HC Deb 27 April 1978 vol 948 cc1634-7
Q1. Mr. Michael Marshall

asked the Prime Minister if he will list his engagements for Thursday 27th April.

The Prime Minister (Mr. James Callaghan)

This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others, including one with a delegation from Liverpool. This evening I shall be host at a dinner for the Prime Minister of New Zealand.

Mr. Marshall

Has the Prime Minister read today's Press reports, which say that he failed to meet the Service Chiefs of Staff before announcing his decision on the pay review last week? How can he justify his failure to hold that meeting, in view of the fact that the pay increase is inadequate to prevent further drainage from the Services? What assurance will he give that he will meet the Chiefs of Staff to review these matters urgently?

The Prime Minister

I am grateful to the hon. Member for that question. I received a memorandum setting out the Chiefs of Staffs' view in full, which I read first thing last Thursday. I reported this in detail to the Cabinet, and I minuted on the memorandum that I would meet the Chiefs of Staff to convey the Government's views and listen to their views. I proposed a date and time for a meeting. Then, as the House knows, I set out for Plymouth the following morning to open a fleet maintenance base. While I was there I received a message that the Chiefs of Staff did not think it necessary to meet me. I would like to add that there is no criticism of the Chiefs of Staff here. In fact, Sir Neil Cameron came to see me privately on these matters, and we had a full discussion on 17th March. I knew the Chiefs of Staffs' view, and the Cabinet knew it, too. I was perfectly open for a further meeting to be arranged if this was convenient.

I think that there is a certain amount of mischief-making going on in the Ministry of Defence at present.

Mr. Alan Clark

Sack the Minister.

The Prime Minister

I have found it very difficult in the past to try to check the nature and origin of the leaks, but when these leaks are mischief-making they are especially dangerous. I very much regret that The Times should have fallen for this particular piece of mischief-making.

Mr. Hoyle

In between his engagements, will the Prime Minister look at the figures for imports of Japanese cars, which have risen 25 per cent. in the last year? The voluntary agreement reached with the Japanese Government should be reviewed at an early date in order to avert damage to the British car industry.

The Prime Minister

These matters are under continuous review. I shall draw my hon. Friend's remarks to the attention of my right hon. Friend the Secretary of State for Trade.

Mrs. Thatcher

Does the Prime Minister recall saying before the Budget that what people wanted most was to pay less tax? How does he square that with figures published this week, which show that after this Budget 900,000 more people are paying income tax than before?

The Prime Minister

My recollection is that 340,000 were taken out of tax as a result of the Budget measures. Clearly, if as a result of increases in pay from collective bargaining, people have moved into the tax bracket, they will be required to pay tax. However, overall the answer is that £2.5 billion in tax cuts has been made or is proposed. I believe that the Leader of the Opposition wants to add to that figure.

Mrs. Thatcher

Will the Chancellor [HON. MEMBERS: "Oh."]—I am sorry, the Chancellor is not here—will the First Lord of the Treasury not accept that what the Government have done is to impose more tax on people who have a lower standard of living than was the case when we left office?

The Prime Minister

Taxes have gone up in an effort to secure national recovery, and they have had an impact. Obviously Conservative policy is to relieve the richer taxpayers and to see that poorer people spend more.

Mr. Mike Thomas

Is my right hon. Friend aware that many Labour Members share his view that he cannot be the only one who is concerned about the growth in inflation as expressed on the television news last night, that the Service pay settlement is fair and reasonable, and that we cannot possibly allow the position to arise in which Service pay increases are used as a lever to break the pay policy that applies to everybody else?

The Prime Minister

I accept that the Services, because of the extent to which they have fallen behind, are generally acknowledged to be in a position where we should stretch the limit as far as we can. My correspondence and the reactions that I am getting show that that is accepted by a great many people. I always believe that the common sense of the country knows when the Government are behaving in a sensible way, even if it may not be strictly logical.

Mr. Churchill

Will the right hon. Gentleman explain how it is, as his Government's pay policy is supposed to be fair to all, that the Armed Forces over the past three years have fallen 32 per cent. behind? Why do they now have to make do with a miserable 13 per cent. when face-working miners under stage 3 have received an increase of no less than 46 per cent. under the guise of a productivity deal—three and a half times as much as the Armed Forces?

The Prime Minister

The answer to the first part of the hon. Gentleman's question is that the Armed Forces have fallen behind in 1978 for the same reasons that they fell behind in 1975—namely, because of the operation of the pay policy that was in force under a Conservative Government, as now under a Labour Government. The same reasons apply. As I have explained on previous occasions from the Dispatch Box, this is one of the difficulties of dealing with the pay of public servants. It is one to which I am quite ready to devote more attention. I hope that the hon. Gentleman, for all his brashness, will not try to set off the miners against the Armed Forces, or any other group of workers.

Later—

Mr. Baker

On a point of order, Mr. Speaker. In reply to Question No. Q1 the Prime Minister alleged that certain members of the Department of Defence were leaking information, the purpose of which was to undermine Government policy. Have you had any indication from the Prime Minister—if these allegations are correct, which he obviously believes—whether he intends to make a statement telling us what he will do about the matter?

The Prime Minister

Further to that point of order, Mr. Speaker. If I found out the source of this leak—it clearly must come from the Department of Defence—I should invite the Secretary of State for Defence to take appropriate action.