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?
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 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.
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?
I hope that the consultation will take place on the basis of the Neddy 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.
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?
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 right hon. Gentleman still holds the record for the highest inflation rate ever reached in Britain. He and, in particular, his former Chief Secretary know 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 at 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.
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.
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.
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.
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?
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.