asked the Chancellor of the Exchequer what further action he proposes to take on the report on invisible earnings, undertaken for the British National Export Council, a copy of which is in his possession.
In accordance with the recommendation of the British National Export Council, a permanent Committee was established under the chairmanship of Mr. Cyril Kleinwort
The first annual report of this Committee will shortly be published and the Government will give careful and sympathetic consideration to its proposals."to suggest and where possible implement measures for the encouragement of invisible earnings".
Will the Chancellor also make some positive proposals of his own on this important subject of invisible earnings and, in particular, will he direct his attention to the excessive proportion of imports coming into this country in foreign ships?
I will certainly consider any matter of this sort. We are, of course, very anxious to encourage invisible earnings. The Government's Development of Tourism Bill and other measures have been in this direction, and from the tourist point of view and other points of view we have done very well.
Would the Chancellor deny that selective employment tax is having an adverse effect on invisible earnings? Would he tell the House what estimate he has made of that adverse effect?
We shall debate this later today, but I would deny that it is having an adverse effect. It obviously falls on certain sectors which produce considerable invisible earnings, but these are sectors which are not price elastic, and they are precisely the sectors in which we have done very well.
International Monetary Fund (Talks)
asked the Chancellor of the Exchequer if he will make a further statement on the progress of his discussions with the Government's overseas creditors regarding the rescheduling of its international debts.
asked the Chancellor of the Exchequer if he will publish the advice given to him by the International Monetary Fund representatives whilst in London during their recent inspection of the United Kingdom's finances.
asked the Chancellor of the Exchequer if he will make a statement on the findings of the latest visit of the International Monetary Fund team to the Treasury in relation to the state of the economy.
asked the Chancellor of the Exchequer if he will make a further statement on the rephasing of Great Britain's external debts.
I would refer to my statement in the House on 14th May, in reply to a Private Notice Question by the right hon. Member for Enfield, West (Mr. Iain Macleod), and to the Answer given by my hon. Friend the Financial Secretary in reply to another Question the previous day by the hon. Member for Banbury (Mr. Marten).—[Vol. 783, c. 1402–10; Vol. 783, c. 1207.]
Now that the Chancellor has once again had to admit that his forecast of balance-of-payments surplus has been further postponed into next year, will he not agree that the present Government are about as much to be trusted with additional dollops of foreign charity as the junkie is to be trusted with free drugs? In the light of that, will he ensure that the Letter of Intent contains the most strict and rigorous control on the Government, trigger clauses and all?
I regard that as a bad supplementary question, even by the hon. Member's standards.
Next time the Chancellor wants to have a drink party to tell hon. Members on what the I.M.F. has insisted, will he be kind enough to ask me as well as his hon. Friends?
I shall always be glad to have a discussion with the hon. Member, either with or without a drink, but I can assure him that no information was given last night which I have not given to the House.
In seeking to rephase our foreign debts, particularly with the I.M.F., will my right hon. Friend avoid an excessive commitment to the newly-found theory of money supply which, although of course of some importance, must not be exaggerated in view of the lack of knowledge that we have about its effect as it applies to this country?
As I said in my Budget speech, I attach the greatest importance to monetary policy. We need a tighter monetary policy than we had last year.
May I reinforce the point made by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and invite my right hon. Friend to resist the dangerous pre-Keynesian archaic nonsense of trying to limit the money supply in this country? Is my right hon. Friend aware that such a step could only exacerbate the country's basic economic problems and would not improve the situation?
I assure my hon. Friend that my thought is post-Keynesian on this as on other matters.
Notwithstanding that yesterday evening's meeting of the Parliamentary Labour Party was supposed to be private and a full report of it appeared on the front page of the Financial Times this morning, would the right hon. Gentleman say whether it is his policy, as reported, to attack as the first priority the supply of money in order to redress our balance of payments?
I stand completely by my Budget Statement, an extract of which I have just quoted, that I attach the greatest importance to monetary policy.
Selective Employment Tax (Snack Bars)
asked the Chancellor of the Exchequer if, in development areas where hoteliers receive repayment of selective employment tax, he will seek to extend the same facilities to owners of snack bars on recognised tourist routes.
Does not this illustrate once again the absurd anomalies created by this tax? Will not the Government think again and abolish it right away?
The hon. Gentleman's Question referred to snack bars. The purpose of the hotel concession in these areas is to attract tourists to the areas for the benefit of those areas by enabling hotels either to lower prices or to improve facilities and services. Without disrespect to snack bar owners, people do not make up their mind about where to spend a holiday by looking at the snack bars which are available.
Would not my hon. and learned Friend agree that this is an unworkable distinction and that it is the sum total of the facilities in the areas which are considered by tourists and not the existence of certain types of hotel?
Clearly, the services which hotels can offer are an important part in the decision which tourists make about where to go.
Value Added Tax
asked the Chancellor of the Exchequer what is his estimate of the administrative cost, in men and money, of introducing tax value added.
I have nothing to add to what my hon. Friend the Financial Secretary said in reply to a Question from my hon. Friend the Member for Heywood and Royton (Mr. Barnett) on 29th January.—[Vol. 776, c. 334–5.]
Would the right hon. Gentleman agree that, although the cost is high, this tax has many advantages in the export field, although it has many disadvantages?
I agree that it has many advantages and many disadvantages. The advantages have not been exactly proven.
Public Sector Expenditure
asked the Chancellor of the Exchequer what estimate he has made of the total increase in public sector expenditure during the current financial year after allowing for the increase in pensions in November and corresponding proportionate increases in all other social security payments.
I would refer the hon. Member to the Answer which my right hon. Friend the Chancellor of the Exchequer gave him on 8th May.—[Vol. 783, c. 119.]
How can the Chancellor of the Exchequer know what the effect of the financing of these increases in pensions and ancillary benefits will be on the demand management of the economy until he knows how he will finance them? Would not he agree that the announced increases in public service expenditure of 1 per cent. this year and 3 per cent. next year, even if achieved, are clearly excessive?
My right hon. Friend the Chancellor of the Exchequer said specifically what the increase in expenditure would be. He said that it would be £250 million, which referred to a full year. When one takes account of the proportion affecting the first year, that is the figure included in the public expenditure provision for which the 1 per cent. is the increase already announced.
asked the Chancellor of the Exchequer what progress has now been made in the reduction of bank overdrafts as a result of the various measures he has taken since devaluation.
Restricted lending by the banks as a whole is now virtually at the ceiling levels which they have been asked to attain. As I said in my Budget statement, I attach the highest importance to the continued maintenance of credit restraint, and I expect those banks whose lending was still above the ceiling in April to bring it within the ceiling as soon as possible.
But surely the right hon. Gentleman's continued reference to a Budget Statement five weeks ago is now something of an anachronism. Has it not been overtaken by events? Is not the position today immeasurably worse than it was five weeks ago? Does his statement today mean that he does not intend to ask the banks to take any further credit restriction measures?
No. The hon. Gentleman seems to be even more inaccurate than usual. With regard to the Question—and I take it that the hon. Gentleman's supplementary was intended to be related to the Question—the position has improved since Budget day. The April figures published after Budget day showed a substantial movement towards the ceiling. I expect and intend that movement to continue.
Despite the protestations of my hon. Friends below the Gangway, are the steps which my right hon. Friend is taking in relation to the commercial banks, also the secondary banks and parallel money markets, and in relation to his new policy in the gilt-edged market, likely to produce an increase in money supply, taking into account a balance of payments deficit of less than 2 per cent. this year?
That is an interesting but wide-ranging question, and before giving an affirmative, or indeed a negative, answer, I should like to see on paper the factors which my hon. Friend quite rightly listed. I must therefore be a little reserved in my reply. I can assure him, however, that I am not looking at this matter solely from the point of view of the clearing banks. I am also looking at it from the point of view of the Scottish banks, accepting houses and discount houses.
In view of the tremendous emphasis which the right hon. Gentleman is placing on the money supply, could he say why he has attempted to make no forecast of this in his financial statement? Will he undertake to publish such a forecast in the OFFICIAL REPORT?
I do not think that I should undertake for the moment to publish more forecasts. As I have often told the hon. Gentleman, who has an insatiable but understandable appetite for forecasts, I have gone much further in this direction than any of my predecessors.
Import Deposit Scheme
asked the Chancellor of the Exchequer what decrease in imports and effect on the balance of payments has been achieved since the inauguration of the imports' deposit scheme; and whether he will now take steps to terminate this scheme on 31st July 1969.
Imports of goods mainly liable to the scheme averaged £235·5 million in the first five months of the scheme. In the previous five months they averaged £243 million. It is not possible to say what imports would have been in the absence of the scheme. The answer to the second part of the Question is "No, Sir".
Do not those figures show a diminution of less than 1 per cent. in the rate of imports? Having regard to the infinitesimal results and minimal outcome after such a brouhaha from the Chancellor of the Exchequer about the importance of the scheme, will he not scrap the scheme as soon as possible and have recourse, without exaggeration, to more effective methods?
I must inform the hon. Gentleman, despite the noise, that his arithmetic is not correct. If he reflects on the figures, he will see that there has been a decrease of 3 per cent.
Since other efforts to control imports have failed lamentably, is it not time the Government gave further consideration to import controls, which some of us have been advocating since 1964?
The arguments for and against import controls have been elaborated since 1964. This is not the occasion on which to debate them.
Marginal Rate Of Tax (Percentage Of Income)
asked the Chancellor of the Exchequer what is the maximum marginal rate of tax in the United Kingdom as a percentage of income; and at what income it begins.
91·25 per cent. The point where it begins depends on the circumstances of the particular case; for example, for a married man with two children aged 11 and 16, and whose income is wholly earned, it begins at £18,951.
Does not the right hon. Gentleman realise that the equivalent in West Germany is as low as 53 per cent. on an equivalent sum of a little over £20,000? Does he not think that the active encouragement of wealth, and thus saving, in West Germany, contrasted to its active discouragement under this Government, may have something to do with the relative performances of the West German and British economies?
I do not think that the two are related. But I should like to add to what the hon. Gentleman has said that the figure which I gave represents an average rate of tax of 60 per cent.
asked the Chancellor of the Exchequer what estimate he has made of the current annual cost to the revenue of reducing direct and indirect taxation to the levels of those in existence at mid-September, 1964, including the abolition of new taxes introduced since that date.
Is it not a fact that the figure would be in excess of £2,000 million? Is the right hon. Gentleman aware that the Chancellor has only five months in which to implement the Prime Minister's television election pledge of 15th September, 1964, when he said that the Labour Government's policies could be carried out over the period of a Parliament without any general increase in taxation?
I cannot offer a comment on the figure as no attempt has been made to estimate it, and it is an impossible task to estimate it with any good sense.
asked the Chancellor of the Exchequer what was the national indebtedness as at 5th April, 1969, both including and excluding central bank transactions, respectively, and including borrowing by public corporations and nationalised industries; and if he will give a breakdown of the total.
The provisional total for the nominal amount of the national debt outstanding on 31st March 1969 is approximately £33,960 million. Details are given in the May edition of "Financial Statistics", published today. Figures for outstanding borrowing by the nationalised industries at the same date are given in Table III of the White Paper on "Loans from the National Loans Fund, 1969–70" (Cmnd. 3995).
Whilst welcoming the reduction in national indebtedness as evidenced at the time of the Budget, may I ask for the establishment of regular machinery to show the extent of borrowing by nationalised industries overseas which is not investment, deferred payments for defence expenditure and bank transactions, so that we know at regular intervals where we are in terms of national indebtedness overseas?
With the exception of the last item, if the hon. Gentleman was referring to short-term bank transactions where it is not usual to disclose the figures, I will consider what he has said.
Capital Outlay Overseas
asked the Chancellor of the Exchequer what has been the level of British capital outlay overseas including investment by industry, and bilateral and multilateral aid in the first quarter of the current year; what has been the corresponding level of capital expenditure and investment from overseas in this country; how the position differs from the same period last year; and what is now the underlying trend.
Estimates of United Kingdom long-term capital transactions in the first quarter will be published on 12th June. Estimates for the four quarters of 1968 were published in the March 1969 issue of "Economic Trends". I have nothing to add to the forecasts in the Financial Statement and Budget Report.
Will the right hon. Gentleman confirm that the trend of investment from overseas in this country is continuing, and that it will support rising investment overseas during the current year?
The statement made in the first part of the question is correct, and, as the hon. Gentleman knows, the trend of investment overseas went up last year.
Negative Income Tax
asked the Chancellor of the Exchequer what study he has made of the capacity of the Inland Revenue to handle a system of negative income tax as an earnings-related alternative to the present system of family allowances.
I have nothing to add to the reply given to my hon. Friend on 19th May by my right hon. Friend the Secretary of State for Social Services.—[Vol. 784, c. 23.]
Bearing in mind the problems which the Chancellor said this year prevented him from extending the claw-back to the whole of the family allowance, will my right hon. Friend give an assurance that he will keep negative income tax under review, since it could be a more effective way of paying adequate family allowances to those who really need them?
I certainly give my hon. Friend the assurance that we will keep it under review, although, as to the last part of his supplementary question, he will have heard what my right hon. Friend had to say.
asked the Chancellor of the Exchequer on how many days since devaluation has the £ sterling been at $2·40 or above.
On 98 working days.
As the constant aim of this Government has been to strengthen sterling, is not it an astonishing record that in the 550 days since devaluation only on 98 occasions has it touched parity or been above? Is not the only way to restore confidence in sterling to have a new Government?
I should have thought it hardly worth the hon. Gentleman's while to put down that Question to enable him to lead to the conclusion which he repeats about five times a week. His arithmetic, as usual, is false. The comparison with 98 working days is not 550 days. The number of working days is much more like 300.
Foreign Exchange Earnings
asked the Chancellor of the Exchequer why he permits companies with overseas investments in the non-sterling area to plough back foreign exchange earnings, but refuses such facilities to companies without such investments.
In general, overseas subsidiaries are allowed to retain a sufficient proportion of their net earnings, normally about a third, to finance their normal development. This arrangement cannot apply to companies without overseas subsidiaries.
Surely we should allow overseas investments to be made in the most profitable field by those companies with the best prospects? It is quite anomalous to restrict overseas investments to those companies which have overseas earnings. Why do not the Government so set the price of foreign exchange that all may partake if it is worth their while?
The Government are under a duty to protect the reserves, and they have regulated overseas investment in such a way that it is running at historically high levels but at the same time imposing the minimum burden on the reserves.
asked the Chancellor of the Exchequer why figures showing the components of the estimated borrowing requirement for 1968–69 were not published in the April issue of "Financial Statistics".
The provisional out-turn estimate of the Central Government borrowing requirement for 1968–69 was not available in time for inclusion in the April issue of "Financial Statistics".
Why has it taken so long to discover what in the net receipts for market transactions is the proportion of marketable securities? Is it because, out of a total of £998 million, only £821 million is the much-vaunted negative borrowing requirement and £453 million is the actual creation of new inflationary money?
This relates to the publication of particular figures. The figures about which the hon. Gentleman asked in his original Question, not the entirely extraneous figures he produced in his supplementary question, were published in the financial statement of 15th April. They could not be included in the regular financial statistics published later, because at Budget time it is necessary to give printing priority to the annual statements, and this makes it possible to publish the figures at a later stage than in the regular monthly publications.
Services Training (Dartmoor)
asked the Chancellor of the Exchequer what request the Duchy of Cornwall has received for a renewal of the licences for Services training on Dartmoor after 1970.
Discussions about the renewal of licences for the Services to train on Dartmoor are taking place, and my right hon. Friend the Secretary of State for Defence will be making a statement in due course.
In considering the application, will my right hon. Friend bear in mind that demands for land on Dartmoor are growing rapidly, and that it is desirable that at least some areas of Dartmoor which are at present occupied by the Services should be available for public access after 1970?
I assure my hon. Friend that these matters will be taken very carefully into account.
New Savings Schemes
asked the Chancellor of the Exchequer what progress has been made in preparing the new savings schemes outlined in the Budget.
The Department for National Savings is continuing its administrative planning for S.A.Y.E. The Trustee Savings Banks have announced their intention to set up a parallel scheme. The target date for both these schemes is October next.
As, since the Budget, savings have been disappointing, and in view of the deteriorating economic position, is there any likelihood of advancing the date from October to perhaps a month earlier?
I do not think so. I should very much like to have these schemes in operation at the earliest possible date, but I must have regard to practical administrative considerations. The Premium Bonds Scheme when it was announced in 1956 took 14 months to bring into operation. We are improving on that. If I can further improve on it I should like to do so, but I hold out no hope of being able to do it.
Will my right hon. Friend consider inviting the National Savings Committee to encourage people on P.A.Y.E. to put part of their overtime earnings into a savings scheme, and will he consider exempting those savings from tax? This would be an incentive to work harder and encourage savings.
I went to considerable lengths in my Budget speech, for precisely the reason that I was at first attracted by this proposal, to explain why the scheme could not be directly related to overtime, and why it was best to give the reward in the form of a tax-free bonus at the end of the period rather than give tax exemption at the beginning of the period, and this view was shared by those most concerned with the savings scheme.
asked the Chancellor of the Exchequer what is the total tax revenue which he estimates will be raised in 1969–70; what was the actual tax revenue raised in 1963–64; and by what percentage the former figure exceeds the latter.
After making the appropriate adjustment for S.E.T. refunds, corporation tax overspill relief and the change to investment grants, £12,645 million in 1969–70 and £6,649 million in 1963–64. Before taking into account the substantial increase in incomes, the first figure exceeds the second by roughly 90 per cent., but after making such allowances it is under 30 per cent., or about 4 per cent. per annum on average.
Are not these shameful figures? Does the Minister think that we shall ever solve the country's economic problems so long as enterprise and initiative have to bear such a heavy burden of taxation?
I do not accept that there is an excessive burden of taxation placed on enterprise, and I am unable to imagine how we can solve our problems if we take no account of those who are in need, for example, of the social services.
Does my right hon. Friend realise that the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) is constantly expressing the view that the Government should increase public expenditure in the Upper Clyde Shipyard, which can be done only by taxation?
Yes, I recognise that. It would be unfair to pick out one aspect. The hon. Gentleman and his hon. Friends continually ask for increases in public expenditure of one kind or the other.
Sterling (Exchange Rate)
asked the Chancellor of the Exchequer whether, in the light of recent speculation in international currencies, he will now commission a study to determine the advantage of a more flexible exchange rate for sterling.
Why is the right hon. Gentleman so obstinate in his refusal to consider the possible advantages of a more flexible exchange rate? Has attention been drawn to the fact that two of the leading protagonists of the money supply school to which he has now been converted, Dr. Milton Freedman and Dr. Harry Johnston, also are advocates of more flexible exchange rates?
The hon. Gentleman should not assume that I have been converted to the money supply school, which is rather different from the views I have expressed. Nor should he assume that an inquiry or commission to study the advantages would be the most sensible approach, even assuming that I thought there were advantages to be gained. I do not think that such a movement as the hon. Member suggests would solve the present world monetary difficulties. But even if I thought it would, I am extremely doubtful whether a commission would be the right approach.
Occupational Pension Schemes
23 and 24.
asked the Chancellor of the Exchequer (1) if he will seek to introduce legislation to empower his Department to consent to transfers of pension rights between occupational schemes in any cases in which at present they are debarred from doing so by statute;(2) what steps he will take to make it permissible for trustees of occupational pension schemes approved under Section 379 of the Income Tax Act 1952 to pay tax-free lump sums on retirement in addition to periodic payments thereafter in the same way as the Civil Service Scheme.
The two points to which the hon. Member refers will be considered, with others, in the course of the general review of the tax rules affecting occupational superannuation schemes which the Inland Revenue has been asked to undertake. I cannot forecast the outcome of the review.
Will the Minister say how long the review will take? What is the point in elaborating in the Budget a savings scheme while leaving unattended the law relating to pensions, when everybody knows what is happening to people who leave them in occupational schemes?
The review will be completed as quickly as possible. With regard to the second part of the question, if I understood it aright, one of the aims of the review is to clarify and simplify the tax rules.
Balance Of Payments
asked the Chancellor of the Exchequer what estimate he has now made of the balance of payments position for 1969.
asked the Chancellor of the Exchequer what he now expects to be the outcome on balance of payments for 1969; and if he will make a statement.
I have nothing to add to the reply to similar Questions given by my hon. Friend the Financial Secretary on 13th May.—[Vol. 783, c. 1209–11.]
Is my right hon. Friend aware that one of the advantages of introducing selective import quotas at present is that if the optimists are right that the balance of payments will improve the quotas can be withdrawn? On the other hand, if the balance of payments does not proceed as well as one might hope, the sooner such controls are introduced the better.
Yes, as my hon. Friend the Minister of State indicated earlier, there are, however, substantial disadvantages to selective import quotas.
What does the Chancellor estimate will be the effect on the balance of payments of any reduction in the money supply which he has in mind; in other words, a reduction of £100 million? What will be the effect on unemployment, and to what level does he intend to keep money supply this year? Does he still persist in his central forecast of 3½ per cent. growth in 1969–70?
In giving my central forecast for economic growth—I am not sure the post-Budget situation was exactly as my hon. Friend has stated it; I think that was pre-Budget—I took into account my intention, announced in the Budget, to pursue a strict monetary policy. My hon. Friend is making the mistake of talking about reductions in money supply and of exactly equating money supply questions with questions of monetary policy. I cannot give him an exact mechanical answer to the two other questions.
Has not the Chancellor made a pronouncement since the one to which his hon. Friend referred? Did he not last week, first of all, finally abandon the £500 million target, and, second, did he not slip, deliberately of course, from the calendar to the financial year, thereby obliterating three disastrous months of this year?
I have no desire to obliterate anything. [HON. MEMBERS: "Oh."] The right hon. Gentleman should not exaggerate his disastrous months. January was not a disastrous month at all. My object remains to get a very substantial sustainable balance of payments surplus.
I must be frank with the right hon. Gentleman and with the House—[Interruption.] I hope that we can have a serious discussion of this matter in the House, otherwise there is no point in answering anything other than "No, Sir" or whatever it may be. I accept the fact that we have not achieved this target as fast as we had hoped to do. None the less, I believe that it would be wrong to abandon the target, and I think that we can get a substantial surplus in the year which is now beginning.
asked the Chancellor of the Exchequer what is his latest estimate of the increase in real net savings from the new scheme outlined in his Budget.
I am confident that Save As You Earn will produce worthwhile new savings, but as I said in my Budget statement it is not possible to calculate the response in advance.
The Chancellor said in his Budget Statement that he would measure the response and seize it. Does it mean that, if in 1969–70 there is a substantial response, he will adjust some other part of his strategy, that is to say, to allow money supply to grow at a greater rate, or perhaps to have an autumn Budget to reduce taxation?
My hon. Friend persists in talking about money supply. I prefer to talk about the effectiveness of credit policy as a whole. But to the extent that savings gave a substantial response in 1969–70, or indeed in any other year, this would have an automatic effect on the level of credit created.
The Chancellor has said that there should be a substantial increase in savings. Has he considered the dis-savings created by his overdraft proposals in the Finance Bill? If the scheme is a success, will he extend it to equities if necessary, some time in the future?
I recognise the part played last year by the hon. Member for Harrow, Central (Mr. Grant) in encouraging savings schemes, but I find his logic a little difficult to follow. I find it difficult to see that a tax disincentive to borrowing will encourage dis-saving. On the second part of his question, dealing with investment in equities, I would not close my mind to it, though I believe that at the moment it is overwhelmingly desirable to invest at fixed interest.
Tax Liability Claims
asked the Chancellor of the Exchequer whether, in cases where the Inland Revenue authorities query the tax liability on substantial amounts of money and the Commissioners subsequently decide in favour of the individual, he will grant the professional costs, wholly, necessarily and exclusively incurred in proving non-liability.
Commissioners hearing appeals against tax assessments are not authorised to make an award of costs to any of the parties concerned.
Is the Chief Secretary aware that I have a constituent of limited means who has been told by his advisers that when his appeal comes before the commissioners he will have to find about £300 in legal fees? Is this justice for the small man?
I am aware that the hon. Gentleman has a constituent. Neither of us is aware what the future may hold. But the hon. Gentleman should remember that when this matter was considered by the Royal Commission on taxation it came to the conclusion that the appeal commissioners should not have the same powers as the courts to award costs.
Selective Employment Tax (Theatrical Employment)
asked the Chancellor of the Exchequer if he will take steps to include all theatrical employment in the category of those employments entitled to the refund of selective employment tax.
No, Sir. All forms of entertainment fall within the services sector.
Does my right hon. Friend not realise that the theatre outside London is in serious decline? If he will not remove the selective employment tax altogether, will he consider the possibility of excluding taxable employment outside the metropolis?
I am aware of the problem to which my hon. Friend has drawn attention, and I am concerned about it. I do not think that the removal of selective employment tax will cure it. I am afraid the answer I must give to his precise request is, "No, Sir".
asked the Chancellor of the Exchequer which particular income group his 'Save-As-You-Earn" scheme is aimed to attract.
I hope that the scheme will appeal widely across income groups. But, as I said in my Budget Statement, it is directed primarily at people who at present save little and who may be attracted by a scheme which offers a generous return and facilities for regular small payments out of income, where possible by deductions from pay.
In his reply, is not the right hon. Gentleman talking about the administrative arrangements, about which we have heard nothing? Does he not consider that the long delay before any return is made on savings and the very high interest rate after tax are more likely to encourage switching among those who already own capital rather than private savings in the lower inome groups?
I am not discussing administrative arrangements at all. I am answering a question which asks to whom I think the scheme will appeal. In any savings scheme there is the difficulty that it is liable to appeal more intensively to people on high tax rates. This is almost inevitable, and it is something that I pointed out last year to right hon. and hon. Gentlemen opposite who were rather reluctant to recognise it. By directing this scheme where we have and by restricting the amounts to £120 a year which may be saved in each part of the scheme, I think that we shall get the main bulk of the money from the sources from which we most wish to encourage it.
Are the classes which my right hon. Friend has in mind not also particularly attracted to spend money on such items as provident checks and budget accounts? If the scheme is to be a success, as we all hope, is it not desirable to exercise that measure of control of these forms of spending in the same way as it is on hire purchase?
I recognise the force of my hon. Friend's point. That is a matter directly within the terms of reference of the Crowther Committee which is considering matters related to hire-purchase credit generally.
asked the Chancellor of the Exchequer what market research among potential savers was carried out by his Department before deciding on the "Save-As-You-Earn" scheme announced in the Budget.
None by the Treasury and specifically related to this scheme; but we were able to consult surveys of attitudes to savings carried out on behalf of the Post Office in 1966 and the National Savings Committee in 1968.
With the abysmal record of the Post Office Savings Bank and the poorer record of the National Savings Committees over recent years, does the right hon. Gentleman consider them to be a reliable fount of knowledge? Is it not the most primitive type of marketing to launch a scheme based on the Treasury's hunches?
It has not been launched on the Treasury's hunches but on the advice of those who carry responsibility to organise the scheme. The hon. Gentleman is being disparaging to those who work in National Savings Committees. Certainly it represents their view. The right hon. Member for Enfield, West (Mr. Iain Macleod) was good enough to say that there was very little difference between us on the matter. I endeavoured to arrive at the best savings scheme on the advice of those most directly concerned, not only savings committees but the C.B.I. and the T.U.C. and others, which would appeal to those in whom we wish to inculcate the savings habit.
Has the right hon. Gentleman's attention been drawn to a study carried out by the Wider Share Ownership Council among new savers, which makes it clear that new savers are more attracted by shares in unit trusts and equities than National Savings?
Yes, I am aware of that survey, among others. But it would not have been right to start a new savings scheme directed towards equities at the time of the Budget.
Has my right hon. Friend consulted the trade union movement as to the reaction of trade unionists to this excellent savings scheme?
Most closely. I consulted the T.U.C. and other bodies in drawing up the scheme, and I was influenced by its views as well as those of others.
Personal Clothing (Tax Allowance)
asked the Chancellor of the Exchequer on what basis the Inland Revenue agrees claims for expenditure on personal clothing as a deduction for tax purposes.
Normal expenditure on personal clothing is not an allowable expense. Under the statutory rule applicable to office holders and employees expenditure is deductible only if it is incurred wholly, exclusively and necessarily in the performance of the duties of the office or employment. For the self-employed the test is whether the expenditure is incurred wholly and exclusively for the purposes of the trade or profession.
Is the right hon. Gentleman aware that that is a most complicated answer? How do people apply for this allowance? That is what I am trying to get clear.
By writing to the Inspector of Taxes setting out the circumstances.
Is my right hon. Friend aware that when I worked down the pits one Sunday suit lasted me five years and that on the back benches a suit does not last five minutes?
I am not sure whether my hon. Friend is basing his case on the fact that his clothes are exclusive, but the expenditure has to be "necessarily incurred" as well.
Current Price Forecasts
asked the Chancellor of the Exchequer if he will publish the current price forecasts corresponding to the constant price forecasts made in Table 3 of the Financial Statement 1969–70.
No, Sir. I believe that for the time being we must concentrate on developing the constant price forecasts that I published in detail for the first time last year.
If the hon. and learned Gentleman had any faith in the Government's prices and incomes norms, why should this present any difficulty?
The hon. Gentleman will know that those who have studied this carefully realise that there are risks and advantages in different kinds of forecasts. They have to be balanced against each other. Certainly he cannot accuse the Government of being slow in coming forward with forecasts which have helped informed discussion.