To ask the Chancellor of the Exchequer what discussions he has had with Finance Ministers abroad concerning expansion targets for the Organisation for Economic Co-operation and Development economies.

To ask the Chancellor of the Exchequer what discussions he has had with Finance Ministers abroad concerning expansion targets for the Organisation for Economic Co-operation arid Development economies.

To ask the Chancellor of the Exchequer what discussions he has had with Finance Ministers abroad concerning expansion targets for the Organisation for Economic Co-operation . and Development economies.

The OECD does not set expansion targets. Therefore, my right hon. Friend discusses more fruitful matters with his fellow Finance Ministers.

Is the Minister aware that before the on Venice conference last year the United States Treasury Secretary, James Baker called upon OECD Governments to try to set a recovery target? Since then stock markets have crashed and the statement by the Group of Seven countries did nothing, so Governments had to intervene. Is it not time that the United Kingdom Government started to intervene and to set up a programme to aid recovery in this country?

Since the fall in stock markets it has become apparent that most major economies were growing more rapidly than seemed to be the case at the time. We are now confident that there will not be a recession in 1988. On the United Kingdom economy, we predict 3 per cent. growth in the non-oil economy, which is very healthy indeed. The major countries of the world have co-operated in ensuring that the difficult period following the financial market crisis has been coped with.

Does the Minister agree that the OECD estimates state clearly and categorically that the growth rate will fall from 2·75 per cent. to 1·75 per cent. in 1989? Is the Chancellor really saying that after he has sold off all the country's assets there will not be a recession or a slump, when there is an estimated balance of payments deficit of £5·2 billion?

I do not think that anyone can be categorical about growth rates in 1989. However, we can be reasonably assured that there will be some growth in 1988, albeit perhaps more modest than in the past. As I said, the British economy looks set to do particularly well, in spite of the gloom that the hon. Gentleman hopes to convey to the House.

Surely the fact is that towards the end of last year the Chancellor said that there was no point in having a Group of Seven meeting unless there was agreement. There was no meeting, and there was no agreement on anything significant. The statement at the end of December did not stabilise the markets until Governments intervened. The whole of OECD is now slowing down, and the effects of cuts in the United States budget deficit will aggravate that. How on earth can the Government be confident that the United Kingdom economy will continue to grow when the rest of the world is slowing down? Why do they not hold a meeting of the G7 countries to meet those targets for recovery asked for by United States Treasury Secretary Baker last year?

The G7 statement did help to stabilise financial markets.

Why did the Government intervene?

We never comment on intervention by the British Government. If the hon. Gentleman believes statements that other countries were intervening, he can draw that inference from the G7 statement. We are reasonably confident that the British economy will do well in future because the policies that have brought us prosperity are precisely the policies needed in times of difficulty, if difficulty should arise.

Does my hon. Friend agree that, because of the twin deficits—the trade deficit and the federal deficit in America—America cannot continue to be the engine of the world's economy? Britain is playing its part; its high growth rate has resulted in a small balance of payments surplus. Does my hon. Friend think that the two surplus countries of Japan and Germany are doing enough to fill the gap left by America?

My hon. Friend is quite correct. It is important that the surplus countries as well as the deficit countries play their part in removing the imbalances that have plagued the world economy. The Japanese economy is growing strongly in terms of domestic demand and we hope to see a strengthening of growth in Germany as well. My hon. Friend is right. The British economy has been the strongest growing major economy in the western world.

Do not the Chancellor's autumn forecasts depend on major corrections in the United States economy and on an expansion in domestic demand in West Germany and Japan? As that has been the subject of the Foreign Secretary's discussions with the Japanese Government, how can the Minister regard it as a fruitless subject for discussion?

No country in the OECD sets quantitative targets for GDP growth. That was the basis of the question that I answered initially. The outlook in Japan is for quite strong domestic growth, which will contribute to the removal of imbalances between Japan and the United States, and that is something that I welcome. I also welcome the presence of the hon. Member for Berwick-onTweed (Mr. Beith) today. I was sorry that he was not in the Select Committee yesterday when we were discussing, among other matters, VAT. We would have been interested to hear his views on where he would apply it.

Does my hon. Friend agree that growth within the OECD is inextricably linked to free trade? Will he assure the House that, together with our OECD partners, we will do all that we can to promote free trade with Japan?

My hon. Friend has hit on one of the most important aspects of the future of the Western economy. We must resist all pressures to move towards protectionism. Free trade brings prosperity to all partners and we are foremost in promoting it.

To ask the Chancellor of the Exchequer if he has issued any guidance on information management in the Civil Service, as a result of lessons learnt during and since the Westland affair; and if he will make a statement.

No, Sir.

I gave the Paymaster General's office four days' notice of my question in the hope of a considered reply. Does the Minister dispute the enunciation by Sir Kenneth Clucas, who is a distinguished civil servant, that on 4 January the Prime Minister put Sir Robert Armstrong in a very difficult position, and that it was unethical for the Cabinet Secretary to embark on an inquiry to which he knew the answer before he started?

I have nothing to add to what has already been said by my right hon. Friend the Prime Minister, and other Ministers, in statements and in reply to questions.

Is my right hon. Friend satisfied that the system of information control within the Civil Service is sufficiently robust to prevent the leaking of unauthorised information to the hon. Member for Linlithgow (Mr. Dalyell)? If not, will he do something about it?

I think that my hon. Friend will agree that his question had a rhetorical purpose, and that rhetorical purpose was caught.

To ask the Chancellor of the Exchequer if he will make a statement on the latest outlook for inflation.

The forecast in the Autumn Statement was that inflation would be 4 per cent. in the fourth quarter of 1988. I shall present a new forcast at Budget time in the usual way.

Can my right hon. Friend tell the House the last time on which the rate of growth exceeded the rate of inflation, as it did in the third quarter of last year? Can he also confirm that low prices are good for competition, jobs and the economy?

My hon. Friend is absolutely correct in pointing to the central importance of keeping inflation low for the strength of the economy. The very good performance of the British economy in all aspects over the past few years has been achieved because we have put inflation at the forefront of our policies. As for the comparison that my hon. Friend made between the rate of inflation and the rate of growth, it is more valuable to look at the figures for a whole year than for a quarter. We have not had the final figures for 1987 yet, and will not have them for a little while, but it may well be that 1987 will prove to have been the first year for a generation in which the rate of growth has exceeded the rate of inflation.

In view of the optimistic remarks of the Economic Secretary that good times are just around the corner, will the Chancellor confirm that Treasury forecasts show that next year there will be a higher rate of inflation, a lower rate of growth and a worse payments crisis than last year? What does he think Noel Coward would have said about that?

I will not answer the last part of the question, because to sing it would be out of order. Certainly the forecast is for a slightly higher rate of inflation in the fourth quarter—not for the whole year, because we do not make that forecast—of 1988 than there was in the fourth quarter of 1987. Nevertheless, that rate of inflation forecast for the fourth quarter of 1988 is not merely one quarter of the average rate of inflation when the Labour Government were in office, but is only about one half of the lowest figure that they achieved in any month during the whole of their period in office. As for the forecast rate of non-oil growth, it may be lower than last year, but it is higher than the Labour Government ever achieved in any year of their term of office.

Is my right hon. Friend aware that most thinking people are well aware that one of this country's main achievements under his guidance has been the low rate of inflation?

What about mass unemployment?

Does my right hon. Friend further agree that the one thing any Government can do to help people on fixed incomes—pensioners and the like—is to keep the rate of inflation down so that the value of their money does not deteriorate, as it did in the 1970s?

My hon. Friend is absolutely right. During his very thoughtful and accurate question I heard a sedentary interjection from one of the junior Opposition spokesmen that there is mass unemployment. I should have thought on this day, when we have the figures showing that there has been a fall in unemployment over the past year of over 500,000, the highest ever fall in unemployment, that at least would have been welcomed by the Opposition.

If the Chancellor places such importance on the rate of inflation—as he clearly does, because he said yesterday to the NEDC that avoidance of inflation was at the "very heart" of Government economic policy—why have he and his Government taken a series of decisions in the past three months deliberately to fuel inflation by pushing up electricity prices, rents in the private and public sectors, water rates and nationalised industry prices? Is he proud of that?

I afraid that the hon. Member does not have the first idea of what causes inflation or what the rate of inflation is. The rate of inflation now is far lower than anything achieved by the Labour Government during their period in office. Not only does it compare very well with our past, but our relative inflation performance compared with other major countries has improved substantially.

To ask the Chancellor of the Exchequer when he next intends to meet his counterparts in the European Council of Finance Ministers; and what matters he expects to discuss.

To ask the Chancellor of the Exchequer when he next intends to meet his counterparts in the European Council of Finance Ministers; and what matters he expects to discuss.

The next meeting of the European Community's Economic and Finance Council is expected to be on 9 February. The agenda has not yet been decided.

May I ask my right hon. Friend—and also say what a pleasure it is to describe him thus —whether, given Her Majesty's Government's commitment to achieving a single European market by 1992, he will discuss with his European colleagues arrangements for the reduction and eventual elimination of all customs examination of passengers arid goods travelling between countries in the European Community?

My hon. Friend will recall that under the Single European Act we have retained control of our own border arrangements on drugs, terrorism and antiques. I think that my hon. Friend will recognise the continuing relevance of Customs and Excise to that task.

Will my right hon. Friend note that the Select Committee on European Legislation recently produced a report drawing attention to the grave danger of the EEC proposals on value added tax? Furthermore, will he note that we have absolutely no intention of agreeing to those proposals, any more than Pym and Hampden had of paying ship money back in the 17th century, and that we regard them as gravely detrimental to the powers of our Parliament and its right, and the right of the Government, to decide and allocate tax priorities in the interests of our people?

The Government are studying the proposals made by the Commission for indirect tax approximations, but have made it clear that we could not accept any proposals that would restrict the United Kingdom's right to use zero-rating. The United Kingdom is not alone in having difficulty with the proposals. Tax changes can be agreed only where there is unanimity.

When the meeting with the Finance Ministers takes place, will they be told of the pressure from the SDP and Liberal leaders for VAT to apply to children's clothing, food, fuel and newspapers? Will they also be told that, while the British Government's economic policies are increasingly discredited in this country, it seems that the leaders of the SDP and the Liberal party have nevertheless been converted to Thatcherism?

There are a number of non sequiturs in the hon. Gentleman's question, but I, too, have noted the interesting but courageous proposals put forward by the alliance yesterday.

When the Minister meets his European counterparts, will he raise with them the fact that the Kuwaitis are increasingly purchasing large blocks of shares in European companies? Is the Minister aware that, despite assurances given by the Chancellor to the House the other day, the Kuwaitis have now increased their holdings in British Petroleum, and are using London broking firms to do so? Will he act now, in the national interest?

Under the internal market, of which the Government are in favour, British newspapers are freely available throughout the Community. I have every confidence that my colleagues among Finance Ministers in the Community will have read of the developments concerning share purchasers to which the hon. Gentleman referred.

Will my right hon. Friend impress on his European colleagues that there is no need for any increase in EEC own resources and that their priority should be the imposition of firm budgetary control, which was promised at Fontainebleau but for which we are still waiting?

Whichever Minister represents the British Government at Ecofin, he will certainly bear in mind what my hon. Friend has said. However, as the European Council will be meeting in Brussels the following week, there will he an even more adequate opportunity then.

On the question of the EEC's VAT proposals, and notwithstanding the new proposals of the third party, the fourth party and the fifth party in British politics, does the Minister agree that, outside the alliance and Lord Cockfield, there is no public support for any attempt to impose VAT on vital necessities? Will he give us the assurance, which he has not yet given that the Government will implement none of Lord Cockfield's demands.

We have made a number of specific pledges concerning zero-rating, and the House would not expect me to add to them today.

To ask the Chancellor of the Exchequer what has been the growth of industrial productivity in the British economy over the last 12 months.

In the three months to October 1987 manufacturing output per head is estimated to have been 7¼ per cent. higher than a year earlier.

Does my right hon. Friend agree that that substantial increase in productivity is a major factor in keeping British industry internationally competitive? Will he also confirm that manufacturing output is growing faster than at any time since the early 1970s?

I certainly confirm what my hon. Friend has said. I should add that manufacturing output has now recovered from its loss during the recessionary period of 1980–81. Output is now above pre-recession levels and is rising sharply. We expect that it will continue to do so.

Would the Minister care to comment on the statement made last week in Dundee by the governor of the Bank of England, who said that growth in the British economy was unsustainably rapid? Before the governor made that statement, were his views discussed with the Government or, as his train passed through Nottingham on the way to Dundee, did he have the idea of forming his own branch of the UDM —the union of disgruntled monetarists?

I certainly cannot say whether the latter point is true. However, the governor was echoing what my right hon. Friend said to the Select Committee on the Treasury and Civil Service some time before. Specifically, my right hon. Friend said that the rate of growth prior to October, which was substantially above trend, was not likely or expected to be sustained next year. However, output next year in the non-oil economy is expected to be 3 per cent. and that represents a substantial level of growth and is substantially higher than that achieved at any stage under the previous Labour Government.

Does my right hon. Friend agree that one reason for this rapid increase in output and growth is that, today, it is worth working because one can keep more of what one earns? Therefore, while it is welcome that the Labour party supports reducing the proportion of GNP that is taken in taxes by cutting spending, is it not unfortunate that it is only the New Zealand Labour party which supports that policy?

I understand that, from time to time, attempts have been made to introduce some of the ideas of the New Zealand Labour party to the Labour party of this country, but with minimal success. My hon. Friend is entirely right about the supply side effects of lower taxation, and my right hon. Friend the Chancellor is acutely aware of those effects.

If the Minister is claiming success for the Government's industry policies, can he explain why a balance of trade surplus of £5 billion has been turned into a deficit of £8 billion? What is the Government's strategy for correcting that difficulty?

The right hon. and learned Gentleman will know that in the period since 1981, and for the first time in many years, export volumes have grown at a similar rate to the world trade in manufactures. That feat was not achieved at any time during 1974–79. The right hon. and learned Gentleman—uncharacteristically in my judgment—is selling British manufacturing short. It is doing exceedingly well, and the size of our export volumes is the clearest possible illustration of that success. The size of the import volumes has a direct relationship with the fact that the British economy is growing substantially faster than that of our competitors. The right hon. and learned Gentleman should be well aware of that.

To ask the Chancellor of the Exchequer what estimate he has made of the relative benefit to British industry of (a) I per cent. off interest rates and (b) 1 per cent. off pay rises.

A 1 per cent. moderation in pay rises would be worth roughly four times as much to British industry as a 1 per cent. reduction of interest rates, even if that were sustained for a full year.

I am grateful to my hon. Friend for those extremely interesting figures. Does he believe that industry could help itself by keeping a tighter grip on its unit pay costs and thereby ensure that inflation falls, which would lead to a decline in interest rates? Does he also believe that the statistics would be extremely helpful if those on the Opposition Front Bench understood what causes inflation?

My hon. Friend is absolutely right to highlight the importance of industry keeping control of its pay costs. I should especially like to pay tribute to the management and employees of the export industries, because the strong rise in productivity that they have achieved has enabled them to keep their pay costs stable up to now, despite the considerable increases in the real earnings of the employees.

On the subject of interest rates, has the Minister had a chance to see the evidence from the National Consumer Council on consumer credit, which shows that eight chain stores are charging rates of interest between 32 and 39·9 per cent.? Does he not agree that that is a swindle, and what will he do about it?

I have not seen the figures to which the hon. Gentleman referred, but I shall examine them. It is now obligatory on those offering credit to make clear the terms on which they offer that credit. The best guarantee that people are not swindled is that they have competitive alternatives to which they can turn.

To ask the Chancellor of the Exchequer when he is next due to meet the Finance Ministers of the other major industrial countries to discuss the international financial situation.

To ask the Chancellor of the Exchequer when he is next due to meet the Finance Ministers of the other major industrialised countries.

I am in regular contact with my opposite numbers in other G7 countries.

Does my right hon. Friend agree that one of the factors that makes it difficult for managers in industry and commerce, especially those involved in exports, to forecast and plan ahead is the volatility of exchange rates? What measures will he be urging upon his counterparts at the next meeting to try to achieve greater stability in exchange rates?

I agree with my hon. Friend. What are needed within a climate of low inflation all round are domestic policies that will sustain reasonable stability in exchange rates, which is of the first importance to successful trade and industry. I hope to say a little more about that in the debate that will follow later today.

Does my right hon. Friend agree that it is good news that we have had five consecutive years of growth in the Group of Seven industrialised countries? It is doubly good news that Britain is at the top of the league for such growth. It is a pity that Britain is at the top of another league table—the league table of the Opposition parties, who see nothing but unremitting gloom and despondency every time that something goes right.

That is a characteristic of the Opposition, and a rather sad one. It is not doing them any good, or doing any credit to the country as a whole. I found it particularly interesting at the meeting of NEDC yesterday, which I had the honour of chairing— [Interruption] This is a very moving moment in the history of the House, with the entry of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), but we are still one short.

Has the Chancellor of the Exchequer seen today's reports that the United States is selling special drawing rights for yen? That is the nearest thing to selling gold for yen. Does the Chancellor believe those reports, and if he does, does he think that the United States will properly defend its currency?

I have seen those reports and I have no idea at present whether they are true, but clearly that would be a move consistent with a determined American attempt to defend the dollar.

What does the Chancellor think would be the career prospects for a Finance Minister in Europe or in Kuwait who sold 20 per cent. of his country's largest company to a foreign power at knock-down prices?

The shares were sold by Her Majesty's Government at a very good price indeed. It was certainly not a knock-down price, and the British taxpayer did very well as a result of that. Contrary to what the right hon. arid learned Member for Mon klands, East (Mr. Smith) predicted, we have had to buy back only a tiny proportion, less than 2 per cent. It is true that following the stock market fall those shares fell considerably, along with many others, and the Kuwait Investment Office took the opportunity to buy, not all of them, but a substantial block of those shares. Anybody could have done that. However, as I told the House on Monday, it has given an assurance that it has no intention of seeking control of BP, nor any management role.

Will my right hon. Friend reassure the House that he will avoid committing too much of Britain's financial resources to concerted foreign exchange support operations for the dollar until it is clear that the United States Government are adopting policies that are themselves likely to produce a firmer currency?

That is certainly a policy position which I have taken throughout. During the greater part of the period since the Louvre agreement the Americans had been following such policies and were fully committed to the defence of the dollar. There was a period towards the end of last year when that commitment by the American Government appeared to be in doubt. Subsequently, however, they have taken action which suggests that they intend to defend their currency. The commitment of the United States is crucial, both in terms of intervention arid in terms of the appropriate internal domestic policies.

To ask the Chancellor of the Exchequer what assessment he has made of the feasibility of the internal market of the European Economic Community in the absence of the harmonisation of value added taxation rates.

The Government strongly support the removal of barriers to trade within the Community, but they do not believe that approximation of VAT rates is a necessary part of this process.

If the Minister takes that view, will he formally repudiate the views of the Conservative appointee on the EEC Commission, Lord Cockfield, who believes that harmonisation of VAT is necessary? If he repudiates Lord Cockfield's views — and he has the opportunity to do so now—will he also repudiate any attempt by the Government to put VAT on food, fuel and clothing, or on books and newspapers, which would be a tax on knowledge for the first time in our history?

Lord Cockfield is in no sense answerable to the Government. It will not have escaped the hon. Member's attention that there have been disagreements between the Government and Lord Cockfield in the context of his proposals. In response to an earlier question I indicated that I will be making no further pledges during the afternoon beyond those already given.

As the Government have made it clear that they propose to use their veto, if necessary, to defend the zero-rating concept, will my right hon. Friend make it absolutely clear to the Commission that there is no point in putting forward proposals which involve its abolition?

My right hon. Friend is correct in stating the Government's position. The approximation proposals are unacceptable as drafted, but discussion between member states is at a very early stage and it would be wrong to anticipate the outcome. The United Kingdom is committed to completion of the single market, but how this is best achieved is a matter for discussion between member states. I repeat the pledges on zero-rating which have already been given by the Prime Minister.

The country will wish to know that the Minister will resist the arguments for value added tax of the party or parties of whom two representatives sit below the Gangway. The Minister has said that the Government have made specific pledges about what they will do and what they will allow in regard to the introduction of VAT. In view of this important occasion, will he list those pledges specifically? Do they include books, periodicals and medicines?

I share the hon. Gentleman's interest in the proposals that have emerged from the alliance Benches. But even into the life of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) some pleasure must have entered yesterday when the hon. Member for Rochdale (Mr. Smith) issued a statement saying that he was opposed to VAT on food. As to the pledges, those that have been given by my right hon. Friend the Prime Minister relate to food, domestic fuel and children's clothing and footwear.

To ask the Chancellor of the Exchequer if he will make a statement on the economic outlook for the rest of the current financial year.

The United Kingdom economy continues to show the winning combination of strong growth, low inflation and sound public finance.

The Chancellor's economic policies have resulted in a substantial reduction in unemployment during the past year. Does my right hon. Friend think that present policies will result in a similar reduction in unemployment during the next 12 months, and does he think that there is any chance that unemployment will be less than 2 million in a year's time?

I certainly do not propose to make forecasts of the future rate of unemployment. My hon. Friend is entirely correct to point out that unemployment has fallen by over half a million in the last year and 300,000 in the last six months, and today's figures again show unemployment down by 35,000. I am particularly pleased to see youth unemployment down and an especially welcome fall in the west midlands, Wales, the north-west and the north.

Will the Chief Secretary bear in mind that the collapsing dollar is very greatly damaging to our export industries, especially the pottery industry? Notwithstanding what was said a moment ago about our exports, will he do what he can to strengthen the dollar in order to aid our exports?

The fall in the dollar is undoubtedly unsettling, as my right hon. Friend has made clear on a number of occasions. The performance of British exports in recent months has been excellent and we are keen to ensure that that contiinues.

Does my right hon. Friend perceive any danger of overheating in the economy in the months that lie ahead? Can he give the House any indication of what steps the Government have it within their power to take if that trend should develop?

We do not see any signs of overheating, so I think that the second part of my hon. Friend's question does not arise.

To ask the Chancellor of the Exchequer what initiatives he is taking with Finance Ministers of creditor countries to address the re-scheduling of a share of the debt of Latin American countries.

The United Kingdom will continue to play its part, along with other creditor countries, in rescheduling its share of developing countries' official debt at the Paris Club. As for commercial debts, that is a matter for the banks and countries concerned.

But is it not true that at the end of the day the bill for Third world debt written off by the banks may well be paid by the taxpayer, as banks write off losses against profits? If that is the case, does it not mean that the taxpayer may well be paying for ill-considered and unnecessary projects in some Third world countries? And, if that is the case, would it not be better to spend public money, taxpayers' money, in another way by simply increasing the amount of money available for Third world aid?

The hon. Gentleman misunderstands the nature of tax relief. If banks or other companies fail to make a profit, they do not pay tax. No money is handed out by the Treasury to them, and therefore there is no money available that is now going to them that could instead go to underdeveloped countries.

To ask the Chancellor of the Exchequer what responses he has received to his 1987 initiative to deal with the problem of developing countries' debt.

My initiative has been widely welcomed. Many countries have followed the United Kingdom's lead in converting past aid loans to grants and the Paris Club has agreed to several extended reschedulings of official debts. I am continuing to press for interest rate reductions on such reschedulings. Following my initiative, the managing director of the IMF launched a separate proposal for interest rate assistance with these countries' multilateral debts via an expansion of the fund's structural adjustment facility.

While welcoming the excellent initiative of the Chancellor, may I ask him whether he agrees that the World Bank and the International Monetary Fund should go much further in expediting progress in this area by themselves writing off and making adequate provisions against the debts which they are putting on their books at unrealistic levels?

I think that the international institutions, which are backed by Governments, are in a very different position from commercial banks, which have to make sure that, if there are bad or doubtful debts, provision is properly made for them. It is, indeed, a matter of importance to the supervisory authorities in this country and other countries to ensure that that is done. I welcome what the commercial banks have been doing in this regard.

Is not the truth of the matter that in this financial year the amount of money that will be set against income tax relief in respect of the four main banks in Britain will be of the order of £1,000 million? Will the right hon. Gentleman also confirm that in the next financial year it is proposed that those debt provisions will rise even beyond that figure? Since the British public is of the view that we ought to be helping Third world countries, would it not make sense for the Chancellor of the Exchequer to allow money to go to Third world countries to bail them out, instead of bailing out the British banks?

I am sorry that the hon. Gentleman has wasted the time of the House by asking precisely the same question, based on precisely the same conception as his hon. Friend the Member for Workington (Mr. Campbell-Savours) asked, and which was answered by my hon. Friend the Economic Secretary. If a bank lends money to any borrower, whether an industrial customer or an overseas sovereign Government, and it turns out to be a bad debt, obviously there is tax relief on the bad debt. That is the law of the land. Equally, if, at the end of the day, the debt is paid, the tax relief in unwound.

To ask the Prime Minister if she is satisfied with the co-ordination between the Secretaries of State for Defence and for Social Services concerning the use of beds in military hospitals for National Health Service patients.

Yes, Sir. Some 34,000 National Health Service in-patients, 4,000 day patients and 200,000 out-patients are treated annually in military hospitals in the United Kingdom. Ways of increasing the number of National Health Service patients treated in military hospitals are being considered by my right hon. Friends.

As the hospitals of the Royal Navy, the Army and the Royal Air Force, which have excellent standards, now take 34,000 National Health Service inpatients every year and could take very many thousands more—on 6 January they had 495 beds available —will my right hon. Friend please urgently consider how they can take more? In particular, will she please consider whether waiting list money can be further applied?

I am very much aware of my right hon. and hon. Friend's concern to see that we get as much health care out of the facilities as we possibly can. The ordinary health authorities can apply for waiting list money if they know of beds which are free in military hospitals and can made an arrangement for patients to be treated there, so we are going in the direction required by my hon. Friend.

Does the Prime Minister agree that the armed forces could provide more beds for National Health Service use and, indeed, provide facilities for the National Health Service—which is being cut back under her Government—if she adopted different priorities and shifted the £11 billion she is spending on nuclear weapons in the form of Trident to the National Health Service? In that way the continuing complaints about operations not being carried out would be brought to an end and we could spend money on patient care, instead of on mass extermination.

The National Health Service is not being cut back. Over and above inflation, there has been provision for an extra 30 per cent. for the National Health Service. The hon. Gentleman might have got muddled up with the record of his own Government, who, 10 years ago, cut back the National Health Service, and who also cut in real terms nurses' and doctors' pay. Under this Government, the money has gone up, the number of nurses and doctors has gone up and the pay has gone up.

Order. The question is about beds in military hospitals.

Does my right hon. Friend agree that the limitation on the number of National Health Service patients dealt with by the services has been caused by a long-running wrangle between the Ministry of Defence and the DHSS? We on the Public Accounts Committee have been assured that that wrangle will reach a satisfactory conclusion by 31 March. Has that same assurance been given to my right hon. Friend?

As my hon. Friend heard, 34,000 National Health Service in-patients are being treated by military hospitals, as are a lot of day patients and outpatients. I can assure my hon. Friend that health authorities are being encouraged to consider every possibility, including military hospitals, when putting in their bids for allocations from the waiting list fund. In view of my hon. Friend's question, I shall make further inquiries to ensure that what he wants is happening.

To ask the Prime Minister if she will list her official engagements for Thursday 14 January.

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

With Matthew Collier critical, Matthew Mulhall and Adrian Woolford of Coventry still waiting, when the parents of the 90 bairns in the Midlands desperately waiting for life-saving heart surgery come to London on Monday afternoon to present to No. 10 petitions with over 50,000 signatures, will the Prime Minister meet them personally, or will she be too frightened to explain to them which children will live and which will not?

I shall not meet them personally. [HON. MEMBERS: "Shame"] I remind the hon. Gentleman that that particular hospital was designated a supra-regional centre only in 1984, under a Tory Government, and since then over 560 open heart operations have been performed. There are vastly more open heart operations performed now than there used to be, and some 3,000 babies survive now who would not have survived eight years ago.

To ask the Prime Minister if she will list her official engagements for Thursday 14 January.

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

Is my right hon. Friend aware that the first phase of the new Bournemouth general hospital in my constituency is due to be opened later this year? Is she also aware that that hospital was planned to be built 10 years ago but that, like so many others, it was a victim of Labour's incompetence in government, which brought the country to the brink of bankruptcy? Should we not be reminded more frequently of the chaos and cuts in the NHS under the Labour Government?

Yes. The Labour Government not only cut the capital programme for hospitals, but, as I have said, cut nurses' and doctors' pay in real terms. The NHS has expanded enormously under us, as has the capital programme, and the number of nurses, the number of patients treated, both in-patients and out-patients, and the number of treatments have gone up.

Will the Prime Minister tell us why she opposes the Protection of Official Information Bill of her hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), or is it a secret?

For the reasons that have already been given in the House and elsewhere, because of the great complexity of the matter, because of the Government's responsibility for such matters and because we are considering a White Paper with a view to bringing forward a Bill. It is vital that this matter is dealt with by a Government measure.

Is not it obvious that the Prime Minister's case is weak and that is why she has to Whip? In any case, the Prime Minister knows very well that the full facilities of the Government could so easily be put at the disposal of the hon. Member for Aldridge-Brownhills as he takes the Bill through the House, so her excuses are absurd. When even her right hon. and hon. Friends describe her attitude to and tactics on the Bill as "monstrous", "dangerous", "a political SAS" and as the tactics of the gulag, is it not obvious that her response has nothing to do with state security, and everything to do with a shallow, spiteful and spurious attitude?

We believe that a private Member's Bill is not the appropriate way to secure changes in this difficult and sensitive area affecting the nation's security, especially when a revisionary Bill affecting section 2 of the Official Secrets Act started its journey in the other place in 1979 but did not secure passage there. I remind the right hon. Gentleman that we need no lessons in security from him.

Will my right hon. Friend today confirm that the purpose of the National Health Service is not to further the interests or feather the nests of COHSE and NUPE? Will she further confirm that the purpose of open tendering is to secure more resources for the Health Service to devote to patient care? Will she therefore condemn these foolish strikes?

I obviously confirm what my hon. Friend has said. The purpose of the National Health Service is to bring more care to the patient. We are enabling treatments to be brought to the patient which were not available some years ago. We all regret any strikes. They are strikes at the expense of the patients, and I hope they will be condemned on both sides of the House.

To ask the Prime Minister if she will list her official engagements for Thursday 14 January.

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

Is the right hon. Lady aware that the Manchester royal infirmary is facing its greatest crisis in 200 years? It is having to issue warnings to its employees that it may not be able to pay their wages. Why does she continue to suggest that the only solution to this problem lies in increasing income tax, when she knows very well that her right hon. Friend the Chancellor of the Exchequer has billions of pounds in his pocket ready to be paid out in income tax cuts? A fraction of those cuts placed at the disposal of the National Health Service would remove fears from people, young and old, who are concerned for the future.

My right hon. Friend has already made more resources available to the National Health Service this year, and next year about £1·1 billion extra will be made available out of the taxpayers' pocket. Next year, the average family will pay £1,600 to the National Health Service. That is a considerable amount. We are trying to see that full value for money is obtained from that.

To ask the Prime Minister if she will list her official engagements for Thursday 14 January.

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

Will my right hon. Friend confirm that the Conservative party remains the only party firmly committed to the modernisation of the British nuclear deterrent through Trident, given that the commitment of the Social and Liberal Democrats to that lasted all of three hours?

I confirm that we are firmly committed to modernising the independent nuclear deterrent with Trident. For one fleeting moment, I thought that we might be joined by another party, but apparently, as soon as it had a policy, it withdrew it.

Does the Prime Minister recall the pledges freely given by the Chancellor of the'Exchequer to the House on 31 March 1982 on "Britoil's crucial independence"? When will those pledges be honoured?

My right hon. Friend the Chancellor made a statement this week on his attitude to using the golden share in Britoil. That statement stands.

When my right hon. Friend next meets or talks to her colleagues who are Heads of European Governments and receives their congratulations on becoming the longest-serving Prime Minister this century, will she remind them, as diplomatically as only she knows how, that she would certainly not have remained Prime Minister for so long, or even have become Prime Minister, if she had proposed as loopy a suggestion as that we should tax the clothes we give our children, the books they read and the food that we give them to eat? Will she remind them that one would need to have monumental hubris to expect to survive in political life by proposing such measures?

I am grateful to my hon. Friend. The undertakings that we gave on this matter during the election — not putting VAT on food or children's clothing — stand in full, of course. Again, for one moment, I thought that another party might have a policy like that, but I quickly understood that it had not.

To ask the Prime Minister if she will list her official engagements for Thursday 14 January.

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

Is the Prime Minister aware of the report last week that, under the 30-year rule, the file on Hugh Gaitskell had been embargoed? Does that have any connection with the allegation in "Spycatcher" that the former Leader of the Labour party was assassinated?

That file was withheld in accordance with rules which are understood by the whole House and in precise accordance with some of those rules. It has been withheld for those reasons. [HoN. MEMBERS: "Why?"]

Order.

During her busy day, will my right hon. Friend take time to consider the situation in my constituency? Does she agree that parents of children in Cleveland are no different from parents in any other part of the country and that consequently, although at the end of the inquiry we may take individual measures, we should seek to reform the law relating to children and parents generally?

I take note of the point made effectively by my hon. Friend.

To ask the Prime Minister if she will list her official engagements for Thursday 14 January.

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

Does the Prime Minister recall the famous words in which she suggested that the National Health Service was safe in her hands? In view of the perpetual crisis in the service over recent months and the tragic cases that have been highlighted in the press, will she now recognise that many people throughout the country believe that she has blood on those hands?

I am happy to inform the hon. Gentleman that for every five in-patient cases treated in 1979, six were treated this year. For every 10 out-patient cases, 11 have been treated this year. For every one heart bypass operation in 1978, there have been three this year. For every three hip replacement operations in 1978. there have been four this year. For every two cataract operations in 1978, there have been three this year. For every two cervical smear tests in 1978, there have been three this year. For every two chronic renal failure treatments in 1978, there have been five this year. 'That is a splendid record of success.