Social Contract
Q1. Mr. George Gardiner
asked the Prime Minister whether the public speech by the Secretary of State for Employment on 14th February at Ebbw Vale on the subject of the social contract represents Government policy.
Q4. Mr. Peter Morrison
asked the Prime Minister whether the Secretary of State for Employment's public speech at Ebbw Vale on the social contract on Friday 14th February represents Government policy.
Q6. Mr. Hurd
asked the Prime Minister whether the public speech by the Secretary of State for Employment on the social contract at Ebbw Vale on 14th February represented Government policy.
[column 1260]The Prime Minister (Mr. Harold Wilson)
Yes, Sir.
Mr. Gardiner
The right hon. Gentleman will be aware that the Secretary of State for Employment has since developed his theme. As the Prime Minister, by virtue of his own frequent appeals for restraint in pay claims within the social contract, must be classed as an economic illiterate in his right hon. Friend's eyes, will he take this opportunity to express his full support for those of his Cabinet colleagues, such as the Secretary of State for Education and Science, who seek in their speeches to underline the wage responsibilities of the social contract, or will the Prime Minister, too, welsh on those responsibilities?
The Prime Minister
While the matter does not technically arise on this Question, as the speech referred to was about the miners' settlement, I am happy to say, on the point raised by the hon. Gentleman so touchingly and movingly, that the House can leave it to me to ensure that the normal rules in these matters are observed. [An Hon. Member: “What rules?” ] The rules of every Government in this country. But while my colleagues and I have been urging for months, before both trade union and other audiences, compliance with the social contract guidelines, I must tell the House—and I want this to be understood—that no Minister has at any time over those months proposed any alternative policy to the social contract. [Interruption.] Certainly no Minister has proposed a return to the disastrous policies of a year ago this week, based on statutory controls and the three-day week. I thought that what I said would be cheered by Opposition Members, because I am glad to feel that on this matter there is total bipartisanship in the House. I understand that the right hon. Lady the Leader of the Opposition has now forsworn the statutory pay policy of her predecessor which she supported when in government.
Mr. Kinnock
Does my right hon. Friend appreciate that no useful advice is to be gained on policy of any kind from the economic sub-literates on the Opposition benches, and that far from unemployment, as offered by them, and statutory incomes policy, as undertaken by them, being the cure for our economic [column 1261]problem, that problem and the problems of our democracy can be overcome—[Hon. Members: “Too long.” ]—only by means of persuasion and example, which are the basis of the social contract?
The Prime Minister
I must say with regret that I disagreed with what my hon. Friend said at the beginning of his question. It is wrong to say that we cannot learn from the Opposition. We can learn from their experience, as they have now done. But I join my hon. Friend in expressing great anxiety about what have clearly become the Conservatives' policies, although they have not yet been made articulate—monetarist policies which can lead only to unemployment.
Mr. Morrison
Is the Prime Minister aware that the Secretary of State's speech was also about the social contract? Is he or is he not satisfied that the convention of collective Cabinet responsibility still exists in regard to the social contract?
The Prime Minister
Certainly. Many of my right hon. Friends and I have been urging compliance with the social contract over many months. But if I want to study collective responsibility I will not look at the Opposition benches—[Hon. Members: “Answer.” ]—because for precisely three weeks the Opposition Front Bench has been dissociating itself from everything it did under the previous Prime Minister.
Mr. Lipton
Will my right hon. Friend put a guillotine on his answers to the silly questions asked by the Opposition? I should like to know whether my right hon. Friend will be visiting Beckermet.
The Prime Minister
I know that my hon. Friend, with his long experience and wisdom in these matters, can put a correct evaluation on the quality and motives of the questions of hon. Members opposite. I shall get to Beckermet when the relevant Question is asked.
Mr. Hurd
Is it not just possible that the Secretary of State for Education and Science is right? Why is it that after one year of the social contract as administered by the Prime Minister and the Secretary of State for Employment we have in this country a rate of inflation which is far higher than that of any of our competitors—twice that of the United States and three times that of Germany?
[column 1262]The Prime Minister
In so far as my hon. Friend was following the speeches which I made, from the TUC onwards last September, urging compliance with the contract, he was expressing the view of all of us and, I should hope, of the whole House since the Opposition have rejected any alternative policy.
The figures which were published last month were inflated by the Tory Government's thresholds—[Hon. Members: “Oh.” ]—which throughout the election I said I supported; they are a very considerable proportion of this. Secondly, the figures include long overdue settlements, which I have not heard criticised by any right hon. or hon. Gentlemen, for people such as nurses and teachers who had been left behind and who received back pay for anything from eight to 10 months. The hon. Gentleman must study the figures before he asks questions about them.
Mr. Edwin Wainwright
Will my right hon. Friend cut down his replies to the Opposition's ridiculous supplementary questions? Does he realise that they do not want the social contract to succeed? Therefore, will he bear in mind that if any disagreement arises between my right hon. Friends he must advise them not to express it in public?
The Prime Minister
My hon. Friend is right in what he says about the Opposition's motives. But they have no alternative policy. As there have been suggestions this afternoon of a certain marginal crossing of ministerial lines, I feel a deep sense of responsibility to engage in some educational help for Opposition Members.
Mrs. Thatcher
Bearing in mind that in answer to a Question in November Harold Wilsonthe Prime Minister said that all his Ministers were responsible for the social contract, may I ask whether the Friday speech of R. Prenticethe Secretary of State for Education and Science represented Government policy?
The Prime Minister
So far as it involves support for the social contract, yes. So far as it has been interpreted, rightly or wrongly, as proposing other alternative policies, I am happy to say that my right hon. Friend at no point, in public or elsewhere, has advocated an alternative policy.
[column 1263]Mr. Thorpe
As no one suggests that the Secretary of State for Education and Science was proposing an alternative policy but was merely suggesting that the present policy was not working, and as the Secretary of State for Employment said that the social contract was the best shield against worsening inflation and rising unemployment, and as many of his colleagues have said that it is not working, what measures does the right hon. Gentleman propose to back up his Ministers who are trying to make it work?
The Prime Minister
The social contract is the right policy. I have not heard an alternative policy from the official Opposition, and I am glad that they have repudiated the policy which they were following a year ago. I pay this tribute to the right hon. Member for Devon, North (Mr. Thorpe). He at least has produced an alternative policy. He supports a statutory policy. The Opposition have thrown over what they supported in office. I congratulate the right hon. Gentleman. I think he is wrong, but at least he is showing more honesty than the official Opposition.
National Economic Development Council
Q2. Mr. Duffy
asked the Prime Minister when he next expects to take the chair at a meeting of the NEDC.
The Prime Minister
My right hon. Friend the Chancellor of the Exchequer is chairman of the council. I have said previously that I hope to take the chair about once a quarter, but I have no specific date in mind at present.
Mr. Duffy
Is my right hon. Friend aware that the worsening outlook for capital investment confirmed by yesterday's CBI Industrial Trends Survey can only prolong the recent fall in industrial production and thus add to unemployment? Will he therefore take an early opportunity, such as chairing the NEDC can provide, to put some backbone into business men, pointing out to them that theirs is the responsibility for the present lack of investment because theirs is the crucial rôle, impressing on them that no one, including themselves, can benefit from this state of affairs, and asking them [column 1264]whether they will start trying to believe once more in themselves?
The Prime Minister
As I have told the House, the NEDC—both sides of industry and the Government—at its last two meetings, and it will happen again tomorrow, has been working on the problem of investment and increased industrial capacity to meet the requirements of world markets in the oil States, in the Soviet Union and elsewhere.
My hon. Friend, and I hope right hon. and hon. Members opposite, will have been encouraged to see the figures published this morning showing that, despite earlier forecasts, industrial investment in manufacturing rose in the fourth quarter of last year. It was 5.4 per cent. up on the fourth quarter of 1973, when the Opposition were responsible for these matters, and 19.9 per cent. up on the fourth quarter of 1972. [Interruption.] In reply to the illiterate muttered supplementary question about prices, may I say that the hon. Member knows that these figures are at constant prices.
Mr. Grylls
If the Prime Minister takes the chair at the NEDC, will he be repeating his speech outlining the Government's achievements, and does he consider the present rate of inflation to be an achievement or a failure?
The Prime Minister
All my speeches from the moment we came to office have dealt with the problem of inflation. Nothing happening today is different from what we were told a year ago—[Hon. Members: “Oh.” ]—since we were told a year ago today about the likelihood for inflation and for unemployment, except that all of us—I should like the Opposition's support—are struggling to stop the increase in unemployment then forecast which is occurring in most other industrial countries. We have also made more impact on the balance of payments problem.
Mr. Noble
When the Prime Minister meets trade union leaders at NEDC or elsewhere, will he listen carefully to what they have to say about import controls? Will he note that these are a means of improving the balance of payments and preventing unemployment from increasing, particularly in such industries as textiles and footwear?
[column 1265]The Prime Minister
There is a special textile and footwear problem. Hon. Members on both sides of the House are concerned about it, and I have suggested that they should meet my right hon. Friend. I have been in touch with the industry and certain action has been taken, but I know of the anxiety.
I take the view that import controls as a general policy would be bad for Britain from the point of view of dealing with the balance of payments, because they would help to get world trade spiralling further downwards. I point out to my hon. Friend and to those who support him that if we impose physical controls to restrict imports it will not be an alternative to deflation. We reject both policies. We should have to have deflation in order to prevent a big increase in consumption which would frustrate our exports.
Mr. Heseltine
Does not the Prime Minister agree that investment intentions are declining to the worst level ever and that, until we see a new confidence in industry, forward investment will not increase? Does he agree that the terms of the letter which I wrote to him on Friday setting out the instructions that would have to be given to bring the Industry Bill into the terms of the White Paper—as he has promised to do—are the basis of the instructions which he will be giving to parliamentary draftsmen for preparing Government amendments to the Industry Bill?
The Prime Minister
I do not accept any of the points made by the hon. Gentleman. As to the effect of business confidence on investment, the figures have been showing a decline for a very long period. The figure for the fourth quarter is actually up, and I hoped that the hon. Gentleman would say how delighted he was, but that is not in his nature. The intentions for the fourth quarter were worse, but they have improved in reality and I hoped that the hon. Gentleman would be pleased.
The hon. Gentleman will be receiving a reply to the letter he so kindly sent to me, and he will know that I am currently discussing these matters with the CBI and the TUC. I thought I might [column 1266]perhaps send him a detailed reply because it is plain from his letter that he has totally falsified the position in relation to the Bill. The hon. Gentleman in his speeches and letters should stop thinking in slogans and apply himself to the problems. He will get the reply to his letter, and I hope that he will be a much humbler man when he has read it.
Mr. Bidwell
Does my right hon. Friend agree that, worrying as inflation is, the villain of the piece has been the failure of those with the ability to invest to do so or their preference to invest overseas? Does he agree that, in spite of what he said, this is a continuing worry? Does he think that the policies are sufficient to arrest the tendency and drastically to improve investment?
The Prime Minister
Yes, Sir. I answered that question a week ago, and I dealt with it at some length when discussing these matters with the Scottish TUC last week and on television in Scotland. I said then, and I must repeat, that, as we have said for 12 months and more, the immediate problem of inflation can arise from self-generated income demands—wages, salaries and other incomes outside the employment field. The long-term problem we face is the totally inadequate investment—under successive Governments; I concede that—for about 20 years. That is the basic problem. Had business invested when it should and could have done and had every chance of doing, we should not be as vulnerable as we are to short-term factors.
Mr. William Clark
When the Prime Minister takes the chair will be explain to the council why his Government are steamrollering through the House an iniquitous tax which is ill-understood and which has far-reaching economic consequences, without adequate debate because of the timetable motion?
The Prime Minister
I do not agree with the hon. Member's premise. There have already been about 170 hours of debate. I understand that the House is being asked today to approve other arrangements which will provide adequate time for considering all the nonsense of hon. Gentlemen opposite for another four days.