§ 14. Mr. Lawsonasked the Chancellor of the Exchequer what proposals he has for intensifying the battle against inflation.
§ Mr. HealeySince the money supply is now under control, and import prices are moderating, stricter adherence to the guidelines laid down by the TUC for wage bargaining is the key to reducing inflation. We must therefore all intensify our efforts to secure that the guidelines are observed more strictly in the spirit as well as in the letter.
§ Mr. LawsonDoes not the right hon. Gentleman agree that the £2,000 million reflationary package being urged upon him by the TUC would be just as disas 690 trous as excessive pay rises, about which he has warned so eloquently on a number of recent occasions and has reiterated today? Despite the right hon. Gentleman's self-satisfaction about the money supply, does not he agree that no anti-inflationary package can work unless there is a marked reduction in the public sector borrowing requirement to well below the official figure of £6,300 million at which it stands at present?
§ Mr. HealeyFor me to give a view now on how much inflation, reflation or otherwise is required by Government action would be to anticipate a judgment which I must make and reveal to the House in my Budget speech, which I assure the House will be either before or after Easter.
The hon. Gentleman's second question escapes me for the moment—
§ Mr. LawsonPublic sector borrowing.
§ Mr. HealeyThe hon. Gentleman will be glad to know that there are two later Questions on that matter.
§ Mr. LuardDoes my right hon. Friend accept that the concern which exists about the present level of inflation is widely shared on the Government benches? Many of us are concerned about its possible effect in the near future on our balance of payments as well as on the level of unemployment. We welcome the strong views which my right hon. Friend has expressed about this, but has he seen the results of the opinion poll published today showing that the great majority of the population have no idea what the social contract means—[Interruption.] For those who believe that this should be the basis of our policy—
§ Mr. SpeakerOrder. The hon. Gentleman must ask a question.
§ Mr. LuardDoes not my right hon. Friend agree that this shows an urgent need for an intensive public relations campaign to make the population aware of what this policy represents?
§ Mr. HealeyIt is desirable that all those who are concerned to reduce the present unacceptable level of inflation should do their best both in public and in private to persuade people to maintain the guidelines set down for bargaining. 691 I hope that I can count on my hon. Friend to give up at least two nights a week for that purpose.
§ Mr. PardoeDoes the right hon. Gentleman agree that his recent rather good speeches on this subject imply that he sees unemployment as the only possible alternative to the success of the social contract in dealing with wage inflation? If so, will he say how much unemployment he believes is needed to cure how much inflation?
§ Mr. HealeyI am sorry to say that I am so overcome by the generosity of the hon. Gentleman's compliments that I scarcely feel like being unkind to him in answering the second part of his question.
Unemployment is not the alternative to bringing down the rate of inflation; it is the consequence of failing to do so. How far unemployment will increase is a matter on which I do not care to make a judgment now. However, thanks to the measures taken by this Government last year, unemployment in Britain as a percentage of those able to work is lower than in any other industrial country, and it is rising more slowly.
§ Mr. SpriggsMy right hon. Friend referred to the social contract. If he hopes to succeed in winning over the trade unions and the employers to the social contract, is he aware that justice must be seen to be done as between all those making claims on the economy?
§ Mr. HealeyThat is the case, but we also have to pay regard to justice to the people of Britain. Settlements made outside the guidelines laid down by the TUC are damaging to each and every one of us, no matter what occupation we follow.
§ Sir G. HoweFurther to the point raised by my hon. Friend the Member for Blaby (Mr. Lawson) about the right hon. Gentleman's response to the TUC's suggestion for a very substantial increase in public spending, is it still his view that if wage rates rise beyond the level recommended in the social contract—to which he attaches such importance—he will, as he said in his Budget speech last year, be compelled to take offsetting steps to curtail demand?
§ Mr. HealeyI have repeated that statement many times since making that Budget speech.
§ Later—
§ Sir John HallOn a point of order. Mr. Speaker. It will be within your recollection that my hon. Friend the Member for Blaby (Mr. Lawson) asked the Chancellor whether he would comment on the problem of the public sector borrowing arrangements, which now stand at about £6,300 million. The Chancellor refused to answer that question on the grounds that there was another Question on the matter later on the Order Paper, so he deferred his reply until then. You will agree that this is a matter of grave and growing concern, not only to hon. Members but to the country. It is clear either that the Chancellor wished to reply to this Question and give more information about this important matter or, alternatively, that he was abusing the procedure of the House. May I suggest to you that the Chancellor be asked to seek your consent to reply to that Question?
§ Mr. SpeakerThese are not matters for the Chair, and I have received no such request.
§ 16. Mr. Stanleyasked the Chancellor of the Exchequer what has been the rate of inflation over the last three months for which figures are available expressed on an annual basis.
§ 29. Mr. Rookerasked the Chancellor of the Exchequer what is his latest estimate of the current rate of inflation.
§ Mr. HealeyI would refer my hon. Friend and the hon. Member to the answer which my right hon. Friend the Paymaster-General gave on 14th January to the hon. Member for Derbyshire, South-East (Mr. Rost).—[Vol. 886, c. 230.]
§ Mr. StanleySince he has ministerial responsibility, will the Chancellor say what he is prepared to do to secure stricter adherence to the TUC guidelines on wage settlements, apart from simply making speeches about them?
§ Mr. HealeyThe essence of the TUC guidelines is that they are guidelines for voluntary collective bargaining. Therefore, influence on those who negotiate is the only means which can be used by 693 the Government to secure adherence to them. I must point out that the exceptionally high increase in the rate of inflation in recent months was due in large part to 11 threshold payments, totalling £4.40, to over 10 million workers, for which legislation introduced by the previous Conservative Government was responsible. The increase in the rate of inflation was also due to various groups in the public sector catching up on the unfair discrimination against them, imposed by the statutory policy.
§ Mr. DalyellIs not one of the major worries of the TUC the rate at which service industry manpower has gone up and the way in which the percentage of those in Government service has risen from 5½ per cent. to 6½ per cent.? In these circumstances, will he get some of the most critical men in the Treasury to look at the inflationary aspects of new forms of bureaucracy in Scotland?
§ Mr. HealeyThere are many critical men in the Treasury, and I hope that I am one of them. My hon. Friend will know, because he will have read the best White Papers, that the Government are planning to halve the increase in local government expenditure which took place during the past three years under policies introduced by the previous Government. I do not deny that effective control both of spending and of recruitment of manpower in local government is a difficult problem for any administration.
§ Mr. BiffenIn the view of the right hon. Gentleman, what would be the consequences either of a fall in the rate of inflation, or the expectation of a fall in that rate, upon the level of unemployment?
§ Mr. HealeyOne certainty is that if there were a fall in the rate of inflation, or the expectation of one, many investment decisions now being held up would go ahead. That would lead to an increase in employment.