asked the Chancellor of the Exchequer whether he is satisfied with the progress of his anti-inflation policy.

asked the Chancellor of the Exchequer if he is now satisfied with the current level of inflation; and if he will make a statement.

I cannot be satisfied when our inflation is far above that of most of our foreign competitors. But I think we can make significant progress in reducing inflation this year if the rate of pay increases does not accelerate.

I should like to ask the Chancellor a question about the arithmetic behind the social contract. Even if we made the assumption that the social contract limited wage increases to price increases, would that make any significant difference to the rate of inflation? Given the slow growth in productivity, and the fact that commodity prices will not fall indefinitely, is it not the reality that to make any significant impact wages will have to rise somewhat less than prices?

No, Sir. If the wage increases were about 9 per cent. less than the 29 per cent. at which they have been recently running, it would have a very significant effect on the rate of inflation, as it borne out by the report of the Price Commission published this week. We shall also be assisted this year, in any case, by the fall in commodity prices.

Does my right hon. Friend believe that, for all its weaknesses, the social contract still offers us the greatest hope for further progress in containing inflation? Is it not now appropriate for him to bring forth some proposals for widening the base of the social contract, for strengthening it, for making it more precise and for making it into a form of tripartite agreement?

My hon. Friend has posed several questions. It emerged very clearly from the Budget debate that nobody in the House has an alternative to the approach of the social contract as a means of dealing with inflation. On the question whether the social contract should be extended, I believe that there is a very strong case for considering whether, before the next wage round, some means should be sought of ensuring that the guidelines are more rigidly adhered to. Whether or not it would be desirable to include the CBI in talks about this—as I think my hon. Friend suggested—is a matter for consideration.

Will the right hon. Gentleman realise that both sides of the House hope that his forecasts of the deceleration in inflation will come about? How does he expect wage inflation to be reduced in the coming 12 months, especially bearing in mind that in the area over which the Government have the most direct influence—their own civil servants; both those on top salaries and the 500,000 at medium levels—they have given in to a scandalous increase?

Before the hon. Gentleman blows his top, he should he aware that in the case of the civil servants and of the higher salaries the settlements were governed by the judgment of independent review bodies, which any Government tamper with at their peril. Nevertheless, the Government did phase the increases at the higher levels of the top salaried bodies.

In so far as the Chancellor is founding his approach to wage settlements on the social contract, I should like to follow up the point raised by his hon. Friend the Member for Wrexham (Mr. Ellis) about the need to make it more precise, because there is a danger that it may be misleading people into pressing for higher pay settlements now. I ask the Chancellor to clarify whether his statement in the Budget speech, that settlements under the social contract should compensate only for rises in the cost of living, should be applied after or before account has been taken of increases in indirect taxation and increases in direct taxation, because it is clear that many trade unionists—

Order. This is not debating time.

I am grateful for your protection, Mr. Speaker. I am fascinated to hear that the right hon. and learned Gentleman is at last beginning to think this problem through, but he should be aware that the social contract is an agreement between the Labour Government and the trade union movement. The wage guidelines are laid down independently by the TUC as its part of the social contract and provide for certain exceptions to the rule. I made it clear in a speech last week that if unions seek to recover the tax increases that I have been compelled to impose—due to past inflation and past settlements in excess of the norm—by even more excessive settlements, the only alternative I would have to tax increases on a further occasion would be cuts in public expenditure, which would be damaging to all the interests which we and the unions have at heart.

asked the Chancellor of the Exchequer what representations he has had that all householders, regardless of their marital status, should receive a personal tax allowance equal to that now received by a married man.

My hon. Friend recently wrote to my right hon. Friend on this subject and I have also noted the motion on the Order Paper to which other hon. Members have attached their names. The increase in the additional personal allowance proposed in my right hon. Friend's Budget effectively meets his suggestion for single-parent families with children.

I warmly welcome my right hon. Friend's assistance for single-parent families, but is my hon. Friend aware that it is unjust that widows and single women with household responsibilities should receive less than half of the help that a working married couple receive? Will my hon. Friend give an undertaking to end this anomaly as soon as possible?

A number of representations have been made to my right hon. Friend about a householder allowance. This idea is among others that are being considered. But the married allowance is not related to the cost of running a home. It is, rather, an allowance for two people instead of one.

asked the Chancellor of the Exchequer when he next expects to discuss inflation and the social contract with the Trades Union Congress.

I have frequent meetings with representatives of the TUC at which inflation and the social contract are among the subjects for discussion.

Should not the right hon. Gentleman have marked May Day by starting a renegotiation of the social contract on a broader, tougher and more realistic basis? Does he agree that, as my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) urged, for the time being the majority of us, whether we are organised or un-organised workers, must accept salary and wage increases below the rise in the cost of living if the lower-paid and other disadvantaged groups are to be protected against inflation and if the rate of inflation is to be brought down?

I made it clear that I believe that it is necessary to discuss how the guidelines can be more strictly adhered to. There may be a case for reconsidering some elements in the guidelines, but I do not think that it would be sensible to seek to change the guidelines towards the end of an existing wage round. That would rightly be regarded as extremely unfair to those who have not yet had a chance to make their settlements.

When he talks to the TUC, will my right hon. Friend discuss the clear indication that his Budget proposals were an attempt to solve inflation by creating more unemployment? Will he discuss with the TUC what is likely to happen in the whole consumer durable industry, where unit costs will go up and overseas competitors, who already have a large chunk of the British market, will capture an even larger chunk?

I had the opportunity of discussing my Budget with the TUC at a meeting the Monday after I made my Budget speech, and I was reassured to discover that all members of the TUC present agreed that the social contract remained the only basis of a policy against inflation. Moreover, many members of the TUC have pointed out, as I have, that wage settlements in excess of the guidelines voluntarily laid down by the TUC were certain to lead to an increase in unemployment, and to paralyse the Government's policy to deal with such an increase by reflationary measures, such as were taken, for example, in Germany, where the average level of wage increases has been under 10 per cent. over the past 12 months. I hope that I can count on my hon. Friend's support in seeking to persuade all members of trade unions engaged in negotiations to observe these voluntary guidelines.

On the completely separate question of consumer durables, my judgment is that the foreign competitors who have been putting up heavy competition with British industry in many consumer durables will find the increase in tax on some of those durables a much more serious obstacle than the British industries will.

We think that when the right hon. Gentleman said last week that he would have to rely primarily on cuts in public expenditure to combat excessive wage claims he was on the road to realism. Is this the approach he will use, if his colleagues allow him in dealing with, say, the railwaymen?

I wish that the hon. Gentleman had read what I said rather more carefully. I said that I should be compelled to rely primarily on reductions in public expenditure if groups of workers attempted to recoup the tax increases made necessary by excessive settlements in the past by even more excessive settlements in the future. I hope that he was not assuming that they would do so, or encouraging them to do so.

On the question of cuts in public expenditure, I should find the attitude of the Opposition Front Bench a good deal more intelligible, and even sympathetic, if they were able to give any indication where they would make the cuts, and which elements in the £3,000 million annual increase in public expenditure, on which they fought find lost the last election, they would choose for priorities.

asked the Chancellor of the Exchequer what measures he proposes for the encouragement of greater personal savings.

Personal savings have been at a high level in recent months and the facilities offered by the Government are kept under close review.

Was it not remarkable that the Chancellor made no reference to personal savings in his Budget Statement? Is it because Ministers are afraid to acknowledge that inflation is running well in excess of 20 per cent? Any conventional savings scheme is likely to be a monumental fraud on the saving public who are suffering arbitrary confiscation of their assets to the tune of millions of pounds a day.

The figures over the past four years speak for themselves. Over the past year the level of personal savings has been the highest since 1970. This compares with the decline in 1971, 1972 and 1973. The new savings schemes have been very well received, as the figures conclusively show.

Does the Minister accept that all national savings certificates with the present derisory rate of interest should bear the words "This document carries a Government financial risk warning"? Does the hon. Gentleman accept that if he wants to increase national savings he must raise the rate of interest?

The hon. Gentleman must be aware that the returns from national savings are fully competitive with those available in the private sector. The fact that in the first quarter of 1975 we have had a net inflow into national savings of £191 million, compared with £25 million in the same period last year, is evidence of the attraction they still offer to those of limited means.

asked the Chancellor of the Exchequer whether he will address later this month the annual conference of the national savings movement.

I regret that other commitments will prevent my right hon. Friend attending, but my right hon. Friend the Paymaster-General has accepted an invitation to address the annual assembly on 9th May in his place.

Before that conference next week, will Treasury Ministers reconsider the decision to abolish the savings stamp? The Chancellor of the Exchequer is in a genial mood today. Will he look a little beyond the arguments of the bigwigs and the officials in his Department and ask himself whether, at a time of savage inflation, he really should abolish the traditional means by which thousands of individual citizens have learned to put something by?

If I may respond with a genial explanation, unfortunately over the past 20 years there has been a steady fall in the number of selling groups in villages and town streets. It has not been possible to find the recruits which would be necessary if sales of savings stamps were to continue, quite apart from the factors of cost, the failure to earn interest and the other problems associated with stamps. There are real difficulties which the national savings movement itself has not so far been able to overcome.

Does the hon. Gentleman agree that profitability has something to do with the falling off in national savings? Comparing the interest received with the fall in the value of money, in real terms is there a net loss or a profit?

I assume that the hon. Gentleman is talking about national savings generally. Although, obviously, in times of inflation it is very difficult to get real rates of interest, the hon. Gentleman must remember that this applies to the private sector, too. Those who put their money into the private sector in the past year in a number of cases have done remarkably badly. For the ordinary small saver, national savings have provided ready access, ease of withdrawal, and security. In addition, due to the introduction of the new index-linked forms of security, we have an extension into an area which I am sure the hon. Gentleman will welcome.

asked the Chancellor of the Exchequer what calculation he has made of the value of fringe benefits offered to business executives, and the amount which could be recovered in taxation by making the value of such benefits liable to taxation as income; and if he will make a statement.

The term "fringe benefits" covers a wide range of facilities and the information available does not enable reliable calculation of their overall value to be made. Fringe benefits are already taxable when received by business employees earning £5,000 or more a year, or by company directors. But as my right hon. Friend said in his Budget Statement—reported at col. 317 of Hansard of 15th April—it will be his intention in the future to take further action on fringe benefits.

Does my hon. Friend accept that the few steps taken on this matter in the Budget are widely welcomed on the Government side of the House? I am sure that he will agree, however, they can only be an opening gambit. If he has studied certain reports, he will have seen that these fringe benefits are tending to increase in amount, and can include not only such items as cars and houses but even servants, and God knows what else these days. Does he agree that if the social contract is to have any meaning, and if—

Order. This is not the time for making speeches. It is for asking questions.

Does my hon. Friend agree that if it is not to cause shop floor disillusionment, action needs to be taken against these back-handed payments?

What my hon. Friend says is largely correct. My right hon. Friend the Chancellor will be taking action next year. The whole matter is under investigation.

If there is to be a review of the matter, will the Minister concerned also undertake to examine fringe benefits which are not confined to business executives, such as concessionary coal and the use of cars for people other than business executives—people in trade unions?

The hon. Gentleman will be aware that miners have been treated as a special case for the past 30 years. If the Conservatives did not like it, they had plenty of opportunity to change it. When they investigated the matter they saw the reasons. As I said, the whole area is under investigation, and we shall be putting forward proposals in due course.

asked the Chancellor of the Exchequer what effect he estimates his Budget proposals will have on employment prospects in the textile industry.

The Budget proposals are unlikely to have much effect on employment prospects in the textile industry.

Does my right hon. Friend agree that any unemployment in the textile industry will be a disaster, especially in view of the short-time working which is already occurring? In the North-West over 50,000 out of 80,000 workers are on short-time working. Does he also agree that what is needed for a viable textile industry is a substantial cut in foreign textiles imports?

I share my hon. Friend's concern about the situation in the textile industry. However, the latter part of his question should be directed to the Secretary of State for Trade.

Is the Minister aware that the fact that the Budget has had no effect on employment prospects means that those prospects have become much worse, and that two weaving mills in my constituency closed the day before yesterday? Will he, together with his right hon. Friend, consider the possibility of including some help for the textile industry in amendments to the Finance Bill, which will be coming forward soon?

The hon. Gentleman will be aware that the closures to which he referred, and which I greatly regret, have nothing to do with the Budget. I cannot agree to the proposal he put to the House.

Does my right hon. Friend accept that, in relation to the economic strategy of the Government, it was not what was in the Budget which dismayed the textile workers but what was left out of the Budget? If we do not introduce import controls no textile industry in Lancashire will be left. Will the Chief Secretary press upon the Prime Minister and his associates the need for urgent action in this area?

I assure my hon. Friend that the Prime Minister and all other Ministers are very much aware of the serious situation in the textile industry. I promise him that his question will be brought to their attention again.

Controlling the British Treasury as he does, will the Chief Secretary urge his right hon. Friend to direct some of the funds which he is prepared to channel into highly inefficient, overstaffed and badly-manned companies to better use in the textile industry, which is highly efficient and highly progressive?

I am not sure that many hon. Members on either side of the House would agree with that; neither do I.

asked the Chancellor of the Exchequer what steps he has taken to inform the British public of the economic and financial consequences of withdrawal from the EEC.

asked the Chancellor of the Exchequer what steps he has taken to ensure that the British public is kept fully informed of the economic and financial consequences of withdrawal from the EEC.

The wider consequences of withdrawal, including the economic effects, were set out in the White Paper "Membership of the European Community Report on Renegotiations" (Cmnd 6003). The Government have also published a popular version of the White Paper.

Will the Chancellor confirm that in the next few weeks he will be giving maximum publicity to the relevant part of the Government's White Paper, which says that there could be a significant effect on confidence, affecting also our ability to finance our balance of payments deficit and investment in this country, and, furthermore, that there could be an adverse effect on employment and the rate of inflation?

Yes, Sir. I have been doing so for many weeks. But the House must understand—whether hon. Members support or oppose Britain's remaining in the Community—that the solution of our economic problems will rest overwhelmingly with what we do in Britain, whether we are in the Community or not. There is no question but that our opportunities to improve our economy have been greatly affected in recent years by major uncertainties about both national and international developments. A decision to leave the Community would add a new dimension of uncertainty to those that already exist—a dimension which might be very protracted in time and which would be certain to damage the readiness of business men to invest and the ability of the Government to borrow abroad. For that reason such a decision would be liable, as the White Paper says, to increase both unemployment and inflation.

Does the Chancellor agree that the largest proportion of our non-oil balance of payments deficit is with the Common Market countries and that there has been a tremendous increase in that deficit since we entered the EEC? Does it not therefore follow that if we leave the Market we shall be better off in that respect?

No, Sir, unfortunately, it does not.

Will the Chancellor assure the House that he will be at the forefront of the campaign in the country for a "Yes" vote and not just sit on the sidelines? Will he also seek to persuade the Prime Minister to be an active campaigner in this matter rather than a lukewarm supporter of his own policy?

I must say that that remark comes rather oddly from a member of the Conservative Party, since we are told in today's newspapers that over half of the constituency Conservative associations have refused to participate in the campaign supported by the Opposition Front Bench.

Will my right hon. Friend issue a statement disabusing the public of the misrepresentations of the trade figures, especially the deficit, given repeatedly inside and outside the House by the Secretary of State for Trade? Will my right hon. Friend make it abundantly clear that if we leave the EEC the balance of payments problem is likely to become worse rather than better?

To adopt some words of Mr. Lytton Strachey, my hon. Friend must not seek to interpose his body between my right hon. Friend and myself.

There is no question but that our balance of payments with the Common Market has deteriorated over the past three years, though there are great differences of judgment on the question whether the causes of that deterioration were the effects of entry into the Common Market. This is an important point. The chance to make British Leyland a viable concern depends critically on increasing its share of the European market for automobiles by 25 per cent.—or from 3 per cent. to 4 per cent. of the whole. The opportunity of doing so would be enormously reduced were we to leave the Common Market.

I do not wish to comment on the most bracing bit of Socialist propaganda, namely the popular version of the White Paper which is supported by so many people, but does the Chancellor agree that many of the forecasts made in the 1971 White Paper have turned out to be untrue? Therefore, why should anyone in this country take any heed of the warnings given about the effect of coming out of the EEC?

I recall, having been a member of the Labour Government at the time when their White Paper was published, that that White Paper made it clear that there were enormous uncertainties about the effects of entry. Indeed, it is worth reminding the House that 50 economists signed a letter to The Times saying that the consequences would be advantageous. That letter was accompanied by another, signed by 50 different economists, saying that the consequences would be disadvantageous. In some cases the consequences have been less damaging than expected, and more helpful than expected. That is especially true with regard to the budgetary contribution. In other cases it has gone the other way.

Will the Chancellor now take advantage of the invitation extended to him by my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) by confirming today his own agreement with the view of the Government that we shall be in a much stronger position to face the future if we stay inside the Market than if we try to go it alone?

Yes, I have done that. I reciprocate the right hon. Gentleman's invitation by suggesting that he should have a private word with the new Leader of the Conservative Party and try to persuade her to behave on all occasions as she did on one occasion in the House. I gather from this morning's newspapers that during her visit to the Assembly yesterday she was extremely evasive when asked questions about her attitude towards the future development of the Common Market.

asked the Chancellor of the Exchequer what representations he has received from married women on the subject of separate tax assessment.

Treasury Ministers receive various inquiries and representations about the separate assessment procedures, but I am not aware of any general difficulty in this area.

Would not it be better to make a married woman responsible for completing her own tax return, rather than placing that responsibility on her husband, as is the case at the moment, thereby ensuring that the husband must know his wife's income without a similar right in the opposite direction? Would not that also mean that the woman would become responsible for any false statement on the return, and for paying tax from her own resources, whereas, at the moment, that again is the husband's responsibility? Is the present practice not out of tune with the equality of the sexes movement in 1975?

Obviously there is a move in this direction. The hon. Gentleman will be aware of the current rules for separate assessment which can be claimed by either the husband or the wife. There is likely to be an increase in this area of assessment, and this is a matter with which the Inland Revenue is prepared to deal.

Is my hon. Friend aware that the workings of the Inland Revenue often are deeply offensive to women, in terms of their taxation position, and that May Day in International Women's Year would be an appropriate time for the Treasury to undertake to look into this matter? Will my hon. Friend make sure that the Government put their own house in order before the passing of the Sex Discrimination Bill makes them do it?

My hon. Friend will be aware that there has been an investigation into these areas— an investigation which I have been conducting. The procedure for separate assessment, which perhaps is not generally understood, meets a number of her criticisms.

asked the Chancellor of the Exchequer when he next expects to meet the Finance Ministers of the European Community.

asked the Chancellor of the Exchequer when he next expects to meet the Finance Ministers of the European Community.

I would refer the hon. Members to my right hon. Friend the Paymaster-General's reply to the hon. Member for Beeston (Mr. Lester) on 23rd April—[Vol. 890, c. 323.]

Does the right hon. Gentleman agree that Britain will be better able to ride out the international economic storm if it works for closer co-operation with other members of the Community?

Yes, I agree, and I hope that the hon. Gentleman will agree that I proved this when I helped organise co-operation among the European members of the International Monetary Fund to achieve the launching of the IMF oil facility in January this year.

Is my right hon. Friend aware that practically the only time that we had a balance of payments surplus was in 1969, when we had a Labour Government and were not in the Common Market? Is he aware, further, that whereas imports of foreign cars used to be one in 10, they are now one in three, and that our car industry would be a great deal better off if we kept out these imports and left the Common Market altogether?

No doubt we would produce more for the home market if we had no foreign trade whatever.

Will the right hon. Gentleman ensure that his views about the EEC are imparted to the Scottish TUC and to trade unionists in Scotland?

Certainly I shall.

Reverting to the subject of imports of foreign cars, the right hon. Gentleman will have seen reports that Britain may be reluctant to sign the OECD trade pledge to avoid import controls. May we have an assurance that there is no reluctance in this matter?

The hon. Gentleman will know that it is most unusual for Ministers to comment on newspaper reports. I can assure him that the Government propose to sign the pledge—a decision which may come a little easier after my last Budget. But we are anxious also to see the OECD recognise the responsibility of countries with strong balance of payments positions to maintain an adequate volume of world trade by reflating their economies. The responsibility lying on countries in surplus must be borne in mind just as much as that lying on the rest of the Community.

asked the Chancellor of the Exchequer what taxation relief he plans to give the aircraft industry to help exports.

None, Sir.

Does the right hon. Gentleman agree that significant help to the aviation industry and to our balance of payments problems could be made if the Minister of Defence were to order the maritime version of the Harrier?

No, Sir.

Surely what the aircraft industry needs is not relief from taxation but relief from the inane policies of a Government who seek to poleaxe the industry and then complain when the corpse fails to grin.

If I have understood that question, the answer is "No".

asked the Chancellor of the Exchequer what progress is being made in fulfilling the objectives of his latest Budget; and whether he intends to take further corrective action in the next six months.

It would be unreasonable to expect to see evidence of progress at so early a stage.

I have no plans for further measures, but I shall of course be ready to act if the situation requires it.

In view of recent Civil Service revelations about the budgeting or otherwise of the British Leyland bailout, does the right hon. Gentleman expect to announce compensatory cuts in public expenditure in the next six months?

The hon. Gentleman should know—if he does not, his right hon. and hon. Friends will confirm it—that rescue operations are always a claim on the Contingency Fund for public expenditure, rather than identified in advance. But when the Financial Statement and Budget Report is published, at the time of the Budget, it tries to make allowances for contingencies then foreseeable. Allowance was made for some aid to British Leyland in that so-called Red Book published at the time of the Budget, but at that time the Cabinet had not taken a decision on the precise way in which to respond to the proposals in the Ryder Report. However, my right hon. Friend the Secretary of State for Industry will be informing the House separately in the near future about legislation for the provision of up to £60 million for buying shares in British Leyland and of up to £200 million for the new equity issue.

Is my right hon. Friend satisfied with the means of monitoring the effects of his Budget?

Satisfied, no. Successive Governments have found it difficult to monitor public expenditure, particularly in local government, which rose by over 8 per cent. a year during the three years that the Conservative Party was in power. We are seeking to remedy that situation, notably by the establishment of the consultative committee which I announced in my Budget speech.

Is not the continuing unprecedented weakness of sterling the clearest possible storm signal that a Budget deficit of over £9 billion is causing widespread anxiety? Would the right hon. Gentleman care to have a bet with me that he will be back here cutting public expenditure as soon after the referendum as is decently possible?

I have only once taken a bet in this House, and I am glad to say that I won it. I do not propose to take any bets on this occasion.

I should like to respond to the hon. Gentleman's point about sterling. There has been a good deal of irresponsible comment on this matter recently. I should like to emphasise now that I do not want to see a further depreciation of sterling. As I indicated in my Budget speech, a continuing downward drift in our exchange rate would further increase pressure on both domestic costs and prices. Unless and until we bring down the rate of inflation in the United Kingdom to that of our main trading partners, there will obviously continue to be a risk of strongly adverse market pressure on the rate. I do not believe that the size of the public sector borrowing requirement was behind the recent pressure on sterling. It was more the inflation rate in Britain compared with other countries.

asked the Chancellor of the Exchequer whether he is satisfied with the reaction to his recent Budget Statement.

Yes, Sir.

I am grateful. Is my right hon. Friend aware that many of us are deeply concerned at the prospect of a further increase in unemployment? Is he aware that in recent months in Bebington and Ellesmere Port, for example, over 4,000 jobs have been lost, affecting a very wide travel-to-work area? Will he assure us that he will keep this matter actively before him and take action whenever it is necessary to prevent further rises in unemployment?

I took action twice last year to ensure that demand was increased to what I regarded as a reasonable level in Britain. As a result, there will be £1,000 million more demand in the economy in the current financial year. But, as I warned the House and the country on many occasions, wage increases vastly in excess of the guidelines voluntarily laid down by the TUC were bound to increase unemployment and limit the Government's ability to deal with unemployment when it occurred. I hope that I shall have the support of my hon. Friend in pointing out to the minority of workers who have been settling well outside the contract that they are putting other people and possibly themselves out of work by doing so, and making it very difficult for the Government to take the kind of action which Governments in other countries with much lower rates of inflation—for example. Germany and the United States—are now able to take.

Will the right hon. Gentleman follow that by taking this opportunity of driving the message home to those employed in the railway industry that no extra Exchequer funds will be made available to finance inflationary settlements and that the only consequences will be either higher fares or a substantial loss of jobs, including, perhaps, the withdrawal of certain services?

It would not be right for me to comment on the details of that negotiation since it is now under arbitration. I told the House at Question Time a month ago that I had no intention of allowing or compelling the taxpayer to pay for excessive wage settlements in the public sector.

asked the Chancellor of the Exchequer what representations he has received in the last 12 months from retired persons regarding their decline in net disposable income.

My right hon. Friend has received a number of representations from retired persons concerning budgetary matters in general I myself received a deputation from the National Federation of Old-Age Pensions Associations.

Is the hon. Gentleman aware that there are literally millions of people whose main net worth is tied up in their homes and who are in a very poor liquid cash situation? In these circumstances, which will be reflected in the lives of many hon. Members on both sides of the House at some future date, will the Minister think again about the whole question of the investment income surcharge?

The hon. Gentleman will know from the statement made by my right hon. Friend the Chancellor of the Exchequer that the problem of inflation affects every person in this country. Our main energy must be in that particular direction.

Concerning old-age pensioners in general, the point made to me during conversations that I had with them was that they very much appreciated the uprating of the pension—the largest ever—and the continuing commitment to uprate later this year.

asked the Prime Minister what plans he has to meet the TUC to discuss the working of the social contract.

asked the Prime Minister whether he has now fixed a date for a further meeting with the TUC.

I have been asked to reply.

I refer the hon. Members to the reply which my right hon. Friend gave to my hon. Friend the Member for Fife, Central (Mr. Hamilton) on 24th April.

In view of what the Chancellor has just said, what maximum rate of wage increases does the right hon. Gentleman think the economy can bear over the 12 months between this May Day and the next May Day?

Broadly speaking, wage increases now must not exceed increases in prices. If we succeed in that, we shall get out of our difficulties. If not, we shall be in greater difficulties. I have made that clear over and over again, as has the TUC in its recent economic survey.

When will the TUC be given specific details of the extra unemployment which will arise from next year's public expenditure cuts in the Budget?

My colleagues and I, including the Prime Minister and the Chancellor of the Exchequer, had some very fruitful discussions with the TUC recently and we discussed the effect of the Budget.

Does my right hon. Friend agree that the TUC is doing its utmost to see that the social contract is working? Has he yet received any representations from the Opposition about their attitude to the social contract? Do they agree with it? If not, may we understand where they stand?

On the first point, I certainly agree. I think that we should bear in mind that we have had a year's transitional period from a statutory incomes policy which virtually brought the country to its knees. We always recognised that the transitional period would be extremely difficult. We have recognised that all along. But, equally, we should recognise that from now on price increases in this country, which are our own responsibility, will be due almost entirely to labour costs.

The right hon. Gentleman said that the social contract dictates that increases in pay should not exceed increases in prices. Does he take into account the increase in taxation? If so, that presumably means that if the social contract is kept there will be a reduction in the real standard of living next year. Is that the position of Her Majesty's Government?

It is exactly the position. The Chancellor made it abundantly clear ant said it in terms in his Budget speech. We have made it clear in our discussions with the TUC that if wage increases are to be claimed for increases due to the Budget—

Taxation increases.

Of course taxation increases. The right hon. Gentleman was not listening to my reply to the last supplementary question. Certainly that is the case. If wage claims are to be made for those increases, we shall not get out of our difficulties this year.

Will my right hon. Friend initiate an appraisal of the working of the social contract with a view to clarifying and strengthening its proposals, making it more precise and broadening its base, and particularly to making it a tripartite form of agreement? Will he also set up an authoritative monitoring body to which people can turn to see the relativities of prices, costs, wages, and so on?

On the last point, if we do what my hon. Friend suggested we shall come very near to a statutory policy again, and we have no intention of returning to a statutory policy.

On the first point, the need is not to change the TUC guidelines, but to secure wider adherence to them. The TUC is doing all in its power, as are individual unions, to ensure that that is done.

Do the right hon. Gentleman and the Government not yet understand that the key to the conquest of inflation is not the relationship of rising wages to rising prices, but the relationship of rising wages to rising production and productivity?

That is an extremely important factor in the whole thing. We have said that over and over again. All I am saying—and the recent report of the Price Commission confirms this—is that now that the oil price increases have worked through—at any rate, the last one will do so in the near future—inflation in this country will be our own affair. We refuse to believe that this nation cannot face that fact and face the responsibility of dealing with it without returning to an arid statutory policy. This nation can do that, and it must.

asked the Prime Minister whether he has any plans to visit Reading.

I have been asked to reply.

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

If my right hon. Friend does visit Reading I hope that he will seize the opportunity to visit the Intervention Board for Agricultural Produce and see it at work. If he does, I hope that he will review his advice to the British people in the light of the disagreeable aspect of the CAP in buying products to put into store or turn into animal feeding stuffs. I hope that my right hon. Friend will review his advice to the British people that their future lies in the Common Market.

I think that in his report to Parliament on the renegotiations my right hon. Friend was forthcoming about this matter. He said that we had not secured the radical reform of the CAP that we wanted, but we believe that we shall do that, and we have support in Europe for it. But while we have not done that, we have secured a good many of our objectives in that field.

Instead of the Prime Minister's accepting these innumerable invitations, is it not time for him to extend one to the leaders of the TUC to come to the Bar of the House and explain to the House and the country what their policies are and what they are doing?

I think that both the TUC and the CBI take every opportunity to do that.

asked the Prime Minister whether the public speech of the Secretary of State for Industry on the EEC industrial policy, made in Glasgow on 13th April, represented the policy of Her Majesty's Government.

asked the Prime Minister if the public speech of the Secretary of State for Industry, made at Glasgow on 13th April, concerning the effect of membership of the EEC on the working of his Department, represents Government policy.

I have been asked to reply.

I refer the hon. Members to the reply which my right hon. Friend gave to my hon. Friend the Member for Hemsworth (Mr. Woodall) on 17th April.

Was it not extremely inconsistent of the Secretary of State for Industry in that speech to accuse the EEC of interfering in our steel industry when he has been engaging in the most blatant obstruction of Sir Monty Finneston's attempt to establish a viable steel industry in this country?

Leaving aside the last part of the hon. Gentleman's question—

Why?

Because the main issue arises on the first part of it. The Question refers to the speech of my right hon. Friend the Secretary of State for Industry. The Government have no responsibility for speeches made on this matter by dissenting Ministers. That is what the right to dissent means. Ministers can put their point of view in the country, and if they do that the Government do not have to answer for those speeches here.

Is the right hon. Gentleman aware that in that speech the Secretary of State for Industry asked four questions about our control over North Sea oil and gas? Is he also aware that the answers to those four questions are well known, as they were given to the House on 23rd April by the Department of Energy, and they do not support the point of view of the Secretary of State for Industry on the EEC? Is it not time, therefore, that the right hon. Gentleman was relieved of his post on the grounds of both ignorance and incompetence, in having kicked through his own goal?

No, Sir. The Secretary of State for Industry is one of the most gifted and able Ministers in the Cabinet. He has claimed the right to dissent, and the right to dissent means no more and no less than the right to put a contrary point of view in the country.

With regard to the speech itself, I was not aware of what was said because I found great difficulty in getting a copy of it.

It is difficult—or it will be—for the British people to make up their minds about the effect upon industry of membership of the EEC, bearing in mind that the Government themselves took a Commission document and distorted it when they reproduced it in their White Paper.

I do not agree with that. The White Paper and the abbreviated form which has been made public give a balanced view of the case for the Government's recommendation.

I heard the hon. Gentleman's comment on the radio this morning. He referred to it as a jazzy document. It is a bright and up-to-date document which gives a balanced view of the argument for staying in Europe.

In view of the non-responsibility of the Government for speeches made by dissenting Ministers, will the right hon. Gentleman say whether he is aware that the House would be grateful for his straightforward explanation of the ludicrous situation into which the Government have got themselves?

It is not a ludicrous situation at all, but an extremely honest one. It is much better than the spectacle of a lot of former Ministers, now on the Opposition Front Bench, going back on policies which they have supported for the last few years.

Will the right hon. Gentleman say whether the statement in that speech, when the Secretary of State for Industry urged Britain's unfettered right over its own major commodity—North Sea oil—is Government policy? Does he see any contradiction between that view and the view expressed by the Prime Minister today, when he urged the world to surrender its rights over nations' commodities and get together to work for commodity stabilisation?

There is no conflict at all. The Prime Minister's statement is being made public this afternoon. I shall answer a Written Question about it today.

asked the Prime Minister whether he will pay an official visit to Cheslyn Hay.

I have been asked to reply.

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

Is the right hon. Gentleman aware that that reply will receive a mixed reception in my constituency? Will he, however, arrange for the Prime Minister to explain to my constituents, and others all over the country, exactly where the money is to come from for the British Leyland extravaganza? It would seem from reports in today's Press that there is a degree of conflict here. May we have clarification as soon as possible?

I am sorry about that supplementary question, because I had armed myself with a map, in view of the supplementary questions about the Prime Minister's visits over the past few weeks. We are getting all round the country.

I am afraid that I have forgotten the main point of the hon. Gentleman's question.

British Leyland.

The Prime Minister dealt with the financing of British Leyland in some detail in his statement and in supplementary questions last week. My right hon. Friend the Secretary of State for Industry will be dealing with the financial side of the matter in more detail during the debate on the affirmative resolution, which will be before the Whitsun Recess.

asked the Prime Minister if he will instigate an attitude survey to ascertain what meaning the social contract has to the electorate at large.

I have been asked to reply.

No, Sir. The electorate's support for the whole range of Government policies included in the social contract was confirmed in two General Elections last year.

I think that there may be some misunderstanding here. No map is required. Does my right hon. Friend agree that the advantage of a survey would be to show what sort of appreciation there is of this matter among the electorate? The NOP survey showed that 75 per cent. of those interviewed had no idea what we are up to on this matter. It might be better for the Government to undertake such a survey.

There was an NOP survey on this subject in February. I agree that there is a great need to explain the issue to the public. The Government have a responsibility, and I have always argued that the Opposition have a responsibility, which they do not accept. They have abandoned a statutory policy for incomes but they refuse to tell us their policy now. They have attacked the social contract and tried to knock it ever since the two elections last year. We have a responsibility to explain our policy and the Opposition have a responsibility to explain theirs and not to denigrate what we are doing.

As the Government refuse to publish a White Paper on what the social contract means, can the right hon. Gentleman say whether, included in that 75 per cent. of the people who do not know what it means, are most of his right hon. Friends in the Cabinet?

There is absolutely no need to publish a White Paper. The social contract is in two documents and I shall be very pleased to send a copy of them to the hon. Member, free of charge and free of VAT, so that he can read them.

Does my right hon. Friend agree that it is very important to get across to the country the fact that the social contract is meant to apply to the higher-paid professional groups just as much as to everybody else?

That is a very important point. I am glad that my hon. Friend made it.

Will the right hon. Gentleman therefore make the same point to the Secretary of State for Social Services, who suggested that the social contract does not apply to those who are not subject to collective bargaining? In the context of the doctors' dispute, she said that the matter should be judged by comparability. Is this not a receipe for leapfrogging inflation?

The word "comparability" in this respect is used in a different sense. There are two ways of using it. It can be used in pay research procedures—where it is quite specific—or in the generalised sense. The social contract rules it out completely in the generalised sense. In recent years all Governments have accepted the concept of comparability for the Civil Service.

In view of the right hon. Gentleman's earlier emphasis on the extent to which wage inflation is now causing our general inflation, and in view of his emphasis and that of the Government generally on the social contract as the means of attacking wage inflation, will he please come back to the question posed earlier by my right hon. Friend the Member for Lowestoft (Mr. Prior)? Will he make it plain that wage increases which are meant to take account of the cost of living should not compensate either for increases in direct taxation or for the impact of increases in indirect taxation? Will the right hon. Gentleman make that absolutely plain?

Yes, I make that absolutely plain. Let there be no doubt about that fact. My right hon. Friend the Chancellor made this absolutely clear, too. I hope that I have not given the impression that I am not giving a clear answer.