asked the Chancellor of the Exchequer how many representations he has received requesting value added tax relief for charities since he last answered oral questions.

My Treasury colleagues and I have received 110 written representations on this subject since 27 January.

As the Secretary of State for Social Services announced last week that there would be provision in the Finance Bill for VAT relief for contracted-out services to the Health Service, will the hon. Gentleman confirm that there is no administrative reason why charities should not have VAT relief as well?

I cannot confirm that. There are formidable technical and administrative problems in meeting what I know is a widespread view in the House and which is represented by the early-day motion on the subject, which bears many signatures.

Is my hon. Friend aware that more than 150 major charities now support that campaign? Will he do something to remove the obduracy of Customs and Excise, which is preventing those changes taking place and preventing the removal of a tax that should never have been imposed on charities in the first place?

I assure my hon. Friend that it is not the obduracy of Customs and Excise or any civil servant, but the judgment of my right hon. and learned Friend the Chancellor of the Exchequer and his colleagues that determines this issue.

Is there not a stark contrast between the administrative problems that are being solved by the Treasury to allow their friends who finance the Tory party to obtain relief on VAT when they provide contracted-out services to the Health Service and the Government's attitude to charities, which are working for other people but, apparently because of administrative difficulties, cannot possibly be given VAT relief? Does that not demonstrate double standards?

No, of course it does not. There is a complete difference between the case that is made for the charities—

Why?

—and the number of charities involved and the business of the contractors that was referred to by my right hon. Friend the Secretary of State for Social Services.

If it is the judgment of my right hon. and learned Friend the Chancellor and his colleagues that determines these issues, in what way is it equitable for the private contractor who provides cleaning, laundering or catering services to a National Health institution to be considered more important than the charities that provide an identical service and on whom VAT is charged?

One is not comparing like with like in any way.

Come off it.

The interest of my right hon. Friend the Secretary of State for Social Services in bringing more efficiency and value for money into services that may be contracted out of the Health Service is wholly dissimilar from the case that is made by the charities.

asked the Chancellor of the Exchequer if he will take into account the problems of west midlands industry in framing his Budget.

I shall of course take them into account, but I cannot anticipate my Budget statement.

Does my right hon. and learned Friend agree that industry and its work force have made huge efforts to cut costs and therefore make themselves more competitive? Does he therefore agree that the coming Budget gives him a great opportunity to help industry more and so help unemployment in the west midlands by giving all the help possible to reduce industry's costs? Furthermore, does he agree that it is more important to cut unemployment than to cut the standard rate of tax for those who are already in jobs?

As I said, I cannot anticipate my Budget statement, but I endorse my hon. Friend's opening remarks about the tremendous efforts made by industry. I also point out that substantial relief has been brought to industry by successive Budgets. I agree with him about the importance of industry, particularly the motor industry, to the west midlands. I have been pleased to note the substantial improvements that have taken place recently in sales by Austin Rover, sales of Metros, and the output of Sherpa vans by Freight Rover. I hope that that performance will continue to improve.

Is the Chancellor aware that his last remark revealed a total misunderstanding of the gravity of the position in the west midlands? Will he confirm that, regionally and nationally, investments, output, profits and plant utilisation are at a post-war record low? Is that not a disgraceful record? When will he frame policies designed to reverse those trends?

The west midlands, having had so much of its activity concentrated on the motor industry, which has been through substantial difficulties in recent years, as he well knows, has therefore faced a surprising and unaccustomed portion of the economic storms that have been raging around the world. However, it is important to emphasise the improvements that are taking place and to underline the greater wisdom affecting local authorities in the region this year than last. There is a substantial contrast between the huge rate increases imposed on Birmingham by a Labour council last year and the substantial rate reductions under a Conservative council this year.

Does my right hon. and learned Friend agree that what the west midlands needs most is a reduction in the costs of employment, which could best be achieved by his cutting substantially the national insurance surcharge?

I agree with my hon. Friend. That is manifest by the substantial reductions that we have already made in that tax on jobs imposed by the Labour party.

After those incredible, complacent remarks, does the Chancellor not realise that last year he presented a budget for industry, the heart of much of which is in the west midlands? Is he not aware that the latest figures for industrial production showed that, overall, industry was producing 0·6 per cent. less in the last quarter than it was a year ago? When he, comes to construct his Budget, will he take account of his grievous errors of judgment last year, do something this time to lift British industry out of the pit into which it has fallen, and do something for the prosperity of the heart areas and industries of this country?

The right hon. Gentleman has an astonishing capacity to disregard the extent to which many of industry's problems are the consequence of policies pursued over many years by the Labour party. He should acknowledge that total national output is already one and a half times higher than it was in the trough at the beginning of 1981. There is a prospect for growth in the year ahead, in some cases ahead of many our international competitors.

asked the Chancellor of the Exchequer what recent discussions he has had with representatives of British banks; when next he expects to have further discussions concerning the rescheduling of loans; and if he will make a statement.

The Bank of England is closely in touch with British banks, and I hold regular meetings with the governor. I discussed the difficulties that many developing countries face in arranging external finance at the IMF interim committee on 10 and 11 February. The committee stressed the importance of the fund's role in providing balance of payments assistance to member countries that engage in adjustment programmes and agreed that fund quotas should be increased from 61 billion special drawing rights to 90 billion special drawing rights.

Will the Chancellor confirm that the British banks and the Government operate different standards regarding loans and their rescheduling for British people and firms in contrast to the large loans that are made to countries such as Argentina and Brazil? Will he confirm that on 20 December Brazil brought together 120 top international bankers and said "You accept our four-point package or else."? On new years's eve Brazil refused to make any capital repayments until the banking system accepted its terms, although it owed £90 billion—

Order. It is Question Time, not speech time.

Does it not show up the Government's policy in that they allow tax relief to British banks for lending such money while refusing tax help to charities and other bodies that have been mentioned today?

There has been no change in the provisions affecting tax relief for British banks in respect of their debts or prospective debts. The health of the British banking system and the world banking system is a fundamental consideration if they are to be able to offer assistance of the kind suggested by the hon. Gentleman to borrowers in this country.

If rescheduling were not permitted, would that not lead to a fall in the standard of living of many millions of people who are much worse off than we are? Would it not also lead to a lack of export orders for the United Kingdom?

My hon. Friend is entirely right. The United Kingdom producer has a manifest interest, not just in the health of the United Kingdom banking system, but in the chances of restoring to balance the economies of other countries which represent in practice and prospect potential customers for this country.

Mr. Peter Shore.

No thank you, Mr. Speaker.

I thought that the right hon. Member had nodded to show that he was seeking to catch my eye.

I shall nod a lot.

Will the Chancellor explain the rationale of making loans to countries that cannot pay interest on them and then lending them more in order to pay interest on the money we lent in the first place?

Such arrangements only take place alongside substantial changes in the pattern of expenditure and borrowing of the countries involved. It is a condition of the granting of IMF adjustment loans, for example, that those countries should transform their spending pattern in order that they can improve their chances of repaying the debts that have been accumulated previously. That is precisely what was undertaken in this country when it was being managed, to its great misfortune, by the Labour party.

Does my right hon. and learned Friend agree that it comes ill from the Labour party to tell us that we should care more about the Third world and its problems and care more about jobs in this country and about making it possible for those countries' economies to be sustained when, in any event, many of the loans were negotiated during the period that it was in office?

I agree entirely with both of my hon. Friends. It is manifest that this country and its people have an interest in restoring the balance of overseas economies for the sake of the people who live there and of the people in this country whose jobs depend upon those countries' prospects. One would not expect consistency of any kind from the Labour party. I am not surprised at the silence of the right hon. Member for Stepney and Poplar (Mr. Shore).

asked the Chancellor of the Exchequer if he will make a statement on the latest position regarding United Kingdom involvement in loans for the Argentine Government.

The IMF has approved loans amounting to about $2·2 billion in support of an economic stabilisation programme. International banks, including British banks, signed a short-term bridging facility for $1·1 billion at the end of last year and are still negotiating a $1·5 billion medium-term loan.

Is the Chancellor aware that many people will be wondering how much of the loans advanced to Argentina will be used by the ruling junta to purchase arms for any future military adventures? Why should the Argentine economy need such assistance, bearing in mind the flattering remarks of the present chairman of the Conservative party when he visited Argentina on a trade mission in 1980 and said that the junta was running the economy well?

The Argentine economy has many natural strengths. In addition, Argentina runs a trade surplus. There is never a shortage of countries willing to offer arms in exchange for commodities produced as a result of the trade surplus. The effect of the IMF programme is, as I have explained, to require the Argentines to undertake an adjustment programme to correct the balance of their economy because, notwithstanding the country's natural resources, its economy has been so managed as to accumulate substantial debts.

Will my right hon. and learned Friend reconsider that reply? Was it not a rather bland statement, because the Argentine Government have not renounced the use of force as a way of solving the Falkland Islands dispute? Is it not rather unedifying that British banks should be engaged in such negotiations?

British banks have substantial and long-standing financial interests in Argentina. One conclusion at which we arrived was that financial restrictions should be removed in both directions. One cannot, by manipulating such matters, stop the Argentines engaging in arms purchasing. I fully endorse my hon. Friend's complaint about the conduct of the Argentine Government and I hope, with all other hon. Members, that they will renounce their willingness to commit hostilities.

As conditionality is at the heart of IMF lending, as the Argentine Government—a dictatorship—have been spending excessively on military hardware and services, and as Argentina is engaged with Britain in hostilities that it has not called off, why did the right hon. and learned Gentleman allow the British member of the executive board of the IMF to agree to a further loan to Argentina? Since the Bank of England refused to join the BIS in the temporary bridging loan some two to three months ago, why has the Chancellor now allowed the Bank of England to organise not merely the rescheduling of old British debt, but the lending of new money to Argentina?

The right hon. Gentleman must accept the reality of the position. Conditions inserted into such loans will not stop the Argentine Government acquiring arms as a result of their surplus in trade. The Argentine Government's capacity to do so will be reduced significantly by the introduction of the IMF programme for its loan. The programme includes conditions that require substantial adjustments in the Argentine economy, and that will reduce rather than increase the scope for the purchase of arms.

asked the Chancellor of the Exchequer whether he will consider the zero rating of all essential items of baby care for the purposes of value added tax; and if he will make a statement.

Babies' clothing and footwear are already relieved from value added tax, as is most baby food.

Is the hon. Gentleman aware that, despite what he said, it can cost people up to £60 in tax to buy essential items of baby care? Is he further aware that the maternity grant, which was fixed in 1969 but which is now worth much less, has been eroded by the application of VAT on other items of baby care? Will he consider increasing the maternity grant and zero rating all items of baby care that are not at present zero rated?

Questions about the maternity grant should be addressed to my right hon. Friend the Secretary of State for Social Services. The hon. Lady should recognise that it is not just a tax on luxuries but that it covers some essential items. If we removed all the essential items from VAT, that tax base would be greatly reduced, which would lead to greater problems.

asked the Chancellor of the Exchequer if he will introduce a rate band of income tax below the present standard rate.

I cannot anticipate my right hon. and learned Friend's Budget statement.

Does the Minister recall the reply given to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), which stated that a married couple with two children on two thirds average earnings has suffered a combined tax and national insurance increase of 25 per cent. since the Government took office, while an identical family on 10 times average earnings had benefited from a reduction in tax and national insurance of 21 per cent? Why is the Minister not prepared to tell us now that the Government will do something to redeem their election promises to cut taxation, especially for the low-paid?

The hon. Gentleman asked about a reduced rate band. The publication "Labour's Programme 1982" states:

"Our first priority, however, is a significant real increase in tax thresholds."

Would not the introduction of a lower rate band lead to considerably higher administrative costs for the revenue, taxpayers and employers? Is not the greater priority the increasing of tax thresholds generally?

The Inland Revenue would require about 1,500 extra staff. However, I prefer to stress my hon. Friend's second argument, which is that one can do more good to more people by raising thresholds than by reintroducing a lower rate band.

Does the Minister acknowledge that the reason why the first priority must now be to raise the thresholds is that his Government reduced them in 1981? Does he remember that when his Government abolished the reduced rate band they thereby increased the margin of taxation for 2 million low-paid workers? As the Prime Minister at Question Time on Tuesday admitted candidly that only the most wealthy are paying less tax under this Government, does the Minister accept that common decency requires him to reintroduce the low rate band and that he should do for the low-paid what the Government have already done for the higher paid?

It has been conceded many times from this Dispatch Box that taxation has increased under this Government. However, the counterpart to that is that taxation upon companies and industries has been greatly reduced. Hon. Members on both sides of the House have urged the Government to do more to help industry. It has been done.

asked the Chancellor of the Exchequer what proportion of the total European Community revenue from member countries' value added tax is derived from value added tax revenue of the United Kingdom.

The United Kingdom's share of total Community revenue from VAT own resources is estimated at 20·72 per cent. in the 1983 Community budget.

Is the Minister aware that Italy, which has a gross domestic product similar to that of the United Kingdom, contributed only 14·9 per cent. from VAT resources to the European Community, which compares badly with the figure that the Minister has given? What action will the Treasury take to remedy this and other persistent disparities that damage our economy?

I cannot confirm that figure for Italy, but I shall check it. Our share of Community revenue is 22·46 per cent. and the proportion that comes from VAT own resources is only 20·72 per cent. The main iniquity in our total contribution lies in our excessive contribution to agricultural import levies.

Does my right hon. Friend agree that the Treasury's expenditure of public money is rather more prudent than that of the European Commission? Therefore, will he make strenuous efforts to ensure that there is no increase whatever in own resources to Europe?

I am grateful for the great compliment that my hon. Friend paid to the Treasury. Such compliments are hard to come by. I confirm that what he said is the Government's policy in relation to increasing own resources.

asked the Chancellor of the Exchequer if he will take steps to remove the fiscal disadvantages of marriage.

The fiscal advantages and disadvantages of marriage was one of the issues set out for public discussion in the Green Paper on the taxation of husband and wife. The Government are considering the wide range of views expressed on the Green Paper and possible options for change.

As it is not yet a crime for a couple to own two homes, or alternatively to save money during their lifetime and have an investment income from those savings, why is it that they would be better off in either case were they to live in sin rather than to stay married?

Against that, there are considerable advantages both in capital gains tax and capital transfer tax for those who are married, rather than performing that rather less elegant way of cohabitating that my hon. Friend has mentioned. What is more, a two-earner married couple are currently entitled to £4,010 in personal allowances, whereas a two-earner unmarried couple are entitled to £3,130 in personal allowances. That seems to be an advantage for marriage.

Will my right hon. Friend consider increasing child benefit as part of the fiscal advantages of having children within marriage. Will he also recognise that the withdrawal of the child tax allowances make child benefit an important part of raising the effective thresholds for those with children?

I was animadverting to the fiscal advantages of marriage, and to stretch that to the consequences of having children is pushing me a little far. I confirm that child benefit is an essential method of support for the family and one that the Government have done their best to enhance.

asked the Chancellor of the Exchequer when he now expects to receive the report of the Keith committee.

My right hon. and learned Friend has recently received part I of the report. It covers income tax, capital gains tax, corporation tax and VAT. It will be published on 23 March. Part 2 of the report dealing with the remaining duties and taxes should be ready later in the year. We are grateful to the committee for its work. The report is a very substantial document. It deserves careful study and full consultation. This will inevitably be a long process.

Will my right hon. Friend assure the House that he has already put an end to the Soviet-style methods of investigation and interrogation and breaking and entering that have been used by VAT inspectors and Customs and Excise men? Will he accept the recommendations of his hon. Friends who are members of the Conservative small business bureau contained in a booklet recently published called "Moving Forward", to the effect that a High Court warrant should first be issued before documents can be seized?

I pay tribute to that booklet. I must also pay tribute to the Keith committee report. The latter is an extremely weighty document of great length and I suggest that all concerned would be wise to study both documents before coming to a judgment.

When dealing with income tax evasion, may I ask the right hon. Gentleman to take account of the concern of the House at the extent of the evasion of income tax and contrast the penalties and the treatment of those offenders with those people, particularly in Oxford, who found themselves arrested merely on suspicion of fraud? Is the right hon. Gentleman not aware by now that for a tax system to be accepted as important, as it is, it should not only be fair but should be seen to be fair?

These matters have been examined in great detail by Lord Keith and his committee. It is right that the House should read the report and then give its views on what the report says, and I look forward to that debate. It will be most important, as it is important that the principles in these matters should be established. Equally, it would be wrong for me to prejudge that by answering such specific questions.

asked the Chancellor of the Exchequer if he will make a statement on the general allowance for shortfall made in "The Government's Expenditure Plans" (Cmnd. 8789-I).

The figures in Cmnd. 8789 for estimated outturn in 1982–83 were based on estimates prepared by Departments at the end of 1982. These made provision for shortfall in expenditure on individual programmes where it could be identified at that time. The general allowance for shortfall of £950 million in 1982–83 was an estimate by the Treasury, at the time of preparation of the White Paper, of further shortfall from spending Departments' earlier estimates of outturn. For 1983–84 the figure of £1,200 million is an estimate of the overall net shortfall in expenditure which can be expected to arise in that year.

Why does the White Paper not specify individual areas where shortfall will occur, instead of giving a general global estimate? How does the right hon. and learned Gentleman presume that local authorities will fall short by specific amounts when he cannot have any idea whether they will underspend or overspend?

It is not possible to be precise as to exactly which Departments will experience a shortfall of a particular amount.

With regard to shortfall, is the Treasury giving active support to the appeal by the Prime Minister and by the former Secretary of State for the Environment that local authorities and nationalised industries should spend up to their permitted targets on construction?

The Treasury is involved with the advice being given to reduce the underspending and considerable progress is being shown in that direction.

asked the Chancellor of the Exchequer what representations he has received about the effect of the betting tax on the racing industry.

A joint memorandum has been submitted by the Jockey Club and other leading betting and racing organisations. Representations have also been received from the British Greyhound Racing Board and other interested groups and from many hon. Members.

Does the Minister accept that a cut in on-course betting duty would give a huge fillip to this labour-intensive industry, at a small cost to the Government?

I can confirm that such a move would be welcome, but I must also use the traditional formula and say that I cannot anticipate my right hon. and learned Friend's Budget statement.

Is it not time that it was recognised that bookmakers have had their day and should be abolished?

Whether that is a desirable objective or not, I am sure that it should not be the function of the taxation system to achieve it.

asked the Chancellor of the Exchequer, expressed as a percentage, what is the value of £1 sterling today compared with May 1979.

According to the general index of retail prices, the value of £1 sterling in January 1983 was 66 per cent. of its value in May 1979.

Would it not make more sense, if a devaluation of that kind is to be carried out, for it to be done as an operation for the benefit of the country, so that we are not dragged into that position, with such an injurious effect on the country?

There is no benefit in a loss in the value of the pound as measured by the retail prices index. It is a measure of the rate at which inflation is taking place, and compares favourably with a much sharper fall, during the same period under the Labour Government, from 100 to 55 per cent. It is a significant step in the right direction, but inflation is still greatly to be deplored.

Can we not be sure about one thing, which is that if there were a Labour Government there would not be a 20 per cent. fall in two years, but a 50 per cent. fall in two days?

I hesitate to predict, but my hon. Friend may be aiming in the right direction.

Is not the truth of the Government's alleged success on inflation that it has been bought at the cost of an overpriced and dishonest pound, a catastrophic loss of competitiveness and 2 million people on the dole? Is the Chancellor not aware that most forecasters are now predicting that, on a continuation of present policies, inflation will go up and not down? Does the right hon. and learned Gentleman accept the analysis of the Financial Times—the Conservative party and the bankers' paper—that there is a big round of price rises on the way?

Under this Government substantial headway has been made in reducing the rate of inflation, and provided that we maintain sound financial policies there are prospects of continuing to move in that direction. We have succeeded ahead of all expectations in recent months, but progress in the immediate future is likely to be slower. As to the hon. Gentleman's suggestion that an overvalued pound, as he puts it, is to be regarded as a dishonest pound, I should have thought that this was precisely the opposite of what is desirable. As for his suggestion that loss of competitiveness, as he puts it, is to be recovered by adjusting the value of the pound, that is again a misleading insight. The only worthwhile way to improve competitiveness is to improve the competitive performance, in terms of price and quality, of the output of our goods and services.

asked the Chancellor of the Exchequer how many member states currently take part in the exchange rate mechanism of the European monetary system.

Eight.

In view of the damaging effects of short-term fluctuations in sterling, does my right hon. Friend not think that it is high time Britain became a full member of the EMS?

One of the difficulties, as demonstrated recently, is that when the oil price has been tending to fall, sterling has tended to fall, too. At the same time, the German mark has tended to rise. It is that disequilibrium that occurred before, in the opposite direction, with the oil price rise in 1979. It is a problem that has always presented a difficulty. It remains our policy that we should join the EMS when conditions are right.

Does the Minister not accept that the damaging uncertainty for traders about the international value of sterling would be assuaged substantially if the Government announced that they were starting negotiations with a view possibly to joining the European monetary system?

I do not think that the instability in exchange rates would be helped by joining or not joining. The instability arises because of varying degrees of success in various economic policies. A change in the price of oil, the balance of commodity prices throughout the world, and a whole mass of matters go into determining exchange rates. They cannot be taken out simply by negotiating in relation to the EMS.

asked the Chancellor of the Exchequer if he will assess the influence of the fall in sterling exchange rates on competitiveness of the United Kingdom since July 1982.

There are many aspects to competitiveness such as marketing, reliability and design, which are not directly affected by the changes in relative costs. But the fall in the exchange rate since July has probably improved relative unit labour costs by about 12 per cent. Whether this improvement is sustained depends upon the future level of wage settlements and productivity.

Is the Chief Secretary now saying that his statement in December that three-quarters of the improvement in competitiveness had been due to the decline in the value of the pound was wrong? If he is not saying that, does he not agree that the pound should fall still further if we are to improve our competitiveness?

I do not think that a further fall in the pound would improve our competitiveness. It improves relative costs only so long as the nation is prepared to accept lower real wages and lower living standards that result from the higher cost of imports. It does not follow by any means that this would be the case.

Does my right hon. and learned Friend not agree that many sections of our industry are extremely competitive, bearing in mind that last year we had a balance of payments surplus of £4,500 million, £2,000 million of which was on manufactured goods?

I agree entirely with my hon. Friend. I would go further and say that the comparison of the competitiveness figures in terms of cost competitiveness can be extremely misleading. West Germany's relative costs deteriorated by 20 per cent. between 1970 and 1980, but during that period she maintained her 20 per cent. share of main manufacturing countries' exports. That is not, therefore, the proper test of these matters.

As the Chancellor of the Exchequer has presided over a 12 per cent. depreciation in the past three months, and as, on his own admission, this has improved relative normalised labour costs by 12 per cent., why does the Chief Secretary not come clean and say that he thinks that this is, on the whole, to the advantage of this country and its manufactures? If he does not think that it is to the advantage of this country, what does he propose to do to reverse it?

I have explained in my last two answers just how misleading that statistical test is, if one looks at what has happened to Germany. I have also explained that it is by no means beneficial for the value of sterling to fall unless the consequences of lower living standards are prepared to be met. At the same time, it is right that full advantage should be taken by British industry of the advantages that do accrue.

asked the Chancellor of the Exchequer what representations he has received from industry on the forthcoming Budget.

I have received a number of representations both from individual companies and from national bodies, such as the CBI, which represent their interests.

While warmly welcoming the fact that the two main concerns of industry—inflation and interest rates—have been met by the Government, may I ask my right hon. and learned Friend nevertheless, in pursuit of his recognition of the importance of manufacturing industry for employment and its competitiveness, to examine those taxes that discriminate against employment in industry, such as the national insurance surcharge and the special car tax, which is of particular relevance to the west midlands?

I have already done a great deal to reduce the pressure imposed by tax on industry by knocking 2 per cent. off the tax on jobs imposed by the Labour Government. In addition to the pressures on industry, there are tax pressures on people. I shall have to consider all these matters, as well as the fiscal position as a whole, in the weeks that remain before my Budget.

Does the Chancellor of the Exchequer remember that he won votes at the last general election with the master plan that he was to reduce personal taxation, fill the pockets of working people with rebated tax that they would use to buy consumer goods, which would set the wheels of industry humming and reduce drastically the high unemployment figure of 1 million? Does the right hon. and learned Gentleman realise that there remains only the coming Budget for him to do something about that promise and that if he fails to take action his hon. Friends will be disastrously embarrassed when they ask for more votes at the next election?

Of course the reduction in the burden of taxation on people and industry is, and was, an important objective. That is why the basic rate of income tax and all other rates of tax have been reduced. Unfortunately, to a significant extent that has been offset by the substantial increase in earnings that took place as a result of the collapse of the pay policy over which the Labour Government presided.

asked the Prime Minister if she will list her official engagements for 24 February.

This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today, including one with Signor Fanfani, the Prime Minister of Italy. This evening I shall be giving a dinner in his honour at 10 Downing Street.

I thank my right hon. Friend for that reply. Does she agree that most of the hardships inflicted on the public during the recent water strike resulted from the trade union leaders concerned using their monopoly supply position and a closed shop to break agreements that they had freely entered into? Does this not show the need for a withdrawal of trade union immunities where essential services are concerned and for binding arbitration?

I agree with my hon. Friend about the abuse of monopoly power. It seems sometimes to be used to give the producer what he wants rather than the consumer what he or she needs or wants. There was an agreement between the water workers and the employers about binding arbitration. That agreement was broken. Another agreement was made, when they first went to ACAS, with the mediator. That agreement, too, was broken. So there can be agreements that are broken. We are looking at the consequences of this for future legislation and the need for a statutory duty to continue the supply of essential services.

Does the right hon. Lady not agree that much the clearest lesson to be drawn from the water strike is how damaging it is for the Government to accept the advice of the Secretary of State for Employment? Does she not understand that if she had consulted my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) she would not have come to the Dispatch Box with the false figures that she has provided today and my right hon. Friend might have saved her from a great deal of embarrassment?

I have not mentioned any figures so far today, none at all. What the water strike has shown is that there are people who are prepared for their own personal advantage—

The right hon. Lady.

—to attempt to withhold essential commodities and services from old and young alike, and that people who attempt to do that will be supported by the Opposition.

The right hon. Lady has it wrong again. If she really wants to stop strikes, why does she not compare her record in that matter with that of the Labour Government? She will then discover that the number of working days lost under her Administration has been 40 per cent. higher than it was under the Labour Administration. That is because she accepts the advice of her Secretary of State for Employment.

Nonsense. Did the right hon. Gentleman condemn the water strike, or was he on the side of the strikers?

Of course I did not condemn the strike, because the strikers have a right to justice under this Government. [HON. MEMBERS: "Hear, hear".]

Do not the consumers, the pensioners and the family have a right to justice, and why did the right hon. Gentleman prefer to—(Interruption.)—

Order. I cannot hear what the Prime Minister is saying.

The Prime Minister is asking questions.

Order. If the House knew the correspondence that I received after last week's exhibition, it would ensure that every one has a right to be heard here.

The right hon. Gentleman, true to his typical beliefs, preferred to be the strikers' friend against the consumer, and was prepared to see old-age pensioners and mothers with young children go to standpipes rather than urge the trade unions to honour a clause in their original agreement. As a result, the consumer lost, the strikers lost—

The right hon. Lady lost.

We now have the new socialism, the new caring society, in which the trade unions care for themselves but not for those whom they serve.

Does—[Interruption.] No doubt there will be even more noise next week when the Labour party has had time to get over the humiliation of Bermondsey and the Conservative has lost his deposit. In the meantime, will the Prime Minister, instead of merely exchanging insults with the Leader of the Opposition, tell us what lessons she learnt from the water strike? Does not the lack of a coherent incomes policy in the public sector give the worst of both worlds—great inconvenience to the public and a vacillating approach to the level of settlements?

The right hon. Gentleman has forgotten the lessons of history. If one can break an agreement of the kind that the water workers broke in breaking the original NJIC agreement, one can also break, as we know, a statutory incomes policy. Has the right hon. Gentleman forgotten that?

asked the Prime Minister if she has any plans to visit Brookmans park.

I have at present no plans to do so.

On behalf of my constituents may I ask my right hon. Friend to comment on the former Labour Government's advertising campaign on defence, which said:

"While we work for a lasting peace, we have to have nuclear weapons?"

Yes. I remember words to that effect in the great advertising campaign that was inaugurated and carried through by the Labour Government of 1969, in support of Polaris missiles, of which some of the members of that Government did not approve. Words to that effect were used in that advertisement and, if I might say so, while we have the threat that we have from the Soviet Union, those words are as true today as they were then.

In view of the nauseating publicity, especially in the tabloid newspapers, about the private life of the Royal family, and, indeed, about others, does the Prime Minister agree that it is high time that we had a Right to Privacy Act—[Interruption]—

Order. Has the hon. Gentleman read question No. 2, which relates to Brookmans park?

—which could be extended to the people in Brookmans park? Does the Prime Minister agree that it is high time that we had a Right to Privacy Act, so that the families of many people could be protected from the predators of the media?

I believe that that was dealt with in a private Member's suggestion in the House last week, and the House voted on that measure. I have nothing to say about what the hon. Gentleman said at the beginning of his question. I understand that the matter is sub judice.

asked the Prime Minister if she will list her official engagements for Thursday 24 February.

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

If my right hon. Friend has time today to consider the future of the National Health Service, a matter which all Governments must consider all the time, will she agree that it is absurd for people in the Labour party to suggest, for instance, that limited privatisation of certain maintenance and contract cleaning activities in the NHS would be a serious attack on the basis of the NHS? As the chairman of the trade association has suggested that £40 million could be saved if those activities were privatised, would it not be a good idea to provide more resources for genuine patient care?

I agree with my hon. Friend that a great deal of money could be saved by putting some services such as cleaning out to contract and that the money thereby saved would be much better used in patient care. If money were saved it would go to patient care.

If the Prime Minister today is considering further possible wage claims, will she discuss with the leaders of industry how they expect workers to take very small increases when very large increases and large golden handshakes are constantly given to directors, regardless of the success of the companies, and when, even in the nationalised industries, increases at the top have been far bigger than at the bottom? If Victorian virtues are to return to this country, should they not start at the top?

If the right hon. Gentleman is referring to the top in politics, what he says is indeed true?

In considering the National Health Service, will my right hon. Friend remind the House that during this Parliament expenditure on patient services has been increased by 6 per cent., after allowing for inflation, which is indeed poor evidence of an intention to dismantle the welfare state?

Yes. There has been an increase in expenditure on patient services, and that is reflected in the increasing numbers of doctors, nurses, and professions ancillary to medicine in the NHS under this Government, over and above what happened under the Labour Government. So it is we who should boast about our record in the NHS, not they.

Will the right hon. Lady call in the Secretary of State for Defence this afternoon, reprimand him for his Goebbels-type party political broadcast yesterday, and remind him that this Government left us nearly defenceless against the Argentine attack by running down the Navy and proposing to sell Invincible? Will she bear mind that at the time of the Russian invasion of Hungary we did nothing because we were invading Egypt? Will the right hon. Lady also remind the right hon. Gentleman that this Government are committed to the non-proliferation treaty? Does her policy, which says that nuclear weapons will stop war in Europe, extend to all other countries?

The answer to the hon. Gentleman is no, Sir. The Falklands war was fought with an excellent Navy and was won gloriously. It is a blot on the whole of the Western world that we stood by and allowed the invasion of Hungary. [Interruption.] With all due respect, the whole of the Western world was not fighting somewhere else and it is a blot on the United Nations and on the Western world. Has the hon. Gentleman forgotten what happened recently in Afghanistan? Why does he not condemn that? The truth is that my right hon. Friend's party political broadcast last night was excellent and it clearly drove home very hard indeed.