National Finance Capital (Tax Relief) 42. Mr. Boyd-Carpenter asked the Chancellor of the Exchequer if he will give an estimate of the loss to revenue of a reduction to 10 per cent. in the allowed return on capital employed in the manufacture of price-controlled goods. Sir S. Cripps I am afraid that it is not possible to provide an estimate of this sort as information is not available to show the actual return at present on capital employed for all the concerns manufacturing price-controlled goods. Israeli Sterling Balances 44. Colonel Crosthwaite-Eyre asked the Chancellor of the Exchequer what counter-claims were made by His Majesty's Government on the Israeli Government before His Majesty's Government agreed to releases of £7 million from Israeli blocked sterling balances. Sir S. Cripps None, Sir. Discussion of claims and counter-claims between the two Governments will begin in Tel-Aviv in a few weeks' time. Colonel Crosthwaite-Eyre As in a Debate the Secretary of State for the Colonies said that no release would be made until the Israeli Government acknowledged all their liabilities to this country, can the Chancellor give an undertaking that that was done before this release was made? Sir S. Cripps It was considered convenient to deal with this immediate problem of the financing of the Israeli Government, and of their necessary sterling payments, before we could arrive at the complete settlement, and that is bound to take some months because of its complexity. Colonel Crosthwaite-Eyre Does that mean that in effect this release has been made before the fulfilment of the undertaking of the Secretary of State, that the Israeli Government would acknowledge their obligation to this country? Sir S. Cripps I am afraid that I am not aware of the undertaking of the Secretary of State for the Colonies. The facts are as I have stated. Major Legge-Bourke In assessing the claims we shall make has the Chancellor borne in mind the immense cost of looking after the illegal immigrants who tried to go into Palestine but had to go to Cyprus before we surrendered the Mandate? Sir S. Cripps I can assure the hon. and gallant Member that we shall look after all the claims we have to make. Colonel Crosthwaite-Eyre Will the Chancellor look at column 1248 of the OFFICIAL REPORT of 10th March, 1948, and in the light of the statement there made by the Secretary of State for the Colonies review any further release to the Israeli Government before the claims of this country are met? Sir S. Cripps It is not proposed to release any further claims until we have had the negotiations in Tel-Aviv in a few weeks' time. Anglo-Indian Discussions 45. Colonel Crosthwaite-Eyre asked the Chancellor of the Exchequer if he has any statement to make on the recent Anglo-Indian financial discussions. Sir S. Cripps Discussions on the working of the financial agreement with India was recently initiated in New Delhi and are being continued in London. I hope to be able to make a statement in due course. Colonel Crosthwaite-Eyre Since these balances have now been reduced by half, can the Chancellor give any undertaking that no further releases will be made until counter-claims have been made by His Majesty's Government and accepted by the Government of India? Sir S. Cripps Certainly not. Colonel Crosthwaite-Eyre If that is so, will the Chancellor make clear to the House that he stands with His Majesty's Government committed to this policy of making counter-claims? In the last three years there have been many opportunities for so doing, but none have been made, and will the Chancellor now make clear to this House when he thinks it will be possible for His Majesty's Government to make such a counter-claim? Sir S. Cripps No, Sir. Mr. W. Fletcher In view of the very disastrous effect that the wrong use of these Indian balances has brought about on our unrequited exports, and in view of their vital importance at this moment to our export trade, will he take that into account in the further negotiations? Sir S. Cripps We always take into account how much unrequited exports are lost to us. Mr. Oliver Stanley Do the present negotiations in fact cover the possibility of His Majesty's Government putting in counter-claims? Sir S. Cripps No. The present negotiations deal with the question of how much release of sterling and how much dollar requirements India as a member of the sterling area requires in the coming 12 months. Colonel Crosthwaite-Eyre Then will the Chancellor now make it clear that in fact His Majesty's Government do not mean to make counter-claims? Sir S. Cripps No, Sir. Anglo-American Talks 46. Colonel Crosthwaite-Eyre asked the Chancellor of the Exchequer if he has any statement to make on the outcome of the recent Anglo-American financial talks in Washington. Sir S. Cripps No, Sir. In accordance with regular practice representatives of the Treasury recently paid a routine visit to consult with our own representatives in Washington. Any contacts with American officials were personal and informal. Colonel Crosthwaite-Eyre Does that mean that His Majesty's Government have no statement to make about the present divergence of opinion over the Anglo-Argentine trade Agreement? Sir S. Cripps It means nothing of the sort. It means that that was why two officials visited America. Double Taxation 47. Mr. Walter Fletcher asked the Chancellor of the Exchequer what progress has been made in negotiations with the Belgian Government to end the system of double taxation which hinders freedom of trade between the two countries. Sir S. Cripps Progress has been temporarily interrupted while a revision of the taxation system is under consideration in Belgium. Discussions will be resumed as soon as possible. Mr. Fletcher Is the Chancellor aware that informed opinion in Belgium and British circles there believe it is the Chancellor of the Exchequer and the Treasury that are preventing the removal of this great hampering of trade between the two countries, and will he give a better assurance than last year, when he said that good progress was being made? Sir S. Cripps Yes, Sir. It is not the Treasury nor the Chancellor of the Exchequer. I understand that the Belgians are considering a revision of their whole taxation system, and until they have done that it is impossible to continue to negotiate. Mr. Fletcher Is the Chancellor aware that he is wrong in that statement. The principle of getting rid of dual taxation does not depend on the incidence of taxation; that is clear from the differences there have been in American taxation where he has been able to make an agreement? Sir S. Cripps I do not think that anyone disagrees with the principle. The question is, working out the system. 48. Mr. W. Fletcher asked the Chancellor of the Exchequer what progress has been made in negotiations with the French Government to end the system of double taxation between the two countries; and if he will give an assurance that His Majesty's Government are in favour of terminating this system. Sir S. Cripps Discussions with French representatives are now taking place. Mr. Fletcher As the same set of circumstances which the Chancellor has mentioned in the case of Belgium do not hold good in the case of France, will be not say that it is himself and the Treasury standing in the way, on some quite untenable grounds of balance of payments, and will he get on with it? Sir S. Cripps No, Sir. Those are not the circumstances. The circumstances are that discussions are now taking place with the French. Customs And Excise, Scotland 49. Sir W. Darling asked the Chancellor of the Exchequer what is the annual amount, to the most recent convenient date, received in Scotland from Customs and Excise duties. Sir S. Cripps The net amount from Customs and Excise duties received in Scotland during the financial year ended 31st March, 1949, was about £123 million (Customs, £55 million, Excise, £68 million). Sir W. Darling Can the Chancellor say the relation these payments to Scotland bear to the total payments to the United Kingdom? Sir S. Cripps I could not without notice, but it would not be very informative if I could, because these goods in many cases are not necessarily consumed in Scotland. Sir W. Darling The Chancellor will be aware that they are manufactured in Scotland. Sir S. Cripps The tax is on the consumer in this case and not on the manufacturer. Dollar Sales, Foreign Countries 50. Mr. W. Fletcher asked the Chancellor of the Exchequer what progress has been made towards stopping the purchase, by countries outside the sterling bloc, of commodities which are subsequently resold for United States dollars. Sir S. Cripps I am pressing on with various remedial proposals and measures. I have, for example, been able to secure changes in some payments agreements which now provide that transferable account sterling may be used only for direct current transactions. I am consulting interested members of the sterling area on other proposals which would require their co-operation. Mr. Fletcher Is the Chancellor of the Exchequer aware that this robbing of the sterling area of tens of millions of dollars over the last six months to a year is creating great pressure on the dollar gap, and will he take very much wider and more drastic steps than those he has mentioned? Sir S. Cripps It is not possible to take very much wider or more drastic steps, except in association with other countries, both the countries whose nationals are engaging in these transactions and the countries in whose areas the goods are to be found. Steps are being taken with both of these countries to try and get a correction. Mr. Stanley Has the Chancellor received satisfactory co-operation from the Governments of these nationals who have undoubtedly been assisting in this serious drain on our sterling resources? Sir S. Cripps I think that they are doing their best to help, but this is a very complicated matter, as anyone knows who has to deal with exchange problems. Colonel Crosthwaite-Eyre When the Chancellor of the Exchequer says that he is dealing with these transferable areas, can he say what percentage is now covered by such agreements as he has mentioned? Sir S. Cripps I could not say. Mr. Fletcher Will the Chancellor bear in mind that he has already established a precedent by the embargo on the export of rubber to Siam? Having established that precedent, why does he not use it in a wider circle? Sir S. Cripps It is not always appropriate. It might not be appropriate to establish an embargo on the export of rubber to Europe. Football Pools (Income Tax) 51. Mr. Symonds asked the Chancellor of the Exchequer whether his regulations provide that the cost of the registered letters sent to every Member recently by the Football Pools Promoters Association should be treated as a business expense for purposes of Income tax. Sir S. Cripps Expenditure by traders for political purposes is not permitted to be deducted in computing profits for the purposes of Income Tax, and any claim to deduct the cost to which my hon. Friend refers would certainly be contested by the Inland Revenue. Mr. Symonds In view of the uncertainty in the public mind as to what these pool promoters regard as expenses, especially as the rules about them are drawn up by the promoters themselves in the privacy of their own association, will my right hon. and learned Friend reply to any protests about taxation which he may receive by inviting or even challenging these pool promoters to publish balance-sheets, so that the general public can see how these expenses are calculated, what amount of profit is deducted and to what extent they are being led up the garden by this expensive propaganda? Sir S. Cripps I am afraid that that would not be relevant to this Question. It concerns how much Income Tax is charged, which is quite satisfactorily seen to by the Revenue authorities. Dollar Earnings 53. Sir Ian Fraser asked the Chancellor of the Exchequer if he will introduce an incentive to dollar earning by permitting United Kingdom taxpayers to retain the whole sterling equivalent of their dollar earnings tax free. Sir S. Cripps No, Sir. Sir I. Fraser Does not the Chancellor agree that the prospect of getting back some part, if not all, of what one earns would be a great inducement in the earning of dollars, and will he quite seriously put this question to his experts? Sir S. Cripps This matter has been studied on many occasions, and it is quite impracticable to prefer one trader to another in this way. Post-War Credits 54. Sir I. Fraser asked the Chancellor of the Exchequer what sum of money is held by his Department as post-war credits; what are the present rules for the repayment of these credits in general or in particular classes; and what is the amount of the repayment in each of the last three years. Sir S. Cripps The total Post-war Credit originally created amounted to £800 million of which £58 million was repaid in 1946–47, £56 million in 1947–48 and £19 million in 1948–49, leaving a balance of £667 million outstanding at the commencement of the current year. It is estimated that a further £18 million will be repaid this year. The existing law provides for payment only to men over the age of 65 and women over the age of 60. Sir I. Fraser In view of the substantial drop in the repayments in the last two years, will the Chancellor consider easing the many hard cases about which Members on both sides are constantly hearing? Sir S. Cripps No, Sir, we cannot afford to distribute any more purchasing power. Gold (Price) 55. Mr. Stokes asked the Chancellor of the Exchequer how much of the 40,000,000 ounces of gold purchased by the United States of America in 1948 came from the sterling area; and whether he will state the average price paid. Sir S. Cripps I have nothing to add to my reply of 24th May. Mr. Stokes Is my right hon. and learned Friend aware that the present official price of gold is £8 12s. 3d. per fine ounce and the market price £22 10s., and that the Americans are underpaying to the tune of £560 million? Is it not a ridiculous situation arising out of the Bretton Woods Agreement? Sir S. Cripps I cannot agree to the figures. It depends on what my hon. Friend thinks is the proper price of gold. Mr. Stokes Is the Chancellor aware that the free market price is £22 10s. and that the official so-called monetary price is only £8 12s. 3d.? Sir S. Cripps It does not necessarily mean that the proper price is £22 10s. Mr. Stokes Is the Chancellor aware that the sterling area is losing thousands of millions of dollars? What is he going to do about it? Sir S. Cripps I agree that if more were paid for gold, we should get more dollars. Mr. Stokes Then why does not the Chancellor charge more for the gold? I shall go on with this, Mr. Speaker? 56. Mr. Stokes asked the Chancellor of the Exchequer how much gold was sold to Belgium from the sterling area in 1948; and what was the average price paid. Sir S. Cripps Figures of our gold and dollar settlements with Belgium since the beginning of the Intra-European Payments Agreement were circulated in the OFFICIAL REPORT of 2nd June, in reply to a Question by my hon. Friend. I regret that information about earlier transactions must remain confidential. In reply to the second part of his Question, I would refer him to the answer given by my hon. Friend, the Economic Secretary, on the same day. Mr. Stokes That does not make it at all clear to the House. Is the Chancellor aware that 2¼ million ounces of gold were sold to Belgium last year, and was bought for only £20 million instead of approximately £45 million which was the market price? What is he going to do about that? Sir S. Cripps If Belgium is prepared to pay more for gold we shall get more. Mr. Stokes I beg to give notice that in view of the extremely unsatisfactory way the Chancellor of the Exchequer is dealing with this matter, I shall raise it at the earliest moment on the Adjournment, when I hope he will be here to answer? Wholesale Prices 57. Mr. Peter Freeman asked the Economic Secretary to the Treasury whether he will publish a table indicating the wholesale rise in prices since 1938 in cars, and the principal articles of clothing, food and articles of domestic use. The Economic Secretary to the Treasury (Mr. Douglas Jay) Such information on prices as is available is already provided in the Monthly Digest of Statistics. Coi (Press Advertisement) 58. Mr. Boyd-Carpenter asked the Economic Secretary to the Treasury why an advertisement entitled "Productivity Campaign 49" inserted in the Press by the Central Office of Information ridicules the Police Force. Mr. Jay As no Government advertisement ridicules the Police Force, the Question does not arise. Mr. Boyd-Carpenter Would not the hon. Member consider he was being ridiculed if he were portrayed in the public Press as being about 18 inches high, almost entirely obliterated from view by a large moustache and showing patent inability to carry a shopping basket? If the answer is "Yes," as I imagine it will be, does he not consider that the police have considerable grounds of complaint? Mr. Jay My impression is that the sense of humour of the Police Force exceeds that of the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). Mr. Boyd-Carpenter In view of the hon. Gentleman's supplementary answer, may I take it that he has no objection to being similarly portrayed? Lieut.-Colonel Lipton Has my hon. Friend received any complaints from the Police Federation or any other body representing the Police Force? Mr. Jay No, Sir, none at all. Air-Commodore Harvey On a point of Order. As the Chamber is warming up, Mr. Speaker, could we have some windows open, please?