HC Deb 29 April 1975 vol 891 cc230-3
Q4. Mr. Watkinson

asked the Prime Minister what plans he has to meet the TUC.

Q5. Mr. Horam

asked the Prime Minister when he next plans to meet the CBI.

Q8 Mr. Cartwright

asked the Prime Minister whether he has any plans for an early meeting with the TUC to discuss the working of the social contract.

Q9. Mr. Pardoe

asked the Prime Minister when he next plans to meet representatives of the CBI and TUC.

Mr. Edward Short

I have been asked to reply.

I refer my hon. Friends and the hon. Member to the reply which my right hon. Friend gave to my hon. Friend the Member for Fife, Central (Mr. Hamilton) on 24th April.

Mr. Watkinson

When the Prime Minister next visits the TUC, no doubt he will go armed with the latest unemployment statistics. Will my right hon. Friend confirm that it costs the country over £1,000 million a year in benefits to maintain an unemployment level of 1 million people? Will he draw to the attention of his right hon. Friend the Prime Minister the desirability of bringing into operation at the earliest possible date a temporary employment scheme such as has been operated successfully in West Germany? Will he ensure that this scheme is applied across the whole country and not only in the development areas?

Mr. Short

On the first point there is, of course, a correlation between the rate of inflation and unemployment. That should be clearly understood. The best hope is to be prepared for the upturn in world trade which will come next year. That is why the Chancellor is making cuts in public expenditure next year. I think that that is our best hope.

Mr. Pardoe

Will the Lord President ask the Prime Minister to explain to the leaders of the TUC when he next sees them how the Government believe that the recent increase awarded to 500,000 civil servants comes within the social contract? Will he tell the House and the country what public opinion pressures were exerted upon the Government to give way to that demand?

Mr. Short

The hon. Gentleman knows that it was not a normal settlement but a 15-months settlement.

Mr. Tebbit

When the Prime Minister next meets the TUC will the Lord Presi- dent be kind enough to ask him to inquire of the TUC whether it thinks that the Chancellor's measures to restrict demand in order to create 1 million unemployed by the end of this year are within or without the terms of the social contract?

Mr. Short

I wish that the hon. Gentleman would look a bit further than the end of his nose on these matters. The purpose of the Chancellor's increases in taxation is to restrict private consumption in order to divert resources into both investment and exports. I notice that a number of Conservative Members giggled just now when I referred to the upturn in world trade next year. Certainly we want to be prepared for that upturn, but we can only be prepared for it if we make resources available. That is the purpose of the Chancellor's increases in taxation and his cuts in public expenditure next year and not this year. That is the strategy behind the Budget.

Mr. Atkinson

Will my right hon. Friend reconsider his statement that there will be an inevitable upturn in world trade next year? Will he give the House some evidence for saying that? Does he not think there are suspicions that in many of the policies now being pursued by the Government they are making a reckless gamble in ignoring the current situation and hoping that the upturn will occur irrespective of what happens in the United Kingdom?

Mr. Short

I think that there is a good deal of evidence for what I have said. I hope that my hon. Friend will consider that evidence. Perhaps he will consider what I have said— [Interruplion.] I should not have thought that this was a laughing matter, although Conservative Members seem to view it in that way. Let me explain again that the increases in taxation and the cuts in public expenditure, which are to apply next year and not this year, are to clear the decks and to make resources available for exports and investment next year when there will be an upturn in world trade.

Mr. Peyton

I hope that the right hon. Gentleman will address the invitation to look beyond the end of one's nose to his right hon. Friend. Does he recall the Prime Minister saying on the day before the election last year that unemployment was beginning to fall and that inflation was moderating?

Mr. Short

Certainly in the second half of this year, if wage demands do not try to take account of the Budget increases, price increases will moderate.