asked the Chancellor of the Exchequer what consideration has been given to the introduction of a scheme based on tax incentives to stimulate equity investment in small and medium trading businesses.

asked the Chancellor of the Exchequer if he will give consideration to a speedy introduction of a tax incentive scheme to the individual specifically designed to increase investment in small and medium trading businesses.

I regret that I cannot anticipate my right hon. and learned Friend's Budget Statement.

When considering proposals for equity investment will my right hon. Friend and our right hon. and learned Friend take into account the fact that small firms have limited opportunities to raise non-interest paying capital, compared with public companies? Does he agree that proposals along these lines would help smaller companies, which have done a great deal in the past to build up Britain's trading position?

I agree with my hon. Friend. My right hon. and learned Friend is bearing those considerations very much in mind. My hon. Friend will recall that a measure of this kind was taken in last year's Budget under the venture capital scheme, which allowed relief for loss on equity investment by, individuals and small businesses.

Is my right hon. Friend aware that, in addition to providing much-needed equity capital for small businesses, a scheme of that nature will bring investment from professional and senior company executives and, with that investment, expertise in management and the skills that are so lacking in our smaller businesses because it is free of charge and by the personal nature of the investment?

I am keenly aware of all that my hon. Friend has done on the small business front and the close interest that he takes. I am sure that my right hon. and learned Friend the Chancellor has listened carefully to what he has said.

Will the Minister give the same consideration to the smaller businesses—and many of those that have disappeared as a result of the Tories' monetarist policies—as the clearing banks, under the guidance of the Bank of England, gave recently to the multinational Massey-Fergusson group and to Stone-Platt Industries about 12 months ago? The Government have assisted other large industries. If it is right for these large industries to be assisted in an interventionist way by the Tory Government, why do they consistently keep kicking the smaller businesses to death?

I am not sure whether the hon. Member is suggesting that the Bank of England should not attempt to bring people together where that would be helpful, or whether he is suggesting that it should do so. I am sure that, on reflection, he will agree that this is a proper function of the Bank of England.

Will my right hon. Friend further consider the fact that a risk investment scheme would be helped if the Government would look at the idea of allowing a rollover of capital transfer tax? Most small businesses do not reach their optimum size in one generation, and if a rollover provision were introduced, the tax would be paid only when the investment was realised for cash.

There are various roll-over provisions on the statute book, but that is a budgetary matter, and my hon. Friend must be aware that I can make no comment on his proposal at the moment.

asked the Chancellor of the Exchequer if he will make a statement on the progress of discussions on changes in taxation on North Sea oil.

Consultations with the industry are in progress and are likely to continue for some time. Due regard will be paid to all representations made to me about prospective changes in the North Sea fiscal regime when I frame my Budget.

Will the Chancellor of the Exchequer accept that, because of the nature of the discussions and the time scale involved, certain substantial investments that should be forthcoming from companies as operators in the North Sea are likely to be held up, with considerable consequences for employment opportunities, particularly in Scotland and in British Shipbuilders?

The prospect of any fiscal change is bound to be one factor affecting investment intentions. In reaching my decisions and embarking on a process of consultation I shall do everything possible to strike the right balance between promoting investment and giving a fair reward to investors and securing a fair share of the proceeds for the citizens of this country.

Is the right hon. and learned Gentleman aware of the growing feeling that our substantial and increasing North Sea oil revenues are proving a curse, instead of a blessing, to manufacturing industry? As the director-general of the CBI has asked why we cannot use North Sea oil revenues to restructure British industry, and as the chairman of Shell UK Ltd. has called for a Marshall Aid plan to channel oil revenues into industry, when will the Chancellor start listening to experienced people in industry and use the oil revenues to help growth, instead of financing unemployment?

The hon. Gentleman must understand that the revenues from the North Sea form part of the total revenues accruing to the Exchequer. They fall far short of the total being borrowed in the present year. Out of the expenditure of the Exchequer, substantial sums are already going towards restructuring British industry. I remind the House of the statement that my right hon. Friend the Secretary of State for Industry made about British Leyland earlier this week. The money is already accruing, is part of the Budget and is being used as best it may be.

asked the Chancellor of the Exchequer what is his latest estimate of the public sector borrowing requirement for the current financial year.

asked the Chancellor of the Exchequer what is the latest estimate for the level of the public sector borrowing requirement for this financial year.

asked the Chancellor of the Exchequer what is his latest estimate of the public sector borrowing requirement.

I ask the honourable Members to await the Budget Statement.

Will the Chief Secretary confirm that when the Budget Statement appears the public sector borrowing requirement is likely to be about £10 billion to £12 billion, or even more if unemployment keeps increasing at the present rate? Will he accept that with the average cost to the Treasury of keeping someone out of work running at between £5,000 and £6,000 a year, it would merit the Government giving consideration to all schemes to take people into employment, either in the public sector or by helping small companies to take them into the private sector, rather than incurring the tremendous costs of unemployment, which are leading to the large PSBR?

I shall not comment on the hon. Gentleman's figures, because to do so would be to anticipate the Budget. The average figure in relation to unemployment is not £6,000 a year. That relates to a family man with two children. The average figure is probably nearer £3,500. However, it does not follow that by spending comparable sums it would be possible to create employment to the same extent. One would have to take into account all the consequential changes of spending money in that way in relation to inflation and everything else.

I congratulate my right hon. Friend on his appointment to the Treasury. Does he agree that a major cause of the Government's difficulties in controlling the public sector borrowing requirement is the high level of subsidies to nationalised industries and British Leyland? Does he agree that a substantial reduction in the level of those subsidies is essential if the Government's financial strategy is to succeed?

I am grateful for my hon. Friend's congratulations. There is no doubt that any substantial sector of public expenditure that one isolates can be regarded as making a major contribution to the PSBR. In terms of the increase that has taken place, borrowings by local authorities and public corporations, reflecting higher than expected expenditure and worsening trade conditions, have made a major contribution to the present situation.

I do not understand why the Chief Secretary is being so coy about the figure. The Chancellor's statement in November anticipated a PSBR for the year of £11½ billion. The Financial Secretary added to that in a recent speech. We know that it is about £12 billion or more. Will the Chief Secretary at least confirm that the major causes of the overshoot this year are the falling off of tax revenue and the increase in social security benefits owing to the massive rise in unemployment? Does he think that there is any sense in publishing long-term estimates for the PSBR? In the light of recent experience, will the hon. and learned Gentleman adhere to the published target for 1981–82, or not?

I am not sure whether the right hon. Gentleman is seriously suggesting that the forecasts published at the time of the Budget and under the Industry Act should not have been published. If so, that is a major change in Opposition policy. I said earlier that major factors in the increase are higher borrowing by local authorities and public corporations and an increase in Government expenditure on defence and as a result of the effects of the recession. Those are well-known factors, and they are the correct ones.

It is not a question of the PSBR level being a forecast. It is one of the targets of the Government, with one or two minor variations, taking account of the real world—of which even the Government have to take account. It was put forward as a target. Will the Chief Secretary tell us whether he thinks that he is sensible and wise in continuing to target when he knows that a major cause of the overspend is the rise in unemployment? Will he also tell us how much of the overspend is due to that cause?

I do not intend to bandy words with the right hon. Gentleman about "forecast" and "target". It was necessary to give figures at the time of the Budget and under the Industry Act, but no one can guarantee that there will not be factors that will lead to the figures changing during the year. If the right hon. Gentleman thinks that any Government of whom he has been a member have been able to give such figures and never change them, his memory must be failing.

Does my right hon. and learned Friend agree that, even if the figures are as predicted by the right hon. Member for Stepney and Poplar (Mr. Shore), they would not be too disturbing in the depths of a recession? Will he confirm that they will not be a very high proportion of the GNP, and no higher a proportion than in other countries in a similar situation?

Other countries are not in the same situation as Britain. We all share the problems of the recession, but the results of unemployment, which have understandably been mentioned in this connection, differ in this country. We are suffering, as are other countries, from the recession, but, on unemployment, we are also suffering from the consequences of past excessive wage claims. I do not believe that such comparisons always take us far.

asked the Chancellor of the Exchequer when he now expects to see a substantial improvement in the economy.

asked the Chancellor of the Exchequer if he is satisfied with the progress of the Government's economic policies.

Inflation has been substantially reduced and there are excellent prospects for a further sharp decline. This is the key to sustainable recovery. There are indications that the fall in output may be coming to an end.

Is the Chancellor of the Exchequer aware that that, as usual, was a farcical answer? With unemployment at the highest level since the 1930s, with never-ending redundancies, closures and bankruptcies, with declining business investment, and manufacturing industry constantly being undermined, would the right hon. and learned Gentleman say that he has been a successful Chancellor?

The hon. Gentleman's question bordered on farce. We came into office at a time of mounting world recession and rapidly-growing inflation rates, and after a period during which unemployment had been mounting higher and higher. Unless the House understands that the way in which to address ourselves to unemployment is to address ourselves to what the Government are doing about the reduction of inflation, it does not understand the first premise. It is crucial that those who are engaged in pay bargaining should continue to recognise the part that way they can play in agreeing to moderate pay settlements as the best way to protect the prospects of jobs.

Does my right hon. and learned Friend agree that there is no hope of the investment-led economic recovery that we need while minimum lending rate remains at its present level? What is the intellectual case for any further issue of long-dated Government stocks at present interest rates, which assume double-figure inflation for years to come, and are adding enormously to the public sector borrowing requirements?

The case for the continued issue of gilts of that form is that this is one of the methods that have been sensibly and conventionally adopted for covering the Government's borrowing requirement. My right hon. and learned Friend is right to express his continued concern over the level of interest rates. That is one reason why effective control of the size and volume of public spending and public borrowing is so important.

When will the Chancellor of the Exchequer recognise the growing damage to our economy that is caused by the severe decline of profitable exporting? When will he take steps to discourage the inflow of foreign capital, which serves to increase the exaggerated value of the pound on the international exchanges?

The hon. Gentleman's question about the inflow of capital has arisen many times in the House. Experience in other countries, as well as ours, shows that it is not possible or sensible to try to stem flows of that sort in any of the ways so far suggested. The hon. Gentleman must also remember that the dominant cause in the decline of competitiveness has been the rising level of unit costs in this country over many years. By lowering that rate of increase of unit costs—this is the importance of sensible pay settlements—we can most effectively and surely offer the prospect of maintaining our position in export markets.

Does my right hon. and learned Friend agree that a substantial improvement in the economy will be inhibited unless small firms have greater access to risk capital from the banks than they have at present?

I join my right hon. Friend the Financial Secretary in endorsing the importance of small firms, and in particular the part that they can play in creating new employment. One of the factors that they regard as important is that to which my right hon. Friend has drawn attention, and it is one of the factors that we have in mind.

On the question of a substantial improvement in the economy, is the Chancellor of the Exchequer aware that unemployment is now running at over 2·4 million and that manufacturing output is down by about 15 per cent. since he took over? Has he seen the latest CBI survey, which predicts that profits in manufacturing industry will be lower this year than ever before and that that will continue through 1981? If he cannot give a precise view about when matters will improve substantially, can he say when he expects output in Britain to reach the level that he inherited in May 1979?

The right hon. Gentleman has not read the CBI survey thoroughly or effectively. It also states that the number of firms expecting an increase in unit costs is the lowest ever, which is a continuing improvement. The proportion of firms expecting an improvement in their prospects for new orders and in the volume of output and export orders has increased. Those factors are substantial and encouraging.

rose—

Order. It would be unfair for me to keep calling Front Bench speakers for two questions and not to do the same for Back Benchers.

asked the Chancellor of the, Exchequer when he expects to make his Budget Statement.

asked the Chancellor of the Exchequer when he intends to make his Budget Statement.

I refer the hon. Gentlemen to the announcement made by my right hon. Friend the Leader of the House on 15 January.

In view of the appalling level of unemployment that was announced this week, in his Budget Statement will the Chancellor announce more public investment to provide more jobs? Is he aware that it is the economics of the madhouse that it is costing the Treasury over £12 billion to keep nearly 2½ million people on the dole? Is the Chancellor of the Exchequer so thick-skinned that he is unaware of the growing public opinion that we shall never get rid of rising unemployment until we get rid of this Tory Government, when I hope the Prime Minister and some of her Cabinet colleagues will take the place of the million people on the dole queue?

The hon. Gentleman's question is still founded on a fundamental misunderstanding of the problem. There is no prospect whatever of our being able, by increased Government expenditure, whether in public investment or anything else, to generate additional jobs that will survive in the long term. It is crucial to concentrate on the reduction of inflation and, as part of that, to concentrate on reducing unjustified borrowing and spending. All our experience shows that unemployment is likely to rise if we follow the course advocated by the hon. Gentleman.

When he is considering his Budget Statement, will the Chancellor of the Exchequer consider the four reasons that he gave in his Budget Statement of 1980 for continuing to raise personal tax allowances in line with inflation? Will he stick to those reasons, particularly the one that shows that the heaviest burden from failing to raise the allowance would fall on the poorest in the community? Will he stick to that, or has that expired with his credibility?

The factors to which I drew attention in my Budget Statement last year are factors to which I shall have to pay attention in my Budget Statement this year. However, it is still right to remember that the percentage of taxes being raised by taxation on personal income is at a lower level than it was when this Government took office.

Will my right hon. and learned Friend confirm that there are sectors of the nationalised industries that have perfectly viable investments that they wish to make but that they are inhibited from doing so by the impact that that will have on the public sector borrowing requirement? Will my right hon. and learned Friend tell the House what thought he has given to ways of relieving these potentially profitable sectors of the nationalised industries from that inhibition, and thus injecting much needed demand into the economy without affecting the public sector borrowing requirement?

It would not be right to regard any step in that direction as a method to be justified for the sake of injecting more demand into the economy for its own sake. It is right that we should look for ways to enable industries that are still in public ownership to raise capital under their own steam for specific purposes. It is our judgment so far that the best way to enable them to do that is to identify sections of nationalised industries that can be truly privatised, so that there is a direct link between the profits that they earn and the discipline imposed upon them, and the money raised.

Given that we are now seeing the moderate pay settlements for which the Chancellor has asked, why does he think his policies are still creating higher and higher unemployment, which is likely to reach 3 million next year? Is he prepared to deny that, given those settlements, there will not be 3 million unemployed next year?

I am no more disposed than the right hon. Gentleman was to make or embark upon forecasts of unemployment. Nevertheless, it is true that the declining level of pay settlements, with probably the majority in the private sector well into single figures in recent months, is helping to fend off the continuing rise in unemployment. It is crucial that the declining level in pay settlements that is being achieved in the private sector, where fewer people are unemployed, should be matched by corresponding self-discipline and reductions in pay settlements in the public sector. It must always be remembered that pay settlements in the public sector are paid out of the rates and taxes that are provided by the private sector.

When my right hon. and learned Friend considers his Budget, will he resist pressures to increase the already disproportionately high duty on spirits? Will he take into account not only the fact that that duty has reached the point of diminishing returns but that there is ample evidence that an increase in the ultimate retail price will not deter the committed alcoholic but only penalise 99 per cent. of the consumers of alcohol who do not abuse the product?

Far be it from me to comment on what may or may not deter the committed alcoholic. I note my hon. Friend's observations. They are to be placed alongside observations to precisely the opposite effect coming almost at the same time from other parts of the House.

As the right hon. and learned Gentleman's leader has already made her own "Budget Statement" to the Lobby, may we tempt him to follow suit? In particular, will he give the House the assurance that now that the right hon. Lady has told him that he cannot increase tax rates he will not seek to increase revenue by the back door, by failing to uprate fully personal allowances, or does he intend to compound his previous performances, which have not only—as the Financial Secretary generously admitted in Zurich—increased the total tax rate, but—which he did not admit—have increased the tax burden most of all on the low-paid, who are least able to pay?

That is not the conclusion to be arrived at by the present shape of the tax system. I repeat the point that I made. The proportion of taxes now being levied on the personal income is lower that it was when we took office. Beyond that, I assure the hon. Gentleman that no decisions have been taken about the forthcoming Budget. There is therefore no question of leaks. I shall not anticipate my Budget Statement.

asked the Chancellor of the Exchequer if he will place a copy in the Library of the address by the Financial Secretary to the Treasury entitled "Thatcherism in Practice: a Progress Report" delivered to the Zurich Society of Economists on Wednesday 14 January.

Needless to say, I have already done so.

Will the right hon. Gentleman admit that Thatcherism in practice is disastrous for British industry and the economy? With 2½ million unemployed, 6,000 companies going bankrupt last year and the Government increasing the overall burden of taxation, what has the sacrifice been for?

As I told the audience at Zurich, the rate of inflation was rising very fast when we took office. It is now falling rapidly. Indeed, it is falling more rapidly than in almost any other country in the world. That is one result of the sacrifices.

Is my right hon. Friend aware that those in industry who have read his remarkably frank speech have commented with some surprise that he made no mention of the pricing policy of nationalised industries, which is the main inhibiting factor to economic recovery? Will he encourage his right hon. and learned Friend to tackle that problem in his Budget Statement?

I am grateful to my hon. Friend for his encouragement to me to make yet another speech. Our policy is to move towards economic pricing for nationalised industries. The alternative is a further charge on the borrowing requirement and further upward pressure on interest rates, which I am sure he would not wish to see.

Will the right hon. Gentleman confirm that in his speech he said that the economy had more or less reached bottom and that better times were clearly in sight? Flow will those better times benefit the unemployed in the next few months?

I should have thought that even the right hon. Gentleman would know that better times will benefit the unemployed. I am not making predictions about the next few months. However, if he doubts whether there has been a turning point, I remind him, as my right hon. and learned Friend has already reminded the House, that the latest CBI survey of industrial trends also indicates that the economy has reached a turning point.

Will my right hon. Friend accept that most of us consider that his speech in Zurich was on the right lines because it brought a sense of reality to the situation? Bearing in mind the importance of pay, may we have figures to destroy the myth that public sector pay has fallen behind private sector pay over the past five or 10 years? With the negotiations that many of my right hon. Friends have, should we not get rid of the idea that those who work in the public sector are deprived, when most of us know that the truth is the opposite?

My hon. Friend is on to a good point. If he tables a written question I shall be happy to see that he gets the figures.

Will the Minister give a one-line definition of Thatcherism? Is it not cutting jobs at the town hall to save money to pay out at the employment exchange?

No, Sir.

asked the Chancellor of the Exchequer whether he will now exempt charities from valued added tax.

Charities do not in general have to charge VAT on their charitable and welfare activities. As to VAT on their purchases, I refer the hon. and learned Gentleman to the answer that my hon. and learned Friend the Minister of State gave on 7 November to the right hon. Member for Manchester, Wythenshawe (Mr. Morris).

As charities are bearing such an enormous weight of social responsibility which would otherwise rest on the public, is it not ludicrous to penalise them by levying VAT so that so many of them, great and small, are facing enormous financial difficulties? As the Government exist primarily on a diet of faith and hope, is not a touch of charity to charities now called for?

The law relating to VAT on charities is precisely the same as it was when the Labour Government were in office. The main difference is that in the Budget last year this Government introduced substantial benefits for charities, worth in all £30 million in a full year.

Has my right hon. Friend seen the estimate by Dr. Barnardo's that in 1981 it will pay £450,000 in VAT, although half of its expenditure is for children referred to the organisation by statutory bodies mainly concerned with handicapped children? Will he reconsider the matter to see whether some concessions can be made?

We consider carefully how best to assist charities. As I said, in his Budget last year my right hon. and learned Friend introduced a range of reliefs for charities, worth in all £30 million, which is a substantial sum. We shall continue to keep the matter under consideration. We are not convinced that the best way to help charities is by a change in their VAT treatment.

Apart from being socially unjust, is it not economic nonsense to penalise voluntary associations that help to keep disabled people out of expensive institutions? Is the right hon. Gentleman aware that this is one instance where the Government can save money by spending it?

I know the right hon. Gentleman's deep desire, over many years, to assist charities and good causes. However, we consider carefully which is the best way to help charities. The Government whom he supported did not believe that his suggestion was the best way. It has to be borne in mind that much charitable income and expenditure, such as rents, the purchase of buildings, staff costs and grants, are not subject to VAT. The situation is rather more complicated than the right hon. Gentleman's question would suggest. The measures that we have taken so far are an earnest of our determination to assist charities.

Judging by the results so far, does the Financial Secretary consider that the Government's first incentive Budget of June 1979 has been an unqualified success?

I am not quite sure what that question has to do with charities—unless the right hon. Gentleman is putting himself forward as one.

asked the Chancellor of the Exchequer whether he will give consideration to the introduction of a tax on interest payments to foreign holders of sterling debt as a means of disengaging the domestic interest rate from the exchange rate.

I do not believe that a tax of the kind proposed by the hon. Gentleman would achieve the effect that he seeks.

With overseas investors getting, effectively, a return of about 15 per cent., is not such speculative investment pushing up the pound even further, to the detriment of United Kingdom exporters? Will the right hon. Gentleman reconsider his answer and introduce a real interest equalisation tax, as in Switzerland and West Germany, which would bring in revenue and help exporters?

The Swiss and West German examples that the hon. Gentleman quotes were not, in practice, effective. Such a measure would be even less effective in this country, with our sophisticated financial markets and the difficulties produced by the existence of double tax agreements and the doctrine of sovereign immunity. Furthermore, it is not at all clear how much interest rates affect the exchange rate. For example, at present the level of interest rates in the United States is considerably higher than it is here.

Can my right hon. Friend say what proportion of the monetary aggregates is represented by net inward flows on current and capital account?

It depends on where those net inward flows go. Inward flows as such do not necessarily add to the monetary aggregates at all.

asked the Chancellor of the Exchequer what is his estimate of the cost to public funds if unemployment were to rise to 2½ million.

The cost to public funds associated with increases in the level of unemployment depends on the factors causing the increase, on the characteristics of the unemployed and on subsequent developments in the economy. I regret, therefore, that I cannot provide an estimate which would cover every eventuality.

Is the Minister saying that he cannot do his sums and that he does not know the cost of unemployment? Is it not the Government's policy to cut public spending? How can they cut public spending if they are paying out about £12,000 million a year in unemployment benefit?

The hon. Gentleman should listen to the answer before reading his prepared supplementary question. The cost of unemployment in the sense of the hon. Gentleman's question varies according to different factors. If the hon. Gentleman will specify particular circumstances and particular sections of the economy that are affected, I shall attempt to give an answer. There is no general answer.

Why is the Chief Secretary being so coy about this? Is he saying that within the Treasury there is no model of the labour market and no estimate of the total cost to the Treasury and this country of unemployment? If he is saying that, why, in a celebrated speech at Warwick last July, did the Minister of Agriculture, Fisheries and Food estimate that the cost of 1½ million unemployed was £7 billion a year. Is he aware that on that basis the cost today of 2½ million unemployed, at last year's prices would be £11½ billion? Was the Minister of Agriculture telling lies when he developed that estimate, or did it come from within the Treasury and from Cabinet papers?

What I said in answer to the question was quite simply that the cost varies according to the particular characteristics of the unemployed. Nobody is denying the fact, as I made clear in answer to a much earlier question this afternoon, that the cost to the Exchequer per unemployed person is very substantial. I indicated that the average figure was closer to £3,500 than to the £6,000 that had been mentioned. The total figure depends upon distribution and a whole variety of factors. But that in itself does not lead one to any conclusions as to the policy implications, as I also made clear earlier.

asked the Chancellor of the Exchequer if he is satisfied with the level of tax incentives available to United Kingdom exporters; and if he will make a statement.

A specific tax relief for exporters would be contrary to our international obligations, but, of course, United Kingdom residents working abroad and thereby contributing to our invisible exports may be entitled to some relief, depending on the length of their absence.

Will my right hon. Friend therefore seek to discuss with his Community partners a method whereby such a tax would be in order in all countries, so that all countries in the EEC might gain equal benefit from all their exports to countries outside the EEC?

Quite apart from the fact that a proposal of the kind advanced by my hon. Friend would be in breach of international obligations, not only those imposed by the EEC, but those of GATT, and therefore considerable renegotiation would be required, it is not clear to me that distortions of this kind would be to anybody's advantage. It is far better in matters of taxation to give general tax incentives, and indeed that will be the policy of the Government throughout this Parliament.

Does the right hon. Gentleman agree that British exporters face very serious disadvantages, particularly those that flow from the overvaluation of the pound? What is he prepared to do to assist people who face difficulties of that kind?

The hon. Gentleman will have to wait for the Chancellor's Budget Statement to see how he is taking into account, among other things, the present condition of industry.

Is it not a fact that a country such as Ireland, for instance, has inbuilt tax advantages within the EEC for its exporters? Is not that one of the inbuilt disadvantages of our membership of the EEC, which we cannot possibly get round because Ireland has a fundamental right to give those tax advantages?

Hear, hear.

I am afraid that I was unable to hear that question, owing to the burst of enthusiasm for the deputy Leader of the Opposition for the time being.

On a point of order, Mr. Speaker. You may recall, Mr. Speaker, that following the answer to question 20 you called me to ask a supplementary question and the Minister said that he could not hear because of the noise—those were his words—made by the public school hooligans on the Conservative Benches and those are mine to describe the objects on the Government Benches. I am not going back over the same ground now, Mr. Speaker, because that would be difficult, but I suggest that when Conservative Members can shout down an hon. Member asking a supplementary question, which means that the Minister does not have to answer, it is a poor day for Parliament. I urge you, Mr. Speaker, that in future you give time for questions—

Order. I agree with the hon. Member for Keighley (Mr. Cryer) that there is a lot of noise when the Minister to whom he has referred replies. Equally, there is a lot of noise when the Prime Minister is answering questions. If hon. Members could read the correspondence that I receive from throughout the country when our proceedings have been broadcast they would share the opinion that we would be wiser to listen to answers as well as questions.

On a point of order, Mr. Speaker.

Order. In any case, I do not take points of order from the Gangway.

I now apologise, Mr. Speaker. May I raise my point of order? I understand that my question—No. 11—was taken with an earlier one. It is the normal courtesy, and indeed the normal procedure, for the Department to notify the hon. Member concerned in such a case. Can the Chancellor tell me why I was not so informed? As you, Mr. Speaker, will know, I am a regular attender at Question Time and I am always in good time. Will the right hon. and learned Gentleman also use whatever influence he has to ensure that next time he answers questions I have question 1?

Order. I usually take points of order about Question Time at the end of Question Time, because what has just happened has taken one minute out of Prime Minister's Question Time.

asked the Prime Minister if she will list her official engagements for Thursday 29 January.

This morning I presided at a meeting of the Cabinet and held meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. This evening I have been invited to speak at a dinner given by the Pilgrims Society.

In the midst of her busy schedule, has the Prime Minister had a chance to see the recently published Scottish Industrial and Commercial Property Review, prepared by Professor Mackay of Heriot-Watt university and other economists, which forecasts a continuing reduction in the rate of inflation and a steady economic upturn from late this year into the medium term? Does she agree that that reflects economic reality, and that in the midst of the recession there are increasingly positive signs for the future, in Scotland as elsewhere in the United Kingdom?

I agree with my hon. Friend that that was a most interesting and excellent report from the economists at the Heriot-Watt university showing that there is considerable hope that inflation is coming down and that we can expect an economic upturn. I warmly support my hon. Friend in saying that the report was excellent and objective. Scottish economists are very good. They started with Adam Smith, and I am delighted to see the tradition continuing.

Has the right hon. Lady had the chance today to examine the report—and can she confirm or deny it—that the Government's support for British Leyland is being submitted to investigation in Brussels by the EEC? Will she give an undertaking that this programme will go ahead whatever is said in Brussels?

I thought that the right hon. Gentleman was in the House when my right hon. Friend made his statement about British Leyland. He said during the course of that statement—I think that I am right, but a quick check can easily be made—that it would of course have to be referred to the EEC under the rules of the Commission, which applied to the previous Government as to this Government. I do not anticipate any difficulty with its final decision.

I did not myself recollect that the right hon. Gentleman said that to the House. If I am wrong, I shall happily put it right. But may I still press the right hon. Lady very strongly on this matter? We believe that it is essential that the backing for British Leyland should go ahead, and we believe also that the decision should be made by this House of Commons and not anywhere else.

I tried to cover that point. I do not believe that there will be any difficulty with the final decsion of the Commission. I believe, therefore, that the backing for British Leyland will go ahead.

Does my right hon. Friend agree that the fact that last year saw the lowest number of working days lost through strikes since 1941 shows the realism with which the British people are facing this recession? Does she agree also that, if we retain that realism when we come out of the recession, not only will our productivity improve, but we shall be better able to compete, and thus create more jobs?

I share my hon. Friend's view that that news was very welcome, that we have an excellent strike record that has not been bettered for 41 years. If we can get rid of the image of Britain as a strike-ridden country, it can only inure to the benefit of the many people who work in home trade and export industries.

Arising from this morning's announcement of over 500 redundancies at Talbot in Coventry, does the right hon. Lady accept that that is clear evidence of the fact that for some people to remain in work an increasing number have to be put out of work?

Where there is considerable overmanning a firm may have to reduce its labour force in order to stay efficient, but I remind the hon. Gentleman that the penetration of the British car market last year by foreign imported cars was 57 per cent. That makes it clear that there is a big market for cars in Britain, and I hope that more and more companies that produce in Britain will fill that market with their products.

Does the right hon. Lady recall that, in the current issue of Conservative News she has written that, in 1981, business should be looking up? Does she think that it will be helped to look up if the Government go ahead with the proposal to transfer the responsibility for the first eight weeks of sick pay to employers?

As the right hon. Gentleman will be aware, those small businesses and other companies that transfer their obligation will have a reduction in their national insurance contribution. A number of employers already take that responsibility, and my right hon. Friend will discuss these matters as the Bill goes through the House.

asked the Prime Minister if, in view of the evidence given by the Secretary to the Cabinet, Sir Derek Rayner and others to the Treasury and Civil Service Committee, she intends to proceed with the reabsorption of the Civil Service Department into the Treasury.

I have studied the Treasury and Civil Service Committee's report on this subject closely, and shall be publishing the Government's response to it shortly. I can, however, tell my hon. Friend today that I have decided to strengthen and improve the existing organisation of the CSD rather than merge the two Departments.

I am most grateful to my right hon. Friend for that reply. In the light of that, can she tell us what we can do to restore to the Treasury that measure of control over good housekeeping by the great spending Departments of State which they lost when the Civil Service Department took charge of promotion at the top end of the Civil Service? Is it not less than coincidental that, since the establishment of the Civil Service Department, public expenditure has spiralled out of control?

I should not necessarily agree with the coincidence to which my hon. Friend refers. I started off being marginally in favour of merging the two Departments but came to the conclusion that if we were to do that, all concentration would go on reorganisation rather than on dealing with the true problem, which my hon. Friend correctly defines as the effective control of public spending. The Select Committee's report had some suggestions to make about that, and we hope to take up some of them, because it is vital that we have that control. As for promotion, the topmost appointments come to both the Secretary of State for the Department concerned and to the Prime Minister of the day. It is important that we put in charge of those Departments people who insist on proper control of public spending and effective value for money.

Does that mean that "Yes Minister" has won again?

I do not think that "Yes Minister" refers to my Administration.

As First Lady of the Treasury, does my right hon. Friend agree that the Treasury would be best pleased if the Ministry of Defence did not move 1,400 civil servants from London to Glasgow, at a cost of about £50 million, at a time when the Minister of Defence cannot for the time being support the development of the Jetstream 31 communications aeroplane in Scotland?

There are always conflicting interests in trying to move civil servants from London to other parts of the United Kingdom. We have taken the view that it is right, in view of Scotland's economy, to transfer some posts. I believe that there are good reasons for the transfer to go ahead. Although I accept my hon. Friend's point that it will mean some increase in public spending, it will also give some hope to the people of Scotland.

asked the Prime Minister if she will list her official engagements for Thursday 29 January.

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

Will my right hon. Friend, in the course of her busy day, find time to look again at the Government's recent Green Paper on trade union immunities? Does she agree that the latest alarming developments, which have demonstrated the ability of a small group of trade unionists to manipulate the Labour Party, show the need for a thorough-going review and reform of the unique system of immunities that has been conferred on the British trade union movement?

I think that my hon. Friend's views on the role of the trade unions in certain leadership appointments are shared by people from a wide spectrum of political opinion. We are looking forward to consultations on the Green Paper on trade union immunities. My right hon. Friend the Secretary of State for Employment has allowed a considerable period for that. I agree with my hon. Friend that the immunities of trade unions in this country are unique in their extent. The decision that we take about future legislation will depend a great deal upon the representations that we receive.

Since the Tate and Lyle factory and its workers at Liverpool seem to meet the Prime Minister's criteria, in the sense that the factory is not overmanned, industrial relations are marvellous and productivity is increasing, can she explain why the factory is to be closed? Are her Government prepared to tackle the problem of the EEC, which is basically responsible for the closure? Is she prepared to help with Government money to keep the factory open?

I seem to remember that the closure of that factory is tied up with the increasing proportion of sugar that comes from beet and the reducing proportion that comes from cane. [HON. MEMBERS: "The EEC."] I hear hon. Members murmuring "The EEC", but I seem to remember—perhaps the hon. Gentleman will check the precise figures—that the quota for beet sugar under the last Government was slightly larger than that which obtains under this Government, which, if correct, seems to suggest that even more sugar would have been refined from beet and less from cane.

In view of the serious drop, of 24 per cent., in net farm incomes revealed in the agricultural review White Paper, will my right hon. Friend think carefully before taking any decision that might erode the competitive position of our farmers in Europe?

I know that my hon. Friend is always assiduous in putting forward the interests of his constituents in farming and that he is often successful in the degree to which he persuades the Minister of Agriculture, Fisheries and Food to give extra help to agriculture in his constituency. I am well aware of the contents of that White Paper. My hon. Friend will know that farming incomes vary greatly from commodity to commodity. He will also be well aware that, as the green pound is now, it gives farmers a good opportunity to export their products and to get a subsidy on those exports.

In view of the fiasco a few minutes ago when my hon. Friend the Member for Bassetlaw (Mr. Ashton) was told that the Government had no idea of how much unemployment was costing public funds, will the right hon. Lady today instruct her Treasury Ministers to find out? If they do not know, how can they justify their policy that it is better to pay people to be out of work than to put money into industry to keep them in jobs?

If one had to pay to put everyone into work, and if their wages were higher than the unemployment benefit, that would obviously be a greater cost. With regard to the specific cost, my memory off the cuff is that this year the national insurance fund, which pays out the unemployment benefit, has estimated that the cost to it of unemployment benefit will be about £1·1 billion. To that is added a sum for social security, which I think is about £1·2 billion. [HON. MEMBERS: "What about tax?".] I hear hon. Members asking "What about tax?". If the Government have to pay people to pay tax back to them, there really is no benefit.

In view of the right hon. Lady's reply, and in view of the somewhat contradictory replies that were given earlier, will the right hon. Lady ensure that before we have the extremely important debate on unemployment next Thursday—I am grateful to her and the Government for having arranged it in response to our request—we shall have a Government statement giving the full details of the cost of unemployment?

If the right hon. Gentleman wants particular details, I am sure that if right hon. and hon. Members on the Labour Benches table the appropriate questions they will get all the statistics available. That is the customary way.