Speeches, etc.

Margaret Thatcher

HC S [Debate on the Address]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [901/19-51]
Editorial comments: 1510-1630. MT spoke at cc19-28, 35, 43, 48 and 50.
Importance ranking: Key
Word count: 11642
Themes: Executive, Parliament, Union of UK nations, Economic policy - theory and process, Secondary education, Employment, Industry, Monetary policy, Privatized & state industries, Public spending & borrowing, Trade, Labour Party & socialism, Northern Ireland, Terrorism, Trade unions
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3.10 p.m.

Mrs. Margaret Thatcher (Finchley)

I rise, in accordance with the pleasant customs and traditions of this House, to congratulate most warmly the hon. Members for Brecon and Radnor (Mr. Roderick) and Bolton, West (Mrs. Taylor) on the able and witty way in which they moved and seconded the motion.

I must confess that until the hon. Member for Brecon and Radnor said that Harold Wilsonthe Prime Minister had visited his constituency twice I had not realised what a marginal seat he represented. Perhaps it was therefore wise that the hon. Member was chosen to discharge this distinguished and honourable task.

I note that the hon. Gentleman has been a mathematics teacher. Someone in my office kindly did the statistical research which it was thought might be appropriate to the wishes of the hon. Gentleman. I understand that his constituency covers 1,200 square miles and has 53,000 electors—an average of 44 electors per square mile. I understand also that it contains one-third of the sheep population of Wales, which totals about 6 million. I am sure that that has nothing to do with the hon. Gentleman's majority.

I understand that the hon. Gentleman could have made his speech in Welsh. I for one am very glad he did not. The hon. Gentleman has shown a certain Welsh independence in not always agreeing with his Government's policy. Indeed, he has sometimes recorded his disagreement in the Lobby. Perhaps it was this independence of mind that appealed to the right hon. Member for Ebbw Vale (Mr. Foot) in selecting the hon. Gentleman as his PPS. I hope that they will not lead each other astray.

I also congratulate most warmly the hon. Lady the Member for Bolton, West on the way in which she seconded the motion. She showed the true spirit of citizenship of the United Kingdom. Having been born in Scotland, and having had a Lancastrian upbringing, it was appropriate that she should have been chosen to take part in the debate on the Address. The hon. Lady is a very good advertisement for direct grant schools, and I am sorry that she denies to others the opportunity to derive such a benefit. [column 20]

I understand that the hon. Lady believes there should be more power given to back-bench Members. The customary way to extend more power to back-benchers is to put them on the Front Bench. Perhaps the hon. Lady, too, will eventually take this course, and I wish her well.

Mr. Russell Kerr (Feltham and Heston)

Now start being sincere.

Mrs. Thatcher

I am very sincere. I am sorry it is not reciprocated.

I wish to base my remarks on the Gracious Speech on three broad themes. They seem to fall quite naturally into three main groups. First, this year we shall consider the question of constitutional change more closely and more deeply than for many decades.

Secondly, we are to consider, as we do in any Gracious Speech, economic problems. They are always with us, and changes in constitutional structure will not solve them. A very difficult year economically is ahead, in some respects even more difficult than the one we have just experienced.

My third theme is the effect of the Gracious Speech on the balance of power between the Government and the citizen.

Although I propose to deal with these matters under three separate headings, in some respects the themes overlap, which I hope will become obvious as I develop my remarks.

First, I should like to deal with the constitutional issues foreshadowed in the Gracious Speech. I take them in the order in which the issues occur and deal, first, with the difficult and prolonged question of Northern Ireland. It is a distinct and important issue with which we shall have to deal in the new Session.

I have visited the Province recently and am grateful to Merlyn Reesthe Secretary of State for Northern Ireland for the arrangements he made. I received an extremely warm welcome, but I saw for myself the strain and tension caused by years of terrorism—terrorism which has gone on for as long as the last world war. I believe that confidence needs to be restored to the minds of all our fellow citizens in Northern Ireland, Protestant and Catholic alike. I hope that the Government will regard the protection of citizens as the first priority. [column 21]

I am also concerned to see that it has been reported that the Secretary of State for Northern Ireland said that he did not intend to give the Government's decision on the Convention Report until early in the new year. If that is correct, I view that decision with some dismay. Some indication is necessary well before then. Could not the Government tell the House which parts of the Report they regard as acceptable and which parts as unacceptable? Can they not decide whether there are any sections which further discussions in the Convention could clarify and then conclude whether they intend to reconvene the Convention? It was impressed upon me very strongly that the worst thing that can be done in these circumstances is to leave a political vacuum in Northern Ireland. I pass that on to the Secretary of State.

The main part of the Gracious Speech concerned with constitutional matters is, of course, that part which refers to devolution to Scottish and Welsh Assemblies. It is interesting to note the way in which this phrase is couched. It is not

“My Government will bring forward legislation”


“My Government will bring forward legislative proposals.”

This probably demonstrates that the Government understand that time is needed to debate these proposals thoroughly, not only in this House but in the country as a whole—and not just in Scotland and Wales. We who represent English constituencies are also citizens of the United Kingdom, concerned with the constitution of the United Kingdom, and likewise accountable to our own constituents. These things will ultimately work only if we appreciate the full consequences of the action before we take it and see that any arrangements we make are effective.

I therefore welcome the fact that the Government appear to give recognition to this need for very thorough and prolonged debate.

Mrs. Winifred Ewing (Moray and Nairn)


Mrs. Thatcher

The constitutional changes we make will last for far longer than some of the economic problems we have. I am very disappointed indeed [column 22]that some of our Scottish Members do not think that thorough debate is necessary.

Mr. Gordon Wilson (Dundee, East)

Would the right hon. Lady not accept that the subject of devolution in Scotland has been thoroughly debated in Scotland and that it formed part of the manifestos of all the political parties represented? Would she not agree that it is high time that the Conservatives came off the fence and said that they want devolution immediately?

Mrs. Thatcher

The general question has been debated. The details have never been fully and properly worked out. Now that we come to consider it in detail we realise just how much there is to work out. I am sorry that those who come from Scotland do not fully realise that. [Interruption.] I am sorry also that they do not appear to believe in debate in a democratically-elected assembly. Certainly other Scottish Members, apart from those in the Scottish National Party, realise the fundamental nature of the constitutional changes we are about to embark upon and are aware that they must be well and thoroughly made because they will last for a long time indeed. I am glad also that the Gracious Speech deploys the case for the integrity of the United Kingdom and specifies:

“within the framework of the United Kingdom” .

The time when we are discussing the interdependence of nations and the need to be part of larger groupings is not a time to start breaking up the United Kingdom.

In my party we treat the question of the Scottish and Welsh Assemblies differently. Scotland has had its own legal system and separate legislation for some years, whereas Wales has had no separate legal system. Also, there is much more demand for such an Assembly in Scotland than there is in Wales. Therefore, although we are pledged to a Scottish Assembly, we have made no similar pledge about a Welsh Assembly.

Mr. Gwynfor Evans (Carmarthen)

Will the right hon. Lady explain the relevance of a different legal system in Scotland from that in Wales? In a country such as Switzerland, for instance, which has 25 cantonal governments, each [column 23]with far more powers than are proposed for our Assemblies in Scotland and Wales, there is a common legal system.

Mrs. Thatcher

I was expressing an undisputed fact. It should be undisputed.

Consequent upon local government reorganisation, most people are wary of too much structural upheaval and of the potential cost of another layer of government. Devolution of power is a popular cry, but more bureacracy and more tax to pay for it is not. We must make abundantly clear that devolution must come to mean not more government and more powers to Governments but a dispersal of some powers to areas less remote from those whose needs they serve.

However, I believe that devolution presents both an opportunity and a danger. The Government and the House have a prime responsibility to see that the issue becomes one of opportunity. The opportunity lies in the chance to re-examine the rôle and extent of government. It is no accident that discontent with our form of government has increased with the extension of government itself. Devolution should march hand in hand with a conscious and deliberate attempt to scale down the size of government. The object is not more government of the people but more decisions by the people over their own lives. That is the opportunity.

The danger, of course, is that devolution could facilitate the break-up of the United Kingdom. There is, however, one major background factor that casts the most oppressive shadow of all; that is the state of the United Kingdom's economy. The prospect of maintaining the Union is related to the success of Denis Healeythe Chancellor of the Exchequer. Economic failure would deliver a succession of hammer blows upon our political structure and the sense of failure would feed the forces of separatism. It is important to consider the future of the economy at the same time as the future of devolution, and the Chancellor perhaps as much as Edward Shortthe Lord President presides over the destiny of the political and constitutional stucture of the United Kingdom.

In this context, we come to my second theme. We are compelled to examine the strategy of the Government's economic policy and to judge whether measures and events are fulfilling that strategy, [column 24]whether their actions follow their words or whether they are saying one thing but doing another.

It is important to consider the future of the economy at the same time as no one disputes the Chancellor's aim, as expressed in the Gracious Speech, to reduce inflation and return to more stable money with the minimum possible social and economic dislocation. I think that a similar aim has been expressed in almost every Gracious Speech—certainly during the whole of my time in the House. Indeed, most of the dangers and fears about both inflation and unemployment are set out in the 1944 White Paper on Employment Policy. We know the causes and we know the effects, but so far none of us has yet been able to solve these problems simultaneously.

However, I do not believe that it makes the Chancellor's task any easier to suppose that he can obtain his central objective of reducing inflation without a period of painful adjustment. The Government have been less than candid on the painful period that must accompany the abatement of inflation. They have not been candid with the public or with the House about the necessity to curb the growth in public spending. They have not been candid, I believe, about the likely trends in unemployment. They have not been candid about the limited scope that exists for import controls.

The hon. Lady the Member for Bolton, West mentioned the problem of import controls, and I shall consider those three matters quickly in reverse order. Most of us agree that this nation must rely for its prosperity on an expansion in world trade. Therefore, there can be no question of general import controls. Equally, we accept that internationally the system is geared to fair and free competition between nations, and the question is, when does the competition become unfair, and cheaper goods become dumped goods?

Harold WilsonThe Prime Minister has no difficulty in visiting Communist countries and in boasting, when he comes back, about his capacity to give those countries credits and rates of interest which are not available to our own people for the export of such goods as textile machinery. But so far the right hon. Gentleman has not been able to discover criteria which would enable us to decide whether consumer goods produced by Communist [column 25]and other countries are being dumped in the United Kingdom.

That question must be solved, and the Government must deal with requests for anti-dumping orders more quickly than they are being dealt with now. At Rambouillet, the Prime Minister made a reference to import controls. Perhaps he will give us his views more precisely today. He referred to selective controls but did not list the industries.

On the question of unemployment, we have been led to believe that 1.2 million persons would be the likely peak of unemployment, after which the figure would level off and then reduce. Michael FootThe Secretary of State for Employment has been specific on this point. I wonder, however, whether it is advisable to raise people's hopes falsely, or risk raising hopes falsely, by saying that that figure might be the peak, at a time when we are experiencing our present levels of inflation and our present difficulty in borrowing enough to finance our public spending. I hope that the Secretary of State is right, but I fear that next year will be worse than this, and that the level may go up to a higher figure than that quoted.

I take the view, which I know is debatable, that it is far better to fix modest targets and achieve them than to fix over-ambitious targets and fail to achieve them. This is what I believe both the Secretary of State for Employment and Denis Healeythe Chancellor of the Exchequer tend to do.

In the event, we are always brought back to the dangers of the Chancellor's current spending and borrowing policy. The current levels of public spending have raced so far ahead of last year's that we can only conclude that the problem is now out of control. There will come a time when the borrowing has to stop. It cannot be maintained at home because, once there is a modest revival in the economy, there will be renewed private demand for investment. It should not be maintained, because our record borrowing is now bequeathing to immediate posterity an interest payment level that will bedevil our national finances and an enormous burden of debt repayment that it will put on future generations.

The past 18 months have been sadly misspent by the Chancellor. A nation in debt has no self-respect and precious little [column 26]influence. I believe the Prime Minister discovered this at Rambouillet when he found that other nations will not bail us out by pursuing policies that would lead them to the same levels of inflation as those we are experiencing under this Government.

The Prime Minister (Mr. Harold Wilson)

The right hon. Lady referred to Rambouillet. Would she give the public sector borrowing requirement of Germany and the other countries represented at Rambouillet?

Mrs. Thatcher

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has some extremely interesting figures, and, if he catches your eye, Mr. Speaker, doubtless he will produce them.

The important issue is not the public sector borrowing requirement but its relation to the productivity of the country. The percentages given by Denis Healeythe Chancellor in the House the other day did not wholly add up. There was a certain difference when they were related to national productivity.

Mr. Robin Corbett (Hemel Hempstead)

What is the answer?

Mrs. Thatcher

The answer is that Germany is doing four times better in dealing with inflation than we are and therefore can speak with more authority. The Prime Minister has to rely on Germany and America to reflate because he has lost control of the economy here. He has to go to other private enterprise economies to try to get the Socialist-run economy of this country out of its financial mess.

The third obvious theme in the Gracious Speech is that it extends more power to the Government and less to the citizen. This, of course, is typical of Socialism. In addition there are the usual extra measures of nationalisation or public ownership as it is now called. It has always seemed that the word “public” was a misnomer for that operation. The irony is that the moment things are taken into public ownership is the moment when the public ceases to have control, consideration or choice. It used to be argued that nationalisation was a means to greater efficiency, but that argument was demolished pretty efficiently by the Economic Editor of The Times on 6th [column 27]November. Further nationalisation puts more power into the hands of the Government and gives less economic freedom to citizens—more monopoly, no choice.

An example of less choice for the citizen and more power to the Government is the Government's policy on education. I hesitate to remind the Government of this, but the last time they tried to bring forward this Bill a General Election followed very quickly. I seem to recall that the Minister's PPS was absent for a crucial vote and the Opposition, with whom I was then concerned on education, rapidly took advantage so that the Bill never became law. That was only six years after the Prime Minister had said that grammar schools would be abolished over his dead body.

This proposed Bill will be a measure to ensure further reduction of choice. It will be a Bill to ensure that parents who want to send children to a school whose intake is based on ability will not be able to do so. We say, allow these parents to do so, and leave the schools in existence. Let the parents be heard as well as be seen. It should be noted that this attack is on statutory schools. The limitation of choice to nil is for those who have to rely on the State system. There is not even a policy of “take it or leave it” because one cannot leave it. It is, “Take what the Government decide you should have—take it and lump it.”

The children who will suffer most—and the Government know this—are those who live in deprived areas and have to go to a neighbourhood school. Most of the teachers in those areas know this. That is why I got such support from the Joint Four for the policy I was pursuing, and why, in an opinion survey during the last General Election, the majority of teachers came out in favour of the grammar schools—something which the Government conveniently forget.

Whatever the Government are planning to do to Parliament through

“a major review of the practice and procedure of Parliament”

it is encouraging to note that it is “the practice and procedure” and not the powers or composition of Parliament. The proposer and seconder of the Gracious Speech suggested that we might have morning sittings. Last time we had [column 28]morning sittings I recall that it took longer to do the same amount of work. It did not, for instance, reduce the necessity to sit on Friday.

Even if there is little hope for the future from the Gracious Speech, great hope came yesterday and today from at least one union. The moderates of the AUEW were prepared to stand up and be counted. When the people exercise their democratic choice extremism is snuffed out and common sense prevails. Perhaps this will give encouragement to the moderates in the Government to follow the lead of these people. Will they not stand up and be counted, too, and ensure that their majority prevails?

If, within that phrase in the Gracious Speech,

“Other measures will be laid before you.”

the Government could consider heralding the AUEW success by bringing forward a Bill introducing postal balloting they will have our maximum support and cooperation. After all, Winston Churchill was right—we may not be able to trust Governments but we can trust the people. 3.35 p.m.

The Prime Minister (Mr. Harold Wilson)

I join the Leader of the Opposition in paying tribute to my hon. Friends who moved and seconded the Address.

Like many hon. Members, I have many times visited the beautiful constituency of my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) both in his time as a Member and in the years when it was held by my noble Friend Lord Tudor-Watkins, my most recent visit being last July. It is a constituency which breathes both the turbulence of the Industrial Revolution and the peace of East and South Wales, as old as history itself. Many of us have seen what my hon. Friend referred to as the reservoirs of the Elan Valley supplying a number of cities with their water, and I also saw some of those 2 million Tory sheep to which he referred.

My hon. Friend demonstrated his wide knowledge, gained over many years, and his concern for improving education for handicapped children. He will know of the initiative which my right hon. Friend the Secretary of State for Education and Science is taking to promote, through a series of regional and local [column 29]conferences, through discussion by all concerned in this most important area of education.

Equally, the House was attracted by the speech of my hon. Friend the Member for Bolton, West (Mrs. Taylor)—a speech as charming as the constituency which she represents. Those who know Bolton know that its people possess great and determined character. My hon. Friend was right to refer in the way she did to the employment challenge and to the situation in the textile industry. Bolton also possesses the character of rather frequent changes in political representation, but clearly, with two of my hon. Friends now representing it, such changes are now a thing of the past.

My hon. Friend the Member for Bolton, West portrays in herself the triumph of one of the greatest social experiments introduced in this country. Speculative, much criticised and even scorned when it was inaugurated, it is now a proven success. Before coming to the House she was a local tutor for the Open University—operating on the other side of the Pennines—now the biggest university in Britain. It is among the top mail order businesses in the world. [Laughter.] It is not a laughing matter for those who have benefited from it. When this idea was put forward, the Tories opposed it. We carried it through. Now they are prepared to say how successful it has been, not only with its material in this country but all over the world, especially in the developing countries.

I will not go into what my hon. Friend said about Bolton Wanderers, who were always my team's bogy team in those days.

In the arrangements for our affairs in this new Session, my right hon. Friend the Leader of the House will shortly be bringing forward proposals for Private Members' time similar to those in recent Sessions, on the basis of rather more time for Bills than for motions, together with the usual four additional half-days for motions. The Government will propose the usual allocation of Supply Days.

In the light of the experiment during the summer, the Government will give the House an opportunity as soon as possible to decide for itself whether we should now go forward to a system of permanent sound broadcasting of our [column 30]proceedings. It is for the House itself to decide on a free vote.

Many hon. Members of all parties have asked whether, by agreed improvements, we cannot run our affairs in Parliament better and enable Parliament to fulfil all its historic and essential functions with increased efficiency but with less strain and effort on hon. Members. My right hon. Friend the Leader of the House will before long be putting forward proposals for a thoroughgoing review of our practice and procedures.

The Gracious Speech makes clear the Government's intention to bring forward our legislative proposals for devolution for Scotland and Wales. The White Paper setting out the Government's detailed proposals will be laid before the House on 27th November, and my right hon. Friend the Leader of the House would hope to provide an early occasion for an extended debate on the Government's proposals. As the House knows, we are already working on the legislation, which we shall introduce as early as possible this Session taking account of reactions to the White Paper, the views of this House and the results of consultations with interested bodies.

In the timing of legislation and its passage through Parliament, there will be no avoidable delay. However, this is a major measure, as both supporters and opponents of devolution all agree. Even after the great national debate on the White Paper following its publication next week, the Bill itself will have to be studied, not only by the House but by people outside. For these reasons the Government are not insisting, even if it were possible and proper to insist, that the House should complete the whole legislative process in this present Session. Whatever view any hon. Member takes, I think he will agree, whether he supports the principles of the White Paper or bitterly opposes them, that we must ensure that the final form of the legislation is responsive to the national debate and to the parliamentary debate, not only on the White Paper but on the text of the Bill.

On the assumption, therefore, that the Bill is to be introduced at the earliest possible time this Session and cannot conclude its passage in this present Session, it will be the Government's intention [column 31]to present the Bill, with whatever amendments are thought right following the national debate, at the very beginning of the next parliamentary Session, so that it can proceed towards Royal Assent with all reasonable speed, having regard to the magnitude and constitutional importance of its provisions.

Mr. George Reid (Clackmannan and East Stirlingshire)

Does not the right hon. Gentleman consider that he has a clear electoral commitment to the people of Scotland on this issue? May I remind him of two of the carefully orchestrated interviews given by devolution Ministers over the past year? On 30th April the Lord President said that the Bill, meaning the Assembly Bill, would be the major Bill of the next Session. On 30th January the Under-Secretary of State for Scotland said that there was no reason why the Bill should not be introduced at the beginning of November. Against that background, does not the right hon. Gentleman consider that the people of Scotland will think that their patience has been cynically abused?

The Prime Minister

The hon. Gentleman has got this wrong. I should have thought he would be the first to say that there must be adequate discussion and debate on the White Paper. The hon. Member should refer to what my right hon. Friend the Lord President said. During the last election, when I was in Edinburgh, I was asked about what he had said about a three- or four-year timetable and I said that I hoped it would be quicker. It is our intention that it should be quicker, and we have entirely kept faith with everyone who accepted the White Paper which we published before the last General Election. We shall keep faith with those who will be considering the White Paper to be published next week.

Mr. Emlyn Hooson (Montgomery)

The right hon. Gentleman referred to “the Bill” . Does he envisage one Bill to cover both Scotland and Wales, or has he an open mind on this and will there be two Bills, one dealing with Scotland and one with Wales?

The Prime Minister

I ask the hon. and learned Gentleman to wait for the White Paper. We envisage one Bill for Scotland and Wales, but, of course, the [column 32]parliamentary handling will inevitably be different as between the two. It does not have to be and will not, of course, be homogeneous in its provisions for Scotland and Wales, for reasons which have already been advanced this afternoon.

Mr. Donald Anderson (Swansea, East)


Mr. Eric S. Heffer (Liverpool, Walton)


Mr. Speaker

Order. It is not quite clear to whom the Prime Minister has given way.

Mr. Anderson

If there is one lesson from recent opinion polls, it is that, whatever enthusiasm there is for devolution in Scotland, there is little, if any, in Wales. Will my right hon. Friend ensure that his proposals take this on board?

The Prime Minister

Yes. I am not sure that I wanted to give way on that point. It is a point which can be made when my hon. Friend has had time to study the White Paper. He may like it very much. But we cannot debate the White Paper on the basis of interruptions to the speech that I am trying to make until my hon. Friend and the whole House have seen the White Paper.

Mr. Heffer

I apologise to my right hon. Friend. There seems to be a misunderstanding with Mr. Speaker on this question. My right hon. Friend must be aware, as we all are, that the manifesto of October 1974 not only stated that there should be Welsh and Scottish Assemblies but went on to say that there would be a consideration for regional devolution in England. Does not my right hon. Friend agree that, before we have a Bill, there must be the fullest discussion and debate amongst English Members in relation to regional devolution problems and answers for England, as we are all concerned about devolution and not merely Scotland and Wales?

The Prime Minister

My hon. Friend is absolutely right about this. We have said that we shall probably publish a separate paper about the English aspect, and we expect that it will be published some time before the House decides the ultimate form of the legislation. My hon. Friend knows that at Newcastle some years ago I made some proposals with [column 33]regard to this matter. Tomorrow I shall speak on this subject to the local authority associations.

Following the statement of my right hon. Friend the Secretary of State for Employment, the Trade Union and Labour Relations (Amendment) Bill will be speedily reintroduced so that all the necessary steps can be taken, under established constitutional procedures, to ensure that the wishes of the elected House on this matter are not frustrated.

The Leader of the Opposition began her speech by referring to Northern Ireland. I was not sure of the implications of one passage. I hope she will agree that we have done better on this question over the past years, particularly when the right hon. Member for Penrith and The Border (Mr. Whitelaw), the Deputy Leader of the Opposition, was Secretary of State, when we sought to maximise and not to minimise bipartisanship. There are plenty of people of the wrong kind ready to exploit any breaches on this problem. I am sure that the right hon. Lady will have this in mind, and I hope that there will be no danger of any misintepretation of some of the things she said.

The House will have noted with horror the passing last week of a new and grim milestone in the history of Northern Ireland when the thousandth civilian death since the present troubles began was recorded. However—here I know that I speak for both sides of the House—despite the men of violence we are determined to work for a constitutional solution.

As my right hon. Friend the Secretary of State for Northern Ireland told the House on 10th November, we have now received the report of the Constitutional Convention, which will be published tomorrow and laid before Parliament. I must tell the right hon. Lady that we do not feel it right to make any substantive comment on the Report at this stage. Parliament should take time to consider the Convention's Report so that when, at an appropriate moment, we come to debate these matters, we shall do so on the basis of considered views. However, I must repeat that the solution to the problems of Northern Ireland must be found in Northern Ireland. That is what we said after the troubles last year. Every [column 34]cowardly murder, every brutal maiming and every insane bomb outrage creates new bitterness and hatred and delays still more the peace that one day must come.

The main theme of the Gracious Speech is economic priorities. The House will no doubt have an opportunity on Thursday of this week and next week of debating the economic situation. In a very real sense, however, a large part of the debate from now until next Tuesday—even the debates on social affairs—will be about the world economic situation and the problems before us in Britain. The right hon. Lady was absolutely justified in devoting a considerable part of her speech to these matters and in giving her opinions on them.

What we face in Britain today—we share this in greater or smaller degrees with almost every advanced country and many other countries—is the interlocked problem, which at one time we would have thought of as a paradox, if not an impossibility, of inflation and depression. In human terms this means unemployment. Our anxieties, not only our fears but the figures themselves and the reality on a world scale and on a national scale, are greater than any in recent memory. Unemployment in this country was up 90 per cent. by July of this year over the fourth quarter of 1973. Unemployment in Japan was up 56 per cent. over the same period, and in the United States it was up by 84 per cent. In France it was up by 113 per cent. and in West Germany by 265 per cent. It is a common problem to all the advanced countries. [Interruption.] It does make a little difference to those who, for political reasons, try to suggest that all the problems are in Britain. It is common to all those countries, whatever form of government they have.

Similarly, while the United Kingdom's industrial production in the second quarter of this year was 9 per cent. down on the mid–1973 peak, industrial production in Germany was down by 10¾ per cent., in France it was down by 12 per cent., in the United States by 12 per cent., in Italy by 14¾ per cent. and in Japan by 16¾ per cent. from the peak in 1973. It is right to say that we have talked about inflation. Conservative Members are always saying that there is more unemployment in this country than in other countries and that production [column 35]has not fallen as much elsewhere. It is a common problem, but they never mention this in their speeches because they want to say that it is all due to a Labour Government. These figures, therefore, utterly confute the whole theme of their political attack.

I come to the public sector borrowing requirement. The scale of deficit in relation to the size of the economy—the very point that the right hon. Lady mentioned in answer to me—has risen in many countries. Allowing for structural differences, it seems reasonably clear that our deficit now is much the same—as a proportion of national income—as that of other major industrial countries such as the United States, West Germany and Italy. That utterly destroys the main theme of the right hon. Lady's political attack.

Mrs. Thatcher

In that case, can Harold Wilsonthe Prime Minister tell us the level of public sector borrowing requirement he is using to make that comparison?

The Prime Minister

Yes, I am using the figures published for last year in my right hon. Friend's Budget Statement in April. [Interruption.] No Chancellor has ever given a figure for this halfway through the year. We have heard from our opposite numbers in those other countries that they also have to face the problems of forecasting. On that basis their deficit is as high as ours. The right hon. Lady might get a new speech writer.

Sir Geoffrey Howe (Surrey, East)

Is the Prime Minister aware that in answer to questions last week the Chief Secretary, in endeavouring to give the basis of the Chancellor's repeated claim about comparable borrowing requirements, made it clear that it was impossible to produce relevant comparisons, and also made it clear that the Chancellor was not prepared to give any figure beyond that given in his Budget Statement in April, which we all know by now to be wholly unrealistic? Will the Prime Minister acknowledge that the real test and criticism is the extent to which the rate of inflation in this country has gone roaring ahead of that in other countries?

The Prime Minister

That is an interesting point. The Opposition have been on about the public sector borrowing requirement for two months. Now that [column 36]they find they are beaten on that, they go back to inflation. [Hon. Members: “Answer” .] I was coming to this later but I will answer it now, if hon. Gentlemen will listen. The rate of inflation in this country was higher when we took office. It rose considerably thereafter. The main item was thresholds. It has risen higher. It is now falling as a result of the Government's policy. During the debate in the summer the Opposition could not vote for or against our proposals. They sat on their hands and by so doing they utterly relinquished any right to talk about inflation in this House. But I know how they love to switch from the balance of payments to PSBR, to unemployment, to production—whichever suits them at the moment.

The first thing that must be realised is that Britain's economic strength in an increasingly interdependent world is dominated more than at any time in our lifetime by international developments. The effect of oil prices on all of us, the effect of violent fluctuations in commodity prices and repeated shortages of essential materials have emphasised this fact in a sense of which we have no previous experience.

The summit conference at Rambouillet last weekend consisted of the Heads of Government of six leading industrial countries accounting between them for over half the world's trade and a current total of 12½ million unemployed. Its work was directed to dealing specifically with world problems while at the same time examining what, by co-ordination in advance of our national programmes, we could do individually and all of us together to get the world economy moving.

The fact that that meeting took place was itself important. Still more important was the fact that every participant felt that it had achieved far more than he could have hoped two weeks ago. In the words of the declaration, unanimously approved, we held a searching and productive exchange of views on the world economic situation. But above all our central theme was unemployment, with the related problem of inflation.

We did not seek to take decisions and impose them on the rest of the world trading community. Everything we said will be pursued through national institutions of our own and the relevant established international organisation. [column 37]

The three countries whose production and trade have the biggest determining effect on the volume of world trade as a whole—and therefore on each one of us—gave chapter and verse on their confidence about their own recovery now and in the immediate future. My right hon. Friends and I stressed the importance of speedy action should that recovery, which has begun, lag or slow down in those countries, or should increased production fail to produce a rapid reduction in unemployment.

In the declaration, which will be laid before the House as a White Paper, we said—all of us:

“We are confident that our present policies are compatible and complementary and that recovery is under way. Nevertheless, we recognise the need for vigilance and adaptability in our policies. We will not allow the recovery to falter. We will not accept another outburst of inflation.”

We expressed our determination to secure speedy international action on multilateral trade negotiations, an orderly and fruitful increase in East-West trade, and increased and secure supplies of energy from all sources.

Paragraph 11 of the declaration, dealing with the decisions we took about monetary problems, has been widely welcomed throughout the world and the seal was set upon those decisions by the success of the United States and France, at Rambouillet, in reaching a wide measure of accord on fundamental questions relating to parties and the reform of the international monetary system. But we each of us committed ourselves to watch the situation closely and to take action, through existing institutions, if a further fillip to trading and employment is needed.

One further point came up on which the House will want me to comment and to which the right hon. Lady referred. On the action to deal with abnormal and damaging imports where they threaten even the existence of sectors of industry in this country suffering now from imports but viable and competitive in recovery conditions, I told my colleagues at Rambouillet exactly what I said in the House on 4th November, and what I said in the House on the 4th November, and what I said was fully understood at Rambouillet.

But no action taken on an international scale absolves us from the necessity of [column 38]taking every possible action to strengthen Britain in the face of the world and national problems. It is our own duty to our own people and it is equally our duty to our trading partners.

Here I stress the fundamental importance of the attack on inflation approved by this House—by some of us, anyway——with overwhelming majorities in the summer. Right hon. and hon. Members opposite know that this policy, which they failed to endorse in the House carries the overwhelming endorsement of the British people, as shown by the miners' ballot, by the TUC and by the overwhelming support of people in the country. [Interruption.] If the hon. Gentleman thinks that the people of the country do not support the policy, perhaps he will get up and say so.

Mr. Victor Goodhew (St. Albans)

The right hon. Gentleman does not speak from a very strong position. Is he not aware that most of the policies included in this Queen's Speech are opposed by a majority of the electors? That being so, why does he not give them a chance to vote on it?

The Prime Minister

I did, in October last year, actually, and we saw the result. But the hon. Gentleman denies my claim that the majority of the people support our anti-inflation policy, on which the House legislated. The hon. Gentleman and the right hon. Lady—the lot of them—sat there in a humiliating posture voting neither for nor against.

Sir G. Howe

Will not the Prime Minister acknowledge the immense contrast between the position adopted by the Labour Party, which challenged and sought to overthrow every attempt of the last Government to implement policies against inflation, and the position now explicitly adopted by the Conservative Party, which is making it very plain that we shall not do anything to try to overthrow the policy and that we wish the Government well in their attempts to tackle the problem?

The Prime Minister

The right hon. and learned Gentleman should not underrate the ability of the right hon. Lady to speak for herself. He is a little too protective and defensive. I was challenging the Opposition on their failure to [column 39]vote for or against the legislation this year. The answer to the right hon. and learned Gentleman, who was the biggest confrontationist in the last Government, the author of the Industrial Relations Act, is that we had the right to the support of the Opposition because our policy was agreed with industry, whereas the Conservative Government's policy was confrontation. When the Conservatives were challenging us for not announcing a policy and saying that we must lay down the law—though they did not say what law we should lay down—we were working night and day to get a consensus, and that is what we succeeded in doing.

My right hon. Friend the Secretary of State for Employment has reported to the House on the extent to which pay settlements, covering a wide range of different types of workers in the public and private sectors, have been concluded within the limit set. More than 2 million workers are now covered by major settlements within the limits approved by Parliament—all of them within the policy—and nine wages councils covering 600,000 workers have agreed proposals for increases in statutory minimum rates in line with the policy.

With the inevitably harsh winter months ahead, when prices will inevitably continue to run ahead until lower costs work through—and this must be said, as it has been—the need for all of us, Government, Parliament and people, to maintain our determination and resolve remains total and must not be abrogated, however strong the circumstances in any particular case or negotiation.

The House knows this. Pay settlements have to be held at a time when prices are still rising—due to previous commodity prices working through, due to previous pay settlements working through, and due again to the need to bring public industry prices and charges into relation with costs. Now, of course, political capital is being made out of the Government's decision on publicly-owned industry pricing. Yet this was also the Conservative Government's policy—they announced it on 17th December 1973 as a firm and irrevocable decision. By 4th March 1974, when they lost office, they had not done it. They had got their figures wrong about what it would cost. They were £900 million out in a matter [column 40]of less than three months. They talked about this policy. We are carrying it through, and they are raking over the political pickings.

The House knows, for the reasons I have given, that the nation must expect to face a period in which there is an absolute temporary reduction in living standards measured by the relationship between earnings and prices.

The House and, I believe, the country understand the paramount need to make these policies effective in human terms—in family terms, in terms of prices in the shops, in terms of the household budget. But, secondly, success in the anti-inflation policy is a necessary precondition of bringing down the present unacceptable level of unemployment and of moving speedily towards full employment. We have, meanwhile, acted to alleviate, with the support of the House, the immediate threat of increased unemployment, especially for young school leavers.

We have done so not by general reflation measures, which are expensive, slow-acting and might operate contrary to the policies that the House has approved. Less than £100 million of expenditure by the methods used by my right hon. Friend has the same effect in creating jobs or saving jobs as a classical Keynesian reflation of £1,000 million, and it takes effect in a quarter of the time. [Interruption.] The House may want to debate this and pursue it further—I mean those hon. Members who understand it and who were listening when I said it. It is a serious point. In a sense, the point is a new discovery of the past few months and I hope that the House will take it seriously when we debate the economy. Too often we are told that the choice is between full-scale Keynesian reflation by taxes or expenditure and by other means. I hope that the House will take seriously what my right hon. Friend has been saying on this matter.

Third, it is essential that we ensure that, when world recovery begins, the export-led boom—which on the basis of our recent export achievement, when for the first time for many years we have increased our share of world trade, we are entitled to expect—is not frustrated within a short period by constraints caused by a fresh round of inflation or constraints of capacity or inadequate investment, above all in manufacturing. [column 41]

The problems we face are partly caused by world factors—for example, the problem of inflation—but also by our own failure over a quarter of a century under successive Governments to increase the amount of industrial investment, to improve its quality and no less its deployment where most needed, and again by our failure over the years to secure a return on that investment in terms of productivity in any way comparable with that achieved by our leading competitors. I do not think any of us can deny that these are the problems that have faced all of us.

That was the challenge before NEDC at its meeting a fortnight ago. The objective accepted by all of us at Chequers—Government, unions and management—was to reverse the postwar economic decline by a breakthrough to a high-output, high-earnings economy, based as it must be on full employment. This was agreed on the basis of a common approach, flexible in its response to the changing needs of industry, and both unions and management, together with the Government, will now get down to identifying the areas of improvement, the action to be taken at national level through NEDC, at the level of particular industries, through the little “Neddies” and, no less important—perhaps most important—at company and plant level.

By these means we all seek industrial regeneration—there is no political difference here—a process founded on an agreed common approach and now backed by the powerful new machinery of planning agreements, the National Enterprise Board and the Development Agencies in Scotland and Wales. The Order enacting the Industry Act 1975 and formally constituting the National Enterprise Board was signed yesterday and will take effect tomorrow.

I want to deal with what the right hon. Lady said earlier and has said so often in public and in the House now. I do not complain about the right hon. Lady concentrating her speech on the problems of inflation, unemployment and public expenditure. I just question her and her Government's credentials on these subjects. [Interruption.] I mean “her Government” . She has not yet totally dissociated herself from the Government of whom she was a member, so I call them “her Government” . [column 42]

An unprecedented increase in inflation existed and was out of control before February 1974. Indeed, in the debate about whether the right hon. Member for Sidcup (Mr. Heath) should have an election, leading Tory newspapers were demanding a quick election on the ground that inflation was out of control and that prices would rise by 20 per cent. that year. That was already happening.

As the die was cast on inflation, it was cast equally in relation to unemployment. The state of the economy in March 1974 was incapable of meeting the challenge of the world oil price and the world depression without heavy unemployment.

Sir G. Howe

Why did not the right hon. Gentleman say so?

The Prime Minister

We said so in the General Election. The balance of payments is, for any Government, a constraint on our ability to expand. This is something that is not often realised by some hon. Members opposite, but it is by most right hon. Members.

Under the previous Government the balance of payments deficit on visible trade was £2,300 million in 1973 for the whole year—that figure will not be denied—when the effect of oil had barely been felt in that year. In the fourth quarter of 1973 alone—again with the oil effect only marginally hitting us—their deficit was running at an annual rate of £4,000 million, before oil had really hit us. It is no good denying it. In less than two years we have not only wiped out the whole of that deficit on our non-oil trade but we have——

Mr. John Hannam (Exeter)

Who are “we” ?

An Hon. Member

Private enterprise.

The Prime Minister

Hon. Members opposite would give the credit to private enterprise, but all the time they say that the Government cannot enable private enterprise to function. In exports it is doing much better than it did under the Tory Government. I do not object, but we have not only wiped out the whole of the non-oil trade deficit; we have also covered one-third of that part of the deficit resulting from the increase in oil prices. Some time it would be nice if the right hon. and learned Gentleman would pay tribute for what has been done under [column 43]this Government, instead of nattering on as he always does.

Last month's figures, excluding oil, were the best figures for any month, apart from the figures distorted by the London docks dispute earlier this year, since July 1972. Without the increase in oil prices since 1973, there would today be a surplus on current account of £1,000 million. We are used to having to do this every time the Labour Party takes office. I wish that the right hon. and learned Member for Surrey, East (Sir G. Howe) would cheer up and look a little happier about it.

As with prices, as with the balance of payments, so with unemployment. Industrial production stagnated from the spring of 1973 and began seriously to decline before the end of the year when the Conservative Party—all of them—had full responsibility for these matters.

In 1973 alone, when money was being printed on an unprecedented scale, M3 grew by a phenomenal 27 per cent. In 1973, far from money going into industrial investment, it went into every wrong purpose the Government could devise. Compared with 1970, bank advances to productive industry fell, as a proportion of all loans, from 37 per cent. to 27 per cent.—over the Opposition's period of office—and loans to the manufacturing sector fell from 28 per cent. to 20 per cent. By February 1974, under the right hon. and learned Member for Surrey, East, who is looking at a brief that has just been passed to him——

Mrs. Thatcher

I am sorry, but the Prime Minister left himself open to an interruption. I was just looking up some Government figures. Trade and Industry for 7th November 1975 shows at page 371 that the level of production in this country is below what it was in 1970. It is not below 1970 in any other European country except Luxembourg. Our performance in production is worse under this Government than under any comparable Government in Europe.

The Prime Minister

I have already dealt with that matter. I said that production began to fall under the right hon. Lady's Government before oil hit us. Oil hit us after that. We were the worst poised for dealing with the oil situation precisely because of neglect. The right hon. Lady's [column 44]brief did not, I think, enable her to counter what I just said, namely, that by February 1974, under her Government's free-for-all, the banks were investing almost as heavily in financial companies as in the whole of manufacturing industry, and bank advances to property companies had increased six-fold since 1970.

Mr. Dennis Skinner (Bolsover)


The Prime Minister

No, I have given way seven times already. I apologise, but I want to get to the end of my speech, as, I am sure, right hon. Members opposite wish me to do. Of course, what happened in 1973 was not their fault. It was all the work of the “demon Barber” . They are all monetarists now—some of them. That is why what was missing in all the right hon. Lady's speeches, including her speech today, was not only any policy for dealing with the balance of payments, not only any policy for dealing with inflation—she does not have one—not only any policy for dealing with unemployment, but any ability whatever to see the three together—balance of payments, inflation and unemployment.

In the interesting series of articles in the Sunday Times it was conceded that successive Ministers of both parties, including the Shadow Foreign Secretary, had achieved success in one or two of these three areas, but the authors concluded:

“What was unique about Mr. Heath 's 1970–74 administration was that failure was total. World prices are often blamed for this but … it was the weakness of domestic policy that was fundamentally to blame” ——

on all three.

Now from the right hon. Lady who leads the Conservatives we have no more than the repetition of their demand for swingeing cuts in public expenditure, and a total absence of any proposals from her of the precise programmes that her party would cut. Some of its programmes, of course, created the additional expenditure of 1974 and 1975. The country is bearing a heavy burden for some of those policies in terms of public expenditure. In fact, the Conservative Party has been demanding individual increases while calling for massive unspecified cuts in the total, and at the same time, while talking about the public sector borrowing requirement, it is calling for reduced taxation and increased expenditure and is [column 45]then complaining about the public sector borrowing requirement.

Let us take defence. The Conservatives voted in December last year, and again in May, against our reductions in defence expenditure. They opposed cuts of £300 million in defence spending this year and £380 million for next year, committing themselves by their votes and speeches not to a reduction but to an increase in public expenditure. Let us put that to one side of the tally—because when we cut expenditure we must, apparently, meet that as well. They opposed our decision to stop the Maplin project, which would have meant an expenditure of £650 million between now and 1980. Their Front Bench—however it was composed at that time—voted against our decision not to proceed with the Channel Tunnel in the foreseeable future.

On the Social Security Benefits Bill, the Conservatives voted for, and carried the House in favour of, relaxing the earnings rule at a cost of £60 million this year and a further £325 million spread over the next two years. They still presumably support their tax credit scheme, biased as it was in favour of the wealthy and costing, on their own original estimates, £1,300 million to operate—£3,000 million at today's prices. They are the people who, on specifics, press for more expenditure and, on the total, say we must cut it.

On taxation, the Opposition have the same irresponsible attitude. Their vote on VAT on rented television sets will cost the Exchequer and the PSBR an estimated £250 million spread over the next four or five years. If all their proposed amendments to the 1975 Finance Bills had been carried, they would have cost an additional £600 million a year. Even in areas where the Conservatives failed to act, and we have acted, they have called for more, and not less, expenditure.

The Opposition ought to work out specific proposals. They should give not just a figure by which they want total expenditure to fall, but that figure plus all the additional expenditure to which they are now committed.

Of course we have made specific increases in public expenditure on the basis of our policy. One cannot talk expenditure without talking policy. That is where the Conservatives are so wide of the mark. They should remember the [column 46]words of Disraeli— “Expenditure depends on policies” .

We have increased expenditure based on policy. It was our policy to increase pensions to £10 for a single pensioner and £16 for a married couple—an increase of nearly one-third in money terms—at a cost of £1,000 million. The Opposition did not oppose it. [Interruption.] Did they oppose it? Are they now of the opinion that we should not have done it? If not, they should not complain about that increase in expenditure.

We provided last year an extra £700 million—a 25 per cent. increase—to get public sector housing moving again, because in the Conservatives' last year in office the public sector starts were 32 per cent. below 1969–70 and completions were 40 per cent. down—the lowest figures since the war that was the Conservative Party's record. Were we wrong to provide another £700 million to get the public sector housing programme moving again? If the Conservatives thought we were wrong, they did not say so at the time. If they now believe we were right, they have no right to say that these are the figures that must be cut.

For the National Health Service—on which we recently had a debate and there is to be another on Friday—we provided an additional £1,000 million last year compared with the previous year, raising expenditure for the National Health Service from 4.9 per cent. to 5.4 per cent. of gross national product. Did the Opposition oppose that at the time? They did not. In fact, they are pressing all the time for more to be spent on the National Health Service. Therefore, all the time that the Conservatives want total expenditure cut they are pressing for more expenditure.

On help for disablement, we are committed to an increased expenditure of £500 million. Again, the Opposition did not oppose this. On the radio I heard the right hon. and learned Member for Surrey, East, then the social services spokesman, welcoming our proposals. Other Front Bench spokesmen for the Opposition have pressed for more, not less, expenditure. They have called for enlarged programmes on social security, fire precautions, health, the urban programme, schools and the social services, including care of the lonely and the [column 47]elderly. I have had a return taken of the sum totals of all the demands in the last month of right hon. and hon. Gentlemen opposite in two areas only—health and education—and they add up to increased expenditure of £60 million.

The House knows that a significant part of the increase in public expenditure over the past two or three years has been in local government. Comparing 1974–75 with 1973–74, the increase in local authority expenditure is about 25 per cent. of the total increase in public expenditure which the Conservatives attack and criticise. Many local authority programmes were increased by right hon. Members opposite and we did not, in many cases, complain. Some have been increased by us and others reined back.

My one criticism—and not of the party opposite in what I am about to say—is that in recent years in particular there has been in some areas of local government a big increase in the ratio between chiefs and Indians—or, perhaps better, between teeth and tail—between those engaged in administration and those at the sharp end providing help for those in need, and so on. This ratio, the administrative overload, in the words of a famous Resolution of this House of 1780,

“has increased, is increasing, and ought to be diminished.”

But the biggest single factor in this wide area of our national life, extending from local government to water supplies and the Health Service—I say this to anyone who talks about the increase in public expenditure—is in the drastically misconceived policies which led to the reorganisation carried through in local government—duplication, double banking, a vastly increased bureaucracy, super-chiefs taken on to supervise existing chiefs, and divided responsibility. Let those whose single prescription for handling our nation's problems lie in vague proscription of public expenditure examine their own record, their own responsibility, their own conscience—on water, on the Health Service and on local government.

I know that right hon. Members opposite have called for immediate cuts in housing subsidies and in food subsidies. We know that that is their policy, and I do not deny that this is a partial [column 48]response from them to our challenge— “What would you cut?” .

Mr. Skinner

Not all of them.

The Prime Minister

Not all of them, no. I suppose that the kindest comment would be to say that a party which abstained on the great inflation debates, on the White Paper and on the Remuneration, Charges and Grants Bill this year could hardly be capable of understanding the effects of such a policy on the retail price index at this time, and therefore the strains which this would put on pay settlements, and on the programme which the nation has accepted. That apart, they have nothing to say on what should be cut except vague promises to cut taxation, which would vastly increase the PSBR that we keep hearing about from them.

Ever hopeful, I studied the reports of the Tory Party Conference in the hope of finding some useful policy proposals. Indeed, we have been told for months that that was where the policy was to be unveiled. I found only one relevant commitment. In the words of the hon. Member who is, I think, currently their spokesman on the environment—they have had three since 1974, so he may have been changed—the hon. Member for Aylesbury (Mr. Raison)—is he still the spokesman—?

Mrs. Thatcher

indicated assent.

The Prime Minister

I thank the right hon. Lady. I did not know whether it was the hon. Gentleman, and I wanted to be sure that she did. We have had three since 1974. [An Hon. Member: “Cheap.” ] Yes, but the hon. Member was not cheap. He is most expensive, and I shall tell the House why.

The hon. Member for Aylesbury announced that the Conservative Party was committed to drastic reform in local government finance and

“specifically an end to the present system of domestic rates” .

That was the promise—an end to domestic rating. He went on to say that

“as a responsible party it had to await the outcome of Layfield before announcing its final views on what should replace the present system.”

Perhaps, as a responsible party, it should not have committed itself to abolition until it had seen Layfield. [column 49]

The Conservative Party's 1971 inquiry into local rates came up with nothing. I know that it is difficult for that party. The right hon. Lady gave a pledge to abolish domestic rates during the October election campaign—one of her two totally irresponsible pledges—which would have added prodigiously to Government expenditure, the PSBR and everything else. Where would the Opposition find the £1,500 million to meet this renewed pledge on rates? Would they get it from industry or from the small shopkeeper, whom they are sponsoring all the time? And where would they get the hundreds of millions to meet their mortgages pledge? Local government expenditure has to be paid for. The Conservatives have vastly increased it with local government reorganisation. It has to be paid for. If it does not come out of rates, something else has to be put in their place, and that is what they have not told us about. That explains why they are making so many pledges about cutting taxation and so few to cut expenditure.

The right hon. Lady referred again today to expenditure. It is perfectly fair that she should do so from her point of view, and it is relevant to the challenges that I have put to her this afternoon, to which we hope to have a reply some time. When challenged on expenditure, she has on a number of occasions talked about the public ownership of aircraft and shipbuilding—referred to in the Gracious Speech—and expenditure in industry generally, including the NEB and the North Sea.

It is fair to say that, while the Opposition's remarks on those subjects are relevant in the PSBR context, they are not relevant, or are only remotely relevant, to the question of the call on resources. Indeed, on shipbuilding and aircraft, which the House will no doubt be debating very soon, the maintenance of these industries in the private sector does not seem to have been a marked success in safeguarding public expenditure. The expenditure has gone to them anyway, and both have been huge recipients under successive Governments.

On general industrial expenditure, under Sections 7 and 8 of the Conservative Industry Act 1972—for which we are very grateful to them—it is possible to question particular expenditure in any [column 50]particular case. It is possible, though in my view wrong, to query the decision of the previous Government when they took into public ownership the Rolls-Royce gas turbine business and got the full and wholehearted support of the Opposition. We have not heard whether the present generation of Tory Front Benchers have yet dissociated themselves from that action. Many of their speeches suggest that perhaps they would now like to do so, but one would hope that they would feel that their Government were right on that occasion.

On the NEB, of course, we went through the frenzied argument we had from them over the IRC, when the whole Tory Party rose in rage against the IRC proposals nine years ago. We all know that the biggest mistake they made then, in an ideological convulsion, was to scrap the IRC. Having done that, they then tried to re-establish it as a private agency. Industry, which nine years ago was critical of the IRC Bill, gave it full support when it became law, as a step—in our view, not a big enough step—to industrial regeneration.

The NEB has an important IRC role. But it also has the role not only of stepping into reorganisation of management when industries or sectors of industry essential to the nation need help to carry on but of ensuring that, when State help is given, not only must reorganisation and restructuring follow if this is needed but that the public who have put up the money should have a corresponding share in the control and the ultimate profits. It has an important role, too, in promoting, on an entirely voluntary basis—which has been much welcomed in industry—joint projects with enterprising companies, especially small and medium-size firms, which have the management and the product but lack resources for the expansion they seek.

I turn next to the policy of the right hon. Lady and her right hon. Friends on the rich resources in the North Sea. While out of the country, the Leader of the Opposition was playing to the Texas oil gallery, and must have been very popular.

Mrs. Thatcher


The Prime Minister

By saying that they would repeal the North Sea legislation which has just gone through the [column 51]House. But the Opposition know that by 1980 we expect to be producing as much oil as we shall be consuming in that year. By 1980 we shall be producing 90 per cent. of all the oil produced in the area of the European Community, and 45 per cent. of the Community's total indigenous energy—oil, gas, coal and nuclear power. They know that our potential North Sea reserves have been valued at £200,000 million, at least 50 per cent. greater, on a comparable basis of assessment, than the reserves so far discovered round the coastline of the United States, including that of Alaska.

Against the background of these figures it is ideology—no more, no less—that leads right hon. Members opposite to seek to deny to the British people their rightful share in the earnings from the North Sea—and later the Western Approaches—for which provision has now been made in a measure which became law a week ago.

The House faces a challenging Session, certainly, and the nation faces a challenging and difficult winter. Our debates, not only this week but throughout the months ahead, will be dominated by formidable economic realities. We shall all put forward—with sincerity, I am certain—our different interpretations of the realities and of what should be done about them. I believe that the nation—which in the previous Session gave the Government its backing in their policies to master the problems—will continue to look to this House to sustain the Government in their endeavours.