SCOTTISH TRADES UNION CONGRESS
Q1. Mr. Canavan
asked the Prime Minister what subjects he proposes to discuss at his next meeting with the STUC.
The Prime Minister (Mr. James Callaghan)
I expect to discuss a wide range of issues affecting the Scottish economy.
Mr. Canavan
Bearing in mind the deep concern within the Scottish TUC about the effects that further cuts in public expenditure would have on the already intolerable total of 150,000 unemployed in Scotland, will my right hon. Friend give a firm assurance to the whole Labour movement in Scotland and elsewhere that it is his intention in future to pursue more Socialist policies which have more in common with the Socialist principles and traditions of Keir Hardie than the sell-out coalition principles and suggestions of people such as Ramsay MacDonald and Harold Macmillan?
The Prime Minister
The Government will continue to pursue the policies on which we fought and won the last General Election; that is to say, to conquer inflation, as our first—[Interruption.] Hon. Members seem to have lunched very well today—to conquer inflation as our first priority and to deal, through that, with industrial regeneration, which is absolutely essential for putting our economic affairs on a sound foundation.
Mr. Gordon Wilson
Is the Prime Minister aware that we on the SNP Bench would much prefer a General Election in Scotland to a coalition, which would be unhelpful to any of the conditions in Scotland? Is he also aware that the gross domestic product in Scotland has risen in real terms by some 13 per cent. this year as a result of supplies of oil coming ashore? What is the Prime Minister going to do to plough back the benefits of that resource into Scotland in order to create more jobs for the STUC and others?
The Prime Minister
On the political aspect of coalition, I have not yet detected much sense of enthusiasm for it anywhere except in the hearts and minds of those who were once joined with us [column 1652]but have now left. As far as I am concerned, I have stated the basis upon which I am Leader of this party, and will continue to remain Leader of this party. On no other basis do I remain here.
In respect to Scotland's GDP it is true that this is reflected in a number of ways. I understand that for the first time the average earnings of manual wage earners in Scotland are now exceeding those of England, which is a very satisfying feature. [Interruption.] It is satisfying if we care for the unity of the United Kingdom. In that sense what is important is that Scotland, like Wales or any other part of the United Kingdom, should not feel that it is being treated adversely. For years Scotland has rightly felt that the level of wages in Scotland has been below that of England. Now they are slightly ahead, although not so much as to prompt a breakaway in the North-West, or anywhere else. There is now much greater equality between Scotland and England than there ever was before, and I believe that that helps the unity of the United Kingdom. I shall hope to have the hon. Gentleman's help in making this clear to the Scottish people.
Mr. Rifkind
When the Prime Minister next meets the STUC will he discuss with it the report in Tuesday's Scottish Daily Express that the shipbuilding industry board has recommended to the Government that a necessary consequence of the nationalisation of the shipbuilding industry is that 2,000 jobs in the West of Scotland must be axed? Will the Government even now drop this measure, in order to prevent a further escalation in unemployment both in Scotland and the rest of the United Kingdom?
The Prime Minister
I hope that the hon. Gentleman, who is usually a fair controversialist, will not relate the number of jobs in shipbuilding to the act of nationalisation, because he knows, as everyone in the House does, that it is only through Government support that a great many jobs are now being safeguarded in the shipbuilding industry. The act of either dropping the Bill or passing it will not affect the economic prospects of the world's shipbuilding industry—[Interruption.] Do hon. Gentlemen really need every syllable spelled out to them? I am beginning to fear that that is true, and that we have to start a long way back. [column 1653]
Hon. Gentlemen know perfectly well that the economics of the world ship-building industry will not be altered by this measure. What we have to undertake is a Bill that will ensure as far as possible that the national responsibility for shipbuilding, which we must preserve in these islands—islands as we are—is properly co-ordinated with our job prospects, and that we intend to do.
Mr. Dalyell
Will the Prime Minister talk seriously to the STUC about the point at issue in tonight's opposed Private Business, namely, whether millions of pounds of public money should go into a green fields refinery site at Nigg if there is no demand?
Mr. William Ross
It has already said that it supports it.
The Prime Minister
I would be happy to discuss all these matters with the Scottish TUC if it raised them with me, but I do not think I can lay down the agenda here this afternoon.
CBI
Q2. Mr. Adley
asked the Prime Minister how many times he has met the CBI during the Summer Adjournment.
Q7. Mr. Aitken
asked the Prime Minister how many times he has met the CBI during the Summer Adjournment.
The Prime Minister
I refer the hon. Members to the reply I gave to the hon. Member for Conway (Mr. Roberts) on 12th October.
Mr. Adley
Has the Prime Minister noticed the similarity in the content of his recent speeches at Blackpool and Oxford with the content of the CBI document published yesterday entitled “Road to Recovery” ? Is he aware that if he had the courage to translate his speeches into actions he would probably attract the support of 75 per cent. of hon. Members in this House?
The Prime Minister
I regret to say that I have not studied the CBI document in detail, but if there is a similarity I am happy to think that my meetings with the CBI have led it to the conclusions that I have long since formed. I hope to continue on that path. A very [column 1654]important measure of agreement, which I wish to foster in the interests of us all, is that the Government, TUC and CBI at Chequers in November 1975 gave priority to an industrial strategy. We are getting slowly on that path—not nearly fast enough, but it will take a long time, as all sensible hon. Members in the House will know. We must pursue that area of policy. I do not spurn any proposals that come from the CBI. I have recently had proposals jointly from the CBI and the TUC. I believe that a national effort is needed, and this Labour Government will continue to make a national effort.
Mr. Ron Thomas
Does my right hon. Friend agree that the proposal from the CBI to cut public expenditure by £3,000 million could push our economy into the kind of depression that would make the 1920s and 1930s look almost like an economic miracle? Does he also agree that the kind of tax handouts that the CBI is now advocating were tried before by the previous Government and found their way into property, land, commodity speculation and investment overseas?
The Prime Minister
Yes, I think there is a case for a detailed study in respect of the burden of taxes. [Hon. Gentlemen: “Why?” ] Because I am told that the tax burden in this country amounted to 40.9 per cent. of GDP in the fiscal year 1975–76. It is estimated to be much the same for the current year. As a proportion of GDP, the tax burdens in the Netherlands, Denmark and Sweden, for example, are appreciably higher, and in West Germany the burden is comparable. [Interruption.] I do not know whether hon. Gentlemen opposite want the facts or whether they want to live with their prejudices. If this can be demonstrated it seems to me important that people should not be labouring under a misapprehension. If the tax burden is too high, clearly, in order to encourage effort—[Interruption.] Sedentary interruptions do not add to the course of easy debate. If it is too high, clearly we should consider the matter, but as far as I am concerned there is no indication yet that we are much out of line in respect of taxation.
With regard to cutting public expenditure, it ought to be reduced over a period as a proportion of GDP—[Hon. [column 1655]Members: “Why?” ] Sedentary interruptions do not help, even from my own side of the House—because, among other things, of the difficulty of borrowing the necessary resources from elsewhere. I fully agree with my hon. Friend that if there was a catastrophic cut in public expenditure over a very short period there would be serious consequences for the social fabric of this country, and I would not be a party to it. These matters are all, perhaps, more the subject for debate than questions.
Mr. Aitken
Does the Prime Minister realise that millions of British men and women on both sides of British industry may have been stirred and inspired by Mr. Harold Macmillan 's call, on television last night, for national unity? Is it not obvious—at least to all those who are not wearing Left Wing blinkers—that the situation in industry and in practically all other economic areas is now far too grave for the British people to go on being bluffed by the Prime Minister's avuncular complacency? Will the right hon. Gentleman now take the initiative to start discussions among all parties and all interested groups to see whether we can find truly national solutions to these deep-seated national problems?
The Prime Minister
I believe that if we can hold to them the policies that the Government are following are bound to produce results. In the past, the Conservatives have not pursued their policies sufficiently long to achieve the results that were necessary. They ran away on a number of previous occasions. They ran away on matters such as the increase in the money supply. They ran away when they gave way to fiscal extravagance as soon as there were difficulties in their economic path. I intend to adhere to the policies that we are following—difficult, uncomfortable and unpleasant though they may be, and bringing a great deal of hardship. I look for very little support from Conservative Members, despite what the hon. Gentleman said.
Mrs. Thatcher
Is James Callaghanthe Prime Minister aware that if anyone is running away from reality it is he, and his Government? Will he look at the facts of his administration and recognise that he has brought the pound down to $1.65, [column 1656]whereas he was left with it at $2.30; he has unemployment at nearly 1,400,000, whereas he was left with it at 600,000; he has the index of industrial production down to below 101, whereas he was left with it at 103? In other words, on all fronts he has followed a disaster course. Does he not agree with his predecessor that most of us would far rather see a Conservative Government with a good majority than any coalition Government?
The Prime Minister
At least the right hon. Lady shares my dislike of coalitions. No, I do not want to see a Conservative Government. I think that it would be a disaster for the country, because neither in their performance in the past nor in their promises for the future lies any hope for the country. I have been looking at the costing of the Conservative tax credit scheme. We all know that the Conservatives intend to cut public expenditure, but is the right hon. Lady aware that the tax credit scheme that she has set out and adopted in her new policy would cost at least an extra £3 billion a year, and possibly as much as £5 billion a year? Does she intend to introduce that scheme or to let it go as a broken promise?
Mrs. Thatcher
The Prime Minister is proving exactly what I said; he is running away from the existing reality. He is running away from the reality of his own record, which has nearly trebled unemployment, brought the pound low, reduced industrial production, and increased inflation.
The Prime Minister
We should acknowledge these facts. The right hon. Lady is correct that these things have happened and are happening in Britain today, and we should certainly examine the reasons for that. But when I contrast the appeal made for national unity by Mr. Harold Macmillan with the behaviour of Conservative Members, I know how spurious is such a call.
Mr. Pardoe
Is the Prime Minister aware that he cannot go on adopting the position that nothing more needs to be done other than what the Government have already done? Is he aware, for instance, that the 15 per cent. minimum lending rate has not stopped the decline in sterling, which is back to the level it was before that measure was taken? Is he further aware of the report in the [column 1657]International Currency Review that out of £6 billion sterling balances the holders of £4 billion intend to remove them from the country within the next two or three years? Is he further aware that the forward rate for sterling for one year hence is $1.47? In the light of that and the causes that he mentioned, does he not think that single-party government has come to the end of the road?
Is the right hon. Gentleman further aware—this goes for the Opposition Benches too—that the lack of enthusiasm for coalition which he noted in his answer to the first Question is confined only to the professional prizefighters within this ivory tower, and that outside, in the country, the great majority want coalition?
Mr. Speaker
It is Question Time, and we are running over. I propose to allow two more supplementary questions, but not if they are as long as that one.
The Prime Minister
I am not aware of what the hon. Gentleman said about sterling balances. I am grateful to him for writing to me and indicating that he wished to explain the figures that he gave to the House on the minimum lending rate and the money supply on Tuesday. His statement this afternoon did not add much to the known position, that is to say, that the country has a serious problem to face. That can be done only by giving priority to manufacturing industry. We intend to stick to that course. We do not think that we need to depart from it. If there is any help that the Liberal Party cares to give us from time to time in the Lobbies—I never despise anybody—I should be very happy to have it.
Mr. Heffer
Does my right hon. Friend agree that the statement made by Harold Macmillan, repeated and supported by Conservatives today, is an indication that the Conservative Party recognises that its present leadership is totally bankrupt of political ideas and that we should be wise to continue with a Labour Government if we want to overcome our problems?
The Prime Minister
I am very content with the quality of the Labour Party leadership. I would not care to comment on the quality opposite.
Mr. Lawson
The Prime Minister has once again referred to the urgent need for a substantial reduction in Government [column 1658]borrowing. Does he propose to achieve that by further cuts in public expenditure or by further increases in taxation? I trust that he will not run away from answering that question.
The Prime Minister
I would not dream of running away, but I suggest that the hon. Gentleman tables a Question on that matter to the Chancellor of the Exchequer.