asked the Chancellor of the Exchequer if he will make a statement on the current level of interest rates.

asked the Chancellor of the Exchequer what effect his Budget has had upon the level of interest rates.

asked the Chancellor of the Exchequer if he will make a statement on the present level of interest rates.

Base rates have been reduced by 2 per cent. since the Budget.

I thank my right hon. Friend for that continuing good news about the economy, particularly as it benefits the Exchequer, industry and mortgage payers. However, at what level would interest rates be if the Labour party implemented its £24 billion of expenditure?

If it were to implement the extra £24 billion of public expenditure we would have substantial increases in taxation, possibly a VAT rate of 41 per cent., excessive borrowing, interest rates much higher than they are today, and no doubt before very long we would be in the hands of the IMF.

Is my right hon. Friend aware that a survey carried out among business men by the Nottinghamshire chamber of commerce showed that what concerned them most was high interest rates? With, I hope, inflation following West Germany down to zero, resulting in high real interest rates, will he please do whatever possible to bring interest rates down as soon as possible to try to alleviate the fears of those Nottinghamshire business men?

My hon. Friend is right. It is important that interest rates should be brought down as much and as soon as is prudent. The 2 per cent. reduction in interest rates already since the Budget has been accompanied by a reduction in the mortgage interest rate of 1¾ per cent., which will come into effect on 1 June, which, on its own, is worth some £3·60 a week to the man or family with the average outstanding mortgage.

Now that Cabinet government has been restored, that we have a balanced ticket and that the winds of change are sweeping through the Treasury, will my right hon. Friend accept that any relaxation of the rules governing the spending of capital receipts by local authorities from council house sales would not significantly affect interest rates?

No, my hon. Friend is wrong. That could have an effect on interest rates. However, I am glad to see from the earlier part of his question that he appears to be fully content with the present state of affairs.

When, within the strategy currently being pursued, does the Chancellor expect British interest rates to be as much below the international average as they are currently above it?

The hon. Gentleman is right in saying that our level of interest rates is higher than the general level in major countries overseas. The relationship between interest rates in Britain and overseas is not unconnected with the fact that labour costs per unit of output are rising much faster in Britain than in our major competitors. That is the major weakness in the British economy at present, and it is a job for management to take a better grip of its costs. We shall then be able to see benefits in competitiveness and in interest rates as well.

If interest rates are falling so well and everything in the garden is so wonderful, why does unemployment continue to increase? I cite the announcement this week that 1,000 jobs will be lost at Kodak, that another 1,000 jobs will go at British Caledonian, and, as we heard yesterday, the appalling loss of 3,500 redundancies in the shipbuilding industry.

The hon. Gentleman should have listened a little more attentively to my answer to the hon. Member for Truro (Mr. Penhaligon) a moment ago. Unemployment is all part of the same problem. Labour costs per unit of output are increasing far too quickly in this country, which prices workers in many of our industries out of jobs, as we are not as competitive as our rivals overseas.

Will my right hon. Friend confirm that the welcome reduction in interest and mortgage rates will at least do something to offset the deplorable increase in domestic and commercial rates imposed by Labour and Liberal councils, including in our county of Leicester?

My hon. Friend is right about the county of Leicester, which both he and I represent. There is considerable unrest about the level of rates imposed by the Labour-controlled council. The same problem exists in much of the country. I am grateful to my hon. Friend for his remarks about the considerable benefits to the economy as a result of the Budget and the consequent reduction in interest rates.

By exactly how much will bank interest rates in Britain have to be cut if they are to fall to the same level as real interest rates in America, Japan, France and Germany, our main competitors?

Although it is difficult to measure precisely or accurately real interest rates, they are slightly higher in this country than in most other major countries. A Labour Government might considerably reduce real interest rates in the same way as always—by letting inflation go through the roof.

asked the Chancellor of the Exchequer when he expects to receive a report from the appointed consultants about reviewing the customs and tax regulations covering freeports; and if he will make a statement.

The consultants were appointed in July 1984 to undertake a five-year research study to enable an initial evaluation of the freeport experiment. Annual progress reports submitted by the consultants to date include assessments of the problems which have arisen in the operation of freeports.

That is a long time to have to wait. Is my hon. Friend aware that the experiment is unlikely to prove successful unless he does something to get the Customs and Excise off the backs of the freeports? Some of us believe that the Customs and Excise was determined to ensure that the experiment failed before it even started. The freeports need to be wholly free of VAT. In some instances, the VAT regime inside the freeport is even worse than that outside it, which is hardly a recipe for success.

I must rebut my hon. Friend's contention about the Customs and Excise. It has not changed any of the rules that were set out at the beginning of the freeports experiment. Freeports remain subject to European Community legislation. On the subject of consultants, there will shortly be an interim report.

asked the Chancellor of the Exchequer what is his latest estimate of the effect of the Budget on unemployment; and if he will make a statement.

While it is impossible to isolate the direct effect of the Budget, or indeed of any Budget, on unemployment, the hon. Gentleman will welcome the fact that nearly 1 million additional new jobs have been created since the last election.

Is it not a disgrace that with more than 4 million people unemployed so little attention was given to job creation in the Budget statement? Does that now show the Government's callous and uncaring nature? I can point to hundreds of people in my constituency and on Merseyside who have lost their jobs since the Budget statement. How many people can the Minister point to who have found jobs?

The hon. Gentleman knows perfectly well that the figures is not—

How many?

I shall answer the hon. Gentleman's questions. The hon. Gentleman knows perfectly well that the figure is not 4 million. The figure could amount to that only if he included the people in employment through various job creation measures. The Budget added considerably to the already very high total of expenditure being incurred on job creation, employment and training measures. When we took office the figure was under £400 million. By the end of these three years it will be £3 billion, which is a clear indication of the priority that we give this subject.

Is not the level of unemployment, both now and in the future, affected at least as much by unit labour costs, as was pointed out by our right hon. Friend earlier? Therefore, would it not be sensible to press ahead as rapidly as possible with schemes to make pay more profit-related, since that might help to redress some of the problem?

My hon. Friend is entirely right to draw attention again to the problem of unit labour costs, where the position is, if anything, deteriorating. I hope that employers and employees will take into account that very important part of job creation—the Budget measures which reduced income tax for employees, which in many cases considerably increases their take-home pay.

Does the Minister recall that it was to encourage entrepreneurs to create jobs that the top rate of income tax was reduced from 84 to 60 per cent.? Will he set up a study to investigate whether a single job has been created by that?

It is clear that the whole series of tax measures, not just the one referred to by the hon. Gentleman, designed to encourage job creation and small business development have worked. The number of new businesses starting up and expanding has been very creditable under this Government compared with the record in the past, and is a major contributor to jobs.

Will my right hon. Friend take up with employer organisations his disappointment over the fact that many firms prefer to increase the wages of existing employees by more than the rate of inflation, rather than take on additional staff? Does he agree that, by international standards, our performance in that respect is poor and is making unemployment worse?

My hon. Friend is putting the unit labour cost argument in another way. I agree with him that this practice does not help unemployment. It is important that all employers take note of the arguments. I pay tribute to the work of the CBI, which is tryng to get across that message, as we do in everything that we say.

Will the Minister answer the simple question embodied in the original question? What figure can he give for a reduction in the dole queues as a result of the last Budget?

The last Budget was not very long ago—[HON. MEMBERS: "Answer."] The right hon. Gentleman must recognise that there have been increases in net new jobs in this country on a scale greater than in the remainder of western Europe put together as a result of the last three Budgets and the policies that we have been pursuing.

Does my right hon. Friend agree that the effect on employment cannot be considered in isolation from the basis on which the unemployment figures are calculated? For example, the severely disabled and single-parent families can be included in unemployment figures, as can people over 60, who sign on simply to obtain their national insurance tax credits. Figures that include such people cannot be treated as an accurate reflection of unemployment.

It is clear that some people are included in the unemployment figures—and there have been various calculations of the number—who are not actively seeking work.

Will the Chief Secretary confirm that his figure of 1 million new jobs since 1983 includes about 250,000 second jobs—second jobs obtained by people who already have jobs; second jobs that are often part-time jobs? Is it not true that there are still 1 million fewer people in employment today than there were in 1979, even allowing for everything that has happened since 1983?

There are some people in the figures—we do not know yet how many, but the number will be small and not on the scale suggested—who have two jobs. We shall eventually discover the number when the surveys have been completed. That does not diminish the fact that there has been a substantial increase in the number of people—the figure is close to the number of net new jobs—who are new to the work force. I do not know why the hon. Gentleman keeps criticising the Government for the number of new jobs that are part-time jobs. Part-time jobs will always have a major contribution to make to the economy. It is interesting to observe that part-time jobs contributed to more than half the increase in the number of jobs under the previous Labour Government.

asked the Chancellor of the Exchequer what representations he has received on the proposed establishment of personal equity plans.

A considerable number, most of which have warmly welcomed the proposal.

Will my right hon. Friend confirm that since 1979, when the Government came into power, the proportion of the population owning shares has doubled from 7 to 14 per cent.? Will he accept that this has been a substantial achievement? As we are now to have personal equity plans, does my right hon. Friend agree that it would be reasonable to aim for 20 per cent. of the population to own shares, which is close to the percentage in the United States?

Yes. The most recent survey conducted by National Opinion Poll showed that the proportion of adults directly owning shares has doubled since 1979 along the lines that my hon. Friend suggested. This has arisen largely as a result of two factors. First, there has been a sharp growth in employee share schemes. Secondly, there has been the Government's privatisation programme, especially British Telecom. We are now adding a third leg to what will become a tripod with the introduction of personal equity plans, which, as I said in my earlier answers, have had a warm welcome throughout the community.

Does the Chancellor accept that personal equity plans would be even more widely and enthusiastically accepted and welcomed if they gave greater incentives than are at present planned? Does he accept also that the great prize for British industry would be to have an agreement which extended across the political parties on this scheme and on the right hon. Gentleman's profit-sharing scheme, which we very much welcome, which he introduced at the NEDC on Monday? Will he incorporate in the discussions on these matters not only both sides of industry but the other parties?

I shall always be happy to listen to representations from the hon. Gentleman and from anyone else before the scheme finally comes into full operation on 1 January 1987. I am glad to know that the hon. Gentleman welcomes the tax concessions under the personal equity plan of complete freedom from income tax on dividends and of capital gains tax on disposals, proposals which were never put into play under the previous Labour Government, of whom the hon. Gentleman was such an avid supporter.

Does the Chancellor of the Exchequer recall that after the findings of the National Opinion Poll were published it was suggested by many, and reported, that the increase in share owners from 7 to 14 per cent. arose because there had been a lot of double counting? Will he confirm that the greatest increase of share ownership that has taken place pro rata is in the Government and the Cabinet itself, with nine members of the Cabinet owning shares and with the Prime Minister and the Secretary of State for Transport leading the way by making money out of the coal strike and privatisation, only to be superseded by the hon. Member for Stockton, South (Mr. Wrigglesworth), who represents Barclays Bank in this place?

I regret that I was not able to hear much of what the hon. Gentleman said. Modern Cabinets may be rather large, but to suggest that they account for 14 per cent. of the adult population of Great Britain is going a little far.

Is my right hon. Friend aware that the refinements to the scheme, which were announced by the Treasury this week to include unit trusts, are very welcome? Who is to issue the plans if the Financial Services Bill does not become law by 1 January of next year, which seems likely?

It is important that the Financial Services Bill should become law by 1 January next year, as I am sure my hon. Friend agrees. If that were not so, special arrangements would have to be in force for the interim period.

asked the Chancellor of the Exchequer what is the value of the United Kingdom's gold reserves.

$6·1 billion.

As there seem to be some goodies in the kitty, despite the recession, would this be an opportune time to return Albania's gold to its rightful owners—the Albanian Government? Must we not face that issue?

I should explain to the hon. Gentleman that the figure for which he asked and the answer which I gave related to the United Kingdom's gold reserves. His question on Albania relates to gold that is held on behalf of the Tripartite Commission for the Restitution of Monetary Gold, in which the United States, the United Kingdom and France are joint participants.

Does my hon. Friend accept that the question of gold reserves has been brought into stark focus by the enormous increase in the number of financial instruments and the financial pyramiding involved, and by the vast increase in trading volume throughout the world? The question arises as to the implications for the financial community of any failure of settlement. Is it not prudent for the Government to increase their gold reserves at such a time?

Total reserves have been increasing. In fact, in the past few months there has been a rise on every occasion. We judge the present balance between gold and convertible currency to be about right in present circumstances.

asked the Chancellor of the Exchequer what is his latest projection for public expenditure as a proportion of gross domestic product in 1986–87.

The latest estimate of general Government expenditure as a percentage of gross domestic product for 1986–87 is 42½ per cent.

Does my right hon. Friend agree that we are by no means achieving full value for our existing public expenditure on health and education? Although it is far from certain that a more relaxed approach to public expenditure would produce better public services, we know all too well from experience that it would lead to higher taxes, higher interest rates and higher unemployment. Will my right hon. Friend underline that truth to the alliance parties, which want to spend an extra £10 billion, and to the Liberal party in Warwickshire, which proposed a rate increase of 23·3 per cent. and more? I am happy to say that those Liberals failed to impress the electorate.

My hon. Friend was correct in the first part of his question. That is why, in addition to establishing priorities in public expenditure, we are concentrating so much on getting value for money in all the programmes. I am sure my hon. Friend will be pleased to know that, as a result of efforts in obtaining value for money in the Health Service, about £150 million a year extra has been devoted to real front-line care. We must continue with such an approach. My hon. Friend was entirely right in the second part of his question. As we saw under the last Labour Government, those were precisely the consequences, and they would be repeated under the proposals put forward by the Liberals and the SDP.

How much is it costing the Government to sustain record unemployment?

The figures for unemployment benefit are in the public expenditure White Paper. If there is ever-increasing public expenditure, it has to be paid for in other ways, which loses real, permanent jobs elsewhere.

asked the Chancellor of the Exchequer when he next proposes to have discussions with the European Community Council of Ministers about the European monetary system.

Aspects of the European monetary system come up for discussion from time to time.

Can my hon. Friend think of more suitable circumstances than those that obtain at present for Britain to join the exchange rate mechanism of the EMS? If not, why do we not join?

We have always made it clear that we see both advantages and disadvantages in membership of the exchange rate mechanism of the EMS. We keep it under review. We would need to be satisfied that there was a clear balance of advantage before joining.

What is the right basis on which we should join the EMS?

The hon. Gentleman makes a fundamental mistake in assuming that membership of the ERM is determined solely on the basis of prevailing rates of exchange between sterling and other currencies. A range of other matters, such as volatility and the technical arrangements of the mechanism itself, must be taken into account.

When my hon. Friend has an opportunity to speak to my right hon. Friend the Chancellor, will he tell him that it would be a good thing if he told his many friends among the fashionable economic commentators that the Prime Minister's opposition in principle to joining the EMS is neither eccentric nor isolated, and that many hon. Members on both sides of the House would deeply resent the loss of national sovereignty that would occur if we were to join?

I note what my hon. Friend has said and, if I get an opportunity to see my right hon. Friend the Chancellor, I shall pass on his remarks. My hon. Friend's question and the question raised by my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) illustrate the fact that people can hold different opinions on this matter.

When the Minister next meets his European colleagues to discuss European matters, especially the ecu, will he inform them of the Chancellor's new-found enthusiasm for profit-sharing by employees as part of their wages? Will the hon. Gentleman inform his European colleagues that the Government are prepared to accept the modest Vredeling proposals on employees having the right to information about their companies?

The hon. Gentleman's question is rather far from the question of the European monetary system. However, I am glad that he has some words of approval for my right hon. Friend's profit-sharing proposals.

If, as my hon. Friend said, there are advantages and disadvantages in joining the EMS, what is the critical disadvantage that keeps us out of it, and therefore keeps our currency fluctuating, in preference to a sound, stable currency at a fixed rate against the currencies of our major European partners?

Two or three months ago I went into these questions at some length in a debate in the House, and I shall gladly do so again outside the Chamber with my hon. Friend. Clearly, in considering the EMS, we must recognise that joining would not be an easy option. My hon. Friend's point about the movement of the exchange rate between sterling and the continental currencies is only part of the picture. It is a mechanism, and a number of its aspects must be taken into account.

asked the Chancellor of the Exchequer what is his latest estimate of the proportion of income tax revenue paid by the 10 per cent. of taxpayers with the highest incomes; and what was the comparable proportion in 1979–80.

The proportion is 37½ per cent. in 1986–87, compared with 34 per cent. in 1979–80.

Is that proportion not further evidence that the sky-high tax rates of the last Government were counter-productive and that our reductions in those rates produced a greater, not a smaller, tax yield, to the benefit not only of high rate taxpayers but taxpayers in general?

My hon. Friend is right. It demonstrates what we have always said—that lower taxes provide encouragement and motivation leading to greater earnings and hence to greater achievement. As my hon. Friend has implied, that is in sharp contrast to the Labour party's policies. It is fairly clear that at the moment the Labour party simply cannot add up the figures. Recently, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) made a speech in which he said that people earning more than £30,000 a year would have to pay more tax. Just to get anywhere near the yield that the right hon. Gentleman seeks would mean total confiscation of earning over £30,000 a year. It is hard to say how that encourages motivation or provides greater tax yields.

Is it not true that, once again, the right hon. Gentleman misrepresents the figures? [Interruption.] He knows that a Labour Government would increase—[Interruption.] Mr. Speaker—

Order. Mr. Campbell-Savours.

The Minister knows that the next Labour Government will increase capital gains tax and capital transfer tax, and by raising those revenues, in addition to the revenues raised from those who are paid higher levels of salary, we will fund Labour's programme.

Because of the—

Just stick to the facts.

Because of the growth in the economy and growth in capital values, the yield from capital taxes has also gone up under this Government. I will stick to the facts. The facts are that the yield from the capital taxes, which the Labour party says it will increase, will fall far short of financing the programme put forward by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and his party. An additional £1·9 billion would be required—I am giving the facts—and even if, as the right hon. Gentleman said, people earning more than £30,000 had to pay more tax, with the implication that others would not, and even if they all were prepared to go on earning at their present rate, with total confiscation of all earnings above £30,000, it would yield only £1½ billion. Those are the facts, and they show that the policy is nonsense.

Does my right hon. Friend agree that his target of 25 per cent. income tax may just be a marker to some people, but means a great deal more to millions of low-paid workers? If he cannot convince his colleagues that consolidation is no policy for the poorly paid and disadvantaged, how can we persuade the public?

My hon. Friend is right. The purpose of the tax changes in the Budget and of the long-term target of 25 per cent. is meant to be of great benefit and is mainly directed to those on modest incomes.

Is not another interpretation the possibility that those job-destroying pay rises, to which the Chancellor referred, have gone to those who are already the highest paid?

No. If unit labour costs as a whole are going up, that cannot mean that they are confined to only a small band of income earners. The truth is that it is happening across the whole field. That is why the tax changes we have introduced in the Budget will, I hope, help to prevent those rises taking place.

asked the Chancellor of the Exchequer if he will make a statement on the current level of inflation.

Over the 12 months to March 1986 the retail prices index increased by 4·2 per cent. and I expect tomorrow's figure to be substantially better.

Does my right hon. Friend agree that these exciting prospects could be put in jeopardy if employers in the private sector were to continue to concede irresponsible and inflationary wage settlements, with their consequent effect on unit labour costs, the efficiency of British industry and job prospects?

My hon. Friend is right to talk about the dangers of excessive increases in unit labour costs. However, the consequences will be felt not so much on inflation as on employment and jobs. That is the problem at present. Another and much greater threat to inflation would be if, by any mischance, any of the Opposition parties were to gain office.

When the Chancellor set out on his policy to reduce inflation to this level, did he know that it would create unemployment of nearly 4 million?

It is not inflation that has created unemployment. In fact, the reverse is the case. Rising inflation is bad for jobs. The inflation record of this Government is something of which the whole nation can be proud.

Will my right hon. Friend confirm that inflation is not a disease, the cure for which is to forget about it, but a constant pressure in the economy which requires the consistent approaches which we have had until now and which we need in the future?

My hon. Friend is right. The achievement of the Government in getting inflation down as far as we have—it is going down still further—is something which nobody in this country should take for granted.

Is it not interesting that despite all the boasting by the Chancellor about inflation rates, the electorate, at every opportunity since the Budget, have decisively rejected policies which they know mean continuing mass unemployment and cuts in housing, education and the Health Service? Is it not also interesting to note that not only are the public not convinced, but that Cabinet colleagues of the Chancellor are not convinced, such as the Leader of the House, who, in a television interview on Sunday, made it perfectly clear that there must be alternative policies to those pursued by the Prime Minister and the Chancellor?

The Cabinet is united on the importance of getting inflation down, and keeping it down. There is no benefit to this country in inflation going up. Let me say, too, that low inflation is of the greatest importance to those who are seeking jobs.

asked the Chancellor of the Exchequer what value added tax revenue he expects to raise through United Kingdom confectionery sales in the current financial year.

It is estimated that the revenue yield from sales in the United Kingdom of chocolates, sweets and similar confectionary will be about £375 million in 1986–87.

Ever since confectionery in this country has been subject to purchase tax, and subsequently to VAT at the standard rate, there has been a major shift in people's dietary habits. Three cooked meals a day are no longer the norm. Confectionery is part of the daily habit. How much longer can the Chancellor justify taxing confectionery, as it is part of the normal consumption of United Kingdom nationals?

I know my hon. Friend's constituency interest in this matter. I applaud his support for the great confectionery manufacturers there, but I cannot hold out hope that the present VAT treatment of confectionery will change. I remind the House that it was the right hon. Member for Leeds, East (Mr. Healey), in his first Budget in 1974, who standard-rated chocolate.

Is my hon. Friend aware that I hope very much that he will not increase tax on confectionery in the way in which my right hon. Friend the Chancellor treated the tax on tobacco in the Budget, increasing it by more than the rate of inflation? As a result of that increase there will be a reduction not only in tax receipts from tobacco, but in jobs, as has happened in Northern Ireland, where 900 jobs have been lost. Will my hon. Friend please stop listening to the exaggerated lobby on tobacco smoking, because that is what it is?

Order. The question is about confectionery.

As you say, Mr. Speaker, the question is about confectionery, but the tobacco yield remains buoyant.

asked the Chancellor of the Exchequer what representations he has received about his recent statement on American depositary receipts.

We have received a number of letters, generally welcoming the changes.

Is not the Treasury's recent announcement of a reduction in the tax on conversion of depositary receipts from 5 to 1½ per cent. a straight post-Budget tax handout to the City of London? When the Chancellor framed his Budget fixing the rate at 5 per cent., was that not a quid pro quo for tax forgone for a lower rate of stamp duty? What has happened to the Chancellor's calculations now? Is this not yet a further example of a Chancellor fixing policies, and well-placed strategic groups in the City of London weakening his resolve and ultimately destroying it?

No. It is not any of those things. In the light of representations that we received following the Budget, my right hon. Friend the Chancellor was satisfied that our objectives would be achieved in relation to preserving the revenue from stamp duty with a rate of 1½ per cent. instead of 5 per cent. Under those circumstances, it was a perfectly proper change to make.

Does my hon. Friend agree that depositary receipts are an admirable way of funding, particularly expansion overseas, and that that applies not only to American but to European depositary receipts? In view of the fact that our American colleagues are against the tax, does my hon. Friend think that that will jeopardise the negotiations that are now going on for the abolition of the unitary tax system?

I am sure that there is no direct connection between those two matters. If British companies wish to raise funds abroad, I have no reason to think that there will not be a satisfactory and active market in ADRs at the rate of 1½ per cent., since they were growing very rapidly indeed in the months before the Budget at the rate of 1 per cent.

Does the Economic Secretary to the Treasury recall that his right hon. Friend the Chancellor of the Exchequer sold this proposal to cut stamp duty and give away £70 million on the basis of this special rate of 5 per cent.? How does he intend to make up the revenue? Why is it that whenever the pensioners knock on the Government's door the Government are hard with them, as they are hard with the sick, the unemployed and the disabled, but are always soft with the City?

If I had time, Mr. Speaker, and if I were in order, I should like to explain at length the many things that this Government have done to help the disabled. When my right hon. Friend the Chancellor of the Exchequer made his announcement, subsequent to the Budget, about stamp duty changes, he pointed out that they would be revenue-neutral and that therefore there would be no loss of revenue to the Exchequer.

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

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

Given the further relentless rise in the unemployment figures that have been announced today and the depressing long-term trend, together with the announcement yesterday of the loss of 3,500 jobs in the British shipbuilding industry and the announcement today of the loss of 1,000 jobs at British Caledonian, will the Prime Minister now announce that she will reverse the disastrous economic polices that she has pursued for the last seven years, or that she will call a general election so that Labour can create genuine jobs?

No, Sir. I did not notice that Labour did particularly well during the last two by-elections. I am sure the hon. Gentleman noticed that the labour force survey confirmed the overall increase in the number of jobs during the last three years to have been 1 million. I am the first to say that we need more shipbuilding orders, but there are very few of them. However, the hon. Gentleman heard yesterday that my right hon. Friend the Secretary of State for Trade and Industry is to take a number of measures to help unemployment in those regions. An enterprise company is to be set up through British Shipbuilders.

Has my right hon. Friend noted the deep anxiety with which, on both sides of the House, the announcement about the decline in Britain's shipbuilding capacity was greeted yesterday? Will she reexamine the many constructive proposals that have been put forward for the development of policies to encourage the expansion of the British merchant fleet—national, European and international—upon which the health of all the marine industries depends? May I beg her to bear in mind that the decline in the British merchant fleet and in our shipbuilding capacity is the most serious mater from the point of view of both the economy and defence? It could be changed and it should be changed.

My right hon. Friend will be the first to know that the future of British Shipbuilders depends upon success in winning new orders. We are taking a number of measures, particularly with regard to soft credit, to ensure that we can compete on an equal basis with other people. My right hon. Friend will be aware of the tremendous number of surplus ships in the world, amounting to 40 million tonnes, whereas the world capacity is 18 million tonnes. Therefore, the surplus would replace the world capacity.

Unemployment stands at 3·3 million. Today's figures show the biggest loss in manufacturing jobs in recent years. In the light of that, and in the light of the case that has just been made, not for the first time, by the right hon. Member for Taunton (Sir E. du Cann), will the Prime Minister now adopt a policy for British shipbuilding of scrap and build, and bring forward public sector orders in order to sustain work and skills in the yards, especially in those areas of very high unemployment? Alternatively, does the Prime Minister intend to stand aside and let British Shipbuilders join the long and growing list of those industries that have become her economic victims?

The right hon. Gentleman will be aware that there are very few shipbuilding orders about in the world and that many other shipbuilding countries have had to close their shipyards. The Swedes have effectively abandoned merchant shipbuilding, the Dutch Government have refused to support their industry to build the sister ship to the large North sea ferry—won by Govan—the Japanese are having to adjust to the shortage of orders, the Germans have cut their capacity by half and the French are also cutting capacity. The fact is that there have been so many subsidies for building ships that they have been built and there is surplus tonnage to the tune of 40 million tonnes. There is no point in scrap and build, as there are already too many ships.

In Japan the unemployment rate is 2·6 per cent., in Sweden it is 2·8 per cent. and in every country which the right hon. Lady has mentioned the unemployment rate is lower than that of Britain, which is nearly 14 per cent. and much lower than the level of nearly 18 per cent. in the northern region of Britain. Different circumstances require different responses. Why will the Prime Minister not look at the option of scrap and build and the option of bringing forward public sector orders for shipbuilding, so as to sustain, for this maritime nation, a viable merchant shipbuilding industry?

There are still merchant shipbuilding yards, which I hope will continue. We are trying our level best to get more orders, in particular for Sunderland. With regard to what the right hon. Gentleman has said about full employment in those countries, may I point out that those countries have not attempted to shore up older industries, but have vigorously embraced the new technologies, and that is what we must do.

Will my right hon. Friend join me in regretting today's announcement by British Caledonian of nearly 1,000 redundancies, many of whom are my constituents [Interruption]—

Order. This is an important question concerning a Member's constituency.

In the light of this sad news, will my right hon. Friend have a word with my right hon. Friend the Secretary of State for Transport and ask him to overturn his appalling decision to revoke the licence for the air link between Gatwick and Heathrow?

My right hon. Friend has heard what my hon. Friend has said. I regret that British Caledonian found it necessary to make cuts as a response to lower levels of traffic. Much of the reason for falling traffic has been over-exaggerated fears of terrorism, especially in the United States of America. We are doing everything possible to make them realise that this country has a safer capital than almost any other one in Europe.

The fact that the Prime Minister quotes countries like Sweden and Germany shows that the Government do not yet understand that there is a strategic necessity to maintain a maritime presence in this country. If she is looking for orders, why not bring forward the naval programme, especially for the large number of coastal vessels, oil rig protection vessels, guard ships and others that are required by the Royal Navy to overcome this cyclical deficiency? If the Prime Minister does not do so, nobody will believe that the Government are making the maximum efforts to preserve this strategic industry.

The right hon. Gentleman is aware that there is still merchant shipbuilding capacity in this country. He is also aware, as I have said, that the surplus tonnage of ships is already of the order of 40 million tonnes. There is little point in building more when we have that surplus.

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

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

If my right hon. Friend turns her attention today to the reallocation of resources in the Health Service to help the worst-off areas, will she reflect on the fact that that policy was originally sponsored by the right hon. Member for Plymouth, Devonport (Dr. Owen), who is now the leader of the SDP, that it has been supported by both parties when in office and that, even so, in London, under that policy, 70,000 more patients are now being treated than were treated when the Government came to office?

My hon. Friend is absolutely correct. The policy of reallocating health resources away from London because the population of London was falling and to try to equalise health provision throughout the country was started by the Labour Government and has been continued by this Government. Nevertheless, the number of patients being treated in London has still increased—70,000 more in-patients, 70,000 more day cases and 50,000 more out-patients are treated each year. London continues to have about 20 per cent. of expenditure on the hospital services, for about 15 per cent. of the population, so it is still improving its services.

When the falling competitiveness of British industry can be desribed as appalling and alarming today by the Prime Minister's own Employment Secretary, does it not show the completely broken-backed nature of the Government's industrial strategy and that unemployment will continue to rise until there is an income strategy which affects the private and the public sectors?

The right hon. Gentleman had a strict income strategy the last time he was in government as a Labour Minister. He also had a strict prices strategy to keep prices down. Inflation is now much lower than it ever was then. The strategy collapsed in the winter of discontent. The right hon. Gentleman would be very rash even to consider bringing it back.

Will my right hon. Friend join me in congratulating Leicester city Conservatives and their leader. Councillor Michael Johnson, on gaining two council seats from Labour and a 7·5 per cent. swing to the Conservatives in Leicester, East? Is she aware that it was done by hard work, far too high rates—an 80 per cent. increase—Nelson Mandela park and a twinning arrangement with Nicaragua?

I gladly congratulate my hon. Friend on the excellent results that he achieved in the local government elections.

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

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

Does the Prime Minister intend totally to ignore the lambasting that she has received from the Office of Health Economics, which shows that the United Kingdom is among the lowest spenders on health of all the developed countries of western Europe? Does she still maintain that the Health Service is safe in her hands? That claim runs entirely counter to the experience of doctors, nurses, Health Service workers and patients. When will she fund the Health Service to cater for the legitimate needs of the population, taking account of the fact that people are living longer and that we live in a technological age?

If the hon. Gentleman considers the figures carefully, he will see that the proportion of public funds spent is not different. The difference occurs because, in many of those countries, people choose to spend far more of their own money on health, on top of state provision. Some of the countries with the top figures spend enormous sums on health privately. Far more is spent on health in Britain than a few years ago. Far more patients are treated—[Interruption.] Of course Opposition Members do not like it, but they will hear it. Far more patients are being treated, which is what matters. Patient services have increased, waiting lists have fallen and the number of staff in the NHS who deal directly with patients has increased—nurses and midwives by 60,000 and doctors and dentists by 10,000. I am grateful for the opportunity to give those excellent figures.

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

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

Is the Prime Minister aware that, despite her declared intention to create a property-owning community, a recent report by the Association of Metropolitan Authorities has produced some disturbing and alarming figures on mortgage arrears? Is she aware that one in 10 families are declared homeless because they cannot pay their mortgages? Is she aware that the number of those in great financial difficulties with their mortgage repayments has increased by 40 per cent. in the past six months? In view of those disturbing figures, what will she do about the problem?

The number of mortgage defaults is extremely small compared with the enormous number of people who take out fresh mortgages every year and the great success of the Government in increasing the number of owner-occupiers. Last year more than 1 million new mortgages were given and 1·3 million new homes were built. Home ownership is up to 62 per cent. from 56 per cent. in 1979.

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

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

Does the Prime Minister realise that following last week's huge fallout of radioactivity in Scotland, which was the heaviest in the United Kingdom, there is a tremendous revulsion against nuclear power? Does she know that the Torness AGR reactor is at present being fuelled up to go into commission, but is not yet in action? As there is 80 per cent. surplus capacity in nuclear generating in Scotland, will she take account of those feelings in Scotland on the issue of nuclear power and instruct forthwith that Torness be not commissioned?

No. Many people were pleased to have the Torness reactor built in Scotland, and many people in Scotland have great faith, as we have, in nuclear power as a way of generating electricity. I hope that the hon. Gentleman will have great faith in our most excellent Nuclear Inspectorate, which does a tremendous job. [Interruption.] I see that he says no. That is what he thinks about the Nuclear Inspectorate, but I am sure that that view is not shared by the rest of the House, nor by the majority of people in Scotland.

On a point of order, Mr. Speaker. My hon. Friend the Member for Crawley (Mr. Soames) made a serious point to my right hon. Friend the Prime Minister about many of his constituents who are being made unemployed today. You may recall that several Opposition Members responded by cheering and laughter—[Interruption.]

Order. That is not a point of order.

On a point of order, Mr. Speaker. I ask you for a ruling to correct an inaccurate statement made yesterday. At Question Time I asked the Minister of State, Department of Trade and Industry whether his right hon. Friend the Secretary of State had met Mr. Robert Stempel of General Motors in New York on 4 May. In reply the Minister said that his right hon. Friend had not met him. The Minister mislead the House with that reply, because he did not say that he had had that meeting. Today l tried to table a question so that the Minister could come to the House and correct that misleading statement, but the Table Office would not allow me to do so. I ask that you allow me to table that question.

I shall look into the matter. As I understand it, the hon. Gentleman asked the Table Office and was told that there was a question on the Order Paper today and that he should wait until the answer was available before tabling his question.

On a point of order, Mr. Speaker. While not in any way challenging your ruling on the first point of order in relation to unemployment in Crawley, may I ask whether it can also be said that it was an incorrect statement of fact? There was no cheering by the Opposition at unemployment in Crawley, just as there is no cheering by Conservative Members at unemployment in Middlesbrough.

Cheering at Prime Minister's questions is legitimate, and today it was somewhat louder than it normally is. We have robust debates in this place, but it is incumbent on the House to give a fair hearing to whoever is on his or her feet.