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Commons Chamber

Volume 798: debated on Tuesday 17 March 1970

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House Of Commons

Tuesday, 17th March, 1970

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Private Business

Huntingdon And Peterborough County Council Bill

Read the Third time and passed.

Somerset County Council Bill

Read the Third time and passed.

Flintshire County Council Bill

Gosport Corporation Bill

Leicestershire County Council Bill (Changed From Leicester County Council Bill)

Considered; to be read the Third time.

Basingstoke Corporation Bill Lords

Read a Second time and committed.

Oral Answers To Questions

National Finance

2½P Coin

1.

asked the Chancellor of the Exchequer whether he will now arrange to make a 2½p new penny coin available after the change over to decimalisation.

It would be premature to take any decision about minting a 2½p coin before we have the report on the sixpence for which my right hon. Friend has asked the Decimal Currency Board.

Does not the hon. and learned Gentleman think that it is about time that the Government made up their mind on this matter? Could the reason for all this dither be that they are looking for an excuse to put off decimalisation from February of next year until after the latest possible date for a General Election?

On the last part of the hon. Gentleman's question, or observation, it has been made clear that there will not be any postponement of Decimal Day. On the first part, of course, there has been as much vacillation on this subject from hon. Members opposite as from others.

Is the hon. and learned Gentleman aware that this vacillation has not been apparent to anyone in the House? Does he not think that it is just a wee bit bizarre to refer a matter to the Decimal Currency Board when an officer of that Board expressed an opinion many months ago that this matter had gone beyond recall and that there was no question of reopening it?

On the first part, I recollect the hon. Gentleman's right hon. Friend saying once that it was impossible to retain the 6d. within the £ decimal system. On the other point, the Decimal Currency Board will properly consider this and all the representations which are being made to it.

Capital Account (Surplus)

2.

asked the Chancellor of the Exchequer what estimate he has now made of the surplus on current and long-term capital account in the financial year ending March, 1970.

The balance of payments for 1969 has recently been published and shows an estimated surplus of £451 million between April and December. I do not propose to make any estimates at present for the current quarter, but the indications are that the current account continues to be in substantial surplus.

I congratulate my right hon. Friend on the largest surplus which this country has ever had in its history. Would he consider whether it can now be used to provide the increase in manufacturing investment and a reduction of the credit squeeze, in so far as it particularly affects small manufacturing companies?

As I have said, I do not think that the surplus can be directly used but should be used as a basis on which to achieve a steady and substantial rate of growth. Clearly, manufacturing investment is an important component in this.

Is not this a golden opportunity to introduce a greater degree of flexibility in the sterling exchange rate.

I do not know what the hon. Member means by a "golden" opportunity, but my views on this issue are not changed from those which I have expressed before.

Selective Employment Tax

3.

asked the Chancellor of the Exchequer if he will make a statement on the report of Professor Reddaway on selective employment tax.

Professor Reddaway has provided a valuable report which has I think shown that many of the common criticisms of S.E.T. are misconceived. I am studying the Report and it would be wrong for me to make any further comment at this stage.

I wholeheartedly welcome not only this report but the kind of attitude towards taxation which gave rise to its publication. But would my right hon. Friend consider this a time to end some of the anomalies—in particular to bring the self-employed into taxation and perhaps to end the anomaly of the wholesaler versus the manufacturer with wholesale interests?

During his study of the Reddaway Report, would the Chancellor bear in mind that his colleagues have already confessed in this House that about £153 million of S.E.T. is attributed to house building and the construction industry, all of which is exceedingly inflationary in present circumstances? Would he study those figures with exceptional care?

My colleagues have, I think, studied certain issues, as I have. I am not sure that I regard the use of the word "confessed" as freely as the hon. Member does. Nor am I sure that he understands the economic meaning of the word "inflation".

Will the Chancellor acknowledge that the Reddaway Report deals with a comparatively narrow sector of the impact of selective employment tax? When considering his Budget, will he bear in mind that the report says nothing at all about invisibles, particularly tourism, where the tax has had a most damaging effect?

I am certainly aware that the Reddaway Report deals only with part of this field, although a most important part. I am also aware that investment earnings, including tourism, have done remarkably well during the period since S.E.T. was introduced.

Personal Savings And Disposable Income

4.

asked the Chancellor of the Exchequer what was the ratio between personal savings and personal disposable income in each of the years from 1964 to 1969.

The ratio of personal saving to personal disposable income in the years 1964 to 1968 was 8·1, 8·5, 8·4, 7·9 and 7·5 per cent. respectively. Figures for the calendar year 1969 are not yet available, but in the first three quarters of 1969 the corresponding percentage was 7·3—seasonally adjusted.

Is the Financial Secretary aware that for 1967, the latest year for which I have been able to get figures, the ratio of personal savings to personal disposable income in Germany was more than twice as high as it was in this country, and in Japan it was nearly four times as high? May that not have something to do with their greater success in growth?

There are a large number of factors which may or may not contribute to rate of growth. Among other things, both Germany and Japan have not suffered from heavy overseas military payments, which is something that hon. Members opposite wish to increase.

Import Deposits

5.

asked the Chancellor of the Exchequer if, in view of the latest trade figures, he will now reduce the rate of import deposits to 30 per cent.

I have nothing to add to what I told the hon. Member on 17th February.—[Vol. 796, c. 184.]

In view of the fact that the Chancellor said in the Letter of Intent last May that it was his policy to abolish the import deposits scheme as soon as the balance of payments permits, and the fact that the E.F.T.A. Council last November expressed concern at its continuation, has not the time now come for at least a start on the process of reduction of the rate?

We started on the process of reduction last year. On the whole, the bodies of international opinion have been somewhat more understanding of the value of the scheme than has the hon. Member. I will consider all these factors.

Will the Chancellor agree that this forced interest-free loan not only has its effect on industrial costs, but, worse than that, it has effects on cash flow and reduces the rate of capital expansion? Does he not regard this as regrettable?

I am not quite sure what the hon. Member means by capital expansion. It is an element in growth restriction, and growth restriction has been responsible to some extent for the turn-round in balance of payments, accompanied by a 10 per cent. increase in the rate of fixed investment in the past year.

In view of the February figures, will my right hon. Friend agree that if we are to have a much higher rate of economic growth this year it may suck in more imports and that is one very good reason for retaining the import deposits scheme at its present level for the foreseeable future?

There are a number of factors, as I indicated in my original Answer, to be taken into account although I would not regard the February figures as either unsatisfactory in themselves or as something which would change my view of the overall situation.

Capital Gains Tax

6.

asked the Chancellor of the Exchequer what is his estimate of the cost to the Exchequer of exempting from long—and short-term capital gains tax all gains that have risen by a lesser amount than the decline in the value of money.

I regret that the information on which to base an estimate is not available.

Would not the Chief Secretary agree that on an investment made in 1965 and realised in 1969 approximately a third of the investors' tax bills on capital gains tax would in fact be due to inflation?

It may well be that there is an element of price variation in computation of capital gains tax. This applies to all capital gains tax systems, and to take it into account would be both confusing and complex to a degree, and quite unfair to other taxpayers.

Development Finance

7.

asked the Chancellor of the Exchequer if he will institute discussions in the appropriate committee of the Organisation for Economic Cooperation and Development on the possibility of using the Special Drawing Rights allocated to Organisation for Economic Co-operation and Development countries for promoting development in developing countries.

There will be further international discussion of the problem of a link between liquidity creation and development finance. But this is scheduled to take place mainly in the U.N.C.T.A.D. at the present stage.

Would my hon. and learned Friend not agree that critical in the discussions in U.N.C.T.A.D. is the attitude of O.E.C.D. countries, which contain the major donors and control the major special drawing rights? Would it not be useful to have discussions within O.E.C.D. on this very important point with a view to constructive proposals being put forward at U.N.C.T.A.D. itself?

I agree with my hon. Friend that discussions in the O.E.C.D. or the Development Assistance Committee may well be desirable at an appropriate stage in due course, but it is U.N.C.T.A.D. to which the recent expert group reported and it is to a further U.N.C.T.A.D. committee that this matter has been referred.

Overseas Direct Investment

8.

asked the Chancellor of the Exchequer what proposals he has to relax restrictions on overseas direct investment in the light of the recent balance of trade figures.

I have nothing to add to the Answer I gave on 10th February to a similar Question by the hon. Member for Horsham (Mr. Hordern).—[Vol. 795, c. 303.]

Is the right hon. Gentleman aware that the recent improvement in the trade figures gives immense satisfaction, particularly to those of us who hope eventually to dismantle exchange control? In view of the undertaking given in the Letter of Intent to the International Monetary Fund, can the right hon. Gentleman say what priority the Government give to a relaxation in present controls over capital movements?

I do not know that I can answer in precisely those terms. I remind the hon. Member that my right hon. Friend takes the view that priority must be given to repayment of our external debts.

Motor Vehicle Registration Fees

9.

asked the Chancellor of the Exchequer if he will state the annual yield to the Treasury from motor vehicle registration fees for each of the past five years, and give his estimate of the annual yield for each of the next five years on the basis that the licence fee was reduced by £2 10s., £5 and £7 10s., respectively.

With permission, I will circulate the figures for the last five years in the OFFICIAL REPORT. It is not possible to make any accurate forecast five years ahead on the basis of alternative rates of duty.

Is my right hon. Friend aware that that tells me nothing at this time and therefore I decline to ask a supplementary question?

As so many thousands are not paying the fees, would it not be better to drop it altogether? That would be the easiest way out for all concerned.

I must ask my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) to keep this matter in proportion.

Following are the figures:

Current

1964–65

prices

prices

£m.

£m.

1964–65187187
1965–66245235
1966–67262243
1967–68283254
1968–69401351
1969–70 (estimated)422355

10.

asked the Chancellor of the Exchequer what consideration he is giving to proposals to reduce the motor vehicle licence registration fees.

My right hon. Friend will bear in mind the proposals that have been made when he is considering his Budget statement.

Is my right hon. Friend aware that I have asked a similar Question to this one for the last four years? Does he not think it time that virtue and diligence were rewarded and that if there were an attempt to reduce the tax on registration fee it would mean that those who use most petrol would pay most in tax?

My hon. Friend, who is to be congratulated on his consistency, will remember and recognise the various arguments which apply if one is thinking of changing the tax on petrol as opposed to what is before us now. This is too long a subject to go into in Question and Answer.

Housing Societies (Borrowing Requirements)

11.

asked the Chancellor of the Exchequer whether he will take steps to allow housing societies and housing associations to have access to the Public Works Loan Board for their borrowing requirements.

The Public Works Loan Board is empowered to lend to housing societies and housing associations, subject to certain conditions; but it does not normally do so, since these bodies can generally borrow from local authorities or from the Housing Corporation, whose lending powers are more flexible and who have greater knowledge of local housing conditions.

Is it not a question of the rate of interest charged? Is the hon. and learned Gentleman aware that in a recent housing society development in my constituency borrowings of £90,000 will mean repayment of £355,000? Is it not grossly unfair that non-profit-making housing societies of this kind, aiming to provide good homes at reasonable rentals, should be subject to this quite intolerable burden?

There are two questions. The first is whether one would get a more favourable rate of interest from the Public Works Loan Board. In recent months the rate has been above the rates obtained from the Housing Corporation. Secondly, the Housing Corporation is better fitted to deal with this kind of question because it often involves a close examination of the rentals that can be obained and an estimate of the cost of the housing. The Housing Corporation is in a better position to carry this out.

Is my hon. and learned Friend aware that he has been misinformed about this? Housing associations cannot get finance from local authorities for building new houses and they cannot get it from the Housing Corporation because it depends on the building societies putting in two-thirds. Would it not be better to depend on the short-fall in local authority building and give it to the Housing Corporation to finance all its work from Government money?

I will study the suggestion that I have been misinformed and I will bear in mind the points my hon. Friend has made.

House Prices

12.

asked the Chancellor of the Exchequer what is his estimate of the effect on house prices on the basis that selective employment tax is abolished and a value added tax of 10 per cent. introduced in its place.

If S.E.T. were abolished and a V.A.T. at 10 per cent. were applied to sales of new houses the cost of new houses might be about 6 per cent. or 7 per cent. higher than now.

Does my right hon. Friend realise that this means that the Tories, who are supposed to be the friends of the owner-occupiers, propose to increase the average price of a house by £300?

I can only say to my hon. Friend that what the Tories propose to do when they win the General Election is a matter of remote academic interest.

Will the right hon. Gentleman accept that my right hon. Friend made it clear in his speech at Brighton that it was not our intention, if we were to introduce such a tax, to extend it to housing?

The only clear message I got was that the Tories would exclude everything from taxation and increase revenue.

Hovercraft (Hydro-Carbon Oils Duty)

13.

asked the Chancellor of the Exchequer what plans he has to give the same revenue duty concession on hydro-carbon oils to operators of hovercraft as that enjoyed by operators of hydrofoils, in order to remove the competitive advantage enjoyed by operators of foreign-built hydrofoils over operators of British-built hovercraft.

The hon. Member will not expect me to anticipate my right hon. Friend's current review of taxation.

When the hon. and learned Gentleman is advising his right hon. Friend on the contents of his Budget will he remind him that because of this lack of a concession for hovercraft it costs 8s. 4d. an hour more to operate a hovercraft than an equivalent-sized hydrofoil? Will he tell the Chancellor that it is penalising British manufacturers? Is he aware that I know of a case where an operator has bought a hydrofoil instead of a hovercraft because of the lower operating costs?

I am sure that my right hon. Friend has listened most attentively to every word the hon. Gentleman has uttered.

Purchase Tax (Personal Case)

14.

asked the Chancellor of the Exchequer why, in view of the ruling in the High Court given by Mr. Justice Cross, the Commissioners of Customs and Excise refuse to repay purchase tax paid by Mr. R. Herbertson, of Shanklin, Isle of Wight, in respect of toffee apples manufactured and sold during the years 1962 to 1965 in the sum of £715 8s. 1d.

The Commissioners are advised that the tax paid by Mr. Herbertson is not legally recoverable, and I can see no equitable basis upon which they could depart from the legal position.

Does the hon. and learned Gentleman realise that the Commissioners are hiding behind the fact that there is a mistake in law so as not to pay? Is he telling me that a small retailer has to go through the Chancery Courts—as the big manufacturers did to get £4,000—before he can get back his £700?

I understand that the position of Mr. Herbertson is different from the case which was the subject of the Chancery Court ruling. Legally we are advised that we are not under any obligation to repay. As to equity, Mr. Herbertson passed on the tax to his customers and there is no way now in which we can give the benefit to the customers.

On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

Inland Revenue (Estimates Committee's Report)

15.

asked the Chancellor of the Exchequer when he expects to publish his reply to the report of the Estimates Committee on the Inland Revenue.

May I take it that this lengthy delay in making a reply has resulted in very careful consideration of the report by the Inland Revenue?

Will my right hon. Friend not be quite so gullible as the Committee in accepting as gospel every word presented to it by the Inland Revenue?

My hon. Friend put that point to me on the last occasion that I answered a Question from my hon. Friend the Member for Fife, West (Mr. William Hamilton). I can only repeat the answer I gave then—I shall consider all factors but I do not believe that my hon. Friend the Member for Fife, West was gullible.

United Kingdom Debts

16.

asked the Chancellor of the Exchequer what recent discussions he has had with central banks and other institutions on the phasing of United Kingdom debts; and if he will make a statement.

What advantage does my right hon. Friend see in reducing central bank debts with short-term money, whether "hot" or only slightly warm? Would it not be preferable to lower Bank Rate and renegotiate the central bank debts?

I do not accept what my hon. Friend says. There has been a natural re-flux of money to this country associated with the very strong position of our balance of payments and the return of confidence. I do not see any need to do as my hon. Friend suggests. Of course. Bank Rate was lowered a fortnight ago.

Is it a fact that our total overseas indebtedness was increased by £356 million through the mishandling of devaluation and the effect on the Exchange Equalisation Fund?

Bank Lending

17.

asked the Chancellor of the Exchequer if he will make a statement on the current trend of bank lending.

Restricted lending by the London clearing banks rose slightly, after seasonal adjustment, in January and February; this rise followed a considerably larger fall in the preceding two months. Other groups of banks showed little change.

Is it not time that we at least brought up to date the arbitrary figure fixed in November, 1967? Will my right hen. Friend consider some relaxation for small manufacturing companies?

It is very difficult to make selective relaxations. Money supply is growing somewhat owing to the inflow of foreign funds. As I have said, I keep all these matters under review.

Does the right hon. Gentleman appreciate that the substantial depreciation in the value of the currency since November, 1967, has had the effect of reducing the real level of the ceiling he put on bank lending to as little as 90 per cent. of the November, 1967, level and that this is both undesirable and unintentional?

The banks are somewhat above their ceiling, about 3¼ per cent. above at present. That is on restricted lending. There is also unrestricted lending which means that bank lending to industry as a whole has increased substantially during this period.

Domestic Credit

18.

asked the Chancellor of the Exchequer what is now his estimate of the probable percentage increase in domestic credit over the current financial year.

I have nothing to add to my right hon. Friend's answer to a similar Question which the hon. Gentleman asked on 20th January last.—[Vol. 794, c. 230–1.]

Is it not evident, notwithstanding that reply, that the pre- sent severity of the credit squeeze is having the effect of pulling in "hot" money which is expensive to service and just as likely to go out again? Under the circumstances, has not the time come at least to stop fining banks for going over their lending ceiling and to abolish the prior deposits scheme?

What the hon. Gentleman is referring to has nothing to do with "hot" money.

Does the right hon. Gentleman intend to place any restriction on the increase in domestic credit in the forthcoming financial year, and if he does will he mention it in his Budget Statement?

My right hon. Friend has listened carefully to the hon. Gentleman's request.

Gross Domestic Product

19.

asked the Chancellor of the Exchequer what is now his estimate of the probably percentage increase in gross domestic product at factor cost in the current financial year.

I would ask the hon. Gentleman to await the detailed economic forecasts to be published with my right hon. Friend's Budget statement.

Could the right hon. Gentleman possibly do some sums on the back of the Dispatch Box now and tell us whether the shortfall in the rate of growth of the nation's resources over the five years of Labour Government as compared with the rate of growth over the preceding five years is 40 per cent. less, or a greater or lesser amount?

I do not know what the rules of order are about doing sums on the Dispatch Box but I think that the suggestion I have made is the best one. Let us wait until we have the figures. Then we can base solid argument on them.

Income Tax

20.

asked the Chancellor of the Exchequer at what weekly wage income tax commences for a single man, married man, married man with one child, and married man with two children, respectively.

About £6 6s., £9 5s., £12 2s. and £13 respectively, assuming the children are under 11 years of age.

While I recognise what was done in the last Budget, may I ask the hon. and learned Gentleman to bear in mind that these are invariably low starting points for taxation and that the administrative costs of collecting them from the low wage earner must be considerable? Will he look at this sympathetically in the Budget?

I am sure that the hon. Gentleman would not wish me to say any more than that I will bear this in mind.

Would my hon. and learned Friend also bear in mind that not only are they very low rates of taxation, but they are very low rates of pay?

Selective Employment Tax

21.

asked the Chancellor of the Exchequer if he will estimate the proportion of the total revenue received from the selective employment tax paid by families with an income of under £20 a week.

The selective employment tax is paid by employers and its effect on consumers depends on how far it is passed on in prices. Households with incomes under £20 a week would bear on average a relatively smaller share of any increase in consumer prices due to S.E.T. than those with higher incomes.

Despite that, is it not a fact that S.E.T., which is passed on, hits hardest at housing and the retail trade which, for the poorer members of the community, represents a greater proportion of their average weekly income? Will the hon. and learned Gentleman look at this matter sympathetically?

As for the retail trade, we have just had the Reddaway Report, which I commend to the hon. Gentleman. As for the general effect of S.E.T., it is undoubtedly much less regressive than an equivalent amount imposed by way of purchase tax.

Has my hon. and learned Friend made any estimate of what would be the effect of a value added tax on similar income groups?

Balance Of Payments

22.

asked the Chancellor of the Exchequer how the balance of payments for 1969 compares to the balance of payments of West Germany and Japan for that year, from information available to him from international sources.

Our surplus on current and long-term capital accounts was £387 million. West Germany had a deficit of nearly £1,700 million. Japan had a surplus of £830 million.

In view of the serious industrial strife which at present exists in this country and the effect this will have on the balance of payments, will the hon. and learned Gentleman advise the Prime Minister to introduce an industrial relations Bill forthwith to protect the balance of payments?

To answer the hon. Gentleman in question form, how would he deal with industrial relations?

Can my hon. and learned Friend tell us of the incidence of industrial disputes in Japan and say whether or not they are higher than in this country?

Inland Revenue Form P3g

23.

asked the Chancellor of the Exchequer if he will issue an amended Inland Revnue form P3G on Tax Rates of Pay and Overtime, to include comparable tax rates in West Germany, France and Japan, from information available from international sources.

Was this form issued by a public relations officer seconded from Transport House or by a Treasury public relations officer on the advice of Transport House?

This form was issued by the Inland Revenue and was concerned to state the facts, which it did.

Is it not a fact that the form is bound to be misleading in a great many cases because it depends on the nature of the deductions from an individual's income according to the level at which he is taxed on the tax scale?

The form is strictly accurate and I should have thought that every hon. Member, with the exception of those who are concerned to make party political propaganda, would welcome a form which made clear to people what rates of tax they should pay.

Domestic Credit Expansion And Money Supply

24.

asked the Chancellor of the Exchequer if he will arrange to publish figures for domestic credit expansion and for the money supply at monthly intervals.

Would the right hon. Gentleman explain how it is possible for the United States to give figures for the money supply at monthly intervals and for the preceding month while we do not have more recent figures than for last December?

The answer is not to ask President Nixon but to ask the Chief Secretary.

The answer is simply that the American banking system is subject to many more statutory controls than ours. They already have to make returns of a vast number of details, and the additional information required in their case is small. In our case it would be enormous and it would not be worth while; and, in the meantime, in the light of that, the figures would be inaccurate.

Purchase Tax

25.

asked the Chancellor of the Exchequer, whereas furniture, ladies tights and stockings are Purchase-Taxed at 13¾ per cent., soft drinks at 22 per cent, motor cars at 36⅔ per cent., and greetings cards, cameras and cosmetics at 55 per cent., all calculated as a percentage of wholesale prices, what would be the corresponding rates of Purchase Tax yielding identical revenue to present duties on whisky, beer, tobacco and cigarettes, snuff and motor spirit; why he levies different rates of tax on sumptuary goods; and what reform he proposes.

The duties on whisky, beer, tobacco products and motor spirit are equivalent to Purchase Tax rates of the order of 800 per cent., 130 per cent., between 300 and 600 per cent., depending on type, and 300 per cent. respectively. My right hon. Friend will be considering all rates of indirect taxation in the context of his forthcoming Budget.

Why do we have this rag-bag of variegated inconsistencies ranging from 800 per cent. on whisky and 55 per cent. on greetings cards to 13¾ per cent. on a Savile Row suit? Cannot we have some reform, with a low-level, widely-based tax on the V.A.T. type on all consumer goods in order to get equitable and reduced prices?

We in the Treasury would welcome the actual proposals of the Opposition for direct taxation. At least, I understand that the hon. Gentleman is in favour of a general sales tax; but, of course, that would hit much harder those on much lower incomes.

Selective Employment Tax

26.

asked the Chancellor of the Exchequer what part, and the sum, of the £615 million retained selective employment tax during 1969–70, enters into the prices of food, drinks, confectionery and everything edible for human consumption; and whether he will reduce food and drinks' prices by abolishing such selective employment tax on all employment entering into prices for all food and drink for human consumption.

The evidence we have indicates that S.E.T. has had very little effect on the price of food. The answer to the second part of the Question is that I cannot anticipate my right hon. Friend's Budget proposals.

How is it that the Chancellor can estimate the amount of S.E.T. which afflicts housing and the construction industries but cannot estimate the amount of S.E.T. which afflicts food distribution? Why is the hon. and learned Gentleman so incompetent in his inquiries in this matter? Would he explain why last summer the Chancellor accused the Tories, in his speech at Aberystwyth, of being the first party in history to tax food when S.E.T. bears directly as a tax on all food distribution?

I find that question totally incomprehensible. [HON. MEMBERS: "Resign".] The hon. Gentleman has clearly not read the Reddaway Report, which makes it clear that the effect of S.E.T. on distribution is absorbed in increased productivity or reduced profits. [Interruption.]

If the hon. and learned Gentleman finds the question incomprehensible, I will repeat it. It has two parts. First, why is it possible to calculate the effect of S.E.T. on housing and not on food? Secondly, why did the Chancellor say that the Tory Party was the first party to put a tax on food when S.E.T., by his own statement, has an effect on the price of food?

I did not say it had that effect on the price of food. [HON. MEMBERS: "Oh!"] I found it incomprehensible perhaps because I had overestimated the hon. Gentleman's intelligence, which is not always an easy thing to do. I thought that he would have read the Reddaway Report. The Question relates to food, and it is clear that, in respect of food, according to the Reddaway Report, there has not been an effect on prices.

Instead of being rude, would the hon. and learned Gentleman answer the question?

The right hon. Gentleman does not like the answer because he does not like the fact that the Reddaway Report—[Interruption.]

Price Inflation

27.

asked the Chancellor of the Exchequer what is now his estimate of the rate of price inflation for the current financial year.

It is not customary to give quantitative forecasts of the general movement of prices.

Whether or not it is the custom, how is it that Ministers, and particularly the Prime Minister, are prepared to go around making unfounded accusations about likely inflation under the imminent Tory Government when prices have risen by 25 per cent. since 1966 under the Socialists?

The hon. Gentleman did not in the Question raise any of those points. If he wants to challenge points made by any speaker he should put down a Question, whereupon he will receive an Answer.

Is my right hon. Friend aware that the hon. Member for Worcestershire, South (Sir G. Nabarro) has continually applied pressure to increase the price of apples to the housewife, that the hon. Member for Westmorland (Mr. Jopling) has consistently—indeed only last week—asked for the highest prices possible for meat, and that existing Tory policy on agriculture would put up the prices of foodstuffs all along the line for housewives?

My experience is that I cannot spend a whole day in this House without at least one hon. Gentleman opposite suggesting something which would inevitably involve increases in public expenditure.

Agricultural Premises (Derating)

30.

asked Mr. Chancellor of the Exchequer if he will calculate the cost to the Exchequer of the total derating of all agricultural premises and units.

What would be the cost to local authorities of derating factory farms which, among other things, the Conservatives seem to have promised they would do?

My hon. Friend will know that the situation in respect of the derating of factory farms is different in Scotland compared with England and Wales. In Scotland there is already a measure of derating of industrial buildings, of 50 per cent., which it is proposed should continue. There is no such de-rating in England, where there is no proposal to change the law.

Chancellor Of The Exchequer (Visit To Scotland)

31.

asked Mr. Chancellor of the Exchequer if he will make an official visit to Scotland.

I hope to visit Scotland again before long, but I have no firm plans at present.

Has my right hon. Friend had it brought to his attention that the Shadow Chancellor of the Exchequer—that is, in the Scottish Nationalist Party —has said that certain industries are not good for Scotland; namely, British Leyland, the strip mill and the smelter? Does not that seem rather weird in the context of a South Ayrshire situation?

We seem to have rather a lot of Shadow Chancellors of the Exchequer at the present time. I have had this particular statement drawn to my attention and it appears to me that it would involve a policy of insulating Scotland from a great part of modern industrial development, which could not fail to have the effect of making a very substantial reduction indeed in Scottish standards of living.

Investment (Interest Rates)

32.

asked the Chancellor of the Exchequer whether, in the light of the most recent Confederation of British Industry assessment of investment pospects, he will now take steps to reduce interest rates.

28.

asked the Chancellor of the Exchequer whether he has considered the publication, Industrial Trends, Survey No. 37, February, 1970, published by the Confederation of British Industry, a copy of which is in his possession; and if he will make a statement.

I give careful consideration to the C.B.I. Survey of Industrial Trends, as I do to other indicators of the development of the economy. The most recent official inquiry into investment intentions revealed a continuing upward trend in manufacturing investment, and it would certainly be premature to conclude from the C.B.I. survey that there has been a significant worsening in investment prospects. As to the level of interest rates, this is affected by external as well as domestic factors. I am not prepared to make statements on interest rate policies and prospects for the future.

Although I appreciate that Bank Rate has been reduced by ½ per cent. since my Question was tabled, will the Chancellor recognise that in many industries the overwhelming view is that new processes and equipment are not going in at an adequate rate to ensure high exports and intensive competition in the coming years? Will he watch this situation with the most careful attention, be cause it is not yet satisfactory?

I do watch this situation with the most careful attention. It is perhaps, of all the major factors in our economic situation, the one on which one gets the most conflicting evidence at the present time. As the hon. Gentleman and the House will be aware, what appears to be the case is that 1969 showed a good rate of increase, and I hope to see a good rate of increase in 1970 too, but I will certainly keep it under review.

Is my right hon. Friend aware that there is great public mystification why, after the recent reduction of Bank Rate and thereby interest rates, the building societies, which were quick to increase mortgage rates when Bank Rate went up, immediately announced that they would not reduce mortgage rates? Will he explain why this is so, so that the public may be informed of these important matters?

This is a quite separate question. As far as I am aware, only one building society has made a statement bearing upon this. I think my hon. Friend should put down a Question on this, rather than raise it on a quite different Question.

Members' Pensions

34.

asked the Chancellor of the Exchequer if he will seek to ensure that back-bench Members are effectively represented in any discussions which take place on the effects of the Government pension scheme on Members' pensions.

The Government are always ready to receive representations from hon. and right hon. Gentlemen on matters affecting them.

The right hon. Gentleman's previous reply suggested that this matter was to be decided by the Whips. Is he aware that many back benchers are anxious about the possible fate of their pensions under the new arrangements, and that they may not be disposed to accept an agreement about their pensions reached in secret through the so-called usual channels?

I said nothing about "in secret" or "the usual channels". I said that the Government are always prepared to accept representations from hon. and right hon. Gentlemen on matters affecting them.

Is my right hon. Friend not aware that the Whips select the hon. Members they want, the committees meet and come to decisions without hon. Members having the opportunity to put their points of view, and those decisions are imposed on hon. Members, as has been done recently on other matters?

I am not aware of the Whips imposing anything. I am sure that my hon. Friend shares with me the joy of coming to the House regularly to do our duty voluntarily.

Is the right hon. Gentleman aware that the trustees of the Members' Fund, of which I am privileged to be chairman, keep these matters under constant review, and that the trustees represent all hon. Members?

I am most grateful to the hon. Gentleman, and I should like to take this opportunity, on behalf of the Government, to pay a tribute to the great work which he and his colleagues do.

Banks (Lending Policy)

36.

asked the Chancellor of the Exchequer what direction he will now give to the banks on their lending policy.

I would refer the hon. Member to the reply which I gave to the hon. Member for Acton (Mr. Kenneth Baker) on 17th February.—[Vol. 796, c. 195–6.]

Is not the right hon. Gentleman aware of the bankruptcies amongst smaller firms and the lack of credit affecting larger firms and, in view of the more reasonable conditions, will he now give a direction to the Bank of England and the banks to be more lenient in their policy?

I have nothing to add to what I said in reply to a similar Question earlier.

6D Piece

37.

asked the Chancellor of the Exchequer whether he has now received advice from the Decimal Currency Board about retaining the 6d. or 2·5 new pence piece.

The arguments for retaining the 6d. piece or having the 2·5p piece have been discussed in this Chamber, and there is now need for a firm decision. Will the Chancellor of the Exchequer bear this in mind and give a firm decision quickly?

Yes, of course my right hon. Friend will bear this in mind. We appreciate the need for a quick decision.

Inland Revenue (Repayments Of Tax)

38.

asked the Chancellor of the Exchequer if, in view of the Annual Report of the Parliamentary Commissioner for 1969 in which it is pointed out that no authority exists for the Inland Revenue to pay interest on sums owed to taxpayers, he will make provision in the Finance Bill this year for allowing such payments.

I have noted the hon. Member's suggestion, but I cannot anticipate my right hon. Friend's Budget statement.

The hon. Gentleman must have seen the report of the Parliamentary Commissioner, which instanced no fewer than 26 examples of delays in the offices of the Inland Revenue. Why should the taxpayer be compelled to lend money free of interest to the Government in this way?

In reply to the second part of the supplementary question, a change in the law would be required, and this is a matter which will be considered in the Budget. I am aware of the criticisms which were made in the Parliamentary Commissioner's report and also of the fact that he attributed the defects which he criticised to pressure of work and not to weaknesses in procedure. In any event, there has been a review, and a number of changes have been introduced since the report.

Gibraltar

Q1.

When the Prime Minister next sees the Prime Minister of Gibraltar, will he discuss with him how it was that, when Gibraltar's sovereignty vis-à-vis Spain was under discussion at the United Nations, the British Government, supported by the Opposition, suggested that a referendum should be held, yet when much the same situation arose here over the Common Market the Government refused a referendum? How it is that Her Majesty's subjects in the United Kingdom are treated less favourably than those in Gibraltar?

I must say that I scratched my head to think what supplementary question the hon. Gentleman had in mind, and I failed to anticipate that one. We have here a sovereign Parliament which is capable of debating these things, and of voting on them too. It was felt right that the people of Gibraltar, not having a Parliament of our kind, should have the right to express their views on adherence to Spain. The results were decisive.

Does my right hon. Friend appreciate that the people of Gibraltar are deeply grateful for the support given to them by the Government against the aggression of their Fascist neighbour? Will he give the House an assurance that this will continue to be the policy of Her Majesty's Government?

Our policy has been clearly stated; I said it again in Gibraltar the last time I was there, and there will be no deviation from it. I think the people of Gibraltar recognise that when the Spanish Government made their claim for Gibraltar we did not, as our predecessors did, immediately fall over ourselves to offer frigates to Spain.

Government Departments (Co-Ordination)

Q2.

asked the Prime Minister whether he will devolve upon the Minister without Portfolio the duty of the co-ordination of Government Departments; and if he will make a statement.

I would refer my hon. Friend to my reply to a Question by my hon. Friend the Member for Stockport, North (Mr. Gregory) on 4th November, 1969.—[Vol. 790, c. 92.]

Will my right hon. Friend reconsider the position? Is he not aware that in the last month his right hon. Friend the Chancellor of the Exchequer has stated that the average amount of assistance given to council house tenants is about the same as the average relief received by mortgagors, whereas the Minister of Housing and Local Government has said that mortgagors receive half as much again as council house tenants? Does not this demonstrate the need for co-ordination between Government Departments?

I shall make a study of this question. What I am concerned with is that the amount of relief given to council house tenants will be cut to a very small fraction if the Opposition carry out their policy.

Would my right hon. Friend care to comment on the co-ordination between his right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Social Services, who are perfectly prepared to sacrifice him unless he agrees to come to a compromise with the trade unions?

The hon. Gentleman is capable of believing almost anything. That story is completely without foundation. The hon. Gentleman may believe it, but no one who was present on the alleged occasion does.

Housing

Q3.

asked the Prime Minister if he will now assume personal responsibility for increasing the housing output.

Q6.

asked the Prime Minister whether he will now assume direct responsibility for the housing drive.

Could my right hon. Friend say how much longer he is prepared to allow Tory councils to deny to thousands of families a year the right to a decent home, since this is what is happening? Does he not think that he ought now to put the Ministry of Housing and the Ministry of Public Building and Works together to make one Ministry of Construction, to set up a house-building organisation and to get the houses built? Will my right hon. Friend please take action on this matter now?

The proposal put forward by my hon. Friend I have replied to on a number of occasions——

But it would not deal with the abysmal performance of certain Tory local councils. When one considers how these Tory local councils are cutting back on council housing, despite the fact that they are getting from this Government the most generous subsidies in history, one can only imagine what they would do if there were a Government carrying out the subsidy policy of the party opposite.

But has the Prime Minister calculated that, with housing completions running at a rate of 365,000 a year, 135,000 families a year are being deprived of homes categorically promised to them by the right hon. Gentleman at the last election, when he made his pledge of 500,000 homes a year? Has he not got those people on his conscience?

Having dealt with this matter on a number of occasions, I would remind the hon. Gentleman that over 2 million houses have been built by this Government in five years——

I did answer the Question—if hon. Gentlemen opposite had stopped barracking they would have heard it—over 2 million houses, more than a quarter better than in the last five years of the Conservative Government, a Government who had already had eight years to gear themselves to the situation.

The Prime Minister has referred to those councils which, despite the great need, are slashing their house building programmes. Will the Government now use the available compulsory powers to refuse permission to councils to cut their lists in this way? If it involves local public inquiries so much the better, because it will spotlight the guilty councils.

This will be a matter for the electors in those areas who will no doubt take into account not only the cutting of the housing programme, but also increased council house rents, which would have been even higher if it had not been for legislation by this Government restraining increases, legislation which was voted against by the party opposite.

Is it not unreasonably optimistic to hope that the Prime Minister will now try to deal with the point about the pledge which he made? He will recall that he distinguished it from "promise". It was a pledge to be carried out in all circumstances, no matter what the difficulties. [Interruption.] Instead of electioneering, or answering questions which have not been asked, will he deal with that point?

I have dealt with the point on a number of occasions in this House, and I did so when the Government had to take decisions following devaluation. I do not remember right hon. Gentlemen opposite coming to the House when they broke their pledge on the Rent Act.

The Prime Minister this afternoon has succeeded in producing a greater string of inaccuracies, to use a polite word, than even he has been able to produce before. [HON. MEMBERS: "Oh!"] Will he kindly give the reference in the alleged Conservative manifesto which said that no legislation about rents would be introduced and which he has so often quoted? Will he also give a reference to the question which the late Mr. Bevan was supposed to have asked? Secondly, it is true that the House is being unfair in blaming the Prime Minister—[HON. MEMBERS: "Too long."]—for not carrying through his solemn election pledge of 500,000 houses, because he broke that pledge, as he says, after devaluation, when he announced that the Government would build 483,500 houses. Will he now explain why——

Will he now explain why the Government have not succeeded in building 483,500 houses but only 365,000 since he gave his last pledge?

On the first question, it was not in the Tory manifesto [HON. MEMBERS: "Oh."] I did not say that it was in the Tory manifesto. [HON. MEMBERS: "You did."] I said that it was a statement in the election and that it was in answer to a question by Aneurin Bevan. I do not know whether the right hon. Gentleman wants to deny that. It was a question by Aneurin Bevan and it was officially denied by the Tory Party at the time. [HON. MEMBERS: "Who by?"] If hon. Gentlemen opposite—[Interruption.]

If the right hon. Gentleman wants to deny it, the records can be searched on this matter. [Interruption.] With regard to the second question, I stated the position after devaluation. I did not say how many houses would be built as a result. Nevertheless, the right hon. Gentleman will recognise that at that time we could not have foreseen what the Tory councils would do—[HON. MEMBERS: "Oh."]—nor could we have foreseen that a Tory housing spokesman would chide Tory councils for building too many. But with regard to the figures he has quoted, the Tories in 13 years—[HON. MEMBERS: "Not again."] —exceed it in only one year, when they were setting the stage for the election and for an £800 million deficit.

Would my right hon. Friend not agree that, despite generous Government help, the building of council houses imposes a tremendous burden on local rates and therefore the housing programme becomes a party political cockpit? Has not the time now arrived when this should be a rate imposed across the country so that the houses can be built with the rate burden being shared equally with those areas which do not have the burden of building these houses?

My hon. Friend is on a good point. That is why I have given priority to those areas where these problems are greatest. But when right hon. Gentlemen opposite say they will cut the housing subsidy by £100 million, that must mean a substantial reduction in the number of houses built by local authorities.

Is the Prime Minister aware that his own Minister of Housing —[HON. MEMBERS: "Sit down."]—has never been able to deny that the record of such Labour councils as still exist is far worse than that of Conservative councils in this period? The reason is plain enough. It is difficult for local authorities with high interest rates—[Interruption.]

Order. Some Members on both sides of the House do not like to hear what they disagree with.

On a point of order. During my 20 years as a Member of this House, I have never known so much latitude granted to a Leader of the Opposition—[HON. MEMBERS: "Oh."]—in asking a question and being given permission by the Chair to do so at such length. Is it not time that this was stopped?

Order. The Chair gives both latitude and longitude to the Prime Minister and to the Leader of the Opposition.

Order. With all the good will in the world, I can only take one point of order at a time. Mr. William Hamilton, point of order.

Further to the point of order raised by my hon. Friend the Member for Sedgefield (Mr. Joseph Slater). I have previously made the same point but, having listened to the right hon. Member for Bexley (Mr. Heath), may I withdraw my opposition and encourage you, Mr. Speaker, to call the right hon. Gentleman more often?

On a point of order, Mr. Speaker. In all the time that I have been in the House of Commons I have never heard a Prime Minister take so long answering his rotten—[Interruption.]—giving such rotten replies to questions.

On a point of order. Mr. Speaker. On one or two other occasions you have deprecated the raising of points of order during the Prime Minister's Question time, because it prevents other hon. Members who have later Questions from getting them answered. I raise this point with you only because the hour of 3.30 is past. Will not you remind hon. Members once again that, by doing this, right hon. and hon. Members who have not got Questions of their own on the Order Paper are being extremely selfish in depriving their colleagues of their opportunity?

Order. The hon. Gentleman has put eloquently what I have said on previous occasions, that raising points of order during Question Time costs someone a Question which he had reason to expect that he would ask.

On the question of subsidies, will the Prime Minister recognise that what this side of the House has urged is that the subsidies should be renegotiated so that local authority housing is concentrated on those in need, namely, the elderly, the disabled, and those who are not able to pay a fair rent, that those who can pay a fair rent should do so, and that those who cannot should have rent rebates? That is the policy of the right hon. Gentleman's own Secretary of State for Social Security. When will he recognise that and stop misrepresenting the facts?

The right hon. Gentleman has put some four or five questions to me in the last few minutes. The answer to the first one is, "No, Sir". The answer to his point about subsidies is this. While I notice his hysterical comment—and it is very easy to get him hysterical these days, I have noticed—that we increased interest rates to penalise Tory councils, the right hon. Gentleman, apart from his presumed knowledge of world interest rates, should recognise that in subsidies to the large local authorities we are now producing something like double what his Government did when they went out of office. Against their £67 million in their last year, which was a peak for them, we have now been providing £131 million.

With regard to the questions which show the right hon. Gentleman's sensitivity about Tory housing policy, the right hon. Gentleman no doubt will have seen——

I am replying to some at the moment. The right hon. Gentleman no doubt will have seen the answers given a week last Friday showing for each major city what it would mean for council house rents if the policy that he is currently touting round the country were carried out. There would be inordinate increases in his housing policy.

With regard to his question about those in special need, we have done more for each of the categories that he mentioned than his Government ever did. It is clear from what he and his hon. Friend the Shadow Minister have said that they would provide no subsidies for general housing need, that they are committed to reducing our £130 million—[HON. MEMBERS: "Speech."] I am replying to a speech in the form of about a hundred supplementaries asked by the Leader of the Opposition. Having pledged themselves to reduce housing subsidies from £130 million to £30 million, right hon. and hon. Gentlemen opposite can only be proposing inordinate increases in council house rents which we shall resist.