Mrs. Margaret Thatcher (Finchley)
James CallaghanThe Prime Minister's speech gives little ground for confidence in Her Majesty's Government, either in their record or in their future. Indeed, he hardly addressed himself to the Government's record at all.
One thing is very clear—that sanctions would not have been removed unless we had a clear victory in two votes last night. They would have remained, in spite of what Michael Footthe Leader of the House, before he held that position, said about them during an earlier debate in the lifetime of the previous Parliament. On 18th March 1974, the right hon. Gentleman said this about sanctions: [column 933]
“I have always thought that one of the reasons why the discussion of incomes policy, so called, has been so difficult has been that, very often, the well-to-do or—even more offen sively perhaps—the truly wealthy have been inclined to threaten sanctions or preach sermons to people who have to fight every day of their lives to keep their heads above the inflationary flood. But the threat of sanctions in such cases does not work. It leads to clashes. The sermons prove boring and ineffective. That is what happens.” —[Official Report, 18th March 1974; Vol. 870, c. 702]
Holding those views, why did the right hon. Gentleman ever agree to sanctions being imposed?
We notice also that countries which the Prime Minister admires and whose rate of inflation, productivity, and growth he tries to emulate, do not have sanctions or anything like a rigid 5 per cent. policy, from which he now seems to be retreating. But yesterday he did not dare to submit his rigid 5 per cent. policy to the Order Paper of the House of Commons for a vote to be taken on it. He knew that it would be totally and utterly defeated if he had—defeated by the House of Commons as it was previously defeated by both the Trades Union Congress and by his own party.
The Prime Minister referred to the private sector taking the soft option. Does he really think that Ford took the soft option by having an eight or nine weeks' strike in support of his policy? He referred to problems of unemployment, which he has largely created, and asked what our policies were. Perhaps he will take time to read the excellent lecture given by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on conditions for fuller employment, pointing out in a detailed analysis of about 15 chapters that jobs come from the consumer, from creating goods which the consumer wants to buy at a price that he is prepared to pay. Jobs do not come from anywhere else. It was quite clear from what the Prime Minister said later about industry, pay and prices that one thing that he is really against is successful industry, and that he is prepared thoroughly to penalise it.
The Prime Minister asked me about our policy for prices. He knows full well that competition has done more to keep prices down than any Price Commission. The irony is that while we have had very strict control on prices in this country [column 934]they have risen more than at any previous time in our history. The right hon. Gentleman spoke also of the public sector, but I understand that his pay policy is to hold the public sector to a rigid 5 per cent. except when it gets too difficult, and then of course he will have a special inquiry and it will not be 5 per cent. at all. We supported him over the police pay and defence, and undoubtedly will do so when a similar situation arises in certain other cases. It was his policy to have a rigid 5 per cent.
The Prime Minister referred to the Health Service. It has been under his Government that the Health Service has gone down. During our time there were fewer people awaiting operations, the waiting list actually improved, and there were fewer people on it, because we spent more time trying to create wealth while the right hon. Gentleman has spent time wholly on restraint. In his motion the Prime Minister speaks of being determined. It is a very strange motion. The Prime Minister is determined “to strengthen the national economy, control inflation, reduce unemployment and secure social justice.” But the Prime Minister has been determined, whether inflation has gone up or down. He has been determined, whether or not unemployment has gone up or down. He has been determined, whether or not the Health Service has gone up or down. He has been determined, whether crime has gone up or down and he has been determined, whether putting the case for or against Europe. Whatever happens the Prime Minister is determined, but we do not get a result. It leads us to think that the only thing that he is determined to do is to try to hang on to the tenancy of No. 10.
The quarrel with the Prime Minister is not with some of the objectives which he puts in this motion. They are unexceptionable. They could have been put down by any Government anywhere in the world at any time, from the USA to the USSR:
“strengthen the national economy, control inflation, reduce unemployment and secure social justice.”
Of course. It is the methods that the Prime Minister is prepared to use and the lack of success in achieving the objectives that we criticise. [column 935]
The Prime Minister did not take very much time on actually considering his Government's record, which is strange, as this is a motion of confidence in the Government. Let us have a quick look at the record of his Government. Let us start with the things with which he preferred not to deal, commencing with inflation. He has forgotten that Denis Healeyhis Chancellor of the Exchequer fought the last election on the ground that he had inflation licked—that it was already at 8.4 per cent. He has forgotten that he has the worst record on inflation of any Government in this century and, indeed, of any Government for about four centuries in this country. His is the only Government that has halved the value of the £1 during less than five years. He has the worst record on inflation in the same world circumstances.
Mr. John Ellis (Brigg and Scunthorpe)
Words and slogans.
Mrs. Thatcher
Words? Slogans? Not to the people who have had to suffer this inflation and see their savings reduced by half. They do not talk of slogans; they have felt exactly what Socialism is like. They might have put £100 into the Post Office when the Government of this Prime Minister came in. That £100 is worth now less than £51—and the hon. Member talks of slogans! The right hon. Gentleman has one of the worst borrowing records in history. His Government have borrowed more money than any previous Government and we are now in the position when we have to borrow massively merely to meet the interest on previous borrowings. That, of course, is a total recipe for bankruptcy. His borrowing has been so great that he has had to shove interest rates up to over 12 per cent., which undoubtedly is responsible for people saying that he is quite hopeless at handling economic affairs now.
In industry the Prime Minister has a policy of encouraging success. I cannot think what happened to it because the moment he got in all he seemed to do was to reward failure and punish success. This week we heard a speech by G. Richardsonthe Governor of the Bank of England, who was putting forward policies that have been put forward from this Dispatch Box many, many times.
Mr. Robert Hughes (Aberdeen, North)
We are not surprised at that.
[column 936]Mrs. Thatcher
Perhaps the Government would do better to heed them, which would be better for the home value of the pound as well as its overseas value. The Governor of the Bank of England pointed out that if the Government go on taking as much of the national income as they take now there will be little room for the private sector. There will be a continual crowding out of the private sector, and we shall not get the increase in wealth which is the only source for better social services, better prosperity and better pensions. He said that it would require a great deal of courage to do some of these things. He did not indicate whether he thought that this Government had it. It would include a readiness to adjust the balance of taxation and to increase personal incentives—thus promoting a climate more favourable to initiative and enterprise—and a willingness to work for a better living. Those are perfect Conservative policies, but they are policies that will never be put forward by this Government.
The Prime Minister spoke of the money supply but he was not very clear whether he supported the Chancellor of the Exchequer's present policy or not. The Chancellor of the Exchequer has talked about 6 per cent. or 7 per cent. this year—not very far wrong, if I may say so; just about right—but it did not seem that he had the support of the Prime Minister at all. Is the Prime Minister for or against having an appropriate money supply for the increase that one expects in output in the economy? It was not exactly clear from what he said.
The Prime Minister's record on unemployment is as bad as his record on inflation, and this is an extremely important point when people consider the record of a Government and how they shall vote next time. Over the lifetime of this Government there has been a tremendous increase of about 731,000. Added to that, the right hon. Gentleman has achieved the extraordinary double not only of increasing unemployment but of having a considerable shortage of skilled labour. We know why; because the continued incomes policy of the type that he has chosen—he did not have to choose that type—has deliberately compressed differentials, so that he cannot get skilled engineers to go into industry. That is one of the problems that is facing [column 937]us today—one of the problems that he is totally ignoring.
The Prime Minister has had the good fortune to have a great deal of North Sea oil coming ashore. This year, taking oil and gas, the net effect on current and capital account is expected to be about £4.3 billion. Even with that he can only just achieve a balance of payments. The record without that tremendous free enterprise achievement would have been appalling indeed. We are finding that through his economic policies industry is totally uncompetitive and the level of imports one of the worst that we have ever known.
We are finding also that the social services are not better but are indeed a good deal worse than before, so the extra expenditure we have had has not gone to improve the social services in any way.
That is the record that the Prime Minister did not tell the House about, and that perhaps he would rather not have heard. The Prime Minister asked me what are our policies on incomes and pay. It seems to be part of his objective to get the whole of the debate on X per cent., as if the highly complex questions that face this country could be dealt with just by any statistical percentage. Of course they cannot. The problem is much more complex and varied, and any approach on incomes policy must be regarded as part of a total approach towards the economy. We have not exactly heard that from the right hon. Gentleman. Part of it must be restraint on Government expenditure and borrowing. That is one of the main problems. The Government take such a large proportion of the national income—52 per cent.—that there is just not enough either for incentives to individuals or for incentives to industry. Until the Government try to match the restraint that they expect from individuals with restraints in Government spending and borrowing, we shall have no chance to reduce inflation or to increase prosperity.
This was all said in the debate on the Queen's Speech. The Prime Minister appeared to quote a speech of mine which was supposed to have been made at Penistone. As a matter of fact, I made no speech at Penistone. I did, however, make a speech at the Conservative Party conference. When speaking of the [column 938]problems that face us and the levels for increased pay, I spoke of the desire to have more, and I said:
“But where is this ‘more’ to come from? There is no more. There can be but there won't be unless we all produce it.”
That is the key. But the Prime Minister's policies give no incentive whatever to bring about extra output. They give no incentives to those who are capable of starting small businesses, building them up, and taking on more employees. Incidentally, it is the small businesses that we have to thank for the availability of bread in the last few weeks. Those small businesses are to be congratulated. We should note that they did not attempt to put up prices in any way. We got our bread, despite some of the worst efforts by some trade unionists.
Our policy must involve a reduction in Government spending as a proportion of national income. The present Government will never make such reductions. Their whole philosophy, as expressed by the right hon. Gentleman Roy Hattersleythe Secretary of State for Prices and Consumer Protection yesterday, was that he and the Government know better how to spend people's money than people do themselves. That is the collectivist approach of Socialism. It does not want people to have more of their own money in their own pockets to achieve their own independence and to spend it on what they desire, on houses they wish to have, or on their own children. Socialism prefers to take away that money and to spend it through the collective genius, if I might put it that way, although I doubt it, of the Government.
The Labour approach to Government expenditure has always been interesting. They feel that whatever they think is necessary—we are not told exactly what they think is necessary—must somehow be raised by taxation. But the fact is that people have rebelled against high taxation. The fact that we were able to push through tax changes against the Government—they were Tory and Liberal tax cuts—illustrates the failure of the Government's expenditure policy.
There was one Chancellor of the Exchequer who managed to match his expenditure——
Mr. T. W. Urwin (Houghton-le-Spring)
On a point of order, Mr. [column 939]Speaker. Is it in the best interests of the House for several Tory Back Bench Members to sleep while their leader is speaking?
Mr. Cranley Onslow (Woking)
On a point of order, Mr. Speaker. Is it not wholly against the traditions of debate in the House that the Prime Minister should have sent a message to his supporters, through the Whips, to whisper and try to disturb my right hon. Friend in her remarks?
Mr. Speaker
Order. What is in the best traditions of this House is that on a major occasion such as this both Front Benches should be allowed to express their point of view.
Mrs. Thatcher
The hon. Member for Houghton-le-Spring (Mr. Urwin) must have been hard put to it to make that intervention. He did not like hearing the record of the Labour Government. Their performance on inflation is the worst on record. That is true of their record on employment and industry. It also is true of the Government's record on output—which, after all the Labour Government's efforts, is not even back to where it was in 1973. That is the Government's record, and it is on that record that we are judging them today.
There was a President of the United States who had a notice on his desk saying “The buck stops here” . That does not apply to the present Prime Minister. He is always prepared to hand the buck to somebody else. If he has had a bad record, it is always due to world recession, world prices, or something of that nature. However, that is not true, because other countries in exactly the same circumstances have fared so much better than this one under the Labour Government. That is the yardstick by which we judge the Labour Government.
The fact is that one cannot judge pay policies, or policies involving pay restraint, other than against the background of something that is much more important. I refer to policies for the creation of wealth. That is a policy which the Labour Government have never possessed, and they will never do so.
The Prime Minister asked me what our policies are. They are based on the fact that if one seeks to curb and confine free enterprise, it cannot produce the wealth [column 940]on which social progress and increased prosperity so largely depend. That wealth depends on the control of the money supply. The Chancellor agrees with that view, even if there is a split between him and the Prime Minister. It depends on reducing the proportion taken out of the economy by Government expenditure and on increasing the proportion spent by the citizen and that which goes to the marketable sector. It depends on having an incentive policy of taxation by reducing personal taxation at all levels. Unless these things happen, we shall not get the extra skills, the managerial expertise, or the small businesses that we require.
When I go round construction sites for factories, I am often told that the person in charge has the lowest pay and the lowest net take-home pay. That is a ridiculous way to run a country. Because this is the case, people will not take on extra responsibility, and those are the people we need.
We also have a recognition of the need for varied rates of pay. The profit element is the cash limit of the private sector. When dealing with pay claims many companies do not do so on the basis of x per cent. Indeed, they cannot deal with them in that way. They are prepared to operate on the basis that if the company does well, those who work for it will do well. That is a Tory principle, but it does not appear to be a Socialist one. It is ironic that the Prime Minister is seeking to stop that principle prevailing.
We need to divide up the added value in respect of the wage element, and there must be enough for investment, some profits and the inevitable tax. All these matters have to be dealt with when considering policies of pay restraint.
The Prime Minister did not say very much about his own policy. Indeed, he asked for an expression of confidence in the Government's policy. However, he was less than frank in explaining the general lines of his expenditure proposals or his strategy.
We have had two indications—indeed three indications—of what Government policy amounts to. First, we had the Labour Party programme of 1976 fully endorsed by the Labour Party conference. Then we had “Into the 80s” , a document [column 941]agreed between the TUC and the Labour Party, and last weekend we had the leaks on the manifesto, which I understand contained nothing new but was a scissors-and-paste job.
There is not much doubt about what the Government have in store. The Government try to conceal some of these deficiencies under the phrase “a mixed economy” . That phrase conceals the fact that under this Government the economy is getting progressively less mixed on the free enterprise side, and more and more mixed on the nationalisation, public ownership and State control side.
Mr. Ian Mikardo (Bethnal Green and Bow)
I wish that it were.
Mrs. Thatcher
I am grateful to the hon. Member for Bethnal Green and Bow (Mr. Mikardo) for confirming what I suspected was the case.
There is not much doubt about what the Government have in store. There will be further substantial measures of nationalisation. Where they cannot nationalise, they will take over control—as, for example, in regard to people's savings in pensions and insurance funds. They will reduce the citizen's capacity for independence by imposing higher taxes, there will be cuts in mortgage relief, cuts in defence, and so on.
All these things the Government have in store. The only question is not about the ends but about the pace at which the Government propose to move. What the right hon. Gentleman failed to say was that if these policies were put into action they would put paid to any attempt to halt inflation and to secure a better standard of life in Britain.
Is the Prime Minister as loyal a supporter of Labour Party policy as Tony Bennthe Secretary of State for Energy? I know that the Prime Minister likes to distance himself from these matters. Or is the only difference that he wants to keep the programme under wraps for the time being? Is the argument about ends, or about the pace at which these proposals should be introduced?
The Prime Minister asked the House to express confidence in his Government. He did not tell us what his immediate policies on pay and on economics were. A Government without a policy is nothing. Over and over again, the Prime Minister [column 942]insisted that the 5 per cent. pay restraint was essential to his Government's whole strategy. We have had that time and again. Many of us think that the 5 per cent. was thought up just in time for an election, assuming that there would be one. The Prime Minister hoped that the TUC would approve it for the time being, so that later, after an election, and if he won, he could virtually deliver the country to further TUC power. Unfortunately, the election did not come. The TUC rejected the policy. The Labour Party, on whose electoral support a Labour Government must rely, decisively rejected that policy. Now the House of Commons has rejected it.
According to the Chancellor, only sudden and large deflationary cuts in public spending and heavy increases in taxation are left for him to implement. Will the Labour Party support those? Will they help to restore prosperity to industry and create jobs for the unemployed? The Government are left with no vestige of an economic policy that is relevant to the country's needs.
What else in the Government's policies are we to feel confident about? Are we to feel confident about the Government's foreign policy—about David Owenthe Foreign Secretary's handling of the Rhodesian crisis? Are we to feel confident about Merlyn Reesthe Home Secretary's dynamic approach to the problem of crime and violence? Are we to feel confident about the state of the National Health Service?
The fact is that the Government have no policies to deal with any of these problems. They have no policy except a determination to cling to the sweets of office without effectively discharging any of the responsibilities of office. It would be better if we told the people the truth—that this Government and this Parliament are dying and that the time has come to rid ourselves of yesterday's men and give Britain the chance for a fresh start.