PRIME MINISTER (ENGAGEMENTS) (Hansard, 22 June 1978)

§ Q1. Mr. Temple-Morris
asked the Prime Minister if he will list his official engagement for Thursday 22nd June.

§ 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 further meetings with ministerial colleagues and others.

§ Mr. Temple-Morris
Has the Prime Minister time today to answer a question unconnected with statistical entrails? May I put it to him that whether phase 3 ultimately succeeds or fails, it has definitely failed with regard to differentials and the skilled labour force? Is he aware that in this and in his other policies he has let down a large number of his own supporters? Does he agree that the only hope that those people have lies with the policies that will be put forward by the next Conservative Government?

§ The Prime Minister
I hope that the skilled workers will not have to wait as long as all that. It is true that when there are rigid systems of pay policy dif- 704 ferentials suffer, as they have done on this occasion. I hope that in the succeeding rounds—in the yearly pay bargaining —this position can be improved. We must recognise skill as far as possible.

§ Mr. Roy Hughes
May I ask the Prime Minister, if not today, at any early date, to enter into negotiations with the trade union movement and the CBI over the practicability of introducing a 35-hour week throughout Great Britain, as a means both of increasing leisure hours and of significantly reducing unemployment, which, by common consent is far too high?

§ The Prime Minister
These matters will, of course, be for discussion with the trade union movement, but I do not think we should assume that there is an easy solution to our problems through adopting a 35-hour week unless a number of other factors go with it. Two factors, for example, would be the need to ensure that unit costs of production do not increase. The second would be to ensure that our European competitors—since we have to sell our goods abroad—would be following the same policy. Apart from that, I think that there is a good case for considering reductions in working hours, provided that they do not just result in more overtime payments.

§ Mrs. Thatcher
Now that school leavers are coming on to the employment register in ever larger numbers, may I ask the Prime Minister whether he is still determined to go ahead with his 2½ per cent. extra tax on jobs?

§ The Prime Minister
As the right hon. Lady knows, the necessity for this surcharge arose from the amendments for which she voted. It was no part of the Government's original strategy to introduce this tax. We asked the House to reject the amendments which altered the balance of the Budget. However, we have to face the consequences. As to whether we go ahead, the amendments will be put forward when we debate the Finance Bill. The House will have to debate these matters in the usual way. I am sure that the right hon. Lady appreciates that.

§ Mrs. Thatcher
There seems to be some doubt whether the Prime Minister will go ahead with this. Does that mean 705 that he is prepared to listen to the CBI and the small businesses when they tell him that such a tax would knock jobs, exports and small businesses?

§ The Prime Minister
I wish the right hon. Lady had thought of all these things before she voted for the amendments. I would not need to stand here defending this impost if the Opposition had not unbalanced the Budget by their votes. As it is, we have had to find the best way possible—

§ Mr. Farr
The worst way.

§ The Prime Minister
—to restore the revenue that the Opposition have lost through their votes. I shall listen to any representations that are made. I must say that when I meet the CBI its members do not bay and shout at me as do Tory Members.

§ Q4. Mr. Wyn Roberts
asked the Prime Minister if he will list his official engagements for 22nd June.

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

§ Mr. Roberts
In view of the impending sharp increases next month in youth unemployment, because of the number of school leavers joining the register, does the right hon. Gentleman agree that the Chancellor of the Exchequer's choice of a 2½ per cent. increase in employers' national insurance contributions is positively the worst choice that he could have made as far as the employment prospects of these young people are concerned? How will the Prime Minister justify this inflationary tax on jobs to his fellow heads of Government at the July Summit?

§ The Prime Minister
If we had really thought that it was the worst choice, I promise the hon. Gentleman that we would not have made it. There is a matter for a difference of opinion here. Because we are seeking to fight inflation, I was myself very opposed to raising value added tax, which was another alternative and which would have had a much more immediate effect than the national insurance surcharge will have, since it would have come into force immediately. [HON. MEMBERS: "Ah!"] 706 It is no use hon. Members saying "Ah". We are about to engage in discussions with the trade union movement on what is to happen to pay next year.
In my view, it really would have been a worse choice to say to the trade unions "We are now going to increase VAT because of the votes in the House of Commons, and in doing so shall put up the cost of living immediately". There is no good choice here, and Opposition Members must accept their full responsibility for the choice that we have had to make.

§ Mr. Molloy
During the course of the day, will my right hon. Friend make arrangements to meet the TUC and CBI in order to make very clear that the Conservative Party's interference with the Chancellor's Budget will mean that very well-off people will get more in tax relief than the amounts which some workers are asking for in order to meet the marginal costs in the rising standard of living? This will create a severe and sour atmosphere in industrial relations, and the CBI should state quite clearly where it stands and whether it will aid and abet the Conservative Opposition in their efforts to sour industrial relations.

§ The Prime Minister
There is a way out of this dilemma, if the Opposition will undertake to vote for amendments which will return income tax to the position where it was. Then we need not proceed with this national insurance surcharge. Which do they want?