To ask the Chancellor of the Exchequer if he will make a statement on the current level of inflation.

My right hon. Friend the Chancellor has asked me to apologise to the House for his absence today. He is attending the annual meeting of the IMF and the International Bank for Reconstruction and Development in Bangkok.

The answer to the hon. Gentleman's question is that the 12-month all items retail prices index inflation rate was 4.1 per cent. in September—the lowest level for more than three years—and, since August, is below the European average for the first time in four years.

I thank the Minister for that reply. All sensible people welcome the decline in the high and unacceptable rate of inflation, but the price that has been paid for that has been enormous in terms of the erosion of our manufacturing base. I do not ask to be forgiven for referring in particular to the position in Scotland, where it could be argued that in previous recessions some of our old basic declining industries were impaired. But now we see the impairment of our high technology manufacturing base. That is an unacceptable fact. That loss should be halted as soon as possible. What are the Chancellor's proposals on that?

Of course, I understand the hon. Gentleman's anxiety. As he rightly says, we should all welcome the news on inflation because plainly it is a condition precedent to full economic recovery, and in particular to the reduction in unemployment, that we should have a climate within which British industry can expand and compete on favourable terms with that on the continent. The fact that today our inflation rate is within 0.2 per cent. of the German rate is extremely good news to those who look for economic recovery. The hon. Gentleman will welcome the fact that the unemployment figures published today are encouraging in Scotland.

Has not the prestigious Item club made it clear that in the unlikely event of a Labour Government's being elected, the current levels of inflation would be doubled within a short period? Would that not be a tragic end to the great successes that we have achieved in lowering inflation in the past 18 months?

As time goes on, people will look more and more closely at the Opposition's policies, and on issues that worry them about our handling of the economy they will ask where the Labour party would differ and what would be the consequences. The Item club is the last in a long list of forecasters who on every key indicator show that the Labour party's policies would make the position worse.

As the Government's policies were responsible for high inflation in the first place, there is clearly no room for self-congratulation. How many people will lose their jobs? How much further will unemployment rise? How much further will manufacturing industry be eroded and undermined as is happening in the west midlands, which suffered badly enough 10 years ago and is now hit by the second wave of recession? Do the Government intend to do anything whatever about unemployment?

The hon. Gentleman suggests that the Government invented inflation. When he was a Back-Bench Member supporting a Labour Government, inflation averaged 15 per cent. The long run average for inflation under this Government has been less than half of that and is well in touch with our European competitors. British industry has come well through this recession. Export volumes are 5½ per cent. up on the year to the end of August. We are well set for a recovery which will undoubtedly take people back into jobs. Before the hon. Gentleman smiles too much, may I say that I am sorry that that is a matter of sadness to him? He knows full well that the last time there was a peak in unemployment in the 1980s, it was followed by more than three years of continuous falls in unemployment, totalling 1½ million. There is no reason why that success should not be repeated, if there is a Conservative Government.

Is it not a remarkable achievement that, contrary to the forecasts of pessimists, since sterling joined the exchange rate mechanism just over a year ago the United Kingdom has enjoyed stable exchange rates, lower inflation and lower interest rates? Is not that the only recipe for sustained economic growth?

Yes, indeed it is. The ERM disciplines have proved to be well worth while for this country and the Government are committed to them. The evidence is there for all to see.

To ask the Chancellor of the Exchequer what are the percentage changes in (a) the total value of shares quoted on the international stock exchange and (b) total investment in manufacturing industry since 1979.

The increase in the total value of shares quoted on the international stock exchange between March 1979 and June 1991 was 560 per cent. The value of the manufacturing capital stock at current prices doubled between 1979 and 1990.

Whatever gloss the Treasury seeks to put on those figures, manufacturing investment between 1979 and 1990 rose in real terms by a pitiful 10.6 per cent. whereas the market value of United Kingdom and Irish equities rose in real terms by 214 per cent.—20 times more. Surely that is eloquent testimony to the fact that market forces are not working and that capital markets and institutional investors are failing British industry abjectly. What do the Government intend to do about that?

I hope that the Labour Front Bench will listen to that critique of capitalism because they no longer believe what the hon. Gentleman believes. He cannot draw those conclusions. Stock market valuations are higher because companies are more profitable, better run and paying less in tax, and therefore worth more. A good deal of that—some £70 billion—is accounted for by privatisation. I am sorry that the hon. Gentleman is so unhappy about the level of manufacturing investment. It may interest him to know that the average annual level of manufacturing investment between 1979 and 1990 was £9,788 million a year and the average between 1974 and 1979 was slightly less, at £9.77 billion.

Can my hon. Friend confirm a change that has taken place which is of immense importance to our economy and nation—that for the first time in living memory the number of individual shareholders exceeds the membership of trade unions? Long may that continue.

My hon. Friend is right. We think that it is excellent that more and more people own shares in companies, but it seems that that opinion is not shared by Labour Members, who hate any form of private ownership.

To ask the Chancellor of the Exchequer if he will make a statement on personal income tax.

The basic rate of income tax has already been reduced from 33p to 25p in the pound. We intend to reduce it further to 20p in the pound over time.

Does my hon. Friend agree that people do not want to pay higher taxes? Indeed, they want to pay less tax. If people wanted to pay more taxation, the Labour party would not be so desperate to hide the truth about its extravagant spending policies.

It is conspicuous that the Labour party has not contested a single one of the spending pledges that we costed last summer. I assume that it accepts that every one is correct, and they are increasing almost day by day. My hon. Friend is entirely right that it would be impossible for any Labour Government to fund those extravagant spending pledges without raising the basic rate of income tax as, indeed, every Labour Government, except Ramsay MacDonald's first one in 1924, has done.

As it has been the Chancellor of the Exchequer's declared policy for quite some time to reduce income tax to 20p, what is holding him back? Is it the fear that public services are already so stretched for resources, particularly in areas such as education, that further cuts are not possible? Or is it the fear that the boom consequences that were generated when the right hon. Member for Blaby (Mr. Lawson) was Chancellor would be generated by a sharp cut in income tax rates?

There is nothing very dramatic about the position. We managed to reduce the basic rate of income tax over a period of years and, along with the whole tax-paying nation, we were glad that we did. We shall continue to reduce taxes when it is possible, prudent and safe to do so. In a time of recession, when tax revenues are inevitably less buoyant and when public spending increases, as it always does in a recession, it is not possible to do so at present.

Is the Minister aware that the Inland Revenue's new method of assessing mileage by voluntary drivers for hospital and other community work is causing a measure of dismay and confusion? Is he further aware that unless the method of assessment is modified, a number of those voluntary drivers will be deterred from offering their services?

I am aware that there has been a good deal of concern about the matter. I should stress that it is only the extent to which any mileage allowance exceeds the cost to the driver that is chargeable to tax. That has always been the case. That is the law as it has stood for many years, but as it is well understood that people who have been receiving the allowances have not been charged tax on that basis I have decided that the introduction of the charge to tax should be phased in gradually over a number of years.

In view of the state of our education and health services, and particularly of training and transport, will the Minister explain how it can be wise stewardship for the Government to contemplate using resources for tax cuts rather than for investment?

As the hon. Lady has taken the opportunity to rise to her feet, she may care to explain from which of the Labour party's pledges she is now resiling. [HON. MEMBERS: "Answer."] I will give the hon. Lady a straight answer. In the middle and late 1980s, we managed at the same time to increase spending on all those desirable objectives to which she referred, to run a substantial budget surplus and to reduce tax, and we shall be able to do so again.

Does my hon. Friend agree that the only possible consequence of placing an additional tax on savings income would be to reduce savings, which would be a thoroughly inept and dangerous policy for this country to adopt?

At a time when the consensus everywhere, outside the ranks of the Labour party, is that savings should be encouraged, it is remarkable that Labour Members cling to their antediluvian ideas about taxing savings ever higher. The Labour party hates people having savings, hates people being independant and wants to tax people's savings so as to discourage them from having any.

To ask the Chancellor of the Exchequer if he will exempt school uniforms from value-added tax irrespective of size.

No. Under the EC VAT sixth directive, member states may neither widen the scope of existing zero rates nor introduce new ones.

I remind the Minister that I received precisely that reply long before the regulations relating to the EC were introduced. Is she aware that the myth that children's clothes are exempt from VAT is easily exploded by the fact that children grow much faster than the rate allowed for by the Treasury? With the increases in VAT, thousands of parents suffering unemployment, combined with family poverty, are having to pay VAT on children's shoes for school, which can cost £25 or £26, and full VAT on school uniforms. Will the Minister find a way to enable uniforms designed for children to wear at school, and the wearing of which is compulsory, to be exempted from the tax?

I have explained that under the sixth directive, member states may neither widen the scope of existing zero rates nor introduce new ones. The hon. Lady will also be aware that the sizes and measurements in the schedule take account of the average sizes of children up to their fourteenth birthday, which is a suitable cut-off point. Even if we were allowed to do it, the problem would be to make certain that the benefit of zero rating was confined to children. As those who followed the Jaffa cake saga will know, definitions are a great problem in the VAT system.

In addition to the important point raised by the hon. Member for Eccles (Miss Lestor), may I ask my hon. Friend to comment on VAT on horses?

Not unless they wear school uniform.

When children wear school uniform to ride horses, can my hon. Friend say anything about VAT on horses?

I am not sure whether I am allowed to reply to that question. You seem to be nodding, Mr. Speaker.

Yes, depending on the answer.

All right. There have been considerable problems for the bloodstock market caused by distortions within the European Community which have disadvantaged the bloodstock industry in this country. We have agreed to enter into discussions with the industry to see whether we can work out an acceptable agricultural flat rate scheme. That will depend on discussions with the industry, but progress is being made.

To ask the Chancellor of the Exchequer when he last met representatives of the Child Poverty Action Group to discuss the effects of the Government's economic policies on child poverty.

My right hon. Friend met representatives of the CPAG in June 1990.

Is the Minister familiar with the report of the Select Committee on Social Security which says that more than 3 million children in the United Kingdom are now living in conditions of poverty? Will he confirm that the level of child benefit in relation to earnings is now lower than at any time since 1948? When he next meets the Child Poverty Action Group, will he consider seriously its advice that an immediate substantial increase in child benefit is needed to offset the worst consequences of his economic policies on those who are most vulnerable?

It may interest the hon. Gentleman to know that when my right hon. Friend the Chancellor announced the increase in child benefit in the Budget the CPAG wrote congratulating him, saying how pleased it was with the increase.

The statistics on the number of people living in poverty are, as the hon. Gentleman knows, completely meaningless as they rely on a totally artificial definition of poverty—[Interruption.] I did not say that there was no poverty, but that the figures on how many people live in poverty are artificial. They rely on taking a notional percentage of income and saying that everyone below that level lives in poverty. As the hon. Gentleman knows, that is not so. Under this Government, real incomes have risen at all levels and the incomes of the poorest 10 per cent. of households have risen by 9½ per cent.

When my hon. Friend next meets the Child Poverty Action Group, will he discuss the role of legislation in relation to accounts submitted by politically motivated charities? Is he aware that for the past 10 years Christian Aid has not submitted full accounts and that there is grave disquiet about the performance of Oxfam?

That is a little wide of the Child Poverty Action Group.

Will my hon. Friend ensure that the CPAG submits full accounts for the current year and for subsequent years?

My hon. Friend raises an interesting point. The whole question of charities' accounts is being considered.

To ask the Chancellor of the Exchequer if he will make it his policy that all tax arrangements and other regulations in regard to products available for sale in the United Kingdom shall apply to imported items with at least the same stringency as they apply to items produced in the United Kingdom.

The Government are fully committed to removing distortions in the market between home-produced and imported goods.

While I support the idea of restrictions likely to reduce smoking and improve health—indeed, the Opposition have a greater commitment to that idea than the Government have—does the Minister agree that to implement regulations so as to place a greater onus on home-produced items than on imported items is likely to endanger jobs in this country to the benefit of jobs abroad, without any balancing improvement in health? Will the Minister undertake, with colleagues in other Departments, to review the Government's approach to the matter?

The hon. Gentleman clearly understands that the Tobacco Products Labelling (Safety) Regulations 1991, based on the EC directive to which he referred, are a matter for the Department of Health. The directive applies partial harmonisation, so there appears to be a little room for manoeuvre above the 4 per cent. of the surface area of the front pack that has to be devoted to the health warnings. From a tax standpoint, the important issue is that all products manufactured to be sold in the United Kingdom will be required to display English language warnings, whatever the text or size permitted, so that packs of cigarettes being imported which do not bear that warning are likely not to have had duty paid on them. That will be useful from a tax point of view.

Will my hon. Friend look particularly at those European countries to which we export goods and which impose high rates of VAT upon those goods? Most of the tax raising in those countries is done by indirect taxation through VAT. Does that not give an unfair advantage to people who export goods to us, given that we impose a low rate of VAT compared with the European average? Surely, the evening out of VAT throughout the European Community would be good for industry and we should not resist that.

I agree with my hon. Friend. The Government are fully committed to removing the distortions, whichever way they work.

Have not the Government also agreed to increase dramatically the duty paid allowances for travellers from Europe coming to Britain, including returning British citizens? In so doing, the Government have forgone more than £1 billion in duty, mostly on cigarettes and spirits. Can the Minister tell the House how that duty forgone will be made up? Do the Government intend to increase VAT again? Do they intend to extend the public sector borrowing requirement still further or to cut expenditure on the national health service to encourage people to smoke cheaper cigarettes? It surely requires a peculiar incompetence on the Government's part to lose £1 billion of revenue and to encourage cigarette smoking at the same time.

It seems that the hon. Gentleman has been reading some rather misleading figures. For example, the Tobacco Advisory Council claimed that the effects of the single market would mean a £1 billion loss in revenue, but that claim is far too high as it assumes that every traveller who smokes will bring in 2,000 cigarettes for his own use each time he passes the border. As things stand, travellers who smoke by no means use up their allowances. The Government estimate that the loss in that particular case might be about £200 million.

To ask the Chancellor of the Exchequer how he proposes to measure convergence between the economies of European Community member states.

This is being discussed in the intergovernmental conference on economic and monetary union. The criteria should include measures of price stability, the sustainability of public finances and monetary stability.

Does my hon. Friend agree that there is a degree of inconsistency in the way in which the various member states of the European Community measure economic developments of one kind or another? Does he therefore believe that there is a case for harmonisation in the way in which economic trends are measured so that countries cannot claim to have converging economies when they are diverging?

Inevitably, there are different measures of economic convergence. I have mentioned just some of them, and those are the ones that we believe are of particular importance for the purposes of economic and monetary union being discussed at the intergovernmental conference. There are accepted common measures of convergence which are applied for the purposes of comparison between various member states.

Does the Minister agree that whatever rules are adopted to measure convergence, notice must be taken of money available in Brussels for regional development? Will the Government therefore now honour the commitment that they entered into to supply money to the coal mining regions of Britain under the RECHAR scheme? Those regions rightly regard that scheme as extremely important. After all, such money is not part of a budget rebate to Britain—it is part of a scheme intended to provide additional and direct benefits to the regions concerned.

I am well aware of the issue, as my constituency is one of those which should be in line for some of the money from the scheme. I hope that the hon. Lady will use her contacts with European Commissioner Millan, whose decision it is to withold those funds from Britain. My constituents—and, I suspect, the hon. Lady's constituents—have a pretty strong grievance against that Commissioner for his refusal to give that money which is due to Britain.

Does my hon. Friend agree that, whatever measures of convergence between the economies of European states are used, they are still such a long way from a degree of convergence that could support any form of economic or monetary union as to make it dangerous to talk about practical steps in that direction in the near future? Will he ensure that that reality is reflected in the British position in the negotiations?

I assure my right hon. Friend of that. From the inception of those discussions it has been our view that any monetary union that was not founded on real and sustainable convergence would be doomed to failure and disaster from the outset. As we have argued that case quietly, firmly and persuasively, we have won others to the cause. There is now a growing consensus among the 12 member states of the Community that strict convergence is of paramount importance before any moves to full monetary union take place.

Does not real convergence depend not only on the headline rate of inflation and interest rates but, crucially, on levels of growth, unemployment, investment and output? On all those fronts do not we lag miles behind our European partners? Will not this country continue to lag behind unless and until we have a proper industrial strategy for manufacturing industry?

That is one of the most fanciful outbursts that I have heard for a long time. Our rate of unemployment has been consistently below those of most of our major competitors in the European Community. In any event, it is not essential as a precondition for monetary union that there should be comparable levels of growth or output. Within any country or confederation that is an economic union there are wide disparities in all those measures. The measures in which it is essential that there should be convergence are those that I mentioned: interest rates, inflation rates and—I should have thought this was of some importance to the Labour party—the state of public finances. Any country that did not get a grip on its public finances and get its public deficits under control would have serious problems. On all those measures our record is exceptionally good. The hon. Gentleman mentioned rates of growth, but he may have failed to notice that, during the 1980s, our rates of growth outstripped those of every other member state of the European Community.

Does my hon. Friend agree that the discipline of exchange rates in the exchange rate mechanism is one way to ensure that there will be ultimate convergence within the Community? However, that also provides the possibility for competitive instincts on taxation and fiscal policy. Has not the Government's record of keeping taxation low for direct taxes and the corporate sector led to an inflow of inward investment from outside the Community? Forty per cent. of non-Community investment has flowed into this country, forcing other countries to adopt lower taxation, too.

It is certainly correct that the very favourable environment for business that we have created in this country has led to the lion's share of inward investment into the Community coming to Britain which we warmly welcome. I am sorry that, at its conference, the TUC chose to describe Japanese inward investment as being alien. When a Labour spokesman climbs to his feet he may wish to say whether the Labour party associates itself with those offensive remarks, which are completely against the national interest.

To ask the Chancellor of the Exchequer what quantity of items seized by Her Majesty's Customs and Excise belonging to endangered species of animals have been disposed of in the last 12 months.

Disposal by customs of items belonging to endangered species is normally done locally. Thus, central records are not compiled. However, I can tell the hon. Gentleman that in the year to 31 March 1991, 2,395 such items were seized and all will be, or have already been, disposed of.

I thank the Minister for that reply and I am sure that the entire House would wish to congratulate Customs and Excise officers on their excellent work in trying to stamp out the vile trade in endangered species. However, many of them think that they are only scratching the surface of that trade and that more officers would enable better results to be achieved. Has the Minister considered that? Moreover, will she make it clear that, wherever possible, prosecutions will take place, because I understand that in 1990 there were no prosecutions of people caught bringing in endangered species.

The other question that I would like to ask—

One question. It is not fair on others.

The hon. Gentleman mentioned prosecutions. There were prosecutions in the year ended 1990 and I believe that the hon. Gentleman has had a written answer to that effect. There was only one prosecution in the year ended 31 March 1991, with the result that two people were gaoled, one for 30 months and the other for 15 months. Obviously, the seizure of the items and their confiscation is also a penalty. From the point of view of the court, the difficulty with the prosecutions is that there has to be proof that the offence has been knowingly committed. That is always the problem; it is not confined to these cases.

On the number of customs officers concerned with such work, we are satisfied that they are doing an excellent job. One of the hon. Gentleman's colleagues recently wrote to congratulate us on the seizures of coral.

May I press the Minister a little further? The current Customs and Excise report says that 1,230 live animals and birds, 1,092 plants and 2,395 articles such as elephant tusks, stuffed animals and birds were seized. The Minister could do more by increasing substantially the publicity at United Kingdom ports which would help to secure more convictions. The report says that criminal proceedings were taken against only five people. That is not enough. I earnestly urge the Minister to do everything that she can to ensure that those who carry on this vile and obscene trade face the full rigours of the law when they are caught passing through ports in the United Kingdom.

The hon. Gentleman will have noticed that display cabinets have recently been erected in many of our ports to show the type of items that are not permitted. That is a useful initiative which will bring to the attention of the public in a visual and concrete form the endangered species and their parts and derivatives that are not allowed.

To ask the Chancellor of the Exchequer when he next intends to meet the Governor of the Bank of England to discuss matters relating to the British banking system.

My right hon. Friend meets the Governor from time to time to discuss various matters.

When the Chancellor next meets the Governor, will he raise with him the question of political contributions made by banks in the United Kingdom? Is not it true that Bank of Credit and Commerce International associate companies paid money to the Conservative party? Can those moneys now be returned to the banks for use by the liquidators so that at least some people will get their money back?

Hear, hear.

Hon. Members should be careful before saying "Hear, hear". The hon. Gentleman is in the habit of making unsubstantiated but very serious allegations in this place. To make one the day after the chairman of the Conservative party has said that, to his knowledge, no contributions were received from BCCI or from any of its senior executives surpasses even his usual low standards.

When my hon. Friend next meets the Governor of the Bank of England, will he impress on him the great disillusionment felt by industry, especially manufacturing industry, about the way in which the clearing banks have been behaving, particularly in the past few months during the recession? Is he aware, for example, that a number of companies are bypassing the banking system altogether and placing money through solicitors so as to avoid arbitrary action by the banks? Will he ensure that the Governor makes it perfectly clear to the clearing banks that they are a service industry and that it is their duty to ensure that their customers, as the wealth creators, prosper before the banks take their cut?

As my hon. Friend will know, the Treasury and the Bank of England looked into the whole matter of the banks' treatment of small businesses in considerable detail. They asked the banks to come up with codes of conduct in relation to their dealings with small business customers. I am delighted that the Midland bank has already published its code, which we will study carefully. I believe that the other banks will publish their codes before the end of the year. If my hon. Friend has any specific instances of what he mentioned, I should be grateful if he would let me or the Governor know of them.

Now that the Abu Dhabi authorities have announced that there will be no restructuring of BCCI because the alleged fraud amounts to $10 billion, what will the Government do to help and support British depositors and former members of staff?

As the hon. Gentleman knows, the Bank of England stood ready to look at any proposal made to it for restructuring the bank. Unfortunately, that has apparently not been possible—no such proposal has been made to it. On 2 December, the date to which the hearing was adjourned, the deposit protection scheme will come into operation. It is more generous than the one which the Abu Dhabi authorities offered. So depositors with sterling deposits in United Kingdom branches of BCCI will receive 75 per cent. of their money up to a maximum of £15,000. Employees have been paid up to the middle of September, or the beginning of this month—I am not quite sure which—and I understand that they will receive their full redundancy payments in the near future, although complications surround that.

If there are further measures that we can take, I will be happy to listen to the hon. Gentleman's advice, but we have gone to considerable lengths to publicise the arrangements made with the other clearing banks to help former business customers of BCCI to establish alternative banking arrangements. Those arrangements have been re-publicised recently, but if the hon. Gentleman thinks that anything else can be done, I shall be happy to hear what he has to say.

Is not there a strong case to be made for separating the banking supervision responsibilities from the central banking responsibilities of the Bank of England, as happens in Germany, France and Switzerland? Given the conflicts of interest that can arise between supervisor and central banker and the need to maintain the special authority of the Governor of the Bank of England, will my hon. Friend consider reviewing the decision that the Government took back in 1985—that this was not the right course of action? In the light of events, we should now consider a more fundamental restructuring.

Since my hon. Friend invites me to think about that, I will, but I doubt whether I shall come to a different conclusion—or whether the Chancellor will. The supervision of banks and the knowledge that the central bank has of its major bank customers from dealing with them seem to me inextricably and valuably linked. My hon. Friend quoted examples of countries with separate authorities, but there are many other countries in which the authority is the same and the United States is experiencing difficulties from having had banking supervision fragmented among different authorities. There is quite a lot of advantage to be had from a central bank having supervisory powers as well.

To ask the Chancellor of the Exchequer if he will make a statement on the progress towards economic recovery in the United Kingdom.

Recent developments are entirely consistent with the Budget forecast for recovery in the second half of the year.

Will the economic recovery this time mean a real fall in unemployment and business bankruptcies, or will it be like the so-called improvement in the British economy between 1979 and 1989, where there was a 39 per cent. increase in consumer expenditure, but only a 10 per cent. increase in British consumer production, leading to a 94 per cent. increase in consumer imports and a colossal balance of payments deficit?

That is an extraordinary description of 10 years which I suspect many people found to be among the most prosperous and successful they have ever lived through. At the beginning of that period Britain was bottom of most of the industrial league tables; at the end of it we were at the top. That is the true record of the 1980s.

Does my right hon. and learned Friend agree that economic recovery is being assisted by the Chancellor's acceptance of the unanimous view of the Treasury and Civil Service Select Committee that the automatic stabilisers should not be inhibited at a time of recession? Is not it entirely appropriate to run a larger public sector borrowing requirement at a time of recession to assist recovery; and is it true that this should in no way undermine international confidence in the position of the economy?

I am most grateful for my right hon. Friend's remarks. We aim for a balanced budget in the medium term. In some years a surplus on public finances has been achieved; in others, such as this year and next in our forecasts, we shall certainly run a public sector borrowing requirement, but within manageable levels—unlike the 9½ per cent. PSBR that the previous Government ran up 15 years ago.

Are the Chief Secretary and the Government at all concerned about the dramatic fall in investment in the manufacturing sector? Can he explain how we can possibly recover by means of an investment-led recovery if investment in our manufacturing sector keeps falling? How will we ever manage to counter the unemployment that is raging through the manufacturing sector, with more and more redundancies announced every day? How can we do any of those things if investment keeps falling? What do the Government intend to do about this serious situation?

The facts are totally contrary to what the right hon. and learned Gentleman says. Any fall in investment during this recession has been from historically high levels—[Laughter.] Since the Opposition find it amusing I shall give them the figures. At 1985 prices, the average investment per year in manufacturing for the six years of the Labour Government was £9.8 billion. For the past six years of this Government the average was £10.9 billion a year. Gross domestic investment in plant and machinery in Britain at 1985 prices was £19.7 billion in 1979 and £32.6 billion in 1990.

To ask the Prime Minister if he will list his official engagements for Thursday 17 October.

I have been asked to reply.

My right hon. Friend the Prime Minister is attending the Commonwealth Heads of Government meeting in Harare.

Will the Leader of the House ask his right hon. Friend to join me in condemning the waste of money by Barnsley district general hospital, which is paying for a number of employees to go on a luxury holiday fact-finding mission to a Paris hotel as part of the hospital's move towards NHS trust status? Is that another example of the Government allowing hospitals to waste money in pursuit of their NHS reforms?

I did not know of that incident. Our reforms are achieving considerable savings right across the board, all of which are being directed at patient care.

If, as has been reliably reported in the press this morning, the Government are—doubtless from the most admirable motives—offering training and education to civil servants from the African National Congress, are not we in danger, first, of assuming an outcome to the constitutional process in South Africa which may be disproved by events? Secondly, are not we in danger of racial discrimination against a significant and admirable people, the Zulus?

What is being proposed is training for people who will participate in the Government. The training that we could offer should greatly help with the whole question of race relations and the future of South Africa.

Does the right hon. Gentleman recognise that unemployment in Britain has risen by over three quarters of a million in the past 12 months, that there have been more than 340,000 job losses in manufacturing industries over the same period and that unemployment in our country is rising faster than in any other European Community country? Is not it clear that the Government's policies are doing long-term damage to the British economy? Is not the right hon. Gentleman ashamed to belong to a Government who are doing Britain down in so many ways?

I hope that the right hon. Gentleman will look at his own policies and realise that they would lose more jobs more permanently.

As a direct result of the policies of the Government in which the right hon. Gentleman serves, output and investment continue to go down. Government borrowing continues to rise and unemployment is heading towards 2.5 million for the second time in 10 years under this Government. Is not it clear that the longer that Cabinet members hang on to their jobs the more other people will lose theirs?

For every day that the Government have been in office, on average 220 new jobs have been added, nearly 100 new businesses have been created and 880 families have bought new homes. That is our record. Employment is higher than it was four years ago and higher than it was under the last Labour Government and it is higher than the European average. Investment over the period is substantially up. That is why we have been able to achieve this record, which is way ahead of anything that a future Labour Government would do.

For the past three years and for next year Britain will be bottom of the investment, jobs, growth and other leagues of the major industrial countries. In Britain, more than 1,000 jobs a day are being lost in industry and services and manufacturing is bearing the brunt of that. Surely the right hon. Gentleman can be proud of nothing in that record. Is not that manifested by the shuffling off of the autumn statement until the end of November because the Government are afraid to bring it forward at the proper time?

That latter point is entirely irrelevant. The decision on when the autumn statement should be made will be taken in the normal way. In the period as a whole, just as in recent times, there has been considerable success in getting inflation down to the levels of our major competitors overseas. That is the issue that most guarantees jobs long term.

As for manufacturing industry, the director general of the CBI said in the summer:

"Virtually everything associated with our manufacturing base is better than it was"

in the era of Government interference, lost orders, strikes and horrific inflation. That was the era of the last Labour Government. The right hon. Gentleman has no right to talk about policies that effectively improve competitiveness, investment and productivity. That is what we have been achieving.

Does my right hon. Friend agree that Opposition spokesmen seem to take particular delight in talking down the British economy—[Interruption.]

Order.

rose—[Interruption.]

Order. This takes up time.

—and the Government's achievements in the economic sphere? Does my right hon. Friend agree that the amount of inward investment is proof positive that the foreigner has confidence in this country because the economy is not only sound but is better than it ever has been?

I entirely agree with my right hon. Friend and I apologise if I interrupted him. The Labour party simply ignores all good news and there is a deal of it at the moment. My right hon. Friend is right to draw to our attention examples such as the substantial bringing down of inflation and the high regard of overseas companies, which is shown by their rates of investment in this country.

To ask the Prime Minister when he will make his next official visit to south London.

I have been asked to reply.

My right hon. Friend the Prime Minister made an official visit to south London in September and intends to do so again in the future.

When the Prime Minister or other Cabinet Ministers next come to south London, will they say whether they agree with the comment of the Archbishop of Canterbury, made half an hour ago in Church house, that the inner cities of Britain suffer from severe and divisive inequalities and severe deprivation? If they accept that that is the case, is it Government policy to increase the gap between the richest and the poorest, as has happened over the past 12 years, or will Government policy change under the new Prime Minister, so that the gap between the well off and the poorest will narrow in the years to come?

I understand that the Archbishop also paid tribute to the Government's inner cities programme, which has been substantial—

indicated assent.

The hon. Gentleman acknowledges that now, but he forgot to include it in his supplementary question. The inner cities programme and many others, including the urban initiative, have greatly improved the prospects for all our inner cities. There are many examples of that. One of the things from which inner cities suffer is Labour councils.

Does my right hon. Friend agree that an improvement in the teaching of economic history in our schools—

Order. This question is about inner London.

I should have said inner London schools, Mr. Speaker. Does my right hon. Friend agree that every child in inner London should be taught that every Labour Government, without exception, have increased unemployment?

My hon. Friend is right. Labour Governments have increased unemployment, increased waiting lists in hospitals and hugely increased the public sector borrowing requirement to the level to which my right hon. and learned Friend the Chief Secretary to the Treasury referred. As my right hon. and learned Friend said, if the PSBR were at the level that was reached under the Labour Government, it would be about £50 billion.

To ask the Prime Minister if the will list his official engagements for Thursday 17 October.

I have been asked to reply.

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

Is the Leader of the House aware that the Minister of State with responsibility for health in Scotland is still hell-bent on pushing the Royal Scottish National hospital to opt out, despite opposition from the overwhelming majority of the staff, the local community and relatives of the mentally handicapped patients? Given the Prime Minister's fine words last week about the power to choose and the right to own, will the right hon. Gentleman defend the people's right to choose that their hospitals remain owned and administered by local health boards instead of self-governing trusts?

There is no doubt that self-governing trusts are already considerably improving the management of the hospitals concerned. My right hon. Friend the Secretary of State for Scotland will be considering the application to which the hon. Gentleman referred, as others, in the light of consultations.

To ask the Prime Minister if he will list his official engagements for Thursday 17 October.

I have been asked to reply.

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

Does my right hon. Friend agree with the chairman of Granada Television, who said yesterday that the Independent Television Commission had exercised its judgment in favour of quality? Does he recall that it was a Conservative Government who created ITV? Conservative Governments also created independent radio and Channel 4 in the teeth of opposition from the Labour party. Will not yesterday's decisions mean that the second rate and the incompetent will give way to those who are professional and entertaining? We could not expect the Labour party to begin to understand that.

My hon. Friend is right. Both choice and quality of television have increased under Conservative Administrations and there will soon be a fifth television channel. We have seen the birth of satellite and cable television, which has expanded the range of programmes that people watch. My hon. Friend is right, too, to suggest that in setting up the Channel 3 and Channel 4 licensing systems, the Government aim to achieve a balance between market forces and quality and to maintain quality. I believe that that is what is happening.

When the Government did their U-turn on child benefit in the Budget and finally increased it after freezing it for several years, in a peculiar act of meanness they took £1 from the allowance of widows with dependent children. Will the Government recant on that act of meanness and give widows back their £1?

The hon. Gentleman knows that there has been a considerable increase in all social security benefits over the years. There has been a considerable increase also as a result of the targeting of priorities.

To ask the Prime Minister if he will list his official engagements for Thursday 17 October.

I have been asked to reply.

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

Does my right hon. Friend recognise the need to revise the arrangements for the payment of European regional development funds, with specific reference to additionality? Is he aware that many people in the regions that have been identified as in need of additional investment believe that we are unable to benefit from the additional resources? Of the £45 million allocated to Cornwall and Plymouth, it will be possible to take up only £27 million because of restrictive measures.

My right hon. Friend the Secretary of State for the Environment has taken steps to resolve the problems arising from the specific targeting of aid at local level and I shall bring my hon. Friend's concern to his attention.

Given the Prime Minister's personal pledge to assist in the regeneration of Lanarkshire and the precedent that has now been set of political intervention in the decisions of British Rail, will the Leader of the House assure us that the Government will be using their influence to ensure that the new Eurofreight terminal in Scotland is sited at Mossend in Lanarkshire? If it is justifiable politically to intervene in the decisions of British Rail to protect political interests in the south, is not it equally justifiable to protect the economy and the regeneration of employment in Lanarkshire and Scotland?

The hon. Gentleman knows that I am familiar with Lancashire—[Interruption.] I am familiar with Lancashire because I have just been there, but I meant to say Lanarkshire, where I was born and brought up. The hon. Gentleman's specific point is not one with which I am familiar, so I shall draw it to the attention of the appropriate Minister.