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Oral Answers To Questions

Volume 893: debated on Thursday 12 June 1975

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

National Finance

Exchange Guarantees


asked the Chancellor of the Exchequer what is the extent of the exchange guarantees currently outstanding to foreign holders of sterling.

Will the Paymaster-General confirm that it is not the Treasury's intention to give any new guarantees for sterling, as it cannot be prudent for sterling to be held at an artificial level while the Government at last search for an effective anti-inflationary policy?

There has been a considerable change in the situation since these guarantees existed and since last December, when they were abolished. We have no such intention.

Bank Of England (Governor)


asked the Chancellor of the Exchequer when he will next be meeting the Governor of the Bank of England.

I maintain close contacts with the Governor of the Bank of England, meeting him on a regular basis and also as and when circumstances require.

When the Chancellor next meets the Governor of the Bank of England will he tell him that he will not for much longer be able to rely on the revenue from Scotland's natural resources to prop up the ailing English pound? These resources will be used to make the Scottish pound one of the healthiest currencies in Europe and will cure our awful areas of deprivation. Is the right hon. Gentleman also aware that the remark he made recently in Scotland, that Scotland cannot stand on its own economic feet, was an affront and an insult to the people of my country?

I am not aware that, so far, there have been any revenues from offshore oil, although I hope they will begin with the first flows of oil from the North Sea this week.

The hon. Gentleman will be aware—and will not, I hope, dispute the fact—that Scotland has been getting a great deal more help from the United Kingdom Government than has the rest of the United Kingdom. During a worthwhile visit to Scotland last weekend I came to the conclusion that the views of the hon. Gentleman on Scotland no more represent the views of the Scottish people than do his views on the Common Market.

Will the Chancellor note that members of the official Opposition who speak for Scotland have no desire to be associated with members of the Scottish National Party who whine constantly on Scotland's behalf and fail to represent the generous spirit of the Scottish people as members of the United Kingdom.

I shall certainly bear that in mind, as I bear in mind the recent evidence of a desire by Scotland's offshore islands, in whose waters the oil is, for separation from Scotland?

In view of the strength of the Scottish economy, as described by the hon. Member for Perth and East Perthshire (Mr. Crawford), will the Chancellor make a start by withdrawing all the heavy subsidies from England on rates and taxes in Scotland, because the English economy is obviously in a terrible state?

No, Sir, I shall not. With respect, the hon. Member should not be led astray by the exuberance of the Question Time atmosphere into ignoring the serious problems of urban deprivation in the Glasgow area—probems which deserve, require and have obtained exceptional help from the United Kingdom Government.

Value Added Tax


asked the Chancellor of the Exchequer how many representations he has had asking him to review the 25 per cent. VAT on television rentals; and if he will make a statement.


asked the Chancellor of the Exchequer how many representations he has now received on the proposed rate of VAT on hired television sets.


asked the Chancellor of the Exchequer how many complaints he has received about the increased rate of 25 per cent. VAT on televisions.


asked the Chancellor of the Exchequer what representation he has received requesting him to review the 25 per cent. VAT on television rentals; and if he will make a statement.

My right hon. Friend has received over 1,200 representations about VAT on television rentals. The great majority of them have been about the application of the 25 per cent. rate to rentals under existing hiring contracts.

Does not my hon. Friend agree that the 25 per cent. value added tax on television rentals is an unfair and excessive burden, particularly for pensioners? Will he investigate alternatives, such as photographic films, together with cuts in defence expenditure, to produce the £100 million revenue required?

I understand and share the concern of my hon. Friend about the effect of these proposals on pensioners. However, we have to keep these matters in proportion. The average increase in the rental of monochrome sets will be about 35p a month. For colour sets it will be about £1·10 a month. Any concession related to pensioners or any other section of the community would, unfortunately, be open to abuse and extremely difficult to police.

Is the Minister aware that this is a punishing imposition on poorer people and that the unfairness is specially resented by those renting old television sets under contract? Scores of constituents have written to me asking why the Chancellor has not restricted this extra tax to new sets, because that at least would be regarded as a fairer approach.

There is nothing new in the impact of this change under VAT law. It was inherent in the provisions of the Finance Act 1972, which was heartily endorsed by the hon. Gentleman and his hon. Friends. I agree that there has been considerable concern about it. However, it is not necessary for retailers to pass the amount on in the case of the very oldest sets. I happen to rent an old monochrome set from the Dudley Co-operative Society, which I am glad to say has absorbed the charges.

Does my hon. Friend agree that there is a great feeling of public outrage not simply about this increase in taxation but about its retrospective nature, in that it applies to contracts taken out prior to the new operative date, and that it applies to people who unfortunately, perhaps because of financial hardship, had fallen behind in their rental payments on the operative date?

I should emphasise to my hon. Friend that there is nothing retrospective about the application of these provisions. No payments made with respect to hiring contracts before 1st May will be affected in any way. This is purely an ongoing situation. I should also draw my hon. Friend's attention to the fact that at such time as the higher rate of VAT may come down in the future it will be the renters who will benefit. The people who will have bought their sets at the higher rate will be stuck with paying for them at that rate.

The Minister says that we must keep this matter in proportion. Does he not agree that it affects 12 million people, including the poorest sections of the community? Would it not have been far fairer to cut public spending rather than put this additional burden on the elderly and those who can least afford it?

The hon. Gentleman will be well aware that the present Government have done more for the elderly than his party ever considered doing. We have arranged for pensions not only to go up in line with rises in the cost of living, but to go further and rise with general increases in the standard of living as reflected in wage rates.

My hon. Friend must understand that there is real disquiet among retirement pensioners about this matter. Will he be a little more flexible and at least say that he will discuss it with his right hon. Friend the Chancellor of the Exchequer? Perhaps it would be helpful to pensioners owning old sets if he spelt out a little clearer, here and now from the Dispatch Box, what he means by saying that the extra VAT on old sets need not be passed on by retailers.

Of course, I recognise the concern which has been expressed by my hon. Friend and by other hon. Members, but the decision whether to pass on the VAT must be a matter for the commercial judgment of the firm concerned. We must recognise, of course, that when VAT was first introduced not all rental firms increased their rentals by the amount of the tax. It is very much a question of the firm's commercial judgment whether it can absorb all or part of this increase itself or must pass it on to its customers.

Do not the points raised by hon. Members on both sides of the House reveal the folly of departing from a uniform tax, and are not the Government returning to all the ridiculous anomalies that we had with purchase tax?

If the hon. Lady is under the impression that the original VAT at a single rate was free of anomalies, I could spend a great deal of time disabusing her of that illusion, but I should be abusing the time of the House. My right hon. Friend decided, quite correctly, that it was time to reintroduce a proper system of discrimination into indirect taxation in this country, and his proposals received the approval of the House.


asked the Chancellor of the Exchequer what is his estimate of the cost to the Revenue of increasing the exemption limit for VAT from £5,000 to £7,000 so as to allow for the fall in the value of the £ sterling since the limit was originally fixed at £5,000.

To increase the VAT exemption limit to £7,000 would cost about £15 million a year.

May I ask the Financial Secretary to increase the limit? May I point out to him that many thousands of small traders are now being brought within the complexities of the VAT regulations? Does he agree that, with inflation, now is the time to raise the limit? It must be increased at some time. Surely this is the time to do so.

I do not necessarily follow the hon. Gentleman in all of his inferences. We have had no recent representations from any trade bodies, and only a few suggestions from individuals, that the limit be raised.

Does not the hon. Gentleman agree that this figure is quite unrealistic in present circumstances and that many individual self-employed shopkeepers will take up so much time in filling in these forms that they will be unable to get on with their business?

I ought to make it clear to the hon. Gentleman that registration is not without certain benefits, as it enables a firm that is registered to reclaim the input tax deduction. I recognise that there are costs and benefits which run both ways in this situation. It would also not be entirely to the advantage of firms already registered to be relieved of registration, because they would also have to pay tax on their existing stocks and assets.


asked the Chancellor of the Exchequer whether he will now seek to raise the point at which firms have to register for VAT.

Does my hon. Friend agree that by far the greater proportion of the VAT revenue is obtained from large concerns and that the cost of collecting that proportion is comparatively low? Does he also agree that as inflation attracts more and more small concerns into the VAT net the administrative cost and burden of VAT is massively increased with a correspondingly small increase in revenue?

I am seized of the general points which my hon. Friend makes, but I cannot usefully add anything to what I said in reply to an earlier Question. The effect of registration is not clear-cut, one way or the other. There are benefits to small traders to offset the administrative costs that registration brings for them.

As we might have to begin to harmonise VAT with our partners in the Common Market, will the Minister tell us the starting points for VAT in some of the Common Market countries?

As far as I am aware, the highest registration level in any Common Market country is £1,800 a year, and discussions—which are by no means binding on us, and no decisions have yet been taken—are centring around a possible figure of £1,600 a year.


asked the Chancellor of the Exchequer why VAT at 25 per cent. is levied on labour charges for repairing washing machines.

It is desirable that, in general, the 25 per cent. rate of VAT should apply both to the servicing of, and to spare parts for, goods which are themselves chargeable at 25 per cent., so as to reduce anomalies and to remove incentives to distortion of trade.

Does the Financial Secretary agree that literally millions of wives, mothers and working women regard a washing machine as a necessity and not as a luxury? Will he reduce this rate of tax from 25 per cent. to 8 per cent. and certainly give that reduction priority over any reduction in the VAT on television rentals?

I welcome this opportunity to make clear yet again that we have never suggested that the 25 per cent. rate was being applied solely to luxuries. My right hon. Friend the Chancellor made it clear that so many things that used to be considered luxuries are no longer considered so—items like television sets and washing machines. It was inevitable, if he was to raise the revenue he thought necessary in the public interest, that certain things which are to be found in every home and are not considered luxuries would have to carry the higher rate of tax.

Is the Financial Secretary aware that the vast majority of washing machines manufactured in the United Kingdom are made in Wales—at Llandudno Junction and Merthyr Tydfil, and that these are in areas of high unemployment, in special development areas? In the light of that, will he reconsider the 25 per cent. level of VAT on washing machines, so that there can be a boost for this industry and for these areas?

I accept the general proposition in the hon. Gentleman's remarks, but my right hon. Friend made it quite clear in his Budget Statement that the impact on his proposals upon employment was one which had caused him the greatest concern. We estimate that over every section of industry affected by VAT the total effect on employment of all the measures will be no more than about 20,000 jobs, which, regrettable as it is, means considerably less for the washing machine industry alone.

Does my hon. Friend agree that, whatever the grievance about VAT, this tax is part and parcel of the price we pay for entering the Common Market? Does he further agree that, whatever the lamentations on this subject now, there will be even more lamentations as and when the tax is harmonised with the rest of Europe?

My right hon. Friend's Budget proposals were directed solely to the economic position of this country, and were—as he was the first to acknowledge—a regrettable but necessary result of the inflation we found here a home.


asked the Chancellor of the Exchequer whether he will take steps to ensure that traders' VAT records can be reconciled with their financial accounts.

It is part of the duty of a Customs and Excise officer, when he visits a trader for VAT purposes, to verify that VAT records and financial accounts are consistent.

Does the Financial Secretary agree that the job of the Chancellor is to collect taxes fairly, with the smallest number of snoopers and the least inconvenience to the taxpayer? Does he agree that this could be achieved if he would call off the stupid civil warfare between the Inland Revenue, on the one hand, and the Customs and Excise, on the other, which prevents the reconciliation of trading accounts, which are sent to the Inland Revenue, with the VAT records, which go to the Customs and Excise?

It is news to me that there is warfare or anything but total harmony between the officials of the Customs and Excise and the Inland Revenue. Certainly no representations have been made to me on that account. It is worth emphasising that the Customs and Excise does not require VAT records and accounts to be kept in a special form. This is entirely a matter for the retailer. There is a need to police reconciliation between cash accounts and what has been charged for supplies of goods and services.

£ Sterling (Value)


asked the Chancellor of the Exchequer what is now the value of £1 sterling expressed in terms of the value of £1 sterling on 28th February 1974.


asked the Chancellor of the Exchequer what is the purchasing power of the £1 sterling at the latest available date, compared with 1st March 1974.

Taking the internal purchasing power of the pound as 100p in February 1974, its value in April 1975, the latest date available, is estimated to be '79p. This estimate is based on the changes in the General Index of Retail Prices.

Is the Minister aware that that really frightening answer is a direct result of 16 wasted months of Socialism? Will he tell his right hon. Friends the Chancellor of the Exchequer and the Prime Minister that their policies, if allowed to continue as they have in the last 16 months, are in danger of turning this country into a banana republic without bananas? Will he now give an assurance that the Government have decided to pluck up courage, ignore the rantings of the Tribune Group, and start fighting inflation, before that 79p becomes 50p by the end of the year?

The hon. Gentleman will be well aware of the proposals that my right hon. Friend brought forward in his last Budget for combating inflation. The hon. Gentleman will also no doubt be well aware of the extremely constructive proposals that have recently emanated from the TUC in this direction, many of them put forward by people who might have a great deal of sympathy with the objectives of the Tribune Group.

Will my hon. Friend the Minister say how many Opposition Members have offered to exchange their £1 notes for 79p?

Will the Financial Secretary assure me that the reason why the Chancellor has not answered this Question is that the figure is really so appalling? Does he agree that to reduce the rate of inflation would involve a cut in Government expenditure, which would involve the abandonment of the Community Land Bill and, indeed, the Industry Bill?

The reason I am answering this Question is that it always falls to the junior Minister at the Treasury to answer Questions on the purchasing power of the pound, under both administrations.

As for cutting public expenditure, the hon. Gentleman will be well aware of my right hon. Friend's proposals in that respect, both for this year and for next year. Therefore, I hope that, arising out of his supplementary question, the hon. Gentleman will be able to recognise the difference between public expenditure which is merely connected with the acquisition of assets and that which has an effect on demand for resources.

Has the Treasury, in contemplating the exchanges this week, been encouraged by the immediate boost given to confidence in sterling by the outcome of the referendum last week—as the electorate were deceived by being promised?

I am glad to be able to reassure the right hon. Gentleman that the exchanges today are quite stable.



asked the Chancellor of the Exchequer what is his estimate of the current rate of inflation; and what action he is taking designed to reduce it.


asked the Chancellor of the Exchequer what is the current rate of inflation.


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


asked the Chancellor of the Exchequer what his estimate is of the current rate of inflation; and what action he is taking to reduce it.

The increase in the retail prices index in the 12 months to April was 21·7 per cent. I explained in my Budget Statement the damage which would be caused if inflation continued at this rate.

In view of this runaway inflation, is it not high time, as some of us have been pressing, that the Government acted with a sense of urgency? If the Government now bring forward counter-inflation measures that are tough and relevant, including an effective voluntary incomes policy, is the Chancellor aware that, whatever view may be taken by some of his hon. Friends below the Gangway, he will be supported by a large number of people, of all parties and none, inside and outside the House?

Let me say seriously, first, that I recognise that inflation is by far the most serious and urgent problem which the Government and the people of this country have to face. I hope that the Government will have the support of all men of good will, in all parties and none, in any measures that they find necessary to tackle it. In reply to the earlier part of the supplementary question, I refer the hon. Gentleman and the noisy gaggle on the third bench above the Gangway to the remarks contained in the Financial Times editorial this morning:

"The temptation to search for some more immediate and dramatic gesture … could now prove a dangerous one. … The Chancellor's belief that the rate of inflation is now nearing its peak has a good deal of evidence to support it."
I ask the House to recognise that the attack on inflation is not one for the Government alone. It requires the sup- port of both sides of industry and, inevitably, to obtain support for action on the scale and of the severity required takes some time. The Government are determined to reach conclusions on this matter in the coming weeks with a view to halving the rate of inflation within the next 12 months.

Does my right hon. Friend understand that there are still many hon. Members on the Government side of the House who believe that we were sent here with a mandate not to interfere with the free collective bargaining process? Among the reasons for the present high rate of inflation are the relaxation of price controls and the relaxation on business rents. If my right hon. Friend wants to conquer the problem, he has to look in the direction of import controls and matters of that kind—if the Common Market countries let him. Therein lies his answer, and that is the policy he should be pursuing.

I understand the points made by my hon. Friend—and that is why I do not agree with him. My hon. Friend must recognise that the TUC, well-nigh unanimously, last year committed itself to guidelines for collective bargaining which it now recognises have not been fully upheld. The TUC is searching for more stringent guidelines for the next wage round and for ways of ensuring that they are complied with. I hope that the TUC will have the support of my hon. Friend in the conclusions which it seeks to reach on this matter.

Will the Chancellor now answer the original Question, which is being asked by the whole country? When will this rabble of a coalition Labour Government start to govern—before or after national bankruptcy?

From the fierceness of some of the supplementary questions asked from the Opposition benches, I have the impression that the Opposition are fully aware that the Government are governing but do not like some of the things that the Government are doing.

If we are discussing inflation—I saw the hon. Member for Oswestry (Mr. Biffen) nod his head when I made that last remark and I hope he will nod his head again to my next remark—it is the view of a large section of the Conservative Party that the scale of inflation from which we are now suffering is due to the total failure of the previous Conservative administration to control the money supply.

Is my right hon. Friend aware that several of the largest firms in the country do not attribute inflation to wages and salaries but draw our attention to the high cost of oil? What is my right hon. Friend doing about that?

Last year the fivefold increase in the cost of oil was one of the major causes of inflation. The increased cost of our imports, not only oil but sugar, commodities and many food stuffs, was a major factor. The major cause of inflation this year is excessive wage settlements, and I think that that is the general view of both sides of industry. On the question of what I am doing to bring down the cost of oil, I assure my hon. Friend that the Government are co-operating with all other consuming Governments in negotiations with the oil producers in the hope of producing greater price stability. My hon. Friend will recognise that the level of oil prices cannot be determined by the Government.

Does the Chancellor agree that the present rate of inflation is dangerous and, if it continues, could be disastrous? Is he planning new measures to come into operation over the next few months? To avoid uncertainty, are the Government still absolutely opposed to any form of statutory wage constraint?

Yes, Sir, I made clear only the other day in Glasgow that the Government oppose legislative interference in the bargaining process, and I gather that the great majority of right hon. and hon. Members on the Opposition benches agree with us on that matter. We are engaged in continuous discussions with the leaders of the TUC to try to achieve a satisfactory arrangement for collective bargaining during the next wage round. The Government, like other public authorities, also have responsibilities as an employer, which they intend to carry out.

Does the Chancellor agree that if the present under-utilised manufacturing capacity were henceforth utilised, it would reduce labour costs and would be the biggest contributory factor to reducing the overall level of inflation? How does that square with the answer that my right hon. Friend has just given?

My hon. Friend will be aware that no one wishes more than I to be able to take the measures which I know to be available to achieve fuller use of capacity in this country but, so long as wage settlements run at their present rate and produce inflation at its present rate, those measures would greatly aggravate our problems both on the side of inflation and on the side of balance of payments. So long as we have to finance 5 per cent. of our spending by borrowing from foreigners, my hon. Friend cannot ignore the attitude which foreigners take on this problem. I hope that I shall have my hon. Friend's support in ensuring that we get the rate of inflation down to a level which will enable us to take our own decisions without regard to considerations of that kind.

Does the Chancellor recognise that if we face this matter with the seriousness it deserves, he can no longer go on blaming the present inflationary situation on the policies of the previous Conservative Government? As he has acknowledged, the major cause of the high rate of inflation now is the extent to which wage settlements have roared ahead—and, we would argue, have been encouraged to roar ahead—because of some provisions of the social contract? Will the Chancellor further accept that the nation is thoroughly alarmed and disturbed by the apparent failure of the Government to come to grips with this problem? Does he realise that the nation would be willing to support the action which is necessary to tackle inflation as our major and overriding problem? Will he echo the words used by the Paymaster-General yesterday when he said there was an overwhelming need for urgency in bringing a better balance both in our overseas payments and in our Government accounting? That is the urgent action which the country awaits.

Personally I do not disagree with very much of what the right hon. and learned Gentleman said, but he will be well aware that a very large number of his right hon. and hon. Friends—one of them sitting beside him at this moment—take the view that the present level of wage settlements would have been impossible without the increase in the money supply which was organised by the last Conservative Government. I remember the hon. Member for St. Ives (Mr. Nott) making this very point himself just before he accepted appointment in the present Shadow Cabinet. If the right hon. and learned Gentleman is to be taken seriously he must ensure that the leader of his party, whom we are sorry but not surprised to see absent again from the Opposition Front Bench, does not make speeches like the one she made last night, in which she recommitted the Conservative Party to introduce a tax credits system which would add over £2 billion to the public sector borrowing requirement in 1975 according to figures published by the last Conservative Chancellor.

The Chancellor is well aware that the first stage towards a tax credits scheme is nothing more than the child endowment proposition which the Chancellor is putting forward as his own policy. Since the right hon. Gentleman referred to me, is he aware that many of my right hon. and hon. Friends and myself believe that the greatest single obstacle to a counter-inflation policy at the present time is the Prime Miinster, who seems incapable of doing anything but trimming on every single issue?

I regret to say that I am not surprised that the hon. Gentleman chose to try to defend his rather mixed record in this matter by attacking my right hon. Friend the Prime Minister, but it remain a fact that the leader of his party committed herself to introduce a tax credits scheme as soon as the Conservative Party returned to power. Fortunately, we know that that event is likely to be very long delayed.

Confederation Of British Industry


asked the Chancellor of the Exchequer when he next intends to meet the CBI.

I meet representatives of bath the CBI and the TUC regularly at NEDC. The next meeting of the council is on 17th June. I also meet representatives of these organisations separately on occasion, but have no immediate plans to do so.

When my right hon. Friend next meets the CBI will he discuss with it the evidence put forward in a recent article in the Economic Journal, to the effect that British manufacturing companies pay very little tax? Is he aware that in 1973 British manufacturing companies apparently paid only 14 per cent. tax on their profits, and, in view of this, will he inquire of the CBI why these companies continually complain that they have no incentive to invest, when this low rate of tax is due to their ability to defer tax with investment?

I shall certainly read the article to which my hon. Friend has referred, and if it seems suitable to do so I shall draw it to the attention of the CBI. However, the tax burden which has fallen on British manufacturing industry in recent years has been very substantial. This was one reason why I arranged for tax relief on stock appreciation, both in the last Finance Bill and in the one now passing through Committee.

When the Chancellor next meets the CBI will he confess to it that he now discerns a connection between the appalling rate of increase of inflation since he became Chancellor and the appalling increase in the net borrowing requirement since he became Chancellor, which now works out at 50p per week per man, woman, and child?

I think that there is a connection between the two, but not in the direction that the hon. Member suggests. The fact is that the very high borrowing requirement is largely a consequence of inflation, and has not been its cause.

Is my right hon. Friend yet in a position to say anything to industry about budgetary proposals in respect of the ferrous foundry industry?

There is a wide welcome in the ferrous foundry industry and in the industry served by it for the scheme of investment assistance which I announced in my last Budget.

When the Chancellor meets the CBI will he take the opportunity of making clear the Government's overriding determination to fight inflation, of spelling out the implications of that policy, of making it clear that a continued link between price increases and wage increases will pave the way to further inflation, and of securing his own understanding of the fact that a large public sector deficit, now increased by £20 billion over two years, is one of the most significant causes of inflation, that it must be reduced, that the consequences of that must be carried through in cash limits on Government spending and in the acceptance by the Government of their own role as a major employer in the British economy?

I do not think the CBI has any doubt about the priority which I give to the struggle against inflation—but if I may attempt to straighten out the right hon. and learned Gentleman in his rather confused supplementary question, he must recognise that a large public sector deficit, such as we now have, is damaging to the economy in many respects. I am seeking to reduce that deficit. It is not primarily damaging because of its effect on inflation. West Germany currently has a public sector deficit—and, indeed, is planning for a deficit as large as we have in Britain—yet its rate of inflation is scarcely one third as high.

National Insurance Contributions


asked the Chancellor if the Exchequer what representations he has received from self-employed people requesting that national insurance contributions be made subject to tax relief.

We have received a considerable number of representations on this matter. The suggestion was the subject of a Finance Bill amendment discussed by the House on 10th June, and I refer the hon. Gentleman to what my hon. Friend the Minister of State said in reply to that debate.

Has the Minister seen reports in today's Press that yesterday in Belgium there took place the first national strike of the self-employed—a strike that caused the interruption of many important services? Is he not slightly afraid that if the Government go on turning down reasonable requests from the self-employed, such as the one to which the Question refers, the time may not be far ahead when the same thing will happen in this country?

I have not seen the reports to which the hon. Gentleman refers. There have been many debates on the subject in this House. On 26th February my right hon. Friend the Secretary of State for Social Services indicated that there was to be an inquiry into certain aspects of this matter, which would include tax aspects. I hope that the hon. Gentleman will stand on that for the moment.

Now that all contributions to the National Insurance Fund are earnings-related, does the Minister accept that there is a situation different from that which existed in 1965, when tax relief on such contributions was withrawn? Is there any chance, in this new situation, of the Chancellor's reviewing the desirability of tax relief on all such contributions?

It is not our view that there should be any change in the tax position from what now exists. However, the tax aspects of the matter can be looked at in the context of the inquiry announced by my right hon. Friend.

Borrowing Requirement


asked the Chancellor of the Exchequer what is his latest estimate for the borrowing requirement for 1975–76.


asked the Chancellor of the Exchequer what change there has been in the public sector borrowing requirement since his Budget Statement.

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

Is the Minister aware that the borrowing requirement is thought to be at the heart of our economic problem in relation both to inflation and to the worsening balance of trade? Will he deny implications that the borrowing requirement has risen even in the two months since the Budget? It he were able to make such a statement, it would have a good effect on confidence in our currency.

If the hon. Gentleman is referring to an article in The Times Business News the other day, my view is that one cannot base on two months' figures the implications which the article made. As for the borrowing requirement being at the centre of our problems, my right hon. Friend has placed great emphasis on the fact that it should be brought down. There are many other aspects of our problems to be considered.

Will the Minister give an assurance that if the public sector borrowing requirement goes above the estimate which the Chancellor originally put forward in his Budget estimate—whether as a result of changes in Government policies or inflation through wage settlements beyond the assumptions made when the borrowing requirements were drawn up—the Chancellor will bring before the House proposals to cut back public expenditure borrowing requirements to the original estimate?

My right hon. Friend has already indicated his intentions in respect of public expenditure in the past year and the cuts which he intends to make in the increase in the rate of public expenditure. He has also indicated on many occasions, as, indeed, all Chancellors do, that from time to time he will take whatever measures are required.

Will the Minister refute the suggestion made by his right hon. Friend that the public sector deficit in Germany is the same as in this country, since in Germany it is a much smaller proportion of the gross national product than is the case in the United Kingdom? What steps do the Government intend to take to deal with the juggernaut of public service expenditure here, arising largely from the so-called reorganisation of local government and the National Health Service under the Conservative Government? What do the Government intend to do about that expenditure, whose main components are wages and salaries?

There has been an increase in the borrowing requirement in Germany. On the question of local government expenditure, the hon. Gentleman knows of the existence of the council, under the chairmanship of the Secretary of State for the Environment, which has been set up to discuss these matters.

Women In Public Life


asked the Prime Minister what actions Her Majesty's Government propose in response to Commonwealth Conference discussions on the role of women in public affairs.


asked the Prime Minister how, following discussions at the Commonwealth Heads of State Conference, Her Majesty's Government propose to provide for the full participation of women in our national and international affairs.


asked the Prime Minister whether he will make a statement on the role of women in the political, economic, social and cultural life of the United Kingdom following the discussions at the Commonwealth Conference in Jamaica.


asked the Prime Minister if, following the Commonwealth Heads of State Conference communiqué, he will make a statement on the role of women in public affairs.

This Government are fully committed to the objective of securing equal status and opportunities for women in all aspects of our national life. A comprehensive Sex Discrimination Bill—which makes sex discrimination unlawful in employment, education and in the provision of the general run of goods, facilities and services to the public—is now before the House.

Bearing in mind the words of Mrs. Burnham, of Guyana, that the best way to achieve women's liberation is through Socialism, will the Prime Minister explain the sudden reduction in the role of women in the Ministry of Overseas Development, following the replacement of the only Member of Parliament in Scotland who is both a Socialist and a woman by a successor who is neither?

I have not found the matter confusing. With regard to the Commonwealth Conference, a leading part in this question has been taken not only by Mrs. Burnham but by her husband Mr. Forbes Burnham, the Prime Minister of Guyana. On the other issue raised by my hon. Friend, there was no discussion of these matters at the Commonwealth Conference in Jamaica.

May I invite the Prime Minister to join me down memory lane by recalling the occasion when he attended a most enthusiastic rally to mark 50 years of votes for women? Has he noticed that there are only 27 women Members of Parliament out of a total of 635 Members in this House? Does he agree that that is not a particularly attractive ratio? Has he noticed that my party does best, because we have two women Members of Parliament out of 11 Members in our ranks, while the Liberals, the Ulster Unionists and, I regret to say, Plaid Cymru have not one woman Member of Parliament to brighten up their benches? If we consider Scotland, we find that the Labour and Tory Parties have only one woman Member each. Should not the Prime Minister—

Let me correct the hon. Lady. The ratio, although small, is highly attractive. I recall that last week the hon. Lady asked me to go to Stornoway with her, and this week she wants me to join her. As for the celebrations of 50 years' votes for women, I did join the function that the hon. Lady referred to, and I also took part in a reception marking International Women's Year. I believe the hon. Lady made a valid point. I believe that all the major parties can be subjected to the criticism—it is a fair one—that we do not have more women Members of Parliament, particularly in the more winnable seats. That is no derogation of the high quality of many Members in all parts of the House, not least in my own party.

Will my right hon. Friend accept that many of us would welcome the appointment of a woman and a Socialist as chairman of the commission which has recently been announced to deal with discrimination against women? Will he ensure that the commission not only has the legal armoury that lies behind the Sex Discrimination Bill but has adequate funds and staff to deal with the task that lies before it?

I know that that is the intention of my right hon. Friend the Home Secretary. As my hon. Friend knows, it is widely conceded that the Sex Discrimination Bill, which has now been reported from Committee, is the most comprehensive legislation of its kind in the democratic world. It is the intention of my right hon. Friend and his colleagues at the Home Office to ensure that it is a question not only of legislation but of a follow-up by the administration.

What did the Prime Minister mean when he referred in his first answer to "comprehensive sex?"

The word "comprehensive" governed the Bill, not the sex. I referred to a comprehensive Sex Discrimination Bill. I hope that that is clear to the right hon. Gentleman. In case he was raising wider questions, I think that these are matters for consenting adults in private, for which the Government have no responsibility.

I welcome the fact that in a number of Commonwealth countries women have obtained high, if not the highest, positions in their political systems, but does my right hon. Friend share my concern that during International Women's Year the prospect of there being a woman Prime Minister in Britain is no nearer now than it was six months ago?

I do not agree with my hon. Friend in this matter. There are more women members in this Government—as, indeed, there were in previous Governments which I headed—than was the practice under Governments of other parties. I believe that the present Cabinet is the first to have two women Cabinet members. I look forward to more.

As some people in public affairs are capable of cutting through the trivia to the real problems of the nation, may I, as a woman in public affairs, ask the Prime Minister what action he proposes to take to deal with the main problem facing the nation—that of inflation?

I agree with the distinction made by the right hon. Lady, but when she spoke for 50 minutes in the debate on economic affairs she did not cut through any trivia. She did not get to the real problems, or offer any real solutions. Nor, I understand, did she take advantage of the 45 minutes during which my right hon. Friend the Chancellor answered Questions today to put any relevant questions. I refer her to the answers given by the Chancellor of the Exchequer this afternoon.

The Prime Minister can talk out Question Time but he cannot talk out the crisis facing the nation. He talked out the economics debate. How much longer is he going to dodge the real issue?

Had the right hon. Lady been listening to my right hon. Friend she would have heard what he said, especially about our discussions with the TUC as well as with the CBI. I would have hoped that she would have reports on the matter. I am surprised that she has not warmly welcomed the initiative taken by the TUC this week. I am surprised that she has not welcomed the initiative taken by Jack Jones, and the warm follow-up which is being given to these matters by the Government. The right hon. Lady has said that she is opposed to a statutory pay policy. If she has any ideas apart from those which we are following—which she condemns—she should let the House know what they are.

Prime Minister (Official Engagements)


asked the Prime Minister if he will list his official engagements on the 12th June.

In addition to a meeting of the Cabinet and a number of official meetings with my colleagues and others, I took the opportunity of the President of Romania's stop in London to entertain Mr. Ceausescu to breakfast at Chequers this morning.

Will the Prime Minister take time to study the newspaper reports of yesterday's meeting of the TUC economic committee, which gave an enthusiastic welcome to Jack Jones's proposals to restrict wage increases next year? In view of that, and the other indications of the trade unions who want to pursue reasonable wage policies, will the Prime Minister and the Chancellor take an early initiative in this matter?

Yes, Sir. I referred to that matter in answer to a question by the right hon. Lady.

My hon. Friend will be aware that in the speech which I made to the CBI just before the recess I welcomed the initiative taken by Mr. Jones on the question of flat rates, because many of these problems are due to differentials—people maintaining percentage differentials which increase cash differentials. I said that these initiatives were well worth studying. My hon. Friend knows that that and other proposals which I have put to both sides of industry are being pursued by the Government. The House knows from its experience last year and from the wise words of the right hon. Lady the Leader of the Opposition that this problem must be solved by consent and agreement. That is what we are pursuing. It might help if what is being achieved by the trade union movement were sometimes praised by the Opposition, and not always criticised.

I believe that on 8th June the Secretary of State for the Environment said that the country was on a suicide course. Regrettably, judging by events, that seems to be true. Does the Prime Minister agree with that statement? When will he take action to get us off that course?

I described the action taken before and since the speech made by my right hon. Friend—action which we are continuing to take. My right hon. Friend warned everyone concerned with wage claims to ensure that as far as possible there was full compliance with the guidelines. We now know that the TUC is taking new initiatives in these matters, which are of great importance. A little encouragement from the Opposition benches might help.

Does the Prime Minister agree that one of his official engagements today should be to meet the new Secretary of State for Industry, to start thinking about those areas of British industry in which the Government might invest, through the National Enterprise Board, to get Britain ahead again—rather than just to preserve existing employment—to promote change, and to get us into the growth areas, the winning areas for Britain?

My hon. Friend knows that that is one of the major purposes of the Industry Bill and of the National Enterprise Board. Last year I insisted that we made more rapid progress than was then being made with both the drafting of the White Paper and the introduction of the Bill, so that the Bill could be put before the House and passed into law this Session. I regard it as essential in relation to investment, to the point mentioned by my right hon. Friend, and to the future industrial development of this country. I have made that clear on many occasions. My hon. Friend can rest assured that I shall take every measure posible and exert all the pressure possible to ensure that the Industry Bill, and all that it means in terms of the National Enterprise Board, becomes a reality at the earliest possible moment. I look to my hon. Friends and hon. Members in various parts of the House to help in getting it through.

Although this is not on the Prime Minister's list of engagements for today, has he any plans which he might formulate today to meet either the board of British Rail or the National Union of Railwaymen? If so, what advice will he give them?

The right hon. Gentleman is fair to put this question. He will understand that the Government are naturally watching this matter very carefully and are greatly concerned about it. Talks have been going on between the two sides. This is a matter of the highest importance. Perhaps the right hon. Gentleman would not press me immediately about any engagements—I am certainly not making any today—in this matter.

World Food Production


asked the Prime Minister how Her Majesty's Government will support the view of the Heads of State Conference in Jamaica on the need to increase world food production.


asked the Prime Minister what actions the Government propose to give effect to the Commonwealth Conference view of the need to increase world food production.

As I informed other Heads of Government in Kingston, we have adopted an aid strategy geared to the poorest countries and to rural development. We intend to intensify our efforts in these directions.

Does my right hon. Friend agree that adverse movements in the terms of trade for primary products often have a disastrous effect on the economies of developing countries? Does he agree that these are best countered by a framework of commodity price indexing? Will he let the House know his thoughts on this matter? Will he tell the House whether the Government will have anything substantial to contribute in that respect to the meeting of the Commonwealth Finance Ministers in August and to the special session of the United Nations General Assembly in September?

Yes. My hon. Friend will be aware that the point he raised was at the centre of my proposals on commodities, including food and other primary commodities—namely, that boom and bust in commodity prices has the worst possible effects on developing countries—and our determination, with other countries, was to obtain some redress or reversal of the balance between the developing and the developed countries in these matters. That was the purpose of my proposal. It was widely welcomed by the Commonwealth and has been welcomed by many other countries since then.

Indexing is a highly technical and difficult matter. I said in that speech that it must be studied. I spelled out some of the practical difficulties. If my hon. Friend has not read my speech I shall be glad to send him a copy, as it might weary the House if I went into all the technicalities of indexation while answering this question.

The working party that was set up was due to meet this week and is expected to produce its report in time for the Ministers who attend the special session of the United Nations in September. It will also be available to the Commonwealth Finance Ministers because they meet in the same week in September.

Has consideration been given to the possibility of a formal approach by the Commonwealth to the member nations of the OPEC group, many of the richest of whom are extremely keen to develop food production but have been finding difficulty in identifying suitable schemes and, when they do so, in finding technicians for development?

I think that the idea is right but that the machinery proposed by the hon. Gentleman—that the Commonwealth as a whole should meet the OPEC countries for this purpose—is not necessarily right. A number of OPEC countries have, with considerable generosity, approached developing countries in Africa, Asia and elsewhere and given them considerable financial and higher technical assistance. We are all concerned over this matter.

I welcome these developments, but I am not sure that it should be a kind of bilateral Commonwealth-OPEC approach.

Does the Prime Minister accept that hon. Members on both sides of the House welcome the increase in food production to feed a hungry world? What is the Government's attitude towards the Common Market policy of encouraging people to discontinue horticultural production rather than providing money to allow them to continue?

While not wanting to take the House back into those exciting weeks which ended last Thursday, I should have thought the opposite was the case. It may be true with regard to individual products. But the hon. Gentleman will know that the widening up of the developing world to the markets of Europe, and, indeed, more widely, is essential to what I know he has in mind.

Does the Prime Minister agree that it is not only the production but the distribution of food which is important? What proposals will the Government be making to other members of the European Community in future to prevent the immoral accumulation of surpluses deliberately taken off the market?

I certainly agree about distribution. I think that distribution costs are important. This ties up with what the Prime Minister of Jamaica strongly pressed on me. There have been recent inquiries in this country, for example, about the distribution of fruit and other produce from the Caribbean, to see whether the costs were excessive. That is the line on which we should be working at this time. My hon. Friend will know that we recently had a conference in this country, on our initiative—the Commonwealth Ministerial Meeting on food production and rural development, at which these questions were considered.

Regarding food surpluses in the Common Market, my hon. Friend will know that as a result of the negotiations undertaken by my right hon. Friend the Minister of Agriculture, a number of steps, such as tighter price and cost control, are likely to lead to a much lower accumulation of surpluses in future. We ourselves are not involved in storage. We have secured other means of dealing with surpluses. My hon. Friend will also know that when a mountain developed, since the renegotiations began, it was the British Government who insisted that, instead of selling it off to the Soviet Union, as was done by the previous Government, it should be made available to pensioners in Britain at specially subsidised cheap prices.