PRIME MINISTER
(ENGAGEMENTS)
Q1. Mr. Brittan
asked the Prime Minister if he will list his official engagements for 20th July.
The Prime Minister (Mr. James Callaghan)
I presided at a meeting of the Cabinet this morning and I shall be holding further meetings throughout the day.
Mr. Brittan
Will the Prime Minister tell those of his colleagues whom he meets today that their continual public squabbling about the £1,000 million spending cuts—coupled with the Government's inexcusable delay in announcing them—is causing immense damage to confidence in the pound and that, when the cuts are finally announced, his colleagues must not run off whining about [column 1512]them to the Lobby, but must either give them their fullhearted support or get out of the Cabinet?
The Prime Minister
I am grateful for the hon. Gentleman's help, but I do not need it, thank you very much. As to public squabbling—unless the hon. Gentleman has bugged the Cabinet room—I can promise him that our discussions are extremely amicable, even though they are keenly argued. I do not think that there is any inexcusable delay in taking decisions on cuts that will begin to apply on 6th April 1977.
Mr. Heffer
Does my right hon. Friend accept that some of us regret that the discussions have been so amicable? We are all deeply concerned about unemployment and feel that further cuts in public expenditure could lead not to a decrease in unemployment, as is suggested, but to an increase in unemployment. Will my right hon. Friend explain whether the argument is about the switch of resources or the confidence of foreign bankers?
The Prime Minister
It is a threefold argument about the use of resources after April 1977, the financing of public expenditure, for which we are having to borrow about £1 in £4, and confidence. [Hon. Members: “Oh.” ] There is nothing new about those figures. They have been going on for some time, started by Lord Barber, as everyone knows. We are now trying to get some order into the situation.
In addition to the discussions that we are having with a view to reducing expenditure next year, the problem we have to face—which is causing as much trouble as anything—is the tremendous number of new bids that have been put in that have to be taken into account. I have seen a figure that has been widely bandied about, but it is a different figure.
There is a real dilemma with unemployment. If we reduce public expenditure, in the short run it will increase unemployment; no one can deny that. If we do not reduce public expenditure, we shall have to consider, and others will consider, whether we can finance the continued level of public expenditure. If we are unable to do so, that will create even higher unemployment.
Mrs. Thatcher
Does the James CallaghanPrime Minister recollect that it is exactly 10 years [column 1513]to the day that the Harold Wilsonthen Labour Prime Minister put the famous financial crisis measures of 20th July 1966 before the House, when the right hon. Gentleman himself was Chancellor of the Exchequer? Bearing in mind that borrowers cannot be choosers, and that some cuts are therefore inevitable, why is he taking so long to bring his proposals before the House? Is he aware that his procrastination makes his predecessor look positively decisive?
The Prime Minister
The right hon. Lady still does not seem to have hoisted in the point that these expenditure proposals take effect from April 1977. We are discussing next year's financial proposals and not this year's. When the expenditure cuts were made on 20th July 1966, they took effect immediately. We have constantly refused to take panic decisions in relation to this year. There is no need to do so, because the deficit is capable of being financed and there is no pressure on resources. To do otherwise, as Opposition Members seem to be pressing us to do, would be to create an absurd situation, which I would not tolerate. What we are concerned with is next year. That is the year we are discussing.
Mrs. Thatcher
Why is a decision when unemployment was below 1 million a panic decision but a decision when unemployment is above 1½ million not a panic decision?
The Prime Minister
I do not know to what the right hon. Lady is referring. What we are discussing is next year's estimates. We are discussing what the likely impact on resources will be and whether we can finance the borrowing, and these kinds of issue. These matters deserve consideration. Indeed, we have time to discuss them and thrash them out, and that is what we are doing. I have already told the House that I hope that we can produce a statement before we adjourn for the Summer Recess. That is still my intention, as far as we can do it, but there is no reason for the right hon. Lady to suggest that there is any need for a panic decision or an urgent decision on these matters when, by thrashing them out, we can get agreement. On the whole, I prefer to carry a Labour Government through this because I would not trust the right hon. Lady.
[column 1514]BELGIUM
2. Mr. Steen
asked the Prime Minister whether he will seek to pay an official visit to Belgium.
The Prime Minister
I have just been to Belgium for the European Council meeting on 12th and 13th July. I have no plans to go there again in the immediate future.
Mr. Steen
Does the Prime Minister agree that although much of Belgium is below sea level it is morally and politically above this country in that it recognises the extent of its social problems and the importance of giving unemployed school leavers the opportunity to create their own work for the benefit of the community and others, rather than letting them hang around on street corners with nothing to do but draw the dole? In order to re-establish the detente with the Opposition, will the Prime Minister lean on the Chief Patronage Secretary in order to expedite the passage through this House of my Bill, aimed at restoring dignity to the unemployed, and in order to give them the opportunity to make Britain great again?
The Prime Minister
I have very great respect for the people of Belgium but I do not think that they would claim to be morally or politically superior to us if they looked at some of the problems of their own country. I shall not go into that today.
As for the position of young people, I listened to the answers given by my right hon. Friend the Secretary of State for Employment a moment ago. Everyone agrees about that. I do not think that in that respect Belgium holds much comfort for us, because I notice that the seasonally-adjusted percentage rate of unemployment for Belgium is 8.8 per cent.—there must be rather a lot of street corners in Belgium where that is happening—whereas our unemployment rate has not, fortunately, yet reached that. I hope it never will. I notice, finally, that the hon. Gentleman, in pursuit of his aims, is still pressing us for more public expenditure, at a time when I get points put by every one of his hon. Friends that I reduce it.
[column 1515]Mrs. Winifred Ewing
In view of the talks being conducted in Brussels on the fishing industry, will the Prime Minister agree to give top priority to the present plight of this industry? Is the Prime Minister listening to the voices of the official organisations within the fishing industry, in their demand for a 50-mile exclusive limit, or has he turned a deaf ear to this legitimate and reasonable claim?
The Prime Minister
The hon. Lady is aware that the matter is being discussed in Brussels today. I have a telegram from a number of fishermen protesting at the fact that my right hon. Friend the Foreign Secretary has to return to this country today and leave these discussions. I think that the responsibility for that is firmly placed on the Opposition. The Foreign Secretary has been placed in an absurd position. I tell the hon. Lady that I do not think that this will be decisive. As she knows, the interim arrangements last until 1982, and I have every confidence that we shall be able to renegotiate something arising out of the 200-mile limit.
Mr. Dalyell
Without nagging the Prime Minister, may I ask whether, in Brussels, he will consider the vexed question of the siting of the nomadic European Assembly which, alas, is one of his burdens?
The Prime Minister
I said the other day that I was grateful that it was not my responsibility. Of course, we have a partial responsibility for the siting of the European Assembly. I would much prefer to see it established in one capital. At the present time, however, I must tell my hon. Friend that I am not willing to recommend the expenditure of more money in order to achieve that.
ECONOMIC POLICY
(CHANCELLOR'S SPEECH)
Q3. Mr. George Gardiner
asked the Prime Minister whether the public speech by the Chancellor of the Exchequer at Newcastle on 3rd July on the subject of public spending cuts represents the Government's policy.
Q6. Mr. Adley
asked the Prime Minister whether the public speech on econo[column 1516]mic policy by the Chancellor of the Exchequer on 3rd July 1976 at Newcastle to the TUC Northern Region Council represents the policy of Her Majesty's Government.
The Prime Minister
Yes.
Mr. Gardiner
The Prime Minister concedes that the effect of spending cuts is to increase unemployment in the short run. How does he answer the charge that if only he had exercised some discipline over public spending earlier the short run might now be nearing its end?
The Prime Minister
The increases in the levels of public expenditure have been extremely beneficial to a great many people. The fact that, for example, oldage pensions will be nearly doubled by November is something for which the House should give a great deal of credit. I think that it was right to do this, especially at a time when our resources were not fully used. We are taking steps to redress the situation for next year.
Mr. Kinnock
Is my right hon. Friend familiar with the view that the cuts now being proposed have absolutely nothing to do with resources and everything to do with business confidence abroad? If that is the case, how many more cuts will be required in order to try to achieve the unachievable and satiate the insatiable?
The Prime Minister
I am familiar with that view, and I think that there is some degree of truth in it. However, as I explained in answer to an earlier question, from the Leader of the Opposition, there is a combination of factors here, and different weights apply to them at different times. At the moment I do not think that the resources situation is the vital one, although we are taking into account the fact that manufacturing industry seems to be expanding at a rate of about 8 per cent. a year, which is very fast, and as we are considering next year's public expenditure, that is an important matter. But other factors do come into the question from time to time; I do not deny that.
Mr. Adley
As there are today 1,463,465 human signs of the total and abject failure of the Government's economic policy, will the Prime Minister make up his mind either to chuck in the sponge [column 1517]to his Left wing and have a totally Socialist State or withdraw these irrelevant and damaging Bills currently before the House, so that, for once, the world may get the impression that the Labour Party is prepared to put nation before party?
The Prime Minister
I am glad to be able to reassure the hon. Gentleman that since this Government took office growing respect has been shown for this country by people abroad. The fact that the trade unions have given their assent to the wage agreement has had a very great impact, together with our determination to get public expenditure fully under control. I promise the hon. Gentleman, from my experience and contacts on these matters, that what is being done by the Labour Government is regarded as much more important than the bleatings of people like him.