asked the Chancellor of the Exchequer (1) if he uses a full employment budget model to assist his decisions on the structure of his budgets; (2) what would be his best estimate of the public sector borrowing requirement if unemployment were at 1¼ million, 1 million, 750,000 and 500,000.

In framing his Budget policy my right hon. Friend looks at a wide range of forecasts and indicators, including, of course, the prospects for output and employment. I am not convinced that any satisfactory method of calculating full employment adjusted figures has been found. In any event a calculation of this kind ignores the financing implications of the actual budget balance. For these reasons I do not regard a full employment budget as a reliable indicator of the stance of economic management. Nor can I provide the estimates requested.