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Commons Chamber

Volume 86: debated on Tuesday 12 November 1985

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House Of Commons

Tuesday 12 November 1985

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

New Writ

For Tyne Bridge, in the room of Harry Lowes Cowans, Esquire, deceased.— [Mr. Foster.]

Autumn Statement 1985


That a copy of the Chancellor of the Exchequer's Autumn Statement 1985 be laid before the House.—[The Chancellor of the Exchequer.]

I call the First Deputy Chairman of Ways and Means to move the eight motions in his name.

Date when Closure claimed, and by whomQuestion before House or Committee when claimedWhether in House or CommitteeWhether assent given to Motion or withheld by the ChairAssent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that MotionResult of Motion and, if a Division, Numbers for and against

and (2) in the Standing Committees under the following heads:—

Date when Closure claimed, and by whomQuestion before Committee when claimedWhether assent given to Motion or withheld by the ChairAssent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that MotionResult of Motion and, if a Division, Numbers for and against

Delegated Legislation

Return ordered,

of the number of Instruments considered in Session 1984–85 by the Joint Committee and the Select Committee on Statutory Instruments respectively pursuant to their orders of reference, showing in each case the numbers of Instruments subject to the different forms of parliamentary procedure and of those within the Committees' orders of reference for which no parliamentary procedure is prescribed by statute, and the numbers drawn to the special attention of the House or of both Houses distinguishing the ground in the Committees' orders of reference upon which such attention was invited; and of the numbers of Instruments considered by a Standing Committee on Statutory Instruments, &c., and by the House respectively, in Session 1984–85, showing the number where the question on the proceedings relating thereto was put forthwith under Standing Order No. 79(5).—[The First Deputy Chairman of Ways and Means.]

Private Bills And Private Business

Return ordered,

Closure Of Debate Under Standing Order No31

Return ordered,

respecting applications of Standing Order No. 31 (Closure of debate) during Session 1984–85, (1) in the House and in Committee of the whole House, under the following heads:—

[The First Deputy Chairman of ways and Means.]

of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders introduced into this House and brought from the House of Lords, and of Acts passed in Session 1984–85;

Of all Private Bills, Hybrid Bills and Bills for confirming Provisional Orders which in Session 1984–85 were reported on by Committees on Opposed Bills or by Committees nominated partly by the House and partly by the Committee of Selection, together with the names of the selected Members who served on each Committee; the first and also the last day of the sitting of each Committee; the number of days on which each Committee sat; the number of days on which each selected Member served; the number of days occupied by each Bill in Committee; the Bills of which the Preambles were reported to have been proved; the Bills of which the Preambles were reported to have been not proved; and, in the case of Bills for confirming Provisional Orders, whether the Provisional Order ought or ought not to be confirmed;

Of all Private Bills and Bills for confirming Provisional Orders which in Session 1984–85 were referred by the Committee of Selection to the Committee on Unopposed Bills, together with the names of the Members who served on the Committee; the number of days on which the Committee sat; and the number of days on which each Member attended;

And of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders withdrawn or not proceeded with by the parties, those Bills being specified which were referred to Committees and dropped during the sittings of the Committee.— [The First Deputy Chairman of Ways and Means.]

Public Bills

Return ordered,

of the number of Public Bills distinguishing Government from other Bills, introduced into this House, or brought from the House of Lords, during Session 1984–85 showing:
  • (1) the number which received the Royal Assent, and
  • (2) the number which did not receive the Royal Assent, indicating those which were introduced into but not passed by this House, those passed by this House but not by the House of Lords, those passed by the House of Lords but not by this House, those passed by both Houses but Amendments not agreed to; and distinguishing the stages at which such Bills were dropped, postponed or rejected in either House of Parliament, or the stages which such Bills had reached by the time of Prorogation.—[The First Deputy Chairman of Ways and Means.]
  • Select Committees

    Return ordered,

    of Select Committees, except Business Committees, in Session 1984–85, with the Sub-Committees appointed by them; the number of the meetings of each and the number of meetings each Member attended; and the number of Members who served on Select Committees; together with the total cost (estimated where necessary) in respect of each Select Committee and Sub-Committee for the financial year 1984–85 of:—the attendance of witnesses; overseas visits; visits within the United Kingdom; specialist advisers' remuneration and expenses respectively, and other work commissioned; entertainment; the preparation for publication of the Minutes of Evidence; and printing and publishing; with so much of the same information as is relevant to the Chairmen's Panel and the Court of Referees.—[The First Deputy Chairman of Ways and Means.]

    Sittings Of The House

    Return ordered,

    of the days on which the House sat in Session 1984–85 stating for each day the day of the month and day of the week, the hour of the meeting, and the hour of the adjournment; and the total number of hours occupied in the sittings of the House, and the average time; and showing the number of hours on which the House sat each day, and the number of hours after the time appointed for the interruption of business.—[The First Deputy Chairman of Ways and Means.]

    Standing Committees

    Return ordered,

    for Session 1984–85, of (1) the total number and the names of all Members (including and distinguishing Chairmen) who have been appointed to serve on one or more of the Standing Committees showing, with regard to each of such Members, the number of sittings to which he was summoned and at which he was present; (2) the number of Bills, Estimates, Matters and other items referred to Standing Committees pursuant to Standing Order No. 79 (Standing Committees on Statutory Instruments, &c.) or Standing Order No. 80 (Standing Committees on European Community documents) considered by all and by each of the Standing Committees, the number of sittings of each Committee and the titles of all Bills, Estimates, Matters and other items as above considered by a Committee, distinguishing where a Bill was a Government Bill or was brought from the House of Lords, and showing in the case of each Bill, Estimate, Matter and other item, the particular Committee by which it was considered, the number of sittings at which it was considered and the number of Members present at each of those sittings.—[The First Deputy Chairman of Ways and Means.]

    Special Procedure Orders

    Return ordered,

    of the number of Special Procedure Orders presented in Session 1984–85; the number withdrawn; the number annulled; the number against which Petitions or copies of Petitions were deposited; the number of Petitions of General Objection and for Amendment respectively considered by the Chairmen; the number of such Petitions certified by the Chairmen as proper to be received, and the number certified by them as being Petitions of General Objection and for Amendment respectively; the number referred to a Joint Committee of both Houses; the number reported with Amendments by a Joint Committee, and the number in relation to which a Joint Committee reported that the Order be not approved and be amended respectively; and the number of Bills introduced for the confirmation of Special Procedure Orders;
    Of Special Procedure Orders which, in Session 1984–85, were referred to a Joint Committee, together with the names of the Commons Members who served on each Committee; the number of days on which each Committee sat; and the number of days on which each such Member attended.—[The First Deputy Chairman of Ways and Means.]

    Oral Answers To Questions

    Social Services

    Housing Benefit


    asked the Secretary of State for Social Services how many of the representations he has received on the Green Paper on social security dealt with housing benefit.

    Does my hon. Friend accept that the Green Paper proposals on housing benefit could lead to the withdrawal of housing benefit not only from many people who are on very small occupational pensions but from their widows? Does he agree that that would be a disincentive to thrift and that that is hardly the best background against which to sponsor the expansion of occupational pension schemes?

    I hope my hon. Friend recognises that the effect of the structural proposals in the Green Paper depends upon the final decisions that are taken and the rates that are set within whatever structure may be proposed, including income support rates. We shall endeavour to ensure that we produce a fair position, but we have to take account of the fact that the purpose of encouraging the development of occupational pensions is to reduce, in the long run, people's dependence on means-tested benefits.

    Will the Minister take any account at all of the representations that he receives?

    I hope the hon. Gentleman will accept that the only real answer I can give to him is wait and see. However, we are studying very carefully what he has said. If he has any representations that he would like to make to me beyond those that he has already made, I shall look at them with unusual care.

    Will my hon. Friend bear in mind that many pensioners who now receive housing benefit would not need to do so if the value of their savings had not been destroyed by inflation because of the policies of profligate Socialist Governments in the late 1970s?

    Does the Minister accept that suffering over housing benefit is being experienced by those in receipt of small occupational pensions and by widows? Does he also accept that the proposal to make a contribution towards rates is deeply worrying and distressing to many people who come within these income groups? Has he received many such representations, and will he consider them very carefully in the context of the White Paper?

    We shall consider all the representations that are made to us, but part of the rates problem is due to the irresponsibility of local authorities, which are conscious that very large numbers of their electorate do not pay rates.

    Can my hon. Friend say what is the current cost of housing benefit and what was its equivalent in 1979? Does he believe that this is a cost-effective way of delivering benefit to those in need?

    The housing benefit scheme can be a more cost-effective and fairer way of helping those in need. We took an important step towards that by bringing together the two systems of help with housing costs in 1982 and 1983, but that is a system upon which we can improve, and we are seeking to do so.

    Will the Minister confirm that, under his housing benefit cuts, there will be 7 million losers, 4 million of whom will be pensioners, mostly owner-occupiers with small occupational pensions? Will the hon. Gentleman now answer the question that he has signally failed to answer: how do the Government justify their view that pensioners who are widows should now be deprived of housing benefit simply because their husbands were thrifty enough in their lifetime to save for a small private pension?

    The outcome of the review obviously depends on the rates that are set and the final decision on the structure. We must bear in mind that one of the main burdens of the people to whom the hon. Gentleman has referred is, apart from the catastrophic rate of inflation over which the Labour Government presided, the extent to which this group is paying taxation. One of our objectives is to reduce the tax burden. I believe that it would be far better to leave widows and others with their own money in their own pockets than to take it from them and return it in the form of means-tested benefits.

    Hospital Waiting Lists


    asked the Secretary of State for Social Services if he will make a statement on action being taken to reduce hospital waiting lists in East Anglia.

    The Parliamentary Under-Secretary of State for Health and Social Security
    (Mr. Ray Whitney)

    The latest figures from the East Anglian region show that, in the 12 months to 30 September 1985, there was a reduction in the inpatient waiting list of 12 per cent. During 1984 the number of inpatient cases treated in the region increased by 4 per cent. The regional health authority is continuing to take urgent action to reduce waiting lists and waiting times still further.

    I thank my hon. Friend for that encouraging reply. Is he aware that, although the numbers being treated are increasing and the numbers on waiting lists are coming down, far too many people are still on waiting lists for orthopaedic surgery, especially in the Norwich area? Will my hon. Friend do what he can to expedite the appointment of an extra consultant and to bring forward plans for a second acute hospital for the Norwich area?

    I certainly recognise that point. I understand that during the next financial year a new orthopaedic surgeon for the Norwich area will be appointed.

    Is the hon. Gentleman aware that this matter is of concern not just to the Norwich area? Is he further aware that in the Peterborough area—

    I think, Mr. Speaker, that Peterborough is in the East Anglia area.

    The Under-Secretary of State may be pleased with the improvements in hospital waiting lists in East Anglia, but can he confirm that in half of the districts in East Anglia—Cambridge, West Suffolk, West Norfolk and Huntingdon—waiting lists have increased in the last six months? Is it not a fact that in Norwich—the hon. Member for Norwich, North (Mr. Thompson) is so proud of the improvements there—of 263 women waiting for urgent gynaecological treatment, 224 have been waiting for more than a month?

    If the hon. Gentleman consults the details put out by the East Anglia regional health authority, he will see that there has been a significant improvement. Of course, that improvement has been patchy. The regions recognise the need to concentrate on the weaker areas, and that is what they are doing. They have taken a number of steps following consultations with my hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten), who previously occupied my post, to ensure that those improvements are put in hand.

    Does my hon. Friend welcome, as I do, the appointment of a district general manager to the Norwich health authority and other district general managers in the East Anglia area? Does he agree that those appointments will undoubtedly secure the more efficient running of all the health authorities in East Anglia, and in other parts of Britain, which will result in a shortening of waiting lists and more efficient management of all the resources of the East Anglia health services?

    I am happy to agree with my hon. Friend. The post-Griffiths management structure, which is now being put into place, will show a remarkable return in terms of patient care for the significant increase in real spending that has been put into the NHS.

    Limited List Prescribing


    asked the Secretary of State for Social Services whether he will make a statement on the operation of the limited list for prescribing drugs under the National Health Service.

    The selected list scheme has been in operation since 1 April, and the scheme is running successfully.

    Is my right hon. Friend aware that I am still receiving letters from constituents and their general practitioners complaining that they cannot get the drug that they need and saying that the National Health Service substitute is not satisfactory? Will he have another go at trying to persuade the British Medical Association to agree to a local appeal procedure?

    All the evidence that we have shows that the scheme has settled down. As my hon. Friend will be aware, we put forward proposals for an appeal mechanism for doctors. They were rejected by the General Medical Services Committee, which put forward no alternative. I shall, of course, bear in mind what my hon. Friend has said, but, on present evidence, I am not sure that any further action is required.

    How many drugs has the Secretary of State allowed to be included on the limited list for each month since April 1985? What has been the reduction in the amount of savings expected? I appeal to him, once more, to place the new mucolytic drugs on the list.

    I cannot give the hon. Gentleman the detailed information that he requires. In general, we thought the savings on the drugs bill would be about £75 million a year, and that has proved to be the case. The hon. Gentleman will be aware that mucolytics were studied by the independent review committee. That committee made recommendations on two matters, but, in general, it said that they had no proven general therapeutic value in the treatment of chest conditions. We have accepted its independent advice.

    Does my right hon. Friend agree that to achieve continued improved patient care it is essential that we have an efficient and effective use of resources, such as the long overdue introduction of the limited list scheme?

    Yes. The scheme has proved to be a sensible way of saving money on the drugs bill and ensuring that extra resources go on the health services. The Government have sought to use the resources available to the National Health Service to the best effect. One of the results is that the NHS is now treating more patients that than at any time in its history.

    Why does the Secretary of State allow the GMSC unilaterally to prevent other doctors from using the appeal procedure? Will he implement his offer to the doctors to allow those general practitioners who wish to prescribe by the appeal system to do so?

    In view of the history of the selected list and the controversy that it aroused in the medical profession, it seems rather foolhardy to seek to impose an appeal mechanism on the medical profession, which does not appear to want it.

    The Opposition said that the limited list would be a disaster, and that was an understatement. It is causing grave anxiety to patients, constituents and doctors. The Minister keeps saying that the list is working. Why does the lady at the other end of this Corridor keep sending letters to me saying that the Minister cannot reply to the complaints in less than three months because he is receiving too many letters about them? How can it be working in that case?

    The hon. Gentleman talks about statements that I have made. He has made a complete mis-statement of the position. Despite early controversy, the selected list has settled down, is working well and is producing sensible savings for the Health Service. I should have thought that that is what the hon. Gentleman would want to see.

    Is my right hon. Friend aware that many general practitioners are delighted with the new selected list because they now find that the patients of their weak kneed brethren are no longer doing the prescribing? Instead, those doctors are prescribing the most cost-effective drugs.

    Opinion inside the medical profession on this issue has undoubtedly changed. Another benefit has been that some drug prices have come down appreciably as a result of the policy. Again, I should have thought that that was something that hon. Members on both sides of the House would want to see.

    How many members of the limited list advisory and monitoring committee still have financial interests in the manufacture of drugs being prescribed? Is the Secretary of State satisfied that, with the number of members who have a financial interest, he is receiving disinterested advice?

    I am satisfied that it is an independent committee and that the advice being given is entirely disinterested and independent. I would not have set up the committee in any other way.



    asked the Secretary of State for Social Services if he will now issue fresh guidelines to doctors regarding the prescription of oral contraceptives to girls below the age of consent.

    The existing guidance is being reviewed, taking into account the detail of the House of Lords judgment and the wide range of views expressed on this issue.

    Is my right hon. Friend aware that the recent narrow Law Lords decision is highly damaging to family relationships and that it has virtually abolished the age of consent? It means that a few doctors will shell out the pill like jelly babies to very young girls. Will he issue guidelines seeking to restore the status quo ante the Law Lords decision?

    I do not accept the exaggerated comments of my hon. Friend. His comment about jelly babies is a slur upon the medical profession and upon others involved. As I have said, the existing guidance is being reviewed, taking acount of the Law Lords judgment and of other views that have been expressed.

    Is the Minister aware that the BMA has already issued careful guidance on this matter to all its members? We have no reason to doubt that the members of the BMA are adhering to that guidance. Bearing in mind that the overwhelming majority of girls who seek help from their general practitioner are already in a relationship, is it not better that they should get advice about how to avoid unwanted pregnancies, rather than bring into the world children they do not want and with whom they canot cope?

    The fact that the existing guidance stresses the quite exceptional circumstances in which doctors or family planning clinics should act in the way described underlines the importance of obtaining parental consent whenever possible. I found considerable support for the five Fraser points, if I may so describe them, contained in the House of Lords judgment. I hope that they will be reflected in the revised guidance that will follow the review.

    Will my right hon. Friend resist what some may see as an automatic next step following the Law Lords decision—namely, a lowering of the age of consent? Will he bear in mind that young girls are just as much, if not more, in danger today than they were in Victorian times when the law came into effect?

    Questions about the age of consent are for my right hon. Friend the Home Secretary. I know of no proposal whatever to seek changes in the law to that effect. Hon. Members on both sides of the House will be concerned to see that the figures show that there were more than 4,000 abortions for girls under 16 in 1984, and equally concerned to see from the figures of the family planning clinics that 17,000 girls received advice and help, some without parental consent. Both those figures should generate concern on both sides of the House.

    Hospital Hygiene


    asked the Secretary of State for Social Services if he has any proposals to seek to improve hygiene in hospitals.

    In view of the importance of hospitals maintaining a good standard of hygiene, I have called for urgent action by health authorities concerned in response to recent criticisms of hospital kitchens. The scope for further measures is under urgent consideration.

    I am grateful to the Minister for that reply. Given that 10 per cent. of patients acquire infectious diseases while resident in hospital, and in view of recent critical reports of wards and hospital kitchens, does the Minister not think that it is time hospitals were excluded from the exemption from prosecution which they currently enjoy?

    I certainly recognise the concern of those who pick up infections in hospital. The first priority must be to take action to deal with dirty, bug-infested kitchens or other areas in hospitals. As I have indicated, the matter of Crown immunity is being considered.

    In view of the recent experience of legionnaire's disease in Stafford, and now again in Glasgow, will my right hon. Friend assure me that proper measures are being taken to ensure that matters of this kind are adequately covered in future?

    Guidance has already been issued concerning legionnaire's disease. I think that the whole House would wish to express its concern and sympathy and condolences to the relatives of those who have been affected by the outbreak in Glasgow. This is a matter primarily for my right hon. Friend the Secretary of State for Scotland.

    Is the Minister aware that surveys show that 60 per cent. of National Health Service hospitals have food hygiene standards below the Government's food hygiene regulations, and that 16 per cent. would warrant prosecution were it not for Crown immunity? When I took a deputation to the Minister recently asking for the abolition of Crown immunity, I gained the impression, rightly or wrongly, that he was deterred by the financial considerations. Has the Minister made any costing of the abolition of Crown immunity? If so, what costing has he made?

    The right hon. Gentleman must have come to the meeting with his delegation already under that impression, because nothing that I said to him when we met at the House a while ago could have sustained such an impression in his mind. I have indicated that matters connected with Crown immunity are under consideration. A general change in Crown immunity would require primary legislation.

    Will my right hon. Friend reject the big bang theory that would be involved in the abolition of Crown immunity, and at the same time provide opportunities for those in charge of hospitals and other public buildings to reassure the public of the generally very high standards of hygiene that currently exist?

    That would generally be true. I repeat that Crown immunity should not and must not be used by those responsible for deferring or postponing action to deal with unhygienic conditions.

    With the further deaths in Glasgow from legionnaire's disease, how closely is the Minister working with his colleagues in Scotland and Wales to combat this insidious problem?

    As I think the hon. Gentleman knows, there is an inquiry into the whole matter. That inquiry, which has already produced an interim report, will be looking very carefully at any lessons that can be learnt from the unfortunate and tragic occurrence in Glasgow.

    Resource Allocation


    asked the Secretary of State for Social Services what basis of population statistics is used for the calculation of allocation of resources to regional health authorities.

    Resources are allocated to regional health authorities using broadly the methods recommended by the resource allocations working party. However, the basis of population statistics has been revised and from 1985–86 onwards allocations are calculated on the basis of population projections for the year of allocation, rather than on the population estimates for past years as recommended by the working party. This new approach is thus more sensitive to the needs of regions with rapidly growing or declining populations.

    I am most grateful to my right hon. Friend for his answer. It will be good news to growing regions, such as the Oxford health region, in which my constituency, Kettering, lies.

    Will my right hon. Friend undertake to look at the morbidity rates which are used in the RAWP formula for the allocation of resources between the different regions of the country?

    I gladly give that undertaking, and with my Treasury experience behind me, I add "with no commitment."

    In addition to the criteria that the Minister uses in terms of population, what consideration is being given to the incidence of diseases in certain regions, particularly those with high unemployment and poverty?

    There are several complicated matters of which account is taken in the allocation of resources. I shall write to the hon. Gentleman, giving him full details.

    Is the Minister basically satisfied that the RAWP formula can work at a time of economic recession, which the National Health Service is having to shoulder?

    "Recession" is a curious word to use when, over the lifetime of the Government, there has been a growth in resources in real terms of over 20 per cent.

    Sick Pay


    asked the Secretary of State for Social Services if he will make a statement on the minimum hours and earnings threshold for entitlement to statutory sick pay.

    The Parliamentary Under-Secretary of State for Health and Social Security
    (Mr. John Major)

    The earnings threshold for entitlement to statutory sick pay is the same as that governing liability to pay national insurance contributions, currently £35·50 a week. There is no qualifying rule about a minimum number of hours.

    I congratulate my hon. Friend on his first appearance on the Front Bench to answer questions. I thank him for his reply. Can he comment on the circumstances of an older employee in my constituency on £35 per week, but with some savings, who finds himself ineligible either for unemployment benefit or for sickness pay?

    I am grateful to my hon. Friend for his kind words. In the case of the man that he mentioned, if his earnings are below £35.50 he will have no entitlement to statutory sick pay. He may, of course, have an entitlement to sickness benefit, which would depend on his previous national insurance contributions. If, however, he falls outside statutory sick pay and state sickness benefit, he may have a residual entitlement to supplementary benefit.

    "Reform Of Social Security"


    asked the Secretary of State for Social Services how many representations he has received regarding his Green Paper "Reform of Social Security."

    Is my right hon. Friend aware that the arguments for reforming the social security system, that is the need to simplify it and to make it more cost-effective, are just as strong today as they were when he commenced his reviews 18 months ago? Accordingly, will he undertake not to be dissuaded from achieving those twin objectives in the forthcoming White Paper by the representations that he may have received?

    Indeed, in the responses to the consultative paper very few people are saying that social security should not be reformed. The question is not whether, but how, it should be reformed. We have set out our proposals in the Green Paper. We look forward at some stage to the hon. Member for Oldham, West (Mr. Meacher), who leads for the Opposition, having the courage to set out his proposals.

    Can the Secretary of State give the House the assurance that he will take note of the representations from people, particularly women and manual workers, who feel that they will suffer considerably when SERPS is either phased out or abolished? They are the people who stand to lose most. Will he give an assurance that he will safeguard their position?

    I certainly give the assurance that I will consider the responses on the state earnings-related pension scheme, but again the hon. Gentleman has to accept that, with the exception of the eccentric hon. Member for Oldham, West, virtually no one outside the House says that SERPS should stay as it is at the moment.

    Does my right hon. Friend agree that the main danger to private pension schemes would arise if, in the future, the investment in pension funds were directed into a national investment bank? Would that not jeopardise the millions of private pensioners? Surely that must lead to the conclusion that under no circumstances must the Labour party be allowed to implement that policy.

    My hon. Friend is absolutely right. The policy put forward by the Labour party on a national investment bank and on pensions is totally against the interests of occupational pensioners. The message should go out that those proposals would damage occupational pensions and the interests of occupational pensioners.

    In the light of the volume and content of the representations so far received, when the Government produce their White Paper, will one option be to reconsider the whole process until they have a mandate from electors?

    We shall put forward the proposals in the White Paper on the basis of what is set out in the Green Paper and the result of the consultation process. It is right to consult the public on the proposals, but we also believe strongly that now is the time to take action on reforming social security.

    Does my right hon. Friend acknowledge, as Lord Beveridge did, the value of voluntary organisations working within the welfare state to provide services for those in need? Will he give serious consideration to continuing the "Opportunities for the Volunteering" scheme when it expires at the end of next March?

    That has been a successful scheme. I shall want to consider it in the light of its success and of what my hon. Friend has said.

    Will the Secretary of State confirm that among the many representations that he has received, some of the greatest concern has been expressed at his proposals for the social fund, which—in demanding that his staff choose whom they will help from many who have proven need—not only put his staff in the firing line, but return us straight to the Victorian concept of the deserving and undeserving poor?

    The hon. Lady is entirely wrong about that. She should read what the Social Security Advisory Committee says about that in its entirety. As I think the hon. Lady understands, the present supplementary benefit system, which employs about 40,000 staff trying to administer it, is in danger of breaking down because of the organisation and structure of supplementary benefit. We have proposed a sensible way forward, which enables the position of individual claimants to be better and properly considered.

    Economic Deprivation


    asked the Secretary of State for Social Services what action he intends to take in regard to alleviating poorer people's economic deprivation in the near future.

    The Government are pledged to protect the retirement pension and associated long-term benefits against rising prices, and have successfully done so. Ultimately, however, improvements in living standards depend upon economic growth and the control of inflation.

    Does not imposing additional charges, partly through rates and mortgages, on those in receipt of supplementary benefit create further hardship for those who are already deprived?

    We believe that ultimately the best way to deal with these matters is to put money in people's pockets so that they may meet the charges. The hon. Gentleman picks a curious time to raise that criticism. He will be aware that a substantial uprating of benefits of around 7 per cent. is taking effect later this month.

    Does my hon. Friend agree that the object of the review of social security is to ensure that benefits go to those most in need, and that the success of the review will be judged against that criterion?

    My hon. Friend is right. The White Paper which my right hon. Friend the Secretary of State will introduce shortly will set out the system which, we believe, will direct resources to those who most need them. I think that that will be a welcome innovation.

    The Secretary of State was studiedly uncommunicative yesterday, as he has been today, about his detailed intentions for the future of SERPS. Can the Minister give a categorical assurance that there is no intention of amending SERPS so as to drop the rule under which every individual's pension is based on his or her best 20 years' earnings? Is he aware of the importance of that rule to very large numbers of severely disabled people and of the concern about its future among the organisations of the disabled?

    The right hon. Gentleman says that my right hon. Friend the Secretary of State was uncommunicative yesterday. That may or may not have been so, but I have nothing to add to what he said.

    Board And Lodging Allowance


    asked the Secretary of State for Social Services if he will make a statement on board and lodging allowances for under-25-year-olds.

    I refer my hon. Friend to the announcement made by my right hon. Friend the Secretary of State in his speech to the House yesterday.

    Will my hon. Friend remind the House of the amount of the allowance? Will he tell the House what happens when a young person on the allowance finds a job, which he reports to the social security office?

    The current limits on board and lodging payments range from £45 a week in some areas to £70 a week in others, to which must be added the personal expenses allowance of just under £10. The plain fact is, I am afraid, that that means that large numbers of young people could not afford to pay for the same accommodation if they were in work, which is thoroughly unsatisfactory and one reason why we have taken action.

    Does the Minister recall that it was a constituent of mine who took the Government to court, when the old regulations were ruled unlawful? As experts have already commented that the new regulations will probably meet a similar fate, will the Government withdraw them and come back to the House with primary legislation?

    I see no reason to withdraw the regulations that have just been laid, because, as I understand it, they meet exactly the points that were raised in the High Court case. The basis of that court case was that the board and lodging limits and the time limits, had they been specified in the regulations, would have been lawful. That is the basis on which we have acted.

    Is my hon. Friend aware that his swift action in investigating severe overcrowding and allegations of lodging allowance fraud in Edinburgh has been warmly welcomed by my constituents? Would it not be helpful to the recipients of lodging allowances and the taxpayer, as well as eliminating racketeering, Rachman-like landlords, if a simple form of local licensing were introduced for the premises concerned?

    My hon. Friend will understand that I cannot speak so readily for the position in Scotland, but local authorities in England and Wales have power to take steps to license houses in multiple occupation, and we encourage them to use that power. The point that concerns me is that we must ensure that the social security system does not virtually encourage the kind of exploitation and abuse about which he is rightly concerned.

    Will the Minister recognise that it is wholly invidious to expect Members of Parliament to vote on new board and lodging regulations which are now effectively sub judice? Is it not also improper for the Government to try to presume upon the decision of the Court of Appeal, especially since they have twice now been forced to back down because of-illegalities? Will he say why the Secretary of State is so obsessed with pursuing tiny amounts of alleged board and lodging fraud, which he then fails to prosecute, when at the same time the Government are so lenient about tax fraud, now running on a scale at least 100 times greater?

    The hon. Gentleman is doing both himself and his party a disservice in talking about tiny amounts of fraud, when it has been discovered in one of our local offices that over half those claiming benefit were not resident at the address for which they were claiming. If that is to be the approach of the Opposition, heaven help the social security bill which they will face if they ever get the chance to run the system.

    Local Community Hospitals


    asked the Secretary of State for Social Services if he will make a statement on Government policy towards local community hospitals.

    Community hospitals make an important contribution to the National Health Service. Their place in the pattern of district services is primarily a matter for health authorities to decide, in consultation with others concerned at local level, including the public and medical practitioners.

    Will my hon. Friend look sympathetically at the need to retain St. Mary's hospital, Hampton?

    I recognise my hon. Friend's concern. I understand that the plans of the district health authority point to the possible closure of St. Mary's at some time in the next 10 years. I can assure my hon. Friend that, before any final decision is made, full cognisance will be taken of local opinion.

    Will the Minister accept the need for a little more enthusiasm towards local community hospitals? Do they not provide excellent value for money and should he not be so financing the health boards that they are able to keep these hospitals open?

    We certainly accept the contribution that community hospitals make, but decisions of the effective deployment of local health services, including community hospitals, must be a matter in the first instance for the local health authority.

    Before the hon. Gentleman makes rash promises about local community hospitals, will he ensure that all hospitals are fully equipped to deal with situations that need to be dealth with?

    The 20 per cent. increase in real terms in resources allocated to the National Health Service since we came to power means a steady improvement in the quality of service and equipment in our HNS hospitals.

    Drug Prescriptions


    asked the Secretary of State for Social Services if he will seek reductions in the quantity of drugs prescribed by doctors.

    With the support of the British Medical Association, doctors are already encouraged to restrict the amount they prescribe on any one occasion, in the interests of both economy and safety. There is no evidence that amounts prescribed are generally excessive, but, following the recent successful conference on prescribing, ways in which doctors may be further encouraged to prescribe both economically and effectively are being explored with representatives of the profession.

    Now that my right hon. Friend has restricted the range of drugs prescribed, will he look for the much greater savings to be made from reducing the huge quantity of drugs in circulation? Is he aware that hundreds of millions of pounds' worth of drugs a year are thrown away or wasted? Will he tell the House what practical steps he will take to make some doctors reform their wasteful prescribing habits?

    The prescribing habits of doctors are monitored, and the family practitioner committees have the power to go to those doctors who appear to be prescribing excessively and discuss the matter with them.

    Blood Plasma


    asked the Secretary of State for Social Services if he will make it his policy to ensure that the United Kingdom is self-sufficient in the supply of blood plasma.

    The Government are already committed to achieving self-sufficiency in blood products. When the new plant at Elstree is fully commissioned by the end of 1986, the Department will ensure that regions collect enough blood plasma to achieve this.

    That reply will be warmly welcomed. However, what steps is my hon. Friend taking to encourage further blood donors to give their services?

    The fact of my hon. Friend having raised the matter today—which I endorse—will, we hope, help to encourage as many people as possible to come forward to offer their blood to the transfusion service.

    Prime Minister



    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. I was present at Victoria station to meet the Emir of Qatar at the start of his state visit to this country, and this evening I shall attend the state banquet given by Her Majesty the Queen in honour of the Emir of Qatar.

    Given the welcome news this morning that Lord Davidson, in the Court of Session in Edinburgh, ruled that the assets of the Trustee Savings Bank are indeed the property of the Scottish depositors, and given that my noble Friend Lord Taylor successfully moved an amendment to the Trustee Savings Banks Bill in another place on behalf of the alliance, seeking to protect those and other interests, will the Prime Minister confirm that the Government, in the light of that ruling, will not now seek to introduce any orders to name a vesting day?

    We shall be considering the judgment very careful indeed, and will make a statement when we have done so.

    Is it not depressing that students at Manchester university should have attacked and abused the Minister of State, Home Office, my hon. and learned Friend the Member for Ribble Valley (Mr. Waddington)? Does my right hon. Friend agree that it is about time that people inside and outside universities stood up to be counted on whether they are prepared to defend the right of free speech?

    Yes, I agree with my hon. Friend. Universities are places where, above all, free speech should be honoured, not prevented.

    Reverting to Lord Davidson's judgment, may I ask the Prime Minister to give an assurance that, in her determination to press ahead with the privatisation programme, she will seek to sell only those items to which she has a valid title? Will she also undertake, in reviewing the judgment, to abandon the attempt to deprive the depositors of the TSB of their property?

    The right hon. Gentleman seeks an instant reply to a judgment which we have not yet seen in full, but, obviously, the result of which we know. He must agree that it is better to see the judgment before commenting on it.


    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    I refer the hon. Gentleman to the reply that I gave some moments ago.

    Will the Prime Minister tell the House which she thinks will contribute most to improving presentations and propaganda for the Tory party, her recent appointment of Lord Young as Secretary of State for Employment, or her earlier appointment of his brother, Mr. Stuart Young, as chairman of the governors of the BBC?

    Will my right hon. Friend consider changes in the way in which accident compensation is awarded, so that people such as my constituents from St. Michael's, who received appalling injuries in the explosion at Abbeystead, and their dependants, who have already been waiting for 18 months without receiving a penny compensation, do not have to go through the courts to establish negligence so as to receive compensation?

    I take note of what my hon. Friend says. I had the impression that the matter was still sub judice, but I shall consider it further.

    The Prime Minister sought last night to give the impression that she is a recruit to renewal. Does that mean that her White Paper plans, published earlier this year, to cut expenditure in investment on construction, vehicles, plant and industrial support by 15 per cent. over the next two years have been abandoned? If it means that, we are delighted. If not, will she admit that last night she was up to her usual tricks of fabrication?

    The right hon. Gentleman is talking nonsense. Had he listened to the replies that I have given from the Dispatch Box twice a week during almost every week the House has been sitting, he would have heard me say that, last year, investment was at a record high of £55 billion, with the private sector outpacing the public sector. That is still true. I just wish that he had heard me say it about 20 times.

    The Prime Minister never admits that manufacturing investment this year is still 20 per cert. in real terms below what it was in 1979. Does she share her Government's lack of concern for manufacturing investment? Does she believe that our future lies, as the Secretary of State for Trade and Industry said, in tourism? Will she now answer the question? Will she abandon those policies, or will she go ahead with cuts in construction, investment, plant, vehicles and industrial support during the next two years? If so, can she explain to the country how we can possibly afford it?

    What matters is the return that one secures on investment. Because we have higher profits, we are now getting higher investment. The right hon. Gentleman always tries to ignore investment in the extractive industries, such as coal, which do not come under manufacturing industry. I also note how much he tries to disparage tourism. What matters is total investment, which is at an all-time high, and which we expect to remain high in the coming year. I am so sorry that he tries to run down tourism and other industries. We do not.


    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    Will my right hon. Friend join me in congratulating the people of Thamesmead on their recent vote to establish a community trust to run the town after the abolition of the GLC, and their complete rejection of a takeover by Left-wing Greenwich council?

    The vote by the people of Thamesmead was very significant. They have chosen a route that gives them far more control over their futures. That is absolutely correct, and I congratulate them on their choice.

    Before the Prime Minister makes a statement on the Trustee Savings Bank, Scotland, will she bear in mind the fact that to proceed with legislation in the light of the judgment in the Court of Session would be to expropriate assets without compensation? In the light of the assurance that she gave to me on 23 July that the findings of the Scottish court would be obeyed, will she assure the House that she will not instruct an appeal to the English House of Lords?

    Of course, the law must be upheld, but one has a right to all the remedies that the law proposes. I hope that the right hon. Gentleman is not asking for instant comment. He and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) would be the first to condemn that, and would think it right to consider the judgment before reaching decisions.


    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    I refer the hon. Gentleman to the reply that I gave some moments ago.

    Will the Prime Minister drag herself away from all these banquets to consider for a few moments that a quarter of her Government's £100 million support for Johnson Matthey Bankers could provide security for tens of thousands of working people in Liverpool, who do not aspire to £400,000 retirement homes in Dulwich, but only to decent family homes with gardens? Is it not obscene that the Government should prepare for a lock-out of council workers in Liverpool, while at the same time running a gravy train for their friends in the City?

    The hon. Gentleman is trying to compare two completely different things. My right hon. Friend the Chancellor has made several statements and has answered many questions about Johnson Matthey Bankers. The matter is in the hands of the police, and it is for them to decide what to do. The people who are running Liverpool have brought it to its present disgraceful state.

    Following my right hon. Friend's excellent speech at the Mansion House yesterday evening, does she agree that, from a total public expenditure of £ 139 billion this year, about £24 billion will be spent on capital projects? That is about 17 per cent. of our total expenditure, which is not a bad record. Does my right hon. Friend agree that that percentage can be increased only in three ways: by cutting other public expenditure, by increasing the public sector borrowing requirement or by increasing taxes?

    I am grateful to my hon. Friend. I believe that, at last, people are beginning to realise the amount that is going in capital expenditure by the Government. Had they listened earlier, they might have got the message earlier. If we want more capital expenditure, it must come either by reducing current expenditure or by raising taxation, which would be most unwelcome to most people, especially those on below average earnings. Increased borrowing would increase interest rates, which also would be unwelcome to industry, which is trying to start up afresh.

    Will the Prime Minister take this opportunity to assure my constituents, who have survived numerous terrorist attacks launched on them from the territory of the Irish Republic, that she still considers them to be as British as her constituents and that she has no intention of diminishing that status by giving the Government of the Irish Republic any rule in the internal affairs of the United Kingdom?

    Northern Ireland is a part of the United Kingdom and will remain a part of the United Kingdom unless the majority of people in Northern Ireland wish otherwise. Negotiations are still under way with the Republic. Any result will still be in accordance with the rule that decisions north of the border are taken by the United Kingdom Government, and those south of the border are taken by the Government of the Republic of Ireland.


    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    I refer the hon. Gentleman to the reply that I gave some moments ago.

    Does the Prime Minister agree that, when she was Secretary of State for Education and Science, she believed that one of the best investments for a nation was a first-class education system? Will she confirm that, while she has been Prime Minister, the proportion of gross domestic product spent on education has fallen from 4·3 per cent. to 3·5 per cent., which means that education has lost about £2 billion—more than enough to have saved any cuts in higher education, to have protected student grants and to have ensured that teachers could be paid a professional wage?

    But, since that time, the number of pupils in schools has fallen by about 1 million. One would therefore expect the proportion of gross domestic product to fall. However, the amount spent on each pupil has never been higher than under the present Government and the proportion of teachers to pupils has never been higher than under this Government. One is entitled to say that now, instead of spending more money, we must try to get better value out of the money that we are spending.

    Has my right hon. Friend seen the latest quarterly report of the Confederation of British Industry, which says that the employment prospects of small manufacturing businesses are the brightest for the past decade? Does that not show that the manufacturing sector has as great a role to play in sustaining our economic growth as the services sector?

    I have seen the CBI's latest report. I believe that employment prospects are better, especially as, in the past two years, some 650,000 jobs have been created—the highest rate of job creation since 1973. I see that the OECD is forecasting that Britain will create more jobs than other OECD countries.


    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    I refer the right hon. Gentleman to the reply that I gave some moments ago.

    The Prime Minister spoke last night about the construction of new hospitals, but is she aware that there is a great scandal in most of our hospitals, new and old, because of dirty and unhygienic conditions, which are damaging many patients? Is she aware that those conditions are caused by negligent health authorities which are flouting the law by hiding behind Crown immunity? Will she consider abolishing Crown immunity to get rid of those conditions?

    I think that on reflection the right hon. Gentleman will see that he has made an unwarranted slur on the vast majority of our hospitals, which are extremely well run and clean. There are some problems. He has asked me before whether Crown immunity should be lifted in regard to health and safety provisions. No decision has been made. My right hon. Friend is still considering the matter.


    asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

    Is my right hon. Friend aware that, despite massive regional aid, there are many parts of the north of England where there is grave concern about the low levels of private investment relative to the south-east? Will she give an assurance that all relevant Government Departments will continue to take actions designed to prevent the growth of the dangerous imbalance that is developing?

    My hon. Friend will be aware that in July my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) was being quite optimistic about Bolton and saying:

    "the success of Government policies in Bolton is evidenced by new factories and shops as well as a new road, a new railway and a new hospital to be built".—[Official Report, 11 July 1985; Vol. 82, c. 1260.]
    We are trying to increase private investment, and the north-west has received about £80 million in regional development grant in 1984–85. That is meant to help investors to go to that area and to build new factories and new commercial offices.

    Questions To Ministers

    3.30 pm

    On a point of order, Mr. Speaker—

    Does the right hon. Gentleman's point of order arise directly from Prime Minister's Questions?

    My point of order arises directly from one of the Prime Minister's replies. You will have heard the Prime Minister say, Mr. Speaker, that she wished to reflect on the judgment in the Court of Session this morning. May we take it that, because of that reflection, the Treasury press notice on the tapes announcing an appeal is incorrect?

    That is not a matter for me. We move on to the Chancellor of the Exchequer's statement.

    I think that the hon. Gentleman's point of order does not arise from Prime Minister's Questions.

    My point of order arises from Question Time a fortnight ago, Mr. Speaker—

    On a point of order, Mr. Speaker. In one of her replies today, the Prime Minister said that a Minister would be making a statement on the Trustee Savings Bank—

    Order. We cannot have an extension of Question Time. The House does not want that and we have a busy day ahead of us. It is not a matter for me in any event.

    On a point of order, Mr. Speaker. In reply to my question the Prime Minister said clearly that the Government were reflecting on the judgment of the Court of Session. My right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) has made—

    Order. The hon. Gentleman has said that the Prime Minister or the Government are reflecting. He did not say that I was reflecting. The hon. Gentleman must raise a point of order that I can answer.

    If the hon. Gentleman's point of order arises directly from Questions today, I shall take it.

    The issue is quite simple for you, Mr. Speaker. If the Prime Minister has misled the House, is there not an obligation upon you, Mr. Speaker, to ensure that the right hon. Lady has an opportunity to put the facts straight?

    Autumn Statement

    3.33 pm

    With permission, Mr. Speaker, I should like to make a statement.

    I am laying before the House today an autumn statement which brings together the Government's outline public expenditure plans, proposals for national insurance contributions next year, and the forecast of economic prospects for 1986 required by the Industry Act 1975.

    This year's autumn statement contains considerably more information than its predecessors. It breaks new ground by providing a forecast of the public expenditure outturn for 1985–86 for each Department, and the plans not just for the year immediately ahead but for each of the next three years. Both these innovations meet specific requests from the Select Committee on the Treasury Civil Service and I hope that they will be welcomed by hon. Members.

    The outturn for this financial year is expected to be the same as set out in the Budget, that is, £134 billion. After allowing for inflation, this is lower than last year, which bore the brunt of the public expenditure cost of the coal strike.

    The Government will continue to maintain firm control over public spending. Following this year's review, the planning totals for 1986–87 and 1987–88 will be held to the levels set out in the Budget —£139 billion and £144 billion, respectively. For 1988–89 the total has been set at £149 billion. Over these three years public spending in real terms is expected to be broadly flat at very slightly below this year's level. As a percentage of national output it will continue to decline as it has since 1982–83. By 1988–89 it should be back to its lowest percentage since 1972–73.

    In order to meet contingencies, the plans contain large reserves, rising from £4½ billion in 1986–87 to £8 billion in 1988–89. The reduction in the reserve for 1986–87 as compared with the provisional reserve for that year, which I announced at the time of the Budget, chiefly reflects the fact that the passage of time allows part of the reserve in any given year to be allocated to individual expenditure programmes as their costs become known more accurately. But the £4½ billion reserve for the year immediately ahead remains a substantial figure.

    Although I expect the planning total for 1985–86 to be the same as I did at the time of the Budget, the public sector borrowing requirement—subject to the usual margin of uncertainty at this time of year—is forecast to be about £ 1 billion higher—some £8 billion rather than £7 billion. This is due to lower sterling oil revenues. But even at £8 billion the PSBR would be the smallest that it has been as a percentage of GDP since 1971–72.

    The PSBR would, of course, have been running at a higher level than this were it not for the proceeds from privatisation, to which I will turn in a moment. But even without the privatisation proceeds, this year's forecast PSBR would still be the smallest as a percentage of GDP since 1971–72.

    The Government's privatisation programme is now getting into top gear and will continue for many years to come. [Interruption.] I am glad to see that the Opposition welcome that. I cannot stress so strongly the importance of this programme—now being emulated throughout the world—as a fundamental objective of Government policy. The transfer of state-owned businesses to the free enterprise sector of the economy brings enormous long-term benefits to the nation as a whole in terms of greater concern for the customer and increased efficiency. It also provides the opportunity for a massive boost to wider share ownership, among both the public in general and the employees of those great enterprises in particular.

    The increased pace of privatisation means that the proceeds from this programme will rise substantially from £2½ billion this year to £4¾ billion in each of the next three years. In particular, the planned flotation of the British Gas Corporation is included for the first time. At the same time, however, there have been increases in a number of public expenditure programmes, so that the overall planning totals have remained unchanged.

    However, this needs to be seen in perspective. Even if the proceeds from privatisation were to be ignored altogether, the public expenditure planning total would still be broadly flat in real terms, at less than 1 per cent. above this year's total, and public spending would still be on a steadily declining path as a percentage of GDP, reaching by 1988–89 its lowest level since 1972–73.

    The annual review of public spending provides an opportunity to reconsider priorities and adjust the balance between programmes. While some programmes this year have been held back, it has been possible to make significant additions to others.

    There will be increased spending on the National Health Service over previous plans of £250 million in 1986–87 and £300 million in 1987–88. On top of this, health authorities are able to spend the savings from their cost improvement programmes, which are expected to amount to £150 million this year and still more in future years. This should enable health authorities to meet demographic pressures and to deliver improvements in services as well.

    Total public sector provision for housing is being increased by £220 million net of receipts in 1986–87 and £200 million in 1987–88, and the housing plans now provide for some £3¼ billion of capital spending next year. Within this total, the Government believe that there should be a substantial shift in priorities in favour of renovation of the existing public sector housing stock.

    An extra £54 million in 1986–87 and £71 million in 1987–88 is being made available for capital expenditure on national and local roads.

    Just over £1 billion is being added to the social security programme for 1986–87, largely as a result of the 7 per cent. increase in benefits taking effect this month. Expenditure in the subsequent years of the survey period is subject to decisions on the Government's social security review, on which a White Paper will be published shortly.

    Additional provision has been made under the law and order programme to allow local authorities to direct extra spending towards the police.

    For defence, the provision is unchanged. After the substantial real increases in spending since 1978–79, from which the defence programme will continue to benefit, the emphasis must now switch to improving our defence capability through greater efficiency and value for money, especially in procurement.

    On employment, there were large additions in the Budget to fund an expansion of the youth training scheme and the community programme. In this survey, a number of new initiatives have been agreed, but savings are to be made by a reduction in payments from the redundancy fund. My right hon. and learned Friend the Paymaster General will be making a statement giving further details later today.

    There have been significant improvements in efficiency and value for money in many programmes. It is a great mistake to fall into the trap of measuring public expenditure programmes solely in terms of the money put into them: it is improved output that matters.

    Further details of these and other changes are contained in the autumn statement itself, and of course full details, together with information on running costs and manpower, will be given in the public expenditure White Paper to be published early in the new year.

    I now turn to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund.

    The lower earnings limit will be increased next April to £38 a week, in line with the single person's pension, and the upper earnings limit will be similarly increased to £285 a week, broadly in line with earnings.

    I announced in the Budget reduced rates of contribution for the lower paid and their employers—5 per cent. for those earning up to £55 a week, 7 per cent. for those earning up to £90 a week and 9 per cent. for employers of workers earning up to £130 a week. These took effect at the beginning of last month and are already starting to provide welcome assistance to the low paid and their employers, and a stimulus to the employment of the young and unskilled. The limits for these reduced rate bands will also be increased from April, in line with the lower and upper earnings limits, to £60, £95 and £140 a week, respectively.

    There will be no change in the main class 1 contribution rates, which will remain at 9 per cent. for employees and 10·45 per cent. for employers. This is the third year running in which national insurance contribution rates have been held constant, despite a growing number of pensioners and the substantial uprating of benefits taking effect later this month.

    My right hon. Friend the Secretary of State for Social Services will this afternoon announce details of these proposals, and will lay before Parliament the necessary order and the accompanying report by the Government Actuary.

    Finally, I turn to the Industry Act forecast. The economy is progressing very much as I envisaged at the time of the Budget. Inflation is falling again, after the predicted temporary rise in the spring, although I now expect inflation in the fourth quarter of this year to be slightly above the Budget forecast: 5½ per cent. rather than 5 per cent.

    The overall growth of the economy this year still looks like turning out at 3½ per cent.—the highest rate of growth since 1973.

    The pattern of growth, too, has been much as envisaged. Exports and business investment, as expected, were the fastest growing elements in demand in 1985. The rise in total investment is now put at 4 per cent. in 1985; within this figure business investment is expected to be up by 7 to 8 per cent., to yet another all-time record.

    As a result of this steady progress, there has been a substantial growth in the number of people in work since 1983. This has now been reflected in a levelling out in unemployment—albeit still at a sadly high level, not least because of the rapid growth in the total labour force. The prospect here is for some further improvement, assisted by the measures I announced in the Budget to help on the jobs front, which will have their main effect in 1986. But that improvement could easily be put at risk by excessive pay settlements.

    The prospect for 1986 is one of continued growth and still lower inflation. The composition of growth is likely to change somewhat, with consumer spending taking up the running as exports—which had an exceptional rise of 7 per cent. this year—grow more slowly. The current account balance of payments surplus is forecast at £4 billion, compared with £3 billion in 1985. Fixed investment is expected to grow, once again, slightly faster than the economy as a whole.

    Overall, the economy in 1986 is expected to grow by a further 3 per cent.—the fifth successive year of growth at an average of 3 per cent. a year, and into the sixth, the best performance since before the first oil shock. At the same time, inflation is expected to fall further, to 3¾ per cent. in the fourth quarter of 1986.

    Indeed, if the forecast is correct—and I am the first to admit its inevitable fallibility—1986 promises to be the first year since the 'sixties when inflation and growth will be within one point of each other. What is beyond doubt is that we are now achieving the steady growth with low inflation which successive Governments have sought in vain for a generation.

    All in all, Mr. Speaker, the progress and prospects I have described amount to the clearest possible vindication of the policies we have been following these past six years, and will continue to follow.

    The autumn statement is now available from the Vote Office, and the House will no doubt wish to take it into account when we debate the economy tomorrow. The framework of public expenditure control which it sets out should allow scope for considered and justified reductions in the burden of taxation; and these in turn will further reinforce the economy's flexibility and dynamism. It is on that prospect that the future prosperity of all our people depends.

    The Chancellor, with characteristic modesty, claims an achievement which a generation of his predecessors sought but failed to obtain. The speaking note for Government Back Benchers, which has been circulated on today's subject—the economy—describes its state as a dream come true. Does the Chancellor regard the economy as a "dream come true" for the 3·5 million men and women who are unemployed, for the families whose child benefit is to be cut in real terms, for the 95 per cent. of taxpayers who are paying more now than in 1979 and for the owner-occupiers who are burdened by uniquely high interest rates?

    Will the Chancellor tell us some of the details of his proposal? Why have we not this year been told the size of what is called the "fiscal adjustment"? Is it because last year the right hon. Gentleman so mismanaged and bungled his tax cut promises that he precipitated the January sterling crisis? Is it simply because, like so many other promises—especially tax cut promises—what started out as an estimate of fiscal adjustment ended with a promise that he failed to deliver? Or, more likely, has he failed to tell us the fiscal adjustment because he wishes to pretend that the sale of British Gas is not intended to finance the temporary tax cuts with which he hopes to solve some of the Conservatives' electoral problems?

    If the Chancellor denies the connection between the sale of British Gas and the prospect of tax cuts, will he tell us whether the proposed temporary tax cuts could be financed without selling off those national assets? What other possible explanation can the right hon. Gentleman give the House for creating a private monopoly, already equipped with the power to fleece its consumers? When the Chancellor has explained the purpose of that privatisation, will he tell us about the long-term implications? What does he think should happen when the privatisation proceeds run out? Does he think that the tax cuts that they finance should be restored, or does he think that there should be more cuts in public expenditure? After British Gas is sold and that annual income to the Government is lost, how does the right hon. Gentleman recommend that it should be made up—not for one year or two years, but in perpetuity?

    All that the right hon. Gentleman can buy with the proceeds of the sale of British Gas is time. I ask the Chancellor again: what happens when the privatisation proceeds run out? What happens when the oil revenues run out? What happens when the report by the House of Lords predicting a collapse in manufacturing industry is proved to be true? In short, is the Chancellor capable of thinking beyond, looking beyond and planning beyond October 1987?

    Tucked away in the seventh paragraph of the Chancellor's statement was the aside that the public sector borrowing requirement had increased £1 billion above its target; yet, despite the PSBR being £1 billion out of line, the right hon. Gentleman still boasts about the economy's strength. As the Government have now been partly converted to the virtues of investing in public sector capital —a proposition that they derided and scorned last year when it was advocated by the Opposition—why does not the Chancellor at least allow the same overshoot next year which he has found tolerable this year to finance some more job creation through public sector capital expenditure? Is it because all his plans, all his intentions and everything revealed by this statement are concerned not with long-term investment but with short-term expediency?

    Let me give the House an obvious example from the document. The Chancellor boasts about growth next year. Every penny of that growth will be accounted for by personal consumption. According to the right hon. Gentleman's own figures, export growth will collapse to 2 per cent. and imports will grow by twice that amount. Of his asset sales, one tenth will go on capital expenditure and nine tenths will be used to finance the election bribes.

    What is the right hon. Gentleman worried about?

    I am worried about the economy. I am not worried about the Conservative party.

    Finally, since we have heard so much about growth, will the Chancellor have the grace to admit that the real figure for growth during the entire life of this Government is an annual average of 1·3 per cent.? The real growth that we have had demonstrated today is a growth of panic about the Government's future.

    It is clear that the right hon. Gentleman is in an acute state of panic about his electoral chances.

    On the subject of growth, there was a world recession during the Government's early years. We went to the polls in 1983, having gone through that recession, and, of course, there was a low rate of growth. I do not know whether the right hon. Gentleman is trying to have a replay of the last general election, but I must remind him that the electorate returned the Government to office with an increased majority.

    On the right hon. Gentleman's point about growth next year—I am glad that he accepts my forecast of 3 per cent. for next year—it is completely untrue to say that this is made up entirely of consumer expenditure, although I have nothing against that. There is a 3½ per cent. growth of fixed investment predicted—faster than the growth of the economy as a whole.

    The right hon. Gentleman devoted a large part of his remarks to privatisation. If he had listened to my statement, he would have heard that public expenditure was declining steadily as a proportion of GDP, even if no account is taken of the proceeds of privatisation. Therefore, the scope for tax reductions is assured. To the extent that there is any relationship between the privatisation proceeds and tax rates, it enables the tax reductions which would take place in any case to be brought forward a little to the great benefit of the economy. As I have told the House on a number of occasions, the public sector borrowing requirement is always set after taking full account of the proceeds of privatisation. The privatisation programme will not merely carry on throughout this Parliament, as set out in the autumn statement; it will carry on throughout the next Parliament as well. The right hon. Gentleman asked what would happen when that programme came to an end. I am glad to learn of his confidence that we shall be in office for a further six years.

    If allowance is made for the dubious accounting convention that treats the proceeds of asset sales as reductions in borrowing and public expenditure and excludes debt interest from the planning totals, does my right hon. Friend agree that domestic demand has been reflating and is planned to go on reflating?

    No; I am afraid that my right hon. Friend is wrong on both counts. He calls the accounting convention dubious, but that is the international accounting convention. It is not a convention peculiar to this country. It was followed by the Labour Government when they were in office. The figures are clearly set out so that my right hon. Friend can make the adjustment that he seeks to make. He will see that general Government expenditure, including debt interest, declines as a proportion of GDP.

    Is the Chancellor aware that the disposal of £5 billion of public assets represents sales of an exceptional magnitude and that it is essential that he does not hurriedly unload them to meet his public expenditure targets? Will he place a higher priority on this matter than he has done in the past by ensuring that, if necessary, such sales are postponed to avoid denying to the taxpayer and the British public the full worth of those assets.

    The flotations of state-owned companies have been conducted with great and acknowledged success throughout the world. As a result, there is benefit to the companies themselves, to the people employed in them and to the nation. I hope that if the right hon. Gentleman catches your eye again, Mr. Speaker, at the end of these questions he will perhaps inform the House which of the companies that we have privatised or plan to privatise, he will not, if he comes to office, renationalise.

    Does my right hon. Friend agree that, despite the prophets of gloom and doom, his statement will be widely welcomed not only in the House but in the country? An encouraging aspect of his autumn statement is the continual decrease of public expenditure in relation to GDP. Obviously, that will bring forward the time when tax burdens can be reduced. Does he further agree that our competitors overseas with a low proportion of GDP vis-a-vis public expenditure and low taxation are able to create jobs?

    My hon. Friend is quite right. The two most successful economies in the world today are those of the United States and Japan. They have the lowest proportion of public expenditure in relation to GDP, and the lowest level of taxation in relation to GDP. Those are important facts to bear in mind, particularly in the context of how to create more jobs. In addition to our satisfactory record on public expenditure and the prospects there, the House will welcome the prospect of a further reduction in inflation to below 4 per cent.

    Can the Chancellor tell us whether one of the programmes to be held back is overseas aid? If so, is that the Government's response to the massive lobby of this House by people of all political persuasions about the Government's reaction to Third world problems?

    Can the Chancellor confirm that if, for some reason or other, the privatisation programme is delayed—and today he mentioned some of the difficulties involved—tax cuts will be put off with it?

    Is the Chancellor's statement an admission by the Government that monetarism does not solve the undoubted problems of pay settlements? If he accepts that that is so in his statement, can he tell us what the Government will do about pay settlements in the next two years? Please do not say, "Appeal to the CBI."

    One question is quite enough, and I will answer the first question that the hon. Gentleman raised which I expect is closer to his heart—the matter of aid. I assure the hon. Gentleman that there is no reduction in the aid budget. The aid budget has been increased and will be maintained in real terms throughout the survey period.

    As my right hon. Friend is now giving more weight to interest rates and less to monetary targets, may I ask whether he now considers this to be a suitable time to apply for entry to the European monetary system?

    Does the Chancellor expect manufacturing output in 1986 to recover to its 1979 level? When the right hon. Gentleman says the assumption in the forecast is that the exchange index will remain at about 81, is the implication that if the dollar falls, the pound will be allowed to fall, too, part way against the deutschmark?

    It is not helpful to go into details about assumptions of exchange rates. As the hon. Gentleman rightly said, the assumption is that the exchange rate, the weighted average, will remain broadly at this level. In answer to his first question, I hope he welcomes the fact that we now look like going into the sixth successive year of steady growth at around 3 per cent. a year.

    While welcoming the increase in the proceeds of asset sales, I should like to ask my right hon. Friend whether he is aware that some of his hon. Friends are disappointed that the Government have not been able to reduce public expenditure and regret that, before the deduction of asset sales, Government spending will increase by over £7 billion in the next year?

    My hon. Friend should remember that, unlike previous Governments, we are steadily reducing public expenditure as a share of gross domestic product.

    What predictions has the Chancellor made about the impact of this autumn statement on the level of unemployment?

    The autumn statement in itself is but a small part of the Government's overall policies. Those policies have brought about a greater growth in the number of jobs than in all the other countries of the Common Market put together. Over the last six months we have seen a flattening out in the level of unemployment.

    Does my right hon. Friend accept that he is to be warmly congratulated on preparing the way for a series of Budgets which will reduce the level of personal and other taxation and increase public capital spending where it is needed? That will be done against a background of falling inflation and rising output. As he said, that has been an aim of Governments for many years and hitherto it has not been achieved. When he looks at the scope of tax cuts, will he consider whether there is room for returning to a lower rate of tax of, say, 25 per cent.—the kind which existed previously —so as to reduce the disincentives to those who are first going to work?

    I will certainly be happy to look into the suggestion that my right hon. Friend has made.

    Is the Chancellor aware that he is not only selling off the country's silver to balance the books, but selling off some of our great national institutions? The Institute of Psychiatry is having to sell itself to private American firms in order to keep going. The Chancellor should be deeply ashamed of pimping for this financial prostitution.

    The right hon. Gentleman is a little bit confused. These enterprises are sold not to American firms, but to the British people.

    If my right hon. Friend seeks more effectively to rebut arguments such as that which has just been presented—that we are burning the seedcorn by financing current expenditure not only with the proceeds from privatisation but with the proceeds of North sea oil—is there not a compelling case for the Government doing what every prudent individual and company has to do, which is to account separately for the capital income and outgoings and for current income?

    I take entirely my hon. Friend's point. It is one which I have considered on a number of occasions. I have some responsibility in this matter. The different figures for current and capital expenditure are shown much more clearly in the national accounts for anybody to see. These distinctions are not always very, not very—[AN HON. MEMBER: "Helpful."]—helpful. Thank you very much. To take one example, some expenditure on education—not all, but some—which is classified as current expenditure is in fact an investment.

    Will the Chancellor reflect on the consumer-led boom that he has predicted and give the House some indication about the effect of the boom on imports, and in particular on our propensity to import manufactured goods?

    I am sorry that the hon. Gentleman is so gloomy at the prospect of the consumer doing a little bit better. I can give him the answer. We expect the current account surplus of the balance of payments to rise from £3 billion this year to £4 billion next year.

    Does my right hon. Friend recall that when Noah sent the animals from the Ark two by two, he said to them, "Go forth and multiply"? Unfortunately, two of them coming out were snakes and they said, "We can't; we're adders." Some of us are a bit concerned because the adding up of the Budget in recent years has meant restriction. I am glad to know that in his statement he is adding to the amount of money spent on housing and the infrastructure. Will he continue that process for the next few months?

    I always listen carefully to the advice of my Leicestershire neighbour. I read in the papers recently that, after a long and distinguished career in this House, he is not proposing to stand at the next election. I wish him a happy retirement.

    Will the Chancellor of the Exchequer come clean and tell the House that the Government have done an about-turn? Is it not true that the Government are reflating the economy by selling off public assets? Does not the flood of press releases from Government Departments this afternoon, boasting about their public expenditure increases, demonstrate that fact?

    If the Chancellor has a fiscal adjustment to make later in the year, will he also ensure that that resource goes into creating jobs and helping those who have been hit by the mistaken policies of the past five or six years—those who are unemployed and need jobs and help with the poverty that they are facing?

    As I said, the employment prospect, although not as good as I should like, is clearly improving.

    The only about-turn of which I am aware is by those former members of the Labour party who are now members of the SDP.

    Would it create any problem for my right hon. Friend's financial strategy if, in the ensuing year, he permitted water authorities to borrow in the market rather than to implement their capital investment programmes through increased charges? Is he aware that this year the Anglian water authority has said that it can carry out its capital investment, if it is able to borrow in the market, with increases of only 7 per cent., but that if it has to be done by charges the figures will be 11 per cent? Farmers and business men very much resent having to pay increases that are higher than inflation and higher than the water authorities themselves would wish.

    It is not the case that the water authorities could borrow more cheaply in the market than they do from the Government.

    My hon. Friend raises the very interesting question of the privatisation of the water authorities. My right hon. Friend the Secretary of State for the Environment is thinking very deeply about that.

    Has the Chancellor of the Exchequer any idea how deeply offensive it is for him and other members of the Government to talk of six years of steady growth in those areas which have suffered six years of 20 per cent. unemployment, particularly when they are hit by cuts in Government regional and other aid? When will the boasted prosperity reach those areas?

    I have never sought to deny the problem of unemployment in particular parts of the country. By the same token, I hope that the Opposition will not seek to deny the success in economic growth and lower inflation that the Government have achieved.

    Given my right hon. Friend's welcome commitment to infrastructural refurbishment, while at the same time keeping a firm hand on public borrowing, will he now relax the rules governing the amount of their own money that local authorities can spend? Has he heard the old adage that a stitch in time saves nine?

    The reasons for the restriction on the pace at which local authorities can use the receipts from council house sales were set out clearly in the debates in the last Session. I do not see that the position has changed at all from that time.

    Given that the Prime Minister told the House at the Dispatch Box a year ago that increased infrastructure was not a cost-effective way of increasing jobs, and that in January she said that it would cost £37,000 for an unemployed worker to go into public sector house building, is the Chancellor's statement today intended to increase or decrease unemployment?