Object.

To ask the Chancellor of the Exchequer what is the United Kingdom's budget deficit as a proportion of gross domestic product; and if he will publish equivalent figures for other states in the European Union. [12671]

The UK's general government financial deficit for 1995–96 is forecast at 4¾ per cent. of GDP. In 1995, six European Union countries had lower budget deficits as a proportion of GDP than the UK, and eight had higher.

I am grateful to my right hon. and learned Friend for that reply. Does that not show that Britain has achieved a position at the top of the tree in relation to the budget deficit as a percentage of GDP? Will he acknowledge, however, that that is not the only statistic where we lead in the European Union? Will he confirm that, although our unemployment continues to fall, today Germany has announced that its unemployment has increased to 4 million?

My hon. Friend is right. We are reducing our fiscal deficit faster than any other major European country and today Germany has unfortunately announced that its unemployment has gone above 4 billion—I mean 4 million. [Interruption.] Let the Opposition take it as a warning. One of the main reasons why unemployment has risen in Germany is that it is suffering from a social chapter and all the additional on-costs on employment that this country has avoided.

We know that the Chancellor of the Exchequer is hellbent on reaching the 3 per cent. of GDP borrowing requirement—one of the essential criteria—at the earliest possible moment, but what does he now say to his colleagues in the European Union, especially Germany, which has just reported a 4.1 million unemployment level? In those circumstances, will he urge it to cut its public expenditure further and to raise taxation so that it can conform next year to the 3 per cent. of GDP borrowing requirement criterion?

I am a strong advocate of getting down towards a balanced budget and of low inflation. They happen to be the Maastricht criteria as well, but as we move towards achieving them it is doing no harm to this country's economy. Sound Conservative policies are giving us the fastest growth of any major European country and falling unemployment. The problems in Germany and France are that they have not made the structural changes in their economies that a Conservative Government have been making in our economy for the past 16 years. Those two countries need more privatisation, less Government intervention, no social chapter, no minimum wage, a flexible labour market and the conditions for enterprise that we have put in place.

Will my right hon. and learned Friend confirm that convergence of budget deficits is not the key factor determining whether a single currency would work, but that much more important is a convergence of business cycles, for instance?

Yes, I do. The criteria are important. I am one of the people who argue that, if economic and monetary union is to go ahead, it is important to have strict adherence to the criteria on budget deficit, inflation, GDP-debt ratio, and so on. I have also frequently said, however, that the countries should go into economic and monetary union only if they are genuinely compatible with each other in other ways and would benefit from doing so. That includes being in the same stage of the business cycles, as my hon. Friend said.

If the reports that the Government are to announce today—that public sector pay awards are to be about 4 per cent.—are correct, will the Chancellor explain how that will be funded, welcome as it may be to public sector employees whose pay has been squeezed? Following, for example, the local authorities settlement, does such an award not inevitably mean that other services will have to be cut or that teachers will be made redundant? Does that not add to the crisis facing many national health service trusts, which are unable to meet their current demands, never mind such a pay award?

With respect, the hon. Gentleman knows that I cannot anticipate my right hon. Friend the Prime Minister's reporting to the House on the review body's report, which he will do this afternoon, but we have had a straightforward, successful approach to pay for several years. We take the view that, in the public sector as in the private sector, pay settlements should be affordable and fair and should reflect the low inflation culture that we have created, but the hon. Gentleman must wait for the proper announcement from my right hon. Friend.

Will my right hon. and learned Friend confirm that the United Kingdom's position relative to other European countries is much better than the statistics that he has announced might suggest, because many other countries in Europe do not take unfunded pension liabilities into account when they calculate their budget deficits? If a common accounting basis were used throughout Europe, would not our budget deficit position be shown to be infinitely better than those of other countries?

Actually, for the purposes of European comparisons we endeavour to compare fiscal deficits on the same basis. Where other countries' accounting methods differ—they do not differ too much—there are moves to bring them on to the same basis. But my hon. Friend is right about funded pensions. When one looks forward and tries to judge the economic potential of a country, it is important to know to what extent it faces what is known as a demographic time bomb, especially if that will turn into unfunded pension demands that future working populations will have to pay. We have anticipated that possibility, with all the changes that we have made to pensions policy through the 1980s and into the 1990s. Our occupational pensions funds exceed the pension funds available to the whole of the rest of Europe, and we shall continue to ensure that we leave our successors a pensions liability that can be afforded and is properly funded.

The Prime Minister has said that public spending should fall to 35 per cent. of national income; the Chief Secretary to the Treasury has said the same. Does the Chancellor agree with the Prime Minister that that should happen—yes or no?

If the hon. Gentleman would do the Prime Minister the courtesy of reading the quotations from him in The Sunday Telegraph, and also read the full text of what I said to the journalists from the Financial Times, he would find that the two are indistinguishable. The Prime Minister's remarks and mine could be swapped with each other. We have a clearly stated policy, which we have both enunciated, of a 40 per cent. target, and beyond that to go as far as we can. The 40 per cent. will be hit in 1997–98. If we continue to restrain growth in public expenditure below the growth in the economy, a steadily declining share of GDP will be taken by the state. The Government are achieving that, and the high-tax, high-spending policies of the Labour party would take us in the opposite direction, as they always have in the past.

Does my right hon. and learned Friend agree that, although the current budget deficit figures are good in terms of international league tables, the cumulative figures are even better? If we consider the total weight of debt in accumulated budget deficits as a percentage of GDP, on which interest will have to be paid by future generations, is not this country almost the best in the developed world?

I can give a short answer. My hon. Friend is exactly right and puts his point clearly. The fact that we are steadily reducing our fiscal deficit means that we shall be on target to reduce debt as a proportion of GDP, and therefore to continue to reduce the burden of debt interest, as we have done in our period in office, which leaves room for economic growth and for other public expenditure, too.

To ask the Chancellor of the Exchequer what representations he has received regarding the use of special dividends in takeover bids; and if he will make a statement. [12673]

My right hon. and learned Friend the Chancellor has received a handful of letters on this subject, including one from the hon. Gentleman. These are receiving attention.

When City financiers freely admit that the use of huge special dividends is a tax abuse, when the Financial Times says that no public interest in served by the loophole whereby the taxpayer subsidises corporate raiders and when The Times calls the practice an outrage and a state bribe, why are the Government doing nothing about it? When will they act to close the loophole which may already have cost the British taxpayer £200 million?

I understand the concerns that the hon. Gentleman articulates, on behalf of those who may not understand the basis on which the mechanism is used. He will realise that, put simply, any dividend, whether special or not, is paid out of already taxed profits. So there cannot be the tax loophole that he identifies. If he is uncomfortable about the process of bids being made by one company to take over another, that shows his fundamental discomfort with the marketplace.

Does my hon. Friend agree that the fact that there are many more shareholders in this country than there were when the Conservative party came to office is a very welcome development in our society?

My hon. Friend is, as always, absolutely right on that point. When we came to office, there were 3 million shareholders; there are now 10 million. All the policies that enabled that increase to take place were opposed by Labour. Those shareholders now look forward to dividends without double taxation—a policy introduced by the Conservative Government. The Labour Government, on the other hand, believed in double taxation on dividends.

To ask the Chancellor of the Exchequer what representations he has received on the impact of his 1995 Budget statement on Leeds. [12674]

My right hon. and learned Friend the Chancellor has received a number of representations since he made his Budget statement in November from all parts of the country, welcoming the measures in the Budget.

Ministers may be content to reel off average figures, but is the Economic Secretary aware that the pay rates of thousands of workers in Leeds are still the lowest in the country? Some of my constituents earn well below £2.50 an hour and they have been hit hard by Tory tax rises for years. Is it not the case that it is not only the unemployed who are paying a high price for the Government's economic policies but thousands of people in work who are seeing their living standards fall?

The hon. Gentleman may care to learn that a family on average earnings is expected to be £4,500, or 40 per cent., better off next year than in 1978–79. When Labour was in power, real take-home pay grew not by 40 per cent. or 30 per cent., but by a miserly 1 per cent. Unemployment has fallen in Leeds in his constituency in the past year, and I hope that he will welcome that.

rose—

Order. It is to be regretted that the Minister widened what was a narrow question by her answer. I call Mr. Marshall, as the question was widened by the Minister.

Will not the Budget lead to a £9 a week increase in real take-home pay and a reduction in unemployment in Leeds and elsewhere in the United Kingdom, as well as faster economic growth in Leeds and elsewhere in the United Kingdom than in other countries in Europe?

My hon. Friend is correct. I look forward to the people of Leeds enjoying the benefits of the Conservative Government's economic policies. I only hope that the Labour-controlled local authority in Leeds runs the city rather better in the future than it does at present.

What representations has the Minister received about regard the Deputy Prime Minister's endorsement of the late payment of bills, a practice that wreaks havoc on small businesses in Leeds and elsewhere? Will she condemn that practice? When do the Government intend to bring forward legislation to introduce a legal right to interest on late payment? Will the Government continue to string the business community along?

This question seems to have become extraordinarily wide. If the hon. Lady had ever run her own business, she would have found that there are both good times and bad times, and sometimes it is harder to pay the bills than others. [HON. MEMBERS: "Oh."] Wait a moment.

With reference to the low paid in Leeds, has my hon. Friend had an opportunity to look at the statement from Unison on recent pay rises? Has she noticed the number of low-paid people in local authorities, particularly Labour authorities, including Leeds? Given that those authorities—particularly Leeds—support a national minimum wage, does she agree that this is a clear case of Labour saying one thing and doing another?

My hon. Friend makes exactly the right point. He may also be interested to know that, in Leeds, the local authority has decided to pass a lot of money into the reserves rather than spending it on services to the benefit of people in the city.

To ask the Chancellor of the Exchequer what assessment he has made of the economic impact of introducing a landfill tax. [12675]

The landfill tax will encourage the minimisation, re-use and recovery of value from waste where it is economically efficient to do so. Since the revenue will allow the main rate of employer's national insurance contributions to be reduced, the tax will provide for a further boost to employment.

Does the Minister agree that, notwithstanding adjustments to the standard spending assessment, the cost of the new tax will fall heavily on local authorities, which will find that the cuts in national insurance will not fully compensate for the new tax? Does she also agree that the people of Liverpool will face an extra burden of £1.5 million a year on their council tax bills? Is that not another example of a new Tory tax on an already overburdened people?

Local authorities will see a reduction in their national insurance contributions. As many of their services are labour-intensive, they will benefit in that way. Obviously, it is the instinct of Liverpool council to pass everything on to the ratepayer. That is not the instinct of Conservative councils. They will be in a good position to reduce the amount of waste that they send to landfill by seeking alternatives, such as re-use and recycling, which will reduce the amount of tax that they pay while they get the benefit of the national insurance contribution cut.

Is it the intention that the landfill tax should be paid by a local authority, if it has to move thousands of tonnes of waste from where the authority put it 10 years ago to another site? May I warn my hon. Friend that an extension to the Bluebell railway line in my constituency, which is loved by railway buffs and is an important tourist attraction in Sussex, may not be able to proceed if the answer to my first question is yes?

I will clearly have to look into the Bluebell line, because I would not want to inhibit my right hon. Friend's project. I can confirm that, in principle, it is a rule of the tax that all controlled waste sent to a registered landfill site will bear tax at an appropriate rate.

To ask the Chancellor of the Exchequer if he will make a statement on real personal disposable income levels in the United Kingdom between January and December 1995. [12677]

To ask the Chancellor of the Exchequer what is the Treasury's most recent estimate for the level of real personal disposable income in 1995. [12646]

Last November's Budget forecast showed real personal disposable income rising by 2 per cent. in 1995. We do not yet have the final figures.

Is it not the case that, after tax and inflation, someone on average earnings will see his or her real income fall by the sharpest rate in 1995 since 1981, or is it that the only real disposable income in which the Government are interested is that of the likes of Cedric Brown?

The hon. Gentleman is partly right and partly wrong. It is true that people's take-home pay fell last year. That is because earnings were restrained. That was responsible behaviour by trade unions and employers, which helped to cause unemployment to fall fast. None the less, real personal disposable income rose sharply last year. I guess that the hon. Gentleman does not understand that dividend income, which goes into pension funds that belong to people, has risen sharply, so people are better off in the assets they own.

The Minister's figures disguise the fact that the typical family is £800 a week worse off this year because of tax increases and that, despite the changes in the Budget, the family will be £670 a year worse off because of tax increases. In view of the fact that the Conservatives committed themselves, on page 5 of their manifesto, to reducing taxation further, are those tax increases incompetence or straightforward deceit?

I think that the hon. Gentleman got the decimal point in the wrong place when he was talking about £800 a week. He is on very weak ground. Take-home pay increased by 1 per cent. during the whole period of the last Labour Government. It has increased by not far short of 50 per cent. under the Conservative Government since 1979. That is very weak ground for the Opposition parties to try to fight on.

Does my right hon. Friend agree that the important thing is how this country has helped those who were unfortunate enough to be affected by the recession and that it is rich for the Opposition, who are always telling the Government to act, to complain when the Government have done so? They should consider how that is reflected in our performance when compared with that of every other European Union country.

My hon. Friend is perfectly right. In a recession, it was right to protect public services. If we had not taken the tough steps that my right hon. and learned Friend the Chancellor of the Exchequer took to correct the budget deficit afterwards, we would be facing a serious situation. The implication of the Labour party's questions is that Labour would not have put taxes up, in which case the debts would have been completely unsupportable. That is a nonsensical policy, like many of those put forward on the economy by the Labour party.

Is it not true that, by their firm action on the economy, the Government have held down interest rates and provided the lowest mortgage rates for 30 years? Will that not have a significant effect on disposable incomes? Has my right hon. Friend had any representations on interest rates from the Opposition?

Opposition policy on interest rates is an enigma wrapped in a mystery; they never tell us whether rates should move higher, lower or sideways. They have no views on the matter whatsoever. It is true that the firm handling of these matters by my right hon. and learned Friend the Chancellor of the Exchequer has meant that we have the lowest mortgage rates for a generation, inflation is in effect at its lowest rate since the war and the economy is growing faster than those of its main competitors in Europe. That is a formidable record.

Is it not the truth that the very assumptions behind the Government's claim that people are an extra £9 a week better off in terms of living standards have been shot to pieces, on the one hand by the Government's driving up taxes and charges—putting up rail fares, driving up the council tax by at least 8 per cent., as the Chief Secretary admitted, and with prescription charges going up as well, as we will see today—and, on the other hand, by the fact that millions of public sector workers will not now receive a full 4 per cent. increase in 1996? Those are the very figures on which the Chancellor's assumptions were based. Is it not the case that living standards are not safe with the Conservatives and that the £9 a week claim is yet another broken Conservative promise?

I can answer that very shortly. The answer is no, because the forecast took into account the matters to which the hon. Gentleman refers. If he wants to fight on living standards rises under different Governments, he is on the weakest possible ground for Labour. There was complete stagnation in take-home pay under the last Labour Government.

To ask the Chancellor of the Exchequer what is his latest estimate of the rate of growth of the economy in the current and next years. [12680]

I expect the economy to grow by 3 per cent. in 1996 and by 3¼ per cent. in the year to the first half of 1997.

Would my right hon. and learned Friend care to tell the House where those excellent figures put Britain in the league tables for growth both in Europe and among the Group of Seven countries? What advice would he offer to other Governments, and to those who yearn for Government, on the best way of maintaining such levels of sustainable growth?

We have had the fastest growth of any major European country since the recovery started in 1992 and we are likely to continue to achieve that. Forecasting is always a difficult business, but I suspect that we are likely to have the fastest growth in the G7. That is because of the combination of policies that we are putting in place and the excellent competitive position that British industry has achieved.

If growth is so superlative, will the Chancellor of the Exchequer tell the House why the CBI has said this morning that exports are falling across all regions? Why is Jaguar laying off, or putting on short time, 1,000 people? Why is the steel industry having to go on to short time? What is the gap between the rhetoric of the Chancellor and the reality of an ever-declining manufacturing base in this country?

The reason our exports are not doing so well is that other countries are not doing as well we are. When France, Germany and, to a certain extent, the United States of America do not achieve the sort of growth that we achieve, their markets do not expand quickly enough for our competitive exports to perform quite so well. Nevertheless, we expect—as does everybody—an increase in disposable consumer income this year. Everyone accepts that conditions for investment are very good. Manufacturing investment went up by 12 per cent. last year alone. It could achieve at least that this year. It is not true that we have a declining manufacturing base; manufacturing is continuing to do extremely well in this country and will do better when other countries begin to match our performance and provide the markets for our goods and services again.

If there is any danger of the Government not achieving their 3 per cent. growth targets, will my hon. and learned Friend not hesitate to make further reductions in interest rates? I should like to take this opportunity of congratulating him on how he has dealt with interest rates over the past 12 months.

I am grateful for my hon. Friend's last point. We set interest rates in order to achieve the inflation target and we shall continue to set interest rates on that basis. That is why—I think that everyone now accepts this—we shall achieve our 2½ per cent. inflation target by the end of this Parliament. We shall keep the target at 2½ per cent. or below during the next Parliament. Low inflation is helping to create the competitive position of British industry, the new jobs that the economy is creating, and the steady and continuous fall in unemployment that we have seen over the past 18 months.

Is it not true that Britain is floundering, and that the truth is a long way from the rosy picture painted by the Chancellor? Growth is lower than the Government predicted last year; Professor Patrick Minford—a Government adviser—said today that it will be less than 2 per cent. this year. Non-oil growth since 1979 has averaged 1.7 per cent.—the worst record of any post-war Government. Britain has fallen from 13th to 18th place in the international prosperity league. The reason for that is that Tory economic incompetence has let down the hard work of the British people.

The sadness for the hon. Gentleman is that he knows perfectly well that the truth is as I have just described it—it is difficult for a party in opposition, such as his own, to accept that. I am astonished to hear the hon. Gentleman pray in aid Patrick Minford, a man whom I have known and liked for many years; the two of us have never agreed on economic policy, as he is far to the right of me and far to the right of any of the wise men—or wise persons—who now advise me. One thing on which Patrick Minford and I are totally agreed is that the Labour party's recipe, with the social chapter, minimum wage, more Government intervention, higher tax and higher public spending, will be totally disastrous for this country and will put us way down any league table that anybody likes to produce.

Will my right hon. and learned Friend confirm that the estimates that he gave for the growth of our economy are based on an assumption that Britain will not be burdened with the obligations of the social chapter? Does he further agree that if we were to be burdened with those obligations, that would undermine our competitive position faster than any other single policy change and would reduce the prospects for cutting unemployment in this country more seriously than any other policy measure?

I totally agree with my hon. Friend. It is totally absurd for the Labour party to try to scoff at that argument. It makes an enormous difference to the jobs market if extra non-wage costs are piled on to the employer. Extra costs on top of wages for an employer in France are more than double those in the United Kingdom, which is why France has unemployment of more than 10 per cent. and is troubled with problems, while the unemployment rate in this country is falling so steadily. That message must be spread across the rest of the continent—meanwhile, we are benefiting, with more than 500,000 new jobs and an unemployment rate which is already down by 750,000 from its peak.

To ask the Chancellor of the Exchequer how much value added tax the Exchequer recovered from the tourism industry in (a) 1993, (b) 1994 and (c) 1995; and if he will make a statement. [12642]

There are no reliable figures available on the amount of value added tax paid by the tourism industry. Some indication of the scale is given by the net VAT paid by hotels and similar businesses. In the three years to March 1995 this amounted to £614 million, £668 million and £727 million respectively.

The Minister may be interested to know that I recently conducted in my constituency a wide survey of hoteliers and others involved in tourism. At the top of everyone's list was the problem of the imposition of 17.5 per cent. value added tax. That rate makes them uncompetitive compared with France, where it is 5.5 per cent.; Spain, where it is 7 per cent.; and Italy, where it is 9 per cent. Is it not time to review the imposition and the rate of VAT on our tourism industry?

The tourism industry has to pay tax just like any other industry—in some member states it is paid at a higher rate and in some it is paid at a lower rate. The tourism industry in this country is doing well. I am advised that in 1994, there were 21 million visitors to the United Kingdom—that figure was up on the previous year, and on the year before that. The industry does not need and will not get a tax privilege. The best thing that Governments can do is to stay out of the way, to stop over-regulation and to try to lower taxes generally, not just on tourism.

Tourism is extremely important for small businesses, especially small businesses of Ribble Valley. Does my hon. Friend agree that one of the great boosts to tourism is fighting hard to ensure that our small businesses involved in tourism do not suffer from the imposition of the minimum wage or the social chapter?

Yes. Tourism is, classically, an industry that would suffer from over-regulation and red tape, whether it came from an opposition party or by the back door from the European Community. We are, therefore, adamant in keeping the social chapter out of Britain so that it does not restrict the highly successful growth of the tourism industry noticed by my hon. Friend.

To ask the Chancellor of the Exchequer what recent estimate he has made of revenues accruing from the increases in fuel tax in the next 12 months. [12644]

The figures published at the time of the Budget show that the 5 per cent. increase in road fuel duties previously announced and confirmed in the Budget will raise £1,475 million in 1996–97, compared to a non-indexed base, and £850 million compared to an indexed base.

Is the Minister aware of the increase in bus fares and other travel charges as a direct result of the increase in fuel tax? Is he also aware that the people who suffer most from that are pensioners, widows and families on low incomes? Does he accept that the increase is a further hidden tax introduced by this Government, which only confirms that the Conservatives are the party of higher taxation?

The transport industry generally must bear its share of any increase in road fuel duties, which were pre-announced by my right hon. and learned Friend the Chancellor. The hon. Gentleman will, however, know that the fuel rebate to the transport industry, and to the bus industry in particular, is still valuable. The help and subsidies given by local authorities mean that buses are still a subsidised form of transport.

Will my hon. Friend confirm that, if he travelled in Europe, he would find that petrol and diesel are considerably more expensive than they are in the United Kingdom?

Yes, I can confirm that, despite the recent rise in petrol duty, we still have about the lowest excise duty rates on petrol of any European Union country.

In view of the severe weather experienced in some parts of the country, now and in the recent past, the Treasury must have an unexpected gain from spending on domestic fuel—not so much a windfall gain as a snowfall gain. Can the Minister estimate how much the Treasury has gained from the necessity to spend more on domestic fuel?

Cold weather payments are available and have been paid during periods of cold weather. The hon. Lady knows that help is given where it is most required.

To ask the Chancellor of the Exchequer if he will give official growth forecasts for 1996 for (a) the United Kingdom, (b) the EU and (c) Germany. [12645]

As set out in the November "Financial Statement and Budget Report", we expect the United Kingdom economy to grow by 3 per cent. in 1996. The European Commission forecasts European Union growth of 2.6 per cent. in 1996, and the latest official forecast for growth in Germany in 1996 is 1.5 per cent.

Does my right hon. Friend agree that the level of growth in this country will help the continued fall in unemployment? Is he aware that, in January, unemployment in France hit the 3 million mark and that it is forecast to hit 4 million this month in Germany? When before was British unemployment almost half that of Germany's? Is that not a ringing endorsement of the British Conservative approach of free markets and minimum labour regulation?

I strongly agree with the implication of my hon. Friend's question. I do not think that there has been a time since records began when the relationship between British and German unemployment was so favourable to us. It is no benefit to us that the German economy is slowing down, but it cannot be denied— German leaders are now saying this—that the over-taxing and over-regulation of that economy is largely the cause of its slowing down.

The Minister would not want me to nit-pick about the fact that the reunification of Germany has had a significant effect on the figures.

It would be unwise of the hon. Gentleman to nit-pick in the way that he suggests, because unemployment in the former West Germany is increasing too, I am sorry to say, so his argument would be invalid.

While I warmly welcome the figures given in my right hon. Friend's original answer, does he accept that we have the best possible chance of maintaining our comparative lead in the European Union if we give a high priority to continuing with our supply side policies—deregulation, privatisation and supply side reform?

I strongly agree. I would quote in aid of my hon. Friend's argument the article by Gavyn Davies, an economist who is respected on both sides of the House, I believe, in The Independent on Monday 5 February, headed:

"No reason to copy the fading German miracle".

On growth forecasts, both the Prime Minister and the Chief Secretary have told us that they believe that the public spending ratio should be 35 per cent. of GDP, but the Chancellor told the Financial Times that, in his judgment, 40 per cent. was the maximum that we should aim at. Which figure is right, and why cannot the Chancellor bring himself to mention the figure of 35 per cent.?

That is one of the most bogus of the Opposition's soundbites at the moment. It entirely depends on the timing. Let us get to 40 per cent. first and then, if the economy grows, as it continues to grow under the Tories, and if we restrain spending—my right hon. and learned Friend has been one of the toughest Chancellors in recent years in controlling spending—the proportion will fall further.

To ask the Chancellor of the Exchequer what representations he has received from business leaders regarding the economic implications of the social chapter. [12648]

The overwhelming majority of British businesses support the Government's decision to reject the social chapter because of its adverse effects on jobs and prosperity.

I am grateful to my right hon. Friend for that reply. Tomorrow, a group of senior business men will publish their opinions on the economic implications of various EU policies, including the ludicrous social chapter and the single currency. Will my right hon. Friend examine that publication and consider carefully the opinions therein of those senior business men?

I shall certainly do so. I draw my hon. Friend's attention to the Confederation of British Industry survey of the year before last, which showed that the majority of companies firmly opposed the social policy measures then under discussion under the social chapter. I am sure that their opinions have not changed.

Will the Minister recognise that the majority of people want a Government who want fair pay and working conditions, and that they will be glad when the present Government go?

I believe that the majority of people want a fair chance to obtain jobs and that they know that they come in an enterprise economy, not an over-regulated, over-taxed economy, which the Labour party would give us, and did give us when the country had the misfortune to have a Labour Government.

Does my right hon. Friend agree that the main difference between the Government's approach to the social chapter and the opposition parties' approach to the social chapter is that we want to leave it up to individual firms to decide whether to take up parts of that legislation, whereas they want to impose it on everyone?

That is entirely right. I am glad that the Leader of the Opposition has joined us because he showed himself to be profoundly ignorant of what the social chapter meant when he spoke to the CBI about it.

To ask the Chancellor of the Exchequer what is the latest estimate of the cost of zero rating for VAT purposes all sales by registered charities; and if he will make a statement. [12649]

There are no official figures on which to base any firm estimates.

Does the Minister accept that disability charities play a vital role in helping disabled people, particularly with care in the community? That being so, is it not invidious that disability charities should be used as tax collecting agencies and have their work set back because of the level of value added tax that they must pay?

I readily acknowledge the good work that is done by disability charities. They receive help through the tax system, such as relief from business rates. The whole charitable sector receives tax relief of more than £1.5 billion per year. The hon. Gentleman will accept that VAT is a broad-based tax. It would be wrong to give charities total tax relief on their business activities, which in some cases are in competition with ordinary commercial activities.

Does the Minister agree that charities have suffered as a result of the decline in the level of tax that they can recover on covenants, the imposition of VAT at the point of sale, and the triple whammy of the loss of money to the lottery?

I do not think that that is a decisive objection to our aim of, and achievements in, lowering taxes generally. The hon. Gentleman will know that lottery funding is welcome and has benefited a great many charities and at least counters any drop in revenue that is experienced across the sector.

To ask the Prime Minister if he will list his official engagements for Thursday 8 February. [12661]

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.

Will my right hon. Friend confirm that the Conservative and Unionist party will always stand four-square behind the Union? Is it not the case that the British constitution has evolved over centuries, but that it could take a matter of months for a meddling, middle-class public school boy to undermine or even destroy it?

We have made some evolutionary changes to the constitution in recent years, and I believe that there is scope for more evolutionary change in the years ahead. I do not believe that large-scale changes that would significantly alter the face of the United Kingdom and the Union as we know it are in the interests of the United Kingdom. Frankly, I believe that many of the plans that have been put forward do not address the difficulties.

Has my right hon. Friend seen the recent newspaper article about education by the Labour transport spokesman, which I shall quote— [Interruption.]—which I shall paraphrase. It refers to public schools producing more social cripples than any other form of education devised by man. Does my right hon. Friend believe that that is yet another veiled attack on the Labour leader and some of his Front-Bench colleagues, or is it simply another example of hypocrisy?

I feel as though I am in an air raid shelter on this occasion, speaking as a grammar school boy. My hon. Friend should not be too hard on the hon. Member concerned. I think that Labour Members are required to put their children down for private school these days so that they can remain in the vanguard of Labour education policy.

Does the Prime Minister agree that the Scott inquiry was entirely fairly conducted and that no criticism can or should be made of its processes or procedures?

As I said in the House on a previous occasion:

"I asked Sir Richard to carry out the report and I have confidence that he will do so"—

"thoroughly."

I must press the Prime Minister on that because he will know that, in the past few days, there has been a concerted attempt to rubbish the inquiry. Will he say unequivocally that he accepts that it was entirely fairly conducted?

I just said to the right hon. Gentleman:

"I asked Sir Richard to carry out the report and I have every confidence that he will do so"—

"thoroughly."

The Prime Minister is not even prepared to say whether the report is fairly conducted. When he says that we should await the findings of the report, let me remind him that he and his Ministers will have had the report for eight days, that four Government Departments have units working on it and that we are to get it a few hours before publication. I am not asking him to comment on its findings, but on whether it was fairly conducted. He set up the inquiry. He chose Sir Richard Scott. Is he now prepared to state that he is confident that it was fairly conducted? If he does not say that, the final vestiges of respect will be removed from the Government.

I know that the right hon. Gentleman had carefully prepared his third soundbite before my first answer, and I am tempted to refer him to the two answers I have just given. I made it clear that

"I asked Sir Richard to carry out the report and I have confidence that he will do so"—

"thoroughly."—[Official Report, 6 June 1995; Vol. 261, c. 15.]

To ask the Prime Minister if he will list his official engagements for Thursday 8 February. [12662]

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

Why cannot the Prime Minister publish such an important document as the report of the Scott inquiry a few days before the statement on it next week so that the Opposition, and indeed the House, can be properly informed? Is it not disgraceful that a few Conservative Members will have had that report for eight days, but the rest of the House will receive it on the day of the statement?

We plan to follow the precedents for a weighty report of this nature, and to permit Opposition spokesmen to see the report several hours before the statement is made. Of course, the House will also wish to study and comment on the report. That is why we propose to find time in Government time for an early debate on the report a few days after the statement has been made, once the whole House has had the opportunity to study the report and comment on it on the basis of detail, not of innuendo and smear, which has been the nature of the comments thus far from a number of Opposition Members.

Does my right hon. Friend agree that the House of Lords provides a useful and important advisory service for this country at very little cost? It has no power to overrule or frustrate the will of the House of Commons. Has my right hon. Friend heard of the old phrase, "If it ain't broke, don't mend it"?

I believe that this House should treat constitutional reform of any sort with care and consideration, and examine what the outcome of that reform might be before being committed to it. I do not believe that the reforms proposed to the House of Lords are relevant to the problems and opportunities facing this country over the next five to 10 years. It seems to me that the reform in question is irrelevant—and intended to be a spiteful, thoughtless irrelevance.

To ask the Prime Minister when he next plans to visit a Campbell Soups exhibition stand at a United Kingdom food trade fair. [12663]

I have no plans at present to do so.

The Prime Minister will be aware of the call for an international boycott of Campbell Soups and Fray Bentos products, arising out of the appalling decision by the company to close down the highly profitable Homepride plant in my constituency— having purchased it for £58.6 million only 11 weeks earlier. Are not the real stakeholders in Homepride not the greedy shareholders in America who do not give a damn about the people of Maryport, but the work force who have invested their lives in making that company a success and who are now being put on the scrap heap? Will the Prime Minister join the 341 Members of Parliament—a majority of this House—who have called on the company to reverse its decision?

I realise the extent of the disappointment that must be felt at Maryport over the decision. I understand that Campbell's has offered employees jobs at one of its five other plants—although, self-evidently, that will not be appropriate for many employees. I also understand the depth of the hon. Gentleman's concern for his constituents, but I hope that he and everyone else will bear in mind the fact that Campbell's has been in the United Kingdom for over 30 years. It employs more than 2,000 people here and has shown its commitment to the United Kingdom by investing more than £100 million here in the past 12 months. I would not wish to threaten and damage those investments, or the jobs that are safeguarded and are being created as a result of those investments.

To ask the Prime Minister if he will list his official engagements for Thursday 8 February. [12664]

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

Does the Prime Minister agree with the Social Security Secretary, who has described today's proposed cuts of £1 billion in the social security budget as devastating?

That is in no sense what my right hon. Friend has said about the outcome of the public expenditure round. The whole House will recall that, in recent weeks, I have been criticised by the Opposition for administrative costs being too high. Here we have a practical illustration of the Government seeking to cut administrative costs, in the interests of the taxpayer, to preserve the resources available for benefits—yet on that point the Opposition criticise me as well.

Does my right hon. Friend agree that it is the height of hypocrisy to maintain that one is committed to the elimination of state subsidy and then to do the reverse? Do not the recent decisions by the Transport Commissioner show that the Labour party— whether old Labour or new Labour, in Westminster or in Brussels—is committed to state subsidy and to Spanish practices?

The whole House will know of our concern about the Iberia decision. It is certainly not in the interests of the air travellers of Europe, and we have made that known to Commissioner Kinnock and to others.

To ask the Prime Minister if he will list his official engagements for Thursday 8 February. [12665]

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

In a statement to the House about the setting up of the Scott inquiry, the Attorney-General stated that matters of form and procedure were a question for the learned judge. Why will not the Prime Minister condemn unequivocally those, such as Lord Howe, who have sought to impugn the integrity of the learned judge and to attack the contents of his report before publication?

On attacks on the contents of the report, if anyone has predetermined what the contents of the report might be, it is the hon. Member for Livingston (Mr. Cook) and not my noble Friend Lord Howe.

Does my right hon. Friend recall the words of Lord Palmerston, who said that to be born British is like winning the lottery of life? Will my right hon. Friend now go further and say that to be born or to live in Milton Keynes is like winning the national lottery, and join me in welcoming the grant of £19 million to build what will undoubtedly be the best theatre outside London?

There may be some challenges about the scheme being the best theatre, but I know that my hon. Friend is proud of the scheme and I congratulate him on it. As for being proud of being British, I just hope that we do not reach the situation where to live in Scotland is to lose the lottery of taxation because it has to face extra taxation and a tartan tax.