To ask the Chancellor of the Exchequer if he will outline the prospects for inflation. [32468]

To ask the Chancellor of the Exchequer what he expects the rate of inflation to be at the end of 1995. [32557]

I expect inflation to increase a little towards the end of 1995, to 3 per cent. in the fourth quarter. That increase reflects the impact of higher import prices, and is expected to be temporary. I expect inflation to fall back during 1996, to 2½ per cent. by the fourth quarter.

Does my right hon. and learned Friend agree that low inflation is a crucial factor in the creation of more wealth, more investment and more jobs? Does not he find absurd the way in which the shadow Chancellor on one hand appears to be for ever calling for lower interest rates but on the other has started to criticise my right hon. and learned Friend for not agreeing with the Governor of the Bank of England, who wants interest rates to increase? Will he assure the House that his inflation policy will be based on sound economics and not soundbites, so beloved by the hon. Gentleman?

I agree with my hon. Friend that the overriding aim of all economic policy is increased prosperity and more secure jobs. It is essential that we deliver low inflation in order to guarantee those and deliver those. We have been more successful on the inflation front in the past two years than at any time in the past 30 years. That has been as a result of the conduct of monetary policy and the determination of the Governor and myself to take no risks with inflation.

Today's inflation rates show that the figures have already exceeded the figures that the Chancellor estimated in his Budget speech. The Chancellor of the Exchequer has given several different figures at different times. Would he say what he really anticipates the figure to be? Does the Governor of the Bank of England agree with his optimism about inflation rates and, more importantly, in his estimates has he consulted the First Secretary?

The figures today entirely coincide with the summer forecast, which we debated yesterday, and the answer that I have just given about the likely pattern of inflation. There is absolutely no doubt about the inflation target among anyone who takes it seriously; it is 2½ per cent or less by the end of this Parliament and through the next Parliament. People try to reinterpret that, but I set the policy. They are my decisions and I repeatedly say plainly on what basis I am setting them all the time. I work with the Governor of the Bank of England, with whom I discussed those decisions, and he and I are determined to achieve the Government's stated inflation target.

May I congratulate my right hon. and learned Friend on the impeccable judgment on interest rates that he has shown so far, especially in resisting the considerable pressures for him to increase interest rates a few weeks ago, just before the American and Japanese rates were lowered, and set off a world bull market in bonds?

I always have the greatest respect for my hon. Friend's advice. That is because he is always constructively but fairly critical when he feels critical and I am grateful for his agreement when he gives it. I believe that the economic evidence supports the decision that I took. I am grateful to know that it has his full support. I do wish that someone on the Opposition Benches had a serious opinion to offer on the subject.

Does the Chancellor accept that irresponsible tax cuts would worsen the outlook for inflation? Does he accept the discipline of his own words—that public borrowing is taxation deferred? Does he accept that, if he introduced tax cuts which could be funded only by increased borrowing, they would be bad for inflation and would have to be reversed soon afterwards, perhaps after a general election?

I hope that we are all against irresponsible tax cuts. I am against doing anything that is irresponsible. We will not have tax cuts unless we can afford it. What we have done so far is to halve the public sector borrowing requirement over the past two years and we have set it on a firm downward course, aiming at our clearly stated intention of achieving balance over the medium term. Tax cuts will come, but only when we can afford them and when it is in the interests of the economy to have tax cuts.

Inflation has edged up today. Can the Chancellor explain why it has now emerged that the Central Statistical Office wrongly calculated the rate of inflation over the past few months and understated the rate of inflation? Can he also explain why he insists on maintaining not just one but three different targets for inflation? He used the figure of 2½ per cent. for the City and the figure of 3 per cent., which he said would be a triumph, for a newspaper interview.

First, it is true that an error was made in calculating inflation for two months earlier this year. The Central Statistical Office has explained that it was a straightforward error. Someone made an error in the calculation which led to an under-recording by 0.1 percentage points in the months of March and May 1995. The new director insists, in his press release, on accepting personal responsibility for this, although he has been in post for only a fortnight. It was one of those human errors which we all make.

Will my right hon. and learned Friend resist the calls which come from some people who say that a bit of inflation would be good for negative equity and for house owners? Does he agree that there has never been a better time in the past decade or so for people to buy their first new home? We have low inflation rates which means low interest rates. That makes buying one's own home very affordable and that is the right way in which to get the house market moving again.

I agree strongly with my hon. Friend. If the public feared that we were going back to what would begin as a bit of inflation, which would mean higher interest rates and the old double figure levels, it would be extremely damaging to the housing market. It is the fact that some people still fear that we may do that that is holding back purchasers from the excellent bargains at affordable prices in the market. I hope that the expert opinion of people such as our hon. Friend the Member for East Lindsey (Sir P. Tapsell), with his view about where interest rates are likely to go—at a time when they are well below half the peak that they hit at similar stages in the economic cycle in the past—will have some effect on those contemplating house purchases.

To ask the Chancellor of the Exchequer what is his assessment of the economic impact of low pay and unemployment. [32548]

Low pay and unemployment result from low productivity and inflexible labour markets. Government policies have successfully tackled these problems. Real take-home pay has risen at all levels since 1979 and unemployment has fallen by 661,000 since December 1992.

Is it not a fact that low pay is now costing every taxpayer £100 a year? Is that subsidy for bad employers a good use of £2.4 billion of public money? Is it not a fact that without a minimum wage, the good employer is undermined by the bad employer, who is undermined by the worst employer, and that the taxpayer winds up picking up the tab?

I am very surprised that the hon. Gentleman should lead with an argument for the minimum wage. One of the most robust Labour politicians I know, the deputy leader of the Labour party, said:

"I knew the consequences of a minimum wage were that there'd be some shake out, any silly fool knew that".

"Don't kid yourselves—the minimum wage is something on which unions will build differentials … Therefore the minimum wage becomes a floor on which you erect a new tower".

Can my right hon. Friend inform the House how those on low pay or the unemployed would benefit from the introduction of a minimum wage, given that a minimum wage would destroy jobs and be a nightmare in the labour market?

The irony must be that either one sets the minimum wage so low that it does not affect anything, or one moves differentials—unless the trade union movement has completely abandoned virtually everything that it stands for. Common sense tells us that the minimum wage will destroy jobs and that it will not benefit the unemployed one whit.

Is the Minister aware that some of us have a figure for the minimum wage? We have done a comparison of those Tory Members of Parliament who receive £10,000 a year from consultancies that they do not declare in the Register. Some £10,000 a year is £5 an hour and the people in my constituency would settle for that. Unlike the moonlighting Tory Members of Parliament, my constituents want only one job.

It is not uncharacteristic for the hon. Gentleman to have the courage of his convictions. He has put a figure of £5 an hour on the minimum wage. Let us have a figure from the Labour Front Bench. If Labour Members below the Gangway have the courage to give a figure, why will those on the Front Bench not do the same?

Has my right hon. Friend estimated the number of jobs that would be lost if the minimum wage were pitched at the level suggested by the Transport and General Workers Union? Does he not think—[Interruption.] The hon. Member for Worsley (Mr. Lewis) should wake up—and so should the hon. Member for Bolsover (Mr. Skinner). Does my right hon. Friend not think that people are most motivated and happiest when they are in work, even if they are not paid £1 million a year for doing the job?

The estimates vary, but I have seen an estimate of anything around three quarters of a million jobs. On the basis of the figure advanced from below the Gangway opposite, it would probably be a little higher than that.

To ask the Chancellor of the Exchequer if he will make a statement on the economic impact of the latest balance of trade figures. [32549]

Recent growth has been export led. In the year to the first quarter of 1995, exports were 9 per cent., while imports rose by only 0.5 per cent. That means that more than half of the United Kingdom's gross domestic product growth of nearly 4 per cent. is accounted for by net exports.

Does the Minister not see that our very weak trade position—a £1.4 billion deficit in April—reflects the Government's failure to invest in the economy? Does he not understand that the people in the special steel sector in south Yorkshire want to see a doubling of investment in jobs, skills and technology? How can the Minister justify possibly wasting £4 billion by reducing capital gains tax and inheritance tax rather than investing in our manufacturing base?

The country's trade performance is extremely good. It is very much better than most forecasters predicted—including the forecasts that came from the Labour Front Bench in the days when Labour Front Benchers used to give forecasts. The hon. Lady referred to the steel industry. British Steel is one of the best steel companies in the world and it is exporting very strongly. That was not the case when it was nationalised. Any tax changes that may be introduced—when we can afford them—which will help capital markets and the economy will only strengthen that position.

Does my right hon. Friend recall that economic recoveries since the war have been blighted time and again by balance of payments crises? Does he agree that the present economic recovery is precisely the opposite, in as much as we are seeing an astonishingly good export performance?

It is the first recovery since the war that has been led by exports. It used to be the holy grail that we all sought, and the country can be proud of achieving it. Above all, manufacturing industry, and the invisibles sector too, can be proud of it. If a few years back we had been told that the United Kingdom would, for example, export more televisions and microchips than either France or Germany, as we did last year, people would have thought that we were in cloud cuckoo land. Yet that is what we are now achieving.

Can the Chief Secretary confirm that our weak balance of trade position is a reflection of the Government's failure to secure adequate investment in the economy? Which areas of investment does he propose to cut to finance the abolition of capital gains tax and inheritance tax?

The premise of the hon. Gentleman's question is absurd. The trade position is extremely strong. I would like to know why he thinks that, under the Labour party's proposals, which are the same old proposals for directed investment, he would not produce more advanced gas-cooled reactors, more Concordes and more of those pretty catastrophic investment proposals which were produced in the past by that very system.

To ask the Chancellor of the Exchequer what proposals he has to increase the level of investment in the economy. [32551]

Our objectives of low inflation and sound public finances are designed to ensure a stable macroeconomic environment, within which businesses can plan ahead with confidence. Industry is now responding. Manufacturing investment rose by more than 6½ per cent. last year.

Given that, between 1979 and 1994, Britain had the worst investment record of any of the G7 or European Union countries, and given that manufacturing investment fell in the first quarter of this year and that total investment is still 10 per cent. below its level prior to the recession, will the Economic Secretary answer the question which the Chief Secretary has failed to answer on two occasions? When resources become available, will the Government use them to assist investment in this country or will they waste them by spending £4 billion of public money on cutting inheritance tax and capital gains tax, which will benefit only a few relatively affluent people and do nothing to improve the underlying capacity of our economy? Will she answer that question?

I find it very difficult to take seriously anything that the hon. Gentleman says about investment, as when he had opportunities and was in charge of Sheffield city council, he wasted £150 million building palaces of leisure for the world student games. That financial millstone has hung around the neck of everybody in that city for a generation. However, he will be pleased to learn that the latest investment figures show a strong pick-up in manufacturing, especially in the north of England.

May I first congratulate my hon. Friend on her very well deserved promotion to the Treasury Bench? I am sure that I speak for all Conservative Members in so doing. Does she agree that most investment, particularly in industrial companies, is funded from retained profits and therefore we should all welcome the increased profitability of British companies?

I thank my right hon. Friend for his kind remarks. I entirely agree with his point. Since company profits are high, companies are managing to retain far more money which they can use for investment, to the benefit of companies and the country.

Does the Minister agree that the availability of a highly skilled, well-qualified work force is always attractive to inward investors? Does she also agree that each right hon. and hon. Member has a duty to encourage teachers, students and those presently unemployed to obtain qualifications and skills in order to attract inward investment and generate wealth-creating jobs from which the whole economy will benefit?

I agree with the hon. Gentleman. Education and training are very important indeed, which is why the Government have given them such a high priority. Since we are attracting so much investment into the United Kingdom, we are obviously doing a very good job in that respect.

Does my hon. Friend agree that the best way to improve the level of investment is to reduce bureaucracy, red tape and interference not only by local government and national Government, but by the European Union?

My hon. Friend makes a very fair point. As part of my job, I shall certainly scrutinise European regulations to ensure that they benefit British industry.

While I welcome the Minister to her first Question Time, can she tell us why manufacturing investment fell in the first quarter of this year? Is she confident that she will be able to sort out the fact that total investment is 10 per cent. lower than it was in 1989 before the recession? With all that going on, how does she justify the priority given to getting rid of capital gains tax and inheritance tax?

The hon. Lady has been mixing her figures. I am sure that she will be delighted to learn that there is a strong pick-up in manufacturing investment, which increased by 8¾ per cent. in the first quarter of this year over the same period in 1994. That is an increase, not a reduction. One factor that aids investment in British industry is a strong economic climate. We have one now and will continue to have one.

To ask the Chancellor of the Exchequer when he received a reply to his letters of 12 May and 14 June to the right hon. Member for Dunfermline, East (Mr. Brown). [32552]

I regret to say that I have received no reply from the hon. Member for Dunfermline, East (Mr. Brown) to my letters to him of 12 May and 14 June. I assume that he is still unable to decide on an inflation target and whether or not he agrees with my decisions on interest rates.

Does my right hon. and learned Friend agree that Labour cannot answer serious economic questions because it does not have a serious economic policy—only classical exogenous waffle to camouflage the job-destroying minimum wage and social chapter?

I agree that members of the Opposition Front Bench find themselves in a sad position. There cannot be a Member of the House of Commons who has not at some stage expressed an opinion on the movement in interest rates. The markets have since moved, there has been a wide range of financial comment and all the data—including the Bank of England's advice to the Government—are before us. The hon. Member for Dunfermline, East cannot even answer a letter because he cannot make up his mind whether or not he has an opinion.

As the Chancellor is so upset about replies to letters, will he now answer my letter to the Treasury of 23 June, which refuted fraudulent Conservative spending claims? While the right hon. and learned Gentleman is at it, will he account for his evident loss of control over the Prime Minister and his new spending commitment, now amounting to more than £11 billion? Answer that.

At least the hon. Gentleman wrote only on 23 June. I shall certainly let him have a prompt reply based on the experience of having taken £45 billion out of my colleagues' spending plans already, so I must rebuff the hon. Gentleman's claims about spending. As to the repeated theme concerning my right hon. Friend the Prime Minister, I was present when he made his excellent speech confirming his leadership of the party. I was not startled by his remarks, and I checked the text to remind myself why.

"My aim is to see these taxes reduced and if possible abolished altogether. I make no promises about when we can do it … no certainty that we can do it in the near future. But it should be set down now as a clear objective of any Government that I lead that I wish to see an end to inheritance tax and capital gains tax."

My right hon. and learned Friend surely is aware that a considerable amount of taxpayers' money goes to the Opposition in Short money, so that they can reply to letters from him asking about the Opposition's policies. Should we not examine the value that taxpayers receive for that money? Should we not be getting answers from the Opposition about their policies, so that taxpayers can see and understand them?

I share my hon. Friend's feeling. I can only assume that the Short money all goes to the hon. Member for Hartlepool (Mr. Mandelson) and the many public relations assistants that he must employ. As we all know, the hon. Member for Hartlepool plays the role in the Opposition that they mythically believe my right hon. Friend the First Secretary will be playing in the Government.

Will the Chancellor now answer the question that he did not answer yesterday? Does he support the principle of abolishing inheritance tax and capital gains tax? Will he confirm that that would cost at least £3 billion? Will he further confirm that the main beneficiaries would be 5,000 people, who would get half the gains from abolishing the two taxes? Will he now tell us who is in charge of the Treasury and of tax policy? Where is the Budget being written—in No. 11 Downing street, No. 10 Downing street or No. 10a Downing street?

If the hon. Gentleman is having difficulty with his correspondence, he could have given me a reply just now when he was on his feet. Let me read again what the Prime Minister said:

"My aim is to see those taxes reduced and if possible abolished altogether. I make no promises about when we can do it."

"The Prime Minister set out these objectives as a long-term aim for the Conservative party".

Is the Chancellor aware of just how desultory and pathetic many of us find the exchanges between him and his shadow? Why cannot we have an economic debate conducted on real economic aggregates, such as employment, productivity and output? Surely that would be better than debates that seem to turn on whether the hon. Member for Dunfermline, East (Mr. Brown) is aware that there needs to be a half-point correction in interest rates so as to meet one of the Chancellor's many inflation targets.

We had a debate on the economy in the House yesterday. Unfortunately the hon. Gentleman seemed to have a prior and pressing engagement elsewhere and was not able to join us. Hardly any nationalists from Scotland or Wales were present from beginning to end, as far as I can recall.

To ask the Chancellor of the Exchequer what representations he has received about the registration of gilts. [32553]

Representations about the registration of gilts are rarely received.

I am grateful to my hon. Friend for that answer. Is she aware of the extent to which stock held on central gilts office accounts is exposed to the risk of misregistration and misallocation, whether intentional or otherwise? As the Pensions Bill contains no provisions relating to gilts custody, will she have discussions with the Bank of England to ensure that this real risk is covered?

My hon. Friend asks a specific and detailed question. I assure him that the Pensions Bill regulates fund managers. As my hon. Friend rightly points out, they are involved in the central gilts office; but thousands of gilts are traded each week in that office and so far not even one alleged case of a breach of security has been reported.

In view of the Chancellor's recent announcement that he intends to limit the scope of taxation on gilts, will the Minister assure us that the Government have no intention of extending, and will not extend, the rate of VAT in a similar spirit? Or does the Minister agree with the Chancellor that far too many goods are still exempt from VAT?

The hon. Gentleman will have to wait until the Budget.

I congratulate my hon. Friend on her well deserved promotion. She is one of the 1992 intake and, on behalf of that intake, I may say that we are delighted to see her.

I am grateful to my hon. Friend, who makes a good point. We consulted large and small holders of gilts. I believe that the announcement that has been made satisfies everybody.

To ask the Chancellor of the Exchequer what plans he has for further privatisation; and if he will make a statement. [32554]

The Government continue to look for opportunities to transfer public sector businesses to the private sector. For example, we are proceeding with plans to transfer the operation of British Rail to the private sector and to privatise the major part of the nuclear power generating industry.

It would be wholly irresponsible, would it not, to use the proceeds of the sale of public assets to fund tax cuts for the purpose of purchasing the result of the next general election?

I am rather surprised that the hon. Gentleman, who normally deals with these matters in considerable detail, poses a question in that way, because he will know that, since the process of privatisation was begun, what used to cost this country £50 million a week now is now generating income to the Treasury of £55 million a week in terms of receipts from taxes on profits. That is the benefit of privatisation that we support.

I congratulate my hon. Friend on his appointment and welcome him to his first Question Time. Does he agree that privatisation has been hugely successful both for taxpayers and for customers, that we should continue to privatise Government services wherever we can, and that we should export the successes of privatisation wherever we can?

I am most grateful to my hon. Friend for his kind words. We debated this matter yesterday and have already had an exchange on it. He is right to draw attention to the tremendous opportunity and contribution that the private sector has given to the Government—£455 million of savings have been posted so far. He is also right to attest to this country's great expertise in privatisation. It is good to see that Britain leads the world in that area.

If the Chancellor is still in charge of economic policy, and not the resident of No. 10a or No. 10 Downing street, will the Financial Secretary tell us whether, in principle, he supports the taxing of income from executive share options and whether he will deal with the scandal of taxpayers who are being ripped off under these privatisation processes?

Rewards in this area are extremely important. The hon. Lady touches on a subject which as she knows full well, will be dealt with when Sir Richard Greenbury reports. [Interruption.] It is not a question of Sir Richard Greenbury or anybody else being in charge. My right hon. Friend the Prime Minister gave a clear indication that he wanted that area to be investigated. He was entirely supported by my right hon. and learned Friend the Chancellor, who has given a robust defence of who is in charge of economic policy. He is and the Government are: the Opposition are not.

Further to my hon. Friend's reply to the hon. Member for Sunderland, South (Mr. Mullin), does my hon. Friend agree that all political parties are in the business of bribing the electorate? The difference is that Opposition Members do it by promising more and more public expenditure, whereas we do it by promising to leave more and more money in the pockets of the people. It will be for the people to make their choice at the next general election.

My hon. Friend touches on an interesting area. The only problem with his analysis, if I may take a point of difference with him, is that our economic policies, which are appealing to people, are based on sound fundamentals. We have real numbers to show where we are going; how anybody could be bribed by a blank piece of paper from the Opposition I do not know.

To ask the Chancellor of the Exchequer what consideration he has given to the name for a single European currency. [32555]

There is no need for a decision now on the name of a possible future single currency.

Does the Minister recall the Chancellor's recent comment that he was in favour of calling a new single European currency the crown or the shilling? Does that mean that he is now in favour of abolishing the pound? What discussions has he had with the right hon. Member for Wokingham (Mr. Redwood) on that over the past month or so?

My right hon. and learned Friend participates in the technical discussions, but the hon. Gentleman should not be too worried either way about the name, as the important point is that we are not committed to stage 3 of monetary union—unlike the Labour party, which is committed to monetary union and a single currency while at the same time being committed to inflationary policies. That combination would be a recipe for ruin.

In the centenary year of Wilde's greatest play, does the Paymaster General recall the advice of Miss Prism:

"The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational"?

Yes, particularly on the name of a single currency, where no decision is required and no decision is imminent.

Will the Minister ask the Chancellor of the Exchequer if he still agrees with the principle of European monetary union? If so, does he still agree with his remarks reported in The Times in February that the Conservative party has run out of ways of making it clear that there are no divisions?

The policy is absolutely clear and it has been repeated by my right hon. and learned Friend the Chancellor and by my right hon. Friend the Prime Minister both to the House and outside: we are not committed to stage 3 of monetary union. We achieved an opt-out during the Maastricht negotiations. A future Parliament and a future House of Commons will make that choice in the circumstances of the day.

To ask the Chancellor of the Exchequer what contribution he expects the private finance initiative to make to the provision of capital for infrastructure projects. [32556]

My right hon. and learned Friend the Chancellor of the Exchequer announced in his Budget speech that contracts leading to £5 billion of capital investment are due to be signed in 1995 under the PFI. He announced a further £1 billion of projects in January.

Will my hon. Friend confirm that the PFI is available across the national infrastructure and is available to every Department of State? Will he comment on the lamentable failure of the Opposition to come to grips with that excellent initiative?

My hon. and learned Friend precisely states the situation. The fact that we can post £5 billion-worth of new economic activity at a time when the Opposition are criticising us on investment shows the true effectiveness of our economic policy. I note that, with regard to private finance in the Prison Service, on the one hand the Opposition call for tougher measures on law and order and then announce that in principle they are against private money building new prisons.

The Minister will be aware that the Belgian high-speed rail link to the channel tunnel is being built and that the French high-speed rail network has been operating for a number of years, yet in Britain this week fundamental questions have been raised about whether our high-speed rail link to the channel tunnel can be funded. In those circumstances, does the Minister agree that the Government's priority should be investment in infrastructure before the abolition of capital gains tax and inheritance tax?

What is fundamental is that the high-speed channel rail link—a project valued at some £2.7 billion—is being actively competed for; the four original bidders are now down to the final two. Private sector companies want to make this investment and they will do so, to the benefit of our transport infrastructure.

Does my hon. Friend agree that the crossrail project offers one of the best prospects for private finance and is of particular importance for the regeneration of the economy of London and the south-east? Will he and his colleagues in government do everything possible to facilitate it?

My hon. Friend is right to point out how private capital can further develop London's transport infrastructure. I add to his joy on that, because we also have PFI help for 100 extra trains on the Northern line. Again, that is an example of how much-needed public investment in infrastructure has been achieved under this remarkable initiative.

To ask the Chancellor of the Exchequer when he next expects to attend an ECOFIN meeting; and what subjects are on the agenda. [32558]

I attended a European Council of Economic and Finance Ministers meeting on Monday 10 July at which a variety of subjects was discussed. My intention is to attend the next ECOFIN meeting on 18 September. As yet, no firm agenda for this meeting has been agreed.

Is it the Government's intention to keep the pound in the European currency fluctuation band even if ECOFIN decides to narrow that band in the next two years?

We have no intention of re-entering the exchange rate mechanism, at least for the duration of this Parliament. [Interruption.]

Order. This is wasting time. I call Mr. Cash.

Will my right hon. and learned Friend confirm that, at the most recent ECOFIN meeting, there was absolutely no question of the United Kingdom submitting to any kind of threats from other member states with regard to the possibility of the creation of a "hard core" in Europe? That would result in their imposing tariff barriers, penalties or sanctions on us, or trying to push us into a second-rate, disastrous exchange rate mechanism.

I can reassure my hon. Friend on all those points. The reports of ECOFIN meetings that I read when I return from them rarely bear much resemblance to what took place. I answer written questions in the House, however, and I suggest that my hon. Friend read those answers if he wants to find out what actually went on. It was reported that, at the last meeting, the French were threatening the imposition of all kinds of penalties on those who were not in the hard core, but I have yet to meet a Frenchman who has ever heard of the suggestion.

To ask the Chancellor of the Exchequer if he will make a statement on progress on the introduction of self-assessment of income tax liability. [32561]

Work is proceeding to the planned timetable for the introduction of self-assessment for personal tax, and the issue of the new tax returns in April 1997.

I thank my hon. Friend and his colleagues for the briefing sessions on self-assessment that they have been giving Members of Parliament. Can he assure businesses and, indeed, individuals that the introduction of self-assessment will not mean added burdens, extra form filling and the like? There are still some worries on that score.

One of the key elements of self-assessment is simplification. I assure my hon. Friend that, just as we have sought to inform Members of Parliament, there will be a major information campaign throughout the coming 12 months to inform all sectors of business and all private individuals about the changes.

To ask the Prime Minister if he will list his official engagements for Thursday 13 July. [32458]

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.

May I urge, yet again, the withdrawal of British troops from Bosnia—particularly because Bismarck's wise advice, quoted yesterday by our right hon. Friend the Member for Shropshire, North (Mr. Biffen), was ignored by his successors, so that eventually the road to Sarajevo was paved with the bones of Pomeranian grenadiers? We do not want that road to be paved with the bones of our young men.

I know that my hon. Friend has held a consistent view about the difficulties that we face in Bosnia, and that some others share that view. There can be no certainty about what will happen in the present circumstances, but I hope that I can tell my hon. Friend why I believe that it would be unwise for us to decide to take that action now.

Will the Prime Minister confirm that his leadership election pledge to abolish inheritance tax and capital gains tax would amount to £3 billion a year, and that almost half that £3 billion would go to just 5,000 people?

I understand that the hon. Member for Dunfermline, East (Mr. Brown) has been dancing around with all sorts of fraudulent and distorted quotations. I will make it quite clear to the right hon. Gentleman—as I have done, both publicly and privately, for some time—that when it is appropriate and we can afford to do so—[Interruption.] That is what I said. When it is appropriate and we can afford to do so, I wish to abolish both capital gains tax and inheritance tax. I repeat the point for the right hon. Gentleman: I have made that clear and it must wait for when resources allow. I make no apology for that. The distortion of capital gains tax will need to be tackled. Unlike the Labour party, I believe in trying to pass wealth down between generations, whereas it squirms and wriggles whenever we talk of any tax reduction.

I might remind the right hon. Gentleman that, during the leadership election, he said that he wanted to do that at the earliest opportunity. I do not know whether No. 11 Downing street or No. 10a has now changed the line, but, in any event, would it not be the most mistaken sense of priority to cut inheritance tax or capital gains tax when we know today that, as a result of Government cuts in spending, we are short of teachers and that classroom sizes are rising? Should not the interests of the many in a decent education for their children come before the Tory obsession with the interests of a privileged few?

I am astonished that the right hon. Gentleman thinks that home owners right across the country, increasingly hit by inheritance tax, are a privileged few. They will be interested to hear that they are a privileged few. It is true that they were a privileged few when the Labour Government were in power and many former council home owners, now home owners, would have remained without that privilege had we been left with a Labour Government. The reality is that the people of this country would like to see changes in those taxes and, when it is prudent to do so, we will change them.

As a matter of fact, the vast majority of people do not pay inheritance tax or capital gains tax and the right hon. Gentleman did not dispute that more than half the benefit would go to 5,000 people. As for tax, let me remind him that he pledged to cut tax at the last election, that he increased the standard rate of income tax by 7p and that only one tax cut has been introduced since the 1992 election: a cut of VAT on fuel by Opposition Members.

The right hon. Gentleman knows very well that he and his colleagues have voted against every tax reduction that we have introduced throughout most of the past 16 years. Even at the suggestion of tax cuts, one sees the instinctive reaction of Opposition Members. They hate the thought of leaving money in people's pockets. They would rather have it themselves to spend for themselves. I have made it clear that it is my ambition to abolish inheritance tax and capital gains tax as and when we can do it. My right hon. and learned Friend the Chancellor of the Exchequer has made that clear, too. It remains our ambition, and we will pursue it.

What message would my right hon. Friend send to the people of Wales, whose Labour Members of Parliament boycotted the House and Welsh Question Time at the beginning of this week? Would he suggest a forfeit for them, because surely their behaviour jeopardises the future representation of the Principality in the House?

There is no doubt that those hon. Members' behaviour was juvenile—sufficiently juvenile, no doubt, to qualify for nursery vouchers as soon as we fully introduce the scheme. When the Labour party thinks up ill-judged stunts such as that, it would do well to remember that two of its past five or so leaders have been Englishmen sitting in Welsh seats.

To ask the Prime Minister if he will list his official engagements for Thursday 13 July. [32459]

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

Following the rather dramatic departure of the Prime Minister's very good friend, the right hon. Member for Wokingham (Mr. Redwood), the right hon. Gentleman has appointed someone to the Welsh Office who, nominally at least, is from the same planet as the rest of us, but in so doing he has appointed the fourth successive Member of Parliament to that office who has no interest at all in Welsh affairs. Has the Prime Minister not shown that he has no confidence in Welsh Conservative Members of Parliament and is it not really a pathetic reflection on them?

I am sorry that the hon. Gentleman chose his question before listening to what might have been asked earlier. He might bear in mind the fact that we are one United Kingdom. It is perfectly proper for a previous leader of the Labour party to be a Welsh Member of Parliament seeking to be Prime Minister of the United Kingdom. It is perfectly proper for two English Members to sit in Welsh seats, one of whom became Prime Minister and one of whom tried to do so. It is only the Welsh nationalists who wish to wrap themselves up in a little country and damage that country and its prospects within the United Kingdom.

If the new directive to abolish internal frontiers is the Commission's response to the action it faces in the European Court for not having dismantled the frontiers under existing treaty law, what credible defence is there for Britain in talk of a veto, or the worthless Luxembourg declaration? If my right hon. Friend means to protect our sovereign borders against unchecked immigration, will he get the treaty amended? If not, he will face the wrath of not just the Euro-sceptics in the House but virtually the entire British electorate.

The European Commission has produced three proposals. It made it clear that the proposals must be taken together and must be agreed unanimously. Unless those proposals are agreed, there is no matter upon which the European Court can adjudicate. I can tell my hon. Friend that there must be unanimity and that that will not happen. The United Kingdom will veto the proposals.

To ask the Prime Minister if he will list his official engagements for Thursday 13 July. [32460]

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

Following the leadership election and his new-found determination to stamp his views and authority on the Cabinet, will the Prime Minister now tell us whether he agrees with the proposals of the Nolan committee on sleaze that amounts earned from consultancies by Members of Parliament should be openly declared?

I have made it perfectly clear to the House on a number of occasions since the outset that I favour greater transparency. I have made it equally clear that we will wait until we have the Select Committee report before I say any more.

Will my right hon. Friend join me in condemning tomorrow's rail strike, which will bring massive disruption to the country? Is it not revealing that, when it comes to standing up for the consumer and criticising the trade unions, new Labour remains totally silent?

That follows neatly from the previous question. There has been absolute and total silence from the Opposition Front Bench when it comes to looking after the interests of passengers. We have not heard a word about the RMT or ASLEF or about the inconvenience to passengers. All I can say is that it is a good job that one does not go to Australia by train.

To ask the Prime Minister if he will list his official engagements for Thursday 13 July. [32461]

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

In the light of today's report from school governors that teachers are being sacked and that class sizes are increasing, despite the Prime Minister's repeated assurances that neither of those things would happen, will the right hon. Gentleman now apologise to the British people?

The hon. Lady might well acknowledge the increase in resources to education year upon year: it is 50 per cent. up on the level that we inherited some time ago. She might also acknowledge the improved examination performance, improved teaching, improved choice and the improvement in the number of our youngsters going to university. All those things have magically waved by the hon. Lady without her apparently noticing them.

Has my right hon. Friend seen the report in today's newspapers, including The Daily Telegraph, that 100 terrorists could be released from gaol early? Does he agree that that is totally untrue and that there are no plans to release terrorists early into the community until they have served their full and rightful sentences?

The position is as it has always been and as the House knows. There is no question of an amnesty for prisoners in Northern Ireland. There are no political prisoners anywhere in the United Kingdom. We keep remission rates under review. That has been the case and it will remain the case for some time. Remission rates were introduced some time ago and, as I have said, we keep them constantly under review. I do not think that the time is yet right for a change.

We now come to Question 5.

Question 6—no, Question 5, Madam Speaker.

Yes, Question 5.

To ask the Prime Minister if he will list his official engagements for Thursday 13 July. [32462]

Whichever question number it may be, the answer is the same.

Does the Prime Minister agree that external regulation of the insurance market, as desired by both Lloyd's and the Select Committee, would increase the global credibility of the London market? Will he amend the Lloyd's Act 1982 to bring that about?

I do not think that I necessarily accept the hon. Lady's premise. It is clear that, because of the difficulties at Lloyd's over the past couple of years, we need to look carefully at the methods of regulation. However, until we have examined them properly, I am not inclined to make any suggestion of a changed regime.

Has my right hon. Friend noticed that the moment the opinion polls give even the illusion that there might conceivably be a Labour Government some time in the future, the trade unions queue up to threaten the customer and the patient with industrial action? Does not it frighten him as much at it frightens me that new Labour will be as much a pawn in the hands of the trade unions as old Labour used to be?

There is no doubt about the pre-emptive obeisance shown by the Labour party on the minimum wage, the social contract and a range of other issues. Of course, we do not have to fight with the trade union movement if we offer it exactly what it wants, when it wants it—and even before it has asked for it.