Speeches, etc.

Margaret Thatcher

HC I [Economic Affairs]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [901/788-800]
Editorial comments: 2125-2200. MT intervened at cc796-97.
Importance ranking: Minor
Word count: 4110
Themes: Public spending & borrowing, Taxation, Social security & welfare
[column 788]

9.25 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short)

It is not like the right hon. Gentleman to run out of words, but on this occasion he has clearly done so. I shall come back to him in a moment.

I think the House would wish me to say something about devolution, which has occupied a fair amount of time during the debate. I want to make absolutely clear that we have no intention of going back on our commitment to devolution. We said in the White Paper in September last year that we should set up Scottish and Welsh Assemblies and we repeated that in the October General Election. We mean it. Some people still seem to think that we are just going through the motions. I ask them to read the White Paper on Thursday and think again.

Mr. Donald Stewart (Western Isles)

rose——

Mr. Short

Perhaps the hon. Member will contain himself for a few moments. We are not devoting all this time and [column 789]effort to something we do not intend to happen.

I flatly reject any accusation that we are going slow on the legislative timetable for devolution. The general drift of some comments has been that the Government are deferring action on devolution and dragging the matter out as much as possible in the hope that it will go away. That is ridiculous, as anybody who reads the White Paper will see. We are not deferring action or dragging the matter out.

Mr. Donald Stewart

rose——

Mr. Short

Perhaps the hon. Member will wait until I have finished this section of my speech. If I have not covered his point, I shall give way.

The work programme of officials and Ministers has been far more intense than anything I have previously encountered. I should like to pay tribute to my officials, who have had to endure the almost killing pace that I have forced upon them. We neither hope nor believe that devolution will simply go away, and nobody should believe that the status quo is any longer an option in Scotland. This has to go ahead.

However much hon. Members may protest, they must recognise that devolution is a tremendously complicated matter involving many different aspects of Government, and it cannot be rushed. Work on the drafting of the Bill started some time ago, and a great deal of progress has been made on drafting the constitutional arrangements involved.

However the drafting of the legislation on the functions and powers of the Assemblies has proved an enormously complex job, involving searching and, where necessary, amending United Kingdom legislation going back to the Act of Union. This section of the Bill will probably not be finished until the spring. Reluctantly, we have come to the view that its passage will inevitably take us into the next Session. There are several reasons for this, including the complications that I have just mentioned.

For example, a whole range of problems arises out of the treatment of Scottish private law. This is a candidate for devolution if anything is. It covers a wide field that interacts at many points with commercial matters such as the law [column 790]of contract, consumer protection and bankruptcies, which, within a single United Kingdom market, inevitably affect people and firms outside Scotland.

The interface between Scottish private law and United Kingdom law presents peculiarly difficult problems on which we are still carrying out an intensive study. I do not suppose that nationalist Members have given so much as a moment's thought to that aspect. When hon. Members read the White Paper on Thursday, they will readily appreciate that there are a number of similar problems, which cannot be ignored or swept under the carpet.

There is then the need for consultations with organisations that will be affected by our proposals. I do not mean general talk, because there has been plenty of that already. I mean detailed comments on the nuts and bolts of our scheme. We cannot ride roughshod over all the bodies and individuals who will be affected. They must see what is proposed and have the opportunity to say what they think of it.

We are concerned with the whole range of government. This will take time, following publication of the White Paper. Upon publication of the Bill, we expect that in the spring there will be a second stage of more definitive public consultation directed towards the specific legislative proposals.

I understand that our timetable is a great disappointment to some people. It is a disappointment to me, too. I know, however, that many of the criticisms of it come from those whose aim is not devolution but separatism. They seem not to want a completely researched proposal for devolution which has received public endorsement by consultation and debate. That would not suit their book.

They would rather see a half-baked scheme introduced immediately, one which would prove completely unsatisfactory, an unstable arrangement which they could exploit because of its deficiencies. No doubt they would then claim that devolution did not work and that the only complete solution was separation from the United Kingdom. They can pursue that course if they wish, but I am sure that the vast majority of people in Scotland and Wales will not [column 791]be deceived by their tactics. We shall not be drawn into this trap. We do not want devolution to fail. We are determined that it shall work, and work well.

Since virtually all the parties in the House have committed themselves in terms to devolution in Scotland at any rate, I trust that our future debates will be concerned not with whether there should be devolution, but with the best way of implementing it.

Mr. Donald Stewart

I do not believe that the right hon. Gentleman is one of the great obstacles in the Cabinet to devolution. The Chancellor of the Exchequer, the Home Secretary and others have been the niggers in the woodpile, if to say that is not an offence against the race relations laws. Does the right hon. Gentleman agree, regardless of the difficulties set out in the White Paper, that his time scale on his promises to the House has fallen behind? Is he not on record as saying that the Bill would start its progress through the House in November 1975?

Mr. Short

The Bill will be published next spring. I have said that the fact that it cannot get on the statute book in this Session is a great disappointment to me.

Mr. Wyn Roberts (Conway)

As the White Paper has quite clearly been made available to members of the Press and to others connected with the media, will the Leader of the House consider advancing its publication date to tomorrow?

Mr. Short

I am not prepared to do that. The same procedure has been followed on this as on other occasions with other White Papers. My right hon. Friend the Prime Minister said at Question Time today that he was looking into this matter.

Mr. John Mendelson

My right hon. Friend said that he hoped that the debate from now on would centre not on whether there should be devolution, but on how it should come. Does he not agree however, that there must be an opportunity for people in the country generally to consider the grave implications of these proposals for the unity of the United Kingdom? Does he accept that there can be no restriction whatever on the debate which must now begin?

[column 792]

Mr. Short

My right hon. Friend the Prime Minister has made it clear that we want a big national debate on the matter. The timetable will make that possible in two stages—a general debate on the White Paper and then a more definitive debate when the Bill is published in the spring.

I turn to the Opposition amendment. I find it hard to believe that it can possibly provide the basis for united opposition to the Government's policies among the Opposition parties. The right hon. Member for Devon, North (Mr. Thorpe) admirably summed up the feelings of many of us about the first part of the amendment in his comments on the speech made by the hon. Member for Henley (Mr. Heseltine) on the second day of the debate.

I hope that the hon. Member for Henley, who does not seem to be present, will not think me churlish if I point out that, apart from one vague reference to the repayment of tax to the successful, there were no practical suggestions of alternative policies. Nor were there any such suggestions in the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe), who opened the debate today, except for one to which I shall come. The right hon. and learned Gentleman showed himself today to be the pedlar of trifles that we have always known him to be. I very much hope that Liberal Members will follow the logic of their leader's comments by rejecting the Conservative amendment in the Division Lobby.

The truth is that the Conservative Party has no practical proposals, to use its own phrase, to solve our serious financial and economic problems. Not a glimmer of a policy has emerged in the whole five-day debate. Listening to my hon. Friend the Member for Tottenham (Mr. Atkinson) tonight, I felt that a certain section of my party was doing much better than the Opposition in proposing alternative policies. I hope that the Leader of the Opposition will be grateful to the members of that section for doing her job for her, as she is not doing it.

The only policy, if one can call it that, of the Conservatives is immediate savage cuts in public expenditure. Calls for such cuts were made in every speech. Nothing could make less economic sense than immediate savage cuts in public [column 793]expenditure, as my right hon. Friend the Chancellor of the Exchequer has consistently pointed out. If industry were in a position to employ those released from public service, if investment were high and productivity were rising, it could be argued that there was a case for such cuts. Indeed, my right hon. Friend has made it clear that, looking ahead to the prospects of an upturn in world trade, we shall bear that case in mind in considering public expenditure from 1977–78 onwards. We have already announced expenditure reduction for 1976–77, and my right hon. Friend made clear again today, in a speech which I understand had the approbation of the right hon. Member for Yeovil——

Mr. Peyton

Only the middle bit.

Mr. Short

It is the bit that I am talking about.

My right hon. Friend made it clear that substantial economies would be necessary in 1977–78 and 1978–79. That will be the time to make resources available for exports and investment, as my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) said in a very good speech this evening [Interruption.] I am sure that the hon. Gentleman is my friend as well.

If we cut public expenditure now, at a time of high unemployment, in the trough of the worst world recession since the early 1930s, we should be digging a hole in our economy that nothing could fill, and so adding to unemployment and therefore to the public sector borrowing requirement. Therefore, I believe that such a course would be utterly unproductive.

Mr. Hordern

I am grateful to my right hon. Friend for giving way. I think that there must be some confusion of identity. I do not recognise my speech from the words the Lord President just read out.

Mr. Short

I left the hon. Gentleman's contribution some time ago. He was talking about the need to make expenditure cuts in the years to which I referred.

Perhaps the right hon. Lady the Leader of the Opposition, who constantly advocates cuts that would lead to high unemployment, would like to go off the country house circuit that she frequents and go to Merseyside. She will find in that area [column 794]12.1 per cent. male unemployment. Perhaps she will tell the people there about the effect of her policies on employment.

I know that the right hon. Lady is very concerned about the public sector deficit, but I would remind her that the recession hits twice—first, through the loss of tax revenues and, secondly, through claims in terms of benefits. Her policies would do nothing whatever to decrease that deficit on both grounds, or to avoid the deepening recession that we are now experiencing.

The right hon. Member for Yeovil (Mr. Peyton) always comes up with an interesting Press comment. He obviously reads all the papers and he quoted some extracts today. Did he read the Observer last Sunday with his usual diligence? If so, I would remind the House what the Observer said:

“We should establish an environment of courage and self-restraint by not talking cuts and acting expenditure.”

I commend that thought to the right hon. Gentleman and his right hon. Friend the Leader of the Opposition.

Perhaps they would cast their minds back to 29th January this year. On that day on the earnings rule they and their Conservative colleagues voted for increased expenditure at a cost to the Government of £60 million this year and a further £325 million over the next two years. That is what the Observer meant by

“talking cuts and acting expenditure.”

Again, I wish to remind the right hon. Lady the Leader of the Opposition that she and her Front Bench colleagues abstained on the issue of the 25 per cent. rate of VAT on television sets. By so doing they ensured a defeat for the Government—a defeat which over the next four or five years will cost up to £250 million. That also is

“talking cuts and acting expenditure.”

Sir G. Howe

Now that the Labour Government have made a modification in national insurance contributions well sufficient to cover the abolition of the earnings rule, which was widely welcomed, will the right hon. Gentleman say whether the Government intend to reverse the decision of the House and to restore the earnings rule to its former limit? Secondly, will he acknowledge that if his [column 795]right hon. Friend the Chancellor of the Exchequer had not reduced VAT from 10 to 8 per cent. to win an election, the revenue would have remained far higher?

Mr. Short

The fact remains that the additional expenditure has been put upon us by the very people who are now asking for cuts [Hon Members: “Answer.” ] Perhaps I could give a third example from this year. On 7th May the Opposition voted against a Government motion on defence that recognised the need

“… to ensure that the level of public expenditure is contained within available resources …” .

That, too, is a matter of

“talking cuts and acting expenditure” .

I do not wish to be unfair to the right hon. and learned Member for Surrey, East because he is not alone in his hypocrisy. He shares this record with most other Members of the Opposition Front Bench, including the right hon. Lady the Leader of the Opposition. If they wish to possess any credibility, they must be more consistent.

They were both senior members of a Government which came into office in 1970 and inherited a negative borrowing requirement—that is a surplus—of £18 million. A few months later, in October, in their White Paper “New Policies for Public Spending” , they imposed the most humiliating cuts, cutting out the Consumer Council, regional development boards and imposing museum charges. When the Conservative Government left office three-and-a-quarter years later, they bequeathed to us a public sector borrowing requirement of £6,325 million. I shall not attempt to calculate the percentage increase in the borrowing requirement in those disastrous years, but the Conservatives' record has been this year, and still is, one of talking cuts and acting expenditure with a vengeance.

The right hon. Member for Down, South (Mr. Powell) in a brilliant speech—if I may say so without sounding patronising—said that the policies pursued by the previous Government were a major factor in any objective assessment of our present economic problems.

Mr. Peyton

The right hon. Gentleman is fully aware that since his Government [column 796]came into office the borrowing requirement has escalated rapidly. Will he answer the question which I asked him? Do the Government now think that there is any limit in time or amount to the extent to which they can borrow their way out of trouble?

Mr. Short

I dealt with that a few minutes ago, as the right hon. Gentleman would have heard had he been listening. Of course the public sector borrowing requirement has increased in the past 20 months. It would have been impossible to prevent the increase. It was caused, first, by the roaring inflation which the Conservatives bequeathed to us and, secondly, by the need to protect the poorest members of the community from the worst effects of inflation, particularly by increasing social benefits and by food and housing subsidies. Even in the circumstances we inherited, we have made substantial improvements in pensions and other social security benefits. We have increased benefits three times in the 18 months since we took office. We have brought the total increase in pensions and related long-term rates to about 70 per cent. Pensions are now 33 per cent. higher than they were a year earlier, and that is a much bigger increase than the rise in prices.

For the future, we have committed ourselves by law to increasing pensions in line with earnings or prices, whichever rise the faster. This month, we are introducing a new non-contributory invalidity pension, doubling the supplementary benefit disregard and increasing by 37½ per cent. the special heating addition payable with supplementary benefits, which now benefit some 700,000 people over pension age and 100,000 under pension age.

These measures reflect the priority which the Government give to improving the position for the poorest members of our society. I shall ask the right hon. Lady a question, and I shall give way to her so that she may answer it. I have read out a list of what we have done to protect the poorest members of the community. They represent one reason why the public sector borrowing requirement has risen as it has. Which of them would the right hon. Lady not have done?

Mrs. Margaret Thatcher (Finchley)

The Edward Short got meny of his facts [column 797]and figures wrong. Many of the measures to help the poorest members of the community come under the National Insurance Fund, which is paid for by the contributions of employers and employees. Many of the other measures he quoted would affect the public sector borrowing requirement much less if they were confined to the poor and were not indiscriminate. The right hon. Gentleman is paying indiscriminate subsidies to himself as well as to the poor.

Mr. Short

The right hon. Lady knows that that does not even begin to be an answer. She knows why the public sector borrowing requirement has risen.

Food subsidies would undoubtedly have been a first target for the right hon. Lady's axe. Members of the Opposition have said so. Given the chance, the right hon. Lady would cut them at a stroke. Supposing she did so, what would happen? This year we expect to spend £550 million on food subsidies. The right hon. Lady is against subsidies. What would happen if the subsidies were dropped? I will tell her. The average family of two adults and two children would find that their weekly bill had risen by 73p. The right hon. Lady would stop food subsidies. She would put up the price of bread by 2½p a loaf, the price of flour by 3p for a 3 lb. bag. She would add 8p on the cost of 1 lb of tea. She would put 12p on 1 lb of cheese, 2p per pint of milk, 11p on 1 lb of butter.

What about rents? Whatever the right hon. Lady did about food subsidies, she would cut council house subsidies. This is what the policy of the Opposition would mean. This is what they advocate.

If the right hon. Lady cut only this Government's increased council house subsidy, the council house dweller would be faced with an extra rent of £1.27p a week on top of the increases already experienced. Would the right hon. Lady have the nerve to ask that of a worker who settles for no more than £6 per week? I understand that the right hon. Lady supports that subsidy. Cutting out food subsidies and removing only the council house rent subsidy which we have introduced in the past 20 months would add £2 per week to the budget of the average family.

[column 798]

Sir G. Howe

Will the Leader of the House confirm what the Chancellor of the Exchequer and the Secretary of State for Prices and Consumer Protection have said on many occasions—that it is the policy of the Government as soon as reasonably possible to phase out the food subsidies about which the right hon. Gentleman has been making so much?

Mr. Short

We shall do so as soon as reasonably possible. But the Conservatives say that they would do so immediately.

I now turn to the amendment in the name of the right hon. Member for Devon, North and his hon. Friends. It mentions higher costs and inefficiency in the docks. I hope that the right hon. Gentleman will take a little more trouble to learn about the docks before we debate the Bill. On Monday he claimed that it was cheaper to ship tea via Hull than London. I suppose that the right hon. Gentleman does not realise that Hull is part of the existing Dock Labour Scheme. He did not know that. He speaks of increased costs, but rates of pay in non-scheme ports are settled by the normal process of collective bargaining. Those ports do not form part of the scheme and are irrelevant to the proposals for its extension. It was asserted that the gross figure of tons shifted per man-hour in Dock Labour Scheme ports is about a quarter of the figures for private enterprise ports. However, the scheme already covers many private enterprise ports. I suspect that his assertions, inaccurate on this point, will prove just as groundless as those of the right hon. Member for Lowestoft (Mr. Prior). He said that Antwerp dockers move seven times more goods per shift than London dockers.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

That was a lie.

Mr. Michael Latham (Melton)

On a point of order, Mr. Speaker. Is it in order for the Patronage Secretary to use the word “lie” in the House?

Mr. Speaker

The word “lie” is unparliamentary language.

Mr. Mellish

Further to that point of order, Mr. Speaker. I willingly withdraw the word “lie” and say that the [column 799]statement was a misconception and that the right hon. Gentleman has not had the decency to apologise.

Mr. Short

The right hon. Gentleman also had to withdraw his remarks because it was discovered that he was comparing the movement of iron bars with general cargo.

The Liberal amendment assumes that the extension of the Dock Labour Scheme to ports not already covered will lead to industrial action. There is no evidence at all for that assumption. The 1972 dock strike was, to a very large degree, the product of anomalies which our proposals seek to correct. That strike left no one in any doubt that industrial action in any or all of our ports has damaging and lasting effects. It is for this very reason that we are introducing this Bill, which is to try to prevent a similar deterioration in industrial relations in Britain's docks, exposing the country to such risks in the future. That is what the Liberals do not understand. This Bill will diminish and not increase the risks.

The Opposition accuse us of policies which increase bureaucracy and diminish freedom. But nothing they have said dur[column 800]ing the course of this debate substantiates that ritual accusation. Their amendment is nothing more than a mirror of their own predicament, their lack of alternative policies, and their unconcern for the freedom and security of our people. Whose freedom will be served by immediate public expenditure cuts? Who will be freer by ensuring extra unemployment in the depths of a recession?

The problem with the right hon. Lady the Leader of the Opposition is that her definition of “freedom” is the freedom of the jungle. It is the freedom of a small group of people to jump the queue for a pay bed in a National Health Service hospital, for example. This amendment is typical of a party which, in opposition, has shown itself not as an alternative Government, but as a home for lost causes. The concern of the——

Mr. Humphrey Atkins (Spelthorne)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the amendment be made:—

The House divided: Ayes 280, Noes 294.