asked the Chancellor of the Exchequer how the tax position of a couple with two children, receiving half average earnings, has changed since 1979; and if he will make a statement.

Their real take-home pay is up by 17½ per cent., but despite that they pay almost £1 a week less in income tax and national insurance contributions than they would have if Labour's 1979 tax regime had simply been adjusted in line with inflation.

I asked a question about the Tories' tax position, not Labours' tax position. Why does the Minister not at least repeat the answer given in Hansard on 27 March this year—that the real position for a couple, with two children, on half average earnings is that in 1979 they paid 12 per cent. of their income in direct tax while today they pay 16·5, per cent. a real rise of over a third in direct taxation? At the same time, yuppy employees in the City of London on 2,000 times average earnings pay 25 per cent. less in direct taxation. The Prime Minister said before the 1979 and 1983 general elections that taxes should be cut. Taxes were not cut then, so why should we believe her today?

I repeat, for the hon. Gentleman's benefit, that the take-home pay of a person on half average earnings is up by 17½per cent. That is a very substantial increase. As the hon. Gentleman is so indignant about the burden of taxation, perhaps he could say what the effect will be of Labour's policies.

If national insurance conributions are included in assessing the take-home pay of a person on half average industrial earnings, as my hon. Friend the Financial Secretary said in his first answer, does he agree that, although great progress has been made in reducing the overall taxation and increasing the amount of take-home pay of such a person, it is still about a quarter of his total gross pay? Therefore, does he agree that it must remain a high priority to reduce taxation levels further for such people?

Of course. We are very firmly of the view that taxes ought to be reduced, and we keep on saying that. It remains the Government's objective to reduce further the burden of taxation. As my hon. Friend said, this is particularly important for the lower paid.

Why will Ministers not come clean about this issue? Tax and national insurance contributions for those on half average earnings have gone up, as my hon. Friend the Member for Coventry, South-East (Mr. Nellist) stated, from 12 to 16 per cent. According to the Government's answer, even 2p off the standard rate has made no difference in the proportion of tax paid. Is the Financial Secretary not aware that the post-tax pay increases for the top earners have been at double the rate of increase of those on half average earnings? Since this question refers to the total burden of tax, will he admit that indirect taxes, including VAT, cost the very poorest almost a quarter of their income but the richest merely one sixth? When will Ministers come clean about their distribution of the burden of taxation?

If the hon. Lady is so indignant about the burden of taxation on the poor, why did she vote against reducing it yesterday?

asked the Chancellor of the Exchequer what response he has received to the proposals for profit-related pay announced in his Budget.

asked the Chancellor of the Exchequer what response he has received to the proposals for profit-related pay announced in his Budget.

I am glad to say that over 3,500 employers have registered their interest in profit-related pay with the Inland Revenue.

Is not the attraction of profit-related pay much the same as privatisation to those who work in the industries? It gives them a share in the industries and a share in the profitability of the industry in which they work.

Yes, I believe that my hon. Friend is right. Indeed, I would go further and say that there are two distinct benefits that arise from profit-related pay. The first is the greater interest that employees have in the profitability of their company and the better labour relations that stem from that. The second is the greater degree of flexibility that is introduced into the pay system. One of the big problems in this country has been an excessively rigid pay system. Therefore, I am particularly glad that as many as 3,500 employers, many of them large employers, have already registered their interest in profit-related pay with the Inland Revenue.

Mr. Soames.

He is not here.

Mr. Skinner.

Ever present.

Now that the Chancellor seems to be in full stride regarding profit-related pay, will he answer the question that has been put to us continually by the lobbies of the nurses and the other Health Service workers? How could the nurses, ill-paid as they are, obtain any benefit from the profit-related pay system that the Chancellor keeps bandying about?

Nurses should benefit considerably from the reduction in the basic rate of income tax by 2p in the pound, which the hon. Gentleman and his hon. Friends voted against yesterday.

asked the Chancellor of the Exchequer what estimate he has made of the impact on the economy of the level of local authority rates and spending now announced for 1987–88.

Local authorities in Great Britain are planning to increase their current expenditure by more than 8 per cent. this year over last, well above inflation and what the Government believe to be necessary. The excess will be met from the reserve, and will not add to the planning total, but this inevitably means less is available for other services. The result of this overspending is rate increases averaging nearly 7 per cent., so it also means a higher than necessary additional impost on businesses.

Does my right hon. Friend agree that the Audit Commission has established that there are potentially £2 million-worth of savings that could be made within local government, particularly if places such as Cleveland cut out the £250,000 being spent this year on political advertising at the ratepayers' expense?

I agree with my hon. Friend. By a slip of the tongue I think that my hon. Friend said £2 million-worth of savings. In fact, just to get it clear, the Audit Commission believes that £2 billion-worth of savings are available. He is absolutely right about Cleveland. I understand that that Labour-controlled council is increasing its total expenditure by over 13 per cent. this year, which is the third highest increase for the counties. It is no wonder, therefore, that Cleveland has the second highest county council rate in England, and that is bound to have a heavy adverse effect on businesses there. My hon. Friend is entirely right.

Before the right hon. Gentleman quotes the Audit Commission too much, he should recall that the head of the Audit Commission, John Banham, now the head of the Confederation of British Industry, has gone on record as saying that local government is more efficient than central Government. Should the right hon. Gentleman not be looking to his own areas of expenditure rather than berating those local authorities?

The right hon. Gentleman, who is always fair in these matters, will know that we have done a great deal in that respect. We have got the numbers of civil servants in central Government down substantially without reductions in the effectiveness of services. In many other ways, and through many initiatives, we are making substantial savings in administration and in the cost of the programmes. I entirely agree with the right hon. Gentleman that it is important to achieve efficiency in central Government as well as local government, and we devote a great deal of our time to doing that.

Does my right hon. Friend agree that, although most Conservative local authorities have increased rates by 5·5 per cent., Labour, alliance and hung councils have increased their rates by about II per cent.? Will he also consider what the alliance leader of Derbyshire county council said? She said that she supported the Labour party on most matters but could not support it on its rate increases. Is that not gross hypocrisy on the part of the alliance? Is the alliance trying to have it both ways by supporting extra spending without considering the consequences of such spending? Will he acknowledge that Derbyshire is the highest rated council in the country?

On the latter points, my hon. Friend is entirely right. Indeed, I listened with interest to what he said about the alliance leader in his county. It rather mirrors what the Liberal and Social Democratic Members do in the House. They urge a good deal more expenditure, vote against tax cuts and then do not know where to go from there. I agree also with what my hon. Friend said at the beginning of his question. It is significant that rate increases in Conservative councils this year are 5·4 per cent., whereas in Labour councils, other than rate-capped councils, they are 12·4 per cent. That speaks for itself. The burden on domestic ratepayers and businesses is clear.

Is it not true that the new rating system—the community charge—will have a dreadful, catastrophic impact on many industrial towns and their economies in the northern region? Have the Government measured the impact that the new tax will have in so far as it will wipe out tens of thousands, hundreds of thousands, indeed millions, of pounds from spending power in such communities?

When the hon. Gentleman talks about business, he is talking, not about the community charge, but about the new non-domestic national business rate that we shall introduce. He will discover that many businesses in his area will find that it is more beneficial to them than the present system.

Will my right hon. Friend comment on the effect on people in Ealing, and my constituents in particular, of the rate increase of 65 per cent. that was imposed by Ealing council? That will represent an average increase of £5 or £6 per week, and some people will have to pay £12 a week. It will hurt the elderly, the disabled, industrialists, jobs, prices and everything else. Is it not wicked and disgraceful? Is it not typical of members of the modern Labour party? That is just what they would be like in government, and that is why they must be strongly rejected.

I entirely agree with my hon. Friend. He has clearly made the point about the impact of a Labour council in Ealing. Bearing in mind the rate increases in Conservative-controlled councils, I am sure that many ratepayers in Ealing will wish that they lived under a Conservative administration at local level and therefore benefited from the much lower rate increases that are happening elsewhere.

When the Minister replied to the hon. Member for Langburgh (Mr. Holt) about the amount of money spent on political advertising, why did he not admit to the House that £42 million — [Interruption.] If the Chancellor would keep quiet, the Minister could hear me. The sum of £42 million was spent on the sale of British Gas. Hundreds of millions of pounds have been spent by the Government on political advertising of Rolls-Royce, British Telecom and the rest. The Minister prays in aid the Government's record on the Civil Service and the spending by central Government. If the Government are so clever, why are thousands of civil servants in Coventry and elsewhere out on strike this week because of pay cuts over the past seven years?

The hon. Gentleman is only envious that our policies on privatisation are so hugely successful and of great benefit to the economy and are being copied around the world. It is just a pity that he does not understand the significance of them.

asked the Chancellor of the Exchequer what representations he has received seeking changes to the taxation treatment of charities.

Charities have enthusiastically acknowledged the very substantial measures on the tax treatment of charitable giving and other aspects of charitable work introduced by the present Government.

Is my hon. Friend aware that charities have been and are conducting political campaigns? Oxfam has been conducting one, and War on Want is in the process of doing another. Indeed, the director of Oxfam has conducted a campaign in The Times today. Does my hon. Friend agree that for four charities to conduct these campaigns is a fraud on those who subscribe to them and endangers the taxation advantages that the charities enjoy?

Like my hon. Friend, I agree that the abuse of charitable funds in the way that he has described is deeply to be deplored and that that is not the basis on which tax relief is given. I shall draw my hon. Friend's remarks to the attention of my right hon. Friend the Home Secretary, because the Charity Commission has responsibilities for seeing that charities do not abuse the funds that are entrusted to them.

But is it not true that public schools enjoy charitable status, and have they not been turning out apparatchiks and Lobby fodder for the Conservative Benches for a century? What does the Minister intend to do about that?

I am sorry that the hon. Gentleman does not regard education as a suitable matter for charitable support.

asked the Chancellor of the Exchequer whether he will prepare estimates of the cost of the programmes announced by the Opposition parties.

I have already costed the Labour party's commitments, which would amount to an additional £34,000 million in a full year. The SDP and Liberal parties' pledges are so vague and confused that they cannot be costed.

I thank my right hon. Friend for that reply. I assume that the £34 billion figure that he has mentioned has been calculated by assessing the cost of various items of policy to which the Labour party is pledged. Can he tell the House whether he has received any representations or objections about specific items that he has costed? If he has not, does he agree that, if the Labour party does not object to the parts, it can hardly object to the whole?

I have often made clear exactly what items are in the £34 billion commitment and how it has been costed. I have made the costings available to the Labour party and have said that, if it will point out a single one that is not official Labour party policy, I will withdraw it. The Labour party has not done so. Almost weekly, Opposition Front Bench spokesmen for social security, education, overseas aid and health keep confirming the pledges. I again ask the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) when he is going to repudiate them. It is perfectly clear that we would have the same situation as the one that we had under the last Labour Government, because if a Labour Government carried out their spending programme they would be back to the International Monetary Fund in no time.

As regards costing programmes, would the Chief Secretary be good enough to tell the House and the country how much extra the average household would have to pay if VAT were to be charged on children's clothing and other essential items, including food? Is it not perfectly clear that what is now being planned by the Tories, should they return, is precisely to levy VAT on such items?

It is quite extraordinary that the hon. Gentleman can come forward with suggestions like that, when he must know that, in order to pay for the kind of programme to which his party is committed, VAT would have to go up very substantially. The cost of his party's programme would be the equivalent of a VAT rate of just under 50p in the pound. The hon. Gentleman puts that point because he is so desperately anxious to find a smokescreen for the cost of Labour's programmes and their tax implications for ordinary people.

In view of the pledge made recently by the hon. Member for Stockton, South (Mr. Wrigglesworth) that the alliance would publish the costings of its policies before the election, purely in the interests of open government would my right hon. Friend agree to run the alliance programme through his Treasury computer? Will he also get his Treasury experts to cost the alliance programmes? Or are they so vague that it would be impossible to tell what they cost?

Indeed, there is nothing as vague as the alliance programme. I have been through the entire document "The Time Has Come", and it is impossible to cost its contents because the Liberals and the SDP do not pledge themselves specifically to anything. Whenever they do, they immediately have to go back to the drawing board, either because they are incapable of agreeing on the policies, or because they have not thought them through.

First, might I ask the Chief Secretary, who precisely is paying for those costings? Is he using public money to do his own costings for the benefit of his colleagues and to prepare election ammunition? Secondly, if he is using public money for that purpose, will he note that some of us take strong exception to that? Thirdly, if the civil servants have got it massively wrong, where has that money been coming from and who is paying for the costings?

No additional public resources are employed in the costings.

asked the Chancellor of the Exchequer if he has received representations concerning his plans to change the treatment of capital gains in the life funds.

A number of representations have been received and are being considered. I have also discussed the matter with the Association of British Insurers. There will be an opportunity for detailed debate in Committee on the Finance Bill.

Is my right hon. Friend aware that the life industry is concerned that his proposed changes in the capital gains of life funds will be at the expense of the savings of existing policyholders, who will as a result be put at some disadvantage against other forms of collective savings such as unit trusts?

I note what my hon. Friend has said. Obviously, there will be further discussions about this. I do not necessarily accept that life policy holders will be disadvantaged compared with unit trust holders, because there are advantages for them too. For example, a unit trust holder will pay income tax up to his marginal rate and will pay capital gains above the threshold. We believe that the impact of the changes will be minimal, but, of course, we shall listen to what is said.

Is the Financial Secretary aware that this is of critical importance to mortgage holders? Is he also aware that 50 per cent. of new mortgages last year were endowment mortgages? Can he confirm that more than £1,500 will be lost on the payout from an ordinary £30,000 endowment mortgage if the Government's proposals go through? Why are the Government hitting millions of small investors with higher rates of tax, while leaving their friends in the City untouched?

The impact on particular policies will vary according to different companies. I do not accept the figure that the hon. Gentleman mentioned. Some companies have said that there will be practically no effect. We estimate that the extra tax that would have been paid in 1985 on those policies would have been less than £20 million. That compares with the policyholders' funds of some £70 billion, so the impact will be very small.

asked the Chancellor of the Exchequer what information he has about the response to the new payroll giving schemes.

asked the Chancellor of the Exchequer whether he will make a further statement about the implementation of payroll giving schemes.

The new payroll giving scheme has made an encouraging start. The Inland Revenue has approved 11 agencies to run the scheme and 300 employers have already signed contracts to participate. I expect many more to follow.

Does my hon. Friend agree that in the figures that he has given those 300 employers represent nealy 1 million employees, and that those figures mark a most auspicious start for the payroll giving scheme? Will he confirm that, since this Government came to power, giving to the 280 charities has already doubled? Does he expect that, with the payroll giving scheme, we shall see a further large increase of charitable giving to charities great and small? Will he also confirm that the administrative costs to employers of operating the schemes will be an expense allowable against tax?

I welcome my hon. Friend's support for the payroll giving scheme. As he said, it has made a most encouraging start. I understand that information about new employers who will be taking part is coming in every day. The scheme will clearly involve a big increase in charitable giving, which has already doubled since the Government came to power in 1979. Already, tax relief of about £500 million is given by the Revenue in respect of charitable giving and we shall be only too pleased if the scheme greatly increases that. So far as I can comment on my hon. Friend's last point, I believe that to be the case, but if there is any problem I shall let him know.

Does my hon. Friend agree that the vast majority of charities do extremely valuable work, which fully deserves the introduction of tax concessions such as the payroll giving scheme, but that organisations such as War on Want, which have used their funds to finance overtly political advertisements, are abusing not only their charitable status but the tax concessions that that status bestows?

I deplore the abuse of charitable status of the sort that my hon. Friend has described. My hon. Friend the Member for Dorset, North (Mr. Baker) made heroic efforts to be in the Chamber to raise the matter earlier, and I know that it is one of widespread concern.

Does the Minister accept that it is an appalling indictment of the Government's policies that an increasing number of well-respected charities, such as Oxfam, along with other well-respected bodies such as the Archbishop of Canterbury's commission on urban priority areas, have felt the need to criticise the Government's policies?

Political behaviour by those involved in charitable work is always to be regretted. However, that does not invalidate the wish of all those in the House to support genuine charitable activities, and I hope that we will be able to continue to do so.

Does not the much increased level of charitable giving give the lie to those who claim that Britain is much less generous under this Government?

The public have been increasingly generous to charitable causes since 1979. As I have said, charitable giving has about doubled. That is one of the beneficial consequences of the strong increase in standards of living and take-home pay, that have been enjoyed at all levels of the population since 1979.

Does the extent of charitable giving show that the people are more compassionate than the Government?

In measures that we have been discussing and in many other ways; the Government are encouraging charitable giving. In this sense I am sure that the Government are entirely with the grain of the population.

Does my hon. Friend accept that the payroll giving scheme has been widely welcomed by many charities, and even by those which are evidently involved in political activities? Will my hon. Friend accept also, however, that the view is gaining ground that some of the giving is almost irrevocable and is difficult to cancel by employees, while some employers regard the scheme as being unduly bureaucratic? Will my hon. Friend take this opportunity to reassure charities, employers and employees that the scheme is easy to administer?

I think that I can give the assurance that my hon. Friend seeks. We went to great lengths to try to ensure that the operation of the scheme would not be unduly onerous or bureaucratic for employers. That is why we insisted on having independent agencies. The excellent start that the scheme has made suggests that it cannot be too off-putting to employers, otherwise there would not be so many of them either already contracted or wishing so to be.

asked the Chancellor of the Exchequer if he has any plans to extend the scope of value added tax.

No, Sir.

Is it not becoming increasingly clear to the House and to the country that the Conservative party intends to fight the next general election on two manifestos — [Interruption.] — one that will be published openly, and a secret document in which there are to be proposals to increase the rate of VAT and to extend its scope to food and other products? Despite the fact that the Minister has answered no to my main question, the Prime Minister is not prepared to deny the assertion categorically? When will the Government be honest with the House and the people?

We shall certainly fight the next election on two manifestos, ours and yours.

Order. I shall be standing at the next general election, but I shall not have a manifesto.

Our manifesto, Mr. Speaker, will be of great assistance to us, but I think that the Opposition parties' manifestos will be of even greater advantage to us.

Does my hon. Friend agree that if any of the Opposition's pledges are put into effect VAT will have to be increased to about 49p in the pound? Will my hon. Friend accept also that the collection costs of VAT, given the thresholds that apply on the turnover of a small business, which is roughtly twice the national average wage, are extremely high? Does he agree that the administrative burden on small businesses is onerous and, despite the EEC, would it not be a good idea to have a threshold of about £50,000 a year to assist small businesses?

I note what my hon. Friend said about the threshold. I hope that he and my other hon. Friends will recognise that the measures we are introducing this year for cash accounting and annual accounting should greatly reduce the burden of income tax for small businesses.

Why have papers concerning the extension of VAT in Britain been withdrawn from the May meeting of Common Market Finance Ministers?

The hon. Gentleman can ask whatever questions of the Commission he likes. The Government's policy is to reduce taxation; the Labour party's is to increase it. I am sorry that Labour Members have to resort to repeated smears to cover up the fact that they are the party of high taxation and we are the party which has reduced taxation.

May I draw attention to the report of the Treasury Select Committee entitled "The Defence of VAT Zero-Rating" which contains clear evidence that the Government are determined to fight the case in the European Court, where the European Commission is seeking to extend the base of VAT? Is that not a very clear indication of the Government's views on the subject?

I thank my right hon. Friend for making that clear to the House. The actions of the Government are well known and have the support of the House.

Does the Minister's answer mean that he is saying to the House what up to now the Prime Minister has not been prepared to say, that when the EEC recommends that Britain imposes VAT on food, fuel, children's clothing and new building, the Government will veto it?

The Commission has not put forward such proposals. I mean what I say.

asked the Chancellor of the Exchequer if he will make a statement regarding the current level of exchange rates.

The sterling index at noon today stood at 73·2.

Does the Chancellor realise how much damage the present high rate of the pound is doing to our manufacturing industries? Is it the Government's policy to keep an artificially high pound as their only means of controlling inflation?

My impression, from a number of visits to manufacturing industries during the Easter recess and from reading very carefully the CBI survey of industrial trends for manufacturing industry, is that manufacturing industry is very well satisfied with the economic conditions at present. It is doing very well and I am very glad that it is. The one thing it dreads and fears is the possibility of a change of Government.

It is well known that the Labour party—this came out from the report to the Treasury Select Committee of the hon. Member for Great Grimsby (Mr. Mitchell), who is a member of the Opposition Front-bench — is in favour of putting up corporation tax to 52 per cent. and of having a dramatic devaluation of the pound, as a result of which inflation would rocket back to the 27 per cent. it was when a Labour Government were last in office. That would be the worst possible thing for manufacturing industry.

Does my right hon. Friend agree that one of the main causes of the strength of sterling at present is the fact that the world financial markets are convinced that the Government will be re-elected? If there were to be a change in polls, with the possibility of a Labour Government or, even worse, a hung Parliament, is it not likely that there would be immediate pressure on sterling?

It is true, as my hon. Friend has said, that if there were to be a change of Government it would be an economic disaster for Britain. The massive confidence that there is worldwide in the British economy, which is demonstrated by the strength of the pound in the foreign exchange market and in a number of other ways, would evaporate overnight. Fortunately, that nightmare will not turn into a reality.

Can the Chancellor tell us whether he is now endeavouring to pursue the same exchange rate policy that he would if we were a full member of the EMS, and, if so, what is the advantage of doing that from outside?

I am happy to answer the right hon. Gentleman's question. As he will be aware, six of the seven Finance Ministers of the Group of Seven met in Paris in February, when we agreed that, having achieved a substantial realignment of currencies following the Plaza meeting in September 1985, it was now right to try to keep the major exchange rates roughly stable. That is what we are seeking to do, and the British Government's policy is in line with that agreement, which was reaffirmed in Washington when we had a meeting of the G7 at the spring meeting of the IMF. That is not only part of an international agreement which would be beneficial worldwide, but it is in the interests of British industry that that should be maintained.

Is it not clear that the recent co-ordinated efforts by my right hon. Friend and other Finance Ministers of the Group of Six have had considerable success in bringing exchange rate stability in recent times through the agreements to which he referred, and has that not been excellent not only for output in Britain but for exports and import substitution?

It has been, and, as I mentioned in the House yesterday in the course of the Finance Bill Committee stage debates—which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was, unfortunately, unable to attend because he was busy expelling a black activist from the Labour party, but it is good to have him back today — yesterday's Financial Times headed its leading article about the United Kingdom "An island of success". However, despite the indications that we are successful, there are problems in the rest of the world which have to be addressed and it is of first importance that there should be a successful outcome of the meeting today between President Reagan and Prime Minister Nakasone of Japan.

asked the Chancellor of the Exchequer what recent representations he has received about the Budget.

The proposals in my Budget have been widely welcomed.

Is the Chancellor aware that there has been little evidence of any improvement, or potential improvement, of the economy of the northern region as a result of the Budget proposals, that there is little evidence of the standard of living being improved there, and that, in fact, wage levels there are decreasing and the north-south divide is becoming even more evident since the Budget proposals? What is he prepared to do about it?

I am glad to be able to inform the hon. Gentleman that he is misinformed. The most recent report from the Association of British Chambers of Commerce made a particular point of saying how big an improvement there has been in the prosperity of business and industry in the north of England. The whole point of the policies that we are pursuing is that they benefit the whole country.

May I say to my right hon. Friend that the Budget has been welcomed by the people of Harlow because, thanks to the success of the Government's economic policies, Harlow is now a boom town with one of the lowest rates of unemployment in the south of England. Does he not find it ironic that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had the nerve to come to my constituency and unveil a plan — after lunch — for a thousand new jobs to be created, the majority of which would have been created by the local authority, which is Labour-controlled and is crippling my local industry?

I should like to take this opportunity to congratulate my hon. Frend on the manful efforts that he has made throughout the time that he has represented his constituency — which will ensure his continued representation of that constituency — against the activities of the local council, which have been consistently anti-business and anti-industry, as, indeed, have so many Labour councils up and down the country.

asked the Chancellor of the Exchequer if he has any plans to permit derogation from the prohibition on building societies making interest-only loans.

The Building Societies Act gives those societies which have total commercial assets of over £100 million the power to lend money to individuals regardless of whether interest is charged on the loan.

Is the Minister aware that building societies believe that that helpful facility, which enables elderly people to liberate the capital in their own homes to make necessary repairs, has not been stopped by the Building Societies Act? Am I right in believing that that was never the Government's intention, and will the Minister make it clear that the facility is still widely available?

Certainly the Building Societies Act does not stop building societies from making such loans. In fact, some societies have shown reluctance to conform with the requirements of the Consumer Credit Act 1974, but other lenders are coping without difficulty. I hope that building societies will not mislead borrowers of the kind that the hon. Gentleman describes by implying that such loans cannot be made.

asked the Prime Minister if she will list her official engagements for Thursday 30 April.

This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Does my right hon. Friend agree that in implementing promptly and in full the recommended 9·5 per cent. pay increase for nurses the Government have demonstrated their continuing commitment to improving the lot of the nursing profession, which has grown by 30,000 under the present Government? Does she also agree that there is no justification for the lightning teachers' strikes, such as those that are happening in my constituency at present, when the Government have awarded teachers a 25 per cent. average increase? That is far more than my constituents in manufacturing industry have been able to obtain.

I agree with my hon. Friend. Under the last Labour Government nurses' pay actually fell in terms of what it would purchase. Under the present Government it has gone up by 30 per cent. over and above the rate of inflation. As my hon. Friend says teachers have also done very well. Their pay will have increased by 27 per cent. over and above the rate of inflation. That shows that, under this Government, the growth that we have experienced has been put to very good use, not only in reducing taxation, but in bringing an enhanced standard of living to those who work in education and the social services.

On the basis of the information now available to her, will the Prime Minister admit that the Government's poll tax scheme, when combined with the so-called social security reform, will result in most families in this country on joint incomes of less than £21,000 a year being worse off than they are now, before the two schemes are implemented?

The right hon. Gentleman is aware of some of the tables that have been published. He will now have to wait until we see what net incomes are and how much Labour authorities in particular spend and charge in rates.

The Prime Minister is trying to deny a fact that she either knows to be true or ought to know to be true. Such conduct only confirms that the Government are ruthlessly determined not to tell the truth about the financial consequences of their re-election. I put the question to the Prime Minister again. It is a matter of fact on which work has been done and has been published. Is it not true that the majority of families with joint incomes of £21,000 or less will be worse off, regardless of whether their local authority is Labour, Conservative or anything else?

What people will have to pay in rates, or later in community charge, will depend upon some of the expenditure of local authorities. Now I understand why the Leader of the Opposition is not present. It is because Ealing has increased its rate by about 62 per cent.

The Prime Minister is devious and disingenuous at the same time. The whole country will understand that she is determined not to tell the truth about the financial consequences of the re-election of her Government. It is all part of the secret manifesto, and we shall expose the lot.

Perhaps the right hon. Gentleman would give a list of the high rates of Left-wing Labour-authorities and the catastrophe, not only of the high rating of ILEA, but of the appalling education.

Will my right hon. Friend confound the dismal Jimmies and agree with me that Scotland's economic performance is one of the success stories of this Government and that that success story will continue if a Conservative Government are re-elected?

Yes. The CBI survey relating to England, Wales and Scotland was very optimistic. It showed a level of optimism that we have not seen for a very long time. The reports of the top 50 companies in Scotland are excellent and unemployment is now falling.

rose—[interruption]

Order. I know that we may be getting close to an exciting time, but—Mr. Jenkins.

I recognise that the Prime Minister is bound to attach considerable importance to the views of the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) on the subject of an MI5 inquiry, but will she none the less repudiate, on reflection, the extraordinary constitutional doctrine that she appeared to be propounding on Tuesday, namely, that the activities of a permanent Government agency, however monstrous they may be alleged to be, cannot be inquired into once there has been a change of Government?

I have nothing to add to the replies that I have given before and to what I said on Tuesday.

Frit.

Order. When I call the hon. Member for Bolsover (Mr. Skinner) he may say what he wants to say., but I have not yet called him.

rose——

Order. If the hon. Gentleman goes on like this, it will be a long time before I call him.

Will my right hon. Friend find time today to assure the House that the Government have no plans to raise the rate of VAT to the 25 per cent. that was reached under the last Labour Government?

Yes, and there are no plans to put VAT on food, either.

asked the Prime Minister if she will acquire for the library of No. 10 Downing street a video recording of the Granada TV programme "World in Action" on the Law Officers' letter in the Westland affair, broadcast between 8 and 9 pm on Monday 30 March.

No, Sir.

May I ask the Prime Minister a question of fact which has not been put to her and which she has had no opportunity to answer? Is it, or is it not, true, as the programme suggests, that her Attorney-General summoned her Cabinet Secretary to confront him with the prospect of the New Scotland Yard police at No. 10 Downing street with the Department of Trade and Industry unless she agreed to an inquiry? Is the programme telling the truth, or is it not?

I have nothing to add to the many, many answers that I have given in statements and in reply to questions. I recognise that the hon. Gentleman will go on asking questions, but nothing can conceal the poverty of his policy.

Further to my right hon. Friend's earlier answer——

Order. This is a definitive question.

Is the Prime Minister aware that I am one of the 8 million viewers who heard that most respected reporter, James Naughtie, say—[Laughter.] He went to the same school as I did. James Naughtie confirmed that the centre of operations for releasing the Solicitor-General's letter was No. 10 Downing street. Can the Prime Minister tell us, therefore, why only selected parts of that letter were released? Was it because 10 Downing street considered Chris Moncrieff's shorthand not good enough to take down all of it?

The hon. Member's source did not go to the same school as I did, and I am not responsible for the press.

asked the Prime Minister if she will list her official engagements for Thursday 30 April.

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

In view of Government policy on local government expenditure, will my right hon. Friend reflect on the fact that Derbyshire county council recently announced a programme of massive spending increases in line with Labour pledges, but has suddently and without explanation withdrawn the programme that it had submitted? Can my right hon. Friend think of any possible reason or any event in the near future, that might have influenced the county council's decision?

I understand that Derbyshire is the highest-rated county in England. This is very damaging to business in an area that needs more jobs, and it is highly damaging to domestic ratepayers. The county council may have had that in mind in considering future matters and events which will come about in the next 15 or so months.

In view of the overwhelming evidence that unemployment affects the health of those without a job, confirmed in yet another medical report issued last week, will the Prime Minister say whether she feels any personal responsibility for the ill-health, some of it very serious, of thousands of people in this country, arising directly from her economic policies?

Overall, health in the United Kingdom has been improving steadily. Life expectancy continues to rise. Infant mortality has fallen by one third since 1979. When we came to power in 1979, only £7¾ billion was spent on the National Health Service. This financial year we shall spend about £20 billion, which shows the priority that we have given to the health of the people.

asked the Prime Minister if she will list her official engagements for Thursday 30 April.

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

With regard to disarmament negotiations, is it not clear that this hopeful situation which we now have has come about because of my right hon. Friend's robust attitude and her refusal unilaterally to throw away our armaments before negotiations begin? Are there not hopeful attitudes in this negotiation which we are about to start?

Yes. I do not believe that the Soviet Union would be thinking of taking out the majority of her SS20s unless we had stood firm and deployed the cruise missiles and Pershings, something that the Labour, Liberal and Social Democratic parties voted against in this House when the decision was made. We would prefer the Soviet Union to agree to a global zero-zero on intermediate nuclear weapons. So far it has been unwilling to do that, but that is what we shall continue to ask for.

Before repeating her usual assertion that there is no connection between the 20 per cent. increase in youth unemployment in Merseyside since 1979 and the 40 per cent. increase in crime on Merseyside over which her Government has ministered since 1979, will the Prime Minister tell the House what she thinks about that well-known Victorian saying, oft repeated in Finchley, that the Devil finds work for idle hands?

I am sure that the hon. Gentleman has heard references several times to studies which show that there is no direct relationship between unemployment and crime. I am sure that he is very much aware that there are countries which have lower unemployment than we have but which have higher rates of crime. I further refer him to an article in the Daily Mail on Wednesday 22 April by Dr. Alice Coleman, who said:

"Historically, there is no evidence that joblessness is the major stimulus to crime."

She went on to say:

"The runaway growth in offences began in the post-war period of full employment, and it was then often suggested that young delinquents were the spoilt products of affluence."

The hon. Gentleman is aware that the peak age for crime is 15. That is not related to unemployment.

asked the Prime Minister if she will list her official engagements for Thursday 30 April.

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

Is my right hon. Friend aware that many of my constituents in the west midlands are trade unionists, many of whom are supporters of mine? Is she aware of the tremendous change in attitude that has taken place on the shop floor in recent months as a result of Government legislation, with such things as no strike agreements, the end of the closed shop and a generally much healthier and more realistic attitude among the workers? Is she aware that many of them are now capitalists, owning their houses, and shares too?

I agree with my hon. Friend. Our trade union reforms have helped to transform the climate for business. We now have the lowest number of days lost through disputes for 20 years. It is our reforms, and the way in which trade unions have responded, that are in part responsible for the excellent optimistic business survey that we have seen this week. I am delighted that under this Government far more trade unionists own their own homes and shares and have more savings than ever would have happened under Labour.