PRIME MINISTER
(ENGAGEMENTS)
Q1. Mr. Nicholas Baker
asked the Prime Minister if she will list her official engagements for 22 July.
The Prime Minister (Mrs. Margaret Thatcher)
rose——
Hon. Members
Resign. Disgraceful.
The Prime Minister
rose——
Hon. Members
Resign.
Mr. Speaker
Order. I suggest that we serve ourselves much better if we listen to answers before we start shouting.
The Prime Minister
In addition to my duties in this House, I shall be having meetings with ministerial colleagues and others. This evening I hope to have an audience with Her Majesty the Queen after attending the garden party at Buckingham Palace.
Mr. Baker
Deeply distressing though today's unemployment figures are, are they not due largely to the fact that wage costs are rising at a much faster rate than those of our competitors? Does my right hon. Friend agree that a reduction in unemployment will come only when the level of wage settlements has been substantially reduced and output increased?
The Prime Minister
I agree with my hon. Friend that one of the main reasons for today's distressing unemployment figures is that we have paid ourselves far more than other countries—[Hon. Members: “Rubbish.” ]—for doing the same job. Consequently, we have lost some of the business and they have some of the jobs.
Mr. David Steel
In the light of today's unemployment figures, does the Prime Minister still stick to the view that she proclaimed at the weekend, that her Government are not deliberately creating unemployment? If that is her view, is not the only alternative explanation that she does not understand the consequences of her actions?
The Prime Minister
The Government have made fighting inflation their top priority. [Hon. Members: “At what cost?” ] Inflation has peaked at a very much lower level than it did under the [column 265]previous Labour Government. It is inevitable that in fighting inflation a short-term increase in unemployment is involved. The alternative is to print money and have a very much bigger increase in unemployment in the long run, which we will not do.
Sir Paul Bryan
Has my right hon. Friend noted that one in four of the resolutions submitted to the Labour Party conference advocates nuclear disarmament? Is my right hon. Friend also aware that the Labour Party's most recent document——
Hon. Members
Order.
Mr. Speaker
Order. The House is right. The hon. Gentleman must question the Prime Minister on those matters for which she is responsible. I do not think that the right hon. lady claims responsibility for anything that the hon. Gentleman has mentioned so far.
Sir Paul Bryan
Under the circumstances, is my right hon. Friend relying for the success of the Trident missile policy, which goes over 20 or 30 years, on the hope that future Labour leaders will, once they are in office, support the nuclear deterrent, as the Leader of the Opposition did when he was in office?
The Prime Minister
We have made our announcement that we intend to purchase the Trident missile from the United States. That is in redemption of a pledge made at the last election that our independent nuclear deterrent must be kept continuously effective. We believe that that is the best way of defending those values which we all hold dear.
Mr. Golding
Is the Prime Minister aware that not only the appalling rise in unemployment but the increase in short-time working is bringing deep anxiety and insecurity throughout the country? Is she aware also that there is no possibility of increasing productivity on the shop floor against that background of anxiety for jobs? Consequently, will she restore the temporary short-time working compensation scheme, the job release scheme, the special temporary employment programme and the other special measures to the levels at which they were 15 months ago, when there were much lower levels of unemployment?
[column 266]The Prime Minister
I do not accept the hon. Gentleman's basic premise. We have to reduce unit labour costs in this country if we are to reduce unemployment, and the best way is to increase output per person. The only way to do that is on the shop floor by arrangements between management and work people. Unless we do it, we shall not recover competitiveness. It is no earthly good looking for some miracle formula. There is none, except increasing productivity.
Mr. Kenneth Carlisle
I recognise that the latest unemployment figures are very grave, not least for my constituency, which is an engineering city, but will my right hon. Friend impress upon the nation that any real, lasting and fundamental improvement must depend on us, as a trading nation, competing with the best industrial nations in the world?
The Prime Minister
I agree with my hon. Friend. One of the problems in the past three years has been the loss of competitiveness of our manufacturing industry. We have become 50 per cent. less competitive than those other industrial countries, and the main factor in that is high increased wages not matched by increased output.
Q2. Mr. Dormand
asked the Prime Minister if she will state her official engagements for 22 July.
The Prime Minister
I refer the hon. Member to the reply which I have just given.
Mr. Dormand
When the Prime Minister visits Buckingham Palace today, will she submit her resignation, before her policies turn the Northern region into an industrial desert? Has the right hon. Lady seen today's figures, which place the region even more firmly at the top of the unemployment league? Before she starts blaming the world recession, may I ask whether she is aware that it is her Government's regional policies that are causing a collapse of business confidence in the region, that it is her Government who have stopped the dispersal of civil servants to the North, and that her Government have not given any encouragement to establish an Inmos manufacturing unit in the region? Will the Prime Minister show not only some compassion but intelligence in dealing with the North?
[column 267]The Prime Minister
The answer to the hon. Gentleman is “No, Sir” . We have put as our top priority fighting inflation. That means short-term unemployment. That unemployment is made worse in so far as people pay themselves more than the value of goods that they produce. Until we stop doing that, and pay ourselves approximately the value of goods that we produce, we shall not cure unemployment and get genuine lasting jobs.
Mr. Nicholas Winterton
I support my right hon. Friend's overall economic strategy, and an eminent economist has today predicted that inflation in this country will come down to single figures in 1982, but does my right hon. Friend agree that it would be wrong to allow our industrial base to be undermined and destroyed before her policies come to fruition? Will she, therefore, if the unemployment position continues to deteriorate, consider introducing selective temporary import controls to ensure that we have a lasting industrial base upon which to build?
The Prime Minister
Where there is a case against dumping, we take it up vigorously in Brussels, and we shall continue to do so. In textiles, we operate 400 quotas on exports from other countries. But in general there are many jobs in exports in this country, and if we were to have general import controls, which I realise my hon. Friend is not asking for, we should lose more jobs than we should gain.
Mr. J. Enoch Powell
Will the right hon. Lady take the opportunity today and every day to make clear to the country, as only she can, that the courses that are being commended to her by the official Opposition and by many other voices mean nothing but a deliberate return to hyper-inflation?
Hon. Members
Oh!
Mr. Speaker
Order. Now that hon. Members have got over their surprise, they should listen quietly.
The Prime Minister
I agree with the right hon. Gentleman. One cannot create genuine jobs on printed money. That way, one produces only suitcase money and even higher unemployment.
[column 268]Mr. Emery
Does my right hon. Friend agree that the high level of the exchange rate is damaging exports at present, and will she therefore consider using methods which have been used in Switzerland? Will she consider having in this country either a different level of interest rates or an investment surcharge against large-scale financial deposits in this country, which are driving up our exchange rate? She would thereby stimulate more exports and more jobs.
The Prime Minister
I accept what my hon. Friend is saying, that a number of manufactrers are worried about the high exchange rate. I do not believe that it is possible for us to follow the same scheme as the Swiss. Ours is a considerable trading currency, and theirs is not. Here there would be ways round the methods that my right hon. Friend proposes which are not available in Switzerland. I believe that we shall have to use the high exchange rate to become more and more competitive.
Mr. Wellbeloved
On a point of order, Mr. Speaker. Will you ensure that all hon. Members, however exalted they may think they are, address the Chair, so that other hon. Members may hear?
Q3. Mr. Dubs
asked the Prime Minister if she will list her public engagements for 22 July.
The Prime Minister
I refer the hon. Member to the reply that I gave some time ago.
Mr. Dubs
Is the Prime Minister aware that, in the light of the unemployment figures, this day will be called “Black Tuesday” throughout the country? Can she tell the House when the increase in unemployment will cease?
The Prime Minister
I have steadfastly set my face against forecasting either unemployment or inflation reductions, except for the inflation reductions that come from reduced VAT. I do not wish to depart from that practice.
Mr. James Callaghan
In view of the seriousness with which everybody views the situation, does it not appear that the failure of the Government's policies, at any rate over their first 15 months, and the unprecedented rapidity of the growth of unemployment, should lead the Prime [column 269]Minister to consider alternative policies? Does she not recognise that a reduction of interest rates, as suggested by her hon. Friend the Member of Honiton (Mr. Emery), an expansion of the economy and an increase in public expenditure could avoid much of what is happening? Is she aware that if only she could bring herself to co-operate with the trade unions she could get a response that would enable her to achieve the success that the Labour Government achieved in their period of office?
The Prime Minister
What the right hon. Gentleman is advocating is deficit financing to produce artificial jobs, leading to higher unemployment. That is a course which he rejected when in office, until his final year, and it is a course which I reject, because it would lead to hyper-inflation and hyper-unemployment.
Mr. Callaghan
Does the right hon. Lady not recognise that she has deficit financing now, to the tune of £10 billion, and that it should be increased Does it ever occur to her that she is, or possibly could be, wrong about these matters? In the interests of all concerned, I ask the Prime Minister to reconsider her policies. As we have been warned by the Secretary of State for Employment, unemployment will increase even further, and the right hon. Lady should depart from the policy that she has adopted of attempting to control prices simply by closing factories and throwing people out of work.
The Prime Minister
The right hon. Gentleman has rejected every fundamental tenet that he espoused in office about how to tackle inflation and unemployment. He said that we could not spend ourselves out of a recession. I recognise that he is concerned, as I am, about the increase in unemployment over the past 14 months. I must remind him that it is not the largest increase in unemployment between May and July of successive years. [Interruption.]
Mr. Speaker
Order. I am finding it difficult to hear the Prime Minister's reply. The House is entitled to hear her reply.
The Prime Minister
The largest increase in unemployment between the May of one year and the July of the next year came between May 1975 and July [column 270]1976, when unemployment rose by 613,000 or 72 per cent. Shortly after that, the right hon. Gentleman went to the Labour Party conference and said:
“Quite simply and unequivocally, it is caused by paying ourselves more than the value of what we produce.”
That was true then. It is true now.
Mr. Callaghan
After all the cheering by Conservative Members, the plain truth is that there are 1.9 million people out of work in this country, and the figure is going higher. The House must have an opportunity to debate the matter. Is it not the case that men and women and young boys and girls are being thrown out of work through no fault of their own? They are being abandoned by the Government as a result of their policies. The Opposition will put down a motion of censure on the Government shortly.
Hon. Members
Resign.
The Prime Minister
I am as concerned as is the right hon. Gentleman, particularly about the increase in the number of young people who are unemployed. That is why we have increased expenditure on the youth opportunities programme from £69 million during the right hon. Gentleman's final year of office to £183 million this year.