Orders of the Day — Industrial Policy and Employment

Part of the debate – in the House of Commons at 12:00 am on 21 May 1979.

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Photo of Mr James Prior Mr James Prior , Lowestoft 12:00, 21 May 1979

What the hon. Gentleman is saying is what we have all feared—that one creates some new jobs for one class or one section of society, and in doing so one automatically rules out other jobs for other sections of society.

I shall carry this just a shade further. The right hon. Member for Bristol, South-East compared our economy with the economies of Japan, the United States, Germany and France, but he missed out one very important matter—the whole question of incentives. The incentives in those economies are totally different from those in ours. During the whole of the election campaign, my right hon. and hon. Friends and I faced up to this problem of creating incentives and getting down to the fact that we must encourage people to work and see that they have a better chance of taking home a bigger proportion of their wage packets at the end of the week.

There is far too much difference between the top line of the pay packet and the bottom line of the pay packet. That is why we have said that we will cut back on public expenditure—and we will—and that we would have to transfer some of the burdens from what people earn to what they spend.

That is a far more honest point of view than that of the previous Government when they were in office. On two separate occasions they put a great deal of extra surcharge on the employers' insurance contributions. The effect of that was to put up unit costs of British production. They kept down the rate of indirect tax merely to encourage imports at the expense of home production. There is no doubt at all that, over the last few years, not only have we switched the balance well away from home production; we have actually been importing other people's unemployment. That is an additional reason for getting down our own unit costs of production and, at the same time, switching the burden of tax from what people earn to what people spend.