Skip to main content

Oral Answers To Questions

Volume 885: debated on Thursday 30 January 1975

The text on this page has been created from Hansard archive content, it may contain typographical errors.

National Finance

Value Added Tax


asked the Chancellor of the Exchequer if he will consider making his VAT regulations retrospective to people building their own homes, where the goods were purchased before his November announcement but their homes were not completed.

We considered carefully and sympathetically the operative date of the relief we are introducing under Clause 3 of the autumn Finance Bill, but we concluded that the provision should not have retrospective effect.

Does my hon. Friend agree that do-it-yourself builders need great encouragement from the Government as they are doing a first-class job? Will he make an assessment of the likely cost of such a concession to those affected by my Question? They are under considerable financial pressure, and any help that we can give them will be greatly welcomed.

I thoroughly endorse the sentiments expressed by my hon. Friend. The reason why the relief was not given retrospectively had nothing to do with cost. It was merely that if we had done it in that way it would have been extremely difficult to preserve equity between individuals who started building their houses as long ago as April 1973. It would have been an impossible task for them to produce invoices going back that far.

Will my hon. Friend say how many people in total have been caught in this VAT trap while building their own homes? Is he aware that this is particularly important in rural areas, where a greater percentage of people become involved in this kind of activity? Cannot the Government be generous in these circumstances and give the people concerned a refund of the tax they pay?

I am afraid that I cannot give my hon. Friend the statistic for which he asks. I take his point that people in rural areas are particularly involved in extremely worthwhile activity of this sort. The concession is to some extent retrospective in that it is not confined to people who started building their houses after the date on which my right hon. Friend announced the concession. Anyone who is receiving supplies that would otherwise have been taxable after that date, even in respect of a house that had already been started, will receive the relief.

While I recognise the difficulties of conceding to the pressures that the Minister's hon. Friends are putting on him, is not the hon. Gentleman aware that the Government have no one to blame but themselves if they are put under pressure to introduce further retrospection bearing in mind the extensive retrospective effect of a great many of their measures in the current Finance Bill?

It is a little cool for that sort of comment to come from a member of the Conservative Party which suggests that we should be giving greater relief in this respect. Do-it-yourself builders are paying value added tax only because it was imposed by the previous Conservative Government. Relief is now being extended by my right hon. Friend.


asked the Chancellor of the Exchequer what consideration has been given to relieving the bloodstock industry of value added tax.

At a meeting which I had with the Bloodstock VAT Committee last April, I explained the difficulties involved in contemplating a concession falling in the area of discretionary expenditure, but said that I would consider any "hard" evidence which the committee might put forward in support of its case for the zero rating of blood-stock. Although the further evidence produced did not advance the committee's case, I understand that the committee has been reconstituted to represent wider interests and that further representations are going to be made.

While I am grateful for what the Minister has said and for the sympathy with which he is viewing this subject, may I press upon him the representations that have been made to me by trainers and owners in the Lambourn area of my constituency to the effect that the present rate of VAT is doing grave damage to the bloodstock industry? The industry is a vitally important foreign exchange earner. Even if the Minister cannot agree to zero rating, is he aware that at least some relief would make a great deal of difference?

I am obliged to the hon. Gentleman for the moderate way in which he has put his representations. I am sure he will acknowledge that the rate of value added tax bearing on the blood-stock industry is lower now than it was before. The officials of Customs and Excise have been looking into the technical matters which might give some marginal relief. I hope that it might be possible to make some progress in that direction. I cannot give the hon. Gentleman any further encouragement.

Is the Minister aware that a far greater threat to the bloodstock and racing industry lies in the capital transfer tax in the present Finance Bill? Has he given thought to a future situation in which all racehorses will be owned by the State, or does he have any other plans for ensuring the continuation of the racing industry?

As the hon. Gentleman well knows, the measures involving the capital transfer tax will be discussed in great detail in Committee on the Finance Bill. Possibly that discussion is better left to those proceedings.

The Minister knows that I wrote to him about this matter last month. Does he accept that the interpretation of VAT by the Treasury is much more rigid than that by the tax authorities in France, which consequently benefits our racing and breeding competitors in France? Does he realise that this greatly affects an industry already beset with financial problems? Will he go a little further than he has gone today—although I am glad that he will consider the matter again—bearing in mind that the industry in total is contributing approximately £650 million to the Treasury?

I am well aware of the considerations that the hon. Gentleman puts forward. He will also recognise that there are many wider considerations that have to be taken into account. There are many other powerfully-argued cases for relief. This is essentially an element of discretionary expenditure. We are receiving powerful representations from all forms of sport, from the living theatre, from charities and from other organisations. It is a question of establishing priorities for relief.

Motor Industry


asked the Chancellor of the Exchequer what plans he has for altering the present rates of taxation and hire-purchase rates in relation to the motor industry.

Questions about taxation are matters for my right hon. Friend's overall Budget strategy, and the hon. Member will not expect me to comment at this time.

As a number of smaller cars are about to be launched by British manufacturers at a time when there is an alarming increase in short-time working, may I ask the hon. Gentleman to consider acting now to help the industry in what are difficult home and world market conditions?

My right hon. Friend is fully aware of the circumstances to which the hon. Gentleman refers. I am sure that his remarks will have been noted.

Is it not the case that unless and until the Government reflate the economy, short-time working and unemployment will increase in the motor car industry and in the country at large? Can my hon. Friend confirm or deny suggestions that the Treasury now accepts that unemployment in excess of I million this year is inevitable?

I certainly do not accept the suggestion at the end of my hon. Friend's supplementary question. Not all the difficulties of the car industry are due to macro-economic factors. My right hon. Friend is aware of my hon. Friend's comments.

When my hon. Friend is considering the aid that can be given to the motor industry, may I ask him to spare a thought for the retail distributive trade? Is he aware that the problem of short-time working in many of the industries producing consumer durable goods in Edmonton and Enfield is causing serious hardship? Will he give serious consideration to relaxing hire-purchase controls, particularly as they relate to deposits and the length of payment, because this would give a boost to employment and retail sales?

My right hon. Friend will be considering very sympathetically all the points put by my hon. Friend.

Company Taxation


asked the Chancellor of the Exchequer what assessment he has made of the difficulty and Civil Service manpower involved in separating the raising and spending of company taxation in England from company taxation in Scotland.

The problems, from the point of view of both the Inland Revenue and companies, of trying to allocate company profits to different parts of the United Kingdom are so formidable that any attempt to do so would be quite impracticable.

Does not that answer illustrate the impracticability of giving revenue-raising powers to a Scottish Chancellor of the Exchequer responsible to a Scottish Assembly?

I have a great deal of sympathy with my hon. Friend's point. I am sure he will be aware that the Kilbrandon Commission specifically said that corporation tax was not at all suitable for devolution to regional administrations.

Will the hon. Gentleman recognise that the problem raised by the hon. Member for West Lothian (Mr. Dalyell) is a symptom of the difficulties of the Labour Party in coming to any agreement on devolution? Will he accept that sooner or later we shall have to have separate taxation because there will be an independent State of Scotland?

It is not for me to comment on the likelihood of there being an independent State of Scotland. If there were to be one, I suspect that my hon. Friend the Member for West Lothian (Mr. Dalyell) would be a far more likely candidate than the hon. Gentleman for a Scottish Chancellor of the Exchequer.

National Savings Stamp


asked the Chancellor of the Exchequer what representations he has now received regarding his intention to phase out the national savings stamp.


asked the Chancellor of the Exchequer what recent representations he has received on the Government's decision to discontinue the national savings stamp.

Since I announced the Government's decision to discontinue the national savings stamp we have received 256 letters, and I have received a deputation from the leaders of the movement for England and Wales.

Is the right hon. Gentleman aware that at the least we might have hoped that a decision would be forthcoming to reverse the previously announced intention to phase out the savings stamp? Has the right hon. Gentleman noticed the large number of hon. Members from both sides of the House who have signed Early-day Motion No. 3 which has this aim in mind? In view of the announcement yesterday that television licence fees are to be increased and of the fact that old-age pensioners have used the savings stamp as a way of saving up for the licence fee, may I ask the right hon. Gentleman to think about this again?

The hon. Gentleman's supplementary question shows that he cannot have studied in full what the Government are proposing. We are proposing that before the stamp is phased out there should be a television licence fee scheme for the very purpose he has mentioned. As for reversing this decision, I do not think that would be sensible, because what has happened since the decision was announced is that the savings movement in England, Wales and Scotland has turned to the task of redirecting its efforts in what I think will be a much better route.

Will the right hon. Gentleman accept that the statistics he has given represent only part of the feeling on this matter? Is he aware that many of us are concerned about the way in which people who have used this useful form of savings are now to be deprived of it? Is he further aware that many of us feel that his answer does not accurately reflect the facts but rather reflects the switching which has been necessary because of the decision he has taken? Will he reconsider this matter and, if necessary, persuade his right hon. Friend the Chancellor to accept the will of Parliament if this is brought before the House—as the right hon. Gentleman so signally failed to do last night?

The stamp is used as a short-term budgetary device. It is not used for saving in the way that was originally intended. A small proportion of the stamps is used for that purpose. As a short-term budgetary device there are alternatives which are more secure, which do not involve the same dangers of loss as stamps and on which people can receive interest. I can assure the hon. Member that although there has been some feeling about this, which I can understand and with which I have sympathy, if the Government were to reverse this decision it would deflect the savings movement again from what are certainly more profitable directions which will encourage savings.

Woodlands (Taxation)


asked the Chancellor of the Exchequer what representations he has had from forestry interests about the likely effects of his proposals for the tax treatment for woodlands on the capital transfer tax.

My right hon. Friend has had representations on this matter from a number of sources. Possible effects of the tax on woodlands will depend on the final form of the provisions in the Finance Bill.

In the light of those representations, does the Treasury recognise the genuine concern about the effect of this tax? Will the hon. Gentleman bear in mind in Committee the damage which will be caused by premature felling to pay the tax? Is he aware that that will lead in turn to increased timber imports and to unemployment? If he can do nothing else, can he make a distinction between softwood and hardwood when he considers taxation rates?

Only a week ago my right hon. Friend said that he had received many representations on this point and that he intended to take them very seriously. We hope to bring forward proposals later in Committee.

Is my hon. Friend aware that many Labour Members believe that there is an element of over-kill in the proposal, which could have serious repercussions on many aspects of our national life?

I note what my hon. Friend has said. Representations have been made to my right hon. Friend from representatives of all six parties in the House.

Will the hon. Gentleman pay particular regard to representations from national park areas such as the Lake District National Park, where the effect of premature felling and the abandonment of woodland would gravely damage the landscape and the environment which is so much enjoyed by so many?

I am grateful to the hon. Member for raising that point. I certainly assure him that amenity considerations weigh strongly with my right hon. Friend.

If there is any danger of forestry workers losing their jobs as a result of these taxation measures, will my hon. Friend consult his colleagues about the possibility of the Forestry Commission, for example, taking over the management, or even the ownership, of privately-owned forestry to conserve employment and the environment?

That question goes rather wider than my responsibility. I will see that my hon. Friend's comments are conveyed to my right hon. Friends.



asked the Chancellor of the Exchequer if he is satisfied that measures introduced so far will achieve his stated objective of a 10 per cent. annual rate of inflation by the end of this year.


asked the Chancellor of the Exchequer if he is satisfied with the progress of his policies to combat inflation.

The success of the Government's counter-inflation policy depends above all on the effective working of the social contract. If we can achieve stricter adherence to the TUC guidelines over the coming months, we can get the rate of inflation down by the end of the year. I have never stated an objective of 10 per cent.

As the rate of inflation—according to the Chancellor's own figures—has trebled since September from 8·4 per cent. to 25·2 per cent., will he explain how the allocation of further vast sums for indiscriminate food subsidies will help him to achieve his objective?

Yes, Sir. The allocation of sums to food subsidies will bring down the retail price index significantly, not only acting directly on the main indicator of inflation but reducing the rate at which settlements need to be reached.

If my right hon. Friend is to combat inflation more quickly than some people expect, does he understand that he will have to stop the bleeding that has occurred as a result of our entry into the Common Market? Does he understand these figures: a £2,000 million trading deficit in the course of two years, a 20 per cent. devaluation of the pound and a 33 per cent. increase in prices coupled with 750,000 men on the dole—and the number is rising? Does he realise that all those things are the result of our entry into the Common Market and that he would do well to advocate in the Cabinet that we should get out and keep out?

I am afraid that I do not understand those things. I recognise that many unpleasant things have happened over the last three years, but I do not think they can all be attributed to our entry into the Common Market.

Will the Chancellor amplify his statement, which I think has been repeated by the Prime Minister, that 75 per cent. of wage settlements have been within the terms of the social contract? Does that 75 per cent. include the allowed exceptions and in what proportion are they? Does that statement mean that 75 per cent. of settlements have been within the rise in the cost of living at the time of the settlement? What does it mean?

The hon. Gentleman has perhaps had an opportunity by now to read the various documents in which the guidelines for wage bargaining, which are part of the social contract, are contained. Seventy-five per cent. of the working people covered by settlements, not 75 per cent. of the settlements, are within those guidelines. Twenty-five per cent. are outside those guidelines, and I have said that that proportion is far too high.

Does my right hon. Friend agree that if Opposition Members want to do something to combat inflation they would have been well advised last night not to seek to increase the public borrowing requirement as such an increase is damaging to our campaign against inflation? Will my right hon. Friend give urgent consideration to ensuring that there will be increases in taxation, met by those with the greatest capacity to pay, to cover the cost of the decision which was taken last night?

Unless Opposition Members, in the light of their action last night, have decided to withdraw them, there are some Questions on the Order Paper about the public sector borrowing requirement which I shall be pleased to deal with presently. In reply to the last part of my hon. Friend's supplementary question, I am considering some very interesting proposals for raising the money which Opposition Members have added to the public sector borrowing requirement, and I shall announce them at the appropriate time.

To revert to the Chancellor's original answer, is it not a fact that in a public speech in September he told the public that he expected inflation to be reduced to about 10 per cent. by the end of this year if the social contract was adhered to? What has happened since September to change his view?

First, I did not say that in a public speech. I will send the right hon. Gentleman a copy of my speech if he wishes. I made clear that if the undertakings given by both sides in the social contract were maintained, if world prices did not rise and if there was international co-operation in the continued growth of trade and output throughout the world, we could get the rate of inflation in Britain down near to 10 per cent. by the end of 1975. I made clear in my speech in the House on 18th December that some of those conditions had not been fulfilled. In particular, the increase in world prices envisaged in December was substantially higher than any of us expected in the middle of last year. Secondly, I regret to say that the world is now moving into a recession in which the level of trade and output will not be maintained to the extent I hoped it would be six months ago.


asked the Chancellor of the Exchequer what has been the rate of inflation over the past three months expressed on an annual basis.

I would refer the hon. Member to the answer my right hon. Friend the Paymaster-General gave on 21st January to the hon. Member for Derbyshire. South-East (Mr. Rost).—[Vol. 884, c. 318–19.]

As the comparable figure in October was 8·4 per cent. and there has therefore been a dramatic increase in the rate of historic inflation, may I ask whether the Chancellor agrees that if the present rate of inflation continues there will be a remorseless and inevitable increase in unemployment? Does he also agree that there is an inescapable obligation on him to contain the rate of inflation, particularly wage inflation, to protect jobs?

The hon. Gentleman may be surprised that my answer is "Yes, Sir" to all that he has just asked. There is no question that the rate of inflation is too high and needs to come down. One important component in bringing it down, as I said earlier, is to have a less flexible interpretation of the guidelines and a stricter application of them in making settlements. However, I must remind the hon. Gentleman that this imposes responsibilities not only on trade unions but on employers. Some of the grossest breaches in the guidelines recently have been by bodies like the BBC and the clearing banks, which are always the first to criticise the Government for failing to ensure that the social contract is maintained.

Will my right hon. Friend clear up this ambiguity about his interpretation of the contract? He goes on about the guidelines and says that wage settlements must do no more than equate with the rise in the price index, but will he clearly state whether he is talking of gross or take-home pay?

Yes, Sir. First, I believe, as does the TUC General Council, that the social wage must be taken into account as well as negotiated wages. Therefore, it is settlements in relation to the past movement of the RPI. I strongly endorse the clarification by the General Secretary of the TUC last week that unions should relate the settlements and the claims they make to the past movement of the RPI, not to what they imagine may happen in future.

Reverting to the original Question, may I ask the Chancellor to confirm that the annual rate of inflation over the last three months, on the same basis as he told the country it was 8·4 per cent. in September, is now 23 per cent. and to explain why that change has occurred?

The main reason for this change is that in the last three months the index has reflected 11 threshold payments which had to be made under legislation introduced by the Conservative Government. Groups of workers who had been held back unfairly under statutory control—for example, nurses and postmen—had to be allowed to catch up. I am not aware that the right hon. Gentleman disagreed with that course. But now that thresholds are out of the way and the catching-up process has taken place, it is very important that we achieve a lower rate of settlement and a much smaller rate of exceptions to the guidelines than in the last few months.

Does the right hon. Gentleman accept that in his first five months as Chancellor he reduced the three-monthly annual rate of inflation to 8½ per cent.? How much of that was his own work? Does he accept that in the following four months he increased it to 23 per cent.? How much of that was his own work? Looking to the future, does he accept the estimate of the research department of my union, ASTMS, that the rate of inflation over the next 12 months will be in excess of 23 per cent.?

Like all hon. Members, I respect the hon. Gentleman's industrial and union experience, but I do not agree with the estimate he has quoted. He asked how much of what happened last year and this year was the effect of Government policy. There is no question that there will be some increase in the RPI this year resulting from Government decisions which, I think, are supported by Opposition Members: first, the decision to relax price controls to prevent mass bankruptcies and unemployment and, secondly, the decision to increase petrol prices and to have realistic pricing for the nationalised industries to reduce the consumption of energy. I hope that the hon. Gentleman, who on most occasions is a fairly objective fellow, will endorse both those elements in our current policy.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Chancellor's reply, I wish to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.



asked the Chancellor of the Exchequer what plans he has to index the tax system, with special reference to the rates of income tax; and whether he will make a statement.

The effects of inflation on the tax system are kept under continuing review by the Treasury and Revenue Departments.

I am glad to hear that, but is it not the case that the present rate of inflation, coupled with a non-indexed taxation system, has a profound and capricious effect both on the pattern of taxation and on the real incidence of taxation, including in particular an increase in the real burden of income tax without the sanction of Parliament? Now that the Treasury has at last yielded the principle of indexation by indexing savings bonds—which I welcome—is it not high time to extend indexation to taxation? Will the Minister appoint a full committee of inquiry into this important and urgent subject?

What the hon. Gentleman said at the beginning of his supplementary question is true. Inflation affects the real burden of taxation under our present system. On the other hand we have frequent opportunities in at least annual Budgets to review the level of allowances, and my right hon. Friend has indicated that he will be reviewing the level of personal allowances in his next Budget. I see no point at the moment in a committee of inquiry. As the hon. Gentleman knows, the Sandilands Committee is looking at one aspect of the problem, and we shall study what the committee says.

Government Borrowing


asked the Chancellor of the Exchequer what is his latest estimate of the Government's borrowing requirement for the year 1974–75; and what steps he is taking designed to reduce it.


asked the Chancellor of the Exchequer whether his estimate of the public sector borrowing requirement for the current financial year has increased; and, if so, by what amount since his Budget Statement on 12th November 1974.


asked the Chancellor of the Exchequer if, and by what means, he proposes to reduce the public sector deficit of £6,300 million.

It is not customary to give forecasts of the public sector borrowing except at Budget time.

Regardless of whether it is customary to give such estimates, is the Chancellor satisfied that he knows what the increase in the borrowing requirement might be? Does he recall that during the debates on the Finance Bill in July, when we were arguing about public expenditure, he maintained that the increase in the borrowing requirement was only a few hundred million pounds and that four months later it was revealed to be more than £2,000 million? Did he not know at the time, or was it not politic to tell the House?

I am staggered at the effrontery of the hon. Gentleman and his hon. Friends. The hon. Gentleman asked me to predict the borrowing requirement this year. Yesterday he and his right hon. and hon. Friends increased the borrowing requirement by £240 million. They are seeking in Committee to reduce the Government's revenue by reducing the rates of taxation and thereby again to increase the borrowing requirement. There has been a series of Questions on the Floor of the House this afternoon seeking to reduce the revenue from taxation. I cannot predict how far the irresponsibility of the Opposition will go.

May I ask my right hon. Friend, purely academically and without wishing to bring politics into it, whether he agrees that, as domestic credit expansion is increasing at twice the rate of M3, the public borrowing requirement—as well as the increase in wages—is having an inflationary effect?

No, Sir, I do not, because the public sector borrowing requirement adds to the money stock only to the extent that it is advanced in sterling through the banking system, and all the indicators show that the monetary pressures adding to inflation are not increasing. Substantial increases in budget deficits are now occurring all over the world as the result of recent oil price increases and the need to counter recession. The United States Secretary of the Treasury announced recently that the central Government deficit alone in the United States will amount to $85 billion over the next 17 months—that is, £35 billion. The West German Government recently announced that they expect their central Government financial deficit this year to amount to 50,000 million deutschemarks—that is, £10 million. Opposition Members, who are doing everything they can to seek to increase the Government's borrowing requirement, would have done well to take the oportunity to keep their mouths closed on this question this afternoon.

Has the Chancellor's attention been drawn to the views of his right hon. Friend the Secretary of State for Industry about the bad effects from the point of view of national sovereignty of British membership of the EEC? Does not the Chancellor agree that Oriental borrowing on a massive scale from the Shahanshah of Iran and the King of Saudi Arabia—who are not happy bedfellows with the right hon. Gentleman—puts in hock our own foreign policy? Will he address himself to this matter?

I do not think that the faintly ridiculous and outdated chauvinism displayed by the hon. Member will commend itself to either side of the House. I would remind him that the borrowing of which he complains was begun by the Conservative Government before we had an oil deficit.

Will the right hon. Gentleman clarify one simple point: is it his objective to reduce the level of the public sector borrowing requirement?

Let me say, Mr. Speaker, "You, too, Brutus". [HON. MEMBERS: "Oh."] I am quoting, Mr. Speaker, as you recognise, and not addressing myself directly to you. Of course I should like to see the public sector borrowing requirement less high than it is, but it is even more important to avoid mass unemployment. At the moment we have a choice. That choice is not made any simpler by the fact that the hon. Member and his Conservative colleagues last night, and continuously in Committee at present, are seeking to increase the borrowing requirement by forcing on the Government unwanted increases in the public sector and are seeking to reduce public revenue.

Will my right hon. Friend make it abundantly clear, so that there can be no misunderstanding in view of the general concern about the public borrowing requirement, that following the decision taken by the Opposition last night the Government will tackle the consequences of that vote not by cutting public expenditure but by raising taxation in another area to compensate for the decision that was reached?

I am grateful to my hon. Friend. I made that very clear, and I am now studying various interesting possibilities to ensure that the cost of the decision forced on the Government last night by the Opposition is borne by those who are capable of bearing the cost.

Is the right hon. Gentleman saying that what the House decided last night, with the co-operation of Labour Members, is unwanted expenditure to help old people? Secondly, he made the claim that it will increase the borrowing requirement by £240 millon. In view of the fact that his arithmetic has no precedent and knows no bounds, will the Chancellor publish in the Official Report how that calculation is made?

I recognise that many items of public expenditure are desperately wanted by many people, including that which was voted last night, but in the circumstances of the time choices must be made—and choices have been made by the Government. I find it odd coming from the right hon. Gentleman, who has pledged himself to support any attempt made by the Government to keep public expenditure under control, that he should have supported that increase by his vote and also by what he said a moment ago. Secondly, on the question of how the sum is made up, if the right hon. Gentleman had been here during yesterday's debate he would have heard a detailed account of the sums given in the speeches of my hon. Friend the Minister of State, Treasury, and my right hon. Friend the Minister of State, Department of Health and Social Security.

Balance Of Payments And Reserves


asked the Chancellor of the Exchequer what are the latest figures for the reserves, and for the balance of payments deficit over the last 12 months.

The level of the official reserves at the end of December was $6,789 million, about £100 million more than at the end of the previous year. The deficit on the current account of the balance of payments in 1974 is estimated to have been £3,730 million.

Despite the slight recent improvement, does my right hon.

Friend agree that we are tackling a Dunkirk situation by "phoney" war methods? When will the Government accept that we need a major curtailment of private consumption, through taxation or other means, particularly of consumption that is expensive in energy and imports, and that we need full employment maintained by a corresponding increase in public expenditure, particularly in house-building and other social services that are not expensive in that way?

I do not agree with the final part of my hon. Friend's supplementary question, and I do not believe that we advance the solution of our problems by the use of tired metaphors from 1940.

Does the right hon. Gentleman appreciate that the converse of the balance of payments deficit is the borrowing requirement? Since the borrowing requirement in the course of six months increased by over £2,500 million, when on the Chancellor's own reckoning the inflation rate was proceeding at 8·4 per cent., will he let the House know the present rate of borrowing requirement? If we are to have a Budget every three months, which is the present going rate, why cannot we have these figures produced much more regularly?

If the hon. Gentleman could give me a firm prediction of the extent of the Opposition's responsibility in increasing public expenditure in the course of six months, I might be tempted to follow his advice.

Is it not time that my right hon. Friend used methods already adopted by other countries, whose deficits are not as bad as ours—namely, to control imports—and also asked the Secretary of State for Defence to reduce the £300 million a year deficit incurred by the British Army of the Rhine in a country which has the largest trade surplus in the world?

I do not believe that our economic prospects would be advanced at this time by controlling imports. Secondly, there is a relationship between the public sector borrowing requirement and the external deficit, but it is noticeable that the Federal Republic of Germany, which in the last year has had the largest external surplus in the world, also expects this year to have the largest public sector deficit in Europe.

Has the right hon. Gentleman any idea of what is happening upstairs in Committee on the Finance Bill? Does he realise that in the Committee the Opposition are pressing that the capital transfer tax should not be brought in, and that by his own admission the capital transfer tax will produce a lower yield than that of the existing estate duty? Therefore, it is the Government and not the Opposition who are pressing measures that will increase the Government deficit in terms of borrowing requirement.

I do not know how far the hon. Gentleman follows the speeches made by his right hon. Friend the Member for Finchley (Mrs. Thatcher), who, if I may use the word, is the hon. Gentleman's mistress in the Finance Bill upstairs and who has stated on behalf of the Opposition that they wish to retain estate duty but to introduce a relief in respect of legacies to wives and spouses, which is part of the capital transfer tax. In that case the revenue from estate duty would be substantially lower than that anticipated from the capital transfer tax. I hope the hon. Gentleman will have the honesty to admit that he misled the House unconsciously in pretending that the situation was other than it is.

Taxation (Sex Differentiation)


asked the Chancellor of the Exchequer if he will list those tax provisions which differentiate between men and women or husbands and wives in the taxation of income and capital and in treatment as regards the offsetting for tax of charges and allowances.

The Taxes Acts do not in general differentiate between men and women. They do in certain respects distinguish between married and single women as a result of the normal income tax rule that the income and gains of a married woman are aggregated with those of her husband. Since the husband is responsible for paying the tax on their combined income he normally receives the allowances and reliefs appropriate to them. Some of the minor tax allowances—those, for example, for a housekeeper, for a dependent relative or for a daughter's services—also depend to an extent on the sex of the claimant or of the dependant.

May I declare an interest which I have registered with the Table Office. Is the Financial Secretary aware that the Treasury's January Economic Progress Report gives great prominence to the Government's intention to promote a Bill aiming at equality for women? Would it not demonstrate a desirable consistency in Government policy if the Chancellor were to introduce amendments to our tax legislation where, to quote White Paper Command 5724,

"The grounds for less favourable treatment are sex or marriage"?

I have already made clear that the discriminations work both ways in our present tax system. There are some minor anomalies to which I have drawn attention.



asked the Prime Minister whether he is satisfied with the co-ordination between Ministers responsible for carrying out Government responsibilities in respect of population trends.

The Lord President of the Council and Leader of the House of Commons
(Mr. Edward Short)

I have been asked to reply.

Yes, Sir.

As the birth rate has steadily fallen from 18·8 per thousand in 1964 to 13·9 per thousand in 1973, and in view of the importance of this trend for the work of most Government Departments, may I ask what research is being undertaken by the Government into the factors now influencing the average size of families in this country?

My hon. Friend is quite correct. The increase in the growth of population has fallen in each of the past eight years, but the population is now almost stable. The Office of Population Censuses and Surveys is stepping up its research effort into population trends, aimed particularly at increasing knowledge and understanding about the factors influencing child-bearing.

Economic Policy


asked the Prime Minister if he will now assume overall responsibility for running the economy.


asked the Prime Minister whether he will assume overall responsibility for running the economy.


asked the Prime Minister if he now assume overall responsibility for running the economy.


asked the Prime Minister whether he will now assume direct control of the Government's economic policy.

I have been asked to reply.

As Prime Minister and First Lord of the Treasury, my right hon. Friend already has that responsibility.

Did the Lord President hear the Chancellor of the Exchequer's answer just now to the question about unemployment? Will he tell us whether the Chancellor and the Prime Minister are prepared to reject or to agree with the view expressed by the Tribune Group in the Morning Star recently that the Government's present policy towards unemployment is unacceptable?

My right hon. Friend the Chancellor of the Exchequer accurately expressed the Government's view both here and in his speech in Leeds.

Does my right hon. Friend agree that one of the difficulties in running the economy is the requirement for higher incomes to combat the increasing cost of food? Has he noticed that last Thursday the Minister of State for Agriculture, Fisheries and Food, in reply to my hon. Friend the Member for Fife, Central (Mr. Hamilton), pointed out that the cost of cheese and butter from New Zealand to the consumer was £600 whereas the transfer to the European Economic Community was about £300 in taxes?

Yes, I noticed that answer. However, the overall effect on food prices of being in the Market is that they are slightly lower now than they would have been if we had been out of it.

Now that the Price Commission has made it clear that the all-important causal factor of inflation is wage increases, and as the Chancellor of the Exchequer this afternoon said that a less flexible attitude is required towards the guidelines, may I ask why the Government and the TUC do not get together to tighten those guidelines?

The report stated that there are still some external factors in the pipeline affecting prices. However, we should be clear that from now on the major factor affecting inflation will be pay settlements.

When the Government refer to pay settlements and state that they must equate with the rise in the price index, are they referring to take-home pay or to gross pay?

I heard my right hon. Friend the Chancellor of the Exchequer answer that question a few minutes ago.

Order. I must ask whether the hon. Gentleman was in the House when the original answer was given.

Since the right hon. Gentleman says that the Prime Minister has overall responsibility, when will he start exercising it? When will we get some action from him to back up the words that he utters periodically in speeches?

My right hon. Friend exercises this responsibility all the time. If the hon. Gentleman will take the trouble to look at the Chancellor's Budgets he will see that there is a strategy for tackling inflation, which is beginning to have effect.

In view of my right hon. Friend's statement, accepting on behalf of the Prime Minister responsibility for running the economy, and in view of the concern expressed on all sides about inflation, will he impress on his right hon. Friend the fact that we are shortly to have an injection of inflation through Government action—the defreezing of business rents? Would my right hon. Friend accept that it is not yet too late to prevent this?

I am sure that the Prime Minister reads everything and will notice my hon. Friend's supplementary question.

Will the right hon. Gentleman now answer the question put by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley)? What is the position of those Ministers who are members of the Tribune Group and, therefore, associated with the recent savage attack on the Chancellor's policies? Will he confirm that the Prime Minister is now presiding over the collapse of collective responsibility, not only on Europe but right across the board?

Fortunately I have no responsibility for the Tribune Group, but, as I have said, the views expressed by the Prime Minister and the Chancellor accurately reflect the Government's view.

Will my right hon. Friend confirm that the attitude of those Ministers who are members of the Tribune Group, as well as all other Ministers and Labour Members, is one of quiet confidence in the Government's economic policies?

I do not know whether the right hon. Gentleman can answer this question. If the Prime Minister is in overall charge of the economy, what is his view of the Bank of England's purchase of the unpledged shares in BP, which used to belong to Burmah Oil, at vastly below the market price and at great disadvantage to the shareholders, without consulting the shareholders? Is this fair dealing by the Government?

This is a very complex matter which no Minister could answer off the cuff. But the hon. Gentleman is asking for the Prime Minister's view, so I suggest that he puts down a Question to him on it.

Has my right hon. Friend any explanation of the discrepancy between the comments of Conservative Members and the obvious confidence of the Stock Exchange in the Chancellor's policies?

As the Lord President has now told the House that the Prime Minister has overall responsibility for running the economy, will he also assure us that in future Questions directly relating to the economy put on the Order Paper to the Prime Minister will be answered by the Prime Minister and not transferred to the Chancellor by his private office? It is an important constitutional matter that the Prime Minister should answer Questions directly relating to the economy.

Second, will the right hon. Gentleman ask the First Lord of the Treasury to ascertain the facts about the earnings rule regulation which was carried last night by the House? He will then find that the cost for 1975–76 is £60 million, of which the Treasury will have to contribute only £9 million, but it will gain £15 million in tax. There will therefore be a net gain for the Exchequer over 1975–76 of £6 million. What, therefore, is this futile and bad-tempered threat from the Chancellor about excess taxation?

On the second point, the facts about last night are well known. The right hon. Gentleman and his colleagues voted together for something on which they had done nothing in three and a half years of government. Their vote was sheer hypocrisy and irresponsibility. The right hon. Gentleman knows that it makes utter nonsense of trying to find priorities in government if an amendment of that kind, involving a great deal of public expenditure, is passed in that way at a stroke. The right hon. Gentleman should be ashamed of himself for his action. It was sheer, utter humbug and irresponsibility on his part. I am afraid that I have forgotten his first question.

If I may help the right hon. Gentleman, the first part of the question was whether the Prime Minister, since he now has responsibility for the overall control of the economy, will answer Questions relating directly to the economy.

On that, the right hon. Gentleman is the very last one to talk. He transferred Questions right, left and centre when he was Prime Minister. He knows, of course, that the Prime Minister and every other Minister have the right to transfer Questions.

Social Contract (Chancellor's Speech)


asked the Prime Minister whether the public speech at Leeds on 10th January by the Chancellor of the Exchequer on the economy, unemployment and the social contract represents Government policy.

I have been asked to reply.

I would refer the hon. Gentleman to the reply which I gave to the hon. Member for Chingford (Mr. Tebbit) on Tuesday 28th January.

If the Lord President has finished abusing Parliament for exercising its free right last night in deciding issues of importance for the nation, will he give a simple "Yes" or "No" answer to the following question? Will he confirm that strict adherence to the terms of the social contract necessarily implies for the majority of people a decline in real standards of living over the forthcoming year?

It does not necessarily do so, but we hope very much that trade unions and employers—it takes two parties to make an agreement—will adhere to the social contract during the coming year.

Referring to the speech of my right hon. Friend the Chancellor at Leeds, may I ask the Lord President to take into account the fact that the decisions taken in the last Budget were allegedly designed to offset the possibility of high unemployment and that unemployment running at a level of 750,000 is a completely unacceptable figure? Will he bring it to the attention of his right hon. Friend that the Labour Party manifesto was designed to combat the problems that the Budget evidently has not combated?

The unemployment figure in Britain is the lowest in the developed world and it is rising much more slowly than anywhere else. As to the Budget, my right hon. Friend took massive steps to prevent unemployment this year. He will have increased consumer demand by the middle of this year by about £600 million and he gave enormous help to firms with cash difficulties.



asked the Prime Minister if he will pay an official visit to Stretford.

I have been asked to reply.

My right hon. Friend has at present no plans to do so.

Is the right hon. Gentleman aware that when, at the time of the last election, the Prime Minister came to speak for me in Stretford, he made all sorts of glib remarks and gave all sorts of assurances about unemployment? Is the right hon. Gentleman aware that unemployment in my constituency has risen by approximately 50 per cent. since his Government came to office? Is he further aware of the gross unfairness being perpetrated under the so-called "social contract", which is nothing but a cloak for a wages free-for-all in which the bully boys reap the bonuses? Last year average earnings increased by 28½ per cent. Since many workers obtained substantially more, inevitably many millions had to make do with much less. Can the right hon. Gentleman say how many millions of workers got nothing like that?

The hon. Gentleman has put his supplementary question with his usual objectivity. I went to Stretford as well, and I certainly did not speak for the hon. Gentleman. [Interruption.] The hon. Gentleman very nearly got beaten. He will be beaten next time. The unemployment figure for Stretford is 2·9 per cent., which is only marginally fractionally above the national level. I agree that it is too high a figure. But once the present Government's policies have worked through, and when this Government have mastered inflation, as they will, the unemployment in Stretford, as elsewhere, will certainly fall.

Has my right hon. Friend seen the recent speech of the hon. Member for Stretford (Mr. Churchill) in which he was speaking about the forthcoming ballot for the Conservative Party leadership—this rather curious ballot—and in which he said he believed that the present Leader of the Opposition could survive if he could get back to the sort of 1970 vintage? Has my right hon. Friend also heard of the possible injunction that may be sought against this particular ballot, as it is asking for a 65 per cent.—

On a point of order, Mr. Speaker. May I submit to you that what has already been heard in respect of this question is out of order and has nothing whatever to do with the Question on the Order Paper?

Further to that point of order, Mr. Speaker. Over recent years the Chair has constantly ruled that points of order arising during Question Time must be taken at the end of Question Time.

The Chair has always said that it would prefer points of order to be raised at the end of Question Time. The hon. Member for Bolsover (Mr. Skinner) certainly was going fairly wide. I hope that he will conclude.

I was asking my right hon. Friend whether he had heard of the rumour that an injunction was to be sought against the conduct of that ballot in view of the necessity of a 65 per cent. majority—

Order. That is the end of the supplementary question. Does the hon. Member wish to raise a point of order?

Yes, Mr. Speaker. I am not aware that this supplementary question by the hon. Member for Bolsover (Mr. Skinner) has anything whatever to do with a potential visit by the Prime Minister to Stretford.

Order. One of the troubles is that supplementary questions very often are far away from the original Question.

You took the words out of my mouth, Mr. Speaker. I was about to say "Nor has the supplementary question of the hon. Member for Stretford (Mr. Churchill)", but as he asked it I would not dream—

Given the unemployment figures, I would not dream of commenting on the difficulties of the Conservative Party. Unfortunately, the hon. Gentleman's speeches are not essential reading for me.

May one congratulate the right hon. Gentleman on his discretion, because he already has his hands well filled with his own difficulties? If he will look behind him, and particularly to his right, he will find plenty.

I thought that when the right hon. Gentleman got to his feet he was going to ask me for the reply to the question he put to me last week when he challenged me to publish the figures about the relative efficiency and productivity in publicly-owned industries and privately-owned industries. I have given these to the Press. I shall not give them to the House now. They are now with the Press.

Is the right hon. Gentleman aware that kindness forebade me even to refer to so meagre an answer?

In view of that, Mr. Speaker, I really feel, with permission—[Interruption.] The net output per employee between 1963 and 1973 has risen by 158 per cent. in public corporations.

Order. The House really is behaving extremely badly—both sides of it. Noise from one side leads to noise from the other side. My purpose is to get as many Questions asked and answered as possible. That has not been possible this afternoon.

On a point of order, Mr. Speaker. Is it in order for the Leader of the House to give an answer to a question which has not been asked?

The right hon. Member for Yeovil (Mr. Peyton) asked the question, so I was going to help him—[Interruption.] In the 10 years between 1963 and 1973, net output per employee—

Order. The hon. Member for Lancaster (Mrs. Kellett-Bowman) raised a point of order. In fact, the Chair has no control over a Minister's answer. He can give the answer he wishes.

Net output per employee has risen in the public corporations by 158 per cent. and in private corporations by 98 per cent. In 1973 net output per employee was 31 per cent. higher in public corporations than it was in private industry.


On a point of order, Mr. Speaker. May we have your guidance? At the end of Question Time the Lord President made a statement which presumably was not related to any Question he was answering. Therefore, it must have been an official Government statement. It contained a statistical matter which was not only inaccurate but misleading, and which appeared to distort the position of the public sector as opposed to the private sector. May we have your guidance as to when we may cross-examine the right hon. Gentleman? As it is not a matter which is within his own ministerial responsibility, it will presumably not be possible for us to put on the Order Paper further Written or Oral Questions to the right hon. Gentleman. Therefore, the only appropriate time appears to be now.

Further to that point of order. Perhaps I can help you, Mr. Speaker. The figures I quoted were from the Department of Industry survey "National Income and Expenditure 1973".

Further to that point of order. No one asked the right hon. Gentleman where he got his figures from. Surely it is unprecedented for a right hon. Gentleman on the Opposition Front Bench to throw out a challenge to a Minister, who then, about a week later, without notice, comes with a piece of paper—

—proceeds to read an answer and then sits down. Surely we should either have a statement—

I can manage without the hon. Lady's assistance.

Surely the Leader of the House himself would be the first to agree that it makes for orderly business if we either have a statement on the usual basis on which statements are made, with questions allowed from both sides, or a Written Answer or something quite different—namely, a speech. But this is the most extraordinary thing. Who will next appear with a piece of paper to say that somebody asked him something six months ago and that he has just found the answer?

I do not think that there was any breach of order. There is nothing in the Standing Orders which was offended against. I think that it was partly the fault of the House, because there was a great deal of noise, provoked from one side or the other and responded to by one side or the other. Therefore, I did not hear what the Lord President of the Council said. I rather understood that he was being coaxed into his reply by the right hon. Member for Yeovil (Mr. Peyton). But as the House was making so much noise I did not hear what the Lord President said. Anyway, the Chair has no power to control a ministerial answer.

I should like to apologise for any contribution I made to your embarrassment and difficulties, Mr. Speaker. At the same time, I should like most warmly to congratulate you on not having heard the contribution of the Leader of the House, which was totally superfluous, quite unnecessary and, in so far as it contained information, quite misleading.