§ Q5. Mr. Dalyellasked the Prime Minister if he will make an official visit to Bathgate.
§ The Prime MinisterI have at present no plans to do so.
§ Mr. DalyellWith the 7.5 per cent. male unemployment rate in Scotland and serious figures in the north and west of England, is it sensible and rational at this moment to change from a system of investment grants, which give money to firms when they want it in the initial stages, to a system of tax allowances, which are a long-term issue?
§ The Prime MinisterWe have discussed this question before in considerable detail. The point has always been that we must take the complex of measures for development areas together. I am confident that free depreciation, the additional assistance under the Local Employment Acts, and the cuts we have made in corporation tax, will be an effective inducement to the development areas, just as effective as the regional differential in the investment grant scheme.
The hon. Gentleman is concerned with the Bathgate area. In a very serious unemployment situation in Scotland, it is a matter of encouragement that in the Bathgate group of employment exchange areas unemployment fell from 6.9 per cent. in March to 6.7 per cent. in April. If that can be maintained, it is a matter of pleasure.
§ Mr. Geoffrey FinsbergDoes not my right hon. Friend agree, however, that the situation is not being assisted by companies like the Ford Motor Company giving inflationary wage increases and at the same time opting out of legally binding trade union agreements?
§ The Prime MinisterI think we all recognise the problem posed by the awards made by the motor industry. I would have thought that it was in the interests of the Opposition and those whom they are seeking to serve to recognise the impact of such awards on the rest of industry—in particular when their own policy was that there should be no increase greater than 4½ per cent. For them to support very large wage increases reveals the bankruptcy of their own policy.
§ Mr. Roy JenkinsWill the right hon. Gentleman tell us whether the recent formidable and apparently continuing rise in unemployment in Scotland and elsewhere was in accordance with the forecasts on which the Budget was based or not?
§ The Prime MinisterMy right hon. Friend the Chancellor of the Exchequer has made plain, as many Ministers have done in both Governments, that there are difficulties at any time in forecasting the movement of unemployment, particularly at a time when there is obviously a considerable increase in redundancies because employers are standing men down on account of wage costs. [Interruption.] There can be absolutely no doubt about this. [Interruption.] However much his hon. Friends may shout behind him, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) is intelligent enough to know that that is the case.
§ Mr. Roy JenkinsWill the right hon. Gentleman please explain a point which is found generally mystifying by me and, I believe, by a large number of other people? If it is right, given the present level of wage and cost inflation, for the Chancellor to plan in his Budget, as he clearly stated, to prevent unemployment rising further, even though this appears to be a very delayed effect, why is it not right for him and the Government to take any steps to bring it down from its present totally unacceptable level?
§ The Prime MinisterThe answer is straightforward. If my right hon. Friend were to go further at this moment before seeing the results of the measures he has taken, he would be running what he himself has described as irresponsible risks in relation to further inflation and the effect on the balance of payments. This judgment is also supported by the National Economic Development Office, which took the view that my right hon. Friend had made a judgment which in the circumstances was broadly right.
§ Mr. Bruce-GardyneDoes my right hon. Friend recall that, at the time of the last Budget of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), it was broadly predicted by most economic commentators that the monetary targets he then set would lead to a substantial increase in unemployment during the past winter? Is this not what we are seeing today?
§ The Prime MinisterWe are seeing today the continuation of a complex of factors certainly in operation under the last Administration. We have debated control of monetary policy many times. Money supply was brought under control at the end of the year.
§ Mr. Harold WilsonPerhaps I misheard the right hon. Gentleman and no doubt he will correct me if I did, but I understood him to say that the Chancellor and other Ministers, even with all the information available to the Government, cannot forecast the trend ahead. Does not he recall that when he was sitting on these benches he twice forecast a level of 750,000 unemployed for the following winter but that it never reached that level? Unemployment has now reached over 800,000. Does he not recall his forecast on 16th June last, when he promised to reduced unemployment at a stroke?
§ The Prime MinisterThe action we have taken in halving selective employment tax is going to have its own impact both on prices and on unemployment. Whereas the right hon. Gentleman caused unemployment in the service industries, what we are doing will provide greater employment in those industries, particularly in the tourist areas.
§ Mr. SpeakerOrder. This is becoming a debate.