HC Deb 14 March 1978 vol 946 cc216-21
Q1. Mr. Wyn Roberts

asked the Prime Minister if he will list his official engagements for 14th March.

The Prime Minister (Mr. James Callaghan)

In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others. This evening I shall be attending the annual dinner of the Finance Houses Association.

Mr. Roberts

Apropos this evening's engagement, has the Prime Minister read today's Press reports of his miraculous eleventh-hour conversion to the Tory principle of cutting taxes? Is he aware that it will cost some £5,000 million to return to the Tory tax levels of 1973?

The Prime Minister

I am not sure whether the hon. Member is congratulating me or—[HON. MEMBERS: "When you have done it."] Then we are all agreed. That is splendid. But, as regards cutting taxes, since we began, taking the example of a married man with two children and earning £60 a week, which is a fair example, during 1977–78 I am glad to say that his tax bill was reduced by £106 a year. That is a good start.

Mr. David Steel

Are any of the right hon. Gentleman's ministerial meetings today concerned with attempts to secure growth in world trade and a reduction in unemployment? Will he say something about his talks on the subject with Chancellor Schmidt?

The Prime Minister

My talks with Chancellor Schmidt were concerned with a number of factors which are affecting growth in the world. At the moment, there is a substantial disparity of view between a number of industrialised nations about what is the best course to follow. I am trying—with what success, I do not yet know—to synthesise some of these views, because it seems to me that no single element in them, whether it be stability of exchange rates or going for growth, or whatever may be the solution that is fancied, will do it. What is needed is a combination of remedies taken collectively by all the nations together. That, in my view, could restore confidence, and it is confidence which is required in the world at present.

Mr. Edwin Wainwright

Bearing in mind that some of us might agree with my right hon. Friend about a reduction in taxes, will he bear in mind that the last time that a Chancellor took out £5,000 million from taxes, expecting that money to go to regenerate industry, the money went elsewhere, a good deal of it overseas and a good deal into property? Will my right hon. Friend take into account that if we have a reduction in taxes it must go to regenerate our industry?

The Prime Minister

Yes. I ask my hon. Friend not to accept as a complete statement of my total views on these matters three lines that were extricated from a public meeting and published in the Press. They happen to be three lines that hit the Opposition rather hard. As far as my hon. Friend's point is concerned, there has always been a certain fear of the growth of imports following the expansion of the economy in this country. I hope that recent indicators will not bear that out as likely to happen to a degree that will make us more vulnerable.

Mrs. Thatcher

If the Prime Minister really believes that people prefer cuts in taxation to an increase in public expenditure, why is he presenting to the House this week a public expenditure White Paper which increases public expenditure next year, and why is he asking the House to approve it?

The Prime Minister

It is important that even though we cut taxes there should be a proper maintenance of public services. If in order to achieve that—including appropriate expenditure on the Health Service and on education —it was necessary to increase public expenditure, I hope that the Leader of the Opposition too would see that that was the answer. It is possible to have a balanced view on these matters.

Mrs. Thatcher

Indeed, but how can the Prime Minister cut taxes and increase public expenditure when production is flat?

The Prime Minister

It depends to a great extent on getting the economy going again. In certain circumstances both an increase in public expenditure, in the construction industry for example, and a reduction in direct taxation could achieve that growth, and both will happen this year.

Mrs. Castle

Is the Prime Minister aware that we are all in favour of increased tax reliefs in the coming Budget, but will he bear in mind that, since the child tax allowance can no longer be increased, the only way of bringing relief to families with children is through an increase in child benefit? This particular increase in public expenditure—by increasing child benefit by £1 next November—is one matter that we are urging upon the Prime Minister.

The Prime Minister

I have heard my right hon. Friend explain this at great length and with great force and conviction. I am bound to point out in logic that this is not the only way of improving the position of families with children. This can also be done by other kinds of tax reduction which affects families with children and families without children. All these matters are being taken into account. I am very happy to see that a stray and random remark of mine has attracted such interest so that now everyone realises that there will be some tax cuts this year.

Q2. Mr. Brotherton

asked the Prime Minister if he will list his official engagements for 14th March.

The Prime Minister

I refer the hon. Member to the reply which I have just given to the hon. Member for Conway (Mr. Roberts).

Mr. Brotherton

Will the Prime Minister find time to explain to 20,000 people who will not get mortgages over the next three months why he has bullied the building societies into reducing their lending? This action is entirely wrong and it will do nothing at all to stabilise house prices.

The Prime Minister

It is too early to draw a conclusion like that. Having seen what happened in 1972–73 when there was a dramatic increase in house prices which did nobody any good— whether those concerned were buyers or sellers—I would have thought that the hon. Gentleman would have congratulated the Government on trying an experiment to see whether, by curbing the amount available in building societies, it is possible to have a reasonable roof put on house prices. Maybe the experiment will not succeed, but the hon. Member should not condemn it out of hand before it has been tried and had a chance to work. It is an attempt to restrain inflation and keep house prices within limits so that people can afford them.

Mr. Thorne

Is my right hon. Friend aware that there are still many people who are looking for houses to rent in Britain today? Will he consider a major increase in public expenditure in housing in order to meet that need?

The Prime Minister

There is always a need, as we on this side of the House constantly recognise. There is a need for owner-occupiers and a need for those searching for rented property. That is why we totally disagreed with the right hon. Member for Leeds, North-East (Sir K. Joseph) when he said that the building of council houses had done great harm. I have never heard a suggestion that is more completely untrue.

Sir K. Joseph

Is the Prime Minister aware that the Government are discouraging the private rented sector? More council houses, less privately rented housing and more homeless than ever before.

The Prime Minister

I am not sure of the point of the right hon. Members' question, but I hope that he will explain to millions of council house dwellers in this country, who are not able to buy houses, that he holds the view that it does great harm to build council houses. Why does he say that?

Mr. Pardoe

Will the Prime Minister find time to call in at his local friendly clearing bank and ask why it does not open on Saturday. Is he aware that one of the major clearing banks has had to withdraw the suggestion of offering a vital Saturday opening service for customers at the behest of the bank trade unions? What are the Government going to do to curtail them?

The Prime Minister

I could, of course, recommend that the hon. Member banks at the Co-op. Short of that, although I am deeply concerned about the problems of the clearing banks, I have too much on my hands in correcting the heresies of the right hon. Member for Leeds, North-East to enter into these matters.

Mr. Loyden

Will the Prime Minister read or re-read the remit to the National Enterprise Board given at the time of the closure of the Plessey factory which indicated that all possible steps should be taken to offset redundancies created at that time? Will he consider the responsibility of the National Enterprise Board to resist the closure of the British Leyland plant at Speke for the same reasons?

The Prime Minister

That would not be appropriate. We have to deal with Ley-land on the basis of its becoming a viable and commercial enterprise. That must be left to the managerial judgment of British Leyland. If it feels that it has to close the Speke plant, that plant must be closed. That is its judgment and the Government will uphold it. The future of British Leyland as a whole is bigger than that of any individual factory.

Mr. Tapsell

Will the Prime Minister in his speech this evening to the Finance House Association seek to explain whether it is still Government policy, as stated in the White Paper that the House is debating on Thursday, to increase public expenditure every year for the next four years by considerably more than the increase in gross domestic product, on even the most optimistic assumptions? If this is still Government policy, how does he reconcile it with his recent conversion to a reduction in taxation?

The Prime Minister

I am very grateful for all the suggestions that have been made to me about what I should say in my speech tonight. I shall take them all into account. There will be a debate on this matter on Thursday, and I shall look forward to hearing the hon. Member's views on the matter then.—[HON. MEMBERS: "Answer!"] I shall answer in my own way and in my own time, and I shall resume my seat when I have finished. In regard to the problem which has been mentioned, the country requires an increase in public expenditure and in turn requires a consistent and steady growth in the economy. That is what the Government are succeeding in doing.