Engagements

HC Deb 09 July 1997 vol 297 cc928-36

Q2. Mr. Stevenson

To ask the Prime Minister if he will list his official engagements for Wednesday 9 July. [5921]

The Prime Minister

This morning, I signed the NATO-Ukraine charter; later today I will have meetings with Cabinet colleagues and with others.

Mr. Stevenson

Is my right hon. Friend aware that the additional £2.3 billion made available for education in the Budget statement is extremely welcome? Is he further aware that the fact that £1.3 billion of those additional resources is coming from the windfall tax and is earmarked to begin to address the Tory legacy of crumbling schools is even more welcome? The task now is to ensure that those resources are made available to schools. Will he ensure that that takes place as quickly as possible?

The Prime Minister

I certainly shall. It is the largest cash injection into schools that has been made by any Government ever, and it has been made in part—[Interruption.]—and it is a good deal better than anything afforded by the last Conservative Government. It has been made and it will be carried through—

Mr. Hague

rose—

The Prime Minister

Just a moment.

It will be carried through and dedicated to improving standards in schools.

Mr. Hague

Is the Prime Minister aware of the serious impact of the Budget on local government pension funds? What estimate has he made of that impact, and what plans does he have to compensate them for it?

The Prime Minister

The Budget measures on pensions were entirely right and necessary. They were right, first, because they remove an unjustified bias in the tax system, and secondly because they deal with the problems of public finances that were left by the previous Administration. As for the justifiability of that, I shall quote from an article in the Financial Times a few days ago: abolition of the tax credit is a reform whose time has come. It was an article by the previous Chancellor's tax adviser.

Mr. Hague

Perhaps we can now have an answer to the question. Has the Prime Minister read the view of the Local Government Association—which is, after all, Labour-controlled—that such a measure would result in a loss of income to pension funds of some £300 million per annum in local government? Has he read the view of the hon. Member for Putney (Mr. Colman), a member of his party, that no such increase could be afforded by local authorities without making further cuts to services to their local residents? Which cuts does he have in mind—or is he prepared to compensate local authorities for the hundreds of millions of pounds that they will have to pay for this ill-thought-out tax increase?

The Prime Minister

I like the cheek of a Conservative party person telling us that we should pay more money to local government. As a matter of fact—[HON. MEMBERS: "Answer."] As the right hon. Gentleman—

Mr. Luff

Answer.

The Prime Minister

As the right hon. Gentleman must be aware, the revaluation for local authorities does not take place for another two years. The stock market has actually risen 11 per cent. since the general election. If he knew what he was talking about, he would realise that the increase in capital value is the best news there could be for pension funds.

Mr. Hague

The Prime Minister cannot patronise his way out of it. What he said was meaningless waffle. Anyone who knows anything about pension funds knows that a prudently run pension fund does not simply assume that increases in investment value in years to come will rescue it from its cash flow problems today. Is he aware that Staffordshire county council has said today that it will have to move £1.5 million from local services into its pension fund in the coming year? Is he prepared to see that happen, or will he compensate?

The Prime Minister

The right hon. Gentleman asked me about prudence. Let me tell him what prudence means. [HON. MEMBERS: "No!"] All this from the party that presided over the biggest pensions misselling scandal in this country. I will tell him what prudence means; it means two things. It means, first, that we deal—

Mr. Luff

Local government.

The Prime Minister

It means, first, that we deal with the appalling situation in our public finances inherited from the previous Government, which means that, because of the doubling of debt under the Government in which the right hon. Gentleman was a Minister, this year we shall pay out in interest payments almost as much as we spend on the health service.

Mr. Luff

Local government.

The Prime Minister

Prudence also means that we tackle—[Interruption.]

Madam Speaker

Order. Mr. Luff, keep calm.

The Prime Minister

Prudence also means that we must take the measures to combat inflation necessary for the long-term health of this country. No doubt the difference between us and the right hon. Member for Richmond, Yorks (Mr. Hague) is that we shall take those long-term measures; he will not.

Mr. Hague

That was just more waffle. The Prime Minister obviously does not know how local authorities will deal with this situation. Given that he said before the election that there were no plans to increase tax at all", and that he has now introduced 17 tax rises in a single Budget, and given that he said that he would do his "best by British pensioners" and is now making pension funds bear the brunt of those tax increases, does he now regret saying in the election campaign: people want honest politics, and they are going to get it"?

The Prime Minister

They did, because we promised the windfall tax, and delivered it; we promised more money for health and schools, and delivered it. Let me tell the right hon. Gentleman that, after the record of the Government that he supported, no one will take any lessons on broken promises from him.

Mr. Hume

Does the Prime Minister agree that the terrible events of recent days in Northern Ireland are basically and fundamentally symptoms of the underlying and deeper disease—our failure as a people to agree on how to live together—and that the symptoms have been truly terrible? Will he therefore agree and make clear that it is a priority of this Government to do everything in their power to promote agreement, and therefore to promote stability, and lasting stability? Does he agree that the process leading to that could best take place in an atmosphere in which there was a total moratorium on all street activity and all marches?

The Prime Minister

Let me say this to my hon. Friend: the situation in Northern Ireland over the past few days has been appalling and tragic for all the people in Northern Ireland. My right hon. Friend the Secretary of State for Northern Ireland, to whom I pay tribute for her courage and determination, has been trying—as have we all—to do the best in good faith in a situation in which all the available options are difficult.

I would ask my hon. Friend and the other people involved in Northern Irish politics, recognising all the pressures that are on them, just as there are on us, to try as best they can to keep the wider process for a lasting political settlement going. It is a terrible situation, but I am not going to give up on Northern Ireland. I am going to carry on searching for a solution. I believe that, if there were good will on all sides, and a little give and take, understanding and reason, a solution could be found.

Q3. Mr. Baldry

Does the Prime Minister appreciate that the hundreds of thousands of people gathering in Hyde park tomorrow will do so because they feel misunderstood and threatened by what they perceive as an urban-based Labour party seeking to impose urban values on the countryside? Although it is always possible for any Government with a large majority eventually to drive through any legislation, there can be little merit in legislation which alienates so many people who live in the countryside. [5922]

The Prime Minister

The Labour party represents many rural constituencies—not least my own—as well as urban ones. The matter will be presented in the form of a private Member's Bill; there will be a free vote on it in the House of Commons, with Members on both sides free to make up their minds. Of course we value what happens in the countryside. Some of the allegations that have been made—that we intend to ban shooting, fishing and all the rest—are nonsense. The debate should at least he conducted with reason on both sides.

Q4. Mr. Cranston

Is my right hon. Friend aware of the warm welcome in the country, particularly in my constituency, for the extra £1 billion to be spent on the national health service? Will he give the House a commitment that the Government will continue to implement their manifesto promise to improve the NHS after the depredations of the Conservative party? [5923]

The Prime Minister

I certainly shall. [Interruption.] Conservative Members may shout about it, but for those who work in the health service, £1 billion more is well overdue.

Mr. Ashdown

Yes, but of course not this year. Will the Prime Minister confirm, in terms of the control totals, that last week's Budget means £5 billion less next year for public services?

The Prime Minister

No. That is not correct. The right hon. Gentleman keeps getting confused about the prediction on forward inflation, which we have revised as a result of the problems that we inherited—[HON. MEMBERS: "Ah!"]—and thank goodness we now have a Government dedicated to tackling those problems instead of avoiding them. The cash going in for schools and hospitals is precisely the money that we promised, and more than the right hon. Gentleman asked for.

Mr. Ashdown

I think it odd that the Prime Minister finds it difficult to agree with what his Red Book plainly says on page 102: the money will be diminished. The Institute for Fiscal Studies, like the Library of the House of Commons, calculates the reduction at £5 billion next year. Of course the Prime Minister is right to say that any extra money for education and health next year will be welcome, but it will be significantly reduced, beyond what the Chancellor said, by the effect of inflation. There is still £5 billion to come from elsewhere in the public services. Is that supportable, and where will it come from?

The Prime Minister

All that happened in the Budget is that the inflation prediction was revised upwards as a result of objective circumstances. The cash limits will remain. The additional money is going into health and education.

Opposition Members opposed the windfall tax on the privatised utilities, so there would have been no money for a school repairs programme if we had adopted the policies of the Opposition parties. The only way we shall sort out the problems in our public finances is to put the Budget deficit on a proper and secure footing. As a result of the changes that the Budget has made, within a few years we shall be cutting public debt, borrowing will be under control and we will be able to move into surplus. That is prudent finance.

Q5. Mr. Timms

The Prime Minister will be aware that, of the 6 million or so personal pensions sold since 1988, at least 500,000 were missold, in that people who bought them would have been better off had they kept what they began with. The determination that the Government have shown in sorting out that mess is welcome, and I welcome what my hon. Friend the Economic Secretary said about that this morning.

However, what steps do the Government propose to renew the probity of the financial services industry so that scandals of that kind do not continue to erupt, as they were allowed to do under the previous Government? [5924]

The Prime Minister

My hon. Friend is absolutely right. Indeed, the Economic Secretary announced today that she has received back representations from 24 of the companies most involved in the scandal of pensions misselling. The result so far of what they are doing is disappointing, so we intend to put further pressure on them to deal with the problem. That is the real difficulty that many people face at the present time, and we are determined to deal with it.

As my hon. Friend rightly points out, it is not merely that nothing was done about this under the previous Government; but their proposal to take tax relief on pension contributions away from people coming into the schemes would have hit everyone investing in pension funds a great deal harder.

Mr. Nicholas Winterton

The Prime Minister and his party are currently all-powerful. The House and the country accept that. He will be aware of the industrial problems in British Airways. Given that the general secretary of the Transport and General Workers Union is a strong supporter of the Prime Minister and his party, and that Mr. Boh Ayling, the chief executive of British Airways, is a personal friend and supporter of the Prime Minister, will the Prime Minister now use his authority to bring that problem to an end and prevent the inconvenience that will be suffered by many people and their families over the weeks ahead?

The Prime Minister

I sympathise greatly with the distress caused to the travelling public as a result of the dispute. I hope that it is resolved as quickly as possible, but it must be resolved by management and trade unions. I seem to remember a great number of lectures from the Conservative party once upon a time about leaving those matters to be determined by management and unions.

Q6. Mr. Khabra

Will my right hon. Friend send a message of congratulations and best wishes to the people and state of India on the 50th anniversary of their independence? Will he confirm that the Government are committed to strengthening our relationship with the largest secular democracy in the world? Does he recognise that the Asians and the blacks are making a useful contribution to the development of a multicultural and multi-religious society in this country? [5925]

The Prime Minister

I entirely agree with my hon. Friend's remarks about the contribution made by the Asian and black communities to the society in which we live. We shall celebrate the 50th anniversary of India's independence both in India and Pakistan and back here in this country. I understand that you, Madam Speaker, will attend special celebrations in India. The granting of independence to India and the strong ties that grew up then between that Labour Government and India will be strengthened under this Labour Government.

Q7. Sir Michael Spicer

If the people of Denmark vote no in the referendum that their Government have allowed them on the treaty of Amsterdam, will that render the entire treaty null and void? [5926]

The Prime Minister

No. That is a matter for Denmark to decide. The idea that this country should have a referendum on the Amsterdam treaty is one of the most absurd propositions that has been advanced in recent times. What happens in Denmark is a matter for Denmark, and does not affect us.

Q8. Mr. Rammell

Comprehensive schools in my constituency of Harlow have been successfully streaming pupils by ability for decades, to the significant advantage of the pupils in those schools. In the light of that experience and the Government's White Paper on education, does my right hon. Friend agree that there is all the difference in the world between that kind of successful streaming by ability in the same school and selection at the age of 11, which condemns four out of five children to permanent failure? [5927]

The Prime Minister

I agree with my hon. Friend. The proposals made in the White Paper are right. We need to modernise the comprehensive principle to take account of pupils' different abilities, but within the comprehensive system. That is why we support initiatives such as those being taken in schools in my hon. Friend's constituency. We do not believe that the right way to go is to return the entire system to the old 11-plus. It is right that we modernise the comprehensive system. That and other proposals in the White Paper will make a great deal of difference to the education system.

Q9. Mr. Sanders

What support will the Government give to the proposed international English riviera film festival in April 1998? [5928]

The Prime Minister

I thank the hon. Gentleman for giving me advance notice of that question; otherwise, it would have been rather difficult for me to answer it.

I wish the festival well. I cannot promise Government money, but the hon. Gentleman will know of the tremendous help that my right hon. Friend the Chancellor of the Exchequer has given to the film industry in the Budget. The hon. Gentleman will also know that a working party has been established by my right hon. Friend the Secretary of State for National Heritage to examine ways to develop more. British films and to contribute to what is already a British success story but could he an even greater one. I wish the hon. Gentleman's festival well.

Mr. Canavan

If the Drumcree fiasco was the least worst option, what on earth was the most worst option? In future, will the Government go for the best possible option, by treating both communities in Northern Ireland in an even-handed way?

The Prime Minister

We treat, and have treated, both communities in an even-handed way. It was an extremely difficult decision. The advice that was given by the head of the Army in Northern Ireland, Sir Rupert Smith, and by the head of the Royal Ulster Constabulary, was to the effect that the march should go ahead. If my right hon. Friend the Secretary of State for Northern Ireland had disagreed with that advice and overturned it, she would have been subject to even more criticism. Those are difficult—actually, impossible—decisions to make in a way that satisfies everybody.

People must keep their minds focused on what is important—the wider process leading to a lasting political settlement. It is appalling that intransigence on both sides obscures the fact that the vast majority of people in Northern Ireland want and deserve the chance of a lasting peace there. It could be done if people would understand that, if it is to be achieved, it requires their commitment all the way through.

Q10. Mr. Burstow

Does the Prime Minister realise that the extra £1.25 billion for education and schools next year will be almost entirely wiped out by the extra £1.2 billion real cut in local authority spending next year as a consequence of the increase in inflation in the Budget? Does he therefore accept that, next year, when it comes to giving more to education, local authorities will be confronted with the choice between making real cuts in social services, policing and other vital services? [5929]

The Prime Minister

To repeat the point I made earlier, the hon. Gentleman is not right to say that the change made in the Budget predictions has altered the facts of the situation. The money going into schools and hospitals is real money. The £1.3 billion dedicated to the schools repair programme is in addition to anything that the hon. Gentleman's party has proposed. If the Liberal Democrats called for a vote against the Budget, that would leave the situation as it is, and no extra money would go in.

Mr. Sheerman

Is my right hon. Friend aware that the British manufacturing sector believes that the recent Budget is the best in living memory for that sector? [HON. MEMBERS: "Oh."] Wait for it. But is he also aware of some of the disturbing trends this week, such as the downturn in engineering and other manufacturing industries that depend on exports? Will he keep a careful eye on the strength of the pound and its impact on employment and jobs?

The Prime Minister

My hon. Friend is absolutely right on both counts. The cuts in corporation tax and in tax treatment for small businesses—which is the best package for companies, particularly the small business sector—have been widely welcomed.

People will face difficulties as a result of the rising pound, but it is important to recognise that we will put economic management on a stable footing only if we take the decisions in relation to monetary policy and fiscal policy that allow for balanced growth. As a result of the situation that we inherited from the Conservatives, we must deal with problems on both those counts.

It is no use Conservative Members' shaking their heads: if we do not deal with those problems, we will be left with a structural deficit in our public finances and no proper control over monetary policy, which is bad for business. That is the difference between government and opposition.

Q11. Mr. Llwyd

Will the Prime Minister tell the House which way he will vote on the hunting Bill, and why? [5930]

The Prime Minister

I have voted before in favour of a ban on fox hunting, and I shall continue to do so. I believe that a ban may be imposed without the massive destruction to the countryside that some people fear. We are all entitled to make up our minds according to the evidence. That is what I intend to do, and I suggest that other hon. Members do likewise.

Q12. Mr. Pickthall

Does my right hon. Friend agree that the proposals that will be advanced by the European Commission next week represent a major shift towards the Labour Government's policy of massively changing the common agricultural policy? Does that not provide an opportunity to start shifting resources from subsidising production to environmental work in the countryside, and to move from intensive farming to extensification? [5931]

The Prime Minister

We welcome those proposals, if they have been described correctly. A change in the common agricultural policy is most important both for the future of Europe and for British contributions in Europe. If that is happening, it is a big change of heart on the part of the European Commission and other European partners, and it is very welcome.

Mr. Townend

As the Government need to speak with one voice, will the Prime Minister tell the House whether the Government have changed their position on the single currency? Has Lord Simon, who was fanatically against the single currency before he became a Minister—I am sorry: who was fanatically in favour of the single currency—changed his view since he became a Minister?

The Prime Minister

The hon. Gentleman seemed to have difficulty summarising my noble Friend's views. The Government will keep the option open and judge the situation according to Britain's national interests. That is the right way to do it.

Q13. Mr. Purchase

Does my right hon. Friend agree that the antics last week of the hereditary peers down the Corridor in trying to sabotage Labour's election pledge to hold referendums in Scotland and Wales—

Mr. Nigel Evans

Not on different days.

Mr. Purchase

The poor chap is demented: what can one do?

Does my right hon. Friend agree that those antics make the ending of the House of Lords in its present form more certain than ever—which, for many, cannot happen too soon? [5932]

The Prime Minister

My hon. Friend is absolutely right: the measure was passed in another place only as a result of the votes of hereditary peers. It is also true that more hereditary peers—twice or three times as many—take the Conservative Whip in the House of Lords than there are Labour peers. If we are looking for constitutional wrongs, what could be more wrong than the Conservative party depending on hereditary peers to pass the measures that it cannot get through this place because it lost the election?

Q14. Mr. Blunt

Following the Budget's cynical smash-and-grab raid on private pensions, what provision have the Government made for people who will now wish to opt back into the state earnings-related pension scheme? [5933]

The Prime Minister

As I have already said, it is absolute nonsense to suggest that the measure will deprive people of their proper pensions—it will not. Which party first cut tax credits? The Conservatives. Our proposal is a great deal better than that advanced by the Conservatives before the election: to remove tax relief on people's pension contributions. That really would have hurt people's pensions.

Mr. Mallon

Does the Prime Minister agree that the most fundamental implication of what the Chief Constable did and said, and of the Government's decision, at the weekend is that it signals in a most dangerous way that, in circumstances such as those at Drumcree, decisions are made not on the basis of natural justice, equity or any semblance of principle but on the threat of greater force—paramilitary force—and the threat of greater disruption? Is it not the role of Government to address and, if necessary, confront that threat of force and to prevent that disruption, rather than to trample on the legitimate rights of those against whom the threats have been made?

The Prime Minister

I well understand my hon. Friend's anger, but the difficulty with this situation is that there are legitimate rights on all sides and the problem is how those are balanced out in extremely difficult circumstances. We are trying to take all these decisions in the best possible interests of the people in Northern Ireland. We have tried to do that throughout. It is a very difficult situation.

Let us be quite clear: the first thing that we should all be doing is totally condemning the violence that has erupted in the past few days. It has no proper justification. I do not want to repeat what I said earlier, but, if we focus on a lasting political settlement and the possibility of achieving it, we will realise that this is a difficult set of circumstances and we are going to have to get through it the very best we can.

However, I know from the past couple of weeks that my right hon. Friend the Secretary of State for Northern Ireland has been trying, in total good faith all the way through, to do her best by the people there. It is very difficult, if not impossible, but she is right to try to carry on, and I will carry on searching for that settlement.

I urge my hon. Friend and all others, once they have got over their understandable anger and dismay at what is happening, to get back to the only thing that offers a future to the people of Northern Ireland—a lasting political settlement that allows the consent of people in Northern Ireland to be uppermost. If we do that, we have some chance.