To ask the Chancellor of the Exchequer what recent representations he has received urging him to make the Bank of England fully independent of Her Majesty's Government. [33405]

The Chancellor has received no such representations recently.

In view of that reply, and as the Government have been so successful in reducing interest rates and inflation over the past few years, does my right hon. Friend agree that there is absolutely no need whatsoever for an independent central bank in this country? Further, will he confirm that we are not legally obliged—under our opt-out—to become part of the central banking system of the treaty on European Union under stage 2 of economic and monetary union?

On the latter part of my hon. Friend's question, I confirm that he is right.

The Chancellor has previously said to the House that he does not believe that there will be any constitutional implications as a result of the creation of a single currency. Will the Chief Secretary tell the House whether the transfer of powers from the Government and from the House to an independent European central bank is not a significant constitutional change?

It is odd for the Labour party to lead on this particular matter. The right hon. Member for Dunfermline, East (Mr. Brown)—who, I take it, has gone to Scotland to try to find out what his party's policy is on devolution—recently said:

"The Treasury rather than the Bank of England must continue to set the targets for monetary policy as well as fiscal policy."

"The pound can go, says Blair, as he cuddles up to Kohl."

Will the Government resist arty claims that are made for an independent central bank? I congratulate my right hon. and learned Friend the Chancellor on his recent decision to reduce interest rates, which has been completely vindicated by events. Will he consider a further reduction, combined with explanations to the public—particularly to pensioners and to those on fixed incomes—that, although nominal rates have been cut, real rates and returns on savings are far higher than they ever were, when under a Labour Government they were negative?

My right hon. Friend is absolutely right—he remembers that clearly and accurately. What is more, the 20 per cent. rate of tax for savings has, in particular, helped pensioners with savings. My right hon. Friend is right: the Chancellor judged the situation correctly, to the great benefit of the country.

Is there not an inconsistency in the Government's position of denying the right of a group of central bankers in London to set interest rates but, as the Chancellor acknowledged in Florence, maintaining that Britain could be a founder member of the monetary union? If that were the case, interest rates would be set by a group of central bankers in Frankfurt. Where is the logic in those two positions?

My right hon. and learned Friend the Chancellor said, quite correctly, that, because of his management of the economy, Britain could be in a position to take that decision, if it chose to do so. Thanks to my right hon. Friend the Prime Minister, we can make that decision freely at the appropriate time. The real confusion lies not among the Liberal Democrats—who have always been consistent—but in the Labour party.

To ask the Chancellor of the Exchequer when he next intends to visit Harborough to discuss the effects of his economic policies on the local economy. [33406]

My right hon. and learned Friend has no immediate plans to visit Harborough. However, my hon. Friend's constituency is benefiting from the general strength of the British economy, with the longest run of low inflation for almost 50 years, steady economic growth and the lowest unemployment figures of any major European country.

On his way to Harborough—I advise him to visit soon—will my right hon. Friend look at the speech by the president of the German BDI, in which he noted that unemployment levels in this country have fallen by 20 per cent. since their height in the 1980s while unemployment in western Germany has increased by 10 per cent. in the same period?

Order. The House requires that the supplementary question should follow the substantive question, which in this case is about a visit to Harborough and its local economy.

Precisely, Madam Speaker. When my right hon. Friend visits Harborough to discuss the Government's economic policies, will he draw to the attention of my constituents the quotations from the speech to which I have referred? If my constituents do not know it already, will he remind them that investors from both within and outside the United Kingdom are queuing up to do business and to set up businesses in my constituency? Following his visit to Harborough, will my right hon. Friend draw the appropriate conclusions from the information that he gathers there, for the benefit of the Opposition?

I would love to visit my hon. and learned Friend's constituency. His constituents obviously have a good understanding of the reasons why unemployment has fallen steadily in that area and elsewhere in the past few years. As my hon. and learned Friend hints, it is typical of new Labour that it is about to embrace the German employment pattern at a time when the flaws and deficiencies in that system are beginning to appear. There are now more Germans out of work than at any time since the second world war, whereas unemployment is falling in this country.

To ask the Chancellor of the Exchequer if he will make a statement on the role of his inflation target in securing sustainable growth. [33407]

The inflation target of 2½ per cent. or less is set to deliver permanently low inflation, which is vital for delivering sustainable growth.

As those under 50 in this country who pay attention to such things are applauding the fact that, for the first time in their lives, inflation is at its lowest level—2.2 per cent.—and as the Organisation for Economic Co-operation and Development is applauding low inflation around the world, is it not odd that almost me only group that is not applauding the success of our inflation target is those on the Labour Front Benches? Could it be that Labour is the party of high inflation?

My hon. Friend makes a good point about low inflation and the fact that this country is enjoying a long spell of low inflation which brings stability to individuals and companies and helps to create jobs. I agree entirely with my hon. Friend's point about the Labour party. We all know that the Opposition have a vested interest in running down the economy and this country. When Labour was in charge, inflation soared.

The Exchequer will be aware that all the water and sewerage companies have produced their results for this year. They total £1.8 billion, which is four times the rate of inflation. How can that be fair in an industry which has increased its prices to customers above the rate of inflation every year since privatisation?

The hon. Lady's dislike of privatisation is well known. I remind her that, when her party was in charge and when it was running the then nationalised companies, those companies cost the taxpayer more than £50 million a week. Those companies now contribute £50 million a week to the public purse. They are providing a better service for customers and water industry companies have contributed much-needed investment.

To ask the Chancellor of the Exchequer what plans he has for alleviating taxation on small businesses. [33408]

The last Budget included plans to reduce further the tax burdens on small business.

Will my hon. Friend join me in welcoming the fact that our corporation tax is among the lowest in the world and in welcoming the Government's recent announcement about reducing rates on small businesses in rural areas? Does he agree that small businesses do not want extra bureaucracy and extra regulation—particularly that which would flow from adopting the social chapter and other social legislation from Europe? [Interruption.] Does that not illustrate the fact that the Labour party cannot be trusted when it comes to small businesses?

My hon. Friend takes entirely the right line. The noises from the Opposition Benches show that Opposition Members completely distrust private enterprise and lack any understanding of it. Indeed, most of them have had no experience of operating in it.

Given the fact that the VAT registration threshold has not been raised in line with inflation, is the Minister happy that another 14,000 businesses have been forced into the VAT net?

Many small businesses are pleased that we have increased the threshold for VAT. That has relieved them of unnecessary bureaucracy and has expanded their opportunities to be competitive in the marketplace.

To ask the Chancellor of the Exchequer what is his latest estimate for VAT income for (a) the current financial year and (b) each of the previous two financial years; and if he will make a statement.[33409]

VAT receipts for 1994–95 and 1995–96 were £41.8 billion and £43.1 billion respectively. The latest published forecast for 1996–97 is £47.9 billion.

I welcome the rising trend announced by my right hon. Friend. Does it not compare favourably with the dismal stories put about by the dismal Johnnies in the Labour and Liberal parties—stories about declining economic activity and falling VAT receipts? Do not the figures reflect a more buoyant economy and augur well for a more cheerful future when tax cuts may in due course be made for everyone?

My hon. Friend is right. The strong and buoyant figures for consumer expenditure are feeding through into higher VAT receipts. When my right hon. and learned Friend comes back from Lyon, he will no doubt read about my hon. Friend's enthusiasm for tax cuts.

Although I welcome the increase in VAT takings and realise that money talks, will the Minister undertake to review VAT on specialist equipment for the blind-deaf, so that they can play a fuller part in a society in which they are so often isolated?

I am sure that the hon. Gentleman knows that equipment specially adapted for disabled people is zero rated—but we keep these matters under review and his comments will have been noted.

Although I am glad that VAT receipts are rising, will my right hon. Friend confirm that they are still a relatively small proportion of total tax receipts? Is he aware that in Social Democrat Sweden the VAT rate is 22 per cent., and it is on everything?

My hon. Friend is entirely right about that. Not only do the Swedes have a much higher standard rate but they do not have our zero rates, so their tax system is a great deal more regressive than the United Kingdom's.

Will the Minister confirm that he is considering introducing a statutory limit of six years on the refund of VAT campaigns? Will he confirm that he is doing so to prevent a haemorrhage of public funds and repayments, to close the gap on avoidance schemes which is opening up and to try to shore up the weak public finances that are undermining the Government's ability to do anything positive in the public sector?

In answer to the original question by my hon. Friend the Member for Ealing, North (Mr. Greenway), I announced that VAT receipts over the past few months have been extremely buoyant. For April and May, they are 12 and 15 per cent. higher, respectively, than a year ago. So I do not understand how the hon. Lady can refer to a haemorrhaging of national finances. If she is saying that the Opposition are against stopping loopholes and avoidance schemes, that too is a most interesting announcement by an Opposition Front Bencher.

To ask the Chancellor of the Exchequer if he will make a statement on his policy for interest rates. [33410]

Interest rates are set to achieve the inflation target of 2½ per cent. or less.

I thank my right hon. Friend for that reply. Does he agree that low interest rates and low inflation are the prerequisites for any successful economy? Will he further agree that both conditions are currently in place, which is probably why the British economy is outperforming our principal competitors in Europe? Would he care to say what would happen to the economy if the policies of the Opposition, especially the social chapter, were implemented?

To quote Aneurin Bevan, we do not need to look in the crystal ball, we can read the book in relation to the Opposition's policies. When they were running the economy, they achieved 27 per cent. inflation. When the Organisation for Economic Co-operation and Development reported on Britain in 1979, among its many criticisms of our economy was the fact that inflation was rising to 11 per cent. again. In its report this year, it says that the

"United Kingdom has … become a more flexible and less inflation prone economy."

I welcome the reduction in interest rates and offer my congratulations to the Chancellor on his relationship with the Governor of the Bank of England, which is a pretty suitable one at present; but will he bear it in mind that the amount of research and development has declined during the past few months, a serious aspect, and that plant and machinery expenditure needs to be much higher? To deal with the shortcomings of the Government's economic policy, particular attention must be given to some form of capital allowances for plant and machinery in particular.

One of the most satisfactory features of the last period—indeed, since 1979—has been the increase in the efficiency of capital investment, which is increasing faster in Britain than in other countries. It is also very satisfactory that in the last recession Britain did not cut its investment or its research and development as much as in previous recessions. Those are both good signs for the long-term health of the economy.

Does my right hon. Friend agree that it is a great triumph for Conservative policy that interest rates are now at a historic 30-year low? Will my right hon. Friend contrast that with the position in Germany, where industrialists are making it clear that they now realise that Germany's commitment to the social chapter is costing it hundreds of thousands of jobs? The leader of the Labour party, in his recent visit to Germany's BDI, the convention of German industry, made it clear that he was still committed to the social chapter. His views are the views of failed old Germany's social democratic socialism.

It was indeed a comic scene when the Leader of the Opposition, having gone to Germany to tell the German Chancellor that he would sign up to everything in Europe, then had to listen to a speech by Mr. Heinkel—during which, I believe, he made his excuses and left—in which Mr. Heinkel paid warm tributes to the British economy. It would have been better if the Leader of the Opposition had stayed and listened.

Does not interest rate policy depend critically on sound public finances? As the Chancellor has admitted that there was a mistake in his Budget calculation of tax revenues, as this year's borrowing races ahead of the Government's forecast, and as the right hon. Member for Wokingham (Mr. Redwood) warns in an article in Public Finance tomorrow that the Government have borrowed an extra £100,000 million during the past three years, is it not high time that the Chief Secretary quantified the mistake that was made in the Budget forecast, came clean with the House and started to tell us the true state of the public finances, and accepted the case that Labour has put forward for an independent audit of the books before the Budget in November?

It will do the hon. Gentleman a great deal of good to learn economics from my right hon. Friend the Member for Wokingham. I am glad that he is reading his articles with attention. They are a very different kind of economics from those that he used to believe in. It will do him good to read my right hon. Friend's speeches. If the hon. Gentleman wants to look at public finances, he should first explain why, under the Labour Government—the only thing by which we can judge him—in every year on average, public borrowing was higher than it has been under the Conservative Government.

My hon. Friend the Member for Oxford. East (Mr. Smith) was at school then.

The hon. Gentleman was indeed at school, learning the wrong economics which I am now glad to find that he is correcting by reading my right hon. Friend's speeches.

To ask the Chancellor of the Exchequer what are his objectives in the field of taxation; and if he will make a statement. [33411]

We aim to reduce the basic rate of income tax to 20p in the pound and abolish capital gains tax and inheritance tax. The Chancellor will make progress towards these objectives when it is prudent and sensible to do so.

I congratulate my hon. Friend on that answer, which is good news for current taxpayers and taxpayers for many years ahead. Will my hon. Friend confirm that he has no proposals for hidden taxes and that he does not have anything up his sleeve, unlike the Labour party, which has so many proposals up its sleeve that it can hardly get its arm in it?

My hon. Friend rightly reminds us that the Opposition are trying to fix their policies, as usual—a state of division and divide. He is right about hidden taxes. We have no plans for a tartan tax, teenage tax, European jobs tax, car tax or a windfall tax. What are dangerous are the taxes that we can see coming, on the successful and the enterprising: the higher-rate taxes proposed for those who earn a little more than £30,000.

Why does the Minister believe, like the rest of his ministerial colleagues, that a tax bribe before the next election will do the trick for them, when the large majority of people are paying a greater percentage in taxes than they were in 1979? That is a dismal failure, and it is unlikely that the electorate will forget it when the election comes.

That really is rich coming from the hon. Gentleman, who is a member of a party that disguised its own tax burden on the British people by borrowing so much money—to the equivalent of another 10p on the basic rate of tax. My right hon. and learned Friend the Chancellor is not in the business of playing fast and loose with the British economy. He made our position about future tax reductions absolutely clear in his Mansion house speech, and I commend that excellent text to the hon. Gentleman.

To ask the Chancellor of the Exchequer if he will make a statement on his estimate of the rate of inflation for the remainder of 1996–97. [33412]

In the previous Budget, my right hon. and learned Friend the Chancellor forecast that underlying inflation would fall from 2¾ per cent. in the second quarter of 1996 to 2¼ per cent. by the second quarter of 1997. I remain confident that we are on course to meet our inflation target of 2½ per cent. or less.

In the light of that reply, does my hon. Friend agree that the rate of inflation still matters very much? Does she further agree that, if the Government were unwise enough to adopt the policies proposed by the Labour party and the Liberal Democrats, this country's trading position and its economic prospects generally would be fatally damaged?

My hon. Friend is quite correct. Indeed, his analysis points out the terrible policies that the Labour party has on the economy, as indeed it has on so many other aspects of British life. He might be interested to know that the average rate of inflation when Labour was in control was just over 15 per cent., which meant that the average supermarket bill for an ordinary family rose by nearly £1,300 in two years. Those are the disgraceful consequences of the Labour party's absence of policy on inflation, as it is on every other aspect of the economy.

Does the Minister recognise that that inflation figure was achieved by taxing the average British family by an extra £2,000 a year? Do not most British families think that that taxation policy is hurting, that it is unfair and that it is not working?

The hon. Gentleman always fails to recognise how much better off people are in this country now when we have run the economy so well. He also likes to deny that the average family will be some £450 better off this year. Our economy is growing when the economies of many other countries have stalled. Our economy is creating jobs; unemployment is rising elsewhere. The hon. Gentleman should congratulate the Government rather than always trying to run the country down.

To ask the Chancellor of the Exchequer if he will initiate studies on the relative economic performance of west European nations that have decided, after referendums, not to join the EU. [33414]

The country to which my hon. Friend refers is Norway, which decided not to join the European Union after a referendum. We have not conducted the study that my hon. Friend describes.

Should not the Chancellor of the Exchequer be genuinely alarmed that, in the European Union, almost 20 million people are unemployed—more than 11 per cent.—and rising; that in Britain, partly because of his natural brilliance, of which he is well aware, and also because we were chucked out of the exchange rate mechanism, unemployment is around 8 per cent.; and in Norway, which voted no against all the advice from the experts who said that it had to join to save jobs, unemployment is 4.5 per cent. and falling? Is that not a certain indication that further Euro-integration is simply a recipe for mass unemployment and despair? When will the Government wake up?

Like Norway, this country has a good record on falling unemployment. Like Norway, we are determined not to catch the continental disease of tying up our labour market with regulations and red tape to such an extent that competitiveness and unemployment rises.

What on earth possessed the Chancellor of the Exchequer to say the other day that Britain ought to be one of the first countries to join a European single currency? Do the Government not realise the madness of the exchange rate mechanism? The last time this Tory Government tried to shadow the mark, the last Chancellor and the Prime Minister together lost £10 billion in an afternoon, and never went near a betting shop.

The hon. Gentleman has described Labour party policy on monetary union fairly accurately, but—not for the first time—he has not quoted my right hon. and learned Friend the Chancellor accurately. What is true is that this country would be among the first to qualify for monetary union under the convergence criteria, if we chose to do so. That gives us the advantage of being able to choose from a position of strength whether to take the enterprise any further.

To ask the Chancellor of the Exchequer which prices of which goods are monitored for the retail prices index. [33415]

The prices of over 600 representative goods and services are monitored each month to compile the retail prices index. For example, a variety of vegetables, such as peppers, are in the index. Details of the items are published each year in "Retail Prices Index Business Monitor".

I thank my hon. Friend for her reply. Will she thank and congratulate whoever included the red pepper in the retail prices index? It reminds us of Labour every single day, because it is bitter and twisted.

My hon. Friend has put the case extremely well. Let me mention a couple of other things that would happen if the red pepper party, alias the Labour party, ever came to power. What would happen is exactly what has happened in the past: savings and pensions would be wiped out, unemployment would rise, companies would leave the country and the United Kingdom's competitiveness would fall.

Is it not true that the current inflation rate has been reached through the crushing of the consumer expectations and hopes of the British people by adding £2,000 per annum to the average tax bill of a British family? Is it not also true that, in re-estimating the level of inflation, the Chancellor should re-estimate the level of the public sector borrowing requirement, which is expected to be £5 billion higher than his original estimate, and was £10 billion more last year than he had estimated? Is it not true that the national debt now amounts to £380 billion, having increased to that level over the past five years? We are storing up massive inflation for the British people.

I always find it extraordinary when the hon. Gentleman is so cavalier about some of the successes of our economy. I remind him—as I shall no doubt do on many occasions—that, in the past 17 years, people have become considerably better off. They have more goods at home than they had in the past, and they will be £450 better off in the coming year. We have brought down the borrowing requirement. When we look at the list, which country do we find has the lowest mortgage rate for 30 years, which has the lowest basic rate of tax for over 50 years, which has lower unemployment than any other major European country and which has had the longest period of low inflation for 50 years? Which country is number one in Europe for foreign investment? The answer is this country, under a Conservative Government.

To ask the Chancellor of the Exchequer what assessment he has made of the findings of the Organisation for Economic Co-operation and Development report on the state of the British economy. [33416]

The recent OECD report on the British economy confirmed and endorsed the success of the Government's economic policies across a broad front. The OECD expects the economy to continue growing at a healthy rate, with low inflation and falling unemployment.

Has my right hon. Friend had an opportunity to evaluate the OECD report of 1979, and has he compared that with the report this year? Does not such a comparison show that in the intervening 17 years of Conservative Government, almost every economic indicator has improved substantially? Have not living standards improved substantially in that time? Is it not self-evident that if living standards are to double in the next 25 years, as is the Prime Minister's wish, we must have a Conservative Government for the next 25 years?

My hon. Friend is absolutely right. No one would have dared to make such a well-founded pledge, as my right hon. Friend the Prime Minister has, in 1979 when, as the report shows, the economy was in collapse. You would rebuke me, Madam Speaker, if I read much of the report, but I remind the House that the OECD said:

"By the end of 1978, British external competitiveness was at its worst level since 1966"—

Can the Minister confirm that in 1979 approximately half the number of people were out of work than is the case today? Can he confirm that five years ago, the work force in this country was 26 million, but that today, it is only 25 million?

There are more people in work now than there were then—[HON. MEMBERS: "NO."] I believe that that is correct; I shall write to the hon. Gentleman if I am not correct. Much more fundamental is the point that the economies on the continent of Europe that have followed the advice of the hon. Gentleman and his Front-Bench colleagues since 1979 have had a far worse unemployment record during those difficult years than we have. That is the point. What matters is the future. Who is better now? We are better than the social democrat countries. Who will be better in future? The Conservative answer brings low unemployment; the Opposition's brings high unemployment.

Does my right hon. Friend agree that one of the key factors in the improvement in the competitiveness of the British economy has been the success in controlling inflation? Does he also agree that that success would be put at risk if we allowed wage rates to rise by caving in to disputes in the public sector, whether in the Post Office or on the tube, or if we introduced a minimum wage which would put up employers' costs and feed through into inflation? Would it not be a disaster to let either of those things occur?

The 1979 report described truthfully the disastrous state of British labour relations. The Labour party should be called on clearly to condemn today's unnecessary strike on the underground system because sensible mediation is on offer from the employers. I suspect that it will not do so because many Labour Members are sponsored by the relevant unions.

Given that the OECD has said that the British Government's deficit is the second highest in the G7, has the Chief Secretary any confidence that the Government will meet their borrowing target this year, when they have missed the target in each of the past four years?

The public sector borrowing requirement is on a steady downward trend; there is nothing wrong with the public finances of this country. The hon. Gentleman would have a greater right to criticise if at any time in the past few years he had given an opinion on whether tax should be higher or lower and on whether interest rates should be higher or lower, or if he had given any other opinion on the management of the economy. The right hon. Member for Dunfermline, East (Mr. Brown), who is unable to be with us today because of Scottish problems, has never given advice on those issues.

To ask the Chancellor of the Exchequer what is his latest percentage target for cuts in overall Government spending for the financial year 1997–98. [33417]

Our plans are to hold overall public expenditure in 1997–98 at the same level in real terms as it was in 1995–96. The Government's target is to reduce general Government expenditure as a share of national income to below 40 per cent., and to reduce it further if possible.

Will my right hon. Friend note that defence expenditure is a lower proportion of general expenditure than it has been previously? Has he studied the defence White Paper which shows that, in real terms, expenditure on defence for the three years from now will remain more or less constant? Those figures are based on an underspend last year of £500 million and, therefore, represent cuts. Can my right hon. Friend assure us that the Treasury regards the defence of the realm as the first duty of any Government? Will he ensure that funds are made available to our overstretched armed forces to improve recruiting and to give them the equipment they require to carry out their extremely difficult task?

I pay tribute to the way in which the armed forces and my right hon. Friends in the Ministry of Defence have reshaped the forces after the end of the cold war to ensure that that first duty is properly met. I can give my hon. Friend the assurance that no Conservative Government will take risks in that area.

What estimate has the Minister made of the increased spending required for bovine spongiform encephalopathy payments?

The best estimate that I can give the hon. Gentleman on BSE is that additional spending this year will be around £1 billion, gross spending over the next three years might be around £2.5 billion, or around £2 billion net of predictable receipts from the European Union.

To ask the Chancellor of the Exchequer what has been the effect on the average mortgage payment of recent reductions in interest rates. [33418]

The cuts in mortgage rates over the past year will leave the average mortgage payer about £400 a year better off.

Does my hon. Friend agree that average mortgage payments are now about £107 a month lower than they were in October 1990—even allowing for mortgage interest relief at source—that the affordability index is now excellent, particularly for first-time buyers and that there is strong evidence that they are coming back into the market in large numbers?

Yes, my hon. Friend is spot on. House prices are relatively low compared with average earnings, so property is a good buy. Meanwhile, the four interest rates cuts since the Budget have been followed by mortgage interest reductions. That is good news for millions of borrowers and has helped to continue the steady increase that is fully sustainable in house prices.

In spite of the fact that our interest rates are higher than those in any G7 country apart from Italy and that the City expects interest rates to rise in the next year, is it not the case that interest rates have not fallen in order to help mortgage payers, but because of fundamental weaknesses in the economy with manufacturing in recession and manufacturing investment in decline?

The hon. Gentleman may be disappointed that the British economy is now performing extremely well by international and historic standards. Mortgage interest rates are now below 7 per cent.—the lowest level for about 30 years—compared with a rate of more than 11 per cent. under the last Labour Government.

May I congratulate my right hon. Friend on his success in reducing interest rates? Does he agree that that is best achieved by applying a national monetary policy to national economic conditions and making sure that we have a balanced economic framework to produce the best outlook for a generation?

I agree that it is an impressive achievement in monetary policy. My hon. Friend also knows that we have no immediate plans to transfer monetary policy to anyone other than the Treasury.

To ask the Chancellor of the Exchequer what fiscal proposals he has to stimulate manufacturing output. [33419]

All businesses will benefit from the tax cuts in the Budget and the four interest rates cuts announced since last December.

Does the Minister accept that Britain should be first and foremost a manufacturing nation? Notwithstanding contributions to the economy from other sectors, is it not a tragedy that our manufacturing base contributes less to the economy than financial services? Is it not the case that although manufacturing industry does not exist to create jobs, it must create wealth and we are slipping too far behind?

In reply to the hon. Gentleman's first question—what a contemptuous statement on all those who work in the City, banking and other financial institutions and who generate so much of our invisible wealth. However, I share the hon. Gentleman's enthusiasm for manufacturing industry. It is a pity that he did not mention Rockwell Light Vehicle Systems which has invested £7.9 million in the west midlands, Everset Frozen Food, an American company which has invested £28 million there and Mann and Hummel, a company that makes air filters, which has invested £13 million in the west midlands. Nor did he mention the 58 German companies fleeing the social chapter to invest in manufacturing in the best place in Europe to make things.

Is my hon. Friend aware that it is not so much special fiscal measures, but the right overall economic climate, with low interest rates, low inflation and minimum regulation that is necessary to support our manufacturing?

My hon. Friend is entirely right. The flexibilities in the British labour force and the excellence and strength of our economic policies have made us attractive and the number one place for inward investment in Europe.

To ask the Chancellor of the Exchequer what is his assessment of the Coopers and Lybrand report on the venture capital industry. [33420]

The report finds that the United Kingdom venture capital industry is the largest in Europe and has made an important contribution to the growth of most of the venture-backed firms surveyed.

Will my hon. Friend confirm that the Government have given very strong psychological support to venture capital companies, the trust and systems and that the companies promoted under those systems have shown astonishingly above average growth in comparison with general indices?

My hon. Friend is entirely correct. The venture capital trust that the Government have backed has taken £150 million and the enterprise investment scheme is prospering. The British venture capital trust recently commissioned a report from Coopers and Lybrand that showed that over the four years from 1990 to 1995, sales of venture capital-backed companies had risen by 34 per cent.—five times faster than the FTSE 100 companies. That shows the tremendous response of those venture capital companies.

To ask the Prime Minister if he will list his official engagements for Thursday 27 June. [33395]

I have been asked to reply.

Does the Deputy Prime Minister agree with the Secretary of State for Scotland's recent statement that, if the Scottish people endorse a Scottish Parliament in a referendum, no future Conservative Government would abolish it? Will the Deputy Prime Minister give a commitment on that?

I am very interested to hear the hon. Gentleman's view of Labour's policy in Scotland, but that was yesterday's statement. Labour's policy in Scotland is a shambles. The right hon. Member for Sedgefield (Mr. Blair), the Leader of the Opposition, when campaigning for the Labour leadership in 1994, said:

"I believe firmly that we should legislate in our first year for the establishment of a Scottish Parliament."

"We have no proposals for a referendum because we want to legislate early and quickly for this outstanding commitment, and that is clear party policy."

To ask the Prime Minister if he will list his official engagements for Thursday 27 June. [33396]

I have been asked to reply.

Is my right hon. Friend aware that there is a side effect of such a policy which would anger the people of Kent, who would find themselves with a regional Government run from Guildford on the other side of London? Is he also aware that the people of Kent and those in the other English regions would be fed up with more politicians, bureaucrats and taxes imposed on them?

I can allay my hon. Friend's anxieties because the next Government have no plans to introduce regional assemblies.

Can I ask the Deputy Prime Minister about Government policy, which will give him time to calm down? Will he confirm today's reports that the Treasury has told the Ministry of Defence that cuts of £1.6 billion in defence equipment will be required this year if the sell-off of married quarters is blocked? Does that not show that the purpose of the sales has nothing to do with the good of service personnel, but is simply a short-term fix for the Government's finances? Is it true that service families could be required to move against their will for non-military reasons so that an estate can be parcelled up for sale as a whole?

May I, in the time-honoured courtesy of the House, welcome the hon. Gentleman to the Dispatch Box in the absence of any member of the shadow Cabinet prepared to come here today? [Interruption.] Again, following the time-honoured courtesies of the House, may I say to the deputy leader of the Labour party—who has sadly had an accident to his leg and has received excellent treatment under the NHS—"Come back soon, John. We know it's hurting, but we know it's working" [Interruption.]

Order. The deputy Prime Minister has a question to answer.

Madam Speaker, that is a timely reminder of the reason why I am standing here. The hon. Gentleman and his party are keen on a fundamental defence review—we do that every year.

Madam Speaker, I know that I am new at this, but I thought that the Deputy Prime Minister was paid a lot more than I am to answer questions. We are dealing with real people, such as the RAF officer's wife—now widowed—who moved for military reasons eight times in two and a half years, and a British Army colonel with distinguished service in Bosnia who moved 23 times in 23 years for military reasons. They did that because they had the comfort of knowing that suitable quarters would be available at the right time and in the right place. Has the deputy Prime Minister not received the letter from the Secretary of State for Defence to hon. Members today, which states that

"too many homes are in poor condition"?

I notice that the hon. Gentleman has just told the House that £100 million-worth of renovation is not adequate for the task. No wonder the shadow Chancellor is not in the House to hear him make that observation. Everyone who enters service life knows that, as a condition of service, they may be expected to move as part of their obligations as members of Her Majesty's armed services.

Does my right hon. Friend think that the education reforms announced this week will help to raise education standards in Islington to a point where the Leader of the Opposition no longer feels it necessary to send his children out of the borough and across London every day?

My hon. Friend makes the critical point. Labour controls most of the education authorities in this country and if it had the first idea how to raise standards, it would not be calling on the Government to do it—it would get on and do it

To ask the Prime Minister if he will list his official engagements for Thursday 27 June. [33397]

I have been asked to reply.

Does the Deputy Prime Minister agree with the real Prime Minister that it is all right to offer Northern Ireland devolution with a Secretary of State in the United Kingdom Cabinet and no reduction in the numbers of Members of Parliament at Westminster, but not all right to do the same for Scotland? Does he not understand that offering devolution to Northern Ireland while denying it to Scotland is a gross insult to the people of Scotland?

The hon. Gentleman can go and try to persuade the Scottish people that they want the ability to have taxes raised by a Scottish Assembly—that they want a tartan tax. If he can persuade them of that, doubtless the referendum will produce the result that the Labour party wants. But the fact of the matter is, as I said to the House earlier, that the Labour party's policies on devolution are now a shambles.

Will my right hon. Friend, as a fellow Celt, reaffirm his commitment to the Union of the United Kingdom? Does he agree with me that the policies of the Labour party will destroy the Union of the United Kingdom?

I am most grateful to my hon. Friend for raising that question. Nothing shows more obviously the cynical nature of the Labour party's policies than that it has different approaches for Wales and for Scotland.

To ask the Prime Minister if he will list his official engagements for Thursday 27 June. [33398]

I have been asked to reply.

Has the Deputy Prime Minister seen the survey of the regions carried out by his Government, which reveals that the wealth of people in the United Kingdom is falling further behind that of people in other European countries? Has he seen that in Yorkshire crime is higher, deaths in the first year after birth are higher, 50 per cent. of women employed are in part-time jobs—that is more than anywhere else—and truancy in secondary schools is greater than anywhere else? This is the record of 17 years of Tory Government. What is he going to do about it?

The hon. Gentleman should take the trouble to look at the base source of years on which that report is based. The fact is that those were 1993 figures. If the hon. Gentleman looked at the recent Organisation for Economic Co-operation and Development figures he would find that our economy was forecast to grow faster than any other European economy this year and next year, that we have the fastest increase in employment, the highest proportion of our people in work and an 800,000 reduction in unemployment. The Conservative party in power will preserve the competitive edge of the United Kingdom, which means that 40 per cent. of all inward investment into Europe comes into the United Kingdom.

Will my right hon. Friend assure me as an Englishman representing an English constituency that, should a Labour Government ever offer a referendum to Scotland, he will campaign for a referendum in England on whether those Labour Members of Parliament should retain their votes in the Westminster Parliament?

I think that the answer to that question will have to come from the party that is proposing so divisive a proposal for the United Kingdom. Labour Members of Parliament will have to answer the question first raised by the then hon. Member for West Lothian, now the hon. Member for Linlithgow (Mr. Dalyell), who has not yet received an answer because there is no answer. The question is why Scottish Members of Parliament should have powers in Scotland as well as powers in England which would be denied to English Members of Parliament in respect of Scotland.

To ask the Prime Minister if he will list his official engagements for Thursday 27 June. [33399]

I have been asked to reply.

Is the Deputy Prime Minister aware that last night's European football championship, watched by 28 million people, could be the last to be available on independent television or the BBC? What plans does he have to prevent Mr. Murdoch's pay television from kidnapping major sporting events in the future? Or is this another case of the party that promises more choice, delivering less?

I did not need to fly 13,000 miles across the world to try to ingratiate myself with Rupert Murdoch. If I may address the substance of the issue, as the hon. Gentleman will know, the Premier League recently entered into a contract under which some £700 million will be injected into the sport, in addition to the remarkable benefits from the lottery in support of sport—all created by the present party in Government as a result of the creation of independent television and the establishment of the lottery. The Labour party should recognise that under this Prime Minister more has been done for sport than by any Government since the end of the war.

Will my right hon. Friend condemn the disruption on London Transport today, which inconvenienced thousands of my constituents and hundreds of thousands of Londoners? Will he compare that disruption with the positive policy of the Government of upgrading the Northern line, extending the Jubilee line, building the Heathrow to Paddington link and improving the docklands light railway?

I unreservedly condemn those who put the public to such inconvenience. I would welcome the support of the Labour party for that condemnation, but I know perfectly well that I will not get it because a significant number of Labour Members are sponsored by the unions that caused the trouble in the first place.

To ask the Prime Minister if he will list his official engagements for Thursday 27 June. [33401]

I have been asked to reply.

The Deputy Prime Minister will be aware that the Secretary of State for Social Security in 1993 tried to add a sweetener to the bitter pill of the Deputy Prime Minister's colliery closure programme by introducing awards for miners who were suffering from chronic bronchitis and emphysema. Later, it proved that the diagnosis criteria were too restrictive and the Industrial Injuries Advisory Council has carried out a further study that was reported to the Secretary of State for Social Security earlier this year. I understand that he has accepted its recommendations but nothing has yet been done. Will the Deputy Prime Minister try to ensure that those recommendations are implemented before Parliament rises for the summer because elderly miners in my constituency and throughout the country are dying of dust?

I give the hon. Gentleman the assurance that I will consider that point as a matter of urgency.