To ask the Chancellor of the Exchequer what areas of welfare spending he has excluded from his review of public expenditure.

To ask the Chancellor of the Exchequer what progress has been made in his review of public expenditure of major spending Departments.

The Government are conducting a long-term review of public expenditure starting with the Department of Social Security, Department of Health, Department for Education and the Home Office.The Government have a duty to examine all areas of public spending to ensure that they give value for money. We would be failing in our duty if any area were to be exempt from scrutiny. The reviews will produce interim results that will be helpful in this year's public expenditure survey.

Millions of people are concerned about the review and the Government should set out its terms of reference and scope. Given the Chief Secretary's meeting with the Prime Minister to rewrite invalidity benefit, will he confirm that the Government intend to exclude

"those who suffer from progressive diseases—for example, multiple sclerosis—and heart patients who are unable to walk on the flat for 200 yards"?

Before I am accused of scaremongering, I may say that that is a direct quote from the Department of Social Security document prepared for that meeting. Will the Chief Secretary explain what other cuts he intends to make to meet the £5,000 million target set for the DSS that is mentioned in that same document?

The hon. Gentleman knows that the Government are on all fours with the Opposition. The right hon. and learned Gentleman the Leader of the Opposition said:

"I set up the Social Justice Commission to conduct a very wide-ranging view of the … complex system of tax, benefits and rights … We have not looked at any of this, almost since Beveridge."

That is what the Government are doing. We are examining the way in which we provide value for money through the system. As to invalidity benefit, the hon. Gentleman knows that that must be looked at. There has been a massive increase in the number of claimants for invalidity benefit at a time when the health of the nation has been improving. That benefit now costs £6·2 billion a year. No decisions have been taken—in fact, no firm proposals have yet been put to Ministers. It is of course of great importance to us to ensure that the vulnerable are protected.

Now that the Chancellor has ruled out prescription charges for pensioners and charging for hospital beds, will he improve his left-wing credentials further by ruling out additional cuts in invalidity benefit and prescription charges in respect of children who are just above income support level? Or does the Chief Secretary feel that the Chancellor will be a little too worried about his own political advancement if the right wing of the Conservative party disapproved?

The hon. Lady does not help the debate by trivialising it. We obviously have to address the question of social security spending rising faster than our national income, which presents us with a problem. We must examine the benefits that are growing fastest and ask ourselves why benefits are rising 3 per cent. a year in real terms, which is much faster than national income. We must take careful decisions. There will be no announcements before November, and it will be later than that, in respect of long-term questions, before we can reach decisions, because those serious matters need careful consideration.

When my right hon. and learned Friend reviews public expenditure, will he bear in mind that every firm in the country that has survived during the recession—small, medium or large—has had to cut its overheads and slim down its staff? Meanwhile, the public sector and local government are still bloated. In the last year, we have increased the strength of the civil service by 2·5 per cent.—nearly 14,000 people. When he looks for savings, will my right hon. Friend set all Departments a target of a 5 per cent. reduction in manpower to cut the Government's overheads?

My hon. Friend has made an important point. In examining Government spending, all we are really doing is ensuring that the public sector does what the private sector has had to do throughout the recession—make sure that it lives within its means. The same applies to every family in the country. It would be intolerable if people made sacrifices, while the Government continued to live beyond their means on the back of borrowing and taxation which are available to them but not to families and businesses.

We need to consider civil service numbers and running costs very carefully. The civil service had quite a tight settlement last year, and I imagine that next year's figures may show the lowest number since the war. I think that that is quite appropriate.

We all greatly admire the excellent work of the national health service, but will my right hon. Friend invite the Secretary of State for Health to consider whether she should continue to provide surgical operations on the NHS for the removal of tattoos? If a person has had printed on his skin signs, symbols, messages and coloured pictures—

Order. I have the impression that the hon. Gentleman's question might be better put to the Secretary of State for Health herself. The Chief Secretary has probably got the point by now.

I thought my hon. Friend's question very valuable. It is now etched indelibly on my mind.

Now that the Cabinet has met to discuss public spending, why does not the Chief Secretary use this opportunity to rule out cuts in invalidity benefit for those suffering from multiple sclerosis, and the heart patients who cannot walk 200 yards? Why does he not tell us that he will drop his proposal to privatise some national insurance benefits, and that anything other than full compensation for pensioners and others on low income who have been hit by VAT rises will not be enough? Why must the users of public services pay the price of the Government's economic mismanagement?

I wonder why the hon. Gentleman does not use his own opportunity to desist from scaremonger-ing. Is he not aware of the real anxiety and fear that he causes? Is he not aware of the disrepute in which he is now held because of the disgraceful tactics that he has used, day after day? Is he not aware that the British people are now pretty well fed up with him, and that he should stop?

Does my right hon. Friend agree that, although it is important to review all aspects of public expenditure, many people are rightly concerned about the growth in the expenditure of the Department of Social Security? They expect the Government to review all the various benefits properly, and to ensure that they are targeted. At the same time, members of the public wish us to ensure that NHS expenditure is protected.

My hon. Friend's comments are very valuable. They come as a breath of fresh air after the question from the hon. Member for Dunfermline, East (Mr. Brown): I am very grateful.

To ask the Chancellor of the Exchequer if he will make a statement on the relationship between the Budget measures for investment and unemployment levels.

The Budget measures for business have been warmly welcomed by the business community. They provide an excellent environment for investment and job creation.

Given that the CBI's industrial trends survey shows that manufacturing firms are still cutting investment, will the Minister tell us what specific steps he will take to promote investment—especially in areas affected by coal pit closures, defence cuts and local authority capping?

In a week in which the Central Statistical Office has announced that manufacturing output is now rising at an annual rate of 5 per cent.—the House may be interested to learn that it fell by exactly the same amount when Labour was in power between 1974 and 1979—I do not feel disposed to take any lectures from Labour about how to create an environment in which businesses expand and jobs can be created.

The hon. Lady asked what measures had been introduced to promote business investment. Let me list the measures introduced in the Budget and the autumn statement, which have been welcomed by the business community. In those statements, the previous Chancellor increased the amount of export credit available, provided a £2 billion cash flow benefit to British industry through the advance corporation tax changes, abolished car tax, introduced capital allowances and put extra money into the housing market through changes in the housing associations and in the capital receipts regulations for local authorities.

My hon. Friend the Financial Secretary omitted from that list the £150 million leasing deal for new railway rolling stock, which was announced in the autumn statement and which is much needed to help preserve jobs in the train-making factory in York. Does he agree that the sooner we establish the leasing market for new trains, the sooner more of those who have been made redundant in York and other places can be put back to work? Would it not help that process if the Labour party dropped its objections to the Railways Bill?

My hon. Friend is absolutely right. The measure to which he refers reflects not only the Government's commitment to investment in railway rolling stock, which my hon. Friend is right to welcome, but, more importantly, the Government's commitment to improving the service available on British railways through the changes to be introduced in the Railways Bill.

Does not the Financial Secretary understand that the minuscule changes to the petroleum revenue tax announced in the Budget will do nothing to safeguard jobs in the oil industry? Is he aware that only yesterday the Association of Offshore Diving Contractors made it clear that there are likely to be about 21,000 job loses? How can he say that he is trying to deal with investment and improve business when he carries out that sort of action which produces high unemployment?

The hon. Gentleman's dismissive attitude to the changes that we annnounced yesterday is not reflected by Brindex, which made proposals very similar to those that we announced. As the House knows, the fundamental reason why we are changing the PRT system is that we do not believe that among the many calls on public resources which my right hon. Friend the Chief Secretary has to balance we should number subsidising the international oil industry.

Is my hon. Friend aware that many Yorkshire companies have been investing in new jobs, new factories and new manufacturing processes over the past nine years and that many have continued throughout the recession to invest their own money, not borrowed money? Perhaps he might persuade his colleague, the President of the Board of Trade, to come and look at some of that investment.

I am sure that my right hon. Friend the President of the Board of Trade is capable of being responsible for his own travel arrangements. If he were to travel to Yorkshire, he would find, as my hon. Friend rightly points out, that British industry is benefiting from the more stable environment that has been created over the past two years as a result of lower inflation, lower interest rates, a more competitive exchange rate and the opportunity for British industry to expand, which the indicators show is now being taken.

To ask the Chancellor of the Exchequer if he will make a statement on the balance of payments.

The visible deficit was much the same in the first quarter of this year as in the fourth quarter of last year. Some deterioration after the movement of the exchange rate is to be expected, but our trade prospects are now very good.

Is the Minister aware that the real story is that imports are growing at twice the rate of exports? Would he care to reflect on the report published this week by the Bank for International Settlements which concludes that the Government's failure to invest in manufacturing industry means that there is not enough manufacturing capacity to support even our domestic markets when demand is low. A total of 44 per cent. of manufacturing jobs in the west midlands have been lost since the Government took office. Does not that show how short-sighted the Government have been to ignore the importance of manufacturing industry?

We have not ignored the importance of manufacturing industry or manufacturing companies. After all, if the hon. Gentleman had looked at the Financial Times' survey of the top 500 companies in Europe, he would have seen that 10 United Kingdom companies were in the top 20 for profitability. That reflects their investment, as does the fact that our export volumes are at record level.

As my right hon. and learned Friend is the 13th Chancellor in whose Question Time I have ventured to pose a question, may I confidently express the hope that he will have a happier tenure of office than his 12 predecessors? Before his officials and special advisers have time to bemuse him with contradictory economic theories and dogma, may I respectfully suggest that he should take a firm grasp of the basic proposition that if we had a large balance of payments surplus it would not matter if we had a large public sector borrowing requirement? In other words, the balance of payments is the critical statistic. So he was absolutely right in his Guildhall speech to stress the importance of helping British industry.

I am sure that my right hon. and learned Friend the Chancellor of the Exchequer will be very grateful for my hon. Friend's good wishes, especially as they come from such a wealth of experience, and for the advice that he has given.

On the question of growth in our manufacturing base, can we be told when the Chancellor will set out the detailed policy changes which will demonstrate a change in the substance rather than merely the style of his prececessor? Does he not accept that giving more television interviews than his predecessor, or the fact that he has spent most of his life in the midlands, do not in themselves add up to a new industrial policy?

We shall set out the changes at the usual time, and particularly in the Budget.

Can my right hon. Friend confirm that our exports to non-EC countries have grown in the past year? Should we not all be congratulating British business and business men for their export achievements?

Yes, indeed. I echo my hon. Friend's congratulations. In value terms, exports, excluding oil and erratics, to the whole world were 12½ per cent. higher in the first quarter of this year.

To ask the Chancellor of the Exchequer when he next plans to meet the panel of independent economic advisers to discuss the current state of the economy.

The panel of independent forecasters will be issuing its second report in early July. I look forward to receiving it.

What advice does the Chancellor think that he will receive which will boost the confidence of the country, given that in the current report the state—[HON. MEMBERS: "Reading."] Yes, that is what I went to school for. The current account deficit was £l2 billion when the panel issued its last report. The Government's forecast for the coming year is that the current account deficit will be £15½ billion: what encouraging advice does he think the panel will give him?

I imagine that when I receive the advice of the panel I shall find that it contains the variety of advice to which my hon. Friend the Member for East Lindsey (Sir P. Tapsell) rightly referred. I accept that we have a balance of payments problem, which is why I am glad that our export performance is improving and that we are doing so well especially in non-EC markets where demand is not depressed as it is in the Community. Certainly, the Government must do everything possible—in my Department and that of my right hon. Friend the President of the Board of Trade—to support our manufacturers in their efforts to export. Otherwise, I hope that the forecast will take some encouragement from the growth in GDP and manufacturing output and today's fall in the unemployment figures for the fourth successive month.

Is my right hon. and learned Friend aware that there was indeed a warm welcome for what he said in his Guildhall speech about growth and recovery and especially about listening to the views of business men? Is he also aware that business men have for some time been calling for a continuation of the process of lowering interest rates? In as far as my right hon. and learned Friend is able to achieve that and therefore able to enhance and maximise growth, he will ease his own problems with the fiscal balance.

I am grateful to my hon. Friend. He sent me a copy of his own interesting suggestions for a policy for industry some months ago, and I have been carrying it around with me ever since. I shall refer to it once more.

One of the things that helps to show the modest signs of recovery is the nine point fall in interest rates which we have achieved recently. It has greatly helped British industry. Clearly, further changes in interest rates can be made only when we have the right circumstances. I set out at the Guildhall the type of circumstances and the type of advice that I would take before deciding on any movement of interest rates.

As the Chancellor has agreed today that the trade deficit is a problem, will he outline the detailed changes in industrial policy that he will introduce? As he said at the Mansion House that achieving higher growth is his objective, what investment in employment measures will he seek to introduce? As the Prime Minister has changed the Chancellor, will the Chancellor now announce the detailed changes in policy so that the country can see action instead of just words?

It is not my intention to pre-empt the work of my right hon. Friend the President of the Board of Trade or my right hon. Friend the Secretary of State for Employment. All three of us will work in the same direction. My next major contribution will, no doubt, be November's Budget, but I assure the hon. Gentleman that he is facing a business-friendly Government who will take specific measures to sustain British industry and commerce in the recovery that it is beginning to make.

Is not it likely that the panel of experts will be able to show in its next report that Britain is heading for an economic growth rate higher than its inflation rate? Would not that be a remarkable achievement?

It would be a quite remarkable achievement. My hon. Friend will agree that it is important to ensure, first, that that is achieved, in so far as it is within the Government's power to do so, and, secondly, that this time we sustain it, because in the past Britain has done quite well for several periods but has always succumbed to various British diseases that held us up once more.

Does the right hon. and learned Gentleman recall being advised that interest rate changes should never be made to offset some unfavourable political event? Does he realise that that advice came from the eighth independent adviser, the right hon. Member for Kingston upon Thames (Mr. Lamont)? Was the right hon. Member for Kingston upon Thames justified by anything in his term of office in giving that advice, and what is the Chancellor doing to change a system under which that could have happened?

I have set out quite clearly the grounds on which decisions on monetary policy will be taken. I propose to take decisions in the light of the various criteria that I have set out. It is quite right that they should be taken on the best objective advice and for good economic reasons. We will persevere with that, so I do not think that the right hon. Gentleman will have cause for complaint on that ground in the coming months.

Will my right hon. and learned Friend take note of the very good advice of his adviser, Professor Patrick Minford, who said on the radio today that, as the Government's policy had brought inflation down to almost zero, it is time for us to consider lowering interest rates so that we can get the jobs going again, which would follow from the Government's admirable effort in killing off inflation?

I know Professor Minford from times gone by. I have met him from time to time and have always listened to his advice with care. I know several members of the panel of forecasters, which my predecessor assembled, and they hold a variety of views. I am waiting to receive all their forecasts. I suspect that there will be a fairly wide range of advice, and I shall take careful regard of all of it.

To ask the Chancellor of the Exchequer if he will prepare an estimate of the average cost to the Treasury of one unemployed person in terms of (a) benefits paid and (b) tax revenue lost.

The net cost to the Exchequer of an individual unemployed person depends on a wide range of variables.

I am as pleasantly surprised as, no doubt, the Minister about today's slight decrease in the unemployment statistics—which prudent observers, I am sure, will distinguish from a reduction in those who are unemployed and seeking work—but does the hon. Gentleman agree that the cost of each unemployed person, which is authoritatively assessed at approximately £9,000 per year, is the single biggest cause of the ballooning public sector borrowing requirement? Does he agree that the best way to tackle the problem is not to punish unemployed people by reducing benefits but to take positive measures to put them back to work?

The best way of helping unemployed people is not to speculate on things that are unpredictable and unmeasurable but to create an economy that creates jobs and puts working people back to work. To achieve that, the best thing that the Government can do is to follow the precedent of their record of the 1980s, when manufacturing investment increased by 67 per cent., when the number of jobs created within the economy was 3 million and when manufacturing output rose by 30 per cent. That is the record of this Government between 1982 and 1990, which we wish to recreate.

Does my hon. Friend agree that the one sure-fire way of adding to the cost of unemployment is to sign the social chapter of the Maastricht treaty?

My hon. Friend is absolutely right. One of the interesting contrasts to be drawn is that between the record of this country in the late 1980s and that of France during the same period. Our growth rates were roughly the same, but the difference was that in this country we converted that growth into jobs and in France, whose socialist Government espoused the cause of the social chapter, they failed to do so. The House should draw conclusions from that contrast.

Will the Minister confirm that the Conservative Government, whose members constantly go on about sound money, are heading for a deficit of £1 billion a week—£50 billion a year—largely created by the incompetence of the previous three Chancellors?

Hear, hear.

My hon. Friend's views are just. Does the Minister accept that the way to cut the appalling deficit is not by slashing welfare payments or by charging the elderly VAT on energy, but by taking a knife to unemployment and getting this country back to work again?

The split between the two sides of the House is not over the desirability of creating extra jobs and getting unemployed people back to work—that is a shared ambition. The split is over how to achieve it. The hon. Gentleman is right to identify the budget deficit as one of the problems that have to be tackled if we are to deliver the objective that both sides of the House share. I look forward to hearing from him, and even more to hearing from his Front-Bench colleagues, how the Labour party proposes to deliver the reduction in the deficit that we all want.

Will my hon. Friend confirm that the only Governments since the first world war to reduce unemployment have been Conservative Governments? Does he agree that the way to reduce unemployment does not lie through a minimum wage, greater regulation of the labour market or the kind of socialism that has delivered 19 per cent. unemployment in socialist Spain?

My hon. Friend is right to draw attention to the interesting historical fact that it is Tory Governments who cut unemployment and Labour Governments who increase it—just as, incidentally, it is Tory Governments who cut hospital waiting lists and Labour Governments who increase them.

As I said earlier, the best way to get people back to work is to create a vigorous and competitive economy. One of the best bits of news in that regard is the fact that manufacturing productivity is now rising by 7·8 per cent. a year, which means that unit wage costs in manufacturing are falling, for the first time in living memory. Those costs are falling by 2·8 per cent. a year, and that holds out the prospect of improved competitiveness and, therefore, of improved job creation. One would like to think that the Labour party would welcome that.

Will the Financial Secretary confirm that the former Secretary of State for Employment put the cost to the Government of unemployment at £9,000 a year for each unemployed person? Is not the greatest cost of unemployment the cost to unemployed people and their families, and the waste to society of the wealth that their employment would otherwise generate? Are not those costs most corrosive in the case of the 1 million people who have been out of work for more than a year, who loom behind today's welcome fall in the headline unemployment figures? Will the Financial Secretary now tell us what new measures the Government will introduce to counter unemployment and, in particular, what they intend to do to bring work to the long-term unemployed? Will he also examine the case for rebates on national insurance contributions for employers who take on workers from among the long-term unemployed, to whom we must give help?

Yet again, we have the spectacle of the Labour party recognising that the budget deficit is a problem, although the only ideas that are announced from the Opposition Dispatch Box are those that would have the effect of increasing that deficit. Of course, it is true that unemployment imposes both a social cost on the individuals concerned and an economic cost on the economy as a whole. We have to address the problem of how to make unemployment fall. We believe that the way to do that is by creating a competitive and vigorous economy. That is what we are about and that is what we are constantly being obstructed in doing by the Opposition.

Will my hon. Friend give me an assurance that, while he is considering the cost of unemployment and other benefits during his public spending review, he will continue to do everything in his power to ensure that we continue to provide the most where the need is greatest?

My hon. Friend is quite right. That, of course, is precisely the purpose of the review of public expenditure on which my right hon. Friend the Chief Secretary is engaged, in order to ensure that, within the public spending total, expenditure reflects today's priorities.

To ask the Chancellor of the Exchequer if he will make a statement on the level of business investment in the economy.

Business investment remains at an historically high level, despite the recession. In 1992, the share of business investment in gross domestic product was over 14 per cent., higher than in any year between 1970 and 1987.

Has the Chancellor read the report by the Bank for International Settlements, to which my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) referred, which shows a major structural weakness in the economy of this country caused by long-term low manufacturing investment? It shows that any recovery is likely to be short lived, since a balance of payments crisis will stop the recovery because of that low level of investment. Will the Chancellor explain to the House what changes in action and policy he will bring about—not words—to rectify the appalling situation caused by 14 years in which his Government have put manufacturing industry at the bottom of the political agenda?

I regret to say that I do not think that that is historically correct. At the moment, business investment is low because we are just emerging from a recession and are in the early stages of recovery, but there was a substantial investment boom in the latter years of the 1980s. Business investment in this country was up more than 45 per cent. in the three years to 1989, which was the fastest three-year growth since the war. We have a much better record of manufacturing and business investment in this country than there has been historically. I will, of course, consider measures that might sustain that good record once the recovery gets under way.

Does my right hon. and learned Friend agree that one form of assistance that he could give to business investment is not to crowd out the borrowing market by the high level of Government borrowing and that, therefore, one of his key responsibilities must be to get down long-term Government borrowing, which would allow long-term interest rates also to fall?

I wholly agree with my hon. Friend, which is why the Cabinet, in its decision this morning, places such a high priority on getting down as quickly as we can the level of Government borrowing. That message is simply not taken by the Opposition, who merely come forward with opposition to any revenue raising and proposals for more spending. Indeed, in the debate last Wednesday, the Leader of the Opposition would have added £12,000 million to the public sector borrowing requirement by that one speech alone. The interests of industry and manufacturing investment in this country lie in the direction suggested by my hon. Friend.

Before Britain joined the exchange rate mechanism, it was well known that the Chancellor of the Exchequer encouraged membership on the basis that it would assist business investment. Will he argue the same case again?

Our membership of the exchange rate mechanism certainly helped us to achieve the low level of inflation which is one of the best bases for making industry competitive as we move into the recovery. The five-point reductions in interest rates before we left the ERM were as valuable as the four additional point reductions that we have made since we left the ERM. All were based on this Government's success in getting down inflation. We now have to demonstrate the same success in getting down the public sector borrowing requirement.

To ask the Chancellor of the Exchequer what measures he has taken to assist the housing market over the last year.

We have introduced a number of measures to assist the housing market. The autumn statement announced additional housing measures of £750 million, plus time-limited measures to allow local authorities to spend nearly all their new capital receipts. The Budget doubled the stamp duty threshold to £60,000, and, following the significant easing of monetary policy since last autumn, mortgage rates are now down to their lowest levels for 25 years.

Does my right hon. Friend agree that it is interest rates that have the major influence on the housing market? Is it not correct that the low mortgage rates are giving very great encouragement to first-time buyers, the housing market as a whole and the construction industry, as new private housing starts have now increased by 20 per cent?

I agree with all that. Private housing starts are up strongly, as are the completions and the particulars delivered. All that is the consequence of the measures that I have outlined, especially mortgage interest rates.

Will the Minister recognise that, following the short-term increase in spending as a result of the relaxation of restrictions on capital receipts and the housing market package, the rented housing market is likely, once again, to decline this year? Does he now recognise that there is no justification for preventing local authorities from spending capital receipts in the long term? Will he extend the relaxation of the restrictions next year as well as this year?

We will not announce anything of that sort at the moment. I notice that new public housing has risen in the first quarter of this year to the highest level for more than eight years. That will greatly help that part of the rented sector.

Will my right hon. Friend resist the calls to release those capital receipts in one go? Is it not the case that, however attractive it may be, that would add £6 billion to the bottom line of our public sector borrowing requirement? Labour Members appear to care about that figure.

That is indeed the case, and that is why we are cautious about it.

To ask the Chancellor of the Exchequer what was the average total annual payment in income tax and national insurance per employed person in 1992–93.

A married man on average earnings of £17,992 would pay £3,107 in income tax and £1,423 in employee's national insurance contributions.

Does the Minister recognise that the March Budget has meant a huge tax hike which will bear down hardest on those who are least able to afford to pay? Will he take this opportunity to tell the House and the public what further tax rises he has in store? Will he now admit that the whole country is being asked to foot the bill for the £ 10 billion-worth of tax handouts that have been given to the very rich since 1988? Why should the poor, pensioners and NHS patients be asked to pay the price for the Government's extravagance?

The hon. Gentleman refers to the record of the 1980s. One might have thought that he would take the opportunity to welcome the increase in the real take-home pay that was available to all people as a result of the economic policies of the 1980s. Under the Labour Government, real take-home pay for the man on average earnings rose by £1·20 a week at today's values—between 1979 and 1993, it has risen by £81·50 a week. Real take-home pay is what matters, not the statistical analysis offered by the hon. Gentleman.

Is it not a fact that no post-war Government have done so much to simplify the personal taxation structure of the United Kingdom as this Government? When my hon. Friend puts the final cornerstone in place in the autumn Budget with regard to future expenditure and taxation plans, I invite him to go a stage further and introduce the reform that is so necessary in the European Community—bringing our pay-as-you-earn year into line with the calendar year. Only Ireland and this country continue with the peculiar date of 5 April.

My hon. Friend is meddling with a long-standing piece of history when he wishes to put the tax system on the same calendar as that by which every one has lived since the 1750s, but I shall certainly look at it.

On the more substantive point, my hon. Friend is right to stress that the simplification of the tax system is one of the major steps that the Government have put in place which has enocuraged the development of a more competitive and successful economy and delivered the improvement in real take-home pay to which I referred earlier, and which is the bell-wether of success.

Has the Financial Secretary seen the revised parliamentary answer given to me yesterday stating that the number of people who earn less than the basic rate tax threshold but will pay more in national insurance contributions in 1994–95 as a result of the Budget changes is not 500,000, as previously stated, but 2·5 million? Is not he ashamed that 2·5 million of his fellow citizens who are in work but are too poorly paid to have to pay basic rate income tax will still be required to pay extra national insurance contributions as well as extra value added tax on fuel? Can the hon. Gentleman give the House an assurance that that parliamentary answer has not anticipated Government policy—[interruption]—and called the 20 per cent. band the basic rate band, solely for the purpose of—[Interruption.]—restric-ting allowances?

It must be a long time since the hon. Gentleman asked a question that secured two cheers while he asked it, particularly one so badly based on the facts. His question reflects the fact that we have increased the personal allowance in real terms by 25 per cent. since 1979. The hon. Gentleman might like to refer also to our change in the system of national insurance contributions for employees, which has reduced the burden on the low paid. It is now a more rational system and more friendly to incentives. The key to a tax system is that it is friendly to incentives and makes it worth while for people to make extra effort. That is the guiding light of our tax policy and will continue to be so.

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

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.

I thank my right hon. Friend for his reply. Will he join me in welcoming today's unemployment figures which show the fourth consecutive fall? Does he agree that that is good news for the unemployed, the economy and Britain?

Yes; above all, it is good news for those workers and their families who find themselves back in work. I am delighted at the fall of 26,000—the fourth fall in a row. I concede that unemployment remains far too high. It has fallen by nearly 80,000 since the beginning of the year. Equally encouraging, vacancies are at their highest level for two years. A few months ago, many people expected unemployment to rise throughout the year. Instead, it has fallen in Scotland, Wales and every English region.

Can the Prime Minister explain—his Minister was asked this question—why only last week the Department of Social Security claimed that the number of people on low incomes who would be worse off as a result of the national insurance increases in the Budget was only 500,000, but yesterday was forced to admit that that was wrong and the real figure was 2·25 million? What sort of advertisement is that for the competence of his Government or their understanding of the effects that his policies have on so many people?

The right hon. and learned Gentleman is operating under a misapprehension. Suggestions of a mistake are wrong. My hon. Friend was asked about the number of people below the basic rate tax threshold who will pay more national insurance in 1994–95. The answer he gave on 7 June related to people whose earnings fall below the 20 per cent. tax band. The answer he gave on 16 June related to people whose earnings fall below the 25 per cent. tax band. [HON. MEMBERS: "Ah."] Therefore, naturally the figures are different.

The Prime Minister—[Interruption.]

Order. The House must come to order. We must hear not only answers, but questions.

The Prime Minister seeks to defend his Department on the basis that it cannot read the questions. The question was the same in both cases, but it received different answers. Leaving that matter aside—[Laughter.]

Order. The House must come to order. We are using up valuable time.

It relates to precisely the same issue. Does the Prime Minister recollect saying on that very issue during that election campaign:

"taxpayers with the lowest incomes will benefit most"?

Why, then, has he imposed a higher national insurance burden on over 2 million low-paid people? Does he admit that, once again, he has broken his word, or was it just another of those throwaway lines delivered on a wet night somewhere in Dudley?

The right hon. and learned Gentleman's suggestion that it might be wise to put that aside is an answer which many people will recall for some time. If he looks at what has happened, he will see that we have raised the threshold for the 20 per cent. band by £500 in the Budget and by a further £500 from next year. Most taxpayers in the lower rate band will gain more from the 20 per cent. lower rate than they will lose from the 1 per cent. increase in national insurance contributions.

Does the Prime Minister still not understand, as millions of low-paid people do, that putting I per cent. on national insurance for people who do not pay income tax is putting up the tax on their income? Why did he say on page 7 of the Conservative party election manifesto:

"We have reduced the burden of national insurance on low earners"?

Was the whole manifesto written on a wet night somewhere in Dudley?

I must tell the right hon. and learned Gentleman that it did not sound any better the second time, so perhaps he should put that aside as well. He should look at what has happened, with the introduction of a 20 per cent. tax band and the raising of a 20 per cent. tax band, and I reiterate—as he clearly did not hear it the first time—that most taxpayers in the lower rate band gain more from the 20 per cent. rate than they lose from the I per cent. increase in national insurance contributions. In short—so that the right hon. and learned Gentleman clearly understands—they are better off under our plans than they ever would have been under his plans, which would have involved the largest increase in direct taxation ever seen this century.

Has my right hon. Friend had an opportunity to study the current issue of the journal of the Royal Society of Medicine? Is he aware that it includes a survey carried out by a distinguished doctor of general practice in 12 countries in Europe, north America and the far east in which he reaches the conclusion that British is best? Will my right hon. Friend confirm that, as we proceed with the implementation of the NHS reforms, that will continue to be the case?

The immediate answer to my hon. Friend is no, I have not seen that survey, but, as he has drawn it to my attention, I shall take the opportunity of looking at it. There has been a dramatic improvement both in the resources available to the health services and in the quality of health treatment provided in recent years by the people who work in the service. It is our intention that that should continue—[Interruption.]—and I am sorry if the right hon. Member for Derby, South (Mrs. Beckett) thinks that it is nonsense that the people in the health service are providing a better service. I believe that they are.

Is it not the case that in the 17 or so years since the decision was taken to build THORP—the thermal oxide reprocessing plant—at Sellafield, the economics of THORP have collapsed, the risk of nuclear proliferation has increased, international opposition has hardened and the threshold of safe nuclear emissions has been substantially reduced? Will the right hon. Gentleman undertake that, before a decision is taken to put THORP into operation, the widest possible consultation and debate will be conducted on that dubious project?

THORP is a substantial engineering and export success for this country. It supports some 3,000 jobs and has £9 billion-worth of contracts, which is a powerful vote of confidence in the plant from people around the world who will be its customers. As the right hon. Gentleman may know, my right hon. Friends the Secretary of State for the Environment and the Minister of Agriculture, Fisheries and Food are considering the inspectors' reports on the proposed new discharge authorisations for the site. The right hon. Gentleman will realise that it would be inappropriate for me to prejudge their considerations.

Is my right hon. Friend aware that visiting the House today is a very special group of 21 men who served this country in the Army, Navy and Royal Flying Corps during the great battles of the first world war? Does my right hon. Friend agree that all of us who live in freedom today owe everything we have to those gallant men and their comrades who died in that most terrible of all wars?

I agree with my hon. Friend. I have sent a message to those very welcome guests to the House today. I am sure they will be welcomed by everyone in the House.

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

I refer the hon. Member to the answer I gave some moments ago.

Given the widespread alarm among millions of constituents about the proposed imposition of value added tax on domestic fuel, which will result in an increased incidence of hypothermia and even more poverty among middle-income groups, will the Prime Minister urge his colleagues to reconsider this pernicious and indiscriminate form of indirect taxation? In so doing, he might just assist his albeit fragile, political future.

I am grateful to the hon. Gentleman for his concern. We have set out a policy that we believe is correct and we have stated that we will take action to assist vulnerable groups. That assistance will be in place before the extra charges are introduced. The hon. Gentleman utterly fails to mention that the cost of fuel has been falling as a result of our policies, not rising astronomically as it did before we came to office.

Does my right hon. Friend agree that it is typically British for commentators and Opposition Members to talk British industry down, yet totally ignore the best manufacturing output figures for five years?

I think that my hon. Friend understates her case a little. They do not just talk Britain down—given the chance, they do it down and do it in. Opposition policies would impose an extra tax on jobs and would be no good for British industry. Raising employers costs and introducing the social charter would be no good for employment prospects or employers. The minimum wage would further damage job prospects. Yet again, the use of flying pickets would be legalised. [HON. MEMBERS: "Boring."] That is the Labour party's policy. Labour Members may regard my comments as boring, but people in work regard their policy as a job destruction programme.

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

I refer the hon. Member to the answer I gave some moments ago.

Will the Prime Minister join me in congratulating Mr. Pink on winning his case for unfair dismissal against the Stockport health authority? Does he agree that whistleblowers play a very important part in a democracy? Will he urge the Stockport health authority to reinstate Mr. Pink and ensure that resources are available to improve the staffing of the geriatric wards at the hospital in question?

I am not aware of the details of the case, but if justice has been done I am delighted.

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

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

Following his Cabinet meeting this morning, will my right hon. Friend unequivocally assure the House that—despite the rumours and smears from the Labour party, which preys on the fears of the most vulnerable in our society—the national health service and welfare state always were, are, and for ever will be safe in Conservative hands?

As I indicated a moment or so ago, the health service has improved dramatically during recent years, partly as a result of the increased resources made available to it and partly as a result of the activities of the many dedicated people who work in it. I have no doubt that will continue to be the case in the future. [Interruption.] It is thriving.

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

I refer the hon. Member to the answer I gave some moments ago.

Has the Prime Minister given the President of the Board of Trade a list of the companies that have donated to the Conservative party since 1979? Will the Prime Minister confirm that if the President finds that they have not declared those donations in their accounts, they will all be repaid?

The hon. Gentleman must understand that British business supports the Conservative party because it believes that our policies are right for British business, the British future and British jobs. Perhaps it is because business understands and applies that test that precious little money from companies goes to the Labour party.

Would my right hon. Friend remember today that, over the past year, the wild and sometimes woolly Members of this House have said that the Government should intervene more directly in Yugoslavia? Will he accept the thanks of most sensible Members for all that he and the Government have done, on behalf not only of the United Kingdom but of the world, in not allowing such intervention to take place?

I am grateful to my hon. Friend. In my judgment, there is no doubt that it was right to assist with the humanitarian operation, and I believe that the activity of our troops has been widely admired, not just in this country but around the world. They have certainly done a magnificent job.

There are only two ways of settling the dispute. One is to put in hundreds of thousands of troops for an indefinite period—no one wise wants to do that, and no other country would be prepared to do it. The only alternative is to seek a diplomatic solution allied to the humanitarian aid that we and others have been providing. We still seek that diplomatic solution.

I understand that Lord Owen and Mr. Stoltenberg had a useful meeting yesterday with the Presidents of Serbia and Croatia. They will continue their negotiations next week. Lord Owen will brief me on Saturday before I go to the European Council His determined efforts over recent months have done as much as those of any other individual to keep alive the prospect of a political settlement.