§ Q3. Mr. Skinnerasked the Prime Minister whether he intends to attend the TUC in September.
§ The Prime MinisterI do not plan to do so.
§ Mr. SkinnerWhen my right hon. Friend met the TUC yesterday, did he detect a certain reluctance by a large majority of its members to accept the current public expenditure cuts? Is not that to be expected when only three years ago just about the only advocate in this House, and possibly outside it, for cutting public expenditure was the right hon. Member for Down, South (Mr. Powell)? Is my right hon. Friend aware that even at that time the right hon. Gentleman was attacked by the Deputy Leader of the Opposition, who said, in a speech at Berwick on 7th November 1973, that inflation could not be got under control by cutting public expenditure? Is this not a strange road for the trade union and Labour movement to travel at this time?
§ The Prime MinisterI found as much reluctance among the TUC Economic Committee as my right hon. Friend the Chancellor and I feel in putting forward the proposals. No one should assume—and I am sure that my hon. Friend the Member for Bolsover (Mr. Skinner) does not—that there is some masochistic pleasure to be secured in this. My hon. Friend made a significant point about the position three years ago. In the last three years public expenditure, in real terms, has increased by 20 per cent. while our gross domestic product has increased by only 2 per cent. Therefore, a speech that might have appeared totally unjustified three years ago might prompt different conclusions if made now.
§ Mr. Tim RentonThe Prime Minister is widely reported as having told the trade union leaders yesterday that public expenditure cuts are vital if he is to stay in office. Is that true? Did he say that? If he did, when will he make clear to his hon. Friends below the Gangway and the country at large this connection between public expenditure cuts and his job?
§ The Prime MinisterI assure the hon. Member that it is not so much a matter of my personal position; it is much more the case that I believe very strongly that only a Labour Government can at present carry this country through the economic circumstances that demand a difficult combination of asking the trade unions for sacrifices from their members at the same 901 time as we are restraining public expenditure, and getting a unique agreement from the CBI to encourage manufacturing industry. I believe that the Labour Government are the Government who can carry this through, and it is in that sense that I wish them to stay in office.
§ Mr. HooleyWhen my right hon. Friend next meets the TUC, will he put to it the possibility that substantial increases in taxation on alcohol, gambling and tobacco, which would reduce the borrowing requirement, would be a more acceptable policy than cutting expenditure and, as a result, increasing unemployment, by 70,000?
§ The Prime MinisterI would prefer not to be drawn into details on these matters at this time. They are more questions for my right hon. Friend the Chancellor, who has just endured 45 minutes of them.
§ Mr. Ian LloydAs the Prime Minister, in some interesting recent speeches, has invited investors and the CBI, as well as the TUC, to co-operate with the Labour Government, will he explain to the TUC and the country how the co-operation of investors can possibly be secured in the light of answers I received from the Chancellor today, which showed that at any rate of income and at any rate of investment the total return is negative?
§ The Prime MinisterThat shows the absolute necessity of the Government continuing their policy to overcome inflation, on which there has been very great success in the last 12 months, with a reduction from about 27 per cent.—
§ Mr. GryllsWho put it there?
§ The Prime MinisterIf we are to go into the reasons for the rate of inflation being there, I shall give the answer in two words—Lord Barber.
To come back to the question, it is clear that if manufacturing industry is to invest it must be assured, after inflation, of a reasonable return on the investment. That is a basic lesson, whether one lives in a capitalist society, a mixed economy 902 or a totally Socialist economy. All economies discover the same thing in the end.
§ Mr. John MendelsonWhether my right hon. Friend does or does not attend this year's TUC conference, his Administration has always attached the greatest importance to relations with the TUC and has derived great strength from that relationship. Is it not clear, therefore that any policy which, instead of reducing unemployment greatly by the end of this year, adds to the number of unemployed is bound to create serious problems between the Government and the trade union movement? Is my right hon. Friend aware that there are many supporters of the Government who will find it difficult to support such a course?
§ The Prime MinisterYes, Sir, I understand all these matters—at least, I hope I do. I have always based our policy, as indeed did my predecessor, upon close co-operation with the TUC. That is why I am engaged with the Chancellor of the Exchequer, in consultation with others, in the perhaps unprecedented task of discussing these problems with the TUC. I do not wish to embroil the TUC in what must be Government decisions, but I want to make sure that the TUC understands whatever measures are taken, so that the social contract can continue and the basis upon which Britain's recovery can be achieved will not be destroyed.
§ Mrs. ThatcherIf the Prime Minister believes the economic diagnosis he gave in his answer to my hon. Friend the Member for Havant and Waterloo (Mr. Lloyd), why did his Chancellor of the Exchequer, in the last General Election, boast that he had already got inflation down to 8.4 per cent?
§ The Prime MinisterIf I am given an opportunity, I shall do so. My right hon. Friend gave the figures for the previous quarter. Those figures have never been disproved. Statistically and arithmetically they were right, but unfortunately, when extrapolated, the trend did not continue.