asked the Chancellor of the Exchequer what estimate he has of the scope for increasing value for money in public spending programmes.

Improvements worth hundreds of millions of pounds a year have already been made, but there is still substantial scope for achieving more.

Does my right hon. Friend agree with the Audit Commission that about £1 billion worth of savings could be obtained in terms of increased value in public services by applying the Audit Commission's criteria? Will he congratulate the Mid-Staffordshire health authority, which, by applying new management techniques, has managed to save this year and for ensuing years more than £100,000 in revenue as a result of its techniques to improve the quality of public services in its area?

I confirm my hon. Friend's comments about the Audit Commission. It has identified possible savings of more than £1 billion a year since its studies in 1983, but my hon. Friend will know that that is in relation to local authority services. There is still substantial scope for better value for money and improvements in local authority spending through all the techniques that the Commission has suggested and which we are applying in central Government. The same principle applies in the Health Service and my hon. Friend is right to draw attention to the techniques that can be used at district and health authority level and throughout the Health Service. The same applies in central Government as a whole.

Does my right hon. Friend agree that public sector bureaucracies have a sponge-like capacity to absorb taxpayers' money, and that increases in funding are all too rarely matched by equivalent improvements in the quality of services delivered? Will he therefore undertake that if, in the coming weeks and months, any suggestions are made to him that there is a need for real increases in funding in particular Departments, he will ask searching questions to see whether the administrative systems in those Departments are as streamlined as they might be?

I assure my hon. Friend that I attach great importance to this, which is shown by the fact that in the last public expenditure White Paper there were more than 1,200 output measures and performance indicators. I intend to apply the same priority in the forthcoming public expenditure round. I hope my hon. Friend will recognise the considerable advances that we have already made. For example, in the machinery of government alone, by the rigorous application of various techniques, we are now producing savings of about £750 million a year.

Will the Minister tell the House what persuades him not to invest money in the prevention of tax evasion when all the studies suggest that money invested in that way would recoup far more than is presently recouped?

I am glad to assure the hon. Gentleman that we have increased the resources to deal with tax evasion.

asked the Chancellor of the Exchequer what assessment he has made of the impact of reductions in the tax rates on the buoyancy of tax revenues since 1979.

A precise estimate cannot be made but certainly the reduction in taxes increases motivation and encourages enterprise. Tax cuts will lead to a healthier, more competitive economy, higher incomes and more resources to improve public services.

Will my right hon. Friend confirm that the proportion of tax revenue that comes from the highest paid has increased as a result of the reduction in high marginal rates of tax? Is this not entirely in line with the American experience, which shows that a cut in taxes increases revenue?

My hon. Friend is right. The proportion of income tax revenue paid by the top 10 per cent. has risen from 34 per cent. in 1978–79 to 37½ per cent. in 1986–87.

In looking at the figures, has the Minister considered the public's attitude to increased public expenditure on health and education in preference to tax cuts? Has he any observations to make on that?

The hon. Gentleman knows that it is the Government's objective to have a good Health Service and a good education service. We also believe that tax cuts are long overdue and are necessary to improve our economic performance.

asked the Chancellor of the Exchequer what he assesses to be the main factors currently influencing the level of inflation.

The economic policy of Her Majesty's Government.

I thank my right hon. Friend for that excellent reply. Does he agree that the people who feel most vulnerable when there is a high inflation are pensioners? Does he further agree that there are certain factors in inflation figures which affect pensioners more than other parts of the community? Can he say whether those factors in commodity prices are going up faster than other items in the inflation figures?

My hon. Friend is right in saying that those who are most affected in the community by high inflation are the elderly, pensioners and others on fixed incomes. That is why the greatest social service that a Government can perform is to bring inflation down and work towards stable prices. As for the slightly different consumption patterns of the elderly and the average member of the population, my hon. Friend may be aware that there is a pensioner price index, which addresses itself to that. In fact, during the period when we have been in office the pensioner price index has risen by less than the retail prices index as a whole.

What on earth has the Government's economic policy got to do with plummeting oil prices and other commodity prices?

I remind the hon. Gentleman that the Government's success in getting inflation down long predated the fall in the oil price.

Does my right hon. Friend agree that those who say that we can have a little more public expenditure and a little more inflation are in fact advocating a dangerous course? Does he further agree that there is no guarantee that more public expenditure would lead to more employment or, indeed, increased services, and that if it were the job of the Government to employ people we would all be living in eastern Europe, with dreary standards of living and dreary services?

My hon. Friend is making a point that is well understood by all those who have responsibility for the conduct of economic policy, not only in this country, but throughout the Western world. Indeed, in all the European countries, where, sadly, unemployment is too high, if there were a simple answer of bringing down unemployment by increasing public expenditure, that would have been introduced long ago. If the policies of right hon. Members in the Labour party were introduced, and there were an increase in public expenditure of £24 billion, the result would be sharply higher inflation and sharply higher unemployment.

Is the Chancellor of the Exchequer prepared to test the validity of his claim about the effect of his Government's policies on inflation by publishing in the Official Report the calculations made by the Central Statistical Office of the reasons why inflation has fallen over the past year?

The Central Statistical Office merely reports what has occurred. It is not engaged in economic analysis.

asked the Chancellor of the Exchequer when he expects the economy to achieve a negative rate of inflation; and if he will make a statement.

The Government's objective is stable prices.

My right hon. Friend will be aware of the negative rate of inflation in West Germany, one of our major international industrial competitors. Will he give a commitment that the rate of inflation in this country will remain in low single figures? Does he agree that only if that inflation rate remains in low single figures for a considerable period will the real benefits of low inflation bear fruit?

My hon. Friend points to the fact that in Germany inflation is currently slightly less than zero. It is a negative figure. I think that that is likely to be a temporary phenomenon. The plain fact is that throughout the world the same sort of economic policies have been pursued. Therefore, it is not that surprising that inflation has come down worldwide. Our inflation has come down even faster than in other countries. It is now under 3 per cent. for the first time in over 18 years. I am confident that it will stay low as long as these policies remain in force.

Will the Chancellor of the Exchequer confirm that there is no merit whatsoever in negative inflation, commonly known as deflation?

Yes, indeed. If the right hon. Gentleman had been paying attention, as I am sure he was, to my answer, he would have heard me say that the Government's objective is stable prices, not falling prices.

Notwithstanding my right hon. Friend's answers to the last two questions, is it not the case that one of the pressures in the pipeline to increase inflation is the excessive level of wage settlements? Will my right hon. Friend take every opportunity to hammer home to the Confederation of British Industry and others that their spinelessness in the face of excessive wage demands will affect their own competitiveness and is likely to cause worse inflation and more unemployment?

It is certainly a major cause of the present high level of unemployment. Inflation is now down to 2·8 per cent. at the most recent count, and if the tax reductions in the Budget are taken into account, the best approximation that we have of the growth in the cost of living over the past year is less than 1 per cent. Yet average earnings, according to officially recorded figures, have gone up by about 7½ per cent. This is inevitably damaging to Britain's competitiveness in world markets, damaging to orders, damaging to the amount of business that can be done by British firms, and therefore damaging to jobs. It is management's responsibility to take a far firmer grip on their costs, especially their pay costs, than they have been doing hitherto.

What does the Chancellor of the Exchequer say to newspapers such as The Economist which say that the inflation rate will go up between 4 and 5 per cent. next year as a consequence of the oil price reductions working through the economy?

We shall publish a forecast at the normal time and in the normal way, and I think it will be found that the track record of forecasts published by the Treasury is rather better than that of forecasts published outside bodies, including The Economist.The plain fact is that inflation is now under 3 per cent. Although at the moment it is flattered to some extent by the mortgage rate element in the index, even if one takes that out inflation is still around 3·1 per cent.

Is my right hon. Friend aware that many members of the public do not understand the wide scope of the retail prices index, as it covers things such as electricity and gas prices, rates and so on? Will he publish a clear explanation to the public showing exactly what the RPI represents and the fact that it is based on real surveys of expenditure?

My right hon. Friend is correct in saying that it is based on those factors. Sometimes there are people who find it difficult to believe that inflation is as low as it is when they consider one particular price which is only a small proportion of total consumer expenditure. The responsibility for the RPI and its publication lies not with me but with my right hon. and noble Friend the Secretary of State for Employment, and I shall draw his attention to what my right hon. Friend has suggested.

asked the Chancellor of the Exchequer what is the cost to the Exchequer of unemployment in the north-west region.

A regional breakdown of unemployment and supplementary benefit paid to the unemployed would be available only at disproportionate cost. It is not possible to estimate the tax revenue forgone.

I thank the Minister for his comprehensive answer, because one of the bones of contention is that this Government, who have no interest in regional affairs, do not even know what the true cost of unemployment in the north-west is. The social costs are massively higher than even the direct economic costs to the Treasury. If the Government are sincere about unemployment, what practical steps are being taken that will lead to a reduction in unemployment, and when will that begin to take place?

All the Government's economic policies are designed to produce a more competitive economy which helps with the creation of real permanent jobs. The hon. Gentleman will be aware that, at a time of a rising labour force, the success of this is measured by the fact that nearly 1 million net new jobs have been created in the economy as a whole since 1983. He will be interested to know that in that figure there are 82,000 jobs in the north-west. In addition, he will be aware that the northwest has received a substantial and fair proportion of the specific employment measures that have been introduced by the Government and added to in the last Budget. That represents a total expenditure of £3 billion this year, compared with £300 million in 1979 when the Government took office.

Is my right hon. Friend aware that in my constituency, which is in the north-west, unemployment is at half the national average? One reason for this is that firms are rushing out of Manchester, because of the lunatic policies of the local authorities there, into Cheshire, where the Conservative-controlled local authorities have much more sensible policies, producing lower rate burdens?

My hon. Friend makes a fair point. All those who urge unnecessary higher spending in local authorities should be aware of the consequences of that for firms which find their costs increased by much higher rates.

Is not the real cost in regions such as Merseyside, the north-west and the north-east, the mass unemployment, the human misery, the marriage breakups, the nervous breakdowns and the number of young people committing suicide because of long-term unemployment? Is this not the real, terrible cost of mass unemployment in our regions?

That is precisely why we have increased substantially the amount of money spent on employment and training measures during our period of office. The hon. Gentleman must know that if public spending rises to the level advocated by his Front Bench that will create much greater unemployment in firms which are doing well in our economy.

As a Manchester Member, may I say that it is a matter of considerable satisfaction that more than 80,000 new jobs have been created in the north-west since the 1983 general election'' If that rate of job creation is projected into the months ahead, at what point does my right hon. Friend foresee it overtaking the rate at which new people come into the labour force, thereby bringing a net reduction in the number of unemployed?

My hon. Friend has fairly drawn attention to the considerable increase in the labour force in recent years. In fact, there was an increase of more than 560,000 in the last year for which figures are available. That demographic factor is now beginning to change and it will be a helpful factor in dealing with unemployment.

May I draw the Minister's attention to the Employment Select Committee's investigation into long-term unemployment, in which it points out that some people have been unemployed for three years? Is it not time that the Government seriously considered all those facts, with a view to taking positive action to alleviate the unemployment problems of these people?

The hon. Gentleman will know that the Government gave a detailed response to the first report of the Employment Select Committee, which has led to the Committee revising its proposals considerably in a downward direction. The restart programme, which is now going nationwide, is designed especially to help the long-term unemployed, and we are undertaking many other measures. It is crucial to know at what point extra public expenditure on these measures becomes counterproductive, not only because they do not produce real benefit in terms of extra places, but because they are a cost on existing employers.

Is it not becoming increasingly clear that the more a town hall spends, the less there is to encourage new enterprises into an area? In my constituency of Stockport, which to the uninitiated is probably indistinguishable from Manchester, it takes half as many men to empty a dustbin as it does in Manchester, and unemployment is now less than 10 per cent, which is far less than the regional average and, indeed, is less than the national average.

My hon. Friend makes a fair point, of which I hope everyone in the north-west will take note.

Will the Chief Secretary simply give one straight answer to one straight question? How many jobs have been lost, net, in the British economy since the Government were elected seven years ago?

There was a considerable reduction in jobs in the period 1979 to 1981. It was a good deal less than 1 million—about 700,000. A large part of that was in the period 1979 to 1981, when we were coping not only with a worldwide recession but with the considerable overmanning that took place under the Labour Government. Since 1983 that trend has gone substantially the other way, and there are now nearly 1 million net new jobs.

asked the Chancellor of the Exchequer if he has any plans to review the Government's policy on the level of public spending on the Health Service, education and housing; and if he will make a statement.

asked the Chancellor of the Exchequer if he has any plans to review Government policy over the level of public spending on health, education and housing; and if he will make a statement.

The level of all public spending programmes will be reviewed as usual in this year's public expenditure survey.

Is the Minister aware that all the evidence shows that most people consider that the first priority should be more public spending on health, education and housing? They are right, of course. Do the outrageous remarks on council housing by the Minister for Information Technology represent Government policy, or were they just remarks of a Minister who wants to show himself to be a stupid clown?

I think that what people want are realistic and prudent public spending programmes, with the right priorities and value for every pound that is spent, and that is what the Government have been delivering. In two of the main areas that were picked out by the hon. Gentleman — education and health — he knows that expenditure per pupil on education has risen substantially in real terms under this Government, whereas it fell by 2 per cent. in real terms under the last Labour Government. Equally, we have devoted particular priority to health, where expenditure in real terms is up by 24 per cent.

Is the Minister aware that the infrastructure in these three sectors is in a very poor state in various parts of the country? May I underline the fact that it is a better policy option to have significant expenditure in these three sectors than to reduce the standard rate of income tax to 25p?

The hon. Gentleman knows that in housing, for example, where he has particularly in mind the infrastructure, because of the very substantial and welcome switch to the provision of housing in the private sector, and through owner-occupation, we have cut down the amount of money that is involved in new council house building. The renovation programme has been increased substantially, in real terms, under this Government, which was a necessary and sensible priority. The hon. Gentleman will know that there are many people throughout the country who, rightly, strongly believe that the present level of direct taxation on people of average and below average incomes is still too high.

Does my right hon. Friend accept that one of the prime objectives of the Conservative Government in 1979 was to cut both taxation and public expenditure? May I draw his attention to the answer that he gave to me only a few days ago, which proves that public expenditure, in real terms, increased by 11 per cent. in 1984–85, and is forecast to be 8 per cent. above the 1979 level in 1985–86? Is this not proof that the Government have not succeeded in cutting public expenditure? May we have an assurance that they will do so in future?

I am sure that my hon. Friend will accept that, rather like steering an oil tanker, it takes a considerable time, once one has tried to change direction, for the results to show through. I am sure he will welcome the fact that, as a proportion of our gross national product, public expenditure is now at the 1978–79 level and is planned to come back almost to the levels of the 1960s.

Taking a slightly different point of view from that of my hon. Friend the Member for Norfolk, North (Mr. Howell), will my right hon. Friend accept that many of us welcome indications that desirable increases in the level of spending on health, housing and education may now be becoming progressively acceptable to the Government? Will he also accept that those who take that view in no way wish the Government to turn their back on tax cuts, but merely seek a desirable balance, in the belief that that is the wish of the majority of the population?

I believe that a desirable balance is what this Government have been achieving. We have managed to achieve reductions in direct taxation and to obtain higher real spending in the priority areas which we have chosen, which accord with those of my hon. Friend.

Will the Minister try to keep in step with the Prime Minister? She has observed that in recent years Britain has moved toward private affluence and public squalor, illustrated by the litter-strewn conditions of most parts of Britain.

When the Prime Minister drew attention to the fact that there was too much litter around she was drawing attention to a phenomenon that has been common in Britain for many years. Many people share her view about the desirability of cleaning up areas to which she drew attention.

In view of my right hon. Friend's comments about balance, he may be able to accept that there are some sound arguments for very modest and carefully targeted increases in expenditure on hospitals, education and housing improvements. I say modest and carefully targeted. If he is able to accommodate any small increases in this year's public expenditure review, what will he do to ensure value for money and prevent additional resources going down the plughole of waste and rising pay, and ensure that they are used to provide better patient care, better educational standards and better housing stock?

In earlier exchanges I outlined my priorities for getting better value for money for every £1 spent. That applies just as much to the Health Service as elsewhere. This year, as a result of value-for-money drives, we expect to devote about £150 million of extra funds to patient care. I can assure my hon. Friend that value for money will continue to be an important part of my attitude towards public expenditure. He also spoke about the danger to public expenditure of excess pay, meaning that that could lead to reductions in service or reductions in capital programmes. That is a message that we shall constantly have to drive home. If too much of the planned public spending total goes away in excess pay, less money is available for other services.

Is the Chief Secretary aware that his answers will bring no comfort to all the people who, while they are waiting for operations, see hospital wards being closed, and that they will being no comfort to teachers, parents, students and everyone else anxious about education? They will bring no comfort to all the people who are desperately trying to find somewhere to live, or are living in totally unsuitable accommodation. Will he now admit once and for all that it is possible to spend more money in ways that will not only improve those essential services for the benefit of the community as a whole, but will provide some jobs for some of the people who are unemployed?

The hon. Gentleman ought to be aware that, because of the priorities we have given to things like this, the waiting lists are down considerably compared to what they were when we came to power. The number of patients being treated is up considerably, by about 19 per cent. Considerable extra effort is going into the Health Service and the same applies to education. The hon. Gentleman drew attention to students. There are now 80,000 more students in higher education than there were seven years ago.

Will my right hon. Friend confirm that for the large majority of our people provision for health and education comes exclusively from the public sector? We on the Government side want to see health provision and education improved for all the people, and is it not a necessary consequence of that that we want to see efficient public expenditure improved in those areas?

I should have thought it was clear that the drive that we are making, especially in the Health Service, to get greater efficiency in public expenditure is being taken very much with that in mind.

When the Minister is reviewing the Government's public expenditure on the Health Service, will he take the opportunity this year to do something about the fraudulent mechanics by which the rate of inflation that is applied internally in the Health Service is not the rate of inflation that the Government use as a means of calculating the real level of their expenditure on the Health Service? The Government use RPI, but everyone knows that the internal Health Service inflation costs are significantly higher than that.

The hon. Gentleman may not recall the period in the 1970s when public expenditure was getting out of control. One reason for that was that it was always planned in volume terms. Planning in cash terms and using the GDP deflator as an indicator is an important ingredient of proper public expenditure control.

asked the Chancellor of the Exchequer if, in his review of public expenditure, he will consider the establishment of uncommitted contingency reserves in the major spending Departments which would be available to those Departments to meet unforeseen demands arising during the financial year in question; and if he will make a statement.

The purpose of the Reserve is to meet unforeseen demands arising during the year, for all spending Departments.

Given my hon. Friend's defence of contingency reserves as a whole, why cannot the large spenders, who cannot be assumed to be more accurate than the Treasury, be allowed a contingency reserve, which is what one does in every large company, down to the smallest standards of budgets?

As it is impossible to foresee on which programmes unforeseen demands on the Reserve will arise in the course of the year, the Reserve has to be central and not split among Departments. Specific departmental reserves would be unnecessary and inefficient.

If my hon. Friend were to permit such a contingency reserve at the Ministry of Defence, will he stipulate that not one penny of that money should go to that sink of profligacy, the Procurement Executive, whose, incompetence and mismanagement have led to an appalling waste of money on Nimrod and the torpedo programme?

As, on behalf of my right hon. Friend, I have no intention of assigning such a contingency reserve to an individual Department, the question is hypothetical.

asked the Chancellor of the Exchequer what proposals he has for producing greater stability in the exchange rate.

Since the Plaza agreement last year there has been a much greater readiness among the major powers to engage in concerted intervention as the need arises.

Is the Chancellor aware that a consistently voiced frustration in British industry concerns both the problems of exporting into Europe, because of' the capriciousness of the exchange rates within Europe, and the difficulties in developing a united European ability to compete against the Americans, again because the exchange rate within Europe is subject to fluctuations? When will he fix the point at which it is feasible and beneficial to join the European monetary system?

I agree that fluctuations in the exchange rate, despite the ability to secure forward cover in most cases, can be irksome for British exporters. I am also glad to say that British exporters have been increasing their share of world markets over the past five years, for the first time in a long time. However, if British exporters took a firmer grip on their pay costs, as I said earlier, their success in export markets would be even greater than it has been.

I do not wish to repeat familiar Conservative arguments in favour of joining the exchange rate mechanism of the EMS at an early date, but does my right hon. Friend agree that, in any case, stability in interests rates and exchange rates would be greatly helped if there were further convergence in our national inflation rates and if every effort were bent to that end?

I agree with my hon. Friend, and there is now a much greater convergence of inflation rates, not least because we have succeeded in getting our inflation rate down so dramatically. As for the EMS, even if we were to join it—there are undoubtedly arguments for doing so—that would not affect fluctuations against the dollar, and it is the dollar that has been far and away the most volatile of the major currencies.

As the exchange rate has been so stable recently, and as inflation is under 3 per cent., what is preventing a further fall in the general level of interest rates, which would do so much good to help the Government's counter-inflation policy?

I know that my hon. Friend will welcome the fact that, in the three months since the Budget, interest rates have already fallen by 2½ per cent.

asked the Chancellor of the Exchequer if he has further plans to reduce public expenditure.

I refer the hon. Member to the reply I gave earlier to the hon. Member for Walsall, North (Mr. Winnick).

As the Minister has been at pains in the course of that answer to talk about the great successes of the Health Service financial provision, how does he explain the report in the Daily Telegraph today that the Secretary of State for Social Services is putting in for a £1·7 billion increase in the Health Service provision? Is that designed to build on success, or to cover up failure?

The hon. Member will know that it is a regular feature at this time of year for commentators to speculate and to throw out all sorts of guess figures into the air in the hope that one will eventually come down. I shall not comment on speculation in the press.

What would be the effect on the unemployment trap if failure to curb public spending prevented my right hon. Friend from making significant tax cuts for the lower paid? Does this question not underline the need to achieve real value for money in the public service and not to pretend to the people that merely pouring increasing amounts of taxpayers' money into the bottomless pit of public spending will solve our problems?

My hon. Friend is right. He is also right to concentrate on value for money. One of the messages that we have to get over to many who comment in the media, and also to the public at large, is that we cannot achieve better services solely by throwing more money at the problems. Better value for money and concentration on greater efficiency can do just as much. That is why in the road programme, for example, we are getting 20 per cent. more roads for every pound spent than in 1979.

What does the Chief Secretary say to people like the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who earlier this week told us that his constituents would rather do without tax cuts if the price of tax cuts meant that less money would be spent on the National Health Service? Does the Chief Secretary think that the right hon. Gentleman is misreporting the views of his constituents, or does he think that those constituents are misguided?

I have already indicated that we have not reduced expenditure on the Health Service—quite the reverse. There has been a substantial increase in expenditure on the Health Service. Under the RAWP formula, introduced by a Labour Government, there is a provision to switch some resources from areas of high resource to areas that have been under-resourced under that formula over the years. That formula is now under review. It is one of the factors that is important. [Interruption.]

Order. It is very difficult to hear questions against the background of chat.

Does the Chief Secretary agree with the Leader of the House, the Home Secretary and the Minister for Information Technology that priority should be given to public spending rather than to tax cuts?

I should have thought that on the Government side of the House we were all agreed that reducing the burden of taxation is an important priority. Clearly none of us would ever contemplate moving to the ridiculous levels of higher public spending that the hon. Lady and her colleagues advocate.

Does my right hon. Friend agree that because of political pressure from the public the reality is that it is impossible to reduce public expenditure and that we can pay for the many programmes that we wish for only by having genuine economic growth?

It is through genuine economic growth, which we have been achieving since 1981, that we can increase in real terms our public spending programmes in many areas under our existing plans and at the same time keep public expenditure level in real terms and reducing as a proportion of GDP.

asked the Chancellor of the Exchequer what are the criteria by which he judges signs of economic recovery.

Since the trough of the recession in the first half of 1981 total output has risen by 13 per cent., investment by over 21 per cent. and manufacturing productivity by over 25 per cent.

When does my right hon. Friend think that his economic policies will be so successful that unemployment will start to fall?

As my hon. Friend will be aware, the problem of unemployment is intimately connected with the excessive level of pay increases in relation to productivity. If unit labour costs continue to rise at their present rate, far faster than in the countries of our major overseas competitors, it makes it difficult to get unemployment down, despite the fact that we have succeeded in generating nearly 1 million new jobs since the last general election—a fact to which I would have hoped that my hon. Friend would pay due tribute.

Will the Chancellor accept that while he may claim that output and productivity in manufacturing industry has increased since the depth of the trough of the recession, it is still below the figure for 1979? Surely the Government will not be able to claim credit until we are making more manufactured goods than we were in 1979, and until we have considerably reduced the present unacceptable level of unemployment.

The hon. Gentleman is completely wrong. Manufacturing productivity is substantially higher today than it was in 1979. What is more, the rise in manufacturing productivity under the Government has been substantially greater than it was under the Labour Government.

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

A large number have welcomed the scheme.

Many of us welcome the moves that the Government have made to encourage small private investment. However, there have been comments from some investment funds that they would like to see personal equity plans geared to them as well as to direct investment. What are the Government's views on those representations?

Obviously we shall consider the representations carefully. As I am sure my hon. Friend knows, we have said that for unit and investment trusts some investment will be permitted under the scheme. The precise limit is being looked at.

asked the Prime Minister if she will list her official engagements for Thursday 19 June.

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

Has the Prime Minister noted carefully that yesterday the United States House of Representatives supported the imposition of the strictest possible sanctions against the evil and repugnant apartheid regime in South Africa, and that that reflects the worldwide revulsion over what is happening in South Africa? Is it not shameful that the only two leaders sending signals of support to the evil regime in South Africa are President Reagan and herself?

The hon. Gentleman is not correct. The European Council of Heads of Government will meet in Europe next week and will decide what further measures to take.

My right hon. Friend knows that her Government have rigorously enforced the mandatory sanctions on the sale of arms to South Africa. Can she assure the House that every other country has done so in exactly the same way and at the same level?

My hon. Friend is correct. We have rigorously enforced mandatory sanctions on arms to South Africa. Nevertheless, South Africa does not seem to be short of certain things, which seems to confirm what my hon. Friend has said. That shows the difficulties of a course of mandatory economic sanctions.

The right hon. Lady says repeatedly that she wants negotiations and the suspension of violence in South Africa, which we would all like. The South African Government's response to her attitude is to deride negotiations, to undertake armed attacks on Botswana, Zimbabwe, Zambia and Angola, and to impose totalitarian controls on the press and public of the Republic of South Africa. Faced with those realities, is not the Prime Minister's vetoing of sanctions not so much caution or concern as supine appeasement of the apartheid regime? P. W. Botha is making use of the right hon. Lady. When will she stop that?

The question is whether adding economic sanctions, with the severe unemployment it would bring to South Africa—adding poverty and unemployment to an already difficult situation—the unemployment it would bring here, and the damage it would do to our shipping, would help the position in South Africa. I doubt very much whether it would. I think that it would aggravate it. It would mean that negotiations would not be brought about. I am still concerned that negotiations should be brought about. Like the right hon. Gentleman, I have totally condemned the raids. I believe that they were responsible for stopping the success of the Eminent Persons Group.

If the right hon. Lady is concerned about employment, here or in South Africa, she had hotel-calculate the effect of what the Eminent Persons Group called the "descent into further violence". Sanctions may cost jobs, but the collapse that, will come without effective pressure on the South African Government will cost a great many more jobs both here and in South Africa. Will not the right hon. Lady accept that her present attitude amounts to doing nothing? Will she remind herself that all that is required for the triumph of evil is that the good people do nothing?

Many of us think that it is quite possible imposing strong mandatory economic sanctions on South Africa would add to the violence, and not detract from it, and would end all possibility of negotiations between the Government and the black people of South Africa, which is still our objective. The right hon. Gentleman speaks as though this Government had done nothing. I do not think that he will find another industrialised Western country that has done more—art embargo on exports of arms, refusal to co-operate in the military sphere, recall of military attachés, discouraging scientific events, except where those contribute to the ending of apartheid, cessation of oil exports to South Africa, prohibition of all new collaboration in the nuclear sector, cessation of exports of sensitive equipment to the police, banning all new Government loans, a commitment to take unilateral action on the banning of imports of Krugerrands — action that was taken — end of Government funding for trade missions and banning the import of all gold coins from South Africa. Would the right hon. Gentleman like to name a Western industrialised country that has done more?

Mr. Speaker — [HON. MEMBERS: "Answer."] I will answer. There is no other country in the world that has a greater and closer relationship or a greater and closer responsibility than this country. A few months ago the Prime Minister was describing all that as a "teeny little bit." Will the right hon. Lady now do the effective thing and ban new investment in South Africa?

Tell me a Western industrialised country that has done more. The right hon. Gentleman cannot.

Does my right hon. Friend recall that, when she was Secretary of State for Education and Science, in her White Paper "Education: A Framework for Expansion" she urged the need for more part-time students? Is that not now very much the essence of our industrial future, in that we need more people to update their qualifications and retrain? Is there any need to wait for a loans scheme to give those people an incentive, because currently they pay both their maintenance costs and their fees?

Retraining, and therefore perhaps returning to university or to other advanced education colleges for further training, will be an important part of our future. Frequently, training takes place through industry itself or through industry sponsoring the requisite courses. I think that that is one of the best ways.

asked the Prime Minister if she will list her official engagements for Thursday 19 June.

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

Do the Prime Minister and her Government represent the people of this nation? [HON. MEMBERS: "No."] I should like the right hon. Lady to answer, bearing in mind that a recent opinion poll found that more than 50 per cent. of the people wanted her to take action against South Africa by way of sanctions. If the answer is no to sanctions, is it because of the financial interests of Conservative Back Benchers in their investments in South Africa? We want to know about that.

Yes, the Government do represent the people of this country. If we do not dash into full economic sanctions, as the Opposition would wish, it is because we agree with the reason that the Labour Government gave in the United Nations when they voted against full mandatory economic sanctions. At that time they said:

"because we do not agree that the far-reaching economic measures which the resolution calls for would produce the changes in South Africa which we would all like to see."—[Official Report, 16 January 1978; Vol. 942, c. 9.]

Will my right hon. Friend confirm that the inner city initiative in Highfields in my constituency, which is much welcomed by the people who live there, will press ahead notwithstanding the childish hostility of Leicester city council?

We believe that the inner cities initiative was widely welcomed. I assure my hon. and learned Friend that we shall press ahead with it in the city he represents.

Since Canada, Holland and the Scandinavian countries have all done more than this country against South Africa, and since, if the Prime Minister is not careful, the United States Senate will pass. a modified Bill following the lead of the House of Representatives and the Prime Minister will again, as last summer, have to follow in the wake of President Reagan, would it not be better for her to adopt a more conciliatory approach and put forward constructive proposals which she could support and which other countries ought to be forced to support as well?

I deliberatly said major "Western industrialised country". No other has done more. I remind the right hon. Gentleman that he. too, is against trade sanctions and has made his position clear in the articles he has written.

Is my right hon. Friend aware that a typical headmaster and board of governors in my constituency would have discretion over a mere £4,000 out of their total budget? Will she have talks with our right hon. Friend the Secretary of State for Education and Science to see whether a system can be instituted that would more fairly reflect the number of pupils in the school and give responsibility locally to the headmaster and the board of governors?

My hon. Friend is correct. That is a possible reform of education expenditure. My right hon. Friend is prepared to consider any reform that will make the money spent on education more effective and produce better results for the pupils.

asked the Prime Minister if she will list her official engagements for Thursday 18 June.

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

Will the Prime Minister take particular note of the early-day motion tabled by my hon. Friend the Member for East Lothian (Mr. Home Robertson), because he expresses fears about the operation of the Torness power station, remembering that Lothian and the Borders fire board has also criticised safety measures at that station? Will she join the Edinburgh Evening News and the people of east Scotland in opposing the commissioning of that station—or have the lessons of Chernobyl been forgotten in this country?

As the hon. Gentleman is perfectly well aware, the commissioning of the station will depend upon its passing the very rigorous tests of the nuclear inspectorate, which are very rigorous indeed. As the hon. Gentleman knows, our safety record in the nuclear industry is excellent. It is not long ago since some hon. Members in Scotland were preferring the AGR kind of reactor and extolling its virtues over others.

Will my right hon. Friend take note of the absence of the right hon. Gentleman the leader of the Liberal party, who I understand is on a nuclear-freeze bus today—

Order. That is not the Prime Minister's responsibility.

Will my right hon. Friend also take note of the presence of the leader of the Social Democratic—

Get it in order please.

asked the Prime Minister if she will list her official engagements for Thursday 19 June.

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

Will the Prime Minister explain to the House her dual standards on South Africa?

I have said that we totally and utterly condemn the system of apartheid and that we condemn the raids, but, like the Labour party when it was in power, we do not agree that the far-reaching economic measures that mandatory overall sanctions would call for would produce the changes in South Africa that we would all like to see. In the end, we shall have to come to negotiations between the Government of South Africa and the black people of South Africa. That is our purpose and we shall strain every sinew to that end.

While condemning the inhuman system of apartheid, will my right hon. Friend make it clear that it cannot be any part of our policy to take steps that would encourage a process leading to bloody revolution in South Africa, but, that on the contrary, it is our policy to redouble our efforts to encourage peaceful evolution there?

That is precisely our policy, but the extent of economic sanctions being called for in some parts of the House would add poverty and unemployment to violence and that would increase the violence and make matters a great deal worse, not only for the people of South Africa, but for the front-line states and other countries beyond those in Africa.

asked the Prime Minister if she will list her official engagements for Thursday 19 June.

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

To get back to the home front, will the Prime Minister reflect for a moment on the plight of thousands of young people who have completed their youth training scheme and now find themselves on the scrap heap? Is she aware that most of those people, particularly in my constituency, have now lost faith in her and in her Government? For God's sake, will she reconsider the position and adopt an attitude that will change her policy, get these young people back to work and give them hope for the future?

As the hon. Gentleman is aware, many, many young people on the youth training scheme benefit from it, go on to jobs and find it easier to get jobs because they have taken the youth training scheme. He will also be aware that the number of jobs in Scotland has increased by 50,000 since 1983 and that there have been 15,000 new companies since 1979. That is going the right way to get new jobs for young people and for those who have been on the unemployment register for some time.

Will my right hon. Friend, as First Lord of the Treasury, take personally a close look at the financing of the first year of the GCSE, which involves an investment in schools which is not proportionate to the number of children taking the examination? Thereafter it will he, but in the first year an expenditure is needed for which no provision has yet been made and without which the future prospects of the first year's intake of those taking the GCSE will be sacrificed.

It is inevitable that we have different arrangements for the first year, because it takes some years to work up to the time when that examination is taken, which, I think, first comes in 1988. However, I shall look at the particular point my hon. Friend raises.

On a point of order, Mr. Speaker. You will have noticed that the first 13 questions on the Order Paper to the Prime Minister today are all from Labour Members. From inquiries that I have made, with great discretion, I understand that the Labour party, and, indeed, the Liberal party, are operating some sort of cabal, which would never be considered by Conservative Members. Will you please ensure that if bunches of questions are put in by one hon. Member on behalf of others, they are given a particularly good shuffle?

Order. As the hon. Gentleman has raised that question, he perhaps should know that only 30 Conservative Members put in questions to the Prime Minister today. The more Members who go in for the ballot the better chance of success.

Further to that point of order, Mr. Speaker. In order that we can be absolutely clear as to why it is that only 30 Tory Members managed to get their questions down today, you should reflect on the fact that it is Royal Ascot week and it is Gold Cup day today