The Prime Minister (Mrs. Margaret Thatcher)
I begin by joining the right hon. Member for Islwyn (Mr. Kinnock) in congratulating my hon. Friends the Members for Birmingham, Hall Green (Sir R. Eyre) and for Aberdeen, South (Mr. Malone), who moved and seconded the Loyal Address so eloquently.
My hon. Friend the Member for Hall Green is, as he said, a Birmingham man through and through, devoted to the city and to all that it stands for. He said a good deal about the enterprise of Birmingham, its business, the co-operation between the universities and industry and the importance of small businesses. Yes, Birmingham faces problems, and my hon. Friend did not attempt to dodge them. We were very interested in his constructive approach to the problems of Handsworth and in his [column 19]proposals to bring derelict land back into positive use. As he said, Birmingham has a great future and is now setting about trying to scoop some more firsts. I congratulate my hon. Friend on his speech and on his splendid record as a Birmingham Member of Parliament.
My hon. Friend the Member for Aberdeen, South is indeed lucky that Edward Pearce has appreciated his endearing diffidence. We appreciate it this afternoon, though I was convinced by his speech that he can still very much see straight. The transformation of the north of Scotland into a world centre for the offshore oil industry is one of the great technological advances of the post-war period, as my hon. Friend said. It has made the far north one of the most prosperous parts of the country by using and embracing change. [Interruption.] Its prosperity has been won at no little risk to the oilman, as we saw in the dangers that were described yesterday. I congratulate my hon. Friend on his speech and on the effective way in which he represents his constituents.
We have heard the views of Neil Kinnockthe right hon. Member for Islwyn on the Gracious Speech. Whatever problems we have, he has no solutions for them. I noted that he said that our economy is shrinking, but the fact is that production is at an all-time high, as is investment. I also noticed that he referred to the speech made by my right hon. Friend Peter Walkerthe Secretary of State for Energy. I also should like to refer to my right hon. Friend's excellent speech. He said:
“We need to win the next general election because the alternative would create the most dangerous decade this century … a Labour party undoubtedly influenced and financed by the Marxist Left, a Labour party already propounding economic plans that would be deeply damaging to the free enterprise system and with defence policies that would delight Moscow and dismay Washington.”
I am pleased to have a chance to quote from my right hon. Friend's excellent speech.
I noticed that the right hon. Gentleman made considerable strictures about housing. The number of renovation grants paid in private sector housing has averaged 150,000 a year under this Government compared with fewer than 100,000 under Labour. In the public sector, the number of local authority renovations completed has run at 75,000 a year under this Government compared with 47,000 under Labour. We also have 1 million more houses and flats in the dwelling stock than there were under Labour. Labour could not hold a candle to our record on housing and many other issues.
The right hon. Gentleman gave us his views about public expenditure. I understand that not for him the firm control of public expenditure referred to in the Gracious Speech, although firm control of public expenditure is critical to confidence in any Government. We know his universal remedy—more spending, more taxation and more borrowing. If we had more borrowing, the interest rates to which the right hon. Gentleman referred would be infinitely higher, but he has not the wit to know it.
Since the right hon. Gentleman became the leader of his party, Labour has pledged to increase spending on transport and communications by £6 billion, on employment and training measures by £9 billion, on local government by £9 billion, on social security by £10 billion and on housing and health by £17 billion. Indeed, only a fortnight ago he promised to double the aid programme. These are the most reckless promises ever made. [column 20]
As Joel Barnetta former Labour Chief Secretary to the Treasury said, the task of the last Labour Government was
“rendered impossible by pledges foolishly made without any serious thought as to where the money would come from. You name it we were pledged to increase it” .
They are well on the way to doing the same.
Following enormous increases, the consequences were massive cuts—bigger than anything before or since. Indeed, that inveterate diarist, Mrs. Barbara Castle, has recorded that to while away the time in a Cabinet meeting—[Interruption.] Labour Members hate being reminded of their reckless stewardship of the economy of Britain. As Mrs. Castle said, one of her colleagues at a Cabinet meeting passed her a rhyme, which said:
“All things bring and beautiful
All projects great and small
All things wise and wonderful
Denis Healey cuts them all.
Healey cuts the old age pension
Although he cuts by stealth
And when he looks for savings
Healey cuts the National Health.”And he did, two years in succession.
It is because the Conservative Government have kept firm control of public spending that the Gracious Speech can go on to talk about further reductions in the burden of income tax. We must be firm on public spending to be fair to the taxpayer. I contrast the approach of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who in recent months has described how he imagines Labour's fantasies would be paid for, including what he called,
“some increase in tax revenues.”
“Some increase” ? Labour's spending plans would require savage increases in taxation, and not just on those earning £20,000 a year, whom the right hon. Gentleman dismisses so contemptuously as rich. It would mean more tax for the primary school head teacher earning £200 a week, who already pays £60 in taxes and contributions. It would mean more tax for the nurse earning £140 a week, who already pays £40 in taxes and contributions. It would mean more tax for the metal worker earning £185 a week, who already pays £52 a week in taxes and contributions.
It has been said that Socialism was founded to help the working man to keep more of the fruits of his labour. Today's Socialists want to take more. We Conservatives believe that people have a right to keep more of their earnings, as the Gracious Speech makes clear. Not only do they have a right; that is the way to an efficient, competitive and more prosperous economy.
The Gracious Speech continues our reforming approach with a considerable programme of legislation. It provides for measures to promote employment, especially among young people; measures to extend enterprise and increase competition by more privatisation and deregulation; measures to ensure that the social services are effectively managed and soundly financed; measures to strengthen the accountability of local government; and measures to reinforce the powers of the police and the courts in relation to public order and to drugs.
Mr. D. N. Campbell-Savours (Workington)
Will the Prime Minister tell the House why, during the past six years under the Conservative Government, there has been a 40 per cent. increase in reported crime?
The Prime Minister
I will deal with public order later. Crime has increased in all Western industrial [column 21]countries and in other countries during the past few years. If the hon. Gentleman can explain that, he can explain the nature of evil.
The legislative programme will be carried forward within a framework described in the Gracious Speech as
“Firm monetary and fiscal policies designed to secure a continuing reduction in inflation.”
That is the important thing: a continuing reduction in inflation, which is what the Labour Government signally failed to achieve.
By contrast, the policies of the Leader of the Opposition would inevitably, or by design, lead to a return of rapid inflation, although I notice that he calls it “reflation” . It is an insidious word, for it is a deliberate policy to increase prices faster all round—to the housewife and to the business man—and a deliberate policy to slash the value of savings to the pensioner and everyone who saves. It does not stop there. The previous Labour Prime Minister said:
“Higher inflation followed by higher unemployment is the history of the last 20 years.”
For that reason, we completely and utterly reject a policy of reflation. We want inflation down; the Labour party wants it up. As a result of our consistent and sound financial policies, this will be our fifth year of uninterrupted economic growth at an average of 3 per cent. a year. This is the first time since the war that we have had such a long period of growth coupled with both balance of payments surpluses and low inflation.
Opposition Members talk disparagingly of the performance of manufacturing industry, but last year British industry exported more manufactured goods than ever before in our history. It is to be congratulated and not criticised. [Interruption.] How Opposition Members hate it when manufacturing industry does well. How they hate success. What suits them is poverty and the sort of violence that we get in Socialist areas. Where we find Labour local authorities we find poverty of a deeper sort than anywhere else. Manufacturing investment was up last year by more than 14 per cent. Manufacturing output was 4 per cent. up last year, the biggest rise since 1973.
Yes, the numbers employed in manufacturing are still falling. Indeed, they have been falling since the mid-1960s—[Interruption.]
Order. I am sorry to interrupt the Prime Minister. The Leader of the Opposition was given a fair hearing, and the Prime Minister should equally have a fair hearing.
The Prime Minister
I am trying to get a fair hearing for the performance of management and the work force in manufacturing industry. The Opposition do not want to hear it. The numbers employed in manufacturing industry have been falling since the mid-1960s. They have been falling in almost every Western industrialised economy. That is a consequence of changes in technology and of the fact that many goods are made more cheaply in the countries around the Pacific basin and in south-east Asia.
But British industry has become more efficient. Manufacturing productivity has increased dramatically, and last year profitability, the foundation of future growth, was at its highest since 1973. This was achieved by the new realism of industry itself, management and work force alike. It was not and could not be achieved by Government and Whitehall.
The duty of Governments is to create the conditions in which enterprise can expand and flourish, and to help in [column 22]educating and training a skilled work force. The Government have done more to train young people than any other in history. [Interruption.] That is the truth, and the right hon. Member Neil Kinnockthe Leader of the Opposition does not falsify it by bellowing from the Opposition Front Bench. The Government have done more to train young people than any other in history. The millionth trainee will enter the Government's youth training scheme before Christmas. But for young people in general the evidence suggests that wage rates set artificially high are destroying their chances of a job. The OECD commented in a recent report that
“minimum wages restrict employment openings and opportunities to upgrade skills, especially among the young.”
We agree. We are therefore introducing legislation to reform the wages councils. This will enable employers to offer the wage rate which they can afford and which young people can accept.
The measures that we have already taken have led to a rapid increase in the number of new jobs—675,000 in the past two years, more than in any other country in the European Community. Indeed, new jobs have been created in this country over the past two years at a faster rate than at any time since 1973, but then, of course, the working population has been rising even faster. Even so, the CBI still reports that its members cannot find suitably qualified people for some of the jobs that are available. It is a matter of getting the training right—a task for industry and education.
It is the wealth creators who are the job creators. All economic policies must be designed as a spur to the wealth creators, whether they are brilliant scientists, skilled tradesmen, talented designers, shrewd managers who know the market place or young people with the ideas and initiative to start up on their own. Those who set out to penalise wealth creators, whether by punitive taxation or by too much red tape, are really penalising those who are looking for jobs.
Industry performs much better when it has to compete for customers, when is has to give a reasonable return to the shareholders who invest in its future. Take Jaguar—profits have increased by 54 per cent. since privatisation and there are more than 500 more jobs. Take Amersham international—profits have increased fivefold and there are more than 200 more jobs. We have already transferred to the private sector 12 companies and 400,000 employees, the majority of whom have bought shares in their companies. That is real ownership by the public. That is why there will be a further assault this year on what used to be called the commanding heights of ownership by the state. Provision will be made to privatise the British Gas Corporation, and we hope that British Airways will be transferred to the private sector. Individual share ownership has already doubled under this Government, and we look forward to it doubling again. By the end of this Parliament we shall have reduced the share of our industry in state hands by 40 per cent. That is an excellent record.
Mr. Tom Clarke (Monklands, West)
The right hon. Lady has referred to jobs. How can she justify the decline of the British steel industry, especially in Scotland? How can she justify British Steel's intention, which was announced this week, to make men redundant in the tube industry in Lanarkshire at the same time as we are [column 23]importing from Italy, which has drawn a horse and cart through the quota system? Surely this is something that even the Prime Minister cannot justify.
The Prime Minister
As the Opposition are well aware, there is overproduction of steel and no amount of special pleading can keep steel plants open if their products cannot be sold. The right hon. Member for Blaenau Gwent (Mr. Foot) knows that full well. He could not keep the Ebbw Vale steel plant open. He said at a meeting of his constituents that if we dodge the truth the difficulties and complications will be even worse in the future. This Government have allocated £130 million to purchase part of the quota from the private sector steel industry to keep Ravenscraig going. That was the type of faith that the House showed in trying to keep steel making in Scotland going. In the end, it will depend upon how competitive we are and how much we can sell in co-operation with the European Coal and Steel Community.
It is only by continuing the economic policies that have already brought four years of sustained growth that we shall be able to pay for improved public services. They have improved under this Government. In the National Health Service, we have not only increased provision but achieved greater efficiency. More patients are being treated under a Conservative National Health Service. Waiting lists have been cut and more hospitals have been built.
In education, spending per pupil and pupil-teacher ratios are at their best ever levels, but the quality of education needs to be and must be improved. That is why my right hon. Friend Sir Keith Josephthe Secretary of State for Education and Science is insisting on agreement to a new pay structure and conditions of service. Only then will he release the very substantial sums of money available to increase teachers' pay—£1.25 billion over the next four years. This Session's Education Bill will provide for a national system of appraisal to enable all teachers to improve their performance and to help the better teachers get more promotion and more pay.
This Session we shall introduce a Bill, which I understand Neil Kinnockthe Leader of the Opposition will not support, to implement the most fundamental review of social security for 40 years. The Bill will help to create a modern, effective social security system which future generations can afford, a social security system which will direct resources to those most in need, be based on sound finance and not on hollow promises; and which will strengthen incentives to work, so that nobody is worse off by taking a job. There are too many cases, even at a time of high unemployment, of jobs remaining unfilled because potential applicants are better off not working.
Last session saw the successful passage of the Bill to abolish the Greater London Council and the Metropolitan county councils. The unscrupulous use of ratepayers' money by those councils to mount massive scare campaigns reinforced the case for their abolition. It also demonstrated clearly that we can no longer take for granted in some Labour councils the conventions of responsible public service which used to inspire councillors of all parties.
We are therefore introducing this Session a Bill along the lines proposed by the independent Widdicombe committee to ban the use of ratepayers' money to finance [column 24]political propaganda. The Bill will also lay a statutory duty on all rating authorities to make their rate by April every year. These measures will be an important check on abuses by some local authorities.
We shall also be publishing our proposals for a major reform of the rating system. We can no longer tolerate a system in which the burden of local taxation is so unfairly distributed, nor a system which permits extravagant local authorities to fleece the business ratepayer to finance excessive levels of spending. There is no surer way of driving jobs away from some of our inner cities.
The Home Office will be having its customary busy parliamentary Session. In addition to legislation on public order, to which I shall refer shortly, it will be introducing three major Bills. First, my right hon. Friend will be introducing shops legislation in line with the main recommendations of the Auld committee. I recognise the difficulty that this measure will cause to some of my hon. Friends. Indeed, many people, both customers and shopkeepers, will wish to preserve the traditional Sunday and will not take advantage of a change in the law. But I believe that it is absolutely right to give people the choice. The present state of the law is indefensible.
Second, my right hon. Friend will also be introducing the first reform for 109 years of the law on experiments on living animals. I believe that this will be widely welcomed throughout the House and outside, and I hope that it will secure a speedy passage.
Third, we shall be taking further action against drugs offenders. Following the excellent report of the Select Committee on Home Affairs last Session, we shall be introducing a Bill to provide wide new powers for tracing and confiscating the proceeds of drug trafficking. I believe that this measure, too, will be supported throughout the House: The war against the drugs trade is one in which all decent people will expect us to unite.
Before most of this legislation can be introduced, the historic meeting between President Reagan and Mr. Gorbachev, due two weeks from now, will have taken place. Both leaders have accepted the aim of reducing nuclear weapons. The United States has long had detailed proposals on the table for deep, balanced and verifiable reductions. Now it has responded promptly to the recent Soviet counter proposals and offered to build on the positive elements in them. The test of Soviet intentions will be Mr. Gorbachev's willingness to engage in real negotiations.
President Reagan has undertaken that the United States' strategic defence initiative research programme will remain clearly within the bounds of the ABM treaty. I hope that the Soviet Union's own very extensive programme will be similarly contained. Indeed, I believe that a reaffirmation and strengthening of the ABM treaty would be a positive and commendable outcome of the summit.
I hope, too, that the President and Mr. Gorbachev will commit themselves to make progress in other arms control negotiations, above all, the negotiations on chemical weapons and on mutually balanced force reductions in Europe, which, for more than 10 years, have made little progress. It has been NATO's strength and steadfastness which have brought us to the point where we can hope for real reductions in nuclear armaments on both sides.
When the Defence Ministers of the 16 NATO countries met last week, their communiqué said: [column 25]
“We declare that the President goes to Geneva with the full support and solidarity of the Alliance.”
The Government side of the House is united in offering that support.
During the debate on the Gracious Speech last year I said that upholding the rule of law was the crucial issue facing this country. The disturbances that we have seen in a few of Britain's inner cities have made that all the more apparent. Indeed, it is the vast majority of people living there—the old, the families with young children, the small business men—who have most to lose from a breakdown of law and order. It is they—not the rioters—who have lost their homes, their shops and, most of all, their peace of mind.
Of course, there are very severe social problems in the inner city areas—problems of family breakdown, of racial tension, of drug abuse, of youth unemployment, of bad housing. In so far as money can help, those problems are taken into account in public expenditure, including the urban programme on which £1,900 million has been spent since 1979. Considerable sums had already been spent in the areas affected by riots.
But the kind of violence which took place on the streets of Brixton, Handsworth and Tottenham recently cannot and will not be eradicated by money. The solution must ultimately lie in a strengthening of our traditional sources of discipline and authority—the family, the Church, the school, responsible community and civic leadership and support for the police.
The Government have made it clear that the police will have the resources that they need in the fight against crime. When this Session's public order Bill has become law, they will also have more powers to prevent and deal with violence and disorder. But those measures alone are not enough. If the rest of us fail to support the police, if we undermine by words or deeds the rule of law, the fight against lawlessness will be jeopardised.
It is not good enough for the Labour party to stand aside and tolerate Labour local authorities which harass and obstruct the police. It is not good enough for the Labour party to claim that it supports the police, while its conference is passing anti-police motions and cheering to the echo descriptions of the police as “the enemy” . And it is not good enough for Neil Kinnockthe right hon. Member for Islwyn to condemn the words of Bernie Grantthe leader of Haringey council against the police while continuing to endorse him as a Labour candidate for election to this House.
A party leadership which stands by while sections of its party undermine the police cannot be taken seriously when it talks of support for the law. Either it stands up for the law or it does not; it cannot have it both ways. The Government rest firmly on respect for the rule of law, and it is on that fundamental basis that I commend to the House the forward-looking programme set out in the Gracious speech.