§ Q4. Mr. Barnettasked the Prime Minister if the broadcast statement by the Secretary of State for Employment on 5th May on prices represents the policy of Her Majesty's Government.
§ The Prime MinisterYes, Sir.
§ Mr. BarnettIs the Prime Minister aware that the Secretary of State spoke only of wage restraint? If that policy is succeeding, as the Prime Minister has said, with prices continuing to rise, does that not mean, effectively, a real cut in living standards? Despite this, would he confirm, perhaps before Thursday's by-elections, that he is not prepared to do anything about price restraint?
§ The Prime MinisterThe hon. Gentleman will realise that there is a delay between wage increases and price increases. The fact that there has been a de-escalation of wage awards will be reflected in prices later. As for the effect on the real cost of living, that has to take into account tax reductions and the action taken to ameliorate the position of those who benefit from the social services, such as pensioners, the disabled and those who qualify for the F.I.S.
§ Mr. RostIf hon. Members opposite are really concerned about price increases, as they pretend to be, why did they support a Government that increased taxation by no less than £3,000 million a year, a Government that devalued the £ and a Government that allowed the most inflationary wage increases to be let loose on this country that we have ever seen?
§ The Prime MinisterThe Labour Party must be responsible for that, but the facts as my hon. Friend has stated them are absolutely clear. What is also clear is that the Labour Party began with guidelines, went to a voluntary policy, went on to a compulsory policy and then abandoned all three; and today they have no policy at all.
§ Mr. Roy JenkinsWill the right hon. Gentleman give attention to the problems of the present and not to the party diatribe which we have just heard from his back benches? If he accepts, which the figures show, that real wages have been falling slightly in the last month or so, does he intend this to continue, for it certainly will if his policy for de-escalation continues, considering what is happening over price increases and so on? What effect does he think a fall in real wages over the remainder of this year would have on the already totally unacceptable levels of unemployment?
§ The Prime MinisterThe right hon. Gentleman must take into account not only the movement of wages and prices but also the movement of taxes and social service benefits. This cannot be done over the period of one month to which he referred. Indeed, when he was in office he constantly emphasised that one had to look at these movements 233 over a considerable period of time—and he was, of course, quite right.
§ Mr. JenkinsWhat is perfectly clear is that reductions in taxation for the great majority of the population up to at least £3,000 a year are balanced by increased charges. Will the right hon. Gentleman face the issue as to whether he intends real wages to fall during the remainder of this year, and will he say what effect he expects this to have on the level of demand, and, therefore, on unemployment?
§ The Prime MinisterIt is no desire of this Government that the real standard of living of the people should fall, whereas it was the firmly expressed intention of the right hon. Gentleman when he was Chancellor of the Exchequer, following devaluation, that it should fall. That is not our purpose. Our purpose is that by a change of policies which affect taxation and social service benefits, as well as by a de-escalation of wage settlements, there should be an improvement, and a genuine improvement, in the real standard of living of the people.
§ Mr. OnslowWill my right hon. Friend remind the House of anything which the right hon. Gentleman the Leader of the Opposition has done to assist the Government in their fight against inflation?
§ The Prime MinisterHowever long one's memory, one could not remember anything like that.
§ Mrs. Renée ShortIs the Prime Minister aware that many of us think that some of my hon. Friends are being rather unfair to him by constantly harrying him about prices? For example, does he realise that if we go into the Common Market he will not be able to do anything at all about rising prices? Is he aware that his right hon. and learned Friend the Chancellor of the Duchy of Lancaster has made it absolutely clear that we shall be facing 6 per cent. price increases over the next five years—that is, once we have signed the Treaty—and that this process will go on for the foreseeable future?
§ Mr. Clinton DavisAnd the right hon. Gentleman will have one of his strokes.
§ The Prime MinisterWhen the Labour Party was in power and decided to apply for admission to the E.E.C., it was the present Leader of the Opposition who said most strongly that, although there might be short-term disadvantages, the long-term advantages for this country were very great, and that they included an improvement in the real standard of living of the people of this country.
§ Several Hon. Members rose——
§ Mr. SpeakerOrder. We must get on.