To ask the Chancellor of the Exchequer what is the public spending planning total for 1989–90.

To ask the Chancellor of the Exchequer if he will make a statement on the public spending planning total.

The public expenditure planning total for 1989–90 published in Command Paper 621 is £167·1 billion.

While thanking the Minister for that informative answer, may I put it to him that he should not seek this year or in any other year to effect a cut in the activities of the Export Credits Guarantee Department? He should take it from me that, given the staggering, disastrous balance of payments deficit run up because of the Chancellor's mismanagement of the economy, the last thing that we want is a cut in the activities of the ECGD. I make special reference to the London Project Group, which finances major capital projects in the Third world. Does the Minister agree that it would be not only absurd but perverse for the Secretary of State to curtail the activities of the ECGD at this time?

In the midst of the public expenditure round, I note the representations made by the hon. Gentleman. I am sure that they will also be noted by the Secretary of State for Trade and Industry. Subsidies for capital exports have been maintained in recent years. Nonetheless, it is extremely important that British exports are obtained on competitive grounds and not by subsidy from the taxpayer.

Given that the actual rate of inflation has so far so consistently exceeded the Chancellor's original estimate, will the Minister revise upwards the public expenditure planning total to compensate for that, or will he tell the House how extensive the cuts will otherwise be in essential public services?

The policy of the Government is the same policy as that subscribed to by the Labour party—we should plan in cash terms. A cash planning system does not mean that we accommodate inflation. That is the essence of the system.

Does my right hon. Friend agree that if inflation is to be brought down, firm control must be maintained on public spending? Will he compare his prudent fiscal policy with that of the Labour party and say what effect its spending plans might have on inflation?

My hon. Friend is absolutely right; the control of public spending lies at the heart of economic management. Furthermore, as my hon. Friend suggests, just to go in for huge surges in public spending, as the Labour party did when it was in power, does not serve the public services well. As we all know, what happened was that the Labour Government started off in years one and two trying to expand public spending regardless of the circumstances and, in the end, they had to cut it. They also had to cut capital programmes. Our record compares well with theirs. We believe that it is necessary to control public spending to get inflation down and that it is essential to do so for a sound economy.

Will my right hon. Friend confirm that the result of his prudent policies gives us, for the second year running, a budget surplus and the ability to repay debt? Will he compare that with the enormous increase in public sector debt which was incurred when the Labour party was in power?

Our policy of having a budget surplus and repaying debt meant that last year we were able to find more room for priority programmes. If we had maintained the public sector borrowing requirement at the level with which the Labour party left us when we came to office in 1979 we should have a crippling burden of debt interest to pay.

To ask the Chancellor of the Exchequer how many letters he has received from members of the public on the high level of interest rates or their impact on the cost of mortgages.

A large number.

I am surprised at that because it is rare for people to write to the deaf and blind. In replying to the many people who have written to him about the catastrophe of mortgage rates, which means that the average householder taking out a mortgage will be more than £1,000 a year worse off, will the Chancellor explain that there is no external cause for this cut in their standard of living? Will he explain that the responsibility lies solely with his own mismanagement of the economy? Will he apologise to the British people for this?

As to the hon. Gentleman's first point, I do not for a moment regard myself as being deaf—in fact, I heard his question very clearly. I am surprised that he suggests that it is unusual to write to the deaf because that is the most convenient method of communication. As for the question of interest rates, I have made it clear time and time again that it is necessary to keep interest rates as high as is needed for as long as is needed to get on top of inflation. Getting inflation out of control—getting it to the sort of levels it was under the last Labour Government —would be far more damaging for home owners. There is another thing on interest rates; what we will not have is the negative real interest rates that there were under the Labour Government which robbed pensioners of their lifetime savings.

While recognising the overriding importance of the control of inflation, may I ask my right hon. Friend, with his fertile and imaginative mind, not to give up the quest for alternative methods to the crude one of interest rates? Does he recognise that interest rates are all very well for the haves but bear very cruelly on the have-nots, particularly the groups which he and I have always supported: small businesses and home owners?

Of course, my hon. Friend is right, and I have acknowledged on a number of occasions that higher rates do impose a burden on many home owners, particularly those with large mortgages and, indeed, on many small businesses. However. I have to tell him that there is no alternative and he would be deluding the House to suggest that there is an alternative to high interest rates if one is serious about getting inflation down. The plain fact is that it would be very much worse for all those concerned if inflation were to go up again.

With so many people facing this crippling burden of high interest rates and with the Chancellor apparently unable to take up the option of an early exchange rate mechanism, can we get it clear: are the interest rate increases dictated by a fear that the money supply is growing too fast or a feeling that the pound has been falling too far?

The interest rate increases are clearly designed to deal with the problem of inflation—to get on top of inflation and to bear down on inflation. Inflation is affected both by the exchange rate and by domestic factors —every schoolboy should know that, even the hon. Gentleman.

Will my right hon. Friend confirm that some people spend all their time complaining about the cost of high interest rates to borrowers without at the same time recognising that those same interest rates bring high rewards to savers, thus encouraging what we want to encourage and discouraging what we want to discourage?

My hon. Friend is absolutely right: this does bring considerable benefit to savers. I can tell the hon. Member for Clydebank and Milngavie (Mr. Worthington) that I have a large number of letters from savers—perhaps not quite as many—and from pensioners saying how pleased they are with the higher return on their savings. So I receive those sorts of letters, too.

"What we're saying, is that if there is a problem in terms of managing the degree of credit growth in this economy it has to be at the margin when new mortgages are being granted."

When will the Chancellor issue a word of regret, apology or sympathy for the problems that he has caused millions of homeowners in the form of the £10 billion extra that they will have paid in mortgage payments by the end of the year and the £1,000 on average that the typical homeowner is having to pay? Does he still repeat the advice that he gave a year ago to home owners —that they should cut back on something else—or does he accept that thousands of home owners have nothing else to cut back on?

Home owners are in many cases cutting back on something else and deferring other purchases—that is part of the process by which the necessary slowdown in the economy is occurring. What is happening now will be nothing like as bad for the cause of home ownership and the housing market generally as the Labour party policy of putting a complete block on new mortgages.

To ask the Chancellor of the Exchequer if he will make a statement on the level of business investment for the latest full year for which figures are available.

Business investment increased by 17½ per cent. in 1988 and now stands at a record level as a proportion of GDP.

I warmly welcome those excellent figures for 1988, but does my right hon. Friend agree that they serve to underline the basic strength of the economy? Can he give the House the latest investment projections, particularly for manufacturing industry, for 1989?

I can tell my hon. Friend the latest figures that we have for manufacturing industry investment. They were for the second quarter of 1989 and were 7·8 per cent. above those of a year ago. Of course, the figure for the second quarter of 1988 was particularly high, so manufacturing industry investment is still forging ahead, and that is very important in ensuring that we have good prospects of continuing growth in the future and continuing export growth in the future after the current slowdown is over.

Why does not the Chancellor recognise that those figures are only part of the story? Is it not a fact that in a key manufacturing region such as the north-west investment in manufacturing is still 36 per cent. below its level of 1979 in real terms? Is it not true that until the Government put that right we shall continue to import more than we export, with a resulting massive deficit?

The hon. Gentleman will be glad to know that, taking the nation as a whole, manufacturing investment is at an all-time high.

Total investment in Britain over the past 10 years has risen by nearly 40 per cent. in real terms. Is my right hon. Friend aware that only this morning the biggest carpet manufacturing company in my constituency, Brintons, announced a £50 million five-year investment programme in its manufacturing capability? Is that not the clearest possible evidence of the strength of the real manufacturing economy and does it not show the confidence of manufacturers in the prospects brought about by the Government's policies?

I am glad to learn what my hon. Friend said and I wholly endorse the conclusion which he drew from it. The plain fact is that manufacturing industry is more efficient, more competitive, more productive arid more profitable than it has been for a very long time. That is why it has the confidence to go on investing and that is what it is doing, and this investment augurs well for our future. Also, of course, we have to bear in mind the quality of investment. Not only is the quantity of business investment as a percentage of GDP higher than since recorded figures began, but the quality of investment is very much higher, too, and that is equally important.

On business investment and the impact on it of high interest rates and exchange rate stability, Sir Alan Walters has said that the European monetary system is half-baked. He said in an article that the arguments for it have never even attained a minimum level of plausibility and that the Prime Minister concurs with his view. In the light of that, will the Chancellor tell us who is now in charge of economic policy in the Government? Is it the Chancellor or Professor Walters who should be giving the Mansion House speech this evening?

I am not sure, Mr. Speaker, what that has to do with the question, but I will gladly answer it. The views which the hon. Gentleman quoted on the EMS from Sir Alan Walters are clearly not the views of the Government. The Government have made their views clear and the Prime Minister has made them clear: we are committed fully to joining the EMS as part of stage one of economic and monetary union. As for investment, which actually is the subject of the question, I am not surprised that the hon. Gentleman shied away from it because, unlike the sharp growth in investment that we have had during the period of this Government, during the period of the Labour Government investment did not grow at all.

I should like to return to investment. My right hon. Friend has given us the latest new figures in a long series of investment figures for Britain. Can he tell us how those compare with the growth of consumption in the United Kingdom over the same period?

Yes, I can. For the past seven years investment had grown twice as fast as consumption in this country, and for the whole of our period of office it has grown by getting on for twice as fast as consumption. That compares with the Labour Government where there was a small growth in consumption and no growth in investment whatever. Also, of course, the international comparisons are not without interest. I am sure they will be of interest to my hon. Friend even though they may not be to hon. Members opposite. During the period of the last Labour Government our investment growth was one of the lowest in the European Community. During the period of this Government our growth in investment has been the highest in the whole of the European Community.

To ask the Chancellor of the Exchequer what has been the negative transfer of financial resources from the 17 most heavily indebted countries since 1983 to the latest available year.

To ask the Chancellor of the Exchequer what has been the negative transfer of financial resources from the 17 most heavily indebted countries since 1983 to the latest available year.

Over the period 1983 to 1988 the 17 heavily indebted countries received a positive net transfer of $5·7 billion from the international financial institutions, including the IMF. In addition, they have benefited from generous treatment provided by Paris Club official reschedulings.

What is the Government's position on the rescheduling of debts for black and Third world countries? Will the Minister also tell us how that compares with the Government's position on the rescheduling of debts to racist South Africa? Does he agree with President Kaunda who said at the Heads of Government conference in Kuala Lumpur that the banks that have thrown a lifeline to the racist South African regime are nothing but blood-suckers?

The arrangements that have been made between the commercial banks and South Africa are a matter for them. They are not the direct business of Government. The hon. Gentleman asked about the assistance that the Government have provided to Third world countries. It was my right hon. Friend the Chancellor who initiated the Toronto terms which led to so many countries in sub-Saharan Africa being assisted.

My right hon. Friend the Chancellor is to be congratulated on achieving leadership in the rescheduling of debt, particularly in sub-Saharan Africa. Does my hon. Friend agree that if only countries such as Zambia would follow the lead taken by exemplary countries such as Ghana in reforming their economies and not seeking to stifle the market, their economies would not be in the mess that they are now?

Three weeks ago I attended the Commonwealth Finance Ministers' meeting in Jamaica. It was apparent from that meeting that many countries in the Commonwealth were embarking on market-oriented policies of the type espoused by the Government but not yet by the Leader of the Opposition. Those countries include Ghana, Gambia, Kenya, India, Jamaica, Trinidad and many more.

The Minister is seeking to slide out of his responsibility for the rescheduling of debt in South Africa. Will he at least accept responsibility for the access of the South African Government to credit, borrowing and new capital? Will he give an undertaking that the Government will reject any approaches by the South African Government, especially as Mr. Walter Sisulu and the others who have been recently released have made it clear that they believe that external pressure assisted their release?

That is exactly the same question as the one asked earlier by the hon. Member for Tottenham (Mr. Grant), and I will give it precisely the same answer. This is not a matter of direct concern to the Government; it is a matter for the commercial banks to work out with the South African Government.

Is it not the case that the weight on the least-developed countries has been reduced by the sub-Saharan debt initiative taken by my right hon. Friend the Chancellor, and that that initiative is being followed by an increasing number of developing countries, thus assisting the Third world?

My hon. Friend is right. Were it not for the initiative taken by my right hon. Friend the Chancellor, many countries in sub-Saharan Africa would not have been helped in this way.

To ask the Chancellor of the Exchequer when he last met ministerial colleagues in the G7 to discuss Third world debt.

To ask the Chancellor of the Exchequer when he last met the managing director of the International Monetary Fund and the president of the World Bank to discuss Third world debt.

During my visit to Washington last month for the annual meetings of the IMF and World Bank.

Does the Chancellor accept that high interest rates impose bigger burdens not only on home owners and others in this country but on Third world debtor nations, because of the high levels of repayment? In view of that, will the right hon. Gentleman stop lecturing those countries about putting their economies in order? Will he acknowledge that he has not been able to put his own house in order, and that his policies are making it much more difficult for them to do the same?

I have to say first that it is necessary for those countries to put their own houses in order, and they know that very well; that is agreed, I think, by all those who have considered the matter seriously.

Did the Chancellor find that the president of the World Bank and the manager of the International Monetary Fund expressed any surprise at the fact that Japan is now offering money out of its Third world budget to Britain to save a major food research institute, which the Government want to close to save £1 million? Is that part of the economic miracle of 10 years of Tory rule?

Without accepting the terms in which the hon. Member put the question to me, I have to tell him —even though it is not connected with this question—that this country is receiving Japanese inward investment on a very large scale, far larger than any other European country. This is because they recognise this country as a country with excellent prospects, and that is why they want to come here.

Is not my right hon. Friend to be congratulated on giving the lead in transmitting debt to write-offs for countries stricken by disease and plague? Is he not absolutely right in giving the lead to the rest of the world? Is he not also right to say that Third world countries have been correctly forced into the reconstruction of their debts so that they can succeed economically and take on commitments from the rest of the world, so that in future they do not rely upon handouts but stand up as fully independent members of society?

I am grateful for what my hon. Friend says about the initiative that I took over two and a half years ago now which eventually led to the international agreement on the so-called Toronto terms to help with the indebtedness of the very poorest countries of sub-Saharan Africa. As for what countries are doing with their economies and what economic policies they are pursuing around the world, I found it very striking at the annual meeting of the Bank and fund this year to see more than ever before, all round the table, country after country was determined to turn its economy from a Socialist economy into a market economy because it saw that as the way forward. Incidentally, no one put this more clearly than the new Polish finance Minister Mr. Balcerowicz who wants a fully capitalist market economy organised in Poland. It will be very difficult, but I think we should give them all the help we can.

Is my right hon. Friend aware that while there will be support from all sides of the House for easing the debt burden of Third world countries, there is concern in some of those countries that have made attempts to honour their debts that they should not be penalised by those who follow a Socialist spendthrift economy?

My hon. Friend has a very good point. Certainly that is something which we need to take into account as the debt strategy evolves. That is a further reason why I believe that it is better to leave that, so far as possible, to the commercial banks—when it is commercial debt bank debts we are talking about, which it largely is —to negotiate with the individual debtor nations without the Government seeking to twist their arms.

Does the Chancellor of the Exchequer accept that contrary to the impression that he attempted to give my hon. Friend the Member for Dewsbury (Mrs. Taylor), the sterling interest rate is relevant to Third world debt and affects very large amounts of debt held by the United Kingdom financial institutions and banks? Does not a high interest rate policy in the developed world intensify the flow of funds from poor to rich countries? Does it not increase the crippling debt burden that the Third world faces, or is the Chancellor ignoring the need of the poor around the world as he is the needs of home owners in Britain?

I take it that what the hon. Gentleman means by the flow of resources from the poor to the rich is the debtor countries paying interest on the debts they have incurred.

Exactly.

The hon. Gentleman says, "Exactly" from a sedentary position. I hope that he is not suggesting that those countries should not pay interest on debts that they have incurred.

When my right hon. Friend next meets Finance Ministers in the G7 group, will he take time to consider with them the world development movement's current resolution on world poverty? Does he agree that it would be far better if help given to the Third world, whether in debt reduction, debt alleviation or generous assistance, were measured in its effect on relieving poverty and not in promoting political propaganda?

It certainly should not be directed to enabling Governments of those countries to make political propaganda. I agree with my hon. Friend. Of course it is aid that we use to relieve poverty and that is very important. Development assistance is designed to help those countries to have more successful economies and to develop their economic policies, but of course at the end of the day the measures that they take to put their own houses in order—and this goes back to the question that the hon. Member for Dewsbury (Mrs. Taylor) originally put—are all important.

To ask the Chancellor of the Exchequer what is the latest estimate of privatisation revenue.

The net proceeds from privatisation since May 1979 amount to some £27½ billion.

Will the Chancellor confirm that since the sale of the electricity and water industries, Government expenditure on adverting will now exceed £2,000 million? Bearing in mind that more than 75 per cent. of the population are against such proposals, when will this Government get off the backs of the people and save money instead of wasting taxpayers' money so profligately?

The figure given by the hon. Gentleman is complete bunkum. Advertising expenditure on the privatisation programme since British Telecom has amounted to less than 0·4 per cent. of the revenues raised, has undoubtedly enabled millions of people to participate in those privatisations and has thereby enabled us to obtain a better price when we have privatised. It would have been irresponsible not to have advertised and not to have let people know that we are carrying out these privatisations.

Can my hon. Friend confirm that the receipts from privatisation have helped to strengthen our public finances, repay the national debt and increase funds available for private sector investment?

My hon. Friend makes a good point. A Labour Government, of course, would find themselves in difficulties without those revenues. However, they are not the main point of privatisation. The main point is to improve the strength of the economy, which it has undoubtedly done. That is why every economy from Warsaw to Tokyo is following our advice and only Opposition Members are against it.

To ask the Chancellor of the Exchequer what is the current short-term interest rate in (a) the United Kingdom and (b) Germany.

On 18 October three-month money market rates were 15 per cent. in the United Kingdom, compared with 8·3 per cent. in Germany.

Given the fact that the Chancellor said that he had to increase interest rates because the Germans had, what advantages does he see in remaining outside the EMS?

My right hon. Friend the Chancellor has made it perfectly clear on several occasions—just as my right hon. and learned Friend the Lord President did in questions here on Tuesday—that we shall enter the exchange rate mechanism when the conditions that my right hon. Friend the Prime Minister set out at the Madrid summit have been met.

In view of the impact that changes in short-term interest rates can have on stock markets, do the Government have any plans to emulate the example of the United States and Japan by introducing circuit breakers in our domestic equity market, bearing in mind that if the American circuit breakers came into operation during one of their morning sessions, our market could be very vulnerable?

That is a matter for the stock exchange and I know that it is being kept under review.

Has the Economic Secretary read the comments of Mr. Henning Christophersen, who has responsibility within the cc for economic matters, that reliance on interest rates can be counter-productive in so far as it leads to wage rate rises? Does he agree that if he looks back over the past 13 months of the efforts of this Chancellor, the reliance solely on interest rates has been a grievous error?

Of all people, the right hon. Gentleman should know that virtually every country in Europe is depending on interest rates to bring down their rate of inflation.

Without in any way asking my hon. Friend to comment on the paper issued today by the Centre for Policy Studies on joining the ERM, as it has particularly said—and it is not exactly a nest of Left-wing vipers—that joining ERM would be the best anti-inflation policy that this country could have at present, will he ensure that that paper is widely disseminated among his colleagues?

I should be very grateful if my hon. Friend could send me a copy.

Given the Chancellor's earlier answer on EMS, how can Sir Alan Walters claim that the Prime Minister agrees with him and with a wholly different point of view to the view the Chancellor has just stated on behalf of the Government?

The hon. Gentleman obviously has not been listening to the replies that have been given. On several occasions today, and during questions on Tuesday to the Lord President, it was apparent that the Opposition were not listening to the answers. The answer is that the Prime Minister has set out on numerous occasions that Britain will enter the ERM when the conditions set out at Madrid have been met.

To ask the Chancellor of the Exchequer what are the current receipts from income tax; and what were the comparable figures for 1979.

Net income tax receipts in the financial year 1988–89 were £43·4 billion, compared with £18·7 billion in 1978–79.

Is it not a paradoxical fact, but a fact nevertheless, that under this Government as tax rates have come down the tax take has gone up, which has enabled us to increase in real terms spending on the services that are so necessary to this country? Is it not a fact that the public do not yet fully understand the relationship between lower tax rates and better public services? Is that not partly because Opposition Front-Bench spokesmen fail to understand that concept?

My hon. Friend makes a good point. It is true that the higher the initial rate that we cut, the greater the response of revenue has been. Whereas under Labour, with tax rates of up to 98 per cent., the top 5 per cent. of taxpayers paid only 25 per cent. of income tax revenue, since we introduced those rates the top 5 per cent. of taxpayers pay nearer 30 per cent. of revenue.

When the Government tax the British people more heavily than they were taxed in the 1970s and when taxation as a percentage of gross domestic produced is still several per cent. higher than it was when the Labour Government left office in 1979, why does the Financial Secretary pile on the agony for home owners and insist on taxing them by making them pay twice as much for their mortgages as they would pay if they lived in Germany?

I could answer that question more readily if I could explain why the Labour party has voted against every cut in the basic rate of income tax since this Government have been in office. Real standards of living, taking into account the rise in the retail price index, which includes mortgage interest payments, have risen for as long as I have been in Parliament under this Government.

Is it not a fact that cannot be emphasised too much that tax reductions since 1979 for the top 5 per cent. of earners have led to increased revenue for the Exchequer? Does my hon. Friend agree that the economic policies of the Labour party would simply lead to less revenue for education and the Health Service?

My hon. Friend makes a good point. Labour's punitive taxes amount to killing the goose that lays the golden egg. Since we have reduced taxes, that goose has been laying fruitfully, and we have been harvesting it to the benefit of public services.

To ask the Chancellor of the Exchequer what is the Government's response to the International Monetary Fund's proposals by Mr. Michael Camdessus for a quota increase.

As I said at the International Monetary Fund and World Bank's annual meetings in Washington, the case for a substantial quota increase has not been made, and the Government believe that a moderate increase in quotas is all that is needed.

Does the Chancellor recognise that since the last quota increase the growth in the world economy and the emergence of the international debt problem on their own justify a larger rate of increase than the Government are willing to support? Does he accept that historically important changes are taking place in eastern Europe, the success of which will depend on the economic progress of the countries concerned? Would it not be tragic if this unique opportunity, from which we have so much to gain in the West, were missed because we starved the IMF of the resources that it needs to play a constructive role?

I can assure the right hon. Member that this historic opportunity, as he rightly calls it, will not be missed and the IMF will not be starved of the resources that it needs. The question is what does it need. The plain fact of the matter is that the IMF's liquidity today, before any quota increase, is larger than it was after the last quota increase, which my right hon. and learned Friend the Leader of the House played a large part in securing. But it is larger today before any further quota increase than it was immediately after the last quota increase, which itself was to some extent a response to the debt crisis which began with Mexico in 1982.

Is it not hypocritical for Labour Members to ask the Government to increase the quota to the IMF because, when they were in Government, they were taking money from the IMF? Is it not proof positive that the economy is sound that we can now consider increasing our quotas to the IMF when, under Labour, that would not happen?

My hon. Friend makes a good point. As I said earlier, we contributed fully to the last quota increase, in 1983. and we shall contribute to the next quota increase whatever that may be. However, we shall not go cap in hand as beggars to the IMF, as the last Labour Government did in 1976.

To ask the Chancellor of the Exchequer when he next expects to meet representatives of the Child Poverty Action Group to discuss child poverty.

My right hon. Friend has no current plans to do so.

Is the Minister aware that before the latest interest rate rise, some 2 million people were struggling with debt, and some 200,000 families faced problems with multiple debt? What measures does he propose to tackle this, bearing in mind that of the proceeds of the last child benefit freeze, two thirds went to his Department, and only a third on means-tested family benefit?

The hon. Lady rightly points to measures that we have taken to target benefit better on those in need, As to those who are in debt, in my previous role, I took measures to urge the financial institutions to target their lending more effectively, because they, above all, have a. vested interest in not lending to people who cannot repay.

Has not the reduction in income tax under this Government increased disposable income, which in turn has enabled more people to give to charitable causes, particularly those helping people in need? Does this not show the caring society that the Conservative Government have created?

That is right, and giving to charity has roughly doubled in real terms under this Government. The fall in unemployment announced today, of some 50,000, is of the greatest benefit to those in need. I am surprised that there has been no welcome for it from the Labour party.

To ask the Prime Minister if she will list her official engagements for Thursday, 19 October.

I have been asked to reply.

What economies does the right hon. and learned Gentleman advise Londoners to make so that they can meet their mortgage repayments? The average repayment has increased by £161 a month in the past year, while average joint incomes have remained static.

It is for householders and citizens to make up their own minds—[HON. MEMBERS: "Oh."] Would the Opposition have it any different? It is for such people to make up their own minds as to how they will react to the measures that are necessary to secure success in the battle against inflation. The House should notice that the measures that they will have to take are a great deal less burdensome than those that they would have to take if the Labour party were in office, because inflation would go through the roof.

To ask the Prime Minister if she will list her official engagements for Thursday, 19 October.

I have been asked to reply.

Is my right hon. Friend aware that all those hon. Members who went to Ethiopia during the last drought will forever be haunted by what they saw? Is he further aware that because of crop failure, some million people in Ethiopia face famine and starvation? While Britain's response in food aid has been swift, the cycle of drought and famine in Ethiopia will never be broken while civil war and military conflict continue there. Is it not time for the international community to act to help to resolve that conflict, because next year, it may be too late for hundreds of thousands of people there?

My hon. Friend is right to draw attention to the grave situation continuing in Ethiopia as a result of the combined effects of the harvest failure following famine and the continuation of the civil war. He is right to draw attention to the steps already taken by Her Majesty's Government to respond to this desperate human need. We have pledged two consignments of 5,000 tonnes of cereals this year. That makes a total of £4 million worth this year, and some £54 million worth since the beginning of 1987.

Now that the Chancellor of the Exchequer has repudiated Sir Alan Walters, who does the right hon. and learned Gentleman expect the Prime Minister to repudiate—her personal adviser or her Chancellor?

The right hon. Gentleman should know perfectly well that throughout my time as Chancellor of the Exchequer Professor Alan Walters was the Prime Minister's economic adviser and in those circumstances, as today, his advice is one factor taken into account by the Prime Minister and the rest of the Government. The policy of the Government is as stated by people speaking on behalf of the Government. The Prime Minister and the Chancellor of the Exchequer have articulated policy in precisely the same terms and will continue to do so.

No answer was the stern reply. [Interruption.] I hear what the right hon. and learned Gentleman says. Is he also aware that Sir Alan says that the Prime Minister concurs with his view about British participation in the exchange rate mechanism? Is the right hon. and learned Gentleman saying that Sir Alan is not telling the truth about the Prime Minister's view?

I am not required to answer for every nuance —[Interruption.]—and it would be astonish-ing if I were. The Prime Minister's view is the one that I reiterated in the House on Tuesday and which my right hon. Friend the Chancellor of the Exchequer reiterated this afternoon. The views set out by the Prime Minister at the conclusion of the Madrid summit are well known to the House.

Did my right hon. and learned Friend see the outcome of the proceedings in the Central Criminal Court today in respect of the Guildford Four? Is that not overwhelming proof that there should never be a return of capital punishment?

I understand why my hon. Friend expresses that view and it is certainly one with which I agree. Perhaps I may take this opportunity to tell the House that in the light of the outcome of the proceedings in the Court of Appeal this afternoon it is the intention of my right hon. Friend the Home Secretary to make a full statement to the House immediately after business questions. A serious miscarriage of justice which has led people to be wrongfully imprisoned for many years has been set right as a result of the police investigations and the Court of Appeal decision. It is right that the House should hear about it as soon as possible from the Home Secretary.

To ask the Prime Minister if she will list her official engagements for Thursday 19 October.

I have been asked to reply.

Has the deputy Prime Minister had time to read the report published on Monday by the National Association of Citizens Advice Bureaux in which it recounts how it had to rescue a literally starving youngster from the streets? As there is growing concern about the plight of the young homeless who are denied benefit and forced on to the streets, often into crime, prostitution and drug abuse, is it not time that the Government, as well as preaching respect for human rights, began to practise it at home by restoring to 16 and 17-year-olds their right to income support?

The whole House is bound to have sympathy with any such case. It is for that reason, apart from the wider implications of social policy, that we have maintained proper arrangements for the transition of those leaving school and going on to any form of further training, which will enable them to have their needs met in the most appropriate fashion.

Has my right hon. and learned Friend had the opportunity to look at the unemployment figures today and to reflect that the fall in unemployment is larger than the Labour party promised with billions of pounds of public subsidy? The economic policies of the Government and the high level of private investment have brought down unemployment yet again.

I have, indeed, observed those figures and I am glad that they were drawn to the attention of the House during Treasury questions. The unemploy-ment figures have fallen for the past 39 months and they fell by 50,000 last month. My hon. Friend underlines the point that the number of people in employment under this Government is at an all-time record. None of those things would have been remotely possible had this country been condemned to follow the policies recommended by the Labour party.

To ask the Prime Minister if she will list her official engagements for Thursday 19 October.

I have been asked to reply.

Given the assertion by the Prime Minister that Pol Pot and the Khmer Rouge should not be allowed to return to Cambodia and remembering that they were responsible for one of the worst cases of genocide this century, will the Government now challenge the seating at the United Nations of the Khmer Rouge-dominated coalition when Cambodia is debated on 15 November? Is the deputy Prime Minister aware of the strength of public opinion in this country on that issue and the feeling that the Government should take a much more active and less hypocritical role in bringing an end to the bloodshed in Cambodia?

The hon. Lady need be in no doubt about the Government's opposition to the prospect of a return of Pol Pot to effective Government in Cambodia. It has also been very important to secure the withdrawal, after years of illegal occupation, of the Vietnamese army. That at least has been achieved. The hon. Lady may rest assured that we will co-operate with our partners in the international community in maintaining our resistance to Pol Pot's return.

To ask the Prime Minister if she will list her official engagements for Thursday 19 October.

I have been asked to reply.

Has my right hon. and learned Friend seen the report that was published today which sets out the progress that has been made in developing the Health Service over the past 10 years including a record number of patients treated and a 20 per cent. increase in the number of family doctors? Will my right hon. and learned Friend ensure that those records, among others, are made known to the British Medical Association so that it can inject a little balance into its campaign against the Health Service reforms?

I have seen the figures to which my hon. Friend refers so helpfully. Under this Government, the National Health Service has employed more doctors, nurses and dentists, and they are being paid much more in real terms, than when the Labour Government left office. The number of people being treated has risen sharply—both in-patients and out-patients. As my hon. Friend states, the BMA would do well to focus on that record of continuing progress and on the fact that the Government are wholly committed to ensuring even better levels of treatment for patients in future.

With his long experience of high interest rates, can the deputy Prime Minister identify for the House the exact economic process whereby penal interest rates wrecking the finances of the fishing industry in the north-east of Scotland will contribute to the diminution of inflationary pressures in the south-east of England?

The hon. Gentleman knows that interest rates apply throughout an economy. The level of interest rates is determined not only by what happens in this economy, but by interest rates around the world. That is why all countries seeking to challenge inflation effectively are relying on interest rates to play a substantial part in securing that reduction.

To ask the Prime Minister if she will list her official engagements for Thursday 19 October.

I have been asked to reply.

Does my right hon. and learned Friend agree that progress on nuclear arms reductions —and good progress has already been made—requires us to maintain effective and up-to-date conventional forces? Has my right hon. and learned Friend had a chance to assess this country's capacity to defend itself if £5 billion were cut from the United Kingdom's conventional force levels—the policy adopted by the recent Labour party conference?

I have indeed. I endorse what my hon. Friend has said about the importance of achieving continued progress in nuclear and conventional arms negotiations. I also emphasise his points about the importance of maintaining our own independent deterrent capacity if we are to continue to play an effective role in that. I underline the fact that our ability to do that would be destroyed totally if we embraced the defence policy adopted at the last Labour party conference.

To ask the Prime Minister if she will list her official engagements for Thursday 19 October.

I have been asked to reply.

Despite the right hon. and learned Gentleman's fine words a few moments ago, is he aware of the health profile report produced by Stoke-on-Trent city council which shows that the standard mortality rates in parts of the city are high and that life expectancy is as low as 62 for men and 70 for women in Chell and that our infant mortality and perinatal mortality rates are worse than the national average? Is he aware of the HMSO report produced today which shows that there has been a 6 per cent. reduction in the number of hospital beds? What comfort does the right hon. and learned Gentleman have for my constituents who now find that their special deprivation money has been taken away from the North Staffordshire district health authority?

I am not able to comment on the relative level of infant mortality in that particular authority, but I am entitled to draw the hon. Lady's attention to the fact that over the past 10 years throughout the United Kingdom there has been a reduction in infant mortality to the extent of 30 per cent. per 1,000 live births. That is an important indicator of the extent to which the hon. Lady is wrong to judge progress in the Health Service simply by counting the number of beds. As a result of increased efficiency in the use of beds there has been a substantial increase in the number of patients treated both in and out of hospital, and so there has been an improvement in infant mortality.

Does my right hon. and learned Friend agree that the Jaguar motor company is a centre of excellence of design and product which we all wish to see expanded in this country and that the Government should not use their minority share to preclude consideration by all shareholders of whatever plans there may be for the expansion of that company?

I understand my hon. Friend's emphasis on the importance of the continued prosperity of the Jaguar motor company. I am sure that the Government will bear in mind the point that he makes when considering how to handle their shareholding in the company.

To ask the Prime Minister if she will list her official engagements for Thursday 19 October.

I have been asked to reply.

Does my right hon. and learned Friend agree that apartheid in South Africa will be brought to an end more quickly by quiet and persistent diplomacy than by extravagant and wild but empty rhetoric?

I agree with my hon. Friend. The progress that is now being made in South Africa has undoubtedly been brought about by the sustained, effective, quiet diplomacy that this Government have deployed. That kind of policy has helped to bring about the most important changes involving the release of Walter Sisulu and the other long-term political detainees. We shall continue to press in the same way to secure the release of Nelson Mandela and the commencement of the discussions within South Africa for which the whole world is waiting.