asked the Chancellor of the Exchequer what effect the recent purchase by the Bank of England of £500 million worth of gilt-edged stock from the banking system will have on the growth of money supply.

I assume that my hon. Friend is referring to the increase in total receipts of direct taxes. Three of the direct taxes have increased by more than 75 per cent. between 1973–74 and 1978–79, the latest year for which outturn figures are available. The information is as follows:current annual yield in the United Kingdom.

The rates of value added tax and excise duty on wines and spirits in the European Community are given in the following table:-

The gilt-edged purchase and resale facilities announced by the Bank of England on 13 February were designed to relieve the excessive pressure which had arisen in the money markets partly as a result of the heavy tax payments made at this time of the year. Their use does not imply any change in the Government's commitment to their stated target for the money supply.

asked the Chancellor of the Exchequer whether the recent purchase by the Bank of England of £500 million worth of gilt-edged stock from the banking system was made with his authority; and from where the resources for the purchase were obtained.

I confirm that the facilities announced by the Bank of England on 13 February for the sale and repurchase of gilt-edged stock from the clearing banks were extended with my right hon. Friend's authority. The issue department of the Bank of England purchased the stock, financing the transaction from the sale of short term assets from its own portfolio; no new resources were involved.