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Economic Policy

Volume 885: debated on Thursday 30 January 1975

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Q2.

asked the Prime Minister if he will now assume overall responsibility for running the economy.

Q3.

asked the Prime Minister whether he will assume overall responsibility for running the economy.

Q4.

asked the Prime Minister if he now assume overall responsibility for running the economy.

Q5.

asked the Prime Minister whether he will now assume direct control of the Government's economic policy.

I have been asked to reply.

As Prime Minister and First Lord of the Treasury, my right hon. Friend already has that responsibility.

Did the Lord President hear the Chancellor of the Exchequer's answer just now to the question about unemployment? Will he tell us whether the Chancellor and the Prime Minister are prepared to reject or to agree with the view expressed by the Tribune Group in the Morning Star recently that the Government's present policy towards unemployment is unacceptable?

My right hon. Friend the Chancellor of the Exchequer accurately expressed the Government's view both here and in his speech in Leeds.

Does my right hon. Friend agree that one of the difficulties in running the economy is the requirement for higher incomes to combat the increasing cost of food? Has he noticed that last Thursday the Minister of State for Agriculture, Fisheries and Food, in reply to my hon. Friend the Member for Fife, Central (Mr. Hamilton), pointed out that the cost of cheese and butter from New Zealand to the consumer was £600 whereas the transfer to the European Economic Community was about £300 in taxes?

Yes, I noticed that answer. However, the overall effect on food prices of being in the Market is that they are slightly lower now than they would have been if we had been out of it.

Now that the Price Commission has made it clear that the all-important causal factor of inflation is wage increases, and as the Chancellor of the Exchequer this afternoon said that a less flexible attitude is required towards the guidelines, may I ask why the Government and the TUC do not get together to tighten those guidelines?

The report stated that there are still some external factors in the pipeline affecting prices. However, we should be clear that from now on the major factor affecting inflation will be pay settlements.

When the Government refer to pay settlements and state that they must equate with the rise in the price index, are they referring to take-home pay or to gross pay?

I heard my right hon. Friend the Chancellor of the Exchequer answer that question a few minutes ago.

Order. I must ask whether the hon. Gentleman was in the House when the original answer was given.

Since the right hon. Gentleman says that the Prime Minister has overall responsibility, when will he start exercising it? When will we get some action from him to back up the words that he utters periodically in speeches?

My right hon. Friend exercises this responsibility all the time. If the hon. Gentleman will take the trouble to look at the Chancellor's Budgets he will see that there is a strategy for tackling inflation, which is beginning to have effect.

In view of my right hon. Friend's statement, accepting on behalf of the Prime Minister responsibility for running the economy, and in view of the concern expressed on all sides about inflation, will he impress on his right hon. Friend the fact that we are shortly to have an injection of inflation through Government action—the defreezing of business rents? Would my right hon. Friend accept that it is not yet too late to prevent this?

I am sure that the Prime Minister reads everything and will notice my hon. Friend's supplementary question.

Will the right hon. Gentleman now answer the question put by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley)? What is the position of those Ministers who are members of the Tribune Group and, therefore, associated with the recent savage attack on the Chancellor's policies? Will he confirm that the Prime Minister is now presiding over the collapse of collective responsibility, not only on Europe but right across the board?

Fortunately I have no responsibility for the Tribune Group, but, as I have said, the views expressed by the Prime Minister and the Chancellor accurately reflect the Government's view.

Will my right hon. Friend confirm that the attitude of those Ministers who are members of the Tribune Group, as well as all other Ministers and Labour Members, is one of quiet confidence in the Government's economic policies?

I do not know whether the right hon. Gentleman can answer this question. If the Prime Minister is in overall charge of the economy, what is his view of the Bank of England's purchase of the unpledged shares in BP, which used to belong to Burmah Oil, at vastly below the market price and at great disadvantage to the shareholders, without consulting the shareholders? Is this fair dealing by the Government?

This is a very complex matter which no Minister could answer off the cuff. But the hon. Gentleman is asking for the Prime Minister's view, so I suggest that he puts down a Question to him on it.

Has my right hon. Friend any explanation of the discrepancy between the comments of Conservative Members and the obvious confidence of the Stock Exchange in the Chancellor's policies?

As the Lord President has now told the House that the Prime Minister has overall responsibility for running the economy, will he also assure us that in future Questions directly relating to the economy put on the Order Paper to the Prime Minister will be answered by the Prime Minister and not transferred to the Chancellor by his private office? It is an important constitutional matter that the Prime Minister should answer Questions directly relating to the economy.

Second, will the right hon. Gentleman ask the First Lord of the Treasury to ascertain the facts about the earnings rule regulation which was carried last night by the House? He will then find that the cost for 1975–76 is £60 million, of which the Treasury will have to contribute only £9 million, but it will gain £15 million in tax. There will therefore be a net gain for the Exchequer over 1975–76 of £6 million. What, therefore, is this futile and bad-tempered threat from the Chancellor about excess taxation?

On the second point, the facts about last night are well known. The right hon. Gentleman and his colleagues voted together for something on which they had done nothing in three and a half years of government. Their vote was sheer hypocrisy and irresponsibility. The right hon. Gentleman knows that it makes utter nonsense of trying to find priorities in government if an amendment of that kind, involving a great deal of public expenditure, is passed in that way at a stroke. The right hon. Gentleman should be ashamed of himself for his action. It was sheer, utter humbug and irresponsibility on his part. I am afraid that I have forgotten his first question.

If I may help the right hon. Gentleman, the first part of the question was whether the Prime Minister, since he now has responsibility for the overall control of the economy, will answer Questions relating directly to the economy.

On that, the right hon. Gentleman is the very last one to talk. He transferred Questions right, left and centre when he was Prime Minister. He knows, of course, that the Prime Minister and every other Minister have the right to transfer Questions.