Say something.” ] We have heard not a single alternative. The amendment stresses [column 800]the need to reduce the rate of inflation. The Government are prepared to act on that but the Opposition are prepared to do nothing—[Interruption.] I feel that I shall not be able to make myself heard in the last few minutes, but I shall try. I remember a dispute between the Leader of the Opposition and her right hon. Friend the Member for Sidcup (Mr. Heath). [Hon. Members: “What about us?” ] No, I want to talk about this lot—the Opposition. There was a major row between the right hon. Member for Sidcup and the Leader of the Opposition. The right hon. Gentleman came out on top. The right hon. Member for Lowestoft said that the answer to the problem was——
Mr. Humphrey Atkins (Spelthorne)
rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the amendment be made:—
The House divided: Ayes 285, Noes 279.