House of Commons Hansard Debates for 15 Oct 1990

Mr. Major : I am grateful to my hon. Friend for his comments about our entry into the exchange rate mechanism, and I share the views that he has expressed about it. On economic and monetary union, I share my hon. Friend's concern about the destination for which some in the European Community are heading at present. I believe that our proposals represent the right way to proceed, and we shall argue for them very strongly indeed in the intergovernmental conference.

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Mr. Leighton : Is the Chancellor aware that pegging sterling at nearly DM3 to the pound is virtually equivalent to signing the death warrant of British manufacturing industry? Is he aware that it is a crazy, stupid and misguided policy? I prophesy that he has it wrong and that the pound will not stay at DM2.95.

Is the right hon. Gentleman also aware that going into the ERM makes absolutely no sense if we do not want stages 2 and 3 of the Delors plan? I am glad that the Prime Minister is paying attention, because she blusters, huffs and puffs, but in the end always gives way. That is what she has done again.

Mr. Major : I did not notice my right hon. Friend the Prime Minister giving way and accepting the European budget which the Labour party left us in 1979.

With regard to competitiveness, I have a good deal more confidence in British industry than do Opposition Members. I simply do not understand why Opposition Members persistently talk down the capacity of our industry to compete.

Mr. Michael Grylls (Surrey, North-West) : Does not my right hon. Friend agree that the tightening of money since mid-1988 has done a good job--no one can ever say again that high interest rates do not work in bearing down on inflation--and that that is why he took his decision on the ERM last week? Does not my right hon. Friend also agree that the Opposition's policy of trying always to suggest an alternative to high interest rates, such as discredited credit controls, proves again that the Opposition are wrong?

Mr. Major : I entirely agree. Our inflationary problem was substantially the result of the dramatic growth of demand. Monetary policy has brought that growth of demand down and will increasingly bring down inflation.

Dr. David Owen (Plymouth, Devonport) : Can we assume that the Government are opposed only to the imposition of a single currency and that they would go along with an optional single currency? Is not such flexibility over monetary union essential if we are to enlarge, as I think we must, to include Czechoslovakia, Hungary and Poland? By insisting on a single currency for everyone, we are effectively ensuring that the European Community will remain only a 12-member Community.

Mr. Major : On the second point, I entirely agree with the right hon. Gentleman. We believe that it is in the longer-term interests of Europe to ensure that the Community of 12 can become a larger Community to admit the increasingly emergent democracies in eastern Europe. We would be wise to do nothing to inhibit their entry at a later stage by decisions taken at an early stage.

An imposed single currency is not only difficult in terms of the concerns of the House of Commons, with which I have full agreement, but also has real econonic dangers for many European nations and we will continue to make those plain. For that reason, we believe that the market-led hard ecu approach is right.

Mr. Ian Taylor (Esher) : Does my right hon. Friend share my dismay about the fact that the right hon. and learned Member for Monklands, East (Mr. Smith) appeared to judge only one criterion of the level of inflation- -the RPI--when a much better guide to the trend is the tightening of monetary aggregates? Will my right hon. Friend take credit for taking sterling into the

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exchange rate mechanism at the earliest possible time when it was clear that monetary aggregates would lead to declining inflation? Will he also repeat and underline the fact that, on a purchasing power parity basis, the DM2.95 central rate will not render British industry uncompetitive and that British industry must now take that rate into account when judging future costs and wage rounds?

Mr. Major : On purchasing power parity, my hon. Friend is entirely right. I quoted some figures earlier which are a clear illustration of that. I am grateful for my hon. Friend's earlier remarks.

Mr. Giles Radice (Durham, North) : Despite the potential advantages of joining the ERM, is not the trouble with the Government's decision of 5 October the fact that it was taken at the wrong time, for the wrong reasons and at the wrong rate? In view of all the suspicions and concerns of our Community partners, would it not be good for the Government to say that they intend to be a bona fide member of the exchange rate mechanism and that they intend to take a constructive attitude at the intergovernmental conference in November?

Mr. Major : We will take a constructive line at the

intergovernmental conference in November, but a constructive line for the future of Europe does not necessarily mean agreeing to each and every plan that may be promoted by one part of the European Community. A constructive line may well mean standing up for British interests and what we see as the long-term interests of Europe. I give the hon. Gentleman an undertaking that we will do that. We will certainly be bona fide members of the exchange rate mechanism. I made it clear today that, as soon as it is appropriate, we will move to the narrow bands. I do not share the hon. Gentleman's view that it was the wrong time to enter. I believe that it was the right time to enter, and that is why I did so.

Mr. Ian Stewart (Herefordshire, North) : Will my right hon. Friend confirm that it was his view that it was appropriate for a first reduction in interest rates to be made which led to his decision to enter the ERM at that time, and not the other way round, as has been generally suggested against his momentous decision? Despite the constraints of the EMS in future, can he assure us that he will do his best not to be pressed into any reductions in interest rates unless and until he judges that they are appropriate in the light of domestic economic and monetary circumstances?

Mr. Major : I certainly confirm the latter point. On the first of the important points that my right hon. Friend made, I think that it was the right time to cut interest rates and to enter the exchange rate mechanism. Indeed, the monetary conditions--first, the fact that narrow money is in its target range ; secondly, the fact that broad money growth has fallen every single month since January ; and thirdly, the fact that bank lending is now decelerating and the indications that one can see of the flat housing market and other matters in the real economy--were classic signs that interest rates needed to be cut by 1 per cent.

I also felt that it was the right time to enter the mechanism. I also had to bear in mind the fact that, since an interest rate cut was clearly justified, if it had preceded

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entry, it might have been seen as an attempt to drive the exchange rate down in advance of entry or, alternatively, a signal that we were not going to enter for some time. Both of those would have caused market turbulence. Fortunately, it was the right time to do both, and we did.

Mr. Harry Ewing (Falkirk, East) : Is the Chancellor aware that it ill becomes Conservative Members who apparently cannot survive on £26,500 a year to lecture the workers of this country about the need to accept low wage increases in the present pay round? May I be the third hon. Member to ask the Chancellor--on two or three occasions, he has mentioned devaluing the currency--to spell out to the House and the country what powers are available to correct his own mistake if he has got it wrong? If he refuses to explain that, we can only assume that he has left himself without any power.

Mr. Major : On the hon. Gentleman's first point, the requirement to spell out clearly the implications of unaffordable pay increases is clear. If people do not know that avoidably large wage increases will cost jobs, they may then negotiate wage increases that would create unemployment, and nobody wishes to do so.

On the second point, I do not accept the hon. Gentleman's premise that we have gone in either at the wrong time or at the wrong rate, and events will bear that out.

Mr. Anthony Nelson (Chichester) : I congratulate my right hon. Friend on the most welcome statement that he has made today. Does he agree that most people in this country, in addition to lower mortgage interest rates, want to be paid and to save in a currency which is strong, stable and valuable? Does my right hon. Friend agree that, having taken the momentous decision to join the exchange rate mechanism, we have taken a most important step towards economic and monetary union from which there can be no turning back?

Mr. Major : I am grateful to my hon. Friend for his kind remarks about our entry into the exchange rate mechanism. The exchange rate mechanism will play a significant part in assisting other aspects of policy to bring down the rate of inflation so that savings will have a secure value. I entirely share my hon. Friend's view on that matter. I do not necessarily draw the same conclusion about future developments towards monetary union.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : If it is such a favourable exchange rate, does the Chancellor now expect a favourable balance of trade, particularly with West Germany?

Mr. Major : As I have pointed out on several occasions during the past few moments, the purchasing power parity rate, which is what matters, is more favourable than many other people have yet considered. If the hon. Gentleman will wait and see, events will give him his answer.

Mr. Quentin Davies (Stamford and Spalding) : I congratulate the Chancellor on his momentous decision. Does he agree that this is the first time since the Labour devaluation in 1967 that British industry faces the disciplines of a regime of credibly stable exchange rates? It is also absolutely clear from this afternoon's proceedings that the Labour party remains at heart a party of

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devaluationists. The vital thing is for both sides of British industry to take on board the full enormous importance of the changed circumstances that they now face.

Mr. Major : It could not be put more clearly, and I entirely agree with my hon. Friend.

Mr. Jim Sillars (Glasgow, Govan) : Does the Chancellor recall quoting the experiences of other countries entering the ERM? Does he agree that it is a fair parallel to cite the French

experience--another weak currency like our own--on entering the ERM? Is it not the case that the French had not only to maintain very high interest rates and introduce credit controls, but to tighten their fiscal policy? Why does the Chancellor think that he can get away with a very loose fiscal policy, when the French had to tighten theirs?

Mr. Major : I think that the hon. Gentleman is overlooking several facts. First, we have a very tight fiscal policy and fiscal surplus, which the French did not ; secondly, we have put in place a whole series of supply side improvements, but the French have not ; thirdly, they have a socialist Government pursuing socialist policies and we have not.

Mr. Hugh Dykes (Harrow, East) : Is my right hon. Friend aware that his decision 10 days ago has been almost universally welcomed in this country? It is a significant step forward, as is his reminder yet again today that the eventual single currency will be reached by agreement, not imposition, which is, after all, the Community habit and was at the specific request of Heads of Government when they asked Mr. Delors to draw up the plans.

Mr. Major : I am grateful to my hon. Friend for his support on those matters, which I greatly welcome.

Ms. Clare Short (Birmingham, Ladywood) : Is not the truth about the timing and level of our entry to the ERM the short-term interests of the Conservative party? The Chancellor thinks that, via an overvalued exchange rate, he will buy, for a short time, a cut in inflation and the stability to cut interest rates. After the election has been called, we shall see a terrible recession because the exchange rate is overvalued. Surely the danger for the Chancellor is that the markets have read all this, and that therefore the pound will drop in value. He will not get his desired outcome --the cut in interest rates--as the whole strategy will blow up in his face. That will be the price he pays for acting in the interests of the Tory party rather than the British economy.

Mr. Major : The hon. Lady and her party should not judge us by their standards. Entry into the ERM is not about short-term advantages and long- term costs--in reality it is almost precisely the reverse. There will be short-term restrictions on policy in return for the long-term advantage of lower inflation. That is the right way to proceed.

Mr. George Walden (Buckingham) : May I congratulate my right hon. Friend on making it clear in his speeches, notably at the party conference, that the success or otherwise of the ERM ultimately depends on self- discipline within the economy? I note his hope, his appeal and his wish for lower wage rates. Will he also make it

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clear to the country that there must be no resurgence of the bloated house prices that played such a large part in our inflation in the first place if this policy is to succeed?

Mr. Major : I absolutely share the views that my hon. Friend has expressed. The way in which house prices took off a couple of years ago added significantly to our difficulties--they took off after the election, so they did not help us win--and they represented a considerable complication in policy.

My hon. Friend is entirely right as well in what he says about wage rates, which should apply to management as well as the work force.

Mr. Doug Hoyle (Warrington, North) : Will not the Chancellor admit that, despite his brave words, British manufacturing industry is not competitive, at almost DM3 to the pound? If it is not competitive, what will the result be? In the early 1980s, the Government destroyed almost 30 per cent. of British manufacturing industry, now the rest of British industry will also go down the plughole because of the Chancellor's folly, dictated not by reliance on economic strategy but by political expediency.

Mr. Major : The hon. Gentleman may feel that, but if he does, he is wrong. In addition, I do not agree with his remarks about competitiveness. I reiterate my point that the size of the trade gap--which I have publicly stated I regret--is essentially the result of excess demand over our capacity to supply at home, no lack of competitiveness. That is why our export performance has been so good.

Mr. Ivan Lawrence (Burton) : Will my right hon. Friend acknowledge that, necessary and commendable as entry into the ERM may be, there is nevertheless widespread concern in the country that it will inevitably lead not only to economic and monetary union but to a form of single currency and centralised banking control, and of control over our economy and taxation policies that will take away this nation's national sovereignty and replace it with the elements of a European super-federal state? Will he make it absolutely clear that under no circumstances will the Government's policies end at that destination?

Mr. Major : I am happy to tell my hon. and learned Friend that I see no prospect of us moving towards a federal state.

Mr. Graham Allen (Nottingham, North) : Does ERM mean exchange rate mechanism of election rigging manoeuvre? Will the Chancellor explain clearly and simply to the House what mechanism exists to devalue the pound within the ERM?

Mr. Major : I will tell the hon. Gentleman precisely what ERM means- -it means an assistance towards low inflation. I am not contemplating devaluation, which is the traditional policy of Opposition parties, not a Conservative Government.

Mr. Andrew Rowe (Mid-Kent) : My right hon. Friend is of course aware that the belated conversion of the Labour party's Front Bench spokesmen to welcoming membership of the European Community reflects their hope that by doing so they will belong to a socialist Europe. Does he accept that, although many of us welcome the fact that we are being moved closer to Europe, we wish to see a

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Conservative Europe and welcome his latest manoeuvre because it gives us a voice in the central policies of the European Community?

Mr. Major : I am grateful to my hon. Friend. What has become crystal clear during this questioning, to a greater extent than I imagined, is that the Opposition are split on the issue of the exchange rate mechanism. Their Front Bench spokesmen want to go in, but their Back Benchers are already asking how to come out--that is how split they are.

Several Hon. Members rose--

Mr. Speaker : Order. I have to have regard for the subsequent business, an important debate on financial services and the European market, in which some hon. Members now standing wish to participate. I shall take three more questions from each side and then we must move on.

Ms. Joyce Quin (Gateshead, East) : Is the Chancellor aware that a document that the House will be considering shortly--the Government's official response to the report of the Select Committee on Trade and Industry on the EC and financial services--clearly states that ERM entry will be considered only

"when the level of United Kingdom inflation is significantly lower."

In view of that statement, will the Chancellor admit that, for political reasons, the Government have made a complete about-turn?

Mr. Major : That is a very charming attempt, but I will not. The relevant factor is not the historic inflation rate when we were not in the exchange rate mechanism but what the inflation rate will be when we are in the exchange rate mechanism.

Mr. Edward Leigh (Gainsborough and Horncastle) : Does my right hon. Friend agree that membership of the ERM makes sense to a Government committed to national economic sovereignty only if it is seen not so much as a cosy support system but as a measure of fiscal rectitude equivalent to the old gold standard? In that sense, what hope would there be for any Government who retained membership of the ERM but pursued policies of high spending, borrowing and taxation, and low interest rates, as a Labour Government would? Would not that send the pound not so much floating as crashing through the floorboards?

Mr. Major : That, of course, crisply put by my hon. Friend, is why Opposition Back Benchers hate the idea of the exchange rate mechanism and would never, in practice, have let a Labour Government enter and, in the unlikely event of a Labour Government coming to power, they would seek to bring them out. I hope that the markets and our colleagues in Europe understand that.

Mr. Robert Litherland (Manchester, Central) : The Chancellor puts great emphasis on self-discipline. If

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voluntary wage restraint did not come up to his expectations, however, would he ever consider a wage freeze?

Mr. Major : I do not think that the experience of wage freezes in the past 20 years--under Governments of both major parties--has been at all satisfactory, and I do not envisage our taking such action. The reason why I set out so clearly the importance of the wage round is that the sooner that it is clearly understood by both sides of industry that it is necessary for wage increases to be only those that are affordable, the less will be the impact in the form of job losses.

Mr. Graham Riddick (Colne Valley) : Does my right hon. Friend agree that one of the more distasteful aspects of the whole ERM debate has been the way in which Mr. Jacques Delors has been saying that the inevitable next step is a single currency whether Britain likes it or not? Will my right hon. Friend confirm once again that the inevitable next step is no such thing, and that the present Government will not be dictated to by this Brussels bureaucrat?

Mr. Major : I am happy to reiterate to my hon. Friend that we are not at all in favour of stage 3 of the Delors plan, and that we intend to pursue very fiercely our own plans for a market-led approach.

Mr. Win Griffiths (Bridgend) : Everyone knows that the Government have been thinking about joining the exchange rate mechanism for 11 years, and that they have been looking into it particularly deeply during the past five. Given this amazing conjunction of events, and the Chancellor's emphasis on the reduction in inflation, can he tell us the expected rate of inflation on a quarterly basis until October next year, and also what estimate has been made of the rate of unemployment in the same period?

Mr. Major : I shall do that in the Autumn Statement--as is traditional--at some stage in November ; the precise date is as yet unclear.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak) : Does my right hon. Friend accept that many of us were disappointed by the rather churlish response of the right hon. and learned Member for Monklands, East (Mr. Smith)--for whom many of us have considerable regard--when my right hon. Friend has done precisely what was asked of him only a week ago, by reducing interest rates and joining the ERM? Is this because the Opposition have recognised--it has been brought home to them--that what we must have are the same kind of wage increases, in relation to productivity, as other European countries ; and that, if Rover and Ford car workers ask for 13 per cent. when Benz and Volkswagen workers are asking for 3 per cent., there is no way in which that can prove successful, whoever are in office?

Mr. Major : My hon. Friend is smack on the button : I entirely agree. I confess, however, to feeling some sympathy for the right hon. and learned Member for Monklands, East. It is not easy to try to ride two horses in that circus.

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Shootings (Jerusalem)

4.33 pm

Mr. Dave Nellist (Coventry, South-East) : I seek to move the Adjournment of the House under Standing Order No. 20, to consider an urgent and specific matter which should have immediate attention, namely,

"Britain's relations with the Government of Israel following the massacre at the Al-Aqsa mosque".

Last Monday, 8 October, was the bloodiest day so far in Israel's 23-year occupation of Jerusalem, the West Bank and the Gaza Strip. Twenty-one Palestinians were slaughtered and 150 were injured when live ammunition was again used against civilians in the area of the old city which the Jews call the Temple Mount and the Moslems call the Noble Sanctuary ; 11 Jewish worshippers were injured by stones in the lower area known as the western wall.

For five days last week, the United Nations laboured mightily--and, in my view, brought forth a mouse. The House should consider urgently whether three assistants from the Secretary General's office, sent as a mission 23 years after Israel's occupation, really constitute a serious response. Certainly, millions will contrast the rapid deployment of a task force to the Gulf following Iraq's invasion of Kuwait with the fact that, 23 years after Israel's invasion of the west bank and the Gaza strip, and after nearly three years of intifada, during which more than 800 Palestinians have been killed, the Secretary General is sending three assistants.

Should you, Mr. Speaker, grant it, the debate could and should illuminate this by considering the words of the former United States Assistant Defence Secretary, Laurence Korb, who said that the Gulf task force was obviously about oil because,

"if Kuwait grew carrots, we wouldn't give a damn."

Well, the Palestinians may not grow many carrots, but they certainly grow olives and citrus fruit, and it seems that the world, or at least the bit represented in the Security Council of the United Nations, does not give a damn.

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Yesterday, The Observer reported Palestinian doctors who treated survivors as saying that medical evidence showed that the police had fired wildly ; and Doctor Mustapha Bargouti of the Al Makassed hospital, whom I had the honour of meeting in Jerusalem about 18 months ago, spoke of

"indiscriminate shooting and in one case we found 14 bullets in one man".

Of 120 people treated at his hospital, 32 were still being treated, including a four-year-old with a rubber bullet in his brain. What security risk was posed by a four-year-old seven days ago in the Noble Sanctuary to result in a rubber bullet in his brain? I end with a call for a debate. There was no excuse for the slaughter. The middle east needs an end to these slaughters and to the occupation. As a socialist, I think that we need a federal solution that guarantees rights to a homeland for Palestinians and the state of Israel. Israel must come out of the occupied territories and these slaughters must end.

Mr. Speaker : The hon. Member for Coventry, South-East (Mr. Nellist) asks leave to move the Adjournment of the House, under Standing Order No. 20, for the purposes of discussing a specific and important matter that he believes should have urgent consideration, namely,

"Britain's relations with the Government of Israel following the massacre at the Al-Aqsa mosque."

I have listened with care to the matter that the hon. Gentleman has raised. As he knows, I have to decide whether to give his application precedence over the business set down for today or tomorrow. I hope that at some stage it will be possible to debate these important matters, but I have to say that the matter that he has raised today does not meet the requirements of the Standing Order and I therefore cannot submit his application to the House.

STATUTORY INSTRUMENTS, &c.

Ordered,

That the draft Hovercraft (Application of Enactments) (Amendment) Order 1990 be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. Boswell.]

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Financial Services and the Single European Market Motion made, and Question proposed, That this House do now adjourn-- [Mr. Boswell.]

[Relevant documents : The fifth report from the Trade and Industry Committee (House of Commons Paper No. 256 of Session 1988/89) on Financial Services and the Single European Market and the Government Reply contained in the Committee's second special report (House of Commons Paper No. 598 of Session 1988/89).

European Community documents Nos. 4454/89 on guarantees issued by credit institutions or insurance undertakings, 6208/90 on "Capital Adequacy of Investment Firms and Credit Institutions", and the unnumbered explanatory memorandum submitted by the Department of Trade and Industry on 13 July on investment services.]

4.37 pm

The Secretary of State for Trade and Industry (Mr. Peter Lilley) : I welcome this opportunity to debate the development of the single financial area in Europe. Before I begin, I wish to apologise to the hon. Members for Gateshead, East (Ms. Quin) and for Redcar (Ms. Mowlam) if there has been a failure of communication on my part, although it has the happy result, from my point of view, that I have the opportunity to debate with them. I suspect that we shall find that, although we may have occasional disagreements over measures, we shall have a large measure of agreement on our final objectives. I begin by paying tribute to the work of the Select Committee on Trade and Industry, whose excellent report forms the prelude to this debate. The Government agree with the bulk of the Committee's findings, as we made clear in our response. Like the Committee, we believe that the creation of a single European financial area should open up opportunities for one of Britain's most important industries. Indeed, the British Government have been the foremost exponent and supporter of the single market programme as a whole and of the single financial area in particular.

The single market is a natural extension of the policies of competition, deregulation and free markets which we have implemented domestically, and the single market programme was largely the brainchild of the British Commissioner Lord Cockfield. The unique and original feature of the single market programme was the idea of mutual recognition. Essentially, once a business or process has been authorised and is supervised in one country, all other member states agree to recognise that the business is duly regulated. It will therefore be allowed to do business or to set up branches in their states without undergoing further authorisation. This paradigm is particularly applicable in the financial services industry, as we shall see.

Implementing the single market in financial services is of special importance to the United Kingdom. Financial services are an area in which the United Kingdom has a relative advantage ; that is clear from the Cecchini report, which shows that in many aspects of financial services United Kingdom industries' costs are lowest and their financial products are the most competitive.

The importance of the financial services industry to the United Kingdom's economy is shown by the number of people that it employs--some 2.7 million as against 1.6 million only 10 years ago. I refer advisedly to the United

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Kingdom financial services and not just those of the City of London, because the United Kingdom also contains Scotland, which is our second most important financial centre. The financial services industry is already the largest industry in Scotland, having increased employment by 40 per cent. since 1979. Its contribution to Scottish GDP has grown at the rate of 6.3 per cent. per annum compound. The City of London is one of Britain's most important economic assets. It has the world's largest foreign exchange market, more cross-border equity transactions are carried out in London than in any other world market centre, and the Lloyd's insurance market is unique.

Mr. D. N. Campbell-Savours (Workington) : It is now generally recognised throughout the City that the exchange rate mechanism statement and the base rate cut were leaked. Evidence of that is to be found in the FTSE 100 index, which went up 16 points, from 2,035 to 2,051, in the 90 minutes before the Chancellor's statement. We are told that the City is properly regulated. Will there be a leak inquiry and will the Minister ask the stock exchange surveillance department for a report on what happened during those one and a half hours so that there can be the fullest possible inquiry? May we have an assurance that this matter will not be brushed under the carpet, because many dealers and speculators in the market made millions of pounds in that 90 minutes as a result of having price-sensitive information.

Mr. Lilley : The hon. Gentleman has an unattractive habit of assuming that any allegation is automatically true. Allegations are examined by the authorities that we have established. I shall deal with that later.

All these businesses in the United Kingdom produce a total net income for the balance of payments of more than £6.5 billion per annum and the Government continue to create the conditions for further success. Taxes on business and on individuals have been brought down to more internationally competitive levels and the Chancellor's forthcoming abolition of stamp duty and the change of basis for the taxation of futures and options represent two further breakthroughs for our financial markets.

The strength of the British industry has been accumulated over generations, but it has been based particularly on two factors--its relative openness to competition and the rest of the world and its relatively high standards of integrity and reliability for which the London market is renowned. The Government have been particularly keen to reinforce both strengths. Hence, on the competitive side, the abolition of exchange controls and the removal of restrictive practices prior to big bang. Both these changes intensified domestic competition, encouraged more international players to base themselves in Britain, and consolidated London as the great world financial centre in this time zone.

Raising the standards of probity in financial markets and seeing that these higher standards were properly enforced has been a Government priority since our inception. In 1980, we brought in the first legislation against insider dealing. In 1981 we appointed Professor Gower to review the whole body of law on financial services and investor protection. His report led to the Financial Services Act 1986.

In 1988 we set up the Serious Fraud Office, with its special powers under the Criminal Justice Act 1987, and

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