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Chancellor Of The Exchequer (Broadcast)

Volume 887: debated on Tuesday 25 February 1975

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Q1.

asked the Prime Minister whether the broadcast statement by the Chancellor of the Exchequer on 8th February about the economic situation represents the policy of Her Majesty's Government.

Q2.

asked the Prime Minister if the public speech by the Chancellor of the Exchequer at Leeds on Saturday 8th February on the economic situation represents Government policy.

Q3.

asked the Prime Minister whether the broadcast statement made by the Chancellor of the Exchequer on 8th February, on the relationship between trade union action and mass unemployment, represents Government policy.

Q9.

asked the Prime Minister whether the broadcast statement by the Chancellor of the Exchequer on the social contract on 8th February represents Government policy.

Although it is difficult for the Labour benches to make constructive suggestions about the social contract because they would be exploited by an Opposition who are obsessively anti-trade unionist, may I ask whether my right hon. Friend agrees that there are only three ways of combating a runaway inflation which may destroy the country: statutory control, which is completely unworkable; mass unemployment, which is totally unforgiveable; or the social contract, which is absolutely indispensable? If my right hon. Friend agrees with that assessment of the situation, will he warn the country in general, and trade unionists and industrialists in particular, that if the social contract fails statutory control or mass unemployment is inevitable?

I agree with my hon. Friend, who obviously agrees with my right hon. Friend the Chancellor of the Exchequer. As the House and the country have learned, confrontations on statutory wage control lead to national disaster. I understand that since the last election the official Opposition now reject any sort of statutory pay control, but all of us have emphasised that the alternative to the social contract is the danger of greater unemployment.

This is one of a number of speeches from Ministers lately warning of the danger of further breaches of the social contract. Will the Prime Minister say whether, in his view, the country can afford the railwaymen, power workers and now the non-industrial civil servants to be given pay rises to match that given to the miners? If not, when will the Government do something to halt the situation?

What the hon. Gentleman asks has been made clear by my right hon. Friends and myself. There were, as my right hon. Friend the Secretary of State for Employment said in his constituency, and as I said last week, special considerations in the case of the miners, including the question of recruitment. But if others were to regard that as an area also appropriate to them, there would be very serious consequences on the lines I have mentioned.

Does my right hon. Friend agree that the Opposition are trying to give the impression that in this inflationary situation wages are the only factor? Why does he not tell them that in pure economic theory terms this is nonsense?

We have warned that this year, as opposed to last year, the problem of industrial costs arising from wages is serious, or could be serious, in relation to further moves of inflation. But when we look over the past few years, we see that the main problem which the country faces—and here I agree with my hon. Friend—is the totally inadequate provision for industrial investment, particularly in the private sector and in relation to our exporting industries.

The Chancellor of the Exchequer in his speech said that wage increases—trade union-organised wage settlements at the present level—threatened Britain with mass unemployment. Can the Prime Minister underline his right hon. Friend's sombre but realistic warning by answering in his usual straightforward manner two simple questions? First, roughly what numerical level does "mass unemployment" mean? Secondly, is it not the case that the commitment to full employment can no longer be regarded by the Government as absolute under the terms of the social contract?

No, Sir. We have emphasised the importance of keeping the expected increase in unemployment, which we inherited—those were the figures we were given—to the minimum. At that time the forecasts and prognosis were for 1 million unemployed this winter. That has not happened, and we are fighting hard to prevent any further increase. I would certainly regard that figure as the kind of thing my right hon. Friend was warning against. But I have noticed from important Opposition statements recently that there appears to be a tendency to discount the importance of unemployment, because the figures are not very accurate. We reject the approach of the Conservative Front Bench on this matter.

What the Prime Minister has not said yet is how we are to avoid the disaster which his colleagues have foretold.

First, by avoiding the disaster of 2 million unemployed, which the policies of the right hon. Gentleman's party brought last year. [HON. MEMBERS: "Rubbish."] There were 2 million unemployed exactly a year ago today as a result of policies that the whole Tory Front Bench then supported. The right hon. Gentleman asked about the future. He wants to forget the past—I understand that—as does his Front-Bench neighbour the Leader of the Opposition. My answer with regard to the future was set out in the statement of my right hon. Friend in the broadcast referred to and in all the policies of Her Majesty's Government within the social contract.

I welcome the refreshing realism of the Chancellor's speech, but can the Prime Minister say, against the pattern of the social contract, whether he regards the miners' settlement as being the exception or the rule to be followed in the future?

I answered that question last week, but I shall answer it again. I expressed my agreement with my right hon. Friend, and the answer is "the exception".

May we have it at the end of Questions? I have no power to direct the hon. Gentleman, but I would prefer to hear his point of order at the end of Questions.

You did not say that to the hon. Member for Canterbury (Mr. Crouch), Mr. Speaker.