PRIME MINISTER (ENGAGEMENTS) (Hansard, 13 June 1978)

§ Q1. Mr. Temple-Morris
asked the Prime Minister if he will list his official engagements for 13th June.

§ The Prime Minister (Mr. James Callaghan)
Earlier today I greeted President Ceausescu of Romania on his 827 arrival for a State visit to this country. In addition to my duties in this House, I shall be holding meetings with Ministerial colleagues and others. This evening I shall be the guest of Her Majesty The Queen at the State dinner in honour of President Ceausescu.

§ Mr. Temple-Morris
No doubt the Prime Minister has had time today to consider the effects of his policies of higher spending, more borrowing and higher interest rates. When this is coupled with stagnant production and a questionable wages policy, how can it be a fact, as pronounced recently by one of his Ministers—this is a vitally important point—that single-figure wage inflation will continue for the indefinite future? Surely this is no more and no less than election window dressing.

§ The Prime Minister
I realise the anxiety with which the hon. Member's thoughts are concentrated on possible forthcoming events. I beg him to contain his impatience. In terms of inflation, it is important that he should not, by slipshod words, convey an impression that is incorrect. I do not suppose that he intended to do so. Nobody has said that inflation will continue indefinitely into the future at single-figure rates. What my right hon. Friend the Secretary of State for Prices and Consumer Protection said was that it would continue at single-figure rates for the remainder of this year. What happens next year will depend to a large extent on the level of wage settlements, which begin again in the autumn. What is much more important than examining the statistical entrails every day is that the Government should have the will—as they have—to carry through their policy to keep down inflation.

§ Mr. Joseph Dean
With due deference to the debate that will take place tomorrow, will my right hon. Friend take time today to remind the general public of the substantial benefits which the Government's existing economic and financial policies have brought to the workers and the under-privileged sections of our society?

§ The Prime Minister
I do not wish to anticipate tomorow's debate. It is true that the family budget was distorted by the Opposition and that the measures that 828 we propose to take will remedy the situation. Nothing can alter the fact that pensions will increase, that child benefit will improve, and that there will be a tax rebate in July. All these are valuable benefits, but we must not be complacent, because there is a great deal to do. I constantly remind the country of this. I did so again at the Nottingham miners' gala last Saturday.

§ Mrs. Thatcher
As one of the Prime Minister's duties today is to answer Questions in the House, will he tell us why, in his package of economic measures, he deliberately chose to put a tax on exports and on all home production, thereby making us more vulnerable to imports?

§ The Prime Minister
There were many means by which we could have put right the recklessness of the Opposition in adding £500 million to the Budget by reducing taxation. We considered them, and no doubt the House will debate them tomorrow. Having looked at them carefully, it seemed to me that because the whole House agrees that inflation is the vital issue, it would not have been appropriate to take action through value-added tax, which might have been sensible in other directions but would have had the effect of pushing up inflation. Therefore, we chose the national insurance surcharge. I dare say that if we had chosen VAT there would have been complaints from the Opposition that we had not chosen something else.

§ Mrs. Thatcher
If the Prime Minister has no confidence in the decisions of the House of Commons about cutting income tax, he knows exactly what he can do about it, because it lies in his power to make arrangements to elect a new one. In the meantime, does he not recall that his Chancellor of the Exchequer, during his Budget speech, dismissed the claim of the Liberals when they wanted to increase the national insurance contribution by saying that it would be wrong to threaten jobs at a time of unemployment, wrong to put up industrial costs when we had a problem of competitiveness, and wrong to introduce a tax which would be passed on in prices at a time of higher inflation? Why has he changed his mind?

§ The Prime Minister
With respect to the right hon. Lady, I must inform her that it is not I who changed my mind. It 829 is the Opposition who have added £500 million to the Budget. As I have said on earlier occasions at this Dispatch Box, I would much have preferred it if those reductions in tax had not taken place. We would then not have had to bring forward a proposal for national insurance surcharge. Both matters should have been left on one side. I very much regret that the House of Commons took this decision, but, as it did so, we intend, as we said at the time, to put the matter right. We intend to follow a sound financial policy on all these matters.

§ Mr. Fernyhough
Does my right hon. Friend agree that what happens about inflation next year will depend largely on whether we have a Government who are prepared to co-operate with the unions or a Government who are determined to have confrontation with them?

§ The Prime Minister
I think the last four years have adequately shown that the policy of the previous Government on confrontation and conflict was not successful. We have been much more successful in the policy of conciliation that we have followed. As for next year's incomes increases, I propose to wait, listen and hear what the trade union conferences which are now taking place have to say. They will come to an end in July. After that the Government will have to put forward their own proposals.

§ Q3. Mr. Joseph Dean
asked the Prime Minister if he will list his public engagements for 13th June.

§ The Prime Minister
I refer my hon. Friend to the reply which I gave earlier today to the hon. Member for Leominster (Mr. Temple-Morris).

§ Mr. Dean
I welcome my right hon. Friend's earlier reply to my supplementary question, but will he emphasise to the trade union movement the benefits which the Labour Government have conferred on their members, and stress that they should not be kidded by the Opposition, who appear to be trying to woo the trade unions with false promises?

§ The Prime Minister
I shall certainly point that out to the trade unions, but I believe it would be better if there were an all-party view about the importance and significance of the trade union:: and of the great role that they play. It would 830 serve the Opposition far better if they were to emphasise that aspect, instead of constantly attacking the trade unions.

§ Mr. Cormack
As the Prime Minister referred to this evening's banquet, will he reflect how he can best commemorate the extinction of freedom and democratic Socialism that took place in Czechoslovakia 10 years ago?

§ The Prime Minister
President Ceausescu on that occasion spoke out clearly against what took place in Czechoslovakia, and I am very glad indeed that he did so.

§ Q4. Mr. Noble
asked the Prime Minister if he will list his official engagements for 13th June.

§ The Prime Minister
I refer my hon. Friend to the reply which I gave earlier today to the hon. Member for Leominster (Mr. Temple-Morris).

§ Mr. Noble
In the course of a busy day, will my right hon. Friend find time to reflect further on the subject of inflation, particularly the rate of increase in food prices, which is now the lowest since 1970? Will he make it clear to the country that if the Opposition have their way in devaluing the green pound, the healthy situation that now obtains on food prices would be totally destroyed?

§ The Prime Minister
I am glad to say that there is no doubt that food prices have risen far less rapidly in the past 12 months. The figure I have is 6.7 per cent., which is very good indeed. The devaluation of the green pound has the effect of putting up prices, but I repeat that it is the Government's policy and intention, so far as we can carry the country with us on issues in which the country is involved, to try to keep inflation down. We are succeeding at the moment, and we hope to continue to do so, because I think that the people of this country understand the issue.

§ Mr. Higgins
Is it not the case that by increasing the national insurance contribution the Government will put up food prices, whereas if they increased value added tax that would not happen?

§ The Prime Minister
An increase in value added tax would have put up immediately the retail price index substantially. [HON. MEMBERS: "What 831 about food?"] Hon. Gentlemen are baying as though they are in the zoo, waiting to be fed. The food index, as the hon. Member for Worthing (Mr. Higgins) knows, even if his Conservative colleagues do not, is part of the overall index and not separate from it, and forms only one element of it. The simple truth is that the Opposition cannot escape from the responsibility that they have forced the Government to introduce a measure that is unwelcome to the Government—namely, the national insurance surcharge. The only alternative would have been to increase value added tax, and that would have increased the retail price index even more. The Opposition can take their choice of which part of the responsibility they wish to assume.

§ Mr. English
I know that my right hon. Friend has tried to alter this silly system, but will he, in future, when met with a Question such as the one before him, or Question No. 1, answer it in the style of an American President? Leaving out matters of security, will he give the details of his engagements during one day? That might persuade hon. Members that they should not ask Questions to which they do not want answers.

§ The Prime Minister
As always, I shall take my hon. Friend's views into careful consideration.

§ Mr. William Clark
If it is necessary to recoup the £500 million to the Treasury because of the amendments moved on the Finance Bill, will the Prime Minister explain to the country why it is essential to put a tax on employment of £1,500 million?

§ The Prime Minister
The tax is to recover the amount that has been lost this year—namely, £500 million. That is what it will do. As I am sure the hon. Gentleman knows, the tax itself does not come into effect until November. There will be another Budget next April, when the matter may be reconsidered.