reported to the House, That Her Majesty, having been waited upon, pursuant to the order of 7 July, humbly to know Her Majesty's pleasure when she will be attended by this House, has been pleased to appoint to be attended on Wednesday 20 July at 11 o'clock in Westminster Hall, and has given her permission for this House to be accompanied by representatives of overseas Parliaments of the Commonwealth.

To ask the Chancellor of the Exchequer what discussions took place at the Toronto economic summit relating to Third world debt; if there will be an increase in aid to less developed nations; and if he will make a statement.

An agreement was reached at the economic summit in Toronto last month, along the lines of the initiative that I launched in April last year, to reduce the debt burden of the poorest, most heavily indebted countries, mainly in sub-Saharan Africa, which are following approved economic policies.

Does my right hon. Friend accept that Britain's role in securing that agreement was decisive? Will he continue his efforts to ensure that the agreement is implemented as soon as possible?

Yes. I am grateful to my hon. Friend for what he has said. It has been our persistence, since I launched the initiative in Washington at the interim committee meeting in April last year, which I believe allowed us to get the agreement in Toronto, which is of the first importance for the heavily indebted poorest countries of sub-Saharan Africa. Earlier this week there was a meeting of senior officials, under the aegis of the Paris Club, at which a substantial amount of agreement was reached on the nuts and bolts. I hope that, as my hon. Friend has said, it will not be too long before the agreement can be implemented.

Does the Chancellor recognise that the cost of debt, particularly in Latin America, can be measured directly in jobs lost in this country through lost exports? What steps will he now take to ensure positive action by the richer nations of the world to ease the debt problems of Latin America?

The middle-income debtors of Latin America indeed have substantial debts. It is a great problem, which has been there since 1982. During that time we have had a well-developed debt strategy for dealing with the problems, but it is not just a matter of the International Monetary Fund taking a lead, as it does very valuably, or of the commercial banks rescheduling debts, which they are doing. It is also vitally important for those countries to put their own economic houses in order.

I welcome the additional information that my right hon. Friend has been able to give about recent action in the Paris Club. Can he tell how long it will be before its members will be in a position to implement the scheme that his energies have helped to create, and what scale of benefit we may expect to see for those poorest countries?

I pay tribute to the part that my hon. Friend has played in the House in consistently drawing attention to these matters. I cannot tell him how long it will take, but we are going ahead as quickly as possible; and the fact that the special meeting was held at the Paris Club earlier this week is an indication of that.

The Chancellor's debt strategy may well develop, but it is not very athletic. Surely he realises that, as was pointed out by my hon. Friend the Member for Stretford (Mr. Lloyd), up to a quarter of a million jobs have been lost in the export sector in the United Kingdom since 1981 alone because of the Latin American debt crisis.

I am astonished at the ill-informed nature of the hon. Gentleman's comments. We have done far more in connection with writing-off old aid loans than France. However, I do not want to enter into competition, because the United Kingdom and France have been working very closely together on the initiative on which agreement was reached in Toronto and which was further discussed at the Paris Club this week.

I congratulate my right hon. Friend on his welcome initiative. Does he agree, however, that it is the height of irresponsibility to promise a massive increase in aid when, if the Labour party ever regained office, our economy would be in such a parlous state that we would not be able to afford an increase in aid, and might not even be able to afford the aid that we now provide?

My hon. Friend is right. It is very easy for the Opposition to say, as they do, that they will increase aid. The Leader of the Opposition—who at present is safely away from these shores—has said that they will increase it by two and a half times, and raise the basic rate of income tax by 2p to pay for it. But, of course, if there were ever another Labour Government the economy would be in such dire straits that I doubt whether even a 2p increase in income tax would be sufficient to pay for it.

To ask the Chancellor of the Exchequer if he will make a statement on the current balance of payments position.

In the first five months of this year the current account deficit was estimated at £4·7 billion.

Does the Minister admit that the figures for May were absolutely appalling—the worst monthly figures on record for any period? Is not the deficit for the first five months of this year three times the size of that for the whole of 1987, and are not all the indications that the position will worsen? Is this the foundation for what the Chancellor calls our economic recovery?

The hon. Gentleman should recognise that there is all the difference in the world between a country that is running a deficit on its payments when it has a surplus on its public finances, and one that is running a deficit that reflects not the growth of investment domestically but a deficit that its Government are running, as the Labour Government that the hon. Gentleman supported produced for this country.

Is it not inevitable, when the latest Department of Trade and Industry intention investment survey projects a 16 per cent. rise in manufacturing investment, that that should be reflected in our import figures? Do not those figures, and the excellent figures from the Department of Employment today, which show that manufacturing productivity is continuing to rise by 6 per cent., offer the best hope for continuing improvement in our competitiveness?

My hon. Friend is right. The investment boom to which he refers also shows up in the import figures. In the past three months the growth in imports of investment goods was about 19 per cent. and that of consumption goods only about 10 per cent.

Is not the most worrying aspect of the high interest and high exchange rate policy now being pursued, not only that the Chancellor will be the first Chancellor in history to preside over a manufacturing trade deficit in excess of £10 billion, but that the trade deficit is deteriorating sharply in the new industries on which our industrial future depends—computers, information technology and electronics—where it is estimated to be £2 billion alone? Will the Treasury now honour the promise made by the Minister for Trade yesterday in the House to publish the revised forecasts for the balance of payments deficit and publish the forecasts for this year and for next year, or is it too ashamed of the real figures even to do that?

My right hon. Friend has said that he will publish the revised forecasts in the normal way in the Autumn Statement as required under the Industry Act. The hon. Gentleman's presentation of the position of British manufacturing industry is grotesque, particularly in a week when we have heard that Britain has won the largest export order of manufactured goods ever. Clearly, that is not a sign that we are doing badly.

To ask the Chancellor of the Exchequer what is his estimate of the rise in manufacturing profitability in 1987.

To ask the Chancellor of the Exchequer what is his estimate of the rise in manufacturing profitability in 1987.

Manufacturing profitability is estimated to have risen by about 1½ percentage points in 1987 to 8½ per cent., the highest level since the beginning of the 1970s.

Does my right hon. Friend's answer not highlight one of the many strong features of our economy, as without profitability there can be no expansion through reinvestment, and without that expansion there can be neither the job nor the wealth creation to finance our welfare and social programmes?

My hon. Friend is entirely correct. The fruits of that success have been shown in expenditure programmes over recent years. In addition, profitability has risen each year since 1981, and that is a most welcome trend.

Are not improved industrial relations contributing substantially to improved profitability? Is it not therefore particularly silly and reactionary for the Trades Union Congress to seek to drive out from its ranks those unions willing to conclude single union agreements, to the great benefit of the company for which they work, the real earnings of their own work force and employment?

I entirely agree with my hon. Friend, but it would be indelicate for me to intrude in the misery of the trade union movement.

Does the right hon. Gentleman agree that a major threat is posed to manufacturing profitability by the high pound and high interest rates, which are estimated to cost £600 million this year?

Profitability frequently depends on competitiveness, and competitiveness is best measured by performance. British industry is performing better today than it has done for many years.

Will the Minister encourage some of that profitability to be reinvested, particularly in research and development? We still have a shocking record of investment in research and development in this country, particularly in the northern region, and we need that research and development to ensure future capacity in manufacturing and in the real economy, which will produce the jobs and the prosperity of the future.

I have some sympathy with what the hon. Lady says. There is a substantial amount of public sector investment in research and development, and I would welcome increased private sector investment in research and development. I hope that that forms part of the significant investment boom that we are now seeing.

To ask the Chancellor of the Exchequer what has been the average annual increase in the productivity of the whole United Kingdom economy since 1980.

Since 1980 output per head in the whole economy has grown at an average rate of 2¾ per cent. per year, about the same as Japan and faster than any other major industrialised country.

Will my right hon. Friend tell the House how far the increase in productivity compares with our performance in the 1960s and 1970s and with that of our competitors over those years?

The improvement in productivity is greater now than at any stage in recent years, including the 1960s. The most effective recent comparative figures are that growth has been averaging 2¾ per cent. per annum since 1980, compared with a growth pattern between 1973 and 1980 of only 0·7 per cent.

Why is the increase in productivity linked to such a massive balance of payments deficit? Is not the problem for the Chancellor of the Exchequer that he cannot leave his job next year? He is locked into his appointment because he is scared stiff of leaving a balance of payments deficit.

I congratulate the hon. Gentleman on the ingenuity of his question. I share his wish that my right hon. Friend the Chancellor of the Exchequer will remain Chancellor for a considerable period. As my hon. Friend the Economic Secretary to the Treasury said, the deficit on the balance of payments and the balance of trade reflects partly a strong growth in domestic activity. It reflects also —this is material to manufacturing—the fact that a great deal of the import growth relates to capital, semi-capital and intermediate goods, which are being imported as part of the investment boom.

Good as the figures are for manufacturing productivity, is my right hon. Friend not a little concerned about the large rise in wage rates? If they continue, they could threaten our economic growth.

I share my hon. Friend's concern about the rise in wage rates, not least because we wish to see the dramatic reductions in unemployment continue. The rise in wage rates in part reflects overtime earnings and productivity bonuses, and that we welcome.

To ask the Chancellor of the Exchequer if he will estimate the impact of top rate tax cuts on imports.

The elimination of the top rates of tax over 40 per cent. will improve economic performance and thus lead to higher living standards all round.

Will the Minister confirm that Britain's balance of trade in cars with West Germany has deteriorated more sharply than any other part of the balance of trade since 1979? Will he also confirm that his £2 billion tax give-away to those on the highest tax rates will find its way into the purchase of BMWs, Audis and Porsches, which will further deteriorate the balance of trade in cars?

The hon. Gentleman has asked me a rather long question, especially if the terms of it are taken back to 1979. He referred to the current balance of payments deficit. He should realise that the increase in investment goods imported is considerably larger than the increase in consumer goods imported.

Less than two years ago imports were lower, the economy was stagnant and in recession and tax rates were much higher. Were the Opposition whingeing then as well?

My hon. Friend is right.

Is not personal consumption the highest import content of any economic activity within the economy? If so, why did the Chancellor of the Exchequer decide in his Budget to place such emphasis on top-rate tax cuts? Those cuts will undoubtedly fuel consumption rather than investment in our infrastructure and worsen the already bad balance of payments position. Will the Minister now answer the question that was put to him earlier this afternoon by my hon. Friend the Member for Dunfermline, East (Mr. Brown)? Will the balance in manufacturing trade reach a deficit of£10 billion this year?

The hon. Gentleman's question linked a series of hypotheses. I continue with the observation that I have just made. In terms of the current balance of payments deficit, the increase in investment goods imported is rising much faster than the increase in consumer goods.

To ask the Chancellor of the Exchequer what is his latest estimate of future inflation.

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

The rate of inflation in May stood at 4·2 per cent.

Despite some signs that the economy may be starting to overheat, is my right hon. Friend aware that Conservative Members, and most of the country, have absolute confidence in his ability to keep our economic progress on course? But will he give the House an unequivocal undertaking that in no circumstances will he accept advice from the Labour party, bearing in mind that in August 1975 inflation hit a 20th century peak of 26·9 per cent. under a Labour Government?

I am grateful to my hon. Friend for his earlier remarks. The annual rate of inflation under Labour in August 1975 of 26·9 per cent. is an interesting figure, because in that one year inflation was more than in the past five years put together. However, I can assure my hon. Friend that I am still not satisfied with the rate of inflation in Britain and, despite the fact that it is only a fraction of what it was under the Labour Government, I am determined that we shall get it down, and our policy will be directed to that end.

As we have been told that today's Cabinet meeting has reached a decision on total public expenditure for the coming years, can my right hon. Friend confirm that the rate of inflation will influence the next expenditure round?

Yes, indeed. My hon. Friend is right. One of the fundamental reasons for Britain's economic success has been our firm control of public expenditure, which has fallen steadily as a share of GDP since 1982–83. In the Cabinet this morning we reaffirmed that strategy and agreed that public expenditure should continue to fall as a share of GDP throughout the next three years.

Despite what the Chancellor says about economic success, does he agree that today's Trustee Savings Bank report on the economic indicators in Northern Ireland demonstrates just how patchy that recovery is? For instance, in Northern Ireland last year employment in manufacturing industry fell by 1·3 per cent. and output is only now reaching 1979 limits. Does he agree that the overheated economy in the south-east of England contrasts with those less prosperous regions of the United Kingdom, where unemployment is still the major problem facing the people living there?

I must confess that I have not read the latest TSB report, but the hon. Gentleman is somewhat mistaken. First, on the question of Northern Ireland, as he is well aware, that unhappy Province has particular problems of its own which are not purely economic—indeed, not economic in origin at all—but obviously have a great bearing on the economic performance of the Northern Ireland economy. However, the figures that have been published hitherto for Northern Ireland may have understated the growth of output in the Province. The hon. Gentleman will welcome today's excellent unemployment figures, which show not only a further massive fall for the 23rd month in succession, but that the biggest fall of all has been in the west midlands, the north-west and the north of England.

Will the Chancellor of the Exchequer explain something that is puzzling many people: why, whenever inflation in goods and services is low he takes credit for it, but when we have a historically high level of inflation in house prices he says that it is due to something else?

I did not know that there had been any discussion today about inflation in house prices. House price inflation is a different matter from general price inflation. [Laughter] If Opposition Members laugh, that only shows their ignorance. Let them explain how it is that, while inflation in Japan is very close to zero, property prices in Tokyo and Osaka have risen far faster than in London.

Further to my right hon. Friend's reply to my hon. Friend the Member for Berkshire, East (Mr. MacKay) about the current danger of overheating in the economy, will he confirm that the Cabinet today decided not to exceed in 1989–90 the amount laid down for public expenditure in the medium-term financial strategy? Will he confirm that it would be dangerous if public sector wage settlements for the coming year exceeded inflation?

What we agreed was wholly consistent with the pledge in our election manifesto last year. Public expenditure for the coming three years should be kept as close as possible to the planning totals, and public expenditure should continue to fall as a share of GDP throughout the next three years. My hon. Friend is right in saying that that pay settlements, both in the public and the private sector, have a very important bearing on the public expenditure totals, and, indeed, on the performance of the economy.

May I drag the Chancellor away from the problems of the Japanese housing market and his reminiscences of the last Labour Government to discuss inflation? Does he agree that the largest single pressure on the retail prices index is the 11 per cent. price rise in electricity, the 10 per cent. price rise in water charges, the 12 per cent. price rise in rates and the 6 per cent. overall rise in gas prices? Those are all in the public sector and the Government should take responsibility for them. What will the Government do to curb that sort of inflation?

All the matters that the hon. Gentleman has mentioned are taken into account in the retail price index, which has gone up by 4·2 per cent., according to the latest figure. However, rate increases are the responsibility, not of the Government, but of Socialist councils up and down the country.

To ask the Chancellor of the Exchequer if he has any plans to approximate indirect t ax rates to the European Community average.

No, Sir.

Does my hon. Friend agree that the EEC Commission proposal to harmonise VAT rates throughout the Community is based on the fallacy that different rates distort competition? Will he point out to the Commission that that is not the case, because VAT is a tax on consumers, not on production costs, and that businesses can reclaim VAT? Does my hon. Friend agree that the EEC Commission might find it inconvenient and untidy to have different rates of tax in different parts of the Community, but that that hardly justifies an assault on the tax powers of individual Parliaments?

My hon. Friend is absolutely right in saying that VAT causes no distortions of commercial trade, because it applies equally to imported and domestic goods, and requires comparatively limited border control. The only distortion is cross-border shopping. The European Commission's proposals to deal with that are rather misconceived. That is perhaps better solved by liberalising controls on cross-border shopping, and then leaving market forces to constrain individual countries through the rates of VAT that they choose to apply.

Will the Minister confirm that all those goods and services that are currently zero-rated will continue to be so rated for the foreseeable future?

I can confirm that the British Government will not allow their powers to retain zero rates to be constrained by the EEC.

Does my hon. Friend agree that the lesson of the United States of America is instructive? In that single market individual states are free to levy their own rates of indirect taxation. The outturn is that market forces are the ultimate constraint on those rates.

My hon. Friend is absolutely right. That illustrates that it is quite unnecessary to constrain the sovereign power of individual countries to set their own indirect tax rates. It would be paradoxical if the member states of the European Community had less power in this respect than the individual states of the United States of America.

Will the Economic Secretary state here and now that there will be no VAT on transport, books, newspapers and periodicals? If he will not, does he realise that these items will then be the subject of some shabby horse-trading in a smoke-filled room some time in 1992 when the Common market comes to make its compromises?

I have made it absolutely clear already that we shall not concede our right to retain the zero rate on any products on which we already have it.

To ask the Chancellor of the Exchequer what has been the growth in economic output during the last 12 months; and if he will make a statement.

Over the 12 months to the first quarter of 1988 total output grew by 5 per cent.

I welcome today's fall in unemployment, which marks the longest continuous period of falling unemployment since the war. Does this not provide convincing evidence of the much greater success of this Government's economic policies than any of the policies that were ever adopted by the Opposition?

My hon. Friend is absolutely correct when he refers to today's excellent figures for unemployment and employment. He might also have a look at today's figures for manufacturing output, which show that it is some 6½ per cent. up on a year ago and that this is the fastest rising sector of the economy.

Can the Chancellor of the Exchequer explain to the House why it is that, on another economic output front—the invisibles, which in election year were running at £700 million a month—had fallen to £400 million a month in the first three months of 1988? There is a point of view that these figures were fiddled during election year to assist the balance of payments during that year. Will he take into account the fact that if that £400 million continues throughout 1988 it will produce another £2 billion deficit on his balance of payments?

I must say in all seriousness to the hon. Member that the figure for the balance of invisible trade, which is frequently revised in both directions by the Central Statistical Office, is worked out totally independently by that office. He has cast a very serious slur on the Central Statistical Office and the civil servants who work for it, and I hope that he will withdraw it.

Is my right hon. Friend aware that the west midlands is working again, producing again and making profits again? Does this not speak volumes for the policies of my right hon. Friend and the Government?

Yes, indeed, and as an east midlands Member I am delighted to see the rapidly growing prosperity of both the east and west midlands. It is one of the most encouraging aspects of the remarkable growth that we have had in this country over the past five years and more that it is now being seen in all parts of the economy.

To ask the Chancellor of the Exchequer if he will estimate the cost to manufacturing industry of the cumulative rise in interest rates since 1 June.

Bank base rates currently stand at 10 per cent. This is roughly in line with the average level of interest rates during the last five years, during which manufacturing output has increased by over 20 per cent.

Does the Chancellor accept the CBI's figures, which show that the five interest rate increases that we have had since 1 June have cost industry about £25 million, that industry is now bearing the brunt of his policies and that in the long term his policies, which might prove beneficial to financiers in the City of London, are proving disastrous for what is left of manufacturing industry in Great Britain?

The hon. Member really is living in a world of his own. If he were to go out into the real world, if he were ever to meet anyone in manufacturing industry, if he were ever to see inside a manufacturing company, he would realise that manufacturing industry is doing better than ever before. Manufacturers know this and acknowledge it.

Given the Chancellor's earlier reference to the Tokyo property market, is he prepared to say that the Prime Minister's insistence on tax encouragement to wealthy people to buy high-priced dwellings, thereby unnecessarily boosting credit, is not bringing his interest rate policy at some point into conflict with noninflationary growth and jeopardising the investment plans of manufacturing industry at its lower, smaller end?

At the time of the Budget I felt that there was a case for cutting back on the extent of that sort of credit. That is why I removed the multiple mortgage relief for sharers and abolished altogether the relief on home improvement loans. I am not sure whether the hon. Gentleman voted for those clauses. I seem to recall that he did not.

Is it not the case that the increased interest cost to manufacturing industry can largely be offset by sensible wage settlements?

Yes, my hon. Friend is right.

Does my right hon. Friend agree that industry is more concerned about the level of inflation than the level of interest rates and that there is widespread recognition of his successful use of interest rates as a means of keeping inflation down?

My hon. Friend is absolutely right. It is something that I have said time and time again. I have shown by my actions that interest rates will be set at whatever level is necessary to bear down on inflation.

To ask the Chancellor of the Exchequer what recent assessment he has made of the popularity of the various coins and bank notes in current usage.

The Government recently reviewed the United Kingdom coinage following a successful public consultation. The most popular option included smaller 5p and 10p coins, which will be introduced in the early 1990s. The Bank of England is responsible for the note issue, which it keeps under careful review.

Can the Minister tell us one other country in the world, apart from England, whose lowest value bank note is as high as £5 sterling or equivalent? If the Bank of England is so insensitive to public opinion that it refuses to give people a choice between a pound note and a pound coin, why not make Scottish bank notes legal tender throughout the United Kingdom instead of forcing people to use unwieldy pound coins which are so heavy, so thick and so unpopular that they remind me of a certain person on the Treasury Bench?

The hon. Gentleman has made much more pithily the speech that he made on 8 July 1986 in proposing his Bill about the Scottish pound note. His abbreviation today was admirable.

To ask the Chancellor of the Exchequer if he will give the latest figures for the stock of United Kingdom net overseas assets both in value and as a percentage of gross domestic product.

The United Kingdom's net overseas assets were estimated at some £90 billion at end-1987, about 21 per cent. of gross domestic product.

Does my right hon. Friend agree that the figures are an excellent measure of the restoration of the economic strength of Britain in the world? Would he care to comment on the effect that the return on those investments has on the British economy at present?

I agree entirely with my hon. Friend's first point. On the second point, those overseas investments brought in nearly £6 billion in annual income in 1987, the highest level ever recorded. The returns from the first quarter of 1988 suggest a similar return this year.

To ask the Chancellor of the Exchequer what is Her Majesty's Government's policy towards the Japanese Government's proposals at the Toronto summit to, in effect, turn part of the commercial bank debt into Government bonds and to ease the amount of debt payments.

These complex proposals were not discussed at Toronto and still need to be clarified.

Bearing in mind that, as a proportion of GNP, aid from Britain to the Third world is now at its lowest ebb, debt becomes an important part of easing the burden of those countries. Also bearing in mind that the Japanese proposals relate particularly to middle-income countries, where malnutrition is rising and whose incomes are falling, could not the Chancellor be persuaded to look more closely at the Japanese proposals, which have a contribution to make?

I would have hoped that the hon. Lady, who takes a great interest in these matters, would pay tribute to my right hon. Friend's success, through his dogged persistence, in achieving agreement at Toronto on the initiative to help the sub-Saharan African countries, which is a major and important priority. We shall, of course, consider in detail any proposals that the Japanese put to us. As we see in the hon. Lady's question, she has misinterpreted what the proposals probably are.

To ask the Chancellor of the Exchequer what is his current estimate of Treasury receipts from sales of public assets in 1988–89, 1989–90, 1990–91 and 1991–92, respectively.

The latest estimate of privatisation proceeds is shown in the Government's public expenditure White Paper.

Has the Chancellor made an assessment of the likely price for the electricity industry if it is sold off, and has he made any assessment of the amount that is likely to be bought by foreign interests rather than by people living in this country?

The public expenditure White Paper estimated proceeds, to which I referred, cover a period of years. The programme which will follow hereafter will undoubtedly sustain those estimates.

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

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

Does my right hon. Friend agree that it is remarkable that Mr. Gorbachev should look to her and to a Conservative Administration rather than to a Socialist Administration for ideas and inspiration? Does she further agree that, whereas the Russians were delighted to stop jamming so that millions could hear her across Russia, they are most unlikely to do the same for the Leader of the Opposition?

I agree with my hon. Friend. I think that the Soviet people wish to hear about successful policies. They want to get away from failed Socialism.

Will the Prime Minister give a categorical assurance that every regional health authority will receive sufficient additional Government funds to meet the cost of the nurses' pay award and the regrading which she promised to finance in full?

The Government have made available £566 million additional to the extra amount of £237 million already in the forecast for the nurses' pay award this year. This includes the whole of the estimated cost of the clinical grading exercise put forward by the Nurses' Pay Review Body.

The Prime Minister must try to grasp the question, because she has chosen to answer one which I did not ask. So I ask her again: will every regional health authority be given sufficient additional funds to meet the cost of the new pay bill, because five of them understand that they will be left short in October? Yes, or no.

The amount that has been made available was the amount that was estimated by the Nurses' Pay Review Body. That full amount has been put forward [Interruption.] The formula used for estimating the total sum required was agreed between representatives of National Health Service chairmen and the review body. That amount is intended to be the amount which they said regrading of the structure would cost.

The sum was not agreed, but the Prime Minister's error of fact is not the matter at issue. The issue is that unless every regional health authority can be sure of its ability to meet the increased pay bill there will be closed wards and bed cuts—five authorities say that. Does the Prime Minister not understand that, or does the Cabinet, insulated by private medical care, not care what happens in the Health Service?

No, £803 million was the figure estimated not by the Government but by the Nurses' Pay Review Body. [Interruption.] Perhaps the right hon. Gentleman, instead of trying to make trouble—[Interruption.]

Order.

Perhaps the right hon. Gentleman would first read the letter of 13 July 1988 from Mr. Trevor Clay—[HON. MEMBERS: "Read it."] I shall gladly read it out, but I thought that the Deputy Leader of the Opposition might be able to read it for himself. Mr. Clay said:

"There are many problems at local level. But some managements are succeeding in some districts. Why can't others make the same speed?"

What hope can my right hon. Friend offer to the many air travellers stranded at British airports that their plight, caused by air traffic control problems over Europe, will not get progressively worse in the years to come? What initiative can the British Government take with their European partners to provide a long-term solution to the problem?

We shall certainly have a look at that. My hon. Friend asked about our air traffic control. As he is aware, we have been trying to get the very latest computers, which should be sufficient and well able to cope with the increase in air traffic control needs. We shall have a look at the co-operation, which I am sure our air traffic controllers have, and need to have, with other air traffic control authorities.

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

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

Does the Prime Minister concur that those Conservative Back Benchers who voted against the European Communities (Finance) Bill earlier this week in all likelihood share her gut instinct? Given that she seems to occupy an increasingly ambivalent position at home, and an increasingly isolated position within the Community on greater financial integration, will she concede that the net outcome is likely to be final confirmation of Frankfurt and the Bundestag as the sole financial centre of Europe, to the long-term loss of our country?

I would reply to that by saying that my position is direct at home and direct in Europe, and both are to the advantage of Britain.

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

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

In the course of her busy day, will my right hon. Friend plan a visit to west Norfolk? If she comes to west Norfolk she will be told that today's excellent unemployment figures are reflected locally. Since 1983 unemployment has fallen by half to 7·5 per cent., and since 1979 expenditure on the local health authority has increased by a staggering 60 per cent. in real terms. Is that not a classic case of wealth creation benefiting the whole community?

Yes. The record has been excellent. Since the last election unemployment has fallen by half a million. The increase in employment goes on apace. The increase in prosperity also proceeds apace, and it is due to the excellent policies pursued by my right hon. Friend the Chancellor of the Exchequer—policies which must continue into the future and which benefit the whole country.

Has the Prime Minister read the report of the Scottish constitutional steering committee entitled, "A Claim of Right for Scotland"? Is she yet aware of the strain that her Administration are placing on the unity of the United Kingdom, and are there any circumstances in which she would be prepared to take account of our national status and the wishes of the people of Scotland?

Scotland has its own national status and always will. That has never been in doubt, since the very Union between Scotland and this country. I have not read the report, but I doubt very much whether either the hon. Gentleman or the Labour party wishes Scotland to separate from England.

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

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

Is my right hon. Friend aware that in the latest seven years for which statistics exist GDP grew in the north of England at the rate of 90 per cent. per head of the population, which was above the British average, and that the figure for Yorkshire and Humberside was 89 per cent., which was the British average? Will my right hon. Friend take this opportunity to announce her intention to improve on that in the coming years, and to improve the prosperity of every region in the United Kingdom, which is undoubtedly the case at the minute?

The figures given by my hon. Friend are excellent, but then the record for the whole country is excellent as the new prosperity spreads over every region. My right hon. Friend the Chancellor of the Exchequer has provided a firm basis of prosperity that will continue and stretch long into the future.

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

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

Does not the proposed privatisation of the water industry make nonsense of the arguments used on the Conservative Benches that privatisation leads to greater competition among suppliers and greater choice for consumers? When the right hon. Lady turns on a tap in the morning, does she have a choice of supplier, and where is the competition?

Many water companies are already in private hands. There is nothing new about water being in private hands, as the hon. Gentleman would know if he knew history.

During the course of my right hon. Friend's busy day, will she reflect on the fact that home ownership has grown substantially during her premiership, and that that growth could not have occurred without her protection of mortgage interest rate relief? Will she assure the House that that relief will not be tampered with and that the Government do not intend to introduce a property tax of any kind?

I agree with my hon. Friend that we would not have seen the enormous extension of home ownership without mortgage interest tax relief. I am a great believer in it. As my hon. Friend knows, I get very cross if anybody wants to stop it, when they themselves got their foot on the first rung of the ladder by making use of that very relief. So long as I am here, it will continue.

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

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

Can the Prime Minister explain to the House why, if no decision has been made about the hot strip mill at Ravenscraig, Sir Robert Scholey should be publicly writing its obituary? Will she undertake to visit the Ravenscraig complex, to meet the shop stewards and a representative selection of Scottish opinion, and to hear at first hand why the closure and dismemberment of the Ravenscraig plant is not acceptable to the Scottish nation?

I answered an almost identical question last Tuesday, except that I was not asked to visit Ravenscraig. I doubt very much whether I can take up that kind invitation immediately. The position was made clear by my right hon. and learned Friend the Minister of Trade and Industry when he answered a parliamentary question last December concerning the future of Ravenscraig, privatisation and the difficulty with hot strip mills, where there is at the moment a surplus of capacity. We do riot know what will be the position following the abolition of European steel quotas. When we do, we shall know precisely whether hot strip mill capacity will be in excess of demand and whether some mills may have to be closed.

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

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

May I ask my right hon. Friend what responsibility she has for British citizens overseas? I give as an example a pair of innocents abroad—a short, red-headed Welshman and his wilful wife—who, no doubt tanked up on South African wine, have offered to give £1,500 million of British taxpayers' money to their hosts each year.

Order. I hope that the hon. Gentleman will relate his question to the Prime Minister.

Is that something that we ought to ignore, or should we think about taking away their passports?

I thought that my hon. Friend started off his question by asking about overseas aid, but it was a little difficult to hear. Is that correct?

indicated assent.

The overseas aid record of this Government is extremely good, not only in terms of direct aid, but in terms of the massive amount of investment that has gone overseas from the private sector. I agree that to increase it enormously, as has been proposed, would put a great deal of burden on our people. I also commend the excellent initiative taken by the Chancellor of the Exchequer to cancel some of the aid loans, which has now been taken up by the Toronto summit. I hope that my hon. Friend heard more of my reply than I did of his question.

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

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

Will the Prime Minister break the habit of a lifetime and give a straight answer to a straight question that has been put to her four times? Will the Government fund fully the pay award and the regrading exercise for our nurses? Does she understand that nurses in every constituency do not regard concern about their pay as troublemaking? They are much more concerned with Government treachery. That is what will be committed if the Prime Minister now says that the Government will not fund fully the pay award to the nursing professon.

Yes or no?

The amount necessary to fund that award in full is £803 million. That was not calculated by the Government, it was calculated by the Nurses' Pay Review Body. It is intended to fund it in full—[HON. MEMBERS: "Yes or no?]—

Order. We do not have the chanting of that sort of thing here.

Most nurses in the United Kingdom rejoice at the £803 million, compared with the cut, cut, cut that they had under Labour.