To ask the Chancellor of the Exchequer what information he has on the pay rises awarded to directors in the last period for which figures are available, if he will indicate the economic effect of all workers having a similar pay rise this year; and if he will make a statement.

Pay is for the parties involved to agree and it is not for the Government to intervene.

What a cop-out answer! How does the Chancellor justify an average increase of 23 per cent. for top directors when inflation is 8 per cent. and workers are having to accept much less than that? How does the Chief Secretary justify a 20 per cent. increase for ICI bosses, 34 per cent. for Unilever's boss, 43 per cent. for Barclay's boss, 47 per cent. for Cadbury's boss, 48 per cent. for BP's bosses, 58 per cent. for Sun Alliance bosses, 100 per cent. for Legal and General's bosses and 100 per cent. for P and O's? Is not the reason that the Conservatives and those directors have the same incestuous class interest? Regardless of the economic effect, there is Government condemnation for workers' pay rises and a free-for-all for top directors.

I am bound to say that I think that the hon. Gentleman has a rather limited view of directors. Contrary to his vivid expression, the vast majority are able, efficient and effective, and we need the best management. Notwithstanding that, I have never justified wage or salary increases that are unjustifiable, and I do not do so now. It is not, however, for me to determine what is or is not justifiable in that respect.

Does my right hon. Friend agree that there are only two resources in any company—money arid people—and that it is the way in which those resources are managed and deployed that results in profitability or loss in operation? It is only right that those who create the profits should, as a result of the shareholders' wishes, be properly remunerated.

My hon. Friend makes his point extremely clearly, but I repeat that I am not directly responsible for or concerned with the matter. Pay is a matter for those who negotiate and determine it, and it is not for the Government to intervene.

To ask the Chancellor of the Exchequer what was the growth of real personal disposable income for the latest full year for which figures are available.

Real personal disposable income is estimated to have grown by 5 per cent. in 1988.

I thank my right hon. Friend for his reply. Can he confirm that under the Government real disposable income has risen by about one third, partly as a result of the Government's tax-cutting policies, and has he any calculation of the effect on real disposable personal income if Labour's policies were put into effect?

My hon. Friend's first point is correct, in the context of the real take-home pay of a married man with two children who is on male average earnings. As for the second point, we know so little about Labour's policies that any observation of mine would be purely speculative—which strikes me as an appropriate adjective to apply to the policies.

Does the Minister agree that not everyone has received a 5 per cent. increase as there has been enormous inequality in its distribution? Is he aware that the worst-paid 20 per cent. in society are increasingly worse off and we are becoming a more unequal society? Does that not concern him? Does he not think that the Government ought to look at the provisions made right across Europe for some national minimum wage rather than allowing inequality to grow in Britain?

The hon. Lady is not well informed in the first part of her question. Perhaps she should put in a little more research in future. As to the second part of her question, that proposal is contained in the social charter, on which the Conservative party looks forward to vigorous debate.

Does my right hon. Friend agree that minimum wage legislation would create unemployment in this country? Does he further agree that the percentage of gross domestic product being spent on the elderly is higher in Britain than in 10 of the other Community countries?

My hon. Friend is perfectly correct in both his observations.

The Paymaster General will know that in calculating real personal disposable income, interest paid to savers is offset by mortgage interest paid to building societies. Does he accept that generally speaking the saver with £30,000 in a building society is not the same person who has to borrow £30,000 to finance the purchase of a house? Will he now admit how much real personal disposable income has been lost in the past year by the man or woman with an average mortgage?

The hon. Member for Wrexham (Dr. Marek) is broadly speaking correct in his surmise about the unlikelihood of coincidence. As to the second part of his question, he knows very well that the policy pursued by my right hon. Friend the Chancellor to bring down inflation is directed specifically to that aim and my right hon. Friend has said that when inflation visibly comes down, interest rates will follow.

To ask the Chancellor of the Exchequer what estimate he has of the number of personal equity plans now in existence.

About 450,000 personal equity plans have been taken out to date.

Does my right hon. Friend agree that the welcome boost to personal equity plans in this year's Budget will increase the number of people who have a personal stake in the success of British business and encourage businesses to invest further because their ability to raise equity will thus be enhanced? Given all those advantages, does my right hon. Friend not think it somewhat sad that the Labour party should oppose this year's Budget proposals to expand personal equity plans? Does that not reflect the Labour party's inherent opposition to the spread of wider share ownership and a property-owning democracy?

Yes, indeed. My hon. Friend is quite right. The Labour party is wholly opposed to share-owning democracy and they were opposed to property-owning democracy. Indeed, for years and years they opposed the sale of council houses to their tenants until eventually public feeling was so strong that they had to change their ways. The measure in this year's Budget will give personal equity plans a new boost. One of them—permitting new issue shares to go into personal equity plans instead of, as previously, purely cash—is an important change. I can announce today that this facility will be extended to shares issued by building societies when converting to plc status, and this includes the Abbey National.

If the Chancellor of the Exchequer is so committed to a share-owning democracy, will he introduce legislation to allow shareholders to determine whether a small clique of Tory sycophants in the boardroom hand over shareholders' money to the Tory party, or is he stopping short of spreading democracy to shareholders so long as the Tory party coffers are substantially swollen, like himself?

The hon. Member's paranoia becomes increasingly tedious. Company shareholders can, if they are dissatisfied with the management of any company, vote that management and vote those directors out of office—and that is democracy.

To ask the Chancellor of the Exchequer for how many months adult unemployment has fallen continuously in the United Kingdom.

Unemployment in the United Kingdom has fallen for 33 months in succession.

Does my right hon. Friend agree that unemployment has fallen in every region, especially among the long-term unemployed? In the past 10 years, we have moved from above the EEC average to well below it. Does he agree that there can be no greater testimony to the performance of the Government on unemployment than the silence of the Opposition on the subject yesterday?

There was certainly a deafening silence on the Opposition Front Bench yesterday. My hon. Friend is entirely correct. The fast falls in the west midlands, Wales and Yorkshire are especially welcome. There have been remarkable reductions in long-term unemployment in every region.

It would have been remarkable if unemployment had not fallen, given that it had risen to such high levels under this Government since 1979. Is it not clear that despite the falls in unemployment, which I do not deny for one moment, under the capitalist system unemployment comes down just as it goes up, but the Government have not achieved the lower levels of unemployment which existed under Labour? The levels are still far higher than they were when the Government took office.

The hon. Gentleman overlooks a point which is material to his concern—that there are more people in work today than there have ever been. The dramatic falls in unemployment have exceeded even the most optimistic forecasts two years ago—certainly those of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who forecast at the general election that unemployment would increase, since when it has fallen by over 1 million.

My right hon. Friend said that unemployment had fallen especially fast in areas previously regarded as the more deprived parts of the country. Does he agree that this shows that those who talked in the past of the inevitability of the north-south divide were somewhat misguided and that the north has qualities and reservoirs of skill which should attract many people to the north?

I agree with my hon. Friend. On the many visits that I have made to the north in recent months, I have been extremely impressed by the way in which the economy is growing and by the confidence and investment in industry. It is clear that the best regional policy is the sustained economic growth that we have experienced in the past few years.

Does the Minister expect unemployment to continue to fall for the rest of this year?

We never make predictions about unemployment. We declined to do so last year, since when it has continued to fall dramatically. As I reminded the House a moment ago when quoting the right hon. Member for Sparkbrook, predictions about unemployment are unwise.

As the spectre of unemployment fades as a result of the Government's economic policies, does my right hon. Friend agree that industry faces a new problem—skill shortages? Are Ministers addressing the problem to ensure that more skills are developed and fresh people brought into the labour force, including women?

That is an important point. As my hon. Friend will know from the public expenditure round last year, substantial additional resources have been made available for skill training. I hope that as industry is increasingly profitable it will devote more of its resources to training present and future workers.

To ask the Chancellor of the Exchequer if he will make a statement on the most recent discussions of the IMF on help to (a) Brazil, (b) Zaire, (c) Indonesia and (d) Nepal.

The discussions to which the hon. Member refers are, of course, confidential. Brazil, Zaire and Nepal have drawn on IMF facilities within the past three years. Indonesia has not applied for IMF assistance in that period.

What measures will the Paymaster General promote in the World Bank and the IMF to ensure that the IMF's structural readjustment programmes do not accelerate the destruction of the rain forests?

IMF programmes are macro-economic and do not relate directly to issues such as the environment. The environment is a matter for the World Bank. IMF programmes create conditions for economic growth which, by leading to the alleviation of poverty, would tend to reduce pressure on the environment.

How do the IMF programmes for underdeveloped and developing countries compare with the IMF rescue operation for this country under the last Labour Government?

That is a slightly larger question than that asked by the hon. Member for Linlithgow (Mr. Dalyell), but there is never any harm in my hon. Friend reminding the House of conditions 12 or 13 years ago.

So far, the Government have been lukewarm, at best, in their efforts to alleviate the massive debt problems of many of the developing countries, and their reluctance to associate that with environmental concern, as shown by the answer that the right hon. Gentleman has just given, makes the position even more worrying. Can the right hon. Gentleman not see the common sense in securing environmental gains for the safety of the planet as a whole while at the same time lightening some of the crippling debt burdens of countries such as Brazil?

Taking the hon. Gentleman's question at face value, the Government fully support the World Bank. As to the enhanced structure adjustment facility, the United Kingdom has led the way in supporting the efforts of the poorest countries to adjust their economies. The IMF pays its way through ESAF, to which the United Kingdom has made one of the largest contributions, providing a subsidy on up to £1 billion special drawing rights of ESAF lending.

To ask the Chancellor of the Exchequer what are the current interest rates in (a) the United Kingdom and (b) the rest of the G7.

Three-month money market rates in the United Kingdom currently stand at 14 per cent., compared with an average of 8·6 per cent. in the rest of the G7.

Given those appalling comparisons, is the Chancellor aware that the Small Business Research Trust recently conducted a survey which showed that a quarter of its members were deeply worried about the impact of interest rates on their businesses? What steps does the right hon. Gentleman intend taking to allay their fears, or can they expect things to become even worse?

Let me say two things in reply to the hon. Gentleman's question. First, on the fact of short-term interest rates in the United Kingdom being above the average for the rest of the G7, there is nothing new about that—nothing new at all. They have been consistently higher over the past five years. During those five years, there has been a massive increase in investment of all kinds. There has been a record growth of new businesses—indeed, business and industry generally have done better than they have ever done before—so I think that the hon. Gentleman is wholly mistaken in drawing the conclusions that he does.

Does my right hon. Friend agree that the speech yesterday by the right hon. and learned Member for Monklands, East (Mr. Smith) undermining the interest rate policy would have the effect of undermining the exchange rate, which would import inflation into this country? Does my right hon. Friend agree that the right hon. and learned Gentleman's policies would therefore be more inflationary?

Yes, indeed. It was quite clear from the debate that we had yesterday that the Labour party has no policy at all to fight inflation. The only policy it has is one to put inflation up, through massive increases in public expenditure, through increased taxes on savings, through devaluation and through lower interest rates.

As the Chancellor has ruled out credit controls, even of a limited kind, is it not clear that his only weapon has been ludicrously high interest rates? As this has been fed directly into the RPI, is it not also clear that wage claims are higher than they would otherwise have been, producing a further level of inflation for which the right hon. Gentleman is responsible?

I entirely agree with the implication in the right hon. Gentleman's question that it is absurd that we have mortgage interest payments in the RPI, unlike most other countries. The right hon. Gentleman is perfectly right about that. But as for ludicrous interest rates, the only ludicrous interest rates were the interest rates during the last Labour Government when he was a Treasury Minister, which were negative in real terms. Negative real interest rates rob the saver and do great damage to the economy. That is what we had under Labour.

Will my right hon. Friend take this opportunity to remind the House that one cannot establish sound security on borrowed money? Will he exhort the nation to follow the Government's example in repaying debt, thereby reducing the burden of interest?

My hon. Friend is right. It would, indeed, be very much better in many ways if the appetite for borrowing was somewhat moderated. This is a free country—a free country—and people and companies are entitled to borrow what they wish to borrow and what they feel is prudent to borrow and I do not wish any change in that. Nevertheless, I do feel that the higher interest rates we have now might be to some extent a discouragement to borrow and an encouragement to save and, indeed, that is what we see happening at the present time.

How can very high short-term interest rates drive inflation out of the system when they bear disproportionately on small businesses and not on the larger businesses, which borrow mainly in the long term? Unless the Chancellor has some change of policy, will the position not be that smaller business will take more and more of the medicine that is not working on the system as a whole?

The main difference—the most important difference—between the effect of long-term interest rates—which, the hon Gentleman is quite right, are well below short-term interest rates tend to bear more heavily on consumer spending because consumer borrowing is linked to short-term interest rates whereas, as he pointed out, a great deal of investment is linked to longer-term interest rates and, therefore, the only sense of what he is saying is that the depression of the growth of demand which is necessary in his judgment should be more directed towards investment and less towards consumption. That is not something with which I agree.

Now that mortgage rates have been 10 per cent. or above for almost all the past 10 years, now that borrowing costs are just about the highest in Europe and now, as the Chancellor confirmed yesterday, that home owners face a summer of high mortgages and rising prices, does the right hon. Gentleman still dismiss the anxieties of home owners throughout the country? Does he still repeat the advice he gave earlier that they should cut back on something else?

What I do say is that the 10 years to which he referred have been 10 years of unprecedented success for the British economy.

To ask the Chancellor of the Exchequer what was the balance of payments for the first quarter of 1989.

The current account deficit in the first quarter of 1989 is provisionally estimated at £4·4 billion.

Is the Minister aware that only this Monday the Engineering Employers Federation predicted that in 1989 the only industry in Britain which will be in surplus with the rest of the world and which is a major metal user will be the aerospace industry?

What about whisky?

That industry does not use metal, so far as I am aware. Does the Minister not consider that that is a major blip on the economic policies of the past 10 years?

It is not necessary for the current account to be in surplus in every sector. I regard projections for individual sectors as insignificant. It does not matter if we are in deficit in one sector, such as engineering. As a result of the measures that my right hon. Friend the Chancellor has taken, demand in the economy will slow down and the position on the current account will improve.

Has my right hon. Friend noticed that the balance of payments includes an unusually high proportion of imports of investment goods? Will they not contribute to a more efficient industrial structure in the future?

My hon. Friend is right. About one quarter of the value of manufactured imports between 1987 and 1988 was accounted for by consumer goods, including cars, with the remainder—fully three quarters—made up of goods for production and investment. That illustrates that, as my hon. Friend says, part of the current account deficit has been accounted for by firms tooling up for investment and higher production.

Will the Financial Secretary explain why the Government have approved the recent OECD report, which shows the balance of payments deficit getting still worse next year?

I think that the hon. Gentleman is mistaken. The report has not been published or released, and he has no basis of saying that the Government have approved it.

Does my right hon. Friend agree that the high levels of investment in manufacturing industry and the recent high level of inward investment as a result of the attraction of the Government's economic policies will result in a much better balance of payments as we progress into the 1990s?

It is not just the high level of investment in manufacturing that matters but investment in the whole economy, and I am sure that the record level of investment in the whole economy is a very good thing for the long-term benefit of the economy. In that respect, my hon. Friend is right.

Do the Government still adhere to the forecast of a balance of payments deficit of £14 billion this year? If not, when will the Minister announce that it is going to get worse?

As the right hon. and learned Gentleman knows, the Government's forecasts are updated in the Autumn Statement. We still stick to the view that the current account deficit in the second half of the year will be lower than it was in the first, as was said in the Red Book, and, indeed, the figures and trends are there to show that. Export volumes in the past three months are up 1½ per cent. on the previous three and the trend is upwards, while imports are beginning to stabilise in response to the slowing down of consumer demand, which is exactly what the policies of my right hon. Friend the Chancellor were designed to achieve.

To ask the Chancellor of the Exchequer if he will make it his long-term policy to abolish income tax.

In my Budget last year, I set the target of reducing the basic rate of income tax to 20 per cent. as soon as it was prudent and sensible to do so. That remains the target.

Does my right hon. Friend believe that there is some innate benefit in income tax? With strong economic growth, is it not conceivable that we could do away with the tax altogether?

I think that that is unlikely to occur during my time as Chancellor of the Exchequer.

Will the Chancellor tell the House how much of the burden of taxation has shifted to indirect taxes such as VAT? How much will indirect taxation increase as he proceeds with his policy of reducing direct taxation?

The increases in direct taxation that have occurred during the time that I have been Chancellor of the Exchequer have been negligible—in fact, very small indeed. Nor during my time as Chancellor of the Exchequer have I increased the national insurance rates, so let us get that straight. What I will say to the hon. Gentleman is that if the policies which have been proposed by the Labour party were ever put in practice, we would see a very substantial increase in income tax at almost all levels.

Does my right hon. Friend agree that Conservative Governments reduce income tax because they always control public expenditure wisely, whereas Labour Governments invariably increase income tax because they are profligate in their public spending?

My hon. Friend is right, and that is how we have been able to get income tax down and that is how we will be able to get income tax down still further in the years that lie ahead, to the great benefit of the economy as a whole and also giving individuals a wider choice of how they spend the money that they earn. As for the Labour party and their spending plans, they have yet so far still failed to answer the question put to them by the right hon. Member who was formerly running the GLC—I cannot remember his constituency at the present time—[Interruption.]—Brent, East (Mr. Livingstone)—who said very pointedly that they have not said where they are going to find the money to spend on all those programmes.

To ask the Chancellor of the Exchequer what is his estimate of the underlying rate of inflation for the British economy; and whether he will make a statement.

The best guide to the underlying rate of inflation is provided by the RPI excluding mortgage interest payments—[Interruption.]—

Order.

—which currently stands at 5·9 per cent.

Why did not the right hon. Gentleman's right hon. Friend receive a more encouraging response today from sterling and the market in view of his very sturdy reaffirmation in last night's debate of his well-known and well-tried counter-inflationary policy?

That, if I may say so, seems to be a question more for the markets than for me. The markets have, in fact, been thoroughly calm.

Will my right hon. Friend reaffirm his commitment to maintaining high interest rates until we abate the rate of monetary growth? Will he reaffirm the commitment of the Government to move towards stable prices at the earliest possible moment?

My right hon. Friend the Chancellor of the Exchequer made that wholly clear yesterday. I am delighted to echo him today.

Is it the Government's view that shadowing the deutschmark has helped to cause inflation in the past?

That question, again, goes somewhat wide of the original question that I was asked. As the hon. Gentleman has risen from the Opposition Front Bench, let me say that one of his Front Bench colleagues earlier this week said on television that inflation was higher now than when the Labour party went out of office. As the RPI was then 25 per cent. higher, and the RPI without mortgage interest payments was 50 per cent. higher, it seems to me that the Opposition Front Bench is seeking to rewrite history.

To ask the Chancellor of the Exchequer what is the latest official projection for the growth of manufacturing investment in 1989.

To ask the Chancellor of the Exchequer what is the latest official projection for the growth of manufacturing investment in 1989.

The latest DTI investment intentions survey, published in December, projected manufacturing investment in constant prices to rise by a further 11 per cent. in 1989 on a year earlier. The latest CBI "Quarterly Trends Survey", published in April, confirms this buoyant outlook.

Is it not clear that it is the policies of the Government that have created the climate where manufacturing investment, output, profits and productivity are all increasing satisfactorily? Can my right hon. Friend say how long and to what extent that trend is likely to continue?

As far as I can tell my hon. Friend the prospects are very good indeed. We now have a situation in which business investment is at the highest proportion of GDP that it has ever been in our history. Company profits are high; company confidence is high. Therefore, the prospects for further investment are also excellent. As for manufacturing industry, it is interesting that during the period that I have been Chancellor of the Exchequer the average annual growth of manufacturing investment has been 9 per cent. compared with the period of the whole of the last Labour Government, which was roughly the same period of time, or a little bit less, when the growth of manufacturing investment was only 2·3 per cent.

While welcoming the record rate of investment in manufacturing industry that has taken place under the Conservative Government, may I tell my right hon. Friend that nowhere in the United Kingdom is there more evidence of the revitalisation of British manufacturing industry than in the west midlands where the latest quarterly report of Walsall chamber of commerce shows that no fewer than 46 per cent. of companies are revising upwards their plans for manufacturing investment this year.

I am particularly glad to hear that from my hon. Friend. Indeed, as a Member representing a midlands constituency myself, I am well aware of the successful economy of the midlands and the reinvigoration of the midlands and the high degree of investment that is going on there. Of course, as my hon. Friend will be the first to admit, it is not something confined solely to the midlands; this is now occurring nationwide.

Does the Chancellor recognise that his complacency hides the wide regional discrepancies between investment in manufacturing industries? Is it not a fact that, if there were more investment in our key manufacturing regions, the Government would do a lot more to improve the unemployment figures and our balance of payments? Does he recognise that investment in the north-west region—a key manufacturing region—according to the Government's latest available figures, is 38 per cent. below the 1979 level?

There have always been differences between different regions, and there always will be. This is not something new. But what I find extraordinary in the question asked by the hon. Gentleman, and, indeed, by most, if not all, Labour Members, is their exclusive concern with manufacturing industry and manufacturing industry's investment. Manufacturing industry and manufacturing industry's investment are indeed very important, but the whole of the rest of British industry is important too. Some time hon. Gentlemen should recognise that the other 75 per cent. of the economy does in fact exist.

Will the Chancellor address himself to the fact that, if we are going to do anything about the balance of payments deficit, we have to manufacture to export? What has happened to our manufacturing exports over recent years? How does he explain those?

I am glad to say that our manufacturing exports over recent years have done extremely well. Indeed, total exports, in which manufacturing accounts for a very large part, in the last three months were 8½ per cent. in volume terms above a year ago.

Does my right hon. Friend agree that investment in manufacturing industry, which is important to many of us who represent such areas, has been absolutely tremendous in recent years, especially in Yorkshire? Does he agree that that is a sign of confidence in the future economic success of the country, and that, instead of decline and dereliction, we now have many new factories and many new jobs?

My hon. Friend is quite right, and I know the very great concern and interest that she has always shown in business and industry in her own constituency. It is indeed a striking fact, as I pointed out a moment ago, that over the past five years manufacturing investment has been growing at the rate of 9 per cent. a year, and it is set to grow still further.

Can I ask the Chancellor the same question that I asked him yesterday, but which he did not answer? By how many percentage points has investment in manufacturing industry increased since 1979?

Investment in manufacturing industry in quantum is only slightly above what it was in 1979, but it is, of course, heading still further up. Manufacturing output has also risen very sharply indeed under this Government, unlike under the last Labour Government, when manufacturing output actually declined.

To ask the Chancellor of the Exchequer what has been the annual rate of growth of manufacturing output over the last two years.

In the two years to the first quarter of this year, manufacturing output grew at an average annual rate of 7·1 per cent.

Does my right hon. Friend agree that the news about investment in manufacturing that we have just heard is good news for tomorrow? However, the answer that he has just given indicates that the supply side boom, which the Government have been working for, is with us today.

My hon. Friend is right. The strength of manufacturing output shows clearly that the supply side changes of recent years are working. My hon. Friend will be pleased to know that the levels of investment that we have seen recently will ensure that that continues.

In view of the lavish claims being made about the level of manufacturing investment, will the Chancellor have another go at explaining the figures that I put to him yesterday—that according to the latest figures from the Department of Trade and Industry, manufacturing investment in the north-east stands now at 53 per cent. of what it did in 1979?

That relates to manufacturing output. In fact, manufacturing investment has risen by 14½ per cent. in the last year to a record level.

To ask the Chancellor of the Exchequer what was the rate of economic growth in the latest year for which figures are available.

Gross domestic product is estimated to have grown by 41/2 per cent. in 1988.

Is it true that, whereas a great deal of investment in manufacturing in the 1970s was directed by politicians into uneconomic enterprises or into uncommercial capacity, it is now being directed by private industry into proper jobs and proper industry? Perhaps that is why, whereas under the last Labour Government manufacturing output fell, it has risen sharply under this Government.

That is right, and it is why we are now well into the eighth successful year of sustained growth of more than 3 per cent. During the past seven years there has been a combination of strong and steady growth that has not been matched since the war.

Would there not be a substantial increase in growth if the Government adopted a positive policy of import substitution? Will the Minister reflect on my modest contribution to last night's debate, when I set out a scheme for private sectoral support for industry that would lead to a substantial number of jobs, cost the state very little and, to some extent, reduce the trade deficit? Will the Minister read what I said last night and, perhaps, drop me a line about it?

I always read carefully what the hon. Gentleman has said, although some of the ideas that he advanced yesterday were tried not wholly successfully in earlier years. I welcome the efforts many industries are now making to provide goods to be sold at home at competitive rates as an alternative to imports. I hope that they will continue to do that.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

During the course of my right hon. Friend's busy day, will she find time to read Paul Twyman's excellent pamphlet entitled "1992, Crossroads for Free Enterprise"? Will she use her best endeavours to ensure that Europe takes the road of free enterprise so that we can look forward to the day when the whole of Europe, from the Atlantic to the Urals, is rid of creeping Socialism and tyrannical Communism?

I have indeed read that pamphlet and I agree with its conclusion that we face a choice in Europe between corporatism, central control and regulation—as is supported by the Opposition—and the creation of a genuine single market in which enterprise can flourish and the energies and talents of people be set free to generate wealth and bring about further social improvement. That is the sort of Europe that the Conservative party wants and for which we shall be campaigning in the forthcoming election.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

Will the right hon. Lady confirm that on Monday evening she will be joining me and my right hon. Friend the Leader of the Opposition in voting in favour of the televising of the proceedings of this House?

I must disappoint the hon. Gentleman, in that I shall not be here on Monday evening. I wish to make it clear that if I were here, I should he supporting the Lord President.

Has my right hon. Friend noticed that the right hon. Member for Yeovil (Mr. Ashdown) is missing from the Chamber this afternoon as he has buzzed off to Hong Kong? He is not, therefore, here to ask his usual silly questions—[Interruption.]

The hon. Lady is not in order.

Order. It must be a question for the Prime Minister.

Does my right hon. Friend agree that although there is considerable sympathy with and understanding of the worries of the people of Hong Kong, it would be wrong to give anyone the idea that millions of people could come and settle in this country overnight? Does not the future of the colony lie with China?

As both my right hon. and learned Friend the Foreign Secretary and I have said, we are deeply concerned about Hong Kong and the natural feelings of its people. We have said that we are prepared to consider ways of obtaining greater flexibility under the present rules to allow an increasing number of people to come to this country under the several different limbs of the immigration rules and the British Nationality Act 1981. We shall consider that matter carefully in the coming days and, if need be, come to the House if we need additional powers.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

How does the Prime Minister justify the shameful decision of Tayside Tories to support the Nationalists where SNP means "sacking 900 people"?

I do not think that I should get involved in that. I am sure that Tories support Tory policy.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

Will my right hon. Friend find time in her busy schedule to visit Maidstone general hospital, which was built under the aegis of this Government after years of obvious neglect and which even now is just expanding to include a mass radiography unit? Does she agree that this is tangible proof of the Conservative commitment to the National Health Service?

Yes, and I am delighted to hear of its success from my hon. Friend. It is an example of the improvements that are occurring throughout the country in the NHS because we are spending three times as much on the NHS as was spent under Labour. Whereas Labour cut the capital programme for hospital building, we have increased it by 40 per cent., and I am glad that my hon. Friend's constituency is a beneficiary.

Is the Prime Minister aware that the chief executive of London Regional Transport says that the only way to reduce rush hour overcrowding on the Underground is substantially to increase fares so that people cannot afford to travel at those times? Does the right hon. Lady agree with those views?

If there are requests for increased fares and they are designed to lead to increased service, of course those would be considered. I would point out that on transport matters, as on most other things, the Government have put an increasing amount to the capital spent on transport.

Why does not the Prime Minister stop wriggling and simply say whether she thinks—[Interruption.]

Order.

Will the Prime Minister say whether she thinks the ability of people to get to their work in London should be rationed by fares regulated by price?

I thought that on a previous occasion the right hon. Gentleman had agreed with me that if one gets increased service, one should expect to have to pay for that improvement. He seems totally to have forgotten that.

Can the Prime Minister explain how, if one is charging fares that stop people travelling, one is increasing service to them?

There have been a number of proposals from London Underground for increasing the standard of service. The right hon. Gentleman, as usual, wants something pretty well free, provided that someone else pays.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

I congratulate my right hon. Friend on her recent visit to the west midlands. Will she confirm that no Conservative Euro-candidate is opposed to our membership of the European Economic Community? What message does she have for the numerous members of the other parties in respect of their attitude to the hard Left campaign group of the Labour party?

Yes, of course I confirm that, unlike the Labour party, all our candidates in the Euro-elections believe that Britain's future lies in the European Community. A Conservative Government led by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) had the vision to take Britain into the Community—[Interruption.]

Order. Interruptions waste a lot of time.

A successor Conservative Government have made such a success of Britain's membership.

Has the Prime Minister been informed by the Secretary of State for Northern Ireland that at a dinner party in Hillsborough castle, the deputy chairman of the Police Authority for Northern Ireland described the former Chief Constable—and I apologise to the House for the language—as a "black bastard", accused him of having previously kicked the—I will not use the four letter word beginning with "f"—out of Roman Catholics, and that the deputy chairman further described the police as "black thugs"? Is that the sort of behaviour the right hon. Lady expects from the deputy chairman of the Police Authority for Northern Ireland? When the right hon. Lady has verified what I have said, will she take steps to ensure that that person is removed from the authority?

I am in no position to know whether or not the account of the hon. Gentleman is accurate. My right hon. Friend the Secretary of State for Northern Ireland says that the answer to the first part of the question is no, Sir. It is monstrous to try to repeat an alleged account of a conversation under such circumstances, and I totally condemn it. The hon. Gentleman knows that we fully stand behind the police in Northern Ireland in the excellent and wonderful work that they do.

Is my right hon. Friend aware that an increasing number of industries in this country are concerned about the policy of high interest and exchange rates, and that those two policies are torpedoing the very sector of the British economy which could reduce our balance of trade deficit and assist in reducing inflation? Will she look at other policies, particularly that of asking the Bank of England to request the clearing banks to place substantial deposits, which would be very beneficial for Britain's manufacturing industry?

There are two points. As my hon. Friend is aware, increases in interest rates are not readily acceptable, but are far less damaging than a perpetual increase in inflation. Secondly, as he will also be aware because he takes much interest in industrial matters, a 1 per cent. increase in wages is about four times as damaging as a 1 percentage point increase in interest rates. There has been an increase in wages of 9 per cent. in the past year.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

Has my right hon. Friend seen press reports stating that a mother of three, a Lambeth Labour councillor, has claimed £20,000 expenses in one year? Does my right hon. Friend agree that that is absurd, and a backdoor way of appointing full-time councillors?

I have seen such reports. In the White Paper responding to the Widdicombe report, we announced our intention to introduce a flat-rate allowance to prevent councillors exploiting an attendance-based allowance system.

To ask the Prime Minister if she will seek to include on the agenda of the Madrid summit, European Economic Community policy towards debt-fornature swaps in relation to conservation of the rain forest.

I welcome the debt-for-nature swaps agreed voluntarily between commercial banks, conservation organisations and debtors, although their role is likely to remain small in relation to both developing country debt and environmental problems. The agenda for the European Council has not yet been agreed, but environmental issues may well be raised.

May I ask the Prime Minister a question of which I gave her Office a little notice? Does she support the European Parliament's resolution of 26 May on tropical timber products?

I am grateful to the hon. Gentleman for giving me notice. The resolution, which is addressed to the Commission for initial consideration, deals with a number of aspects relating to trade in tropical timber. My right hon. Friends in the DTI, with their officials, are looking at its full implications.

In relation to the Prime Minister's earlier response as to our success in the European Community—

Is this related to rain forests?

In relation to rain forests and the European Economic Community, should we not have a proper social contract throughout Europe?

It is much more practical for us to do what we do to assist the continuation of the rain forests and that is one of the reasons why we should be proud of being British.

To ask the Prime Minister if she will list her official engagements for Thursday 8 June.

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

As tickets for the West German national lottery are now circulating in Britain, is it not time to consider the setting up of a national lottery here so that the proceeds of such a lottery can benefit the British people?

As my hon. Friend knows, that question comes up from time to time, but we have never set up a national lottery. People want a national lottery for many different reasons, but I would be slow to consider setting one up because enough money already goes to gambling of one sort or another and such a lottery would be damaging for a number of local fund-raising occasions which are far more profitable.