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inflation next April. The allowance for those aged 65 to 69 will rise by 14 per cent. and that for those aged 80 and over will go up by some 30 per cent.

The right hon. Gentleman tried to say that what they had in the Soviet Union was not Socialism. Of course it was--the Union of Soviet Socialist Republics. Under previous Labour Governments there has been massive nationalisation, and if the right hon. Gentleman looks back at his speeches in opposition he will see that he wanted more and more nationalisation ; massively high taxation, which, again, is a way of taking people's rightful earnings from them ; and such massive detailed controls that at the end of the previous Labour Government's period in office manufacturing output was lower than it was at the beginning. The right hon. Gentleman omitted to say that. One would think that manufacturing output went up under the previous Labour Government ; it did not. It was lower at the end than it was at the beginning.

The right hon. Gentleman said that we are being dragged along behind the EC. Far from being dragged along behind, we are, for example, ahead in implementing the directives for the single market. Some 68 single market directives should have been implemented by the end of June. France has yet to implement nine ; Denmark and the Netherlands 12 and all the other countries more than 12, with Italy at 33. The United Kingdom has the record, with only three measures unimplemented. As in so many other things, we lead the field in Europe.

The right hon. Gentleman tried to suggest that competition policy was not an essential part of the single market, but there cannot be varying subsidies if we are to compete on fair terms with others. If subsidies were permitted, the richest countries would have the biggest subsidies and there would be no Common Market, no single market, and nothing extra for us to enjoy.

The right hon. Gentleman then pointed out that there were times when Britain was isolated in her arguments. Yes, we were isolated in the EC when we tried to get a fair deal for Britain for the budget, and we stayed isolated until we succeeded in obtaining the fair deal that had eluded the previous Labour Government. Yes, we were isolated when we tried to reform the common agricultural policy, and eventually we succeeded. Yes, we were isolated when the EC wanted a common withholding tax. We went on with our arguments and eventually we won. What the right hon. Gentleman calls isolation is really leadership and winning the argument.

The new parliamentary Session will witness the start of a new decade. The 1970s was a decade when Britain was in decline ; when Socialism meant that we had to be treated like some Third world country and be rescued by the IMF. The 1980s has been the decade when Britain regained her strength and pride. We are no longer afraid of change. We can respond to it with confidence. British industry has been set free to adapt to new ways and new technology at an unparalleled rate.

Businesses can once again get a good return on investment. That is why over the past three years we have seen a 40 per cent. increase in business investment--an unprecedented advance. That is why industries such as steel, newspapers and now the docks, whose equipment and working methods were barely adequate for the 1950s, have been transformed to compete with the best in the

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1990s. That is why Britain has been getting the lion's share of overseas investment into the European Community. They prefer to come to Britain.

Mr. Clive Soley (Hammersmith) : The Prime Minister talks about pride in our country. What pride does she take in the fact that she is the only Prime Minister since the second world war who has presided over a situation in which teenage children sit homeless and hungry on the Dickensian streets of Britain?

The Prime Minister : If the hon. Gentleman listened to the Autumn Statement, he will know that extra sums have been allocated to help homeless people. He will also know that there are something like 1, 900,000 more homes than there were during the life of the last Labour Government. But I was dealing with industry. Let me go on. Output and investment are at an all-time record and profitability is higher than for 20 years. Of course we need high profitability. Where else would we get high investment? Where else would we get the income that enables us to do better for the social services? What is more, people want a stake in success. More people than ever own their own homes and own shares. More people are running their own businesses. This year, an extra new business has been started up every seven minutes.

The ownership of property is no longer the privilege of the few. We have extended ownership ever more widely to the overwhelming majority of the nation, giving them the self-confidence and pride that come from property and choice. The old class-based Labour order is being replaced by one based on merit, ability and effort. That is the new Britain. That is the Britain of the 1990s.

Mr. Stuart Bell (Middlesbrough) : If industry is so satisfied with the Prime Minister's performance, can she explain the CBI's statement yesterday that all profits are being wiped out by losses on the exchange rate? When the exchange rate goes down profits are wiped out.

The Prime Minister : That is nonsense. The hon. Gentleman will know that the CBI has two views about exchange rates. It suits some industries to have a high exchange rate because the raw materials they import are cheaper ; it suits others to have a lower exchange rate because they think that it helps them with exports. The only real security for industry is to be really efficient by virtue of its management and the design of its products.

Mr. Heffer : Will the Prime Minister give way?

The Prime Minister : Far-reaching reforms in education and training are widening opportunity even further. I understand that the Leader of the Opposition--

Mr. Heffer : Will the Prime Minister give way?

The Prime Minister : Please let me get on with a few more sentences before I give way again.

I understand that the right hon. Gentleman told the Labour party conference that education and training are now the commanding heights of the economy. Under this Government they always have been. Let us look at the facts on education, which is absolutely vital for our future. The national curriculum is making sure that every child has a really good basic education. The new GCSE has been an outstanding success and has produced better exam results. In spite of what the right hon. Gentleman said, there are 210,000

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more students in higher education than there were in 1979. For every four people taking degrees when Labour left office, there are now more than five.

The last Labour Government did not leave us much of a legacy on training. Our approach has been much more fundamental : to provide good-quality training which will put people into real jobs. This Government set up the youth training scheme and employment training, the largest adult training programme that this country has ever known. Of course the Labour party and its trade union paymasters did their best to frustrate both training schemes, and they denied people these opportunities, but, in spite of their efforts, over 500,000 people have joined employment training and well over 2 million young people have benefited from the youth training scheme.

Mr. Heffer : Earlier, the Prime Minister talked about people owning their own homes and how much better off they are under this Government. Would she like to explain that to my constituent who came to see me at my surgery on Saturday? He left the armed forces to work on an oil rig. He bought his own home, but his son met with a serious accident. He had to give up work to look after his child, but is now being evicted from his home because he cannot pay his mortgage. How does she explain to my constituent, and thousands like him, how much better off they are under this Government?

The Prime Minister : The hon. Gentleman is correct. There will always be people who cannot cope because their circumstances are adverse at the time. That does not take away from the enormous increase in owner- occupation--two of every three families now own their own home. That would never have happened under Labour. That exceptional case, which is hard and gives great cause for sympathy, does not take away from that enormous achievement or from the fact that nearly 9 million people now own shares.

I was talking about training and how the trade unions have tried to frustrate opportunities--

Mr. Tony Banks (Newham, North-West) rose --

Mr. Derek Fatchett (Leeds, Central) rose --

The Prime Minister : I should like to get on and make a little more of my speech. I shall give way later.

I was talking about training and how the trade unions had tried to frustrate the training schemes but have not succeeded. Employers are investing heavily in training Britain's work force--to the tune of £18 billion a year, and that is on top of the £31 billion that they invested last year in plant and machinery. Yes, of course we must do better still if we are to compete with Germany and Japan, which is why we are developing a network of training and enterprise councils throughout the country with business in the lead--because business knows how to run business and business can work with the universities on training--and not the arrogance of Socialist politicians who think that they can run everything.

I shall not give the detailed figures, but the Government have devoted extra funds to research. Thanks to the growth in our national income, the Government will be able to spend nearly £3 billion on civil science and technology next year. The science budget will be 25 per cent. higher in real terms than it was under the last Labour Government. That is why there is great strength in our economy. We have growth, excellent investment, good

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profits, output that is higher than ever before, a high rate of new businesses, a good rate of investment and a good rate of investment in research.

Which hon. Member was first? I gave way to the hon. Member for Leeds, Central (Mr. Fatchett).

Mr. Fatchett : I am grateful to the Prime Minister for giving way so graciously. May I take her back to the point that she made about education as a source of strength in the economy? She painted the picture of all being well with the education system. Will she explain to parents in London boroughs such as Tower Hamlets why their children are being sent home from school because no teachers are available?

The Prime Minister : What a pity they are not in my constituency--I am sure that they would do very much better. We have the very best education, a good local authority, which runs our education system superbly, and the best results. As I pointed out, and will point out again to the hon. Gentleman, there are more teachers in proportion to pupils than at any previous time in our history, and more is being spent on each pupil than ever before. I should have thought that with more teachers and more resources the local authorities could manage those resources better and give a better education to the children.

Mr. Bob Cryer (Bradford, South) : Will the right hon. Lady give way?

The Prime Minister : May I continue, please? I have to lay out the Government's policies. I will give way from time to time, but I should just like to make a bit of my speech.

Not only have we had extensive growth and created extra wealth but we have shared the success. Ecomomic success has brought unprecedented prosperity to this country. Under the Conservative Government a family with two children, and the husband on average earnings, now gets an extra £55 a week in take-home pay, after allowing for the increase in prices. [Interruption.] Let me repeat : after allowing for inflation a family with two children, and the husband on average earnings, now gets £55 a week over and above what it would have got at the end of the period of the Labour Government. Of course more wealth has been created, but people have shared, rightly, in that success. In terms of what the money will buy, for every £3 that that family had under Labour, it now has £4. That is, of course, sharing the extra success.

Mr. Brian Wilson (Cunninghame, North) : Will the right hon. Lady give way?

The Prime Minister : I shall give way in a moment. I will earmark the hon. Gentleman to be next.

Greater prosperity also means that, as a nation, we can afford the better public services that we now have. Since the Conservative party has been in office, there have been more doctors, more nurses and more patients treated in the National Health Service every year.

Mr. Ronnie Campbell (Blyth Valley) : They do not believe it.

The Prime Minister : Well, let us shout the facts-- [Interruption.] Labour Members are trying to conceal them. Labour does not want to reveal the facts, because they are against Labour. Labour does not want the people

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to know the facts about extra prosperity and the National Health Service. I will not take the time to repeat them, because there is more good news. Spending on people who are sick and disabled has nearly doubled under the Government, again after allowing for inflation. This October, we gave extra help to the 2.5 million pensioners who need it most and we abolished the earnings rule.

Mr. Wilson : The Prime Minsiter has talked a great deal about unique prosperity, generosity to the family and so on. Would she care to make the moral case for what the Government have done to 16 and 17-year-olds, tens of thousands of whom are without jobs or YTS places and who have been thrown out without a penny and-- [Interruption.] We hear the reaction of Conservative Members. Will the Prime Minister tell us the moral case for leaving tens of thousands of 16 and 17-year-olds without a penny of legal income on which to subsist?

The Prime Minister : The hon. Gentleman is not correct, and he knows it. There are more YTS places in every region than there are young people to fill them. There is no shortage of YTS places. We think that it is very much better that young people should take part in training, if they do not have a job, than be left idle. There are plenty of YTS places. Some of those 16 and 17-year-olds with a particular hardship problem--those who cannot go home--have special allowances, as the hon. Gentleman knows. The policy of persuading young people to go to training and not just be idle is the right one and is supported by most people.

Our excellent record on social services has been possible because Conservative policies have led to more wealth being created than ever before and wealth being spread more widely than ever before. That is a very good claim for any Government to be able to make, but we must safeguard and build on these hard-earned economic achievements. Over the past two years, the economy has been growing at a faster rate than we could sustain. The threat of inflation has re-emerged and a large external trade deficit opened up, and action has had to be taken to deal with both.

Mr. Robert N. Wareing (Liverpool, West Derby) : Will the right hon. Lady give way?

The Prime Minister : Not until I come to the end of this section, and I promise the hon. Gentleman that I will then give way. Naturally, home owners and many businesses are concerned about higher interest rates, but they are necessary to cut borrowing and to increase saving. The savers will never forget that, in the 1970s, Labour Governments robbed them of a large part of their savings by letting inflation run rampant. Inflation today is lower than the lowest rate that Labour ever achieved between 1974 and 1979. A rate that was a cause of celebration for the Labour Government because it was low by their standards is a cause of concern for us because it is far too high by our standards. The absolute priority is to get inflation down.

Mr. Wareing : Is not the holdback that the Government have introduced on economic growth this year simply the result of 30 per cent. of our manufacturing industry being destroyed at a time when North sea oil revenues were

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available for investment in it? Is that not reflected in the £20 billion balance of payments deficit? Will the Prime Minister tell the House and the British people when the balance of payments will be in the black again?

The Prime Minister : When growth has been too fast, inflation re- emerges. It emerged in 1973 and it has re-emerged now. That is the cause of our having an adverse balance of payments deficit. We could hope that manufacturing industry here would fill more of the demand--and there is no doubt about the demand. I can only point out to the hon. Gentleman that manufacturing industry is in a very much fitter shape. There are no restrictive practices now and it has been, therefore, far more modernised. It has been able to invest in new technology, and there is higher manufacturing output and higher manufacturing investment than the best under Labour.

It is not only Governments who determine the prospects for growth and jobs ; they depend on how well businesses keep their costs down. The more that the trade unions press for higher wage claims regardless of productivity, the greater is the threat to our competitive position and to jobs. It is about time that the Opposition faced up to that instead of cheering on every high pay claim and then complaining that we have become uncompetitive. The sheer emptiness of the Opposition's approach is shown by their policy on credit controls. The truth is that in today's open markets, credit controls do not and could not work.

We all receive many leaflets advertising credit and usually they go straight into the wastepaper bin. However, I saw one very interesting leaflet recently which I happen to have with me. It says : "the Labour Co- Op Visa card works just like every other credit card You can choose your own credit limit Simply tick the relevant box--£1,000, £2,000 or other, please specify Use it to spread the cost of Christmas, or birthdays or summer holidays".

There is a nice picture of the Eiffel tower just to give people all sorts of ideas. The leaflet continues :

"Use it as a second credit card Every time you use the card the Co- Operative bank makes a donation to Labour."

Mr. Tony Banks rose--

Mr. Speaker : Order. I do not think that the Prime Minister is giving way at this point.

The Prime Minister : Labour's Front-Bench spokesmen peddle credit controls while their PR men peddle credit cards.

Let us turn instead to the Government's legislative programmes for the year ahead.

Mr. Nigel Griffiths (Edinburgh, South) : Will the Prime Minister give way?

The Prime Minister : I have rather a lot more to say and I have not spoken continuously so far, but I shall give way just once more.

Mr. Griffiths : Does the Prime Minister agree with her Secretary of State for Trade and Industry that in certain circumstances, children should have credit cards? We do not agree.

The Prime Minister : If the hon. Gentleman reads the report very carefully, he will find that that is not what my right hon. Friend said. [ Hon. Members :-- "Oh!"] That is not

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what he said. He did not say that they should have credit cards. I advise the hon. Gentleman to read precisely what he said. Let us consider instead the Government's legislative plans for the year ahead. As people have become more prosperous they are naturally looking for an even better quality of life. They are looking for increased choice and improved services and for measures to enlarge their personal liberty. The Gracious Speech contains a full programme of 15 major Bills to address precisely those issues.

Several of the Bills stem from scientific advance, which we are harnessing for the well-being of the nation. Care for the environment has moved to the centre of people's concerns for the quality of life. Science has told us that it is imperative to protect the global environment, and the Government are taking the lead in recognising that concern and acting on that advice.

In this Session, we shall bring forward a new environment protection Bill. Traditionally, the control of pollution and toxic waste has been handled piecemeal--that is, separately in relation to discharges to land, air and water. In future, pollution will be controlled in relation to the environment as a whole, in a new system known as integrated pollution control. I believe that that new system will be copied round the world in years to come.

We shall also provide for a better local environment. That means clean streets and tidy parks. For those selfish people who litter our streets, the maximum fine will increase to £1,000--more than double the present fine. I hope that magistrates will make full use of the powers. The Bill will also place a new legal duty on local authorities to keep streets and public places clean, and individuals will be able to take their council to court if it fails to do that. I am sure that the purpose of the Bill will be welcomed by hon. Members in all parties.

Mrs. Margaret Ewing (Moray) : Will the Prime Minister give way?

The Prime Minister : If the hon. Lady's point is on the environment, yes.

Mrs. Ewing : The Prime Minister refers to the control of pollution. Will she tell us the Government's plans for the disposal of low and medium- level nuclear waste--especially as it looks as though the people of Caithness are to have it wished upon them irrespective of their democratically expressed views?

The Prime Minister : The hon. Lady knows that all the technology for the disposal of nuclear waste is known and that it is a case of deciding where that disposal should take place. At the moment, most disposal is at Sellafield although, as the hon. Lady knows, we are also considering other places.

The food safety Bill will also enhance the quality of life. Our laws must keep pace with the revolution that is taking place in the way in which food is produced, stored and prepared. The new Bill will mean that everyone who supplies food to consumers has to take proper care--the due diligence test- -to ensure that it is safe. The Bill will improve our powers to respond quickly to unexpected problems. Perhaps one of the most controversial Bills --although not in the party-political sense--is what has come to be known as the Warnock Bill, following the report of the

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committee chaired by Baroness Warnock. That Bill responds to the scientific advance in the treatmeant of infertility. It will establish a statutory licensing authority to ensure that treatments such as in vitro fertilisation take place in reputable centres and under proper safeguards. It will forbid research developments such as cloning and the creation of hybrids.

Inevitably, the question of embryo research arouses strong feelings. Some people attach importance to research that can help increase our knowledge of hereditary diseases such as cystic fibrosis and muscular dystrophy. Others believe strongly that there should be no further embryo research. These are matters of personal conviction, on which there will, of course, be a free vote of the House.

Mr. David Alton (Liverpool, Mossley Hill) : Many of us are delighted at the news that the Government have announced today, but does the Prime Minister accept that, in diseases such as cystic fibrosis and muscular dystrophy experiments carried out up to 14 days' gestation would make no difference anyway because the necessary limb parts, muscles and other parts of the body have not developed by then?

The Prime Minister : The hon. Gentleman is arguing a point which will arise during our proceedings on the Bill. I hope that people will ask the research scientists their views and obtain a clear opinion on these matters. In the end, it will be a matter of personal conviction and conscience. We may hold different views, but there will be a free vote in the House which, together with what happens in the other place, will decide the matter.

The next theme of the legislative programme is greater choice and better service to the individual. That is particularly important in our public services. The National Health Service Bill, about which the right hon. Member for Islwyn (Mr. Kinnock) had something to say, will implement the reforms that will ensure that the resources and talent devoted to the NHS are used to give patients an even better service and the widest possible choice.

Mr. David Winnick (Walsall, North) : Will the right hon. Lady give way?

Mr. Bruce Grocott (The Wrekin) rose --

The Prime Minister : I will give way before I leave this subject. The hospitals that give the best service to the greatest number of patients will receive more resources. I believe that that is right. General practitioners who believe that they can give better value to patients by holding their own budgets will be able to do so. Together with the improved GP services that we have introduced, the changes should mean that patients will be able to get operations more quickly, hospitals will have a reliable appointment system for out-patients, more children will be vaccinated against disease and that there will be more regular check-ups on people's health. The Bill will also implement the proposals in our White Paper on community care which will enable growing numbers of elderly and disabled people to live at home and will direct more resources and assistance to the relatives and friends who help look after them.

Mr. Jack Ashley (Stoke-on-Trent, South) : Will the Prime Minister give way?

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The Prime Minister : A doctor summarised our health reforms best-- [Interruption.] I want to finish this point and then I will give way. The doctor said :

"The White Paper proposals are going to lead to better quality and more cost-effective medicine, better decision-making locally and give a considerable degree of power to the patient and their general practitioner."

Mr. Grocott rose --

Mr. Winnick rose --

The Prime Minister : I will give way to one of the hon. Members and then I will give way to the right hon. Member for Stoke-on-Trent, South (Mr. Ashley). I will give way to the one who was standing longest.

Mr. Grocott : Will the Prime Minister give the House her latest estimate of when she will be so satisfied with her 10-year management of the National Health Service that she will start to use it herself?

The Prime Minister : As the hon. Gentleman knows, if there are accidents or disasters, all of us must use the National Health Service. As he knows, that has been shown full well-- [Interruption.] In the meantime, some 5 million people pay not only their dues to the National Health Service, but for their own treatment. That relieves pressure on the Health Service which enables other people to get their operations much more quickly. Those people should not be denigrated ; they should be thanked.

Mr. Ashley : The Prime Minister mentioned community care. Her interest in that is well known and it is not new. She has been concerned with it for 10 years or so. However, in that case, why have thousands of mentally ill people ended up in prisons, in cemeteries or walking the streets? Is that not a shabby reflection on her Government?

The Prime Minister : I hope that the new Bill will address those issues-- [Interruption.] As the right hon. Gentleman is aware, the policy has been to get as many mentally handicapped people as possible out into the community. Sometimes the proper provision has not always been made for them in the community before they have gone out into it. One of the purposes of the Bill is to ensure that no one shall be discharged from a mental hospital until it is certain that there are proper community care services for them. I am sure that the right hon. Gentleman will be very much in favour of that.

Mr. Winnick : Will the Prime Minister give way?

The Prime Minister : I have given way. I am afraid that some people are making their own speeches during gaps in mine. I want to get on. Choice will also be extended in the broadcasting Bill, the main purpose of which is to reform commercial television. There will be new local television stations using microwave or cable. There will be a new channel 5 which will cover most of the country. The new franchises for the existing channel 3 and the new channel 5 will be awarded by competitive tender, but only companies whose programme proposals pass a quality test will be able to bid. The Bill will also give legal backing to the Broadcasting Standards Council, which will safeguard decency and keep off our screens the violence that is unacceptable. Together, those reforms will mean much more choice and higher standards. British television will remain among the best in the world.

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There will also be the Courts and Legal Services Bill, to which I was about to refer, but I will move on rather more quickly. It will be an interesting Bill which will help clients more often to have the advocate of their choice, and it will hasten the conveyancing process.

The Government's programme will also enlarge personal liberty through further reform of trade union law. The employment Bill will give a right of redress to a person who is denied a job because he does not want to belong to a union. It will also make secondary action unlawful. Hitherto, the law has been uncertain on that point. The Bill will deal with wildcat strikes, by requiring unions either to repudiate them or to put them to a proper secret ballot. Doubtless, that will be strongly opposed by the Opposition, but it will be widely welcomed by the British people, as will the rest of our programme.

I now refer to the single market in the European Community. The Gracious Speech pledges us to achieve a real common market in Europe by the end of 1992. Many important matters remain to be tackled, such as opening up protected markets, in particular for telecommunications, air transport, road haulage and financial services--we are prepared to have ours open, and do in many cases, but they have not yet opened them in Europe--and reducing subsidies and other obstacles to fair competition. One expects fair competition in the Common Market, not unfair competition through different subsidies. That has always been one of Britain's priorities, and we are working with the Commission to achieve it. It has the crucial role of ensuring that all member states play by the same rules and implement their obligations. When it comes to implementing single market directives--I have already given the record--we lead the field in Europe. We have implemented a bigger proportion than any other country.

Mr. Tony Banks : The Prime Minister told us about the aspects of the single market of which she approves, but there is another aspect, and that is the adoption of the social charter which complements the single market. What parts of the social charter does she reject?

The Prime Minister : The parts that we are firmly in favour of are those that will lead to the creation of new jobs and will not upset competition and competitive costs. The parts that we reject are those that will add great burdens to industry, reduce our competitiveness, and ensure that someone outside the European Community gets the orders and the jobs. I advise the hon. Gentleman to read the Granada lecture of Sir Leon Brittan. It will tell him all the reasons why it is wrong.

Ability to compete will determine our economic success. That is one reason why we object to the present draft of the social charter. As I have said, it will lead to the export of jobs to other more competitive countries and will also infringe a principle with the terrible jargon name of subsidiarity, which means that the Community should not set out to do those things that nation states can best do for themselves. It is still possible for our approach to succeed if others are willing.

The Gracious Speech reaffirms Britain's commitment to progressive realisation of economic and monetary union. We strongly support the first phase, which is due to start in July next year and is based on freeing financial markets and services and abolishing exchange controls, which we have already done. The debate on 2 November--I was not quite certain whether the Leader of the Opposition had

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read it in detail--left no one in any doubt that Parliament will not accept stages 2 and 3 of the Delors report. They would remove from Parliament's control powers that are central to its very existence--the crucial matters of economic and budgetary policy. The right hon. Gentleman, almost alone among the Opposition, seems willing to remove such powers. From my careful reading of the debate, I did not get the impression that that was the view of the House. Mr. Giles Radice (Durham, North) rose --

The Prime Minister : I would rather get on, if I may.

The Government have put forward alternative ideas to enable the Community to extend economic and monetary co-operation without intruding on the parliamentary powers of member states and without introducing a new bureaucracy that is not democratically accountable. People who deal with these matters should be democratically accountable, although the right hon. Member for Islwyn did not seem to realise that. Our ideas have been welcomed by many people, among them the president of the German Bundesbank and I am sure that as the debate in Europe develops, aspects of stages 2 and 3 of the Delors proposals will increasingly be questioned by others in the Community as well.

The right hon. Member for Islwyn and the mover and seconder of the Loyal Address spoke about East-West matters. The Gracious Speech also commits us to encourage reform in the Soviet Union and to give every possible support to the remarkable changes taking place in eastern Europe. The Government warmly welcome those changes--

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