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The Prime Minister (Mrs. Margaret Thatcher)
First, I join the Leader of the Opposition in warmly congratulating my hon. Friends the Members for Pudsey (Sir G. Shaw) and for Lewisham, West (Mr. Maples) on the most excellent speeches that they made in moving and seconding the Loyal Address. My hon. Friend the Member for Pudsey is famous for his wit and affability, and his performance today was even better than his reputation. It was an absolutely marvellous speech. I noticed that he was typically modest about his own contribution to government. We miss him very much—[Interruption.]—but one of the advantages of being on the Back Benches is that we are able to hear him move a most excellent Loyal Address today.
I also congratulate my hon. Friend the Member for Lewisham, West on a typically persuasive and thorough speech. I enjoyed it very much. I have a fellow feeling with him, being a London Member, particularly as we suffer from RAWP in the Health Service, as he knows well. It was a most excellent speech and I, too, hope that he will keep his seat for as long as I have kept mine—[Interruption.]
Order. I did not wish to interrupt the Leader of the Opposition, but will hon. Members below the Gangway kindly refrain from chatting?
The Prime Minister
Let me deal quickly with some of the comments made by the Leader of the Opposition before making my remarks on the Gracious Speech.
There are now far fewer pensioners on low incomes today than there were—[Interruption.]
The Prime Minister
There are far fewer pensioners on low incomes today than there were 10 years ago. Ten years ago, 38 per cent. of pensioners were in the bottom one fifth of national income. Today, only 24 per cent. of pensioners are in the bottom fifth—an enormous improvement.
Domestic electricity costs 8.1 per cent. less in real terms today than it did five years ago. But it is quite misleading for the right hon. Gentleman to suggest that we can have all the environmental improvements and all the improvements in electricity and water quality without [column 20]having to pay the price. Of course there is a price for environmental improvement, and we should believe that it is a price worth paying.
A report by scientific experts which was put before the North sea conference, which was held in Britain, confirmed that the state of the North sea was generally good and that environmental damage was largely confined to localised areas such as the German and Dutch Wadden seas. If people are interested in the cleanliness of rivers, they might turn their attention to cleaning up the Rhine.
With regard to the RUC, I may point out that expenditure in 1986–87 was £319 million—[Interruption.]
Order. I have drawn to the attention of right hon. and hon. Members seated below the Gangway my views on talking during the speech by the Leader of the Opposition. I now say to those seated above the Gangway, and especially to those who are members of the Opposition Front Bench, that they should not seek to interrupt the Prime Minister.
Mr. Allan Rogers (Rhondda)
On a point of order, Mr. Speaker. When my right hon. Friend was speaking, there was noise not only from below the Gangway but from the Government Front Bench, about which you, Mr. Speaker, said nothing. Frankly, I resent the threat that you, Mr. Speaker, make to my right hon. and hon. Friends on the Opposition Front Bench.
There is no question of a threat. I say to the hon. Member for Rhondda (Mr. Rogers), who is a member of the Opposition Front Bench, that he should set a good example.
The Prime Minister
The Leader of the Opposition referred to the resources available to the RUC. In 1986–87, they totalled £319 million. For the current year, 1988–89, £385 million will be available, and next year a figure in the region of £414 million will be available to the RUC. That is a substantial increase in resources for that brave police service.
The right hon. Gentleman referred also to the clinical grading of nurses. Almost half a million nurses, midwives and health visitors will have to be regarded, and nearly £1,000 million has been provided for that purpose by the taxpayer. The overwhelming majority of nurses are very satisfied with their grades. There is a very limited amount of trouble, and my right hon. and learned Friend Kenneth Clarkethe Secretary of State for Health will be seeing the Royal College of Nursing. Most taxpayers do not understand why, when they have provided the amount for that award in full, there is still trouble. We hope that we will get an improvement in the Health Service.
The Leader of the Opposition finished by making the astonishing claim that things are being more centralised. I counter his claim very strongly. In taxation, for example, the Government are taking a smaller proportion of the national income; the right hon. Gentleman wants the Government to take a bigger proportion. In nationalisation, we are privatising and taking powers away from the Government and giving them to the people. In education, we are giving far more powers to parents and taking them away from central Government. In council housing, we are giving far more opportunity to the people to have capital than the Leader of the Opposition would ever have given. In share ownership, more opportunity has come from the Government to the people. All those are movements of [column 21]power from central Government to the people, giving them far more independence—which is something that Opposition Members cannot stand because they want people to be totally and utterly dependent upon the state for pretty nearly all their needs and wants.
I turn to the Gracious Speech—[Interruption]
Order. I say to both sides of the House, if we cannot have freedom of speech in this place, where can we have it? We ought to set an example by listening to one another in silence and with mutual respect.
The Prime Minister
The Gracious Speech makes clear the Government's determination to hold to firm and successful economic policies. We shall continue to bear down on inflation, to keep firm control of public spending, and to promote enterprise. Those are the policies that have brought a period of unparalleled prosperity to the British people—prosperity that has been shared by all income groups.
We are now in the eighth successive year of economic growth, averaging over 3 per cent. In terms of output per head in manufacturing we have not yet caught up with our main competitors, but after two whole decades—the 1960s and 1970s—when the United Kingdom was at the bottom of the growth league, in the 1980s we have climbed to the top of the table.
Unemployment has now fallen for 27 months in succession. Over the last year, it has been falling in all regions, and the unemployment rate has fallen faster than in any other major industrial country. Growth has been spread widely across the economy. In particular, manufacturing output is at its highest ever level. These policies have produced extra resources for public spending priorities, such as the Health Service, pensions, the disabled, scientific research, defence and the police services. But total public spending, although it is at record levels, now accounts for less than 40 per cent. of national income—for the first time in over 20 years.
The extra spending has been financed soundly, but combined with lower tax rates. At the same time public borrowing has been eliminated, and we are now on target for a budget surplus of some £10,000 million in the current financial year. As a result, the burden of debt interest will fall, thus releasing more resources within the same total of public expenditure for priority programmes. That is truly a virtuous circle.
The achievements under this Government reflect the new vitality of our economy. This year the number of small businesses is increasing at a rate of nearly 1,000 a week, and since 1980 manufacturing productivity has been growing at over 5 per cent. a year. Under the last Labour Government it averaged only just over 1 per cent. a year. Buoyant investment across all sectors is further strengthening our economic potential.
For the public sector, the plans set out in the Autumn Statement provide an additional £2.25 billion of capital spending next year, taking the total to over £25 billion. For example, there will be £440 million more for public sector housing and £250 million more for water and sewerage investment, taking this year's total capital investment in water to £1,500 million. There will be £220 million more for motorways and trunk roads, taking this year's total capital investment to £1,310 million. There will also be £170 million more for the Health Service. [column 22]
Investment by the private sector has been growing rapidly. Total private investment in 1987—some £60 billion—was over 15 per cent. higher in real terms than in any year under the last Labour Government. Now, in the first three quarters of 1988, investment by the manufacturing, construction, distribution and financial industries is 13.5 per cent. higher than it was in 1987.
With all the talk about investments by overseas businesses in the United Kingdom, let us not forget that British businesses are expanding their overseas holdings and investments at a far higher rate. In the 12 months to June this year, the value of takeovers by overseas companies in this country was £2,900 million. In the same period, British businesses made over 550 overseas acquisitions, with a value of £13,700 million—over four times as much.
These are investments that are earning—and will continue to earn—a big return for Britain as the revenue from North sea oil diminishes.
Mr. Tam Dalyell (Linlithgow)
Does the Prime Minister approve of the Australian bid for Scottish and Newcastle Breweries plc and the moving of its major financial headquarters out of Edinburgh?
The Prime Minister
The hon. Gentleman knows that the bid has been referred to the Monopolies and Mergers Commission. He is well aware that while that reference is being considered, it is utterly improper for any Minister to make a statement about the matter.
Industrial profitability has risen every year since 1981, so business today is able to finance a large part of its investment from retained profits. However, the personal sector also needs to save. Considerable attention has rightly been given to the fall in the savings ratio and to the increase in personal borrowing. Much of that extra borrowing is by people who are buying their own homes or by people who are purchasing shares, insurance policies, and so on. However, some of the borrowing has been for the purchase of consumer goods, too many of which are imported—a major factor in the deficit on current account.
If savings and investment are to be kept in reasonable balance, borrowing must be checked, so that non-inflationary growth can be sustained. That is why we have raised interest rates. The highest rates will take time to have their full effect, both to exert downward pressure on inflation and to help reduce the deficit on trade—[Interruption.]
The Prime Minister
Of course, higher interest rates are unpopular with some people, although they are good for those who save, including many millions of old people. They are the right response because the defeat of inflation is, and will remain, the top priority.
I shall now speak about the legislative programme. The Gracious Speech outlines a full programme of legislation. Its main provisions can be summarised under three headings. First, there are provisions that deal with industry and commerce; secondly, there are those particularly concerned with the care, protection and education of children; and, thirdly, there are measures for safeguarding the security of the realm, fighting terrorism and combating crime and hooliganism, such as the Football Spectators Bill. [column 23]
I shall deal first with industry and commerce. Under that heading, we have two major privatisation measures for water and electricity. The Water Bill will be a major environmental measure as well—[Laughter.]
The Prime Minister
The Bill will establish a new public body, the National Rivers Authority, to take over the responsibilities of water authorities in England and Wales in relation to controlling and reducing water pollution, resource management, flood defence, fisheries, recreation and navigation. The Water Bill will also establish a new statutory framework for the control of drinking water quality and river quality.
Mr. Simon Hughes (Southwark and Bermondsey)
Will the Prime Minister give way?
The Prime Minister
I shall give way at the end of this section.
The Bill will enable the existing water authorities in England and Wales to be replaced by new limited companies, which will then be privatised. It will also provide for the appointment of a director general of water services to keep the services under review and to protect the interests of consumers.
Mr. Simon Hughes
If the Government are so committed to the environment, why do they propose to privatise the water industry, which will make the private consumer pay a considerable amount more, instead of shouldering the burden of expenditure for environmental improvements, which is what the public want? They want the water industry to be retained in public ownership, as they have overwhelmingly argued.
The Prime Minister
The Government have only the taxpayers' money. Some hon. Members speak as if there were some other source of money. If we want environmental improvement, it will cost money. There will soon be environmental improvement concerning nitrates in water. It will be the people who want those improvements in water who will have to pay. It is utterly irresponsible to suggest that we can have those improvements without being prepared to pay the price for them.
An Electricity Bill will be introduced to privatise the electricity supply industry in England, Wales and Scotland.
In England and Wales, in order to promote competition, the Central Electricity Generating Board's generating capacity will be split into two companies. The area electricity boards will also be privatised as 12 independent supply companies, and the national grid will be transferred to a new company jointly owned by the suppliers.
In Scotland there will be two independent companies broadly based upon the existing Scottish electricity boards.
In England and Wales we aim to maintain the proportion of electricity produced from nuclear power at the current level, which would mean four more nuclear power stations, including Sizewell, by the year 2000. That in itself—[Interruption.] That in itself—[Interruption.]
The Prime Minister
I said, “we aim to” —[Hon. Members: “Oh!” ] Of course, if hon. Members had been listening, they would have heard that. Maintaining nuclear power at the current level itself will help to mitigate acid rain and the greenhouse effect. A real culprit in the greenhouse effect is the vast amount of carbon dioxide that is produced from burning coal in power stations.
The two Bills show our determination to secure the advantages of privatisation for each industry, their customers and the taxpayer while at the same time making a major contribution to the establishment of improved environmental standards.
Under the same heading of industry and commerce, the coming Session will also include legislation to transfer the Scottish Bus Group to the private sector. This will give a further boost to enterprise in Scotland and will create new opportunities for employee participation, wider share ownership and investment, which, of course, Opposition Members hate.
A Companies Bill will be introduced to improve and simplify procedures for companies and to improve merger control. The Bill's proposals on merger policy cover voluntary pre-notification of mergers and provision for enforceable undertakings rather than reference to the Monopolies and Mergers Commission.
Turning to the second area of legislation, which concerns social measures, the House will recall that the School Boards (Scotland) Act 1988 extended parental involvement in schools. We now propose to introduce an Education (Scotland) Bill which would extend freedom of choice for parents in the Scottish education system by granting them the right to vote for the removal of their school from the central management of an education authority. The Bill would provide that such a self-governing school would remain publicly funded by direct Government grant and would not be able to charge fees; would be run by a board of governors representative of parents, teachers and the wider community; and would retain its denominational character.
Mr. James Sillars (Glasgow, Govan)
Is the Prime Minister aware that that measure will be totally abhorrent to the vast majority of people in Scotland and that it will simply reinforce detestation of her and her policies? Is she further aware that in Scotland she now has as much credibility and legitimacy as her new pal, General Jaruzelski, has in Poland?
The Prime Minister
On the latter point, when the hon. Gentleman was a member of the Labour party and the Labour party governed Britain without a majority in England, he did not complain and neither did we because we believe in the United Kingdom. I recognise that he does not.
With regard to the hon. Gentleman's comments on the Education (Scotland) Bill, of course he does not want to extend choice to ordinary people—he is a Socialist.
A further important measure will be the Children's Bill which will reform the law on child care and family services. It will take into account the recommendations of the report on child abuse in Cleveland. Children are entitled to protection from harm and abuse, and innocent families from unnecessary intervention by the state.
The Bill will replace the existing fragmented and overlapping provisions on child care and family law. It will improve the procedures governing the removal of children [column 25]from their homes in emergencies, while strengthening parents' rights to challenge court orders. It will redefine local authorities' responsibilities towards children in need, and address the difficult questions which arose in Cleveland of parental access and medical examinations.
The Bill will also implement reforms in private child law covering custody and guardianship. Taken together, the proposals will form a unified and consistent code in respect of the care and upbringing of children. Nothing could be more important, and I hope that the Bill will have the support of all hon. Members.
Mr. D. N. Campbell-Savours (Workington)
The Prime Minister set out what might appear at first glimpse to be progressive legislation. Will she give us an absolute guarantee that every social services department in the country that complains today that it has not the staff to monitor even current legislation will be given the money to ensure that it has the staff to carry out that function properly?
The Prime Minister
The money that they receive takes important duties into account. If some local authorities did not waste money on other things, they would have more money to give to important things. It is not only the amount of money but its good use and way in which it is managed.
A major Local Government and Housing Bill will also be brought forward to introduce in England and Wales new arrangements for local authority housing finance and home improvement grants, and local authority capital finance. Additionally, the Bill would give effect to several key proposals contained in the Widdecombe report on the conduct of local authority business.
The third group of measures concern safeguarding the security of the realm and fighting terrorism. Section 2 of the Official Secrets Act 1911 will be replaced by a narrower and more closely defined provision. Its aim will be to ensure that the criminal law penalises, and penalises effectively, only those who make unauthorised disclosures of official information which do unacceptable harm to the public interest.
The House had an opportunity to debate the Government's proposals in July, and the Bill that we shall introduce will take account of points in that debate and elsewhere. I believe that the new Bill avoids what are generally accepted to be the unsatisfactory aspects of the old Act and provides a more effective safeguard against the unauthorised disclosure of information.
A Bill will also be introduced to put the Security Service on a statutory basis, under the authority of Douglas Hurdthe Secretary of State. The legislation will set out the functions of the Security Service and will reaffirm ministerial responsibility for the service. It will replace the published 1952 directive to the Director General of the Security Service from the then Home Secretary—known as the Maxwell Fyfe directive. The legislation will follow the structure approved by Parliament in the Interception of Communications Act 1985.
This country owes much to the work and dedication of our security service. The Government believe it is right to provide the service with the authority and clarity of a statute.
Mr. Merlyn Rees (Morley and Leeds, South)
At first sight, the measure seems to be a great improvement. What will it mean in terms of accountability to the House?[column 26]
The Prime Minister
In precisely the same way as the Home Secretary and myself have always been accountable to the House—[Interruption.] We do not, as the right hon. Gentleman knows, ever say anything about operational matters. The right hon. Gentleman knows that Conservative Members always supported his decisions on the security service, even when his own party did not.
Several Hon. Members
The Prime Minister
I shall make one more point, because I have a lot more to say. It might help.
From what Mr. Speaker said, I understand that the Opposition have chosen to debate home affairs tomorrow. My right hon. Friend Douglas Hurdthe Home Secretary will then say more about this Bill, which we hope to publish tomorrow so right hon. and hon. Members will be able to see precisely what is in it.
To strengthen our defences against those who preach and practise violence, especially in Northern Ireland, we are taking a number of steps in addition to those already announced. First, we shall introduce a Bill to require candidates in local elections in Northern Ireland to sign a declaration not to support violence. It is deeply offensive to the great majority of people in Northern Ireland that there should be those who openly support and, indeed, advocate violence in local council chambers. The Bill is intended to prevent such statements and activities.
Secondly, we shall be re-enacting the Prevention of Terrorism Act 1984, including the power to exclude known terrorists from part or all of the United Kingdom, as well as the power to arrest and detain those suspected of terrorism.
The Bill will also include new provisions, in three respects. First, it will make it an offence to be involved in handling or holding funds for terrorist purposes. The police will be given new search powers to assist them in tracing those funds and the courts will be able to order their forfeiture when a conviction is obtained. The provisions follow those used successfully against drug traffickers.
Secondly, for Northern Ireland, the Bill will also reduce the remission granted to prisoners servicing sentences of five years or over for terrorist offences from one half to one third of their sentence.
Thirdly, the Bill will provide that anyone out on remission from a sentence of more than one year, who is then convicted of a terrorist offence, will have to serve the full unexpired portion of his earlier sentence as well as whatever new sentence is given.
Those provisions will mean that those found guilty of terrorism will spend longer in prison. They should act as a further deterrent to those who contemplate acts of terrorism and violence.
The Government are determined never to give in to the terrorist, but to do everything in their power to defend society against terrorism. We hope that our determination will enjoy the unanimous support of the House. But I have to note that right hon. and hon. Members opposite have consistently voted against the existing legislation. I believe that this is seen by the terrorists and their supporters as a sign of weakness. I hope that those Opposition Members will take the opportunity to correct that impression, and to demonstrate that they share the Government's determination to deal firmly with terrorism, by voting for the Bill. [column 27]
The Gracious Speech reaffirms the Government's determination to maintain strong and effective defences while striving to break down the barriers between East and West. There is no contradiction between those aims: indeed, they complement each other. It is a sense of security which gives countries the confidence to negotiate and discuss their differences. If we adopted the policies advocated by the Opposition, there would be no need for others to negotiate with us, because they would be able to get all they wanted without it. Fortunately, the Government take very seriously their responsibility to maintain and update our defences, especially while the Soviet Union's military strength continues to expand with ever more sophisticated weapons.
Mr. Patrick McNair-Wilson (New Forest)
Does my right hon. Friend realise that there is some concern about keeping the level of conventional forces sufficiently strong to deter, as she suggested in her last remarks? There is some concern, too, about the replacement for the Chieftain tank. Can my right hon. Friend tell the House when we will have a decision on whether the order will go to the British company, Vickers, or to the American company, General Dynamics?
The Prime Minister
As my hon. Friend knows, in the Alliance we are trying to secure unified proposals to negotiate with the Soviet Union on conventional weapons.
Secondly, a decision has yet to be taken on the replacement of the Chieftain tank, but I do not expect that it will be very long before we take it.
Thirdly, the provisions announced by my right hon. Friend the Chancellor in his Autumn Statement mean that the defence budget will grow by nearly £1 billion a year over the next three years. That is the measure of the Government's determination to ensure that our forces have the most modern and up-to-date equipment, both nuclear and conventional. I hope that those who criticise Britain for not being sufficiently European will reflect that, when it comes to making a real contribution to Europe—both our financial contribution to the Community and our military contribution to the defence of Europe beyond our own borders—we are second to none.
I was able to discuss many of those issues with Vice-President Bush during my visit to Washington last week. I am glad to say that he wants to see the special relationship between Britain and the United States continue in all its strength, including, of course, the arrangements for Trident, which is so vital to our defence. It was clear, too, from my talks that our views and those of the new Administration on all the main issues of defence, arms control and East-West relations will continue to be very close indeed.
At the same time, Britain is in the forefront of efforts to overcome East-West divisions. My own recent visit to Poland—welcomed by both the Polish Government and by Solidarity; indeed, by everyone except the Labour party—is evidence of that. What the Labour party cannot bear is that one can go to eastern Europe and the Soviet Union, believing in strong defence, ready to speak up for our democratic beliefs and for human rights, and still receive a warm welcome.
Mr. Dennis Skinner (Bolsover)
On the subject of travelling around the world, if the Prime Minister believes [column 28]that it is right for her to have spent, I think, £5 million of the taxpayers' money during the past nine years, why is she stopping the Queen from going to Russia?
The Prime Minister
As the hon. Gentleman knows, we do not discuss this matter. The matter has not been addressed in any way at all—[Interruption.] It is completely hypothetical.
The official visit of President Gorbachev and Mrs. Gorbachev in December will be another opportunity to discuss how we can take forward our aim of more peaceful and stable relations, as well as to hear more about his plans for reform in the Soviet Union. The visit is further evidence of the weight which Britain's views on all these matters now carry in the world. It is the result of the Government's success in rebuilding our economy, strengthening our defences and restoring our reputation—success which will make the years ahead great ones for this country.
The first Session of this Parliament was the fourth longest this century—it enacted 44 Government measures. The coming Session will be shorter, but it is a full programme which carries forward our policies and our commitments in a number of important areas. I commend it to the House.