To ask the Chancellor of the Exchequer when he next proposes to have discussions with the European Community Council of Ministers about European monetary matters.

At an informal meeting of European Community Finance Ministers in Germany on 14 and 15 May.

In his discussions with his European counterparts, will my right hon. Friend confirm that it is Government policy to continue to try to achieve the maximum possible exchange rate stability?

I have no doubt that my right hon. Friend will continue to say the same sort of things to his colleagues on the continent as he has before.

Will the time ever be right for Britain to join the European monetary system as long as this Government are in power?

As the hon. Gentleman knows, that matter is kept under continual review. The Government will join when they think the time is right.

In his discussions, will my right hon. Friend agree to put a proposal to his fellow Ministers that, with the advent of the single European market, with the free movement of labour, goods, services and capital, we shall have the economic conditions that will allow us to have a single European currency instead of the composite currency that now exists in the form of the ecu? Will he remind his fellow Ministers that in the United States the dollar encompasses 52 states, each with a different tax regime, so there is no need to wait for European tax harmonisation? Will he also remind them that each year about £2 billion is made by foreign exchange dealers dealing in European currencies alone?

My hon. Friend advances a visionary idea, but I doubt whether my right hon. Friend will say that to his colleagues this weekend.

In relation to European and other exchange rates, what is the Chancellor's exchange rate policy? We were told that the pound would be aligned with the deutschmark when it was below Dm3, since when the level of the pound has consistently risen, despite the Chancellor constantly telling us that each rise is unsustainable. As the Chancellor told The Wall Street Journal yesterday that the pound should continue to be aligned to the deutschmark, at what level should it be so aligned? Or has he been elbowed aside by the Prime Minister, and is it now his policy that it is unsustainable?

The right hon. and learned Gentleman has asked me a long question. There is a long answer to it in my right hon. Friend's evidence to the Treasury and Civil Service Select Committee.

To ask the Chancellor of the Exchequer how many tax breaks are eliminated or reduced by the Finance (No. 2) Bill 1988.

The main tax breaks eliminated or reduced by this year's Finance Bill are the forestry tax shelter, the tax relief for non-charitable convenants and for home improvement loans, and the under-taxation of company car scales.

Does my right hon. Friend accept that the elimination of these loopholes, which were inherited from the Labour Government, is extremely welcome and constitutes the reverse side of the coin of the tax cuts in the recent Budget? They are particularly welcome as they will reduce the load on tax lawyers and tax accountants, who can then put their brilliant minds to work that is productive to the economy. In taking these steps further, will my right hon. Friend learn from experience in the United States in this regard?

It is not often appreciated that in many respects we have gone further than the United States, which retains some—and more—of the reliefs that we have. If one adds to the list business entertainment, life assurance premium relief and the alterations that we have made to align capital gains tax and income tax, the revenues raised by these changes in 1989–90 will be more than £800 million. We do not hear much about that from the Opposition.

When the Prime Minister was wagging her finger at the Chancellor, as was reported to him by his hon. Friends, was it because of differences about the exchange rate, because of a difference of opinion over interest rates, or just because she was telling him to let the pound rise, no matter what the expense to British industry?

Those are highly interesting questions, but, alas, they have nothing to do with the question on the Order Paper. All that I shall say to the hon. Gentleman is that I was there and he was not.

Does my right Friend agree that one of the best consequences of lower tax rates is a reduction in the premium on the avoidance of tax? In that contest, will he promise to consider a speedy end to the close company provisions, which now seem wholly redundant?

I shall consider my hon. Friend's latter point; and, of course, his first point is entirely right. The dramatic reductions in rates that we have made substantially reduce the incentive for people to waste a lot of time trying to find a way round and through the tax system—something that they did enormously when we had punitive taxation rates under the previous Labour Government.

But will the Financial Secretary confirm that for every tax loophole that was closed in the Budget another was opened by the Chancellor? Will he also confirm that whereas somebody earning less than £60 a week will be paying 25p in the pound in tax, which is completely unavoidable, the man earning £1 million, by using all the tax loopholes that the Chancellor has made available to him, can end up with a tax liability of absolutely nil? How does he defend that?

The first point that I would make is that if the hon. Gentleman thinks that under the Labour Government there were not ways in which someone's tax bill could be reduced to nil, he does not know what was happening. Secondly, we have deliberately retained some reliefs in the tax system, such as the business expansion scheme and the enterprise zones, because we think that they serve a socially useful purpose. I do not know why the hon. Gentleman is so opposed to enterprise zones. The other day he said that some rich men are now finding the charms of Middlesbrough irresistible. That shows that the tax relief on enterprise zones is doing some good. It has doubled employment in the enterprise zones.

rose —

Order. I appeal for brief questions today and then we shall have brief answers.

To ask the Chancellor of the Exchequer what is his latest estimate of the financial effect on the Exchequer in a full year of the changes in inheritance tax announced in the Budget.

The full year cost is £220 million measured from an indexed base.

Does the Minister accept that that is a substantial sum and that for an estate worth £1 million the tax bill has now been cut by £148,000? How can the Government justify giving money away in that way? Surely incentive is not an appropriate justification. Would it not have been better to help those of my constituents who have lost housing benefit and rent rebates? That would be a much more appropriate way for the Government to spend money than to give it to those who are already well off.

If the hon. Gentleman had been here earlier this week he would know that we debated that matter fully. Several of my hon. Friends made the point that the incentive to hand on money is one of the most important incentives for keeping businesses together, and we believe that that contributes greatly to the incentives that are necessary for the growth of our economy.

Does my right hon. Friend agree that the difference between Conservative and Opposition Members is that Conservatives believe that income tax and inheritance tax relate to money that belongs to the individual, whereas the Opposition believe that it belongs to the state and that we should be given back only a little pocket money?

My hon. Friend is entirely right. He might also have added that if we had punitive rates of inheritance tax we would probably find that we raised less money, because since we started cutting the rates of inheritance the yield has gone up.

What conceivable reason is there for the Chancellor to give away money on estates worth £1 million and more to the super-rich, who do not need it? It cannot be because there will be any incentive. It cannot be because it will attract other people to Britain. The Minister has admitted that it is a loss to the revenue. Is it not a theft of public money from the Treasury to give to people who have far too much already?

The hon. Gentleman entirely ignores the fact that the money is the taxpayer's in the first place. What conceivable reason is there to want to break up existing family businesses?

Does my right hon. Friend agree that one of the most welcome aspects of the changes in inheritance tax is that the effective rate, taking into account the business property relief on the transfer of small businesses to the next generation, is now below 20 per cent.? Is this not a great encouragement for the formation of small companies, as well as for the prosperity of coming generations?

The Government have very much altered the nature of inheritance tax, not only with the change to which my hon. Friend refers, but with the provisions for lifetime giving. It seems to escape the notice of Opposition Members that the burden of inheritance tax at the lower end was such that, because of increasing house prices, it was hitting many people of comparatively modest means.

To ask the Chancellor of the Exchequer what steps he takes to ensure that advertising expenditure by Government Departments is kept under control.

To ask the Chancellor of the Exchequer how Her Majesty's Treasury monitors the public expenditure of Government Departments on advertising.

The cost of advertising is found from departmental spending programmes, as published in the public expenditure White Paper. The Treasury does not monitor and control it separately.

Is the Chief Secretary aware that Government expenditure on advertising has gone up fivefold since 1979, and, in the current year, is estimated to be £88 million? I realise, of course, that rotten products take a lot of advertising to sell, and nothing comes more rotten than Government policies. However, as many of the policies on which the taxpayers' money is spent are controversial, does the Chief Secretary agree that, rather than the taxpayer funding party political advertising by the Conservative party, Conservative Central Office should make a substantial contribution?

The underlying premise of the hon. Gentleman's question is entirely wrong. In fact, the percentage of Central Office of Information expenditure on advertising is not materially different in the current year from that of 1978–79. On advertising generally, it is in everyone's interest to know about policies and new schemes and to receive advice on such matters as health and safety, and that is precisely what the Government are determined to do. They stick strictly by proprietorial rules that have existed for many years.

Would it not save the necessity for Government expenditure on advertising if my right hon. Friend were to take this opportunity to tell us what Conservative Members particularly wish to know, namely, that my right hon. Friend the Chancellor of the Exchequer has no intention of resigning—or is that a hypothetical question?

I can certainly express a strong preference for my right hon. Friend remaining Chancellor for a considerable period. The evidence of his time as Chancellor is that he has produced a remarkably successful British economy.

The Chief Secretary referred to costs. Whose job is it in the COI to decide whether advertising has crossed the boundary into being party political?

The role of the COI is to advise the Government on matters of propriety in relation to advertising. The COI is, of course, responsible to my hon. Friend the Economic Secretary to the Treasury. The final decision on advertising is a matter for the departmental Minister, but the Government are bound to accept the rules presented to the Widdicombe committee, and do so.

Does my right hon. Friend accept that the money being spent by the Department of Trade and Industry on advertising to encourage companies to take advantage of the single market is money well spent, but that if companies are to observe this exhortation they must be endowed with a stable and sustainable rate of exchange against the deutschmark?

I believe that advertising designed to advise people of the merits and desirability of the single market is money well spent. It represents an extraordinary opportunity for British industry, and we wish to see it taken.

The House was interested to hear the Chief Secretary confirm that responsibility for the COI within the Government Treasury team has slid from the Paymaster General to the Economic Secretary. Will he confirm that the reason that that change was slipped through, without a great blaze of publicity, was the clear conflict of interest between the Paymaster General's duties to the Government's Treasury team and his duties as chairman of the Conservative party?

There can be no conflict of interest in that respect. My right hon. Friend the Chancellor passed the responsibilities for the COI to my hon. Friend the Economic Secretary to ensure that there was no such conflict, and he did that before there was a single representation from the Opposition to the effect that that change was needed.

To ask the Chancellor of the Exchequer what is his latest estimate of t he stock of United Kingdom net overseas assets.

At the end of last year the United Kingdom's net overseas assets were estimated at some £90 billion, second only to those of Japan.

I am grateful to my right hon. Friend for that encouraging answer. Will he confirm that a substantial part of those assets is in the United States? Does he believe that that is one of the main reasons for the most encouraging report in magazine on the excellent performance of the United Kingdom's economy under the stewardship of the Government and the Chancellor of the Exchequer?

I do not know whether there is a connection between the two facts that my hon. Friend mentions, but he is correct in saying that there has been a warm endorsement of my right hon. Friend's policies by magazine.

Does the Paymaster General agree that the value of the assets depends on sterling's exchange rate. Will he say how the Chancellor of the Exchequer has been able to have a quarrel with the Prime Minister on that most important matter, over which he has supreme authority? To quarrel with the Prime Minister on such matters may be unwise, but to do so openly is foolish.

I confirm that the exchange rate affects the scale of overseas assets.

The right hon. Gentleman's second question does not seem to follow from the question originally asked by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth).

Does my right hon. Friend agree that the excellent figures of overseas assets prove the strength of the British economy? Does he further agree that the money that has been invested abroad has been extremely good, not only for our invisibles, but for our export potential? Does he also agree that we should do nothing to prevent the mobility of capital, no matter where that capital is invested?

I endorse my hon. Friend's views. The removal of exchange control has played a substantial part in the build up of the assets that we have secured.

Surely the Government realise that the scale of foreign direct investment by British companies is disproportionate to Japanese investment. Japanese investment is mainly in the financial sector and buying other countries' companies. Our foreign investment substitutes for export trade. The evidence to prove that suggests that the scale of United Kingdom direct investment is undercutting exports to other countries and that is one of the reasons why we do not have an effective response even when the pound is low, and despite the fact that at the moment the Chancellor cannot get it low.

In practical terms the answer to that question is the opposite to the hon. Gentleman's proposition. He has omitted to notice that the Japanese have placed their largest investment within the European Community in this country. A substantial part of that investment is in manufacturing.

Does my right hon. Friend agree that the benefits accruing to Britain from those overseas assets will continue long after the transient benefits of North sea oil? That is a major vindication for the abolition of exchange control.

My hon. Friend is correct. In 1987 the net income from overseas assets was the highest ever recorded.

To ask the Chancellor of the Exchequer what impact he expects the taxation changes announced in his Budget to have on the balance of payments.

To ask the Chancellor of the Exchequer if he will assess the impact of the taxation changes in the Budget on the current account of the balance of payments.

None.

What action will the Chancellor take to prevent the rich from further damaging our balance of payments by spending their tax cuts on European cars, Japanese electronics and perhaps even Swiss chocolates?

If I may say so, that is an extremely foolish question, even from the hon. Gentleman. I do not know whether we shall be told, in one of the new policy documents on public enterprise culture that are coming from the Labour party every day, what people may or may not spend money on, but the plain fact is that what distinguishes the rich is that they save a higher proportion of their income.

Despite the Chancellor's answer, is it not inevitable that increased consumer spending as a result of the tax cuts is bound to suck in more income? Will he consider what changes he can make to company taxation to encourage spending on research and development so that British manufacturing industry can improve its position, which in some cases is quite woeful?

We all know that the Labour party is against tax cuts, that the Labour party voted against the basic rate tax cuts in the Budget, and that the Labour party, if it ever had the mischance to gain office again, would put taxes up, but that is not the road to economic success, as we saw when the Labour party was in office. The tax reductions in the Budget are part of a supply side programme which will improve the performance of the economy, and, over time, strengthen not only our economy as a whole, but the balance of payments in particular.

Does my right hon. Friend recall that in the past United Kingdom Governments have deliberately devalued the currency in an attempt to increase export competitiveness and have usually failed to do so? Will he compare that with the performance of the strongest economies, such as Germany, Switzerland and Japan, which have the strongest currencies and also the strongest export performance?

My hon. Friend makes a very good point. It is very difficult to know what is the current policy of the Opposition. The hon. Member for Dagenham (Mr. Gould) does have an exchange rate policy—that, whatever the exchange rate, it ought to be 20 per cent. lower. He has made that clear on a number of occasions. Perhaps the right hon. and learned Member for Monklands, East (Mr. Smith) will tell us whether he agrees with that.

Does my right hon. Friend agree that the exceptionally strong overseas asset position that we now enjoy, coupled with the healthy state of public finances, means that we can regard with equanimity the prospect even of a balance of payments deficit? Is it not clear that since the Budget the foreign exchange markets have taken the same view?

My hon. Friend is right. The temporary current account balance of payments deficit after six or seven years of continuous surplus is not a matter that should cause alarm. Certainly it is striking how overseas opinion has confidence in the British economy, despite the temporary current account deficit. That is shown by the popularity of sterling at the present time. It is also shown by the Fortune (9 May, 1988) article to which my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) referred, which said:

"Britain is Back … the 20th century's archetype of unstoppable industrial decline has suddenly stopped declining and come roaring back."

Will the Chancellor of the Exchequer talk about the booming economy and explain what the Government are going to do to remedy the current balance of payments deficit of about £4·5 billion? What are they going to do about the balance of trade deficit in manufactured goods with the Common Market, which is in excess of £10 billion? Does he regard those massive balance of trade and payments deficits as a mark of economic success, or of economic disaster, along with the 2 million jobs that the Government have disposed of in the manufacturing industry—more than Adolf Hitler achieved between 1939 and 1945?

Manufacturing industry is doing very well indeed and is doing better all the time. That has been recorded in CBI survey after CBI survey. I do not think that the hon. Gentleman's crude mercantilism is a help in understanding these economic matters. The plain fact is that if monetary policy is sound, inflation is low, fiscal policy is sound—indeed, we have a balanced Budget and we have a surplus—and British industry is getting steadily more efficient, there is very little wrong with the British economy.

Does my right hon. Friend agree that his Budget tax changes will help to sustain our extremely satisfactory rate of economic growth and the improvement in the performance of our economy, upon which our trading performance ultimately depends?

My hon. Friend is right. Our growth throughout the 1980s has been consistently at the top of the major European league table, and I expect that it will again be at the top of that league this year. As for the future, that is the whole point of the supply side policies that we have been pursuing in successive Budgets—to create a climate in which British industry and the British people can give of their best. That is why the British economy is doing so much better than it has ever done at any time since the war.

As the Chancellor raised the question of exchange rate policy during earlier exchanges, can he tell us straight what his policy is on the exchange rate? He told us when the pound was less than Dm3 that the pound should follow the deutschmark. Since then it has gone up, through various so-called unsustainable levels, until it now stands at Dm3·16 and may go higher. Do the Government want the pound to be worth more, or less?

Perhaps the right hon. and learned Gentleman can answer that question. I put it to him earlier. I have explained the policy very clearly to the Treasury and Civil Service Select Committee. That explanation is now available and it is well known to most hon. Members on both sides of the House. We also know the policy of the hon. Member for Dagenham (Mr. Gould), which is that whatever the exchange rate is, it should be at least 20 per cent. lower. That is not my policy. What is the Opposition's policy, and what is the right hon. and learned Gentleman's policy?

To ask the Chancellor of the Exchequer what is his estimate of the weekly value to the average pensioner couple of the changes in income tax for 1988–89.

The Budget changes in income tax will be worth over £4·10 a week to I he average pensioner couple paying income tax.

While recognising that about half of all pensioner couples do not pay income tax at all, and that this year's Budget will have taken about 195,000 pensioners out of income tax altogether, may I ask whether my right hon. Friend agrees that it is very good news for all those pensioners who pay tax that they will have gained, on average, about £4·19 a week from this Budget?

I entirely agree with my hon. Friend, except in one tiny respect. It is not one half of pensioners who do not pay tax. As a result of the increase in age allowance and other changes, two thirds of pensioners do not now pay income tax.

How can the Minister justify that claim? Although pensioners will receive a tax reduction, in many cases they will be paying £15 to £20 a week more in rent and rates, compensation for which will be only on a transitional basis? How do the Chancellor and the Chief Secretary justify a position in which the richest 1 per cent. of taxpayers are receiving 70 per cent. of all the Budget tax concessions?

Between 1979 and now pensioners' real incomes have risen, in real terms, five times more than they increased in real terms between 1974 and 1979. Most pensioners' incomes under the social security changes have been either increased or are unchanged. The transitional protection arrangements that were announced by my right hon. Friend the Secretary of State for Social Services deal with the problems that are faced by a minority of pensioners who, until then, were losers.

Does my right hon. Friend agree that, in addition to the benefits from the tax changes as they affect pensioners, the control of inflation is also important, as it affects their disposable income? Pensioners remember how they were affected during the period when those who sit on the Labour Benches were in government. Does my right hon. Friend also agree that the increase in their disposable income will give pensioners a great opportunity to take the products of national savings, many of which are tax-free?

I agree entirely with my hon. Friend. The change that has taken place in recent years in the living standards of pensioners was most effectively shown in the family expenditure survey that was published some time ago. Many people were considerably surprised by the improvement that has taken place.

Is the Chief Secretary able to tell us what the weekly impact is on a pensioner couple, especially those with a small occupational pension, of the changes in the housing benefit tapers and the 20 per cent. rates payment provisions that were introduced by the Government in April? Do they not wipe out in hundreds of thousands of cases any small benefit that was available under the Budget?

Yes.

No, the answer is not necessarily yes. The net effect on a pensioner couple as a result of the changes will depend on a variety of intangibles, but in the vast majority of cases considerable protection is provided against them, and the average living standards of pensioners have materially increased.

To ask the Chancellor of the Exchequer what were the regional growth rates in the British economy in 1986–87; and what information he has on regional growth rates in other Organisation for Economic Co-operation and Development countries.

The latest official estimates of United Kingdom regional money GDP growth, measured at factor cost, are for 1986. I shall arrange for the relevant information to be placed in the Official Report . Estimates for regional GDP, but on a somewhat different basis, are available for other EC countries in the Eurostat Yearbook of Regional Statistics, a copy of which may be obtained through the House Library.

Is my right hon. Friend aware that unemployment in my constituency of Beverley in east Yorkshire has fallen by the staggering total of 22 per cent. in the past year? Is it not an incontrovertible truth, and a fact that should be understood by the Labour Benches, that the Government's economic policy works in the north of England as well as in the south?

My hon. Friend is right. One of the most encouraging signs of the current strength of the economy is the way in which prosperity is spreading throughout the economy and unemployment is coming down throughout the economy. Only the other day I was looking at the figures for job vacancy advertisements in some of the leading regional papers. It was interesting to note that in the Manchester Evening News job vacancy advertisements are up 26 per cent. from a year ago; in the Bradford Telegraph and Argus they are up 40 per cent. and in the Birmingham Evening Mail they are up 41 per cent. My hon. Friend will be particularly interested to know that job advertisements in the Yorkshire Post are up 61 per cent.

Is the Chancellor not worried by the expansion of domestic credit— [Interruption.] —as manifested by the inflation of house and property prices in the south-east? If he is to take corrective action on interest rates, which he was hinting to the Wall Street Journal, will he also take action to protect those parts of the regional economy that are not suffering from these problems?

As I pointed out, one of the most encouraging aspects of the current economic scene is the way in which prosperity is now spread throughout the country, and in which unemployment in particular has gone down faster in many regions than in the south-east of England. Of course there is a regional imbalance; there always has been. When the hon. Member for Caithness and Sutherland (Mr. Maclennan) was a member of the Labour party—I do not know his party now—and indeed a junior Minister, there was a regional imbalance. But all parts of the economy are growing faster now than they were then.

Bearing in mind the effects on growth of exchange rates, can my right hon. Friend tell us the cost of supporting the dollar last year and the loss in sterling terms? Does he think that it was money well spent?

We do not publish figures of the exchange equalisation account and its operations, for obvious reasons. No previous Government have done so. If the House wants to investigate this matter, a perfectly proper channel for that is an investigation by the Public Accounts Committee, as indeed occurred in 1978. At that time the practice of the Government, which was the same as this Government's, was endorsed. As for intervention in the foreign exchange markets, it is a very foolish Government who refrain from intervention in foreign exchange markets in all circumstances.

When the Chancellor of the Exchequer has looked through all those newspapers at the situations vacant columns, and perhaps found himself a job, will he tell the Prime Minister first? When he has done with it, will he get all the bundles of papers together and pass them to the leader of the SDP, because he is looking for a job, and then pass them on to the Liberal Chief Whip, because he is looking for a job, and then to the present leader of the Liberal party/SDP, because he is looking as well?

I do not think it would be right of me to intrude into this delicate subject of rather private grief.

Following is the information:

Source: Economic Trends, November 1987, page 86.

To ask the Chancellor of the Exchequer what has been the United Kingdom annual inflation-adjusted rate of growth since 1981; and what equivalent information he has about the United Kingdom's major competitors.

Between 1981 and 1987, total output in the United Kingdom grew on average by over 3 per cent. a year. That is faster than in any of the other seven major industrial countries except Japan.

Is it not particularly gratifying that, in 1987, growth in United Kingdom manufacturing output was dramatically higher than in any other country in the Group of Seven? Will my right hon. Friend consider going halves with me in buying every Opposition Member a copy of the recent issue of "Fortune" magazine, so that they may have a better comprehension of the dramatic and continuing improvement of the United Kingdom economy?

I entirely agree with my hon. Friend's first point. On his second point, I am not entirely sure that it would be money well spent, but I am prepared to try it. For my hon. Friend's interest, and that of the Opposition, I affirm that, since 1980, in manufacturing alone, output per British worker has risen by more than 5 per cent. a year. That is even faster than at any time in the 1960s.

To ask the Chancellor of the Exchequer if he will make a further statement on progress towards the elimination of inflation.

The elimination of inflation remains our ultimate objective.

As the Government— [Interruption.]

Order. Interruptions take up a lot of time.

Talking of ultimate objectives, as the Government are acknowledged to be three years behind on their target of eliminating inflation, will the Chief Secretary tell us to what extent that is because of price increases that the Government have imposed on nationalised industries, and to what extent it is because of the Chancellor's judgment that the measures that are necessary to squeeze inflation out of the system will stop growth?

For reasons that are unknown to me, the hon. Gentleman's popularity seems to have grown rather substantially in the past few days.

The slower progress is not really surprising, given the strong growth performance of the economy. The hon. Gentleman touched upon that proposition in his question.

Although exchange rates clearly have an important role to play in bringing down inflation, does my right hon. Friend accept that the competitive edge of British industry could be undermined if sterling continues to rise? My right hon. Friend has referred to the tremendous contributions that manufacturing has made to the British economy in recent times, but such contributions could be completely undermined. Is it not important that we keep a careful watch if we wish British manufacturing to continue to play a major role in our economy?

As my hon. Friend knows, it is certainly the Government's intention to ensure that manufacturing continues to grow as it has done. On that basis, we are certainly keen to aim at price stability. We agree, too, that the stability objective in the exchange rate is also a highly desirable proposition.

To ask the Chancellor of the Exchequer what is his latest estimate of the balance of payments deficit for 1988–89.

The financial statement and budget report forecasts a current account deficit of £4 billion in 1988.

Does that answer not reveal to us that one of the real reasons for the deficit has been the fact that the Government have converted a manufacturing trade surplus into a chronic deficit? Will the Chancellor take the opportunity now to explain how high exchange rates will help our exporters to be competitive, and how, as he said in his interview in the Wall Street Journal , high interest rates, not only in this country but in others, will increase economic activity, encourage investors and, indeed, boost employment?

I am surprised that this figure really reveals anything, because it was published two months ago. As for the substantial point that the hon. Gentleman made, the comparison between this Government and the Labour Government is quite the reverse. During the whole period that this Government have been in office there has been cumulatively a substantial current account surplus, whereas during the Labour Government's period there was a current account deficit. Even more important is the real sign of competitiveness of manufacturing—yes, of manufacturing. During the period of the Labour Government Britain's share of world trade in manufactured goods was steadily declining. During the period that we have been in office it has stopped declining for the first time in decades, and has in fact risen slightly.

To ask the Chancellor of the Exchequer if he will estimate the effect upon elderly taxpayers of the change to independent taxation of husband and wife.

Over 80 per cent. of the 1·1 million elderly married couples paying tax under the present system will have less tax to pay under independent taxation, and 160,000 elderly couples will be taken out of tax altogether.

I am obliged to my right hon. Friend for that reply. Can he confirm that elderly wives will get age allowance in their own right for the first time?

My hon. Friend is right. That is one of the aspects of independent taxation that makes it very valuable to elderly people.

To ask the Chancellor of the Exchequer if he will make a statement on the growth of manufacturing output in 1987.

Manufacturing output grew by 5½ per cent. between 1986 and 1987.

Given the fact that there has been a 90 per cent. increase in GDP per head in the northern region, does my right hon. Friend see a significant improvement in manufacturing industry in that region?

As my right hon. Friend the Chancellor said earlier, this last year has been an extremely strong one for manufacturing output, a nd he expects that the same will be true for this year as well. That obviously bodes well for the northern region.

To ask the Prime Minister if she will list her official engagements for Thursday 12 May.

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

In the course of her busy schedule, will the Prime Minister pause to consider the desperately long hospital waiting lists in Gwent, which, combined with the recent Scrooge-like cuts in social security benefits, would seem to illustrate her complete lack of concern for the plight of ordinary people? May I point out to her—or perhaps she needs an astrologer, after all—that it was factors of this sort that led to the virtual extermination of the Conservative party in Newport in the local elections last week?

With regard to the Health Service, first, there have been two specific programmes directly related to cutting down waiting lists that have been very successful. Secondly, there have not been cuts in the Health Service. Indeed, nearly £2 billion more is allocated to the Health Service this year than last. Thirdly, there have also been increases in social security. Again, another £2 billion has been allocated to social security over and above previous years. None of this could have been done unless my right hon. Friend the Chancellor had run the economy in such a way as to ensure a higher standard of living and of social services.

Will my right hon. Friend take time today to consider the implications of the gains made by the Conservative party last week on the Bradford metropolitan district council, plus the defection this week of a Labour councillor who has joined us, thus making us the largest group on the council? Is this not a sign that people in the inner cities are looking to us to ensure for them a better future by controlling Government locally and nationally?

Yes. I join my hon. Friend in congratulating the people of Bradford on their wisdom. The results give Bradford new hope and a new chance. Prosperity is spreading widely all over the country, including the Bradford area.

To ask the Prime Minister if she will list her official engagements for Thursday 12 May.

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

Does the Prime Minister recall that a few days ago she told the House that she would seek reassurances from the Government of the Irish Republic that they would not back out of their responsibilities under the Anglo-Irish Agreement with regard to terrorism? Does she recall, further, that she told the House that the people of Northern Ireland would have their rights maintained under the Anglo-Irish Agreement and that the Government of the Irish Republic had accepted that? Did her right hon. Friend the Secretary of State bring back such assurances after his private meeting with Mr. Haughey last week?

The hon. Member has quoted correctly what I said. The Anglo-Irish Agreement was signed by both Governments and registered with the United Nations, and must continue to be upheld. That, I believe, is now understood on both sides of the border.

Will my right hon. Friend reflect on the fact that it is 40 years to this very day since a Labour Minister announced that Britain would have its own independent atomic deterrent? Will she further reflect upon the remarkable contrast between what now must be seen as the giants of the postwar Labour Government and the political and parliamentary pygmies who have replaced them?

Yes. In those days there was virtually no difference between the two sides of the House on the importance of defence and the nuclear deterrent. What a pity there is such a difference now.

In view of the Government's unwillingness to use the Industry Act 1975 or other powers to intervene to protect Rowntree from the proposed takeover by Nestlé, will the right hon. Lady confirm that she is not willing to intervene to protect any industry, service or national asset from international predators and that it is the Opposition, not the Conservative Government, who would protect workers and the people of Britain?

I confirm what my right hon. and learned Friend pointed out on Tuesday, that when we receive a bid it has to be dealt with in accordance with the law passed by the House, after debate. That law is that the opinion of the Office of Fair Trading must be obtained and that the Secretary of State must wait to receive that opinion before making up his mind on whether such a bid should be referred to the Monopolies and Mergers Commission. After that has been received, he will decide. If he decides to refer it, the matter can be dealt with under competition rules or under public interest. I hope that the hon. Member is not suggesting that we can disobey the law of the land.

Will the Prime Minister take it from me that the vast majority of the people throughout the United Kingdom deplore the unwarranted attacks on the members of the SAS who carried out an effective action in Gibraltar in defence of the innocent? Does the Prime Minister agree that it is disgusting that some people inside and outside the House are more concerned about terrorists than about the welfare of our security forces?

I join the hon. Gentleman in saying how thankful we are for the excellent services of all members of the security forces in protecting us from terrorism.

To ask the Prime Minister if she will list her official engagements for Thursday 12 May.

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

Following the disclosure yesterday in the National Security Archive in Washington of Colonel Oliver North's memoranda, can the Prime Minister give the House a categorical assurance that her Government have never, either directly or indirectly, perhaps through the CIA or her friend Colonel Pinochet in Chile, facilitated the supply of arms to the Contra terrorists in Nicaragua?

I have given the answer so many times. I will repeat it again. I can say categorically that we have not agreed to supply Blowpipe, and we have not supplied Blowpipe, to the Contras.

Has my right hon. Friend yet sent congratulations to the President of France on his re-election? Has she noticed that the leaders of the Governments in two of the great democracies in the world, France and the United States, will reach the end of their elected terms of office in their late seventies? Is she determined not to be outdone in this matter?

I have sent a message of congratulations to the President of France, and I have spoken to him. We hope to arrange a meeting, probably before the Toronto summit, to discuss important matters. I have also noted the point to which my hon. Friend referred. I assure him that at all times I shall take a balanced view of these matters.

The pound has risen again against the deutschmark. Is the Prime Minister content to see it going on rising?

The right hon. Gentleman will complain when the pound goes up and when the pound goes down. The Chancellor will run the economy in such a way that he will combine low inflation with good economic growth. He has been extremely successful in that objective. It is an objective and an achievement which completely eluded the Opposition.

It is a pity that the Prime Minister could not answer that question. Can she answer this one? Does the right hon. Lady recall the Chancellor of the Exchequer saying two weeks ago, when the pound was lower than it is now,

"I do not want to see the exchange rate appreciate further. It would he unsustainable and … damages business and industry."

Does the right hon. Lady agree with the point that the Chancellor made?

I agree that the Chancellor runs the economy extremely well, with low inflation—which Opposition Members were never able to do—and with excellent growth, giving all people in this country a much higher standard of living.

That is all very interesting. Can the right hon. Lady give us a straight answer? Does the Prime Minister agree with her Chancellor of the Exchequer?

We shall continue to run the economy, with low inflation, and excellent growth, which gives a high standard of living and a high standard of social services. It is that total picture that counts. What a pity that the right hon. Gentleman cannot understand the answers or the economics.

May I draw my right hon. Friend's attention to the position today in Langbaurgh and Redcar, where the Labour party is in total disarray?

The Prime Minister is not responsible for that.

Will my right hon. Friend today send a message of support to the new Conservative mayor of the borough of Langbaurgh and Redcar, where the Labour administration has fallen apart and two Labour Members are now voting with the Conservatives?

I will join my hon. Friend in doing just that, and join him in congratulating the mayor.

To ask the Prime Minister on approximately how many occasions since January 1986 Mr. Bernard Ingham has given briefings to the press on the unauthorised disclosure of letters between Ministers; and if she will make a statement.

As the hon. Gentleman knows, it is not the practice to comment on Lobby briefings.

Why is it that in the course of many, many speeches, many, many broadcasts and many, many press statements, not once has the truthfulness of the Prime Minister and of Mr. Ingham about the events of January 1986 been endorsed either by the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) or the giant from Henley (Mr. Heseltine)?

The details have been given many, many times in the House. I have nothing further to add to them.

Will my right hon. Friend note today that the—

Order. The hon. Gentleman has not looked at the Order Paper. This is a definitive question.

To ask the Prime Minister if she will list her official engagements for Thursday 12 May.

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

Is the reason why no replacement was made when Lord Whitelaw resigned as Deputy Prime Minister that the right hon. Lady already has a Deputy Prime Minister, her chief press secretary, Mr. Ingham? Although the right hon. Lady clearly has many difficulties in getting on with her Foreign Secretary and Chancellor of the Exchequer, is it desirable that a chief press secretary should have more influence in policy matters than any of her Cabinet colleagues?

The hon. Member must he hard put to it for a question to ask that one. I note that he cannot find a single thing to criticise about the economy or about the way in which the country is run. How very revealing.

If my right hon. Friend today, as First Lord of the Treasury, receives a request that the Bank of England Export Credits Guarantee Department should underwrite any deposits required by aspirants for the job of leader of the Social and Liberal Democrats, will she please resist it as firmly as she can?

I take note of my hon. Friend's sentiments.

To ask the Prime Minister if she will list her official engagements for Thursday 12 May.

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

How long will it be before the pensioners who are now paying increased rents but hope to benefit from the Government's about-turn on the social security changes know for certain that they will benefit, and how long will it be before they receive the money?

I think that the hon. Gentleman, who I hope has an interesting week ahead, will already have received a letter from the Department of Health and Social Security giving details of a freepost and freephone service, where any inquiries can be made. He will know that a special unit has been set up in Glasgow to deal with each of those matters, and he will also know the place to which people can apply if they have any queries.

Following my right hon. Friend's visit to Docklands this week, will she underline from the Dispatch Box the outstanding achievements in terms of jobs, housing and transport systems that the combination of private and public funding has achieved?

Yes. I went to Docklands yesterday. The result of the work of the London Docklands Development Corporation is quite outstanding. It is outstanding in the amount of investment that has been made there. About £4 billion of private sector investments have been secured. It is outstanding in the number of jobs that the area is providing. There are now 36,000 jobs in Docklands and the number unemployed has fallen by 15 per cent. It is outstanding in community support. About £17 million has been spent on that. It is outstanding in increased road and rail improvements. It is outstanding in housing in the private sector, and one notes that a quarter of purchasers of new homes on LDDC sites were former local council tenants. It is an outstanding achievement in every way for private enterprise, the imagination of the Government and the way in which the whole scheme has been administered by the first two chairmen and their deputies.