Speeches, etc.

Margaret Thatcher

HC S [Debate on Address]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [921/16-48]
Editorial comments: 1512-1639. MT spoke at cc16-22 and intervened at c43.
Importance ranking: Key
Word count: 11502
Themes: Autobiographical comments, Parliament, Union of UK nations, Conservatism, Economic policy - theory and process, Industry, By-elections, Privatized & state industries, Public spending & borrowing, Taxation, Foreign policy - theory and process, Labour Party & socialism, Local government finance
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3.12 p.m.

Mrs. Margaret Thatcher (Finchley)

By long-standing custom it is the privilege of the Leader of the Opposition to be the first to congratulate the mover and the seconder of the motion on their admirable speeches. I carry out this custom today with very great pleasure. I have heard many speeches of movers and seconders of this motion, and each year they have lived up to the traditions and standards of those of previous years. This year was no exception. The hon. Member for Huddersfield, East (Mr. Mallalieu) took us back to the time when he first came into this House, which was, with respect, long before I came here.

When I first came here in 1959 I had an annual family duty to perform—to be present at the Oxford-Cambridge Varsity match, which was usually held on the second Tuesday in December. I asked how this could be arranged, and I was advised that the best thing was to try to pair with the hon. Member for Huddersfield, East. That pair was duly effected on several occasions, but in those days Hugh Gaitskellthe Leader of the Opposition was very co-operative in the numbers of pairs allowed.

I wonder whether the hon. Gentleman was chosen specially to move the Address on this occasion because of his connection with the University of Chicago. I thought that Denis Healeythe Chancellor of the Exchequer might need its support in some of the difficulties that we are encountering, particularly as this year's particularly distinguished Nobel Prize winner is a member of that university and specialises in the subject of money supply. However, the hon. Member for Huddersfield, East was also a member of the University of Oxford, as was the seconder, and I was, too. However, I think it is politic in days like these to wear the colours of Cambridge University.

The seconder of the motion referred to things that Chelsea would not tolerate. I should inform him that I live just off the King's Road, and I am very glad that swinging Chelsea would not put up with what he took over in Gloucestershire, West. It is better that way. The mover and seconder could both be said to have seats which are marginal. One has a majority of only 400; the other a [column 17]mere 8,000. I note that both of them somehow voted in favour of a Bill introduced last Session to abolish the House of Lords. Happily, this House refused permission for that Bill to be introduced.

It is the custom for the Leader of the Opposition to start off the debate with a very brief speech, leaving the main speech to James Callaghanthe Prime Minister. Naturally I studied the anniversaries which fell this week and I found two rather interesting ones. There is a lesson for us, because on 26th November 1964 the then Chancellor, who is now Prime Minister, announced that Britain had borrowed $3 billion to save the pound. He also pointed out that he had applied to the IMF and was using part of that loan to repay other borrowings. The second anniversary which falls this week is 28th November 1919, when Lady Astor was elected the first woman MP. Clearly she started something which has not yet finished.

I disagree very firmly with one thing that was stated by the mover of the Address. He did not think that there was very much legislation in the Gracious Speech. I think that there is a great deal, particularly when one considers the amount of time which some of it will take. It is easy to put in a short paragraph on devolution, but we all know that it will take a great deal of time in this House. I understand that the Bill will be presented very shortly and that at least three or four days will be devoted to the debate on Second Reading. It is better that most of my comments should be made then when we know the Government's full proposals.

I wish to confine my comments to three points. The coming year will be dominated by economic circumstances and in particular by the deficit we now face. I notice that the longest paragraph in the Gracious Speech is devoted to the economic future of this country, and that investment has the highest priority. Whichever way we look at it, it is not legislation which dominates people's lives but the success with which we manage to cope with the deficit, with public expenditure and taxation. I believe that the Chancellor is learning the lesson that

“he who goes a-borrowing will soon go a-sorrowing” .

One of the conditions on which he applied for the standby credit is that if [column 18]we are not able to repay the loan on the due date, he will be prepared to go to the IMF to secure money to do so. In other words, we have to draft a Letter of Intent unless we are able to repay the loan by other moneys. The Chancellor said at the Labour Party Conference that he was going to negotiate with the IMF on the basis of his existing policies and that there would be no changes. But he has had to change his financial policies before, and it looks as if he will have to change them again if he is to secure that loan.

He also pointed out in the House that

“the British people would prefer to maintain the highest possible standard of living at the expense of borrowing at a very low rate over a reasonable period rather than to incur a sudden and dramatic fall in living standards which would be involved if we did not succeed in arranging the loan.” —[Official Report, 11th November 1976; Vol. 919, c. 639.]

When he said that, a number of us were rather shocked, because we felt that his only policy was perpetual borrowing and not one of attempting so to order our financial affairs that the Government could easily live within their means. It seemed to me that he was taking up, if I may explain it thus without causing offence, an “Irish” position. He seemed to be saying “Let us all be happy and live within our means, even if we have to borrow the money to do it” . That was the Irishism he seemed to be expressing.

That policy will not do if the country is ever to be successful in the world again. I do not mean being successful only at home. The first foundation of a successful foreign policy is a successful home policy. It is a great sorrow to many of us that whenever our great statesmen go abroad now the main news when they come back seems to be the question whether other nations will support us in our application for a loan.

It will not be easy with the IMF this time. Far too many people want to borrow from the limited coffers of the IMF. Even the IMF does not have unlimited resources, and many nations wish to draw upon them. We believe at the moment that Britain has lost credibility and that the sooner we regain it by sound financial policies the better. During the time that Denis Healeythe Chancellor has held that portfolio he has continued to talk big, but his actions have made [column 19]Britain look very small. The Chancellor has always taken the view, as have many Labour Members, that public expenditure and higher public expenditure is, per se, a good thing. I think they probably never ask the right question, which is, how is that public expenditure to be financed?

As I walked around the streets of Walsall and Workington during the by-elections the main thing which people said to me was that they did not want to go on paying their present level of tax, let alone pay even more tax to finance the level of public expenditure which the Government have assumed. Ask them which they would prefer—a bigger social wage, which they will have to pay for, or more take-home pay. There will be no doubt about the answer. They will go for greater take-home pay.

Mr. Dennis Skinner (Bolsover)

Will the right hon. Lady admit that some of the borrowing and some of the financing that took place in the past two and a half years has been also to assist in the finaning of the private sector? Does she also agree that about £300 million was used to bail out Burmah Oil, a private company with which her husband had more than a passing interest? The right hon. Lady, in considering public expenditure and the borrowing requirement, should consider all these factors, not just whether the social wage is large enough for working-class people.

Mrs. Thatcher

The hon. Member must know that one of the reasons why money is not available for the private sector is that the Government are prepared to pay so highly for it, and that the private sector simply cannot compete with them and pay 14¾ or 15 per cent. in order to finance its operations. If the Government were not borrowing so much, the interest rates would be a lot lower. If interest rates were a lot lower it would be a good thing for British industry. It would be better for the wealth-creating sector of the economy and for the many people who want to realise the ambition of purchasing their own houses.

I shall now leave the question of investment, because we shall be debating the economy later. James CallaghanThe Prime Minister and some of his Ministers and Back-Benchers pay lip service to the mixed [column 20]economy, but the Government constantly produce programmes which make it less and less mixed. The balance leans far too much towards the public sector and far too little towards the wealth-creating private sector. This Gracious Speech is no exception. We still suffer from too few producers and too many people who are dependent upon those producers.

I notice that the Aircraft and Shipbuilding Industries Bill is to be reintroduced. No doubt that measure will give my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) a wealth of intellectual exercise when once it comes in. I note that one noble Lord who served for many years in this House—Lord Shinwell—made a brilliant speech about the Bill before it was finally despatched in the other place. That speech is one that we would all do well to read. With this Gracious Speech the mixed economy becomes less mixed, by virtue of the nationalisation of aircraft and shipbuilding.

My right hon. and hon. Friends and I will also vote against any further measures to increase the powers of direct labour forces. There are already many of them which are extravagant. They cause the ratepayer to pay increased rates and cause increased public expenditure by local authorities. While many rate-payers are already suffering an unacceptable shock through the size of their rate bills it seems absurd to introduce such a measure. Another measure is that concerned with water authorities. We are not certain whether the Government intend to nationalise the water companies.

The final aspect of the mixed economy that I want to mention involves the Bill which shows that although the Government pay lip service to a healthy private sector they do not hesitate to take £1,000 million out of it by way of the payroll levy to which the Gracious Speech refers.

If we are to continue with a politically pluralistic society we must continue to have an economically pluralistic society. We cannot say that we believe in having two or more political parties in the democratic system yet not accept that there must be two or more economic policies. So long as the other party persists with its present policies, some of which are irreversible, it is showing a rejection of its alleged belief in a pluralistic society.

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Mr. Eric S. Heffer (Liverpool, Walton)

The right hon. Lady argues that one must have a free enterprise capitalist system in order to have democracy. Why is it that there is no democracy in Chile, and that there was no democracy for 50 years in Spain or for 70 or so years in Portugal? Is it logical to suggest that in those countries, which are free enterprise countries, there could not be a dictatorship?

Mrs. Thatcher

A free enterprise system is a necessary but not a sufficient condition. There is only one economic system in the world, and that is capitalism. The difference lies in whether the capital is in the hands of the State or whether the greater part of it is in the hands of people outside of State control. Where there is State capitalism there will never be political freedom. Where there is private capitalism there may not be political freedom, but there cannot be political freedom without it. I am grateful to the hon. Member for allowing me to make that clear.

Mr. Heffer

That is absolute nonsense.

Mrs. Thatcher

The third point that I wish to make is that many people are worried that the individual no longer seems to count. He seems to count only if he is a member of a large group. If he is not, it seems to me that his voice is not heard or considered. I sometimes wonder whether we are moving to a situation in which only those who belong to large groups have rights. I suggest that the Government should ponder upon that very carefully indeed. The more money that is taken away from the citizen to finance decisions taken on his behalf to produce things that he does not necessarily like, the less he and his decisions count.

At the end of the Gracious Speech there is a small phrase which refers to promoting both

“justice and equality for all the people of the United Kingdom.”

The word “equality” is often used, but, wisely, rarely defined. The moment one tries to define it, one gets into great difficulty. For example, it cannot mean equality of incomes or earnings; otherwise, we would not need more than one union. Indeed, we would not need one union. If we are to have opportunity, we [column 22]cannot have equality, because the two are opposite. We may have equality of opportunity, but if the only opportunity is to be equal, it is not opportunity.

It is interesting that the Socialists have proceeded by not defining this term. They did not define equality, or the social contract. Therefore, people must judge by performance.

What the Government have left out of that phrase at the end of the Gracious Speech is any reference to liberty. That is the important thing.

I was interested in an article written by Daniel Moynihan in Commentary of March 1975. It was a very long article, about world society and the effect of British Socialism on it. In that article Mr. Moynihan studied countries which had put equality before liberty as an objective. At the end he came to this conclusion:

“And equality, what of it? … what is the record? The record was stated most succinctly by an Israeli socialist … that those nations which have put liberty ahead of equality have ended up doing better by equality than those with the reverse priority” .

The Prime Minister has chosen to put equality first. We suggest that he should choose to put liberty first. Then he will end up with liberty and fewer inequalities than if he puts equality first and wholly neglects liberty.

The view that we shall take on the Gracious Speech will be that our purpose in Opposition will be, first, to further those policies which lead to confidence in our economic and industrial future; secondly, to revitalise the wealth-creating sections of the mixed economy; thirdly, to ensure that the individual counts in society; and, fourthly, to try to see that constitutional changes are carried out in accordance with the traditions and achievements of the United Kingdom as a whole.

For these things we have fought, and for these things we shall fight on.

3.33 p.m.

The Prime Minister (Mr. James Callaghan)

I begin by endorsing what the Leader of the Opposition said in tribute to the mover and seconder of the Address on the Gracious Speech.

I regret that I am the first speaker who, alas, did not study at Oxford University, but, by way of compensation [column 23]in late life, I was made a Doctor of Laws of the University of Wales.

I should like particularly to congratulate my hon. Friend the Member for Huddersfield, East (Mr. Mallalieu), who is one of the select handful on the two sides of the House—we regard ourselves as a select handful—who entered the House in 1945 and who have represented the same constituencies ever since. Indeed, as he said, both he and my hon. Friend the Member for Gloucestershire, West (Mr. Watkinson) between them span 30 years since their entry.

My hon. Friend the Member for Huddersfield, East gave us yet another reminder of what those of us who have known him for so long recognise—namely, his lightness of touch, his sense of humour and the delicacy with which he can skirt round a controversial topic, which he combines and always has combined with a great firmness of principle and a passion which has not mellowed with the years.

My hon. Friend can be rough. I recall, if the House will permit a personal reminiscence, when he was rejoicing in all the glory of one ring and, as an ordinary seaman, I forgot to put the sugar in his tea. That night—the House will believe it or not—when I was standing in line to go ashore on the liberty boat, he had the impertinence to stop me from going ashore because, he claimed, my oilskins were not properly marked—and they were. My hon. Friend has held office as a member of the Board of Admiralty—I notice that he is wearing his Board of Admiralty tie today—and in other Ministries.

My hon. Friend has that rarity of being a muscular intellectual. I believe that he is the only person who has combined being President of the Oxford Union with getting a blue at rugby. My hon. Friend has represented Huddersfield, East with distinction and faithfulness. I positively refuse to draw comparisons between the merits, on the one hand, of George Hirst and, on the other hand, of Walter Hammond.

My hon. Friend the Member for Gloucestershire, West also has a distinctive sporting prowess. I was impressed—as I am sure the whole House will be until it hears the end of the story—when I heard that he was the only former [column 24]world champion at his sport who was a Member of this House. I am sure that the House will be impressed until it hears that the game that he played was the esoteric game of rugby fives, which, in any case, is played only in England. However, he was all-England champion for a number of years. I congratulate him on that and on his thoughtful speech.

My hon. Friend has played an active part in the Council of Europe and as a member of the Public Accounts Committee since he entered the House. Like the right hon. Lady, I was not sure how to take his reference to the fact that he took comfort in that the amorous pecadilloes of Charles Dilke were, at any rate, tolerated in Gloucestershire, West. I am sure that no personal reference was intended.

I should like to take the opportunity of thanking my hon. Friends the Members for Huddersfield, East and Gloucestershire, West for the manner in which they moved the reply to the Gracious Speech.

I should also like to take the opportunity of saying something about the textile industry. My hon. Friend the Member for Huddersfield, East reminded us that his constituency lies in the centre of one of the largest wool textile industries in the world and one of the most renowned, with a history of excellent labour relations.

Last year that industry met 90 per cent. of home demand and exported one-third of its output to more than 150 overseas markets. It has been adversely affected by the world-wide depression in textiles, with mill closures, but the industry has made full use of the Industry Act scheme. Altogether, nearly £80 million has been spent on investment in new plant, machinery and buildings fertilised by the Industry Act scheme.

I invite the House to note that that was public expenditure. The industry is now substantially rationalised and re-equipped and is well placed to exploit home trade revival and exports. We hope shortly to announce further measures of Industry Act assistance.

Our policy is for a viable, profitable and internationally competitive textile and clothing industry because it employs 840,000 people. Clearly it is one of the largest employers of labour in this country. It is therefore vital to preserve the health of that industry. [column 25]

I have taken note of what was said by my hon. Friend the Member for Huddersfield, East about the textile industry. We recognise the difficulties through which it is going. But its export performance remains encouraging. There has been a steady improvement during the first 10 months of this year. Cheap imports remain a problem, although I remind my hon. Friend and others in the textile industry that it has the most comprehensive programme of restraints ever.

There are unsatisfactory features, which the Government are examining, of the operation of the Multi-Fibre Arrangement which is made under GATT and which expires at the end of 1977. During the next 12 months we shall be consulting the industry and unions about modifications which we believe are necessary in any new arrangement.

We have come to the preliminary conclusion that changes are needed in the Multi-Fibre Arrangement. We shall have to convince others, because this will be a matter for negotiation. However, we intend to maintain substantial contact with the industry during those negotiations. I want my hon. Friend and textile Members generally to take back to their constituencies the fact that we recognise these unsatisfactory features. We shall do what we can in the meantime, before the ending of the Multi-Fibre Arrangement and the new agreement, which I trust will take its place, to make their position more tolerable.

Mr. Dan Jones (Burnley)

When deliberating on the textile industry will the Prime Minister send the issue to an appropriate Select Committee so that in turn the Government may have the advice of the Select Committee with that of the administration officials?

The Prime Minister

As far as the Government are concerned, I can say now that if the House wished to make its own investigations into this matter, it would be a matter for the House and an appropriate Committee, and the Government would be glad to consider what advice might be proffered.

We have begun a detailed study of the matter, which has gone quite a long way. I hope that we shall be able to begin discussions with the Community, which will be very important in this mat[column 26]ter, very shortly. However, this is a matter for the House, and certainly the Government—subject to what my right hon. Friend the Leader of the House says—will not resist any proposal of that sort. I hope that my right hon. Friend will not rebuke me when we leave the Chamber.

The Gracious Speech begins very properly with a reference to the 25th anniversary of Her Majesty's accession to the Throne, which is to be celebrated next year. This will give the nation the opportunity to express its thanks for a quarter of a century of devotion and public duty—[Hon. Members: “Hear, hear.” ]—known best, perhaps, to those who have had the opportunity of serving Her Majesty closest.

Our people will wish to join in the celebrations. Many events are being prepared in all parts of the country. Her Majesty will also travel to various parts of the Commonwealth, where preparations are also being made. It is intended that both Houses of Parliament should present Addresses to Her Majesty in Westminster Hall. For the convenience of the House, perhaps I may announce now that these presentations will be made on 4th May next.

I should like now to comment on our domestic arrangements in Parliament. Because of the later start, the parliamentary year will be fully occupied with legislation and essential business. There are 29 Supply Days, which will be provided, as usual, by the Standing Orders of the House and be allocated to the Opposition. It will be for the official Opposition to decide whether to allocate any days to the other parties and which days. In addition, 20 Fridays will be allocated to private Members for Bills and motions, and four half-days for motions in addition. The Leader of the House will shortly be bringing forward motions to deal with these matters.

There have been a number of improvements to the service of Members in recent years in the provision of information. The Government have decided to make a modest change—I claim no more than that—further to assist hon. Members in the House.

The practice of publishing Green Papers will continue, for appropriate subjects, but in addition the question has been raised about what other information [column 27]can be made available. When the Government make major policy studies, it will be our policy in future to publish as much as possible of the factual and analytical material which is used as the background to these studies. This will include material used in the programme analysis reviews, unless—and I must make the condition—there is some good reason, of which I fear we must be the judge, to the contrary.

I am trying to help. I assure the House that we shall not endeavour to pull back the information. We shall look at every case to see whether we can make it available. The cost to public funds is a factor here, and we should like to keep that cost to a minimum. Therefore, arrangements will not be of a luxurious nature, but we shall make available what information we can to provide a basis for better informed public debate and analysis of ministerial policy conclusions.

The right hon. Lady the Leader of the Opposition referred to the Aircraft and Shipbuilding Industries Bill. Before I come to new legislation mentioned in the Gracious Speech, I must refer to this piece of business, which was left in an unacceptable state in the Session that we have just ended. Let me announce straight away that the Aircraft and Shipbuilding Industries Bill will this week be reintroduced into the House of Commons.

I note what the right hon. Lady says about providing the hon. Member for Tiverton (Mr. Maxwell-Hyslop) with a great deal of intellectual exercise. This is not the way in which it is seen on the Tyne or the Wear, or on Clydeside. It is not an intellectual exercise there. It is a question of how the futures of these industries and jobs are to be preserved and whether they are, indeed, to have a viable future at all. I hope that when the right hon. Lady is speaking to her hon. Friend she will convey to him the fact that this is not the Oxford University Debating Society but a House of Commons which should reach conclusions in order that these industries should know where their future lies.

It is true that the House of Commons reached conclusions. Throughout the debates on the Bill, many hours of discussion, on no single occasion were the Government defeated in this House. It [column 28]is an unelected, inbuilt anti-Labour majority in another place which has arrogated to itself the right to refuse to accept the repeated decision of this House. We now invite Parliament to put the matter right again.

Mr. Peter Tapsell (Horncastle)

Will the Prime Minister give way?

The Prime Minister

Before giving way, I should like to congratulate the hon. Gentleman on his new-found accession to the Opposition Front Bench. I wonder why he is sitting where he is.

Mr. Tapsell

I thank the Prime Minister for his graceful remark. Our Front Bench spokesmen are so assiduous in their duties that there is no room for me on it. However, I now come to the point on which I rose. The House of Lords has been operating under an Act that was passed by a Labour Government. It is absolutely and constitutionally within its rights to seek to preserve rights, which have been given to it under the constitution, intended to give this House, as the elected representatives of the people, a chance for second thoughts on these highly important and controversial matters.

The Prime Minister

I am aware of that, and that is what we now intend to invite the House to put right in the manner of voting once again for the Bill—as I believe it will.

I wish to move on to other measures of importance. I come first to the Fishing Limits Bill. Its main purpose is to extend fishing limits from 12 miles to 200 miles. The Bill will provide for the regulation of fishing by vessels of all nationalities and by British vessels where-ever they may be. The Bill will contain powers to conserve fishing stocks, whether by Community measures or measures introduced unilaterally by the United Kingdom.

We should like the House to help us to be in a position to extend fishing limits by 1st January 1977 in concert with other members of the European Community. The Bill will provide for substantial penalties for serious offences such as unauthorised fishing or fishing in a closed area. This will meet increasing criticism about inadequate penalties.

I should like to refer to a further Bill on water charges.

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Mrs. Winifred Ewing (Moray and Nairn)


The Prime Minister

I wanted to mention these Bills in passing. There will be other opportunities to discuss them in greater detail. In the course of debate, no doubt the hon. Lady will be able to make observations about the Fishing Limits Bill which can be answered.

There are, as is known, wide variations in average water bills according to the parts of the country in which people live. That has been a cause of great dissatisfaction to domestic users. We shall, therefore, ask the House to pass a measure which would mean more fairness in water charges by narrowing the gap—not closing it—between the highest and lowest charges which at present vary very considerably. I am glad to say that this measure will be especially welcomed in Wales where charges rose sharply after reorganisation.

In due course we shall also submit to the House a Bill on direct elections to the European Parliament. The Select Committee on Direct Elections has produced its second report. This legislation will be introduced during the current Session with a view to holding elections in 1978.

We shall also introduce a Patents Bill. That may sound a dry subject to those not involved, but, having given a little study to the matter. I believe that it will be a most important Bill, although perhaps not particularly party controversial. The present patent system has served the country well, but its origins lie in Victorian times. I believe that the changes we propose will be welcomed by industry.

The Bill will provide three major changes. One change will provide for early publication of patents specifications so that industry may become aware of new technology at an early date. Secondly, the Bill will enable procedures to be streamlined and simplified. Thirdly, it will ratify the European Patent Convention. That will enable British industry to obtain by means of one application, in accordance with one law and one procedure, the possibility of coverage throughout most of Europe. That, in connection with our industrial strategy, will provide a most valuable ancillary weapon. [column 30]

My hon. Friend the Member for Gloucestershire, West referred to the Criminal Law Conspiracy Bill. The Government intend to introduce legislation to amend this law, and conspiracy will be restricted to agreements to commit criminal offences. As regards trade disputes, the penalty for conspiracy will be limited to three months. I am informed that that is what Parliament originally intended with the Conspiracy and Protection of Property Act, which was passed as long ago as 1875. However, there was a technical defect in that Act.

Probably all hon. Members attend constituency surgeries, and I am sure that they will all be glad to hear that the Bill will simplify the rules that govern the delegation of cases to Crown courts and magistrates' courts. It is expected to result in the transfer of about 10,000 cases from Crown courts to magistrates' courts. It will reduce delays, therefore, in the time spent awaiting trial, a matter which most hon. Members have probably found to be the subject of many complaints in their surgeries. The magistrates' courts will need additional resources to cope with the work, but I am glad to say that an overall saving in public expenditure is expected.

Levels of crime are a cause for serious concern, especially offences committed by young people and the increase in violence that is taking place in our cities. There is a disturbing increase in vandalism, especially among teenagers. There is real and justifiable concern about group violence, including so-called football fans who frighten peaceful citizens inside and outside the football grounds.

The Government must do all that they can to help in matters such as police strength and the maintenance and improvement of police communications and other aids that give considerable assistance. I have asked about the figures and I am told that during the past two years the total police strength in Great Britain has increased by 7,500 to a total of over 121,000—the largest police force we have ever had in these islands. Perhaps in some ways that is regrettable, but it is necessary to try to handle some of the problems of vandalism, violence and crime.

The Criminal Law Conspiracy Bill will increase many maximum summary fines, [column 31]including those for offences committed by football hooligans. The House will have to decide but the Government will propose a maximum fine of £1,000 for an adult and £200 for a juvenile.

Of course, we shall listen to what the House has to say, but it is our belief that it is necessary and important that there should be real deterrents to the growth of hooliganism and vandalism on the scale at which it is now running. I was told the other day that British Rail is suffering damage to the extent of £1 million a year as a result of that behaviour. That cannot continue.

The Bill will also contain proposals to increase amounts payable as compensation by convicted offenders to their victims. The police and many other organisations are putting in a great deal of work to counter motiveless and mindless behaviour. But the rôle of the parent and the influence of the family are vital. Parents must reassume the responsibilities for the care of their children that some of them seem to have given up.

My right hon. Friend the Secretary of State for the Home Department intends to call a special conference to be held in January, at which the appropriate organisations and others can discuss these matters. The Government will do all that they can, but what we can do in these matters is, I think, limited. The major key lies with society itself and with its organisation.

There are other Bills that we should like to introduce depending on the time that is available. The House knows of the limitations under which we are working this year. There is a Bill on homelessness to which the Government are committed. We welcome the fact that local authorities already take prime responsibility for coping with homelessness, but they need better legislative cover than is now provided. Until that can be provided, I ask them to continue to take the prime responsibility that they have already undertaken on our behalf.

We should also like to introduce a Bill on occupational pensions but more consultations will be needed. Again, much will depend on the time that is available. We intend in 1977–78—that is, not this Session—to legislate—[Interruption.] Yes, we shall be here then: there is no need [column 32]to worry about that. We intend in that Session to legislate on smoking and health, there being a particular need to divorce to some extent the provisions on smoking from the financial machinery that Chancellors of the Exchequer have used in the past and to transfer them to the Medicines Act.

The debate on education for which I asked and which got under way before I was allowed to make my speech is now proceeding. My right hon. Friend the Secretary of State for Education and Science will bring forward a consultative document that I trust will focus on methods, curriculum, and the relevance of the present system. She is now embarking on consultations herself.

I inform the House that there may be a contingent need for legislation on Rhodesia. That will depend on the results of the conference. The chairman, Mr. Ivor Richard, has set 20th December as the target date for the conference to complete its work. The surest guarantee of early independence, to which the House, the Government and the Labour Party are committed, is rapid agreement on the establishment of an interim administration. The words “an interim administration by agreement” are important, because that is what is necessary.

There is also a need to achieve agreement on a date for independence, although I believe that that will be less difficult because the area of difference is so small that it can be bridged. Britain will do everything possible to achieve a successful conclusion to the conference.

We have recognised our constitutional position by being willing to provide a chairman. There is no limitation to our political willingness—I emphasise political willingness—to help to reach agreement, but there are limitations to our capacity to do so. These limitations will be determined by the prospects of the Europeans and the Africans working together to make a success of independence based on majority rule.

Our future rôle between now and independence—that is the period in which those concerned have worked up to the establishment of an interim Government and the period between that establishment and final independence—must be influenced by the prospects of agreement between the Europeans and the Africans. [column 33]The greater the willingness to agree, the more hopeful and the larger the rôle we can play. If there is no basic willingness to agree, our rôle is limited. Our purpose will be to seek to provide a secure future for the people of Rhodesia.

I turn to the major item in our programme in terms of length and in some ways importance—namely, devolution and the proposals to establish Scottish and Welsh Assemblies. A Bill will be presented in a few days' time and my right hon. Friend the Leader of the House hopes to arrange its Second Reading before Christmas so that we may begin the Committee stage when we return after the Christmas Recess. Before the Second Reading date we hope to publish a consultative document on England.

The devolution Bill—and the Government have considered this matter carefully—is a necessary means of bringing government closer to the people. It will give them an opportunity to take more part in the way our affairs are run and it will enable them to feel closer to the centres at which decisions are reached. I realise that this may not be the universal view, but I believe that there is real feeling about these matters.

Public bodies which are currently run by nominated and selective bodies will be more readily accountable to the electorate. Transfer of increased democratic responsibility for their own affairs to the people of Scotland and Wales lies at the heart of the devolution proposals. But these changes, as the Gracious Speech emphasises, must be made within the secure framework of the continuing unity of the United Kingdom.

That is what the vast majority of people want. We live in a State where individual national identities and national cultures flourish within the context of democratic unity. We wish to see that situation continue.

The proposals which will be embodied in the Bill are the outcome of a lengthy period of consultation, investigation and reflection—and, indeed, of second thoughts and, on some occasions, third thoughts. It is probably the most widespread, thorough-going and open examination of constitutional change ever made, certainly in modern times, in these islands—and so it should be. [column 34]

I shall not recount all the stages of discussion and study through which the proposals have gone. There will be many opportunities to debate these matters in the months that lie ahead, but there have been extensive consultations with the widest possible range of organisations. These have all helped to determine the shape of the Bill which will shortly be published and which, we believe, rests on a broad basis of understanding and participation.

Mr. Gordon Wilson (Dundee, East)

Does not the Prime Minister realise that, following all the considerable consultations in the past two years, if not in the past eight years, majority opinion in Scotland is that the conditions and powers indicated by the Government in the new Bill are insufficient because they do not take account of industrial and economic powers and access to Scottish oil revenues?

The Prime Minister

No, Sir, I do not accept that. Judging by what I know of the views of Scottish industrialists and of the Scottish TUC—and I have had occasion to meet them both—I believe that they do not take the hon. Gentleman's view. However, there will be plenty of time to debate these matters in the weeks that lie ahead.

Mr. Kevin McNamara (Kingston upon Hull, Central)

Many Labour Members, including English Members, will welcome my right hon. Friend's statement about devolution, but will he say whether within the devolution powers in the Bill there will be an elemental power of taxation to the local Assemblies?

The Prime Minister

No, Sir. We have discussed this matter on many occasions, and no doubt we shall do so again in the course of debating the Bill. The Bill when presented will contain no powers for taxation of that sort. Although I am sure that the House will want to debate the matter and although some hon. Members may find it desirable as a concept, they will find it very much more difficult to decide the nature of such powers. I repeat that the Bill will not contain such powers.

I accept that many hon. Members hold strong views on this subject and the Bill will undoubtedly be given careful and [column 35]full consideration. Indeed, the Government accept that major constitutional proposals of this kind, which make fundamental changes in the system of government, demand proper time for discussion and conclusion.

The Government will set aside a considerable proportion of legislative time at the Government's disposal in the coming year for this purpose. We shall be ready to listen closely to the discussions and to make adjustments if good reasons are substantiated. There is a need for a full and constructive debate, marked by a genuine desire to improve the institutions through which we govern ourselves.

The Government ask Parliament to place this Bill on the statute book by the end of the Session we are now beginning. We believe that the people of Scotland and Wales are entitled to a decision by Parliament on these matters during this Session. The Government's view is that this decision should not be deferred beyond the present Session.

Discussion of our constitutional arrangements naturally leads me to the subject of Northern Ireland, where the problems are radically different from those on the mainland. It remains our first task to establish peace and political stability. We continue to stand by the aim of effective devolved government in Northern Ireland.

But no system will be stable or effective unless both parts of the community accept and support it. There are slight but encouraging signs that progress can be made, and I hope that these signs will continue to grow. However, in the meantime direct rule must continue. All necessary support will be given to the police and Army in defeating terrorism and maintaining the rule of law.

The Royal Ulster Constabulary is increasingly effective in detection and the arrest of terrorists. I wish to express my thanks to the RUC, the Ulster Defence Regiment, and the Regular Army for their courage and perseverance in facing a most thankless task.

The economic situation in Northern Ireland is of particular concern, as it is throughout the rest of the United Kingdom. I wish therefore to embrace that subject in what I wish to say generally [column 36]

The right hon. Lady the Leader of the Opposition said that the Session would be dominated by the economy. That is probably true, but I hope that there will not be undue concentration on that topic to the exclusion of other matters of social and cultural concern on which the House must spend time. I sometimes reflect that we spend so much time in taking our temperature on the economic front that we allow a number of other matters which are of equal concern to the health of the nation to go undiscussed.

There is no doubt that the world economic climate has changed in the past few months since the summer. Until then there was pretty general concern that recovery in the world might be too fast and inflation too high. But the reality now is that world economic growth has slackened since the first quarter of the year and in most countries, including our own, inflation remains too high, although there are some important exceptions.

Some countries, such as France and Italy, have introduced tough measures of restraint. We have acted in a similar fashion in the last year. The continuing strength of upturn in world trade is still open to question, and the prospects on this score depend almost exclusively on the United States of America, Germany and Japan.

We already see moves on this aspect being pursued by the new United States Administration. Our estimate is that there is more prospect in present policies of a downside risk for growth in the world than there is for too fast an expansion. The prospect—I must put this fairly and squarely to the House—is for employment to continue to rise in this country as in many others. This is a matter of serious concern.

Against this sombre world background we must consider how we determine our economic affairs and policies. The doctrine of interdependence of world trade is being spread more widely, is becoming more generally accepted, and is being proved more conclusively every day.

Domestically against that background we have achieved noteworthy successes in certain respects. [Hon. Members: “Where?” ] One has only to instance industrial relations. The present Government came to office against a disastrous failure of regulating industrial relations [column 37]in the courts as though they were criminal matters. Does anybody claim that there has not been noteworthy success in that area of activity? We have relied on voluntary consent and co-operation.

Nowhere has voluntary co-operation been more crucial or effective than in the attack on inflation. There has been real success in that respect. [Hon. Members: “Oh!” ] Opposition Members are either singularly dense or stupid if they do not think that there has been improvement in the rate of improvement in the past 12 months. With the co-operation of the trade union movement, we broke the wage-price spiral, which 18 months ago threatened to destroy this country. Does anyone deny that?

Mr. Peter Rost (Derbyshire, South-East)

You started it.

The Prime Minister

That is where it was started—on the Tory Front Bench.

Mr. Ronald Bell (Beaconsfield)

The right hon. Gentleman invited an intervention. Does he seriously suggest that the rate of inflation has now dropped below 8.4 per cent.?

The Prime Minister

No, Sir. What I am saying—I repeat my words—is that we have broken the wage-price spiral which 18 months ago threatened to destroy this country. That is what I said and that is what I stand by. That is a singular success, which even Conservative Members should be ready to welcome in the interests of their own country.

The voluntary pay guidelines for which the TUC made itself responsible were achieved through the social contract. It is a living agreement based on a social strategy, yes, and an economic strategy. [Interruption.] I hear the Opposition scoff, but they failed entirely in this field. Even now, they cannot decide whether they are in favour of a policy on incomes—even now, at this stage. The right hon. Member for Leeds, North-East (Sir K. Joseph), who has now left us, is against; the right hon. Member for Sidcup (Mr. Heath) is for; the right hon. Lady the Leader of the Opposition is both for and against at the same time.

Mr. Russell Kerr (Feltham and Heston)

That is very shrewd.

The Prime Minister

It may be shrewd, but it will not lead this country out of [column 38]its political and economic problems. We need a clear indication from the Opposition of where they stand on this matter. We need it not only from the Leader of the Opposition, but from the shadow Leader of the Opposition. Let them get together and tell us what the reality of their policy is.

Although inflation has been substantially reduced, as is well known, it is still far too high. I must inform the House that on present prospects I do not see the rate of inflation declining during the next few months. This is bad from every point of view—from the point of view of employment, exports and investments, from the angle of the consumers and especially for large families and poor families.

We must ask the country to adhere to existing policies, hard though that may appear to families who see the necessities of life costing more each month. In our view, these will include—it will be interesting to hear some time from the Opposition what their attitude is—the need for a further voluntary agreement on income levels for 1977–78. I wonder whether we shall have the support of the Opposition for that.

On prices, there have been steep increases for gas, coal, electricity and travel. All of these have borne very hardly on families, but these industries cannot live for ever on borrowed money. [Interruption.] The Conservatives should know this: they tried it themselves in 1972 and 1973.

The deficits of these industries—the Opposition Front Bench knows this even if Opposition Back Benchers care to forget it—were financed by substantial increases in public sector borrowing. That is the way they did it. They allowed public sector expenditure to rise by borrowing and they increased the supply of money to do it.

We were the heirs of that profligacy. We have now brought public expenditure under control. [Hon. Members: “No.” ] Public expenditure in this country is under control and it does no good to anybody—certainly not to our own country—for hon. Members opposite to deny that. They know very well that it is. Indeed, one of the reasons why 40,000 people demonstrated outside the House only a week ago was that they felt the effects of that. [column 39]

Public expenditure is under control and cash limits have been applied in as rigorous a way as they have ever been before—indeed, more rigorously than previous Governments applied them over many years. But the result—I do not deny it—has been sharp price increases, much sharper than they would have been if our predecessors had acted with greater prudence. We should not have gone through some of the things we have gone through with coal, gas and electricity if we had not had to increase prices to make up for their failure to keep pace with them.

We shall take every step to reduce the effects of price increases, ensuring, so far as we can, that no company, corporation, industry or individual makes a killing at the expense of the community. Present prices powers last until July and we intend to pay special attention to goods and services, such as basic foodstuffs and including the things people wear as well as what they eat. The Price Commission will be asked to examine a number of cases.

We have already had success in holding back increases in a number of areas. Last week, my right hon. Friend the Secretary of State for Prices and Consumer Protection announced the holding back of an increase in the maximum retail price of bread pending new arrangements. Also, a short while ago TV rentals were held back, and there are other issues which the Price Commission will be asked to investigate.

The Price Commission will also maintain its strict enforcement of the Price Code. During the last 12 months up to August it obtained price reductions worth over £80 million from firms and over 1,000 notifications of price increases were either modified, rejected or withdrawn. We are now considering—and we shall consult industry, the CBI and others—what should replace the present powers when they expire next July.

The Government's strategy for a successful United Kingdom economy is based on a sustained and substantial improvement in our industrial and economic performance. Nothing else will give lasting full employment and rising standards. That is why we put so much emphasis on the industrial strategy, [column 40]giving highest priority to industry and calling for a joint effort by both side of industry to improve performance.

It is true that many years ago when I was Chancellor of the Exchequer industry seemed to regard changes made by the Government as being the one necessity which could cause it either to boom or to go into a recession. I do not think that people in industry feel that any more. They know that they must do more themselves. This change is taking place throughout industry.

Industry understands, too, that long-term changes in the world economy, such as we have seen, for example, in relation to textiles, have not made its task any easier, but the first step was taken to try to make the task a little easier when we broke out of the wage-price spiral. The second step has been the dramatic improvement in our strike record. The number of days lost in industrial disputes is only one-fifth of the level of two years ago.

These factors among others—they are not the only ones—have helped to make exports more profitable and have encouraged industry to increase new investment, despite high interest rates. I am glad to say that interest rates have declined slightly, just by a touch, recently—[Laughter.] I know that the hon. Member for Blaby (Mr. Lawson) would much prefer us to fail than to succeed, but as we continue he may find that they will come down even further. [An Hon. Member: “Of course we would not.” ] If they would not prefer us to fail, why do Opposition Members scoff and jeer whenever there is a mention of good news?

Mr. Russell Kerr

Because they are little-minded ponces.

The Prime Minister

No, it is because they are party politicians.

However, it is still expected that industrial investment will increase sharply. [Interruption.] Now that the hon. Member for Blaby has reached the distinguished position of being an Opposition Whip, he should know that Whips do not speak.

Although it is still expected that industrial investment will increase, the gross national product will grow slightly during the next 12 months and we want to encourage faster growth. It is important [column 41]and vital therefore that the broad industrial strategy which has been agreed among the TUC, the CBI and the Government should succeed.

Since I am often asked what we have done for industry, perhaps the House will allow me to list some of the things which have been done and which I believe reflect that improvement. There have been generous allowances against tax for capital investment and for the appreciation of stock values. This is known to every Opposition Member and there are many experts among them who deal with company affairs. The result of these concessions in a year of recession such as we have gone through, and in which we are still, is that many companies will pay little or no mainstream corporation tax. That is what we have done to help companies in that area.

There has been a relaxation in the Price Code designed to help investment. Industry's financial situation in terms of liquidity and profitability has markedly improved during the past 18 months. Of course, there are adverse factors, some of which I have mentioned. But there are favourable prospects, too. I ask the Opposition to consider this matter fairly and not only to pick on unfavourable factors but to encourage industry to know what the factors are so that we can try to escape from the current recession.

There is one other factor—the social contract. However much it is sneered at, it has offered a crucial assurance to employers over two years that there will be no wages explosion. That, too, is important. There are opportunities here which must be taken to achieve a sharp increase in export volumes, to create new jobs and to make more profit. The national and economic environment and our policies are important. But action is also needed in each industry and in each firm at factory level.

The Government have asked both sides of industry through NEDC, and both have agreed that their task now is for individual companies and firms, working in conjunction with the trade unions in those firms, to set targets which can be accomplished. The National Enterprise Board will be able to be of assistance to the industrial strategy, as can the Development Agencies for Wales, Scotland and Northern Ireland. [column 42]

We need to set aside more funds for the NEB and also to achieve planning agreements. We have failed here and I very much regret that we have had no further success with industry. When I discuss the matter with leaders of industry, I find that in principle they are not against such agreements, but they feel that a lot of trouble is involved and that consultation will be required.

I believe that the advanced industrial complex in which we live is now at a stage when we have to take that trouble. We may be a few years ahead of other countries but I believe that we must take this trouble. Planning agreements are one way to go about it. Linked with this is the Government's ambitious plan, never exceeded in terms of size, for adult retraining and better training in industry. This underlines the point that opportunities for expansion must not be frustrated, as we have seen time and again, by bottlenecks caused by skilled labour shortages or shortage of capacity, particularly in engineering.

All industries, including the Engineering Industry Training Board, have done a lot in this area. This year the Board aims to achieve a target of training 28,000 craft apprentices, including 5,000 supported by public funds. That is more public expenditure. Training under the Training Opportunities Scheme—this also involves public expenditure—has increased from 62,000 to 87,000 this year. Some 15,000 to 20,000 people are being trained in engineering skills. A further increase is expected next year.

Over the past 18 months we have allocated £140 million of public expenditure to boost training. That is public expenditure well spent. These are the ways in which to create sustainable full employment. In the meantime, the Government have introduced a variety of manpower measures designed to alleviate the worst effects of unemployment, particularly among the young.

Over £500 million of public expenditure has been made available since the 1975 Budget to create or to keep open 500,000 jobs or training places. This is important, especially during the present period of unemployment. I intend, and I know that my colleagues intend, to discuss the problem of unemployment at the Hague when the Community Governments meet [column 43]at the end of the month. It also needs discussion on a wider canvas with the United States. I note what President-elect Carter has been saying about this matter.

Britain is losing her reputation as a strike-ridden country. I hope that we can keep this up. It is our reputation abroad—or perhaps I should say our bad reputation—more than the reality of the situation which dogs us overseas when discusing these matters. The number of stoppages has been the best for a quarter of a century thanks to the reform of industrial relations. The Advisory, Conciliation and Arbitration Service was set up in the autumn of 1974. It has had over 3,000 requests for conciliation in a period of 16 months and the success rate has been about 80 per cent. This is one reason why we look forward with some hope to the future.

I turn now to financial matters. The Leader of the Opposition referred to November 1964. Yes, I recall it well. I well remember the first evening I went into No. 11 Downing Street. The indefatigable Treasury knights, who were busy during the election, produced a thick folder. It began with these words:

“We greet the Chancellor of the Exchequer. We wish to inform him that there will be a deficit on the balance of payments of nearly £800 million during the current year.”

I remember very well that that was why—because the right hon. Lady's Government, even in those days, did not have the courage to take the necessary action—I had to go to the IMF within a month of taking office. [Interruption.] I remember this only too well. The Conservative Government failed to take even the minimum action they could have taken on such matters because of the election. They put off taking decisions for month after month. I remember 1964 very well. I shall never forget it.

I remember the contrast in 1970, when the right hon. Lady's Government inherited not a deficit but a surplus. They did not have to go to the IMF because they could live on the surplus accumulated by the previous Labour Government.

Mrs. Thatcher

Will the right hon. Gentleman say how much debt the Socialist Government left us with in 1970?

[column 44]

The Prime Minister

As I was not aware that the right hon. Lady would misuse history in this way I have not come prepared. [Interruption.] What I can say is the Conservatives came back to power in 1970 in a period when there was calm in the exchanges and a balance of payments surplus. They had no worries on the international monetary front at all. After 13 years of Tory rule they handed over to us a situation which required action.

Everyone knew in 1964, including the Conservative Government Front Bench—although I do not think that the right hon. Lady was a member of that Cabinet—that action was needed. But they waited until after the General Election. Perhaps they hoped they would win and take action or perhaps they were leaving it to us. The Tory Government's record is nothing to be proud of. [Interruption.] I thought that the right hon. Lady would want to change her arguments when she heard the answers. She was simply repeating a piece of misquoted history. I lived through it and I know what happened.

There are two problems concerning financial matters which the country has to face at the moment. They are the problems of internal and external financing. On internal financing, the needs of the Government and the needs of industry must be reconciled and they must be matched against the flow of available savings.

On external financing, the problem is to bridge the period of deficit that we have and to improve the competitiveness of our goods and services so that, together with the flow of North Sea oil, we can eliminate our current deficit. These are separate problems but linked by the issue of confidence. We also need to achieve an orderly move towards a stable capital account position.

Some of these problems are now being discussed with the IMF. The House will not expect me to give an account of those discussions until they are completed. I shall report our conclusions to the House in due course. Others, particularly the problem of the future of sterling balances, need to be discussed on an intergovernmental level. I intend to pursue that. Indeed, it is already being followed up. [column 45]

There are only two ways in which to bridge the present gap. One is by borrowing and the other is by accepting a temporary fall in our own standards. We have done both. All the suggestions that are made to the Government boil down to varying the mixture between those two.

In tackling the problem, our first consideration must be—and we intend to adhere to it—not to block the longerterm industrial improvement which the country needs so much and on which our hopes of a better future rest. In the medium term the aim must be faster growth fed not by inflation—that is easy—but by sustained improvement in productivity and exports.

Let me repeat the Government's attitude on import controls. It is based not on ideology but on a continuing assessment—which will continue—of where the balance of national advantage lies and of our trading relations with other countries. Where possible, as I said in the case of the textile industry, which I used only as an example, the Government will protect individual industries which need temporary assistance by the use of selective import controls.

For example, the Government were able to agree with most of the proposals we recently received from the TUC and the CBI in a joint communication on dumping, on GATT and on the Multi-Fibre Arrangement. Perhaps some of the dumping procedures need speeding up. That is under review and we shall see whether it is possible to do that.

I have also agreed with President Giscard d'Estaing on the need for a special examination of a number of sensitive industries—motor cars, electronics, textiles, steel and shipbuilding.

I have not hesitated to outline our successes and our failures. The House must face them frankly. In the current discussions with the IMF we are certainly doing that. I try to give at certain intervals a sober, realistic and objective account of our difficulties and of the prospects for a regenerated industrial system. I believe those prospects exist and that it is our task to try to take maximum advantage of them.

Before concluding, I should like to say a word about industrial democracy. Here, again, we wish to progress through co-[column 46]operation rather than confrontation. That is essential at all levels. I want the House clearly to understand the Government's policy. We want to see participation by workers in decision-making in their own companies which will directly affect their jobs and their lives, have social consequences in helping to bring down the “them” and “us” barriers, and help to lessen the class divisions which have bedevilled British industry and much else in recent years. I believe that decisions jointly arrived at will be more acceptable to all.

The present law is based on out-dated nineteenth century ideas about the rôle and responsibilities of companies in society. There is a need for social and industrial reform. I know that some—perhaps many—in industry on the managerial side have grave doubts about this, but I ask them please to note that participation of this kind has been successful in other countries, including those to which they are most ready to point when they want to show the other directions in which they believe British industry should move.

We shall not anticipate the report of the Bullock Committee, because we hope to have it by the end of this year, in just over a month's time. We shall not take firm decisions before the necessary consultations with both sides of industry have been undertaken, but the Government believe that substantial changes are necessary, and we shall work towards that end.

I have spoken of the need for creating the conditions in which industry can thrive and in which I believe that it will, but let us not overlook our social programme. I do not apologise because the Labour Government and Labour Members of Parliament seem always to be specially concerned about the protection of the poor and the disadvantaged. Why should we be ashamed of that? We shall continue to the best of our ability to protect those in need.

The purchasing power of the old-age pension is higher than it was when we took office—involving more public expenditure. We are looking forward to a new pension scheme which will start in April 1978. It will enable present-day workers to build up pension rights comparable with those available in good occupational schemes, and both men and [column 47]women will be included in the scheme. Millions of people at work will benefit from that. Should not we aim to do these things over a period? Of course we should. We have begun to take poverty out of old age.

I am proud of the considerable help we have given to the disabled and those who care for them. I am proud that we have given invalid care allowances and mobility allowances, that we have tempered the heavy electricity bill and are phasing in the child benefit scheme. We have also given aid to one-parent families.

I wonder whether it is true, as the right hon. Lady said, that it is only the voice of those who are in large groups that is heard. One-parent families and those in need of invalid care allowances are not in large groups. As long as there is a Labour Government and a Labour Party, their voices will be heard.

Mr. Patrick Cormack (Staffordshire, South-West)


The Prime Minister

In our view, by giving aid to one-parent families and invalids who need care, we are adding liberty to equality and justice. That is part of our case that the Conservative Party never seems to have understood.

I am asking the local authorities to protect as far as they are able the standard of services given to the elderly, the mentally ill and the handicapped. Local authorities are under special stress in respect of expenditure because of the great pressure there is on public expenditure——

Mr. Cormack


The Prime Minister

I will give way when I have finished my point.

I am asking the local authorities to maintain the services they provide. That is the principal task. There may be some criticism among local authorities when I say this, but I think that it is nevertheless true. Local government exists to provide services for the people, not to create jobs that would not otherwise be necessary. That is the basis on which local authorities should proceed.

Mr. Cormack

Will the right hon. Gentleman stop pretending that he and [column 48]his party have a monopoly of compassion and tell us how many more people are paying tax after his party's two years in office? Will he also tell us about the lot of the widows?

The Prime Minister

I do not deny that there are many social injustices still to be put right, but the hon. Gentleman when he constantly presses me at Question Time to reduce public expenditure is not helping towards that end.

This will undoubtedly be an eventful year. The Government intend to see it through as long as we can rely on a majority in the House of Commons. There are no short-term gimmicks. We must stick to the essential policies that we have laid down, and we shall stick to them despite electoral unpopularity in mid-term. There will be many events during the next 12 months that will no doubt try our patience, but I take heart from the fact that there is growing agreement on national objectives and what needs to be done.

Since we assumed office in 1974, the Government have radically changed the previous Government's course. We must not let up now. In industry there are encouraging changes in attitude. In Parliament the Government intend to pursue the changes that are necessary in our institutions—political, economic and social—to bring about the shift in relationships that is necessary if we are to transform the country.

We must remain steadfast, for only so can we set the country on the course of national recovery to which we have pledged ourselves. Whatever setbacks, whatever disappointments, whatever cynicism we may have to face, let us see it through.