Oral Answers To Questions National Finance Unemployment Costs 1. Mr. Rogers asked the Chancellor of the Exchequer if, further to his answer of 29 January, Official Report, column 376, he will take steps to prepare estimates of the cost to the Exchequer of the current level of unemployment in Wales. 2. Mr. Michael Cocks asked the Chancellor of the Exchequer if, further to his answer of 29 January, Official Report, column 376, he will take steps to prepare estimates of the costs to the Exchequer of the current level of unemployment in the south-west. 3. Mr. Patchett asked the Chancellor of the Exchequer if, further to his answer of 29 January, Official Report, column 376, he will take steps to prepare estimates of the cost to the Exchequer of the current level of unemployment in Yorkshire and Humberside. The Chief Secretary to the Treasury (Mr. John MacGregor) I regret that such estimates could be provided only at disproportionate cost. Mr. Rogers Would it not be reasonably easy to calculate the cost of the 180,000 unemployed in Wales, especially as that figure has grown by at least 3,000 in the past month? When will the Chancellor take real steps to solve the unemployment in the valleys of Wales? Mr. MacGregor The disproportionate cost of making regional calculations of the kind that the hon. Gentleman wants comes not from calculating unemployment benefit but in relation to supplementary and housing benefit. The hon. Gentleman will know that with six years of steady growth in the economy, overcoming all the difficulties of the 1970s, the improvement in many of the basic industries in Wales and the attraction of new firms to Wales on a large scale, we are making considerable progress in turning the Welsh economy round on a basis that will ensure regular prosperity for the future. Mr. Cocks The Minister referred to disproportionate cost, but has he considered the disproportionate cost of the tens of thousands of people who are on the dole in the south-west? Would it not put into perspective the Chancellor's possible concessions in tax relief if we had some idea of what it costs to keep all those people out of work? Mr. MacGregor I am sure that the right hon. Gentleman will have observed that since the 1983 election there have been 100,000 new additional jobs in the south-west, which shows that employment is increasing. In addition, considerable employment and training measures are being used in the south-west, involving 80,000 people. That leads to an average overall unemployment level of 9·7 per cent. I believe that the best prospects for the south-west lie in the continuation of the Government's financial and economic policies. Mr. Patchett Is the Minister aware that more than 250,000 manufacturing jobs have been lost in the Yorkshire and Humberside region since 1979 as a result of the Government's policies? What is he prepared to do to reverse that trend? Mr. MacGregor I am sure that the hon. Gentleman is also aware that there have been 74,000 new jobs in Yorkshire and Humberside since 1983. The hon. Gentleman will no doubt have seen the survey which came out this morning from the Association of British Chambers of Commerce. It is one of the most optimistic recent surveys of industry in Yorkshire and Humberside and shows that things are moving in the right direction. Sir Anthony Meyer In view of the rising number of jobs in Wales that are dependent on inward investment, what effect would the Labour party's policies in that regard have on future employment prospects? Mr. MacGregor I am sure my hon. Friend is entirely right in saying that, just as Wales has been one of the major beneficiaries on inward investment, often in high-tech and high-growth industries for the future, so nothing is more likely to make those industries and investors think less of investing in the United Kingdom than the kinds of policies that we are beginning to see emerge from the Opposition. Mr. Speller Does my right hon. Friend agree that there is a great problem associated with lumping these three questions together? The right hon. Member for Bristol, South (Mr. Cocks) lumped the whole of the south-west together. Does my right hon. Friend agree that that epitomises the problem, because the prosperity of Bristol drags up the apparant prosperity of the south-west? Does my right hon. Friend agree that his Department should consider the south-west as Devon and Cornwall, perhaps, which have a smaller population than Bristol, rather than lump them together so that, in economic terms, the best pulls up the worst? Mr. MacGregor I take my hon. Friend's point, but he will realise that the question was not one that I tabled or wished to see. He will also know that present and future improvements in infrastructure in his constituency are among the most important means of helping to ensure prosperity in his part of Devon. Mr. Hickmet Is my right hon. Friend aware of the substantial Government investment in South Humberside, which has three enterprise zones, developmeent area status and substantial assistance from Europe? Is he further aware that unemployment in my constituency has fallen faster than in any other, bar five? Does that not demonstrate the Government's commitment to regions such as Yorkshire and Humberside? Mr. MacGregor My hon. Friend is right. Scunthorpe has undoubtedly benefited from designation as an enterprise zone. The much better targeting of regional development policies to concentrate on areas of greatest need has helped my hon. Friend's constituency considerably. It received more than £12 million in the earlier regional development scheme after June 1983, another £4·2 million in the latest development scheme and a further £4·8 million in regional selective assistance. Those sums have contributed substantially to the results that my hon. Friend has described. Mr. Duffy Will the Chief Secretary confirm that the 74,000 jobs that he claims for Yorkshire and Humberside were not in manufacturing? Can he confirm that the unpublished Government report to which he is privy said that matters would get worse in South Yorkshire? Does he agree that relief can come only from economic expansion at home and overseas? Why did the Chancellor not seek a co-ordinated economic expansion when he had the opportunity at the Group of Five meeting last weekend? Mr. MacGregor The hon. Gentleman will know that South Yorkshire, like many other parts of Europe, has experienced problems with the decline of heavy industries. That is one reason for the fall in manufacturing employment. I hope that he will read the Association of British Chambers of Commerce survey, published this morning, which shows that in Yorkshire and Humberside there are substantially better expectations for home orders and export orders and confidence in manufacturing industry generally. Mr. Holt Does my right hon. Friend agree that employment in Yorkshire and Humberside and Teesside could be vastly improved if the Government were to harmonise with the rest of the EEC and have light duties charged centrally so that we have fair competition? Does he agree that that would enable jobs which have been lost because of lack of harmonisation to come back to the north-east? Mr. MacGregor My hon. Friend knows that that is not a matter for me, but I shall ensure that his question is passed on. Mr. Hattersley The Chief Secretary will recall that in his first supplementary answer he made claims about the past six years, that in his second supplementary answer he made claims about the past three years and that in his third supplementary answer he made claims about the past four years. Does he not find it demeaning to spend so much of his time manipulating the figures in that way? Mr. MacGregor Not in the slightest. I am not demeaning the figures—I am giving the figures. I have given the employment figures since the June 1983 general election, when the electorate gave the Government a resounding vote of confidence in our previous policies. As for economic growth, between 1979 and 1981 we experienced a world recession and the difficulties of restructuring the British economy after the effects of the Labour Government's policies. The past six years have been the longest period of sustained, balanced growth for a long time. I should have thought that the right hon. Gentleman would be pleased about that. North Sea Oil 4. Mr. Hunter asked the Chancellor of the Exchequer what percentage of total revenue has been derived each year since 1979–80 from North sea oil. The Economic Secretary to the Treasury (Mr. Ian Stewart) I shall arrange for the full figures to be printed in the Official Report. The figure for 1985–86 was 11 per cent. and that for the current year is expected to be about 4 per cent. Mr. Hunter I believe that the figures will reveal that North sea oil has declined in relative importance in revenue terms, and also, by impliction, that there is a buoyancy in other areas of economic activity. Will my hon. Friend comment on that proposition? Mr. Stewart It is undoubtedly the case that the decline in the oil industry following the reduction in the oil price has been substantially offset by the strength of the rest of the economy. One of the great achievements of the Government is that such a major reduction in the oil price has been taken in our stride and we have the strength of the economy that we see today. Mr. Donald Stewart Is the Minister aware that there will be no achievements from the Government, apart from the lifeline of the revenue from Scottish oil, and that the spin-off for Scotland has been minimal, bearing out the forecast that Scotland has been the only country which has had oil discovered in its territory and has ended up worse than it was before the oil was discovered? Will the Minister take into account the fact that unemployment is rising in Scotland when it is falling in England and that we have had nothing out of Scottish oil? Mr. Stewart There will be a short-term effect on oil and oil-related industries in Scotland immediately after a change in the oil price of the scale that we have seen, but Scotland is a part of the United Kingdom which benefits from the reduction in overseas debt, from increased net assets overseas—now £80 billion plus—from the annual yield of more than £5 billion that that brings to the United Kingdom, and from the reduction of the public sector borrowing requirement, which has been one of the important facts in the strength of the British economy as a whole. Mr. Tim Smith Does my hon. Friend recall that only a year or two ago people were asking what would happen when the oil ran out? Oil revenue has run right down, but Government revenues are more buoyant than ever. Is that not the clearest possible evidence of the strength of the non-oil economy? Mr. Stewart My hon. Friend is absolutely right. He may recall a phrase in the last Budget speech of my right hon. Friend the Chancellor about having lost half the oil revenues in 25 weeks, not 25 years, as some people had been suggesting. In fact, since my right hon. Friend's Budget speech last year, the strength of the non-oil economy has exceeded expectations and bears out very strongly what my hon. Friend has said. Mr. MacKenzie Does the Minister accept that, although there has been a reduction in oil revenue, it is still very substantial, and that most Labour Members would much rather that that revenue was spent on building up our infrastructure and on creating more manufacturing jobs than on paying out unemployment benefit? Mr. Stewart The right hon. Gentleman overlooks the fact that the benefits of the oil revenues to the balance of payments and to the Exchequer over the past few years have enabled a major restructuring of the British economy and that that is one of the things that has contributed so much to the present strength of the economy. Following are the figures: ------------------------------------- | | ------------------------------------- |1979–80 | ------------------------------------- |1980–81 | ------------------------------------- |1981–82 | ------------------------------------- |1982–83 | ------------------------------------- |1983–84 | ------------------------------------- |1984–85 | ------------------------------------- |1985–86 | ------------------------------------- |1986–87 (Autumn Statement Forecast)| ------------------------------------- |1979–80 to 1986–87 | ------------------------------------- Share Ownership 6. Mr. Forman asked the Chancellor of the Exchequer what is the latest information he has on the extent of employee share ownership in the United Kingdom. Mr. Ian Stewart The number of all-employee share schemes has increased from less than 30 in May 1979 to over 1,200 now. Under those schemes 1·5 million employees have acquired shares or options. Mr. Forman I warmly welcome the progress that is reflected in those figures and urge my right hon. Friend the Chancellor to go further in that direction. Does my hon. Friend accept that the time has perhaps come to consider carefully some form of time-limited tax relief to give a substantial boost to this particularly attractive form of democratic capitalism? Mr. Stewart I note what my hon. Friend says. I shall not comment about the future, but on past performance the profit-sharing and savings-related share option schemes that are already in force have proved very successful and popular. Indeed, there is no let up in the flow of new proposals for them. Mrs. Roe Is my hon. Friend aware that the Stock-Exchange has recently produced information suggesting that 42 per cent. of individual shareholders are women? Since many of these will be married women whose tax position at the moment is unfair, as I think most people would accept, does not this welcome statistic emphasise the importance of the reform of personal taxation as outlined in the Green Paper? Mr. Stewart I note my hon. Friend's comments. I am delighted to hear that such a high proportion of personal shareholders are women, but matters of that kind are not for now. Interest Rates 7. Mr. Alan Howarth asked the Chancellor of the Exchequer if he will make a statement on the current level of interest rates. 13. Mr. Sedgemore asked the Chancellor of the Exchequer what representations he has had recently on the level of United Kingdom interest rates. The Chancellor of the Exchequer (Mr. Nigel Lawson) Bank base rates are currently 11 per cent. Mr. Howarth My right hon. Friend will be aware that the very favourable configuration of public finances, upon which he is to be congratulated, is giving rise to much optimism about the future course of our interest rates. Does he agree that we now have an important opportunity to lower the Government's prospective borrowing requirement and that a prudent course of that sort, in contrast with the degrees of extravagance proposed by the various Opposition parties, would give the best prospect of fulfilling those hopes for lower interest rates in the long term? Mr. Lawson I am grateful to my hon. Friend for his remarks about the state of the economy, which is indeed in a particularly sound condition, as is widely recognised by everybody, even including now—for the first time that I can recall—the National Institute of Economic and Social Research. As to the question of the public sector borrowing requirement, as my hon. Friend knows, it is an integral part of the medium-term financial strategy that the public sector borrowing requirement should be reduced—as it has been. That has clearly brought great benefits in its wake, just as there would be great disasters were the public sector borrowing requirement to be inflated in the way that all the Opposition parties wish it to be. Mr. Roy Jenkins Will the Chancellor tell us the comparable rates of interest at present in Germany and in France, the two major countries which are fully within the European monetary system? Mr. Lawson I am not at all clear that the difference between interest rates in this country and those in France and Germany is attributable to the fact that those two countries are in the exchange rate mechanism of the EMS and we are not. It is perfectly true that interest rates are higher in this country. That is well known. That is necessary at present in order to secure a steady downward pressure on inflation. Interest rates will be lowered only as and when it is safe to do so. Mr. Beaumont-Dark Does my right hon. Friend agree that one of the most important factors for manufacturing industry is not so much a reduction in tax as a reduction in interest rates? Does he also agree that one of the most helpful things that could happen would be to reduce Government borrowing so that 2 per cent. could come off interest rates rather than 2p off income tax? Mr. Lawson I note my hon. Friend's suggestion that there should be a further reduction in Government borrowing. It is difficult, however, to draw the precise connection between a particular reduction in Government borrowing and a particular effect on the interest rate. It is far more complex than that. The level of public sector borrowing is one factor that determines the level of interest rates, but there are many others as well, as I have pointed out on a large number of occasions. As for British industry, I am sure that my hon. Friend will welcome the fact that British industry is exceedingly healthy. That is one of the reasons for the strong improvement in the Government's tax revenues, which are coming from increased profitability and increased corporation tax. Mr. Robert Sheldon If the Chancellor believes in the success of the Plaza II agreement, does he not also accept the consequences of that for lower interest rates in this country? Mr. Lawson I share the right hon. Gentleman's hope that the Plaza II agreement, in which I participated, will be successful. I think that it will be helpful in a number of ways. So far the signs are that it is succeeding, but I think that it is premature to reach a final judgment on that. Mr. Andrew MacKay At this time, when the country is greatly anticipating a cut in interest rates due to the Government's prudent economic policy, would my right hon. Friend care to speculate on how much interest rates would be likely to increase if the full public expenditure committed by the Opposition were implemented through an increase in borrowing? Mr. Lawson Of course, there would have to be a massive increase in interest rates if there were to be the misfortune of a Labour Government, which, of course, there will not be, not merely, although partly, because of a massive increase in public expenditure and public borrowing, to which they are committed, but because their policies would completely forfeit the confidence of the world financial community. There would be a major exchange rate crisis, which would force up interest rates still higher. It is fortunate, indeed, that that nightmare will never become reality. Mr. Skinner The Chancellor referred to the many factors involved in interest rates going up or coming down. Is it fair to say that the Government may follow the pattern of what happened before the 1983 general election, when they timed a cut in interest rates to precede the election but having managed to return safely to office they then carefully and dutifully put them up again? Does the right hon. Gentleman agree that another factor is that Brazil has suspended payments on the $108 billion debt and that, coupled with all the other Latin American debt, could have a serious effect on interest rates? What discussions did he have at the recent conference on that matter? Mr. Lawson On the first part of the hon. Gentleman's question, I am, of course, grateful to him, as ever, for the helpful hints that he has given me. On the second part, we did have a discussion about the Brazilian debt problem in Paris last weekend, and I shall be seeing the Brazilian Finance Minister, Mr. Funaro, on Monday. Sir Michael Shaw Does my right hon. Friend realise that among all the difficulties that face small farmers in my constituency, nothing would do more good and help to relieve the position in which they find themselves than the lowering of interest rates? Mr. Lawson I entirely take the point that my hon. Friend has put, and I am confident that, over time, the success of the Government's economic policies will lead to interest rates coming down, but, as I have said on a number of occasions, they will come down only when it is prudent for them to do so. Dr. McDonald Why are United Kingdom real interest rates so high? Mr. Lawson That is a rich one coming from the Opposition Benches, because it was the Opposition who got real interest rates so low that they were negative, and they did that by getting inflation going through the roof, and we are not going to go that way. Public Expenditure 8. Mr. John Townend asked the Chancellor of the Exchequer if he has had any further correspondence with political parties on proposals for increases in public expenditure. Mr. MacGregor No further correspondence, but I note a stream of pledge-laden documents from the Opposition in the past few weeks. Mr. Townend Does my right hon. Friend agree that paying for the election promises of the Opposition, which exceed £24 billion and increase every time a shadow Minister makes a further commitment, would necessitate such a large increase in taxation that the brain drain, which has been reversed in recent years, would soar and there would be a haemorrhage of brains and talent such as the country has never seen before, which would adversely affect our ability to compete abroad? Mr. MacGregor There is no doubt about that, coupled with the effects on industry of much higher interest rates, the effect on inward investment and the loss of overseas confidence in our policy as a result of the overall programme put forward by the Labour party. I know that the hon. Member for Dagenham (Mr. Gould) is making some assessments of what Labour party policy should be on jobs and the poverty package, but it is clear that the Labour party is still highly committed to a large range of spending programmes in other directions. Mr. Wrigglesworth Is it because of the Government's anxieties about public expenditure that the exchange rate cover has been taken from loans from the European Investment Bank? Is the Minister aware that that has hit small and medium-sized businesses very hard and has meant the loss of thousands of jobs? Will the Treasury reintroduce exchange rate cover for those loans? Mr. MacGregor I have no plans to do so, but that is certainly not because of anxieties about the levels of public expenditure. We believe that they should be prudent, and that is what we are pursuing. We believe in establishing priorities for extra expenditure, and that is what we have done. I think that the anxieties rest rather with the hon. Gentleman. It is clear from the latest Liberal/SDP document that the alliance is not prepared to cost any of its policies because it fears that, in the words of the right hon. Member for Plymouth, Devonport (Dr. Owen), "A ragbag of listed policies is not in itself likely to be attractive to the electorate". I think that the right hon Gentleman has learnt the dangers into which the Labour party got itself. Mr. Hind In the light of the promises made by the Labour party to increase public spending in a year by £28 million, will my right hon. Friend tell the House what that would do to the rate of VAT? Mr. MacGregor If that were done on VAT alone, of course it would raise VAT to more than 41p in the pound. I note that one or two Opposition Members have said that we suggested fanciful VAT figures. I am sure that that is simply a smokescreen to cover up the levels of VAT or of income tax that would arise under the Labour party's policies. Mr. Campbell-Savours Is the Minister aware that since the Al Fayed brothers took over Harrods the Exchequer has lost £20 million a year in corporation tax? Is the right hon. Gentleman aware that Labour will change the law in many of these respects to ensure that companies pay their taxes? That is how we shall fund our public expenditure programme. Mr. MacGregor I note what the hon. Gentleman says, but he will note that, as a result of the increased profitability of British industry and British companies generally, there is now a bigger yield from corporation tax. That is largely the result of the improved profitability of British industry, which would not occur under a Government pursuing the policies suggested by the Labour party. Mr. Roger King Will my right hon. Friend spare just one moment to consider the plight of many of the hapless politicians who may soon face the wrath of factory workers coming out of the factories, including in my constituency, with promises of skyjacking their taxes? Mr. MacGregor I suspect that my hon. Friend is referring to the policies that the Labour party will put before the electorate at the election. Labour Members are trying to pretend that they would not put taxes up, but there can be no question that the kind of spending programme advocated by the Labour party could be met solely by increased borrowing—the money would have to come from substantially increased taxes as well. My hon. Friend is therefore entirely right. Mr. Gould Will the Chief Secretary confirm that the material which he uses to describe what he calls "Labour's spending plans" is supplied by a political party—that is, by the political advisers employed by Conservative Central Office — and not by the Treasury, as is so often represented? Is the work on the increase and extension of VAT being done by those advisers or, on this occasion, by the Treasury? Mr. MacGregor I can confirm that the material comes from a political party—the Labour party. It is documented in many of the spending pledges made by the Labour party over a period. I have constantly made it clear that I would take items off if the Labour party showed that it was no longer committed to them. In the past few weeks we have seen the following policy documents from the Labour party: "Investing in People", "Caring for People", "Towards a new Agriculture", "Jobs and the Environment", "For the Good of All", which deals with aid, and "Fresh Directions". Either the Labour party is still committed — I believe that it is — to its massive spending programmes, or it is undertaking a massive con on the electorate. Immigrants (Remittances) 9. Mr. Greenway asked the Chancellor of the Exchequer if he will estimate the value of money sent to private individuals in (a) India, (b) Pakistan, (c) Bangladesh and (d) all other countries by people settled in the United Kingdom; and if he will make a statement. The Minister of State, Treasury (Mr. Peter Brooke) The Government do not hold any estimates of these amounts. My hon. Friend might like to seek the advice of the London embassies of the countries concerned. Mr. Greenway I am grateful for that helpful reply. Does my hon. Friend agree that those countries and others benefit as a nation and as individuals by many millions of pounds of investment a year by companies in this country run by expatriate Indians, Pakistanis and the rest? Does he agree that these countries will suffer greatly if there were a Labour Government, because they would prevent companies from sending money on this basis and recall British investment already in those countries? Mr. Brooke My hon. Friend is quite right to warn his constituents who control such companies about the draconian vindictiveness with which they are threatened by Labour policies on overseas investment. Mr. Pavitt When the Minister is looking at the vast amounts of money that go to companies overseas, will he bear in mind that it is invidious to choose these three countries? That is because most people who are lawfully settled here still have family ties with those countries and often like to look after their elderly parents and their children who remain in the countries of origin. Mr. Brooke I do not think that any value judgment was implied in my hon. Friend's question. Mr. Watts Does my hon. Friend agree that it is strange that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) should go around making speeches about massive increases in overseas aid, which would be at the taxpayers' expense, while intending to cut back on the opportunities for individuals to invest their money in developing countries? Mr. Brooke The policies of the Opposition are matters for them. I share my hon. Friend's distaste for the siege mentality that they imply. Mr. James Lamond If it is true, as Conservative Members assert, that considerable sums are sent abroad to these countries by individuals, could the Minister draw that to the attention of the Foreign and Commonwealth Office and the Home Office, as it demonstrates once again the validity of the claim by many of my constituents whose families are not allowed to join them in this country and who send money abroad to try to support them in Bangladesh, India and Pakistan? Will the Minister also bear in mind that that admirable trait should not be used as a further stick against those people whom Conservative Members resent living and working in this country? Mr. Brooke If I may say so again, the hon. Gentleman has misunderstood the purport of my hon. Friend's question. Personal Equity Plans 10. Mr. Bright asked the Chancellor of the Exchequer what further evidence he has of the latest response to personal equity plans. Mr. Lawson The response to the new personal equity plans has been most encouraging. Latest available figures suggest that in the first month of the scheme more than 2,000 people a day invested in personal equity plans. Mr. Bright Does my right hon. Friend agree that the present regulations, which mean that people can invest only in 30 or 40 major companies, are too restrictive? Would he look at the possibility of trying to extend this list so that they could invest in some of the smaller public companies and in some of the unquoted companies? Obviously this would help more investors, and especially employees in companies that are not covered at the moment by the scheme. Mr. Lawson The Government do not dictate the particular shares that are being invested in. Different plan managers have different arrangements and, indeed, there is a large variety in the number of shares in which people have invested. I do not believe that any change is needed in this scheme. As I pointed out, this scheme, which is the third leg of popular capitalism after the growth, first, of employee share schemes and then the growth of shareholders by privatisation, is proving extremely successful despite the doubting Thomases that there were at the beginning. Mr. Wrigglesworth Does the Chancellor not agree that this mouse of a scheme is attractive only to those who are already paying capital gains tax and to those who are already investing in shares? Will he look at the scheme again and make it much more attractive? Will he adopt the proposals that we tabled in the Finance Bill in order to make it attractive for newcomers to buy shares, and not only for those who already have shares? Mr. Lawson The hon. Gentleman is mistaken. First, far from being a mouse of a scheme, as I said, in the first month alone—which is the latest figures for which we have records—over 2,000 individuals a day started up personal equity plans. As for the question of making it more generous, the scheme does not apply only to those who pay capital gains tax or to existing shareholders. Indeed, Barclayshare, one of the largest of the plan managers, has already estimated that roughly a quarter of those who subscribe to its personal equity plan are first-time shareholders. Income Tax 12. Mr. Fallon asked the Chancellor of the Exchequer what information he has on the starting rates of income tax in other European Community countries. Mr. Brooke The United Kingdom has the second highest starting rate of national income tax in the Community and the third highest rate, after Denmark and Ireland, when local income taxes are included. I shall arrange for further information to be placed in the Official Report. Mr. Fallon Are the starting rates of tax not too high? Will my hon. Friend reinforce his determination to cut tax for the low-paid by paying particular heed to the advice in last week's Militant newspaper that "Labour leaders are at last realising the electoral damage being done by their pledge to reverse Tory tax cuts and that ordinary employed workers fear"— Mr. Speaker Order. The hon. Gentleman must summarise, not quote. Mr. Fallon "that ordinary employed workers fear that Labour will increase their already heavy tax burden." Mr. Speaker Order. I repeat that the hon. Gentleman must summarise, not quote. Mr. Brooke Answering my hon. Friend's question sub specie aeternitatis, I think that my right hon. Friend has indicated that he proposes to cut tax. In the narrower context of St. Patrick's day, it would be wrong for me to quote. The quotation from Militant did not appear to be one which the Opposition enjoyed. Mr. Winnick Has the Minister seen the memorandum from the Tory Reform Group— a number of Cabinet Ministers are associated with that organisation—which has argued strongly that, instead of cutting taxes, the Government should make further substantial investment in housing, education and the rest? Is the Minister aware that what we complain about are not tax cuts for the lowest paid, who should certainly get relief, but the tax cuts that have benefited the wealthiest people under the Tory Government? Mr. Brooke I have read a wide number of representations, from Militant to the Tory Reform Group, but that does not allow me to anticipate my right hon. Friend's Budget. Mr. Maples The disparity in the starting rates of tax highlighted by my hon. Friend's answer is serious. Many of us hope that he will soon find himself able to do something about it. Does he not agree that tax revenues are not maximised by high rates of tax? Is that not borne out by the fact that over the last seven years the yield of higher rate tax in real terms has risen by 40 per cent. over a period when rates of tax have been reduced? Mr. Brooke My hon. Friend is quite right to draw attention to that element of buoyancy. Following is the information: ---------------- | | ---------------- | | ---------------- |Belgium | ---------------- |Denmark | ---------------- |France | ---------------- |Germany | ---------------- |Greece | ---------------- |Ireland | ---------------- |Italy | ---------------- |Luxembourg | ---------------- |Netherlands | ---------------- |Portugal | ---------------- |Spain | ---------------- |United Kingdom| ---------------- 1. The rates relate to employment income.2. The starting rates are in all cases the lowest applicable when tax actually becomes payable. The figures reflect the latest enacted rate scales, as far as is known.3. The rates shown may differ from the nominal rates of tax in the countries concerned because, where appropriate, they take account of employment income reliefs, minimum expense deductions, tax credits for personal allowances and other standard reliefs.4. In Belgium and Denmark local income taxes are payable in addition to the national rate. The combined figures for these two countries assume, in the case of Belgium, that the local tax is payable at the rate applicable to the majority of the population; in the case of Denmark at the Copenhagen rate, which is about average.5. The higher starting rate for a married couple in Ireland (60 per cent.) reflects the marginal relief just above the exemption limit. Where there is no longer any marginal relief, the rate reduces to 35 per cent. Privatisation 14. Mr. Nellist asked the Chancellor of the Excheqer what lessons he has drawn from the recent privatisation of British Airways for future flotations of publicly owned companies; and if he will make a statement. Mr. Lawson The main lesson from the British Airways sale is that there is very considerable popular support for the privatisation programme. Over 1 million people became shareholders in British Airways, including over 90 per cent. of the company's employees. Mr. Nellist Why does the Chancellor not admit that the deliberate undervaluation of British Airways cost working people, that is, his beloved taxpayers, £300 million, and that £50 million profit was made on the first day, including Lord King's personal profit of £13,000 in 24 hours? Is it not just like all the other privatisation exercises of the Government—legalised theft? Mr. Lawson On the contrary. it is public ownership in the true sense of the word. It is returning savings to the people. As for the hon. Member's expertise in the pricing of new issues, I would have had a little more respect for that if he had predicted what would happen. Mr. Yeo Does my right hon. Friend agree that there is one clear lesson to be learnt from the British Airways share sale, and that is that, even without the benefit of a large advertising campaign, there is massive public interest in and support for the Government's policy of privatisation? Is that not conveniently highlighted by the Oppositions determination to reverse our policy? Mr. Lawson My hon. Friend is right. That is precisely why we shall continue with this programme throughout the remainder of this Parliament and well into the next Parliament. Mr. Blair Is it not the case that foreign speculation on gas, British Telecom and British Airways alone creamed off over £350 million on first-day profits, more than a full year's cost of the Bill introduced by my hon. Friend the Member for Walsall, North (Mr. Winnick) to give free TV licences to pensioners'? Why are the Government so mean with pensioners and so generous with foreign bankers? Mr. Lawson The hon. Member's xenophobia, which he cultivates for the benefit of certain elements in his own party, because he himself does not believe in it for a moment, is entirely without the statistical foundation which he attempted to give to the House. Pensioners (Income Tax) 15. Mr. Dubs asked the Chancellor of the Exchequer how many pensioners pay income tax; and what is the total revenue involved. 17. Mr. Fry asked the Chancellor of the Exchequer how many persons in the last financial year for which figures are available, in receipt of retirement pensions, paid income tax of £300 or less for the relevant year; and what were the comparable figures in the two preceding years. Mr. Brooke The available information relates to single people and married couples aged 65 or over. About 2½ million pay income tax totalling nearly £4 billion per annum. However, in each of the last three years about four and three quarter million had no liability to income tax while a further three quarters of a million paid tax of 1;300 per annum or less. Mr. Dubs Does the Minister understand the sense of injustice felt by those pensioners who have a small occupational pension on top of their basic pension and still have to pay tax on it? Does not justice to pensioners demand that those poor people should be exempt from paying income tax? Mr. Brooke Single pensioners can have income up to £16 per week over basic pension before paying tax, and married pensioners can have around £25 per week. Mr. Fry Does my hon. Friend not appreciate that the figures that he has provided this afternoon show that it is dangerous to lump all pensioners together and that some pensioners are not quite in the category described by the Labour party? None the less, does he appreciate that it must cost the Inland Revenue a considerable amount to collect the taxation from the three quarters of a million pensioners he mentioned'? May we hope for further moves in the direction that the Government have taken to remove those people entirely from the income tax net? Mr. Brooke Between 1979 and 1985 pensioners' total net income increased on average by 2·7 per cent. a year more than prices, whereas the average net income for the population as a whole increased by 1 per cent. per annum. I note what my hon. Friend said, but that again is a question for the Budget. Prime Minister Mr. Speaker Before we start Prime Minister's questions, I remind the House that questions should be related to the Prime Minister's responsibilities. Engagements Q1. Mr. Franks asked the Prime Minister if she will list her offical engagements for Thursday 26 February. The Prime Minister (Mrs. Margaret Thatcher) This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today. Mr. Franks Has my right hon. Friend noticed the latest optimistic forecast from the National Institute of Economic and Social Research concerning jobs, inflation, growth and output? Will she confirm that the Government's policies, which have secured those improved prospects, will be continued, not only in this Parliament but in the next, despite the efforts of the Opposition to undermine national prosperity? The Prime Minister I had noticed that report from the National Institute of Economic and Social Research, which said that the economy would expand by nearly 3 per cent. this year. It has been accompanied by other optimistic reports at the same time from the Association of British Chambers of Commerce and the Institute for Fiscal Studies and by excellent construction figures. I confirm what my hon. Friend said, that the policies that have led to a healthy industrial and commercial base will be continued in the next Parliament. Mr. Kinnock When £3 billion spent on high quality health and education services and building homes would generate at least four times as many jobs as an equal sum spent on tax cuts, does not the course of prudence dictate to the Government that they should be using whatever resources they have to generate jobs in Britain rather than using them for pre-election give-aways? The Prime Minister More jobs are being generated in Britain, as the right hon. Gentleman knows. The healthy state of the economy, which I have just indicated from the reports today, has been brought about partially by the incentives that have been given by some of the income tax cuts. Most of us want to keep, at the top end too, some of our best brains in this country and one does not do that by high taxation. Mr. Kinnock Does the Prime Minister not recognise that, whenever they are asked, the vast majority of British taxpayers say that they would rather have dependable, high quality services, decent old-age pensions and jobs for people in this country than a few pence off income tax? Is it not clear that their sense of prudence and patriotism is much greater than that of the Government? The Prime Minister We have high quality services in this country. The Health Service is excellent, and, with regard to pensioners, Britain's spending on the elderly is the third highest in Europe as a proportion of the national income. With regard to what the right hon. Gentleman said about tax cuts, may I remind him of what the last Labour Chancellor said about these. He said: "With the rate of inflation remaining low, and with these substantial tax reliefs"— he was referring to some small cuts on 11 April 1978— "modest increases in earnings should ensure that real living standards can continue to rise over the year ahead without unduly increasing our industrial costs." He went on: "This is the best possible recipe for commercial and industrial success. It is the only recipe for curing unemployment."—[Official Report, 11 April 1978; Vol. 947, c. 1207–8.] That was a Labour Chancellor. Mr. Kinnock Yes, and does the Prime Minister recall that when that Labour Chancellor said that there were 1 million, not 3 million, unemployed, that we had a surplus in our manufacturing trade, that we had lower interest rates and that everybody — old-age pensioners and others alike—was in relative and absolute terms better off? Will she accept that that Chancellor, also had a 25p band for income tax? Will she introduce that and use any other money she has for generating jobs, instead of trying to bribe at election time? The Prime Minister Perhaps the right hon. Gentleman has forgotten a few facts. We now have a higher standard of living than this country has ever known and the highest standard of Health Service that this country has ever known. The day that we were returned to No. 10 Downing street spending on the National Health Service was £7¾ billion a year and now it is £18¾ billion a year. The standard of pensions has never been higher than it is now. Mrs. Peacock Has my right hon. Friend had time today to study the report from the Association of British Chambers of Commerce, which suggests that four regions in the north of England, including Yorkshire, have above average investment? Will she congratulate those companies in my constituency that have invested over £20 million in manufacturing industry? The Prime Minister My hon. Friend is right. The Association of British Chambers of Commerce has confirmed that manufacturing industry is doing well in the north as well as in the south, that exports are also doing well in the north, that a considerable number of people are taking up enterprise allowances in the north and that half the increasing number of self-employed also find their place in the north. Q2. Mr. Nicholas Brown asked the Prime Minister if she will list her official engagements for Thursday 26 February. The Prime Minister I refer the hon. Gentleman to the reply that I gave some moments ago. Mr. Brown When the Prime Minister next bats for the north in Cabinet, will she thump her right hon. Friend the Secretary of State for Energy with her bat and tell him to get on with ordering coal-fired power plants from the north's engineering industry? What is the point of planning tax cuts for people to spend on imported electrical consumer goods when there will be no electricity in the mid-1990s with which to run them? The Prime Minister I notice that the Labour party is a party of high income taxation at all levels. We happen to believe that people are entitled to the lion's share of their own earnings and that that gives rise to better incentives and a better standard of living for all people. With regard to power stations, my right hon. Friend the Energy Secretary will be taking decisions in the near future about what power stations, if any, he will be ordering. Q3. Mr. Latham asked the Prime Minister if she will list her official engagements for Thursday 26 February. The Prime Minister I refer my hon. Friend to the reply that I gave some moments ago. Mr. Latham When my right hon. Friend met the American arms control negotiators yesterday, did she stress that the stars wars project, in its limited research form, has already been immensely helpful to the West in bringing Mr. Gorbachev to the negotiating table and, we hope, keeping him there? The Prime Minister I believe that it is the strength and resolution of the West, including this Government, that have brought the Russians to the negotiating table at Geneva. It is continued strength and resolution that will in the end ensure balanced reductions of nuclear and other weaponry. Indeed, that is one reason why the Labour party's policy of one-sided nuclear disarmament is so dangerous and will be totally rejected by the British people. Mr. Steel When the Prime Minister told the Institute of Directors on Tuesday that she believed it wrong for the state to take and spend so much of people's earnings, did she not recognise what a poll in the Today newspaper shows, which is that a clear majority of people would rather see money spent this year on jobs, education, pensions and health than have two or three pence off their rate of income tax? Does that not show that the people have a rather higher concept of responsibility to their neighbours than has the Prime Minister? The Prime Minister No. I am interested to learn that the Liberal party also wants higher income tax for people such as nurses and teachers. We do not wish to have higher income tax. We believe that a Chancellor does not give away money on Budget day, but decides how much of people's money he will take away. Mr. Gerald Howarth Will my right hon. Friend join me in congratulating the aerospace industry on achieving a 12·5 per cent. increase in exports last year, reaching a record £4·74 billion? Does this not show the strength of manufacturing industry in high-tech, and does it not give the lie to what has been said by the Leader of the Opposition, who is doing a great disservice to manufacturing industry? The Prime Minister Yes, I gladly congratulate the British aerospace industry and the company. It had a good year the year before last, which was shown in the company's annual report in March last year. I understand that it has had another very good year this year and we congratulate all concerned. Q6. Mr. Terlezki asked the Prime Minister if she will list her official engagements for Thursday 26 February. The Prime Minister I refer my hon. Friend to the reply that I gave some moments ago. Mr. Terlezki Will not the trade union reforms announced this week be welcome in the whole of the country because they will ensure that no longer will the trade union barons have the power to dictate to our industries? Should not power belong to the ordinary trade union members, who should be the people to decide the future of their labour? The Prime Minister Yes, all our trade union reforms have been designed to give more power to ordinary members of trade unions against the trade union bosses. They have led to a new atmosphere in industrial relations, with the lowest number of strikes for a long time and an excellent, profitable industry with good prospects for the future. Mr. Flannery Will the Prime Minister take note of the hurriedly organised lobby of teachers' unions outside the House today? The lobby is asking for the right to negotiate as a union—a right of which it has been deprived by a Bill introduced by a Minister who does not understand what he is doing. Will the Prime Minister do something so that the unions generally know that this is an attack not only on the teachers' unions but on the trade union movement, to deprive it of the right to negotiate? The Prime Minister The overwhelming majority of teachers, and of parents, know that teachers have had a better deal from this Government than from any other Government. The increase in pay is outstanding and takes teachers way above what used to be their old bench-mark of the Houghton award. This settlement goes way above that and defines their pay and conditions of service for the first time, ensuring that better teachers get better pay. It is a temporary arrangement until permanent arrangements for negotiating can be worked out. Q7. Mr. Robert Atkins asked the Prime Minister if she will list her official engagements for Thursday 26 February. The Prime Minister I refer my hon. Friend to the reply that I gave some moments ago. Mr. Atkins With regard to the Government's recently announced policy on the future of Leyland Trucks, will my right hon. Friend take time today to consider the division within the Liberal party? Its employment spokesman is in favour of Paccar, and its industry spokesman is in favour of DAF. Is this not— Mr. Speaker Order. Was the hon. Gentleman not here when I made my announcement? Questions must relate to the Prime Minister's responsibilities. Mrs. Clwyd Does the Prime Minister recall Question Time on 22 January, when she described Mr. Duncan Campbell as ferreting around and as a threat to national security? Will she now apologise to him and to all those smeared by her accusations? The Prime Minister No. The matters referred to were accepted by both Front Benches as a threat to national security. Yesterday Mr. Campbell gave the High Court a binding undertaking not to publish sensitive information about the secret defence project—[Interruption.] The injunction against him was accordingly discharged in the light of that binding undertaking. Q7. Mrs. Virginia Bottomley asked the Prime Minister if she will list her official engagements for Thursday 26 February. The Prime Minister I refer my hon. Friend to the reply that I gave some moments ago. Mrs. Bottomley With 15,000 deaths and 24,000 new cases of breast cancer a year, does my right hon. Friend agree that the announcement of a national screening service is further demonstration of the Government's commitment to women's health? The Prime Minister Yes. As my right hon. Friend the Secretary of State for Social Services said yesterday, the Government have accepted the recommendation of the Forrest report in full. This is greatly to the advantage of many women and greatly to the relief of many others, not only in relation to breast cancer, but with regard to cervical cancer. It was a very good statement yesterday and it is a further earnest of the way in which this Government constantly look after the Health Service and constantly improve it.