To ask the Chancellor of the Exchequer what criteria he used to determine the level of value added tax on fuel; and if he will make a statement.

Following last week's vote, the level of value added tax on domestic fuel and power will remain at 8 per bent.

Given the huge embarrassment experienced by the Chancellor last week on the 7.5 per cent. increase in VAT on domestic fuel, is he aware that the introduction of 8 per cent. VAT on domestic fuel was equally unpopular? Is he further aware that, despite the criterion set down for the annual mean temperature over the country as a whole, the temperature in the north of England and Scotland is well below that of the south, which makes the tax very unfair? As nothing can be done about the 8 per cent., will he reconsider the criteria that trigger the cold weather payments, in view of the difference in temperature between the north and Scotland and the south. And—

Order.

Well, finally, is the proposed increase to 17.5 per cent. still the Chancellor's primary concern?

I cannot congratulate the hon. Gentleman on the topicality of his question, but I appreciate that the problem is caused by our procedures, which govern when he had to table it. The financial embarrassment caused by the defeat has been closed by the revenue that I announced last week. No doubt people will be able to make some objections about some of what we did last week, but the Budget judgment remains intact and we remain on course for recovery.

I am not an expert on climate so I cannot comment in detail on the differences between north and south, but it is not the case that every part of the north of England is colder than every part of the south of England. I come from the midlands so I am fairly neutral, but I believe that, although costs vary across the country, the burden of taxation is pretty fair. As the hon. Gentleman acknowledged, the answer is the cold weather payment scheme, which was invented by this Government and had no precedent before we came into office. We acknowledge that there are periods of severe weather when some form of compensation is called for. In two Budgets I have raised that compensation from £6 a week two years ago to £8.5 a week from now on.

I welcome the fact that my right hon. and learned Friend left intact the increase in cold weather payments, which is of great benefit to the elderly and those on low incomes, and that he has left intact the £30 million for the home energy efficiency scheme. Will he ensure that the Opposition, who seem intent on scaremongering and frightening the most vulnerable in society, are made aware of the free phone number that such people can call for information and help?

I am grateful to my hon. Friend. To close this episode, let me say that, as a result of our package, the average pensioner will be fully compensated for the average VAT bill in forthcoming years. Pensioners were not being borne down on by our proposal and a small majority of pensioner households will now be overcompensated for the 8 per cent. that will remain. In fact, by its vote, the House has relieved the rest of the population of the feared burden of VAT on fuel. I appreciate my hon. Friend taking up the positive point about the home energy efficiency scheme. We doubled it last year and have now added a further £30 million. It has been a huge success and, as well as reduced fuel bills, brings to many elderly people the added comfort of having a properly insulated home. I trust that it will be backed enthusiastically by all parties.

Given the differential impact of VAT on living standards, not least those of British Gas showroom workers, who now stand to earn less in a year than their' chief executive earns in a week, will the Chancellor of the Exchequer take the chance that I gave him before to condemn the 75 per cent. pay rise for the chief executive of British Gas and even, belatedly, to outline what action he proposes to deal with excesses that are both irresponsible and unfair, and an affront to decent standards in British industry?

I do not want to talk about the affairs of individuals across the Floor of the House, but I have no doubt that Mr. Brown lives in a house whose fuel bills make him a major beneficiary of the effect of last week's vote on VAT. I should think that he was one of the big gainers from the hon. Gentleman's brave gesture when he voted on the Budget. Secondly, the hon. Gentleman shows ever-increasing enthusiasm for expressing views and striking attitudes towards the running of private-sector companies, especially in the energy sector. 'The background to all this is that British Gas has been a huge success since privatisation, and customers are benefiting from improved services and lower tariffs. It would be a regression to go back to the state of affairs that existed when Governments both of his party and—for a time, unfortunately—of mine, thought that somehow they could take over the supervision of the delivery of major public services such as gas.

Does my right hon. and learned Friend agree that the Government have done more than any other to help the elderly and low-income groups with energy bills, not only through the cold weather payments, which have already been mentioned, but because, under privatisation, the real cost of gas and electricity has fallen? Will he continue that trend by resisting any imposition of a carbon tax?

It is certainly true that the effect of sticking at 8 per cent. VAT is that gas and electricity prices have fallen by 1 per cent., even allowing for VAT, compared with the rate of inflation over the past two years. It is clear that the regulation imposed on the utilities will ensure continued falls in the price of gas and electricity. We must resist the attempt by the Labour party to take the affairs of such industries back into Government hands. A carbon energy tax—an alternative favoured by the Liberal party usually and the Labour party often—would impose not only a tax on domestic fuel but extremely heavy costs on British industry, and would disadvantage us in world markets. I am glad to say that at the Essen summit President Delors acknowledged as much, saying that the Commission would continue to design the outlines of a carbon energy tax, but would accept that it was for individual member states to decide whether they wanted such a tax. We shall rescue this country from such a tax, whether the idea comes from Europe, the British Liberal party or the British Labour party.

To ask the Chancellor of the Exchequer if he will make a statement on how VAT on domestic fuel will impact on households at differing income levels.

To ask the Chancellor of the Exchequer if he will make a statement on how VAT on domestic fuel will impact on households at differing income levels.

Taking account of the generous compensation that they will be receiving, benefit recipients will be paying much less than those with higher incomes. For the majority of pensioners that compensation will more than match the VAT that they will be paying.

Is it not a fact that the poorest households spend 13 per cent. of their income on fuel, whereas richer households spend only 3 per cent. of theirs? Does the Chancellor know that the Institute of Fiscal Studies has estimated that, as a result of VAT at 8 per cent., the poorest fifth of the population will reduce their fuel consumption by 9 per cent., compared with an average of 6 per cent? The compensation package shortchanges the people who need it most, such as the elderly and the infirm. People on disability living allowance will get nothing. Those who pay the highest price can do the arithmetic; they will go cold this winter because of VAT on fuel, even at 8 per cent.

The hon. Gentleman is misusing a statistic that makes the obvious point that people on lower incomes tend to spend a higher proportion of their income on fuel, just as they do on food. Many of them also tend to spend a higher proportion of their income on tobacco and alcohol than other people do. [HON. MEMBERS: "Oh!"] That just happens to be the case.[Interruption.] Of course it does.

The Opposition are obscuring the fact that, in cash terms, we introduced VAT in order to give cash compensation to the poorest. As I have already said, and as I restated in my reply, for the majority of pensioner households, the amount added to their pension will be greater than the amount that VAT adds to their bills. With the greatest respect—this is becoming an old campaign and I have accepted the vote of the House—I still become roused by this absurd claim that people were somehow going to die from cold and all the rest of it, when they were going to be compensated in respect of their bills. The people in the big houses will save the VAT.

Does the Chancellor not realise that, in the light of the statement that he has just made to my hon. Friend the Member for Leeds, West (Mr. Battle), he does not really understand the plight of old-age pensioners, the poorer families and the sick in relation to VAT? In addition, the Chancellor has been responsible for cuts in benefits.

If VAT costs the average pensioner a certain amount, and if the compensation that we offer is equal to that amount, I cannot see how I can be accused of neglecting the interests of pensioners. The hon. Gentleman says that this is part of the fall in living standards, but fortunately I am very glad to say that the living standards of retired people have risen well ahead of inflation since the Government took office. Living standards have risen about 40 per cent. ahead of inflation in the 15 years that the Conservatives have been in power.

Does my right hon. and learned Friend recognise that pensioners in particular study his Budget statements with great care and they do not take a great deal of notice of the Opposition parties' scare stories? However, is he also aware that there is some anxiety about the position of VAT on fuel in 1996, when it is believed that the European Union will require an end to all zero rating? Can my right hon. and learned Friend put at rest the minds of pensioners, who are concerned about future VAT rates on fuel?

I am grateful to my hon. Friend because I am aware that there are fears of that kind and I can put them at rest. Until we have a new VAT regime agreed in Europe, the present regime continues. We have always safeguarded our right to determine which goods remain zero rated. That remains the case. As we enter discussions in Europe about a possible further regime for VAT, we will ensure that we retain the right to set zero rates according to our judgment. That is one of our main negotiating aims.

With regard to pensioners in general, I agree with my hon. Friend the Member for Torbay (Mr. Allason). They follow these issues with care. I am sure that many of them noticed that, when I was able to go back to indexing the tax allowances for the general population against inflation, I over-indexed the aged person's allowance for income tax. Therefore, the tax bill of pensioners who pay income tax was relieved by my Budget. The overall effect of the Budget is slightly to reduce the burden that we impose on pensioners for revenue purposes.

Will my right hon. and learned Friend continue to resist the scare claims of Opposition Members which, as usual, are designed to frighten the most vulnerable in our society? Will he also continue to give attention to providing funds and incentives for home insulation and energy conservation despite past and expected future falls in the price of gas and electricity?

I undertake to do so. The good thing about the home energy efficiency scheme, to which we have already alluded, is that we have expanded it very rapidly indeed. We doubled it last year and the people responsible for the scheme have responded and have proved capable of spending that money. Sometimes one can move so fast that it becomes difficult for the administration to keep up speed and deliver the money in terms of homes insulated. One million homes have been insulated and the level at which we are now running the scheme will produce a significant difference to the comfort and fuel bills of many elderly and poor people.

Given that many low-income families will receive no compensation for the increase in VAT on fuel, and given that we know that the gap between the rich and the poor is getting wider, why will not the Chancellor condemn the 75 per cent. pay increase for the head of British Gas? The Prime Minister condemned it; why will the Chancellor not do that?

Carrying on about the pay of individuals does no earthly good to pensioners. It merely distracts public attention from the fact that the Opposition have no positive proposals to put forward on taxation or on public spending, or the relationship between the two. I have repeatedly made it clear that I deeply deplore, in any major company, pay increases that are not justified by performance. Shareholders should take an interest in remuneration when there is any reason to doubt that it is matched by performance. I strongly reject the idea that it is the business of Government to go back to the business of setting salaries in major companies, something that was a hallmark of an extremely unsuccessful period in running many businesses, including the public utilities.

To ask the Chancellor of the Exchequer what assessment he has made of the likely effect on the economy of a continuation of public borrowing at current rates.

The Government have taken firm action to reduce public borrowing. That should ensure sound public finances and the strengthening of the UK's economic recovery.

I thank my right hon. Friend for that answer. Is he aware of the recent successes by Jetstream Aircraft of Prestwick in selling Jetstream 41s overseas? Does he consider that the reduction in our long-term borrowings will assist future exporters?

I am indeed aware of the considerable successes in the export market of the Jetstream company in my hon. Friend's constituency. It recently sold aircraft to South Africa and to Korea, both of which are new markets for that company. It is part of the mounting success of Britain's exports, which are at the record level of a 14 per cent. increase this year.

What is the Government's policy on future borrowing? Does the right hon. Gentleman have a view on whether, on the upturn of the cycle, the Government should eliminate borrowing, or is it his and the Chancellor's intention to ensure that Government debt continues to increase even when the cycle is on the upswing? Will he make a clear statement on the Government's plans for borrowing? Do they believe in a balanced Budget?

The hon. Gentleman should study the Red Book, where all those matters are set out in some detail. In general terms, it continues to be our policy to reduce public borrowing in accordance with the graphs and curves set out in the Red Book, and that will remain our policy.

Does my right hon. Friend agree that only by taking a tough approach to public spending has it been possible significantly to reduce the public sector borrowing requirement and, at the same time, to achieve an impressive 4 per cent. economic growth? Does he also agree that that is in stark contrast to the Opposition, who urge more and more spending and do not have a clue how they would reduce the PSBR?

My hon. Friend is entirely correct. As usual, the silence from the Opposition on those subjects is absolutely deafening and embarrassing. They will not say at what level they intend to reduce public borrowing or whether they intend to reduce it at all. In more general terms, sound public finances are absolutely central to the economic recovery, which is going well, with growth rates of more that 4 per cent. I am grateful for my hon. Friend's endorsement of our successful recovery.

While the Chief Secretary to the Treasury has the graphs and curves from the Red Book in mind, will he confirm that, on debt interest alone, the Government propose to spend £35 billion extra over the next five years, compared with what they spent over the past five years? Is the projection in the Red Book for 1996–97 of a PSBR of113 billion a firm target? If that is not a firm target, what is his target?

All targets are intended targets, and we are aiming for them, so there is nothing different about that. I am delighted that the hon. Gentleman is at last taking a serious interest in reducing public debt. The cost to the taxpayer of gross debt interest payment is almost £1,000 a household. Therefore, at long last, after the embarrassing silences from the Opposition, we are glad to have a signal that they are interested in reducing public borrowing. That is a first for Labour.

Will my right hon. Friend confirm that the welcome reduction in borrowing will help to ensure that we continue to have one of the lowest absolute levels of borrowing as a percentage of gross domestic product of any country in the developed world? However, at a time when private sector borrowing is falling, I urge my right hon. Friend to be very chary about further rises in interest rates.

My hon. Friend is quite right to commend Her Majesty's Government for their good record on steadily reducing public borrowing, which has halved in two years and which is exemplary compared with that of many other nations. As he knows, Treasury Ministers do not comment on rises or falls in interest rates, but I have listened carefully to his advice.

To ask the Chancellor of the Exchequer what estimates he has made of the effect of his Budget on investment levels in the United Kingdom economy.

To ask the Chancellor of the Exchequer what impact his Budget will have on investment levels in the United Kingdom economy.

To ask the Chancellor of the Exchequer what effect his Budget will have on investment levels in the United Kingdom economy.

The Budget reinforces our strategy of ensuring sound public finances and low inflation, providing a good climate for investment. We expect investment to grow strongly in the coming year, with whole economy investment increasing by 5¾ per cent. and business investment at nearly 11 per cent.

That strategy has resulted in Britain coming 22nd out of 24 countries in an OECD survey of investment as a function of gross domestic product, and it has resulted in a steady decline in manufacturing investment in plant and equipment since 1990. Will not that strategy continue to undermine Britain's manufacturing base?

I do not see how the hon. Gentleman can claim that 11 per cent. growth in business investment next year is in any way disadvantageous. What would damage investment in this country are the Labour party's proposals to help itself to substantial sums of money from industries which were nationalised—money that it would find only by cutting investment and infrastructure and thus creating unemployment. We will listen to no lectures about investment from the hon. Gentleman.

The Minister talks about business investment, but surely he is aware that even the most optimistic forecasts do not predict that it will reach the level it was before the recession. Therefore, he will not be surprised to learn that at a recent meeting with the West Midlands Engineering Employers Federation I was told that, apart from a little help that will be provided to tiny businesses, the Chancellor's Budget will do absolutely nothing to secure the long-term sustained growth in business investment that is necessary if we are to reach the investment levels of our competitors to which my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) referred.

After 15 years of Tory Government, is the Minister not ashamed of that record? According to an answer from the Minister of State to my hon. Friend the Member for Great Grimsby (Mr. Mitchell)—[Interruption.]

Order. This is a total abuse of Question Time. Both questions and answers have been extremely long, and it is totally unfair on those hon. Members who have questions listed further down the Order Paper and who can reasonably expect to be called. I want brisk questions and answers.

The hon. Lady is not correct. A recent Confederation of British Industry survey, published in October, showed that the balance of firms planning to spend more on plant and machinery is at its highest level since April 1989.

Will the Minister congratulate those in the north-east—notably those in my constituency of Hartlepool and those in the Northern Development Company—who have worked so hard to secure the recently announced investment by Samsung Electronics in Teeside? Does that not demonstrate a very powerful case for a close partnership between the private and public sectors, as well as the importance of effective regional policies and Government incentives for investment? Will the Minister therefore repudiate the Employment Secretary's demand that such essential industrial assistance be cut?

Of course I pay tribute to those who have won the orders. One reason why the north-east has done so well is that the Government have consistently supported that area through development corporations, city challenge and enterprise zones, and our policies are now paying off.

I congratulate the Financial Secretary on what he has told us. What budgetary measures does he think need to be introduced in order to maintain—let alone increase—investment levels if serious suggestions were made by serious people that Britain should leave the European Union?

My right hon. Friend is right. Many investors, particularly international companies, want to invest in a country that is at the heart of Europe, and that is a key part of our selling strategy. A healthy economy, sustainable recovery, low inflation and rising profitability are what matter, and we now have them.

Why does Britain have the most punitive rate of capital gains tax in the entire developed world? Would not it boost investment if we were to reduce or even abolish CGT? Japan has no CGT, and it works perfectly well.

There will be opportunities as the Finance Bill goes through Committee to develop at length the subject of CGT. It is worth recording that 99 per cent. of taxpayers do not pay CGT, so one must put the problem in perspective.

Is not the 11 per cent. projected increase in business investment exceptionally high? Although the Labour party—for obvious reasons—does not want to acknowledge that fact, is it not irrefutable evidence of the confidence that the Government's policies have engendered in the economy?

My hon. Friend is right. In the past few days, a decision has been taken by London Underground about the Northern line, and the go-ahead has been given to the Croydon tramlink and the midlands metro. Investment decisions are now being taken, jobs are being created and we are making progress in modernising the infrastructure.

On Tuesday, the Chancellor said that the timing of interest rate rises depended on, among other things, political events. Who will decide the timing of interest rate changes as we approach the general election—the Governor, acting in the interests of the economy, or the Chancellor, acting in the interests of the Tory party?

The hon. Gentleman knows precisely what the regime is. Decisions are taken at the monthly meetings, and the Governor has flexibility on the timing.

Will my right hon. Friend comment on the levels of investment by British Telecom, the gas industry and the water industry? Does he believe that the rise in their investment is due to the fact that they are now in the private sector and are not nationalised industries?

My hon. Friend is quite right. It is exactly those successful investment programmes that the Opposition seek to damage with their proposal for a windfall tax, which I hope has now been abandoned.

To ask the Chancellor of the Exchequer what assessment he has made of the effect which Budgets since 1992 have had on living standards.

Household income after tax and inflation is expected to rise next year to be almost 50 per cent. higher per head than in 1979. Our policies of sound finance and low inflation have created the prospect of sustained growth and of further increases in living standards.

Do not the averages mask the differentials? Is it not true that since 1979 half the tax handouts from the Government—£16 billion—have gone to the top 10 per cent. of the population and that, since 1992, £2 billion has been taken from those in the bottom half of the household incomes table? Is the basic unfairness of that Tory tax policy an unfortunate mistake or part of a deliberate policy?

What really matters is that the real incomes of vulnerable groups—pensioners, the unemployed and the low paid—have all gone up. The burdens of the 1993 and 1994 Budgets are spread fairly across all income groups.

Has my right hon. Friend noticed that whenever Opposition Members quote statistics on the amount of tax that is being taken from the average householder, there is always an assumption that the living standards of that average person have gone up well ahead of the rate of inflation? Would not it be sensible for them to look at what sums people take home? Have not living standards risen year by year for the average householder?

My hon. Friend is quite right. Tax is an important part of the picture, but it is only part of it. What matters is the total picture, which includes earnings. As I said a few moments ago, real income per head has risen by nearly £50 per week since 1979. That is the figure that really matters.

To ask the Chancellor of the Exchequer what consultations he had with the Northern Ireland Office in drawing up his public expenditure allocation to Northern Ireland for the fiscal year 1995–96.

My right hon. and learned Friend the Secretary of State for Northern Ireland was fully involved in the decisions about future public expenditure in Northern Ireland.

I thank the Minister for that reply. May I draw to your attention, Madam Speaker, and that of the Minister, that the announcement regarding public expenditure in Northern Ireland was made on Monday, not to the House or to Members of Parliament who represent Northern Ireland but to the press? Notwithstanding that, I am sure that the Minister will agree that the advent of peace in Northern Ireland has created new public expenditure priorities. Expenditure on security is being reduced, increasing the need for further expenditure on other parts of the public sector and, in particular, on job creation. It is estimated that peace will mean the loss of more than 25,000 jobs in Northern Ireland, and that vacuum must be filled. Will the Minister assure me that the financial benefits gained from spending less on security will be used in the public sector on job creation and not clawed back into the Treasury? That money should be spent for the benefit of Northern Ireland to enhance its future chances.

As today is the first anniversary of the Downing street declaration, I am glad to join the hon. Gentleman in welcoming any proposals that will strengthen the prospects for peace, prosperity and investment in Northern Ireland. It may be premature to speak about a large peace dividend, because it is too early to lower the guard on security. I emphasise, however, that prospects for investment, as highlighted by my right hon. Friend the Prime Minister at yesterday's meeting of the Investment Forum, are excellent.

The Government have no intention of taking money away from Northern Ireland—far from it. As we made clear in the announcement at the Essen conference, we have shown our good will by ensuring that any new investment money from the European Union or from other sources will be considered in addition to the Government's planned spending growth and investment in Northern Ireland. The prospects therefore look good for a new era of better investment in Northern Ireland.

To ask the Chancellor of the Exchequer what estimates his Department has made of the costs of unemployment.

In 1993–94, the costs of benefits paid to the unemployed in Great Britain is estimated to have been £9.7 billion.

The problem with that answer is that the Minister has not taken into account all the lost taxes and national insurance contributions, other benefits that are paid to the unemployed and the cost of redundancy payments in many cases, which bring the cost of unemployment to a total to £9,000 a year for anyone unemployed. That is why another member of the Cabinet, the Secretary of State for Education, went along to a Select Committee and used that very figure. On top of that, miners who have been thrown out of work and who receive money from the Department of Energy—there are more than 100,000 of them—are not included in the unemployment statistics. The truth is that if the Government got rid of mass unemployment in Britain, they could wipe out the public sector borrowing requirement for next year.

The hon. Gentleman is always full of instant solutions and wrong figures; today is no exception. The figure he has quoted is wrong. Successive Governments have declined to make estimates of the kind that the hon. Gentleman has made because they require all sorts of arbitrary assumptions and guesses to be made about the potential earnings of unemployed people and their spending patterns. It is safer to say that the implied costs of an unemployed person are about £3,500. That is why the figure that I gave in my original answer stands.

Is my right hon. Friend aware that the costs of unemployment in the constituency of the hon. Member for Bolsover (Mr. Skinner) fell last month because the unemployment rate there fell by more than 2 per cent.? Is my right hon. Friend further aware that the cost of unemployment in my constituency has fallen consistently since the general election? What lessons has he learnt from the overall unemployment figures throughout the country?

Unemployment is falling all over the country at the extremely satisfactory rate of more than 1,000 a day. The hon. Member for Bolsover (Mr. Skinner) may not be aware of the interesting phenomenon in his constituency known as the "Bolsover diamond"—that is not a reference to the hon. Gentleman when he is in one of his rougher moods but a £35 million investment project under the single regeneration budget, £5 million of which came from the Government, the rest being raised in partnership with the private sector. That project will create nearly 3,500 jobs and train more than 1,000 people. That is the kind of employment advantage that the Government are creating through their excellent policies and the sound Budget of my right hon. and learned Friend the Chancellor.

To ask the Chancellor of the Exchequer what assessment he has made of the level of skills in the United Kingdom relative to international competitors.

The competitiveness White Paper made it clear that, although the United Kingdom has world-class skills in some areas, further progress is needed in others. The Government have introduced major reforms to improve outputs from education and training.

I am rather surprised by that answer because the Minister will be aware that a great deal more needs to be done. Yesterday, the Trade and Industry Select Committee visited Glasgow, where we spoke to IBM, Stevensons and Hoover, who told us that they were having extreme difficulty in finding the skilled labour that they required. Britain obviously needs far more skilled labour if we are to compete with our main competitors. What resources will be made available, and over what period of time, to lift skills in Britain to the level of our major competitors?

The hon. Gentleman makes a fair point on behalf of the Trade and Industry Select Committee, of which he is a member. This country lags behind some others in technical and intermediary skills, which is why considerable extra resources are being made available through the advanced and apprenticeship schemes, which should provide some 70,000 extra people with national vocational qualifications over the next five years.

Does my hon. Friend agree, however, that even the most skilled workers cannot compete and get jobs in a negative industrial environment where minimum wages and social chapter restrictions are the order of the day?

My hon. Friend is absolutely right. A minimum wage and social chapter would undoubtedly destroy jobs and diminish training budgets.

To ask the Chancellor of the Exchequer what plans he has to extend the scope of VAT to goods which are currently zero-rated.

My right hon. and learned Friend has no plans to do so.

We shall have to wait and see on that. As a special Christmas gift to women, will the Minister consider zero rating something that is not a luxury but a necessity—sanitary towels and other sanitary apparel? Will he give the matter serious consideration because those items are a necessity and women should not have to pay VAT on them?

We have no plans to reduce VAT on the items mentioned by the hon. Lady and we cannot introduce zero rates for reasons, of which she is aware, connected with rules under the European Union.

Is my hon. Friend aware that I have a question for written answer on the Order Paper for answer next week asking him to clarify the position with regard to zero-rating VAT on pleasure rides? Is he aware that in Cleethorpes people are concerned about whether VAT will be put on donkey rides on Cleethorpes beach? Will he clear up that matter, as those donkey rides are an important part of the local economy?

Public transport will continue to be zero rated. Unfortunately, beach donkeys do not constitute public transport, even in Cleethorpes, but at the standard rate of 17.5 per cent. I am sure that they represent excellent value.

To ask the Chancellor of the Exchequer if he will make a statement on living standards.

Real household income per head has risen by an average of nearly £50 a week after tax and inflation since 1979.

Will the Chancellor explain why, at the last general election, the Government said that they would raise the living standards of the British people yet now have the gall to expect the typical British family to find £800 a year to pay for the new taxes that he has introduced?

What the hon. Lady calls a typical household is about 1 per cent. of households in the country. She is misusing statistics again. She will have noticed that next year we expect personal disposable incomes to rise by about 1.5 per cent. After taking account of tax and inflation, that is an average of about £5 a week. Those are the first fruits of our economic recovery and we are now set on course for a strong economic recovery, strong manufacturing base, falling unemployment and rising living standards for the people of this country, in line with what we promised at the last election and in marked contrast with the previous Labour Government's record.

Does my right hon. and learned Friend agree that one of the clear signs of the improvement in living standards in the United Kingdom is the substantial number of people today who hold shares in companies? Does that not perhaps alter slightly the statistic that 1 per cent. of the population pay capital gains tax?

It does, indeed. Another of the achievements of the past 15 years is the fact that the Conservative attachment to the principle of popular capitalism and every man a shareholder has been taken a great deal further forward, and very many people now own shares in successful British companies. I agree with my hon. Friend that it puts the arguments about capital gains tax in context that such a comparatively small number of taxpayers in this country actually pay capital gains tax.

Would the Chancellor like to take a cut in his pay of 16 per cent. this Christmas? Would he rather work in the British Gas boardroom, where one gets £500,000 a year, or in the showroom, where the £13,000 salaries are being cut by 16 per cent.? If the Chancellor will not do anything about the unacceptable face of privatisation, why does not he introduce a system of taxation that reduces the marginal tax on the poor, and ask people with their snouts in the trough to pay their fair share?

Questions about the management of British Gas must be addressed to British Gas. The hon. Gentleman, like the Labour party, must resist the temptation to return to the days when parliamentary questions, ministerial decisions and political interference determined the commercial policy of institutions that provided the country with utilities. We now have a massive increase of investment in British Gas and falling fuel prices. An extremely strong industry has developed, and I trust that its management will continue to manage it fairly and properly in the public interest.

To ask the Prime Minister if he will list his official engagements for Thursday 15 December.

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.

Given today's news that British Gas retail staff, who earn an average of £13,000 a year, will be asked to take a pay cut while the chief executive will receive a pay rise of 75 per cent., does the Prime Minister share the opinion of the deputy chairman of the Conservative party that, under the present Government, the rich are getting richer on the backs of the rest?

I am a little surprised that the hon. Lady should mention that matter, in the light of what her hon. Friend the shadow Chancellor had to say on the radio a couple of hours ago.

To ask the Prime Minister if he will list his official engagements for Thursday 15 December.

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

In the light of this week's welcome further fall in unemployment, has my right hon. Friend met a single business man who supports the Labour party's demand for a minimum wage, which would destroy so many jobs in constituencies such as mine in Blackpool?

I cannot be sure that there is none who would, but certainly the overwhelming opinion is to the contrary. Even the right hon. Member for Kingston upon Hull, East (Mr. Prescott) has in the past used the expression that there would be some jobs "shakeout", or words to that effect. That means, of course, that people will lose their jobs. The right hon. Member for Sedgefield (Mr. Blair) has said that a minimum wage would have a potential jobs impact. He can hardly believe that it would be a favourable jobs impact. I think, therefore, that hon. Members on the Opposition Front Bench tend to agree that jobs would be lost by that policy.

Will the Prime Minister confirm that, by next year, the chief executive of British Gas will earn in one week what his employees, who are now confronted with job cuts and pay cuts, earn in one year? Is it not time that he took a grip on those privatised utilities and put a stop to excesses that are offensive to the British sense of justice?

The right hon. Gentleman will have to decide whether he wishes to have a private sector with rigid Government controls over every aspect of it. in which case it is not a private sector, or to renationalise industries such as gas, in which case he should make his position entirely clear. He might also clear his lines with his hon. Friend the Member for Dunfermline, East (Mr. Brown) because my answer to the hon. Member for Hornsey and Wood Green (Mrs. Roche) applies also to the right hon. Gentleman.

Since these industries are regulated, why could they not be regulated to put a stop to those excesses? Is not the point one of efficiency as well as justice because, if we want a modern motivated work force, we can have it only on the basis of investment, partnership and fairness, not on the old Tory notion of greed at the top and insecurity for the rest?

A couple of hours ago the shadow Chancellor was asked:

"Surely there is nothing you could do, could you, about wage rates within an industry? You are surely not going to start interfering with that again, are you?"

To that, the hon. Gentleman said:

"No, these are matters for negotiation between the unions and the employers."

They should sort their lines out themselves before they criticise us.

The issue is not the market conditions of British Gas but the contrast between the treatment of the chief executive and those ordinary staff who are facing pay cuts. I understand that the Cabinet has its own committee looking into these matters. If the Prime Minister has such a committee, why will he not accept the suggestion put forward from the Opposition Benches that where there are excessive pay increases at the top the regulator should act to stop them?

The right hon. Gentleman knows that that is not a matter for the regulator. He is being wholly inconsistent. One day he complains about the British Gas monopoly, the next day he complains when British Gas faces competition and cuts its cloth accordingly. In one sense he opposes monopoly, in another sense he opposes competition. The reality is that he just opposes the private sector. What the right hon. Gentleman is doing is what he and his colleagues have done so often—find a grievance, whatever it is, and use that grievance for partisan interest in the interests of the Labour party.

To ask the Prime Minister if he will list his official engagements for Thursday 15 December.

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

My right hon. Friend will be aware that today is the anniversary of the Downing street declaration. I congratulate him on the progress that is being made in Northern Ireland towards a lasting peace and the announced inward investment and on the atmosphere that has improved so much in Northern Ireland, which he found in Portadown yesterday. Conservative Members believe that unless we get rid of the explosives and the firearms of the IRA, the UVF and the UFF, we will not be able to make the progress that we should.

I share that view. Firearms, explosives and detonators, whether held by the IRA or by the loyalist paramilitaries, need to be decommissioned. As I said yesterday, I am not concerned whether they are surrendered; I am concerned that they are decommissioned and destroyed so that they can no longer be used to disrupt the democratic life of Northern Ireland. That is the important matter. That does have to be discussed and it does have to be acted upon during the preliminary discussions that are taking place at the moment. If progress is not made on that, not only, in my judgment, would the other democratic parties in Northern Ireland politics not sit down with those who retain those weapons, but nor should any British Government.

Given the damage that has been done by indecision and division over Bosnia in the past, will the Prime Minister tell us what his response will be to the French proposal to be put to NATO on Monday to secure Sarajevo airport and to open a route to the sea in order to reinforce the UN's humanitarian operations and to make more secure the position of our troops there in the future?

Of course, we consider carefully anything that would secure the position of our troops and the right hon. Gentleman should know better than to suggest that we would do otherwise. I wish that he would not repeatedly undersell and undermine what is done there by British troops, United Nations troops and the Government. He has done nothing but grandstand on this issue from the commencement of the matter. If he really understood a little more about it, he might say a little less about it.

Does my right hon. Friend agree that employees should be encouraged to take stakes in the companies that they work for? Does not he think it odd that the Labour party attacks share options, particularly bearing in mind the extent to which its leader and various of his "luvvie" friends seem to have benefited from them?

I certainly think that it is right to extend share ownership as widely as possible. In the past 15 years, there has been a dramatic extension of share ownership. That has entrenched the private sector and private enterprise. It has done a great deal for the individual security of people owning shares. We shall certainly continue those policies. It would be welcome to have a cross-party consensus on it.

To ask the Prime Minister if he will list his official engagements for Thursday 15 December.

I refer the hon. Gentleman to the answer I gave some moments ago.

I thank the Prime Minister for his reply. Will he join me in congratulating the Industrial Development Board for Northern Ireland, and may I thank him personally for the great contribution and excellent launch of the Investment Forum drive in Belfast this week? He and, I hope, all hon. Members will pray that it bears immediate and urgent fruit. Having launched the Investment Forum, and having begun demilitarisation talks with the republican and loyalist paramilitaries, does he agree that the most urgent and pressing need in Northern Ireland is the recommencement of political dialogue, which must perforce await completion of the framework document? Will he assure the House today that, with the creation of the new Government in the Republic of Ireland under the new Taoiseach, John Bruton, the Government will act urgently to complete the framework document so that the two Governments and the political parties can negotiate a lasting political settlement in Northern Ireland?

I am grateful for what the hon. Gentleman had to say about the IDB, officials in the Northern Ireland Office and the investment conference held yesterday. No one who attended the conference has any doubt that it was a tremendous success not only in the new investments that were announced yesterday, but in the number of new investments that may arise as a result of the conference. The atmosphere was quite astonishing, as everyone who attended will know.

On the second half of the hon. Gentleman's question, clearly it is desirable to recontinue the political dialogue as soon as possible. I have written already to the new Taoiseach, Mr. Bruton, to say that I look forward to meeting him as soon as possible. I am confident that the new Irish Government will wish to sustain together the work that we have done over Northern Ireland. We wish to recommence discussions on the framework document and, I hope, conclude it as speedily as possible. But I would rather take a little longer over the document and get it right than deal with it too speedily and perhaps not have it right.

What advice will the Prime Minister offer to the people of Islington who are entitled to say that, if local education is not good enough for the Leader of the Opposition, it is not good enough for them?

I suspect that it is not only the Leader of the Opposition who has not found the education system satisfactory in Islington, although the right hon. Gentleman shakes his head so perhaps he does find it satisfactory after all. We need the highest quality of education in Islington not just for the right hon. Gentleman, of course, but for every Islington resident whose children attend schools there.

To ask the Prime Minister what is the outcome of the investigation, referred to in his letter to the hon. Member for Linlithgow of 29 November, of the scrutiny of the film "Maltese Double Cross" by those involved in the investigation; and who were those involved to whom he referred.

The Crown Office and Dumfries and Galloway police are still considering the contents of the film.

Is it not a matter of record that on 19 September 1989 the then Secretary of State for Transport, Lord Parkinson—in good faith, quite certainly—offered the British relatives of the victims of Lockerbie a public inquiry on the condition that it was agreed by his colleagues? Which colleague vetoed that, and why did she do it?

My understanding of what I believe the hon. Gentleman has in mind is a little different from that implied by him. I am advised that in 1990 Lord Parkinson undertook to consider with colleagues the case for a confidential inquiry. When, subsequently, a decision was taken to hold the fatal accident inquiry, the case for a second inquiry fell away. I am advised that that was explained and accepted at the time by the relatives.

To ask the Prime Minister if he will list his official engagements for Thursday 15 December.

I refer the hon. Lady to the answer I gave some moments ago.

Is the Prime Minister aware that the London to Crianlarich and Fort William and other sleeper trains are to be axed? That is no scare story. It signals the death knell of many vital rural services in Scotland and is due entirely to the Prime Minister's chaotic and damaging privatisation scheme.

Unless the hon. Lady is talking about a different service, I understand that sleeper services from London to Edinburgh, Glasgow, Aberdeen and Inverness will be safeguarded for the first time. If she has other detailed questions about other services, I suggest that she addresses them to the Secretaries of State for Transport or for Scotland.

The debate on the supplementary estimates gives the House an opportunity to discuss the current report on the Child Support Agency laid before the House by the Select Committee on Social Security. I should like to make some general observations about the CSA and then to discuss some of the specific proposals that we made in our report, which we issued recently.

The nature of the debate allows me to begin by thanking the members of staff of the Select Committee for the work that they do. Given that our proceedings are now televised, it may surprise many taxpayers to know that Select Committees run their own establishments on a tight reign. Our own Select Committee has just four staff to cover all its functions. Although we may not live up to the expectations of American committees, we certainly give extremely good value to taxpayers in the way in which we attempt to monitor what is happening in government. I am grateful for the opportunity to put my thanks to those staff on the record.

The first and most important general observation about the CSA is that the whole atmosphere of the debate on its future has changed in the few months since we previously debated it. At one time, I seriously thought that the agency would collapse; that the difficulties of establishing it and the weight of its work load were such that before the end of this year the Secretary of State would have to come before the House, draw stumps and say that the Government were beginning again. I no longer believe that that is so. Although the Select Committee has some criticisms to make, to which I hope the Government will respond constructively, anyone who believes that the agency will collapse is either misleading himself or misleading others.

The nature of the debate now is how we reform the CSA to make it more effective and to fulfil the goals that the House thought it was voting for when it established the agency, rather than a mere moonshine debate about what will happen when the agency is replaced. It will not collapse, so the politics surrounding the CSA relate to how we should reform it. Certain reforms have been made and I hope that the House is clear about the significance of the change that it has made to that area of policy.

Since the welfare state was established, with the first reforms that Lloyd George put on the statute book in this Chamber, we have been about redrawing the boundaries of duties between state and individuals. Each of those changes has redrawn the boundary in favour of collective action as against individual responsibility. The importance of the Child Support Agency is that, in that most sensitive of areas, we have for the first time redrawn that boundary restoring duties to individuals and withdrawing state support. If any hon. Members thought that that would be a popular move, they were clearly foolish to hold such a view. Given that we have decided to redraw the boundary, it is doubly important that we listen carefully to the criticisms that have been made about the running of the agency and that Governments respond sensitively, quickly and regularly to concerns that hon. Members express on behalf of their constituents.

The most serious concern that we should all have is the fact that those of us who voted the passing of that measure, with widespread support, made it retrospective. The normal rules of the House have been hostile to passing retrospective legislation and that was not seriously considered when we debated the measure. Although we deplored the number of fathers—generally speaking—who had deserted their families and left taxpayers to pick up the bill, for a considerable period there was very little activity by the Treasury to reduce the increasing number of families who were deserted and whose household bills were met by taxpayers.

Over the past 20 or so years, but particularly the past 10 years, we have witnessed fathers disappearing from the scene and taxpayers taking on the responsibility of surrogate parents. This measure was intended to draw a line and, we hoped, to prevent that trend from continuing.

I follow what my hon. Friend says, but am concerned that in my constituency the agency is failing to do what he wants. The agency is placing in most difficulty people who have been conscientiously paying, while it seems incapable of getting a grip on those who have washed their hands of all their responsibility and disappeared. I accept the fact that the courts have failed to do anything about those people, but so has the agency. The agency is therefore causing a massive upset to people who were meeting their responsibilities in the past and is failing to do the job that I and many others wanted it to do: to get a grip on those who were genuinely dodging their responsibilities.

I hoped that the agency would get a grip on everybody, not just on one group or another. If parliamentary answers are to be believed—I see no reason why they should not be—the position has changed of late, given the groups of absent parents that the agency is now targeting. If I remember the answer correctly, some 70 per cent. of those now being contacted are parents who previously had not paid their contributions.

While the House must be aware of the value of representing single-Member seats and holding surgeries in those seats, which teaches us a great deal, it must also recognise that a selective group of people comes to see us. People do not come to our surgeries to tell us that everything is going well—thank goodness. Our lives would be made impossible. By the very nature of such surgeries, people come to complain. No one has come to my surgery to say, "This is a wretched agency. I dumped my wife and disappeared. Thanks to you lot in the House of Commons, I have now been not only chased but traced and am being presented with bills." I do not expect people to come to my surgery and say that, although it is clear from the figures that people are being traced and money is being collected.

The point that my hon. Friend the Member for Denton and Reddish (Mr. Bennett) makes is valuable, in that, if we were starting again, obviously we would not have started with those parents—not always, but generally, fathers—who were doing their level best to meet their commitments to their first families. They read about all the parents who were presented in an unfavourable light in the media and somehow felt that they were guilty by association and then, to add insult to injury, they were the ones who were on the learning curve of the agency as it tried to set up a new operation from scratch.

The balance has changed, but by the nature of our surgeries, we do not expect people to come to them and say, "I have been a heel for several years and the agency has stopped that." That does not excuse some of the behaviour that affected some of our constituents who played the game, who felt strongly about their commitments to their first families, who have never thought of themselves as absent parents in that sense, and who felt that they were being tried, not only by the agency, but by the media.