To ask the Chancellor of the Exchequer what assessment he has made of the causes of the reduction in the surplus on invisible trade.

The fall in the United Kingdom's invisibles surplus in 1989 reflected a number of factors, including unusually high net contributions to the EC budget and high insurance payments following disasters in the United States.

Is not it clear to everyone that the trade in invisibles fell into deficit in the last quarter of 1989 due to the massive trade deficit and the need to keep interest rates high to finance that with hot money? Do the Government still believe that our manufacturing industry and the trade deficit hardly matter?

The hon. Gentleman's question was about the invisibles deficit, not about manufacturing, which does not come into it. We had an invisibles surplus of £2·8 billion last year. It is true that they moved into deficit in the last quarter, for the reasons that I gave, but we are projecting a surplus on invisibles of £1·5 billion this year. I am pleased that at long last the Labour party is beginning to recognise the importance of invisibles and the service industries.

Does my right hon. Friend agree that our international security, particularly with overseas assets, is at an all-time high, giving confidence to overseas investors in Britain, in addition to which we have high reserves and can easily withstand any pressures on the pound?

My hon. Friend is absolutely right. Our overseas investments are larger, as a proportion of GDP, than in any other country and last year our overseas assets appreciated in value by some £30 billion. That is a measure of Britain's financial strength and it greatly dwarfs all the points made by the Labour party about the deficit on the current account or on invisibles.

As the Chief Secretary seeks solace in international comparisons, will he reflect that not only do we have the worst balance of payments deficit of any of the Group of Seven countries, but we have the highest rate of inflation and the highest interest rates? Does that show that Government policy is working?

If the right hon. and learned Gentleman wants to make international comparisons, why does not he also point out that in the 1980s we had the highest growth of any major country in the EC, that we have the highest rate of investment of any country in the EC, that our manufacturing productivity has grown faster than that in any other major industrialised country and that our unemployment rate is two thirds of the EC average? The right hon. and learned Gentleman is a friend of every country but his own.

To ask the Chancellor of the Exchequer what representations he has received on his proposal to extend save as you earn to banks.

The proposal responds to representations from the British Bankers Association and a number of individual deposit takers. It has been widely welcomed.

Has my hon. Friend been encouraged by the general response to my right hon. Friend's savings initiative? Does he believe that the biggest disincentive to savings is the fear of many potential savers that some future Government might devalue their savings, as happened under the previous Labour Government, all too disastrously for them?

That is precisely what happened under the previous Labour Government, when we had negative real rates of interest. Small savers, particularly those nearing retirement age and the elderly, lost a great deal of money.

To ask the Chancellor of the Exchequer when he intends to respond to the Treasury and Civil Service Select Committee's report on international debt strategy.

My right hon. Friend will be responding shortly.

Will the Minister respond to the Committee by doing something that the Treasury has so far failed to do, and assist Third world debt, which in the major indebted countries is running at over $500 billion, by revoking the £1·9 billion tax concessions, using taxpayers' money, given to British bankers to service debts? As the Minister knows, that money goes not to the starving poor of the Third world, but into the pockets of shareholders of the big banks. When will he end this scandal?

The hon. Gentleman may have noted the changes made in the Budget, which increased the relative attraction for banks to return debt to the indebted countries. I am sure that he will welcome that. He is wrong to say that the Government have done nothing to help with the debt problem of underdeveloped countries. Far from it. My right hon. Friend the Member for Blaby (Mr. Lawson) launched the sub-Saharan debt initiative, we have forgiven £1 billion of debt to the 27 poorest countries and the abolition of exchange controls ensures that more direct investment goes from the United Kingdom to underdeveloped countries than from all the other EC countries put together.

In terms of international debt, is not it also important for Britain not to continue to incur debt itself? Is not the reduction of our debt, to the extent that we are paying £2·5 billion less in interest, an effective move?

My hon. Friend is right. The Labour Government left us with vast overseas debts and were the first Government of any major country to have to call in the International Monetary Fund, which should be helping poor countries in need. We shall ensure that that will be the case.

Would not it be sensible to use the tax system not only to encourage the banks to make provision in their own accounts against Third world debt but to forgive debts to Third world countries? Even after the Budget changes, does not the present system provide an easy ride for the commercial banks but offer no real help to the struggling peoples and economies of the Third world?

The hon. Gentleman is wrong. As I pointed out, and he half-acknowledged, the Budget has increased the relative attractions for banks to give back debt to debtor countries. If he or the Opposition have proposals retrospectively to withdraw relief that banks have been expecting, as all other commercial entities do, I am sure that the House would be interested to hear them.

Does it strike my hon. Friend as strange and even inconsistent that Labour Members spend so much time complaining about the burden of debt in the Third world, when in the next breath they encourage the Government and the EC to erect yet more trade barriers, such as the multi-fibre arrangement, against Third world products? Such barriers prevent Third world countries from improving their living standards by selling us the products that they can best make.

My hon. Friend is right. The under-developed countries most need access to two things—the markets and the capital of the developed world. Socialist policies would deny them both.

On a point of order, Mr. Speaker. In view of the pathetically inadequate response to my question, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

To ask the Chancellor of the Exchequer if he will announce a date for the redemption of war loan.

There are no plans to redeem 3½ per cent. war loan.

That answer will disappoint at least one of my constituents. Are not there substantial numbers of people who either bought war loans or whose parents bought war loans that they have inherited and who believe that they have had a poor deal? Will the Government consider a scheme by which such people could redeem war loans rather than having to sell them at discounted prices?

I am afraid that I cannot hold out hope for the hon. Gentleman. I stated what has been the policy of successive Governments. To redeem stocks now at par would cost a substantial amount of money and would lead to demands for redemption of other undated stocks. In most cases it would simply lead to windfall gains for those who purchased the stocks not at the original point of issue but after the price had fallen. I know that the hon. Gentlemen has been working hard on behalf of his constituents and has put forward ideas for distinguishing between some holders and others, but I am afraid that that would not be possible administratively.

Will my right hon. Friend confirm that the previous Labour Government issued the highest coupon gilt ever, popularly known as "Healeys", and that it would be more sensible to repay those stocks which have a date and a high coupon rather than undated stock with a low coupon such as war loans? When did a Government last repay the national debt for three years in a row?

My hon. Friend is right. I am not sure about his remarks about "Healeys", but he is certainly right in his general point about undated stocks, and I have given the hon. Member for Denton and Reddish (Mr. Bennett) the reasons why it is impossible to repay them.

As the Government make a virtue of repaying the public debt, why do not they give some attention to those who lend money in the particular circumstances of war and have held the stocks continually ever since? As those names must have been recorded, why is it impossible to repay those people?

As I explained, large numbers of holders of war loans are not people who bought at the original price. As the hon. Gentleman knows, the stock lies at well below par. We would be giving a substantial capital gain, in particular to higher rate taxpayers and not to those who originally bought the stock. It is impossible to distinguish between those who bought the stock originally and those who hold it now.

To ask the Chancellor of the Exchequer what representations he has received on his proposal to abolish all stamp duties on share transactions.

The proposal to abolish stamp duties on share transactions has been widely welcomed.

Does my hon. Friend agree that the abolition of stamp duty will be most advantageous to the 11 million shareholders in this country because it will reduce dealing costs to them, it is likely to extend wider share ownership in a way that Opposition Members fail to understand, and it will further enhance the City's leading role as the financial centre of Europe?

My hon. Friend is right. It will benefit the 11 million direct shareholders—to the obvious disappointment of the Opposition—and all those people who are members of pension funds and have personal pensions or life assurance policies. They will benefit greatly, as will people who work in that much-expanding industry.

To ask the Chancellor of the Exchequer what discussions he has had with the pools promoters about his Budget.

To ask the Chancellor of the Exchequer what discussions he has had with the Football Trust about his Budget.

Following the Budget statement, officials met the Football Trust and the Pools Promoters Association to discuss implementation of the proposed reduction in the rate of pool betting duty. Both organisations welcome that and I am confident that they will meet the conditions for reducing the duty. Negotiations are proceeding to that end.

Although I welcome the progress, will the requirements to distribute the funds according to the differing needs of clubs be met through the Football Trust? For example, at the moment Leeds United is storming back into the first division, where it belongs, but other smaller clubs such as Halifax, Huddersfield and even Stockport County may have different requirements which have to be met.

I congratulate my hon. Friend on the success of Leeds United, and I look forward to seeing them lose at Stamford Bridge next year. The Football Trust is committed to a fair distribution of benefit and duty reductions according to the differing needs of clubs. It has also undertaken to account separately for the moneys received and distributed.

I am most grateful to my right hon. Friend for his reply. We welcome that in Leicestershire and in particular in Bosworth. Will he give an undertaking that Leicestershire will be considered most carefully under those proposals?

I assure my hon. Friend that the Football Trust will carefully consider comparative needs before distributing resources.

As the Chancellor of the Exchequer is Chelsea football club's second best-known supporter, will he guarantee that he will declare an interest as Stamford Bridge could do with some of that additional money, and he and I could enjoy the additional facilities that would be provided?

As the hon. Gentleman is undoubtedly Chelsea's best-known supporter, perhaps we should declare a joint interest.

The Chancellor said that the reduction in duty will be granted to those in need on the basis of ability to pay. If he can do that for the football pools, why cannot his right hon. Friends do it for the poll tax? As some of those football clubs are owned by very wealthy people, will he make sure that the Government are not bailing out people such as Robert Maxwell and his friends?

There are some temptations that even I can resist. The hon. Gentleman's ingenuity stretches matters a little far when he refers to the community charge. But the Football Trust made it clear that it is entirely committed to a fair distribution of benefit and duty reductions and I am confident that that will be achieved.

The Chancellor will be aware that the Government have designated as international grounds Wembley, Roker Park and a ground in Belfast. Those grounds will require extra money because they have extra commitments. Why have not the Government designated any ground in Wales for international status?

I am not sure whether that is a matter for the Government and I am certain that it does not arise on this question.

To ask the Chancellor of the Exchequer what representations he has received about TESSA.

This innovative proposal has been widely welcomed.

The explosion of credit in recent years has not been matched by a similar growth in personal savings. Does my right hon. Friend agree that tax concessions can play an important role in encouraging individual savers, and that is why the TESSA scheme and the abolition of the composite rate have been so warmly welcomed? Does he agree that it is important to promote that new scheme next year to people who do not save now so that there will be a growth in savings and not simply a replacement of other deposits to take advantage of that valuable tax concession?

My hon. Friend makes an important point. There will certainly be an element of dead weight cost in the new scheme, as I acknowledged from the outset, but I hope that it will be widely promoted to encourage people who at present do not save to do so. That would be wise economically and socially.

Will the Chancellor step back for a moment from the paean of self-congratulation on TESSAs and reflect on their impact on the competitive position of friendly societies, which have made such a considerable contribution over the years to encouraging the very small savers whom we want brought into savings schemes? Will he consider raising the exempt limit on deposits for friendly societies, and will he legislate at an early date and bring into force the recommendations in the Green Paper? We do not want Green Papers alone, we want action.

Green Papers need to be considered. As for friendly societies, the hon. Gentleman will be aware of the measures in the Budget, to which I have nothing to add at present.

To ask the Chancellor of the Exchequer how many letters he has received from small businesses about the level of interest rates.

A small number each month.

Will the Chancellor explain to people who run small businesses how a rise of over 100 per cent. in the number of firms going into receivership caused, they say, largely by the Government's policies of high interest rates and the uniform business rate, helps Britain prepare for the challenge of 1992? If a doubling in the number of firms going bust was not the purpose of those policies, will he now at least urgently address himself to their undoubted effects?

The most crucial element of all for 1992 is to make sure that by then we have a competitive economy and much lower inflation than at present. That is the purpose of the Government's present monetary policy. The right hon. Gentleman quotes the number of companies going into receivership; he might equally have quoted the net number of new companies which is running at a record level of 1,300 each week.

Will my right hon. Friend assure the House that whatever representations may be forthcoming from business, he will not consider reducing interest rates until it is clear that inflationary and monetary pressures are at last abating?

I am entirely content to give my right hon. Friend that assurance.

Has the Chancellor noted the Treasury and Civil Service Select Committee report that was published today, in which we say that the level of interest rates has a major impact on the timing and level of investment? Is not there a case for the Government not to rely so exclusively on interest rates in managing the economy?

The hon. Gentleman will also be aware that interest rates are a powerful counter-inflationary weapon. It is precisely for that purpose that we believe that monetary policy is so important. I must echo to the hon. Gentleman what I affirmed to my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart): interest rates will have to remain high until I am confident that inflation is on a downward trend.

Does my right hon. Friend recognise the damaging connection between high public expenditure and interest rates? In particular, does he share my concern about the impact of high local authority expenditure on public expenditure generally? I am sure that he will have noticed that the high-spending authorities are Labour controlled. Does he share my worry about the impact on interest rates in the future if a party that is committed to high local expenditure should again get its hands on the Treasury?

I entirely share my hon. Friend's view. That matter will he watched carefully in the coming months. It is essential that we retain firm control of public expenditure which we intend to do.

Does the Chancellor recognise that the danger that most people, particularly in small businesses, fear is not that he will prematurely lower interest rates but that he will shortly raise them again? Will he reconsider the use of increased interest rates as the sole instrument of policy, particularly in the light of the recent Bundesbank report which showed that across the major economies of the world credit controls play a useful, if minor, role as a direct alternative to the use of interest rates alone? Will he assure the House that he is not waiting until 4 May to increase interest rates?

I am not entirely sure that the hon. Lady carried all her hon. Friends with her in every aspect of her question, which she founded on a misconception. Monetary policy is backed by fiscal policy, and must remain so.

To ask the Chancellor of the Exchequer how many people he anticipates will benefit as a result of his abolition of composite rate tax.

An estimated 14 million people will benefit from the abolition of composite rate tax.

May I thank my hon. Friend for listening to the representations that I and others made? As all those 14 million people are small savers, the change will be welcomed by many people other than the immediate beneficiaries.

I am grateful for my hon. Friend's opening remarks. His representations, along with those of others, played a part. Some 5 million women, 4 million pensioners, 2½ million other adults and 2½ million children will benefit from the removal of that unfair form of taxation on small savers.

To ask the Chancellor of the Exchequer how many businesses he expects to be helped by his proposed value added tax reforms.

About 1,150,000 businesses should be helped by the proposed new scheme for relief from VAT on bad debts, and most of the 250,000 or so businesses that register each year could benefit from the simplified VAT registration requirements.

I thank my hon. Friend for that helpful response. As a former managing director, I know only too well—[HON. MEMBERS: "Hear, hear."] Those were the days when I was gainfully employed. Bad debts are bad news; they go straight to the bottom line and adversely affect the balance sheet. I therefore welcome unreservedly my right hon. Friend's Budget changes, which will substantially help companies. I wonder whether I might pursue one matter with my hon. Friend—[HON. MEMBERS: "No."]

Order. One question is the ration.

I have not actually asked the question yet, Mr. Speaker. I should like to ask my hon. Friend to elaborate on the figures that he announced at the end of his answer. Did I hear him say that there were 250,000 new registrations each year?

Will the hon. Gentleman give way?

How does that compare with the last year of the last Labour Government?

I thank my hon. Friend for his kind remarks about my right hon. Friend the Chancellor's Budget. My hon. Friend is right also to give thanks to the imaginative set of Budget proposals to help small and growing businesses which my right hon. Friend introduced on 20 March. My hon. Friend is looking for a figure. Under this Government, more than 1,300 small businesses start up each week. In the last year of the Labour Government, there was a loss of 100 per week. I do not think that the hon. Member for Bradford, South (Mr. Cryer) was the Minister with responsibility for small businesses at the time because he had resigned. Nevertheless, there was a net loss of 100 a week.

Very quickly, before the Prime Minister comes in, will the Minister give the House an assurance that the Government will not extend VAT before the next general election?

The hon. Gentleman was on the Standing Committee that considered last year's Finance Bill and he has held his job for a long time. He knows perfectly well that the Government's position with regard to VAT has been set out on countless occasions from the Treasury Bench. There is no change whatever in those views.

The small business lobby is grateful to the Government for the changes made by the Budget, but will my hon. Friend go a little further in respect of bad debts? Bad debts are bad debts when they become bad debts. No small business man writes off debts that are not bad. It seems an onerous requirement for a small business man to have to wait two years to get relief from VAT. Will my hon. Friend promise to reduce that period?

Doubtless we shall have an occasion to debate that matter when the subject of bad debt relief comes before the House—perhaps in a Committee of the whole House on the Finance Bill. I look forward to debating the matter further with my hon. Friend then.

To ask the Chancellor of the Exchequer when he last met the Finance Ministers of the Group of Seven countries; and what subjects were discussed.

My right hon. Friend met his counterparts in the other Group of Seven countries at a G7 meeting in Paris on 7 April. Along with the central bank governors of the G7 countries, they reviewed economic policies and prospects in their countries, reaffirmed the need for close co-operation of macro-economic and structural policies, and discussed recent developments in financial and exchange markets and the impact of events in eastern Europe.

Given the regular, strenuous efforts by the Opposition to rubbish the achievements of management and workers in British manufacturing industry, can my hon. Friend tell us which country out of Britain, France and Germany achieved the highest rate of growth in manufacturing output and manufacturing productivity throughout the 1980s?

Not only did manufacturing output and manufacturing productivity grow faster in the 1980s in Britain than in the other two countries, but growth of British investment between 1980 and 1988 was also faster.

The Chancellor would surely have discussed the balance of payments with the other Finance Ministers. If so, he would have explained why our invisibles surplus has disappeared and understood that the high interest rates required to bring in that hot money from abroad are the price that we have to pay in terms of manufacturing industry suffering and high mortgage interest rates. The sooner the Chancellor brings that policy to an end, the sooner we can find other means of satisfying the demands of British industry.

The right hon. Gentleman is correct to say that balance of payments issues were discussed at the G7 meeting in Paris on 7 April, and a paragraph reference is made to them in the communiqué. The right hon. Gentleman overlooks the fact that, as my right hon. Friend the Chief Secretary said earlier, the last set of British invisibles figures were erratic in so far as they took into account higher than usual contributions to Europe and the higher than usual contributions that we had to make as a result of the hurricanes in the West Indies and the United States.

Did my hon. Friend tell the Finance Ministers of the G7 countries that since Britain attempted to shadow the Deutschmark in 1988 this country has learnt a terrible lesson about the dangers of attempting to rig exchange rates?

As far as I know, that particular matter was not discussed at the G7 meeting in Paris on 7 April. Had it been discussed, however, my right hon. Friend would have pointed out that not only the pound but several other currencies have fallen against the Deutschmark.

To ask the Chancellor of the Exchequer what assessment he has made of the impact of his interest rate policies on Third world debt.

Sterling interest rates have relatively little impact on developing countries as less than 5 per cent. of their debt is denominated in sterling and some of this will be at fixed or concessional rates.

Is the Minister aware that Japan's economic problems will mean that that country will be keeping more of its surplus capital at home and that German reunification will mean the same for Germany, the other major lender in the world? Where will the major debtor nations, of which Britain and the United States are among the most prominent, get their hot money from? Will not it be from the Third world nations, which are already suffering a net outflow of capital?

No, I do not think so. There are vast quantities of money in the world ready to go to countries where there are excellent investment opportunities, as there are in the United Kingdom.

Have not the Government made a particular contribution to assist Third world countries faced with that problem by converting a large amount of Government debt into grant? Is not that particularly true in respect of sub-Saharan Africa?

My hon. Friend is absolutely right. The Government have forgiven some £1 billion of debt to the 27 poorest countries. That was the right thing to do and will be welcomed on both sides of the House.

To ask the Chancellor of the Exchequer when he expects the Madrid conditions for exchange rate mechanism participation to be satisfied.

In due course.

Do the Government believe that all the conditions for entry, including those related to inflation, will be met by next year?

We must wait and see, but when the conditions are met we shall join the exchange rate mechanism.

What specific features of the Bretton Woods agreement were so successful that we should want to recreate them now?

I think that we now find ourselves in a different set of circumstances, in which a greater degree of exchange rate stability would be extremely useful for everyone.

To ask the Chancellor of the Exchequer what representations he has received on his plans to help traders with bad debts.

I think that my hon. Friend has already asked his question; nevertheless, I shall answer it again. During the comprehensive review of the arrangements for relief from VAT on bad debts, the views of professional and business bodies were sought, and many representations received.

I am sure that you, Mr. Speaker, will be pleased to hear that I do not propose to ask the same question again. Does my hon. Friend agree that as dangerous to small businesses as had debts are debts which are paid slowly and that some of the worst culprits are local and public authorities? What efforts can he make to encourage public authorities, including the Government, to pay their debts to small businesses a little more quickly?

I fully agree with my hon. Friend and efforts are being made to ensure that those things are put right as soon as possible.

To ask the Chancellor of the Exchequer how many businesses he expects to be helped by his proposed value added tax reforms.

About 1,150,000 businesses should be helped by the proposed new scheme for the relief from VAT on bad debts and most of the 250,000 or so businesses that are expected to register in a year could benefit from the simplified VAT registration requirements.

With the rapid increase in the number of businesses in my constituency and throughout the United Kingdom, what steps is my right hon. Friend taking to ensure that businesses which grow to VAT level understand their responsibilities?

I think that the small business sector in recent years has shown that it understands its responsibilities very well. It will also react favourably to the fact that we have the most generous tax structure for small businesses of any country in the European Community.

To ask the Chancellor of the Exchequer what is his estimate of how much in combination the increases in electricity, gas, water charges, mortgage repayments and the poll tax will cost, in 1990–91 as against 1989–90, a family on average earnings with two children.

It is not the practice to provide forecasts of interest rates. However, the announced increases in gas, electricity and water rates, together with the community charge, are estimated to add over 1 percentage point to the RPI inflation rate in 1990–91.

As the figures given today make nonsense of the Government's claim to be conquering inflation., is the Chancellor of the Exchequer now prepared to revise the estimates of inflation given in the Budget for the end of the year 1990?

No, we are not.

Does my hon. Friend agree that over the next decade the prices of those particular commodities are likely to have to rise because of problems associated with the environment and the bringing in of greener policies? Does he also agree that it is arrant nonsense for Opposition Members to ask for green policies and then complain about the price of those policies?

As my hon. Friend knows, those matters are being considered in the White Paper being prepared by my right hon. Friend the Secretary of State for the Environment. With regard to the Opposition's green policies, the hon. Member for Islington, South and Finsbury (Mr. Smith) brought out a short paper on that issue just before the Budget. Doubtless the Opposition Front Bench will table amendments to our various proposals in the Budget during the passage of the Finance Bill, the Committee stage of which we expect to begin in a fortnight's time.

To ask the Chancellor of the Exchequer what representations he has received from employers' organisations on his proposals to assist TECs.

The measures announced in the Budget to provide tax relief for business contributions to TECs have been widely welcomed by a number of employers' organisations.

I am sure that my hon. Friend will accept my view that the training and enterprise councils are the best possible means of improving training in our respective areas. We have a thriving TEC starting up in my borough of Kingston upon Thames. I hope that my hon. Friend will consider other means of assisting TECs in future.

I entirely agree with my hon. Friend. The development of training and enterprise councils is extremely important because they harness the private sector and the public sector to improve training, which is one of our most important objectives. The Opposition pay lip service to that objective, but in general they oppose every constructive measure that the Government introduce.

Given the cuts in training budgets announced in the Government's expenditure White Paper, does the Financial Secretary envisage that business will be expected to fill the gap in those budgets? What will happen to the voluntary organisations providing training for people with special needs, for which budgets are being cut at the moment? Will they have to face those cuts themselves or will business, and passing the hat round, be expected to save that important training work?

Business is responsible, and recognises that it is primarily responsible, for training people and it has increased substantially the amount that it spends on training. It has been able to do that because of the improved profitability of British industry. I believe that it is far better to rely on that than to do everything through the state. I am certain that British industry does not want a payroll tax to be imposed. The Opposition have been proposing such a tax vigorously, although they now seem to be getting cold feet. I am sure that the House would like to know whether the Opposition are going to renege on that policy proposal.

To ask the Chancellor of the Exchequer whether he will make a statement on the level of interest rates.

Bank rates are set at 15 per cent.

In view of the serious recession in the construction industry and the significant downturn in retail sales, will my hon. Friend confirm that nothing in the underlying features of the British economy would require a rise in interest rates?

Interest rates will remain as high as is necessary for as long as is necessary to bear down on inflation. My right hon. Friend the Chancellor reserves the right if need be to raise interest rates, just as he reserves the right to get them down.

To ask the Prime Minister if she will list her official engagements for Thursday 26 April.

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

Is the Prime Minister aware that the report of the Select Committee on Education, Science and the Arts on teacher shortages, pay and conditions has been suppressed for almost a year? As the report is not to be published until after the local elections, will the Prime Minister tell the House what she and her Conservative colleagues on the Select Committee are afraid of?

We are very proud of our record with regard to teachers' pay, compared with that of the previous Labour Government. By 1 January 1991, teachers' pay will have risen by 50 per cent. on average in cash terms since March 1986. My right hon. Friend the Secretary of State for Education and Science is implementing the interim advisory committee's recommendations. That will mean very substantial rises for all teachers, particularly for experienced teachers and for those who are new to the profession. Heads and deputies will receive increases of up to 12·2 per cent. It is a good record.

My right hon. Friend will have received many representations in the past 12 months about alternatives to the community charge. Was not the most callous unveiled yesterday in Scotland, when there was a proposal which made no allowance for rebates for pensioners, the sick, or the unemployed? [HON. MEMBERS: "Rubbish."] That proposal was outlined by the hon. Member for Glasgow, Garscadden (Mr. Dewar) yesterday. [Interruption.]

My hon. Friend makes—[Interruption.]

Order. I am not responsible for what the hon. Member said. It is a matter for him. I call the Prime Minister.

My hon. Friend makes his own point very effectively—[Interruption.]

Order. This is disgraceful behaviour.

The policy of the Opposition which I would criticise is the roof tax, which would bear particularly heavily on all those in council houses who, having purchased their houses at a very generous discount, would find themselves with a very high actual charge—the roof tax—on the up-to-date valuation of their houses.

Is the Prime Minister aware that, whatever may be said by politicians in Europe, including some in this House who should know better, there is widespread support throughout the United Kingdom for her defence of Britain's status as a nation state in all respects?

I am very grateful for the right hon. Gentleman's question. I agree that most people wish to be absolutely certain that they will continue to have their own head of state or monarchy—half of them are monarchies in Europe—their own parliamentary institutions and other institutions, and that we should be accountable to them.

Is my right hon. Friend aware of the growing anger among the general public at the enormous cost of the recent prison riots, which will have to be paid by the taxpayer? Will she give an assurance that it will not be allowed to happen again that in any future incident control of the prison will be taken immediately and that whatever course is necessary will be used, be it the SAS, tear gas or arms, and that the Government will not be deterred by fear of convicts being injured?

The matter of cost will be discussed with the Home Secretary. Although it is normally expected that the police themselves meet from their grants the costs of ordinary policing, that will be further discussed with the Home Secretary. As for the timing of what happened, I think it right that the decision should be left to those on the spot, in conjunction with consultation with the Home Office. It is not for us to second guess the decisions that were made.

To ask the Prime Minister what guidelines she has set out to enable her private office civil servants to ensure that the appropriate distinction is maintained in the handling of party business and official business.

Civil servants in my private office observe the same guidelines as other civil servants.

In that case, what were the facts of Mr. Powell going to see Mr. Black about the position of Mr. Hastings? Is it quite proper that a civil servant should go to see a newspaper proprietor about the position of an editor?

I would not accept all that the hon. Gentleman says or his interpretation of it. Civil servants in my private office have served Governments of both political complexions with great efficiency, conscientiousness and professionalism. That is a great strength of our system, and it is understood that we do not normally attack people in this House where they cannot answer back. I am certain that they will continue to carry out their duties in the highest spirit of conscientiousness and professionalism.

My right hon. Friend will be aware that Mr. Dennis Payne, who recently conducted an investigation into leaks from Downing street, has given a lengthy interview to Thames Television, for broadcast this evening, which is being considered by the Independent Broadcasting Authority. Does she consider that to be appropriate? Will she give serious consideration to the IBA banning the broadcast on the ground that Mr. Dennis Payne had not been given permission to make those disclosures?

If any people have given interviews to television as civil servants, they have cleared it with the Cabinet Secretary, who is head of the Civil Service. Matters concerning the IBA are for the IBA to reply on and not for me.

Why have the Government redefined the duty of a civil servant? The duty and loyalty of a civil servant has always been to the Crown. The head of the Civil Service has now announced that the duty and loyalty of a civil servant is to the Government. What fear or ambition has led the right hon. Lady to approve that constitutional change?

The hon. Gentleman is not correct. The duties under the previous Cabinet Secretary were reissued, very substantially in the same form as previously, as the hon. Gentleman will find if he goes through them. Those duties are of course to the state, which means that they must serve the Government of the day.

On a point of order, Mr. Speaker. In view of the nature of the Prime Minister's reply, I beg to give notice that I shall endeavour to raise the matter on the Adjournment.

To ask the Prime Minister if she will list her official engagements for Thursday 26 April.

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

May I return my right hon. Friend to the mutiny at Strangeways prison? [HON. MEMBERS' ``Yes."] Having regard to the earlier answer that she gave, may I ask if she is aware that there is a significant body of public opinion in Britain which cannot understand why the recapture of the prisoners should have been allowed to take such a long time? Will she reassure the House that the prison service will get whatever equipment it says that it needs to control riots in prisons?

I shall return for a moment to the subject of the Strangeways riots. I said previously that I thought that we could not second guess the decision of those on the spot in consultation with the Home Office. It would be mistaken hindsight for us each to express our views without having been on the spot at the time.

In view of yesterday's further evidence of the appalling balance of payments position, what changes does the Prime Minister intend to make in her economic policies?

The Government have no changes to make in their economic policies. In view of the right hon. Gentleman's question, I hope that we shall receive his support in trying to keep down unit labour costs and, therefore, that he will not support every increase in pay which is unrelated to productivity.

I remember when the Prime Minister used to think that unit labour costs were a matter of market movement and not a matter for politicians. Does she realise that Britain now has the highest inflation and the lowest growth rate of any of the major industrialised countries? Is she aware that it is now three years since the last time we had a monthly balance of payments surplus? Is she willing to recognise that no Government have ever had it so wrong for so long, and does she not owe it to the country to change from her disastrous policies?

I am interested that the right hon. Gentleman thinks it so wrong to have the highest number of jobs that there have ever been in this country's history. That is the basis of the people's prosperity. I am also interested that he thinks it so wrong to have the highest level of capital investment in manufacturing industry, and the highest output. We think that that is a good basis for the future.

Has my right hon. Friend noticed that in the second year of the community charge in Scotland local authorities' expenditure programmes are largely within the rate of inflation and that 20 of them have expenditure programmes at about the same level or below the level the previous year? Does not that show clearly that the community charge is working? [Interruption.] Oh yes, it is. More importantly, those people in Scotland who have paid their community charge have little sympathy for those who can pay but refuse to pay, such as the provost of Angus district who is now using his community charge money to run around in a car which is not paid for by himself?

What my hon. Friend is suggesting is that in the first year of the community charge local authorities try to increase their expenditure and blame the community charge instead of themselves, but in the second year they cannot do that and may therefore be more conscientious in trying to curb their expenditure. The community charge law was passed by the House and, like all laws, it should be observed by all honourable citizens.

To ask the Prime Minister if she will list her official engagements for Thursday 26 April.

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

Will the Prime Minister kindly apologise for the attack that she made on the Scottish people when she said that they were subsidised by the tolerant English? Will she also make it clear that although when the poll tax was being implemented in Scotland and her advisers' answer was yes, yes, yes, the answer from the heartbeat of Glasgow and all Scotland is no, no, no?

As for the practical part of the hon. Gentleman's question, he will be aware that the community charge in Scotland meets only one fifth—20 per cent.—of local government expenditure. The community charge in England meets 30 per cent. of local government expenditure. We in England would very much like to have the same proportion of grant as Scotland enjoys.

Does my right hon. Friend agree with the awful historical statistic that, of the 800 Isle of Wight riflemen who were sent to reinforce the beach head at Gallipoli, only 180 returned without injury?

Take your hands out of your pockets.

Does my right hon. Friend agree that that statistic is the best reason why we should have a strong NATO, supported by an excellent military ally such as Turkey, and that we should modernise our nuclear deterrent, and is notit a timely reminder of the unity that the Commonwealth gives us in adversity?

Yes, I agree with my hon. Friend. It is particularly noteworthy that when we were celebrating the 75th anniversary of the Gallipoli landings we did so with Turkey as a main ally of this country. Both of us believe staunchly that NATO provides us with a sure defence against such things happening again.