asked the Chancellor of the Exchequer if he will give the average annual rate of inflation for 1979 to 1982 compared with 1974 to 1977.

The average annual rate of inflation between May 1979 and May 1982 was 14·2 per cent. From February 1974 to February 1977 the averge annual rate of inflation was 19·6 per cent.

Does my right hon. and learned Friend agree that those figures speak volumes for the value of a Conservative Government as against a Socialist Government? What effects will that have on Britain's future and its position in the world?

The continued fall in inflation is the biggest single contribution that we can make towards sustained recovery. It will improve our competitiveness and the prospect of lower interest rates.

I welcome my right hon. and learned Friend's reply, but will he confirm that if we are to sustain the fall, not only in inflation but in interest rates, it is essential that the Government do everything in their power to limit increases in public sector wages?

I readily confirm that.

In his last answer the Chief Secretary mentioned the continued fall in inflation, but he neglected to mention the catastrophic rise in unemployment. Will he tell us something about that?

When I am asked I will—

I am asking.

There is no shortage of questions on unemployment on the Order Paper. This question is about inflation.

asked the Chancellor of the Exchequer what indicators now lead him to believe that the recession is ending.

Industrial production in the three months to May was about 3 per cent. higher than in the spring of last year. The prospect is for further gradual recovery. This is supported, for example, by the central statistical office's index of leading cyclical indicators, and by most recent independent forecasts.

Are there any signs of increased job opportunities in British industry to combat the present disastrous levels of unemployment?

There are two foundations upon which the prospects of improved employment are to be built. One is the continued success against inflation, and the second is the improvement in output that is likely to follow that. All our policies are directed to that end.

Is the Chancellor aware that his own central statistical office states that the figures to May are incomplete until we have the June figures, partly because of this year's exceptional incidence of the spring bank holiday and, secondly, because of the frenzied industrial activity due to the Falklands crisis?

I agree that the surge in imports is to be regretted. That is a consequence of the continued lack of competitiveness of Britain's economy, which has nevertheless made substantial improvements in recent months. It is also aggravated by continued examples of industrial unrest.

Does my right hon. and learned Friend believe that the record number of bankruptcies in the first six months of this year, mostly among small businesses and largely due to high interest rates, suggests that the recession is ending?

I understand my right hon. and learned Friend's anxiety about the record level of bankruptcies, which is not confined to this country. He rightly draws attention to the importance of lower interest rates in improving prospects for small businesses as well as others. As a result of the Government's economic policies interest rates are now 4 per cent. lower than at the end of last year.

On 30 July 1981 the Chancellor of the Exchequer told an incredulous House that the recession was at an end. Is the right hon. and learned Gentleman aware that in the past 12 months—not three months—manufacturing production slumped still further and has only recently returned to the level of last July? With the right hon. and learned Gentleman's track record of predictions, the House and the country would do far better to take notice of people such as the chairman of the Yorkshire and Humberside CBI, who last Saturday said that the economy was as dead as a dodo.

It would not be right to take that view of the economy. Economic growth in Britain, as in every country, is still slow and hesitant. Economic growth in some European countries is static or negative. However, the OECD, which is an international observer of the scene, stated in its most recent forecast that output growth in Britain is likely to be about 1¼ per cent. this year and slightly higher than that next year. That is close to our forecast, and it is one that is confirmed by the majority of independent outside forecasts. What is more important is that the OECD's forecast represents an upward revision of its earlier forecast at the end of last year.

asked the Chancellor of the Exchequer when he now expects his policies to result in a fall in unemployment.

asked the Chancellor of the Exchequer what is his assessment of the effect of his policies on unemployment.

Employment prospects should improve as inflation comes down and our competitiveness improves. The Government have done much to alleviate the impact of unemployment on particularly vulnerable groups such as school leavers. As is usual, I make no forecast about future employment levels.

Does the Minister agree that the real level of unemployment is more than 4 million and that the Government's policies are not working, despite their attacks on trade unions, the unemployed, the sick and disabled and others? When will the Chancellor of the Exchequer introduce measures drastically to reduce unemployment?

Our policies are working. Inflation is falling and competitiveness is improving. These two factors together provide the best hopes of improvement.

When will Ministers stop spreading the rubbish that high wage demands cause high unemployment when the truth is that we have one of the lowest wage economies combined with the highest rate of unemployment in Western Europe? Surely it is about time that the Government started to take action against unscrupulous employers such as Murdoch and Co. in Kilsyth in my constituency, which seems to be involved in some shady sort of asset stripping while making redundant the entire work force, the average take-home pay of which is less than £50 a week?

When high wage rises lead to decreased competitiveness in British industry, fewer people buy British goods and that leads to a loss of jobs. Higher wage increases this year will lead to the export of jobs rather than the export of goods.

Does my hon. Friend agree that one of the main reasons for high unemployment lies in past excessive wages claims without increased productivity, leading consequently to a loss of competitiveness in export markets and in the home market? Does he accept that a second main reason lies in the irresponsible strikes that we have suffered in the past and especially the one that we are suffering now with ASLEF, which will lead to even higher unemployment because of the irresponsible attitude of the leaders of ASLEF?

Pompous man.

My hon. Friend is exactly right. I hope that all who can bring some influence to bear will bring it to bear upon ASLEF leaders in asking them to call off a damaging and unnecessary strike.

The Minister was asked the simple question "When does he expect the level of unemployment to fall?". The simple and obvious answer is that he has no such expectation. Not one forecast available to the Government, or others outside, predicts any fall in unemployment over the next three years. Are we not faced with a stubborn, instransigent and insensitive Government who are planning on the basis of at least 3 million unemployed from now until the next election and beyond?

It is clear that the right hon. Gentleman did not listen to my answer. I said—this was customary with the Government of which he was a member as well as with this Administration—that I do not make estimates of future levels of employment.

Does my hon. Friend agree that one way to reduce unemployment would be to remove the discriminatory hire purchase restrictions on motor cars? The motor industry forecasts that if that were done another 70,000 or 80,000 cars would be sold, which would obviously help to reduce unemployment.

I know that this matter is being actively promoted and I am sure that my right hon. and learned Friend has taken note of my hon. Friend's comments.

Does the Minister agree that the honest answer is that, with the range of current policies, there is no way in which the level of unemployment will be less than 3 million in the foreseeable future? Do the Government accept that? If not, what do they intend to do about it?

The honest assessment is that we shall succeed only by reducing inflation and by making industry more competitive. If there are to be more jobs, more people at home and abroad must buy British goods and use British services, and these will have to be of the right price and the right quality.

asked the Chancellor of the Exchequer if the increase in overseas investment since the abolition of exchange controls has had any effect upon the level of (a) industrial and (b) other investment in the United Kingdom.

I know of no evidence to show that the abolition of exchange controls has had a quantifiable effect on investment in the United Kingdom. But, if anything, it might have led to an increase in investment, particularly in sectors exposed to international trade, by keeping the sterling exchange rate from rising in 1980–81 as much as it would otherwise have done.

Is the Minister aware that since the Government took office £10 billion worth of valuable capital has gone overseas, that the rate is now £4 billion a year and that since exchange controls were abolished industrial investment in the United Kingdom has slumped by 20 per cent? Is the hon. Gentleman not the slightest bit worried about these figures?

I am not sure that the hon. Gentleman has watched what has been happening to business investment in the United Kingdom, which has held up remarkably well to output. The latest Department of Industry investment intentions survey foresees a modest rise in investment in 1982, which will increase in 1983. I remind the House that much investment overseas helps to build links between companies in the United Kingdom and overseas and thereby helps United Kingdom exports.

If we continue to have a large surplus on our current payments, is it not inevitable that we must have a corresponding outward investment?

Yes, the right hon. Gentleman is entirely right. The alternative to the outflow of productive investment overseas would be the accumulation of reserves, which would reflect official investment in under-pinning the PSBRs of other countries. I doubt whether that would be a more sensible use of our resources.

Does my hon. Friend recall that during the Public Accounts Committee's examination of the heavy losses incurred by Rolls-Royce, witnesses observed that the losses would not have been suffered and the company would not have found itself in financial trouble were it not for exchange controls, which stopped the company buying dollars forward? Surely that is a good example of how exchange controls have caused unemployment?

My hon. Friend is right. There is no doubt that exchange controls were ineffective in insulating the United Kingdom from the judgment of the market place on the performance of successive Governments. Among other things, they implied distortions of trade and payments, such as those to which my hon. Friend has drawn attention.

Does the hon. Gentleman agree that since the Government came into power capital has been flooding out of Britain, for whatever reason, at twice the previous rate? Is he aware that in the first year after the abolition of exchange controls, 22 per cent. of direct British investment went abroad, compared with 4 per cent. in the United States, 2·5 per cent., in Germany and 0·6 per cent. in Japan? Can he not see that those figures show one of the reasons for the decline in British manufacturing industry? Can he not grasp the fact that unless we check the flight of capital from Britain we shall not arrest the decline of our manufacturing base?

Britain was entering a period of substantial oil surpluses when the Government took office. As I have already explained to the right hon. Member for Down, South (Mr. Powell), the alternative to the outflow of capital and private investment account that occurred would have been a build-up of Government holdings of overseas gilt-edged securities, which might have helped the borrowing requirements of other Governments, but it would have been of no long-term benefit to Britain.

Does my hon. Friend agree that one of the reasons why our industrial companies have invested overseas is that they are able to exploit their technological advantages and inventions there and that they are able to supply firms abroad which are not content to rely on one United Kingdom source of supply? Does he agree that that investment protects British jobs and British design?

I entirely agree with my hon. Friend.

asked the Chancellor of the Exchequer if he foresees a further period of reduction in real incomes.

As the Budget forecast showed, a small fall in after-tax real incomes is likely this year. Continued moderation in pay settlements is essential to improve the competitiveness and profitability of industry and so create more jobs for the future.

Does the Minister realise that that cut in spending power can only lead to more company closures and therfore much more unemployment? Does he agree that the cut in spending power means that areas such as Warrington, which were prosperous until the advent of this Government, will be turned into industrial wildernesses?

That is why it is necessary to improve the competitiveness of British industry. We shall then be able to sell more goods and services.

Does my hon. Friend agree that one of the contributory factors to the problem of real incomes in the past 10 or 15 years has been that most people, whether they are good or bad performers, expect and demand an annual wage increase?

Widespread expectations of increases in income that are not linked to increases in productivity are a recipe for increased inflation and a fall in real income.

asked the Chancellor of the Exchequer what regular meetings take place between Ministers in his Department and Ministers in the United States Treasury; and in what context they occur.

I meet my American opposite number at the regular meetings in the OECD, the IMF and the World Bank; and at the annual economic summits. We also meet on an ad hoc basis from time to time.

What representations has the right hon. and learned Gentleman made at those meetings against the disastrous effects of President Reagan's monetarist madness, high interest rates and now the President's ban on the take-up of contracts for the German-Soviet pipeline? Does he agree that those factors bode ill for economic recovery in Europe, especially in Britain, which is afflicted by the same madness?

Contracts for the Soviet pipeline are a separate issue. It is appropriate to put further questions about it to my right hon. Friend the Secretary of State for Trade. With regard to American economic policies, it is important that the American Administration should succeed in their battle against inflation. Firm control of monetary growth, there as here, is an essential part of that. However, it must be supported, there as here, by firm and effective control of the Budget deficit. It is ironic that the hon. Gentleman, who belongs to the party that frequently urges me to expand the Budget deficit in Britain, acknowledges the consequence of a Budget deficit in the United States—that it is too high and that it is one of the main causes of high American interest rates.

When my right hon. and learned Friend meets his colleagues abroad, does he explain to them, as he sometimes does not explain to us, whether he is now controlling the prospective rate of inflation by reference to the money supply or by reference to the sterling exchange rate?

As I have said often, the Government have no covert or overt target for the sterling exchange rate. Our policies are determined by attention to the rate of monetary growth, exactly as I explained in my last Budget Statement.

We agree that the United States, as well as other industrial countries, is suffering, to a greater or lesser extent, from many of the problems that face Britain—especially unemployment and the lack of adequate industrial growth. Is the right hon. and learned Gentleman satisfied that the forums in which the principal countries of the Western world discuss matters of major and mutual interest are adequate? Does he agree that the summit of the Seven could be reinforced, in spite of the incredibly disappointing series of recent meetings, including the Versailles summit? Does he agree that that could be done by having meetings of Finance Ministers before the summits take place?

I take the importance of the right hon. Gentleman's point. It is important that Britain should play an important part in international discussions of that type. The summit of the Seven at Versailles addressed itself to that point. As a result of it, discussions are now taking place on those international matters. They follow up a suggestion that I made in a speech to the IMF last year. Perhaps I might respond to the right hon. Gentleman's question by asking him another—[HON. MEMBERS: "No".] Does he believe that the Budget deficits that are high and rising in the United States are to be deplored, but that those in Britain should not be?

asked the Chancellor of the Exchequer if he sees any evidence of an upturn in the economy.

asked the Chancellor of the Exchequer if he is satisfied with the momentum of recovery in the real economy since the second quarter of 1981 to date.

The turning point was reached in the spring of last year. A gradual recovery has begun and is expected to continue.

Is the Chancellor of the Exchequer aware that the Cambridge economic policy group recently forecast that by 1990 there would be 4¼ million unemployed in Britain? Is he further aware that the same group forecast that by the end of this year—I understand that Sir Terence Beckett agrees—there will be 4 million unemployed? If that is so, does he agree that his economic policies have failed and that he should therefore resign?

The hon. Gentleman must bear in mind that unemployment has been rising steadily for many years under successive Governments. That is happening at the same time as unemployment rates elsewhere are rising even faster. The solution is to be found only in the continued determination to fight inflation, to correct the balance of the economy, to restore competitiveness and in the economy's capacity to improve its output performance.

How does my right hon. and learned Friend envisage the economy developing in the West Midlands in the next year?

The economy in each region has its own components. That means that patterns will not be identical. However, if the economy as a whole continues to improve as we believe is likely, and if those concerned with production on both sides of industry in the West Midlands apply themselves to improving their own performance, which is the most important factor, I see no reason why the West Midlands should not share the improvement.

Bearing in mind the size of the upturn that the Chief Secretary to the Treasury sees taking place all about us, will the Chancellor undertake to ensure that at the end of his period of office manufacturing output will be higher than it was at the beginning?

It is not possible—[HON. MEMBERS: "Ah!"]—for anyone in any circumstances to give absolute assurances of that type. The hon. Gentleman is better placed than many hon. Members to appreciate that the extent to which we can succeed in improving economic performance depends on the performance of people in industrial units and companies. If we were able, for example, to improve the performance of the motor industry, a huge demand for motor cars in Britain would be satisfied by British working people.

Did my right hon. and learned Friend see the recent article by Samuel Brittan arguing that some fiscal stimulus could be given to the economy now without prejudicing the Government's monetary policy? Does the Chancellor agree that the least inflationary way to help British industry out of the recession would be to abolish the national insurance surcharge, which is a tax on employment and was imposed by the Labour Government?

I read the observations of one brother Brittan with almost as much attention as I listen to the observations of the other. We have made clear our dislike of the national insurance surcharge in the changes that will shortly come into effect reducing the burden of that tax, which, the House will recall, was introduced with acclamation by the Labour Party.

asked the Chancellor of the Exchequer whether the assumption of 2·9 million unemployed in 1982–83 contained in his White Paper, Cmnd. 8494-II is still valid.

The assumption, which relates to the unemployed in Great Britain excluding school leavers, is still valid.

Will the Minister confirm that, in re-examining his estimates and assumptions, the Chancellor will talk not only to Sir Terence Beckett, director general of the CBI, but to Mr. Denny, chairman of the Yorkshire and Humberside CBI, who said last week that the economy is as dead as the dodo and that we are into another recession before we are out of the last? Will he do that before he revises his estimates?

Before any revision of the estimates, there will be a trawl of discussions far wider than the hon. Gentleman suggests.

As almost all the questions today involve problems of fundamental structural readjustment of the Western economies, all of which were predicted in an OECD report before the election of most of the present Administrations of major Western democracies, is it not time that we addressed our questions and concern to those fundamental structural readjustments and tried to deal with them rather than constantly seeking to apportion blame as between this Administration and the last?

I could not agree more. The fact that under successive Governments there has been a steady upward trend in unemployment that is matched in many other countries shows that fundamental structural problems are involved and that no useful purpose is served by the apportionment of blame, which is a substitute for serious thought about serious issues.

As all serious commentators agree that unemployment will be higher than the forecasts and assumptions in the White Paper, and as we know that the figures used in the White Paper are provided by the Treasury, is it not clear that the position, disastrous though it is, has been understated, with consequent understatement of Government economic policies generally?

As the right hon. Gentleman well knows, the assumptions to which he refers are working assumptions and not forecasts. Therefore, it is far more useful to ask what can be done about levels of unemployment which, whatever forecast or assumption one takes, are far too high. The answer to that has been given by my right hon. and learned Friend the Chancellor. Unemployment will not be reduced in any substantial, serious or lasting way by reflation of demand, which would merely lead to a short-term boost, an increase in inflation and lack of confidence, resulting in levels of unemployment higher than they would otherwise be.

asked the Chancellor of the Exchequer what factors are taken into account when determining which items are zero rated for the purposes of value added tax.

VAT is a broadly based tax which, of its nature, covers a wide range of goods and services in the domestic economy. Zero rating is applied as an exception to a number of essential items in family budgets, such as most food, heating and light, public transport and young children's clothing.

Does the hon. Gentleman agree that one such exempted category has always been that of medical supplies, which would include articles of sanitary protection for women? Is he aware that following last week's radio phone-in on the subject and the petition now circulating thousands of women will be petitioning him about this? Will he consider removing the tax from those essential items?

I am, of course, aware of the arguments advanced in support of that proposition. I must point out, however, that items of sanitary protection are one of a large list of articles involving what is described as personal hygiene—including toilet paper, soap, toothbrushes, razors and the like. I can see no logical reason to single out one item in the list for special treatment.

On another sanitary point, why does a person who builds a new lavatory receive better VAT treatment than the person who repairs an old one?

That has pulled the plug on my hon. Friend.

The whole construction industry is an area in which the boundary between zero rating and standard rating is highly complex. The logical answer, which I do not envisage the Government pursuing at present, would be to apply standard rating to all forms of construction work.

As items of sanitary protection are the only items on the list given by the Minister which, for biological reasons, are used exclusively by females, does he agree that their inclusion is discriminatory? Is it not time that the Government backed up their views on sexual equality by removing that item from tax?

I am glad to say that, in my experience, most women have a tendency to use soap.

On a point of order, Mr. Speaker. Due to the totally unsatisfactory nature of the Minister's reply, and the levity with which he treated the question, I give notice that I shall seek to raise the matter on the Adjournment.

Further to that point of order, Mr. Speaker—

Order. This is only consuming Question Time. Perhaps it could wait until afterwards.

Further to that point of order, Mr. Speaker. It is not a waste of time. That was a sexist remark and the Minister should apologise.

The hon. Gentleman knows that that is not a point of order and it was a waste of our time.

asked the Chancellor of the Exchequer if it is his policy to seek to make investment in the service sector as attractive as investment in the manufacturing sector; and if he will make a statement.

The Government's economic policy aims at providing the right background for profitable investment by companies, whether in the manufacturing or the service sector. But the key to investment, as my hon. Friend will know, is profitability. That, in turn, depends substantially on productivity and sensible wage bargaining, which is not in the gift of this or any Government.

My hon. Friend will know of my interest in the service sector. Will he confirm that the Government recognise that £1 of overseas earnings from, say, tourism or airlines, is just as valuable to the economy as £1 of overseas earnings from manufacturing industry? Are the Government convinced that the service sector is just as important as the manufacturing sector to the economy of this country?

Yes, the Government accept that. Our general policy has been to avoid introducing new measures that discriminate in favour of specific industrial sectors. The measures introduced by my right hon. and learned Friend in the 1982 Budget that were designed to help business—the NIS changes—and the measures designed to encourage enterprise and innovation, do not discriminate between specific sectors of industry. I can assure my hon. Friend that the Government have no desire to have a pecking order in manufacturing and service industries.

Will the Minister consider the problems of investment in the service industries, in particular those relating to shipping? Will he condemn Lord Matthews, Trafalgar House, Cunard and all others involved in refusing to place an order with British shipyards for the replacement of "Atlantic Conveyor", using British steel? What representations, investment encouragement or other assistance is the Minister giving to see that that takes place?

I am not entirely clear how that arises from the original question. The shipping industry must live in an international climate and if it is obliged, or persuaded, to purchase new equipment at a higher price than that which its overseas competitors pay, its ability to compete will be reduced and in the long term the industry and the country suffer.

Although I do not underestimate the importance of the service industries, will my hon. Friend reconsider his remarks to my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) and admit that manufacturing industry is the real wealth creator? In an effort to slow down the increase in unemployment, and perhaps reduce it, will he ensure that our manufacturing industry does not suffer from unfair competition, not only from the developing countries, but from developed countries in the European Community?

I agree that one of the duties of the Government is to ensure that our industries do not suffer from genuinely unfair competition. Where there is evidence of genuine unfair competition, it is the Government's duty to take countervailing action. That is accepted. However, I do not agree with my hon. Friend's assumption that there is a wealth-creating aspect in manufacturing industry that does not apply to the service industries.

asked the Chancellor of the Exchequer when he now expects output to obtain the level of May 1979.

I cannot give a firm date, but growth will be faster the quicker we are able to improve competitiveness and profitability.

Does the hon. Gentleman realise that the public believe that the Government can no longer hide behind allusions to the Labour Government's record? Does the hon. Gentleman also realise that the public feel that there is no hope under this Government? Does he agree that to stimulate greater output we must put the unemployed skilled workers into productive employment under the stimulus of policies that have now been set out publicly by the Labour Party? Does he further agree that we must give considerable State assistance through national enterprise? Is it not a wholesale indictment of the Government that there are 4 million people unemployed and that the Government can do nothing about it?

More jobs will be available to skilled men and women, as well as to the unskilled, when more people buy British goods.

Will the Minister and his right hon. and learned Friend give that reply, and the others they have been giving this afternoon, to the workers of Ronson (UK) Ltd., who are now entering their second receivership this year, but who have been manufacturing a product for which there is world-wide demand?

I make no comment on that matter, as I do not know the details. However, providing goods and services at the right price and of the right quality will generate demand for those goods, which, in turn, will lead to more jobs in making them. If wage increases reduce our competitiveness, the jobs will be lost.

Further to the original question asked by the hon. Member for Ealing, Southall (Mr. Bidwell), has my hon. Friend had an opportunity to read the document to which the hon. Gentleman referred, known as "Labour's Programme 1982", which contains massive plans for reflation? Will my hon. Friend say what impact those plans would have on our economy and on our international competitiveness if the Labour Party ever had the opportunity to implement them?

That is a hypothetical question, as that document will never be implemented. If a Government sought to implement such policies, it would lead to a massive increase in inflation and a consequent massive increase in unemployment.

asked the Prime Minister if she will list her official engagements for Thursday 15 July.

This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall have further meetings later today. This afternoon I shall leave for a visit to Dorset.

I thank my right hon. Friend for that typically forthcoming and helpful reply. For the past 143 years, Rugby has been a prosperous railway centre. That prosperity is now threatened by the present ASLEF dispute. [HON. MEMBERS: "Question".] The question will come in a moment.

Perhaps the hon. Gentleman would oblige me and bring it at once.

Does my right hon. Friend agree that the ASLEF dispute is not supported by the overwhelming majority of railwaymen and, according to the BBC, is not supported by the majority of the Shadow Cabinet? What advice does my right hon. Friend give to railwaymen in general and to Shadow Ministers in particular on how to get the railways back to normal working?

May I in turn thank my hon. Friend for his typically helpful initial question? With regard to the future of the railways, there is no future unless working practices agreed in 1919 are updated. The problem could be quickly over if the ASLEF workers returned to work and accepted flexible rostering, in accordance with the British Rail offer.

In view of the growing gravity of the crisis on the railways, will the right hon. Lady now—desperately late, but still not too late—instruct the Secretary of State for Transport to cease his inaction and take a positive step towards trying to find a solution to the crisis? Does not the right hon. Lady consider it high time that one of her Ministers discussed with the parties concerned the growing crisis that threatens the railways?

No, Sir. The board has made it quite clear that if the drivers are prepared in their own interests to accept flexible rostering and return to work in sufficient numbers to enable a timetable and reliable service to be operated the railways need not close. I invite the right hon. Gentleman to join me in an appeal to drivers to accept flexible rostering and return to work.

The appeal that I made to the right hon. Lady a moment ago is exactly the appeal that has been addressed to the Secretary of State for Transport by Mr. Sidney Weighell, whom the right hon. Lady quoted a day or so ago. Mr. Weighell says:

"It is the refusal of your Government to honour its commitments to the railway community which is responsible, above all, for that deeper crisis in the railway industry".

I prayed Mr. Weighell in aid only in making a judgment on the right hon. Gentleman. Mr. Weighell was right. The way to end the strike is for ASLEF to accept flexible rostering, as the NUR has, and for people individually to return to work. Then the railway strike will be over. That will be in the interests of the railway and of the whole working population. The Government, through the external financing limit, have given record assistance to the railways and there is a first-class investment programme now in progress.

Does not the right hon. lady think that it is an outrage that, on the eve of a major national crisis such as this, none of her Ministers has seen all the parties concerned?

No, I think it is an outrage that the right hon. Gentleman will not appeal to the drivers to return to work.

asked the Prime Minister if she will list her official engagements for 15 July.

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

Will my right hon. Friend confirm that, despite her Government's criticism of the Israeli action in Lebanon, she remains a friend of the Israeli people and an admirer of Israel's domestic achievements and democracy?

Yes, we have always admired Israel's democracy and her tremendous achievements in turning that land into a fertile and rich country. We are totally committed to the security of Israel. We believe that that security will be best achieved when Israel and the Palestinian people mutually accept and respect one another's rights.

Will the right hon. Lady—[Interruption.]

Order. The House is doing itself no good by an exhibition of this sort. The right hon. Gentleman has a right to be heard.

Does the right hon. Lady agree that no formula that allows the ASLEF executive to continue with the equivocation of the past year, or to escape from its clear obligation to accept the McCarthy award, is tolerable? Does she also agree that to keep the support of the other rail unions it is necessary not only to point out the dark consequences of the strike but to make clear the Government's wholehearted commitment, when the present difficulties are overcome, to an efficient railway system with a secure long-term future?

Yes, I agree that we cannot make progress unless we have flexible rostering. The question has been considered for a long time. A few months earlier this year, after having considered it, Lord McCarthy said that

"unless progress is made on this question, the future outlook for the railway system and railwaymen is bleak and unpromising".

Has my right hon. Friend seen reports that in some parts of the country NALGO members are blacking the work that is necessary to inform National Health Service employees of the Government's improved pay offer? Will my right hon. Friend condemn that practice and take every possible step to ensure that the terms of the pay offer are widely known?

Yes, I understand that one of the regional health authorities wished to put details of the pay offer into the pay packets but NALGO blacked the necessary work. It is important that full details of the offer should be conveyed to the employees and we are considering how it can be done.

Is the Prime Minister aware that, although the ASLEF strike cannot possibly be justified, nevertheless it would be wrong to let the railway network close down, because of what that would do to the employment prospects of thousands of railwaymen who are not involved in the dispute? Therefore, will the Prime Minister change tack and set up a court of inquiry on the understanding that ASLEF calls off the strike?

No. There have been endless arbitrations and inquiries, finishing with that of Lord McCarthy, whom I have just quoted. He said that flexible rostering must be accepted.

Does my right hon. Friend agree that, instead of constantly urging the Government to solve the rail dispute, people should urge the TUC to direct ASLEF to call off its strike, on the ground that it is detrimental to the trade union movement as well as being detrimental to the country as a whole?

The ASLEF strike and the National Health Service strike are both detrimental to the trade union movement as a whole. If the ASLEF executive will not recommend a return to work, it is up to individual members to accept the BRB's offer.

asked the Prime Minister if she will list her official engagements for 15 July.

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

Bearing in mind that unemployment among women is now accelerating at twice the rate of unemployment among men and that certain Government measures, such as the work availability tests and other things, will make it even more difficult for women who have the opportunity of a job to take it, will the right hon. Lady state this afternoon that women have an equal right to work? Will she also dissociate herself from comments by some of her colleagues to the effect that married women should stay out of the labour market and leave it to men? In view of the exhibition that we had earlier from the Treasury Benches, will she take the opportunity to educate some of her male colleagues about the sexually discriminatory tax on articles of sanitary protection for women?

This is not a Budget. If the hon. Lady wishes to make representations, doubtless she will do so in due time. With regard to jobs, the people best qualified should have them, regardless of whether they are men or women.

Does my right hon. Friend regret the decision of many local councils not to take part in the civil defence exercise later this year? Does she agree with the Home Secretary when he says that local councils can no more declare a nuclear-free zone than they declare a snow-free zone?

Yes, local councils cannot declare nuclear-free zones. Many of us wish that nuclear weapons had not been invented, but they have, and it is our duty to make preparations for civil defence to defend the population. It was very disappointing that out of the 54 local authorities that were scheduled to take part in exercise Hard Rock, only 34 were ready to do so. The 20 that were not prepared to do so were all Labour councils.

Will the right hon. Lady, when considering all the proposals put to her on the railways dispute, recognise that the British Railways Board and the House have a duty to the nation?

Yes. The railways have a duty of service to the nation. So have all those who work on the railways. The vast majority of those who work on the railways, including some ASLEF members, are still working. Those who are still working, especially the ASLEF drivers, have the great gratitude of the nation. The whole question can be sorted out if the remaining ASLEF members accept flexible rosters, which have been inquired into endlessly. I hope that by Tuesday they will have done so.