§ Q2. Mr. Pattieasked the Prime Minister if, further to his statement,Official Report, 7th July, column 1423, that the social contract was no longer intact and his answer of 13th July to the hon. Member for Chingford (Mr. Tebbit) that it was not broken, he will clarify the present status of the social contract.
§ The Prime MinisterYes. [Interruption.] Yes. I thought that the hon. Member would be surprised. I refer him to the new statement that was announced yesterday, entitled "The Next Three Years and into the Eighties". This provides a renewed basis for co-operation between the Government and the Trades Union Congress.
§ Mr. PattieWhy does the Prime Minister think that his new piece of paper, which has no TUC commitment other than a reluctant aquiescence to the 12-months' rule, will succeed when the old, now defunct, contract, which had genuine TUC commitments, produced record unemployment, stagnant productivity and a disastrous slump in overyone's standard of living?
§ The Prime MinisterI have answered that question many times in the House, and I am not able to get the hon. Gentleman to accept the answer. But, in addition to the factors that I gave in answer to the last Question, allow me to add that the fact that sterling—which I have 929 constantly described in this House as stable and which is now strong and moving upwards—is yet another favourable factor for wage negotiators. I would deny what the hon. Gentleman said about the trade union part of the contract being a failure last time, because there is no doubt, as I hope he will recall, that the £6 wage limit produced a very substantial decline in the rate of inflation during the first 12 months.
§ Mr. HefferWill my right hon. Friend explain to the Opposition that the social contract was begun in 1972, extended in 1973 and carried right through to today? Will he further explain that it was never mainly about wages and incomes policy —although it was partly about that, at one stage—that it has never been dead, and that part of it involves the introduction at the earliest moment of a wealth tax? Will he also explain that there should be an extension of planning agreements, and that if they are not accepted by industry there must be a statutory back-up to them? Will he make it clear that Opposition Members, instead of making noises, ought to study the social contract and not talk the nonsense that they have talked in the past about it?
§ The Prime MinisterI am asked for a comment upon opinion and therefore I will give it. It seems to me that the Opposition demonstrate day after day in this House their total incapacity to understand that unless they get on terms with organised labour in this country, instead of appearing constantly in opposition to it, as they do—unless they recognise that our industrial society demands that cooperation—they are never likely successfully to govern this country.
§ Mrs. ThatcherIs the Prime Minister aware that one of the results of the social contract under Socialism is that the average family is now paying more, per week, in income tax and national insurance than it has left to spend on its food bills? When does he hope to reverse that situation?
§ The Prime MinisterThe right hon. Lady continues to mislead the country about the necessity for a reduction in the national standard of life if we are to pay our way. When she starts to explain that, we may have less facile questions and explanations from her. I 930 ask the right hon. Lady whether she will join me in urging trade union negotiators to be moderate during the next 12 months and to keep the level of their earnings increases within 10 per cent.
§ Mrs. ThatcherI shall gladly do that. Now will the Prime Minister answer my question?
§ The Prime MinisterI have answered the question. I shall answer the right hon. Lady's question again, although she knows the answer perfectly well. It is that this country, because of the increase in oil prices by four to five times, required a reduction in its standard of life. I have never evaded making clear that the Government took measures deliberately to achieve that. I hope that the Opposition, one day, will have a similar sense of responsibility. Now, I am glad to say, the period of the worst reduction is over and we can look forward to an improvement in our standard of life. I hope that the right hon. Lady, in her support for me—for which I thank her—on this matter of an increase in earnings, will include all groups, no matter who they may be.
§ Mrs. ThatcherWith great respect, I do not think that the Prime Minister can have heard or understood my question. The question was: is he aware that under the social contract the average family is now paying more, per week, in tax and national insurance contributions than it has left to spend on food? Has he any plans to reverse that situation, which would mean having tax incentives to get the growth that the next stage of the social contract demands?
§ The Prime MinisterVery well. I shall try to give the right hon. Lady even more information than I have given her so far—[Interruption.]—if the animal noises coming from the Opposition will stop for a moment.
First, as a result of the Budget, a man with average earnings of about £80 per week, with an average family of two children, will receive in child benefit and tax relief an extra £2.19 in his wage packet. That is the first contribution. The second is that, because of the increases in allowances, the same average family will receive, in the wage packet during August, nearly £20 as a lump sum. That, too, is a contribution. I hope that the 931 hon. Lady can understand these figures and I also hope that, unpleasant though they may be to the Opposition, who can never stand good news of any sort about the pay packet, at least they will join me when I say that I hope that when this back tax of £20 is returned in the pay packet this year people will buy British goods with the money.
§ Mr. Bryan DaviesWill my right hon. Friend take this opportunity of further educating the Opposition? Since a major priority at the present time must be to reduce the appalling level of unemployment, will he point out to the Leader of the Opposition and to the country just how the policies of Adam Smith and free market capitalism affect unemployment rates in countries such as the United States of America?
§ The Prime MinisterI despair of educating either the right hon. Lady or the Opposition. I have spent the past 12 months trying to do it, with singularly little success.
§ Mr. TebbitIn the process of education, would the Prime Minister like to tell his hon. Friend the Member for Enfield, North (Mr. Davies) that Britain was the star of the Common Market last month, contributing almost the whole total of the increase in unemployment throughout the whole Community? Would he like to make a note to himself, to keep by him, that since the October election the real net take-home pay of the average industrial worker, about whom the Prime Minister was talking, has fallen by more than £8 a week? Is that not a pretty fair subscription to pay for joining the social contract?
§ The Prime MinisterI have always regarded the hon. Gentleman as one of my least promising pupils, but during the recess I shall be very happy to conduct a seminar with him and any other of his hon. Friends that he cares to bring along.