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Mr. Latham : Since the Government's interest rate policy is already having a dramatic effect in reducing overheating, and indeed output, in the private housing industry, is not the practical reality likely that market forces will soon force down building society borrowing rates?

Mr. Major : I am certainly not in the business of making that forecast, but my hon. Friend is entirely right that there are already clear signs of a slowdown in consumer spending, and one trusts that inflation will follow it down in due course.

Dr. Marek : Will the Chief Secretary accept that the Opposition are alarmed at the Paymaster General's complacency about the dominance of hot money over direct and portfolio investment on the capital account and its clear threat of inflation? What measures is the Chief Secretary going to take with regard to this matter, or is he just going to keep to an interest rate war with the United States of America? If he does not take further measures, the country, as judge and jury, will find the Government and their economic policy guilty as charged.

Mr. Major : The hon. Gentleman's remarks bear little or no relationship to the question. I find it very strange to hear lectures about inflation from the Labour party when every policy it recommends to us is inflationary in one aspect or another.

Tax and Prices Index

12. Mr. David Martin : To ask the Chancellor of the Exchequer what was the increase in the tax and prices index in the 12 months to December 1988.

Mr. Lawson : 4.8 per cent.

Mr. Martin : In order to get these things into perspective, would my right hon. Friend care to estimate the likely consequences for the rate of inflation of the spending, taxing and borrowing policies of the Labour party in the unlikely event of it ever regaining office?

Mr. Lawson : That is, as my hon. Friend says, an extremely unlikely eventuality. It is quite clear that, if the Labour party were ever to put into practice its policies of bringing interest rates down when it is not safe to do so, having a depreciated currency, spending more and pushing up borrowing again, we would see inflation go through the roof, just as it did when it was last in office. That is why, although I am very concerned about the current rate of inflation, I am certainly not going to take any lectures from the Labour party.

Mr. Robert Sheldon : Since the tax and prices index was the creation of the Chancellor of the Exchequer in his


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attempt to produce what he thought might be a fairer method of calculating price increases, will he now take some action to deal with soaring house prices, which are not reflected at all in the tax and prices index?

Mr. Lawson : The right hon. Gentleman is not strictly correct, because mortgage interest payments--it is, of course, mortgage interest payments not mortgage interest rates that reflect house prices--are in the tax and prices index, just as they are in the RPI. Since the right hon. Gentleman mentioned that this is a useful index, I will make a comparison with the Government in which he was a Treasury Minister. In the five and a half years or so that I have been Chancellor of the Exchequer the tax and prices index has gone up at an average rate of 3.7 per cent. a year, whereas during the five and a quarter years of the Government of which he was a member it went up by 16.1 per cent. a year.

Mr. Yeo : Is my right hon. Friend aware that if he is bold enough on 14 March to use a substantial part of his record budget surplus to cut income tax he could produce a fall in the tax and prices index?

Mr. Lawson : I am interested in my hon. Friend's suggestion, but I have to tell him--I trust this will not be considered a leak--that the Budget that I shall introduce on 14 March will be prudent and cautious.

Pensioners (Medical Insurance)

13. Mr. Allen McKay : To ask the Chancellor of the Exchequer what is his latest estimate of the total cost to the Exchequer in a full year, of tax relief for private medical insurance for pensioners.

Mr. Norman Lamont : I refer the hon. Member to the reply that I gave to the hon. Member for Dunfermline, East (Mr. Brown) on 21 February, at columns 542-43.

Mr. McKay : Why should my pensioners who have worked and been taxed all their working life, and use the National Health Service, now have to subsidise those who wish to use private care?

Mr. Lamont : The purpose of the relief is to give help to older pensioners when they face increasing health costs. That will relieve pressure on the National Health Service, and that is to the benefit of everybody who uses the state service.

Mr. Nicholas Bennett : Does my right hon. Friend agree that tax relief would be lower if the earnings rule for pensioners were abolished? Will he bear that in mind in preparing the Budget as one way of helping to increase pensioners' earning power at a stroke?

Mr. Lamont : I note my hon. Friend's suggestion.

Tax Cuts

15. Mr. Madden : To ask the Chancellor of the Exchequer if he will estimate the differential impact of his tax cuts in the last Budget on the median earner in (a) the south-east and (b) other regions.

16. Mr. Maxton : To ask the Chancellor of the Exchequer if he will estimate the differential impact of his tax cuts in the last Budget on the median earner in (a) the south-east and (b) other regions.


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Mr. Brooke : The impact of the income tax reductions in the 1988 Budget was broadly the same for the median earner in both the south-east and the rest of the country. In both cases the proportion of annual income paid in tax has fallen by two percentage points.

Mr. Madden : Is it not true that people on average incomes in the south-east gained more than £40 from the income tax cuts compared with those on average incomes in the regions, including Yorkshire? In the "prudent and cautious" Budget that the Chancellor has just announced that he is to make next month, will he heed the views of public opinion polls which have shown solid majorities, including Conservative voters, wanting the available resources to be invested in the National Health Service, in public housing and public education and not on more tax cuts which primarily overheat the economy in the south-east?

Mr. Brooke : The general statistics that the hon. Gentleman quoted at the beginning of his question were correct. However, he was relating them to the median earnings in the two regions. My right hon. Friend the Chief Secretary to the Treasury will have heard everything that the hon. Gentleman said about public expenditure.

Mr. Maxton : I apologise for just arriving in the Chamber--

Hon. Members : What is the question number?

Mr. Speaker : Order. I hope that the hon. Member for Glasgow, Cathcart (Mr. Maxton) heard the answer.

Mr. Maxton : Unlike Conservative Members, I knew that this was a connected question.

Will the Minister make every effort to ensure that the Budget provides proper investment in Scotland and the rest of England and not just another heating-up of the economy in the south-east?

Mr. Brooke : The hon. Gentleman had the disadvantage of not hearing my answer and of having forgotten his original question. This question has nothing to do with the Budget, but I heard the hon. Gentleman's question.

Mr. Ian Taylor : Does my right hon. Friend agree that the tax cuts in the last Budget have benefited people right across the country and, because of the resultant bouyancy of the economy, have resulted in higher expenditure in exactly those areas where the Laboutr party has urged us to spend more money? We have been able to spend that money without increasing the national debt.

Mr. Brooke : My hon. Friend is correct to draw attention to the way in which prosperity has fanned out across the country. As I said in my original answer, the effect of the 1988 Budget on those on median earnings was broadly the same in the south-east and elsewhere.

Mr. Hind : My right hon. Friend will be pleased to know that people living in the north-west will be glad to hear that they have benefited equally with the south-east from the tax cuts. In his deliberations with my right hon. Friend the Chancellor of the Exchequer, will he consider that some of those tax cuts could benefit the community by improving the income- to-savings ratio, thereby providing us with further investment in the north -west to tackle our unemployment problems?


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Mr. Brooke : I am grateful for what my hon. Friend said, but I cannot make any comment about his Budget representation.

Mr. Robert Hughes : As the Chancellor has defended the tax cuts on the basis of having to protect pensioners against inflation, what does he say to my constituents and many others on income support who will find in April that pensions are going up, but transitional support is going down and they will be left with not a penny of an increase? Is that not robbery? Is he not ashamed of himself?

Mr. Brooke : The relationship between that question and the original question is not precise. However, what happens from April onwards will be determined by what my right hon. Friend the Chancellor introduces in his Budget.

Mr. Sumberg : Does my right hon. Friend agree that a feature of the north-south divide is that the north-west of England is booming, unemployment is being reduced there faster than in any other region and once again Labour Members appear to be walking around with their eyes closed and their ears blocked?

Mr. Brooke : My hon. Friend is quite right to draw attention to the greater incentives produced by the Chancellor's tax cuts and their highly beneficial effect on his region.

Incomes

18. Mr. Jack : To ask the Chancellor of the Exchequer what has been the growth of real personal disposable income over the latest 12-month period for which figures are available.

Mr. Norman Lamont : 3 per cent.

Mr. Jack : Does my right hon. Friend agree that the increase in disposable incomes is the most tangible way in which people realise the success of the Government's economic policy, and that it has been reflected in increased home ownership, wider share ownership and an increase in the general standard of living of all people in the United Kingdom?

Mr. Lamont : My hon. Friend is absolutely right. He may recall that real take-home pay for a married man, with two children, who is on average earnings has gone up by some 29 per cent. since the Government have been in power. The comparable figure when Labour was in power was a miserly, measly 0.7 per cent.

Mr. Skinner : If real disposable income is increasing and if all the other answers that we have heard from Treasury Ministers are correct, why have they not told the voters in Richmond, Yorkshire, where half the Conservative vote is disappearing from view?

Mr. Lamont : I am sure that by this time tomorrow the hon. Gentleman's question will have been proved wholly wrong.

PRIME MINISTER

Engagements

Q1. Mr. Baldry : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.


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The Prime Minister (Mrs. Margaret Thatcher) : This morning I presided at a meeting of the Cabinet and held meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Baldry : Will my right hon. Friend confirm that drinking water throughout Britain is of a high quality and that the problems experienced in Swindon and Oxfordshire this week are very rare and, in this instance, have been dealt with properly and fully by Thames Water, and that with new capital investment of £1.4 billion in the water industry next year, the Government are doing far more for water quality than the Opposition ever did when they were in power?

The Prime Minister : I am happy to confirm that, generally, public water supplies in Britain are of a high quality. The incident in Oxfordshire is only the second such incident to have been identified in a public water supply in the United Kingdom. I agree that Thames Water has taken the necessary precautionary measures to safeguard public health and is investigating the cause of the incident as a matter of urgency. We are making heavier capital investments in the water supply than ever before, and the investment of some £1.4 billion next year will ensure a higher standard of water throughout the country.

Mr. Kinnock : In regard to the Prime Minister's plans for the Health Service, whose judgment should patients trust--that of the doctors who work in it or that of the Prime Minister who never uses it?

The Prime Minister : Perhaps they should judge the record of this Government compared with that of the Labour Government.

Mr. Kinnock : The Prime Minister has been telling us about that record for some time--

Hon. Members : It is true.

Mr. Speaker : Order.

Mr. Kinnock : The huge majority of patients are not reassured about it. Why should they be reassured about any of the Prime Minister's plans?

The Prime Minister : The huge majority of patients are reassured by using the Health Service. Public opinion polls show that those who use the Health Service are highly satisfied with it, and so they should be. There are far more doctors and dentists and a greater proportion of GDP is invested in the Health Service. The right hon. Gentleman's problem is that the National Health Service is better than it has been at any time.

Mr. Onslow : Is my right hon. Friend aware that the award of £100, 000 in costs against a firm of developers that was flagrantly seeking to breach the Government's green belt policy will be particularly welcomed in south-east England and elsewhere? Does she agree that that decision should be taken as a warning by any other developers with similar ambitions?

The Prime Minister : Some two years ago my right hon. Friend the Secretary of State for the Environment said that if developers went to appeal in flagrant breach of green belt land, they would risk paying high costs. That is what has happened and it is yet another example of my right hon. Friend's determination to safeguard the green belt.


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Q2. Mr. Parry : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Parry : Will the Prime Minister make urgent representations to the Prime Minister of South Africa on behalf of Mr. Oscar Mptha, a sick, 80 -year-old man who has been in gaol for nine years?-- [Interruption.] Will she ask Mr. Botha to use his discretion and mercy before he has on his hands another murder which will be condemned by the western world?

The Prime Minister : I did not quite catch the whole of the hon. Gentleman's question, but I understand that it concerned South Africa and people who have been in prison for some time. The hon. Gentleman knows full well that the Government are anxious for Nelson Mandela to be released and believe that anyone who has been on remand should be either charged or released. We are closely watching events in South Africa, but we do not believe in sanctions. I should also point out that Namibian independence could scarcely have been achieved without the great co-operation of South Africa.

Dr. Twinn : Does my right hon. Friend agree that yesterday's vote by the Civil and Public Servants Association against having YTS trainees in the Civil Service was a disgrace and a slap in the face for young people genuinely seeking work and training?

The Prime Minister : I agree with my hon. Friend that it was a disgrace that the CPSA voted against having YTS trainees in the Civil Service. It was very disappointing for us all and for many young people who would have liked that opportunity to train.

Mr. Hume : In her discussions with Chancellor Kohl, did the Prime Minister discuss the possibility of moving towards a common European currency? Does she think it possible to have a genuine common market without a common currency?

The Prime Minister : I did not discuss that with Chancellor Kohl. It is possible to have a genuine single market without a common currency, which is not in any way necessary to achieve a single market.

Q3. Miss Emma Nicholson : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Miss Nicholson : In her busy day, has the Prime Minister had time to glance at the copy of The Meavy Times that I left at No. 10 Downing street this morning? It is the Meavy primary school's entry in The Daily Telegraph schools newspaper competition. Did she note the pupils' call for a cleaner world, including beaches and rivers? Has she a message for me to give to those caring children?

The Prime Minister : Yes, thanks to my hon. Friend, she can tell those school pupils that I received a copy of The Meavy Times at No. 10 Downing street this morning. I congratulate them on its excellent content and production. Will my hon. Friend please tell the pupils that we must all play our part in improving the environment? I should be grateful if she would take back to them the Government's


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leaflets and information on the environment and the British aid programme, overseas development and tropical forests, and the guide to protecting the environment.

Q4. Mr. Morgan : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Morgan : As one of Sir Raymond Gower's constituents for the past 32 years, may I say on behalf of Welsh Members how much we shall miss his unfailing courtesy? May I also send that message to Conservative Members who were his friends, and to his family? Will the Prime Minister confirm that she will be giving a keynote speech on 5 March at the conference on the ozone layer and CFCs at the Queen Elizabeth II conference centre in London? Will she also confirm that she refused to attend the international environment summit at The Hague on 11 March convened by her friend the Dutch Prime Minister, Mr. Lubbers? Will she accept from Opposition Members that if she wants to be taken seriously in international environmental scientific collaboration to solve the environmental problems affecting this planet, she should not attend only conferences at which Mr. Bernard Ingham can control the television cameras?

The Prime Minister : May I say how much we appreciate the hon. Gentleman's message of sympathy on the loss of our hon. Friend the Member for Vale of Glamorgan (Sir R. Gower)? He, like all of us, regarded it as a great privilege to serve his constituents in Westminster, and he will be greatly missed here and by them. With regard to the ozone layer, I shall be making a speech at the conference, as will many others. The purpose of the conference is to create new and higher standards so that we cut the CFC gases by 85 per cent. At the moment we have reached our target of 50 per cent. reduction. By the end of this year, we shall reach a 60 per cent. reduction. The conference is designed specifically to raise standards and improve the quality of the environment.

The other conference to which the hon. Gentleman referred, which has been called by the French Prime Minister and is to be held in The Hague, is not on specific targets for the environment. It is to form a new organisation, and I respectfully submit that we do not need one, given that we have the United Nations, the European Economic Community, the World Climate Authority and the World Meteorological Authority. The conference is to set up yet another organisation, which is not necessary, and it proposes that compensation should be paid--without saying how--and that sanctions should be applied if rules are not complied with--again without saying how. We believe in calling conferences to do things about the environment.

Mr. Higgins : Will my right hon. Friend today meet ministerial colleagues from the Department of Employment, the Department of Social Security and the Treasury to discuss the earnings rule for pensioners, which is an anachronism that is long overdue for abolition?

The Prime Minister : I take note of what my right hon. Friend says. I know that he has long held this view and we shall, of course, consider the matter.


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Q6. Mr. Mans : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Mans : Will my right hon. Friend join me in condemning the action of the Association of University Teachers which, in order to pursue its pay claim, is threatening not to set the examination papers of students, thus jeopardising their degrees and causing them a great deal of anxiety and worry?

The Prime Minister : I agree. The action taken by some university lecturers to the effect described by my hon. Friend is deeply disappointing, very irresponsible, wholly unprofessional and careless of the interests of the students in their care. It also goes contrary to what they frequently tell us--that it is vital that we have graduates of high calibre. If we are to have more of those, teachers must carry out their duties of teaching and setting and marking exam papers.

Mr. Healey : Does the Prime Minister recall instructing her spokesman to inform the Sunday Times last November that she would--I apologise for using his indelicate words

"help Kohl to screw Genscher"?

Can she explain how it happened that when she visited Germany this week it was, in fact, Kohl who helped Genscher to conduct the same indelicate operation on her?

The Prime Minister : Such indelicate language and thoughts do not come from any part of Downing street during the lifetime of this Government.

Mr. Cormack : Will my right hon. Friend take a little time today--or over the weekend--to select appropriate thank-you cards to send to the Leader of the Opposition, the hon. Member for Linlithgow (Mr. Dalyell) and all the others who played such a signal part in defeating devolution, which led to her return to power 10 years ago?

The Prime Minister : My hon. Friend has saved me the expenditure involved in doing what he requires, but the feelings are precisely the same as they were then.

Q7. Mr. Eastham : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Eastham : Noting the Government's fanfare about finally bringing unemployment down to fewer than 2 million after nearly 10 years of Conservative Government, may I ask the Prime Minister to tell the House how many more years it will be before they can bring unemployment back to what it was under the Labour Government?

The Prime Minister : The employment we have now is not full of restrictive practices as it was at the time of the Labour Government. May I remind the hon. Gentleman that the work force in employment is at a higher level than ever. There are more jobs now than ever before.

Mr. Burns : Can my right hon. Friend confirm that the British Government will not be bounced by the European Commission into a phased withdrawal of the mile and the pint? Is my right hon. Friend aware that it would cause widespread dismay?


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The Prime Minister : As my hon. Friend is probably aware, there is a permanent derogation for the pub pint, for the bottle of milk on the doorstep, for the mile and for the acre. I hope that that reassures him.

Q8. Mr. Simon Hughes : To ask the Prime Minister if she will list her official engagements for Thursday 23 February.


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