PRIME MINISTER
Engagements
Q1. Mr. Jacques Arnold
To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
The Prime Minister (Mrs. Margaret Thatcher)
This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty The Queen.
Mr. Arnold
Has my right hon. Friend noted the widespread public support for our education reforms? Has she further noted the Gallup poll results in Yesterday's Daily Telegraph, which noted that two out of three Londoners would not be worried by the loss of ILEA and that three out of four of them support the national curriculum, testing and parent power to opt out of local authority control?
The Prime Minister
Yes. My hon. Friend makes his point very effectively. I believe that most parents want the chance to opt out, to get their children out of the grip of some of the fanatical Left-wing authorities. I believe that the reforms to which my hon. Friend refers will lead to much better education. That is why the Labour party is fighting them, but parents will be very pleased with them.
Mr. Kinnock
May I warmly welcome today's cut interest rates and the Chancellor's victory over the Prime Minister? Does this cut mean that the Prime Minister has changed her position and now wholeheartedly agrees with the Chancellor that further rises in the pound would be unsustainable and would damage British business and industry?
The Prime Minister
I am glad that the right hon. Gentleman welcomes the cut in interest rates. He will not that we have taken interest rates down three times in the last two months. I am sure that he would like a detailed reply.
My right hon. Friend and I entirely agree—[Hon. Members: “Reading.” ]
Mr. Kinnock
We want to listen.
The Prime Minister
I thank the right hon. Gentleman very much. I hope that he will listen to the next reply too. Nigel LawsonMy right hon. Friend and I entirely agree that we must maintain a firm monetary policy and a downward pull on [column 799]inflation. I agree completely with all my right hon. Friend's Budget speech, every bit of it, which is more than the right hon. Gentleman Neil Kinnockthe Leader of the Opposition does.
The right hon. Gentleman asked about exchange rate policy. It is a part of overall economic policy. As I indicated a moment ago, he will note that we have taken interest rates down three times in the last two months. That was clearly intended to affect the exchange rate. We use the available levers, both interest rates and intervention, as seems right in the circumstances and—[Interruption.]—I hope that right hon. and hon. Gentlemen will listen very carefully to the last sentence—it would be a great mistake for any speculator to think at any time that sterling was a one-way bet.
Mr. Kinnock
I am, and I am sure everybody else is, interested to hear the Prime Minister draw attention to the three cuts in interest rates in the past two months. Two months ago I asked her whether she would intervene or use interest rates to bring down the pound and she said that intervention “would lead to inflation” and interest rate action could not deal with the matter because it would not be in the “interests of inflation” to do so. Is she now saying—[Interruption.]
Mr. Speaker
Order. These are important matters.
Mr. Kinnock
rose—[Interruption.]
Mr. Speaker
Order. The whole House wants to hear the question.
Mr. Kinnock
This is of general interest. Is the Prime Minister now saying that she was wrong about the inflationary implications of interest rate reductions?
The Prime Minister
I do not think that the right hon. Gentleman is entirely the master of his subject. [Interruption.] I gave the right hon. Gentleman the same reply when I was asked the same question on either the last or the previous occasion when the interest rate was taken down ½ per cent. The reply was this: As the value of sterling has risen, that is the exchange rate has risen, that has tightened money supply, which enables us to reduce the interest rate without having any adverse effect on inflation.
Mr. Kinnock
Between the Prime Minister and the Chancellor of the Exchequer we at least know who the master is at present. Did the Prime Minister's last answer imply that if the pound rises above DM 3.18, which is where it is now, the Government will use interest rates again?
The Prime Minister
Anyone who is asking to know precisely what will happen is the friend of the speculator and aiding and abetting him.
Sir William Clark
Does my right hon. Friend agree that today's reduction in the base rate, and the two previous ones, give the lie to media and Opposition Members' accusations and hysteria to the effect that there is a rift between herself and the Chancellor of the Exchequer in the management of the economy? Does she agree that managing a successful economy, which is the envy of the whole world, means the control not only of inflation and public expenditure and a sound fiscal policy, but of the exchange rate? Does not today's reduction prove [column 800]beyond peradventure that there is complete and utter unanimity in the management of our economy under the capable management of the Chancellor?
The Prime Minister
Yes.
Mr. Steel
Will the Prime Minister clarify the Government's policy towards the exchange rate mechanism of the European monetary system? Is it still that we will join when the conditions are right? As that has been the position for the last eight years and the pound has varied against the deutschmark from DM 4.79 to DM 2.86, how have the conditions never been right?
The Prime Minister
It has been a very consistent position. We shall join when the conditions are right. It remains a consistent position.
Q2.Sir Hugh Rossi
To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
The Prime Minister
I refer my hon. Friend to the reply that I gave some moments ago.
Sir Hugh Rossi
Does my right hon. Friend agree that the decision to withdraw from Afghanistan may well represent the high-tide mark in Russian expansionism and that it augurs well for glasnost and future peace between East and West? Does she further agree that the world is indebted to the Afghan people for their courage, tenacity and suffering, which has brought this about?
The Prime Minister
Yes, I agree with my hon. Friend. We welcome the Russian withdrawal from Afghanistan, which has now begun to take place. We also believe that it was due to the tenacious fighting by the Afghan people against the occupation, with the support of many people throughout the world. We believe that it will improve East-West relations and hope that it will be followed by other withdrawals, for example, by Cuban troops from Angola and by Vietnamese troops from Cambodia.
Mr. Robert Sheldon
Is it not clear that the difference between the Prime Minister and the Chancellor of the Exchequer is simply that the Chancellor of the Exchequer learnt about the problems of the DM 2.40 pound and the way in which it damaged so much of our manufacturing and other industries, and the Prime Minister did not? Will she learn that it is unwise to quarrel with the Chancellor of the Exchequer, but it is extremely foolish to do so in public?
The Prime Minister
I wish that right hon. and hon. Gentlemen on the Opposition Benches could go further and say that they totally endorse Nigel Lawsonthe Chancellor's policy, they totally endorse his Budget and they agree with the reductions in tax, instead of trying to take away in increased taxation from the nurses and the doctors some of their increases in wages. That is what the Labour party wants.
Mr. Patrick McNair-Wilson
Does my right hon. Friend recall that 10 years ago, in the last year of the Labour Government, we had a combination of a weak pound, rampant inflation and goods pouring in from countries with strong currencies, such as Germany and Japan? Does she agree that, in industry's interests, as one of the component factors that it has to take into account is raw material prices, a buoyant currency is an essential concomitant of a successful economy?
[column 801]The Prime Minister
I hear what my hon. Friend says, and I well remember the way in which the economy was handled by right hon. and hon. Gentlemen on the Labour Benches. The reserves of this country dropped to only $4 billion and no one in the world would lend us a dollar or a penny piece. The reserves now are $48 billion because of the way in which the economy is run by Nigel Lawsonthe Chancellor.
Q3. Mr. Bidwell
To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
The Prime Minister
I refer the hon. Gentleman to the reply that I gave some moments ago.
Mr. Bidwell
In view of the right hon. Lady's recently published list of achievements, would it be her intention to add to it the widening gap between the rich and the poor, which is occurring throughout the nation?
The Prime Minister
Everyone in the nation has benefited from the increased prosperity—everyone. The amount spent on social security is well up. The fact is that Labour Members would rather have the poor worse off, provided that those who create the wealth did not earn so much. It is because we have encouraged those who are enterprising that we now have increased wealth to give in greater amounts to the Health Service and social security.
Mr. Beaumont-Dark
Will my right hon. Friend accept that her total endorsement of the Chancellor of the Exchequer's policy is a great comfort to her friends, as it is an annoyance to her enemies?
The Prime Minister
I endorse once again my right hon. Friend Nigel Lawsonthe Chancellor's most excellent policy. I hope that my hon. Friend who has asked the question will never cease to extol the virtues of a successful economy, which has been built up over the past nine years.
[column 802]Mr. Healey
Was there not a contradiction in the remarks that the right hon. Lady made earlier in Question Time? As I understood it, she said she had agreed that the Chancellor should cut interest rates to bring down the value of the pound, and that that was the appropriate level for bucking the market at this time. But a moment later she said she had agreed earlier to cut interest rates because the high pound made it safe to do so without damaging the control of the money supply.
The cut in interest rates this morning has already led to a big fall in the pound. Does that mean that the right hon. Lady will now insist on an increase in interest rates in order to tighten the money supply, or is she not entirely the mistress of her subject or of the Chancellor?
The Prime Minister
If we were going to take lessons we would take them from someone who was the master of his subject and not from the right hon. Gentleman, who reduced this country's reserves to their lowest level ever. No one would lend him a penny piece. I do not wonder why.
Q4. Mr. Cartwright
To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
The Prime Minister
I refer the hon. Gentleman to the reply that I gave some moments ago.
Mr. Cartwright
As the right hon. Lady reminded her supporters yesterday of her manifesto's commitments, will she assure the House that she will honour the manifesto commitment that child benefit would continue to be paid as now, and that there is no truth in press suggestions that child benefit is to be cut, taxed, frozen or abolished?
The Prime Minister
I agree with the hon. Gentleman that the manifesto clearly stated:
“Child benefit will continue to be paid as now, and direct to the mother.”
That commitment will be honoured.