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Volume 957: debated on Thursday 9 November 1978

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I meet representatives of the TUC from time to time, at NEDC and on other occasions. Further meetings will be arranged as necessary.

I wonder whether the Prime Minister will tell the TUC that his pay policy will be kept in respect of those who proliferate on the housing market—estate agents, property solicitors and the rest of the speculators who have just made a killing out of the 25 per cent. increase in house prices in a year. Instead of supplying us with this rickety three-legged stool that he keeps talking about, why does not he add another stave and call it controlling prices?

Talks are going on between the TUC and the Chancellor, and I should like to thank my colleagues who are conducting them and the representatives of the TUC for those thorough discussions. The question of prices will be covered in their debates. My hon. Friend will recognise that the elements about which we have been talking today all form constituents of prices. We shall certainly be ready to strengthen price controls if it seems likely that they would have the effect that my hon. Friend described. But if I may say so—indeed, my hon. Friend has said it himself on many occasions—we have had considerable success in keeping prices down as a result of our policies over the past 12 months.

When the Prime Minister next meets members of the TUC, will he tell them that the massive increase in MLR announced this morning is the beginning of the end of the pre-election boom which was so conveniently arranged in anticipation of the October election which did not take place?

No. I would not tell them that because I would not want to rub salt into the wounds of those who really thought that there was a pre-election boom. The simple fact is, and I hope that some day the hon. Gentleman will recognise it, that this country's position is such that the Government ought, whether there is an election ahead or not, to take the appropriate decision that will keep inflation down and prevent unemployment from soaring. Nothing will deter us from those objectives.

Does my right hon. Friend remember the answer of the Secretary of State for Economic Affairs in 1968 that it was impossible to control prices and that the Government must retain control over the part of the economy which they already controlled? Is that the policy of this Government?

I do not recall the exact occasion on which that was said, but certainly it is not impossible to control prices. The work of the Price Commission has reduced price increases, that would otherwise have taken place, to the tune of well over £100 million a year. A control is taking place and my hon. Friend may take it for granted that we shall use every means to prevent unwarranted price increases. What we cannot prevent, if industry is to remain healthy, are price increases that arise out of cost increases. Therefore, costs must also be kept down.

Will the Prime Minister tell us what the increase in American interest rates has been, what the increase in British interest rates has been and, in the light of what my right hon. Friend the Leader of the Opposition has said, what has changed since the Chancellor made his statement some time ago?

I cannot answer about the American rates off-hand, but if the hon. Gentleman puts a Question down to the Chancellor I am sure he will receive a detailed reply. But it is known, even to the hon. Gentleman, that American rates have gone up during the past few months, which is the general point that I was making. What has changed are the fears of the market about certain consequences that might arise during the winter. Those fears arise out of a number of different considerations. They do not know which way to go. If we enter the EMS, will it make sterling weaker? [Interruption.] We know where we are going. The point is that the market do not know where they are going. Let us see the result of the vote tonight, and then see what the country has to say if it goes the wrong way.

There are, as I think the hon. Member knows in his more rational moments, a number of uncertainties. The Government do not intend to be caught by those uncertainties and we are therefore taking steps in anticipation of them, in order to prevent their developing into reality.