The Prime Minister (Mrs. Margaret Thatcher)
I join with James Callaghanthe Leader of the Opposition in congratulating my hon. Friends who moved and seconded the humble Address. My hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott) has represented his constituency for 22 years, and it is a matter of great pride with him that he has always taken part in every debate on [column 74]North-Eastern matters. The matters that he raised, particularly unemployment in his own region, are ones about which he has occasion to know the heritage left by the last Government. I share my hon. Friend's views that in this election campaign a very large number of young people came our way and supported the Conservative cause, believing that it was the only one that would give them the opportunity for the future.
I greatly enjoyed the speech of my hon. Friend the Member for St. Marylebone (Mr. Baker). If all his contributions are to be of such high quality, I am extremely glad that he has retired from the bowling at Prime Minister's Question Time. I listened carefully to his Right and Left and concluded from some of his remarks that he considers that I am in the extreme Centre. I shall watch with great interest the success with which he treads the straight and narrow path between rebellion and sycophancy. I am sure that he will be extremely successful.
The right hon. Gentleman the Leader of the Opposition, after one or two remarks at the expense of my right hon. and hon. Friends, returned to his customary hostilities. As he agreed, in our party there are a lot of outstanding Members on the Back Benches. I listened carefully to what he said on foreign affairs, as of course one listens to the advice of any previous Prime Minister. The right hon. Gentleman will, however, expect me to take a similar course as Prime Minister to that which he took, namely, to consider matters afresh and to bring one's own judgment to bear on them. I am sure that that is what he did, and that is exactly what we shall do on the serious matters that he raised.
The right hon. Gentleman particularly asked me about the continuance of the existing programme for overseas aid. He knows full well that when a new Government look at public expenditure commitments, few programmes are exempt from that search. As is my custom, I shall be absolutely candid. That programme is not exempt. I remind the right hon. Gentleman that his programmes led to the biggest borrowing that this country has ever known and left the biggest debt of any Government round the necks of our children. The amount spent on interest on public debts [column 75]this year is more than the amount that will be spent on the education programme or the health programme. That is the right hon. Gentleman's legacy. He commented that perhaps my right hon. and learned Friend the Chancellor was looking a little mournful. If he is, it is because of the great problems that the right hon. Gentleman's Government have left us to solve, including the large numbers of post-dated cheques.
I expect the right hon. Gentleman to continue to put the case in which he believes, but I gently remind him that that case suffered a severe defeat at the hands of the electorate, who thought that it was a time for change and new policies. A number of right hon. and hon. Gentlemen opposite are dashing into print on the reasons for that defeat. The right hon. Member for Stockton (Mr. Rodgers) said in The Guardian yesterday——
Mr. Dennis Skinner (Bolsover)
Praising the Left.
The Prime Minister
I believe that he had every justification for flaying the Left. The right hon. Gentleman said this of his own party:
“The party in opposition must offer a more positive appeal, especially if it is to capture the middle ground of politics.”
It is a pity that he did not have a word about that with the Leader of the Opposition before the election. If he had, the Leader of the Opposition might not have fought his entire campaign on a negative attack on Conservative policies. In any case, I welcome and agree with the implication in what the right hon. Member for Stockton said. The Conservative Party has captured and now occupies the middle ground of politics. We do so because we are offering people what they want and the policies that they instinctively favour and desire. Well may the right hon. Member for Stockton ask:
“What is wrong with choice and diversity? Why should enterprise and opportunity be dirty words?”
I shall tell him. There is nothing whatever wrong with choice and diversity. They are central to Conservative policies and are precisely what Britain wants and needs. Enterprise and opportunity have become dirty words in the Labour Party because the Opposition have allowed Socialist ideology to blot out common sense and the economic realities of life. Far from [column 76]stamping out enterprise and opportunity, we shall foster and increase them because we know that without them the economy will wither and die.
The right hon. Gentleman finally continued in his article:
“Above all the Labour Party has let the idea of freedom be filched.”
We agree with him, but was that not part of the strategy of so many of his hon. Friends, steadily to increase the power of the State and erode that of the individual and gradually to substitute the politicians' judgment about what the people should have for what the people themselves wanted? That resulted in higher taxes, higher public expenditure, at the expense of private expenditure, increasing State ownership, increasingly detailed controls through employment and prices legislation, and the determination to keep people renting council houses rather than owning them.
Suddenly the people rumbled what was happening. The conscientious citizen under the Labour Government was not getting a fair deal; people would not achieve their ambition of home ownership from a Government dedicated to extending their powers over citizens' lives; public ownership was a misnomer, because the public did not own any of the nationalised industries and could not get at those who ran them. People realised that they got a better deal from competition than from State monopoly; that Britain's economic decline had something to do with the fact that the skilled did not get fair differentials and the exceptionally talented were not allowed fair rewards; and that the full magnitude of our decline had been concealed by North Sea oil. They also knew that the unfortunate members of society cannot be sufficiently helped unless opportunities are given to the able.
The choice before the people was to take further strides in the direction of the corporatist all-powerful State or to restore the balance in favour of the individual. The Labour Party stood for the former. We offered the latter. The difference is clear-cut, and we steadily put it across during the campaign. It was indeed a watershed election. The result was decisive, with a difference of about 2 million votes between the two major parties, which was the largest difference since 1935. [column 77]
The Gracious Speech sets out some of the policies designed to implement the views that we expounded in the election. I shall examine the proposals under five heads: first, to restore the economic balance of society; secondly, to restore choice; thirdly, the law and order provisions; fourthly constitutional matters; and, lastly, overseas and defence.
On restoring the economic balance we start from a poor base. For almost four years there have been well over 1 million and sometimes as many as 1½ million unemployed. Recent improvements offer no hope of long-term recovery, and many job creation schemes are temporary. The problem is not one of creating new artificial jobs but of creating genuine new jobs. Over the past five years the economy has hardly grown at all. Prices have more than doubled, and inflation is once again in double figures. The current inflation rate of 10 per cent. is 10 per cent. on double the prices that existed five years ago.
How is society to be improved? By millions of people resolving that they will give their own children a better life than they had themselves. That is the true driving force of society—the desire of the individual to do better for himself and his family. For too long individuals have been unable to benefit their families sufficiently from the fruits of their efforts. That truth pervades all too many areas of our national life. It affects management's willingness to take on responsibility. It reduces the readiness of business men to bear extra risk. Just as serious are the consequences for those at the bottom of the income scale, where an extra pound earned can be lost in tax and by the withdrawal of means-tested benefits.
During the election campaign the then Prime Minister tried to give the impression that our tax reliefs would benefit only those in high income groups. I wonder whether he knows how many people on very low incomes, wages and pensions bear quite a high burden of tax. He does not, and they do. I well remember coming across one person during one of my walk-abouts—[Interruption.] If some hon. Members kept more contact with real people they might know more about this sort of thing. This lady was a pensioner of 64, with an income of [column 78]£25 a week, and she was paying £1.15 a week in income tax under a Labour Government. That is the kind of person who will benefit from the reductions in income tax that we propose. There is also a need to give an incentive all the way up the scale—to those on low incomes, those on differentials and those on management earnings. We shall hope to benefit all of those by a reduction in direct tax.
Our present system of taxation seems almost designed to discourage extra work, extra skill and extra responsibility. People have preferred to reduce their tax bills by working less hard than to increase their earnings by working harder. The first important step in restoring incentives is to reduce the excessive burden of direct taxation. Sir Geoffrey HoweThe Chancellor will make a start on this when he introduces his Budget four weeks today on 12th June. In the meantime, I give a firm assurance that we regard the reduction of income tax as an objective of the highest priority.
Further, the Government will do everything possible to encourage free enterprise, particularly the small business sector, which is the source of genuine new jobs. Our policies will be founded on a firm belief in the need to promote profits and profitability, because profits are the main stimulus to enterprise and the key source of funds for new investment and new jobs. That is why we shall bring forward measures to amend those parts of the Employment Protection Act which discourage firms from creating new jobs. We shall bring forward measures to reduce the damaging consequences of the existing price controls and measures to increase competition.
We shall introduce proposals to increase the powers of the Director General of Fair Trading and the Monopolies and Mergers Commission so that they can deal with prices in conditions where competition is limited. We shall also introduce proposals——
Mr. John Fraser (Norwood)
It takes the Price Commission about three months to look at a monopoly. When the Monopolies and Mergers Commission looks at a monopoly, it takes about three years to do so. How does the Prime Minister square a policy of abolishing the Price Commission with her ideas for a greater degree of competition? Surely it will mean less.[column 79]
The Prime Minister
The hon. Member makes a very good case for strengthening the Monopolies and Mergers Commission. I am surprised that he did not do it.
We shall introduce proposals designed to enable the Director General of Fair Trading to examine the abuse of monopoly power by nationalised industries.
We have carried out a review of the workings of the Price Commission and have decided that its impact on inflation has been negligible, as is shown by the doubling of prices under the previous Government. We believe that the Price Commission has destroyed jobs and new investment as well as imposing extra burdens on industry. The Bill that puts forward proposals for strengthening competition will also provide for the abolition of the Price Commission. John NottThe Secretary of State for Trade will give further details shortly.
We are concerned not only to see a healthy free enterprise sector but to increase its size. Too narrow a base for the wealth-creating part of the economy will restrict the growth of the economy as a whole. We shall therefore make a start in extending the role of free enterprise by reducing the size of the public sector—it needs reducing—and by making economies in public spending. We shall examine the role of the National Enterprise Board and require it to dispose of certain holdings in profitable companies. My right hon. Friend Sir Keith Josephthe Secretary of State for Industry will bring forward proposals to amend the Industry Act 1975 during this Session. We see no justification for extending public ownership through the NEB into profitable areas of manufacturing industry.
I turn to the second theme—that of restoring choice to the individual. That choice was progressively diminished during the lifetime of the last Government. Many, many people wish to see choice return, whether it is choice over how they spend their own money or more choice in housing and education, and some choice in health. During the election campaign many people said that at least the Conservative Party gave people choice and that this was quite different from the other party.
I turn first to the question of choice in housing. Thousands of people in council [column 80]houses and new towns came out to support us for the first time because they wanted a chance to buy their own homes. We will give to every council tenant the right to purchase his own home at a substantial discount on the market price and with 100 per cent. mortgages for those who need them. This will be a giant stride towards making a reality of Anthony Eden 's dream of a property-owning democracy. It will do something else—it will give to more of our people that freedom and mobility and that prospect of handing something on to their children and grandchildren which owner-occupation provides.
We will also give council tenants who do not wish to buy their own homes, and want to go on renting, additional rights and safeguards, and we shall take action to halt the decline of the privately rented sector. Our new concept of short-hold tenure will encourage new letting of empty property. We shall also take steps to tackle the land shortage for new building. We shall speed up and simplify the planning system and we shall repeal the Community Land Act. We shall substantially increase choice in housing.
Choice in education was another very important election issue, particularly in crowded urban areas, where the main worry of many parents was how to get a good education for their children. Many felt that they were not getting it. We shall end as quickly as possible all the measures taken by the last Administration to force local education authorities to reorganise their schools along comprehensive lines. Those authorities that still have grammar schools, technical schools and smaller secondary schools may choose to keep them. Those that wish to stay comprehensive will also be free to do so. They will have the choice and the freedom to do so, and the parents will also have the freedom. We shall ensure that parents' wishes are taken into account as far as possible in the choice of schools for their children. At least we shall enlarge that freedom. The Labour Government did nothing but reduce it.
Although the education service is often described as being free, it is hardly free at all because it is paid for out of all our taxpaying and ratepaying pockets. The cost is significant. The average yearly cost of educating a child in a primary school is now £324. In a secondary school [column 81]for children below 16 it is £455, and in the sixth form, £800 per pupil. The education service must be truly accountable to parents' and taxpayers' wishes. We shall see that that is so.
We shall also extend the principle of choice in education by introducing a scheme to help talented children from less well-off homes to attend certain fee-paying schools. Their abilities entitle them to an education suited to their talents, and they should not be denied it because of dogma. We shall fight to improve education standards. We shall have to make better use of our resources and schools will need to have clear aims and pursue them with vigour. Greater choice and higher standards will be our aims in education.
We shall also work to improve the use of resources in the National Health Service and to simplify its administration. [Hon. Members: “Oh” ] I expected that. Labour Members have been complaining about this matter for five years, and have done nothing about it. Also, I have great sympathy with the cause of small local hospitals and hospitals with a special role, such as the Elizabeth Garrett Anderson hospital. There is no such thing as a free service in the Health Service. It must be made more responsive to the needs of patients. Therefore, in those ways we shall extend choice and diversity—matters that have been diminished during the lifetime of the Labour Government.
Mr. Dick Douglas (Dunfermline)
The right hon. Lady spoke earlier of real people. On Saturday one of my constituents spoke to me about the matter of choice in the Health Service. She told me that the provision of a wheelchair that had been prescribed for her husband had been frozen, awaiting the decision of the Government. Will she tell me how I should reply to that constituent in the matter of choice?
The Prime Minister
I am astonished that the hon. Gentleman did not obtain a wheelchair for his constituent before the election. It is amazing that he should complain just afterwards.
I turn to the third head, namely, freedom under the law. In recent years the Government have tried to do too much of [column 82]what they should not do, and failed to do what they should do. The people must be able to look to the State for protection from crime, otherwise the whole basis of a free society is in danger. They should also be able to look to the Government to support the judges in their decisions. The battle against crime will be pursued with relentless vigour and total commitment. That is why the first action of the new Government was to implement immediately and in full the recommendations of the Edmund-Davies committee on police pay. That was an earnest of our intention to back the police in the war against crime. We must have a strong and experienced police force.
We shall also bring forward proposals to strengthen the powers of the courts in dealing with young offenders.
Mr. Clinton Davis (Hackney, Central)
Does the right hon. Lady intend to refer to an extraordinary omission from her party's manifesto and the Queen's Speech, namely, the problem of the inner cities? In particular, will she describe her proposals in regard to the existing partnership schemes? Are they to be enlarged, as I believe is necessary, or what?
The Prime Minister
Whatever the hon. Gentleman's policies on inner cities may be, they clearly have not been successful. I have been talking for several minutes about small business, which is vital to inner cities, about education, which is vital to inner cities, about the Health Service, which is vital to inner cities, and about housing, which is vital to inner cities. It is those policies that are far more likely to revivify our inner cities than the giving of subsidies without sufficient consultation with local people, which was the policy followed by the Labour Government.
Mr. Guy Barnett (Greenwich)
I wish to press the right hon. Lady on inner city policy. That policy was initiated only a year and a few months ago. Because we have not yet seen results, is it not wrong to sit in judgment on a whole range of policies initiated by the Labour Government?
The Prime Minister
The Labour Government have been in power for 11 out of the last 15 years. Those policies have had a long time in which to be tested, yet where one finds poverty in [column 83]inner cities, there one finds that Socialist government has operated for many years. That may have happened because Labour policies did not give sufficient care and attention to the personal freedom and dignity of individuals. Labour tried to impose the will of the State on the people when the people wanted something totally different.
Under the heading of the rule of law, I wish to deal with the law as it relates to trade unions. We accept that a strong and responsible trade union movement must play a large part in our economic recovery. Government and public, management and unions, employers and employees, all have a common interest in raising productivity and profits and in improving real standards for everybody.
The crippling industrial disruption that hit Britain last winter in the period of office of the Labour Government had several causes. They were years with little growth in production, rigid pay controls, high marginal rates of taxation and the extension of trade union power and privileges through the Acts of 1974 and 1976 passed by the Labour Government.
We shall introduce a Bill to make three changes in the existing law. First, the right to picket will be limited to those in dispute picketing at their own place of work. Secondly, we shall amend the law on the closed shop so that those arbitrarily excluded or expelled from any union are given the right to appeal to a court of law—a right that the Labour Government took away from them.
Existing employees and those with personal convictions against joining a union will be protected. If they lose their jobs as a result of a closed shop, they will be entitled to full compensation—compensation that they did not obtain under the Labour Government.
Thirdly, we shall provide public funds for postal ballots for union elections and other important decisions. Every trade unionist should be free to record his decision without others being able to watch or take note. We believe that the great majority of trade unionists will over-whelmingly support these changes.
Mr. Denis Healey (Leeds, East)
In that case, will the Prime Minister say whether she has dropped the proposal to rob the families of people on strike of social security benefits—a proposal that [column 84]was opposed by the Association of Conservative Trade Unionists and castigated some years ago by her right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) as conveying the image of Mr. Gradgrind and Mr. Bumble?
The Prime Minister
Nobody proposes to rob families, to use the language of the ex-Chancellor of the Exchequer. We are entitled to expect the union funds of those who go on strike to make a greater contribution while people are on strike, as they do in many other countries. That proposal is not specified in this Gracious Speech. This is the Gracious Speech for one year. There will be four other years, and in case the right hon. Gentleman should try to circumscribe us as to when we should go any further. I must tell him that anything that we do will be covered by the famous phrase:
“Other measures will be laid before you.”
Those I have given are specific undertakings that my right hon. Friend James Priorthe Secretary of State for Employment is pursuing with the unions and hopes to introduce in a Bill before Christmas. In these ways we shall restore the balance between the power and responsibilities of trade unions.
Mr. Kevin McNamara (Kingston upon Hull, Central)
The Prime Minister
I will give way to the hon. Gentleman, but after that I must get on.
Will the right hon. Lady define where is the “place of work” of a lorry driver?
The Prime Minister
I have given considerable thought to that. I believe that the legislation will define it. I know what the hon. Member for Kingston upon Hull, Central (Mr. McNamara) is suggesting—that the lorry is an extension of the premises. That would depend upon whether the legislation referred to premises and premises only. I doubt very much whether premises could be construed as a lorry. Doubtless the hon. Gentleman will take a considerable part in the legislation, but as the Bill has not come before us yet I doubt whether he can consider whether all matters have been defined.
You said so.[column 85]
The Prime Minister
No, no. I am a tax lawyer, and the nature of trade was never defined in tax law.
I turn to constitutional matters, upon which the right hon. Gentleman remarked. We shall ask Parliament to approve the orders repealing the Scotland and Wales Acts. We shall do nothing to jeopardise the unity of the kingdom. We shall initiate all-party discussions aimed at bringing government in Scotland closer to the people. We shall give Parliament an opportunity to consider ways of improving its scrutiny of Welsh affairs.
The Gracious Speech sets out the Government's objectives for Northern Ireland. We shall maintain the union between Great Britain and Northern Ireland for as long as that is the wish of the majority of the people in the Province. We shall give the strongest possible support to the security forces in combating terrorism and in bringing before the courts those responsible for criminal activities. There will be no amnesty for convicted terrorists.
Politically, the Government's most urgent task is to find a way to restore to democratically elected representatives of the people of Northern Ireland a substantial measure of control over their own affairs. As we all know, this will not be easy but it is an aim we must pursue.
I turn to defence and overseas matters. We give priority to defence because security is essential to our survival as a free nation. The quality of any system of defence depends, first, on the troops who man it. That is why we pay tribute to the men and women in our forces and the job that they do for us all. That is why, in our first days in office, we have fulfilled our promise to bring up their pay to the level recommended by the Armed Forces Pay Review Body. That will go a long way towards stopping the critical outflow of skilled manpower from the Services.
Despite the pressure on our resources and our determination to control Government expenditure, we shall affirm Britain's commitment to NATO. We shall ensure that the British nuclear forces, like their French and American counterparts, remain a factor that cannot be ignored in the calculations of a potential aggressor.
I am glad that the right hon. Gentleman noted what I said about Europe. I noted [column 86]that he had been complaining a great deal about the terms that he had renegotiated and how he had handled them during the last five years. We believe that a strong Britain in a strong Europe can play a crucial part in the future of the West. As I explained recently to our German partners, we see no contradiction between a vigorous and effective membership of the European Community and vigorous and effective pursuit of Britain's interests within the Community. I am sure that other countries have the same approach.
There is nothing wrong in finding, after a certain number of years, that policies need to be changed to meet new circumstances, or that anomalies which flow from them need to be corrected. Such necessary changes must be made by agreement among the member Governments. In making those changes we shall not undermine the Community—we shall make it better able to serve the common interest and to be fair, just and reasonable to all its members.
The right hon. Gentleman referred to the problem of Rhodesia. I should like to address some remarks to that very serious problem. The Government welcome the major change that has taken place in Rhodesia as a result of the recent elections and the emergence of an African majority Government. It is our objective to build on that change to achieve a return to legality in conditions that secure wide international recognition. We have sent a senior Foreign and Commonwealth Office official to Salisbury this week to have discussions with Bishop Muzorewa.
We shall need to consult many people in the coming days and weeks, including our own partners in the Nine and in the Commonwealth. The United States Government should be one of the first to be consulted in view of their involvement in the Rhodesian question. Therefore, I am particularly glad that Mr. Vance will be here next week for talks with my noble friend Lord Carringtonthe Foreign and Commonwealth Secretary.
I have seen my noble Friend Lord Boyd following his return from leading a group of observers at the Rhodesian elections. He and his colleagues are completing their report. I expect to receive it tomorrow and we shall hope to publish it. We must and will recognise the realities of the present situation in Rhodesia. We [column 87]must and will take into account the wider international implications. I assure the House that we intend to proceed with vigour to resolve the issue.
The programme that I have outlined, of measures in both domestic and foreign policy, is a programme for action for a 17-month Session of Parliament. Our priorities are to restore the balance in our economy, to restore the balance between the individual and the State, to promote the freedom of the individual under the rule of law, and to defend our interests wherever they are challenged.
These are the policies that we submitted to the people. The path that we now take is the path that the people have chosen.