CBI (Hansard, 16 December 1976)

§ Q2. Mr. Michael Latham
asked the Prime Minister when he next expects to meet the CBI.

§ The Prime Minister (Mr. James Callaghan)
I refer the hon. Member to the reply which my right hon. Friend the Lord President of the Council gave on my behalf to my hon. Friend the Member for Bolsover (Mr. Skinner) on 30th November.

§ Mr. Latham
How can the CBI or anybody else be expected to have confidence in a Government whose party machine, against the express wishes of its own Prime Minister, appoints a Trotskyist to high executive office?

§ The Prime Minister
I understand that yesterday the CBI had a Press conference—[HON. MEMBERS : "Answer the question."] I am answering the Question. I was asked when I am expected to meet the CBI, and I am replying to that Question. I understand that, although CBI leaders have warned that they will reserve final judgment, they broadly welcome my right hon. Friend's measures as a boost to business confidence, although they criticise many aspects of them. Therefore, in conjunction with the TUC, which also has certain criticisms to make, there seems to be a much better reception among those who really know than among those who are just here to criticise.

§ Mr. Whitehead
Will my right hon. Friend tell the CBI to tell its friends in the international monetary community that they must not think that they can ratchet into another round of public expenditure cuts which have been the subject of discussions in the Cabinet, that this has happened for the last time and that we do not wish to see this country put at the mercy of the monetarists on the Opposition Benches, with the chaos that that would bring to the conduct of our affairs?

§ The Prime Minister
When the representatives of the CBI came to see the Chancellor, they were opposed to further substantial measures of deflation because of the effect on industry. For that reason they have been critical of the measures taken in the construction industry. I think that the whole House—or, at least, I hope the whole House—will agree that, in view of the present state of British industry and the general level of the economy, it would be a bad thing if there were any further cuts in public expenditure. It is our belief, looking at the package as a whole, that when the world has had time to examine it clearly, instead of taking these things off the tapes, there will be a substantial boost to confidence and that that will go towards a reduction in interest rates.

§ Mrs. Thatcher
Yesterday the Chancellor said that his measures would generate more jobs. How many?

§ The Prime Minister
With respect to the right hon. Lady, we have just had 45 minutes of Questions to my right hon. Friend the Chancellor on these matters. What he said yesterday was that some of the offsetting measures he proposes to take would have this effect on jobs. He did not say that unemployment would not rise next year, as the right hon. Lady knows. I have said myself that it will rise. It will go up, but the measures my right hon. Friend has taken on the temporary employment subsidy, job creation and the additional investment made available through the provision of funds will have a substantial offsetting effect. That is what my right hon. Friend said.

§ Mrs. Thatcher
The figures must have been before the Cabinet at its many meetings. Why is the Chancellor afraid to give them to the House?

§ The Prime Minister
The right hon. Lady should not attach all that importance to forecasts which are bound to be inaccurate. [Interruption.] When we know that two forecasts produced by two reputable bodies differ by a figure of £3 billion in terms of the public sector borrowing requirement, I believe that the right hon. Lady is making a fetish of this matter. There was a former and reasonably successful Tory Chancellor who said that in the end one had to fly by the seat 1724 of one's pants. When he had examined all the forecasts, he made his best judgment. That is what has been done here. The thought that one can produce exact figures of the increase in unemployment next year shows a hobgoblin of a little mind.

§ Mr. David Steel
Since the withdrawal of the regional employment premium in development areas, coming on top of the increase in employers' national insurance contributions, will make a substantial difference to the financing of employment in development areas, when will the right hon. Gentleman spell out the alternative measures which the Government will take to promote employment in those areas?

§ The Prime Minister
This was examined and, as far as it is possible to see, the abolition of the regional employment premium will not make all that substantial a difference. We would not have taken the step if we had thought that it would. When we introduced it 10 years or so ago, it was a quite significant proportion of the weekly wage bill. It is no longer that. A great many of the companies that receive it do not need it. Therefore, we thought it better to have a more selective form of aid to industry, which my right hon. Friend the Chancellor of the Exchequer spelt out in some detail yesterday, through the operation of the National Enterprise Board and through the operation of the Welsh Development Agency, the Scottish Development Agency and other institutions of that kind.