CITY OF LONDON (Hansard, 1 March 1977)

§ Q1. Mr. Rifkind
asked the Prime Minister when he last visited the City of London.

§ Q4. Mr. Charles Morrison
asked the Prime Minister when he last visited the City of London.

§ Q10. Mr. Grylls
asked the Prime Minister when he last visited the City of London.

§ The Prime Minister (Mr. James Callaghan)
I last visited the City of London on 16th February when I attended the annual dinner of the British Overseas Trade Board and its Advisory Council.

§ Mr. Rifkind
Is the Prime Minister aware that both the City of London and British industry are gravely concerned about the fragile condition of British Leyland? Does the Prime Minister recall that in 1975 the Government said that future public money for British Leyland would depend on better industrial relations and increased productivity? Does he not agree that industrial relations at Leyland are in a parlous state and that production is only one-third of total capacity? When will the Government decide that enough is enough?

§ The Prime Minister
The hon. Gentleman has called attention to a serious problem. The funds that were made available by the Government and that are committed will of course continue to be made available, but there must be a review of the situation before further funds are committed. As the hon. Gentleman may know, the Secretary of State for Industry yesterday had a lettter from the National Enterprise Board. The Government are giving serious consideration to this and my right hon. Friend will make 183 a statement as soon as we have been able to conclude our deliberations.
On industrial relations, I recognise the difficulties that have arisen as a result of the pay policy of the past two years and that the policy has created difficulties with differentials, but it has been a necessary step in overcoming inflation. I say to those who are concerned about differentials that perhaps the biggest differential of all is between the man who is in a job and the man who is out of one, and some of them could be out of one.

§ Mr. Grylls
Is not the most helpful thing the Prime Minister could say to British Leyland that stage 3 of the policy will be more flexible? Would it not be the supreme irony and very sad if the social contract in the end was responsible for bringing down British Leyland?

§ The Prime Minister
I am grateful for the first part of the hon. Gentleman's question because it gives me an opportunity to say that the discussions with the trade union movement will clearly have to be on the basis of a more flexible policy than there has been during the past two years. I have made this clear from the Dispatch Box time after time, and I hope that this will be understood in British Leyland.
As the TUC does not wish to come to a conclusion on this matter until after the Budget, it is not possible for us to reach finality now. I hope that those in British Leyland who feel that they have a genuine grievance—and I do not deny that—will remember that the agreement runs out in August and that thereafter—and possibly before then if an agreement is concluded—there will be an opportunity to get greater flexibility. The Secretary of State for Industry is considering the position of Leyland and he will make a statement to the House as soon as he can.

§ Mr. Morrison
Is the Prime Minister aware that last month foreign-made cars accounted for 43 per cent. of the home market? Given that choice and preference of the taxpayer, how much longer does the Prime Minister think that the British taxpayer will be willing to pour money into British Leyland to produce cars that are increasingly not wanted at home and to support a company that is, 184 regrettably, giving a worse name to British industry every day?

§ The Prime Minister
I hope that we shall not carry that point too far, because I am sure that the hon. Gentleman does not want to pour scorn on an important British national asset. British Leyland's record last year was that the company failed to produce about 200,000 cars that had been included in its plan. I hope that Leyland understands that not only European car manufacturers but the Japanese are simply waiting to pour cars into this country for every car that we fail to produce.

§ Mrs. Dunwoody
When he visits the City of London will the Prime Minister discuss with what is probably the wealthiest local authority in the world the situation of tenants living in the Barbican, who not protected by the Rent Acts and who are in dire need because there is no willingness on behalf of the City of London to protect the interests of these people?

§ The Prime Minister
Perhaps my hon. Friend will put that question to the appropriate Minister. I shall draw it to his attention, but I am not sure that it is a responsibility for a Minister.

§ Mr. Pardoe
Will the right hon. Gentleman give no credence to the new myth that the problems of British Leyland are due to the pay policy? Is he aware that the problems of Leyland pre-dated the present policy and the last Government's pay policy? Will he also not go to the City of London for advice on how to run Leyland, because the City has already virtually destroyed the company? Will he look at Meriden, which has not been disrupted by the pay policy, and draw the appropriate conclusion?

§ The Prime Minister
I shall take all those considerations into account with pleasure. I have never thought that there was any particular connection between the Question on the Order Paper and the supplementaries that I am asked, so the hon. Gentleman can be certain that I shall not be going to the City for that purpose.

§ Mrs. Thatcher
Is the right hon. Gentleman aware that we are asking whether the problems of Leyland do not 185 demonstrate the weaknesses of his two main pillars of policy, the social contract and the industrial strategy? Are they not mutually incompatible? Does he not agree that we are getting neither the production from the nation as a whole nor the productivity that we need because we have neither a pay policy that allows for differentials nor a taxation policy that permits of incentives?

§ The Prime Minister
The right hon. Lady is adding to her consistent policy of a completely negative approach on all these questions. She is aware that although she failed to support the incomes policy, some of her spokesmen did, including the Opposition spokesman on Treasury policy. I do not know why she should go back on his policy in this matter. The right hon. Lady is consistently negative on this matter and on industrial strategy. She is consistently negative on industrial democracy and consistently negative on devolution. Indeed, it is difficult to know what she stands for on any single issue.

§ Mrs. Thatcher
Is not the right hon. Gentleman aware that the negative thing is to refuse differentials and the negative thing is to refuse incentives? Does he not realise that the positive thing is to give differentials for skill and the positive thing is to give incentives? Only in this way shall we get the positive results that his Government will never get.

§ The Prime Minister
The only way in which the right hon. Lady exceeds her capacity for a negative approach is in her capacity for stating the obvious. The Government's position on differentials has been made completely clear. I made it clear in my answer to the hon. Member for Surrey, North-West (Mr. Grylls), who asked a constructive question on this matter earlier. The right hon. Lady is not trying to help industrial relations in this matter; nor is she concerned with the future welfare of British industry. She has only one concern—naked ambition.