Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1984 Jun 12 Tu
Margaret Thatcher

HC Stmnt: [London G7 Summit]

Document type: Speeches, interviews, etc.
Document kind: House of Commons Statement
Venue: House of Commons
Source: Hansard HC [61/763-77]
Journalist: -
Editorial comments: 1535-1612.
Importance ranking: Major
Word count: 8145
Themes: British Constitution (general discussions), Parliament, Defence (general), Defence (arms control), Defence (Falklands War, 1982), Economy (general discussions), Employment, Industry, Local elections, Monetary policy, Privatized & state industries, Energy, Environment, Public spending & borrowing, Trade, European Union (general), Foreign policy (general discussions), Foreign policy (Americas excluding USA), Foreign policy (Asia), Foreign policy (development, aid, etc), Foreign policy (Middle East), Foreign policy (USA), Foreign policy (USSR & successor states), Local government, Local government finance, Science & technology, Terrorism, Strikes & other union action
[column 763]

London Economic Summit

The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker, I shall make a statement about the tenth annual economic summit which was held in London from 7 to 9 June. Heads of State or Government of the seven principal industrialised countries were present, accompanied by their foreign and finance or economic Ministers, together with Gaston Thornthe President of the European Commission, who was accompanied by Monsieur Ortoli.

I have placed in the Library of the House copies of the economic declaration and of declarations issued on democratic values, East-West relations and terrorism, together with a statement about our discussions on the Iraq-Iran conflict. I shall deal first with the political issues.

The summit considered it timely to restate the values which bind the Western democracies, particularly at the end of a week when we had been remembering the very different conditions of 40 years ago. Too often we have seen the Western case go by default while Governments who deny democracy maintain an unceasing flow of propaganda.

At British initiative, we had a thorough discussion of the problems posed by terrorism. There was unanimous determination to confront and defeat international terrorism whatever forms it may take. We identified a number of detailed proposals which will be followed up in the working group of experts from the summit countries.

On East-West affairs the summit, having stressed the need for resolve and solidarity, stated our readiness for dialogue and our hope that the Soviet Union will react constructively and positively. We expressed our belief that East and West have important common interests: in preserving peace; in enhancing confidence and security; in reducing the risks of surprise attack or war by accident; in improving crisis management techniques; and in preventing the spread of nuclear weapons.

We also discussed the conflict between Iraq and Iran. We expressed our regret at the breaches of international humanitarian law which this conflict has brought and called for freedom of navigation to be respected. As to oil supplies, we were satisfied that, given existing stocks of oil and the availability of other sources of energy, adequate supplies could be maintained for a substantial period of time by international co-operation and mutually supportive action.

The primary purpose of the summit was to discuss economic matters. On these we reached the following main conclusions. First, the declaration pointed out that economic recovery can now be seen to be established in the summit countries. It is more soundly based than previous recoveries, thanks to the firm policies designed to bring down inflation. But to sustain recovery, and spread its benefits further, requires unremitting efforts. We agreed, therefore, to continue and where necessary to strengthen policies to reduce inflation and interest rates, to control monetary growth and reduce budget deficits.

Secondly, as unemployment in our countries remains high, we emphasised the need for sustained growth and the creation of new jobs; the need to ensure that industrial economies adapt and develop in response to demand and [column 764]technological change, including in small and medium-sized businesses; and the need to encourage active job training policies and the efficient working of the labour market.

Thirdly, on international debt, the problems will be easier to resolve if world recovery is sustained and policies are followed which are conductive to lower interest rates. We reaffirmed the case-by-case approach. We agreed that with the strategy we have adopted the problems are manageable. We identified a number of matters which require further attention. Among them: that, where debtor countries have successfully made efforts to adjust their economies, we will encourage multi-yearly rescheduling of their debts; that we should like to see even closer co-operation between the International Monetary Fund and the World Bank, whose role should be strengthened; and that developing countries should be encouraged to open their economies to increased direct investment from the industrialised countries and to substitute longer-term direct and portfolio investment for short-term bank lending.

Fourthly, the summit urged all countries to reduce trade barriers and liberalise and expand international trade in manufactures, commodities and services. We agreed to consult our GATT partners with a view to early decisions on the timing and objectives for a new negotiating round.

Fifthly, we agreed on a new programme of research and co-operation, the better to establish and deal with the causes of environmental pollution.

To sum up, the summit expressed the clear view that the economic strategy we have been following is right and that we should continue to pursue it. We did not leave it at that. We set out in the declaration a 10-point action programme for the next 12 months. This includes a series of specific measures for reducing obstacles to the creation of new jobs; and records our agreement to seek to maintain and wherever possible increase the flow of official aid to developing countries, particularly the poorest; and to encourage more openness towards private investment flows. The declaration as a whole sets out a global approach to the economic situation and deals comprehensively and positively with current needs and problems.

This was a workmanlike and constructive meeting which achieved a very large measure of agreement on the basic objectives of our respective policies, on both the economic and political fronts.

Mr. Neil Kinnock (Islwyn)

The Prime Minister said that the primary purpose of the summit was to discuss economic matters, and I shall confine my questions to that. The Prime Minister and the communiqué referred to recovery in the world economy. That is good news, of course, as far as it goes. But when the Prime Minister says in her statement that

“the summit expressed the clear view that the economic strategy we have been following is right” ,

is the reference to America's strategy or hers? Obviously they are absolutely opposite. Does not the right hon. Lady agree that any signs of life have come largely as a result of the expansion of the United States' economy, despite her lectures to the President?

Will not the Prime Minister face the fact that capital is being pulled to the United States of America by the vigour of its economic revival, and that we shall draw capital back to Britain and Europe, without an interest rate war, only if and when our economy is stimulated into a similar expansion? Will her efforts to control monetary growth in [column 765]keeping with the summit declaration exclude the raising of interest rates? If that is her intention, can she explain how the squeeze on the supply of credit will bring stability or a reduction in the price of credit for industries and families in Britain?

The failure of the leaders of the strongest economies to take systematic and serious initiatives to deal with the current and growing debt crisis in an unforgivable evasion of the responsibilities that go with their immense power. Does the Prime Minister understand that her self-righteous approach to the needs of the people of the Third world is yet further evidence of her pervading lack of concern for poor people, whether they be in this country or elsewhere? Why does she refuse to comprehend that, if others in the world are denied the power to spend, our people will not get the proper opportunities to work, to produce and to earn? How did she have the gall to agree to the communiqué when her policies absolutely contradict the declarations on technological change, job training, efficient working of labour markets, flexibility in working time, official development assistance and much else? After five years of reduced investment, cuts in training, jobcentres, overseas aid and much else, that is a massive insincerity, even by the Prime Minister's standards. It is matched only by the vanity which she displayed in this empty epic over the weekend.

The Prime Minister

The comments in the communiqué on recovery and expansion were the conclusions of all seven Heads of State and Government plus Mr. Thorn. They said together:

“That recovery can now be seen to be established in our countries. It is more soundly based than previous recoveries in that it results from the firm efforts made in the Summit countries and elsewhere over recent years to reduce inflation.”

All countries have made efforts to reduce inflation. I am sorry that the Leader of the Opposition is so critical of the conclusions of President Mitterrand and Prime Minister Craxi.

On monetary growth and interest rates, the communiqué said that we shall pursue policies to keep down monetary growth and interest rates. Interest rates in the United States are a great deal lower now than they were three or four years ago. Indeed, they are only about half what they were. We have set out a programme to deal with the debt crisis—[Interruption.] I am sorry that the right hon. Gentleman does not agree. Apparently, Mr. Larosière of the International Monetary Fund does. I am not surprised that the right hon. Gentleman is out on a limb on his own.

I am sorry that the right hon. Gentleman thinks it wrong that in the declaration of democratic values published by all Heads of Government and State at the summit we said:

“We are aware that economic strength places special moral responsibilities upon us.”

We think that; perhaps the right hon. Gentleman does not.

We have been foremost in encouraging technological change. No other Government have acted so strongly in educating children on technological change. We have introduced computers in schools and a big computer training programme for young people. We have also helped particularly to launch new products, particularly for small businesses. The communiqué pointed out the importance of that in securing new jobs. [column 766]

The fact is that once again the right hon. Gentleman is out of step with all the other countries.

Mr. David Steel (Tweeddale, Ettrick and Lauderdale)

Will the Prime Minister accept that it is particularly difficult to take from her today the statement about the values of Western democracies the day after every hereditary backwoodsman in the land has been hauled into the other place to push through a Bill which seeks to switch the political complexion of the government of London with no democratic election whatever?

Secondly, what effort did the right hon. Lady make at the summit to obtain a common EC line against the high interest rates of the United States? Does she accept that that continues to stifle economic recovery in both the developed and the underdeveloped world?

Thirdly, how is the right hon. Lady's talk about preventing the spread of nuclear weapons consistent with the President of the United States entering into the Star Wars concept of space? How does it square with her determination to press ahead with the proliferation involved in the Trident programme and with her reluctance to put the French and British nuclear deterrents into the equation in dealing with East-West relations?

The Prime Minister

May I point out that the majority of 20 in their Lordships' House the other day was far higher than that received on Second Reading of most Bills under the previous Labour Government which the right hon. Gentleman supported? The Aircraft and Shipbuilding Industries Bill was put through with a majority of six and the Bill which set up the National Enterprise Board was put through with a much smaller majority than 20. As the right hon. Gentleman supported the previous Labour Government, he is in no position to criticise.

We are all pursuing policies which will try to reduce high interest rates. The United States is, of course, pursuing a policy which will reduce the deficit by reducing public expenditure and increasing taxation which together will amount to $150 billion.

I repeat what I said earlier on the reported experiment that has taken place. It would be a very rash person who would conclude future policies on the basis of one experiment. As the right hon. Gentleman is aware, it takes an enormous time on the experimental stage to produce weapons and an enormous amount more on testing. In the meantime, wise Governments ensure that their people are defended and wise Governments deter potential aggressors.

Mr. Terence Higgins (Worthing)

Did those at the summit recognise that the international debt crisis is concentrated largely on a very small number of countries, especially Argentina, Brazil and Mexico, and that there is a real danger that too many additional resources are being devoted to their problems rather than the Third world countries which are the poorest and the most in need of aid?

The Prime Minister

My right hon. Friend is the first hon. Member to note that the poorest countries are not so much those that are in debt difficulties, because, on the whole, we try to get more aid to them. Aid is far more appropriate than large loans which they could not possibly afford. I agree with my right hon. Friend that a number of other countries are facing debts. I am sure that my right hon. Friend has seen Mr. Larosiére's speech at the [column 767]Philadelphia conference and has noted the excellent way in which he said that the matter should be dealt with, a way that we warmly endorse.

Mr. Robert Sheldon (Ashton-under-Lyne)

Does the Prime Minister agree that little profit is to be obtained by nagging the United States about its budget deficit, as it is largely the United States budget deficit that has been responsible for whatever recovery we have? Would it not be better to get a number of like-minded countries to co-operate in reducing interest rates, even if that meant some increase in the money supply?

The Prime Minister

No one was taking the United States to task for its budget deficit, because the United States has said that it is making a down payment to reduce its deficit. The phrase “down payment” implies that there are other substantial instalments to come.

Our recovery started before the recovery in the United States. We are all of one mind to continue policies to reduce inflation, to restrain public expenditure and public borrowing and to hold monetary growth. That is the right strategy, and it was agreed by every head of Government.

Mr. Peter Hordern (Horsham)

Does my right hon. Friend agree that the problems of the international indebtedness of the Latin American countries and, to some extent, the developing countries are being caused not only by the United States budget deficit but by the fact that their exports have been hampered by restrictions on trade because of quotas? Is my right hon. Friend satisfied that the GATT negotiations to which she referred will be an adequate instrument to deal with those restraints?

The Prime Minister

I agree with my hon. Friend that the debt position is aggravated by any increase in interest rates. It is not possible to argue with that proposition. An increase in interest rates causes problems to those countries when they are already struggling with their international indebtedness. As my hon. Friend knows, countries such as Mexico and Brazil have made the adjustment process. Mexico has just received multi-schedulings, and does not have to come back on a yearly basis for rescheduling its payments of interest rates.

I agree with my hon. Friend that, if the debtor countries are to get out of their indebtedness, they must be able to export their goods more freely to industrialised countries. They must be able to trade their way out of the problems, and that matter was very much taken on board at the summit. A number of people tried to get a specific date for a decision on a new GATT round. As we are not the authority that can take the decision on GATT, we shall have to consult our colleagues with regard to that matter before we commit ourselves.

Mr. Jack Ashley (Stoke-on-Trent, South)

Is the Prime Minister aware that the difficulties of developing countries, which are caused by the commercial banks, cannot be solved either by the piecemeal case-by-case approach, which the right hon. Lady embraces or by the communiqué, which she obviously espouses? The developing countries need, first, time and, secondly, lower interest rates to enable them to repay their debts. That can be done only by a joint Government approach. What is the Prime Minister doing about that?

The Prime Minister

I disagree with the right hon. Gentleman. He said that those problems cannot be solved [column 768]on a case-by-case basis. I quote from the speech by Mr. Larosière of the International Monetary Fund made at the Philadelphia conference of bankers. He said:

“there are no magical solutions to the problems we have been facing. Proposals have been made for panaceas such as writing off part of the debts or transferring them wholly or in part to official institutions … those proposals have attracted little support. One reason for this is that each country's debt situation has its own specific features that cannot adequately be taken into account in generalized approaches.”

That was the view that he took and that was the view that we took, and I believe that it is the right one. The right hon. Gentleman knows that it will help to keep interest rates down if we try to keep down public expenditure and deficits.

Mr. Peter Tapsell (East Lindsey)

Although it certainly brings its own problems with it, if we do not want to see a drastic reduction in United States expenditure on defence, on which the security of the free world depends; and if we do not want to see a sharp fall in the prices of raw materials, on which the living standards of the Third world depend; and if we do not wish to see the loss of the only great market in the world in which Britain enjoys a large surplus on her banance on trade; should we not be a little chary of joining the chorus of those who, often for their own and varied reasons, seek to blame most of the economic problems of the world on the fact that the United States is running a budgetary deficit of about 5 per cent. of its gross domestic product?

The Prime Minister

If my hon. Friend reads the communiqué, he will find that we did not blame most of the problems of the world on the United States deficit. Indeed, the United States is not mentioned in it. We observed that if we are to have a sounder based and sustainable recovery we must continue to keep down inflation and restrain public expenditure, monetary growth and deficits. That applies to each and every one of us and that is the policy that we are pursuing. My hon. Friend will find that that strategy was endorsed in the communiqués issued by many previous Heads of Government summit conferences.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the Prime Minister answer the question that she did not answer when she replied to the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel)? How does she reconcile signing a declaration on democratic values with the abolition of elections to the Greater London Council and the metropolitan counties?

Mr. Speaker

Order. I have allowed that question to be raised, but I do not think that the House should now persist with it.

Mr. Foulkes

The Prime Minister was one of those who signed the declaration on democratic values. Perhaps she will tell us how she explained the fact that London will soon be the only capital city from Washington to Tokyo and from Edinburgh to Cardiff that does not have an elected council covering the whole city.

The Prime Minister

The issue was not whether the elections should be cancelled. The issue was whether GLC councillors should continue for a further year or whether others should continue for a further year. As the hon. Member for South Shields (Dr. Clark) said from the Opposition Front Bench on 11 April, he could sympathise with the Government's belief that it would have been wasteful to hold elections. The question was whether we [column 769]should prolong the mandate of GLC councillors after that mandate had been exhausted, which would have been a wrong precedent which could have been used to prolong the mandate, for example, of the House. That would have been constitutionally wrong. It would clearly be wrong to prolong a mandate after it had been exhausted. The issue was whether we should substitute for those councillors other councillors who would take over the responsibility—[Interruption.] The hon. Member does not like hearing the right answer. However, Mr. Speaker allowed the question and therefore I must give the right answer. Councillors whose mandates have been exhausted will be replaced by councillors who still have a mandate on their district councils.

Several Hon. Members

rose——

Mr. Speaker

Order. We cannot have an extension of Prime Minister's Question Time. I allowed the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) to ask the question, but perhaps I should not have done so. We must return to the subject of the economic summit.

Mr. David Winnick (Walsall, North)

On a point of order, Mr. Speaker. The Prime Minister has just said——

Mr. Speaker

Order. I shall take points of order after questions on the statement.

Sir Paul Bryan (Boothferry)

In the course of the proceedings my right hon. Friend had talks with the Japanese Prime Minister. Was he able to give her any assurances on the prospects of the opening up of that market?

The Prime Minister

Obviously we considered that because, as the hon. Gentleman knows, the Japanese have recently embarked upon a liberalisation of their capital markets which we hope will be advantageous to other countries, including our own. I think that the Japanese Prime Minister is very much for investment by Japanese firms in this country because, as my hon. Friend knows, they have a greater surplus of currency, and they would like it to be used in that way.

Mr. Bryan Gould (Dagenham)

In her answer to my right hon. Friend, the Prime Minister pointed out that American interest rates had fallen substantially at the same time as its budget deficit had risen to record levels. How does she explain that fact?

The Prime Minister

Because, as the hon. Gentleman is well aware, the price of money varies with three factors: inflation, the Government deficit, and the private sector demand for money. Each of the three must be taken into account.

Mr. Anthony Nelson (Chichester)

Does my right hon. Friend accept that many people in this country and abroad would wish to congratulate her on the constructive lead which she has taken in the economic summit meeting in London? In view of the fact that the prudence exercised by this Government may inevitably be directly affected by the economic policies pursued in the United States, can my right hon. Friend be very hopeful that the down payment which has been made this year by the American [column 770]Administration will be followed immediately after the forthcoming elections by a real contribution towards budget deficit reductions in the United States?

The Prime Minister

I take it that that is what the phrase “down payment” means, and that is why it was used. That down payment will be followed by further measures to reduce the budget deficit in the coming year.

Mr. Norman Atkinson (Tottenham)

In regard to the economic declaration, does the Prime Minister recall that on two or three occasions recently she has assured the House that it is not the Government's intention to initiate any new moves on industrial training or job creation? Why then did she not propose to issue a minority statement, following the declaration, unless this new statement indicates a fundamental change in Government policy?

The Prime Minister

It is not a fundamental change of this Government's policy; it is a continuation of this Government's policy. We have one of the best schemes the world over for job training for young people.

Mr. Patrick McNair-Wilson (New Forest)

Does my right hon. Friend agree that, with all its faults, the Bretton Woods conference of 40 years ago did much to underpin the banking system? Does she also agree that, in the current state of uncertainty, such a gathering could be of material benefit, and why does she object, or appear to object, to such a conference?

The Prime Minister

Because we now have, as a result of Bretton Woods, the very international financial institutions that we did not have before that time. It is the existence of those international financial institutions—the IMF, World Bank and the various aid agencies—and the various political summits that we have had that enable us to take action to counter the world economic difficulties. None of that could have been done before the International Monetary Fund or World Bank existed.

Mr. Dick Douglas (Dunfermline, West)

Does the Prime Minister accept that when she speaks about recovery, particularly in this country, it is largely based on North sea oil? Could she explain what the likelihood would be if, instead of exporting about £10 billion in terms of investment across the exchanges to the United States and elsewhere to strengthen their manufacturing base, we had more investment to strengthen the manufacturing base in the United Kingdom? Would she accept that, while we are not disappointed in her posture in relation to the deprived sections of the world, we recognise her posture in relation to the deprived section of the United Kingdom, some of whom were demonstrating in London on Thursday, and she would have been much more beneficially employed by meeting them rather than attending the summit?

The Prime Minister

The last part of the hon. Gentleman's question is nonsense, and he knows it. Does he really suggest that one should not be in charge of a summit when all those people have been asked to London? If it has come down as far as that to ask a question, I am just astounded.

The recovery depends not only on North sea oil. Much manufacturing industry is extremely efficient. The chemical industry is exporting extremely well. The car industry, when it is not on strike, has also put its own house in order, and its exports and sales here are going up. Investment in manufacturing industry over the last year [column 771]has increased by 10.5 per cent. We have had inquiries many times, and they have found that there is plenty of money for investment. It is not just investment itself which is good; it must be productive investment. As the hon. Gentleman will see from the report of the Select Committee on Trade and Industry one has to have not only the investment, but also the design, the goods and the price at which they will sell.

Mr. Tim Rathbone (Lewes)

On a broader question, does my right hon. Friend agree that the summit may have been useful not only in the agreements that have been struck but also in the disagreements that may have been discussed? Will she continue to press for further such summits, and for summits which embrace the Eastern bloc in order to defuse the tension in the world?

The Prime Minister

There is a paragraph in the communiqué which points out that one of the most valuable aspects of the summit is that we meet to discuss world economic problems and world political problems. I think that all who have been engaged in the 10 summits that we have had would agree that that is the most valuable aspect of them.

In the East-West communiqué, we said that we would attempt to have more dialogue between West and East. With that in mind, President Mitterrand will be going to Moscow later this month, I understand, and my right hon. and learned Friend Sir Geoffrey Howethe Foreign Secretary will be going to see Mr. Gromyko in July. Naturally we are concerned about the apparent isolation of the Soviet Union—a self-imposed isolation. We wish, for the reasons given in the communiqué, to have more discussion and to keep contact with them.

Mr. Allan Roberts (Bootle)

Will the Prime Minister explain why she condemns those countries that deny democracy, yet her Government continue to support regimes in countries like Chile, El Salvador and South Africa? Could Liverpool and other hard-pressed local authorities benefit as well from multi-year rescheduling of debt in the way that Right-wing countries in central and southern America have benefited? Does the reduction in trade barriers for which the countries are aiming include a reduction in trade restrictions on cheap food coming into Common Market countries from elsewhere in the world? If the economy of these countries is recovering, will she deny that a moratorium will be announced on all local authority capital expenditure?

The Prime Minister

I think that the hon. Gentleman's questions were highly artificial. We prefer democracy, and I notice that the hon. Gentleman makes good use of it, although some of the political views that he espouses do not always grant as much democracy as he receives.

With regard to Liverpool, I have already said in answer to earlier questions that a paper has been prepared by officials, and will be discussed shortly.

Mr. Julian Amery (Brighton, Pavilion)

Does my right hon. Friend agree that, in the less developed countries, electoral pressures push towards default, and in the more developed countries towards deficit? I congratulate her and her colleagues on having successfully resisted these pressures so far. Does she agree that a substantial part of the deficit of the United States arises from its armaments programme, for which we should all be grateful?

[column 772]

The Prime Minister

I hope that we shall not be faced with full-scale default on the part of the debtor countries. It would have considerable consequences. Because of that, strenuous efforts are made through the IMF to encourage them to have adjustment programmes, and, when they have adjustment programmes, to have loans made available to them through the international financial institutions, backed up by commercial banks. I think that on the whole that has been a successful programme.

I am well aware of the increased amount which the United States has spent on defence, because her deficit would not be so significant if at the same time there was not a high demand from the private sector because of the recovery.

Mr. Gavin Strang (Edinburgh, East)

When the economic declaration refers to the creation of new jobs by encouraging flexibility in the pattern of working times, does it mean that a reduction in the working week has a contribution to make to reducing unemployment? If that is the case, is that the policy of the British Government?

The Prime Minister

It does not mean that. The reduction in the working week without a proportionate reduction in wages would have the effect of putting up unit costs, which would mean that we could not sell goods, thus adding to unemployment.

Sir Anthony Kershaw (Stroud)

Does my right hon. Friend agree that the Opposition's policy, which is to solve the world crisis by flinging money at it, is even more ridiculous in relation to the whole world than it is in relation to this country alone?

The Prime Minister

It is precisely the one way in which we cannot solve the problem. When looking through the communiqués of the other summits before I attended this summit, I noticed that almost every one of them had put in the forefront of its strategy the need to keep down inflation.

Mr. Tam Dalyell (Linlithgow)

Given the case-by-case approach, and the dangerous position that we are told by Mr. Rodgers, Mr. Fleet and other serious financial commentators is developing with the IMF delegation, what constructive ideas has the Prime Minister on the specific and unique problem of the Argentine debt? Would not it be wise to follow some of the advice given by the former Foreign Secretary, the right hon. Member for Cambridgeshire, South-East (Mr. Pym), to the Select Committee on Foreign Affairs?

The Prime Minister

I was not aware that that Select Committee was discussing the economy of Argentina. Indeed, I doubt very much that it was. The Argentine debt is already the subject of negotiations between the Argentine Government and the IMF. If the hon. Gentleman is talking about negotiating with Argentina the sovereignty of the Falklands, the answer is no.

Mr. Nigel Forman (Carshalton and Wallington)

Is my right hon. Friend aware that her emphasis upon the contribution of direct and portfolio investment to world recovery, especially in the developing countries, will be most welcome? Did the summit consider any schemes for investment protection, which would greatly help the developed countries to increase investment in the developing countries?

The Prime Minister

I agree that some of the debtor countries could reduce their debts substantially either by [column 773]sale of assets or by portfolio investment. That course is available to them. It would make a great deal of difference if there was an international code of practice for investment protection. A restricted number of countries have codes, but there is no international code as yet. It is true that a new Government that took over a country by coup could flout that code, but it might help in the meantime to secure more internal investment.

Mr. Dennis Skinner (Bolsover)

Is the right hon. Lady aware that one reason why the majority of British people treat the summit with a great deal of cynicism is that, by and large, bland statements are issued? Only on a few occasions has there been anything specific mentioned, such as at the Venice summit attended by the Prime Minister a few years ago, when a declaration was made that there would be a doubling of coal production in European countries. Does not that fly in the face of what the Government and the Prime Minister have recently been doing to the coal industry——

Mr. Speaker

Order. We are going off track again.

Mr. Skinner

I have not finished yet.

Mr. Speaker

Order. The hon. Gentleman must relate his question to the summit.

Mr. Skinner

I am doing that. I am making the point about the cynicism of the British people towards summits. Does it not embrace what the Prime Minister once said when she was in Opposition, and my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) used to attend summits? She said that they were a complete waste of time. Has not this summit, which cost the taxpayer £2.5 million, been nothing more than a top people's junket to launch, among other things, Ronald Reagan 's election campaign?

The Prime Minister

I use to say from the Opposition Dispatch Box that I thought that the main value of the summits was the getting together of the Heads of Government and not necessarily the communiqués. I have not departed from that view.

Britain was in considerable difficulties with oil supplies during the Venice and Tokyo summits. I must remind the hon. Gentleman that currently we can hardly have even the coal that we need because many of the miners are on strike.

Mr. Michael Marshall (Arundel)

Does my right hon. Friend accept that there will be a wide welcome for the further progress on collaboration on manned space stations? Should not United Kingdom policy be determined urgently? Is there not an opportunity here for European collaboration or bilateral collaboration with NASA?

The Prime Minister

We have received a generous invitation from the President of the United States to participate in the new manned space station. The United States intends to put one into space in any event. We have the opportunity to consider whether we, either alone or with some of our partners, want to participate in that research. It opens great possibilities for research that would not otherwise be available to us. We shall consider the invitation carefully.

[column 774]

Mr. D. N. Campbell-Savours (Workington)

Does not the statement by Mr. Donald Regan that there is no connection between high interest rates and the high budget deficit in America wholly undermine the Government's justification in introducing four years of public sector cuts? Is that not precisely what the Labour party has been saying for the past four years? There is no connection. Will the right hon. Lady learn from Mr. Regan, who appears to know more about the matter than does the Chancellor of the Exchequer?

The Prime Minister

But Mr. Regan is introducing a down payment and, later, other measures to reduce the deficit. I rather thought that the $150 billion down payment was going before Congress. Interest rates are determined partly by the deficit, partly by the inflation rate and partly by other demands from the private sector for credit. When the deficit is high and there is a high demand for credit from the private sector, the interest rate is high.

Mr. Mark Robinson (Newport, West)

The World Bank development committee is seen in the communiqué as an appropriate forum for representative discussions on some of the issues aired during the summit. Yet The Times, in its headline yesterday, went one step further and envisaged a world monetary meeting being held in 1986. I can find no reference to that in the communiqué. Can my right hon. Friend clarify the position?

The Prime Minister

I know of no arrangement to have a world monetary meeting in 1986. We continue to survey the monetary arrangements and the inflation performance of each country, but most of us take the view that we now have the international financial institutions which we did not have before Bretton Woods, that they are being used and that they can continue to be used. They have been adapting themselves to modern conditions. Therefore, we do not need a further institution.

Mr. David Winnick (Walsall, North)

Does the right hon. Lady recognise and admit that the summit was a propaganda exercise with no worthwhile purpose? It will not offer any ray of hope to the millions of people in this country who are unemployed, especially those in the west midlands who have been devastated by the policies pursued by the Government since 1979.

Does not the statement on democratic values smack of hypocrisy? Is not the United States busy, in every way possible, helping Right-wing dictatorships and, as in Chile in 1973, taking an active role in undermining democratically elected Governments?

The Prime Minister

It is absolutely right that a summit of Western industrial countries should proclaim the values in which we believe and which we operate in Britain. I am sorry that the hon. Gentleman, who takes such advantage of democracy, does not proclaim the values that he uses.

Viscount Cranborne (Dorset, South)

Should not this House be grateful that the summit has considered the whole question of the Iran-Iraq war? During its deliberations, did it consider the possible interest and potential influence of the Soviet Union on the course of that conflict? Did it consider the possible use of Afghanistan as a base for furthering that influence, with particular reference to Soviet activity among Iranian Baluchistan, and also the use of the base at Shindand for naval reconnaissance aeroplanes over the Indian ocean?

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The Prime Minister

No, but we are very much aware that it would be easy for the Soviet Union to misread the signals. Therefore, efforts are being made to ensure that it does not do so.

Mr. Jonathan Aitken (Thanet, South)

I congratulate my right hon. Friend on her initiative in having the subject of terrorism discussed at the summit. Does she agree that it was somewhat disappointing to find that some of our allies did not seem to be supporting, other than in a lukewarm way, the original British paper on this subject? Will she continue to press for a co-ordinated international response to this problem?

The Prime Minister

As my hon. Friend knows, we got a good response in the Council of Europe, and I think we had a good response from the summit, and one from the European Economic Community Council of Ministers of Foreign Affairs. The communiqué from the summit makes a great advance on anything that we have now on co-operation and information on international terrorism.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Is my right hon. Friend aware that there is a wide welcome for the summit's restatement of its commitment to arms control negotiations? Will my right hon. Friend confirm that, although the response from the Soviet Union has so far been disappointing, her Government will press on with diplomatic negotiations and so soften the ground for the meaningful negotiations that we hope will come next year?

The Prime Minister

As my hon. Friend implied, the communiqué makes it clear that the United States has said that she will return to the negotiating table without preconditions. We hope that there will be a response to the United States invitation. In the meantime, we continue the dialogue in Stockholm in the conference on disarmament, in Vienna where we have been negotiating for nine years on mutual and balanced force reductions and in Geneva where we continue to negotiate on the nuclear non-proliferation agreement and also on chemical warfare. There is a good deal of dialogue across the negotiating table, but not specifically on nuclear weapons, and we should like a return to the negotiating table. It would be unwise to be too optimistic about how soon that will occur.

Mr. Harry Greenway (Ealing, North)

The communiqué talks about the creation of new jobs. Will my right hon. Friend say in which sectors she expects these new jobs to be? Was it envisaged in the discussions that there would be co-operation between seven countries? Will they be acting individually or together to create new jobs?

The Prime Minister

We spent some time on this. It would seem that in the United States and Japan most of the new jobs have come from high technology and from the service industries. In both cases, many of these jobs came from small businesses and the creation of new business.

Mr. Speaker

Mr. Winterton

Mr. Nicholas Winterton (Macclesfield)

I thought that I was wearing invisible clothes, Mr. Speaker.

Mr. Speaker

Order. It is no good getting frustrated about these matters. The hon. Gentleman has the same rights as everybody else, and he has now been called.

Mr. Winterton

My right hon. Friend, quite rightly, expressed grave concern about unemployment. In her [column 776]statement, she stressed that the liberalisation of trade was very much part of the package that had been announced in the communiqué. Is she aware that the liberalisation of trade without adequate safeguards on unfair competition will work against the best interests of employment in this country? Will she answer that point directly, and also give an assurance to business that interest rates will not be raised here? If the package that follows the summit is to mean anything, will she assure us that there will be stimulation of the economy along the lines of the package recommended by the CBI, with modest capital public expenditure?

The Prime Minister

With regard to free trade, I agree with my hon. Friend that one cannot simply have one group of countries opening up its markets for trade without adequate safeguards for fair competition and without others similarly opening up their markets. The poorest developing countries cannot do that, but there are many newly industrialised countries that give protection to their own markets but expect to be able to export freely into others. That is the subject of a GATT working party, and I hope that the working party's conclusions will be accelerated and that there will be a report before the new round of GATT on which we are consulting our partners.

I cannot say anything more about interest rates than I have. Judging by our performance, there is no need for interest rates to rise.

Mr. Kinnock

I shall not detain the House long, but, in view of the Prime Minister's references to the declaration of democratic values, and the way in which she has perversely used those references in answers to my right hon. and hon. Friends, I wish to point out that, set against the background of her economic and constitutional policies, it is she who has made those fine values, set out as they are in the declaration, look like decorative tinsel.

The Prime Minister

Nonsense.

Mr. Allan Roberts

On a point of order, Mr. Speaker. In the Prime Minister's answer to me she did not disagree with any of the facts that I put across or with my arguments, but she seemed to doubt my motives and to cast aspersions——

Mr. Speaker

Order. I cannot answer such questions.

Mr. Roberts

Further to that point of order, Mr. Speaker. I understand that you and previous Speakers have ruled on the calling in doubt of the motives of right hon. and hon. Members. I submit to you that that is what the Prime Minister did in her answer to me——

Mr. Christopher Hawkins (High Peak)

Aah.

Mr. Roberts

It is all very well saying “Aah” . I, in the spirit of 1944, have been fighting for democracy and civil liberties all my life, as did my father, who landed on the beaches of Normandy without being ordered to land there. I submit that to have my motives disputed in that way is a breach of parliamentary privilege, as you, Mr. Speaker, and other Speakers have ruled.

Mr. Robert Parry (Liverpool, Riverside)

Further to that point of order, Mr. Speaker. Is it not disgraceful that the Prime Minister should cast aspersions on my hon. Friend the Member for Bootle (Mr. Roberts), who is always arguing for democracy, when there are several [column 777]Members of the Conservative party who are openly supporting Fascist regimes such as Chile, South Africa, Indonesia and the Philippines?

Mr. Speaker

Order. I am sure that the Prime Minister did not intend——

Mr. Winnick

She did.

Mr. Speaker

Order. I hope that the Prime Minister did not intend to impute any dishonourable motive to the hon. Member for Bootle (Mr. Roberts).

Mr. Roberts

Further to that point of order, Mr. Speaker.

Mr. Speaker

Order. I have disposed of the matter and there is nothing more to be said about it.

Mr. Peter Shore (Bethnal Green and Stepney)

Further to that point of order, Mr. Speaker. You addressed your remarks to the Prime Minister, hoping that she was not casting aspersions on the integrity and motives of my hon. Friend the Member for Bootle (Mr. Roberts). Either the Prime Minister was or was not doing that, and we are entitled to know.

The Prime Minister

I do not think that I used any words that could bear that construction.