PRIME MINISTER (ENGAGEMENTS) (Hansard, 4 July 1978)

§ Q1. Mr. Ashley
asked the Prime Minister if he will list his official engagements for 4th July.

§ The Prime Minister (Mr. James Callaghan)
In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others. Later today I have a number of engagements with Chancellor Kreisky of Austria, including the opening of the new offices of the Anglo-Austrian Society, and this evening I shall be giving a dinner in his honour.

§ Mr. Ashley
Now that the Government have shown such concern for top-salaried people, will my right hon. Friend find time today to consider the plight of low-paid workers, especially homeworkers, and support the concept of a national minimum wage, which has been recommended by the TUC but rejected by the Government? Will he bear in mind that some homeworkers are receiving less than £10 for a 50-hour week and that the argument against a national minimum wage —on the ground that differentials would be reduced—is now quite bogus in view of the gains made by, and the claims of, many better-paid workers?

§ The Prime Minister
I understand that an announcement on homeworkers will be made tomorrow. However, the complications of incomes policy and pay cannot be discussed in a reply to a supplementary question.

§ Mr. MacKay
During the right hon. Gentleman's busy day, will he find time to comment on the speech made yesterday at Newcastle by the Chancellor of the Exchequer, when he said that the long-awaited economic miracle is within our grasp? Will he compare and contrast that with the CBI report, which forecasts that productivity will drop in the next four months? Which is right?

§ The Prime Minister
I never know about forecasts. That is why I always mistrust them when I am asked about forecasts of this sort, and I advise the hon. Gentleman to do the same. I am sure that my right hon. Friend made an excellent speech yesterday that will repay everybody's attention. I look forward to reading it. I noticed the CBI forecast this morning and gave it all the attention that I give to all the other forecasts that I see.

§ Mr. William Hamilton
Will my right hon. Friend take time today to study the recent proposals of the Highlands and Islands Development Board on land ownership in that part of the country, especially the taking of compulsory purchase powers for sporting estates? Will he remember that one of the most popular policies that could be put forward for that part of the country would be the nationalisation of all such estates?

§ The Prime Minister
I know that that has been a proposal that has found a 228 great deal of favour with a great many people over many years, and it would repay much study. I shall ask my right hon. Friend the Secretary of State for Scotland to consider it.

§ Mrs. Thatcher
Although the Prime Minister says that he does not make forecasts, he does become involved in forecasts, especially on inflation. Now that he knows that he has a year-on-year average increase in wages of 14 per cent. and virtually flat output, what is his forecast for inflation for next year?

§ The Prime Minister
I did not say that I did not use forecasts. I said that I always add caution to what I am told in the forecasts that I see. I am glad to see that a considerable amount of scepticism is now appearing, even in the columns of the newspapers, about some of the forecasts, and perhaps about some of the forecasters, who might be redeployed for more profitable work at some time.
As for next year's inflation figures, I do not think that we can go further than the end of this year. I think that that has been made clear to the right hon. Lady on a number of occasions. That figure can be pretty acurately forecast. We hope that it will remain within the region of 7 per cent. to 8 per cent., or round about that percentage. As for the figure next year, much depends, naturally, on the level of sterling, the price and cost of our imported raw materials and the level of wages. If the right hon. Lady can tell me the answers to all the questions posed by those factors, I will give her a figure.

§ Mrs. Thatcher
Does the Prime Minister recall that he was exact in the mathematics he used in his New Year's Day broadcast, when he said that if wage increases went up by 10 per cent. price increases would follow at 10 per cent., and that if wages went up by 30 per cent. price increases would follow at 30 per cent.? Does he accept that average wages have increased by 14 per cent.? What is his forecast for price increases?

§ The Prime Minister
There is a rough relationship between the two. [HON. MEMBERS: "0h."] That is why the Government were anxious to secure a 10 per cent increase this year to keep it within single figures. That it might turn 229 out much higher than that clearly worsens inflation.
I see no reason why the Opposition should cheer about that. I have never hesitated to point out to the country the consequences of this. I shall continue to do so, as I did in my speech to the Confederation of Shipbuilding and Engineering Unions last week. The Government will continue to work within the limits of a free society in which many bargains are struck on which the Government have no influence at all. The Government will continue to work for maximum moderation in order to prevent inflation returning to double figures.

§ Mr. Gwilym Roberts
Does my right hon. Friend agree that the Leader of the Opposition's argument, which she attributed to him, about the direct relationship between wages and prices can never be solved because wages constitute only a part of costs and that, therefore, there can never be a 10-to-10 or 30-to-30 relationship between the two?

§ The Prime Minister
That is correct. I said something to that effect during my New Year's Day broadcast. When one is broadcasting, it is right to get across the simplicities. The simplicity is that there is a direct relationship between an increase in wages and an increase in the cost of living. The Opposition can disentangle the question of whether it is exactly the same arithmetically. The people understand the relationship. They understand well that when wages went up by 27 per cent. the retail price index went up by about the same amount. They now see that the retail price index is much lower because the increase in wages has come down. That is not the whole element. Sometimes I really believe that I shall get that into the Opposition's heads.

§ Q2. Mr. Neubert
asked the Prime Minister whether he will list his official engagements for 4th July.

§ The Prime Minister
I refer the hon. Member to the reply which I have just given to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley).

§ Mr. Neubert
Why have the Government again today funked facing up to the problem of pay differentials by deferring yet another legitimate public service award until after the general election? 230 Does the Prime Minister realise that Britain's failure to achieve peak performance is attributable largely to ministerial cowardice in refusing to allow people to b. paid what their skills, responsibilities and contributions deserve?

§ The Prime Minister
The hon. Member is entitled to his opinion that it was an act of cowardice to endeavour to keep people within the 10 per cent. limit when we have influence over that. But it is not usually regarded in that way. It is generally accepted that the Government are right. The jeers from the Opposition Benches to my last answer showed that there is a great deal of anxiety when the Government cannot succeed in keeping people within the 10 per cent. limit. That is what we are proposing to do for the Boards of nationalised industries and elsewhere. The Opposition should make up their minds whether they support that policy. From there we have said that we shall stage the increases that have been proposed in the following two years. I believe that in a difficult situation this will probably meet with considerable support.

§ Mr. Grocott
Will my right hon. Friend find time to explain to the people why we must spend three days of our time this week and public money considering Lords amendments to the Scotland Bill when the Lords speak for no one and represent no one and will be abolished next year anyway?

§ The Prime Minister
The only reply that I can give is that this is the way in which the constitution operates at present. I am bound to say that a number of the amendments that the Lords have proposed would not be accepted in Scotland or Wales and, I trust, will be removed by the House of Commons in due course.