asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the progress of his consultations as to whether changes should be made in the classification and grading of agricultural land.

My consultations with the Minister for Local Government and Environmental Services are nearing completion.

Does my hon. Friend agree that much land that is classified as grade 3 is good, productive agricultural land? Is it not misleading to put such land in the same category as poorer agricultural land, especially at a time when the Government want to discourage good agricultural land from being used for urban development, except as a last resort?

My hon. Friend is right. About 2·8 per cent. of the land is grade 1, 14·6 per cent. is grade 2 and 48·9 per cent. is grade 3. I believe that it is because my hon. Friend and I see eye to eye that he is pressing me to make sure that grade 3 land is not thought of as third-class, which it is not.

asked the Minister of Agriculture, Fisheries and Food what has been the average percentage increase in food prices since May 1979.

In the 17 months between May 1979 and September 1980 food prices, as measured by the general index of retail prices, rose by 15·6 per cent., compared with a rise of 25·2 per cent. in the retail price index as a whole. The House will be delighted to see that over the past three months the food price index has shown a slight fall.

Is not the Minister ashamed of that disgraceful record, after 17 months of Tory government? How much of that increase was due to the absurdities of the common agricultural policy? Can he assure us that any so-called decrease in our Common Market contribution will not be paid for simply by increased food bills for families in this country?

I apologise to the hon. Gentleman for the fact that my reply did not fit in with his well-prepared supplementary question. If he suggests that those figures show a monstrous and shaming policy, I point out that the performance is much better than the average increase in food prices during every year of the previous Labour Government.

Does my right hon. Friend agree that if other industries, particularly those which the hon. Member for West Stirlingshire (Mr. Canavan) represents, had the same track record as agriculture in price rises, productivity and lack of strikes, we should not be in the mess that we are in now?

In the interests of British politics, I should be grateful to my hon. Friend if he would give the hon. Member for West Stirlingshire (Mr. Canavan) a "teach-in".

Does the Minister agree that there is a connection between food and farm prices? Does he remember the speech that he made at Wye college last week, when he said that in 1960 we produced 60 per cent. of our food, and that we are now approaching 80 per cent.? Did he not further say that in the past 20 years there had been a 150 per cent. improvement in the productivity record of the agriculture industry? Does the right hon. Gentleman agree that if, as the hon. Member for Devon, West (Mr. Mills) said, we had that throughout industry, we should have a miracle in this country and throughout the world? Therefore, is it not a scandal that farm workers' wages are still £33 per week below the average?

Order. With every respect, many of those questions could be related to several later questions.

I am grateful to the hon. Lady. There has been a substantial improvement in productivity, and a very substantial improvement in wages in the agriculture industry, which is right in view of its freedom from restrictive practices and strikes.

Does my right hon. Friend agree that our food producers have received price increases that have been much lower than the rate of inflation? Does that not constitute a remarkable track record for the whole industry?

Yes. Agriculture has made an enormous contribution to the battle against inflation, as the figures that I have announced to the House today show.

Is it not a fact that because of a series of green pound devaluations and an artificially high rate of sterling there is a United Kingdom positive compensatory amount of about 10 per cent? Although our food exporters may be benefiting from that, is there not a tax on food imports to this country which is likely to increase food prices by about 5 per cent? Is it not time that the right hon. Gentleman considered a green pound revaluation to reduce prices, give our consumers a better deal and help to tackle inflation?

I am grateful to the right hon. Gentleman for asking that question, because it gives me the opportunity to clear up some incredibly distorted comments that have appeared in certain sections of the press. If I were to eradicate the whole of the present MCA advantage to Britain, the effect on the retail price index would be ⅓ per cent. The headlines that talk about an 8 or 9 per cent. tax on food give a totally false impression. The Labour Party constantly points out the disadvantage to British industry of a high rate of sterling, so it should not be disappointed when there is a European mechanism that stops that disadvantage from occurring in agriculture.

May I take it from what the right hon. Gentleman has said that he has no intention of revaluing the green pound? Does he accept that if the present situation continues he will be bound to agree to a general increase in food prices at the annual price review?

As the right hon. Gentleman knows, there have always been discussions on the relativity of MCAs and prices, and I am sure that such discussions will take place at the coming price review. I assure him that at the present time I have no intention of revaluing the green pound.

asked the Minister of Agriculture, Fisheries and Food what recent discussions he has had concerning the future role of the sea fisheries committees; and if he will make a statement.

I am reviewing a number of local fisheries matters and I intend to issue a consultation document which will cover, among other things, the sea fisheries committees.

In view of the experience that we have had of regional water authorities and the personalities of the fishermen involved, will my hon. Friend take it from me that he will not need to undertake much consultation to understand that few fishermen want anything to do with sea fisheries committees being subjugated or taken over by, or merged with, regional water authorities? Will he give an assurance that that will be more than carefully borne in mind in the consultations?

Not least because of the direct representations that I have received from my hon. Friend, for which I thank him, I am fully aware of the specific points that he has made. I assure him that those matters will be taken fully into account in the review.

Is the hon. Gentleman aware that the opinion that has just been expressed from the South of England is even more strongly held in Northumberland, where there would be tremendous resentment if the sea fisheries committee were to be taken away, and even more resentment if its job were to be given to the regional water authority?

Far be it from me to be an arbiter on the strength of regional feelings. I recognise the strength of feeling in the North-East as well.

Is my hon. Friend aware that considerable concern has been expressed about the suggestion that the functions and responsibilities of sea fishery committees might be extended beyond river mouths? Will he assure us that that would not be done without wide consultation with, among others, representatives of Scottish fishermen?

There will be consultation on all these matters that affect the fishing industry.

Does my hon. Friend agree that regional water authorities already have enough to do and that they are still settling down, even though they have been in existence for about six years? Transferring the power of the sea fisheries committee in Cornwall to the regional water authority would create not only opposition but resentment.

I assure my hon. Friend that no decision has been taken on the matter. Representations have been made, and if the functions of sea fisheries committees had to be altered in the way that has been suggested legislation would be required and the matter would have to come before the House.

asked the Minister of Agriculture, Fisheries and Food what developments there have been during 1980 affecting the size of the dairy herd and domestic production of milk.

The size of the dairy herd in England and Wales in 1980 has been affected by a number of factors, including the impact of the EEC's non-marketing scheme. Despite this, milk production during the year has held up, and indeed is slightly higher than in the previous year.

In the light of the decline in the number of producers, partly as a result of declining profitability and the EEC scheme that my hon. Friend has mentioned, and the fact that we are not self-sufficient in milk production, will my right hon. Friend, if I may put it this way, give a clear steer to our dairy farmers on the Government's policy?

The favourable effects on the industry of three green pound devaluations and the increase that it has received from the increase in the retail price of milk show that the Government consider it essential to maintain a major presence for the dairy industry. The big scope for improvement is in dairy products. That is why I am pleased to tell the House that over the past two months the proportion of butter sold to the British market that was British-produced has been higher than for many years.

Does the right hon. Gentleman agree that the EEC levies act against the British dairy farmer when we have no surplus of milk or dairy products? Will he therefore take action with the EEC to ensure that those who produce the milk surpluses reduce the number of their dairy cattle?

In negotiations last year, Britain, alone of the member countries, expressed sympathy for the Commission's proposal that additional levies should be imposed on those who produce the surpluses. That is a principle with which we are basically in sympathy.

Is my right hon. Friend aware that British dairy farmers are annoyed at having to pay the co-responsibility levy, and even more annoyed when they discover that French farmers are being compensated by their Government?

I should point out that the period during which French farmers did not pay the levy was the last quarter of 1977, when I had no personal responsibility for these matters. I am glad to say that since that time French farmers have paid the levy.

Are not the right hon. Gentleman's replies unreasonably complacent, since thousands of milk producers are going out of production as a direct consequence of his Government's high interest rates and the EEC co-responsibility levy? Was not the public burning of the EEC co-responsibility levy cheque by the chairman of the Scottish Milk Marketing Board ample evidence that the producers are reaching the end of their tether? When will the Minister take some action?

When the cheque burning took place, the general impression created in the press was that French farmers were not paying the levy and that the cheque was burnt in protest at that. It is now known that the period when they did not pay the levy was the last quarter of 1977, when the hon. Gentleman had certain responsibilities in this sphere.

asked the Minister of Agriculture, Fisheries and Food what further meetings he has had with his EEC counterparts regarding fishing methods; and if he will make a statement.

On 29 September the EEC Council of Fisheries Ministers agreed a comprehensive regime for the conservation of fish resources.

Will the hon. Gentleman confirm that the deal between Britain and Denmark on the North Sea pout box was described by Scottish fishermen as totally irresponsible and wrecking? Is not the truth that the Ministry of Agriculture is so jealous of all the other Government Departments, which are smashing industry to the ground on the home front, that it is ensuring that large numbers of fishing fleets are being pushed into dry dock all round the country?

I suggest that the hon. Gentleman should discuss the matter not only with the Scottish fishing industry, but with other fishermen. He will discover that the pout box deal made in the Council of Ministers has been generally welcomed by the British fishing industry.

Will my hon. Friend ensure that when there are changes in mesh sizes for conservation purposes there is an adequate supply of the nets available and that changes are not made so often that fishermen have to buy new nets every other week?

I am aware of the expense that can be faced by fishermen when there are changes in mesh sizes. I accept the point about the availability of nets. The increases in mesh sizes that have been agreed will take effect from 1 December, and were first proposed about 18 months ago. The fishing industry has therefore had a considerable period of warning that this increase in mesh sizes was likely to take place.

Despite what the Minister said, somewhat unkindly, to my hon. Friend the Member for Bolsover (Mr. Skinner), is he aware that there is considerable scepticism and dubiety among Hull skippers about the methods used by the Danes? I am talking not about the pout box, but about the North Sea. Similar sentiments have been expressed in Lowestoft over past years. Does the hon. Gentleman accept that according to what we are told, a senior Minister has done a deal at the last EEC talks, under which invigilation of fishing methods is to be carried out by a so-called EEC fleet? Many people in Hull and elsewhere believe that invigilation and enforcement should be the responsibility of our own national fleet, rather than that of others coming into our waters.

While I might expect the hon. Member for Bolsover (Mr. Skinner) to get his facts wrong in relation to the pout box, I should not expect the hon. Member for Kingston upon Hull, West (Mr. Johnson) to get his facts wrong. I point out to him that if we had not made the agreement at the end of September there would have been no pout box to the east of the Greenwich meridian. What we have negotiated means that 80 to 90 per cent. of the white fish stocks in that area can be protected. To that extent, the British fishing industry has welcomed the proposal.

Will my hon. Friend assure those hon. Members who have constituencies nearer the sea than Bolsover that the only way in which we can have sensible conservation measures is by co-operation with the rest of the EEC?

If my hon. Friend continues in this manner, he too will reach the sea fairly shortly. He is right. The best way to ensure effective conservation is to get international agreement and have it effectively enforced, as the hon. Member for Kingston upon Hull, West, implied. That is what we are seeking to do in the Common Market negotiations.

Is the Minister not aware that what seriously concerns the British Fishing Federation is the size of the mesh used in the nets, especially by the Danes, who depend upon industrial fishing? The federation is worried that these fine nets will sweep the seas, and that British fishermen, using a larger mesh size, will lose the chance of taking the table white fish that we require. Will the Minister allay those fears?

I point out three things to the right hon. Gentleman: first, we have conserved a massive area of the North Sea where the Danes will not be permitted to fish, not just for six months of the year, as was the case previously, but for 12 months when the white fish by-catch can be only 10 per cent., much lower than previously. Secondly, fishermen are also entitled to fish for shrimps and other fish with nets below that size.

What about whiting?

Thirdly, in the control measures agreed this week we have agreed one specific measure which is that where two nets are carried one has to be stowed in a particular way, which makes policing of industrial fishing much more effective.

What about the red herring?

asked the Minister of Agriculture, Fisheries and Food if, as a result of his discussions with the European Council, he is now in a position to make a full statement on the common agricultural and fisheries policies which are due to come into operation on 1 January 1981.

I am not aware of any significant aspects of the common agricultural policy due to come into force on 1 January 1981 and shall therefore confine my reply to the common fisheries policy. Further steady progress towards a revised CFP was made at the Fisheries Council on 28 October, and on this I shall be making a more detailed statement later today.

I am grateful to my right hon. Friend for that reply. I am sure that he has viewed with interest the comments of the hon. Member for Bolsover (Mr. Skinner). We have never heard of Bolsover bass. It is probably a new fish that we shall hear about when the quotas come into being. Will my right hon. Friend confirm that, in making these satisfactory recommendations and decisions on the pout box and policing—especially the policing—there will be policing within the waters to such an extent that it will discourage the unfair competition that our fishermen are experiencing?

In reply to my hon. Friend I can perhaps comment on the question put by the hon. Member for Kingston upon Hull, West (Mr. Johnson) to the Minister of State. The policing will be carried out by the member States, as requested by the hon. Gentleman, but I insisted at the Council that the Commission operates a system of supervision to see that all member States carry out their duties properly. I think that the fear of our fishermen is that we shall do our task properly and other countries may not. At the fishing Council it was agreed that the Community should make sure that each member State was carrying out its duties properly.

The right hon. Gentleman has whetted our appetite about his future statement. Can he say whether the policing control will be within 12 miles or 200 miles, whether there will be adequate quotas for our fishermen and whether the conservation schemes will be accepted by the European Community, as our fishing industry requires?

The answer to the first question is 200 miles. Quotas will be the subject of the next Council meeting. There are agreed conservation measures, which I believe to be in the interests of our fishermen.

Will my right hon. Friend say what I can tell my inshore fishermen in Brighton, who find increasing difficulty in earning a decent living and whose stocks have been destroyed? What hope have they for the future?

One of the most important matters of interest to my hon. Friend's fishermen is that we managed to keep the regulations on beam-trawling, which was such a potential danger to his fishermen.

Does my right hon. Friend accept that any agreement on a common fisheries policy will have to include agreement on conservation matters, licensing, quotas and policing? Does he agree that the latter is very important if British fishermen are to get a fair deal?

We have made it clear that we will not agree to any common fisheries policy without considering it in totality. Enforcement is a basic issue.

asked the Minister of Agriculture, Fisheries and Food if he will make a statement about the state of the fishing industry.

On 7 August I announced a £14·1 million scheme of aid for the industry. My right hon. Friends and I keep in close consultation with representatives of the industry.

When will my hon. Friend be in a position to give a definitive answer to the House about the future of the British fishing industry, particularly with regard to our European partners? Will he bear in mind that we require that fish around our coasts should remain our property? It has nothing to do with common ownership with the EEC.

It is to ensure a proper future for fishing in this country that we are negotiating with our Common Market partners. It is our hope that we can keep to the programme of resolving these negotiations between now and the end of the year.

Bearing in mind that the Minister knows full well that, in Hull, we are on our knees, will he accept that if he does not get a settlement by the end of this calendar year we shall be on our backs, and finished as a fishing port?

I am grateful for what underlies the hon. Gentleman's statement. It underlines the need to try to get the common fisheries policy settled. It is a matter that has been outstanding for far too long. I am glad that we have his support.

Does my hon. Friend agree that the most deep-rooted problem associated with the state of the fishing industry is the fact that fewer people in this country are eating fish, in contrast to what is happening in Europe? Will he give an assurance that his Department is actively considering an improvement in the marketing of fish generally, along the lines of what has sometimes been done in agriculture?

I share my hon. Friend's concern. Over recent years there has been a decline in consumption per head of fish. Marketing is a responsibility of the White Fish Authority. I shall be discussing the matter with the authority and others responsible.

The original question asked the Minister to

"make a statement about the state of the fishing industry."

The right hon. Gentleman knows that one of the reasons why the fishing industry is in a parlous and difficult state is the failure of the right hon. Member for Deptford (Mr. Silkin) to come to a sensible negotiated arrangement in Europe. The British fishing industry is now paying the price for that intransigence.

asked the Minister of Agriculture, Fisheries and Food what steps he is taking to maintain a viable home-based horticulture industry.

We are continuing to give considerable financial support to the horticulture industry through the capital grant schemes, an extensive research and development programme, free advice to growers by the Agricultural Development and Advisory Service and assistance towards improved marketing of horticultural produce, including the recently announced grant of £300,000 to the Apple and Pear Development Council towards the launching of the kingdom pack scheme.

I welcome those comments and congratulate the Government on the action that they have taken. May I draw the Minister's attention to the glasshouse industry? In that context, has any progress been made on a common energy policy in Europe? Has consideration been given to making a once-for-all compensatory payment to glasshouse growers who are prepared to go out of business and pull down their glasshouses?

The European Commission told the Council on 30 September that it was satisfied that the preferential gas price available to Dutch growers distorted competition. The Commission is taking action under article 93 of the Treaty of Rome. We continue to urge the Commission to do so speedily, in view of the gravity of the situation.

Is my hon. Friend aware that many glasshouse growers in my constituency are driven to the view that our right hon. Friend no longer has any power to deal with imports, from the Netherlands in particular, which are grown with the help of a considerable fuel subsidy?

My hon. Friend's views on the Common Market are well known. Tomatoes are subject to EEC rules.

Is the Minister aware that many of the people engaged in the horticulture industry view the Minister's list of aids as worthy of derision, since they are so insubstantial? Is it not clear that in this matter, as in so many others, particularly when energy policy is involved, the Government are disdainful of national need and disregard the supportive attitude of Governments of other member States?

I shall not answer for the horticulture industry as a whole, but I believe that progress in the apple industry has been remarkable, and something of which we can be proud. Difficulties still exist in some areas, and tomatoes represent one of those difficulties. I remind the hon. Gentleman that we spend nearly £19 million on research alone. That is an enormously high proportion of the total available. The hon. Gentleman's accusations are false.

Is my hon. Friend aware that the Treaty of Rome permits discriminatory action to be taken against imports when our industry is being unsettled by abnormal imports? Now that the EEC has found that Dutch gas prices break the competition rules, will he please take unilateral action to keep out Dutch imports until action by the EEC on gas prices becomes effective?

Unilateral action is neither likely nor called for on this occasion. Germany, France and Belgium are suffering in the same way. We are not alone in our complaints. We have the cause of righteousness on our side.

asked the Minister of Agriculture, Fisheries and Food whether he is satisfied with the result of the homegrown potato crop; and if he will make a statement.

High yields, coupled with a high level of plantings, mean that there will be a surplus this year. It is not yet possible to estimate its size, but the Potato Marketing Board believes that it will be contained within the 422,000 tonnes already held under our joint support buying arrangements.

Does the Minister accept that some of the glut is due to allowing too many imports of non-EEC new potatoes? When he decides the date on which he will stop imports of non-EEC new potatoes next year, will he try to get it right?

With respect to the hon. Gentleman, I do not think that what he says is true. The early potato imports do not affect dramatically the main crop, to which the question relates. Imports caused anxiety this year, and we took immediate action in order to control them. We are having discussions with our suppliers about next year, to ensure that the market is treated in a proper and orderly way.

Will my hon. Friend convey to our right hon. Friend the need to exercise the same stringency in the marketing of potatoes as he has in the marketing of apples? Will he accept my advice as a housewife—a rare breed in these parts—that the current potato crop is something of a disgrace? Is he aware that some people care no more for plastic-bag potatoes than for plastic-bag bread? Will he ensure that the potatoes on the shelf are a credit to the British potato crop?

I do not think that it is necessary for me to convey that to my right hon. Friend, because I am sure that he has taken note of it. The Potato Marketing Board, though it is criticised on some counts, has done a great deal to raise the standard of potatoes. Equally, many producer cooperatives are working hard to that end. I accept that there is scope for further action. It is one matter that is being studied by our marketing advisers.

asked the Minister of Agriculture, Fisheries and Food if he is satisfied with the prospects for the dairy industry.

I believe that the structure and efficiency of our dairy industry continue to provide a sound basis for its future.

Is my hon. Friend aware that the costs of dairy farmers in my constituency are rising faster than the prices that they receive, and that they are worried about the future?

Yes, we are aware of the difficulties facing dairy farmers. I remind my hon. Friend that during the last year, in relation to retail prices and in other ways, we have done our best to try to maintain incomes.

Since the Department has a general responsibility for agricultural policy in this country, will the Government bear particularly in mind the differential effect upon dairy farmers of current EEC and other policies in this industry?

Yes, we bear that in mind. My right hon. Friend discusses it frequently with the Secretary of State for Northern Ireland. I had informal discussions with representatives of the Northern Ireland Farmers Union this week, and that was one topic raised by it.

Is the Minister aware that production in the area covered by the North of Scotland Milk Marketing Board was 7·2 per cent. lower in August this year than it was in August last year? Does he accept that, unless there is a significant increase in the retail price of milk soon, production will fall even further?

One must bear in mind the needs of the consumer as well as the producer if our milk is to be sold. I am conscious that in certain areas and on particular types of farm there has been a decline in production, but the pattern is not even throughout the country. In England and Wales there will probably be a slight increase in the production of milk.

Is the Minister aware that it would be unacceptable to the British housewife if the Common Market were to force the pint of milk off the doorstep? Will he please take definite action? Is he aware that the issue affects the employment of thousands of distributive milkmen, who are threatened with being thrown out of work? Does he accept that the farm support schemes are based on milk being at the centre of the arrangements? Does he accept also that if milk production deteriorates the price of every other product that the housewife buys will increase?

I endorse the value to the British housewife of the door-to-door delivery of milk, not only in terms of producing a high quality foodstuff on a daily basis, but for all the side benefits—not least the social ones. I ask the hon. Gentleman not to spread scare stories. Nothing has come from the Communiy that threatens the door-to-door delivery. I assure him that we shall do everything possible to maintain the essential door-to-door service to the British housewife and consumer.

asked the Minister of Agriculture, Fisheries and Food what is the Government's latest estimate of expenditure on the common agricultural policy in 1980.

asked the Minister of Agriculture, Fisheries and Food how the figure for the guarantee section of the EEC budget to pay for surplus products in 1980 compares with 1979.

The Community's expenditure for 1980 is expected to be kept within the £7,600 million included in the original published Community budget for 1980. Of that total, £3,400 million relates to export refunds compared with £3,100 million in 1979 and £1,600 million relates to internal surplus disposal measures compared with £1,000 million spent in 1979.

Is it true that subsidised grain, as well as subsidised butter, is now to be exported by the EEC to the Soviet Union?

With regard to reports that appeared today about certain forms of feedstuffs being exported to the Soviet Union, a meeting of the management committee in Brussels is taking place today to discuss the matter. From the beginning the British Government have suggested that the EEC should examine all exports—not just grain—to the Soviet Union. At that time such action was not considered essential, either by the Commission or the other member States. If the reports are correct, they will substantiate the view perpetually propounded by the British Government. I hope that in future the Community will abide by our suggestions.

Does the Minister accept that the guarantee section, which subsidises the food mountains, is becoming more expensive? Is he aware of the answer given to my hon. Friend the Member for Newham, South (Mr. Spearing) on 28 October, that instead of it costing 10 million units of account as it did this year, it will cost 12 million units of account next year? Is it not a fact that the CAP is becoming more horrendous every year? Would we not be better off outside it?

A year ago the two worst features of the CAP in terms of cost were the surpluses in dairy products and sugar. The butter mountain has been reduced by one-third during the past 12 months, and instead of paying export restitutions for sugar we are now obtaining rebates because the world price is higher than the Community price. There has been a substantial improvement in those two sectors.

Does my right hon. Friend agree that we could make better use of the CAP resources if we were to change to a subsidy system, rather than the intervention buying system, especially for perishable goods?

Yes, Sir. I am no supporter of the intervention system for perishable goods. That is why it was an important breakthrough in the Community when we agreed to the premium payment system for lamb. By being able to point to the success of that scheme I hope that we can persuade the Community that it is a better system to ensure that perishable goods go to the housewife, instead of to the stores.

If £3,000 million is being spent through the CAP on support for milk and dairy products, why is there a difficulty in the balance of retail and wholesale production of milk in Britain, which, as the Minister knows, is threatening the dairy industry?

I do not think that that is the case. There is a considerable future for the British dairy industry. We have the doorstep delivery service, with a guaranteed high level of liquid milk sales. There is considerable scope for improvement in the manufacturing side of the dairy industry, as has been shown this year by our substantially improved exports of dairy products to the Community and our much larger share of the domestic market.

Will it remain my hon. Friend's intention broadly to oppose increases in Community prices for foodstuffs already in surplus? Is he satisfied that the present position of the domestic green pound is logically compatible with that objective?

I think that my hon. Friend was absent when I pointed out that on the question of the green pound, the total effect on the retail price index was one-third of 1 per cent. As much of industry is complaining about the adverse effects of the level of sterling upon our export performance in industry, perhaps it is an advantage that in the sphere of agriculture the adverse effects are dealt with by a mechanism agreed within the Community.

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

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

Quite apart from the question of who won at the Cabinet meeting this morning, will the Prime Minister confirm that she is proud that her crony Lord Matthews of Trafalgar House wants to haul down the British flag in order to pursue the right hon. Lady's low-pay policy? Did Lord Matthews get the wage-cutting idea from the Quinton Hazell subsidiary in South Africa—of which the right hon. Lady's husband is a director—which is paying starvation wages? What steps will the Department of Trade take to ensure that the code is no longer infringed.

On the first part of the hon. Gentleman's question, I think that he is referring to the two Cunard liners that are to fly under different flags. I understand that it is a matter of keeping the liners competitive. If they are not competitive they might leave British ownership altogether. On the second part of his question, the reports on Quinton Hazell have been given to the Board of Trade in accordance with the voluntary code. They will be placed in the Library of the House, as is the customary practice.

As the Cabinet rightly discusses further measures to bring public spending under proper control, will my right hon. Friend use all the weight of her authority to ensure that those measures bear upon the proper control of pay and current wending, and not on further cuts in capital expenditure, which provides jobs and investment for the future?

I agree wholeheartedly with my hon. Friend's objective. It is better to make any public expenditure economies bear on the revenue side of the budget rather than on the capital side, which often goes to the private sector. Having said that, I have to say that it is not always easy to do so. Currently, our objective is to hold public spending to the levels previously published, not to cut it overall. There are certain aspects of the programme where public expenditure is increasing sharply, which means that there will have to be reductions in other parts of the programme.

If the Cabinet this morning discussed further cuts in public expenditure, will the Prime Minister say what they are? Will she say what calculations were before the Cabinet about the further increases in unemployment that will result from such cuts?

All aspects were discussed, and are regularly discussed, by the Government. I repeat that the Government's objective is to hold the public spending totals that have been published. In some ways I regret that we do not have the former Chancellor of the Exchequer's objective in mind when he reduced public spending by £5 billion in one year.

As the right hon. Lady is responsible for the Cabinet, will she say what further increases in unemployment will result from her decisions today? Has she taken into account the deepening unemployment crisis, based on the Department of Employment's figures, as described on the front page of the Financial Times today.

"Service industries hit as employment figures plunge"?

The way to secure good longer-term prospects for jobs is to make the defeat of inflation one's top priority.

Does my right hon. Friend agree that the British people's patience would be sorely tried if yesterday's vote by British Leyland workers were to lead ultimately to industrial action? Does she accept that industrial action can only damage the improving image of British Leyland at home and abroad?

We are obviously very much concerned that just when British Leyland has a super new car, which we have all been doing our best to promote as hard as we can, there might be the threat of industrial action. We must leave this matter to Sir Michael Edwardes and the board to deal with. They have been very successful to date, and I hope that they will be successful in bringing British Leyland through this particularly difficult period. We wish the new car well.

Will the Prime Minister between her engagements today, consider the serious plight of the woollen textile industry in my constituency and the surrounding parts of West Yorkshire? It is suffering mass unemployment. Will she take some action to stop the unfair competition from abroad, including from the Common Market, which is creating this problem, and will she give aid to this important industry, to alleviate unemployment in my constituency?

We operate the multi-fibre arrangement and we increase the number of quotas where that is appropriate. At the moment there are some 400 quotas with a number of different countries. We shall continue to watch the basket regulation carefully to see whether there is any chance of applying for more. We shall need a new agreement. The present one was negotiated by the pre- vious Government. There will be a new agreement because we are very concerned to see that textiles have a fair chance.

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

I refer my hon. Friend to the reply that I gave a moment ago.

May I remind my right hon. Friend that most of us fought the last general election on the issue of giving top priority to the conquest of inflation? Is she aware that my constituents are pleased that the cost of living is now much more stable—(HON. MEMBERS: "Oh!"]—and that their message to her is that they want her to stick to her guns?

I am grateful to my hon. Friend. Will he please tell his constituents that the conquest of inflation must have top priority and that I shall do exactly as he says?

Will the right hon. Lady accept that, whatever the views of the constituents in Twickenham, the views of the constituents in Sunderland, South are vastly different? In the Cabinet meeting this morning was there any discussion of the serious effect of unemployment throughout the country? Is the right hon. Lady aware that, far from being prepared to receive lectures on the economy from her, the unemployed in areas like the North-East want to know what practical action she will take to alleviate their problem?

In the longer run, good jobs must depend on the conquest of inflation. If we go the way that successive Governments have gone in the past 30 years—that is, reflating and printing money each time—we shall finish up with a higher level of unemployment and inflation. We have to break that cycle once and for all. Contrary to what the hon. Gentleman said, I believe that even in Sunderland, South the constituents prefer a falling rate of inflation to a rising one.

Will my right hon. Friend confirm that, in the light of this morning's Cabinet meeting, control of the pubic sector borrowing requirement and of the money supply remains at the heart of the Government's policy? Does she agree that the reason why both are rising so sharply is that the cost of public borrowing and the cost of unemployment are so high? That is because interest rates are so high. Are we not in danger of creating a society in which money lending is the only profitable business?

I agree with my right hon. and learned Friend that there must be no question of printing money to get an artificial boom, which would lead ultimately to hyper-inflation and higher unemployment. The Government always confirm and stand absolutely on that. We shall not go in for printing extra money. My right hon. and learned Friend knows that I am every bit as anxious as he is to try to bring down interest rates, because I much prefer them to be lower. The key to getting them down is to reduce the amount of borrowing in the economy, and for that public spending must bear its share of the blame.

Is the Prime Minister aware that my constituents want jobs? Does she not feel ashamed sometimes that she has managed to bring record levels of unemployment to an area that has never known high unemployment? Will she stop lecturing these people about high wages, because they have never had high wages, and they are still being thrown out of work every day as a result of her policies?

I make two points in reply to the hon. and learned Gentleman. The key to better jobs lies in keeping British industry competitive with other industrial nations on the Continent. There is no way out of that fundamental truth. The second point, which illustrates the first, is that in the past three years monetary demand has increased in the economy by 50 per cent. It did not go into increased output: it went into increased prices and increased imports. That is the answer to the Labour Party's policy, which is to reflate, which would be catastrophic.

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

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

In the light of the evidence of the increase in pacifism, as shown by the CND march the other day, and given the interest of the Soviet Union and, apparently, of certain Labour Members in British unilateral disarmament, will my right hon. Friend take every opportunity to remind those in this country who are easily led of the result of appeasement in the 1930s, and the even greater horrors and dangers of nuclear appeasement in 1980?

I believe that appeasement always has the same result. It gives encouragement to a potential aggressor. That is why this Government will never go the way of appeasement, although any Government formed by the Labour Party might.

Will the Prime Minister take time to consider the fact that the majority of people in this country believe that the decision that her Government took this week to allow prisoners in the H block cells in Northern Ireland to wear civilian clothes was both humane and wise? Does she agree that if, as a result of the hunger strike, coffins are carried out of the Maze prison into the Catholic areas, the violence and confusion that will result will be unacceptable to this country? Will she therefore take further decisions to ensure that those coffins do not have to be carried out of the Maze prison?

As I indicated last Tuesday, and as my right hon. Friend the Secretary of State for Northern Ireland had indicated previously, a decision was taken before the hunger strike began to allow all prisoners in Northern Ireland to wear civilian clothes, of prison issue, in place of prison uniforms. That decision had been discussed for several months. We thought it advisable to take it before the hunger strike began. There can be no question of any concessions to those on hunger strike now that the hunger strike has begun, and I sincerely hope that they will not persist in it.

Will my right hon. Friend take the opportunity today to point out to the Leyland workers and others in the public sector that with inflation, on a three-monthly basis, running well down into single figures over a 12-month period, in accepting a single-figure pay increase they will not necessarily reduce their standards of living?

We are all most anxious for British Leyland to succeed and for the new car to have considerable sales. It is ironic that there should be a strike threat just when British Leyland has restored its share of the market and is up to about 23 per cent. We earnestly hope that that strike will not come about. We shall have to leave the negotiations to the management of British Leyland to secure that end.

Will the Prime Minister find time today to reconsider her remarks about the competitiveness of British industry? Is she aware that with the present level of sterling there is no chance for whole sectors of British manufacturing industry to be competitive? So long as that remains the case, the prospects for employment and for the Prime Minister's borrowing requirement will get worse.

Competitiveness has deteriorated sharply. A part is due to the exchange rate—the smaller part. The greater part, as the figures show, is due to people paying themselves increases for producing the same amount or less. That is abundantly shown by the figures. Two-thirds of the decrease in competitiveness is due to increased pay not matched by increased output. One-third is due to the exchange rate. The way to hope to bring down the exchange rate is to try to reduce interest rates substantially, and that goes back to the question of trying to secure reductions in public expenditure below the levels that would otherwise obtain.