HC Deb 15 April 1975 vol 890 cc266-9
Q1. Mr. Lawson

asked the Prime Minister whether he will place in the Library a copy of his public speech at Cardiff on 15th March about economic policy.

Q2. Mr. Norman Lamont

asked the Prime Minister whether he will place in the Library a copy of his public speech on economic policy in Cardiff on 15th March.

The Prime Minister (Mr. Harold Wilson)

I refer the hon. Members to the reply which I gave to the hon. Member for Mid-Sussex (Mr. Renton) on 8th April.

Mr. Lawson

In that speech the Prime Minister asked what number of unemployed would be tolerable to the Conservative Party. Does he believe that that form of economic illiteracy marks a serious contribution to the economic debate? If so, will he tell the House what number of unemployed is tolerable to the Labour Government?

The Prime Minister

The hon. Gentleman is quite right in that the whole of that speech was in the interests of democracy—namely, a polite suggestion to the Conservative Party that it should be thinking about having an economic policy. My reference to the number of unemployed is a reference to the article in the Sunday Express written by the right hon. Lady the Leader of the Opposition. In that article she covered up the problems by referring to the statistics of unemployment as meaningless. As regards the second part of the hon. Gentleman's question, I think that these matters will be fully debated in the debate which will follow the statement of my right hon. Friend the Chancellor of the Exchequer.

Mr. Lamont

With regard to the Prime Minister's remarks about the Opposition's attitude to unemployment, may I ask whether he has read the latest report of the National Institute which mirrors the Treasury's thinking and which says that the Government should now deliberately use the threat and reality of unemployment as part of the anti-inflationary strategy? Therefore, is it not the height of hypocrisy for the Prime Minister to go on attacking others for what his Government are doing?

The Prime Minister

The hon. Gentleman is quite wrong. I read the report, which does not in any sense represent Treasury thinking. The fact that the director of the institute was a former pupil of mine at Oxford does not mean that it reflects my thinking either. On behalf of Her Majesty's Government, I emphatically repudiate that statement.

Mr. Horam

Does my right hon. Friend agree that, whatever happens today, what we need is a clear sector-by-sector strategy for industrial investment? Since Sir Ronald McIntosh of NEDO has re emphasised the need for such investment, and since there is experience of this policy in the little NEDCs, will be bring pressure to bear for the drawing up of a short-term plan to allocate the priorities for industrial investment?

The Prime Minister

My right hon. Friend is right to say that the NEDC has a mandate. The last time I chaired the NEDC we spent the whole day on the question of a sector-by-sector approach to investment. The whole House is coming to the view that the appalling lack of new investment over a whole generation under successive Governments has been responsible for our problems. This matter can be dealt with in part, but only as to a small part by macro-economic policies—financial policies and so on—and what we need is a direct approach to sector-by-sector investment. That is what the National Enterprise Board is all about.

Mr. Thorpe

Since in the Cardiff speech the Prime Minister said that the social contract must be given a chance to succeed, will he confirm that the Civil Service pay is, so far as possible, based on comparability with the private sector and, therefore, is an important indicator? Will he say whether a rate of increase of 26 per cent. in the year, or 32 per cent. over 15 months, is within the TUC guidelines? If it is, are we not reaching the position that the norm is controlled by what happens to be the most recent and highest wage award?

The Prime Minister

No, Sir. The right hon. Gentleman has not quite fully understood the position of the Civil Service settlement. He will recall that since 1957 all parties in this House, including his own, have accepted the Priestley principle—namely, that in the fixing of wages for industrial civil servants in the dockyards, or wherever they may be, they should reflect pay outside for comparable work, in respect of carpenters, shipwrights or whoever it might be. The same is true of clerical and specialised grades. When we came to office last year I met administrators of the Civil Service and it became clear that in the previous three years the Priestley rules had been breached. I gave an assurance that as quickly as possible we would get back to the figures they should have had under what has been accepted by all parties. This settlement is a partial but not a complete acceptance or fulfilment of the pledge I then gave.

Mr. Ioan Evans

On the occasion of my right hon. Friend's visit to Cardiff—where he saw Wales win at rugby football and also saw the celebrations marking the granting of the freedom of the city to the Foreign Secretary and to Mr. Deputy Speaker—does he recall that he asked what alternative to the social contract was put forward by the Leader of the Opposition? Has he had any reply?

The Prime Minister

Well, no, actually, but we may get it this afternoon. Who knows? In fact the speech was not related to that matter. I asked in that speech whether, with the agreement of the Opposition, we could be informed about their policy on housing, public expenditure, wages and their whole approach to inflation. We have heard from them nothing at all. Personally I am an optimist and I expect that by about the year 1979 they will get round to making some proposals in those areas.

Mr. Walters

As exports are vital to the British economy, since British influence is strengthened by the supply of our equipment, and as in the past we have supplied submarines to Israel, will the Prime Minister assure the House that he will not allow his own personal sympathies to interfere with the pursuit of British interests?

The Prime Minister

I think that my right hon. Friend the Foreign Secretary has already answered the question on that topic. The inspiration lying behind the hon. Gentleman's question is misconceived. I did not myself interfere in this matter because the decisions had been taken by the Department under the policy approved by the Government and announced in the House on 10th June last year. [Interruption.]

When I received a letter from a noble Lord in another place about a particular case, I said that I would look into the situation. When I did so, I found that a decision had already been taken. I understand from what has been published in the past year that the Libyans themselves had decided, several months before on commercial and price grounds, not to go ahead with the purchase of British submarines, even if Her Majesty's Government approved them. I applaud and agree with what has been done by the Secretary of State for Defence and the Foreign Office under the policy announced by the Government. I should be surprised if the hon. Member for Westbury (Mr. Walters) was pressing that we should send arms to Libya indiscriminately, not only because of our policy of maintaining a very strict control in relation to the Middle East generally but also because of Libyan sales of arms to the IRA.