HC Deb 30 January 1973 vol 849 cc1155-8
Q2. Mr. Norman Lamont

asked the Prime Minister whether he is satisfied with the progress of the Government's anti-inflation policy; and if he will make a statement.

Q5. Sir Gilbert Longden

asked the Prime Minister if he will make a statement on the talks he has had during the recess with the Confederation of British Industry and the Trades Union Congress regarding future policy for regulating prices and incomes.

The Prime Minister

I refer my hon. Friends to the answer which I gave in reply to a Question from the hon. Member for Bolsover (Mr. Skinner) on 25th January.—[Vol. 849, c. 637–8.]

Mr. Lamont

In any prices and incomes policy is not the maintenance of profit margins important for employment and investment? Will my right hon. Friend not agree that in all the items of left luggage published as a Labour Party policy document yesterday, the proposals for a voluntary wages policy and compulsory prices policy are the most damaging?

Mr. Russell Kerr

Spoken like a merchant banker!

The Prime Minister

In the talks that we had with the TUC and the CBI during the autumn and at the begining of this year it was accepted as essential that there should be sufficient profitability to enable increasing investment to take place because it was necessary to maintain growth after our present resources are used up in the expansion which is now taking place. The objective of phase 2 and particularly phase 3 of the policy will be to ensure that the profitability is sufficient for that. At the same time, I believe that everyone agrees that there is no justification for excessive profitability because of increased prices due to dearer raw materials or because of the increased turnover which a large part of industry is enjoying with the expansion of the economy. It is a question of keeping a balance in this respect.

Sir Gilbert Longden

Does my right hon. Friend not feel that we might enjoy better industrial relations if he were to propose a charter guaranteeing to all employees among other conditions of service a fair share in the profits of the joint enterprise; a right to joint consultation before automation is introduced or mergers are proposed; a right to retraining at public expense in the event of inevitable redundancy; and a transferable contributory pension?

The Prime Minister

I believe that three out of the four points are covered by the Code of Industrial Relations Practice, and I believe that many good firms in this country follow the practice put forward by my hon. Friend, which I personally strongly support, as do the Government. There are probably a few firms which operate profit-sharing arrangements. It is at the moment a matter for individual firms. It was put to the CBI and the TUC during the talks that we would welcome far greater participation by trade union members and officials in securing progress towards increasing profitability and in ensuring better management. I believe that that is the modern approach.

Mr. Harold Walker

Will the Prime Minister now come clean about the Government briefing that led to the disastrous speculation on 21st January about the rigours of phase 3 of the Government's counter-inflation policy?

The Prime Minister

I explained the position very clearly to the House during the debate. I have sent a letter in answer to the hon. Member for Islington, East (Mr. John Grant). His letter has been published in the Press and there is no reason why mine should not be. It shows that directly after the White Paper was published the Press correctly interpreted it and many correspondents drew attention to the fact that it is preferable to have the same improvement in real earnings from lower levels of price and wage increases. That is surely the objective of all anti-inflationary policies.

Mr. Joel Barnett

Will the Prime Minister now attempt to answer the question on profit margins which the Secretary of State for Employment somehow omitted to answer yesterday? Most companies will not know at the beginning of the year what their profit margins will be at the end, so to whom do they give back their surplus profits?

The Prime Minister

From his own professional experience the hon. Member knows that most firms monitor their profitability as they proceed through the year, and the fact that this power will reside with the board means that it will take particular care to ensure that it is not put in the position of having to deal with excess profitability.

Mr. Ridley

Will my right hon. Friend not agree that the level of investment in British industry is deplorably low and that it is not statements made or alleged to have been made by Mr. Slater or my right hon. Friend the Secretary of State which have caused the present collapse in the Stock Market? Will he agree that it is the prospects for profits which are worrying investors? Will he in particular ensure in stage 3 that conditions are created in which high levels of investment can be achieved.

The Prime Minister

I agree to a certain extent with what my right hon. Friend said. It has been constantly impressed upon industry that one of the major reasons for low levels of investment is the fear of inflation. Therefore, if we are to secure more investment we must show clearly that inflation is being dealt with and if we can do that we stand a chance of success. If the Stock Exchange feels that inflation will be dealt with and therefore there is less speculation in equities, it is encouraging.

Mr. John Grant

The Prime Minister was most evasive both in reply to my hon. Friend the Member for Doncaster (Mr. Harold Walker) and in the letter which the Prime Minister sent to me. Will he confirm that what he told my right hon. Friend in his speech last week was not true, and that there was ministerial action which led to the speculative reports, which, in turn, led to the speculation on the Stock Exchange?

The Prime Minister

The hon. Member's comments are absolutely unjustifiable. I told the House that there had been no ministerial briefing to the effect that phase 3 was to be tougher than phase 2. That was the situation, and it remains so. I am perfectly happy for my letter to be published in full and I will see that it is done so that people can judge for themselves. If the hon. Member examines an account by one industrial correspondent in The Times today he will see that there is nothing there to support his allegations.