COUNTER-INFLATION POLICY (PRIME MINISTER'S SPEECH) (Hansard, 20 February 1973)

§ Q2. Mr. Skinner
asked the Prime Minister if he will place in the Library a copy of the public speech made by him to the Young Conservatives at Bournemouth on 4th February on Government policies.

§ Q9. Mr. Bruce-Gardyne
asked the Prime Minister if he will place in the Library a copy of his public speech at Bournemouth on 4th February on prices and incomes policy and industrial investment.

§ Q12. Mr. Molloy
asked the Prime Minister if he will place in the Library a copy of his public speech to the Young Conservatives Conference on 4th February on prices and incomes.

§ 14. Mr. Carter
asked the Prime Minister if he will place in the Library a copy of his public speech made at the Young Conservative conference in Bournemouth on 4th February on prices and incomes.

§ 15. Mr. James Lamond
asked the Prime Minister if he will place in the Library a copy of his public speech to the Young Conservative conference on 4th February on prices and incomes.

§ Q16. Mr. Ewing
asked the Prime Minister if he will place in the Library a copy of his public speech to Young Conservatives at Bournemouth on Sunday 4th February on prices and incomes.

§ Q17. Mr. Duffy
asked the Prime Minister if he will place in the Library a copy of his speech to the Young Conservative Conference at Bournemouth on 4th February on the Government's counter-inflation policy.

§ Q18. Mr. William Hamilton
asked the Prime Minister if he will place in the Library a copy of the public speech he made to the Young Conservatives at Bournemouth on 4th February on prices and incomes policy.

§ Q20. Mr. Meacher
asked the Prime Minister if he will place in the Library a copy of his public speech to the Young Conservative conference at Bournemouth on 4th February on his economic policies.

§ Q21. Mr. Walter Johnson
asked the Prime Minister if he will place in the Library the speech he made to the Young Conservatives at Bournemouth on 4th February on his counter-inflation policy.

§ The Prime Minister
I did so on 7th February, Sir.

§ Mr. Skinner
I have read it again. Does the Prime Minister recall telling 225 the Young Tories that he would like to he more generous to particular groups? Was he referring to people like himself who are on £15,000 a year and are to get a £6-a-week increase on All Fools' Day? If such people can get increases of that order, why cannot gas and hospital workers and pensioners who are fighting for a decent standard of living?

§ The Prime Minister
The hon. Gentleman knows that the salaries of both Members and Ministers are fixed by Parliament. I was referring to the fact that the present Government have an undisputed record of helping the deprived groups in our community, in particular the old-age pensioners, in a way that they have never been helped before.

§ Mr. Carter
In that speech the Prime Minister referred to the priority attached by the Government to British investment. If at sometime in the future British investment in the Common Market is running at such a level that it places investment at home in jeopardy, what action could the British Government take to redress that situation?

§ The Prime Minister
I am glad to say that all the indications now are that investment, long delayed thought it has been, is greatly improving. The CBI, the DTI and other forecasts substantiate that. Concerning Europe, I do not visualise the position mentioned by the hon. Gentleman. If that situation arose it could be considered with the Community as a whole with either the Council of Ministers or the Commission. Surely the right thing is to make investment here attractive so that it can find suitable opportunities.

§ Mr. Bruce-Gardyne
My right hon. Friend referred in his speech to manufacturers looking for black clouds in the sky to deter them from investment. Surely they do not have to look very far, bearing in mind the calamitous decline in the real rate of return on investment over the past decade or more. Is it not a fact that the shareholders of ICI, for example, would have been far better served if every penny spent by the managers of ICI on plant and machinery in the early 1960s had been invested in land instead? Is a restriction of profit margins related to five fairly calamitous years a yardstick which is likely to disperse the clouds?

§ The Prime Minister
As I have said, all the forecasts for investment are greatly improving. The reason is that the manufacturers say that what has deterred them from investment has been the rate of inflation and the threat of inflation, and their belief that the Government's present policies will deal with these problems is giving them more confidence for investment.

§ Mr. Lamond
Does the Prime Minister recall that in that speech he also said, referring to wage claims, that of course there were hard cases with which it was easy to sympathise? Why does he find it so easy to make exceptions, in the case of price increases and so difficult to exercise that sympathy for hard cases when it comes to allowing wage increases during the freeze?

§ The Prime Minister
Very few exemptions have been made for price increases. That is borne out by the fact that right across the range of manufactured goods, including manufactured foods, the difference between the monthly indices was 0.2 per cent. and has been at that figure for two months running. That shows how effective the standstill has been right across the range of manufactured goods and manufactured foods.

§ Mr. Ewing
With regard to that part of the Prime Minister's speech in which he criticised those members of his own party who believe in the freedom of market forces, is it not true that that was the economic policy on which his Government were elected and that the Government are in such a mess not because of the excessive wage demands of trade unionists but because of the worst economic mismanagement this country has ever been subjected to by any Government?

§ The Prime Minister
I cannot agree with the hon. Gentleman. As the Trades Union Congress has told us that it also believes in a free market economy, it should be possible to have it if agreement can be reached between the TUC, employers and the Government on how it is to be managed.

§ Mr. Tugendhat
My right hon. Friend also referred to rates. Does he agree that today's announcement by the Greater London Council shows how much more successful Conservative-run councils are than Labour-run councils in safeguarding 227 the interests of the ratepayers? What progress has been made in his discussions on the subject?

§ The Prime Minister
I have told the House that we are examining the various aspects put to us by the cities and the local authority associations. I agree with my hon. Friend, having seen the announcement about the GLC, that it is commendable that it should be asking for an unchanged rate for the second year running. I hope that other local authorities can do the same.

§ Mr. Harold Wilson
With regard to the gas dispute, the Secretary of State for Employment has made clear his willingness to take action before 1st April by appointing members of the Pay Board, including at any rate the component for dealing with particular cases and problems. Will the Prime Minister now consider a development of what his right hon. Friend has said?
Does he recall that when we set up the Prices and Incomes Board, in order to give it the necessary powers in advance of legislation, we created it as a Royal Commission so that it could get down to work right away? Will he agree to set up either a nucleus of the Pay Board or at least the component dealing with special cases or particular problems as a Royal Commission, and then in the gas dispute enable it to embark in relation to phase 3 settlements—[HON. MEMBERS: "Too long."]—on the thorough-going inquiry suggested by Sir Henry Jones last week, which would take into account the whole productivity record—[HON. MEMBERS: "Speech."]— and the problem of the electricity analogue, which was slipped through before the standstill phase I agreement—[Interruption.] Tory backbenchers are bad enough—[Interruption.]

§ Mr. Speaker
Order. The right hon. Gentleman is asking a serious question.

§ Mr. Wilson
Yes, Mr. Speaker, and it is one to which the Opposition want a serious answer. I was just completing my question, and I want the right hon. Gentleman to hear it.
I was asking the Prime Minister whether the Pay Board could then go on to the gas inquiry as suggested by Sir Henry Jones, including the electricity analogue—[Horn. MEMBERS: "Too 228 long."] I could have finished 10 minutes ago but for the interruptions of Conservative back-benchers. I am asking a serious question which the Prime Minister must answer.
Recalling, as I said when I was interrupted before, that the Government are insisting on the matter coming into phase 3, as Sir Henry Jones requires, will the right hon. Gentleman on that basis consider this suggestion?

§ The Prime Minister
I have listened carefully to what the right hon. Gentleman has said. He will not expect me to answer such a question without careful consideration. What my right hon. Friend the Secretary of State for Employment said was that the appointment of secretaries of the board can be made at once, because they are members of the service and therefore available and in the Government's employment, and that the union was therefore perfectly able to present whatever material it wished. That could then be handled, and we should appoint the board at the earliest constitutional opportunity. That gives the union, or any others that wish—because the flatter cannot be considered solely on the basis of any one industry or union—the opportunity to prepare the material and hand it in.
On the question of the inquiry, what is important is that the board should be able to examine the claims for exemption or exception from all those who wish to raise them, and not consider one in isolation. I think the right hon. Gentleman will agree from his own experience that it is the examination by a different select group in isolation of a particular application that has so often led to leapfrogging and then to inflation.

§ Mr. Wilson
I am grateful to the Prime Minister for that reply. Of course, that was what the Prices and Incomes Board was for; it required powers. Is the right hon. Gentleman aware that I am proposing that instead of waiting for legislation by 1st April the Pay Board should be given powers to start on the job now? As he probably could not hear all I said, because of the twittering of the clowns behind him, if I send him an elaboration of the proposal tonight will he, as he has offered, give consideration to it?

§ The Prime Minister
Of course, I always give consideration to anything the right hon. Gentleman puts forward. But I must re-emphasise that what my right hon. Friend the Secretary of State for Employment has already proposed offers everything the union can reasonably ask for in consideration of its proposals or claims so that they can be implemented in the autumn in stage 3.