NATIONAL ECONOMIC DEVELOPMENT OFFICE
Q1. Mr. Norman Atkinson
asked the Prime Minister when next she intends to take the chair of NEDO.
The Prime Minister (Mrs. Margaret Thatcher)
On 9 January.
Mr. Atkinson
Will the Prime Minister consider the possibility of reducing the hostility that she may encounter when she meets members of the Economic Council by considering their deep concern that British manufacturers are now having to pay as much as 10 per cent. more than their Continental competitors for fixed interest loans? Is not this the time for her to tell the country that no more shall we go down this road of high interest rates, thus giving British manufacturers a chance to borrow money at rates of interest equal to those on the Continent and thereby avoiding the slump that is facing all of us?
The Prime Minister
There are many Continental practices that one would like to assume in this country, including the Continentals' tendency not to spend money that they have not got. As the hon. Gentleman knows, on the scale on which Governments have to borrow at [column 1150]present there is a tendency to have to have high interest rates to get the money. Therefore, the answer is to reduce public expenditure as a proportion of national income.
Mr. Forman
Will my right hon. Friend be in a position, when she next meets the members of the National Economic Development Council, to report to them on the progress that the Government have made with their plans for a more wide-ranging and well-informed consultation body, either within NEDO or elsewhere, to bring about a more realistic understanding of exactly what the economy can stand and of public sector pay bargaining?
The Prime Minister
I hope that the consultation will take place on the basis of the Neddy NEDC organisation, because that is now a well-tried one and I think that we are likely to get the best results through it. It is important that all consultations take place on the basis of full and frank facts. People must be brought to face reality, both in their wage claims and in their demands for expenditure.
Mr. Healey
Does the right hon. Lady recall telling the House earlier this year that interest rates at 14 per cent. would impose an intolerable burden on home buyers and small businesses?
Mr. Rost
Who overspent?
Mr. Healey
How will the right hon. Lady explain to the National Economic Development Council that industrial performance will improve, when she has saddled this country with the highest inflation and the lowest output in the industrial world, and is proposing to saddle it on Thursday with the highest interest and mortgage rates in British history?
The Prime Minister
The right hon. Gentleman still holds the record for the highest inflation rate ever reached in Britain. He and, in particular, Joel Barnetthis former Chief Secretary known that, if their level of public expenditure had gone ahead, interest rates would have been right up and inflation rates next year would have been even higher than those we have a present. The right hon. Gentleman knows that if we are to get interest rates down we must get public expenditure down as a proportion of national income.
[column 1151]Mr. Healey
Is the right hon. Lady telling us that next year public expenditure will be a lower percentage of gross domestic product than this year? If so, she has a view that is not shared by anybody else in the country.
The Prime Minister
I am telling the right hon. Gentleman that in the words of his former Chief Secretary:
“We have to face the unpalatable fact that with, at best, low rates of economic growth, and at worst, nil or even negative growth, public expenditure cuts will be necessary.”
Mr. Healey
Will the right hon. Lady answer one of the questions I have asked her in the past few minutes?
The Prime Minister
We shall embark——
Mr. Healey
Just one.
The Prime Minister
Perhaps the right hon. Gentleman—[Interruption]—will do——
Mr. Speaker
Order. The House must allow the Prime Minister to answer the question.
The Prime Minister
We are embarking on a sustained programme of trying to get down public expenditure as a proportion of national income. That is the right programme for Britain.
Mr. Scott
If my right hon. Friend has consultations about a wider economic forum based on Neddy, will she consider ways in which the representation of employees on that body might be more representative than that provided by the TUC?
The Prime Minister
I shall always consider trying to get broader representation. Every time we increase the representation, there are demands for still more. It is not easy to have discussions in a very large body. We have to keep it comparatively small.
PRIME MINISTER
(ENGAGEMENTS)
Q2. Mr. Dormand
asked the Prime Minister if she will list her official engagements for 13 November.
The Prime Minister
This morning I was present when Her Majesty the Queen welcomed President Suharto of Indonesia. [column 1152]In addition to my duties in this House, I shall be having meetings with ministerial colleagues and others, including one with the Foreign Minister of the Republic of Zaire. This evening, I shall attend a State banquet given by the Queen for President Suharto.
Mr. Dormand
Will the right hon. Lady take time today to reflect on our membership of the European Economic Community? Is she not aware that current problems, such as the exporting of lamb and the Community budget, are continuing manifestations of the creeping political paralysis that is crippling our power to make our own decisions? When these problems have gone away, there will be others. Will she make arrangements for the holding of another referendum asking the people of this country whether they wish to withdraw from the Community?
The Prime Minister
The answer to the last part of the hon. Gentleman's question is “No, Sir” . I reflect very hard on the problems we experience with the Community. I am doubly anxious to get a substantial reduction of our contribution at Dublin. This will have the effect of helping to get down our public expenditure next year.
Mr. Dykes
Does not my right hon. Friend agree that jumping to ridiculous conclusions that we might have to withdraw from the Community to resolve a short-term financial and economic problem goes too far? Is there not now an increasing willingness on the part of other member States to solve our budget problems?
The Prime Minister
I hope that my hon. Friend is right. But if the Community could find the sum without us, it can find it with us there.
Mr. Duffy
Should not the Prime Minister take time today to consider how she wishes to explain to the British people her hints last night about rising interest rates and the Chancellor of the Exchequer's warning yesterday against the expectations of further tax cuts in next year's Budget. Does she agree that these developments are not providing the economic picture that her Government's economic policies are designed to produce?
[column 1153]The Prime Minister
The answer is simple. We cannot go on spending money the nation does not earn. Those who wish to spend more must become interested in incentives, so that the nation can first earn more.
Mr. Kilfedder
With the NATO Defence Ministers meeting in The Hague today, will the Prime Minister take this splendid opportunity of making a positive response to President Brezhnev 's recent call for arms limitation by refusing to allow the United Kingdom to be a base for a new generation of American missiles?
The Prime Minister
Judging by what Pravda has already said about me, the Russians think that I have made a positive response. It is important that we negotiate from strength, bring up to date our theatre nuclear forces and make decisions by the end of this year in the NATO Alliance.
Mr. Shore
Reverting to the question of the EEC budget, is the Prime Minister aware, taking account of what she said last night and her other statements, that not only her personal prestige is involved in the Dublin summit but the whole reputation of this country for meaning what it says? Will she take account of that fact and make plain that she means what she says? Will she take account of that fact and make plain that she means what she says? Will she make plain that there will be no resiling and retreat in a few weeks' time? If she needs any help in taking powers to carry out the meaning of her own words, she has only to look across the Chamber to find it.
The Prime Minister
I think I prefer more faithful allies.
Mr. Lyell
Will the Prime Minister take time to consider the report of the “Nawala” decision, to be found in today's issue of The Times, on trade union immunities? Will she consider the threat, in the light of that decision, by the International Transport Workers Federation to black every vessel flying a flag of convenience, that employs Asian crews, coming to this country? Will she also consider the effect on job prospects in the North-East and the North-West, in our ports, shipyards and ship repair yards, of the threat by the ITF?
[column 1154]The Prime Minister
I believe that case is one that involves the definition of furtherance of trade dispute. I know that it is causing a good deal of worry about jobs for the reason that my hon. Friend gave. A judgment is due by the House of Lords on another case along similar lines. We must await that judgment before finally deciding what is the law and what needs to done about it. I must therefore give my hon. Friend a temporising answer until we know the precise state of the law. I have observed the problems that would arise if the judgment went unchanged by later law.
Q3. Mr. Leighton
asked the Prime Minister if she will list her official engagements for 13 November.
The Prime Minister
I refer the hon. Member to the reply which I have just given.
Mr. Leighton
While the Prime Minister was in the City last night with those who are earning our invisible exports, which have so often come to the rescue of our balance of payments, she no doubt ruminated on the grisly fact that our invisibles this year have been wiped out and pushed into the red by our outsize contribution to the Common Market. Will she assure the House that, come what may in Dublin, she will demand and insist upon a broad balance of our payments with those of other countries which must mean a rebate of £1 billion plus to this country?
The Prime Minister
I have used the very argument that the hon. Gentleman employs when I have been putting our case on the Continent. The City of London is earning heavily on invisible exports but, as soon as it is earned, a lot of extra money goes out to Europe. That is why we shall have a very interesting and difficult summit at Dublin. I am prepared for it. We cannot go on next year, in 1980–81, making a £1 billion net contribution to Europe. We just cannot. It is unfair and inequitable.
Mr. John H. Osborn
Will my right hon. Friend explain, following the intervention of the hon. Member for Sheffield, Attercliffe (Mr. Duffy), how it is possible to reduce taxes without reducing public expenditure and increasing gross national product?
[column 1155]The Prime Minister
I do not try to embark on the impossible by trying to convince some Labour Members.
Mr. Ashley
Without commenting on the “Panorama” programme, which is being specially investigated by Scotland Yard, will the Prime Minister reaffirm the freedom and independence of the BBC? Will she assure the House that the Government intend in no way to interfere with that freedom and independence?
The Prime Minister
Of course, as the right hon. Gentleman knows, the BBC is independent of Government in its selection of news and the programmes that it puts out. But when we get incidents of the kind that was reported the other day, the Government also have a duty to express an opinion, and to express it vigorously.