HC Deb 13 April 1976 vol 909 cc1139-42
Q3. Mr. Blaker

asked the Prime Minister whether he will dismiss the Chancellor of the Exchequer.

Q4. Mr. Wyn Roberts

asked the Prime Minister if he will dismiss the Chancellor of the Exchequer.

The Prime Minister


Mr. Blaker

In that case, will the Prime Minister ask the Chancellor to pay attention to the debates on this year's Finance Bill? Is the Prime Minister aware that had the Chancellor listened to what was said by the Conservative Party, during last year's debates, about the impact of the 25 per cent, rate of VAT and the damaging effect of capital transfer tax on small businesses and farms, he might have avoided putting a number of people out of work and the humiliating climb down that he has made this year?

The Prime Minister

That is not the case. My right hon. Friend said that he believed the rate of VAT should be reduced, and I think the reduction has been generally welcomed throughout the country. Rates of tax are often generable up and down and I dare say this one will be, too.

Mr. Les Huckfield

Does my right hon. Friend agree that it is time more attention was focused on the CBI and some of its members, and also on the niggardly investment response that it bas made to the tax concessions already received? Is not the most fundamental issue facing the country the lack of economic growth?

The Prime Minister

Yes, Sir. I agree with my hon. Friend's last point. But the biggest single disincentive to investment is inflation and, clearly, the counter-inflation strategy is a necessary precondition to investment recovery. The assurances of the tax allowances and stock relief will serve to bolster business confidence. I have seen a recent report that business confidence is beginning to return, but it is early days yet. I think that the Budget may have helped that.

Mr. Roberts

Returning to the Chancellor's pay offer, does the Prime Minister think it fair and just to the country, including trade unions, that only the tax reliefs part of any wage bargain should be subject to statute, and that the limitation on wage increases should not be subject to statute and, therefore, unenforceable?

The Prime Minister

We cannot apply strict logic in this area, if we do not want to fall into the errors that the previous Conservative Government fell into. Unless there were a real corporate State it would be impossible permanently to regulate wages and incomes by statute. That is the difference between tax allowances and rises in income.

Mr. Kinnock

Is my right hon. Friend aware that it is a pretty daft idea to consider dismissing my right hon. Friend the Chancellor of the Exchequer, whether the request comes from Wales or England, Blackpool or Conway? Given that we have a deadline for the fixing of a new pay arrangement announced by my right hon. Friend the Chancellor in his Budget Statement of early June, it is necessary to carry it through with the full assent of the TUC and individual trade union leaders. Consequently, must not all options be re-opened, so that we can have a genuinely renegotiated policy, not within the parameters that have been rather rigidly set by my right hon. Friend?

The Prime Minister

I recognise the force of my hon. Friend's point that what is necessary if we are to carry the work people with us is a voluntary agreement. So far I go with him. But my right hon. Friend the Chancellor pointed out the limits within which he could give reliefs if we are to achieve both his and the TUC's aim. The TUC's aim is not different—it is to reduce inflation by at least one half during the current year. That is the overriding factor. My right hon. Friend pointed out in his Budget Statement the parameters within which this could be done, but in the end the House will have to decide, in the light of the success or otherwise of the discussions with the TUC—and I hope that they will be successful. If the TUC comes forward with other propositions, my right hon. Friend and others will want to examine them, but that will not destroy the basic arithmetic of how to cut inflation down by half this year.

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