HC Deb 03 July 1973 vol 859 cc246-9
Q1. Mr. Wyn Roberts

asked the Prime Minister if he will make a statement on his official talks with the CBI about inflation on Monday 18th June.

Q21. Mr. Joel Barnett

asked the Prime Minister if he will make a statement on his meetings with the Confederation of British Industry and the Trades Union Congress.

The Prime Minister (Mr. Edward Heath)

As I have already told the House, specific subjects for further discussion were agreed at my meetings with the CBI on 18th June and with the TUC on 13th June. These will be discussed at further meetings with the two bodies, the dates of which are being arranged.

Mr. Roberts

Does my right hon. Friend agree with the CBI's view that, if we are to maintain the present growth rate under phase 3, there will not be much scope for a real increase in wages? If this is not the position as my right hon. Friend sees it, will he take active steps to counter the pessimistic propaganda which is being put out at the moment about workers, business and, indeed, the nation's prosperity under phase 3?

The Prime Minister

With my hon. Friend, I regret that that attitude has been taken by some people about the prospects of continuing growth and continuing employment and I do not think that it is justified. With regard to forecasts, whether by the CBI or anybody else, what I said to the CBI and TUC on the last occasion was that, having agreed the objectives for our talks, we would do the same as we did last year—which is, in the autumn, to put forward the best economic model we can as to what will happen to growth in the economy, employment, investment and all the other factors. These would be discussed between the three parties, if they so wished, first at official level and then between the delegations. In the meantime, I have offered to give the CBI and TUC, in the work they are doing on the subjects upon which we settled, any information we have available, if they will indicate what they require.

Mr. Barnett

Can the Prime Minister explain how he reconciles the statement that he is negotiating in good faith with the TUC with the fact that the TUC's commitments are incompatible with Conservative philosophy?

The Prime Minister

It is a strange accusation for the hon. Gentleman to make. He and most of his right hon. and hon. Friends have always urged that we should be prepared to discuss anything with the TUC, and the TUC is taking advantage of this. This is valuable—in exactly the same way as we are prepared to discuss any item with the CBI, which also may have a different philosophy.

Mr. Ridley

As the rate of inflation has increased since the counter-inflation policy was started, will my right hon. Friend have careful regard to economic, fiscal and monetary policies in the months ahead during phase 3 as well?

The Prime Minister

I do not agree with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) in his fundamental premise, which I notice he put forward the other day. On the question of monetary policy, I am sure he will take satisfaction from the fact that the monetary supply is firmly under control.

Mr. Harold Wilson

Recalling that the Prime Minister last week, while still resisting the proposals to use food subsidies for the very high-priced foods, nevertheless seemed willing to discuss such proposals with the two sides of industry, may I ask him to say whether there is any truth in reports that the Common Market Commission, under Articles 92 to 94 of the Treaty of Rome, is warning Britain not to introduce food subsidies as a means of fighting rising prices?

The Prime Minister

I said to the CBI and the TUC that in the context of our general discussions I was perfectly prepared to listen to any proposals that they had to make on food. I know of no formal statement by the Commission on this matter, nor do I know of any private representations. In fact, such things do not happen. In any event, as I have said already, on some foodstuffs the Government have provided subsidies. The right hon. Gentleman knows that on milk it is happening at the moment.

Mr. Wilson

If the right hon. Gentleman does not know of any private hint or public statement, will he consider the statement issued by Commission sources over the weekend which said that its rules preclude the use of food subsidies as such to fight rising prices but went on to say that the threshold idea in use in Belgium for offsetting the effects of higher prices, which I understand the right hon. Gentleman to be considering, is the only way round the rules of the Commission? Will the right hon. Gentleman look into this matter again?

The Prime Minister

I am perfectly prepared to look into it. As I have told the House before, threshold agreements were offered to the CBI and the TUC in the discussions last year. No ()Teat interest was shown in them at that time. But there was a further discussion in the two meetings that we have had so far this summer, and much more work has been done on them.

Sir Gilbert Longden

Must it not be true that, if necessities become scarcer, and therefore dearer, and are subsidised by the State and are not also rationed, the result is that the richer get more of those necessities than the poorer? Is that the idea of social justice held by the Opposition? Was not my right hon. Friend right when he said that large subsidies must mean rationing?

The Prime Minister

That is true. Inevitably it leads in the end to rationing and also to what my hon. Friend has said.

which is that if there is a world shortage of certain foodstuffs, as there has been this year of meats and cereals, and countries are subsidising them, they increase the demand and push world prices still higher. Therefore, the spiral increases and the contributions that any Government have to make to subsidies becomes even greater. It is because of this open-ended commitment that Governments find themselves driven to rationing, as this country has found in the past.