USSR
Q1. Mr. Stoddart
asked the Prime Minister if she will pay an official visit to the Union of Soviet Socialist Republics.
The Prime Minister (Mrs. Margaret Thatcher)
I have at present no plans to do so.
Mr. Stoddart
Is the Prime Minister aware that many people in this country regret the belligerent attitude that she is taking towards the Russians—[Hon. Members: “Who?” ]—Many people. Is she also aware that they regard the decision to station a new generation of nuclear weapons in this country as provocative and highly dangerous to world peace and the safety of the British people and others in Western Europe? Will she reconsider her decision and pay a visit to the Soviet Union, not in Churchill 's trousers, but as a peace maker? Will she urge upon the Russians—and, indeed, all nations—that a reduction in weapons of mass destruction is the only way to world peace?
The Prime Minister
The message that I have received from the country is that the only way to tackle a potential threat from any potential aggressor is to be strong in defence forces in this country and to be strong enough at each and every level to deter any potential aggressor. That is the policy that we shall continue to follow.
Mr. Maxwell-Hyslop
Does my right hon. Friend agree that there is little purpose in holding discussions with the Russian leaders while they fail to honour the agreements that they have already entered into, such as the Helsinki agreement?
The Prime Minister
We long for the day when the agreement which the Soviet Union signed is, in fact, honoured.
Mr. James Lamond
Does the Prime Minister recall that President Carter said that to keep the peace we must avoid an uncontrolled and pointless nuclear arms race? If that is the case, why does she not go to the Soviet Union in a conciliatory vein and meet Mr. Brezhnev to discuss the proposals that he put forward on 6 October including those to reduce nuclear armaments in the European theatre?
[column 1497]The Prime Minister
We are always prepared to consider disarmament, provided that it applies to both sides. I hope that when I meet the leaders of the Soviet Union again—I met Mr. Kosygin in Moscow on my way to Tokyo—we shall be in a position to negotiate from strength.
Mr. McCrindle
While the Prime Minister is at home, and until she has the opportunity to visit the Soviet Union, will she take account of the recent press reports which indicate the most alarming development in both the quantity and quality of Russian arms in Europe?
The Prime Minister
It is true that the Russian forces in Europe are receiving the most up-to-date theatre nuclear weapons and that NATO has not had any new weapons for about 10 years. That is the task to which we must put our hand at the next NATO meeting early in December. We must agree to modernise those theatre nuclear forces.
PRIME MINISTER
(ENGAGEMENTS)
Q2. Mr. William Hamilton
asked the Prime Minister what are her official engagements for 15 November.
The Prime Minister
This morning I presided at a meeting of the Cabinet. In addition to my duties in this House I shall be having further meetings with ministerial colleagues and others. This evening I shall be attending a banquet given by President Soeharto of Indonesia.
Mr. Hamilton
Was the Cabinet meeting this morning happy and agreeable? When the right hon. Lady was appointed to her high office last May, did she imagine that she could produce such a shambles in such a short time? Can she give an assurance that we will not be plunged much deeper into the mire before she does a U-turn on incomes policy?
The Prime Minister
As usual, the Cabinet was united this morning—[Interruption.]
Mr. Speaker
Order. Hon. Members are merely reducing the time for questions.
[column 1498]The Prime Minister
As usual, the Cabinet was united this morning in its determination to carry through those policies upon which the Conservative Party fought and won the election. The question behind the supplementary question of the hon. Member for Fife, Central (Mr. Hamilton) perhaps refers to the interest rates announced today. With the expansion in borrowing that we are facing, the alternative was either to raise interest rates, as we did, or to print money. We would not print money, and it was necessary to raise interest rates to conquer inflation. With Government borrowing as high as it is—it would have been higher had the Labour Party been in office—we must have interest rates high enough to get in the money to pursue existing expenditures. I shall be grateful for the hon. Gentleman's support in getting down public expenditure so that we may get down interest rates.
Mr. Hannam
Will my right hon. Friend take time off today to explain to the British miners that it is impossible to reconcile their complaints about the importation of cheaper coal from abroad with the exorbitant pay demands that they are now making?
The Prime Minister
The issue of importing cheaper coking coal is vital for the British Steel Corporation, which already has many difficulties. Coking coal from the National Coal Board costs about £40 a ton. The imported coking coal costs about £30 a ton. It is necessary for the steel industry to have minimal raw material costs to stay competitive.
Mr. Foot
In view of the reply that the right hon. Lady gave a short while ago, will she say when she mentioned a 17 per cent. minimum lending rate during the election? If she does not have the date handy, will she publish it in the Official Report?
The Prime Minister
May I welcome the right hon. Gentleman back? The right hon. Gentleman knows that our policies about fighting inflation were never in doubt. We do not flinch from taking the steps necessary to tackle inflation. There were times when my predecessor had to increase interest rates. With borrowing expanding as it was, we had to put up the rates. With the present level of public expenditure, we must have the interest [column 1499]rate high enough to get in the necessary amount in gilts. If the right hon. Gentleman, too, will support us in getting down public expenditure, the interest rates, too, can come down.
Mr. Foot
As the right hon. Lady says that her policies for dealing with inflation were never in doubt, will she tell us when she mentioned a 15 per cent. rate of VAT in the election?
The Prime Minister
If the right hon. Gentleman read the Conservative Party manifesto, no doubt he found that it stated that a number of decisions on public expenditure had to be taken, that public expenditure had to be reduced, and that we would take the necessary decisions. We also said that we would transfer from direct taxation to indirect taxation, and that we did. I believe that in the end it will result in incentives that will increase the national income.
Mr. David Steel
Does the Prime Minister recall the occasion almost a year ago when she told——
Mr. Skinner
She ought to.
Mr. Steel
Shut up. [Interruption.] I am sorry, Mr. Speaker. Does the right hon. Lady recall the occasion a year ago when she told the House that a Prime Minister who had to shove interest rates up to over 12 per cent. was quite hopeless at handling economic affairs? If she still sticks by that view, will she advise this young man how he should regard the economic competence of the present Prime Minister?
The Prime Minister
I seem to remember that the reply that I received on the occasion to which the right hon. Gentleman refers, or a similar occasion, was that there was no alternative in the light of the increase in borrowing. If that applied then, it applies now. I must react to the circumstances that face us now. Conditions would have been much easier for us if there had not been the value added tax strikes and problems, and if there had not been the strike that prevented the issuing of telephone bills, which means that we are—[Interruption.]
Mr. Speaker
Order. The House is being unfair. It must listen to the right hon. Lady's answers.
The Prime Minister
That strike means that we shall be short this year of about [column 1500]£400 million, which means extra borrowing.
Mr. Burden
When my right hon. Friend took office, did she expect to find foreign overseas borrowings raised by the previous Government amounting to $26.133 billion?
The Prime Minister
The borrowing that took place under the previous Government was of a record amount. Borrowing more than doubled during the lifetime of the previous Government. The whole of the public sector borrowing requirement this year has to go to paying interest on previous borrowing.
COMMISSIONER TUGENDHAT
Q3. Mr. Flannery
asked the Prime Minister if she has any plans to meet Mr. Tugendhat of the EEC in the near future.
The Prime Minister
I met Mr. Tugendhat in September. I have at present no plans for a further meeting.
Mr. Flannery
Does the right hon. Lady remember that her predecessor, the right hon. Member for Sidcup (Mr. Heath), as Leader of the Tory Party promised in a White Paper positive and substantial gains on our balance of payments if we went into the Common Market? Will she explain to Mr. Tugendhat that the £4,000 million that the Common Market has cost us and the £1,000 million that it is now costing us every year is driving our people to desperation, and that they want to get out of the Common Market now? Will she take it up with him, because the cost to Britain will grow and grow until we come out?
The Prime Minister
The Common Market gives our manufacturers the same opportunities as other manufacturers in the larger market of the Common Market. I agree with the hon. Gentleman that it is a great tragedy that we have imported many more manufactured goods from the Common Market than we have been able to sell in other member States of the Common Market. If we can get rid of strikes and increase productivity, we shall do a great deal better.
Mr. Gummer
Will my right hon. Friend please take as many opportunities as possible to point out to the Opposition that they wasted four years in which [column 1501]they could have built up our place in the European Economic Community to enable us to compete with our friends in the Community?
The Prime Minister
My hon. Friend knows that I have frequently said that had we spent as much time on increasing productivity as we spent on incomes policy we would have done much better.
Mr. Heffer
Will the Prime Minister explain what cash limits she will put on the EEC in the same way as she is putting cash limits on local authorities and public authorities? Will she not go beyond the cash limits that she has already announced?
The Prime Minister
That is hardly the right way to approach that issue, as the hon. Gentleman knows. We need substantially to reduce the net contribution that we make to the Common Market for 1980–81. I am grateful to have the hon. Gentleman's support and the support of the whole House in that objective.
PRIME MINISTER
(ENGAGEMENTS)
Q4. Mr. Bob Dunn
asked the Prime Minister if she will list her official engagements for Thursday 15 November.
The Prime Minister
I refer my hon. Friend to the reply I gave earlier.
Mr. Dunn
Will my right hon. Friend take time from her arrangements today to consider how best to persuade our NATO allies urgently to increase expenditure on defence? Will she continue to remind our allies in NATO that the hallmark of a free society is the ability to defend itself?
The Prime Minister
I totally agree with my hon. Friend that those of us who value a free society must be prepared, as a first charge, to ensure that it is properly defended. My hon. Friend knows that we have accepted the NATO target of a 3 per cent. annual increase in expenditure. I hope that other NATO countries will also accept that increase. Many of them already spend far more per head on defence than we do.
Mr. James Hamilton
Will the right hon. Lady give time today to deny the [column 1502]fact that her Government are operating an incomes policy? It appears that for private enterprise free collective bargaining is all right, but the right hon. Lady has put a ceiling on the public sector.
The Prime Minister
As far as the public sector is concerned, we set cash limits, but the cash limits that apply to the nationalised industries are but a very small part of their total income. We set those limits with a view to getting unit wage costs down, and I am grateful for the opportunity to make that clear.