To ask the Chancellor of the Exchequer how many G7 countries will have had a lower average annual rate of growth than the United Kingdom between 1979 and 1992, using the latest International Monetary Fund forecast for 1992.

None. But between 1981 and 1991, of the G7 countries, only Japan had a substantially higher average annual rate of growth than the United Kingdom.

The Minister confirms that the answer is none. Given the low rate of growth that we have experienced since 1979, despite North sea oil, the current weak levels of investment and our record balance of payments problem, how do the Government expect us to obtain increased, long-term and sustainable growth in future years?

The hon. Lady misinterprets my answer. She chose her years carefully to obtain the answer, but she knows that during the 1980s the United Kingdom had a good rate of growth. Between 1981 and 1989, we had eight years of growth averaging more than 3 per cent. a year, and between 1980 and 1990 our rate of growth was faster than that of Germany, France and Italy. By comparison, in the 1960s and the 1970s, we were at the bottom of the league. There is no reason why we should not get back to those high levels of growth.

My right hon. Friend is undoubtedly right about the growth rates in the mid-1980s. Does he agree, however, that if we are to return to those growth rates he must, first, cut interest rates further and, secondly, severely restrain the growth in public expenditure—and I mean severely? What are my right hon. Friend's policies in that regard?

I am sure that what my right hon. Friend the Chancellor has been able to do in bringing down interest rates from 15 to 10 per cent. is an important precondition for recovery. My hon. Friend is right to say that it is important that we should fulfil our pledge to reduce our public spending as a proportion of gross domestic product and, in the medium-term, to eliminate our borrowing. Those are important economic objectives.

If, as the Minister says, a decrease in interest rates is a precondition for recovery, when does he expect to fulfil that precondition and substantially decrease interest rates?

The hon. Gentleman is being less than fair about recent events. Since the autumn of 1990 interest rates have been reduced on nine separate occasions and they have fallen from 15 to 10 per cent. That is an important change and it is an important precondition for recovery.

Will my right hon. Friend give me his judgment on the prospects for economic growth and confidence if the Opposition's policies had been put into effect after the general election?

Order. The Minister has no responsibility for that scenario.

Does the Chief Secretary accept that, in view of today's disappointing Confederation of British Industry survey on sales, an apparent post-election recovery has petered out already? Surely, given the continuing malaise in the economy and the constantly rising levels of unemployment and bankruptcies, action must be taken by the Government to stimulate the economy with an early cut in interest rates, such as has been advocated by the chief economist of the Bank of England.

The right hon. and learned Gentleman has possibly not yet had the time to study what the CBI distributive trades survey shows. It shows a strong improvement in business confidence, which bears out a number of recent surveys of business confidence. Confidence is now at the highest level since August 1988 and the distributive trade sector improved strongly in May to plus 32 per cent. It is useful so soon after the election to have confirmation from the Labour party that it would not wish to follow prudent fiscal policies and that it would be interested in moving to lower interest rates, whether that was prudent or not. I am sure that the public, especially the investing public, will note that.

To ask the Chancellor of the Exchequer what is the current level of retail prices inflation in (a) the United Kingdom, (b) Germany and (c) the European Community as a whole.

In April, retail price inflation was 4.3 per cent. in the United Kingdom; consumer price inflation was 4.6 per cent. in Germany and 4.8 per cent. in the European Community as a whole.

Will my right hon. Friend give a warm welcome to the announcement on Tuesday that producer price inflation is at the reduced level of 3.6 per cent? Does he agree that that figure, coupled with the figure for wage inflation which is also falling, means that British businesses can look forward to an excellent future in a highly competitive position vis-a-vis the rest of Europe, in which we shall be poised to improve on our present position?

My hon. Friend makes an important point, because producer price inflation is a good indicator of what we may expect in future for retail prices inflation. If we take out food, drink and tobacco, which were influenced by price increases in the Budget, producer output inflation was 2.7 per cent. in May, down from 5.4 per cent. a year earlier. That is the lowest rate of increase since June 1969. That is a very clear message and indicator of the way in which inflation pressure has abated in our economy. As my hon. Friend says, that bodes well for the future.

Is the target for inflation now 2 per cent., as the Chancellor says, or zero per cent., as the Prime Minister implies when he talks about stable prices? Does the Chancellor recognise the tendency of inflation to increase in the British economy when there is growth, or is he no longer worried about that now that the growth forecast has been revised from 1 per cent. to 0.5 per cent?

As the hon. Gentleman knows, we have said that our ambition is to get price stability. The hon. Gentleman may remember that we had a discussion about that in the Select Committee and said that, because of changes in the retail prices index, 2 per cent. was probably the equivalent of price stability because the index did not capture all goods and services that come on to the market. The hon. Gentleman is right to emphasise that we need to improve the working of the economy—the supply side—to ensure that we do not have a resurgence of inflation when growth is more firmly based.

Does my right hon. Friend agree that success in bringing down inflation is a prerequisite of lower interest rates? There has been a welcome fall in wage increases in manufacturing industry. Does my right hon. Friend agree that we need a similar fall in wage settlements in the public and service sectors?

I entirely agree with my hon. Friend. It is extremely important that the public sector sets an example and that wage settlements in the public sector are based strictly on what is affordable and what is needed to recruit and retain people in the public service. We cannot go beyond that or we would be asking the private sector to bear the whole burden of adjustment, which would be extremely unfair and unwelcome.

Does the Chancellor accept that the underlying rate of inflation, which excludes mortgage interest—which he has favoured in the past over the retail prices index and which is a more appropriate comparison anyway—still shows us performing worse than Germany and worse than the European average? Even that has been purchased at a horrendous cost in terms of recession and unemployment.

The hon. Gentleman should make himself clear—[HON. MEMBERS: "He has."] No, he is contradicting himself. First he says that the underlying rate of inflation is too high and then he says that the policies to get it down are too painful. I have always made it clear that we want not only to get the headline rate down but to get the underlying rate of inflation down. That is coming down and the differential between our underlying rate, minus mortgage interest payments, vis-a-vis that of Germany has narrowed considerably in the past year.

To ask the Chancellor of the Exchequer what representations he has received about differing VAT levels throughout Europe on the sale of racehorses; and if he will make a statement.

We have received many representations about the different rates of VAT within the European Community on the sale of racehorses. I understand the concerns of the bloodstock industry about the potential position next year, and we are working with industry representatives to explore the options open to them.

I thank my right hon. Friend for his reply. Will he bear it in mind that the Irish rate is 2.3 per cent. and that the French rate is 5.5 per cent? Will he bear it in mind also that large sums are involved in the sale of a racehorse and that it will be much easier for organisations such as Tattersall's and other dealers to take their entire operations to a country where the tax regime is much more favourable? Will my right hon. Friend look at this question urgently and make sure that our breeders and dealers are no worse off than if their business operations were in other parts of the European Community?

We are indeed looking carefully at this question, but anybody who is considering moving his business operation should think carefully before doing so because, apart from anything else, the French have not got permission for their reduced rate, although they claim to have it. There is opposition to it from both the Commission and ourselves.

Will the Minister consider giving the same sort of consideration to greyhounds and whippets?

Of course.

I thank my right hon. Friend for his obvious commitment to finding a solution. We greatly appreciate the efforts of my right hon. Friend the Member for Norfolk, South-West (Mrs. Shephard) when she held his position. She tried very hard to find a way to deal with this matter. The industry employs about 8,000 people. This country is pre-eminent in the industry and has a positive balance of trade. If we do not find a way through, we shall lose it all. Moreover, the Treasury will lose the VAT.

One should not be too apocalyptic about it. Apart from VAT, the racing industry has a number of troubles. Nevertheless, I fully understand the points that my hon. Friend has made.

To ask the Chancellor of the Exchequer what discussions he has had recently with the mortgage lenders association regarding interest rates.

My right hon. Friend met the Council of Mortgage Lenders on 2 June. A number of issues were discussed on that occasion.

I thank the Minister for his reply. Does he recognise that the average mortgage interest rate is still 10.98 per cent. and that since the Tories came to power in 1979 there have been only two months when interest rates were below 10 per cent? Does the Minister recognise that, for many people, continuation of the abolition of stamp duty will not be as important as getting mortgage interest rates below 10 per cent. and keeping them there?

It is a sign of success, rather than failure, that the Government's economic policies have led to nine successive reductions in interest rates, amounting to 5 per cent. The average mortgage interest rate is now under 11 per cent. On a typical £30,000 endowment mortgage, payments are down by £85 a month since October 1990. By any account, that is considerable progress.

The House is aware of the value of mortgage interest tax relief to home buyers, but has my hon. Friend considered the introduction of a more general housing tax allowance that could be made available to those who rent their homes as well as to those who buy their homes? That would help to bring down the net cost of renting and would also help to bring on to the market some of the 650,000 dwellings that at present are sitting empty.

My hon. Friend makes an interesting suggestion. We acknowledge the importance of the private rented sector. The cost of mortgage interest relief is considerable. The Government have already introduced a number of expensive and worthwhile measures to encourage the private rented sector.

Will the Government admit that, according to their figures, since they introduced their relief scheme the number of people in mortgatge arrears who have been taken before the courts has increased every month this year? Will the Government now accept that the scheme has proved to be ineffective and a damp squib? Will they immediately consider a scheme to convert mortgages into rents to ease the mortgage misery faced by many millions of people?

That is certainly not the view of the Council of Mortgage Lenders, which estimates that, as a result of the package of measures introduced by my right hon. Friend the Chancellor, there will be about 55,000 fewer repossessions this year than would otherwise have been the case.

Contrary to what my hon. Friend has just heard from the hon. Member for Leeds, West (Mr. Battle), the mortgage rescue scheme has been very successful in my constituency. Will my hon. Friend refute the suggestion, implicit in what has been said, that there could ever be a time when some homes are not repossessed? Is it not significant that fewer than 0.5 per cent. of all existing mortgage holders are in danger of having their homes repossessed?

My hon. Friend is absolutely right—the figure is less than 0.5 per cent., although the Government acknowledge that in each individual case that means real distress for the family involved. However, we cannot indemnify every possible position. The measures introduced by my right hon. Friend have brought real relief to many tens of thousands of people.

Does the Minister recall that when his right hon. Friend the Chancellor announced his scheme just before Christmas, he claimed that it would help some 40,000 families? Most hon. Members understood him to be saying that that would be achieved by August. Can the hon. Gentleman confirm that fewer than 10 families have been helped? If so, as both the problem and the money that the Government set aside to solve it still exist, why do not the Government announce an extension of the scheme?

I think that I can help the hon. Lady because her facts and her understanding are wrong. The Council of Mortgage Lenders has confirmed that, in its opinion, the package introduced by my right hon. Friend the Chancellor will save not 10 but 55,000 people from repossessions. It is true that only a limited number of people are being helped by schemes at present, but that is also a reflection of the fact that many people have been saved from repossessions and so are able to continue to occupy their homes.

Does my hon. Friend agree that one reason why there have been so many reductions in interest rates is that the markets have considerable confidence in the Government? Does he further agree that, to retain that confidence and to make further interest rate reductions possible, we need policies to ensure that public expenditure is restrained and that pay policies in both the public and the private sectors are moderate in the forthcoming pay round?

My hon. Friend is right; the Government are fully committed to constraining public expenditure and reducing inflation. That is the surest way to bring about further reductions in interest rates and mortgage interest rates.

To ask the Chancellor of the Exchequer what was the level of VAT in 1979 and in each succeeding year.

From 18 June 1979 the highest rate of VAT, which was 12½ per cent. was abolished and the standard rate of VAT was increased from 8 per cent. to 15 percent. On 1 April 1991 that rate was increased to 17½ per cent.

Does the Minister acknowledge that VAT was 8 per cent. when the Labour Government left office but that it is now 17.5 per cent.—an increase of 119 per cent? Does not that bear heavily on poorer homes? The Government claim that they are reducing taxation and many people appear to believe that. Does the Minister agree that the conclusion to be drawn from that is that although the Government are not good at reducing taxation, they are most adept at black propaganda?

The hon. Gentleman is drawing attention only to the standard rate of VAT in 1979. Of course, what matters is real disposable incomes, not just the tax burden. As the Institute of Fiscal Studies said, there were real gains in all parts of income distribution between 1979 and 1988.

Can my hon. Friend confirm that there is no question whatsoever of the United Kingdom being forced to give up zero rates?

I can indeed. Our zero rates are guaranteed by the sixth VAT directive and they can be changed only by the unanimous agreement of all member states. Obviously, we have no intention of agreeing to that.

May I welcome the Minister to his first Question Time as the Paymaster General? Will he not be corrupted immediately by using selective statistics and admit that the burden of taxation has gone up and that, in spite of what it says, the Conservative party has increased the burden of taxation on the British people compared with the days when Labour was in office? Will he also make the pledge that the Prime Minister made before the election, that the scope of VAT will not be widened one iota during this Parliament?

I am happy to reinforce what my right hon. Friend the Prime Minister said, in so far as I can add anything to it. Obviously, we stand entirely by what he said. On the earlier part of the hon. Gentleman's question, I certainly have not been corrupted and I have no intention of being corrupted. The statistics that I gave are the relevant statistics and they are extremely important to the people concerned. In any case, the amount of taxation to which the hon. Gentleman and the hon. Member for Newport, East (Mr. Hughes) referred concerned VAT.

To ask the Chancellor of the Exchequer on what dates building societies objected to the unequal impact of the Income Tax (Building Society) Regulations 1986; and how many judicial reviews have ensued.

Building societies have raised this issue on a number of occasions. The 1986 regulations have been subject to judicial review, and further action is under way arising out of legislation last year.

Is my hon. Friend aware that there is unparalleled interference in the conclusions of the courts; that there is an unequal impact on building societies, whereby the Woolwich is separated from the Leeds, the Loughborough, the Greenwich and others; that it is unjust to treat people in different ways; and that that approach will be unsustainable when the matter gets to Europe? Would it not be a good idea if my hon. Friend and his colleagues got together with some of the affected societies and drew the sorry business to a conclusion? That would probably be done at a cost of less than £100 million out of the £15,000 million of taxation imposed on building societies over the past five years.

I understand why my hon. Friend feels that the regulations were unfair, but I do not agree with him. The matter was carefully considered during debates on section 53 of the Finance Act 1991 and Parliament accepted that the 1986 transitional provisions did not involve double taxation. What is now in question in the Leeds case is not transitional tax due from building societies but mainstream composite rate tax, for a number of years payable by all CRT payers. The Government are right to put that beyond question by confirming the intention of Parliament.

To ask the Chancellor of the Exchequer when he last met his European counterparts to discuss the operation of the exchange rate mechanism.

My right hon. Friend regularly attends meetings of the European Council of Finance Ministers with his Community colleagues. The operation of the exchange rate mechanism has been discussed at a number of past meetings.

Will the Chancellor say whether a revaluation upwards of the deutschmark within the ERM would be good or bad for the British economy?

It is not for my right hon. Friend or for me to comment on prospective movements in exchange rates.

Why not?

What it is right for the Government to comment on is that we are committed firmly to maintaining our position within the exchange rate parameters, which we have done to the benefit of the country in terms of a sound exchange rate, and reducing the levels of inflation and interest rates.

Will my hon. Friend confirm that sterling being within the exchange rate mechanism has added considerably to the stability of sterling in the past 18 months? Will he confirm also that it is the Government's wish to enter the narrow band of the exchange rate mechanism in due course? Has my hon. Friend any idea when that might be practicable?

We will move in due course to the narrow band at the current central parity of DM2.95 to the pound. In the meantime, it is our firm intention to remain in parity with all the existing currencies within the exchange rate parameters.

Why does not the Minister let the Chief Secretary to the Treasury answer this question so that he can make a statement not only about the exchange rate mechanism and whether it will be shifted, but about the principle of the common market in the Maastricht treaty? Let him stand up and tell us. His right hon. Friend the Secretary of State for Social Security has answered—

Order.

My right hon. Friend and I are at one on this issue as, indeed, on all others.

I fully accept that the ERM is an efficient anti-inflationary discipline, but does my hon. Friend accept that if we could react to the health of our economy, with inflation just above 4 per cent., interest rates in Britain could be reduced to 8 per cent. if we were outside the ERM? That would be of immense benefit to manufacturing and to mortgage payers in Britain.

I understand what my hon. Friend says, but I do not agree and nor do the Government. Indeed, a strong case could be put that interest rates would have to be higher if we were outside the ERM rather than within it.

To ask the Chancellor of the Exchequer, pursuant to the Prime Minister's oral answer of 21 May, Official Report, column 494, what evidence he has suggesting that inflation will fall to 1½ per cent. by mid 1993.

The forecast for producer-price inflation is underpinned by the prospect of further marked improvement in unit labour cost performance. Lower wage settlements have still to feed through fully into earnings, and productivity will continue to recover.

Is it not true that if producer-price inflation dropped to 1½ per cent., it would mean that the economy was flat on its back? Is it not also true that if the economy took off, inflation would inevitably rise because Britain has lost its productive capacity?

I suggest to the hon. Gentleman that economies such as Germany and Japan, which have low producer-price inflation, can hardly be described as flat on their backs—far from it. Low inflation of both retail and producer prices is more likely to lead to sound economic growth.

Does my hon. Friend agree that long-term low inflation and long-term growth depend on our international competitiveness, which is a lot better now than a decade ago?

My hon. Friend is absolutely right. Confidence is returning. That is reflected most markedly perhaps by the substantial and buoyant levels of inward investment.

Will the Chief Secretary have a word with the Prime Minister when he returns and tell him to desist from the practice of continually switching to the measure of inflation which gives the Government the greatest short-run presentational benefits? They switch from headline inflation to core inflation to underlying inflation and now to the new measure of factory gate inflation. To most people in the street, that means that the price of factory gates has fallen but nothing else. I understand that the word "portillo" means factory gate in Spanish, unless my Castilian has been struck by lightning. Perhaps that is one reason why the Government use that measure—I do not know—but I should be grateful if the Minister would have a word with the Prime Minister and tell him to stop trying to deceive the British public.

The hon. Gentleman's complaint should be with not the Prime Minister but his hon. Friend the Member for Workington (Mr. Campbell-Savours), who asked the question about producer-price inflation. I am entitled to reply by pointing out that producer-price inflation, which was down to 2.7 per cent. in May, is the lowest for some 23 years. That is surely good news which the whole House welcomes.

To ask the Chancellor of the Exchequer what was the United Kingdom's net contribution to the European Community in 1991; and what it is expected to be in 1992.

The United Kingdom's net contribution to the European Community budget in 1991 was £545 million. It is forecast to be £2.6 billion in 1992.

I congratulate my right hon. Friend on defeating the wholly unwarranted and expansionary budget plan proposed by Jacques Delors earlier this week. Does my right hon. Friend agree that so long as Britain makes such massive net contributions to help the supposedly poor countries of the European Community —Portugal, Ireland, Spain and Greece—we shall find it virtually impossible to meet the United Nations target for overseas aid to third-world countries in genuine need?

I am grateful to my hon. Friend for those remarks. He will be encouraged to know that the majority of European Community Finance Ministers agreed with him because they took the view that the proposals by the President of the Commission for an expansion of the Community budget were not justified. That must be right when one considers that the suggestion is that the Community should expand spending at the rate of about 5.6 per cent. per annum in real terms. Frankly, that is unaffordable. As my hon. Friend said, it is extremely difficult for Finance Ministers in each country to justify economy at home when such incredible extravagance is proposed at European Community level.

Yah-boo apart, is the House of Commons not entitled to a serious answer from the Chancellor about the Chief Secretary's attitude to that matter?

I can tell the hon. Gentleman that my right hon. Friend the Chief Secretary is strongly in favour of economy in the European Community budget. I do not know why the hon. Gentleman expects anything else.

Does my right hon. Friend agree that if the Government are serious about reducing public expenditure, as they ought to be in view of the forecasts of how it is rising, a good place to start is our net contribution to Brussels? Should it not be reduced rather than increased?

I have already explained the position that the Government and the majority of other Governments in Europe take. The Community ought to take into account the fact that, even within the existing own resources ceiling, there is plenty of room for increased expenditure. Under the existing guidelines, it could increase by more than 3 per cent. per annum in real terms. The ambitious plans for interference in European industry and trans-European networks are not projects that we can endorse. I accept my hon. Friend's point. There are many competing claims for public expenditure in this country, and Europe ought to take that into account before telling us that we should economise at home.

To ask the Chancellor of the Exchequer if he has received any recent representations to make changes to value added tax rates.

My right hon. Friend receives many representations on taxation.

As the Minister responsible for setting VAT rates, can the right hon. Gentleman tell me the current percentage rate charged on the following products: a milk chocolate digestive biscuit, a deep frozen chocolate mousse, and a Kit Kat bar? If he cannot give an answer, will he get rid of the confusion by rating all such products at the general food rate of zero?

It would probably be more useful if I told the hon. Gentleman that Customs and Excise are reviewing legislation on the VAT treatment of snacks to take account of developments in the market.

Did the Chancellor of the Exchequer have the opportunity on Tuesday to raise with Commissioner Scrivener her reported comment that she will take Britain to court next year if we have not charged VAT on food, electricity and gas? Has he received any legal advice from Government officials on whether the Commission would have the right to go to the court to seek to oblige Britain to charge VAT on those items—which are zero-rated—under the terms of the Single European Act, which calls on member states to charge VAT at a harmonised level, as is necessary to complete the internal market?

We have received legal advice and are satisfied that all our zero rates meet the criteria of the sixth directive, which is what matters. As I said in answer to an earlier question, it would take unanimity in the Council of Ministers to alter that, and we obviously would not agree.

The whole House will welcome an assurance from the Minister that the Government intend neither to widen the scope of VAT nor to increase the rates. I invite him to give that assurance to the House.

We have no plans and no need to raise or extend VAT, as my right hon. Friends have said on numerous occasions.

To ask the Chancellor of the Exchequer when he next expects to meet the Director General of the Confederation of British Industry to discuss economic policy.

I meet the Director General of the CBI from time to time to discuss a broad range of matters.

Has my right hon. Friend seen the latest quarterly CBI industrial trends survey, which shows a big improvement in export orders and business confidence? Is he aware that since the general election, we have seen the biggest improvement in business optimism since 1988?

I agree with my hon. Friend and, indeed, the evidence of the May survey was extremely encouraging. The script attached to it of the evidence from the CBI stated:

"Evidence from the latest CBI surveys continues to suggest that the economic recovery is, at last, on the way … the CBI's latest economic forecast suggests that growth will resume in the second quarter of this year and continue throughout 1992 and 1993."

What response does the Chancellor of the Exchequer have to the statement of Sir Antony Pilkington, the chairman of the St. Helens glassmakers who had to cut the dividend for the first time and see profits collapse, that the Chancellor is killing British industry and that he has not met one business man who can see any signs of any economic upturn whatever?

It so happens that I had dinner with Sir Antony Pilkington last week and he assured me that he wholly supported Government policy.

When considering calls from the CBI and others to cut interest rates, will my right hon. Friend consider the position in the United States where interest rates have been cut to 3.5 per cent. but where recovery remains elusive and long-term market rates remain almost as high as in this country? Does that not illustrate that the real problem is a shortage of capital in international markets and an imbalance between savings and consumption, particularly Government consumption, internationally? Bearing that in mind, does he agree that premature cuts in interest rates would exacerbate the problems by reducing incentives to invest?

My hon. Friend makes a good point in reminding us that the function of interest rates is to balance investment and savings. It is necessary both to attract the relevant amount of capital and to encourage savings. My hon. Friend is also right to emphasise that it is the long-term rate of interest which is particularly important for investment. Unless we have tight control of public spending it will be more difficult to get interest rates down. That is why my right hon. Friend the Chief Secretary to the Treasury is absolutely right that economy in public spending is essential.

To ask the Chancellor of the Exchequer when he next expects Britain's balance of trade to be in surplus.

The "Financial Statement and Budget Report" forecast for the current account was for a deficit of £6½ billion in 1992 and £9 billion at an annual rate in the first half of 1993. Forecasts for future years are not available.

That reply from the Chief Secretary in no way answers my question to the Chancellor of the Exchequer. I will ask the question again because that answer demonstrates the Government's dangerous contempt for our balance of trade deficit. Will the Chief Secretary answer the specific question: when will our trade next be in surplus? Will he tell the House whether he agrees with the advice of the President of the Board of Trade to the Conservative Government not to argue that the balance of trade deficit is easy to manage and would not be a problem for the Government to cope with?

The hon. Gentleman's substantive question was answered in what I said. I told him that we made no forecasts beyond the first half of 1993. He asked about the sustainability or manageability of the current account deficit. At about 1 per cent. of gross domestic product it is indeed sustainable. At present we are seeing a substantial inflow of investment into this country. There is strong investment in particular from the United States and Japan, which tends to demonstrate that there is no difficulty in funding the deficit.

Although that inward investment is particularly welcome, does my right hon. Friend agree that in terms of Britain's balance of payments our overseas investment into other countries has increased in value in the past year by substantially more than our trade imbalance?

My hon. Friend makes a good point. He will recognise that that inward investment helps the very significant growth that there has been in our exports. Our growth in manufactured exports is showing up now compared with world trade. During the 1980s the proportion of our manufactures fell as part of world trade. Since 1988, there has been a marked increase.

If the Minister will not give an estimate of when we shall next be in surplus, will he give us a guess?

I made this perfectly clear to the hon. Member for Warrington, South (Mr. Hall). We have produced a forecast for 1993. Our export volume is extremely high. We are now seeing some increase in imports which, because they tend to centre around basic materials, provide some evidence of recovery which the hon. Gentleman should welcome.

To ask the Chancellor of the Exchequer what are his policy priorities during the British presidency of the EC Council of Ministers; and if he will make a statement.

The United Kingdom's key priorities are the completion of the single market, enlargement of the Community, and working towards a conclusion on the Community's future financing.

Is my right hon. Friend aware that financial orthodoxy is one of the most important priorities for the presidency of the Community? I hope that he will follow that in the months to come.

I am extremely grateful to my hon. Friend.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

rose—

Remember to give short answers.

I am glad to see that the hon. Member for Bolsover (Mr. Skinner) is in his usual friendly form.

Why did the Secretary of State for Social Security need to issue a statement yesterday expressing his confidence in and support for the Prime Minister's policies?

My right hon. Friend the Secretary of State for Social Security clearly thought—in my view, rightly—that his position had been misconstrued and that it was sensible to make that clear. I am glad to note that in some quarters journalists have begun to question the interpretation that had been placed on a meeting which had been interpreted as a conspiracy, but which appeared to have Government Whips present.[Interruption.]

Order. The House should come to order and let us get on with our business properly.

During my right hon. Friend's hitherto busy day, has he borne constantly in mind the speech made just under four years ago in which Mr. Jacques Delors said that 80 per cent. of economic decisions and perhaps even 80 per cent. of fiscal and social decisions should be subject to initiation at Community level? Does my right hon. Friend agree that that is the unacceptable ambition of political centralism? Does he further agree that, in those circumstances, the reappointment of Mr. Delors would be provocative and counter-productive? May I say that my question was formulated without the assistance of the Whips?

I think that I could have guessed that.

Why did the Government promise that after 1 April no patient would have to wait more than two years for hospital admission?

The Government made commitments in the patients charter and in relation to the development of health service policies that the aim was to ensure that no one should have to wait more than two years for treatment. Huge progress has been made in that, with a drop of nearly 50,000 in the numbers awaiting treatment in the year running up to April. It is obviously a disappointment that there was a small increase in April. That is now being addressed.

I will give the Leader of the House credit for getting the statement wrong by mistake rather than by intention. The document that went through every door in the land guaranteed—the Government's word—that after 1 April—the Government's date—no one would wait longer than two years. Did the Government ever really mean that, or was it just pre-election propaganda?

Not merely did the Government mean it, but a huge improvement, to which I referred, has been delivered. That progress will be reinforced by the action that my right hon. Friend the Secretary of State for Health has taken.

Whether or not the Government meant it, they clearly failed in that ambition. What does the right hon. Gentleman say to those citizens who believed that the Government were honest in the guarantee that after 1 April they would not have to wait for more than two years but who now find that they are having to wait for more than two years because the Government failed to keep a promise which was made purely for electoral purposes?

A reduction in the number of patients waiting over two years from more than 50,000 to fewer than 2,000 in a year is hardly a failure of ambition.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

I have been asked to reply.

Does my right hon. Friend agree that fighting the international drugs trade is vitally important? Will he join me in congratulating the Prime Minister on his announcement yesterday in Colombia? Mr. Newton: Yes, and I thank my hon. Friend for his comments. The illicit drugs trade is an international problem which demands an international response. What the Prime Minister has agreed with the Colombian Government in the last few days represents a significant and valuable advance.

Will the right hon. Gentleman try to explain to the people of Northern Ireland why, despite the Government's promise that hospital waiting lists would be reduced, they have been going up rather than going down and today we have had the announcement of further hospital beds being closed although people are waiting for treatment.

I have made the Government's position absolutely clear on that matter. Whether in Northern Ireland or in any other part of the United Kingdom, the Government are determined to deliver the improvement in service set out in the citizens charter and the patients charter. Further progress has still to be made, but the progress already made is striking.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

I have been asked to reply.

Is my right hon. Friend aware that some local education authorities are discriminating against pupils who attend grant-maintained schools? Does he agree that any authority that treats children in that way is not fit to be called an education authority?

I agree with my hon. Friend and join him in deploring what has been reported in relation to some local authorities' attitudes towards children at grant-maintained schools or, for that matter, at city technology colleges. For once, I wish to pay a compliment to the Opposition Front Bench. I was pleased to read the remarks of the Labour education spokesman, the hon. Member for Blackburn (Mr. Straw) yesterday, which suggested a responsible shift, for once, in the Opposition's position.

How do the Government intend to reduce the waiting time for operations in hospital, as people are now having to wait over two years?

I do not know how many times I have to say this to get it understood— [Interruption.] For those waiting over two years, there has been a movement of 400, in relation to a total number of operations running into many hundreds of thousands, and against the background of a reduction from more than 50,000 to fewer than 2,000 over the year before. We intend to maintain that improvement.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

I have been asked to reply.

Does my right hon. Friend agree that the decision by NatWest to return £33 million to Maxwell pensioners is good news for those concerned, and also an example to others who hold Maxwell pension fund money?

I agree with my hon. Friend on both counts. What has happened is a substantial vindication of the approach and effective package announced by my right hon. Friend the Secretary of State for Social Security earlier this week. I hope that that will be of especial comfort to my hon. Friend, as I know how much effort he has put in on behalf of Maxwell pensioners in his constituency.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

I have been asked to reply.

Will the Leader of the House describe to my constituents in the Bellshill area some of the supposed advantages of the specialisation that would accompany the opting out of the local hospital? In particular, will he identify the services that could be regarded as non-essential or peripheral and may be curtailed or closed down according to the law of supply and demand? I should tell him that the local hospital is the Bellshill maternity hospital.

I am sure that my right hon. Friend the Secretary of State for Scotland will have noted the reference to a particular hospital. What I would say to the hon. Gentleman's constituents is that if they are in any doubt they should come and visit the growing number of trust hospitals and talk to the staff and patients, who are experiencing the benefits.

As the British Government are a signatory to article 8 of the European convention on human rights, will my right hon. Friend tell us what the Government feel that they should do to protect the family life and privacy of the royal family who, after all, are entitled to the same consideration as other members of the community?

I made some observations on that subject on Tuesday. I am sure that people both outside and inside the House will take note of my hon. Friend's concern, which has been added to that expressed in other quarters earlier this week.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

I have been asked to reply.

The Lord President of the Council will no doubt recall that in a previous Parliament I introduced the Consumer Guarantees Bill, which endeavoured to give rights to people who had purchased shoddy goods. The Bill was killed by Conservative Members. It had no Government support, but offers were made for guarantees to be considered. Will the new Government and the Prime Minister consider guarantees and give people real rights instead of the confetti of charters?

I had better acknowledge that I am not familiar with all the details of the hon. Gentleman's proposed private Member's Bill, but the Government already have a considerable record in protecting the rights of consumers of all kinds, and a continued determination to do so. Indeed, we have greatly improved the rights of consumers of public services.

Further to the question asked by my right hon. Friend the Member for Shropshire, North (Mr. Biffen), about Mr. Delors, will my right hon. Friend confirm that, in line with the EC principle that everybody seems to like to move step by step, there could at least be a review of Mr. Delors' position, if not an announcement that he will not be reappointed?

My hon. Friend, who puts his question a little more gently than did my right hon. Friend the Member for Shropshire, North (Mr. Biffen), will be aware that those are matters for consideration at the Lisbon Council. It would not be sensible for me to go further than I already have in respect of my right hon. Friend.

To ask the Prime Minister if he will list his official engagements for Thursday 11 June.

I have been asked to reply.

Following the decision of the Danish people to reject the Maastricht agreement, the Prime Minister and the Government have stressed their commitment to ratifying the treaty. Whether or not the people of the United Kingdom are also given a referendum —I, for one, am not afraid to trust them on constitutional matters—a fundamental cornerstone of the treaty remains subsidiarity, to which the Leader of the House referred in answer to a previous question. On the Prime Minister's return from Rio, will the Leader of the House urge him to accept that the principle of subsidiarity must also be applied within the United Kingdom, starting with a referendum to allow the Scottish people to decide their constitutional future?

The hon. Gentleman knows perfectly well that the Government have no plans for a referendum, as my right hon. Friend the Prime Minister has made perfectly clear on a number of occasions. The principle of subsidiarity already applies to the Government's approach to the United Kingdom, where much of the power is devolved down—at national level in Scotland, Wales and Northern Ireland, and at local authority level in England.

Does my right hon. Friend agree that many of us voted for the Maastricht deal as we felt that it was the best deal to be had, both for the United Kingdom and for Europe, and we have in no way backed off from that view? Does he agree that when we take over the presidency of the European Community in three weeks' time our partners will look to this country for positive leadership, backed up with the full confidence of the House, including Opposition parties and including the Whips? That is what we should be aiming to achieve.

In my judgment there is widespread support from hon. Members of all parties for the emphasis placed by the Government, and achieved in the Maastricht agreement, on the concept of subsidiarity and the development of the Community through intergovernmental co-operation. The Government will pursue and advance those key objectives during the United Kingdom presidency.