TUC (Hansard, 13 May 1976)

§ Q2. Mr. Atkinson
asked the Prime Minister what was the outcome of his last discussions with the TUC.

§ The Prime Minister (Mr. James Callaghan)
The agreement of the TUC General Council to make a recommendation to a special TUC conference next month about a further voluntary extension of incomes policy that will meet the Government's objective of ending next year with an inflation rate in line with our foreign competitors.

§ Mr. Atkinson
Does the Prime Minister recollect his assurances to foreign holders of sterling that he did not foresee any expansion in the public sector as a means of overcoming the dreadful unemployment position in this country? Is he aware that the same foreign holders of sterling are now saying that British manufacturing industry is still overmanned and that, therefore, investment should not take place without a further fall in the value of the pound? How does he reconcile Labour Party policy of doing 664 all that it can to overcome the unemployment situation with these threats from foreign holders of sterling?

§ The Prime Minister
I was referring to the levels of public expenditure, which have been a source of controversy between some of my hon. Friends and the Government for some time, but which were decided a few weeks ago, and not to anything else. Overmanning obviously varies industry by industry. It may be true of some industries, but it is not true of others.

§ Mr. Henderson
Will the Prime Minister tell us when he expects to meet the STUC in Scotland? Like most other people in Scotland, it is anxiously waiting to hear what real measures the Government will introduce to deal with the horrifying unemployment situation.

§ The Prime Minister
The Scottish TUC will be able to address me directly if it wishes to give me an invitation. I look forward to meeting the STUC, the Scottish Labour Party and, indeed, any other organisation which has anything to offer on this serious matter of unemployment in Scotland. I was very glad to see, and I am sure the hon. Gentleman welcomes the fact, that Govan Shipbuilders yesterday secured a very valuable order. That shows the competitiveness still of British shipbuilding.

§ Mr. Speaker
Mr. Grimond.

Hon. Members
Hear, hear.

§ Mr. Grimond
May I ask whether the Prime Minister has registered this scene of enthusiasm for Liberal policy? Has he received any indications that productive investment may now increase?

§ The Prime Minister
I should like, on behalf of a great many Members, to congratulate the right hon. Gentleman on his bed of thorns. We recognise that he is taking on the leadership of the Liberal Party out of a sense of public responsibility and duty, but I hope that he will get some enjoyment out of it while he is doing it. [Interruption.] The House should not be so cynical. I really hope he does. As to Liberal policy, when I see the right hon. Gentleman leading the party, I think that the wrapping is very attractive, but I am not sure about the contents.
665 On the levels of public and private investment, I think that the CBI's most recent survey of intentions shows that there is a returning confidence in British industry about the need to invest. I hope that is true. Government policy must be to encourage it in every possible way.

§ Mr. Kilroy-Silk
Does the Prime Minister recall that he has spoken a great deal about the need for increased profitability in order to obtain increased investment? But even when there were high levels of profit, this did not invariably mean that they went into increased investment, job creation, or to regions such as Merseyside. If we are to have higher profits in future, we need more public means of controlling them to ensure that they go into socially desirable objectives.

§ The Prime Minister
My hon. Friend points to a dilemma. Although high profits do not necessarily lead to high investment levels, the corollary is true also. Profitability in a number of industries at present is not sufficient, assuming the will is there, to enable proper reinvestment or investment at current prices to take place. Therefore, it is essential that there must be an improvement in the rate of profitability. We must go on working at this. In a nutshell the situation is this—today's profits must be tomorrow's jobs. If there are no profits, there will be no jobs.

§ Mrs. Thatcher
Now that the Government have introduced a special incentive to encourage investment, as in the case of ICI, will the Prime Minister tell the TUC whether it would be appropriate also to consider introducing a special incentive in pay to encourage productivity and to deal with the difficult problem of differentials?

§ The Prime Minister
The House is very good at pointing out some of the dilemmas of Government. The Leader of the Opposition has just touched on another. There is a general recognition that pay settlements of this year's nature or last year's nature will lead to difficulties later. The question of differentials will be very difficult to solve, as is the fact that the new rates have not been consolidated in the basic rates. But that is no reason for trying to destroy the 666 advances which are being made in this direction and which are having a substantial impact on our economy now.

§ Mrs. Thatcher
I am not trying to destroy anything. I am trying to say that there will be very considerable difficulties with differentials. Already there has been a suggestion that there should be power cuts to enforce differentials, or so it was reported in the Press. Is the Prime Minister to continue to ignore this, or, as he has allowed a special case for investment, will he allow a special case in pay?

§ The Prime Minister
I was not aware of the right hon. Lady's enthusiasm for the TUC's recommendations. As far as I can see, she seems to be damning them with faint praise. If she is in favour of them, I welcome that. What is needed over the next 12 months—which will be difficult when working people find that their standard of living has been reduced—is a common understanding of the reasons which have led to this situation. I hope that the right hon. Lady will lend her authority in support of the Government on this matter.
On the question of whether the trade unions should exercise their power in the way the right hon. Lady envisages, all I can say is that it would be totally against the national interest, and the long-term interests of the men themselves. I hope that the right hon. Lady will not at any time make it appear to these men that their grievance is of such a character that they are entitled to wreck the whole scheme. I do not believe that is her intention, and I hope that she will make it absolutely clear that it is not.