To ask the Chancellor of the Exchequer what revenue he expects from the proceeds of privatisation for the period of the public expenditure survey.

Privatisation proceeds are expected to be £8 billion in 1992–93, and £5½ billion in 1993–94 and 1994–95. These are as announced in the Chancellor's autumn statement of 6 November 1991.

What will we live on when the oil revenues have all gone and there is nothing left to privatise? Or will the Chief Secretary and his friends be sunning themselves in some tax haven by that time?

I suspect that we will live on the talents of the British people, which will be greatly assisted by the tax and spending regime—[HON. MEMBERS: "On the backs of the working class."] It is clear how rattled the Labour party is, as it has to start barracking this early in the proceedings. The real question that the hon. Gentleman should put is to his own party: how will it keep tax and spending plans going if it does not have the benefit of privatisation revenues?

Apparently there are some interesting, exciting, progressive, damn fool ideas going around about renationalising the water industry. How much would it cost if fair compensation were paid to the standard rate taxpayer each year if that were to be done?

My hon. Friend touches on an interesting point. The Labour party has become ever so coy about the details of its renationalisation plans. The last time it was asked about them by The Times, the best that it could do was to put up a research assistant to the hon. Member for Dunfermline, East (Mr. Brown) to answer. I think that in due time the British people will want to know a bit more than that.

The Minister asks what Labour will do when it gets the chance to govern. Labour will ensure that the 3 million people on the pile of human misery known as the dole queue will be given a chance to work and to provide tax and insurance. Then, if I have anything to do with it—[Interruption.]

Order. Give the hon. Gentleman a chance.

We shall take back from the richest 1 per cent. of the population the £26·2 billion that they have had in tax cuts and use it for the national health service, pensioners, schools and all the social services.

I am sure that the hon. Gentleman's application for a job has been noted in the quarters which matter. What the hon. Gentleman must explain away is why, with the reductions in the upper rate of tax which have taken place under this Government, the contribution of higher rate taxpayers as a proportion of income tax is so much higher. It is because a low tax regime is a stimulus to effort, a way of ensuring that the British economy works effectively and that people are put back to work. I do not doubt the hon. Gentleman's aspiration to get people off the dole queue, but I doubt whether he has any policies to achieve that.

To ask the Chancellor of the Exchequer what is the policy of the Inland Revenue in respect of charging penalty tax for a period before retroactive primary legislation is passed.

That depends on the provisions of the legislation.

As the problem which prompted the question has been resolved by the Inland Revenue, will my hon. Friend pass on to its staff the thanks of many Members of Parliament for dealing with issues that we have raised on behalf of our constituents and say that we hope that the problems will continue to decline as tax rates come down rather than go up?

On behalf of the Inland Revenue, not always the best loved department of Government, I accept the kind compliments that my hon. Friend has paid to it; I am sure that they will be echoed in all parts of the House. The Inland Revenue does a difficult job in difficult circumstances extremely well.

To ask the Chancellor of the Exchequer when he next expects to meet representatives of the CBI to discuss manufacturing investment.

I meet representatives from the CBI from time to time to discuss a broad range of issues.

In view of the CBI's projected figure for 1992 of a 4·4 per cent. fall in manufacturing investment, and of the 20 per cent. fall in 1991, is it not time that the Chancellor considered adopting the Labour party's policy on investment?

I am grateful for that suggestion, but I am not sure which Labour party policy the hon. Gentleman is suggesting that I adopt to encourage investment.

As the future of manufacturing investment depends on confidence in future economic performance, does my right hon. Friend think that anyone contemplating what will happen to his income will feel more confident if he is threatened with slow torture rather than immediate amputation?

My right hon. Friend is absolutely right. The Labour party talks all the time about investment, but the other side of investment is savings. There is no investment without savings. The Labour party's way of encouraging savings seem to be the ingenious one of putting extra taxes on it.

Does the Chancellor appreciate the harm being done to the economy by the 20 per cent. fall in investment in manufacturing industry and the CBI's prediction of a further 4 per cent. fall? Bearing in mind that unemployment is rising yet again, and that 900 companies are going bust every week, when will the Government realise the depth of the recession that their policies have caused and do something to stimulate investment in our manufacturing industry?

I note what the right hon. and learned Gentleman says about investment. As he knows, it has fallen from high levels. Business investment grew by 45 per cent. between 1986 and 1989. He will also know that manufacturing investment actually rose in the third quarter of last year. He will also know that, notwithstanding the CBI's prediction, the latest Central Statistical Office intention survey predicted a 2 per cent. increase in manufacturing investment this year.

To ask the Chancellor of the Exchequer what was the total revenue from duty on tobacco goods in 1990.

The revenue from duties on tobacco goods in 1990 was £5·5 billion.

I thank my hon. Friend for that explicit reply. Does she agree that tobacco companies also contribute a great deal to sport, and that they employ tens of thousands of people directly and indirectly? Will she send out a message to those who oppose smoking and belong to the brigade who say, "Do as I say and as I instruct you," to the effect that they should leave ordinary people to get on with the job of smoking and supporting the economy?

I note what my hon. Friend says. At this time of year we receive many such representations, but they must be weighed against the annual death toll of 110,000 people which is associated with smoking. Employment in the tobacco industry, which my hon. Friend mentioned, has been falling steadily due to increased automation and the long-term decline in smoking.

While we are on the subject of indirect taxes, will the Government tell the House how they will continue to cut direct taxes and improve public services without at the same time raising VAT as they did in 1979 and in the last Budget?

I certainly would not like to prejudge what my right hon. Friend the Chancellor might announce in his Budget. It was interesting to read in the Daily Express about Labour's plan for a luxury VAT rate.

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

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

All-items RPI inflation was 4·3 per cent. in November.

Does my right hon. Friend agree that increasing expenditure on day one of a new Government while failing to deal with the important issue of taxation is the fastest way back to the high levels of inflation which characterised all Labour Governments?

My hon. Friend is absolutely right. There is nothing wrong with massive increases in public expenditure, provided that the Opposition are open about the fact that they plan massive increases in taxation to finance them.

Does my right hon. Friend agree that it is difficult to take Labour seriously on unemployment when under its policy inflation would rise following increases in public expenditure and our competitiveness in world markets would diminish?

My hon. Friend is absolutely right. Labour does not seem interested in getting inflation down. Indeed, the Leader of the Opposition never even mentioned inflation in his speech at the party conference. Reducing inflation is the absolute first condition for medium-term prosperity. The fight again inflation must go on.

While the Chancellor has been concentrating—unsuccessfully—on bringing down inflation, unemployment is raging and further factory closures and redundancies have been announced nearly every week since he came to office. When will he take steps to reduce interest rates to give some of the companies in Britain an opportunity to survive, fight and compete internationally? Should not the Chancellor hang his head in shame and resign now, and let the Labour party get on with bringing this country back to the richness that it deserves?

I am sure that the hon. Gentleman will welcome the reduction of 3·5 percentage points in interest rates in the past 12 months. I am sure that he also welcomes today's news that the Abbey National, Halifax and Nationwide building, societies are reducing their lending rates to, as they put it, give a fillip to the housing market. I am puzzled by the hon. Gentleman's comment that we are unsuccessful in getting inflation down. At 4·3 per cent., our inflation rate is below the average of the European Community. I hardly dare to mention the 15½ per cent. average rate of inflation under the last Labour Government. Everything that Labour says about public spending shows that it is completely indifferent to inflation, which would have a bad effect on unemployment.

Will the Chancellor explain why after the 1983 and 1987 elections inflation and other indicators rose significantly but the Government managed to get them down just before those elections? Is that the Government's real policy? What sort of guarantee can the Chancellor give that that sort of thing will not happen again? The only guarantee that I can give is that there will not be a Tory Government after the 1992 election.

Perhaps the hon. Lady will tell me under which of the three Conservative Governments since 1979 the average rate of inflation was remotely near that of the Labour Government from whom we took over.

Will my right hon. Friend confirm that the figures for factory output prices, which were published earlier this week, show that the underlying rate of inflation continues to fall? What effect does he expect the very welcome news about mortgage interest rates to have on the retail prices index?

My hon. Friend is drawing attention to an important point about the underlying rate of inflation. We have had some excellent producer prices figures. Excluding the volatile food, drink and tobacco sectors, which are influenced by Budget changes, the rate of inflation has fallen to 3·8 per cent. It is forecast to be 3½ per cent. in the fourth quarter of this year, which will be the lowest figure since 1969. The fact that the underlying rate of inflation is falling so sharply is a very good indicator and is very encouraging for the trend of the headline rate.

Does the right hon. Gentleman recall telling the House that a rise in inflation was expected in these months for what he called "technical reasons" shortly after the Prime Minister told the country that the Government had inflation licked? Did the Prime Minister speak in ignorance, or was he trying to keep the British people in ignorance before a possible November election?

As always, the Opposition should quote my right hon. Friend the Prime Minister correctly. My right hon. Friend said that we had inflation licked in a way that we had not had it licked for years. The trend of inflation is very good. The statistics prove that absolutely, and everybody except the hon. Lady knows it.

To ask the Chancellor of the Exchequer what was total investment in plant and machinery in 1979, 1983, 1987 and 1991.

Measured at constant 1985 prices, plant and machinery investment was £19·7 billion in 1979, £19·4 billion in 1983 and £25·9 billion in 1987. Complete figures for 1991 are not available, but in the first three quarters plant and machinery investment was at an annual rate of £29½ billion, and 52 per cent. above its level in the comparable period of 1979.

It is important that the figures confirm that positive policies are being pursued. Will my right hon. and learned Friend say how we compared internationally in the 1970s and the 1980s?

The figures reveal the full extent of the increase in investment in the 1980s as a result of the Government's policies, an increase which has been maintained even during this period of recession. In absolute levels, we have fallen off only from the historically high 1980 figures. Comparison with other OECD countries is extremely interesting. In the 1970s, the average increase per annum in business investment in the Group of Seven was 3·1 per cent. whereas for the United Kingdom it was 2·3 per cent. In the 1980s, the average increase in the Group of Seven was 4·6 per cent. and in the United Kingdom it was 6·8 per cent.

Has the right hon. and learned Gentleman not been listening to the chorus of demands from the CBI, from the trade unions and now also from a number of Conservative newspapers for an increase in capital allowances for manufacturing industry? Why does he not take note of that widespread feeling?

We do take note of that feeling. The right hon. Gentleman, who was a Treasury Minister throughout the lifetime of the Labour Government, will appreciate that figures such as those that I have just disclosed to the House would have been regarded as a complete impossibility in his time.

Does my right hon. and learned Friend agree that the level of investment is most of all decided by the real rate of interest? Does he also agree that there has been a noticeable change of opinion in the business community, in that in 1990 it thought that we could go into the exchange rate mechanism without any disadvantage whereas it is now beginning to realise that the ERM obliges us to have a higher exchange rate and higher real interest rates than are appropriate for domestic needs?

I do not know whether my hon. Friend read Gavyn Davies's recent article, which showed that what most greatly influences investment is availability of markets and demand, and that running costs come very much second to those factors. Evidence shows that expected productivity in unit labour costs of British industry are more competitive now than they were when we entered the ERM.

To ask the Chancellor of the Exchequer what was the increase or decrease in manufacturing investment between 1990 and 1991.

Complete data for 1991 are not available. In the first three quarters, manufacturing investment at constant 1985 prices was 15½ per cent. below its level in the comparable period in 1990.

Does the Chancellor agree that our abysmal economic growth performance since the Government took office in 1979 is due largely to the dismal performance of British manufacturing industry, and that the forecast for the year 1991 of a 15 per cent. fall in investment is a testimony to the failure of the Government's policies? Was it not sheer arrogant complacency for the right hon. Gentleman to tell the National Economic Development Council at its recent meeting that if he had known before that there would be a fall of 15 per cent. he would still have done nothing? Is it not time he retired and let somebody do something?

The hon. Gentleman's question was supposed to be about investment, but he has asked about growth in general. I cannot understand why he referred to poor growth performance in the 1980s unless he thinks that it is poor to have grown faster than France and Germany. That is an extraordinary assumption. He seems unaware that our exports in manufactures have recently been increasing their share of world trade. That cannot be described as a poor performance. The hon. Gentleman should get up to date with his facts.

Does my right hon. Friend agree that, although the Opposition seem to delight in talking down the United Kingdom economy, the confidence of the foreigner investing in this country is great and we have the highest rate of inward investment in the EEC, despite the pessimism that the Opposition are always trying to spread?

My right hon. Friend is absolutely right. As he said, inward investment is one of the great success stories of the last decade. We have achieved more inward investment than any other European country. The great thing about that inward investment is that some of the most successful countries in the world have chosen this country in which to invest.

Will the Chancellor assist businesses in making their investment plans by telling us whether he has revised his growth forecast for this year in the light of the Prime Minister's statements in his new year interview, which seemed to cast considerable doubt on the growth forecasts given earlier? In the light of what surely must be a changed forecast, will the right hon. Gentleman review his hostility so far to careful public expenditure designed to create infrastructure improvements for the future and to get the economy moving?

I note the hon. Gentleman's early Budget representation. I note that, unlike the Labour party, when the hon. Gentleman's party advocates increased public spending, it is at least honest enough to say that it will put up the basic rate of tax. However, the hon. Gentleman's position does seem a little curious. His party says that it will put up the basic rate of tax. Yet, at the same time, it said that if there were a coalition Government, it would stop the Labour party putting up the higher rate of tax. That is a curious position to occupy.

To ask the Chancellor of the Exchequer if he will make a statement on the trend in United Kingdom export performance over the past five years.

United Kingdom exports have grown 23 per cent. over the past five years, and reached record levels during 1991. I am pleased to say that after decades of decline, the United Kingdom's share of world trade in manufactures flattened out in the mid-1980s, increased in 1989 and 1990, and looks most likely to have increased again in 1991.

I thank my right hon. and learned Friend for that extremely encouraging response. Does he agree that much of our country's undoubted export success has been due to competitive premium Export Credits Guarantee Department rates? Is he aware that many industrialists are concerned that we shall be unable to maintain our export performance due to uncompetitive rates, particularly vis-à-vis our principal competitors such as Germany, France and Japan? Will my right hon. and learned Friend therefore have a meeting with his opposite number at the Department of Trade and Industry and endeavour to bring ECGD rates down to a level which would be more favourable to British exporters?

We regularly discuss such matters, which I recognise are important, but, as my hon. Friend will appreciate, ECGD premiums must reflect the risk for the taxpayer in export credits. He will be aware that losses by ECGD of £3 billion, which have already been disclosed, with the possibility of a similar sum in the pipeline, suggest that we cannot afford to underestimate the possible losses to the nation if we get the ECGD judgments wrong.

If export performance is as impressive as the right hon. and learned Gentleman suggests, when will unemployment levels return at least to those that the Government inherited in 1979?

I have already told the House that the export performance of United Kingdom industry has been extremely good, with an increase of nearly 25 per cent. over five years, and an increase in manufacturing exports even during the past year of recession, in excess of 3 per cent. The question that the hon. Gentleman has to answer is what nostrums put forward by his Front-Bench spokesmen would make such a record possible under a Labour Government.

To ask the Chancellor of the Exchequer if he has any plans to meet the Governor of the Bank of England to discuss the City institutions.

My right hon. Friend meets the Governor of the Bank of England frequently, and they discuss a wide range of issues.

Self-regulation in the City was meant to be a panacea which would solve most existing problems. Since then we have had Polly Peck, Brent Walker, the scandal of the Bank of Credit and Commerce International, and then the greatest scandal of all—the Maxwell scandal. As self-regulation is proving somewhat less than satisfactory, is it not time to consider establishing a Securities and Exchange Commission—an SEC—as exists in America?

I hear what my hon. Friend says. We have certainly seen some large and spectacular frauds uncovered recently, although they were not all in financial institutions. Clearly, however, that does not mean that the City is riddled with fraud or that the regulatory system has failed. I am sure that my hon. Friend will agree that no system of regulation can ever give complete protection against a determined thief or fraudster. The Government have done more than any other Government to tighten the regulation of the City, through a series of powerful pieces of legislation. In the end, a balance has to be struck between tight regulation and cramping any sort of innovation or initiative in the financial services sector, as the Labour party would advocate.

Could the Government be prevailed upon to persuade the City institutions to provide more positive assistance for depositors, creditors and former employees of the Bank of Credit and Commerce International? The Minister will know that former depositors will have problems getting facilities for mortgages. She knows, too, that representations have been made to the Chancellor of the Exchequer. Could the City institutions be made positively to assist people who, through no fault of theirs, have lost a considerable amount of money?

The hon. Gentleman will wish to know that that point is being pursued. He will also be aware that arrangements are in place for the liquidators to aid banks in their assessment of applications made by small businesses and personal customers for alternative facilities.

May I support what my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has just said in urging the Government to give serious consideration to the establishment of a Securities and Exchange Commission in Britain. Is it not clear that the multiplicity of often overlapping self-regulating authorities are not adequately protecting the national interest? Will my hon. Friend the Minister bear it in mind that many of the frauds that have come to the attention of our regulating authorities were first discovered and reported to them by the American SEC?

Of course, that was not so in the case of BCCI. I repeat to my hon. Friend that, while there is cause for concern about the large spectacular frauds that have been uncovered, the Government have done more than any other with the Financial Services Act 1986, the Banking Act 1987, the Building Societies Act 1986 and amendments to the Companies Acts to regulate the City of London.

In discussions with the Governor of the Bank of England on City institutions will the Chancellor discuss how to circumvent the damage done to hopes to locate the Eurobank in the United Kingdom by the Government's opt-out policy on the single currency? Will he further discuss whether it would be better to argue for Edinburgh as a location for the bank—a location much more acceptable to other Europeans than London, which the Labour and Tory Front-Bench teams have argued for?

No decision needs to be taken for some time on the location of the European central bank. The Government have made it clear that a decision on the site would be premature at this stage. Whatever happens, the Government will do what they can to advance the case of the most credible United Kingdom candidate.

To ask the Chancellor of the Exchequer what assessment he has made of the likely impact of the Maastricht agreement on future inward investment into the United Kingdom.

To ask the Chancellor of the Exchequer what assessment he has made of the likely impact of the Maastricht agreement on future inward investment into the United Kingdom.

We expect to continue our excellent record in attracting inward investment. Latest available estimates are that between 1984 and 1988 the United Kingdom received about one third of all inward direct investment to the EC—higher than any other member state.

My right hon. Friend the Chancellor of the Exchequer said that the success of inward investment depends on availability of markets. In my hon. Friend the Minister's view, what would be the effect on the economy and inward investment if she abolished the ceiling on national insurance, increased the ordinary rate and basic rate of tax for a third of the population in the south-east and introduced a higher rate of value added tax on luxury products—all measures proposed by the Labour party?

The attraction of the United Kingdom to inward investment is the skilled labour force, low unit costs compared with other EC countries and, of course, the competitive tax system with the lowest rate of corporation tax in industrialised countries. I fear that many of those features would be threatened by the policies of the Labour party.

The effects of the Maastricht agreement will be extremely beneficial for inward investment into Britain, but does my hon. Friend not agree that all the paraphernalia that would be inflicted on industry by a Labour Government would be disastrous for inward investment? Will she also emphasise that we are building on success and, to this end, will she give the House the figures for 1988, 1989 and 1990 on the proportion of American and Japanese investment in the EC which came to Britain?

In 1988–89, 62 per cent. of all United States inward investment in the EC came to the United Kingdom and 42 per cent. of all Japanese direct investment in the EC came to the United Kingdom.

If the Minister is so keen on inward investment, why are she and her hon. Friends blocking the inward investment that would come from RECHARbonisation?

For a moment, I rather wondered if the hon. Gentleman was following in the footsteps of his colleagues in the trade union movement who regard inward investment as an alien culture. Perhaps I might say that the problems with RECHAR, the Government consider, are entirely in the court of the European Commission.

For every £1 of inward investment that might conceivably be attracted by inadequate employment conditions and inadequate rights for employees, are there not £2 or £3 of inward investment that will be deterred by the absence of any positive contribution from Britain to the growing economic and monetary integration of Europe? Is not the greatest threat to inward investment the uncertainty that the Government have deliberately created by their opt-out on a single currency?

As I said before, the key factors in the determining foreign investment are a stable economic environment, a commitment to a free and open market and a lack of intrusive social and industrial regulation. The United Kingdom's right to decide for itself on the merits of a single currency is not an important factor in investment decisions.

To ask the Chancellor of the Exchequer whether he has had any recent representations about ways of encouraging wider utilisation of qualifying employee share ownership trusts.

I have received a small number of such representations, from my hon. Friend the Member for Esher (Mr. Taylor) among others.

Despite the considerable progress that has been made under this Government in encouraging employee share ownership, will the Minister take careful note of the recent KPMG Management Consulting report which shows ways in which the qualifying employee-share option trusts can be made more flexible and therefore likely to be more widely used by companies and available to more employees in subsequent years of Conservative government?

I have seen the report and am considering its implications carefully, but it is just worth pointing out that in 11 of the past 12 Budgets we have taken steps to encourage employee share ownership to the extent that by the end of March last year about 2·25 million employees had benefited under all employee share schemes and had received options or shares with an initial value of £6·5 billion. It is a highly desirable development and we hope to see it continued.

Does the Minister recall that when we discussed these matters during the passage of the Finance Bill the then Financial Secretary, now Chancellor of the Exchequer, expressed passionate enthusiasm for workers' control? In the light of that enthusiasm is the present Financial Secretary able to tell us how many employee share ownership trusts have been set up under the statutory provisions?

As I said, by the end of March 1990, 2·25 million employees had received shares or options under approved share schemes. Employee share ownership trusts are a relatively small part of the Government's provision of tax relief for employee share ownership, but it would be very nice to hear the hon. Member for Newcastle upon Tyne, East (Mr. Brown) express on behalf of the Labour Front Bench wholehearted enthusiasm for what we believe in, which is giving employees in companies real ownership of the companies that they work for.

To ask the Chancellor of the Exchequer what account he takes of the national interest in terms of the viability of businesses and the retention of jobs in deciding on the exercise of the functions of his Department in respect of Inland Revenue responsibilities.

The first duty of the Inland Revenue is to collect tax which is properly due. It aims to treat all taxpayers with equal fairness and to settle their tax affairs impartially.

Does the Minister recognise that that is a highly bureaucratic response? Given the way that business is suffering under the policies and decisions of this Government, and especially the policies of the Prime Minister, does the Minister recognise that he has a responsibility to ask his officials to deal with businesses in such a way as to enable them, wherever possible, to retain jobs and to keep their businesses going? Will he also accept that this should be his personal responsibility? Will he accept it before the House?

The hon. Member for Cardiff, South and Penarth (Mr. Michael) described my response as "bureaucratic". It is not a bureaucratic response at all; it simply expresses the statutory duty placed on the Inland Revenue by the House—that is, the duty to collect tax which is properly due. But the Inland Revenue does not pursue that in a blind and dogmatic way. If tax is owing and payment on the due date is impossible, the Inland Revenue will discuss payment over a period of time to meet the liability; and any taxpayer who is in difficulty in paying his or her tax should contact the Inland Revenue at the earliest opportunity to discuss how the difficulty might be resolved.

To ask the Chancellor of the Exchequer what quantities of drugs have been seized by Her Majesty's Customs and Excise in each of the last three years.

The information is as follows: in 1989, 50,935 kilos of cannabis were seized, in 1990, 24,896 and in 1991 21,796 kilos; in 1989, 337 kilos of heroin were seized, with 576 kilos in 1990 and 357 in 1991; 409 kilos of cocaine were seized in 1989, 561 kilos in 1990 and 1,061 in 1991.

Obviously Customs and Excise must be congratulated on its vigilance. However, is it not time to consider the possibility of legalising soft drugs, especially cannabis? After all, cannabis does much less harm to a person's health than nicotine, and yet cigarettes are legal. It is the criminal activity surrounding the supply of illegal drugs that we should really worry about. If we were to legalise soft drugs, that would no longer be a problem.

I am delighted that the hon. Gentleman congratulated Customs and Excise. I remind him that its task is to enforce the law. Would it be the policy of the Labour party to legalise those drugs?

To ask the Prime Minister if he will list his official engagements for Thursday 16 January.

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

In view of the evidence given yesterday should there not be a full and frank ministerial statement—which should come from the Prime Minister—of what was known inside the Government at the time about the supergun affair? Bearing in mind the number of military items sold to the Iraqi regime by this country right up to the invasion of Kuwait and the highly critical comments made about the conduct of Ministers during the Gulf war, what right do the Government have to lecture hon. Members on the Opposition Benches over defence matters?

In so far as the Gulf war is concerned, the hon. Gentleman is referring to one of the most successful military operations ever undertaken by this country or any other. It achieved its objectives more swiftly and with less bloodshed than anyone could possibly have imagined. As to the earlier part of the hon. Gentleman's question, he knows that much of what he said was nonsense. It has been dealt with often enough.

To ask the Prime Minister if lie will list his official engagements for Thursday 16 January.

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

Could I remind the Prime Minister that one of the consequences of his Maastricht agreement is to prevent Northern Ireland from participating in the new cohesion fund, to the extent of losing tens of millions of pounds? I am sure that he is aware of the total lack of adequate funding for roads, transport and the environment in Northern Ireland, especially now that the Secretary of State has imposed a total moratorium on all public spending in Northern Ireland. Would he assure the people of Northern Ireland and the House that as soon as possible he will remedy that appalling error, and allow Northern Ireland to benefit from the new cohesion fund as a category 1 area?

There is, as the hon. Gentleman knows, a higher level of public expenditure per head of population in Northern Ireland—and rightly so—than anywhere else in the United Kingdom. The establishment of the cohesion fund and eligibility to benefit from it were agreed by all the member states. There is a misapprehension that Northern Ireland is the only category 1 area that will not benefit from that, but that fund is designed to help the poorest member states, not poorer regions or provinces within the more prosperous nations. So, the hon. Gentleman does not understand the purpose for which the fund was devised.

To ask the Prime Minister if he will list his official engagements for Thursday 16 January.

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

Will my right hon. Friend assure the House that he has no plans to increase income tax and national insurance contributions for millions of ordinary tax-payers? Does he agree that it is the height of irresponsibility to try to pretend that there can be a massive increase in spending from day one of a Government if the tax increases to pay for that are to be phased in?

I can also confirm to my hon. Friend that we have made no plans for a super increase in VAT, as the Opposition have apparently considered. There is no doubt that the Opposition are now in a shambles over their tax plans. Their muddled statements show that they cannot be trusted on tax; they shift their position from day to day. The only thing that is certain is that a party that promises to spend and spend is a party that would have to tax and tax.

Will the Prime Minister tell us why his record on unemployment is even worse than that of his predecessor?

Everyone in the House and beyond regrets the fact that unemployment rises. That is why we are persisting with policies that will create long-term, permanent jobs for the future. We have put those policies in place—low inflation, lower taxes and lower interest rates. Those are the only measures that will get people into work and keep them in work, which is the only proper policy to follow.

Unemployment has risen by nearly 1 million in the time that the hon. Gentleman has been Chancellor and Prime Minister, but still he refuses to do anything useful to stop that remorseless rise. Is it not because he believes that 2·5 million unemployed is "a price worth paying"?

The right hon. Gentleman should not be so cheap over such a problem. Unemployment is greater than a year ago in every country in EFTA and in every G7 country except the Netherlands. French unemployment is at its greatest level ever. United States unemployment is higher than for the past five years. What the right hon. Gentleman might also have fastened his mind upon is the fact that reported job vacancies are rising, that the number of people placed in jobs is rising and that there are 500,000 more people in work than in 1979. Those are some of the facts which the right hon. Gentleman should absorb.

The right hon. Gentleman is a dodger.[Interruption.]

Order.

In the last year employment in Britain went down by 873,000. Job vacancies are still 10,000 lower than they were this time last year. When Sir Nicholas Goodison of the Trustee Savings Bank says that this is the worst recession in living memory, is it any wonder that the whole country knows that this is the Government of high unemployment?

Some people might say that on policy rather than on personal matters the right hon. Gentleman is a tax dodger. He can give no lecture to us on unemployment. [HON. MEMBERS: "Withdraw."] His policies would cut jobs across the whole country.

Withdraw.

Order. I do not think that that was meant in a personal sense.

Indeed; I expressly said that, Mr. Speaker. The right hon. Gentleman's minimum wage would increase unemployment by putting 2 million people out of work. His plans to slash defence budgets by £6 billion would cost 100,000 more their jobs. His tax on jobs would cost another 100,000. He is the only person in opposition to plan for greater unemployment as a matter of policy.

Will my right hon. Friend confirm that if the upper earnings limit on national insurance contributions—[Interruption.]

Order. I ask the House to settle down.

Will my right hon. Friend confirm that if the upper earnings limit on national insurance contributions were to be removed, it would punish not just somebody earning £20,280 a year but would punish anyone who earned £390 in a single week? Does he agree that a proposal that would impose a massive tax burden on 4 million ordinary people could be produced only by a shower such as those who currently comprise the Opposition?

My hon. Friend is quite right—[Interruption.]

Order. The House is in a very excited state.

My hon. Friend is right. I suspect that the Labour party simply did not understand when it drew up its policy that everyone would pay more national insurance contributions in a single week if they earned above one fifty second of statutory UEL. The Independent pointed out, for example, that the Opposition's tax plans would mean

"the largest ever peacetime tax increase."

To ask the Prime Minister if he will list his official engagements for Thursday 16 January.

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

Will the Prime Minister confirm that he personally was informed about British Steel's decision to close Ravenscraig over a fortnight before the official announcement last week—[HON. MEMBERS: "Oh?"]—and that instead of trying to reverse the decision, he and the Secretary of State for Scotland took part in a conspiracy of silence? Will the right hon. Gentleman now, even at this late stage, intervene to try to stop the closure, bearing in mind the Government's responsibility for privatising the steel industry, thereby allowing a butcher such as Bob Scholey to betray the Scottish steel workers?

It is noticeable that the Labour party has not offered to keep Ravenscraig open. I was informed that British Steel would be making a decision on the day that it made the decision—[Interruption.] I was informed in confidence some days before that it would be making a decision on that day. It was a commercial decision by British Steel. It is clear, despite all their words, that Opposition Members would have done nothing different.

Does my right hon. Friend agree that defence cuts of £6 billion would lead to a massive loss of jobs in defence industries throughout the country? Does he further agree about the hypocrisy of those who call on the one hand for the maintenance of defence contracts in public and, on the other, plan in private for defence reductions?

My hon. Friend makes a good point. Our policy, both for nuclear and conventional defence, is clear, has been set out in a number of documents and is properly costed. The Opposition do not say where they stand, cannot say where they stand and cannot admit to the jobs that would be lost if their policy were carried out. The Labour party conference has three times voted to cut £6 billion from the defence budget, and we can see the extent to which that would devastate the defence industry and the defence of this country.

To ask the Prime Minister if he will list his official engagements for Thursday 16 January.

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

Might I ask the right hon. Gentleman a question about which I gave notice to his office earlier this morning? Will he arrange for X-ray and metal detection equipment to be installed immediately at Armley prison in Leeds? I ask for this following a serious breach of security at the prison last Friday, when a visitor inside the prison drew a knife and sought to attack another visitor. As this is the latest in a series of serious breaches of security at prisons, will the Prime Minister call upon the Home Secretary, who has clearly lost control of his own Department and no longer enjoys the confidence of the public, to resign now or else sack him?

First, I am grateful to the hon. Gentleman for giving me notice of the detailed point that he wished to raise.

To ask the Prime Minister if he will list his official engagements for Thursday 16 January.

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

Does my right hon. Friend agree that to base defence policy on defence cuts—the North Sea oil of the 1990s—is irresponsible and misguided? Is my right hon. Friend aware that the Opposition Front-Bench spokesman on Treasury affairs has actually stated this as a belief—

Order. The hon. Gentleman must ask a question about Government policy.

Will my right hon. Friend confirm that Labour remains unsound on defence?

Yes, it is clear that, as my hon. Friend says, Labour would cut the defence budget to ribbons. It is true that on defence Labour cannot be trusted. [ Interruption.]

Order. Will the Prime Minister please answer the matters for which he has responsibility?

I am seeking to do precisely that.