asked the Prime Minister if he will make a statement on his most recent meeting with the TUC General Council.
I have had no recent meeting with the TUC General Council, although I am in regular touch with TUC leaders whom I have met on four occasions since the recess.
Does my right hon. Friend agree that many trade union leaders have already expressed their readiness to co-operate with the Government in policies aimed at stemming the rate of inflation? Does he accept that the good will which the trade union movement is showing towards the Government stems in large measure from the consistent manner in which the Government have carried out their side of the social contract? Does he accept that continued trade union co-operation must depend upon the Government having policies aimed at keeping down the cost of essential items in the family budget? Therefore, will my right hon. Friend look again at the policy announced by his right hon. Friend the Secretary of State for the Environment and its effect on council rents?
I entirely agree with my hon. Friend about the extent to which trade union leaders are showing tremendous courage, and particularly in the proposals they have put forward for relating wage settlements in future to the target rate for price increases and not to any past period. This is a very big step forward and I know that Conservative right hon. and hon. Members will welcome this fact. One would like to hear them say it from time to time. This is a very important matter and it is certainly the fact, going back to the original agreement about the social contract in 1973, that the Government have fully carried out what we undertook to carry out in the social contract. In those circumstances, we are entitled to expect a response, which we have substantially obtained, and particularly in the latest proposals put forward by the TUC.My right hon. Friend dealt with rents in considerable detail on 16th June. Having referred to the fact that we froze rents last year and have moderated rent increases this year through additional subsidies, he went on to give figures showing the increase in rents compared with other costs during the past two years. He said, of course, that while rents are an important part of the cost of living, the contribution of rents to housing costs has been steadily falling over the past few years.
Instead of the rather absurd charade of warning the TUC that if it does not agree to a tougher so-called social contract there will have to be further public expenditure cuts, would it not be better for the Prime Minister to tell the truth—namely, that there will have to be further public expenditure cuts anyway?
The question of public expenditure is always under review at this time of the year by every Government. Indeed, I think that it was under review by the previous Conservative Government although they never carried out their promises in that regard. It is under review with a view to the publication of the National Expenditure White Paper in the autumn. This process is always going on. I made no threat to the unions as the hon. Gentleman suggests. I stated what is fact in relation to the position of the Government as the paymaster and the treasurer, on behalf of the taxpayer, of the publicly-owned industries—namely, that where there are income settlements or wage settlements which take too much out there is a limit. We shall not allow it to be met now by subsidy, by taking it out of the public or by borrowing. That must mean either a more economical use of labour, with all that that means for jobs, or accepting incomes which are related to what is available within public industry. That is what I said last Saturday, and said very clearly.
Will my right hon. Friend further qualify the answer he has just given—namely, that high wage settlements have enabled the British people to take out more than they have put in? Does he not agree that if the Government were to replace the free market price mechanism by a planned pricing strategy, and at the same time replace free trade externally by planning imports, it would not be possible, whatever wage settlements were made, for the British people to take out more than they were putting in?
No, Sir. I made it clear that if in any industry or concern, public or private, more is taken out than can be afforded by that undertaking, be it a nationalised concern or private industry, the result is bound to be, sooner or later, an effect on jobs unless we are prepared to subsidise. As regards a pricing strategy, we have had a strong price strategy from the time we came to office. It is a fact that traders, particularly in food distribution, have suffered very considerably as a result of the tightening of the price strategy. As regards import controls, apart from those which we apply at any time where there is evidence of dumping or unfair trading practices—and we are considering a number of allegations—I do not believe that a large trading nation like Great Britain will succeed in keeping up its exports along with other countries in this chronic world depression by taking such action. I do not believe that we have anything to gain in starting a rat race by cutting down international trade.