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Mr John Major (Huntingdon)

With permission, Madam Speaker, I should like to make a statement on the Halifax summit, which I attended with my right hon. Friend the Foreign Secretary, my right hon. and learned Friend the Chancellor of the Exchequer and my hon. Friend the Minister of State, Treasury. I have placed the communiqué and the chairman's statement in the Library of the House.

As last year, the summit was in two parts. We started with a G7 meeting focusing on economic matters and were then joined by President Yeltsin for a G8 meeting on wider political issues.

In the G7 countries, growth averaged 3 per cent. last year, with the United Kingdom growing somewhat faster. The issue of most concern is the continuing high level of unemployment, particularly in continental Europe. Unemployment, for example, across the western European states in the European Union is currently at 11 per cent. We are all agreed on the policies needed to tackle that. They are those set out in the G7 jobs conference last year and taken forward in the recent Organisation for Economic Co-operation and Development study: more flexible labour markets, deregulation and the scrapping of restrictive practices, and better training and education. Those are the policies being pursued by the Government of this country, which have led to unemployment falling by more than 600,000 in the past two years.

We agreed to hold another jobs conference in France next year to review progress on those issues. All countries will be represented by Finance and Employment Ministers, and further consideration will be given to including others, such as Education and Trade Ministers, as well.

Last year at Naples we agreed to conduct a review of international institutions. At Halifax we have drawn up a series of specific proposals to strengthen the Bretton Woods institutions and the United Nations.

We all agreed that the most effective way to tackle exchange rate instability is the pursuit of sensible economic policies domestically. Finance Ministers and central bank governors will maintain close co-operation on economic surveillance and on exchange markets. We also agreed on a range of measures to strengthen co-operation between the world's financial regulators and supervisors on such matters as prudential standards and transparency. Among the proposals for the international financial institutions, I would single out those aimed at improving the International Monetary Fund's early warning mechanisms and its ability to handle crises where prevention fails.

The summit also discussed the problems of poverty and sustainable development. We agreed in particular to encourage better use of all existing World bank and IMF resources to tackle the substantial burden of multilateral debt faced by some of the world's poorest countries. That is an area where the UK has taken the lead in pressing for action. All G7 countries have now agreed to explore the option of pledging some of the IMF's gold, and we and some others will continue to argue the case for modest outright sales of gold to help reduce the debt burden.

This year is the 50th anniversary of the United Nations. We all wish to see a strong and purposeful UN, able to play the full role envisaged under its charter. We agreed that reform is essential if the UN is to continue to meet the demands placed upon it. We have made a number of proposals for eliminating duplication and waste, and consolidating and streamlining the UN's economic and social bodies.

We shall be actively pursuing those proposals in partnership with the rest of the UN's membership, as decisions on them are not solely for the G7. We also recognised the need for the UN to be properly financed. All UN member states should meet their financial obligations and agree to reform the system of assessment.

The G7 gave a strong push to the next stage in liberalising world trade. There is unfinished business from the Uruguay round, as well as new areas to be tackled, including non-tariff barriers, investment and Government procurement.

We dealt with a number of other issues, including the environment, where we agreed on the need to review and, where appropriate, strengthen the commitments that we made at the 1992 Rio summit. We also discussed international crime, where the G8 has taken up our suggestion to establish a high-level group to look at existing arrangements for co-operation against crime and to make practical proposals to improve them.

President Yeltsin played a full part in the political discussions. He described the tragic consequences of the taking of hostages by Chechen guerrillas in Budyonnovsk. The crisis, which has claimed many lives, has taken a new turn today. The guerrillas are now reported to be leaving, by agreement, but with a large number of hostages as well as Russian deputies and journalists. I hope that there will be no further loss of innocent lives, but the wider problem of Chechnya remains. We urged President Yeltsin to do all that he could to find a political solution.

Terrorism has been a problem in many of our countries, and we agreed to set up a better system for exchanging information about terrorist incidents and methods of dealing with them. We also agreed to President Yeltsin's proposal to hold a special summit in Moscow next year to discuss a range of issues on civil nuclear safety.

On Bosnia, Security Council resolution 998 on the reinforcement of UN protection forces was adopted on 16 June. The summit supported the new rapid reaction force, which the UK and France have helped to establish. President Clinton said that he had not yet secured congressional approval for that force to be funded from UN assessments, but made it clear that he wanted the US to share in the financing.

Following new offensives in Bosnia, summit leaders called for an immediate moratorium on military operations so that political negotiations based on the contact group proposals could resume.

Over the past day, the remaining protection forces' hostages have been released and the level of fighting has decreased. There has so far been no significant change in the military situation as a result of the latest offensives, and we continue to believe that this question will not be solved militarily.

Bosnia clearly remains in a dangerous phase. Mr. Carl Bildt, the former Swedish Prime Minister, is about to begin his mission as the European Union's negotiator. He will do so with the strong support of all the eight summit nations.

This was a summit that addressed a range of primarily long-term but in some instances short-term issues: growth and employment; the reform of international institutions; the debt problems of the poorest countries; pushing forward free trade; the conflict in Bosnia; and terrorism.

The people of Nova Scotia gave the summit a conspicuously warm welcome. That helped to make it a friendly and productive meeting without the over-elaborate formalities that have often characterised previous summits. That is something that I have pressed for for some time, and I hope that we can take the process forward even more next year.

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Mr Tony Blair (Sedgefield)

I broadly welcome the statement that the Prime Minister has just made. I shall deal with it briefly under four key headings: Bosnia; global finance; action on jobs and the environment; and other related matters.

On Bosnia, the Prime Minister knows that we support the deployment of the rapid reaction force. May I simply press him, though, on its role? Is the intention that it be limited mainly to the protection of UNPROFOR troops, or will it be more vigorous in implementing the UN mandate, for example, in trying to secure convoy routes or in the policing of safe areas? I add our regret that the United States Congress has not thought it right—yet, at any rate—to contribute to the funding of the force. Can the right hon. Gentleman say whether that is likely to change? Are there other measures with which the US is proposing to help?

Was it impressed on President Yeltsin in particular that continuing pressure on Serbia by Russia is essential to a solution in Bosnia? Did the Prime Minister make it clear to Mr. Yeltsin, as other leaders did, that our desire for him to act over Serbia, and our deploring of any acts of terrorism by Chechen guerrillas, does not mitigate our concern for minimum standards of proper conduct on all sides in the handling of the crisis in Chechnya?

On global finance, I regret that the Government's proposals on the use of gold sales to help the debtor nations did not find support. Does the Prime Minister agree with us that the summit was disappointingly empty of new measures to assist poverty in the poorer countries? Does he further agree that such measures are in the interests not just of those countries but of the wealthier nations, too?

It is clearly right, especially following the financial crisis in Mexico, that the IMF pays greater attention to the way in which a crisis is prevented rather than merely to the way in which it is resolved once it has happened. I therefore agree with the improvements that have been suggested to allow for a better early warning system where problems have arisen and with the key benchmarks agreed on the publication of economic and financial data, but does the Prime Minister accept that doubling the IMF's general arrangement to borrow, as has been agreed, to allow earlier intervention in an emergency, is sensible, but only if the other reforms that have been agreed and the tough conditions necessary are put in place?

I also welcome the increased emphasis on co-operation over banking regulation in the wake of Barings, but is not the central issue the revolution in the globalisation of the financial and currency markets, which now wield massive speculative power over the Governments of all countries and have the capacity seriously to disrupt economic progress?

Apart from the general words—[Interruption.] Conservative Members may find this a problem of no account at all—but that is hardly surprising—but I think that most sensible people do. Apart from the general words in the communiquéé, were there any specific proposals as to how the G7 countries—[nterruption.] I do not think that Conservative Members realise that the G7 summit specifically drew attention to those problems, and most sensible people would regard it as intelligent to ask questions of the Prime Minister on them.

Apart from the general words in the communiqué, were there any specific proposals as to how the G7 countries could promote the greater stability in the new financial world that they have asked for?

On jobs, without such stability, job prospects are much bleaker, and the Prime Minister will know that the G7 suggested, as well as the elimination of unnecessary regulation, a greater emphasis on investment in skills. Will he not therefore reconsider the irresponsible cut of around 20 per cent. in the Government's budget for training the long-term unemployed? Does he agree with the emphasis in the communiqué not just on jobs, but on jobs of quality that pay wages that allow people to enjoy decent living standards?

As for the environment and related matters, especially nuclear power, we welcome the statement on the environment and, in particular, the decommissioning of Chernobyl nuclear power station. But is the Prime Minister as sanguine as the G7 appears to be about the state of the other nuclear power stations in the former eastern bloc? The chairman's statement mentions the importance of bringing the chemical weapons convention into force at the earliest possible date; what are the Government's current plans for its ratification, and when can we expect legislation?

We also welcome the initiative on fighting international crime and terrorism. Does the Prime Minister agree that the global nature of organised crime today makes concerted action imperative? We also approve of the mention of the position of Mr. Salman Rushdie, and the support for him expressed at the summit.

Finally, may I make a point with which I am sure the Prime Minister will agree, although he may not say so? When he next represents our country at an international financial summit, will he do so without his efforts being overshadowed by undisciplined shenanigans on the Conservative Benches? In the end, the loser from such behaviour is not just the Conservative party, but Britain.

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Mr John Major (Huntingdon)

First, let me thank the Leader of the Opposition for the areas in which he supported the decisions and proposals that were made at the summit.

I shall take the right hon. Gentleman's questions in the order in which he raised them. He asked about Bosnia. The role of the rapid reaction corps is primarily to reinforce and protect, but it may well be operating in greater numbers in terms of some elements of convoy protection. For example, it will have much better equipment to remove mines. It is difficult not to give a misleading impression by saying that it is there to add muscle; it is emphatically not there to fight—that point should be clear—but the greater reinforcements and equipment will assist in ensuring that more convoys can get through, because of the ability that they will have in greater numbers to deal with problems that are currently extremely difficult to overcome.

As for funding by Congress, President Clinton faces the difficulty that he needs the approval of Congress and at present does not have it. He wishes to pay, and he wishes to make it clear that the United States would wish to pay its equivalent to an assessed United Nations contribution towards the cost of the rapid reaction corps. He will be looking to see how that can be done. Moreover, around the table, every Head of Government agreed that, in the absence of an assessed contribution, they would themselves voluntarily pay the contribution that they would have paid under a system of assessed contributions.

The right hon. Gentleman asked about President Yeltsin's relationship with Serbia. President Yeltsin has repeatedly put pressure on President Milosevic; he did so most recently when I telephoned him with Chancellor Kohl from Germany when the present difficulties began. He reassured us yet again that he would continue to do so—although I think that the degree of pressure subsequently exerted by President Milosevic on Karadzic is a different matter, over which the Russian leader feels that he has less direct control.

The chairman's statement made clear the feelings of the G7 about Chechnya, the need for a political solution and the need to ensure proper standards in dealing with the conflict. President Yeltsin knows from what we have said on this and other occasions that we do not believe that it was handled in the most appropriate fashion.

As for finance, we would have preferred an outright sale of gold by the IMF to help to deal with the problems of the very poor nations. The intention, however, was never to sell the gold and use the proceeds, but to sell the gold, maintain the proceeds and use the interest to alleviate the debt of the poorest. I think that that can broadly be met by the pledge, although I share the right hon. Gentleman's view that the pledge is second best: we would have preferred the outright sale of gold, and we shall continue to press for it to assist those very poor nations.

I welcome the right hon. Gentleman's support on the IMF questions and agree that doubling the general arrangement to borrow is sensible, but that the other reforms need to be put in place. That point has been securely made. I also agree about the co-operation that is necessary to deal, in terms of IMF surveillance, with countries that are running into economic difficulties.

I now refer to speculative flows. Everyone is concerned about an element of speculation, although sometimes people confuse speculation, which does exist, with significant movements of large pension funds from one country to another. Those responsible for pension funds are sometimes under a statutory requirement to move funds if that is right and is thought to be in the interests of their pension holders. There is undoubtedly some speculation. The problem in dealing with it is that even the sum total of foreign exchange reserves of the world's seven largest industrial countries, whose representatives were seated around that table, would probably be less than the flow of foreign exchange through the New York exchanges on a single day.

The reality is that we are no longer in the circumstances that we may have been in 15 or 20 years ago to deal with open market operations on speculation. Frankly, it is no longer true and no one should harbour the belief that it can be tackled in that fashion because the market is now much too big for the problem to be dealt with in that way. We looked at how best to deal with it and reached the unsurprising but, I think, sensible conclusion that the only way to deal with it is for countries not to place themselves in that position. They will not do that if they follow sensible economic policies, so that their currencies are not likely to become subject to speculation. I think that that was universally agreed around the table. There are areas in which there can be central bank co-operation, but we felt that they were very much on the margins of what could be achieved and that those achievements cannot be central because the market is too big.

On the environment and nuclear power, we welcomed the decommissioning of Chernobyl. I am sorry if the right hon. Gentleman thinks that the communiqué is sanguine on the eastern bloc problems. I do not think that that was the view of those who were present. Certainly, Chernobyl has caused great trouble, but there is a large number of unsafe nuclear establishments across eastern Europe. They have not become Chernobyls and we hope and pray that they never will, but judged by the safety standards that we wish, they are not safe. That is one of the reasons for not only the financial assistance that has previously been offered but the decision to hold a conference on civil nuclear safety in Russia in the first half of next year.

I cannot give the right hon. Gentleman a date on the chemical weapons convention, but I can tell him that we shall proceed to ratification as soon as we can. I am grateful to him for his support for the condemnation of Iran's fatwa on Salman Rushdie. On jobs, we agree about greater investment in the right sort of skills. We were looking at skills and education expenditure right across the board. In our view, it is a matter not just of more spending but of how existing resources were being used.

On jobs, we supported what was said by the Organisation for Economic Co-operation and Development, which made the position clear on the policies that it supported. The OECD also highlighted policies that it felt cost jobs. They included: high non-wage costs, artificial training levies and high minimum wages—all of which will be familiar to the right hon. Gentleman.

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Mr Peter Hordern (Horsham)

My right hon. Friend said that the United States sanctioned the United Nations rapid reaction force, but is not prepared to pay for it. Is there some prospect of that being reversed, and does he agree that if it is not, there will be an unacceptable burden on ourselves and the French? Would reform of the IMF mean that we could avoid the problems that occurred when Mexico was bailed out by the United States and by the International Monetary Fund without, I understand, any consultations with those, including ourselves, who subscribe to the IMF?

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Mr John Major (Huntingdon)

In response to my right hon. Friend's first point, I hope very much that the President will be able to find a way of meeting what would otherwise be the assessed United Nations contribution of the United States. Whether the President will be able to change the present opposition by Senator Dole and Speaker Gingrich is not a matter that I can judge from here. I am in no doubt about the President's willingness to do that or to find some other way to meet that cost. If not, it will, of course, have to be met either by France and Britain or by a voluntary settlement from other members of the G8 and other United Nations members. That also is a possibility; both possibilities exist.

One impetus for the reform of the IMF was, of course, the lack of proper surveillance that predated the problems with Mexico. The difficulties in Mexico should have been spotted earlier by the IMF, but they were not. The problems created a great deal of currency turbulence in central Europe and also played a material part in the rising level of the deutschmark against other European currencies. It is precisely for that reason—among others, but certainly for that reason—that we are looking at reform of the institutions.

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Mr Paddy Ashdown (Yeovil)

I welcome the Government's proposals for the limited sale of gold to relieve the debt burden on third-world countries. I am sorry that they did not receive the full support that they deserved. May I assure the Prime Minister that if the Government continue to press those proposals, he will, I suspect, have the full support of all Opposition Members?

On currency speculation, the Prime Minister described very accurately both the scale of the problem and its danger. Have the Government given any thought to the proposals, which have been very well worked out over a number of years, that are being put forward by, among others, Professor Tobin for an international scheme for a low level of taxation of speculators in the spot markets in currency? Many believe that that would have a stabilising effect and it is well within the scope of the international institutions' power.

On Bosnia, the Prime Minister will no doubt understand why the very disappointing decision of the Americans not to fund the rapid reaction force at the moment will be regarded by many as yet another example in the long chapter of disorganisation, disarray and disunity for which the UN, the Bosnians and our troops on the ground have paid such a price in the past. I would ask the Prime Minister one specific question. On Saturday, he said that, if the UN was forced to withdraw, the result would be a massacre. I believe that that calculation is correct. Does it not follow that if, against our will, the UN is forced to withdraw from Bosnia, it would be inconceivable to leave the Bosnian Government without the means of their own defence?

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Mr John Major (Huntingdon)

Again, let me take the right hon. Gentleman's points in order. On gold, yes, we shall continue to press and I shall be happy to have the right hon. Gentleman's support and that of other hon. Members. It is the right way forward. Pledging the gold will certainly make an improvement, but we think that outright sales of gold would have been better.

On speculation, we did not specifically refer to the Tobin proposals, but we did discuss matters such as the imposition of taxes and exchange controls. However, we agreed without dissent that either the reimposition of exchange controls or new taxes on financial transactions would be counterproductive. We did consider those proposals, but there was unanimous agreement among the G7 that that was not the direction in which we wished to go.

On Bosnia, I think that the first half of the right hon. Gentleman's remarks was inaccurate, in the sense that the responsibility for the fact that the United States is unprepared to contribute lies not with the United Nations, the Bosnians or the American Administration, but with Congress itself. I very much hope that that will be able to be corrected. As I indicated to my right hon. Friend the Member for Horsham (Sir P. Hordern) a moment ago, we must wait and see whether that is the case.

I did say that, if the United Nations protection force were forced to withdraw, I feared that one of the outcomes would be a massacre. That is a position that I have held to for a long time; it is why I remain rigorously opposed to the withdrawal of the United Nations protection forces unless and until it becomes transparently clear that it is no longer safe or prudent for us to leave our troops there. So I very much wish them to remain. Were the United Nations protection force to leave, I think that it is very likely that the arms embargo would be lifted.

Several hon. Members:

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Miss Betty Boothroyd (West Bromwich West)

Order. A number of right hon. and hon. Members are seeking to question the Prime Minister. I caution the House that now that we have heard from the two major Opposition parties, I am seeking one question each from Back Benchers to the Prime Minister; otherwise, there will be great disappointment. There may be disappointment in any event, but this is not a debate. It is one question to the Prime Minister, who, I am sure, will give a brisk answer.

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Mr David Shaw (Dover)

My right hon. Friend will have met President Chirac at the conference, someone who has suffered a number of political disappointments in his political life, but who won through in the end. Perhaps my right hon. Friend had the opportunity to talk to President Chirac about reports last week that he criticised our overseas aid budget. Did my right hon. Friend have the opportunity to point out to him that Britain not only spends some £3 billion a year on overseas aid, but puts £3 billion into Europe, whereas France gets about £3 billion from Europe? Should—

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Mr John Major (Huntingdon)

I did not spend any time discussing overseas aid with President Chirac. We had the opportunity to discuss that the week before, so we did not do so this weekend. I think that President Chirac knows and accepts that we have a very high-quality aid programme.

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Mr Tony Benn (Chesterfield)

Will the Prime Minister tell the House what representations were made to him about the decision to allow the Brent Spar oil rig to be ditched in the sea and what representations he and others made to the French about the resumption of nuclear testing, both of which run absolutely counter to the bland and meaningless words used in the communiqué about the environment?

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Mr John Major (Huntingdon)

I understand that many people seem deeply upset about the decision to dispose of Brent Spar in deep water. I believe that it is the right way to dispose of it. It will be disposed of in the Atlantic, in 6,000 ft of water. It is 150 yd tall and 30 yd wide, and the proposition that it could have been taken inshore to be disposed of is incredible. Shell has my full support to dispose of it in deep water. I made that clear to people in the discussions that I had over the weekend.

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Sir Patrick Cormack (South Staffordshire)

When my right hon. Friend and his colleagues made their understandable calls on Saturday for a cessation of hostilities in Bosnia, did they recognise the fact that any sovereign state has the right to defend its own capital city?

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Mr John Major (Huntingdon)

I think that that point was well understood, but I repeat that I do not believe that the matter is ever going to be solved on the battlefield in any remotely satisfactory way. That is why I believe that we must do all we can, as we have over the past three years, to try to seek a negotiated political settlement. It is bitterly disappointing that, time after time, one group or the other—it has not been one group alone—has stood in the way of a settlement when it looked as if we could get to serious talks.

All the main groups have stood in the way of that at some stage and, I believe, for different reasons. However, the sooner that every group realises that if it seeks to win on the battlefield it will be an international pariah for years, the better; the sooner other groups realise that the United States is not going to enter the war on the ground on one side, the better; and the sooner those two points are recognised by the different groups, the sooner we might get to some political negotiations that would realise a satisfactory settlement.

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Mr James Molyneaux (Lagan Valley)

Given the vulnerability of modern society to terrorism and the certainty that terrorism will seek to dominate democracy in the next century, will the Prime Minister continue the good work that he did last week and strongly press his colleagues—the leaders of the other Governments—to arrange and establish workable and effective structures to co-operate against terrorism? Will he warn the other leaders that it would be completely futile if they were to make any concessions to terrorists, which would merely whet their appetite?

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Mr John Major (Huntingdon)

I share the right hon. Gentleman's views. We agreed to share information on major terrorist incidents and to strengthen co-operation in all aspects of counter-terrorism, including the research and development of methods to prevent and to deal with terrorist attacks. In our discussions, we attached special importance to measures to impede the ability of terrorist organisations to raise funds, without which, of course, they cannot purchase the weapons that they use against innocent citizenry. In order to carry matters forward, we asked a terrorism expert group to report on specific measures to deter, prevent and investigate terrorist acts, and we shall jointly consider that report when it is completed.

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Mr Cranley Onslow (Woking)

When my right hon. Friend says—and it is welcome news—that there are to be measures to improve international co-operation against terrorism, may I take it that that extends to crime in general and not just to terrorism in particular? If there is to be a better system and one that is more effective and secure than Interpol, will he tell us any more about how it is to be developed and who is to pay for it?

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Mr John Major (Huntingdon)

I can confirm that to my right hon. Friend. There are some further matters directly related to crime, again to strengthen the exchange of information and co-operation and to provide assistance to other nations in areas where drug-related crime, for example, may find its roots. We are also seeking to co-operate, to stop criminals escaping justice by crossing borders—another matter that is long overdue, where more decisions are yet necessary and where discussions will take place to ensure that they are taken.

We should also like to encourage all Governments to adhere to the recommendations of the financial action task force to prevent money laundering. Clearly, money laundering takes place on a massive scale in different parts of the world. Often it is money laundering not just by individual criminals, but by organised, large-scale criminal groups in different parts of the world. We have established a group of senior experts to consider critically existing arrangements for co-operation and to report back to the next summit.

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Mr Peter Shore (Bethnal Green and Stepney)

Returning to nuclear matters, the Prime Minister touched on the business of nuclear safety at Chernobyl and elsewhere, but he made no mention of the French decision to resume nuclear testing in the Pacific. In the context of the advanced stage of the comprehensive test ban treaty negotiations, and taking account of the justifiable anger in New Zealand, Australia and other Pacific countries, what representations did the Prime Minister make to the French President and, if so, with what effect?

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Mr John Major (Huntingdon)

The question of French nuclear testing was not discussed bilaterally or in the discussions among the G7 or G8 at all. [HON. MEMBERS: "Why not?"] It was not discussed at all at the economic summit. The important international objective now is the early agreement of the comprehensive test ban treaty, and we all confirmed our commitment to that. The decision on the resumption of French nuclear testing is a matter for the French Government and they have taken that decision. The French have said that there would be a short series of tests, following which they proposed to adhere to the comprehensive test ban treaty. That is their position. It has been established and we accept it.

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Mr Roger Knapman (Stroud)

When discussing economic affairs, did my right hon. Friend and other leaders discuss the position in socialist Spain, which was recently obliged to increase its interest rates by 0.75 per cent. to meet convergence criteria—and that despite a 24 per cent. unemployment rate? Does not that show my right hon. Friend's wisdom in maintaining our opt-out from a single currency?

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Mr John Major (Huntingdon)

I agree with my hon. Friend about the wisdom of maintaining the opt-out. [HON. MEMBERS: "What a surprise."] I say to Opposition Members that it is no surprise that I agree with my hon. Friend on that particular opt-out, as I negotiated that particular opt-out and it would be extremely surprising if I did not agree with it. I must say to my hon. Friend, however, that, although it would have been tempting, we did not discuss the particular matter to which he referred in the first half of his question.

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Mr Dennis Skinner (Bolsover)

How on earth can the Prime Minister come to the House of Commons and try to give the impression that he can resolve the problems on the world stage when he cannot sort out all the conflicting groups in his own party?

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Mr John Major (Huntingdon)

I have to say to the hon. Gentleman that his ingenuity knows no bounds, and that its irrelevance to the subject under discussion knows no bounds, either.

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Mr Michael Jopling (Westmorland and Lonsdale)

Leaving aside Bosnia, is the Prime Minister aware that there will be broad support for the agreement to try to find fairer ways of financing the overall budget of the United Nations? However, was there broad agreement among all the Heads of Government, including the Americans, that, given all the problems that we have in the world, the recent decisions by the United States Congress to cut United States contributions to the UN are both deplorable and, as the Minister of State, Foreign and Commonwealth Office told the House the other day, probably illegal?

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Mr John Major (Huntingdon)

Yes, we have discussed that matter. I share the view expressed on the subject by my right hon. and learned Friend the Minister of State just a few days ago. It is necessary, though, for us to reform the system of payments to the United Nations generally. The House will be interested to know that if the system is based on gross national product, it will not make any material difference to the British contribution. It would certainly reduce the American contribution and increase the contributions from Japan and Germany. There would be other changes as well, to reflect changing patterns of GNP over the years. For this country, the change would be marginal.

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Mrs Margaret Ewing (Moray)

Will the Prime Minister confirm that the issue of Brent Spar was raised publicly as well as privately at the summit? Will he advise the House which, if any, other leaders agreed with the decision taken by Shell and the United Kingdom Government in favour of such a form of disposal? Will he advise us whether there is a financial interest for the Government, because some of the costs of disposal at sea can be offset against petroleum revenue tax? The costs cannot he offset if there is full disposal on land, which could actually create jobs and has been shown in the Smit report to be much cheaper.

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Mr John Major (Huntingdon)

The question of Brent Spar was not discussed among the G7 leaders. Chancellor Kohl and I spoke bilaterally about Brent Spar; he expressed one view and I expressed another. There were no public statements about the matter other than in response to questions asked of us by journalists. There were no public discussions.

On the disposal of Brent Spar, I repeat the point that I made a moment or [o ago. The right environmental way in which to dispose of Brent Spar is to drop it into 6,000 ft of water in the Atlantic. The hon. Lady seems to think that the platform should be taken ashore. If she thought that it was to be taken ashore in Scotland, she would think differently.

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Sir Peter Tapsell (Linsey East)

On the subject of global finance, may I put it to my right hon. Friend that the most immediate problem is not speculation, as stated by the leaders of the Labour and Liberal Democrat parties, but the continuing need of many Japanese institutions to repatriate, for purely commercial reasons, increasing quantities of their vast holdings of overseas assets, much of them held in liquid form? If that repatriation continues at the rate of recent weeks and months, it will have the same impact on the world economy as did the oil hike of 1973–74. It could plunge the whole world, including this country, into another slump. Did the leaders of the G7 give any thought to international co-operation to deal with this problem of a recycling kind?

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Mr John Major (Huntingdon)

My hon. Friend touches on a problem of real severity as we look to the months that lie immediately ahead. There was some discussion of the problem at the G7 and there was some discussion about the desirability of increased demand within Japan itself. Those points were carefully noted by the Japanese Prime Minister.

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Mr Calum MacDonald (Na h-Eileanan an Iar)

On the matter of Brent Spar, does the Prime Minister acknowledge that, once again, the reputation of the United Kingdom as the dirty man of Europe has been confirmed'? Will he confirm that it is technically possible to recycle Brent Spar on land, which would create more jobs, and that the only obstacle is that it would be more expensive for Shell?

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Mr John Major (Huntingdon)

The hon. Gentleman is quite wrong. I repeat that Brent Spar was not a subject of discussion at the G7 summit. The deep sea disposal of Brent Spar, first, is consistent with our international commitments, secondly, has been endorsed by the overwhelming majority of independent expert opinion received by the Government, thirdly, has received all the necessary approvals and consents and, fourthly, is the best practicable environmental option available to us. The hon. Gentleman would be wise to consider that.

In the context of the Government's general position on the environment, this country is, in many ways, far from fitting the hon. Gentleman's categorisation, which I do not recognise and which I think he should be ashamed of having uttered. He should be ashamed of having uttered it—[HON. MEMBERS: "Why?"] Because it is untrue. Not only is it untrue, but it is another illustration of the way in which Opposition Members always speak as ill as they can of this country and as well as they can of other countries.

The hon. Gentleman should look at the environmental record of other countries before criticising this country for its environmental record. Not many other countries are, like us, on target to exceed the Rio commitments on carbon dioxide emissions; we are. Not many other countries are contributing £90 million to the global environmental facility; we are. Not many other countries have made the contributions that we have to things such as the biodiversity convention. It would be very nice if, just for once, Opposition Members spoke well of this country and not ill.

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Hon. Bernard Jenkin (Colchester North)

Will my right hon. Friend confirm that it is in fact a matter of some pride for him to represent the economy in Europe that is leading Europe out of recession? Will he confirm that there was absolutely no interest in national minimum wages and increasing employers' costs, demonstrating that the ideas of the Leader of the Opposition are as irrelevant to the rest of the world as they are to the future of this country?

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Mr John Major (Huntingdon)

I can confirm that for my hon. Friend. There is no doubt that this country was well ahead in terms of growth as we emerged out of the recession and that it still leads the rest of Europe in its growth, low inflation rate and fall in unemployment. On measures for further job stimulation, the G7 leaders endorsed the OECD report, which supported in terms the policies that we have been following and condemned in terms those advocated by the Opposition.

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Mr Andrew Faulds (Warley East)

As regards Brent Spar, which was raised by Chancellor Kohl in bilateral discussions, what contribution does Shell UK make to the Conservative party? If the Prime Minister does not like the question, why does he not publish the figures of funding for the Conservative party?

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Mr John Major (Huntingdon)

I repeat that Brent Spar was not a subject of the conference. [HON. MEMBERS: "How much?"] I have no idea whether Shell contributes. The hon. Gentleman may not know it, but the responsibility for the Conservative party's finances does not lie with the Prime Minister if he is a Conservative. It lies with the party machine itself and not with me. The answer to the hon. Gentleman is that I do not know whether Shell contributes. The reality is that, having sought advice on the best environmental method by which to dispose of Brent Spar, we have taken that advice.

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Mr Winston Churchill (Davyhulme)

Will my right hon. Friend convey to the President of the United States the regret of this House that the United States Congress, so free in giving its advice on Bosnia to those of us whose countries have for many years had forces serving in difficulty and danger in the Balkans, has thus far appeared unwilling to pay its contribution to the funding of the rapid reaction force?

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Mr John Major (Huntingdon)

I can say to my hon. Friend that I have already done so. I believe that the President regrets it as well.

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Mr Denis MacShane (Rotherham)

On jobs, did the Prime Minister discuss with Chancellor Kohl the fact that the rate of decline of unemployment in Germany is now four or five times that in England? In other words, for every job that we are creating, the Germans are creating four under a partnership economy committed to the social charter.

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Mr John Major (Huntingdon)

I must say that the hon. Gentleman never ceases to amaze me with the nonsense that he talks. That is absolute rubbish from top to bottom. The reality is—[Interruption.] I am sorry that he does not like the reality. We have to live in the real world. He can live in his fantasy world if he likes. The reality is that this country has reduced unemployment by more than any other country in Europe. If he cares to look at the particular—[Interruption.] If he looks not just at Christian Democrat countries but at those socialist countries in Europe, he will see unemployment very much higher in those socialist countries, as it would be in Britain if the sort of policies that they have followed were followed here.

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Mr Iain Duncan Smith (Chingford)

Does my right hon. Friend agree that he went to the conference in a remarkably strong position, despite what the Opposition have said? He was the leader of a country with one of the lowest levels of unemployment, the lowest interest rates and lowest inflation. Does he not therefore agree that, despite what the Opposition say, the reality is that speculation takes place on economies that are unsound, which is exactly what would happen were the Opposition to get into power?

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Mr John Major (Huntingdon)

My hon. Friend is quite right about the soundness of our economic recovery and the security of our economic recovery. That was well recognised by our partners at the summit.

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Mr Tony Banks (Newham North West)

May I say that I can scarcely remember a day when such an important statement from the Prime Minister was greeted by so many empty Benches behind him? It must worry him as much as it intrigues us. To what extent did the questions that he had to face in Halifax about divisions in his party and the impending leadership challenge—

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Miss Betty Boothroyd (West Bromwich West)

Order. That is totally irrelevant to the Prime Minister's statement. If the hon. Member has a question relating to the statement, of course he should put it. It must relate to the statement.

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Mr Tony Banks (Newham North West)

I was merely asking to what extent the questions that the right hon. Gentleman faced in Halifax distracted him from important considerations in Halifax.

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Mr Jacques Arnold (Gravesham)

Did my right hon. Friend notice the odd way in which the social costs of employment were jumped over by the Leader of the Opposition in his questions? Does my right hon. Friend think that our policies will be adopted by the right hon. Gentleman or that he was merely embarrassed?

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Mr John Major (Huntingdon)

I am not sure. Far be it from me to divine what was in the mind of the Leader of the Opposition. That is not a matter for me. I did notice that he did not touch on those particular points, but the right hon. Gentleman and I know that we have clear differences on the matter and that they are likely to continue in the future.

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Ms Angela Eagle (Wallasey)

The Prime Minister's answer on the failure of the summit to do anything about some of the difficulties of exchange rate instability assumed that the global financial markets were rational. Does the Prime Minister agree that global financial markets can be as irrational as the Conservative party when it contemplates leadership elections and stalking horses?.

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Mr John Major (Huntingdon)

What is irrational in the hon. Lady's question is the belief that exchange rate stability can be imposed when the flows over the New York exchange in a day probably equal the sum total of the foreign exchange reserves of all the seven countries that were at the summit. That is completely irrational, to the point of being economically dotty. The only way in which people will get exchange rate stability is by having underlying economic stability. That was accepted by all the seven Heads of Government who sat round the table at the G7 summit.

If the hon. Lady is indicating to me that it is now Labour party policy to try in some artificial way to sustain exchange rates with open market operations, I look forward at long last to a statement on policy from the shadow Chancellor on that issue, if on none other. He seems to have no policy on most issues. If he is being pressed by his Back Benchers on that issue, I am sure that my right hon. and learned Friend the Chancellor will press him on whether that is indeed the principal Opposition party's policy.

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Mr John Wilkinson (Ruislip - Northwood)

To what extent does my right hon. Friend feel that the Group of Seven summit clarified the objectives to be given to the allied rapid reaction force? When he says that the force will not be there in order to fight, how will it be able to fulfil its mission of protecting the protection force of the United Nations if it is not permitted to take offensive action if necessary? Is the withdrawal of UNPROFOR from the weapons holding sites a precursor to a more passive role? Did Mr. Chrétien feel that Canada, which has troops in the theatre, ought to be represented on the contact group? Did the Dutch feel that they should be represented?

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Mr John Major (Huntingdon)

The latter point was not raised by Prime Minister Chrétien either in the G7 or in the bilateral meeting that I had with him. If he holds that view, it is not a matter that he raised with me. Certainly, the proposals do not indicate a more passive role for the United Nations protection forces. I was seeking to tell the House that they will not unilaterally fight aggressively, but of course, under the rules of engagement, they have the authority to fight in defence or in protection of other United Nations protection forces that are there. They will certainly exercise that right if it proves to be necessary.

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Mr Robert Wareing (Liverpool, West Derby)

Was there any discussion at Halifax about the need to stop the sale of arms to oppressive regimes, particularly to those countries against which there are United Nations sanctions? If there was, was the Prime Minister embarrassed?

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Mr John Major (Huntingdon)

There was a discussion on collaboration with Iran on nuclear matters. That was the subject of a discussion. If the hon. Gentleman cares to see the chairman's statement, which has been deposited in the Library, he will see that it calls on all States to avoid any collaboration with Iran which might contribute to the acquisition of a nuclear weapons capability. The G7 partners have already adopted restrictive practices on nuclear co-operation with Iran.

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Mr Peter Bottomley (Eltham)

My right hon. Friend referred to the discussion on the brutal war in Chechnya and the hostage taking in Russia. Whatever decision the Russians may feel they have to take, will my right hon. Friend make it plain that this country is not likely to change its policy when people make menaces of that kind?

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Mr Barry Jones (Alyn and Deeside)

The right hon. Gentleman began his statement by referring to the important subject of unemployment. Has he the courage to tell the House how many people are unemployed in the United Kingdom?

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Mr John Major (Huntingdon)

If the lion. Gentleman goes to the Library, he will see the figures that are published monthly, which are calculated on more than one basis. At present, that figure stands at just over 2.3 million, and he will find that that is so according to more than one basis. The figure was 2.9 million some time ago. If the hon. Gentleman looks across the European Union, he will see that, whereas the average unemployment rate is around 11 per cent., it is 8.3 per cent. here. In some large countries, the unemployment rate is getting on for 13 per cent.—for example, the rate stands at just over 20 per cent. in Spain. The only European Union country with a lower unemployment rate than us is, I think, Holland.

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Mr Anthony Coombs (Wyre Forest)

When considering the long-term reform of the United Nations institutions, did my right hon. Friend stress the importance of maintaining Britain's seat on the Security Council? Does he agree that, if there were to be a European Community seat, as proposed by the Labour party, Britain's seat would be gravely threatened?

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Mr John Major (Huntingdon)

In due course, the membership of the permanent five on the Security Council will be reformed, which I am sure is right. I have no doubt that that reform will lead to the enlargement of the five, to include a larger number of nations on the Security Council. I doubt that that will be a speedy process, because, although there is rapidly building consensus in favour of two nations, other nations will also want to be included. It will therefore take some time before a decision is reached. I see no threat whatsoever for the United Kingdom's place on the Security Council either now or in the future. I see no probability whatsoever that the European Union would be collectively represented. It is currently represented by France, Germany and the United Kingdom. It would not be in the tradition of the Security Council for it to have a member that did not represent a nation state.

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Mr David Winnick (Walsall North)

On Bosnia, is there not something particularly despicable about the manner in which the Serbs have deliberately targeted civilians—for example, by murdering those who were trying to get water at the weekend? That probably occurred at the same time as the summit was taking place or just ending. Does not such an act amount to outright terrorism?

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Mr John Major (Huntingdon)

Many of the actions that we have seen in Bosnia in the past few years have been, as the hon. Gentleman said, despicable. Many have been aimed at innocent civilians or aimed carelessly, in a manner in which innocent civilians have been as likely to be killed or maimed as soldiers fighting in the opposite camp. I therefore share the hon. Gentleman's view, but I would add only that the appalling behaviour of the Serbs has from time to time been matched by the other parties as well.