HC Deb 19 February 1987 vol 110 cc799-805W
Mr. Soames

asked the Prime Minister if she will make a statement on the achievements of Her Majesty's Government since 1983.

The Prime Minister

Since the 1983 election, the inflation rate has remained low, and in recent months has been around the lowest level for 20 years. Gross domestic product has grown at an average annual rate of about 3 per cent., the United Kingdom is now in its sixth successive year of growth and GDP is at an all-time high. Since 1983, the United Kingdom has topped the European Community's growth league, reversing the position in the previous decade when we came bottom. Non-oil export volumes have risen by an average 8 per cent. a year and investment by an average of 4½ per cent. Manufacturing productivity has risen by over 4 per cent. a year and company profitability is at its highest level for over 20 years. Total employment has risen continuously since early 1983, the longest period of sustained employment growth for almost 30 years, and over 1 million new jobs have been created. The level of the United Kingdom's net overseas assets has almost doubled to £80 billion, yielding annual income approaching £5 billion a year.

The Government have continued to maintain sound public finances. Government programmes have provided better value for money. Public expenditure has been falling as a percentage of GDP since 1982–83 and is planned to fall further over the next three years. The public sector borrowing requirement in both 1985–86 and 1986–87 is likely to be lower as a percentage of GDP than in any year since 1971–72—with or without privatisation proceeds.

The Government have pursued a substantial programme of tax reform. Business taxation has been radically restructured: the United Kingdom now has one of the lowest rates of corporation tax of any industrialised country. For income tax payers, thresholds have been raised in real terms and the basic rate reduced. New schemes for tax relief have been introduced to promote wider share ownership and encourage charitable giving. Stamp duties have been reduced and restructured. Four taxes — the national insurance surcharge, development land tax, investment income surcharge and capital transfer tax on lifetime giving—have been abolished completely.

The programme of privatisation has continued to be highly successful. There have been 11 share sales since June 1983 including most recently the sale of British Airways. The privatisation of British Gas in December 1986 was the largest flotation ever in Europe or America and led to a further substantial increase in the number of people holding shares. The National Bus Company's programme to dispose of its subsidiaries is well under way. Preparations are well in hand for the privatisation of Rolls-Royce, Royal Ordnance, and BAA (formerly the British Airports Authority), and the Government have also announced their intention to privatise the water authorities in England and Wales in the next Parliament.

Further measures have been introduced to improve the operation of markets. Tax changes and the restructuring of national insurance contributions have increased incentives. Changes in employment legislation, the reduction in the powers of Wages Councils effected by the Wages Act 1986 and measures to increase labour mobility have improved the operation of the labour market. Regulations applying to a wide field of industry and finance have been removed entirely; the Building Societies Act 1986 gives societies new lending powers and permits the provision of other services. The small firms sector has been helped by a variety of schemes and the Government's programme of employment and training measures has been improved and extended. The Government have encouraged more competition in the professions.

Following a review in 1983 the Government have introduced a more cost effective and job related regional industrial policy. In 1986 British Steel returned to profitability for the first time in 10 years. The Government have supported a wide range of measures aimed at increasing the amount of research and development undertaken by industry including the Alvey programme in advanced information technology, the LINK programme which brings together academic and industrial researchers in collaborative projects, and the EUREKA initiative for collaborative research in Europe. The National Space Centre has been established.

Productivity per person in agriculture has continued to improve and has helped this sector to provide food to consumers at prices which have risen more slowly than the retail price index. The value of agricultural feed, food and drink exports has risen by an estimated 26 per cent. since 1983.

The task of tackling costly surpluses under the common agricultural policy has been considerably advanced by the agreement of the Agriculture Council in December 1986 during the United Kingdom's presidency of the Community, on reforms of the CAP milk and beef regimes and on an outline package of structural measures. The agreements in the milk sector to reduce Community production with compensation, and in the beef sector to restrict access to intervention whilst retaining the United Kingdom's beef variable premium, constitute the most important single contribution to the process of reform already begun with the agreements to curb over-production in the milk and wine sectors in 1984, and with successive reductions in CAP support prices in real terms in each year since 1983.

The Government have introduced grants to encourage farmers to diversify their sources of income. We have carried forward policies designed to ensure that landscape and conservation interests are maintained, and where possible enhanced, as farmers respond to change.

We secured in January 1983 a common fisheries policy on terms very favourable to the United Kingdom. Subsequent arrangements for the incorporation of Spain into the CFP have fully protected our fishermen's interests. Conservation, control and structural measures have been strengthened, particularly under the United Kingdom presidency of the Fisheries Council.

We have substantially increased the manpower and resources available to the police and have strengthened their powers to deal with public disorder and the controls on their use of firearms. An independent Crown prosecution service is now in operation throughout England and Wales. Measures have been taken to ensure that the terms of imprisonment served by violent offenders fully reflect society's abhorrence of their crimes. Government assistance to the victim support movement has been greatly expanded: £9 million will be provided over the next three financial years to help local schemes.

A wide range of measures are being taken to counter drug misuse. The Video Recordings Act has brought video nasties under control. Legislation has also been put through for data protection; to provide more rigorous control of animal experimentation; to provide a framework for the development of broadcasting by satellite and cable television; to set out a new framework for police powers, for providing safeguards for the citizen and for handling complaints against the police, in the Police and Criminal Evidence Act; and to control the possession and sale of alcohol in connection with football matches. The Government have played a major role in developing international co-operation in the fight against terrorism and has strengthened police powers under the Prevention of Terrorism Act.

The Government have continued to be active in strengthening safeguards against fraud and in ensuring that the probity of our financial institutions is maintained without undermining their competitiveness. The Insolvency Act 1985 increased the scope for disqualifying directors of companies which have gone into liquidation or receivership, and introduced a new liability of directors for wrongful trading. The Financial Services Act 1986 broadens the general regulatory framework within which people in financial institutions have to operate.

The Criminal Justice Bill provides for the establishment of a serious fraud office and other improvements in the investigation, prosecution and trial of fraud offences, based on the recommendations of the Roskill committee.

In education, the Government have introduced many major initiatives to raise educational standards. Many of those affecting the schools were set out in the White Paper "Better Schools" (Cmnd. 9649). We have embarked on a reform of the school curriculum to prepare pupils better for adult and working life. We have given financial support to promote technical and vocational education for 14 to 18-year-olds in schools and colleges and supported pilot programmes for improving the education of lower attaining pupils. We have introduced the GCSE based on national criteria. We are introducing the AS level to broaden A-level studies. We are developing records of achievement for all school leavers. The Education (No. 2) Act 1986 promotes the more effective management of maintained schools and teaching quality within them.

In higher education the number of home students has risen by about 49,000 since 1983 without loss of quality and with a higher proportion studying science and engineering, thanks partly to the Government's information technology initiative and engineering and technology programme. Greater cost-effectiveness has been achieved, especially in the polytechnics where unit costs have fallen substantially. The funding of universities now includes greater selectivity in the interests of concentrating research activity in the best centres.

In further education, development plans have been introduced with gains in relevance and efficiency. Course and qualification patterns continue to evolve, including the certificate of pre-vocational education, which the Government launched in 1983. The work of the Council for the Accreditation of Teacher Education is leading to improvements in initial teacher training, and new specific grant support for in-service teacher training is being introduced in 1987–88. Education support grants are now well established.

The Government have revolutionised vocational education and training for young people through TVEI and two-year YTS. TVEI becomes a national scheme from autumn this year. YTS has given vocational training to over 1 million young people and already over 300,000 have entered two-year YTS. Every unemployed young person under the age of 18 is now guaranteed training leading to a recognised qualification: unemployment need no longer be an option for this group. We have recently announced a major new programme of quality training—the job training scheme — aimed particularly at long-term unemployed people aged under 25. We have established the National Council of Vocational Qualifications to ensure that in future there will be a clear system of relevant vocational qualifications. Through the restart programme, for the first time in this country, we are offering personal counselling and assistance to all long-term unemployed people.

The Government have encouraged new business, particularly through the expanded enterprise allowance scheme, which has helped nearly 200,000 unemployed people to start up in business.

We have continued the reforms which have transformed the industrial relations climate in this country. The Trade Union Act 1984 has promoted and protected democracy in trade union affairs.

In the Health Service, we have continued to develop services for patients. NHS spending has been increased to record levels — nearly £19 billion this year. More patients are being treated than ever before — 5.6 per cent. more in-patient cases in England alone in 1985 than in 1983, and 18.4 per cent. more day cases. We are investing in the largest sustained capital programme ever, costing over £1 billion in the current year. In England, over 400 schemes, each costing over £1 million, with a total value of about £3 billion, are at various stages of planning, design and construction.

There are more doctors and nurses working in hospitals and the community. Since April 1984, the first settlement from the Pay Review Body which this Government established, nurses' pay rates have gone up by just over 10 per cent. in real terms.

The drive for better management continues. Health authorities in England have achieved cash-releasing cost improvements worth over £240 million in the last two financial years, and plan further cash savings of some £150 million this year. A further £130 million is expected to be freed this year from sales of land which the National Health Service does not need.

We have also launched the first major reviews of primary care and community nursing since 1948.

In the social security field, the Government have protected and improved the real value of nearly all the major social security benefits. Expenditure on social security as a whole has never been higher—both in cash and real terms. For example, real spending on the long-term sick and disabled has risen by nearly £6 billion. We have also conducted a major review of the social security system and the Social Security Act 1986 will make the system easier to understand, target help more effectively on those who need it and improve work incentives. Choice will also be widened in pension provision.

In energy, domestic gas and electricity prices have gone down in real terms, gas by 7 per cent. and electricity by 10 per cent. Britain has launched a successful energy efficiency campaign with savings already stimulated of more than £500 million a year in the industrial and commercial sectors. Energy efficiency in the home is proceeding apace and the Government are helping to fund voluntary groups who insulate the homes of low-income families and pensioners. Over 300,000 such homes have been insulated.

Deep mined productivity of coal production is now 60 per cent. higher than it was during the last year of the Labour Government.

In local government, the Greater London council and metropolitan county councils were abolished without the chaos predicted in some quarters, and to the substantial benefit of ratepayers. Legislation has been passed to regulate local authority publicity activities. We are considering the response to consultation on the report of the Widdicombe committee on the conduct of local authority business. We have prevented extravagant authorities from using creative accounting to get more than their fair share of resources, either at the expense of other authorities or, ultimately, their ratepayers. The Rates Act is protecting ratepayers from huge increases in rates in the highest spending councils. The Abolition of Domestic Rates etc. (Scotland) Bill now before Parliament, provides for the abolition of domestic rates in Scotland starting at 1 April 1989. It has been confirmed that a Bill similarly to replace domestic rates in England and Wales will be introduced as soon as possible and not later than the first session of a new Parliament.

Between May 1983 and December 1986 there has been a net increase in the number of dwellings of about 660,000 through new building and conversion in England which has more than kept pace with the growth in the number of households over the period. Since May 1983 the number of owner-occupied dwellings has increased by about a further million and 63 per cent. of all dwellings are now owner-occupied. The discounts available on the sale of council houses and flats have been further increased to encourage tenants to exercise their right to buy.

The Government have encouraged greater diversity in the rented sector by assisting housing associations and private sector landlords. A new Estate Action team has helped local authorities with more than 120 schemes to tackle problems of rundown estates. A scheme of assistance has been provided to the owners of defective houses previously in the public sector.

The Government have continued to promote enterprise, improve the environment and encourage self-help in the inner cities. Five new urban development corporations have been announced in addition to those existing in London and Merseyside docklands. The urban programme, which supports some 12,000 inner city regeneration projects, has been concentrated on the areas of greatest need and potential, and its management improved. The derelict land reclamation programme has been increased substantially and directed towards commercial, industrial or housing development on urban land. Some 34,000 acres have been removed from the land register of unused or under-used public land. Enterprise zones have continued to attract substantial private investment. Powers have been taken to pa) urban regeneration grant to support private sector development packages. The UK2000 initiative has been launched to promote environmental improvement. The Scottish development agency continues to be a major instrument of urban renewal in Scotland and both Scottish and Welsh development agencies continue to play a vital part in economic and environmental policies.

The Government have taken a wide range of steps to simplify and improve the planning system and to speed up its operation, without reducing necessary protection to the environment in town and country.

In transport, London Transport has been transferred from the GLC to London Regional Transport and targets set for better value for money. In its first full financial year under Government control, LRT very nearly achieved its target of halving subsidy for which the Government have allowed three years, while providing additional services to meet increasing demand. The subsidy to British Rail has been reduced by 25 per cent., targets set for a further 25 per cent. reduction in the current level of subsidy and the improvement of customer service, and major new investments approved. The deregulation of local bus services has seen service levels maintained and has stimulated innovation through competition while cutting subsidies. A number of National Bus Company subsidiaries have also been privatised. In England alone during this period the Government have invested £2 billion in the motorway and trunk road system; 110 major road schemes have been completed of which 40 are bypasses and relief roads. The Government are supporting 310 major local authority road schemes through transport supplementary grant, two thirds of which help bypass or relieve communities. Private investment in the Channel tunnel project has already begun even though the Bill has not yet completed its passage through Parliament.

Since 1983 receipts from sales of new town assets have totalled £900 million. Basildon development corporation was wound up on 1 April 1986 and the Government have announced proposed wind-up dates for each of the remaining six corporations. The finances of the corporations have also been put on a more satisfactory basis.

In defence, the capability of our armed forces has continued to be strengthened. The Government have played their full part in implementing NATO's 1979 decision to modernise intermediate range nuclear weapons. Increased efficiency is being pursued by the continuing transfer of resources from the support areas to the frontline, and by introducing increased competition in defence contracts and promoting collaboration with our international partners. A major reorganisation of the headquarters structure of the Ministry of Defence has been introduced.

In foreign policy we have maintained Britain's firm commitment to national defence and the NATO Alliance, and promoted closer European defence co-operation, notably through a revived Western European Union. At the same time we have worked vigorously for a mere stable relationship between East and West and for balanced and verifiable reductions in nuclear and conventional weapons, and for a global ban on chemical weapons. British Ministers and representatives have been active in building up an East-West dialogue and in promoting the arms control process. We played a leading role in the Conference on Disarmament in Europe negotiations which were successfully concluded last autumn. At Camp David last November President Reagan and I agreed upon priorities for arms control after the Reykjavik Summit meeting.

Within the European Community we negotiated a favourable settlement of the longstanding budgetary dispute. We were instrumental in bringing about an agreement on amendments to the EC treaties which should improve Community decision-taking and hasten the creation within the Community of a genuinely free market for goods and services as well as giving for the first time a treaty basis to co-operation in the foreign policy field. The latest British presidency reached agreement on internal market measures and on significant reforms to the common agricultural policy. We have worked actively for maintenance of the world open trading system and the launch of a new round of multilateral trade negotiations.

We reached agreement with China about the future of Hong Kong. The Gibraltar border has been reopened, and negotiations started with Spain aimed at overcoming all our differences over the rock. We have stood by the people of the Falkland Islands.

We have at the United Nations and elsewhere supported the international rule of law and respect for human rights. With our Commonwealth and European partners we have worked towards ending apartheid in South Africa by peaceful means. We have worked successfully for financial and administrative reform in the United Nations and have promoted international co-operation to combat terrorism and drug-trafficking. We have maintained a substantial aid programme—totalling nearly £4,000 million since 1983. We have responded swiftly and generously to appeals for emergency aid to sub-Saharan Africa and bilaterally we have provided effective long-term assistance to some 120 developing countries.