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Oral Answers To Questions

Volume 722: debated on Tuesday 14 December 1965

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National Finance

Sterling Area (Transactions)

1.

asked the Chancellor of the Exchequer what was the liability incurred by the United Kingdom as sterling area bankers for the rest of the sterling area over the past five years in respect of the rest of the sterling area's trade with the non-sterling area; and what information he has as to how these balances were settled.

I apologise for the length of this Answer, Mr. Speaker, but I promise that it is not possible to give the information required more shortly.

The published balance of payments figures show that the overseas sterling area's surplus on all transactions with non-sterling countries resulted in transfers to the United Kingdom estimated at about £440 million over the years 1960–64. Other things being equal, this would have led to a corresponding increase in United Kingdom liabilities to the overseas sterling area and thus in their assets in the United Kingdom. But, in fact, the greater part of this increase in assets was used as it took place to meet the area's deficit with the United Kingdom.

Canada (Balance Of Trade)

2.

asked the Chancellor of the Exchequer what estimate he has made of the gold and dollar liability which Great Britain has incurred in respect of her adverse balance of trade with Canada over the past five years.

The adverse balance of visible trade between the United Kingdom and Canada in the period 1960–64 amounted to £768 million. The hon. Member will, of course, realise that visible trade is only one element in our transactions with Canada.

Does not the right hon. Gentleman realise that this is a most serious deficit and that there are still impediments to our trade with Canada? Would he say what steps he is taking to reduce this serious drain on our resources?

Yes, I agree. A number of efforts are being made, including visits by a number of commercial counsellors and attachés in Canada to this country under the general name of "Canextour". They have been visiting hundreds of firms here to make them more interested in exporting to Canada.

Currency (Decimal System)

3.

asked the Chancellor of the Exchequer if he has now fixed a date for the decimalisation of the currency; and if he will make a statement.

50.

asked the Chancellor of the Exchequer whether he will now make a statement on Her Majesty's Government's policy in relation to the introduction of decimal currency.

I regret that I cannot add to what my hon. and learned Friend the Financial Secretary said on 22nd June.

Is the right hon. Gentleman aware that I quite appreciate the difficulties in this matter, but would he consider whether he can decide the system which is to be adopted, if it is to be adopted, and publish that? If he does, it will be of great help to business.

I think that there is a lot in that point. We hope to derive some benefit from the Australian experience. I am hoping to send one or two Treasury officials to Australia when they introduce the system, because there are a number of lessons in what they have done from which we can learn. I will certainly consider the suggestion.

History Of Parliament

4.

asked the Chancellor of the Exchequer how much the Government have so far contributed to the History of Parliament; how much more it expects to contribute before completion; and how many more years he anticipates it will take to finish the History.

So far, just over £250,000. I am reviewing with the trustees the scope of the remaining work, its timing and cost.

Is not that a staggering sum of public money to spend on what eminent historians have described as "a Westminster white elephant", "a masquerade", "a purely biographical dictionary", and "a record of the insignificant"? Will my right hon. Friend consider whether it is worth proceeding with the remaining volumes, since so far it has cost us this sum and taken 12 years to produce the first three volumes?

I will, of course, consider my hon. Friend's representations. The amount so far promised, with all-party agreement, is approximately £360,000, but it is clear that that sum will be used up in producing less than half the planned amount of work.

National Savings Committee (Civil Servants)

5.

asked the Chancellor of the Exchequer how many civil servants are engaged full-time and part-time respectively, in assisting the chairman of the National Savings Committee; and what is the cost.

565 and 134 respectively, at 1st November, 1965. Their salaries will cost about £782,000 this year.

Is my tight hon. Friend aware that many of us accept the need for increased savings to avoid increased taxation? Would not he agree that, with the greatest respect to Sir Miles Thomas, what is needed is a full-time appointment, with a younger man engaged wholly on the task of increasing National Savings?

The Government have every confidence in those who are acting, in an honorary and a paid capacity, in helping in this all-important task.

Would not the Chief Secretary agree that one way of increasing National Savings would be to convince the small saver that he should have confidence in the Government?

That consideration does not arise on this Question, but it is always present.

Civil Service Pensions (Unestablished Service)

6.

asked the Chancellor of the Exchequer on what date he received the proposals from the staff side of the Civil Service National Whitley Council on the subject of the counting of unestablished service for pension purposes; what is the cause of the delay in reaching a decision; and if he will now make a statement thereon.

My right hon. Friend received the proposals on 14th January. The staff side has now been informed of the Government's decision that in present circumstances they cannot give sufficient priority to the introduction of full reckoning to justify starting negotiations.

Will the right hon. Gentleman say how much money is involved annually and whether reconsideration cannot be given to the matter in view of the fact that the question has been a live one for five or six years?

The total amount involved is £310 million over a long period of years. In early years the annual cost would vary with the solution adopted, but it would never be less than several million pounds a year.

Hospital Building And National Health Service (National Lottery)

7.

asked the Chancellor of the Exchequer if he will initiate a national lottery as a means of financing the National Health Service, and especially hospital building.

Will my right hon. Friend give an assurance that his mind is not completely closed on this matter? Can he say how on earth we are to get all our hospitals modernised within a generation unless some such unorthodox policies are adopted? Would he not consider it preferable to gear the natural gambling instinct to a valuable social purpose such as that mentioned in the Question?

Treasury minds are always very flexible, both upwards and downwards, but on balance we believe that the arguments, both financial and moral, are against the Government sponsoring lotteries.

What is the difference between a straight-out lottery and the present system of Premium Savings Bonds, in which there is a lottery on the interest?

The difference has been well explained—[HON. MEMBERS: "No."]—perhaps the hon. Member was not in the House at the time—by the right hon. Gentleman who introduced the scheme.

Balance Of Payments

8.

asked the Chancellor of the Exchequer by what amount the measures that he has taken will benefit the balance of payments for the year 1965.

Although the full benefits of the Government's policies will not be felt in 1965, I nevertheless expect an improvement in our balance of payments of some hundreds of millions of pounds.

Will the Chancellor confirm that the estimate which he received from the Treasury on taking office of what would be the adverse balance of payments for 1965 if he did not take any measures was very similar to what the figures are likely to be?

I certainly would not confirm such a figure. The hon. Member will, I am sure, be glad to know that in the first 11 months of this year, including today's excellent export figures, our trade deficit has fallen to £296 million compared with £535 million last year.

Post-War Credits

9.

asked the Chancellor of the Exchequer what plans he has for extending the categories of those entitled to early payment of post-war credits.

While recognising that both sides of the House must feel a bit uneasy that thousands of people have been holding these bits of paper for nearly a quarter of a century, may I ask whether the right hon. Gentleman cannot consider enlarging slightly the existing categories to give hope to more people?

The hon. Member presses me in other connections to keep down expenditure. Now he is asking me if I cannot increase it. The answer is that I cannot do both at the same time.

10.

asked the Chancellor of the Exchequer if he will take steps to enable all widows aged 40 years or more to receive repayment of their post-war credits.

Widows, irrespective of their age, are entitled to repayment of post-war credits which they hold in their own right.

Mortgage Payments (Income Tax Relief)

11.

asked the Chancellor of the Exchequer the estimated total of Income Tax allowances in respect of mortgage payments in the last financial year; and the estimated total for the current financial year.

The estimated cost of tax relief on mortgage interest payments on domestic property in 1964–65 was £115 million and for 1965–66 is £130 million.

Is my right hon. Friend aware that this sum compares very much with the amount paid out in Exchequer subsidies in respect of housing? Will he give more publicity to this to combat some of the propaganda from the other side?

Will the right hon. Gentleman say how much of the increase is due to the increase in mortgage interest rates this year and this week's announcement that in the first nine months of the year the cost of houses went up by a greater amount than at any other time since statistics were first kept?

I cannot give the split of the figures, but the answer is that the increase is due partly to the estimated rise in total mortgage interest and partly to the rise in the standard rate last year from 7s. 9d. to 8s. 3d.

Investment Allowances

12.

asked the Chancellor of the Exchequer whether he will now announce the outcome of the Government's review of investment allowances.

31.

asked the Chancellor of the Exchequer if he will make a statement on his review of investment incentives.

Would not the Chancellor agree that this review, like many other Government reviews, seems to be taking an inordinately long time? Can he give the House an assurance that when he decides upon new forms of investment allowances, he will not compensate the Treasury for this by raising the rate of Corporation Tax in next year's Budget?

I certainly would not give that assurance. It must follow from the estimates which I have already given concerning the rate of Corporation Tax that that rate is based upon allowances as they exist at present. That has been made clear on numerous occasions. In reply to the first part of the question, we have been hoping for discussions with the C.B.I., which have now started, and I do not think that there has been any delay in this matter.

Do we take it from the Chancellor's first answer that no announcement will be made before the Christmas Recess? If so, can he say that the announcement will be made in the House—that is, after the Recess and not during it?

We should like to make the announcement to the House, but, on the other hand, there is pressure to make it as soon as possible. I could not give a definite answer, but if it is possible to make it in the House, we certainly will do so. But it will not be before Christmas.

Messrs Carless, Capel And Leonard And Customs And Excise

13.

asked the Chancellor of the Exchequer if he will take steps to ensure that the proposed legislation to establish a Parliamentary Commissioner or Ombudsman is framed so that the class of matters such as the case of Messrs. Carless, Capel and Leonard against the Customs and Excise can be referred to that body.

This legislation will be framed in accordance with the terms of the White Paper Cmnd. 2767.

Why, for the sake of administrative convenience, is the Treasury compelling this small firm to make a forced loan of £350,000? It has taken a year to try to find a solution. Why cannot the Treasury find a solution to this problem?

In the first place, I do not accept what the hon. Member has said. Secondly, there has been very full correspondence and my hon. and learned Friend the Financial Secretary has seen the hon. Member. Thirdly, it has nothing whatever to do with the Question.

May I ask the Chief Secretary to look personally into this case again? It seems clear from the information which has been made public—I am thinking of the City page of The Times a few days ago, which the right hon. Gentleman will have seen—that this is a matter which the Treasury and the Customs and Excise together could settle. Will the right hon. Gentleman look into this and see that this is done?

Of course, I will look into anything that the right hon. Gentleman asks me to look at. I repeat, however, that my hon. and learned Friend the Financial Secretary has himself looked into the matter fully and carefully and that the report is not accurate.

In view of the unsatisfactory nature of the Chief Secretary's reply, I propose to raise this matter on the Adjournment.

Distilleries, Moray And Nairn (Revenue Duty)

14.

asked the Chancellor of the Exchequer the amount of revenue collected in duties upon the products of distilleries in the joint County of Moray and Nairn and the County of Banff in 1964.

Is the right hon. Gentleman aware that the estimate is a large figure? Considering the large proportion which s exported in addition, is the Chief Secretary aware of the major contribution of the industry in this area of Scotland? Has he, however, observed the trend so far this year, which will warn him that increasing the tax does not materially increase revenue?

I take careful note, and so does my right hon. Friend, of all the points which the hon. Member has made.

Water Undertakings (Tax)

15.

asked the Chancellor of the Exchequer the estimated additional revenue likely to come from water undertakings in the United Kingdom as a result of the Finance Acts, 1965.

Assuming that the water companies maintain the level of their dividends, the best estimate I can make of the extra tax they will have to pay in 1966–67 is around £1 million.

Is the Chancellor aware that by his actions in the Budget he has substantially increased the cost to these undertakings, and that one in my constituency finds itself having to spend in excess of 17 per cent. of its rate revenue on this taxation alone?

My right hon. Friend the Chancellor is aware of no such thing. What he is aware of is that he has acted as the Public Accounts Committee of this House asked him to act to remove an anomaly in cases such as this.

Nationalised Industries (Subsidies)

17.

asked the Chancellor of the Exchequer what is the estimated total cost to the Exchequer of subsidies granted or promised to nationalised industries and other statutory bodies in lieu of price or fare increases or other charges to the consumer during the current financial year; and if he will indicate individually the value of all such subsidies.

London Transport has been promised a subsidy of £3·85 million. In addition, relief of part of the Coal Board's debt will cost the Exchequer about £600,000 this year in loss of interest.

Would the right hon. Gentleman agree that these subsidies are a way of encouraging inflation rather than discouraging it because, while they peg prices, they do not peg wages and they increase the amount of money available to purchase other goods and services?

Some parts of the hon. Gentleman's statement are clearly true, but in the Government's financial policy there must always be a balance between subsidy and charging people the economic price. That principle has been followed consistently by successive Governments.

Can my right hon. Friend say how the subsidy to London Transport conceivably fits in with the Government's policy of regional development, particularly in reference to development in areas like Scotland?

That illustrates my point, because in fact, as we have heard in relation to a previous Question, there is a limit beyond which fares cannot be increased at any one time without doing more harm than good. We may, therefore, be driven from time to time to the giving of a subsidy for the very best of economic and social reasons.

Is the right hon. Gentleman aware that if fare increases are imposed almost as an automatic annual measure, more and more people will be driven into bringing their cars into Central London, which is contrary to Government policy?

That is why I have always felt—and I hope that I have the support of the hon. Gentleman—that it is far better to try to keep prices and incomes stable than to have automatic increases of both unrelated to productivity each year.

Capital Gains Tax

18.

asked the Chancellor of the Exchequer whether he is aware that where an individual bought War Loan at £100 and died, and the holding was subsequently sold by his widow at a price higher than that at date of death or 6th April, 1965, she will have to pay Capital Gains Tax; and if he will introduce legislation to extend to widows the same basic valuation methods as would have been available to her spouse.

My right hon. Friend is aware of the position but could not support the hon. Gentleman's proposal.

Is not this yet another anomaly which has been produced by the very unfair practice of extending the Capital Gains Tax to War Loan? Will the right hon. Gentleman specifically confirm that a husband and wife are grouped together for the purposes of Income Tax and for some parts of Capital Gains Tax, and will he look at this again to see if a compromise can be reached?

42.

asked the Chancellor of the Exchequer whether it is his intention that the levy foreshadowed in Cmnd. 2771 shall exclude the imposition of short-term Capital Gains Tax on the realised development value on which it falls.

No, Sir, but the amount of levy paid will be allowed as an expense for the purpose of the short-term gains tax.

44.

asked the Chancellor of the Exchequer whether investments held by the High Court in trust for widows and infants and subsequently transferred to a common investment fund to be controlled by the Public Trustee are to be liable to Capital Gains Tax, even though the original purchase price is higher than the price at which the investment is trans- ferred from the High Court to the Public Trustee.

Yes, as the law stands. But as the hon. Gentleman knows, my hon. and learned Friend the Financial Secretary has already promised to consider the matter.

Is the right hon. Gentleman aware that it is now five and a half months since the Financial Secretary promised to consider this very deserving cause? Is he further aware that beneficiaries of the High Court are suffering because of the bad trusteeship of the Masters of the High Court, and that if this is allowed to continue as it stands it will create great injustice to those widows and orphans who can ill afford to lose money in this way?

I am sure that with the hon. Member's great knowledge of these matters he appreciates that this is a very complicated matter, which affects large numbers of persons and requires careful consideration.

If anything is done in this matter, will the hon. Gentleman give an assurance that it will be retrospective?

Whatever may be the rights and wrongs of this matter, will the hon. Gentleman make it clear that it is not the fault of the Masters of the High Court?

I am grateful that the hon. and learned Gentleman should think so kindly of the Masters, one of whom happens to be my brother.

Rhodesia (Gold)

19.

asked the Chancellor of the Exchequer what additional annual burden will fall on the United Kingdom balance of payments as a result of the diversion elsewhere of over £7,000,000 of gold mined in Rhodesia.

The United Kingdom's balance of payments will not be affected, although the supplies of gold available on the London market may be.

Does the right hon. Gentleman's statement mean that the gold will be available for the sterling area if it goes to South Africa?

The movements of the gold market are extremely mysterious, but it is true to say that gold which starts in one place sometimes ends up in another.

Scottish £ Notes

20.

asked the Chancellor of the Exchequer if he will introduce legislation to prohibit the exchange of Scottish £ notes in England for less than £1.

No, Sir. I do not know of any Scotsman who would accept less than 20s. for a £.

Is my right hon. Friend aware that Scotsmen in certain parts of England, particularly Manchester and Birmingham, have no option but to accept 19s. 6d. for the Scottish £ because that is all they get; and has the recent case been drawn to his attention of a Service man who was refused the right to spend two Scottish £ notes in a Naafi in Malaya on the ground that they were worthless; and will——

Order. Even if the Scottish £ is short, the Question must also be short.

The fact is that these Scottish £ notes have to be given away more or less as matters of local interest as souvenirs.

I am quite willing to offer the hon. Gentleman, shall we say, 19s. 9d. for any £ note. I do not want to exacerbate relations, and I am sure that it will produce a lot of correspondence in the Treasury, but the simple truth is that Scottish £ notes are not legal tender.

On a point of order, Mr. Speaker. In view of that most unsatisfactory answer by the right hon. Gentleman, I wish to give notice that I will make every effort possible to raise this matter on the Adjournment.

Order. The hon. Gentleman should give notice in the usual form, but, by doing so, he now cuts out other supplementary questions in support of his point of view.

Retired Public Servants (Parity Of Pensions)

21.

asked the Chancellor of the Exchequer if he will make a statement on parity of pensions for retired public servants based on position held and length of service regardless of the date of retirement.

I would refer the hon. Member to what I said on the Second Reading of the Pensions (Increase) Bill on 18th November, at col. 1360.

I am aware of that statement made by the Chief Secretary, but does he not recall that apparently a firm pledge was given by his party at the time of the last election, and that 15 months have elapsed, during which time all that the Government have said is that it is under review? Is this pledge going to be honoured, or is this yet another broken promise?

The hon. Gentleman has been quite inaccurate in the statement that he has made. I dealt with this matter very fully. If he will be good enough to read what I said, he will see that I made a complete answer.

Surely the hon. Gentleman recognises that his party has led people to believe that the return of a Labour Government would lead to something like parity? In spite of the records of both parties in the House, will he see that these great injustices are not permitted to persist just because these people have very little voting power?

I listened very carefully to what the hon. Gentleman has said. I dealt with this matter very fully in my speech. I took the precaution first of looking at what was said in the party documents before my answer was given to the hon. Gentleman.

Retirement Pensioners (Income Tax)

22.

asked the Chancellor of the Exchequer if he will seek to exempt retirement pensioners from the payment of Income Tax on State retirement pensions; and if he will make a statement.

Does not the Chief Secretary appreciate that although a tax allowance in respect of insurance contributions is given when a person is earning, nevertheless when the pension is paid the recipient is in a less good position to pay tax than when he was earning, and would he please look at the tax charge which arises on State retirement pensions?

The simple position is that National Insurance pensions are regular income, and therefore I should have thought that the hon. Gentleman would have agreed with me that they are properly included in income for Income Tax purposes.

Horticultural Industry (Glasshouses)

23.

asked the Chancellor of the Exchequer if he is aware of the hardship to the horticultural industry that will be caused by the proposed 40 per cent. tax on land scheduled for development; and if he will ex amine the possibilities of new tax reliefs for those building or rebuilding glasshouses with a view to offsetting this imposition.

My right hon. Friend cannot propose any special tax reliefs for the horticultural industry. However, grants are available under the Horticulture Improvement Scheme towards replacing or reconstructing glasshouses.

Will the hon. Gentleman look at the position and realise that the whole traditional pattern of the British glasshouse industry has been very adversely affected by these tax changes, and that the comparable tax position of the glasshouse industry in Holland is very much more favourable? Will he seize himself of these figures and then perhaps receive a deputation?

I am always prepared to receive a deputation. I was not quite sure from the point that the hon. Gentleman is making whether it would be preferable for me or for my right hon. Friend the Minister of Agriculture, Fisheries and Food to receive the deputation in question.

Hotel Equipment (Investment Allowances)

25.

asked the Chancellor of the Exchequer whether it is his policy that hotel equipment should continue to be eligible for investment allowances.

I cannot anticipate the statement of the Government's intentions concerning incentives for investment and modernisation, which my right hon. Friend the Prime Minister referred to on 9th November.

As the Chief Secretary made disparaging remarks about the eligibility of hotel equipment in the debate on 15th June, will the Chancellor bear in mind that this is an important matter to the hotel and tourist industries, especially in Scotland?

Companies (Christmas Gifts)

26.

asked the Chancellor of the Exchequer whether, under his regulations, Christmas presents given by a company to its customers may be treated by the company as expenses before tax.

Not unless they fall within the exception in Section 15, Finance Act, 1965, for gifts to overseas customers or for small advertising gifts.

Would not the hon. Gentleman agree that this minor evasion of tax by presenting Christmas presents to people is going on on too great a scale? Will he make what he has just said well known to prevent this abuse from spreading further?

Valuation Officers

27.

asked the Chancellor of the Exchequer what plans he has for increasing the number of valuation officers in the Inland Revenue department, in view of the present shortage of staff and the additional duties which will be imposed upon them.

The Inland Revenue will continue to recruit suitably qualified valuers. It also proposes to increase substantially the number of trainees in the Valuation Office who will prepare for the professional examinations. A new competition to this end will be announced shortly.

In view of the additional work which will be imposed on this Department, and as it is already snowed under, can my right hon. Friend say whether there is any intention to see that adequate salaries are paid, as one gets only what one pays for in this life?

Would not the Chief Secretary agree that he, his right hon. Friend, and the Government were warned that they were placing an intolerable burden on the Inland Revenue when the Capital Gains Tax and the proposals on the Land Commission were announced? Would he agree that perhaps in addition to making the quinquennial valuation a victim of this lack of officials, the Capital Gains Tax should also be dropped?

There is no intolerable burden on the officials, and as a result of the measures being taken it is not expected that there will be any undue delay in coping with the responsibilities that are put on them.

Commonwealth Sterling Area Trade

28.

asked the Chancellor of the Exchequer what consideration he has given to the memorandum on Commonwealth sterling area trade and payments submitted to the Commonwealth trade officials meeting by the Commonwealth Industries Association and the Economic Research Council; and what action he has taken.

I have read the memorandum which the right hon. Member was good enough to send me. As he knows, international discussions on liquidity and aid have been proceeding under a new impetus since September.

As the Commonwealth countries have shown great interest in this memorandum, will the Chancellor conduct a close examination into this proposal before the Commonwealth Trade Ministers' meeting next year?

I have studied it, and I think that it has a number of ideas which might form part of the discussions that are going on; but I do not think that I could undertake to sponsor it as a conference document.

Could not the Chancellor give a warmer reply on this? Does not he agree that this is an imaginative and ingenious proposal for facing a very real and difficult problem? Could not he undertake to have a close examination made of this in advance of the meeting of Ministers to which my right hon. Friend referred?

I have had an examination made of it. I do not think that it is cast in a form in which it could be submitted to a meeting of Commonwealth Ministers, but that is not to say that any ideas which are of value should not be extracted—and they will be.

Local Authority Expenditure (Public Libraries)

29.

asked the Chancellor of the Exchequer whether, in restricting local authorities' expenditure, he will exempt from such restrictions money to be spent on public libraries.

If the hon. Gentleman is referring to the deferment of public capital expenditure following my right hon. Friend's statement of 27th July, the answer is, "No, Sir".

Will the Chief Secretary accept that there is a logical distinction between cuts, or cut-backs, on civic centres and office buildings, and cuts in libraries which really are a part of education? Will he understand that there is considerable resentment among librarians about this?

I understand that there is a distinction, but the line has to be drawn somewhere.

Balance Of Payments Deficit (North America)

32.

asked the Chancellor of the Exchequer what action he is taking to reduce the balance of payments deficit with the United States of America and Canada.

I take it that my hon. Friend is referring to the deficit on trade. Particular efforts are being made to increase exports to North America, which I am glad to say have risen this year by 15 per cent.

Is the Chancellor aware that during his visit to Moscow the Foreign Secretary drew attention to the £30 million imbalance of trade, and will he consider that now is the time to use our £400 million deficit with the North American Continent as a means of bargaining for rather betters terms than we have so far achieved in our balance of payments?

This is a constant preoccupation of mine. I think that the most important thing to do is to lower the barriers of trade so that we can improve our exports to the United States. This is what we are constantly trying to do.

Would not the Chancellor agree that the decision to exercise the Government's option to purchase the F111 will vastly increase the present deficit to the United States?

No, it does not necessarily follow. It depends partly on the amount of imports that one has to use in any home-produced equivalent.

Malaysia (Double Taxation Agreement)

34.

asked the Chancellor of the Exchequer when the negotiation for a double taxation agreement with Malaysia will be likely to be completed.

The terms of an agreement were settled at the beginning of last year but the subsequent secession of Singapore and the changes in the United Kingdom tax system raise the question of its revision; this matter will be taken up as soon as possible.

In the meantime, before agreement is reached, why is the Treasury asking for payment in full on the pensioners' income, 40 per cent. of which has already gone, thanks to the fumbling financial policy of the Government, which is bewildering not only pensioners, but tax experts, both at home and abroad?

The hon. Gentleman has gone rather far afield, but if there is any special case where he thinks there is particular hardship, if he will send it to me I shall be only too glad to look at it.

In view of the last Budget, will not all double taxation agreements need to be re-negotiated?

Does the Chief Secretary recall that I have drawn an individual case to his attention, and that he said that it must await the signing of a new double taxation agreement with Malaya?

I do not recall it at the moment, but I am sure that the hon. Gentleman's recollection is correct.

Dividend Payments (Tax Revenue)

35.

asked the Chancellor of the Exchequer whether he expects any increase in tax revenue this year from increased dividend payments.

Is the Chief Secretary aware that many companies are increasing their dividends because of the uncertainty of the future tax position, which seems to have changed since the last Budget? Can he promise that Corporation Tax will stay at 35 per cent., as promised at the time of the last Budget? Is he further aware that his hon. Friend the Member for Buckingham (Mr. Maxwell) is rumoured as shortly going massively to increase his dividend because of this?

It would be improper to make any estimate whatsoever of what might be in my right hon. Friend's mind when he comes to introduce his Budget.

Government Stock (Rhodesian Residents)

36.

asked the Chancellor of the Exchequer if he will estimate the annual value of interest payments to residents in Rhodesia in respect of Government stock held by them; and what warning is given, at the time of investment, to purchasers of Government stock that interest payments might in certain circumstances be withheld.

The answer to the first part of the hon. Member's Question is that no reliable estimate can be given. The answer to the second part is none, Sir.

Is it not still the fact that savers or investors cannot get their money? Is there any precedent for withholding interest from loyal citizens, according to the Government's own definition, who have invested in National Savings? Is not this a breach of faith, and was the Chairman of the National Savings movement consulted?

I had not realised that this Question was concerned with National Savings. I thought that it was concerned with Government stock, and it is that to which I addressed my Answer.

Estate Duty

37.

asked the Chancellor of the Exchequer if he intends to alter the exemption from Estate Duty where one party to a marriage leaves a life estate to the surviving spouse and Estate Duty has been paid on the first death.

My right hon. Friend cannot disclose his intentions in advance of the Budget statement.

Is the Chief Secretary aware that in a letter to me the Financial Secretary described this as an anomaly? Is the right hon. Gentleman aware that if this exemption were withdrawn it would cause great resentment and quite a lot of hardship?

On a point of order. The close season for Chancellors not answering Questions on the grounds of not disclosing what their Budget proposals are going to be seems to be getting longer and longer. Mr. Speaker, can you say whether there is any limit whatever, either statutory or otherwise?

That is not exactly a point of order, and I hope that hon. Members will hesitate before raising similar points during Question hour when, in any event, they might he better raised at the end of Question Time.

Investment Dollar Premium

38.

asked the Chancellor of the Exchequer, in view of the recent rise in the investment dollar premium to over 16 per cent., and of the fact that it is damaging to the £ to have such a high premium quoted for switching to a foreign currency security, what action he will take to control any further increase in this premium.

Is the Chancellor aware that the rise in premiums against the £ is preventing investors from investing money if they wish in America, and not only that, but is showing up the falling value of the £ on world markets? Should not this premium be controlled in the national interest?

The second part of the hon. Gentleman's statement is not true. He knows that the value of the £ in the exchange markets stands higher today than it has stood for two years, and that what happens on a thin market like this bears no relationship to the value of the £.

Purchase Tax

39.

asked the Chancellor of the Exchequer why Purchase Tax is charged on a patent fastener for fitted carpets and not on the sewn-on rings.

Fasteners designed for fixing carpets to the floor are liable to Purchase Tax as hardware and ironmongery of a kind used for domestic or office purposes. But the charge does not extend to general purpose rings and washers.

Is the Chief Secretary aware that, despite his reply, it seems idiotic to many people that, at a time of great labour shortage, a labour-saving device of this description should be taxable, while the ring sewn on is tax free? Will he be good enough to look at it again?

I have looked at it. I am aware of what my hon. Friend has said, and I hope he will permit me to add that I am also aware of the fact that any hon. Member sitting in my hon. Friend's place, or thereabouts, is likely to get a similar response to a similar Question.

Married Teachers (Income Tax)

40.

asked the Chancellor of the Exchequer if he will bring in legislation to permit expenses incurred by married teachers in making provision for their own children whilst they themselves are in school to be deductible against Income Tax.

Will the Chief Secretary look at this again, as it would tend to help considerably to release a number of married women teachers who are in notoriously short supply at the moment.

I am sure that the hon. Gentleman appreciates that married women already receive special Income Tax reliefs on their earnings, including the wife's earned income allowance. If my hon. Friend pays careful attention to the net result of these reliefs, I am sure that he will not be disposed to press his question.

Fairfield Shipbuilding Company Limited

41.

asked the Chancellor of the Exchequer what sums have been advanced to the Fairfield Shipbuilding Company Limited; and what reorganisation has been effected to enable this yard to carry out its contracts, and to protect public investment in it.

£450,000. I would refer the hon. Member to the statement made by the First Secretary on Thursday, 9th December.

Is not the failure of one of our most modern yards, with £32 million worth of orders in hand, menacing the whole of our shipbuilding industry? Is not this the result of restrictive practices and labour troubles? Ought not the right hon. Gentleman to be considering getting at the root causes of this? If this is not done, the whole future of our shipbuilding industry is at risk.

This is a matter for my right hon. Friend the President of the Board of Trade. The hon. Member seems to be forgetting that there is an extremely high-powered body, under the chairmanship of Lord Geddes, which at the moment is examining these questions, and I have already informed the House that it will be reporting on them within six weeks or two months.

Railway Season Ticket-Holders (Tax Relief)

43.

asked the Chancellor of the Exchequer if he will consider granting tax relief to those who travel between their residence and place of work in respect of the cost of railway season tickets purchased for this purpose, so that the strain on urban roads may be reduced.

Will the hon. Gentleman look at this matter again, as a very effective method of persuading people to take to the railways and relieve the roads? Is not the carrot better than the stick?

Whatever may be the argument in support of what the hon. and learned Gentleman is properly putting forward, the method of dealing with it is not by creating greater anomalies in the Income Tax system.

Will the hon. Gentleman bear in mind that one solution would be to provide tax relief for those who co-operate in staggering hours?

Rural Bus Operators (Fuel Oil Tax)

45.

asked the Chancellor of the Exchequer if he will remove the tax on fuel oil used by rural bus operators, in view of the ever increasing cost of rural bus services to the public.

Is the hon. Gentleman aware that there is a serious risk of many rural bus services breaking down in consequence of the high fuel tax, and that this is a very serious problem in areas where rail closures have taken place? Will he consider this question again, as a matter of urgency?

The problem is undoubtedly a serious one, but I cannot accept that the one cause is that to which the hon. Member has referred.

Will my hon. Friend or the Chancellor of the Exchequer, when considering his Budget proposals, bear in mind that those hon. Members who represent rural areas are concerned about this matter and that he might do worse than to obtain the opinion of the Minister of Transport, in view of the action of the Traffic Commissioners, who are not always in touch with rural requirements?

I can assure my hon. Friend that my right hon. Friend the Chancellor is well seized of the urgency and difficulty of this problem.

Will not the hon. Gentleman give an undertaking at least that the petrol tax will not be increased in the Budget?

There is no need for me to add that I am unable to give an undertaking of that kind.

Teaching Machines

47.

asked the Chancellor of the Exchequer how much Her Majesty's Government spent on teaching machines and their provision during the last available year.

For Civil Service training purposes the Government spent £17,567 in the year ending 31st August, 1965; £12,090 on the purchase or hire of electric teaching machines and the balance on simpler manually operated equipment.

Is the Chief Secretary aware that in spite of this great technical break-through to assist the teaching profession the Ministry of Education this year has spent only £19 on teaching machines? Is it not disgraceful that a Government which promised technical advance take so little notice of this new development?

Defence

Q1.

asked the Prime Minister, in view of the need to ensure that measures for strengthening collective defence must not only not make disarmament measures more difficult but should contribute to making disarmament agreements easier, if he is satisfied that British defence policy satisfies this condition; and if he will raise these issues in his forthcoming discussions with President Johnson on Western defence policy.

The answer to both parts of the Question is, "Yes, Sir".

Is not the Prime Minister convinced by now that any form of association of Western Germany with any kind of international nuclear force would constitute an insuperable obstacle to reaching agreement with the Soviet Union, as he himself told the House would be the case on 3rd July, 1963? In those circumstances, will not he represent to President Johnson the need for abandoning his scheme?

I referred in July, 1963, to the idea of a German finger on the trigger. I also criticised the then current scheme for an M.L.F., which we have opposed. This has been fully discussed at Question Time. I hope that there will be an opportunity for discussing all these questions more fully in the foreign affairs debate.

Will the Prime Minister now give an assurance confirming what he has said on previous occasions, that the measures necessary for the nuclear defence of the West will take priority over other political measures, such as the obtaining of a non-proliferation agreement?

I think that we have dealt with this matter in the past. We are certainly not giving an absolute priority to the kind of scheme that the right hon. Gentleman mentioned in Der Spiegel, about associating Germany with nuclear weapons, if that means that there is no hope of stopping the spread of nuclear weapons, which is of vital importance. We hope within the Alliance to work out methods which do not stand in the way of a non-dissemination agreement.

I mentioned no scheme in Der Spiegel. Perhaps the Prime Minister did not read it in the original German. Surely the Prime Minister himself will not argue that such a scheme as has been put up by Mr. McNamara, or his own A.N.F., is not perfectly compatible with a non-proliferation agreement.

I read the translation. We have expressed support for Mr. McNamara's scheme. It involves no dissemination of nuclear weapons; on the contrary, there is a guarantee against the dissemination of nuclear weapons. But if, as I understand, the right hon. Gentleman wants to give priority to nuclear sharing over nuclear non-dissemination, I cannot give an assurance to that effect.

Nassau Agreement

Q2.

asked the Prime Minister whether, in the course of his forthcoming discussions with President Johnson, he intends to renegotiate the Nassau Agreement.

The purpose of my visit to Washington is not to negotiate so this does not arise immediately.

Does the Prime Minister recall his speech on 14th January last year, and other speeches, in which he said that the party opposite would renegotiate the Nassau Agreement, in the sense of ending the proposal to purchase Polaris missiles from the United States? Will he accept our congratulations on having completely abandoned that position?

I am deeply touched at the assiduity with which the hon. Member reads my past speeches. I wish he would read them right through. As for the Nassau Agreement, I made it clear last December that changes would be necessary arising out of our proposals for the Atlantic Nuclear Force. If those proposals go through it will be necessary to renegotiate the Nassau Agreement. If, as a result of the current discussions in N.A.T.O., other proposals come up that we are prepared to contemplate, action on these may be necessary.

Vietnam

Q3.

asked the Prime Minister if he will seek to discuss with President Johnson, at their forthcoming meeting, the need to end the bombing in Vietnam and to hold negotiations, which would include the Vietnam National Liberation Front, on the basis of the 1954 Geneva Agreements and the United Nations Charter.

Q28.

asked the Prime Minister what fresh initiative Great Britain proposes to take with the United States Government to end the bombing of North Vietnam.

As I explained on 9th December, I hope to discuss all aspects of the Vietnam problem with President Johnson.

Will my right hon. Friend make it clear that in these discussions he will hold by the Geneva Agreements providing for the reunification and military neutralisation of Vietnam as a basis for a settlement, and will rule out the use of force or the threat of force, in the form of the American occupation, to extort terms which are inconsistent with the Geneva Agreements?

Leading American spokesmen have expressed their willingness to negotiate on the basis of the 1954 agreement as, to use my hon. Friend's phrase, the basis of a final settlement. With regard to the question of bombing raids, which is mentioned in the Question, we made clear in the Commonwealth Prime Ministers' communiqué our view that the bombing and the infiltration should be stopped—and stopped together—as a basis for a ceasefire and negotiations.

When my right hon. Friend sees President Johnson, would he try to obtain an extension of the proposed cease-fire on Christmas Day for many more days and, at the same time, impress on President Johnson that any extension of the war which might include the whole of South-East Asia—including China—would be abhorrent to the British people?

The wider danger referred to by my hon. Friend will be abhorrent not only to the British people hut, I am certain, to the whole world—not least to the United States and any other country which is involved in this matter. With regard to the bombing, we have repeatedly said that if there were to be a suggestion of linking an agreement by Hanoi to go to the conference table with the stopping of the bombing, this is something which we would want to pursue. This was one of the ideas in the minds of the members of the Commonwealth Peace Mission. We have not yet had any indication—though we may get it one day—that Hanoi would be willing to come to the conference table on that or any other reasonable basis.

When the Prime Minister stresses that negotiation would be welcome to everybody, would he also thank the President for the very great efforts of the United States to stop the over-running of the Far East by Communist military forces?

We have repeatedly said, in many debates, that we support the United States in their policy in Vietnam. At the same time, we pressed the United States very strongly last spring, and we have pressed Hanoi repeatedly since that time, to agree to negotiate and to end this war to which, as we have repeatedly said, there can be no military solution.

Atlantic Alliance (Nuclear Consultation)

Q4.

asked the Prime Minister what is the policy of Her Majesty's Government on the setting up of a nuclear committee as a means of achieving nuclear sharing within the Atlantic Alliance.

We have supported the proposal for a Special Committee of North Atlantic Treaty Organisation Defence Ministers to examine and report to the North Atlantic Council on ways of improving nuclear consultation in the Alliance.

The Prime Minister will be aware that the Soviet Union recently came out very strongly against this proposal. Does he not agree that, in assessing the weight to be attached to that posi- tion, it is important to hear in mind that, in spite of recent improvements in Soviet attitudes towards the West, it is almost certainly still one of their major objectives to weaken the N.A.T.O. Alliance?

My right hon. Friend the Foreign Secretary discussed these matters at some length a couple of weeks ago in Moscow, and they have been further pursued in Paris this week We have repeatedly stressed that any proposal of this kind does not involve what the Russians fear—one understands their fear—that there would then be a German finger on the nuclear trigger. This is a consultative committee which could be very valuable: it does not involve dissemination.

Would not many of the difficulties in the way of this proposal be removed, particularly the Russian objections, if we were to achieve parity with the Germans by abandoning our independent nuclear power? Was not this formerly my right hon. Friend's policy? Why is he not getting on with it?

I thought that I satisfied even hon. Gentleman opposite, to say nothing of my hon. and learned Friend, in the debate last. December that the claim that we had an independent nuclear power was a completely bogus claim. The proposal which we have made for the Atlantic Nuclear Force, in which we have sought and offered to internationalise this deterrent, I should have thought—[Interruption.]—this is a very serious matter—would have met the requirements of my hon. and learned Friend in the suggestion which he has just made.

Is it the policy of the Government that this committee should discuss control of the planning of hostilities in a nuclear war outside N.A.T.O. and the N.A.T.O. area?

Yes, Sir, I very much hope so. I think that one of the defects in previous discussions in N.A.T.O.—as both parties have said, from both sides of the House, before and since the election—is that discussions about the use of nuclear weapons have been too narrowly related to the area of the Alliance itself. For example, there was not sufficient freedom to discuss the use of nuclear weapons in an area which is outside N.A.T.O. but which might plunge N.A.T.O. into war.

Lord Beeching (Transport Co-Ordination Study)

Q5.

asked the Prime Minister on what date he first asked Lord Beeching to undertake single-handed the transport co-ordination study.

As Lord Beeching's pro-railway evidence to the Geddes Committee was given months before this and as the Prime Minister has given his reasons to the House for deciding against Lord Beeching, in view of this disqualification, why did he ask him in the first place?

The hon. Gentleman has worked hard, but I did not say that it was a reason for deciding against Lord Beeching, but that it was a reason for saying that he should have assessors who would be capable of representing the road haulage interests. Otherwise, their interests would have had to be expressed, as I am sure they would have been, by hon. Gentlemen opposite when the Report was debated. From 13th November and for the next month, we were concerned with other matters with Lord Beeching—namely, the terms on which he should return to I.C.I. and the terms on which he could carry on his chairmanship of British Railways and hold this inquiry—after which it was clear that we would not agree on the assessors.

When the right hon. Gentleman first offered the post to Lord Beeching, did he then submit that assessors should sit with him, or was this raised only after the Prime Minister's return from the United States?

No, Sir. To the best of my memory, I did not raise it with Lord Beeching at that time—[HON. MEMBERS: "Why not?"]—but I know that it was being discussed. I think that the Ministry of Transport was discussing it at that time, but we ran into many other difficulties, including discussions with the head of I.C.I. about the period for which Lord Beeching could be released—I was involved in four or five meetings: we had to get over that—before we knew whether Lord Beeching was willing to undertake any job of this kind. Before this was clear, the other difficulties supervened which, very much to my surprise, meant that he was not able to accept the assignment.

Is my right hon. Friend aware that many hon. Members on this side of the House are much more interested in the co-ordination of transport than in the people concerned? When can we expect the policy of coordination followed by legislation which is long overdue and which hon. Members want?

I share my hon. Friend's keen desire to see this done. As I have said many times, I was disappointed that we were not able to get Lord Beeching on the terms I mentioned, so that we might have been a good deal forrader with the integration plan than we are. I think that we were right to insist on its not being a report, which would certainly have been bitterly attacked by hon. Gentlemen opposite because it did not pay enough attention to the road haulage interests as well.

Does not the Prime Minister's statement indicate that he made this proposal, quite properly, to Lord Beeching, that, when he got back from the United States, he was then forced, under pressure from the Minister of Technology, to insist on the assessors sitting with Lord Beeching, and that that is why the latter had to refuse this position?