HC Deb 20 June 1978 vol 952 cc207-9
Q1. Mr. Ovenden

asked the Prime Minister if he will pay an official visit to Northfleet.

The Prime Minister (Mr. James Callaghan)

I have at present no plans to visit Northfleet.

Mr. Ovenden

Is my right hon. Friend aware that if he could find time to visit my constituents in the coming months he would soon find how much they welcome the Government's success in bringing down inflation to the lowest level for five years? Would he not find it refreshing if, just for once, the Leader of the Opposition would stop carping and would give a similar welcome to the country's success in overcoming its economic problems?

The Prime Minister

It is the case that, thanks to some moderation in wage settlements during the last 12 months and to other factors, the inflation rate has gone down, with benefit to our exports and our living standards. I hope that we can maintain that. Our rate of inflation is now lower than that of a number of our major competitors. On the other hand, it is still higher than the rate in Japan, West Germany and the United States. I should like to see it comparable with those countries as well.

Mrs. Thatcher

The Prime Minister and the Chancellor of the Exchequer have repeatedly said that if wage rises were 10 per cent. or more inflation would soon be back into double figures. Now that the figures are showing that wages are rising at the rate of 15 per cent. or more, what is the Prime Minister's forecast of the annual rate of inflation?

The Prime Minister

I am too wary about the inaccuracy of forecasts to start a competition of that sort, but I have no reason to withdraw from my consistent position on this, which I uttered as recently as a fortnight ago to the hon. Member for Romford (Mr. Neubert) when I said to him that we need a substantially lower rate of increase in earnings next year if we are to maintain inflation at its present level. It is far better to get the major basic lesson home than to indulge in battles of forecasting statistics.

Mrs. Thatcher

In that case, why did the Prime Minister say a fortnight ago that he did not see why inflation should ever rise above single figures again?

The Prime Minister

I hope that some time I will get the right hon. Lady to understand the simple point—

Mr. Geoffrey Johnson Smith

Do not be so patronising.

The Prime Minister

I would not need to be patronising if the right hon. Lady were not artificially slow. I know that really she is intelligent, but she tries to misunderstand this point.

Mr. Fairbairn

Be your age.

The Prime Minister

There is no reason for inflation to rise into double figures if we adhere to our policies and keep increases in incomes in single figures. If I have said that once, I have said it 20 times, and perhaps some day it will dawn into the heads of the Opposition.

Mr. Fernyhough

Does not my right hon. Friend agree that it is an admirable situation, according to what the Leader of the Opposition has said, when inflation is coming down and wages are going up? That is a wonderful society.

The Prime Minister

Yes, but we must ensure that productivity and increased production keep level with the wages that are being paid. As my right hon. Friend knows, that is the major point. Certainly, when I reflect on all the questions that I have been asked about special cases and all the people who should be allowed to escape, I must say that we have not had very much help from the Opposition in trying to keep earnings at a reasonable level.

Sir G. Howe

As earnings are rising at an annual rate of 15 per cent., and in view of the Prime Minister's misleading attempts to grapple with that fact a moment ago, does it not show that his answer of a fortnight ago was as complacent as it was characteristic?

The Prime Minister

What I think it shows, and what I hope everyone on the Opposition side will grasp, is that it is necessary to carry the consent of the people of this country. I do not believe that either side of the House stands for a statutory incomes policy. Therefore, the people of the country can decide to take decisions out of the Government's hands where the Government are not the direct controller. Where we are, as in the case of public servants, we have stood firm, without any help from the Opposition. I was pressed by the CBI and others to do that. We have played our part as a Government in trying to keep inflation down. I hope some day to have some help from the Opposition.