asked the Chancellor of the Exchequer what is his latest estimate of the annual cost to the Exchequer of the present level of unemployment.

The overall cost to the Exchequer of unemployment and supplementary benefit paid to the unemployed is estimated to be £5·6 billion in 1986–87. In addition, it is estimated that £1·15 billion will be paid in housing benefit, a benefit which can continue to be paid if the claimant finds employment.

Will the Minister accept that my constituency will find that figure shocking, outrageous and wholly abhorrent because it has a large number of people unemployed, including skilled building workers, when we desperately need a new hospital in Washington, new council houses in the borough of Sunderland and new factories in Hetton and Houghton? Is this not just another example of the fact that the Government simply do not care?

Not at all. The hon. Gentleman referred to new hospitals.

Not in my constituency.

Order.

The hon. Gentleman will know that the Government have a record on hospital building that is far better than under the previous Government and that expenditure on the Health Service is well up in real terms. He will also know that if we followed a prescription of very high public expenditure programmes, well beyond the ones that we are pursuing at the moment, the effect on real jobs in the economy, given the precarious situation we are in now with the massive fall in oil prices—

Precarious?

Let me explain. There is a precarious situation in the world economy where, with a fall in oil prices, if one does not pursue prudent economic policies, we could easily have higher levels of unemployment. That is what is precarious. If the hon. Member for Houghton and Washington (Mr. Boyes) pursued very high public spending policies, such as the Labour Opposition are suggesting, it would undoubtedly lead to a much bigger increase in unemployment and a loss of real jobs.

Is it not infantile for hon. Members, such as the hon. Member for Houghton and Washington (Mr. Boyes), to imply that unemployment can he reduced overall by expanding public spending, because public spending has to be paid for by increases in taxes, by interest rates, or by inflation? Every one of those will increase unemployment, not reduce it.

My hon. Friend is quite right. In a world in which conditions can fluctuate very quickly, it has been our prudent economic policies which have enabled us to come through the massive fall in oil prices unscathed and which have also enabled over 1 million new jobs to be created in this country since the last election.

Will the Minister give us the full figures, not just the three he has given for unemployment, which include the loss of taxation, the loss of national insurance and increased health costs? Does he agree with the House of Lords Select Committee figure, confirmed by Professor Adrian Sinfield and others, that the true cost of unemployment is at least double what he says, and that it costs about £6,000 per year for each adult?

I do not agree at all. It is difficult to make any calculations of that sort. It depends on what levels of earnings are assumed for those who come off the unemployment register to take jobs. It depends on a number of other factors, including the effect that increased public expenditure, and therefore increased taxation or increased borrowing, have on real jobs in the economy. It depends on a whole range of things.

Is not the basis of this question even dafter than my hon. Friend the Member for Talton (Mr. Hamilton) suspected? If the hon. Member for Houghton and Washington (Mr. Boyes) had his way, either the people working on job creation schemes would have to be paid realistic wages, in which case there would he a truly massive increase in public expenditure, or the same amount of money would have to go round, and that would mean that some people would wind up without unemployment benefit.

Far too many simple assumptions are made about the relationship between unemployment benefits and how one can get people off the unemployment register. The prudent economic policies that we have been pursuing, which include £2·4 billion of expenditure on employment and training measures this year, is the right way to ensure steady progress and steady economic growth, and therefore an increase in real jobs.

Will the Chief Secretary comment on the latest unemployment statistics today, which show, on his own Government's figures, an underlying rise of 10,000 to 15,000 people every month on the unemployment register? Why does he not admit that after seven years in government his party has nothing to offer the unemployed except pious hopes and fiddled figures?

The hon. Gentleman will know that unemployment has been rising in nearly every country—certainly, every advanced industrial country. He will also know that the levels of youth unemployment here are well below the average in Europe, and that 1 million extra new jobs have been created in this country since the election. We are all extremely concerned about the level of unemployment, but it is necessary to get the right policies to ensure that it comes down.

asked the Chancellor of the Exchequer what comparative information is available to him on the relationship in Organisation for Economic Co-operation and Development countries, between the burden of taxation and unemployment.

High taxation inhibits job creation in other OECD countries, just as in the United Kingdom.

Why does the Chief Secretary continue to mislead the House and the country about the relationship between unemployment and taxation? Has he not worked out yet that Britain's unemployment record is the worst of any of the major OECD countries, but that a number of major OECD countries have higher tax burdens and lower unemployment?

I am not misleading the country or the House on the first point that the hon. Gentleman made. With regard to other OECD countries, the hon. Gentleman will know that in making those comparisons one also has to look at comparative economies. When one looks at advanced economies, it is not without significance that Japan and the United States, countries with the highest growth records, also have the lowest levels of taxation. If the hon. Gentleman wants to refer to the OECD, let me refer him to the recent communiqué of OECD Ministers, which stated:

"the control of public expenditures and budget deficits is essential to establish a stable domestic financial environment and to promote a durable reduction in real interest rates which will help private investment to expand and thus promote sustained growth worldwide."

In view of the many different and complicated causes of unemployment in the OECD countries, does my right hon. Friend accept that one of the characteristics of both the Japanese and the American economies is that, through prudent policies, they have managed to maintain a relatively low burden of taxation and borrowing, which has contributed to low inflation rates, which has been good for jobs?

I am sure that my hon. Friend is right. Some of the studies that I have seen, which examine those matters, fail to take into account the effect on the supply side of a policy of lower taxation, which encourages enterprise and, in the long run, undoubtedly produces the jobs which a high expenditure policy would not.

asked the Chancellor of the Exchequer when he next plans to meet his Group 5 colleagues to discuss the co-ordination of economic policies.

The Finance Ministers of the Group of Five nations meet from time to time to discuss their economic policies and prospects.

Does the Minister accept that one of the major problems facing the world is that of Third world countries' debt repayment? What have the Government done to help with that problem in the past few years? Is there anything that the Government can claim that they have achieved in that area? What is the hon. Gentleman pressing the other five countries to do to ease the problems of the debt of Third world countries? Does he accept that until we find a solution, things such as Sport Aid and all the other assistance from the Western world are as naught compared to those debt problems?

As the hon. Gentleman will know, these problems are more generally discussed through the forum of the International Monetary Fund and the World Bank rather than within the Group of Five. I am happy to respond to his question about the United Kingdom's contribution. Not only do we have a substantial overseas aid budget, but we have, in the case of several African countries, converted loans into outright grants. We have also taken part in discussions through international organisations which have led to the fulfilment of one of the aspects of the Baker plan, which has not perhaps received as much attention as it might, which is that the World Bank is now concentrating more of its resources, not on project lending, but on structural adjustment loans. Since the IMF meeting last year, $2·7 billion has been provided by that means in 10 loans to eight different countries.

Is it not of greater significance that since the last G5 meeting the British economy has weathered the oil crisis elsewhere without any serious crisis, just as it weathered the miners' strike? Is this not a tribute to the underlying strength of the British economy and should that not be brought to the attention of the G5 nations?

My hon. Friend is absolutly correct in that analysis. I am equally sure that other members of G5 recognise the importance of my right hon. Friend the Chancellor of the Exchequer following such sound and successful financial policies.

Does the Minister think that one day perhaps the Western taxpayer will pick up the bill and pay for the Third world debt?

The Western taxpayer already makes extensive contributions through national Government programmes. I have no doubt that it is right that international institutions should be the route whereby the international debt problem is resolved. The right approach is to continue to consider these matters on a case-by-case basis, which has served us well so far.

asked the Chancellor of the Exchequer how much extra charitable giving he now expects to result from his Budget measures.

Depending on the public response to the Budget proposals, it could be £120 million or even more.

I thank my right hon. Friend for giving that dramatically encouraging figure. Will he confirm that the Government's tax concessions are geared, in that they materialise when private donations worth twice as much are made? Does he agree that enlisting charitable donations in partnership with direct public provision is a thoroughly useful and practical way of mobilising additional resources of money and dedicated people to help tackle the problems of social need?

I agree with my hon. Friend. It is the Government's policy to encourage private giving. The figure that I gave is merely an estimate. It could be more. It is up to us as politicians to encourage people to take advantage of the unprecedented generous reliefs.

Do the Government regard the giving of free school dinners to the children of the unemployed as charity? If so, why are they stopping local councils from having the discretion to do that? Why is there one rule for those charities in which the Government believe and another rule for the charities in which local councils believe?

The hon. Gentleman's point has nothing to do with this question. The main question is about tax relief for private charities. I am only sorry that the hon. Gentleman does not see fit to welcome a provision that is welcomed by voluntary organisations in this country.

Does my right hon. Friend agree that it is now up to businesses and charities to develop closer links to take full advantage of the new scheme?

I agree completely with my hon. Friend. Charities have very much welcomed this development. It was widely agreed that the last Budget was the best Budget ever for charities.

asked the Chancellor of the Exchequer what percentage of his gross wage a single person earning £100 per week pays in income tax and national insurance contributions.

Twenty five per cent.

Although I appreciate that there has been a significant reduction in the tax liability of the low-paid under this Government, will my right hon. Friend confirm that it must continue to be a top priority of the Government further to reduce these tax levels, bearing in mind that a person on only half average earnings must pay a quarter of his gross salary in tax? Is that not another reason why we must control public expenditure?

My hon. Friend is correct. He will recall that my right hon. Friend the Prime Minister said in the House on 10 July that it was the Government's objective to reduce the burden of tax for those on average earnings or the lower paid. Anyone reflecting on these matters would realise that, given certain events on the other side of the Atlantic, lower-paid workers in this country might pay a higher marginal rate than American multimillionaires. Tax cuts matter to the lower-paid. It is rather surprising that the Opposition do not give them a higher priority.

Will the Minister confirm that the Government have changed the position so that less tax is now paid on an unearned £100 than on an earned £100? Can he explain the logic of that?

We have rightly got rid of the investment income surcharge, because it was a tax on savings. The hon. Gentleman implies that there should be national insurance contributions on unearned income. That would mean that there would be no national insurance contributions, as such, but rather a social security tax. Why does he not put it that way?

Is it not a fact that, in addition to taxing national insurance, incentives for many people on £100 a week are also directly affected by the tapers of means-tested social security benefits? Can my right hon. Friend assure the House that in deciding those tapers, the incentive effect, when coupled with tax and national insurance, is taken into account?

My hon. Friend is absolutely right. This is an extremely serious matter and it is one of the problems that my right hon. Friend the Secretary of State for Social Services has been addressing. We have taken some steps to meet this problem, but of course we have not solved it. We regard it as an important matter.

If the Government are so concerned about reducing taxes for the lower paid, why is it that over the past seven years taxes have increased for virtually everybody earning less than £500 a week and decreased for literally everybody earning more than £500 a week, as was revealed in the Minister's predecessor's answer on 20 April?

Compared with the 1978–79 indexed regime, the proportion of incomes taken in tax and national insurance contributions is lower for every group except those on half average earnings. That one group is the exception. Below that level the proportion compares favourably with the 1978–79 indexed regime.

asked the Chancellor of the Exchequer what progress he is making with his discussions about profit-related pay schemes.

A Green Paper on profit-related pay was published on Tuesday and has been widely welcomed.

I thank my right hon. Friend for that reply. Will he confirm that profit-related pay forms a substantial element of remuneration in Japan? Does he not regard that as a most encouraging precedent for his scheme and this country? Is he, therefore, able to proceed with speed and confidence towards the fulfilment of a similar position in this country?

My hon. Friend makes an important point. It is customary in Japanese industry for the average Japanese employee to have a sizeable part of his total remuneration in performance bonuses, which are linked to the profitability of the company. I have little doubt that that has a positive effect on industrial relations in Japan, on the identification of employees with their companies, and on the low unemployment rate that Japan enjoys.

How will a nurse working in the National Health Service benefit from one of these schemes?

A nurse working in the NHS will benefit from the better performance of the national economy, and that is what the scheme is about.

Is the Chancellor's main attraction to this scheme the idea of getting people involved in the profitability of their company, with which I would certainly concur, or is it the possibility that it might keep down pay claims?

There are two objectives. One is certainly to improve identification and motivation among employees, and I am glad that the hon. Gentleman, on behalf of the Liberal party, supports that. Secondly, the scheme has a beneficial effect on pay flexibility. One of the difficulties in the United Kingdom is the excessive rigidity of our pay bargaining system. The introduction of greater flexibility in this way will be beneficial, not least to those who are at present out of work.

asked the Chancellor of the Exchequer what representations he has received seeking additions to his proposals to extend direct ownership of equity shares.

Some modifications to the personal equity plan have been suggested, but most have warmly welcomed the scheme as it stands.

Does my right hon. Friend agree that, following the achievement of a property owning democracy, our central aim as Conservatives should be to achieve a share-owning society in which the majority, not just a small minority, of British people are given a real stake in the ownership of British industry? In that light, has he reached a decision on the limits which will apply to investments in unit trusts, investment trusts and the personal equity plan, and will he be as generous as possible?

My hon. Friend should know that I am answering a written question today whereby the limit on investment in authorised unit trusts and approved investment trust companies under the scheme will be £420 a year or 25 per cent. of the investor's annual—

Order. That is a written answer.

Yes. Unusual. Mr. Nellist.

As for the question from the hon. Member for Gainsborough and Horncastle (Mr. Leigh) regarding a share-owning democracy, is the Minister aware that 467 shareholders own more than two-thirds of the shares of Cable and Wireless? Any other investigation of privatisation in the past seven years under this Tory Government would show that rather than creating a share owning democracy — the public as a whole had previously owned these industries — a smaller and smaller number of larger, private shareholders are raking in the benefits of privatisation.

The purpose of the personal equity plan is to increase direct ownership of shares by individuals and to reduce the proportion owned by institutions as such. If that is what the hon. Gentleman is criticising, I very much welcome his conversion to supporting the scheme. The Government very much want to see the widest possible ownership of shares. That is why we have introduced this special relief,, which will be of particular benefit to small shareholders and people on modest incomes.

Does my right hon. Friend agree that most people would like to go into share owning but at the moment are frightened by the tactics of the Labour Opposition who suggest that they will steal back British Telecom shares at a price below their market value?

We have all noticed that the Labour party has put forward a proposal for re-nationalisation of private companies, but it does not seem to have the guts to give it its true name. We all know that it simply amounts to the confiscation of people's shares.

Does the Minister expect the scheme to have any credibility with investors, let alone new investors, when, if they wish to dispose of their shares in a falling market, they will lose the benefits of the Exchequer arrangements? How does that have any credibility?

I am not sure what point the right hon. Gentleman is making when he refers to a falling market. Obviously if there are no profits to be made there will be no tax relief. This scheme gives small investors the opportunity to build up, over a period of time, significant profits on which there will be tax relief. The relief given on dividends is especially important to small investors.

Is my right hon. Friend aware that a recent stock exchange survey has shown that share ownership has doubled under this Government? One in seven adults now have a direct stake in British industry. Is this not a good base on which the Government can build?

I believe that it is a thoroughly desirable development. There are different estimates of the proportion of the population that own shares, but it does seem to be universally agreed, even if there are different estimates of what the position is today, that it has doubled from whatever the situation was before.

asked the Chancellor of the Exchequer what estimate he has made of the comparable cost per job of jobs created as a result of (a) tax cuts and (b) public spending.

The hon. Gentleman's question is based upon a fallacy. Lasting jobs cannot be bought. What matters is the performance of the economy, and in general this is more likely to be improved by reducing the burden of taxation than by increasing Government spending.

The right hon. Gentleman must be aware that every objective study has suggested that public expenditure is far more effective than tax cuts in creating jobs. Evidence given to the Employment Select Committee said that infrastructure investment was cheaper and quicker than tax cuts in creating jobs. This investment would also provide much needed roads, sewers, schools, hospitals and house refurbishment. When will the right hon. Gentleman concern himself with the 4 million people who are unemployed and less about putting a couple of pennies in the pockets of those who are employed?

I recall an opinion poll recently which showed that the overwhelming majority of Labour voters wanted a reduction in the basic rate of income tax, even though Labour Members of Parliament did not. The studies to which the hon. Gentleman referred do not look at the supply side effects of either public expenditure or the reduced burden of taxation. The supply side effects are absolutely crucial in determining the performance of the economy and, therefore, the level of employment.

Is it not right that if we take the grasping hand of the national Government and the grasping hand of local government out of people's pockets, that will benefit individuals and their families, industry and charities, which we were talking about earlier?

My hon. Friend characteristically puts it very well indeed.

Will the Chancellor and other Ministers stop sounding like a record on which the needle is stuck? Is it not true that they keep repeating the same old fallacies without there being any effect on the economy? Has the Chancellor taken account of the fact that tax relief will probably suck in imports, whereas the same money used in public spending would benefit all?

I have to disappoint the hon. Gentleman by informing him that the facts of life and the laws of arithmetic do not change from week to week or from year to year.

If the consequence of high public expenditure is a diminution in unemployment, how is it that, under the Labour Government, when public expenditure rose massively, unemployment also doubled? Is my right hon. Friend aware that it is only by reducing the levels of taxation that we shall encourage greater activity in the economy?

My hon. Friend is right. He was an especially close, astute and penetrating observer of the follies and misfortunes of the last Labour Government. He makes an important point. It was during the early period of the Labour Government—what one might call their red period, the pre-IMF period, when they were boosting public expenditure extravagantly — that unemployment doubled. My hon. Friend is absolutely right. There is no solution to the problem of unemployment by increasing public expenditure, whether by the £24 billion which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) wants, or by an even larger figure.

The Chancellor referred to what a majority of Labour voters want. Is he aware that a majority of all voters want a reduction in unemployment? Everybody — the National Institute for Economic and Social Research, the Henley Centre for Forecasting, the London Business School, Cambridge Econometrics, the Select Committee on Employment and the House of Commons Library, using the Treasury's economic model — agrees that sensible increases in public expenditure provide more jobs than do tax cuts. Why will the Chancellor not change his economic policy and base it on the facts instead of on his personal prejudice?

My policies are based on facts and not on artificial calculations by computer models or any other models.

This is the right hon. Gentleman's model.

These are models which do not capture the supply side of the economy, which is critical to the performance of the economy and, therefore, the creation of jobs. That is what matters. It is no accident, as my hon. Friend the Member for Amber Valley (Mr. Oppenheim) said earlier, that the two most successful economies in the world—Japan and the United States—have the lowest proportion of gross national product taken in taxation.

asked the Chancellor of the Exchequer how many individuals have purchased premium bonds in each of the last five years; and what was the total prize money paid out in each of those years.

The number of premium bonds purchased in 1985–86 was approximately 2¼ million, and total prize money in that year was £135 million. I will arrange for the figures for earlier years to be published in the Official Report.

Is my hon. Friend satisfied with those figures, or does he agree with those who feel that premium bonds are rather old hat, with unexciting prizes and disappointing returns for the Treasury? Does he agree with those who would like a new form of national lottery?

I do not accept what my hon. Friend says about premium bonds being unattractive or unsuccessful. Whether they are old hat is a matter of judgment. They have been going for 30 years, during which time they have accumulated very large sums of money—the current figure is about £1·8 billion—and about 24 million of our fellow citizens hold them. That can hardly be described as an unsuccessful exercise. As to lotteries, we had a debate a few years ago, and there was little support for the idea. What I think has been suggested when that idea has been put forward is that it might have a substantial effect on other forms of betting and gaming, and one cannot necessarily expect it to be a very substantial exercise in this country.

asked the Chancellor of the Exchequer what are his latest projections for receipts from asset sales for 1986–87.

I expect privatisation proceeds this year to be around £4¾ billion, in line with the projections in the public expenditure White Paper.

Does the Chancellor recall that when British Telecom was sold off share prices rose by £1·3 billion on the first day after privatisation? What guarantee can he give that the same thing will not happen when he sells off British Gas, or is his first priority to provide further windfalls for his friends in the City?

So far from those profits going to friends or otherwise in the City, they went to a wide range of ordinary shareholders. Very nearly 2 million people subscribed to the highly successful privatisation of British Telecom and got shares, and 1·5 million shareholders are now told by the Labour party that if by any mischance a Labour Government are returned they would be grabbed back at 130p a share, well below the market value. That is expropriation and confiscation, and the public should know that.

Bearing in mind the substantial proceeds received not only in the current year but in previous years from privatisation and the large increases in the price of these investments which employees and other shareholders have enjoyed, has my right hon. Friend been able to estimate the public expenditure cost of repurchasing all these shares? Does he agree that, if such a repurchase was to take place, it would be one form of public expenditure that would create not a single additional job?

My hon. Friend is right, but it would also plunge the companies that are now doing very much better than they have ever done before back into the dead hand of the state, which would be bad for the companies, bad for their employees and bad for the economy. One of the reasons why nearly every one of the companies has been privatised and stands at a higher price in the market than when it was first privatised is that, almost without exception, they have improved their profitability, their sales and their performance generally now that they are in the private sector. Therefore, we shall continue, undisturbed by these criticisms, with the privatisation of British Gas later this year and a number of other privatisations.

Having talked about the market value of British Telecom shares, will the Chancellor tell us why he chose to sell them below the market value, and will he give an absolute assurance that he will not waste public money in the same way with the flotation of British Gas?

The right hon. Gentleman clearly knows very little about market values, because there was no market value until they were first offered to the market. They were offered to the market at a price that the most expert advisers advised was the appropriate price at which to offer them. Since then, I am glad to say, they have appreciated. What is more, I recall the Labour party and, indeed, the right hon. Gentleman, predicting confidently that the privatisation would be a flop. In fact, it was an outstanding success, and that is what he does not like.

asked the Chancellor of the Exchequer what assessment he has made of the change in competitiveness of British exports owing to changes in the sterling exchange rate over the past 10 years.

Experience has shown that competitiveness is determined by many factors other than the exchange rate. The excessive growth of our unit labour costs currently poses the greatest threat to our future competitiveness.

Is it not a fact that interest rates in this country are still too high, which, in exchange rate terms, is putting the pound at an artificially high level, and this is putting our exports and manufacturing industries at a disadvantage compared with our competitors abroad? In view of the Conservative Government's seven years of abysmal failure in reducing unemployment, when will they take some action to get the output of our manufacturing industries above the 1979 figure and manufacturing exports in surplus compared with our imports?

The hon. Member may not have observed that since the Budget interest rates in the country have already fallen by 2½ per cent. I would also remark that manufacturing output and investment have been rising well in recent years.

Is it not true that those countries that have the best record in manufacturing output are those that have had Governments who have followed consistently pro-enterprise, pro-business, pro-profit, lower taxation policies, unlike this country, which has been intermittently burdened by Left-wing Socialist Governments?

My hon. Friend is absolutely right. Clearly the success of the British economy in the past few years has owed a great deal to the way in which this Government have been able to liberalise the economy and take off the shackles of the state and of excessive public expenditure. There is only one way in which that progress could be put at risk, and I hope that there is no chance of that. It would be if the Government were not given the chance to have not only one but many more terms ahead, so that years and generations of damage can be put right.

asked the Chancellor of the Exchequer when he next intends to meet the Trades Union Congress general council to discuss manufacturing output; and if he will make a statement.

My right hon. Friend has no plans as such to meet the Trades Union Congress general council but, of course, he regularly meets the Trades Union Congress general secretary and other members of the general council at the National Economic Development Council.

If the Chancellor were to meet the TUC general council, would he explain how, if this is the sixth successive year of successful economic growth, the Central Statistical Office in the past few days can admit that manufacturing production has fallen again by a further 1 per cent. over the past 12 months? Is it not the case that private ownership under the Government is manifestly incapable of providing decent living standards or full employment for the majority of the population?

That is pretty rich coming from the hon. Gentleman. It was those of a militant nature who think and act as he does who did more harm to large parts of British manufacturing industry, and hence jobs, in the 1970s than anything else. The hon. Gentleman clearly has not noticed that, since June 1983, manufacturing output is up 81 per cent., manufacturing investment is up 8½ per cent., manufacturing exports are up in volume terms by 22½ per cent., and manufacturing productivity is up by 3¼ per cent. What is more, the biggest threat to jobs and the competitiveness of industry is the way in which our unit labour costs are rising faster than those of many of our competitors. The hon. Gentleman's contribution to that problem, given his philosophy, would be nothing short of disastrous.

If my right hon. Friend meets the TUC, will he ask it to take note of the recent numerous votes against strikes in manufacturing industry, such as the vote in British Rail Engineering Ltd., for which many of my constituents work? Is it not time that the TUC ruled out strikes, as they are the most negative, destructive and pointless way in which to negotiate in an industrial dispute?

The climate is different now, and not one that those such as the hon. Member for Coventry, South-East (Mr. Nellist) could exploit, as was done in the 1970s, with such harmful results to the British economy. My hon. Friend is right. The record on strikes is one of the most successful aspects of the British economy.

If the British economy is so good, given the litany of statistics that the Chief Secretary has just cited, why did he say earlier that the British economy was in a precarious state due to falling oil prices?

I am grateful to the hon. Lady for giving me the opportunity to make clear what I said. The problem is that we now live in a precarious world where there are substantial fluctuations in economic conditions. One clear sign of the strength of the British economy is the fact that we have managed to come through a 12-monthlong coal strike and a period of fast falling oil prices. We have been able to do so because we have an increasingly strong economy and the world can see that. If the policies advocated by the hon. Lady's party were pursued, with an expenditure of £24,000 million, we would move into a precarious state.

asked the Chancellor of the Exchequer what is his estimate of the revenue from North sea oil in 1986–87.

I refer the hon. Member to the forecast my right hon. Friend published at Budget time.

Given the Government's commitment to a market economy, does the Minister agree that a falling oil price should almost automatically lead to falling exchange rates? Why, then, do the Government persist in keeping interest rates higher than they would otherwise be merely to keep up the exchange rate of the pound?

As I am sure the hon. Gentleman knows, interest rates are determined not by oil prices but by the market and also by monetary conditions in the economy at the time.

Does my right hon. Friend agree that the real strength of the economy is shown by the fact that, with falling oil prices, we have not had a cash crisis or a sterling crisis and we have not had recourse to the International Monetary Fund, as we would have had under a Labour Government?

My hon. Friend is right. If we had pursued the policy advocated by the Opposition of spend, spend, spend, we would undoubtedly have had an enormous crisis at various times when the oil price has been under pressure.

asked the Prime Minister if she will list her official engagements for Thursday 17 July.

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

Given today's hint of an impending change in Government policy on sanctions against South Africa, does the Prime Minister agree that the only just solution for that country is the eradication of apartheid and the establishment of majority rule in a united and non-fragmented South Africa, a statement to which she signed her name at the Commonwealth Heads of Governments conference in New Delhi in 1983?

Both the Nassau accord and the European Council meeting at The Hague envisaged discussion on further measures that might be needed. As I said in the House on 1 July, contingency arrangements are being made. With regard to the latter part of the question, if the hon. Gentleman reads the Commonwealth accord at Nassau he will find this sentence about getting rid of apartheid:

"We believe that we must do all we can to assist that process,"—

"while recognising that the forms of political settlement in South Africa are for the people of that country—all the people—to determine."

Does my right hon. Friend agree that the insistence of Mr. Colin Sampson, the chief constable of West Yorkshire, on the suspension of Mr. John Stalker as the deputy chief constable of Manchester pending the outcome of his inquiries into the activities of Mr. Stalker in Manchester, and his insistence on the suspension of two senior police officers in Northern Ireland pending the outcome of the inquiries into certain activities of the Royal Ulster Constabulary, demonstrate that Mr. Sampson is carrying out a proper and robust inquiry into both matters? Further, does my right hon. Friend agree that suggestions in the media to the contrary are at best mischievous and at worst the result of an orchestrated campaign by those who have the worst to fear from the outcome of those two most important inquiries?

As my hon. Friend is aware, police matters in Northern Ireland are for the Chief Constable of the RUC and matters concerning Mr. Stalker are for the police complaints procedure. It would be totally wrong of me to comment on either while the procedures are in process.

On the contingency measures that the Prime Minister has just announced, which could well be the important signal that the Commonwealth needs to rescue the Commonwealth Games, will the Prime Minister make it clear that those measures are neither "immoral" nor "repugnant", and will she withdraw those very offensive remarks?

I have answered faithfully accusations made against me and about various things concerned with sanctions. Like every hon. Member, I wish to see apartheid ended at the earliest opportunity. I believe passionately that it will best be ended by negotiations. We are doing everything we can to bring those negotiations about, as the right hon. Gentleman knows. The further contingency measures were in the communique of the EEC. Those are not automatic. They never were automatic. They are there to be considered. I have described them as contingency measures, but they are not automatic.

Has my right hon. Friend considered what some of us regard as the disgraceful decision of this House last night in voting for a large increase of over £7,000 for secretarial allowances? If the decision is irreversible, can my right hon. Friend think of any other section of public expenditure that has increased by over 50 per cent. this year?

As my hon. Friend knows, the level of the allowance is a matter for the House, which voted last night for a 52 per cent. increase in the office, secretarial and research allowance. The decision was taken against the advice of my right hon. Friend the Leader of the House, who argued that it was wholly inappropriate to vote for such a substantial increase at the very moment when the level and structure of the secretarial allowance had been referred to the Top Salaries Review Body for general review. No doubt last night's decision will be taken into account in that review. I remind the House that the cost of Parliament, which is determined by Parliament and not by the Government, has risen from £26 million in 1978–79 to £72 million last year. The increase to which my hon. Friend has referred must be found out of the pockets of our constituents.

asked the Prime Minister if she will list her official engagements for Thursday 17 July.

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

Would the Prime Minister like to comment in any way on the numerous press articles which have appeared in the past few days regarding the position of the Head of the Commonwealth and the future of that organisation? Does the right hon. Lady not agree that the Commonwealth faces its most severe crisis, largely because of her attitude? Only a few days ago she suggested that South Africa should not have been excluded from the Commonwealth in 1961. Does the right hon. Lady not realise how deeply offensive and grotesque those remarks were, coming from a British Prime Minister?

We try to influence the policies of nations with which we disagree. We seem to have taken a different view of South Africa — [Interruption.] —although we do wish to try to influence its policies to end apartheid. [Interruption.]

Order. We often condemn lack of free speech elsewhere. We must not deny it to the Prime Minister.

I propose to follow the well-established practice of my predecessors and not answer questions on the Floor of the House, directly or indirectly, about the monarch.

asked the Prime Minister if she will list her official engagements for Thursday 17 July.

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

Does my right hon. Friend accept that there are many black leaders in South Africa who have different and constructive views as to what should be the change after the dismantling of apartheid? Will she take those different views into account when formulating her own policy, so that we can move the debate on to the more fruitful ground of discussion of the substance of change rather than merely any change for change's sake, without having firm ideas about its actual nature, which so often appears to be the refuge of Opposition Members?

As my hon. Friend knows, the African National Congress has made its views well known. A representative of the ANC met my hon. Friend the Minister of State, Foreign Office, the hon. Member for Wallasey (Mrs. Chalker), some time ago, and we know its views. We also know, and read only this morning in the newspapers, of the testimony of Chief Buthelezi, in which he said that the imposition of negative, punitive measures against Pretoria can only impair the process by which black and white are finding common cause with each other to an ever-increasing extent. Our objective is the same. It is the end of apartheid. We wish to do everything that we can to bring it to an end by negotiations, and, ultimately, that will be the way that change will come about.

Record unemployment figures have again been published today, amounting to three and a quarter million. For the first time since March 1983 the numbers employed have gone down. In her current review of public expenditure for next year, what will the Prime Minister do to try to ensure that the jobs that desperately need to be done can be commissioned and paid for: jobs, for instance, in the building industry, where private building is now stagnant and council house building is 70 per cent. —90,000 houses—lower than it was when she took office in 1979?

I believe — although I do not have the press release with me — that the numbers in employment have gone up, although the right hon. Gentleman is right in saying that the unemployment figures are deeply disappointing and that the seasonally adjusted unemployment figure has gone up by 15,000, so that it has risen to 3·2 million. As the right hon. Gentleman is aware, we have done a very great deal for the unemployed. [Interruption.] This is not a matter which affects only the United Kingdom. It affects the whole of the Western world. In the last five years we have spent over £8·5 billion on employment measures and the youth training scheme. The YTS has taken more than 1 million trainees and it has now expanded to a two-year scheme. On housing, as the right hon. Gentleman is aware, 1·3 million new homes have been built in Great Britain since 1979. If we take more money out of business and away from the taxpayer, what we have to take into account are the jobs that are lost and the investment that is lost by the money we take away and the return that that would give, compared with any that it would give if it were put into the public sector.

Is not the critical fact that at the same time as the Prime Minister has been cutting public expenditure and losing jobs in the construction industry, 1·7 million manufacturing jobs have also gone? So the equation does not work at all. Is it not the case that there are more people in long-term unemployment than there were in total unemployment when the Prime Minister took over? Will she tell us what has happened to the 2 million full-time jobs that have been lost since she became Prime Minister? Why does she not stop dodging and start building?

We have tackled some of the problems from which the right hon. Gentleman's Government ran away. If the right hon. Gentleman is suggesting that we should put back into manufacturing industry all the overmanning that was taken away, he will ruin the whole lot of industry.

asked the Prime Minister if she will list her official engagements for Thursday 17 July 1986.

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

Turning to the future of education, does my right hon. Friend agree that what we have to do in the coming months is to offer the prospect of choice within the state system of education to parents, and that this can best be done by ensuring that state funds for the state education system are based upon cash following the pupil? Is my right hon. Friend aware that on Thursday 24 July a group of her colleagues on this side of the House, who have produced a pamphlet called "No Turning Back", will be producing a pamphlet to he published by the Conservative Political Centre entitled, "Save our Schools"? Will she undertake to set that pamphlet as homework for the Secretary of State for Education and Science?

Yes, my hon. Friend is right. It is our purpose to give more choice to parents whose children go through the state system, which is 95 per cent. of our children. We wish to give to those parents more choice of schools, particularly as some children in some city centres have to resist political indoctrination and do not get the teaching that they deserve. My hon. Friend has illustrated one way in which it will be possible to do that. I shall certainly add the pamphlet to my own homework and that of the Secretary of State for Education and Science.

asked the Prime Minister if she will list her official engagements for Thursday 17 July.

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

Will the Prime Minister take time today to send a clear statement to the Heads of Government of the front-line states, who will meet tomorrow in Harare, that she is absolutely totally committed to the statement issued by the recent EEC summit, in order not only to preserve and save the Commonwealth, but to save the Commonwealth Games?

The Commonwealth Games are a matter for the Commonwealth Federation. They are not a matter for me. We have faithfully carried out the Commonwealth accord and we shall also faithfully carry out the EEC statement. It is important, as we have made clear all along, that any action which is taken should be considered not only by the Commonwealth and the EEC but by all the Western industrialised countries. The hon. Gentleman will be aware that my right hon. and learned Friend the Foreign Secretary left to discuss matters further in Washington today.

asked the Prime Minister if she will list her official engagements for Thursday 17 July.

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

Has my right hon. Friend had the opportunity of looking at the pamphlets about the miners' strike and the Falklands war which I sent to her office recently? Is she aware that those pamphlets, circulating in schools in my constituency and elsewhere in Yorkshire, were collected by concerned trade unionists, who were appalled at the level of political propaganda that they represented? Does she share their concern, and what is to be done about the offensive remarks made about her and about the British interest? What will she do about the continuing attack upon freedom of education in our country by the Left?

I and a number of my colleagues saw those two pamphlets, which were utterly disgraceful. They were nothing to do with education and I am amazed that they properly came within anyone's education budget. My hon. Friend will be aware that the other place has been trying to do something to exclude political indoctrination from schools. The matter will shortly come before the House and we shall express our view upon that clause, I hope forcefully, and keep it in the Bill.

On a point of order, Mr. Speaker.

Does it arise directly out of these questions?

Yes. You may recollect, Mr. Speaker, that on Tuesday I attempted—

Today or Tuesday?

Tuesday.

I shall take it later.