The Prime Minister (Mrs. Margaret Thatcher)
First, I join the Leader of the Opposition in paying tribute to the speeches of the mover and seconder of the motion. My hon. Friend the Member for Scarborough (Mr. Shaw), like me, was elected to the House on his third attempt; and he is one of the most widely respected Members here. He spoke about economic matters, of which he has expert knowledge. We listened to his remarks with great attention. He also spoke on the European Economic Community, where he was a member for some time and played a prominent role. We know, too, of his interest in trade union reform and of the great interest that he has taken in defence. We heard and heeded his advice. Rarely has the House listened to a better or more constructive speech from the mover of the motion and we warmly congratulate him and thank him for his comments.
I also congratulate the seconder of the motion, my hon. Friend the Member for Dartford (Mr. Dunn). As he pointed out, I fought Dartford in 1950 and 1951, and lost. My right hon. Friend the Minister of Agriculture, Fisheries and Food fought Dartford in 1955 and 1959, and lost. My [column 20]hon. Friend fought Dartford in 1979, and won. What a tremendous future must lie in store for him that he triumphed where the Front Bench could not succeed.
I also congratulate my hon. Friend on his speech. We listened with great interest as he retailed some of the improving industrial performance in his constituency, and also to his comments on nationalisation, how badly it serves the consumer, and the need to get more nationalised industry into the private sector. I, too, shall comment on that. I warmly congratulate my hon. Friend on his excellent speech.
I wish that I could warmly congratulate the Leader of the Opposition on his excellent speech, but I do not feel able to do that, either for what he said or for the way in which he said it. He made a number of references to the Gracious Speech. I shall pick up one or two. First, he spoke about the concern of my right hon. Friend Michael Heseltinethe Secretary of State for the Environment about high rates. We are all concerned about very high rates. The system was never designed to bear the levels of taxation now being placed on it. It seemed as if the right hon. Gentleman was saying that it was undemocratic to refer such a matter to the vote of the people. I find that very puzzling. After all, rates are not exactly a shining example of a democratic tax. Only a minority of electors are ratepayers, and many ratepayers have no vote.
The Leader of the Opposition also mentioned the reference in the Gracious Speech to trade union reform. We remember that it was the Labour Government that introduced two new measures of legislation, which gave trade unions enormous extra powers and which ended up in the winter of discontent. We also remember that it was one of those measures that enabled a person to be sacked from his job for refusing to join a trade union. However, under the right hon. Gentleman's legislation that person would not have been entitled to any compensation. Yet, the right hon. Gentleman pleads humanity. That was hardly a humane piece of legislation.
We heard exactly what the right hon. Gentleman said about disarmament. However, the Gracious Speech urges talks on multilateral disarmament. What the right hon. Gentleman says and does makes it less likely that the talks will succeed. If he pursues a unilateral line, what reason will there be for getting the Soviet Union to come to the negotiating table? The right hon. Gentleman said “soon” . The talks with the United States of America start on 30 November, and we wish them every success. Anyone who listened to the right hon. Gentleman's speech would hardly have thought that he was a member of a Government that preserved Britain's nuclear deterrent for five years because the right hon. Gentleman then thought that it was in Britain's true interest to do so. We believe that it is still in Britain's true interest to do so.
The Leader of the Opposition also talked about reflation and suggested that during the early years—the 1950s and 1960s—a measure of reflation was used. Indeed, in those early days a measure of reflation was used. Then it required only tens of millions of pounds to secure a few extra jobs. As time went on, the dose got bigger and bigger. It required £100 million to produce the same number of jobs. Then billions of pounds needed to be injected to produce the same number of extra jobs. Gradually the rate of inflation became higher and higher and the effect on unemployment became less and less. That produced the stop-go system of the 1950s and 1960s. Eventually, the rate of inflation became so high that the [column 21]whole fixed exchange rate system broke and the discipline which applied in the 1950s and early 1960s no longer existed. We had to replace that discipline with something else.
The Leader of the Opposition also said that the period of high employment was in the early 1950s. That was nothing to do with Keynesian policies. That situation arose because there was a seller's market after the war and half of Europe's industries lay in ruins, while Japan's were not yet rebuilt. In addition, the pattern of world trade had not changed. The right hon. Gentleman must come into the 1980s and deal with the situation as it is.
Last week, we debated reflation. It would seem that the arguments of the right hon. Member for Down, South (Mr. Powell) fully triumphed over anything that the Leader of the Opposition said then or has said today. For example, does anyone imagine that the German Government would continue to pursue their responsible financial policies if they thought that they could solve their high rate of unemployment by means of reflation? Of course not. The German Social Democratic Party knows full well that reflation would not overcome its country's problems; it would only make them worse. So, too, in Britain a policy of reflation would not solve the problems of the unemployed. On the contrary, by increasing inflation it would put in jeopardy many of the jobs of the 23 million people who are in work and dash the hopes of the 3 million unemployed that they would ever find lasting jobs.
If reflation is not the answer—and it is not—the answer must lie in practical steps to help the unemployed. There are two types of practical steps that can be, and are being, taken. The first step involves special employment measures and the second involves encouraging small businesses and the technologies of the future.
As regards direct measures, we announced a number of decisions last July, which are only just beginning to come into effect. Last month, the number of trainees on the youth opportunities programme rose by 55,000. On Sunday of this week the age of entry to the job release scheme was lowered to 63 and in February, it will be lowered to 62. On 4 January the young workers scheme will start, but employers who take on young people now will still qualify in January for the help provided by the scheme. They do not have to wait until then to take youngsters off the unemployment register and on to the payroll.
By the turn of the year I expect my right hon. Friend Norman Tebbitthe Secretary of State for Employment to announce substantial further measures in the form of a comprehensive training scheme for the young unemployed—arising from the consultations on a new training initiative. The whole of July's special package is beginning to take effect and new measures will be announced by the turn of the year. They do not—
Mr. Eric S. Heffer (Liverpool, Walton)
Will the right hon. Lady give way?
The Prime Minister
I have only just started. I shall give way to the hon. Gentleman. I usually do so, because he helps me along very well and I am always very grateful to him. Reflation would—
Mr. Heffer
rose—
The Prime Minister
Have patience. Reflation would put the jobs of the 23 million employed in jeopardy. The [column 22]right policy is to help by means of special employment measures, and that is the policy that we are pursuing. After I have given way to the hon. Member for Liverpool, Walton (Mr. Heffer), I shall turn to some of the help that we are giving in order to stimulate new jobs.
Mr. Heffer
I intervene in order to help the right hon. Lady along. Does she agree that the proposals that she has just outlined and those put forward in July represent a reversion to policies that were pursued by the Labour Government, although this Government have still not achieved the levels of support to unemployed youngsters that were achieved when the Labour Party left office?
The Prime Minister
I understand that the hon. Gentleman fully agrees with the measures that were announced in July. I am delighted to have his support. I hope that my right hon. Friend Norman Tebbitthe Secretary of State will have his support when he announces further comprehensive training measures. The hon. Gentleman could have fooled me that he was supporting our actions.
We must also stimulate the new jobs of the future. The combined tax incentives announced by my right hon. and learned Friend Sir Geoffrey Howethe Chancellor of the Exchequer in his last two Budgets are now widely recognised as providing the best conditions the world over for encouraging the birth and growth of new businesses. We have taken a range of initiatives on industries, such as information technology, to ensure that Britain does not fall behind the rest of the world. Later this month we shall identify some 20 sites, concentrated in inner cities, for training teenagers in computing and electronic skills. We have also launched a £25 million scheme designed to stimulate research and development in fibre optics.
Those are only a few of the many ways in which we have created a climate in which small businesses can start and grow, in which advanced technology can flourish and in which investment from overseas can be attracted. Under the Government's policies, investment from overseas in the high technologies is being attracted, and attracted into the development areas in which it is needed. That shows a great measure of confidence in the policies that the Government are pursuing.
Today, we see British industry slowly but inexorably improving—[Hon. Members: “Where?” .] Of course, Opposition Members do not like that. They love bad news and hate to hear good news. They know that reforms of labour practices that should have taken place decades ago have been achieved in a matter of months. They know that many firms have found new scope for co-operation between management and employees. In the manufacturing industries, we have seen productivity per man hour rising at a rate that is reminiscent of Germany or Japan. That has been achieved in the teeth of a world recession—at a time when increases in productivity are rarely achieved. For years, hon. Members on both sides of the House have spoken about export-led growth. Now, for the first time there is a real chance of that happening. This reflects falling inflation, moderating wage settlements, higher productivity, and an exchange rate at a level which enables British industry to compete in the markets of the world. Increasingly we see British firms winning contracts based on price and performance.
Some would say that the changing attitudes that we see in industry will not survive a return to growth. If that were to be so, we should all have failed. The Government want [column 23]realism and a sense of partnership that will continue to grow when the lean years give way to expansion. Sound common sense policies are as vital to a nation coming out of recession as they are to one that is still in its grip. We must see that those sound policies endure.
We all welcome the fact that British Leyland is back at work today. Common sense has prevailed and the company, which is painfully hauling itself back to profitability, can now get on with the job of making and selling cars.
The British Leyland board has today decided to put forward the company's corporate plan to the Government. We shall, of course, study the details carefully, but it seems clear that the solid progress won, at much cost, over the last three and a half years, can be continued—and with it at least 200,000 jobs in British Leyland and its components suppliers and others can be safeguarded. We wish the company, its management and its work force every success.
To survive, all our industries must be competitive. There is no safe corner where the inefficient can shelter, indefinitely protected from the progress of more vigorous rivals. That ought to be as true for the nationalised industries as it is for the private sector, but many of the nationalised industries are monopolies, not pressed by normal market forces and with no fear of bankruptcy to spur them to greater efficiency. Their costs and their wage increases inevitably flow through to the rest of the community in higher prices for their goods and services. Those higher prices add to the costs of our private sector companies fighting for business in world markets. Yet, price control is no answer. It is the costs that must be brought down.
Our first aim is to try to expose these industries to competition. That is why we shall bring forward legislation to end the British Gas Corporation's monopoly in both the purchase and sale of gas to industrial consumers.
A number of my hon. Friends will recognise these words:
“The British Gas Corporation is a highly profitable organisation which enjoys both the monopoly purchase right to all the gas in the North Sea and a monopoly of gas distribution. There is no good reason why an oil company which produces gas from the North Sea should be forced to sell its entire production to the BGC, which then re-sells it to private industrial customers at a substantial mark-up. Because of the unrealistically low prices which BGC is able to impose on gas producers, output of gas has undoubtedly been lower than it might have been. There is no justification for the present situation in which gas producers are prevented from piping gas ashore and selling it direct to industrial customers such as the chemical industry. The breaking of the BGC purchase monopoly should be a high priority for a Conservative Government.”
Those words came from a recent much noticed pamphlet subtitled “What the Government should do next” . I am sure that its authors will be happy to see that the Government have taken their advice at the first opportunity—[Hon. Members: “Author?” ] It is from a pamphlet called “Changing Gear—Proposals from a group of Conservative MPs” . It is full of good stuff. Labour Members should read it.
Once there is competition, we must return as many industries as possible to the private sector, which can provide the best environment to stimulate further improvement and investment. We shall, therefore, be [column 24]introducing a Bill to transfer to the private sector—that is, to genuine ownership by the people—the oil-producing business of both the British National Oil Corporation and the British Gas Corporation. It is private enterprise that has made North Sea oil the outstanding success story that it is. It is private enterprise that will be the key to its continuing success in the future.
Mr. Clinton Davis (Hackney, Central)
Will the Prime Minister tell the House what has happened to the much-vaunted proposals of last year to privatise British Airways? What are the Government's intentions in that respect? Have they all gone into the sand? Is not the reality that those proposals deflected British Airways from going ahead with capturing international markets and building up the morale of its work force?
The Prime Minister
No; that is nonsense. British Airways will be returned to the private sector when the market conditions are at their most propitious. The legislation is there, and it will be very beneficial.
But there are some nationalised industries, notably the big utilities, in which it is difficult to introduce competition and which are not easy to return to the private sector. In those industries we must ensure that the absence of market forces is replaced by other pressures to induce greater efficiency. Some have already been referred, with salutary effect, to the Monopolies and Mergers Commission.
We shall make certain that the monopoly suppliers know clearly what is expected of them. We shall set tough targets, because the health of the economy depends on their achievement. The future of many jobs outside the public sector lies in the hands of these monopolies, which, if their prices are too high, can push up the cost of industries in the private sector, so that jobs are lost. The House will have the opportunity to discuss the performance of the nationalised industries as we bring forward measures to deal with their financing.
Labour Members are constantly talking about gas. There is a positive return from gas. This year the positive return of the British Gas Corporation is about £400 million. That is more than swallowed up by the subsidy to the National Coal Board of £1,100 million—and that is only one such subsidy to a nationalised industry.
While I am referring to heavy costs imposed on the private sector, I emphasise that we have been increasingly concerned at the extravagant increase in the spending of a number of local authorities. The Government will, within a matter of weeks, be publishing a Green Paper on the alternatives to domestic rates.
In the meantime, we face an immediate problem. The majority of local authorities have co-operated with the Government to reduce current expenditure. I might wish that progress had been faster, but no one can question that the previous, almost automatic, annual increase has been reversed. But a small minority of authorities have absorbed virtually the whole of the economies achieved by the rest. If we as a Government pursued the traditional policy, we would simply cut the budgets of all authorities to compensate for the excesses of a few. The low-spenders and the prudent would suffer with the over spenders.
Some say that it is worth it in the name of local government freedom. It is a curious sort of freedom that argues that the profligacy of the few should be paid for by the sacrifices of the many. [column 25]
We shall introduce a Bill to ensure greater accountability of high-spending authorities. At the same time, we shall introduce a measure of protection for the industrial and commercial ratepayers in those authorities.
But the problems of British industry are not confined to those of direct costs. They are concerned as well with industrial relations. The response to the Green Paper on trade union immunities has shown that opinion is now firmly in favour of further legislation.
My right hon. Friend Norman Tebbitthe Secretary of State for Employment will therefore announce his proposals, and a Bill will be introduced in the New Year. It will be designed to meet two needs: first, to provide better redress for those harmed by the abuse of trade union powers, particularly of the closed shop; and, secondly, to redress the balance of bargaining power and to improve the prospects of a continuing growth in productivity. Although these proposals will meet with the customary opposition from some Opposition Members, we believe that they will be widely welcomed in the country as a whole.
Mr. John Page (Harrow, West)
While the Prime Minister is in the middle of her interesting and exciting speech, I wonder whether I could sow a seed in her mind about picketing. That might form a worthwhile part of the new legislation. Many people have been upset by what they have seen of the unsuccessful picketing that has occurred at BL over the last few days.
The Prime Minister
The proposals will be published before the Bill is brought forward. I have no doubt that a number of my hon. Friends will have advice to give to my right hon. Friend Norman Tebbitthe Secretary of State.
In addition to widespread support for a new Bill on trade union matters, I believe that there will also be widespread support for our proposals for the social services. One of the sad fallacies much trumpeted by Opposition Members is the belief that only by spending more money can improvements in the social services be achieved. Because of that view, too little attention has been paid to efficient administration and to making benefits simple and clear. That is why our programme this year takes these matters into account.
A unified housing benefit, which we shall bring forward, is a sensible and worthwhile reform. It will end the confusion of two competing benefits—one from the social security office and the other from the local council. It will ensure that those most in need are more effectively helped and their rights are more clearly defined. Help with housing is one of the most valuable services of our Welfare State, and we can now provide it in a much more sensible way.
The Government's sick pay scheme has been discussed widely. We have decided that employers will receive 100 per cent. reimbursement for payments they make in the first eight weeks of sickness. The new scheme will be more efficient and will save some 3,000 posts in the Civil Service. Industry's careful and constructive advice has been heeded and the Bill should command a wide measure of support.
Both housing benefit and sick pay are part of the established provision which a compassionate society makes. Yet it is all too easy to be so committed to present provision that we fail to see other needs. The Government are particularly concerned to do more for those whose [column 26]voice is hardly heard and who, by consequence, are often overlooked. My hon. Friend John Dunnthe Member for Dartford has mentioned the measure to which I now intend to refer.
In the last Session, our implementation of the report of the Warnock committee, which I set up as Secretary of State for Education and Science, marked a major step forward for the education of the mentally handicapped.
In this Session, we want to make some far-reaching reforms for the most severely mentally disordered. Here the last major change was introduced over 20 years ago by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith). It is to continue the pioneering work of the Mental Health Act 1959 that we shall bring forward a Bill to protect those who are confined to institutions for the mentally disordered.
The changes that we shall make will give to these people—perhaps the most vulnerable of our fellow citizens—additional rights and protection. The fact that they are a relatively small group who seem so easily to be forgotten only emphasises the real importance of this valuable humanitarian reform.
The Gracious Speech renews the Government's total commitment to uphold the rule of law. Many of our people feel unsafe in their own neighbourhoods and even in their own homes. The fact that crime, violence and terrorism are increasing throughout the world is no consolation.
Most of our people want to reassert the true values of family and society. They recognise the role of the family and the school in bringing up a new generation which respects the law and accepts the need for order. It is with this in mind that our new Criminal Justice Bill will strengthen the powers of the courts to make parents responsible for their children's fines. It underlines once again parental responsibility. It is only in a society where individuals take upon themselves the responsibility for restraining their own actions and teaching the virtue of self-discipline that both freedom and order can be guaranteed.
Our backing for the police will be unswerving as, with such courage and dedication, they uphold the rule of law. They are our front line of defence. Already, they have been dramatically strengthened in numbers and morale by the measures taken by my right hon. Friend William Whitelawthe Home Secretary.
There are some who from time to time criticise the police for the way in which they carry out their exacting tasks. We, however, have made our support for the police clear and unequivocal. I believe that they themselves would be the first to insist on those high standards that we have come to expect. They will ensure that all our citizens, whatever their background and wherever they live, can rely upon them equally for the protection that they need.
It is natural that, in the face of recent events, I should turn from matters of law and order to Northern Ireland. We will concede nothing to terrorism. Demands advanced by the gun and the bomb will be rejected absolutely. The Government will meet the violence of the terrorists with implacable resolve.
The ballot box is the means of change. We shall continue to seek a political solution because that offers the only way forward. We shall also continue with the effort to create closer and stronger links between the United Kingdom and the Irish Republic, whose Prime Minister I shall be welcoming in London very shortly.
Abroad, the Government's pursuit of the true interests of the nation will remain resolute. No country in our [column 27]geographical position, with our historic traditions, and with our pattern of trade, could turn its back on the rest of the world. We spurn the small-minded and disingenuous policies advocated by Opposition Members. They claim, for instance, that only they care about the arms race. It is a false claim. We all care. But we, on this side of the House, also believe that Britain should make a full contribution to its own defences.
Opposition Members intend to rely on the support which they assume the Alliance will provide whatever they do. That is a dishonourable policy.
They proclaim their intention to pull out of Europe. But they conceal the enormous political harm and economic hardship which would result. That is a dangerous policy.
They parade their concern for the developing world. But they favour schemes of general protection which would ruin many of the poorer countries and probably us as well. That is a dishonest policy.
Many Opposition Members know very well that the programme being adopted by their party would be profoundly damaging to this country. A few of them have acted on that knowledge. No doubt the rest hope to fudge their way to some dubious compromise. But composite motions have never solved real problems.
Unilateralism is once more in the forefront of political debate. I recognise that many of those involved are well intentioned and sincere. But motives—whether good or ill—are not the point. We have to reckon with facts as well as with feelings.
The facts are that last year the Soviet Union deployed 250 new intercontinental ballistic missiles, 400 new military helicopters, 1,300 new combat aircraft and 3,000 new tanks. The Soviet Union spends nearly twice as much on defence as it spends on health and education combined. We spend barely half as much on defence as we spend on health and education combined. That gives some idea of Soviet priorities.
Against that background, it is obvious that negotiated and balanced arms control agreements would be a great prize for this country. The Government therefore actively support the talks which are in progress in Geneva and Vienna.
We attach particular significance to the negotiations on theatre nuclear forces, which are due to begin later this month, between the United States and the Soviet Union.
Through those negotiations all can hope to achieve greater security at less expense, but unilateral disarmament offers no short cut to that goal. On the contrary, unilateral disarmament would prevent us from reaching it. Why should the Soviet Union come to the negotiating table if we had already given up our arms? Does anyone seriously think that the Soviet Government would follow our example? Of course not. Will unilateral disarmament make war less likely? No. It will make it more likely.
I do not say that because I believe that the Russians are intent on war. I am well aware how keenly the horrors of the last war are remembered. I say it because I am also aware that the Kremlin's only success since 1945 has been in developing Soviet military strength. In every other sphere it has failed either to meet its own targets or to keep pace with the West.
Where it was safe to do so, Soviet military power has been used to disguise, both from the Soviet people and the rest of us, the collapse of the party's political, economic [column 28]and ideological ambitions. We have seen this in Eastern Germany, in Hungary and in Czechoslovakia. We have seen it in Afghanistan. We have, so far, narrowly avoided seeing it in Poland.
If we in the West allowed our resolve to waver, if, thanks to members of the Labour Party and people like them, the West became clearly weaker than the Warsaw Pact, the temptation for the Soviet Government to exploit our weakness and to put us under military pressure would be overwhelming.
Faced with that pressure, I do not believe that people in the West would allow their way of life to be destroyed without a struggle. At any rate, we in the Conservative Party would not allow that. I correct myself. I do not believe that anyone in the House would allow that, and certainly the people of this country would not allow it. We in the Conservative Party would see that our people were properly equipped with the weapons that they needed to defend their way of life. If we were weaker than the Soviets, the result would be war—a war no less destructive to the West for being unequal.
There must be no illusions about this matter. Anyone who doubts what I am saying should take an unblinkered look at this week's parade in Moscow and ponder the figures that I quoted a moment ago. That is why we must never accept what has happened in Afghanistan. I must say that it was heartening for me to see what was happening in Pakistan the other day. I saw the indomitable spirit of the refugees from Afghanistan. There is no failure of resolve there. That is why we must go on stressing the need for the Poles to decide their own destiny without interference. That is why, finally, the wishful thinking of the unilateralists must be exposed.
The policy of withdrawal from the European Community would also be deeply harmful. It could be carried out only at the cost of the most severe damage to the Western world, to our own political position, to our international trade, to the investment which we could otherwise expect from abroad and to employment in this country. It is folly to pretend otherwise.
To say this is not to close one's eyes to the Community's shortcomings. As my hon. Friend Michael Shawthe Member for Scarborough said, we have to look after this country's legitimate interests. He pointed out how the Government had done just that, and will continue to do so.
There is to be a European Council meeting in London later this month. Dominating the agenda will be the questions of budgetary restructuring and common agriculture policy reform. Means of resolving the present problems, of resolving them on a lasting basis, must be agreed soon.
The impact of the Community on the rest of the world is growing politically. I have seen that on two visits to the Middle East. It is growing economically. I saw that in Melbourne and Cancun. Above all, the Community has been a growing source of strength and stability in Western Europe. The Government are determined that these achievements should be preserved and built upon.
In the coming year, I believe that Britain's confidence in herself will grow. That confidence will come from an increasing realisation that the signs of economic success are no mere passing hopes but are instead a testament to our new economic strength. We shall look for a continuing improvement in productivity as we become more able to compete in the markets of the world. [column 29]
Real jobs will not be quickly won, nor will unemployment fall dramatically; but slowly and surely the British people will create the new jobs which these difficult years have made possible.
Above all, there will be a growing confidence that the major changes that we have so long needed and so often shirked have now been made, and that we shall secure the kind of success which our neighbours have achieved and which has eluded us since the war.
That success is not simply a matter of production figures, overseas earnings and income per head. Economic achievement is a vital part, but certainly not the whole of our national renewal. A new mood of realism and personal responsibility is taking hold in this country.
The generation which was brought up to believe that Governments can guarantee prosperity, full employment, and happiness for all now knows that life is really not like that—[Interruption.]—and that it never was and never could be in a free society. That generation has learnt that a successful community relies first upon individual effort. It has learnt that collective concern cannot replace personal responsibility. It has learnt that only when each one of us plays his part to the full will the whole nation benefit.
The Government have created the conditions in which out of the recession can come renewed confidence. It is in the coming year that our confidence will be rewarded. The success will be Britain's success, and the achievement will be the achievement of all our people.
Mr. Alex Eadie (Midlothian)
On a point of order, Mr. Speaker. May I ask whether the Prime Minister would be prepared to make an amendment to her speech, in which she said that the coal industry—
Mr. Speaker
Order. I am surprised at the hon. Gentleman. He knows that that is not a point of order.