PRICES (MINISTER'S SPEECH)
Q1. Mr. Tim Renton
asked the Prime Minister if the public speech on prices by the Secretary of State for Education and Science at the National Liberal Club on 9th July 1977 represents Government policy.
The Prime Minister (Mr. James Callaghan)
In so far as my right hon. Friend's speech touched upon Government policy, the answer to the hon. Member's Question is “Yes” .
Mr. Renton
How can it be the Prime Minister's policy both to support his right hon. Friend in her vigorous denunciation of the damage caused by constant critics of our EEC membership and, at the same time, to permit a quarter of his Government to vote against direct elections? When will he stop imitating Dr. Doolittle 's push-me-pull-you, facing both ways at once? What steps will he take to remedy that damage, particularly in the light of the decisions taken yesterday by the Labour Party National Executive Committee?
The Prime Minister
The Government's policy on the European Community is quite clear, and I have nothing to add.
Mr. William Hamilton
Has my right hon. Friend seen the recent statement made by the retiring Chairman of the Price Commission, who indicated that if there is a responsible approach to wage demands and prices there is a reasonable prospect of getting inflation down to a 10 per cent. Yearly average by the end of this year? In that context, will he also look at a report in the Scottish Daily Record this morning, showing that in some instances the price of beer has gone up by at least 30 per cent. in the past year? Unless we tackle that problem, we shall not get the response from the trade unions that we desire.
The Prime Minister
I believe that my right hon. Friend the Secretary of State for Prices and Consumer Protection is looking into the matter of beer prices. Generally, it is the case that if there are moderate increases in earnings during the [column 928]next 12 months the country can look forward to a substantial reduction in the rate of inflation. Let me just list for the House some of the contributions to this end. In milk prices, railway fares, gas prices and postal charges there will be no increase before the end of 1977. In electricity charges and telephone charges there will be no increase before the spring of 1978. That, together with the reductions in income tax, which will find their way into the wage packet during the month of August—including a lump sum, in two instalments—provides a most favourable climate for wage bargainers during the next 12 months. I believe that against that background, and despite the jeers of the Opposition, trade union bargainers will want to ensure that inflation does not go rampant again.
SOCIAL CONTRACT
Q2. Mr. Pattie
asked the Prime Minister if, further to his statement, Official Report, 7th July, column 1423, that the social contract was no longer intact and his answer of 13th July to the hon. Member for Chingford (Mr. Tebbit) that it was not broken, he will clarify the present status of the social contract.
The Prime Minister
Yes. [[Interruption.]] Yes. I thought that the hon. Member would be surprised. I refer him to the new statement that was announced yesterday, entitled “The Next Three Years and into the Eighties” . This provides a renewed basis for co-operation between the Government and the Trades Union Congress.
Mr. Pattie
Why does the Prime Minister think that his new piece of paper, which has no TUC commitment other than a reluctant aquiescence to the 12months' rule, will succeed when the old, now defunct, contract, which had genuine TUC commitments, produced record unemployment, stagnant productivity and a disastrous slump in everyone's standard of living?
The Prime Minister
I have answered that question many times in the House, and I am not able to get the hon. Gentleman to accept the answer. But, in addition to the factors that I gave in answer to the last Question, allow me to add that the fact that sterling—which I have [column 929]constantly described in this House as stable and which is now strong and moving upwards—is yet another favourable factor for wage negotiators. I would deny what the hon. Gentleman said about the trade union part of the contract being a failure last time, because there is no doubt, as I hope he will recall, that the £6 wage limit produced a very substantial decline in the rate of inflation during the first 12 months.
Mr. Heffer
Will my right hon. Friend explain to the Opposition that the social contract was begun in 1972, extended in 1973 and carried right through to today? Will he further explain that it was never mainly about wages and incomes policy—although it was partly about that, at one state—that it has never been dead, and that part of it involves the introduction at the earliest moment of a wealth tax? Will he also explain that there should be an extension of planning agreements, and that if they are not accepted by industry there must be a statutory back-up to them? Will he make it clear that Opposition Members, instead of making noises, ought to study the social contract and not talk the nonsense that they have talked in the past about it?
The Prime Minister
I am asked for a comment upon opinion and therefore I will give it. It seems to me that the Opposition demonstrate day after day in this House their total incapacity to understand that unless they get on terms with organised labour in this country, instead of appearing constantly in opposition to it, as they do—unless they recognise that our industrial society demands that co-operation—they are never likely successfully to govern this country.
Mrs. Thatcher
Is James Callaghanthe Prime Minister aware that one of the results of the social contract under Socialism is that the average family is now paying more, per week, in income tax and national insurance than it has left to spend on its food bills? When does he hope to reverse that situation?
The Prime Minister
The right hon. Lady continues to mislead the country about the necessity for a reduction in the national standard of life if we are to pay our way. When she starts to explain that, we may have less facile questions and explanations from her. I [column 930]ask the right hon. Lady whether she will join me in urging trade union negotiators to be moderate during the next 12 months and to keep the level of their earnings increases within 10 per cent.
Mrs. Thatcher
I shall gladly do that. Now will the Prime Minister answer my question?
The Prime Minister
I have answered the question. I shall answer the right hon. Lady's question again, although she knows the answer perfectly well. It is that this country, because of the increase in oil prices by four to five times, required a reduction in its standard of life. I have never evaded making clear that the Government took measures deliberately to achieve that. I hope that the Opposition, one day, will have a similar sense of responsibility. Now, I am glad to say, the period of the worst reduction is over and we can look forward to an improvement in our standard of life. I hope that the right hon. Lady, in her support for me—for which I thank her—on this matter of an increase in earnings, will include all groups, no matter who they may be.
Mrs. Thatcher
With great respect, I do not think that the Prime Minister can have heard or understood my question. The question was: is he aware that under the social contract the average family is now paying more, per week, in tax and national insurance contributions than it has left to spend on food? Has he any plans to reverse that situation, which would mean having tax incentives to get the growth that the next stage of the social contract demands?
The Prime Minister
Very well. I shall try to give the right hon. Lady even more information than I have given her so far—[[Interruption.]]—if the animal noises coming from the Opposition will stop for a moment.
First, as a result of the Budget, a man with average earnings of about £80 per week, with an average family of two children, will receive in child benefit and tax relief an extra £2.19 in his wage packet. That is the first contribution. The second is that, because of the increases in allowances, the same average family will receive, in the wage packet during August, nearly £20 as a lump sum. That, too, is a contribution. I hope that the [column 931]hon. Lady can understand these figures and I also hope that, unpleasant though they may be to the Opposition, who can never stand good news of any sort about the pay packet, at least they will join me when I say that I hope that when this back tax of £20 is returned in the pay packet this year people will buy British goods with the money.
Mr. Bryan Davies
Will my right hon. Friend take this opportunity of further educating the Opposition? Since a major priority at the present time must be to reduce the appalling level of unemployment, will he point out to the Leader of the Opposition and to the country just how the policies of Adam Smith and free market capitalism affect unemployment rates in countries such as the United States of America?
The Prime Minister
I despair of educating either the right hon. Lady or the Opposition. I have spent the past 12 months trying to do it, with singularly little success.
Mr. Tebbit
In the process of education, would the Prime Minister like to tell his hon. Friend the Member for Enfield, North (Mr. Davies) that Britain was the star of the Common Market last month, contributing almost the whole total of the increase in unemployment throughout the whole Community? Would he like to make a note to himself, to keep by him, that since the October election the real net take-home pay of the average industrial worker, about whom the Prime Minister was talking, has fallen by more than £8 a week? Is that not a pretty fair subscription to pay for joining the social contract?
The Prime Minister
I have always regarded the hon. Gentleman as one of my least promising pupils, but during the recess I shall be very happy to conduct a seminar with him and any other of his hon. Friends that he cares to bring along.
PRIME MINISTER
(ENGAGEMENTS)
Q3. Mr. Hannam
asked the Prime Minister what his engagements are for Thursday 28th July.
The Prime Minister
This morning I presided at a meeting of the Cabinet. In [column 932]addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.
Mr. Hannam
Will the Prime Minister take an opportunity today to explain to the British people why, at a time of record unemployment, inflation, industrial stagnation and the imminence of a wages explosion, he has thought it proper to allow Parliament to go into recess for the longest period since the 1950s? Is it because he is becoming unable to bear the heat of the kitchen?
The Prime Minister
There is no prospect of ever satisfying the Opposition on any of these matters. Last year the complaint was that we were adjourning for too short a period. This year the complaint is that we are adjourning for too long a period. The plain truth is that Tory Members must try to find something on which to question me and, so far, they are not being very successful.