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National Finance

Volume 35: debated on Thursday 27 January 1983

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

Falklands Campaign (Costs)

1.

asked the Chancellor of the Exchequer what has been the total so far of advances from the Contingencies Fund in respect of expenditure by Departments related to the Falklands war and subsequent costs.

As I told the hon. Member on 23 December, £12 million. The amounts charged to the Contingency Reserve are also set out in my answer of 23 December to the hon. Gentleman.

That is £12 million compared with the £15 million that would be needed to solve the water workers' claim. How does it compare with the £37 million which is the total expenditure of the British Council and the £38 million which is our total aid to India? How does the expenditure on the Falklands compare with the £500 million that is needed urgently for rail investment? Should we not get these matters into prospective?

The hon. Gentleman knows that the figures to which he has referred for other items of expenditure have nothing to do with his question, which is a limited one about advances from the Contingencies Fund. As he knows, that is a special form of financing, which is required to provide money in advance of parliamentary approval for a portion of the expenditure on the Falkland Islands.

What is the total amount of public expenditure that has been incurred in answering all the questions that have been asked by the hon. Member for West Lothian (Mr. Dalyell) for weeks and weeks on this subject?

I fear that that is a level of expenditure which is so complex in its composition as to require a certain amount of research to discover.

Employment Creation

2.

asked the Chancellor of the Exchequer whether he considers that his 1982 Budget has achieved the encouragement to employment which he anticipated.

The Government's consistent policy, maintained in my last Budget, is to reduce inflation and so create the conditions for sustainable recovery, and hence better employment opportunities. The prospect now is for further modest recovery. The outlook for employment can be further improved by continued reduction of costs and further moderation in pay settlements.

When does my right hon. and learned Friend expect unemployment to start falling—this year, next year or 1985?

Even in answer to my hon. Friend I do not intend to break the practice of successive Governments of not forecasting trends of unemployment. By laying the foundations, to which I have referred, for continued success against inflation we are likely to make the speediest progress.

Has the Chancellor read the recommendations of the Confederation of British Industry for his Budget? Will he now take the measures that are needed to contain the inflationary effects of the fall in the pound, so that industry can take advantage of the recovery in competitiveness without the costs being passed to the consumer?

I have, of course, studied the CBI's recommendations and agree with the implications of the hon. Gentleman's question. The fall in the pound will help to improve competitiveness only if it is combined with still lower pay settlements and still greater improvement in productivity.

Does my right hon. and learned Friend agree that the fall in the value of oil represents a very important stimulus to British manufacturing industry, particularly in the west midlands? Will he undertake that the Government will make no attempt whatever to hold up the price of oil?

My hon. Friend knows that this country is a price taker and not a price maker in the oil markets. It is right that although the modest fall in the price of oil represents both gains and losses for this country, the overall effect is likely to be beneficial. It would, however, be in no one's interest if the price of oil were to fall too far too fast.

The Chancellor must recall that when he presented his last Budget he described it as a Budget for industry, for jobs and for people. Is he aware that since he presented that Budget unemployment has increased by 270,000 and manufacturing output has fallen by 1½ per cent.? Does he not agree that his Budget judgment was wholly wrong? What does he intend to do to have some impact on the problem of unemployment and falling output?

I remind the right hon. Gentleman that the growth in output in the United Kingdom since the spring of 1981—[HON. MEMBERS: "1982".]—1982 is a little over 1 per cent. In Japan there was a rise of 3 per cent., while in all the other countries of the summit seven output fell substantially during that period.

Real demand rose in Britian by 4 per cent. last year. If we are to achieve the growth in output that that makes possible, it is all the more necessary for us to continue to improve our competitiveness.

Industrial Competitiveness

3.

asked the Chancellor of the Exchequer what was the decline in United Kingdom competitiveness since May 1979, as measured by relative normalised unit labour costs.

Relative actual unit labour costs are probably the best single measure of competitiveness, since they take account of recent improvements in productivity. But United Kingdom relative normalised unit labour costs are now around 15 per cent. worse than in the second quarter of 1979. This deterioration reflects the fact that United Kingdom wage increases have been higher than those of our competitors, as the effective exchange rate is now 5 per cent. below the figure for the second quarter of 1979.

How is it possible for the Government to claim that their policy is deliberately—rather than accidentally—increasing the competitiveness of British industry when, in reply to my hon. Friend the Member for Blackburn (Mr. Straw) on 22 December, the Government admitted that three-quarters of the 20 per cent. increase in improvement in the cost-competitive position of British industry was derived directly from a fall in exchange rates and other minor factors?

Why does not the right hon. and learned Gentleman come clean and admit that the only developments of any benefit to British industry during the past 12 months derived from exchange rate movements and had nothing to do with the Government's tight monetary policies?

That is simply not true. The cost of labour has increased at a much lower rate than in past years and done well compared with most of our competitors, which is an important part of the progress that has been achieved. The Government's action to reduce industrial costs by such measures as the fall in the national insurance surcharge is also of considerable significance.

The hon. Gentleman is doing less than justice to Britain, never mind the Government, in failing to pay heed to the substantial improvement in productivity, which has had an important effect on industry.

As the Treasury is at last admitting that it takes the sterling exchange rate into account, will the right hon. and learned Gentleman now tell us what is the Treasury's exchange rate policy?

I am not aware of any new statement that entitles the hon. Gentleman to suggest that there has been any change. He knows that the Government do not have an exchange rate target, but regard changes in the rate as one of several indicators of the relative tightness or laxity of monetary policy.

Does my right hon. and learned Friend agree that the sharp fall in the rate of inflation has been a major boost to Britain's ability to compete? Is it not true that in May 1979 our inflation rate was higher than that of most of our competitors, and that it is now lower?

There is no doubt that the improvement in inflation during the past year has been to the dramatic benefit of Britain.

As the right hon. and learned Gentleman well knows, any dramatic improvements in the past year have come about because the pound is a little more sensibly valued than a year ago. Will he understand that we cannot for long sustain—certainly not to the benefit of Britain—a dishonest pound?

If the right hon. and learned Gentleman does not have an exchange rate policy, he certainly has an interest rate policy. Does he not understand that the rise in interest rates from 9 to 11 per cent. during the past six weeks is imposing an intolerable burden on British industry? Is he aware that not only do we have the highest real interest rate since the war, but that it is higher than in any other country with which we are trying to compete?

The right hon. Gentleman, wittingly or unwittingly, wholly distorted my answer to the last question. I referred to a dramatic improvement in inflation. That has nothing to do with the exchange rate—quite the reverse. The fall in the value of the pound tends to have an adverse effect on inflation, not a favourable one. Therefore, the Government are perfectly entitled to point to the great improvement in inflation.

Any adverse movement in interest rates, when compared with the substantial fall during the past year, would be as nothing compared with the effect on interest rates of the implementation of any of the right hon. Gentleman's policies.

Argentina (Loans)

4.

asked the Chancellor of the Exchequer, further to the reply of the Prime Minister on 20 December, Official Report, c. 352, what progress has been made with the loans by the International Monetary Fund and British banks to Argentina.

An IMF executive board meeting on 24 January approved Argentina's application for a SDR 1·5 billion stand-by facility in support of an economic stabilisation programme. A drawing of SDR 0.5 billion under the compensatory financing facility was also approved. A short-term bridging facility for $1·1 billion provided by a group of international banks was signed at the end of last year. British banks are participating in this and are taking part in negotiations which are currently in progress for a $1·5 billion medium-term loan.

Is the Minister aware that the Tory Government and the guarantees of the Prime Minister in answer to a question on 20 December have sent a lifeboat to Argentine banks? How do the Government and the Prime Minister reconcile that with the Fortress Falklands policy? Are they not propping up a Fascist regime? The Government talk about brave boys dying on the beaches, yet they are propping up the Argentine banks with British taxpayers money? What hyprocisy that is.

I hope that the hon. Gentleman feels better for having got that off his chest. May I try to explain to him—

Order the hon. Member for Bolsover (Mr. Skinner) asked his question and he must allow the answer to be given.

The loans to which my original answer referred have an important contribution to make towards helping Argentina's economic adjustment and thereby safeguarding the health of the international financial system. The purpose is to ensure that Argentina continues to service its existing debts. If it did not, that would create problems for the entire international banking community and have repercussions for British trade.

If the hon. Gentleman does not understand that—

I accept what my hon. Friend said, but is he not aware that there is widespread concern that we are backing loans to Argentina while that country is still spending considerable amounts on rearming? If it was not doing so, it could service its debts.

As the Prime Minister has made clear, the loans are not for arms purchases but to help Argentina to continue to pay its debts. Tight IMF ceilings on both external credit and on credit to the public sector should inhibit the diversion of funds to military expenditure.

Is the hon. Gentleman aware that there is some dispute over the size of the foreign debt incurred by Argentina, with its central bank disagreeing with its Economic Ministry to the extent of $4 billion? In view of the large packages which the hon. Gentleman mentioned, and which have been supplemented by the news that we had at lunch-time today, should not this serious difference be resolved before these large packages are finally implemented?

I noted the reports in the press to which the right hon. Gentleman referred, but that is a matter for the Argentine authorities to sort out among themselves. We cannot arbitrate between their different estimates, but whatever the exact figure—

—it is clear that Argentina would have been faced with serious debt service difficulties without the arrangements agreed with the IMF, the commercial banks and other creditors. That could not have been in the interests of the international community.

As the Prime Minister told us last night that we must not talk to the Argentines until the formal ending of hostilities, is it right that we should lend them such large sums of money?

I am surprised that the right hon. Gentleman, with his experience of these matters, should imagine that it would be in the interests of the international trading community that arrangements should not have been arrived at to enable the Argentine Government to continue to service its national debt.

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

Free Ports

5.

asked the Chancellor of the Exchequer if he will make a statement on what progress the working party on free ports has made.

The working party has recently visited Rotterdam, Shannon and Hamburg to examine the facilities available in these localities. It has discussed Community rules with a representative of the Commission. In the immediate future visits will be made to a number of traders to examine the facilities currently available in the United Kingdom. In addition, the working party will consider all this evidence together with any additional contributions offered by industrial and commercial interests not directly represented.

I thank my hon. Friend for that helpful and full response. Will he affirm that, contrary to reports in the media, the Government have not taken any financial decision on this matter and that those decisions will be taken on the merits of the scheme, including the extra new jobs which the free ports may provide? Will my hon. Friend give some idea of the time scale of the Government's decision on this matter?

I assure my hon. Friend that he should not believe everything that he reads in the press. I speak from experience. I can give him the assurance that he seeks. The working group is examining all aspects of the issue and is doing so with a completely open mind. Our ambition is to complete our work as swiftly as possible so that if it should be the view of the working group, and if that view is subsequently accepted by Her Majesty's Government, that there is a need for change in existing legislation, provision can be made for that in this year's Finance Bill.

If that is the case, why did the hon. Gentleman sack the hon. Member for Aberdeen, South (Mr. Sproat) from the working group?

I was just trying to think who was the hon. Member for Aberdeen, South.—[Interruption.] My hon. Friend the Under-Secretary of State for Trade expressed an interest in attending the first meeting of the working group, and did so. In general, however, the Department of Trade, like other Departments of State, is represented on the working group, and most effectively, at official level. I should tell the hon. Gentleman as well that he should not believe everything that he reads in the papers.

Income Tax

6.

asked the Chancellor of the Exchequer by how much the basic rate of income tax would have to be reduced in order to restore the proportion of total taxation, direct and indirect, and including national insurance contributions taken from the income of a family—wife not working, husband in work—with two dependent children on (a) average earnings and (b) 75 per cent. of average earnings to its level in 1978–79, from its level of 1982–83.

As my right hon. Friend the Financial Secretary told the hon. Member for Islington, South and Finsbury (Mr. Cunningham) on 23 November, the figures are about 4p and 6p in the pound respectively. Even without such reductions, the take-home pay at all levels of earnings is higher in real terms today than under the last Government.

Is it not appallingly misleading to have an increase in taxation of £8 a week, in effect, for the cases that the hon. Gentleman has quoted, when the Tory party claimed that it would cut taxation, but has managed to increase it dramatically at the same time as introducing mass unemployment?

The fact of the matter is that the overall tax burden has inevitably risen because of the increased public expenditure due to the recession and by the need to keep borrowing under control. The reductions in the high rates of tax on the highest incomes need no excuse. The fact remains that take-home pay at all levels of earnings is higher in real terms than it was under the previous Government.

With regard to family incomes, has my hon. Friend read today's Financial Times and seen the article by Mr. Samuel Brittan recommending an increase in child benefit to £7 a week? Does my hon. Friend agree with Mr. Brittan that

"When anti-poverty considerations and economic incentives point the same way, this the very least that is needed"?
At a time when low-paid workers are in dispute over wages, will my hon. Friend and his right hon. Friends bear in mind the attractions of meeting the needs of those with real problems by increasing child benefit, rather than by giving way to blackmail and giving blanket increases in wages?

I cannot anticipate my right hon. and learned Friend's Budget, but many of the benefits to which poorer families are entitled, such as child benefit, family income supplement, retirement pensions and so on, have gone up more rapidly than inflation since 1978–79.

The Minister is up to the Treasury's old trick of breaking statistics. Is he aware, as a result of the questions answered by his colleague, that, as a proportion of average earnings, taxation at every level up to twice the average earnings has risen under the Government? As my hon. Friend the Member for Hammersmith, North (Mr. Soley) said, the average family is paying £8 a week more in taxation than it was before. Is not the truth that the burden of taxation has risen so much under this Government that to get it back to its level under Labour would cost not 6p off income tax, but 9p, or £9 billion?

Although the hon. Gentleman is correct in saying that the proportion has gone up, the real level of take-home pay has gone up. My constituents live on their take-home pay.

Economic Forecast

7.

asked the Chancellor of the Exchequer what prospects he sees for the recovery of the economy.

Although developments in the world economy have continued to hold back recovery at home, average GDP was 0·75 per cent. higher in the first three quarters of 1982 than a year earlier. Lower inflation and better productivity are providing a basis for a strengthening and sustainable recovery. The forecast published in the autumn statement was for growth of 1·5 per cent. in GDP in 1983.

Is the Chancellor aware that his absurd wild goose chase after sound money has imposed the lowest level of industrial production for 17 years? Why does he not now abandon his three-year mirage hopping predictions of recovery and argue for a co-ordinated boost for demand in the Western world and give some hope of jobs to my constituents in the northern region?

I understand, and the House understands, the emphasis that the hon. Gentleman places on the prospects for sustainable growth in employment. However, I remind him that during the first two years of his Government, which the right hon. Gentleman the Leader of the Opposition described as a period of signal success, unemployment doubled, while inflation rose by 27 per cent. and earnings rose by 30 per cent., and it was only after reference to the IMF that the policies could be put back to a sensible form. This is the first Government since the war to pass on a lower average rate of inflation than they received from their predecessors. We do not intend to change that.

If the right hon. and learned Gentleman persists in regarding the lower rate of inflation as almost the only factor necessary for recovery for this and other economies, will he explain why the inter-wars period, which was a period of low, sometimes zero, inflation, and sometimes negative inflation, was so markedly less successful economically than the 25 years from 1948 to 1973?

The right hon. Gentleman could draw a number of different conclusions from that analysis. He must recollect that inflation was falling at the beginning of the 1930s. The 1930s was, in fact, a period of little, or zero, inflation. We have experienced one of our most substantial growth periods during this decade. I must remind the right hon. Gentleman that since the spring of 1981 growth in this country has been moving forward, in contrast to that in almost every country in the summit seven. It is by laying the foundation to bring down inflation and by continuing to improve other supply conditions in the market, including emphasis on the need for pay moderation, that we shall secure both growth and sustainable employment.

My right hon. and learned Friend referred to the state of the world economy. Can he say what action the Government are taking to follow up the suggestion of the United States Secretary of the Treasury that there should be a new Bretton Woods-style conference to bring about greater monetary stability and to stimulate world trade?

The suggestion of the United States Treasury Secretary for a new Bretton Woods-style conference is not to be taken literally, for very sensible and practical reasons. There is no purpose in our trying to reassemble a conference of the kind which, at the end of the war, established the present international financial institutions, when they are already in place. We need, of course, to improve and strengthen them. It is that among other things to which I shall be devoting my attention as chairman of the interim committee. One objective—it was among those set out at Bretton Woods—is to move towards a world of greater stability of exchange rates. That, again, is something that I shall have in mind.

The right hon. and learned Gentleman must be aware that in talking of the international trade prospect, which is undoubtedly very gloomy, the pursuit of his own policies in the last three-and-a-half years, and the active advocacy of those policies to other countries, means that he has contributed in a marked degree to the world recession about which he now complains. In recalling what he sees as the record of his Government, is he not aware that GDP in this country has fallen by 5½ per cent. since the second quarter of 1979? Can he think of any other country in the world, let alone a country that has become an oil exporter, that has suffered anything like a comparable disaster in the same period?

The right hon. Gentleman knows that the growth performance of this country over many years has been significantly below that of other countries. It is therefore inevitable that, at a time when growth throughout the world is falling, we should suffer initially more seriously because of our history. I come back to the fact that our growth performance now shows the prospect of moving ahead of other countries. It is virtually universally agreed that until the world succeeds in establishing success against inflation it will not be possible to lay the conditions in which growth can begin to be resumed. It is on that basis that the world outlook is now beginning to improve.

Industrial Competitiveness

8.

asked the Chancellor of the Exchequer when he next intends to meet the Confederation of British Industry to discuss the level of international competitiveness.

My right hon. and learned Friend's next planned meeting with representatives of the CBI is at the meeting of the NEDC on Wednesday 2 February, when it is likely that the discussions will touch on competitiveness.

Has my right hon. and learned Friend noted the CBI's Budget representations, which, not surprisingly, urge more assistance to industry? While there may be a case for assistance to specific areas of industry, for example energy intensive industries, surely the overwhelming argument that my right hon. and learned Friend should be considering is the need for more assistance for income tax payers, particularly by raising the threshold?

I am grateful to my hon. Friend for giving his views on the CBI's representations. A balance has to be made. That will be made by my right hon. and learned Friend in due course when he comes to determine his Budget decisions.

Does not the right hon. and learned Gentleman agree that the dismal economic climate and the low level of demand brought about by the Government's economic policy has made matters infinitely more difficult for British industry in facing international competition?

No. I do not agree. I think quite the reverse. The readiness of the Government to tackle the fundamental and deep-seated problems of the British economy by dealing with inflation and taking action to remove the restraints on industry on the tax side and on the control side is setting in train a situation that will lead us to advance out of recession in far better shape than our competitors.

Is my right hon. and learned Friend aware that some of us hope that the Chancellor will be able not only to raise thresholds but to help the competitiveness of industry, on which the future good health of the country relies?

I accept that this, too, is an important consideration to bear in mind in formulating the Budget.

Does the Minister still believe that industrial recovery is just around the corner?

It is the hon. Gentleman rather than I who is stuck in a record groove. We stand by the forecast that we made in the autumn statement of a modest improvement in the economy in the course of 1983.

Stamp Duty

9.

asked the Chancellor of the Exchequer what was the yield from stamp duty charged on the purchase of dwelling units in 1981–82.

The estimated yield from transfer of residential property in 1981–82 was £315 million. The yield this year is likely to be slightly less because of the increase in the threshold in March 1982.

I appreciate that the thresholds were raised in the last Budget. May I ask my hon. Friend to bear in mind that this impost is a considerable additional burden for many purchasers of properties? Will he promise to communicate to the Chancellor of the Exchequer in good time before 15 March the fact that many people think that it would be fair and reasonable if the raising of the thresholds of this tax became a continuing and annual process?

I shall get my hon. Friend's message across. It has not been the practice to increase the stamp duty threshold each year. House prices have not increased very significantly over the past year. It should be borne in mind that two-thirds of house purchasers do not pay stamp duty.

Does my hon. Friend agree that without indexation the burden increases, particularly for those who have to move to find jobs? At a time of high unemployment, should not the Government increase the threshold?

My right hon. and learned Friend increased it last year. As a result, there are now about the same proportion of home buyers paying stamp duty as there were in 1973. About 90 per cent. of house purchasers get the benefit of the threshold and reduced rate band.

European Community (Budget Refund)

10.

asked the Chancellor of the Exchequer if he will make a statement concerning the current state of negotiations related to United Kingdom refunds from the European Community.

As the House will recall, the European Parliament rejected on 16 December the Council's draft supplementary and amending budget for 1982 making provision for the United Kingdom's basic refund for 1982. The Council has this week considered new budgetary proposals prepared by the Commission and will now be holding informal discussion with the Parliament prior to establishing a new draft supplementary budget for 1983. It is hoped that this can be established in time for formal consideration by the Parliament in the week beginning 7 February.

Does the Minister agree that out of the £13,000 million EC budget, this country contributes about £2,000 million and gets back about £1,000 million? Does he further agree that the discussions he has mentioned in respect of the proposals of the Council for a £400 million additional rebate to this country is subject to the consultation procedure, agreed between the Council and the Assembly in Paris last summer, which requires both of them to agree? Is it not a fact, in that case, that the Assembly has a veto on this sum due to the United Kingdom?

I agree with the hon. Gentleman that the present constitution of the budget between the member partners of the Community is unsatisfactory. That is why Her Majesty's Government have persistently pursued the objective of a long-term solution. The hon. Gentleman will recall that the Parliament shares our ambition in that respect. This is precisely what the Parliament has called upon the Council of Ministers to achieve. The negotiations with the Parliament must now proceed.

I should point out to the hon. Gentleman that the Commission has already lodged in a separate fund in London the payments that were due in respect of the last financial year.

Does my hon. Friend agree that a time limit must be placed on the negotiations? He has said that consultations will take place again in February. Is it not a fact that it is within the power of the European Parliament to drag this out for months? Would that not be quite intolerable and unacceptable to most hon. Members?

I agree with my hon. Friend that it is our purpose to see the conclusion of these negotiations and the payment of the sums agreed in respect of 1982 as soon as possible, but I do not think that we should, at this stage, speculate about actions that might need to be taken in the event of failure to achieve such an agreement in due time.

Has the Minister seen the report in today's Financial Times to the effect that, far from the European Assembly seeking to co-operate with the Council and the United Kingdom Government, the president of the assembly, Mr. Pieter Dankert, is setting his face against a settlement except on wholly unacceptable terms, including no special budget deal with Britain after this year? Given the point made by the hon. Member for Dorset, West (Mr. Spicer) that the assembly can drag this out and veto any attempted deal by the Council, when, instead of talking tough, will the Government act tough and refuse to pay any further money over to the EC until we get a proper deal?

Our right to what the hon. Gentleman describes as "a proper deal" has been recognised by the Council of Ministers. I must reiterate that, whatever the president of the assembly may have said, the assembly has been demanding that there should be a long-term solution to the budget problem. That is precisely the objective of Her Majesty's Government as well. So we share an objective with the Parliament and we want to see that objective achieved as soon as possible.

Manufacturing Output

11.

asked the Chancellor of the Exchequer if he is satisfied with the recent performance of the economy in terms of gross domestic product growth and output by manufacturing industry.

Recent figures, particularly for manufacturing output, confirm that there was a hesitation in the recovery last year, partly reflecting the unexpected length and depth of the world recession. But with lower inflation, improved competitiveness, and the prospect of some growth in the world economy, the outlook for 1983 is for a modest rise in output.

As the economy clearly did not bottom out in April 1981, does my right hon. and learned Friend feel that the latest CBI proposals understate or overstate the need for new resources in the economy?

Contrary to what my hon. Friend says, there has been growth in output in the economy since the second quarter of 1981. Indeed, growth during that period, as I have already said, exceeded that in all seven summit countries except Japan. I shall, of course, consider the representations made by the CBI.

Is there nothing that can pierce the right hon. and learned Gentleman's complacency? Is he not aware that last week's disastrous output figures show that house completions were at their lowest level since 1947, that the output of commercial vehicles was at the lowest level since 1953 and that steel output was lower than in Poland? As the output of manufacturing industry has fallen by 2 per cent. since the right hon. and learned Gentleman last assured me that we were at the end of the recession, would he care to tell the House when he expects us finally to reach the end of the recession?

The hon. Gentleman must take account of the factors that I have already pointed out. There was growth in output between the first three quarters of last year and the first three quarters of the preceding year. During last year there was a 4 per cent. growth in real demand in our economy. There is expected to be a growth in real demand in the economy in the year ahead. The key factor is for British manufacturers and producers to go on improving their competitiveness so that British goods fill a larger rather than a smaller share of that market.

Tourism

13.

asked the Chancellor of the Exchequer if he will introduce further fiscal measures aimed at stimulating the development of tourism in the United Kingdom; and if he will make a statement.

A number of Budget representations on the tourist industry have been received, which are being considered in the normal way.

As the tourist industry provides employment for more than 1·5 million people and in 1981 attracted more than 11 million visitors to Britain, who spent £3 billion in valuable overseas currency, does my hon. Friend agree that there is an extremely strong case in the forthcoming Budget to increase the level of industrial building allowances for hotels to 50 per cent. and to make additional funds available for section 4 aid for approved tourist projects?

Those are among some of the representations that we have received and are being examined in the normal way.

Civil List

14.

asked the Chancellor of the Exchequer if Her Majesty's Government will make it their policy when bringing forward proposals for increases in annuities to recipients on the Civil List for 1983–84, to reduce the proposed amount of each increase by the amount in excess of the rate of inflation by which that annuity was increased in 1982–83.

No; this policy is neither appropriate nor necessary. The policy is to increase annuities to recipients on the Civil List in line with increases in other public service cash limits and this policy will continue for 1983–84. Details will be published when the Supply Estimates are presented to Parliament in March.

Since the right hon. and learned Gentleman lays great stress on the need for restraint in wage and income demands and would prefer ideally a nil increase this year, would it not be a wonderful example for him to set by having a nil increase for these particular well-heeled individuals?

The hon. Gentleman should remember that annuities are paid to members of the royal family largely to meet their official expenses, which includes the wages and salaries of staff necessarily employed. The whole House would prefer to conclude that the economical nature of the arrangements for the support of the monarchy in this country would stand comparison with those for any head of state in any other country in the world.