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Heads Of Government (Downing Street Meeting)

Volume 931: debated on Monday 9 May 1977

The text on this page has been created from Hansard archive content, it may contain typographical errors.

With permission, Mr. Speaker, I should like to make a statement on the Downing Street Summit, which was attended by the Presidents of France and of the United States, and the Prime Ministers of Canada, France, Italy and Japan and the Chancellor of the Federal Republic, as well as the Finance and Foreign Ministers of the countries represented, and yesterday by the President of the European Commission.

Nearly a year has elapsed since our meeting in Puerto Rico, and there was a general wish among the leaders of the major industrial democracies to consult, to exchange experiences and ideas and to harmonise as far as possible our responses to our shared problems, recognising that our well-being is bound up together. Our discussion had the purpose of agreeing a common analysis, and so a common approach.

We have been able to share our views with the new American Administration and to review the state of the world's economy and examine our present policies as a whole. We have reviewed our policies to combat inflation and unemployment and discussed the policies that will be needed to reach a successful conclusion of the Conference on International Economic Co-operation. We also readily responded to President Carter's call for a close examination both of the need to conserve energy and of the dangers of nuclear proliferation.

Let me briefly restate seven target areas where we pledged ourselves to action. First, we agree that our most urgent task is to create more jobs, including special measures for young people, and that hand in hand with the fight against unemployment is the fight against inflation. Inflation destroys jobs, corrodes democracy and undermines economies strong and weak.

Secondly, Heads of Government committed themselves to maintain their tar- gets for economic growth or for stabilisation policies. We recognised that growth rates must be maintained in the stronger economies, increase in the weaker economies, and inflation tackled successfully in both, if we are to cut unemployment and provide a basis for sustained non-inflationary growth.

If countries concerned seem likely to fall short, they will adopt further policies to achieve their targets. This should give added stability and confidence.

Thirdly, we committed ourselves to seek more resources for the International Monetary Fund and to support the link between its loans and the adoption of appropriate stabilisation policies. Such facilities are essential if countries now in balance of payments deficit are to maintain reasonable levels of internal activity and foreign trade so that the world can avoid the danger of new trade and payment restrictions.

The danger of new trade restrictions also prompted our fourth pledge: that we would work to expand opportunities for world trade by giving a new impetus to the multilateral trade negotiations originally launched at Tokyo in 1973, whilst not removing the right of individual countries to avoid significant market disruption.

In view of the increase in demand for energy and oil imports, which is placing increasing pressure on finite sources of fuel, we pledged ourselves to greater energy conservation and agreed on the need for greater exchanges of technology, joint research and development for the efficient use of energy sources, including the improved production and use of coal.

This brought us face to face with the nuclear dilemma. The present generation has an awesome responsibility for the future of mankind. We agreed to launch an urgent study, the first stage of which we intend will be completed within two months, of how to reconcile the world's demand for nuclear weapons. Our initial studies will be concerned with the terms of reference for evaluating the nuclear fuel cycle internationally.

Our seventh pledge was to the world's poor, for whom the impact of the oil crisis and the world recession has been devastating. The countries attending the Summit agreed to do all in their power by means of trade, aid and finance to help the developing countries towards a just share in the sustained growth of the world economy. We should work for a successful conclusion of the CIEC in Paris at the end of the month. We also invite the COMECON countries to join us in this, the only war worth fighting—the war on want.

We placed on record a welcome for the work being done to achieve international agreement to eliminate irregular practices in international trade, banking and commerce.

The text of the Downing Street Declaration, together with the fuller Appendix issued with it, will be published in the Official Report.

Mr. Speaker, all of us recognised the difficulties of raising standards, or in certain countries even of maintaining them, and the problem of overcoming unemployment. But we shared a common determination to succeed, and we ended our discussions with the confidence that our democratic systems have the resilience and the inner strength to surmount our present difficulties.

It is our perception that the world economy is one and must be managed increasingly as one. This weekend the seven leading industrial democracies pledged themselves to a programme aimed not simply at their own future prosperity but in working for that prosperity to be more fairly shared in a safe and peaceful world.

Mr. Speaker, all of us recognised the difficulties of raising standards, or in certain countries even of maintaining them, and the problem of overcoming unemployment. But we shared a common determination to succeed, and we ended our discussions with the confidence that our democratic systems have the resilience and the inner strength to surmount our present difficulties.

It is our perception that the world economy is one and must be managed increasingly as one. This weekend the seven leading industrial democracies pledged themselves to a programme aimed not simply at their own future prosperity but in working for that prosperity to be more fairly shared in a safe and peaceful world.

I thank the Prime Minister for making that statement, and also congratulate him on having the Summit at Downing Street and on his part in presiding over it.

I have three points to put to him. Because I received his statement only shortly before he rose, I took the opportunity to look at other communications from other similar conferences in Rambouillet and Puerto Rico. I found that they are all very similar in what they say about inflation, unemployment, the need for recovery without inflation, the need not to have protectionism, to conserve energy and to renew confidence. Will the Prime Minister agree that one should not expect too much to emerge in practical terms from the Summit? This is a serious point: will he agree that the greatest value of such conferences is the meeting and understanding between the leaders of the great industrial nations which, in itself, is worth achieving?

Will he be bringing forward any practical proposals as a result of this Summit? Will he agree that the most practical item to emerge—and we welcome it—is the help to the Third World and the decision to establish a fund to stabilise commodities?

Finally, as this was a very important conference, what steps did he or any other Heads of State or Ministers from other countries take to see that women are represented at these conferences?

I thank the right hon. Lady for her courteous comments at the beginning of her questions. It is true that the communiqués are similar when we meet, but I think that that is the measure of the depth and complexity of the problems that the world now faces. It was interesting that the Prime Minister of Japan had been present in London during the 1930s. He made an interesting contribution, in which it was made clear that the problem of unemployment now is totally dissimilar from the problem as it existed in the 1930s, and indeed from the problems of the period before 1973. It is for these reasons that the Heads of Government and Heads of State need to meet at regular intervals. I agree with the right hon. Lady about that.

I do not think that enough credit has been given to the world for the successes which have been achieved, bearing in mind the pressures under which Heads of Government have been from their electorates and their own people to introduce restrictive and protectionist measures. There has been a common perception that this would lead the world into something much more like the 1930s. The fact that we have been meeting has enabled us to resist those pressures, which, however tempting they might seem in the short term, would be very damaging to world trade in the long run.

As for practical proposals, one of the more important matters to emerge has been the agreement to monitor the rates of growth of world trade in our countries, especially in those which are growing faster, so that if they fall short they have committed themselves to take new measures to ensure that they attain those targets. That is very important as a means of enhancing confidence and stability in the business community and elsewhere that investment decisions have to be taken.

As for the Third World, there were a number of proposals there on which we are working in order to bring the CIEC to a successful conclusion—such matters as stabilisation of certain export prices, if that can be achieved; funds to assist where stocks sometimes get too high, or, indeed, too low; funds perhaps to assist those countries which are deeply in debt at the moment and which suffer more than any of us. All these proposals are under consideration.

I would say to those who doubt the value of these meetings that it is not our job at these conferences—I have always taken this view—to produce a blueprint for the future. What we must try to do there is get political impetus for the direction in which we should go. Then that should be fitted into the various international bodies—the IMF, the OECD, UNCTAD and the others, of which we are part only of the membership—in order to ensure that they get results.

On the right hon. Lady's last question, I regret that no ladies were present. I shall certainly take note of her application for the post, but I cannot say that she will necessarily find that she will be successful.

May I join the Leader of the Opposition in congratulating the Prime Minister on his personal success at this summit?

I should like to ask two particular questions. What contribution will our own Government make to the study of the danger of nuclear proliferation? Second, after this meeting, has the position of the President of the European Commission at future Summits of this kind been regularised?

On the first question, we are in a favourable position to make a contribution on this matter because we are in the forefront of nuclear technology. Therefore, we shall be playing a large part in the small group which is to be set up on this matter. I hope that when we get the report, inside two months, we shall then be able to see whether we can proceed to the next stage that President Carter is very keen about—the international fuel cycle evaluation—and to see which fuel cycle would be most appropriate to the world and whether we can get some agreement on that to safeguard the world against the risks.

The future position of the President of the Commission is a matter for the Community itself to deal with and not for that conference as it stood.

Whilst warmly congratulating my right hon. Friend on the success of this seven leaders' conference and his personal contribution to it, may I ask whether he seriously believes that not only the COMECON countries but also Japan will respond more readily and liberally to the needs of the Third World?

These matters were discussed with the Japanese Prime Minister present and I had a bilateral discussion with him about this and about Japan's trading policies at Downing Street after the Summit Conference had concluded. It is not for me to speak for Mr. Fukuda, or perhaps to go into detail about what was said, but certainly he was the one who pointed out the problems of the existing situation in the world from his previous experience, going back about 40 years. I hope therefore that he will follow up his analysis with the appropriate conclusions.

As the priority seems now to be to conquer unemployment, did the Prime Minister in his discussions with President Carter get the impression that it is absolutely no part of United States policy to use protectionism, either general or narrow, to conquer their own unemployment problems in any particular field?

Everyone is under pressure in this area, including the President of the United States. He is resisting these pressures in the case of some elements of trade but not in the case of others. In all cases, certain political decisions will be taken by Governments. However, what is important is that by our standing together the general onrush for protectionism has been resisted. The resistance has become a little frayed at the edges in a number of cases, but we have achieved more success than I would have expected in this area. The President of the United States, like the remainder of us, is satisfied that to depart from that general principle would mean more unemployed in the world and not fewer.

Would my right hon. Friend please convey to President Carter the warm thanks of the people of the North-East for the pleasure and joy that he brought to their region on Friday during an all-too-brief visit?

The President thoroughly enjoyed himself on Friday. I always thought that the people of the North-East would give him a warm welcome, and they did. I am sure that not only will he never forget it but that it has strengthened the bonds of affection between him and this country.

Since it is envisaged that the evaluation of the nuclear fuel cycle which the experts will conduct may take as long as a year, was it agreed that in the meantime Britain and other countries which are engaged in the nuclear fuel cycle business should not go ahead with overseas reprocessing contracts?

The work in the nuclear suppliers' club will continue, of course, on the matter of safeguards. As regards our own possible contracts for reprocessing, until we can conclude such an agreement on these matters as the hon. Gentleman has mentioned, we shall have to reach our own conclusions, as will the United States, on the export of uranium. We are all still free to do that, but I hope that all of us in reaching our conclusions will take into account the general principles on which we based ourselves yesterday.

Will my right hon. Friend accept that the House will be thrilled to learn from him that the British Government now have much more confidence in British nuclear engineers than they have had in the past and that he is now confident that we can take world leadership in these matters? In regard to the report that my right hon. Friend will now submit to the meeting of the rich and the poor countries on 31st May, before that report on nuclear affairs goes forward will he give some consideration to the political problems which exist, in the sense that, in the United States, Germany and elsewhere, nuclear reactors and the nuclear indutry are mainly in the control of the private sector? This means that the Government control is somewhat limited over the contracts which those industries are likely to place with the poorer countries. In this country, we are fortunate in having public ownership of the nuclear industry. Therefore, will my right hon. Friend have further consultations with the committee of experts which has now been set up to see whether a common solution can be found to overcome this difficulty of the nuclear industry elsewhere remaining in private hands?

The manufacture of reactors in this country is in private hands, too, as it is in the United States or, indeed, in France. But Governments have the responsibility to impose safeguards upon the circumstances in which these reactors should be exported, the nature of the reactor and what safeguards should be evolved for the use of the spent fuel. All of these things must be overseen by Governments irrespective of whether the manufacture of the particular reactor is in private or in public hands.

Is the Prime Minister aware that we generally welcome the view that means must be found to deal with unembployment? Does that mean that there is to be a shift in Government policy to laying stress on reducing unemployment rather than reducing inflation?

No, it does not. Inflation and unemployment go hand in hand. One depends on the other. One can, of course, have a low level of inflation and a high level of unemployment as, indeed, the Federal Republic has at present. This is one of the difficulties that has led experts and authorities to conclude that the present recession is different in form from that before 1973 and certainly from that before the war.

Our position is really quite straightforward. The smaller the increase we have in earnings this year, the lower will be our rate of inflation next year. There is a direct correlation between the two. That is our task. If we have too high a settlement, our rate of inflation will be much too high in itself. Our task is to get down the rate of inflation but at the same time to take special measures, which we can take, including those for young people, in order to lessen the impact of unemployment.

Does the Summit Declaration against protectionism apply to agricultural as well as to industrial goods?

That was one of the most difficult topics we had to discuss because the United States and Canada clearly have a particular interest in this and some member countries of the Community have a different interest. But we cannot solve the trading problems of the one without regard to the social problems of the other. Certainly, there is a desire to ensure that protection should be lessened in agricultural goods as well as in industrial goods, but I have a feeling that we are likely to make faster progress on the second than on the first.

Will the Prime Minister accept that many hon. Members on both sides of the House welcome the fact that the Summit turned its face against "beggar my neighbour" protectionism? Will the right hon. Gentleman agree to give the House an indication of any changes in Government policy which will follow the Summit? Does the British Government intend to go for more growth than that envisaged by the Chancellor in his Budget Statement? If the Government intend to do that, how can that be reconciled with their statement to control the rate of inflation?

The hon. Gentleman puts his finger on the crux of the problem. At the moment our task is to pursue our stabilisation policies as they have so far turned out. With the improvement in our balance of payments, which is undoubtedly now taking place, I believe that we shall see a further improvement as the months go by. Perhaps our situation will alter. But for the moment and for the time being our task is to pursue existing policies. The fast-growth countries who might appear to be falling behind in their growth rates—if they do so that would have an adverse influence on us—have pledged themselves to maintaining their fast growth rates or to review policies and take further steps to ensure that they are maintained later.

Will my right hon. Friend confirm whether he had any discussions with President Carter regarding the standardisation of weapons within NATO?

Yes. There were talks outside the formal sessions. This is a matter in which President Carter is very interested and in which he would like to secure greater standardisation without necessarily giving all the advantages to the United States by so doing. It is something that he is quite sincere about, and he has also gone on public record with regard to his policies on the export of arms. I know that it is his desire that the export of arms in itself should be smaller.

Will the Prime Minister say whether the further studies on nuclear proliferation will include the question of the dumping of nuclear waste? If so, will he instruct all concerned in this country to suspend any applications for planning permission to look for sites for the dumping of nuclear waste until these studies are completed?

These studies will include this question, which is one of the most important questions. But it would be quite wrong to postpone planning decisions or to invite people not to go ahead with them until we have concluded our studies. We want to be ready to proceed in this field if we can be certain that there will be safety and that we are not endangering future generations. I see no reason why we should halt the preliminaries on this while these studies go on.

Is my right hon. Friend aware that his arranging and chairing of this meeting is deeply appreciated not only by the people of our own country but indeed throughout the western countries and the developing lands in particular? Does he not also agree that what has been revealed at this Summit, which should have been called many years ago, is that the principle of laissez-faire competitive fighting has to be dropped and that there is now an urgent need for a form of universal co-operation? This ought to be monitored. Will he see to it that if possible the monitoring of these broad principles for a return to sensible world co-operation will be reported to this House from time to time?

I think the principal reason that we have held three conferences of this sort within a relatively short period of time is the perception that the world economy is interdependent and that it must be increasingly managed as one. It cannot be left to free market forces in its entirety. There is a place, but not an excessive place, for market forces when we have 15 million people unemployed in the OECD countries. It is for this reason that the two must be combined. That is why I am a democratic Socialist and that is why Conservatives are just primeval monsters.

May I press my right hon. Friend on the question of Japan? In view of the widspread reports preceding the arrival of the Japanese Prime Minister can he say whether in bilateral or multilateral talks at the Summit the Japanese Prime Minister confirmed that he would be committing his Government rapidly and drastically to increase its aid giving in the near future or, if not, whether he at least indicated that his Government would be making a public announcement on this matter in the near future?

I cannot give an affirmative answer to either of those questions. The Japanese Prime Minister committed himself and his Government to the communiqué. That is as far I can go.

Will the Prime Minisster now answer the question that he has been asked twice already? In what respects is British Government policy going to be changed as a result of this meeting or is it just another case of pious hopes and meaningless platitudes?

I have already answered that question very fully and satisfactorily, namely, that we continue with our existing policies. But what was more important in the case of this conference is that those countries which have set out to grow faster, because they have strong economies, have undertaken and committed themselves so to do and to take further steps if they look like falling short. We have all agreed that there should be monitoring of this process.

The hon. Gentleman should not assume that we are the only country attending to this. It is a common effort. Each country has to put into the deal what it can in order to achieve the world balance that is required. [Interruption.] The hon. Gentleman may snigger about this, but that is the truth of the situation. Each of us has a different task to fulfil and we have a different rôle in the economic cycle. Each of us has to do different things.

Apart from that aspect on the economic side, what we discussed, for example, in relation to the developing countries and our relationship with them will be of assistance not only to them but to world recovery as a whole. The impact of the increased oil prices on them has been devastating. That is bound to affect our exports. It is bound to affect world trade. It is these things, which are indirect in our policies, which, if we can ensure that the IMF increases its resources, will, in the end, if we take advantage of the situation, enable our exports to grow. I ask the hon. Gentleman not to dismiss these things but to see them in the round. Let him try to see that the world is interdependent and that what others do may be as important to our economy as what we do ourselves.

Will the Prime Minister tell the House how progress towards the objectives agreed last weekend will be reviewed—whether any machinery for monitoring progress has been established, or whether another meeting will be held in due course?

The progress will be reviewed and monitored, and I hope that the political impetus will be put into the OECD meeting next month and the meeting of the IMF in September. We are all ready, if necessary, to meet again if it seems appropriate to maintain the momentum of the recovery which has begun. We are remaining in touch through our own officials at all times, and it is fairly easy to get people together whenever we think it necessary.

Several Hon. Members rose—

The House has had a very good run on this, but I shall call three more questions from each side.

On the question which the Prime Minister answered from the right hon. Member for Battersea, North (Mr. Jay) about agriculture, does this mean that Her Majesty's Government will implement their policy of importing more food from outside the Common Market, which policy is supported by the Conservative Opposition, and is not this, therefore, against that primeval monster, the common agricultural policy?

The common agricultural policy needs revision—I have said this constantly—and it is the British Government's policy that it should be revised in our interests. At the same time, as I said in reply to an earlier question, there are big social consequences of such a revision for some of the other members of the Community. Therefore, it will take time to do it. The seven nations agreed yesterday that there should be a mutually acceptable approach to agriculture which will achieve increased expansion and stabilisation of trade and greater assurance of world food supplies. The hon. Gentleman can assume that Canada certainly and the United States probably will be pressing the European Community for more outlets for some of their agricultural produce. I am sure that a bargain will be struck in the end.

Does my right hon. Friend recall that when the leaders met at Rambouillet there were about 1 million people on the dole in this country, that when they met at Puerto Rico another 200,000 had been added to the list, and that the total is now nearly 1·5 million? Do not those figures go to prove that these pious platitudes are not getting people back to work, any more than would the policy put forward by the Leader of the Opposition? In other words, capitalism has not got the answer. The answer is to be found, if my right hon. Friend wants to get down inflation, in freezing prices, if he wants to get people off the dole queue, in restoring the cuts in public expenditure, and, if he wants to do something for Britain, in getting us out of the Common Market?

That is a series of slogans which do not bear much relationship to reality.

That may be so. But the hon. Gentleman has a responsibility to give leadership as well as to listen to what people on the streets say.

Freezing prices is not a Socialist remedy. It has been applied in countries in Europe which are by no means Socialist and with the results that we have always known. These problems are more intricate and difficult than the hon. Gentleman seems to think. He has a dual responsibility, as I have. One is to ensure that our people are at work. The second is to preserve freedom in this country. He is a democratic Socialist, and the combination of the two is as important to him as it is to me. I know countries, as he does, where there is no unemployment. There is no freedom, either.

Was not the Prime Minister even a little embarrassed or ashamed to be acting as host and to be leading a Government who have dragged this country to the bottom of the league with shameful and disgraceful policies for stagnation, unemployment and inflation? Did he not pick up any tips at all?

The only factor which embarrasses me is when the Leaders of other nations have to read in Hansard that sort of comment.

In view of the fact that the nuclear energy programme took so long to discuss at the conference, and seeing that it will take 12 months to produce a preliminary report, will not the country's energy needs be in grave danger by the end of the century? Turning to a domestic matter arising from the conference, will the Prime Minister now tell the Secretary of State for Energy to instruct the Central Electricity Generating Board to go ahead with Drax B based on coal-firing?

My hon. Friend may have noted that, in my statement, I referred to the agreement that there should be an improved production and use of coal. As regards any specific power station, including Drax, my hon. Friend will know that it is not a shortage of power at present which is causing the hold up in this matter. It is other considerations concerning the future of the power plant industry. But that the power station, when it comes, will be coal-fired, I have no doubt.

What advice did the Prime Minister receive from his colleagues about the inflationary dangers of premature reflation? Did he take the opportunity last weekend to repeat the undertaking which the Chancellor of the Exchequer gave to the Managing Director of the IMF on 15th December last that a continuing and essential element of Her Majesty's Government's economic strategy was a substantial reduction in the share of resources taken by the public sector?

The share of the resources taken by the public sector has, to my regret, been educed—[Interruption.] Yes, to my regret. It means that a number of essential public needs are not being met. That is why we say that our first task is to overcome inflation so that we may resume non-inflationary growth. That is the order of priorities and the way in which we intend to tackle this task.

What was said about stopping the nuclear and non-nuclear arms race? Is my right hon. Friend aware that many of us who held very high hopes of the President's earlier proposals have been greatly disappointed by his recent actions on this subject? Therefore, what did Britain do at this conference, and what initiative will it take on this issue?

The biggest problem that we have is the future of our nuclear fuel and what should be done about that. We all agreed—and my hon. Friend must have heard what I have said about three times already—about the need for a very urgent study of the way to control these matters. As for conventional arms, of course, this was not a negotiating conference for conventional arms, although my hon. Friend will know the position that we have taken on mutual and balanced force reductions. Although I do not wish to commit the President in any way, my hon. Friend is a little premature in his disappointment. The President is undoubtedly quite sincere and convinced about the need for reductions in these areas.

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