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Economic Affairs (Prime Minister's Broadcast)

Volume 885: debated on Tuesday 28 January 1975

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Q5.

asked the Prime Minister whether he will place in the Library a copy of the transcript of his interview on the economy in the programme "The World This Weekend" on 29th December 1974.

I have been asked to reply.

My right hon. Friend did so, Sir, on 13th January.

As for most of this year one person's large pay increase is likely to be someone else's redundancy notice, or three-day working, will the Lord President clarify the question whether the Prime Minister, in his broadcast, was ruling out the possibility of any form of statutory pay restraint this year, or whether, alternatively, he was simply ruling out the possibility of a statutory pay freeze this year?

The Prime Minister was ruling out any form of statutory incomes policy by this Government.

A week being a long time in politics, is my right hon. Friend aware that I have forgotten what the Prime Minister said on 29th December? Will my right hon. Friend tell us what all the fuss is about?

As I have said, there is a copy in the Library. No doubt my hon. Friend will go along there and read it.

Would it not be fairer, as well as more honest, to tell the people of this country now about the higher unemployment which inevitably lies ahead, rather than let it take them unawares?

If the hon. Gentleman will read what the Prime Minister said and my right hon. Friend the Chancellor of the Exchequer said in his Leeds speech, he will agree that there is no lack of honesty, frankness or openness in discussing the great danger of unemployment this year.

How does my right hon. Friend reconcile what he said earlier at Question Time—about treating those in the lower income scales and disabled people more favourably than those at the top end—with the announcement made just prior to the Prime Minister's statement on television, about salary increases of up to £8,000 for judges and people in the armed forces and the established institutions? Does he understand that this is causing a great deal of worry, not only on the Labour benches but generally in the movement outside?

I understand that there are a number of points of view about this. My right hon. Friend the Prime Minister has answered questions on the matter. This is something which always causes difficulties for all Governments. There is never a right time to do this.

Does the right hon. Gentleman believe that the social contract is likely to close the gap between the rate of inflation of 19 per cent. and the rate of wage increase of 28 per cent. over the past 12 months? Do the Government accept that that gap will remain for ever? Since the right hon. Gentleman has ruled out any form of statutory control, how do the Government intend to ensure that wages do not increase faster than prices?

We intend to make the social contract work. If the hon. Gentleman looks at the settlements since July he will see that approximately 75 per cent. of them have been within the terms of the social contract. Of course, we are changing over from a rigid statutory system to one of free collective bargaining, and we have always said that there would be initial difficulties. The social contract is working, and if the parties opposite will support it it will work a good deal better.