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National Finance

Volume 173: debated on Thursday 7 June 1990

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Personal Equity Plans

1.

To ask the Chancellor of the Exchequer what representations he has received on his proposals to change PEPs.

The improvements in PEPs, which my right hon. Friend the Chancellor announced in his Budget statement, have been widely welcomed.

Does my hon. Friend agree that some of the financial institutions that at one time had deep reservations about the effectiveness of PEPs now welcome them as a most essential, important and attractive component of the savings market? Does he foresee, in respect of either PEPs or TESSAs, the possibility of a similar conversion on the part of the Labour party?

My hon. Friend is absolutely right that the institutions have put their whole weight behind PEPs, and that is why they are now going extremely well. I am afraid that confused messages are coming from the Opposition about such matters. Some Opposition Members say that they are in favour and some say that they are against. I do not foresee any conversion and certainly there is no uniformity of view among the Opposition.

Does my hon. Friend agree that the encouragement to small savers since the Government came to office has meant that they have increased in number from 2·75 million to 11 million today?

I am not sure how my hon. Friend defines small savers, but he is perfectly correct that there has been a big increase in their number. As regards personal equity plans, in the first quarter of this year the number of new plans issued was a quarter higher than in the whole of 1988. That is excellent news.

Income Tax

2.

To ask the Chancellor of the Exchequer by how much the basic rate of income tax has been reduced since 1979; and what are his future plans for the rates of income tax.

The basic rate of income tax has been reduced from 33 per cent. in 1979 to 25 per cent. in 1990. Moreover, the borrowing requirement, which was a deferred tax liability, has given way in the past three years to a Budget surplus. It is our objective to reduce the basic rate of tax to 20p in the pound, but only as soon as it is prudent and sensible to do so.

Will my right hon. Friend confirm that every time the Government have reduced the basic rate of income tax, the Labour Opposition and the Liberal Democrats have bitterly opposed the reduction? Is not it the case that had Labour still been in power we would still have a basic rate of 33p in the pound? Will my right hon. Friend confirm that, were he to adopt the policies and commitments in the Labour party's policy review document, the basic rate of income tax would have to be massively increased for everyone? Has not the Labour party always been the high-tax party and will not it always be?

My hon. Friend makes his point entirely clearly. I am not sure that is wholly true to say that the Liberal Democrats have invariably opposed the tax decreases. I think that there was an occasion when they chose not to do so. My hon. Friend is being generous when he suggests that if a Labour Government were in power at the moment we should have a tax rate of 33p in the pound. It might well be noticeably higher. When, in due course, we get round to the detailed costing that Phillips and Drew has already attempted, we may be able to illustrate that it would be higher.

Will the Chancellor explain what he meant when he said that it was not prudent to achieve his objective of an income tax rate of 20p in the pound this year? Is he admitting that he is using the level of income tax as a tool of economic and fiscal management? Will not all Governments have to do that?

The answer to the hon. Gentleman is that of course I am, as we have done and as I shall continue to do.

Is not it right that the Government have greatly increased personal allowances, so taking out of tax many people at the bottom of the income scale? Does not that give the lie to Opposition parties, which suggest that they are the only people who care about those on lower incomes?

That is entirely true. By almost any measure—there are a variety that one can use—there has been a considerable increase in personal allowances at the bottom end of the tax scale. That is desirable. It is a deliberate act of policy and, of course, it has kept many people out of tax who otherwise would have been in the tax net.

This question seems to have been tabled as a direct attack on the Chief Secretary to the Treasury and I hope that the Chancellor will repudiate it. He will recall the Chief Secretary saying on BBC's "On the Record" on 13 May that the prospect of tax cuts at the moment does not look very good, that these things are always uncertain, but there is very little room for manoeuvre. Will the Chancellor explain to the House why, after 10 years of Conservative Government—a Government who have declared that a further reduction in income tax is their main objective—there is now very little room for manoeuvre? Will he confirm to the House that it is highly unlikely that there ever will be enough room for manoeuvre to enable 24 out of 25 taxpayers to pay income tax at a basic rate of 20p in the pound?

Whatever else may happen in this Session of Parliament, the hon. Gentleman just won the palm for brass-necked cheek in his comments of the past few moments. There is no dislocation whatever between the comments of my right hon. Friend the Chief Secretary and those that I made at the Dispatch Box a few moments ago. One significant difference that is reflected in what the hon. Gentleman chooses to call the tax burden is that this Government tax honestly for their expenditure and do not tax for some, borrow for the rest and leave later generations to repay. When the borrowing requirement of the hon. Gentleman's party is taken into account, the tax burden in 1979 was sharply higher than it is today.

Does my right hon. Friend agree that the Government have shown in the past that reductions in income tax stimulate economic growth and lead to an increase in overall revenue? Will my right hon. Friend take that very much into account when making his tax plans for the future?

I can assure my hon. Friend that it is ever close to my mind that that virtuous relationship exists. As he may know, the top 5 per cent. of taxpayers will pay 30½ per cent. of total income tax this year compared with 24 per cent. in 1978–79 when the top rate of tax could have been as high as 98 per cent.

European Monetary System

3.

To ask the Chancellor of the Exchequer if he will make a statement on progress on the Madrid conditions for joining the exchange rate mechanism.

8.

To ask the Chancellor of the Exchequer which of the Madrid conditions concerning the United Kingdom entry into the exchange rate mechanism of the European monetary system have yet to be fulfilled.

17.

To ask the Chancellor of the Exchequer when he expects that the conditions for the pound sterling's participation in the exchange rate mechanism of the European monetary system will be fulfilled.

A good deal of progress has been made in a number of conditions for membership of the exchange rate mechanism, but they have not yet all been met.

Will the Chancellor tell us which condition is likely to be satisfied first: a satisfactory reduction in our underlying rate of inflation or the achievement of a level playing field through the abandonment of subsidies by our European competitors?

Significant progress has been made in recent months on a number of the external elements that we require before joining the exchange rate mechanism. We have made our position on domestic inflation perfectly clear and I stand by that.

At a recent press conference the Chancellor seemed to suggest that our underlying rate of inflation was much closer to Community averages than a proper statistical approach would reveal. Was he using that figure to try to persuade the Prime Minister that we really should be joining the exchange rate mechanism, and on those grounds should Opposition Members keep quiet about the statistical flaws in his figures?

It is always a distinct help to the Government if Opposition Members keep quiet, whichever part of the Opposition they may represent. In the remarks to which the hon. Gentleman referred, I was drawing attention to the fact that the British rate of inflation appears misleadingly unreasonable compared with those of our European partners simply because we contain within our inflation rate that which other countries do not, and it was in response to a question about that matter that I made the remarks to which the hon. Gentleman refers.

When we enter the exchange rate mechanism, as the Chancellor of the Exchequer proposes to do in the summer, will he go in on the tight band of 2½ per cent. or on the broader band of 6 per cent? Will he share his views on that with the House?

I can neither confirm the date that the hon. Gentleman surreptitiously slipped into his question as an assumption, nor enlighten him on his substantive point.

Will my right hon. Friend assure us that, regardless of the specific matters spelt out in the Madrid conditions, he will not contemplate the entry of sterling into the exchange rate mechanism until he regards it as fully compatible with the needs of domestic monetary policy and, in particular, that he will not do so at any time when it might mean that interest rates would have to be lowered more or more quickly than is necessary for the proper control of monetary conditions and the reduction of inflation?

I am acutely conscious of the point to which my right hon. Friend rightly draws attention. The aim of joining the exchange rate mechanism is to support the policy to reduce inflation, not to damage it, and from that, my right hon. Friend will be aware of our policy.

Will my right hon. Friend confirm that entry into the exchange rate mechanism is stage one of the Delors proposals? The Delors proposals are supported by all the Commission's bureaucrats and by all the nation states of Europe, with the exception of ourselves. Paragraph 39 asserts that entry into the first stage shall be taken as acceptance of all subsequent stages.

My hon. Friend has made assertions about what the purpose of stage one might be and about the extent to which that falls within the Delors plan. The fact that the proposal is supported by what he calls the bureaucrats in Brussels does not in itself make it wrong. We have a series of sound economic reasons for joining the exchange rate mechanism. The Government set out the policy that they would join the exchange rate mechanism when certain conditions were met. That remains the policy and it will be in the interests of this country.

Now that United Kingdom membership of the exchange rate mechanism has become the fig leaf behind which the Labour party has chosen to hide the private and unpleasant parts of its economic policy, would not we be better advised to join sooner rather than later so that those inadequacies can be exposed to the public for all to see?

If, as my hon. Friend suggests, the exchange rate mechanism will hide the shortcomings of Labour policies, it will need to be a good deal larger than a fig leaf. It is perfectly clear that the conditions that the Labour party has set out under which it would join the exchange rate mechanism make that pledge——

The hon. Member for Bolsover (Mr. Skinner) is correct. The conditions set out by the Labour Front Bench, without the support of the Labour Back Benches, for joining the exchange rate mechanism are essentially bogus, for the conditions mean that the Labour Front Bench could not enter.

In the context of possible entry into the exchange rate mechanism, will the Chancellor tell us whether the sufficiency of any reduction in inflation will be assessed according to the retail prices index or according to the so-called "underlying" rate of inflation? May I have a direct answer, please?

The direct answer, as I have often said, is that the rate of inflation will be assessed on the proximate rate of inflation, which means——

I am coming precisely to the point. The rate of inflation will be assessed not on the RPI, but o n a comparative basis to the measure in which European nations themselves assess inflation. I have repeatedly made that point clear for a long time.

Does my right hon. Friend recall that when there were recent rumours that this country was about to become a full member of the exchange rate mechanism, the immediate effect was that the stock market rose, the exchange value of sterling became firmer and money market interest rates fell? In view of that positive response, which should have warmed my right hon. Friend's heart towards the idea of joining the exchange rate mechanism immediately, will he bear it in mind that if he felt it necessary to take an executive decision, even while the Prime Minister is abroad, to embark on that, he would earn the recognition of a grateful nation?

I have had some attractive offers in my time. I am not entirely sure to what extent my hon. Friend's offer ranks among them.

I have made it entirely clear to the House now and on previous occasions that I have reached the judgment that, when the conditions that we have set out are met, it will be right for us to join the exchange rate mechanism. We must be aware of the point to which my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart), drew attention some time ago, that the balance of advantage in due course is clearly to enter the exchange rate mechanism, and in due course that is what we shall do.

European Bank For Reconstruction And Development

4.

To ask the Chancellor of the Exchequer what position was taken by the United Kingdom Government in discussions on the European bank for reconstruction and development, in relation to the environmental consequences of any development undertaken.

The United Kingdom, like all other potential members of the European bank for reconstruction and development, supports the promotion of economically sound and environmentally sustainable development in the full range of its activities.

The Chancellor and the Economic Secretary to the Treasury will be aware that Mr. Nicholas Brady from the United States Treasury and other European Finance Ministers have taken the lead in calling for environmental objectives to be built into the role of the development bank. May we assume from the Minister's answer that the British Government will support them enthusiastically? Does he agree that there is a big difference between a lot of talk on green issues and practical proposals such as this, which will clean up eastern Europe?

Does my hon. Friend agree that it is not only the recipients of the bank's funds who need to co-ordinate the environmental input into their investment decisions but the industrialised countries of western Europe, which, of course, are the providers of the funds? Is my hon. Friend aware, for example, that the Department of Transport seems to have no accurate comparisons between the environmental input allocated by, say, West Germany or France, as opposed to the environmental input in this country, on transport investment decisions? Would he be so kind as to conduct research within the Finance Ministries of the EEC to see what is actually going on as to the allocation of environmental input in public sector investment decisions?

In so far as that question affects the EBRD, I shall of course ensure that Mr. Attali, when he gets down to his job in London shortly, is made aware of the points that my hon. Friend raises.

The Economic Secretary will be aware that article 2 of the bank's constitution contains a general provision

"to promote in the full range of its activities environmentally sound and sustainable development."
He will also be aware that that provision is due to the leadership and insistence of the United States, not that of the British Government. What practical steps, rather than words, do the British Government intend to take to ensure that that objective is carried out?

If the hon. Gentleman is not satisfied with article 2 of the EBRD's constitution, he should be aware that the EBRD must report annually on the environmental implications of all its policies.

Taxes

5.

To ask the Chancellor of the Exchequer how many taxes have been abolished since 1979.

Five: the investment income surcharge, the national insurance surcharge, development land tax, tax on lifetime gifts and capital duty. Moreover, in his 1990 Budget, my right hon. Friend announced the abolition of stamp duty on share transactions from late 1991–92 and the abolition of composite rate tax.

Does my right hon. Friend accept that that fine achievement is still incomplete? Will he undertake to abolish in the next Parliament as many as possible of the taxes remaining in this Parliament? I suggest for early inclusion stamp duty on house purchase and inheritance tax.

It remains the Government's objective to find taxes that can be abolished and certainly to simplify the tax system. My hon. Friend might also have noticed that, whereas we have abolished five taxes, in its policy document the Labour party proposes the addition of five brand new taxes.

Is not there one tax that the Government have brought in which should be abolished—the poll tax? Is not it a fact that, for every tax that he has abolished, the Chancellor has abolished many benefits, many jobs and all the other things that go with public expenditure that Labour supported?

The hon. Gentleman should recognise that we have dramatically cut the burden of income tax and that that has gone alongside a considerable improvement in living standards, which have increased dramatically during the past decade.

I congratulate my right hon. Friend on his excellent record, but is he aware of the disappointment among my hon. Friends that he has not been able to abolish inheritance tax, especially for small businesses? In view of the tremendous contribution that small businesses make to the economy in general, and to employment in particular, if my right hon. Friend cannot abolish inheritance tax, will he at least ease its quite unjustified burden?

I note what my hon. Friend says, but I am sure that he will acknowledge that we have dramatically reformed the punitive rates of taxation on businesses in capital transfer tax and that we have greatly increased the reliefs for businesses, which make it much easier for small businesses to be transferred from one generation to another. That has been recognised by the small business lobby, but I note what my hon. Friend has said.

In pursuit of the objective of honest taxation, which was identified by the Chancellor a few moments ago, will the Chief Secretary now give us the other side of the balance sheet and list the taxes that have been increased under this Government, starting with VAT and national insurance contributions, and finishing with the poll tax?

As I have already pointed out in reply to the main question, although indirect taxes have been increased, they are taken into account when measuring real standards of living—and real standards of living have dramatically increased on a per annum basis far more than ever happened when the Labour party was in power.

Is my right hon. Friend aware that one of the greatest benefits to the regional economies has been abolition of the taxation and bureaucratic burdens that lay upon them? Will he speculate on the damaging effects of a payroll tax and a regional assembly with taxation powers of its own, as proposed by the Labour party?

My hon. Friend is absolutely right. The Labour party is proposing new tax-raising powers for an elected Scottish Assembly. It has also advanced the idea of a training levy, which would be yet another new tax on jobs. We know that when it was in power the Labour party imposed taxes on jobs and destroyed jobs through the tax system.

Invisibles

6.

To ask the Chancellor of the Exchequer what he forecast for the surplus on invisibles in 1990 in the 1989 autumn statement; and what is his latest forecast.

The Chief Secretary will understand my scepticism about his forecasts, given the Government's bad historic record of forecasting the balance of payments. Does the right hon. Gentleman recall that when Opposition Members have complained about the deficit on manufactures, his Government have frequently told us that we should not worry about that because everything would be made up by the invisibles? Does the right hon. Gentleman agree that it was a mistake so to damage the manufacturing sector that it is incapable of performing in the way that the nation needs? What does he intend to do to ensure that global shortfall in the balance of payments is made up?

On the hon. Gentleman's first point about forecasts, the Government's forecasts on the current account do not differ substantially from those of the vast majority of outside forecasters. Indeed, the right hon. Member for Leeds, East (Mr. Healey) described the forecasts of the Government of which he was a Member as being rather like long-range weather forecasts—better than nothing. We have a higher opinion of our forecasts than that.

The hon. Gentleman also referred to the deterioration on the invisibles account. That is due to a number of factors to which I referred at our previous Question Time, including the timing of EC payments. That is why, despite what happened in the last quarter of last year, we are expecting the position to improve according to the forecasts that I have given to the House.

Will my right hon. Friend give some thought in future to whether, when publishing the invisibles figures, a clearer distinction might be made between interest and dividends received, intergovernmental payments, and the sale of services to non-residents—all of which are conceptually different elements in the national income account, and distinguishing between them might avoid some of the confusion that has given rise to some of the questions this afternoon?

I shall certainly look into the point that my hon. Friend has raised. Several points have been made about the compilation of the invisibles account, including, for example, the fact that appreciation of our overseas assets does not score, although it might be argued that it should count against interest payments and dividends.

The Chief Secretary might be squirming, after 10 years, that his Government have achieved the record that the tax burden has increased sharply since 1979. The total tax burden is much higher now.

Yes, it is, and the Chancellor of the Exchequer knows it. He also knows that the balance of payment on our visibles is much lower now than it was in 1979. He has achieved the unique record after 10 years of his Administration that he managed to wipe out the balance of payments on our invisibles in the last quarter of the last year. Instead of simply telling the House that he expects this shameful state of affairs to improve, will he tell the House precisely why he expects it to do so?

I explained carefully to the hon. Member for Stretford (Mr. Lloyd) why we expected an improvement in invisibles. We also expect an improvement on the current account because we expect the economy to slow down as a result of the measures that we have already taken. We have repeated that on many occasions.

Charitable Giving

To ask the Chancellor of the Exchequer what is the estimated cost to the Exchequer of his proposals to assist charitable giving.

Will my hon. Friend confirm that charitable giving has doubled in the past 10 years and say how much the cost of tax relief has increased over that period?

My hon. Friend is right that the amount of charitable giving in Britain has more than doubled in real terms during the past decade. Tax relief has risen in real terms by 120 per cent. and has been a major stimulus in that welcome increase.

Is it true that the Adam Smith Institute, a right-wing think tank and the keeper of the sacred flame of Thatcherism, benefits under the legislation governing charities? Is it fair that it can call itself a charity? Is not that an abuse of charity law and should not the law be changed?

I can neither confirm nor deny the hon. Gentleman's point. Of course, he could look it up in the public records. However, I have been lobbied in the past on behalf of the Fabian Society for alleviation of inheritance tax. Apparently it receives a large proportion of its moneys from inheritances from deceased members.

What does my hon. Friend think would be the effect on charitable giving if the 171 promises for increased spending in "Meet the Challenge, Make the Change" were implemented, estimated by Phillips and Drew at £19·5 billion?

My hon. Friend makes a good point. Undoubtedly, the increase in charitable giving was due not only to the physical incentives that we gave but to the fact that people have more money in their pockets because taxes are lower. They are able and willing to give more. If that were not the case charitable giving would decrease, as it would under the heavy and increased burden of tax which the Labour party would impose.

Although I welcome the increase in charitable giving, does the Minister agree that many charities are disappointed that more citizens and taxpayers have not used the give-as-you-earn scheme?

I confirm that there is considerable scope for improvement in the use of the scheme that we have introduced. However, last year the number of donors through the payroll giving scheme increased by 50 per cent. and the amounts given increased by 100 per cent. I pay tribute to the level of giving of all kinds in the hon. Gentleman's Province. Although the Province has the lowest income, it has the highest level of giving per head and is an example to the rest of the United Kingdom.

Why is not inheritance tax paid in respect of donations to political parties? What justification can there be for that?

Because the decision was taken, alongside other changes in inheritance tax, by the Committee that considered the Finance Bill last year, without a great deal of dissent.

Investment Growth (Ec)

9.

To ask the Chancellor of the Exchequer what was the total investment growth in the 1980s across European Community countries.

Since 1980 growth of total investment has averaged 2·1 per cent. a year across EC countries.

Do not those figures confirm that Britain and our European partners are preparing well for 1992? Does not that provide a sound basis for future export performance? Will my right hon. Friend join me in welcoming the confidence recently shown by business men in Norwich about future export performance?

I agree with my hon. Friend. Our investment performance compares well with that of other countries. The average for the European Community is 2·1 per cent., whereas total investment in this country between 1980 and 1989 has gone up by an average of about 4½ per cent. a year. That is an extremely impressive record.

Is not the Minister rather easily impressed? He should look at the answer given to me by the Chancellor of the Exchequer on Tuesday in which he suggested that had we achieved a rate of increase in manufacturing investment during the lifetime of the Government comparable to that achieved by France and West Germany we would have had £18 billion more investment and, according to the Chancellor's figures given in that answer, had we achieved the rate attained under the previous Labour Government, we would have had an extra £30,000 million of manufacturing investment. Does not that explain why we are unprepared for 1992?

Opposition Members do not like it when we give some of the good facts about the British economy. That is why the hon. Member for Derby, South (Mrs. Beckett) chose to make a press announcement this morning to celebrate the opening of the World Cup by saying that British economic performance compares badly with that of Italy. During the 1980s, however, we have grown faster than Italy; our investment and manufacturing output has been better and our unemployment rate is lower. Our rate of inflation, based on a comparable measure, is also lower. I fear that the hon. Lady has scored an own goal, and it is a pity. Like Bobby Robson, she ought to play for England.

Does my right hon. Friend agree that the figures are encouraging even if they do not meet the needs of the Opposition? Does he also agree, however, that one of the most important things that we must do is to encourage manufacturing industry to invest in new plant and machinery? When we come to consider new concessions they should be given to manufacturing industry, not to private individuals through individual taxation.

I note my hon. Friend's suggestion; perhaps he is making an early Budget representation. He will also have noticed that in the past couple of years manufacturing investment has grown strongly. I am sure that my hon. Friend, with his concern for manufacturing industry in his constituency, will have welcomed that strong growth.

Mortgages

10.

To ask the Chancellor of the Exchequer what information he has on the percentage of total mortgage holders who pay interest on an annualised basis.

More than 40 per cent. of building society borrowers are members of annual review schemes. No precise information is available on banks and other mortgage lenders.

Will the Secretary of State assure those millions of people, of whom I am one, who have their mortgage payments adjusted annually in the spring, that the next time they are adjusted they can look forward to a reduction in payments?

Interest rates will remain as high as necessary for as long as necessary to bear down on inflation. Once inflation has been conquered in that way, interest rates might come down.

Does my hon. Friend agree that it is hypocritical for Opposition Members to talk about the impact of interest rates on mortgages when they opposed the right to buy and when their roof tax would bankrupt many householders?

My hon. Friend is right. The Labour party is growing increasingly unsure of itself as those sorts of charges are made.

When the Economic Secretary attacked yesterday inaccurate and misleading advertising of mortgages, was he referring to either or both of the following, beginning respectively:

"John Major might take a year to cut"—
[Interruption ]

Was he referring to either or both advertisements that suggest that the Chancellor might cut mortgage rates or that the surest way in which to ensure that mortgage rates come down is to bring about a general election in which case there would be nothing to pay? When he was referring to misleading mortgage advertisements—[Interruption.]

When the Minister was referring to misleading mortgage advertisements, did he have in mind perhaps the biggest-ever misadvertisement for mortgages—that there was any prospect of interest rates coming down in the immediate future and some relief being given to people who are suffering the enormous mortgage misery that affects so many home owners and home buyers in Britain?

That was a poor advertisement for a sound bite. The answer to the hon. Gentleman's question is no.

Business Investment

11.

To ask the Chancellor of the Exchequer by what amount total business investment has increased in real terms over the past three years for which figures are available.

Business investment grew by over 40 per cent. in real terms in the three years to 1989, the largest increase over a three-year period since the war.

Does my right hon. Friend agree that the most encouraging aspect of the investment scene is the amount of investment being made in this country by foreign companies, illustrated this week by the Invest in Britain Bureau, which announced that up to 15 March this year, 233 investments had been made in Britain? It was illustrated also by the fact that 40 per cent. of all Japanese investment in the European Community came to this country, 9 per cent. went to West Germany and only 6 per cent. went to France, proving that other countries know the fundamental strength of the United Kingdom economy.

My hon. Friend makes a good point. This country does well, compared with its competitors, in the receipt of Japanese and American investment. That investment has been into certain key sectors, and there have been particularly important investments in the motor industry. I entirely agree with my hon. Friend.

Will the Chief Secretary mount an urgent investigation into the latest small business to be registered in Britain, National Front Printers Ltd? Will he ensure that that company, which seems to have come into being aided and abetted by officials and possibly Ministers at the Department of Trade and Industry, does not enjoy any tax reliefs or other benefits from the Treasury?

Is my right hon. Friend aware that much of that massive business investment has been in manufacturing industries in Yorkshire, and particularly in my constituency, and that it has contributed to reducing unemployment? Will he congratulate the wool textile export companies which are managing in difficult times to increase their exports?

My hon. Friend is absolutely right. Last year, manufacturing investment grew by about 6¼ per cent. to reach its highest-ever level, and I agree with her comments about the wool textile industry.

Mortgage Rates

13.

To ask the Chancellor of tht, Exchequer when he will next meet the Council of Mortgage Lenders to discuss mortgage rates.

16.

To ask the Chancellor of the Exchequer when he will next meet the Council of Mortgage Lenders to discuss mortgage rates.

I have no present plans to do so, although I recently met the chairman of the organisation, Mr. Birrell.

Does the Chancellor accept that the smug levity with which the Economic Secretary answered the previous question about mortgage rates paid scant respect to the hundreds of thousands of people who are suffering profoundly because of the Chancellor's one-club policy on interest rates? Does he accept that, according to the Building Societies Association, over 400,000 families in Britain are subject to legal action for recovery of arrears because of the mounting problems of interest and mortgage rates? Does he have any message of comfort to offer those people, many of them in my constituency, or is what he has to offer represented only by the kind of rubbish that we heard from the Economic Secretary?

There was neither rubbish nor smug levity in what my hon. Friend said. If the hon. Gentleman consults the Council of Mortgage Lenders or the Building Societies Association, they will tell him without reservation that mortgage arrears account for only a small amount of repossessions and that the principal problems that cause repossessions and other difficulties are marriage break-ups and other marital concerns. They have repeatedly made that clear, and Mr. Mark Boleat of the Building Societies Association did so yet again in recent days.

When the Chancellor is told by his Permanent Secretary that 70,000 mortgage holders are six months or more in arrears does he say to himself, "How could I conceivably have been so incompetent, so ignorant and so irresponsible as to ruin the lives of so many people?"—or does he not care?

I understand the concern of people with mortgage difficulties. The hon. Gentleman, who phrased his question with his usual charm, should bear it in mind that the number of borrowers in serious difficulties remains a very tiny proportion, as traditionally they have been. He will be aware, because I know that he takes an interest in this matter, that the Council of Mortgage Lenders recently issued all sorts of indications of precisely how the lending societies can help people who are in mortgage difficulties. The societies are doing so and I hope that they will continue to do so.