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Prime Minister's (Engagements)

Volume 986: debated on Thursday 19 June 1980

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Ql.

asked the Prime Minister if she list her official engagements for 19 June.

This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall have further meetings with ministerial colleagues and others.

After last night's rigged party political broadcast, produced by Saatchi and Saatchi, will the Prime Min- ister tell real pensioners how she invented a new 54-week calendar and thus cheated a married couple out of £13·70 this year? Is it not a scandal that fake nurses in white coats, headed by "Mr. Turncoat", received more money in an hour than real nurses receive in a day? Are not the Prime Minister and her Government the biggest hypocrites of all time?

Clearly, the hon. Gentleman worked hard and long at that supplementary. I am delighted that he watches good party political broadcasts. I hope that he will learn something from them. The increase in pensions was announced in the Budget. It will take place as announced and on the date announced. The same applies to the Christmas bonus, which was not always paid during the period of the previous Labour Government.

It has been put about this year that nurses' pay will be increased by 14 per cent. However, in addition to that 14 per cent. increase, the Government have given nurses an extra £116 million, because they are nurses, to secure a 37½ hour week this year instead of next. Together with a small adjustment for the application of the Clegg award and another small adjustment for the Speak-man report, the total wage increase amounts to 20 per cent.

Order. For the sake of the record, I remind the House that to address any individual as a hypocrite is unparliamentary.

During my right hon. Friend's busy day, will she meet representatives of the Federations of Commerce and Industry, and other representatives of small businesses? Is my right hon. Friend aware that high interest rates discriminate against manufacturing industry and in favour of institutions? Will my right hon. Friend assure the House that interest rates will come down in the near future? Does not she accept that, although business may agree with her overall economic strategy, present interest rates are extremely damaging?

I am prepared to accept that interest rates are very high. They will come down when Government borrowing and borrowing by the manufacturing sector jointly fall below their present levels. My hon. Friend will realise that manufacturing industry borrows so heavily because large wage increases have put up costs. To some extent, its goods have been priced out of the market. As a result, firms are holding considerable stocks. It is, therefore, important to get wage costs down.

Why does not the right hon. Lady recognise the validity of the question instead of constantly harping on wage increases? Has she read the report culled from the Bank of England report today that companies are paying 30 per cent. of their gross income in interest? Does she accept that that is incredible? The money supply figures, just published, give no prospect under this Government of a reduction in interest rates. What hope can the right hon. Lady offer to manufacturing industry?

As the right hon. Gentleman has already paid a good deal of attention to the Bank of England Bulletin, he will have seen its prime recommendation that wage rates in future must be below the level of the RPI. It is the first to recognise the importance of making British industry more competitive, which means lower wage increases, unless they are matched by productivity increases.

By implication, I have. If those companies borrowed less to pay wage increases that they cannot afford, they would pay less interest.

Reverting to the Bank of England review, has the Prime Minister noted that company profits have fallen in real terms by about 60 per cent. in the past 10 years? Does my right hon. Friend agree that, if pay increases continue to run ahead of output, the result must be inflation and more unemployment?

I agree. The position of company profits is serious. We are a party which knows that, without higher company profits, sufficient resources will not be available for investment, and we shall therefore not be able to keep abreast or ahead of our competitors in future years. One problem is that money has been drained out of the corporate sector into the personal sector by very considerable wage claims and settlements. Those have to be moderated.

Will the right hon. Lady take time today to take a further look at the agreement that the Government recently reached with the EEC over our budget contribution? Will she accept that we are still paying far too much for the deficiencies of the common agricultural policy, and that she has made no effort to reform the CAP? Does she agree that action should be taken to get us out of the Common Market.

The answer to the last part of the hon. Gentleman's question is "No." With regard to the first part of his question, I agree that we are still substantial net contributors. However, this financial year we shall get about £700 million back, which is not bad for a start.

Q2.

asked the Prime Minister if she will list her official engagements for 19 June.

I refer my hon. Friend to the reply that I gave a few moments ago.

Will my right hon. Friend find time today to comment on what many of us consider to be a disgraceful and irresponsible act by an hon. Gentleman, who yesterday sought to cower behind the privileges of this House, when, without reference to Rolls-Royce or the Department of Industry, he made an attack calculated to destroy the reputation of an employee of a nationalised industry, although he was not prepared to substantiate it outside the House? Will my right hon. Friend ask the Leader of the Opposition how long the hon. Member for Birmingham, Perry Barr (Mr. Rooker) is likely to remain an official Opposition spokesman?

I share my hon. Friend's distaste for any suggestion that there should be guilt by accusation in this House, or under any privilege. I confirm that it is my understanding that neither the Department of Industry nor the senior management of Rolls-Royce knew that the allegation was to be made or had any knowledge of the matter at all. They are taking it extremely seriously. It is better that no further comment should be made until the facts are ascertained. However, I share my hon. Friend's distaste for using this House in that way.

The right hon. Lady referred to the main recommendation of the Bank of England survey about moderating pay rates. Has she any plans to see that that is done outside the public sector?

That is for the companies outside the public sector. The private sector has disciplines that we do not have in the public sector. Because firms are coming hard up against their own cash limits—what they can command as prices in the market—I believe that wage increases will be moderated. Many a work force realises full well that there is little point in demanding vastly increased wages if, at the end, they have no jobs. From time to lime, reports reach my desk of firms that are going out of business because they cannot afford to meet the very large wage claims that are being made.

Is my right hon. Friend aware that the leader of Manchester city council today announced that his authority is to go into debt to the tune of £21 million? Is she further aware that that debt is due mainly to the Clegg commission award and over-large wage settlements? Does she agree that that is an object lesson for us all?

The rate support grant cash limits largely took into account the teachers' pay claim. As many local authorities are managing to live within those cash limits, I see no reason why their economies should not be extended to authorities that have hitherto been more extravagant.