HC Deb 12 October 1976 vol 917 cc237-40
Q3. Mr. Wyn Roberts

asked the Prime Minister when he last met the CBI and the TUC.

Q5. Mr. Michael Latham

asked the Prime Minister when he last met the TUC.

Q7. Mr. Robinson

asked the Prime Minister when he last met the CBI.

The Prime Minister

I am frequently in touch with leaders of the TUC and the CBI, both at the National Economic Development Council and on other occasions. Further meetings will be arranged as necessary.

Mr. Roberts

At the July meeting of the NEDC the Prime Minister emphasised the importance of profitability for industrial investment, job creation and job preservation. How does he honestly view the prospects for profitability in industry now when £1,700 million is to be taken out of the system by the increase in the minimum lending rate and employers' national insurance contributions?

The Prime Minister

Obviously the additional national insurance contributions will lower profitability. However, it is interesting and reassuring that the liquidity position of companies has been building up during the past few months. Companies now have more liquid resources from which to finance new investment, or whatever it is they wish to undertake, than they had some time ago, and that is to the good.

I am not in the forecasting business—anyway, I hear too many forecasters. I take the view that profitability under the relaxed Price Code—it is not entirely removed—should continue to build up. I think that that will to some extent offset the increase in the minimum lending rate, which was bound to have an adverse effect yesterday. The effect must depend upon how long that rate continues.

Mr. Robinson

When my right hon. Friend next meets the CBI, will he draw to its attention, and to the attention of Opposition Members, that even before the regrettable increase in lending rates and, indeed, when lending rates were much lower, industry was drawing less than 40 per cent. of the facilities available to it from the banks? As my right hon. Friend has said, it is in current gross surplus from its own cash flow. Nevertheless investment is currently 12 per cent. below what it was last year. While we welcome the CBI's intentions for next year, we see no reason for its not getting on the with the job now.

The Prime Minister

The most important thing still for the Government to stick at is overcoming inflation. That, I think, will undoubtedly improve the desire of companies to invest, just as it will improve the objective of securing more jobs. According to the latest views and proposals, I understand that companies will invest about 15 per cent. to 20 per cent. more next year. [Interruption.] Certain Opposition Members are now becoming sedentary prophets. None of us knows what are the intentions, but when we work out the arithmetic it does not work out in the way that some hon. Members suggest.

It would have been valuable if some more industries had taken advantage, as has the non-ferrous industry and the machine tool industry, of our accelerated project scheme, encouraging companies to invest now against the upturn in demand. Undoubtedly that has had an important effect. For a relatively small expenditure of public money we have been able to attract a great deal of extra investment, and that has been accelerated. I hope that others will follow that lead.

Mr. Latham

Will the Prime Minister be stressing to the TUC that he remains unalterably opposed to the Labour Party conference resolution about the nationalisation of the banks, not just because it is an electoral albatross, but because it is bad for Britain?

The Prime Minister

Perhaps the hon. Gentleman will be good enough to leave relations between myself and my party to me. If he were to offer to join, I should send him a membership form, but I doubt whether we should let him come in.

As regards the future of the banking system, my right hon. Friend the Member for Huyton (Sir H. Wilson) can be trusted to make a detailed examination of all the matters involved. I am glad that his appointment has been so well received, except among Opposition Members. When the examination has been completed, we shall be able to see what are the functions of the banks, how they perform their parts and to what extent it is true that the failure of British industry to invest is related to their policies. For myself, I am not convinced that that is so, as I have said on other occasions.

Mr. Wrigglesworth

Does my right hon. Friend agree that one of the most complex and difficult problems facing the Government in the forthcoming year will be putting some bones on an orderly return to free collective bargaining? What plans do the Government have for discussing this with the TUC so that it can help to sustain the present pay policy and restore the confidence in the pound, which is so necessary now?

The Prime Minister

I said at the end of last night's debate, though I am not sure whether it was heard above the hubbub from the Opposition, that it is necessary to have a policy for prices and incomes next year. We are about to begin discussions with the TUC at the appropriate time and we shall also be discussing the matter with the employers in due course. The first thing to find out is whether it is possible to get an agreement on that approach. I have read with care the speeches made at the TUC conference and I am not without hope in this matter. The TUC leaders understand the situation perfectly well and they know that there cannot be a complete return to free collective bargaining.

Mrs. Thatcher

Is the right hon. Gentleman aware that my hon. Friend the Member for Melton (Mr. Latham) was asking him to answer to this House on where he stands on banking and insurance nationalisation? Where does he stand?

The Prime Minister

I answered to the House last night, and we got a majority of 13.

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